Energy first

[David]

I've post a game report, showing just how small current B2B business is, with electronic components + CPU + CCD. And perhaps it can shed some light about where the difficulty lies in current B2B trade with AIs.
http://capitalismlab.com/forum/viewtopi ... =13&t=2011

I think you are one of the few players who have had successes with B2B business in CapLab, as it is far more challenging and difficult to run a viable B2B business than a traditional B2C one.

[counting]

It's already harder to be pure retail product wholesaler with upstream AI source. It's way more difficult to be pure semi-product producers.

Although it looks simple enough on first glimpse, but many tricks and experiences are needed to pull it off. Like constantly watching who are potential buyers from the beginning, try to roll a very low RWR city for productions. Get the timing to step into the middleman business right, too soon there will be no customers, too late AIs will start to do it themselves. Be prepare for upstream AI source storage with buffer input warehouses. Make sure the wholesale warehouse output units are always supplied with products, so AIs wouldn't switch suppliers or manufacture themselves (they'll do that when there's a shortage, and difficult to get them back). And the most important thing, to optimize the overhead as low as possible by sharing manufacturing factories.

One thing counter-intuitive is to NOT have tech lead too much (which is not that "difficult" to do, at higher difficulty scenario), or AIs will drop the price too low with their low quality products thus attract more AIs to buy inferior products. Sometimes make sure there are competitors in 2nd and 3rd place to create balance for other 20+ AIs, who would be the true customers. It's easier to compete within 3 than 30.

[therealevan]

David & Gang

Glad to see this topic is still being discussed. Looking forward to further content!

[counting]

David & Gang

Glad to see this topic is still being discussed. Looking forward to further content!

How do you think of my energy sector idea? More raw resource types and more product classes and retails? Should we embrace special kind of power plants similar to "factories" integrate with utility industries, even instruments? Or should we just use abstract facilities similar to media firms?

Energy business would be interesting as the foundation not just for city simulation purpose and more realistic overhead expenses, but also for automobile and transportation businesses.

[therealevan]

I definitely really admire & appreciate the amount of effort and time you have put into the energy sector. I'd like to start with the post from Monday, July 21st. Essentially all of these sub sectors of the energy market are really what the ultimate energy sector should look like. Now me personally, I have not done much research on the energy markets, I own a small stake in Peabody Energy so I have a bit of a knowledgeable backround in regards to the coal energy sector. But I think a lot of the ideas you have come up with for sub sectors could be doable, and should be done, the end product will definitely enhance S&D chains within CapLabs.

I'd be interested to see what direction they decide to take the energy sector, undoubtedly there are many routes you can go as you have pointed out. Perhaps starting with the basics? Taking Coal, Oil, Corn (commodities already present in the game), and building production chains from there. I'll use coal as an example since I am somewhat familiar with it. Typically thermal coal whether its mined out of an open face mine (using electric shovels) gets sent straight to a power plant. Simple enough right? A further look into oil where it can be used as a building block for different products can provide much more content, not just in commodities but strategy as well. Unlike coal where it goes straight from point A to point B and at point B is its end product, oil takes a much longer route through a complex production chain.

A similar note can be mentioned about the bio-fuels sector, most exclusively the ethanol sector which has been on a roller coaster this decade. Ethanol fuel can be made from Sugar cane, corn, grasses and is classified as a renewable fuel. This is one of many (I think) areas of bio fuels which could be explored further.

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Now moving onto the post from July 30th,

You touch a bit on it in your opening paragraph, but I am a firm believer that commodities that are introduced should help buffer the current demand slump from specific items such as steel. Essentially, we notice this in all of the raw materials mainly due to the reason that there aren't enough production chains that require that specific resource in realistic quantities, AND, the AI only buys on a just-in-time manufacturing agenda. While there are a few exceptions to the rule, i find most raw resource productions to be a bit ridiculous in most situations. (But that's a discussion for another time ).

Let's take a further look into power plants, because I think there is a lot here to be discussed and could quite possibly be a real game changer for caplab. Power plants, whether its coal, water, gas, all require constant streams of input for their output of electricity (duh). But I never see power plants ordering their input product on a limited/short-sighted as needed basis, power plants must stock "vasts" quantities of the required input so there is no hiccup in the power grid. Case & point example, this latest cold winter it was noted many times that power plants across the united states began stock piling cheap thermal coal when natural gas prices began to climb due to the increase of natural gas heating. A simple supply & demand mechanic gave light to the coal miners who focused in on thermal coal production (such as Arch Coal Inc who are still gasping for air).

In CapLab, there may need to be a few mechanics introduced to correctly implement power plants. Cities require X amount of electricity based on a number of factors as they do in real life. The X number of citizens, Industries, commercial outlets etc etc. A 3x3 factory should require X amount more energy units than a 1x1 or 2x2 factory (energyrequired=size/output?). Internal functions will be built in the power plant, just like any other factory. Varying on how much raw input & energy output your plant will handle, this has an impact on its expense & revenue.

All in all, lovely work you have done Counting. I still there there needs to be some fining of the edges, but there is definitely some concrete foundation here for a new sector.


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EDIT;

Somethings that should be openly discussed are the various metrics that are implemented with power plants. How do you measure quantity input? How do you measure energy output?

[counting]

Thank you for sharing your thoughts My experience with semi-product businesses in game and raw-material businesses like those journals you share, combined with the observation of overhead cost, let me to understand the potential of B2B in game. Indeed some base products have quite low combined demand as just being product ingredients, a lot of their usages haven't been portrayed in game, like steel for construction business or oils for fuels.

As modern society has been built around the usage of electricity, and as I mentioned before, electricity generation is just a process of converting different type of energy. The interesting thing about input energy source vs output measurement is that different input source types are considerable different with their measurement of units. And major portion of the expenses are spent on utilities and instruments (and maintenance), salaries, depreciation, and loan interests for the initial huge setup cost, instead of the direct "fuel" cost (and some waste disposal and water treatment cost). Some power plants' "fuels" are even practically free like hydraulic, solar, and wind. Some have very low portion like nuclear, and some fuels consist major portion like most fossil-fuel thermal - coal, natural gas, etc (in fuel import region at least, in cheap fuel or fuel production countries, fuel cost could be quite small in proportion). Hence it's more reasonable to design integrated intake mechanism for both fuel and utilities with Capitalism's "factory layout", a uniformed intake unit for both (some purely for utilities to free source ones, and other for varied fuel).

Another interesting thing about electricity generation is that its output is a "bandwidth" instead of discontinuous units like normal products (usually measured in kW and electricity is just electricity, no quality what so ever to speak of, but only service quality, more related to my "readiness level"). However, like your example, a lot of fuel thermal power plants stockpile input fuels (measured in it's potential per unit in MJ, or kWh, potentials can varied with impurity in quality), and the input source quantity can be varied over time. An analog in game is like wool and socks, wool varied greatly, but socks also need constant output. And instead of seasonal changes of wool by design, fuel market price caused varied input level in fuel thermal power plants. However in game, it's not very feasible to players to manually link and un-link constantly (besides most renewable don't even concern fuel at all). For the purpose of simplified the mechanism, I design the fuel input and maintenance to be consumed with constant rate, and diminished input quantity for utilities and instruments for "readiness level" and simulate the long construction period of a power plant (although players can still manually link/un-link if necessary, and if they want to optimize). This way the const input can form a direct relationship with output bandwidth. Instead of ingredient units to normal goods units, electricity "goods units" will be fuel units/time plus utilities "repaired/replaced over time" to kW output units. (This mechanism of utilities and parts consumption could be extended to normal goods in the future as well, if we want to introduce even more realistic overhead cost from durable assets with depreciation)

[therealevan]

There might need to be some adjustments to the current financial model that is in place to properly represent the new expenses that powerplants present. We could be very detailed and particular about it, however I think David's team might just want to stick with the basics. What do you think are some of the key/primary expenses that powerplant's financial model would cover?

[counting]

Generally power plant overall cost consist 3 major parts : Capital cost (depreciation, interests), fixed O&M (operation&maintenance cost, most salaries and utilities), and variable O&M (fuel if needed and relevant materials, contracts, waste treatment, water bills and fees). Obviously their portion varied with different types of power plants.

In Capital cost, loan mechanism already exists, but the calculation of depreciation for durable equipment is not implemented yet, since this business sector doesn't exist yet in game. However it could be simulated with my proposal of huge setup "intake" overtime for reaching readiness level. In the long run they will exhibit similar financial behaviors.

The fixed O&M part is the key, currently most overhead is just a fixed abstract number, however salaries are already a separate part of different mechanism if we used the factory-model. The problem will be the slow input of durable equipment to represent the upgrade portion of the power plant. This is why I separate maintenance with setup intake. The maintenance should be fixed representing by slow intake of parts.

The variable O&M, fuel as combined with intake should be enough, the extra fees and costs would be a problem, but it could be represented via a varied overhead cost purely abstract. It can be proportion to the current fuel consumption rate. Or in the case of certain renewable power plants this part is negligible. The waste cleaning fees can even be outsourced to government sector with the city simulation pack.

I think using basic expenses model to cover the general principle of power generation process is good enough for current city simulation purpose. However the income of the power plants could be added with more than just selling electricity, also in some country you can combine heat and power to gain extra income in high altitude cities. Extra water purification combined with solar and steam in desert climate cities.

What else of the financial structures do you have in mind that also need to be adjusted beyond current mechanism?

[therealevan]

In detail, somethings that can impact the financial model of a powerplant can include:

Location - Where is the powerplant in relation to transportation systems, plants that are close to river/sea access or efficient rail networks should in theory realize lower transportation costs, than powerplants that have limited transportation connection.
Age - Older powerplants are arguably far less efficient at generating energy than newer built plants
Type - Thermal coal, natural gas, hydro, solar, each have their pros & cons.
In-plant technology - Newer built plants or plants converting to remain in compliance with tightening EPA standards might witness declining or rising profit margins. Potentially realizing that it takes more input to generate more output which in turn increases O&M which can make an impact on the bottom line.
External pressures - Powergrids surge and let off, plants I don't think always operate at a constant output for extended periods of time. Throttling output has a direct correlation on input levels, thus the most output the more input is required.

And like everything else, your expenses fluctuate heavily on the price your suppliers set for purchases commodity from them.

[counting]

If we use factory-mode the transportation cost would be included via current location system. However the source location that can influence energy conversion itself would be more interesting, like hydraulic must be next to river, or wind and solar has varied effectiveness depend on location. (wind usually related to the city location itself, and solar as well, but more importantly the weather, however we don't have weather system yet). Detailed transportation effect and quality would need transportation expansion to take full effect.

About degrade, it's exactly why there's depreciation cost in financial statements. It's meant to represent the life spam of equipment. That's the "setup intake" in my proposed mechanism represents. A power plant is not a real building per se, but more of the location of electricity facility complex, like you have many modules and some would be out of commission due to age, but new ones will be rebuilt at the current location. (Sort of like factory tech level up, when a new power tech researched, the "generator units" downgrade hence needed huge setup intake again, representing the rebuild process). And we can make the readiness level has a constant degraded percentage, like the current tech disruption, and force to maintain a tech level at higher difficulty / realism setting.

The "readiness level" in my mechanism is designed to represent several aspect of the energy covering efficiency. It would fluctuated regarding the the intake level, it would represent the disruption or integration of newly developed process. However I would prefer a tech system that's similar to current tech mechanism described above for the "fluctuation" of profit margin, since it affects readiness level, hence in term the profit margin.

Power plants usually have protective measures build-in for the purpose of exerting capacity with multiple backup models. And the extend demand of watts doesn't actually increase the overall energy output per se, since it's physically impossible, but result in drops and unstable voltage or currents in service area (which means everyone gets a smaller portion of the total energy output), or the combined resistance large enough inside the circuit loop, combines with the drop of voltage cause a blackout. (The entire electric network is a giant complex circuit loop, and can short circuit). For a power plant to have varied output depending on usages, multiple models are required to go online with different combination to form different output level. Some standby modules have to be kept online constantly for surge and switch between them. Power plant generate powers very differently with factories producing goods. Unlike you take in fixed amount of ingredient you would expect linear output of products, energy conversion efficiency is relatively non-linear.

And power plants will be divided between renewable, high tech, and high fuel types. They will have very different capital structure and power output. Most renewable will fluctuated not depend on suppliers but nature conditions. Fuel types obviously similar to current factory-mode. And high-tech types related to the training of the employees and tech level rather than variable O&M, which could be represented with higher training cost and higher contribution of utilization depend on "training", which might require some rework of the current ingredient/tech based "product quality pecentage" mechanism.