Energy Companies could Pay Customers for using Smart Grids

This post features an other entrepreneurial opportunity in the Energy Sector. There is an incentive for energy companies to pay us for using energy saving technologies during peak hours.

 In the energy market there is a difference between peak and baseload prices.  Peak prices are higher  than baseload prices. In peak hours energy companies need to use extra more expensive sources of energy to meet customers’ needs. As we can see from the graph more than a €20 difference per megawatt hour is not unlikely. Considering that energy companies go trade several TWh (1 000 000 Mwh) a month this is serious money.

Energy companies want customers to shift consumption from peak to base so they do not need to switch spare capacity on and off.  Electricity companies try to give customers incentives with different peak and baseload prices. From the elasticities we can see that customers are likely to react. Companies could however do more.

Energy companies could give away energy saving appliances for products used during peak hours and/or give away smart-energy systems which automatically decrease energy usage of for example laptops (which can store energy) when prices are higher, and increase energy usage (to charge batteries) when prices are lower.

Filippini M. (2010). Short and long-run time-of-use price elasticities in Swiss residential electricity demand, CEPE Working Paper 76, Centre for Energy Policy and Economics (CEPE), ETH Zurich, July 2010. [pdf, 263 kB]