Morphological analysis of energy services: Paving the way to quality differentiation in the power sector

Abstract

This is the author's version of a work that was published in the following source:Salah, F.; Flath, C. M.; Schuller, A.; Weinhardt, C. (2017).Morphological analysis of energy services: Paving the way to quality differentiation in the power sector .Energy policy, 106, 614-624. doi:10.1016/j.enpol.2017.03.024 Please note: Copyright is owned by the author(s) and / or the publisher. The commercial use of this copy is not allowed. AbstractThe activation of the still predominantly passive demand side is necessary to further guarantee a stable power system in the short term and ensure capacity adequacy in the long run.A system with a high share of generators with nearly no marginal costs requires new services that facilitate transmitting the right economic signals to the system stakeholders. To this end we refine the notion of energy services and propose a framework to systematically design quality differentiated energy services for consumers. This approach facilitates a value-based economic assessment of energy services that deviates from the marginal-cost-paradigm. We further illustrate pricing options for these new energy service products and outline infrastructural needs and additional use case-specific product properties. Moreover, we discuss how the morphological approach can be formalised using a mathematical programming formulation and introduce a complexity measure that facilitates assessing potential adoption obstacles for end consumers. Additionally, we illustrate the practical applicability of these findings by using a prototypical implementation of a decision support system. To foster differentiated energy services, we recommend a more lenient regulatory regime lowering the barriers for new market entrants.

From Energy as a Commodity to Energy as a Service—A Morphological Analysis of Smart Energy Services

“…For instance, in the related area of electric mobility, research has applied the technique to develop service offerings and corresponding business models for electric vehicles (EVs) (Kley et al 2011). Moreover, Salah et al (2017) have presented a morphological box for design options regarding energy services that are based on smart metering. Their analysis concentrates on energy services for end customers with a focus on energy quality criteria and pricing (e.g., flexible tariffs services).…”

“…To date, research has assisted energy utilities in selecting potential smart energy services (Goldbach et al 2018). Few academics have analyzed different smart energy services and their design options along several dimensions (one exception is the work of Salah et al 2017).…”

Engineering Energy Markets: The Past, the Present, and the Future

“…Salah and Flath (2016) and provide insights into how to create price-based incentives for the provision of demand-side flexibility while mitigating renewable generation uncertainty in a local context. Finally, in Salah et al (2017), the idea of quality of service differentiation is applied to the energy sector. The general idea is to differentiate demand requirements by the service quality, i.e., the supply security and the demand pattern that need to be fulfilled.…”

Renewable electricity trading through SLAs

“…Similarly to product (service) differentiation in power systems engineering and energy markets (Oren and Smith 1993;Salah et al 2017), we propose SLAs that differentiate in the reliability of successful delivery. Product differentiation in electricity trading also includes but is not limited to: (i) deadline-differentiated trading, where consumers agree to defer the service of pre-determined loads in exchange for lower prices (Bitar and Xu 2017), (ii) varying probabilities of electricity service interruptions (Chao et al 1986), (iii) reliability differentiation for trading spinning reserve capacity (Siddiqi and Baughman 1995).…”