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Distributed Generation Storage, Demand Response, and Energy Efficiency as Alternatives to Grid Capacity Enhancement

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  • Rahmatallah Poudineh
  • Tooraj Jamasb

Abstract

The need for investment in capital intensive electricity networks is on the rise in many countries. A major advantage of distributed resources is their potential for deferring investments in distribution network capacity. However, utilizing the full benefits of these resources requires addressing several technical, economics and regulatory challenges. A significant barrier pertains to the lack of an efficient market mechanism that enables this concept and also is consistent with business model of distribution companies under an unbundled power sector paradigm. This paper proposes a market-oriented approach termed as "contract for deferral scheme" (CDS). The scheme outlines how an economically efficient portfolio of distributed generation, storage, demand response and energy efficiency can be integrated as network resources to reduce the need for grid capacity and defer demand driven network investments.

Suggested Citation

  • Rahmatallah Poudineh & Tooraj Jamasb, 2013. "Distributed Generation Storage, Demand Response, and Energy Efficiency as Alternatives to Grid Capacity Enhancement," Cambridge Working Papers in Economics 1356, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1356
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Paterakis, Nikolaos G. & Erdinç, Ozan & Catalão, João P.S., 2017. "An overview of Demand Response: Key-elements and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 871-891.
    2. Kaschub, Thomas & Jochem, Patrick & Fichtner, Wolf, 2016. "Solar energy storage in German households: profitability, load changes and flexibility," Energy Policy, Elsevier, vol. 98(C), pages 520-532.
    3. repec:eee:appene:v:210:y:2018:i:c:p:881-895 is not listed on IDEAS
    4. Good, Nicholas & Ellis, Keith A. & Mancarella, Pierluigi, 2017. "Review and classification of barriers and enablers of demand response in the smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 57-72.
    5. repec:eee:enepol:v:114:y:2018:i:c:p:22-29 is not listed on IDEAS
    6. repec:eee:eneeco:v:64:y:2017:i:c:p:638-650 is not listed on IDEAS
    7. Steen, David & Stadler, Michael & Cardoso, Gonçalo & Groissböck, Markus & DeForest, Nicholas & Marnay, Chris, 2015. "Modeling of thermal storage systems in MILP distributed energy resource models," Applied Energy, Elsevier, vol. 137(C), pages 782-792.
    8. repec:eee:rensus:v:80:y:2017:i:c:p:367-379 is not listed on IDEAS
    9. Liu, Yingqi, 2017. "Demand response and energy efficiency in the capacity resource procurement: Case studies of forward capacity markets in ISO New England, PJM and Great Britain," Energy Policy, Elsevier, vol. 100(C), pages 271-282.
    10. repec:aen:journl:ej38-3-jenkins is not listed on IDEAS
    11. Yazdanie, Mashael & Densing, Martin & Wokaun, Alexander, 2016. "The role of decentralized generation and storage technologies in future energy systems planning for a rural agglomeration in Switzerland," Energy Policy, Elsevier, vol. 96(C), pages 432-445.
    12. repec:eee:juipol:v:50:y:2018:i:c:p:40-48 is not listed on IDEAS
    13. Schachter, Jonathan A. & Mancarella, Pierluigi & Moriarty, John & Shaw, Rita, 2016. "Flexible investment under uncertainty in smart distribution networks with demand side response: Assessment framework and practical implementation," Energy Policy, Elsevier, vol. 97(C), pages 439-449.
    14. repec:gam:jeners:v:10:y:2017:i:12:p:2107-:d:122453 is not listed on IDEAS
    15. Nijhuis, M. & Gibescu, M. & Cobben, J.F.G., 2015. "Assessment of the impacts of the renewable energy and ICT driven energy transition on distribution networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1003-1014.
    16. repec:gam:jeners:v:11:y:2018:i:4:p:822-:d:139254 is not listed on IDEAS
    17. repec:eee:enepol:v:115:y:2018:i:c:p:239-248 is not listed on IDEAS
    18. Després, Jacques & Mima, Silvana & Kitous, Alban & Criqui, Patrick & Hadjsaid, Nouredine & Noirot, Isabelle, 2017. "Storage as a flexibility option in power systems with high shares of variable renewable energy sources: a POLES-based analysis," Energy Economics, Elsevier, vol. 64(C), pages 638-650.
    19. repec:eee:renene:v:115:y:2018:i:c:p:989-998 is not listed on IDEAS
    20. Schachter, J.A. & Mancarella, P., 2016. "A critical review of Real Options thinking for valuing investment flexibility in Smart Grids and low carbon energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 261-271.
    21. Poudineh, Rahmatallah & Jamasb, Tooraj, 2016. "Determinants of investment under incentive regulation: The case of the Norwegian electricity distribution networks," Energy Economics, Elsevier, vol. 53(C), pages 193-202.
    22. Paulo Moisés Costa & Nuno Bento & Vítor Marques, 2014. "Dealing with Technological Risk in a Regulatory Context: The Case of Smart Grids," GEMF Working Papers 2014-11, GEMF, Faculty of Economics, University of Coimbra.
    23. Zhou, Kaile & Yang, Shanlin, 2015. "Demand side management in China: The context of China’s power industry reform," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 954-965.
    24. repec:eee:energy:v:134:y:2017:i:c:p:850-863 is not listed on IDEAS

    More about this item

    Keywords

    Distributed generation; storage; demand response; network regulation; business model;

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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