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Impact of Deregulation - DSM in Industries

Summary

The competition of the deregulated electricity market has increased the suppliers efforts to serve their customers with attractive ''added values'' included in the electricity sales contracts. To study the deregulation's impact on DSM measures, computer simulations have been performed of the electricity use and of potential end-use measures at some industries' in Sweden. The industrial simulation model INDSIM has been applied on the industries' load curves and measures as load management, introduction of dual fuel systems and potential energy efficiency improvements have been simulated. To compare the consequences upon DSM measures from the different market philosophies the analyses are based on both former traditional, monopoly electricity contracts and on typical modern, competitive contracts.

Among others it is shown that the electricity costs for industries has decreased considerably after the deregulation and that energy efficiency improvements as a consequence has become less profitable. The same investment brings a lower pay off when the electricity market is competitive. Concerning the competition between oil and electricity for heating, due to price structures, oil has after the deregulation sometimes become more economically benefiting than electricity. This is a surprising result since the average price level for electricity is lower than it was before. Regarding load management, in spite of the lack of power related charges in the electricity sales contracts, these measures can be more profitable after the deregulation. A fact that mainly depends on increased power charge levels in the electricity distribution contracts. Anther consequence of the deregulation is that the electricity sales companies' basic motives for DSM measures have become evident; to tie old and new customers tighter to the company through increasing their comfort and reducing their energy costs. The grid owners' incitements for introducing DSM measures are more traditional; to avoid heavy investments due to bottle-necks in the distribution grid or to reduce the own power related subscription costs paid to the regional distribution company. Conflicts may occur within the same group of companies if the sales company activate DSM measures that at the same time effectively reduces the income of the gird owner.

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