Smart energy business is aimed at harnessing new technologies and developing new business models that will empower and incentivize retail customer and independent power producers to engage in efficient consumption and participate in the production and storage of energy. Achieving this goal requires that energy be priced at the retail and wholesale level so as to reflect physical constraints and capabilities and eliminate cross subsidies that lead to market distortions. At the wholesale level we have witnessed over the last two decades major industry restructuring around the world that introduced market mechanisms in the procurement and dispatch of resources and transformed the transmission infrastructure into a common carrier facilitating competition among power producers. More recently, however, there has been a growing movement to “democratize” the grid by integrating into the supply mix distributed resources that operate at the distribution level or behind the meters.  Traditional consumers can now produce or store energy with rooftop PV panels and local batteries and can actively participate in load balancing and mitigation of uncertain supply from renewable resources by controlling their load profiles.    Hence consumers have become “prosumers” or “prostomers” and new market paradigms and business models are emerging that attempt to push some of the load balancing and risk management to the grid periphery. 

Integration of distributed energy resources at the distribution level poses both technical and economic challenges. From a technical perspective the distribution grids that used to be radial and unidirectional is facing new technical challenges associated with accommodating two way flows. From an economic perspective we facing new regulatory challenges associated with incentives for efficient production and consumption and with cost recovery mechanisms. 

This workshop will cover:

• A survey of new market paradigm and business models for integration of distributed resources, including renewables, storage and demand response. 

• Review of different approaches being experimented with in various states in the US, including New York, California and Hawaii.  

• Review of recent reforms in wholesale markets that are designed to facilitate integration of distributed resources through aggregators and to mobilize flexible resources that are needed to mitigate the uncertainty and variability of renewables.

• Review of alternative approaches and forms of retail rate structures, their volumetric and cost recovery components and their implication with respect to policy objectives, incentives and cross subsidies

• A presentation of a recent research paper exploring an aggregator business model for firming renewable supply with demand response to produce wholesale energy products.