Marcel Boiteux died on September 6. Deeply attached to public service, great entrepreneur and father of the French nuclear program, intellectual, member of the Institute, he embodied better than anyone the senior French civil servant of the post-war period. He recounted his life as general director and president of EDF in his book High tension (Odile Jacob, 1993).
He is less known to the general public as one of the most renowned French researchers in economics abroad, and as president of the Econometric Society succeeding Keynes, Schumpeter, Irving Fisher, Leontief, Samuelson and Arrow. In fact, it changed the management of the electricity industry and, more generally, of all network industries. We will only discuss here the academic part of his work.
Post-war France is asking itself the question of its electrification. A young EDF engineer, Marcel Boiteux, then explained, in an article published in 1949 in the General review of electricity, how to determine the size and composition of the electricity fleet and how to price electricity to finance it ( “Peak Demand Pricing: Applying Marginal Costing Theory”). Because electricity is not a good like any other.
As relevant as in 1949
In all industries where the product is storable, it is possible to dampen fluctuations in demand and production by alternating storage operations in periods of low demand and destocking in the others, stabilizing the price. The electrical industry does not have this possibility of storage, except on a very small scale with pumped energy transfer stations and batteries.
The energy to be injected into the network by producers must therefore be permanently equal to the quantity withdrawn by consumers. For a given production fleet, in periods of high demand (for example, very cold weather) or low supply (no wind or sun), the adjustment must be made either by a substantial increase in the price, or by rationing of withdrawals. Both solutions are generally poorly received by users.
This question is as relevant today as in 1949; to fight against global warming, the use of electricity is encouraged in all residential, commercial, industrial and transport uses. We are therefore going to push the producers to install production capacities such that the stress episodes of the fleet are very rare, with the disadvantage of an oversized fleet most of the time.
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