NERA Shares Insights on Smart Electricity Services Contracts at Paris Research Seminar

25 January 2017

NERA Consultant Laura-Lucia Richter recently gave the presentation, “Which Smart Electricity Services Contracts will Consumers Accept? The Demand for Compensation in a Platform Market” at the Chaire European Electricity Markets (CEEM) Research Seminar in Paris on 13 December 2016.

The working paper for the presentation, which took place at Université Paris-Dauphine, is based on data from a discrete choice experiment on electricity service contracts that was conducted in Great Britain in 2015. The paper analyzes the heterogeneity of household consumer preferences for electricity service contracts in a smart grid context. The findings suggest that while consumers are willing to pay for technical support services, they are likely to demand significant compensation for sharing their usage and personally identifying data, and also likely to participate in automated demand response programs involving remote monitoring and control of electricity usage.

Based on these findings, Ms. Richter’s paper discusses potential platform pricing strategies that could incentivize consumers to participate in a smart electricity platform market. By combining appropriate participation payments with the sharing of bill savings, service providers could attract the number of customers required to provide the optimal level of demand response. The study also suggests how, by targeting customers with specific characteristics, smart electricity service providers could significantly reduce their customer acquisition costs.

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NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA's clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world's largest economic consultancies. With its main office in New York City, NERA serves clients from more than 25 offices across North America, Europe, and Asia Pacific.