IEEE Power & Energy Magazine - July/August 2015 - 18

G

GLOBALLY, POWER SECTORS HAVE ENTERED AN ERA
of unprecedented optionality that transcends supply, transport, and
demand. Renewables are increasingly penetrating power systems;
greater efficiency in lighting has been achieved; manufacturing
capability for energy storage technologies is expanding, smart
grid technologies have evolved, and emissions technology has
advanced; energy efficiency and demand response adoption rates
are rising; and distributed resources are increasingly competing
with central station supply even as central station technologies
have themselves become more efficient and diverse. Today, the
savvy prosumer has a choice between utility supply and self-supply or can opt for a combination of both. Just as important, innovative supply, transport, and demand options have led to an emerging array of complementary policy and regulatory approaches.
Thus, traditional utility business models face the threat of revenue erosion from both reduced wheeling of energy through utility
assets and overall lowering of energy demand. Traditional central
station power generation also faces greater revenue risk as increasing renewables penetration having no, or only minimal, marginal
costs deflate spot prices. Competitive power market structures have
led to greater transparency in price formation for various products:
day-ahead energy prices, real-time prices, reserves and regulation
prices and shortages, congestion and basis risk differentials, marginal-loss prices, and capacity prices. Because wholesale markets
alone as currently structured are unable to factor in revenues for
renewables and energy efficiency to project profitablility and economic feasibility, many out-of-market financing options-subsidies, tax credits, in-feed tariffs, and others-have been introduced
to make doing so more feasible.
The challenge is adapting exising utility business models and
wholesale market structures for future technology innovations
as well as a vast array of policy and regulatory movements.

An Era of
Many Options
By Randell Johnson
Digital Object Identifier 10.1109/MPE.2015.2418077
Date of publication: 25 June 2015

18

ieee power & energy magazine

1540-7977/15©2015 IEEE

july/august 2015



Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2015

IEEE Power & Energy Magazine - July/August 2015 - Cover1
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IEEE Power & Energy Magazine - July/August 2015 - Cover3
IEEE Power & Energy Magazine - July/August 2015 - Cover4
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