Energy efficiency services as a tool for commercial development in competitive markets

Panel: Panel 5: Energy Efficiency Markets & Financing Mechanisms

Authors:
Helle Grønli, SINTEF Energy Research
Klaus Livik, Powel

Abstract

When electricity markets are deregulated, traditional utility functions are normally unbundled into regulated and competitive functions. Experience from Scandinavian deregulated markets shows that unbundling of functions and retail rates introduces new incentives for the different market participants and hence changes incentives for procuring load management and energy efficiency. Distribution companies, for instance, can avoid costs related to capacity expansions through advanced information services, new tariff structures and new types of technology (e.g., different types of Smart-house technology). Electricity suppliers, on the other hand, are interested in offering customer services of similar character based on profit potentials and strategies for business diversification. In a study, the potential for peak power reduction of Norwegian end users has been estimated to 33% of available capacity. This potential offers possibilities for cost savings for end users, distribution companies and system operator as well as new business areas for electricity providers. Although the incentives for offering customer services promoting load management and energy efficiency differ, experience shows that the customer services offered by different market participants are complementary. Energy efficiency potential can, in other words, be found within and in the interface between different companies representing the unbundled functions. The challenge is to facilitate and promote energy efficiency between organisational and regulatory borders.