Monday, September 27, 2010

Too good to be true environmental solutions

... roughly 42 percent of U.S. lighting energy (in Canada the fraction might even be a little higher) goes to incandescent bulbs. ...compact fluorescent lamps in all sorts of sizes and shapes that have roughly quadrupled efficiency -- 11 watts replacing 40, 18 watts replacing 75, and so on. They last about thirteen times as long as a regular light bulb; therefore each one of them saves you not only three quarters of the electricity, but also a dozen replacement bulbs and trips up the ladder. That more than pays for them, even though these things are rather expensive.

Think of such a compact bulb, with 14 watts replacing 75, as a 61 negawatt power plant. By substituting 14 watts for 75 watts, you are sending 61 unused watts -- or negawatts -- back to Hydro, who can sell the electricity saved to someone else without having to make it all over again. It is much cheaper to save the electricity than to make it -- and not only in thermal stations. It is cheaper for society to use these bulbs than to operate a Hydro plant, even if building the dam were to cost nothing. Each bulb has a net cost of minus several cents per kilowatt- hour, and no dam can compete with that! - The Negawatt Revolution 

The crackpot with a mo, Amory Lovins, wants people to be paid to not consume electricity as a way to promote energy efficiency and decrease the demand for energy. He has been pushing the negawatt bandwagon for twenty years, yet for all our dramatic increases in energy efficiency, we consume more energy than ever (or more correctly, we use more natural resources to generate more electricity, heat and motion than ever). 

The term negawatt describes the fact that in a capacity constrained electricity generation system, reduced energy consumption by one customer allows an increase in consumption by another customer. Without the reduced consumption by one customer, the increased consumption by the new customer would only have been possible by investing in new generation capacity. Thus, the energy saved is as good as energy generated - so much so that the energy generator could pay users to reduce their energy consumption.

From an engineering perspective there is little wrong with this concept. Unfortunately, an economic perspective reveals many flaws.

First, we have a baseline issue. Customers use electricity over time in an irregular manner. If I was being paid to not use electricity I would make sure my baseline measure was extremely high by leaving on all lights and appliances all day and night. Then, when I go back to normal use, I would be paid.

Second, there is a pricing issue. If someone reduces their consumption of electricity they save the cost of electricity. The new users would then pay the same price for their electricity. Thus revenue is unchanged for the generator and they have no incentive to offer payments to reduce electricity consumption.

Third, if new customers are willing to pay more for electricity then the price can be increased. Existing users then have greater incentive to reduce use to save a now greater electricity cost. Further, with higher prices, electricity will be directed to higher value uses.

Finally, there is a problem of rebound effects when electricity consumption is reduced through economic adoption of energy efficient technology. Increased spending elsewhere, and increased demand for electricity from new appliances need to be considered.

In light of these extensive problems, nega-incentives are becoming quite popular in other areas. Recently a QUT Professor proposed that paying the Japanese to stop whaling – for negawhales – would be a good idea.

Hang on. I don’t whale. Where’s my money? There is clearly a severe baseline problem here, let alone a problem of equity. 

Why stop there? If this approach is so effective, why no pay criminals not to commit crimes?

Maybe I’m being cynical, but if a something sounds too good to be true, it probably is. As a rule, never pay anyone to not do something.


  1. I agree that this system won't work, but not for the same reasons - to my mind it more a technology problem.

    Energy costs are high (and our energy usage is inefficient) because of the timing of our usage, not necessarily the quantum. It is an issue of peak demand, not consumption.

    Inefficiency in energy consumption comes from the low average usage of distribution networks - that are built to cover peak demand which occurs only a few days per year - and the use of expensive energy sources (gas-fired or deisel peaking plants) to cover peaky consumption.

    The main problem with the negawatt proposal is that we currently do not have the technology (smart meters) in place to record the load trace of a customers consumption.

    This means that, consumers could reduce their electricity consumption during off peak times (the times that they don't want want electricity) and continue to consume large amounts of electricity at peak times.

    While their current meter would show that they have reduced their energy consumption, the actual costs incurred to supply them with electricity may have increased because their consumption is now more volatile.

    The increase in costs would relate to the reduced average usage of the network (reducing the total consumption (kWh) without reducing the maximum capacity (kW) required in the network) and the increased dependence on more expensive electricity generation to deals with the more volatile consumption.

    This could however all be fixed by providing better technologies and allowing consumers to face the real-time costs of electricity consumption.

  2. Good point Therimu.

    I agree with the peak/non-peak redistribution of demand as an argument for some kind of demand management, but paying people not to use electricity over a particular peak period still leaves us with a baseline issue, and a rebound effect issue. I could not use my kitchen for cooking during peak time, but go to a restaurant, where their kitchen would use electricity in the same grid. On a large scale, we can't control the net impact of paying people to avoid peak time electricity use.

    Wouldn't a simpler way be to have a two tier pricing system? This would provide incentives to shift electricity consumption to non-peak times. Many areas have a similar system, but metering limitation persist to have a fully developed system.

    Also, thinking a little bit more broadly, governments could intervene to reduce their consumption of electricity, in their buildings and public spaces (road lighting etc), during peak times.

  3. Cameron the USA has I believe already passed legislation to get rid of incandescent bulbs.

    I have by-passed the CFT's as I think they are wasteful and inefficient. I imported LED bulbs, and I replaced about 100 bulbs with both corn cob bulbs, as well as downlights.

    Truthfully most homes have lights that are rarely used, so most homes would become efficient by just replacing about 12 bulbs with LED's.

    I have probably cut lighting power useage by 90%.

    Next step is Solar Panels, do you have any info on them?

  4. Importing LED clusters for existing fixture is a smart move Peter. However I don't have info on cost and energy return of various systems off hand.

    I do have, as you might guess, a theoretical argument that solar power does not contribute to reducing greenhouse gas emissions or coal and gas consumption at an aggregate level. Maybe a post for another time.

  5. Cameron my bulbs draw 4.5W but I use 9W in the downlights above my desk for better work lighting.

    So reducing a 40W or a 60W bulb down to one that draws only 4.5W has a large saving. Each bulb cost me about $8 landed, but they last 10 times longer than an incandescent, so the return is there long term. Importing 100 bulbs is an investment though.

    I fully agree about the solar solution not being as efficient as it would appear on the surface.

    However the government rebate makes it attractive from a users POV, and I am a great believer in investing in new technology, to improve that technology to a level that suddenly makes it worthwhile from several aspects.

    I'm an optimist - didn't you know.


  6. PS - LED bulbs don't get hot, so they would have saved many house fires.