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Why New Daedalus?

Daedalus was the mythical great architect and artificer of the classical world. Today, embedded intelligence is enabling the most profound changes in the way we create and use buildings since his day.

Building Intelligence meets the Intelligent Building. The Intelligent Building negotiates with the Intelligent Grid. How will this transform how we interact with the physical world?

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Friday
Sep212007

Big Decisions and Big Process

I hear arguments that electricity is too important to leave to markets. The tasks are too large. The complexity is too great. The mandate of universal service is too important. In fact, so the argument goes, the long term risk to society is so large that we cannot trust or rely individual actors. We need to involve of society to make the best decisions for us all. This argument is coherent, engaging, and false.

Time and time again we see examples of misallocation of economic resources toward stasis and incidentals and away from service and innovation, and thereby away from conservation and reliability as well.

In Mission Hills, San Diego, the homeowners opted in the 1950’s to impose a fee on themselves to put their power lines underground. The decision was largely aesthetic, rather than engineered, but even so the homeowners voted to pay an additional fee on each month’s bill until sufficient funds were available. Twenty years later, enough money had been paid in. Forty years later, after being ignored by the Utilities Commission, lawyers became involved.

During the 80’s, the power quality in Mission hills slid from poor to worse. Long-time denizens would share complaints about short black outs and random brown-outs at back-yard cook-outs. Electronics equipment in the neighborhood had a short life. Despite charging a premium for premium distribution, the neighborhood got the same old service. If regulated monopolies and utilities commissions were attuned to fairness, and service, and meeting agreements made, Missions Hills would have had its distribution system fixed a generation earlier. Instead they are focused on stranded costs, and historic rates of renewal, and, presumably, hoping that the customers would never complain, so they failed to meet their agreements.

If we were considering some sort of larger societal concerns, we would allocate energy supplies so as to build redundancy and to pay rational heed to the physical demands of each energy source. For example, coal requires advanced technology and significant transportation infrastructure. Natural gas can be delivered easily, economically, and cleanly to point generation sites like the home or neighborhood. New low maintenance small-scale generation technologies like fuel cells and old efficient uses as heating can be reasonably distributed to the home. If regulated monopolies and utilities commissions were able to look to the future, they would demand that central plants be coal, and reserve gas for distributed generation. They don’t, because they are always looking back.

Yesterday I heard on the news that the local power company is buying light bulbs and selling them at a discount through the local Lowes home improvement stores. Despite the huge improvements that an intelligent grid would bring in reliability, and in economy, the path that the Utilities can find in current markets is to subsidize purchases by the middle class through a selected vendor. Getting points on some sort of green scorecard has trumped attention to the power companies own domain.

Numerous new technologies are close to market for the provision of light more efficiently; if there were a cogent argument for central selection of the next lighting technology, the rational decision time would be a year out. If we, as a society, were looking at the big picture, we would look at incentives to steer some of those decisions toward the newer technologies that can work on DC. We certainly would not lock in on fluorescent bulbs, and the heavy metal waste disposal problems they pose.

Adaptation and innovation are critical to meeting emerging energy needs. Neither of these is attained without vision and neither is attained without risk. Public processes have a keen vision focused backward on the last problem. New technologies constantly reduce the value of historical cost. If you eliminate all completion on price, then there will be no competition on service. This is true whether the service is rendered through new definitions of quality, or through differential amenity, or in innovation.

The public management of “natural” monopolies demands a focus on only on cost, and none on opportunity. New approaches like IT-based demand smoothing will make huge game-changing differences, ones we cannot make looking back. We cannot afford to ignore the dollars in opportunities, even though preparing for them may cause us to abandon the pennies we spent a decade ago.

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