Energy markets and Energy Efficiency: consumers costs and benefits

The Regulatory Assistance Project (RAP), ECF and the Coalition organised a workshop on how power markets works and the consumer impacts of efficiency measures such as savings obligations and demand management/response programmes, and how these can be designed to achieve specific results.

One general finding is that energy savings significantly lower energy system costs. For example, energy savings lower the clearing price on power markets which simply means that energy becomes cheaper for retailers and consumers. One important effect of this is that even if only a few consumers directly benefit from efficiency interventions, still all benefit from lower energy prices. The list of the efficiency benefits for the energy system is long, and includes more obvious ones like deferred distribution and transmission investments and reduced capacity reserves, but also less obvious ones like reducing marginal line losses which are significantly higher than average losses, because electrical resistance increases with flow.

The presentation of Richard Cowart (RAP) and Chris Neme (Energy Future Group) showed many more aspects and details and exposed who are the winners (consumers) and losers (generators) and important obstacles, like the perverse incentives from throughput based network tariffs.

Presentation by Richard Cowart (RAP) and Chris Neme (Energy Futures Group): Power markets, System benefits & Key design issues