The Valuation of Negawatts: the Controversial Articulation of Demand-Side Management with the French Electricity Markets
Résumé
In the development of intermittent renewable energy production, flexible demand-side management (DSM) constitutes a promising solution to balance electricity production and consumption. In general, its flexibility involves consumers' changing their practices and agreeing to reduce or postpone their consumption. Since it can help to balance the network, DSM has technical value for the energy system, because the electricity saved or consumption postponed can provide the same balancing service as the additional production of electricity. Following the market logic, demand-side flexibility should be valued according to market mechanisms. However, because DSM is also associated with energy sobriety and energy transition, its societal value is not limited to market mechanisms, but can have value for the electricity system, including reducing the use of the network, avoiding polluting peak production, and facilitating the diffusion of intermittent renewable production. As such, demand-side management can gain political support and be valued in light of different objectives, values, and economic value calculations, not only per its participation in a centralized market. The convergence of demand-side flexibility and the Negawatt project prompted the emergence of a new economic actor: the load-shifting aggregator, a non-supplier operator that organizes the load shifting of different consumers and creates economic value of the activity by selling saved electricity. In France and the United States, regulatory authorities have recognized that load-shifting aggregators can develop independently of suppliers by selling services directly on the wholesale electricity market, day-ahead market, or balancing market. Those aggregators can benefit from additional support since, as new entrants—namely, renewable energy suppliers—in the energy sector, they face unfair competition from existing traditional suppliers. To analyze the process by which load-shifting services have been valued economically, we have followed a pragmatic approach of valuation (Dewey 1939) updated by market studies scholars (Kellberg et al., 2013). The concept of valuation focuses on the social practices by which goods or services are valued that enable qualifying contributions and calculating, negotiating, maintaining, or contesting economic value. Research using that concept tends to venture beyond the division between economic calculation and moral, political assessment by showing how different practices of judgment can be interwoven (Dubuisson–Quellier 2013). The chief contribution of this paper is its explanation of the driving forces of the valuation process of energy services in the context of energy transition.
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