Creative Energy policy formulation

It is hereby accepted that for fossil price, environmental and availability of sustainable sources of power, that it would be desirable to make the transition to sustainability.

Such a transition represents a revolution.  Since industrialisation, primary energy has been extracted, processed and used in a definite series of ways.  All this is changing.

As energy is central to everything Government has always taken a keen interest in it.  It is an intriguing fact that although the market rules in so many areas of life a limited form only applies in the energy sphere.
Subsidisation is the norm.  Some $400Bn annually has been funnelled to energy security, price support etc. (World Bank).  I will document subsidisation in subsequent blogs.  Here my only goal is to record how deeply all Governments are involved in energy.

Electricity is a subset of energy.  As time marches on it grows in importance.  Over the coming fifty years electricity will grow in importance until it is virtually the only energy vector as far as the customer is concerned.  (The single possible exception will be flight where biofules may always be necessary).

Despite the opening of electricity markets it is hard to break the monopoly effect.   Much progress has been made in separating generation from transmission and from supply.  This is the first necessary step in the sustainability revolution.

Electricity companies are regulated entities at least insofar as they service their home customer base.  The regulator sees it as his duty to protect the customer while ensuring energy security.  Up to now most regulators performed a short term function.  It is assumed, in this short term world view, that the world of the future will resemble the world as it is now.  There was always room for creativity.  The Florida Regulatory Commission (PUC) for instance refused one of the local generation companies permission to build a new power station.  The PUC instead proposed that the company retrofit several skyscraper buildings with reflective glass.  This would reduce the air conditioning burden.  The cost of retrofitting the glass was allowed in the rate base of the utility.  What this means is that the utility was given a regulated rate of return on the glass investment.

However Regulatory bodies will not lead the Revolution.

This duly falls to Government.  The task is relatively easily formulated.  It depends on the answer to a number of questions.

What renewable sources of energy are available to us?

What is the relative cost of each renewable?

What is the extent of the supply chain needed to take us on the renewable road?


How will we deal with variability in renewable supply? (All renewables vary)

How far can energy efficiency initiatives take us?

What is the most effective support regime for renewables?

What can and should be done at household level as distinct from at central generation level?

How adequate is our gird for the new generation setup?

What changes do we have to make to the laws governing regulation to give regulators adequate long term power?

How are we going to communicate the revolution to the populace?

Is the soft science of economics adequate to describe and allow important trade off decisions to be made?

A fundamental question from left field is can we carry out this revolution by ourselves as a Nation or do we need our neighbouring States to help us?

What new corporate players are needed and how do we encourage them to enter the market?

How will the revolution affect the rest of the economy – competitiveness, productivity and general economic growth?

Our next subsequent blogs will address these questions.

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