Table of Contents


Executive Summary

  • A New Electricity Marketplace
  • Current Electricity Business Models
  • Future Retail Market Designs
  • Business Models for Future Markets
  • Evolution of Markets and Business Models
  • Implications

1.  Consumers in Electricity Markets

  • Consumer Participation in Electricity Markets is Not New
  • Markets Empowering Customer Participation are Emerging
  • Developments in Other Countries
  • Business Models and Value
  • Organization of this Report

2. Business Models for Regulated Service

  • Business Model 1: Regulated, Vertically-Integrated, Investor-Owned Utilities
  • Business Model 2: Electric Distribution Cooperative Utilities
  • Business Model 3: Public Power Distribution Utilities

3. Business Models for Retail Competition

  • Business Model 4: Utility Transmission & Distribution (T&D) and Retail Sales
  • Business Model 5:  Retail Power Marketer
  • Business Model 6: Combined Heat and Power (CHP)
  • Business Model 7: Demand Response Aggregator
  • Business Model 8:  Community Choice Aggregation (CCA)
  • Business Model 9: Community Solar
  • Business Model 10: Energy Service Company (ESCO)
  • Business Model 11: Distributed Solar PV Developer

4. Market Designs for Consumer Participation

  • Market Design Decisions
  • Alternative Retail Market Visions
  • Comparison of Market Visions
  • Consumer Participation in Wholesale Electric Markets
  • Implications of Lack of Design
  • Consumers: The Source of Value and Market Segmentation

5. Business Models for Consumer Participation

  • New and Expanding Business Models
  • Vendors and Energy Traders
  • Prospective Business Model 12: Prosumer
  • Prospective Business Model 13: Distributed Energy Storage
  • Prospective Business Model 14: Prosumer Aggregator
  • Prospective Business Model 15: Virtual Power Plant (VPP) Operator
  • Prospective Business Model 16: Microgrid

6. Markets and Infrastructure

  • Impact on Electric Utility Business Models
  • Grid Architecture
  • New Business Models
  • Prospective Business Model 17: Transaction Platform Provider
  • Prospective Business Model 18:  Market Maker
  • Prospective Business Model 19:  Distribution System Operator (DSO)
  • Prospective Business Model 20:  Distribution System Owner (DO)
  • Prospective Business Model 21:  Independent Metering Company

7. Pathways to Change

  • Technology Penetration Pathway
  • Policy and Regulation Pathway
  • Economics Pathway

8. Adaptation and Survival

  • Value Creation and Destruction
  • Applicability of Business Models to Market Designs
  • Decision Making In a Transactive or Transitional Business Environment
  • Growing Conflicts and New Alliances

9. Implications and Unresolved Issues

  • Resource Portfolios and Diversity of Supply
  • Reliability and Resilience
  • Risks and Risk Management
  • Investment Needs and Financing
  • Final Thoughts


List of Figures

Figure ES-1 State Activity Relevant to Consumer Participation in Electricity Markets
Figure 1. State Activity Relevant to Consumer Participation in Electricity Markets
Figure 2. Average Residential Electricity Consumption and Prices by State and DER Market Activity, 2015
Figure 3. Example Value Chain
Figure 4. Market Shares for Electric Services Provided to Ultimate Customers, 2014
Figure 5. Jurisdictions with Retail Electricity Choice, 2016
Figure 6. Example Financial Structures of Community Solar Projects
Figure 7. Distribution System Owner and Operator Functions
Figure 8. Types of Distribution System Operators
Figure 9. Possible Distribution System Evolution
Figure 10. Distribution Functions by Evolutionary Stage for a Centrally-Operated Market
Figure 11. The California Duck Flying in 2016 – Load, Net Load, Wind, and Solar – 05/15/2016
Figure 12. Electric Power Interdependencies and Decision Makers, A Simplified Picture
Figure 13. Electricity Distribution System Additions by Investor-Owned Utilities 1994-2013



List of Tables


Table 1. Regulatory Activity with the Potential to Support DER Markets by State
Table 2. Household Income Distribution by State Category, 2014
Table 3. Major Entity Types by Ownership Currently in the Electric Power Sector
Table 4. Comparison of Community Solar Business Models
Table 5. Comparison of Example Transitional and Transactive Market Visions
Table 6. ERCOT Recommended DER Market Participation Options
Table 7. Possible Transactive or Transitional Energy Market Segmentation
Table 8. Median Household Income: Total and with Solar PV
Table 9. Installed Cost of Different Scale PV Installations, 2015
Table 10. Current Levelized Cost of Energy for Different Scale PV Installations with and without Federal Tax Subsidies
Table 11. Potential Roles of Existing Business Models in Each Type of Market
Table 12. Potential Roles of Possible Future Business Models in Each Type of Market
Table 13. Roles of Market and Distribution System Business Models in Each Type of Market
Table 14. Some Potential Parties and their Business Model Decisions
Table 15. AMI Meters in States Moving Toward Transactive Energy or
Transitional Markets, April 2016.