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The need for competition between decentralized governance approaches for data exchange in smart electricity grids—Fiscal federalism vs. polycentric governance

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  • Buchmann, Marius

Abstract

The institutional framework of the electricity sector is challenged by digitalization. With smart metering, data on energy consumption and production becomes available. Information management shall secure the efficient exchange of this data (e.g. from smart metering) in smart grids. Currently, national as well as regional governance approaches for information management systems are being developed. We discuss how the scale and scope of an information management system has an influence on the level of innovation in the process of the data exchange. We define information management as a club good and apply the insights from the theory of fiscal federalism. We conclude that neither of the extremes of national (central) and decentralized governance approaches for information management will be optimal. Rather, we identify the need of polycentric governance approaches that compete with each other to define the optimal degree of decentralization.

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  • Buchmann, Marius, 2017. "The need for competition between decentralized governance approaches for data exchange in smart electricity grids—Fiscal federalism vs. polycentric governance," Journal of Economic Behavior & Organization, Elsevier, vol. 139(C), pages 106-117.
  • Handle: RePEc:eee:jeborg:v:139:y:2017:i:c:p:106-117
    DOI: 10.1016/j.jebo.2017.05.011
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    1. Tooraj Jamasb and Manuel Llorca, 2019. "Energy Systems Integration: Economics of a New Paradigm," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    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.

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