Paying for the smart grid

Luciano De Castro and Joísa Dutra

Energy Economics, 2013, vol. 40, issue S1, S74-S84

Abstract: Smart grid technologies may bring substantial advantages to society, but the required investments are sizable. This paper analyzes three main issues related to smart grids: reliability, demand response and cost recovery of investments. In particular, we show that generators will lose profits as a direct effect of demand response initiatives, and most of the benefits of smart grids cannot be easily converted into payments. Moreover, there are potential issues in the choices made by utilities for providing smart grids, and the reliability pertinent to smart grids is a kind of public good.

Keywords: Smart grid; Demand response; Demand response effect; Reliability; Social planner problem in electricity markets; Public good; Regulation of utilities; Investment decisions by utilities (search for similar items in EconPapers)
JEL-codes: D04 D78 K29 L51 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:40:y:2013:i:s1:p:s74-s84

DOI: 10.1016/j.eneco.2013.09.016

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