Can electricity branding save us from ourselves?
Brands are a fundamental part of capitalism, because they convey information about products to customers. See for example a discussion of Rory Sutherland’s book “Alchemy” on that.
They make products and producers identifiable. Performing below expectations has real consequences.
Can we use their power for the benefit of society and the electricity consumer?
Brands and quality
Common sense says that it is not possible.
The way we set the price for electricity explicitly tries to “blend” all electricity and make it as much of a commodity as possible:
Multiple producers bid a price for the next 15min period. Once the forecast demand is met, all producers get the price of the highest bid that was accepted. This is supposed to incentivize bidders to bid their real costs. If they ask too much, they will not sell anything, if they ask too little, they will lose out. The electricity is bought by intermediaries that sell it to their customers. The customer can thus not create any relationship with a particular producer. Given that voltage and frequency of electricity are fixed, theoretically, there should not be a difference in producers and the cheapest producer wins out.
But not all electricity production is equal and not all costs are captured: Reliability, stability, storage demands, black start capabilities and emissions are for example not captured by the pricing mechanism. Without brands, consumers cannot give direct feedback on their preferences. Without this feedback and any possibility of consumers to choose their producers, there is a huge incentive to lower the quality of the product and increase the profit margin.
In Alchemy, there are two great examples of the consequences of this incentive:
Rivets for boats in the Soviet Union became so bad that ships sank regularly. The remedy was to stamp the rivets, so you could trace bad quality back to the producers.
Ice cream in Romania. There were 3 companies producing ice cream sandwiches. But one was markedly better. People peeled back the packing to get a look at a production code, which indicted the origin. This created a pseudo-branding.
The modern day instantiation of this incentive is that there are laws that mandate variable renewable energy to be put into the “pool” of electricity, they can bid at $0/MWh and get a politically subsidized compensation. Providers can reap the premium that customers are willing to pay for reliable power, without actually being able to offer it. They can outsource the ability, and the costs associated with it to market competitors.
Why do we think it is a moral virtue to force the public to pay a premium to people with houses and spare money on their hands for EVs and rooftop solar, while we raise the price for the general population? Including the very poor? I have become convinced that the lack of branding of electricity makes it possible for vocal, virtue signaling people to get away with free-riding. Utterly free of the consequences of what they ostensibly demand. It did seem impossible to me to brand electricity, because everything is physically connected and blended by the grid. You cannot channel specific energy through it. BUT: you can send information about it!
Create your own electricity brand
So we should be able to offer an option for these vocal people to cut fossil fuels from their life, without having to wait for any institution or greedy capitalist company to act on the issue. Instead of merely using capitalist, financial instruments that transfer the blame for consuming fossil fuels to poorer people, they can actually opt for only using green energy. How? Easy!
Let’s take an ordinary smart meter that will be vital to the future of mostly renewable grids to cut people - presumably those that aren’t able to pay the higher prices or don’t have political influence - off the grid, when there is a mismatch in supply and demand. That’s called load shedding. But that electricity will still be tainted by some amount of fossil fuels, especially by fast ramping gas power plants.
I think that no upstanding climate activist can bear that. So we need something better than mere “smart” meters. Let’s use “virtue” meters. Any activist can pay to have them installed in their homes in series with their “normal” meters. Maybe a public charity can help out?
Every electricity consumer has an electricity provider. These buy electricity from physical energy producers. We can - and do! - measure how much energy the producers put on the grid, and how much power is sent across grid connectors. This information can be used in the virtue meter.
Let’s say an activist is a very good person. Great! What producers do they want? Solar and wind? Because hydro destroys nature and nuclear is bad? And fossil fuels are evil anyway? No problem!
When we know the real-time production data of electricity producers, activist can choose their level of virtue. Here are some ideas:
Saint: They choose some identifiable power producers (like a specific rooftop solar installation) near them with “dedicated” peak capacity1 equal to their average power consumption.
Monk: They choose a virtual pool of many producers with “dedicated” peak capacity equal to their average power consumption.
Devotee: They choose some identifiable power producers with “dedicated” average capacity2 equal to their average power consumption.
Fashionable: They choose a virtual pool of many producers with “dedicated” average capacity equal to their average power consumption.
Sinner: They choose a maximum instantaneous carbon intensity of electricity.
Deplorable: They choose an average moving horizon carbon intensity over a day.
Demon: They choose an average moving horizon carbon intensity over a week.
Satan: They choose an average moving horizon carbon intensity over a month.
And that is an electricity brand!
I imagine that a lot of public activists will create their own brands and people can join them. Just link your virtue meter to the AOC or Greta energy brand.
Whenever your instantaneous power consumption would violate your chosen idol’s virtue level, the virtue meter will post a message of praise on social media - and cut your power. If you are a saint, that will likely be every evening - and several times during the day. Or most of November and December, if you happen to live through a German Dunkelflaute.
What a token of true valor to shiver in the dark for your own ideas! You can also use the accompanying app on your smartphone that will cut all internet traffic for you for the time being. The whole history of your electricity brand will be public for everyone to see, and your shining example will surely attract followers quickly!
My personal prediction is that a device like this would rapidly increase the understanding of the difference between average and peak power, the relationship of nameplate capacity, utilization and availability factor and the role of fossil fuels in today’s energy infrastructure. And that knowledge might be useful in discussions about climate change.
My guess is that the brand value of nuclear power for providing zero-carbon, reliable nuclear power would certainly go through the roof. Not the worst outcome, I guess.
Here is the idea for the “dedicated peak capacity”. Let’s say you choose a 10kWe solar installation as your only power provider. When your average yearly load is 1kWe, you get a reserved capacity of 10% of that installation. If it produces only 5kWe, or 50% of its nameplate capacity, you will be able to consume 50% of your dedicated resource, or 500W of power.
Here is the idea for the “dedicated average capacity”. Let’s say you choose a 1MWe of solar installations and a 1MWe wind turbine as your resource pool. Wind has a capacity factor of 35% or so in the US and something solar has something like 25%. The average power of your averaged pool is therefore something like (35%+25%)/2*2MWe=600kWe. When your average yearly load is 1kWe, you get a reserved capacity of 1/500 of that installations’ average power. If the pool produces only 300kWe, or 50% of its average capacity, you will be able to consume 50% of your dedicated resource, or 500W of power. If the installations are producing their nameplate capacity of 2MWe, you can consume up to “your” share of that power. In this example up to 4000W of power.