The goal of deregulating energy markets is to create competition in a market that was previously controlled by monopolies. According to standard economic reasoning, this increase in competition should lead to lower prices. Unfortunately, this has not always been the case. In reality, deregulated power plants can sell power at higher prices because they are not held in check by governments. Although there is slightly more competition, most regions are still dominated by one large utility, eliminating any real retail choice. The average price of power in deregulated states is 48% higher than in regulated states. The lack of continuity also means that power grids are less reliable because several different companies need to work together to keep the electrical balance.
The business opportunity that can take advantage of deregulated energy markets is in microgrids. A report by Robert Liam Dohn defines mircogrid as,”a discrete energy system consisting of distributed energy sources (e.g. renewables, conventional, storage) and loads capable of operating in parallel with, or independently from, the main grid. The primary purpose is to ensure reliable, affordable energy security for commercial, industrial and federal government consumers.” Microgrids can provide backup to unreliable grids. They were used in New Jersey after Hurricane Sandy Hook to immediately provide electricity to damaged areas. They also have potential in underdeveloped regions of the world, with no grid access. A microgrid tied to a renewable energy source has the potential to supply critical electricity to areas of the world which are lacking. As energy markets deregulate, a market for microgrid technology should develop rapidly.
“The Business Case for Microgrids” – Siemens
Click to access The%20business%20case%20for%20microgrids_Siemens%20white%20paper.pdf
“How Solar-Based Microgrids Could Bring Power to Millions” – MIT Technology Review
http://www.technologyreview.com/featuredstory/429529/how-solar-based-microgrids-could-bring-power-to-millions/
“Microgrids Keep Power Flowing Through Sandy Outages” – MIT Technology Review
http://www.technologyreview.com/view/507106/microgrids-keep-power-flowing-through-sandy-outages/
Hi Liston! I had no idea that the price of power is that much higher in deregulated states. It does make sense that it would be higher, but that is a significant amount! You also brought a great point about all the companies working together. I had never thought about that. If there are no financial gains for them working together, they probably wouldn’t. Great information!