Self-Sabotage in the Procurement of Distributed Energy Resources

David Brown and David Sappington

No 2017-11, Working Papers from University of Alberta, 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.

Keywords: self-sabotage; distributed energy resources; regulation; procurement (search for similar items in EconPapers)
JEL-codes: L51 L94 Q28 Q40 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-10-03
New Economics Papers: this item is included in nep-ene, nep-ppm and nep-reg
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2017_011

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