Candidate: Eve Tsybina

Dissertation Title: “Essays in Economics of Distributed Energy”

Abstract: 

The first 20 years of 2000s saw a seismic shift in the production landscape and technology for distributed energy resources, energy storage, and demand response. It was followed by a 5 to 10-fold decrease in cost, which made distributed energy resources available to a broader range of users. The growing base of consumers that can offer their idle assets to the market gives rise to a new phenomenon, prosumers (producers/consumers) of electricity in a “sharing economy”. This Dissertation explores what to expect from distributed electricity prosumers as they join the market. Will they be able to gain and exercise market power? How will they respond to grid-related effects such as transmission losses and transmission constraints? Since prosumer economy is still in its early stage, what can be said about the existing consumer engagement in distributed energy sources in relation to production and consumption incentives?

To address these questions, we apply existing models in game theory, Cournot model and Supply Function Equilibrium model, to a prosumer. We observe how the payoff function of a prosumer that includes both producer payoff and consumer payoff responds to the conditions of imperfect competition. We find that a prosumer is able to exercise market power, but will always do so while considering its consumer payoff. Specifically, its behavior in the market will be moderated by consumer loss it could incur for unilaterally raising prices too high. Then we relax the assumptions of a power network without losses and no transmission constraints under the Supply Function Equilibrium model. We observe that in the presence of transmission losses, prosumers tend to submit more competitive bids. As transmission losses reduce their profit markup, they try to compensate for the eroding profits by increasing the revenue base. Transmission constraints were found to affect prosumer behavior in two ways. First, they localize prosumers in a smaller market, which makes their strategic behavior more pronounced. Second, larger transmission capacity stimulates more competitive behavior.

Finally, we dedicate some of our work to the analysis of real statistics on the engagement of households with distributed energy resources. Since prosumer economics is still in its early stages, we are unable to talk about real life prosumer markets yet. Still it is possible to explore what is the current level of household engagement with residential photovoltaics. We find positive and statistically significant correlations between the area and/or number of residential photovoltaic systems and the main control variables of interest, such as net metering, demand response programs, and variables related to the cost of consumption. Further, we find a statistically significant negative correlation between the area and/or number of residential photovoltaic systems and the presence of community photovoltaic option.

These findings help provide a theoretical foundation for policymaking, to establish which technological developments should be prioritized, and to predict the consequences of certain physical and societal conditions that exist or could develop in prosumer context. The empirical findings serve as an exploratory study and inform our preliminary knowledge on the behavior of current households that own distributed energy sources and/or exercise behaviors characterized by price elastic demand. While these households cannot be considered pure prosumers yet, they form the basis of potential development of prosumer markets in the future.

Committee:

Matthew Oliver, PhD (advisor), GA Tech

Tibor Besedes, PhD, GA Tech

Laura Taylor, PhD, GA Tech

Santiago Grijalva, PhD, GA Tech

Justin Burkett, PhD, GA Tech

Location: https://bluejeans.com/624389584/8385

Time: November, 19, 11 a.m.