 Competition in smart distribution gridsMarina Bertolini, Marco Buso and Luciano Greco Energy Policy, 2020, vol. 145, issue C Abstract: Smart grids are often considered a cornerstone of energy transition and market liberalization in electric industries. From a critical reading of the interdisciplinary academic and governmental literature, we draw a new definition of grid smartness that is based on the reduction of the volatility of market prices and flows. Then, relying on a simple industrial-organization model of the electric market, we analyze the impact of smart grids on competition among energy suppliers and on the incentives of distribution system operators to invest in it. We show that the risk-reduction effect of smart grids pushes firms to supply more energy. However, the latter can be compensated by an indirect competition effect of investments in smart grids which prevents the entry of firms into the market, though the aggregate effect on energy supply is always positive. We also find that distribution system operators under-invest in smart grids because they fail to internalize positive externalities on energy consumers and producers. Keywords: Electricity markets; Smart grids; Investment regulation; Risk aversion; Distribution system operator (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:145:y:2020:i:c:s0301421520304559 DOI: 10.1016/j.enpol.2020.111729 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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