Newsgroups: bit.listserv.biosph-l
Date:         Sat, 29 Aug 1992 18:41:35 EDT
Reply-To:     Dave Phillips <davep@ACSU.BUFFALO.EDU>
From:         Dave Phillips <davep@ACSU.BUFFALO.EDU>
Subject:      RE: electricity
X-To:         biosph-l@ubvm.cc.buffalo.edu

To add my US$.02 to the exchange between Jeremy and Joe on the relationship
between growth in population, GNP and electricity/energy production:

  It appears to me that there is a causative loop.  As Joe pointed out,
more people and a growing economy clearly demand more energy.  On the
other hand, economic growth as we've known it to date has been stimulated by
improvements in efficiency, including declining costs of factor inputs
to manufacture basic necessities.  In the case of electricity, the
basic large-scale techniques employed in hydropower and heat-transfer
methods have led to declining marginal costs (additional KW of capacity
are ever-cheaper over a range of capacities for individual plants),
and thus even in capitalist economies electric power companies have been
either state-owned or regulated monopolies [the rationale being that
declining marginal costs define "natural monopolies," in which it is
most efficient to regulate a monopoly than to try to promote competition].
 Increased demand for electricity [holding technology and methods of
production and manufacturing constant] would therefore lead to cheaper
electricity, if demand were allowed to be transformed into capacity.
 Of course, this is where the earlier assumptions bite us on the behind.
First, demand increases in a near-continuous fashion, while power-plant
capacities are "lumpy," built in multi-MW or GW chunks.  Second, the
above argument ignores environmental externalities, which I believe are
not fully measurable and therefore cannot be brought into a cost-
benefit "equation;" rather, the environmental issue is one of public
understanding and political determination of levels of acceptable risk
of consequences of large projects in light of our imperfect knowledge.
A third, related factor is that in hindsight we can ask if earlier
electric generation was *really* characterized by declining marginal
costs, or whether only the internalized marginal costs were declining
over a capacity range.
 I believe that once a decision to constuct a project like a power
plant has been made, there exists some range of capacity within which
all costs (economic and environmental) decline per unit output. The
difference between this view and the pure "economic" one is that this
range must be set by levels of risk and is not deterministic. Once this
range has been set, it makes the most sense from a policy standpoint
to built the plant at the high end of the capacity range, obtaining the
greatest output for the least damage.
 Proponents of smaller scale power generation (e.g., cogeneration,
home-solar, etc.) probably have a case on the efficiency front (economic
plus environmental) when total delivered costs are considered.  In
other words, costs of transmission of power including power lost in
the wires and the transmission infrastructure itself eat up a good
chunk of the total cost of electrical power consumption. I don't have
the data on this and would appreciate seeing it if someone does.

-dave phillips
 dept. of geography, SUNY at Buffalo
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