SAVING ENERGY

Nuclear Issues, 16, No.9 (1994) p 2 available from APG, 8 Ruvi-gny Mansions, Embankment, Putney, London SW15 1LE in its article "Demand Side Mythology'' discusses the fallacy in "demand side management,'' a favorite anti-electric energy concept promoted by Amory Lovins. The concept is to spend money improving the efficiency of energy use instead of spending money for new electricity generating equipment. Figure 1 was presented by John Reid of the Canadian Nuclear Association at a Financial Times conference.

The upper line shows extra costs of demand management as estimated by the Electric Power Research Institute, while the lower line shows Lovins' Rocky Mountain Institute estimates. Notice that Lovins claims that demand reduction measures would have negative cost up to 19% reduced electricity consumption and almost no cost to 40%.

The current balance of electricity supply and demand is in free-market equilibrium. (This is distorted somewhat by government regulations.) The upper line is consistent with that free market equilibrium, while the lower line is not. Both supply and demand should be allowed to adjust in a free market with as little hindrance as possible.