From smart technology to smart consumers: for better system reliability and improved market efficiency

The new pricing schemes, enabling smart grids technologies and remote control equipments allow retail consumers to procure demand response resources and participate more intensely in the efficient functioning of markets. This fact is inducing significant changes regarding the roles historically attributed to the different operators acting along the supply chain. It is also involving improvements in markets efficiency, system reliability, and of course regulatory models (Clastres, 2011). This paper aims at focusing on two different benefits, although not incompatible, of smart technology and retail consumers' activation. - The first focus lies on smart grids technology's potential and on smart consumers in enhancing the reliability of power systems. - The second focus is based on the potential of smart grids technology to improve markets efficiency. Regarding the many aspects contained in these two -restricted- sides of benefits, this paper studies smart grids and demand response (DR) programs adoption in California, Germany, Illinois and the UK and is articulated in four points. First, it describes the challenges linked to peak load and peak prices and discusses the instruments becoming available through short-term demand side activation as well as the barriers to procure greater flexibility. Second, this paper deals with demand response and smart metering as a way to enhance wholesale and retail markets efficiency. At last, it discusses the regulatory mechanisms available to the authorities to give the sound incentives for adopting smart grids technology, in order to respond to the real needs encountered by the systems