On the Analogy Between the Electric Grid and Our Banking System: Investigating "Consumer Power" in Deregulated Power Markets

Per Ribbing

doi:10.15344/2456-351x/2018/154

Abstract

This article investigates the Product Electricity, the product being sold at our power markets and distributed via our electric grids. The paper aims to enhance the understanding of the physics behind the Product Electricity. The traditional (physical) perspective of the purchase of power might have been compromised already in the early 1900’s. This investigation aims to clarify what electric power really is, how it is traded, and if the different offers of so called ‘Green Power’ are valid. A deregulated power market is ruled by the laws of the free-market, i.e. Supply and Demand. It is not ruled by the laws of Ohm and Kirchhoff. To purchase the Product Electricity is to place an order of consumption beforehand, not specified in volume, space or time. The economical transaction; purchasing electric power, is strictly non-physical. Today, an active choice of not buying fossil power is advertised on the power markets. Customers who do not want to get electricity generated from fossil fuels are offered to stop buying it. This article tries to answer the question if that offer is valid.

Highlights

One form of energy, often converted from the burning of fossil fuels, is electric energy i.e. electricity
The proposed new perspective on electricity as a specified product on a non-monopoly market suggests that a person buying a specified kind of electricity which is audited by a third party, e.g. Eco labeled electricity, solar, hydro, wind, wave or nuclear power, can never receive any other Product Electricity
For this new paradigm to function there must be a regular audit of produced volume of kWh:s in specified power plants, e.g. windmills, hydropower stations or nuclear reactors, versus consumed volume of kWh:s by the customers buying the specified kind of the Product Electricity

Summary

Introduction

One form of energy, often converted from the burning of fossil fuels, is electric energy i.e. electricity. This paper takes a closer look at the Product Electricity in deregulated electricity markets. The deregulated electricity market in the Nordic countries + the Baltic states (Nord Pool) today offers the possibility of active choices by consumers; ‘Consumer Power’ if you like. An analogy with our banking system is investigated. The banking system is a system we know very well and use as often as our energy system, i.e. daily. In the banking system we separate the words “Money” and “Banknote” and handle them separately (Figure 1). Never did we question that the Banknotes we withdrew from our account was our money. We know that there is an audit made, an audit that would never allow us to withdraw more money from our account than we have deposited

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