The Economics of the Smart Grid

Luciano De Castro

No 1544, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: Smart Grid (SG) technologies may bring substantial advantages to society, but the required investments are also sizable. This paper establishes a framework for examining the issues related to the SG, and highlights some of the difficulties in establishing a mechanism for paying SG costs. In particular, we show that generators will lose profits as a direct effect of demand response initiatives, and most of the benefits of SG cannot be easily converted into payments. JEL Code: D61,H42, D62,L51

Keywords: Smart Grid; Energy Economics; Cost-Benefit Analysis; Demand Response; Demand Response Formalization (search for similar items in EconPapers)
Date: 2011-10-01
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