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Electricity should be sold as a service

Hugo Kruger
South Africa - France
2023
lol.co.za
Electricity is the most important thing for the modern world because it controls everything else. It must be managed with respect and protected from opportunists and people intent on destroying the world. The photo shows apartment buildings with balconies covered with bushes. It made them green, but also brought many problems of bugs. Nature has a place. So does modern living in high rises.

In the days of vertically integrated utilities, and when fixed prices were set by a regulator, electricity was always cross subsidised, leading to the false assumption that electricity costs were the same during the day and night and carried the same value to consumers during those periods. The various generating technologies were compared to one another, using a simplistic discounted cash-flow model, called the Levelized “lying” Cost of Electricity (LCOE), and electricity to the end users was priced in dollars or rand per kilowatt-hour. The LCOE is determined by dividing the entire cost of the electrical plant in net present value by the amount of electricity that it will generate over its lifetime.

The unfortunate consequence of the tradition is that it gave policy makers the wrong paradigm about electricity, which was to regard it as a commodity and not as a service (EOS). The metric is used today by salespeople, but few experts inside the energy sector take it seriously, because it does not account for the full cost to guarantee the end user a security of supply.