Is mandating smart meters smart?

Léautier, Thomas-Olivier (2014) Is mandating smart meters smart? Energy Journal, 35 (4). pp. 135-158.

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Official URL: http://tse-fr.eu/pub/27658

Abstract

The advent of "smart meters" will make possible Real Time Pricing of electricity: customers
will face and react to wholesale spot prices, thus consumption of electric power will be aligned
with its opportunity cost. This article determines the marginal value of a fraction of demand (or
a consumer) switching to Real Time Pricing. First, it derives this marginal value for a simple yet
realistic specification of demand. Second, using data from the French power market, it estimates
that, for the vast majority of residential customers whose peak demand is lower than 6 kV A, the
net surplus from switching to Real Time Pricing is lower than 1 euro/year for low demand elasticity,
4 euros/year for high demand elasticity. This finding casts a doubt on the economic value of rolling
out smart meters to all residential customers, for both policy makers and power suppliers.

Item Type: Article
Language: English
Date: October 2014
Refereed: Yes
Uncontrolled Keywords: electric power markets, demand response, smart grid
JEL codes: D61 - Allocative Efficiency; Cost-Benefit Analysis
L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L94 - Electric Utilities
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse), TSM Research (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:40
Last Modified: 26 Mar 2018 09:15
OAI ID: oai:tse-fr.eu:27658
URI: http://publications.ut-capitole.fr/id/eprint/16479

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