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Customer-Side Energy Management: What Role Should Utilities Play?

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  • Brennan, Tim

    (Resources for the Future)

Abstract

Decarbonization of the electricity grid implies more variable and intermittent solar and wind generation. Intermittency response is the strongest motivation for customer-side energy management (CSEM)—that is, technology that allows a third party to monitor electricity availability and adjusts use to balance supply and demand. The question is the role of utilities in providing CSEM. Antitrust and regulatory policy have reflected a principle that regulated businesses’ participation in unregulated markets creates opportunities to exploit market power. Tactics include excessive transfer pricing of unregulated inputs, cross-subsidization of unregulated services, and discrimination against unaffiliated rivals in obtaining the regulated service. Risks of utilities’ involvement in CSEM can probably be mitigated through vigilance and safeguards. Moreover, a utility may be well placed to undertake CSEM because of its supply and consumer use. In addition, adverse selection may inhibit a direct-to consumer CSEM market from developing. A likely outcome is that the utility procures CSEM technology from a competitive market and provides CSEM directly.To read the working paper, click "Download" above.

Suggested Citation

  • Brennan, Tim, 2021. "Customer-Side Energy Management: What Role Should Utilities Play?," RFF Working Paper Series 21-03, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-21-03
    as

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    File URL: https://www.rff.org/documents/2789/RFF_WP_21-03_CESM.pdf
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    References listed on IDEAS

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