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Platform Markets and Energy Services

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  • Claire M. Weiller
  • Michael G. Pollitt

Abstract

A structural shift from transaction-based, marginal cost pricing to fee-based service business models often accompanies We emergence of “platform” markets, i.e. multi-sided markets where an intermediary captures the value of the interaction between user groups. The many examples include telecommunications, data storage, cinema, music and media, and the automobile industry. Why not electricity? In this paper, we explore how the electricity supply industry can be conceived of as a platform-mediated, two-sided market and the consequences for pricing. Through two cases, a balancing services provider for smart home energy management systems and an electric vehicle charge manager, we show where a platform entrant could position itself in the retail electricity markets between supply companies and end-users. The drivers of such a transition include increased volatility due to renewable generation, the new complexity of roles for end-users, and the introduction of information and communication technologies. Conceiving of electricity as a platform market where new entrants provide an energy optimisation and management service may stimulate a competitive ecosystem and innovation. We suggest that fee-based pricing would enable the objectives of time-varying pricing to be achieved without adversely affecting the most vulnerable customers.

Suggested Citation

  • Claire M. Weiller & Michael G. Pollitt, 2013. "Platform Markets and Energy Services," Cambridge Working Papers in Economics 1361, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1361
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    Cited by:

    1. Hannu Huuki & Rauli Svento, 2020. "Unobserved preferences and dynamic platform pricing under positive network externality," Netnomics, Springer, vol. 21(1), pages 37-58, December.
    2. Michael G. Pollitt and Karim L. Anaya, 2016. "Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    3. Friedrich Chasin & Ute Paukstadt & Patrick Ullmeyer & Jörg Becker, 2020. "Creating Value From Energy Data: A Practitioner’s Perspective on Data-Driven Smart Energy Business Models," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(4), pages 565-597, October.
    4. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Pere Mir-Artigues & Pablo del Río, 2021. "Prosumers’ Behavior under a Regulation That Encourages Strict Self-Sufficiency. The Case of Spanish Photovoltaic Micro-Generation," Energies, MDPI, vol. 14(4), pages 1-19, February.
    6. Hochberg, Michael & Poudineh, Rahmatallah, 2021. "The Brazilian electricity market architecture: An analysis of instruments and misalignments," Utilities Policy, Elsevier, vol. 72(C).
    7. Richter, Laura-Lucia & Pollitt, Michael G., 2018. "Which smart electricity service contracts will consumers accept? The demand for compensation in a platform market," Energy Economics, Elsevier, vol. 72(C), pages 436-450.
    8. Ahl, A. & Yarime, M. & Goto, M. & Chopra, Shauhrat S. & Kumar, Nallapaneni Manoj. & Tanaka, K. & Sagawa, D., 2020. "Exploring blockchain for the energy transition: Opportunities and challenges based on a case study in Japan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 117(C).
    9. Teresa Pakulska & Małgorzata Poniatowska-Jaksch, 2022. "Digitalization in the Renewable Energy Sector—New Market Players," Energies, MDPI, vol. 15(13), pages 1-21, June.
    10. Anuradha Jain & Dirk Bruckmann & Rob E.C.M. van der Heijden & Vincent A.W.J. Marchau, 2019. "Towards rail-related multimodal freight exchange platforms: Exploring regulatory topics at EU level," Competition and Regulation in Network Industries, , vol. 20(2), pages 138-163, June.
    11. Boehm, Jonas & Bhargava, Hemant K. & Parker, Geoffrey G., 2020. "The Business of Electric Vehicles: A Platform Perspective," Foundations and Trends(R) in Technology, Information and Operations Management, now publishers, vol. 14(3), pages 203-323, December.
    12. Newbery, David, 2017. "Tales of two islands – Lessons for EU energy policy from electricity market reforms in Britain and Ireland," Energy Policy, Elsevier, vol. 105(C), pages 597-607.

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    More about this item

    Keywords

    platforms; balancing services; electric vehicles; retail electricity markets;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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