Dynamic Pricing of Electricity

Joskow, Paul L.; Wolfram, Catherine

doi:10.1257/aer.102.3.381

Cited by 231 publications

(101 citation statements)

References 6 publications

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“…These distortions in consumption lead to deviations in generation capacity investment and utilization relative to what is optimal from society's perspective (Joskow and Wolfram, 2012). Although the idea of moving from time-invariant pricing to RTP tied to marginal cost was introduced more than 50 years ago, the practical application of theory has lagged (J.…”

Section: Differences In Wholesale and Retail Pricesmentioning

confidence: 99%

“…Functionally, smart grid refers to the modernization of the electricity-delivery system to allow for greater automation in grid operation at virtually every node, including facilitating data communications and operations between all agents in the system, which include generators, system operators, and final demanders (consumers) (Electric Power Research Insti-tute [EPRI], 2011;Joskow, 2012). The National Energy Technology Laboratory (NETL) has defined five categories of smart-grid systems to describe this modernization (GAO, 2011):…”

Section: Using Technology To Overcome Problems: the Smart Gridmentioning

confidence: 99%

“…This collection of firms, RTOs, and ISOs manage the linked infrastructure that is used to deliver electric power. Because of the just-in-time nature of electricity distribution, the ability of grid operators at both the high-and low-voltage levels to balance (and perhaps shift) patterns of supply and demand is crucial to the efficient delivery of the product (Joskow, 2012;Denholm and Hand, 2011).…”

Section: Potential Benefits To Distributors and Utilitiesmentioning

confidence: 99%

“…For producers, the quantity information can be used to increase efficiency in transmission and distribution by theoretically increasing delivery efficiency through improved load-management predictions at a technical level and by reducing the transaction costs in billing through automated metering (Joskow, 2012;Römer et al, 2012).…”

Section: Potential Benefits To Distributors and Utilitiesmentioning

confidence: 99%

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The Adoption of New Smart-Grid Technologies: Incentives, Outcomes, and Opportunities

Guo¹,

Bond²,

Narayanan³

2015

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This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions.html.The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest.RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org For more information on this publication, visit www.rand.org/t/rr717Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2015 RAND CorporationR® is a registered trademark. Cover image: cherezoff/Fotoliaiii Preface New technologies have created significant opportunities for electric-grid modernization that will allow for enhanced communications between transmission and distribution operators and consumers. This communication layer, its associated enabling technologies, and the infrastructure necessary to deliver electricity are collectively known as the smart grid. A fully functional smart grid has been estimated to bring large net benefits to society through the ability to more efficiently manage transmission, distribution, and consumption of electricity, as well as incorporate and integrate intermittent renewable-resource fuels and distributed-generation technologies. However, some evidence suggests that either the net benefits have been overestimated or incentives are not aligned for current utilities and customers to fully modernize the grid.This report reviews the current status of smart-grid development, including some entrepreneurship opportunities and the barriers to achieving a fully modernized grid. We identify some recommendations to help overcome these barriers and detail the policy levers available to regulators under the incumbent regulatory system to incent (or discourage) adoption.This research was sponsored by the Kauffman-RAND Institute for Entrepreneurship Public Policy (KRI), housed within the RAND Institute for Civil Justice. KRI is dedicated to assessing and improving legal and regulatory policymaking as it relates to small businesses and entrepreneurship in a wide range of settings, including health care and civil justice.The intended audience for this report includes electricity industry professionals, consumers of electricity, researchers, and policymakers who help shape the environment in which the electric market operates. The report should be of interest to any ...

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Section: Differences In Wholesale and Retail Pricesmentioning

confidence: 99%

Section: Using Technology To Overcome Problems: the Smart Gridmentioning

confidence: 99%

Section: Potential Benefits To Distributors and Utilitiesmentioning

confidence: 99%

Section: Potential Benefits To Distributors and Utilitiesmentioning

confidence: 99%

See 2 more Smart Citations

The Adoption of New Smart-Grid Technologies: Incentives, Outcomes, and Opportunities

Guo¹,

Bond²,

Narayanan³

2015

View full text Add to dashboard Cite

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“…The major Spanish utilities have developed pilot projects of smart grids in cities where their distribution companies have installed smart meters. Joskow and Wolfram (2011) indicate that the introduction of time-varying electricity prices for households in the US is slow despite of decreasing device costs and improved functionality for meters and automated demand response technologies. They think that most utilities will begin offering alternative tariffs while leaving flat-rate pricing the default option.…”

Section: The Introduction Of Household Hourly Tariffsmentioning

confidence: 99%

Evaluation of the trading development in the Iberian Energy Derivatives Market

Herráiz¹,

Rodríguez‐Monroy²

2012

Energy Policy

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HIGHLIGHTS• The continuous traded volumes in the Iberian power futures market grow steadily.• Those volumes are correlated to OTC volumes and the enrolment of key players.• Most liquid contracts show the smallest hedging ratio.• Regulation fixing the coal fired generation price affects spot and forward prices.• The overall efficiency can grow via market monitoring reports and OTC data access. ABSTRACTThe efficiency of the Iberian Energy Derivatives Market in its first five and a half years is assessed in terms of volume, open interest and price. The continuous market shows steady liquidity growth. Its volume is strongly correlated to that of the Over The Counter (OTC) market, the amount of market makers, the enrolment of financial agents and generation companies belonging to the integrated group of last resort suppliers, and the OTC cleared volume in its clearing house. The hedging efficiency, measured through the ratio between the final open interest and the cleared volume, shows the lowest values for the Spanish base load futures as they are the most liquid contracts. The ex-post forward risk premium has diminished due to the learning curve and the effect of the fixed price retributing the indigenous coal fired generation. This market is quite less developed than the European leaders headquartered in Norway and Germany. Enrolment of more traders, mainly international energy companies, financial agents, energy intensive industries and renewable generation companies is desired. Market monitoring reports by the market operator providing post-trade transparency, OTC data access by the energy regulator, and assessment of the regulatory risk can contribute to efficiency gains.

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Utilization and Customer Behavior: Smart Choices for the Smart Grid

Jessoe

Rapson

Smith

2016

Smart Grid Handbook

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The smart grid offers a wide array of opportunities to improve efficiency of the electricity grid via load management policies. This chapter reviews the current state of knowledge in the economics literature as it relates to time‐varying pricing and to behavioral interventions, which together comprise a large portion of regulators' policy choice set. The authors present evidence that consumers respond to financial incentives, but that these are not the only determinants of behavior. For example, consumers are often uninformed and inattentive, and they exhibit a tendency to respond to certain nonmonetary factors in addition to monetary incentives. The authors conclude that time‐varying pricing is an effective and essential policy instrument, while instruments designed to boost customer attentiveness and allow households to become better informed about their energy use play an important complementary role. Smart meters are crucial in making such a policy package feasible. The power of randomized experimental designs, which underlie much of the evidence that is presented, is also discussed. The authors highlight the important areas for future research and recommend that such future research efforts continue to leverage randomized designs.

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Dynamic Pricing of Electricity

Cited by 231 publications

References 6 publications

The Adoption of New Smart-Grid Technologies: Incentives, Outcomes, and Opportunities

The Adoption of New Smart-Grid Technologies: Incentives, Outcomes, and Opportunities

Evaluation of the trading development in the Iberian Energy Derivatives Market

Utilization and Customer Behavior: Smart Choices for the Smart Grid

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