by Roger Feldman -- Bingham, Dana L.L.P.
The recent decision to rebuild Iraq’s power infrastructure on the American model – following a recently experienced, overwhelming local sandstorm – has led to a haj of power policy gurus to the Middle East (or at least to Halliburton HQ in Houston). The Blackout experience in the U.S. has been carefully dissected (although certain chapters of the Congressional Report have been expurgated). Fortunately, since the problems facing Iraq’s grid have been determined by American intelligence to be the same as our own, all of that experience has been declared "will make do" ("WMD" in spook speak).
As a result of that analysis, the following deficiencies in both grids have been found:
Throughout the country, warring Regu and Deregu sects have emerged, urging theological solutions to the periodic absence of power and light. (Crack U.S. analysts have unmasked these sects as being actually a cover for the economic self-interests of different exploiters of the grid.)
Deregus assert that the service territory/cost of service approach that antedated "open access" is a flawed approach to the modern world that:
The U.S. has been relying on the local Great National Congress to heal the schism of the two sects. The prognosis is "fair and balanced" developments, which are unlikely to have sufficient visible impact in the form of new infrastructure for years:
An enterprising Mad Mullah has pointed out the potential of disseminating small electric engines ("determined generation" or DG) where power lines are insufficient or reliability is poor, or where building them will decrease the need for power lines. He suggested to a hostile U.S. viceroy that in the midst of the current probable "gridlock," a near-term way to improve system operations must be found. His arguments were cogent:
Distributed generation is uniquely positioned to bolster the robustness of transmission operations through systematic and strategic deployment in potentially impacted areas, as well as to enhance the operations of aging, storm-tossed distribution systems.
Moreover, when DG is approached as a system-enhancing strategy, compatible with overall system operations, the resistance of utilities to DG as a strain on their distribution system operations can be addressed rationally and accommodated as a development opportunity available to willing distribution systems or developers. Future distribution systems can be designed to accommodate distributed generation by virtue of the addition of key "smart technologies," which handle two-way electrical flows as well as communications that permit all interconnected DG to be dispatched, monitored, and controlled from a central source.
Transmission system enhancement, by itself, will still leave the over-all operation of the nation’s power system subject to an increasing number of constraints, potential breakdowns and costs at the distribution system level.
Complementary DG planning at the distribution system level can both reduce these possibilities and actually reduce the capital requirements for additional transmission.
The Mullah’s proposals have been brushed aside, at the present time, by the determination of the Viceroy that if more oil can be drilled, the problem can be solved. It must be so, he stated, it says so in the U.S. National Energy Policy.
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon Markets Group has practiced law related to the finance of environmental and energy projects and companies for 40 years. In particular, he has analyzed and executed a wide variety and substantial value of project financings. He chairs the American Bar Association’s Committee on Carbon Trading and Finance, serves on the Board of the American Council for Renewable Energy, and has been a senior official in the Federal Energy Administration. He is a graduate of Brown University, Yale Law School and Harvard Business School.