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Paying for the smart grid

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  • De Castro, Luciano
  • Dutra, Joisa

Abstract

Smart grid technologies may bring substantial advantages to society, but the required investments are sizable. This paper analyzes three main issues related to smart grids: reliability, demand response and cost recovery of investments. In particular, we show that generators will lose profits as a direct effect of demand response initiatives, and most of the benefits of smart grids cannot be easily converted into payments. Moreover, there are potential issues in the choices made by utilities for providing smart grids, and the reliability pertinent to smart grids is a kind of public good.

Suggested Citation

  • De Castro, Luciano & Dutra, Joisa, 2013. "Paying for the smart grid," Energy Economics, Elsevier, vol. 40(S1), pages 74-84.
    • Handle: RePEc:eee:eneeco:v:40:y:2013:i:s1:p:s74-s84
    DOI: 10.1016/j.eneco.2013.09.016
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/60sgjahunh9dkqd8c1s048perp is not listed on IDEAS
    2. Cédric Clastres & Haikel Khalfallah, 2021. "Dynamic pricing efficiency with strategic retailers and consumers: An analytical analysis of short-term market interactions," Post-Print hal-03193212, HAL.
    3. Hall, Stephen & Foxon, Timothy J., 2014. "Values in the Smart Grid: The co-evolving political economy of smart distribution," Energy Policy, Elsevier, vol. 74(C), pages 600-609.
    4. Dato, Prudence & Durmaz, Tunç & Pommeret, Aude, 2020. "Smart grids and renewable electricity generation by households," Energy Economics, Elsevier, vol. 86(C).
    5. Anil Markandya & Xavier Labandeira & Ana Ramos, 2013. "Policy Instruments to Foster Energy Efficiency," Working Papers 01-2014, Economics for Energy.
    6. Tunç Durmaz & Aude Pommeret & Ian Ridley, 2017. "Willingness to Pay for Solar Panels and Smart Grids," Working Papers 2017.24, Fondazione Eni Enrico Mattei.
    7. Prudence Dato & Tun Durmaz & Aude Pommeret, 2017. "Intermittent renewable electricity generation with smart grids," Working Papers 2017.09, FAERE - French Association of Environmental and Resource Economists.
    8. Alaqeel, T.A. & Suryanarayanan, S., 2019. "A comprehensive cost-benefit analysis of the penetration of Smart Grid technologies in the Saudi Arabian electricity infrastructure," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    9. Eid, Cherrelle & Reneses Guillén, Javier & Frías Marín, Pablo & Hakvoort, Rudi, 2014. "The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery, cross subsidies and policy objectives," Energy Policy, Elsevier, vol. 75(C), pages 244-254.
    10. Clastres, Cédric & Khalfallah, Haikel, 2021. "Dynamic pricing efficiency with strategic retailers and consumers: An analytical analysis of short-term market interactions," Energy Economics, Elsevier, vol. 98(C).
    11. Nayara Aguiar & Indraneel Chakraborty & Vijay Gupta, 2020. "Renewable Power Trades and Network Congestion Externalities," Papers 2006.00916, arXiv.org, revised Jan 2021.
    12. Julia Bok & Evens Salies, 2018. "Transformation numérique du secteur de l’énergie," Sciences Po publications info:hdl:2441/60sgjahunh9, Sciences Po.
    13. Cédric Clastres & Haikel Khalfallah, 2020. "Retailers' strategies facing demand response and markets interactions," Working Papers hal-03167543, HAL.

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    More about this item

    Keywords

    Smart grid; Demand response; Demand response effect; Reliability; Social planner problem in electricity markets; Public good; Regulation of utilities; Investment decisions by utilities;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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