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Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making

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  • Pereira, Guillermo Ivan
  • Specht, Jan Martin
  • Silva, Patrícia Pereira
  • Madlener, Reinhard

Abstract

The transformation of the electricity sector towards a sustainable energy supply and use has a disruptive potential for infrastructure and utilities. The spread of digital technologies, renewable energy, and prosumers requires a swift and well-guided adaptation of the electricity distribution industry to smart grid technologies and related business models. This paper, based on the large technical systems (LTS) conceptual framework, investigates the complex evolution and company and market design adaptation needs. Challenges and opportunities are analyzed through nine multi-stakeholder workshops, held in two EU member states (Germany and Portugal) in 2016–2017, engaging distribution system operators, researchers, academics, and integrated utility companies. The results indicate considerable uncertainty for distribution system operators regarding the value of large-scale smart meter rollouts. Also, a corporate culture with resistance to change is observed, challenging the integration of novel technologies and processes. Traditional regulation is seen as a barrier to smart grid investments, and is associated with job losses and knowledge destruction. Policy-makers can benefit from these insights on the dynamics of DSOs, which can contribute to public policy design and market reform which traditionally has often been mainly concerned about operational efficiency in a steady-state, stable economy.

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  • Pereira, Guillermo Ivan & Specht, Jan Martin & Silva, Patrícia Pereira & Madlener, Reinhard, 2018. "Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making," Energy Policy, Elsevier, vol. 121(C), pages 426-440.
    • Handle: RePEc:eee:enepol:v:121:y:2018:i:c:p:426-440
    DOI: 10.1016/j.enpol.2018.06.018
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    Cited by:

    1. Chamaret, Cécile & Steyer, Véronique & Mayer, Julie C., 2020. "“Hands off my meter!” when municipalities resist smart meters: Linking arguments and degrees of resistance," Energy Policy, Elsevier, vol. 144(C).
    2. Marius Buchmann, 2019. "How decentralization drives a change of the institutional framework on the distribution grid level in the electricity sector – the case of local congestion markets," Bremen Energy Working Papers 0031, Bremen Energy Research.
    3. Siddharth Sareen, 2020. "Social and technical differentiation in smart meter rollout: embedded scalar biases in automating Norwegian and Portuguese energy infrastructure," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-8, December.
    4. Sovacool, Benjamin K. & Martiskainen, Mari & Hook, Andrew & Baker, Lucy, 2020. "Beyond cost and carbon: The multidimensional co-benefits of low carbon transitions in Europe," Ecological Economics, Elsevier, vol. 169(C).
    5. Pereira, Guillermo Ivan & Pereira da Silva, Patrícia & Cerqueira, Pedro André, 2020. "Electricity distribution incumbents' adaptation toward decarbonized and smarter grids: Evidence on the role market, regulatory, investment, and firm-level factors," Energy Policy, Elsevier, vol. 142(C).
    6. Lazar Gitelman & Mikhail Kozhevnikov & Olga Ryzhuk, 2019. "Advance Management Education for Power-Engineering and Industry of the Future," Sustainability, MDPI, Open Access Journal, vol. 11(21), pages 1-1, October.

    More about this item

    Keywords

    Electricity distribution; Smart grid; Technology; Business model; Market design; Policy;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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