The Sharing Economy for the Smart Grid

The sharing economy has disrupted housing and transportation sectors. Homeowners can rent out their property when they are away on vacation, car owners can offer ride sharing services. These sharing economy business models are based on monetizing under-utilized infrastructure. They are enabled by peer-to-peer platforms that match eager sellers with willing buyers. Are there compelling sharing economy opportunities in the electricity sector? What products or services can be shared in tomorrow’s Smart Grid? We begin by exploring sharing economy opportunities in the electricity sector, and discuss regulatory and technical obstacles to these opportunities. We then study the specific problem of a collection of firms sharing their electricity storage. We characterize equilibrium prices for shared storage in a spot market. We formulate storage investment decisions of the firms as a non-convex non-cooperative game. We show that under a mild alignment condition, a Nash equilibrium exists, it is unique, and it supports the social welfare. We discuss technology platforms necessary for the physical exchange of power, and market platforms necessary to trade electricity storage. We close with synthetic examples to illustrate our ideas. Keywords—Sharing economy, electricity storage, time-of-use pricing, Nash equilibrium I. SHARING IN THE ELECTRICITY SECTOR The sharing economy. It is all the rage. Going on vacation? Rent out your home for extra income! Not using your car. Rent it out for extra income! Companies such as AirBnB, VRBO, Lyft, and Uber are disrupting certain business sectors [3]. Their innovative business models are based on resource sharing that leverage underutilized infrastructure. And much of our infrastructure is indeed underused. Some 90% of cars are simply parked 90% of the time. Investors have rewarded companies in this new sharing economy model. Privately held Uber reached a valuation of $60 B in December 2015. It has become more valuable faster than both Google and Facebook. A. Sharing Opportunities To date, sharing economy successes in the grid have been confined to crowd-funding for capital projects [7]. What other products or services could be shared in tomorrow’s grid? We can imagine three possibilities. Many others surely exist. πSupported in part by CERTS under sub-award 09-206, NSF under Grants ECCS-0925337, 1129061, CNS-1239178. a Electrical Engineering & Computer Science, Univ. of California, Berkeley, USA. bCorresponding author, Electrical Engineering & Computer Science, Univ. of California, Berkeley, USA, [email protected] (a) Sharing excess generation from rooftop PV Surplus residential PV generation is traded today through netmetering programs. Here, utilities purchase excess residential generation at a fixed price πnm. Usually πnm is the retail price and there is an annual cap, so households cannot be net energy producers over the course of a year. Utilities are mandated to offer net-metering, but do so reluctantly and view such programs with hostility as it threatens their profitability and business model [4]. Net-metering is not, strictly-speaking, sharing. True resource sharing would pool excess PV generation and trade this over a spot market. Utilities could be paid a toll for access to their distribution infrastructure. (b) Sharing flexible demand recruited by a utility Many consumers have flexibility in their electricity consumption patterns. Some consumers can defer charging their electric vehicles, or modulate use of their AC systems. Utilities are recognizing and monetizing the value this demand flexibility. Excess recruited demand flexibility could be shared and used at other buses where generation is expensive. Trading this shared resource requires infrastructure to coordinate to physical power transactions and support financial transactions. (c) Sharing unused capacity in installed electricity storage Firms faced with time-of-use (ToU) pricing might invest in storage if it is sufficiently cheap. These firms could displace some of their peak period consumption by charging their storage during off-peak periods when electricity is cheap, and discharging it during peak periods when it is dear. On days when their peak period consumption happens to be low, these firms may have unused storage capacity. This could be sold to other firms. This sharing economy opportunity is the focus of this paper. B. Challenges to Electricity Sharing Business Models A principal difficulty with sharing economy business models for electricity is in tracing power flow point-to-point [8]. Electricity injected at various nodes and extracted at others flows according to Kirchoff’s Laws, and we cannot assert that a KWh of electricity was sold by party α to party β. As a result, supporting peer-to-peer shared electricity services requires coordination in the hardware that transfers power [2]. An alternative is to devise pooled markets which is possible because electricity is an undifferentiated good. Regulatory and policy obstacles may impede wider adoption of sharing [5]. The early adopters will be behind-the-meter opportunities such as industrial parks or campuses, where sharing can be conducted privately without utility interference. ar X iv :1 60 8. 06 99 0v 1 [ cs .S Y ] 2 5 A ug 2 01 6