“Markets for Reactive Power and Reliability”

Michael Giberson

Two years ago, the Federal Energy Regulatory Commission issued a staff report diagnosing problems with the way reactive power is procured, paid for, and used in the U.S. electric power industry. The report was widely recognized as authoritative and thoughful, and as laying well the foundation for further progress on the topic. As far as public policy at the FERC, however, that is about as far as it went. Commissioners changed, as did priorities, and policy remains stuck where it was in 2005 (which, more or less, was where it had been since 1998, which – by the way – closely resembles the approach taken pre-1992).

However, while any particular momentum at FERC was lost after the report came out, the very talented folks at Cornell’s “Engineering and Economics of Electricity Research Group” have carried on (with support from the U.S. Department of Energy and National Science Foundation, it should be noted), producing a working paper that lays the issue out well and significantly advances the discussion. The paper is more than an analysis of reactive power procurement policy. As the authors note, to address that problem properly requires consideration of the proper market for real power and other reliability services. They get to the foundation, ensure it is secure, and build up from there.

This paper is good stuff, about which I hope to have more to say. You serious power market design geeks out there shouldn’t wait for my further comments, however. Go get the paper and read it now. (PDF is here: “Markets for Reactive Power and Reliability.” The paper is also available from this page at Cornell.)

[Here is a link to Lynne's earlier post on the FERC staff report.]

“Markets for Reactive Power and Reliability”

Michael Giberson

Two years ago, the Federal Energy Regulatory Commission issued a staff report diagnosing problems with the way reactive power is procured, paid for, and used in the U.S. electric power industry. The report was widely recognized as authoritative and thoughful, and as laying well the foundation for further progress on the topic. As far as public policy at the FERC, however, that is about as far as it went. Commissioners changed, as did priorities, and policy remains stuck where it was in 2005 (which, more or less, was where it had been since 1998, which – by the way – closely resembles the approach taken pre-1992).

However, while any particular momentum at FERC was lost after the report came out, the very talented folks at Cornell’s “Engineering and Economics of Electricity Research Group” have carried on (with support from the U.S. Department of Energy and National Science Foundation, it should be noted), producing a working paper that lays the issue out well and significantly advances the discussion. The paper is more than an analysis of reactive power procurement policy. As the authors note, to address that problem properly requires consideration of the proper market for real power and other reliability services. They get to the foundation, ensure it is secure, and build up from there.

This paper is good stuff, about which I hope to have more to say. You serious power market design geeks out there shouldn’t wait for my further comments, however. Go get the paper and read it now. (PDF is here: “Markets for Reactive Power and Reliability.” The paper is also available from this page at Cornell.)

[Here is a link to Lynne's earlier post on the FERC staff report.]

Ethanol for Grown-Ups

Michael Giberson

For a long time in the United States, ethanol has been a fringe act, a political plaything, a way for Congress to subsidize the income of well-connected agribusinesses without thinking too hard. Now, ethanol has become a member of a small cluster of “ideas” that are supposed to help us get on down the road into a future in which the petro-terrors of global warming and lack of energy independence threaten us at every turn. It’s time for the grown-ups to take a look at ethanol policy.

I don’t mean to insult all the folks out there doing real work with ethanol, whether it is engineering biofuels or scouring the data to figure out the net impact on carbon emissions, or what have you. The grown-ups have been out there, but so long as ethanol was a fringe act no one had to pay attention.

As Bush travels to Brazil this week, it is widely assumed the topic of the U.S. tariff on ethanol imports will come up. A (high) tariff is a no brainer if ethanol is just a Senator’s political slop for donors in the home district. And a zero tariff is a no brainer if, like me, you tend toward free trade. But a high tariff on imports while subsidizing agribusiness seems like the kind of political silliness that should be left behind now that ethanol is center stage.

A New Scientist article provides more of the goods on ethanol for grown-ups: research on the carbon footprint, prospects for genetically engineered yeast to boost yeilds, the food vs. fuel arguments. Things grown up policy people should know about.

By the way, it isn’t just federal policymakers that need to grow up. All this state buffoonary about making Washington state energy independent, or North Dakota, or where ever. I say start small. When Seattle can manage to become “coffee independent”, then maybe I’ll trust Washington state politicians to successfully tackle the harder and more important question of managing energy supplies.

A prime exhibit of the need for local politicals to wake up and stop smelling the grain alcohol comes from Cumberland County, North Carolina, which has awarded $875,000 to build a ethanol plant to what appears to be no more than a shell company operated out of a couple’s house who have no particular experience in building anything. (See this article, via WSJ’s Energy Roundup and R-Squared Energy Blog.)