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Self-Sabotage in the Procurement of Distributed Energy Resources

Author

Listed:
  • Brown, David P.

    () (University of Alberta, Department of Economics)

  • Sappington, David E. M.

    () (University of Florida, Department of Economics)

Abstract

We analyze the regulatory procurement of electricity infrastructure that can take the form of either a traditional core investment or non-traditional distributed energy resources (DERs). We identify conditions under which a regulated utility will engage in self-sabotage (i.e., intentionally increase its own costs) in order to elicit more favorable procurement terms. We also demonstrate how the implementation of standard policies (e.g., cost reimbursement or a simple cost-sharing plan) or the adoption of a traditional core project rather than a potentially less-costly DER project can reduce procurement costs by deterring self-sabotage.

Suggested Citation

  • Brown, David P. & Sappington, David E. M., 2017. "Self-Sabotage in the Procurement of Distributed Energy Resources," Working Papers 2017-11, University of Alberta, Department of Economics.
  • Handle: RePEc:ris:albaec:2017_011
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    File URL: https://sites.ualberta.ca/~econwps/2017/wp2017-11.pdf
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    References listed on IDEAS

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    1. repec:aen:journl:ej39-5-brown is not listed on IDEAS
    2. David P. Brown and David E. M. Sappington, 2018. "Optimal Procurement of Distributed Energy Resources," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
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    1. repec:kap:regeco:v:54:y:2018:i:2:d:10.1007_s11149-018-9368-8 is not listed on IDEAS

    More about this item

    Keywords

    self-sabotage; distributed energy resources; regulation; procurement;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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