Which electricity market design to encourage the development of demand response?
Vincent Rious, senior energy economist at Microeconomix gave a talk on electricity market design and deamnde-side management at 12th workshop of the Centre for Competition & Regulatory Policy.
Abstract
Whether the development of smart metering is a regulated, a purely competitive activity or a hybrid form is a question that is set neither from a theoretical nor from a practical point of view. Considering that we don’t know if demand response and smart metering for mid-size and small consumers can develop on a private ground, we wonder which types of market signals should be sent to demand manager to see demand response emerge as a competitive business. Using data from the French power system over the last 8 years and the guidance of the literature about the missing money for peaking units, we compare the possible market design solutions to allow demand response to develop and conclude that capacity market can be a valuable solution to take into account.
