A review of electricity product differentiation

Chi Keung WOO, P. SREEDHARAN, J. HARGREAVES, F. KAHRL, J. WANG, I. HOROWITZ

Research output: Contribution to journalArticles

49 Citations (Scopus)

Abstract

This review is motivated by our recognition that an adequate and reliable electricity supply is a critical element in economic growth. From a customer's perspective, electricity has several distinct attributes: quality, reliability, time of use, consumption (kW. h) volume, maximum demand (kW), and environmental impact. A differentiated product can be formed by packaging its non-price attributes at a commensurate price. The review weaves the academic literature with examples from the real world to address two substantive questions. First, is product differentiation a meaningful concept for electricity? Second, can product differentiation improve grid operations and planning, thereby lowering the cost of delivering electricity services? Based on our analysis and comprehensive review of the extant literature, our answer is "yes" to both questions. We conclude that applying product differentiation to electricity can greatly induce end-users to more effectively and efficiently satisfy their demands upon the system, and to do so in an environmentally friendly way. Copyright © 2013 Elsevier Ltd. All rights reserved.
Original languageEnglish
Pages (from-to)262-272
JournalApplied Energy
Volume114
DOIs
Publication statusPublished - 2014

Citation

Woo, C. K., Sreedharan, P., Hargreaves, J., Kahrl, F., Wang, J., & Horowitz, I. (2014). A review of electricity product differentiation. Applied Energy, 114, 262-272. doi: 10.1016/j.apenergy.2013.09.070

Keywords

  • Product differentiation
  • Electricity economics
  • Grid operations and planning

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