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Topic Title: Engineering Electricity Market Reform
Topic Summary: What role should engineers play in electricity and other energy market reforms?
Created On: 23 July 2012 03:22 PM
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 23 July 2012 03:22 PM
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jarathoon

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The select committee report on the draft energy bill is published today.

http://www.publications.parlia...menergy/275/27502.htm

DECC's current draft energy bill is a complete incoherent mess. The Treasury and DECC are at loggerheads over our future energy policy.

Now that the top civil servant at DECC has done the right thing and resigned (and is leaving at the end of October), there is a small chance for engineers and other suitably qualified outsiders to find their way into the process and to help reform our energy policy on a more rationally argued basis.

There will be a "competition" to identify the next Permanent Secretary, see footnote 4.

http://www.decc.gov.uk/en/cont...n12_084/pn12_084.aspx

However after some inquiries I've found out that the cabinet office will be arranging this not DECC and the job advert will be out later this week (not necessarily today). The advert will be placed on the civil service website.

https://jobsstatic.civilservice.gov.uk/csjobs.html/

Apparently external candidates (outside of the civil service) will be allowed to apply. Hopefully some senior engineers will apply.

James Arathoon

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James Arathoon
 23 July 2012 09:53 PM
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jcm256

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I agree let the Engineers have a say (think they mention the RAE once) in this parliament debate, the Government cannot really give a straight answer to some of the questions because they do not know.


http://www.publications.parlia...btext/120712-0001.htm

(Also posted in "what is the green deal" debate in the wiring & regulations forum)


Regards
 24 July 2012 02:30 AM
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Ipayyoursalary

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Having read the lamentable reports of the IET's own Energy Policy Panel, I have no confidence that the type of 'engineers' who would be chosen for this post would do anything other than advise their masters to do what they have already decided to do: To waste yet more £billions on diffuse, intermitent, unreliable 'green' energy scams, so-called 'smart' meters (electricity rationing devices), 'smart' grids (tying UK supplies to the EU sinking ship) and every other daft, self-immolation scheme the scaremongering greens and climate profiteers can think up.

The first thing an engineer should do when given a job is to question assumptions and consider if the job he's been asked to do makes sense. eg. A competent engineer might note that the UK only contributes 1.7% of man's 4% contribution to total natural CO2 emissions. And that the 7.5% annual *growth* in China's 23% contribution exceeds the entire UK output. Therefore the hugely expensive target to reduce UK emissions is pointless tokenism. And this is before even considering doubts over whether CO2 can cause dangerous warming ( seems unlikely since there's been no warming this century despite a 7% increase in the trace level of CO2).
 24 August 2012 04:35 PM
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JonathanHill

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http://www.powerengineeringint...-of-lords-report.html

It seems the House of Lords is doing a good job of performing it's role in scrutinising proposed legislation - there's still hope for achieving transparency in the energy support mechanisms.

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Jonno
 26 August 2012 03:45 AM
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Ipayyoursalary

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I'm afraid I don't share your faith in the lords Jonno. I've listened in on some of their energy debates on the BBC parliament channel. Cloud cuckoo land stuff mostly, eg. talk of a national network of pipes for pumping CO2 offshore for storage.

Also worrying is the degree to which many honourable lords have financial interests in 'green energy' which may give the appearance of a conflict of interest.

Lord Deben (John Selwyn Gummer) the proposed new head of the climate change committee has a list of green financial interests as long as my arm

I'm sure these will be throughly examined when fellow green Tim Yeo grills Deben before the commons select committee next month. FYI here's a list of Yeo's green interests

Imagine this was a committee discussing drug approvals. Do you think it would be OK for the committee to be stuffed with drugs company employees and investors?
 02 September 2012 04:35 PM
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acsinuk

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Looks like insider trading by the old schools association to me. But the current article in IET journal p52 looks all doom and gloom with no recommendations so it not helpful. In my view; Tidal Power is much more promising than windmills.
Think ! If I had a million ton oil tanker and at high tide supported it on 4 gantries with attached steel wires connected to geared generators mechanically . As the tide went down then a huge force would tension the wires that could generated energy as the tide went out. When it bottoms tie it tight to the bottom with steel wires to stop it rising and again the mechanical force or tension in the wire can generate electricity as it rises.
Carbon Free electricity and as the time of the tides varies all over the UK there is no times of zero generation.
As this is a "copyright applied for text" would someone like to do the calculation if the distance between high and low tide is 6 metres down and up every 12 hours on how many kWhrs can be generated?.
CliveS
 02 September 2012 09:21 PM
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ectophile

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Originally posted by: acsinuk

Looks like insider trading by the old schools association to me. But the current article in IET journal p52 looks all doom and gloom with no recommendations so it not helpful. In my view; Tidal Power is much more promising than windmills.

Think ! If I had a million ton oil tanker and at high tide supported it on 4 gantries with attached steel wires connected to geared generators mechanically . As the tide went down then a huge force would tension the wires that could generated energy as the tide went out. When it bottoms tie it tight to the bottom with steel wires to stop it rising and again the mechanical force or tension in the wire can generate electricity as it rises.

Carbon Free electricity and as the time of the tides varies all over the UK there is no times of zero generation.

As this is a "copyright applied for text" would someone like to do the calculation if the distance between high and low tide is 6 metres down and up every 12 hours on how many kWhrs can be generated?.

CliveS


Let's see if I can get it right.

The potential energy of a ship once it is raised is

delta-U = m g delta-h
m = 1.0e9 kg
g = 9.81
delta-h = 6 m

delta-U = 58.9e9 J.

Having the figure in Joules isn't much use. But 1kWh = 3.6e6 J, so

delta-U = 16530 kWh.

If the sea rises and falls every 12 hours, then the rate of energy production would be

16530/12 = 1362 kW = 1.362 MW.

So a 1 million tonne tanker (which is very large) would produce as much power as a modest size wind turbine operating at 30% efficiency (which is typically what you get out of one).

-------------------------
S P Barker BSc PhD MIET
 06 September 2012 12:46 PM
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acsinuk

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Yes SP that is correct for the energy gained in first 6 hours but if we tie the tanker to the bottom at low tide we can then get the same energy again as the ship pulls upwards giving 2.7 MW.
Thinking one stage further; what if we used hydro instead of mechanical generation. If we placed the tanker in a dry dock which it exactly fitted into then we should get the same result without investing in a tanker just a lock gate which could be open at high and low tide for about an hour; although this would reduce the efficiency to probably about 75% as we have only 10 hours of generation time in the 12 hour period. What do you think??
CliveS
 06 September 2012 01:35 PM
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ectophile

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Originally posted by: acsinuk

Yes SP that is correct for the energy gained in first 6 hours but if we tie the tanker to the bottom at low tide we can then get the same energy again as the ship pulls upwards giving 2.7 MW.


I believe you're right. If it falls then rises in the 12 hour period, then you'll get power going both ways.

But it's still a tiny amount of power after building such an enormous ship.

Thinking one stage further; what if we used hydro instead of mechanical generation. If we placed the tanker in a dry dock which it exactly fitted into then we should get the same result without investing in a tanker just a lock gate which could be open at high and low tide for about an hour; although this would reduce the efficiency to probably about 75% as we have only 10 hours of generation time in the 12 hour period. What do you think??

CliveS


That sounds a lot more practical to me, but it would require a large area to generate a useful amount of electricity. It's essentially what the proposed Severn barrage is meant to do.

With two "dry docks" connected by a pipe, I think it's possible to generate power constantly, but I suspect that the total power you could generate that way would be considerably less than a more simple arrangement.

-------------------------
S P Barker BSc PhD MIET
 18 September 2012 01:14 PM
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acsinuk

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YES again SP.
Have just been on holiday to Scotland and noticed plenty of wind generators around Liverpool and Glasgow areas. These look fine and are easy to maintain. BUT the ones off the coast in Liverpool and also in Margate are going to be a nightmare to maintain. The monies been spent and all we can do I think is to try and use the base foundations for tidal AND wave energy recovery where these are significant.
TIDAL is the best option in my view particularly where there are inlets with dangerous tidal flows through the heads. There are several inlets along the Devon, Cornish and Welsh coasts. The Severn barrage under new bridge would probably produce 800 MW and if Exmouth inlet and Taw Torridge estuary where barriered another 500 MW could be produced with a road over the top these could really ease the traffic flow and create a coastal highway PLUS save residents heaps of time and fuel. A win win situation.
Other sites in Wales such as Pembroke and Bangor are already bridged and only need the hydro barriers. Similar applies to Connel and Creagan inlets on the A828 in Scotland which we drove over last week. [ plus many more !!]
Any engineers that live near a possible tidal site with a dangerous flow between the heads, I would urge to kick their local MP and transport authorities right now; to get us moving so we can get cheaper power and create useful jobs for engineers, technicians and the construction industry general.
CliveS
 28 September 2012 11:38 AM
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jarathoon

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The fact that the top civil servant at DECC is being replaced doesn't look like changing anything concernng UK electricity market reform.

Since I am a member of the Liberal Democrats, I went along to the Lib Dem conference on Sunday 23rd September. I heard Ed Davey's main speech and went along to a fringe event where I had the chance to ask him a couple of questions. (Ian Marchant of SSE was also speaking)

One question was concerning the early investment decision enabling process and the fact that EDF won't be able to make their final investment until after the new Energy Bill has received Royal Assent. This is because the secondary legislation that gives DECC to ability to write the "letter of comfort", requires the primary legislation in the new energy bill to be enacted first.

Ed Davey didn't give a clear response on this, but this indeed appears to be a problem for EDF as they are now clearly pushing for Royal Assent of the new Energy Bill to be pulled forward from the end of next year to the spring of next year.

As the new energy bill will be published in November, the only way that the new energy bill can receive royal assent by next spring is for DECC to try and steam roller it through parliament with minimal scrutiny and debate. Consider this a predicition.

The other question was regarding CfD's, and how together with power purchace agreements, they will effectively create a legalised cartel arrangement for electricity suppliers which effectively blocks new entrants and snuffs out any remaining competitive differences in the big six energy suppliers business models for at least the next 20-30 years.

I think this will become very clear later this year when DECC add the necessary technical details to their CfD model, including the nature of the counterparty and strike prices etc.

Ed Davey thinks competitive auctions for new generation capacity (initially technology specific) will be sufficient to keep prices low for consumers. My belief is that this will not work and only by encouraging new entrants into the electicity generation will energy prices be kept as low as they can be for consumers. The only way of doing this that will promote a competitive free electricity market in place is to use an effective carbon floor tax and gradually start ramping it up over the next 2-3 decades. This will immediately encourage money to be directed into insulating homes better (to reduce fuel bills), which I think is the best route for public (bill payer) investment at the moment.

James Arathoon

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James Arathoon
 30 September 2012 01:19 AM
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Ipayyoursalary

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Thanks for the update James,

Ed Davey didn't give a clear response on this

Why am I not suprised?
 30 September 2012 12:29 PM
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westonpa

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Originally posted by: acsinuk
BUT the ones off the coast in Liverpool and also in Margate are going to be a nightmare to maintain.
CliveS

Did you not get the memo....it stated quite clearly 'sustainable development' and did not say anything about maintainable development.

Regards.
 30 September 2012 01:44 PM
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westonpa

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Originally posted by: jarathoon
The fact that the top civil servant at DECC is being replaced doesn't look like changing anything concernng UK electricity market reform.

In essence governments implement taxes and offer reductions if companies find and implement energy saving schemes. That is about the only method governments know how to use and anything else they generally mess up.
Ed Davey didn't give a clear response on this, but this indeed appears to be a problem for EDF as they are now clearly pushing for Royal Assent of the new Energy Bill to be pulled forward from the end of next year to the spring of next year.

Politicians do not give clear responses because they know they will have then made a commitment which they will have to break later.
Ed Davey thinks competitive auctions for new generation capacity (initially technology specific) will be sufficient to keep prices low for consumers.

Low relative to what price I wonder. What the government is mainly concerned about is the low paid because in reality the better paid will moan a bit but find a way to pay their bills whereas the low paid will moan a bit but invariably struggle to pay their bills. The problem is that all this is a lot of nonsense because let us say for example every household suddenly insulated their home overnight. They would have spent their money which they would then 'have' to recover. However the energy companies would now be faced with a shortfall and so would then raise their prices to compensate. Now the very same households will be paying the same level of bills and yet would still have to find the money to pay for their insulation. The only change would be that the government would have received more tax related to the installing of the insulation as well as being able to say the UK has reduced CO2.

At the same time we have been buying more and more goods from the likes of China and which gives them more money to compete with us for goods and resources which puts our costs up and also puts up CO2 use because we are transporting stuff half way around the world, as are the Chinese. Maybe we need to start considering all the non renewable energy used elsewhere to manufacture and transport our purchases and make the neccessary adjustments.
My belief is that this will not work and only by encouraging new entrants into the electicity generation will energy prices be kept as low as they can be for consumers. The only way of doing this that will promote a competitive free electricity market in place is to use an effective carbon floor tax and gradually start ramping it up over the next 2-3 decades.

OK let's have a free market as you suggest, but remember that in a free market there will be winners and losers. So when the low paid start to lose out because the better paid start using as much as they want because they can afford it let's see how you then deal with the free market. My guess is that we would start to regulate the energy market and so now it will not be as free as was suggested.

Whilst the utility companies were nationalised they under invested for many years, albeit that was because their policy was to supply the current and next generation rather than concerning about umpteen generations into the future and who were hundreds of years away from being born. Therefore the infrastructure now requires a large investment. That investment will be coming from our bills, so get used to high prices because they are here to stay.

Regards.



Regards.
 30 September 2012 05:55 PM
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jarathoon

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Originally posted by: westonpa
OK let's have a free market as you suggest, but remember that in a free market there will be winners and losers. So when the low paid start to lose out because the better paid start using as much as they want because they can afford it let's see how you then deal with the free market. My guess is that we would start to regulate the energy market and so now it will not be as free as was suggested.


I'm not a rigid and ideological free marketeer (I do believe governments can meddle a bit without the consequences being all bad); However potential new entrants to markets don't have well paid lobbyists to speak up for them, and existing players always like blocking new entrants (with government help) as that makes life much easier for them. So I'm just trying to speak up for the potential new entrants to the energy market that don't yet exist.

I would support a slightly non-linear system of taxation based on the power ratings of the appliances etc that we use, or our peak power requirements from the grid. (In a similar way to car road tax depending on the CO2/ maximum power output of your car engine)

Therefore I agree with you, if the energy and peak power requirements of the wealthy require new power stations etc to be built (including backup power stations), a disproportionate cross subsidy should not come from all other bill payers, incuding the poorest who are desparately trying to make ends meet.

However this is still a free(ish) market, its just that the rules of the game are tweaked slightly so the wealthy pay more of their fair share.

Such an economic system is just designed to be slightly non-linear in respect of taxation of potential peak power requirements of installed appliances or actual peak power usage if that can be measured. This sort of meddling, doesn't prevent new entrants into the energy market.

(This can hardly be descibed as a well worked out policy, just an idea really.)

As an introduction into more detailed thinking in this whole area of economics see Stephanie Flanders programs on Keynes and Hayek and soon Karl Marx.

These past thinkers are now informing the economic debates over how much of a role governments should take in guiding our economic future.

I agree with Hayek that governments will always fail at decisions that require picking winners from existing players with a limited knowledge of where the future might lead. However I think he is arguing from an a extreme position when he says governments should not meddle at all.

http://www.bbc.co.uk/iplayer/e...ters_of_Money_Keynes/
http://www.bbc.co.uk/iplayer/e...sters_of_Money_Hayek/

I believe Governments can change taxation of simple things like energy and power without too much damage. They can also encourage people to insulate their homes better without too much damage, as this helps people reduce their overall energy usage and peak power requirements)

However if for the next 30-50 years the government creates an inefficient and publicly funded cartel in the energy supply market then they will create enormous damage to our economic competiiveness, especially if other countries choose a lighter touch regulation route that leads greater competition and lower energy prices. The role of government is not to guarantee the future profits of existing privately owned corporations using public and bill payers money.

James Arathoon

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James Arathoon
 30 September 2012 06:55 PM
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drhirst

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James,
Thanks.
I deeply disagree with Hayak that governments will always fail in attempts at intervention, whether this be picking winners, or other "management" of the economy. His world was not one in which being human works. And I am unwilling to pass the future of the planet, or the country and the economy, entirely to the "invisible hand". It too is far too often profoundly wrong, and potentially deeply uncivilised. Strong countervailing actions and pressure are, to my mind, vital.
For a discussion of the successes, do explore Mariana Mazzucato and The Entrepreneurial State http://www.demos.co.uk/publica...eentrepreneurialstate. We owe the internet to the US government! We also owe much of today's electricity infrastructure to government actions, and it is serving us very well.
I have not (yet) listened to Stephanie, but Keynes Hayak - the conflict that defined modern economics, by Nicholas Wapshott is well worth reading.
Nicolas Wapshott also argues that the austerity economic policies being inflicted on Greece, (or Spain, Portugal and even Italy and Ireland) by Hayakian (or German) thinking is at least as risky as the draconian reparation policies inflicted on Germany after the first world war, and as forthrightly and prophetically condemned by Keynes in The Economic Consequences of the Peace. Are we destroying democracy in Greece and Italy by putting unelected austerity Eurocrats in charge?
In electricity it seems to me that, in order to persuade the private sector to do what the government reckons is in the public interest via a market, it is tying itself up in convoluted and ideological Hayakian knots, adding costs on all of us, and offering low risk opportunities for the rich to get richer. It may well be better to have direct control, even at the loss of some notional efficiency.
David

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David Hirst
 30 September 2012 08:56 PM
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westonpa

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Originally posted by: drhirst
Nicolas Wapshott also argues that the austerity economic policies being inflicted on Greece, (or Spain, Portugal and even Italy and Ireland) by Hayakian (or German) thinking is at least as risky as the draconian reparation policies inflicted on Germany after the first world war, and as forthrightly and prophetically condemned by Keynes in The Economic Consequences of the Peace. Are we destroying democracy in Greece and Italy by putting unelected austerity Eurocrats in charge?

Was it not visible hands who allowed the unelected Eurocrats to be in charge and allowed the banks to operate in a way which ultimately brought all this austerity about? So much for the visible hands. And was it not many of the general public who were quite keen to borrow to the hilt in order to live beyond their means? The Greek problem comes about because for decades the people there have hardly paid any tax and voted in successive governments who did not collect the tax and gave them great pensions at a relatively young age. When they fiddled their books and joined the EU they suddenly had access to large amounts of money at low interest rates and went on a spending spree, well beyond their means. They were not protesting on the streets then!! No one forced the Greeks to join the EU or to fiddle their books or to live beyond their means. Too many people want to live beyond their means and then only start complaining once someone asks them to start paying for it.....it's mostly always everyone else's fault but their own.

It is the so called visible hands who are taking the direct control you suggest is a good thing to prop up the Euro and force the austerity onto the Greeks.

With regards to the large energy companies who dominate the UK market and who we want to lower their costs and allow competitors in, who actually owns them? I seem to recall a very large % is the pension and investment funds. Who do those funds ultimately belong to? I seem to recall that is us the British public. So when those companies make less money and we get a lower pension would we then say no worries because at least we had lower energy costs or will we just moan and groan because our pension is a little less and we cannot then afford those extra luxuries?

All these things are linked because the energy market, financial market, food market, etc., all exist in society. What we really have to decide is what sort of society do we want for the future and what we are prepared to give up in order to get it.

Regards.
 01 October 2012 11:22 AM
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jarathoon

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Here are some of my observations about the economics of Keynes and Hayek:

Governments can act well on very short time scales to stabilise financial panics even if they make mistakes in the process of doing this. However the problems they create in the process zombie banks and corporations that need to be delt with honestly and openly after the short timescale emergency is over.

In the longer term governments can make serious errors when the time-constants of the problems are much longer than politicians term of office.

I have thought about governments acting on the economy like a PID controller acts on some system to hold a measured variable constant.

Now PID control is not necessarily that good an analogy for a complicated economy, that ecompasses human confidence about the future, trust and creativity in the face of new problems etc, however there are some interesting thoughts that arise from the analogy in terms of the basic economic theories of Keynes and Hayek.

The PID economic control system analogy:

a. The proportional term (P) is like the free market responding imediately to changes in the measurement variable (information). The actual value of the proportional term is configured using government regulation over how our resources etc can be used to generate new wealth.

b. The integral term (I) is like a pure Keysesian taxation and welfare system that runs by adding net money into the economy when times are bad and net money out of the economy when times are good. It smoothes the system to stop it oscillating continuously from boom to bust.

However one of the problems with using the integral term, in an engineering sense at least, is that the measured variable used to set its level must be accurately representitative of the variable we wish to control. There must be limits on the use of the integral term otherwise we can get integral runaway that depletes all resources particularly if the input measurement is in error; in the analogy this is might be where governments run out of cash quickly and lose all power to influence the economy.

c. The differential term (D). This is the term where governments try to predict the future in an attempt to stop the markets deviating from what they see as the stable and correct path. The differential term is difficult to set, highly tuned to a specific set of circumstances and highly sensitive to noise and uncertainty. Incorrect use can make the system more unstable not less, especially if the system we are attempting to control is non-linear as the real economy is. I will call this the (weak) Hayekian term. A strong Hayekian term would include effects on the proportional and integral terms as well, and would encompass all government meddling in the realm of the analogy.

James Arathoon

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James Arathoon
 01 October 2012 04:45 PM
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jarathoon

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I wasn't clear in my last post what the measured value should be for such an economic PID controller, that's because I don't know.

At the moment we target various rates of change such as inflation rate or GDP growth rate. Would it be possible to target something that wasn't a rate?

Is it even possible to simplistically separate government interventions into proportional, integral and differential terms that can be used to control to such rates?

I don't know, is my answer to both those questions.

When the PID controller is used to control a non-linear system (i.e. something more complicated than a first order (linear) system or a second order (damped/lossy) system) then using a constant differential term in the control code will (I think) always eventually lead to stability problems.

The only way of making such a controller stable under all circumstances is by accurately predicting the future and making the necessary on the fly controller term changes in advance. This is not a realistic control strategy (although it is problably analogous to what politicians and economists do now in the real economy), especially with the added noise and uncertainty of relying on an instantaneous double differential with respect to time (assuming the measured variable we wish to control to, is itself a rate like GDP growth or inflation).

A PI controller can be used to control a simple non-linear system (although probably not something as complicated and multi-variate as the real economy), without the system becoming unstable, simply using a faster acting integral term than normal and more gain (analogous to less overall taxation perhaps). Overshoot and undershoot can never be completely eliminated within such a control regime, only bounded within certain limits.

In the real economy you would have to set up some slave controllers to control things like the redistribution of wealth from rich to poor for example.

Good student project for someone studying economics/politics/comedic farse perhaps: Can PID controllers be used to replace economists and politicians in the real economy?

James Arathoon



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James Arathoon
 01 October 2012 10:13 PM
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westonpa

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Originally posted by: jarathoon
The only way of making such a controller stable under all circumstances is by accurately predicting the future and making the necessary on the fly controller term changes in advance.

If we could accurately predict the future then our changes would already have been accounted for else if we started making changes and that subsequently altered the future from that which we predicted then our original prediction would not have been accurate and thus we failed in the first requirement!
This is not a realistic control strategy (although it is problably analogous to what politicians and economists do now in the real economy), especially with the added noise and uncertainty of relying on an instantaneous double differential with respect to time (assuming the measured variable we wish to control to, is itself a rate like GDP growth or inflation).

We will not grow forever and so until we start to deal with that and manage it then everything else will just be about moving from one crisis to another and then trying to deal with it. They say the economy is mostly psychology and so how exactly can we have a reliable system which depends on human psychology?
In the real economy you would have to set up some slave controllers to control things like the redistribution of wealth from rich to poor for example.

But then we rich would simply take our money and put it in a offshore bank, so how exactly are you going to redistribute it?

Regards.
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