Dynamic pricing based on short term changes in supply and demand is a spreading experiment.
Meters that can read prices every hour are also the centerpiece of aggressive conservation efforts in Virginia and Maryland, where Gov. Martin O'Malley (D) has pledged to reduce the state's electricity consumption by 15 percent by 2015. Fluorescent light bulbs that outlast traditional incandescent ones, rebates on energy-efficient appliances, free energy audits -- all are on the table for customers of Pepco, Virginia Dominion Power and BGE, among others.
"At the end of the day, people want to understand what their electricity is costing them and what they are getting for it," said Steven B. Larsen, chairman of the Maryland Public Service Commission, the state's utility regulator. "The basic concept is that technology can help save us money."
Smart meters have not been mandated, but they are being used in several states. The Illinois legislature has required the expansion of peak pricing programs, and Florida and California are among those conducting pilot programs.
This is a necessary development. Two of our big prospects for future electric generation, wind and solar, are not dependable. To use more wind and solar we need to adjust electric prices based on not just demand but also on available supply. Charge less when the sun shines and the wind blows. Charge more at night and overcast and winter days. Charge more as well when the breezes die down.
Dynamic pricing also helps nuclear power because it shifts more demand away from peak periods. Nuclear works best as baseload power that is running constantly 24 hours a day and 365 days a year. Nuclear capital costs are too high to operate a nuclear power plant only during hot afternoons. Dynamic pricing will partially flatten demand and by doing so make nuclear able to supply a larger fraction of total used electric power.
By Randall Parker at 2007 December 12 10:35 PM Policy Energy | TrackBackI'm not sure the storage problem is really that hard. There are technologies like molten sodium-sulfur batteries that already exist and could probably manage a lot of the problem, and doubtless as demand for large scale storage increases, more technologies will appear.
Technologies other than batteries are available for power storage - look what TVA has done:
What isn't obvious is that O'Malley is actually just going to cut electricty use by destroying Maryland's economy.
Sorry, the link didn't come through - here it is: http://www.tva.gov/sites/raccoonmt.htm
Perry,
Storage has two costs:
1) Capital costs and operations.
2) Energy loss in the conversion to and from the stored form.
So far the cost of wind and even more the cost of photovoltaics makes the added cost of storage too high. Now, if wind and solar fall far enough then storage costs will become acceptable. Also, dynamic pricing of course increases the incentives to store when cheap and sell when prices are high.