Electricity is more expensive than you think

Retailing electricity is becoming more and more expensive over the years. This is mainly due to the increase in electricity usage, which wears down the existing infrastructure and calls for costly grid upgrades. As a result, transmission and distribution costs are taking up an increasingly significant proportion of utilities’ operating expense budget. These costs are passed down to ratepayers, who end up having increasingly expensive electricity bills.

Utilities have implemented dynamic tariffs in an attempt to flatten demand peaks and reduce these costs. In a dynamic pricing model, retail electricity prices are adjusted based on supply and demand, rather than being charged according to a flat rate.

There are two problems with these systems that Powerweave’s technology aims to solve. First, due to the way utilities buy electricity in bulk today, the price of retail electricity can be influenced by macro factors that are not necessarily relevant on a more local scale. Ratepayers in Montana might for example pay more for electricity when air conditioning units are working full speed in Louisiana.

Second, electricity has to travel long distances before it reaches its end-user. Although some congestion issues might be solved with dynamic pricing, local distributed energy resources such as rooftop solar panels are not leveraged to shorten the distance between the generation and consumption of electricity.

Powerweave’s solution comes in the form of local electricity markets. Whereas traditional dynamic pricing is top-down, the local electricity market model takes a bottom-up approach tailored to smaller customers. The goal of a local electricity market is to engage all community members to create a more sustainable energy environment. While dynamic pricing responded well to grid issues as they were understood several decades ago, Powerweave’s local approach is better suited to the current climate of increasing distributed energy resources installation. 

Distributed energy resources have broadened the difference in the way electricity is consumed and generated between localities. Although this can become more difficult for utilities to manage, it also provides new opportunities to reduce problematic demand peaks.

By relying on local consumption and generation, local electricity markets significantly reduce transmission and distribution costs. Grid operators can defer the need for infrastructure investments created by congestion since some consumers become prosumers and increase market flexibility.

Local electricity markets also provide social benefits by empowering communities to be more energy-secure and independent. For example, operators can better tailor their markets to meet community needs and policy goals. Community members have the opportunity to be more involved in those goals, which can in turn foster social cohesion.

Local markets also have added environmental benefits. Since they are better suited to support distributed energy resources, they facilitate the adoption of renewable energy. By focusing on local supply and demand, these markets can also be better tailored to encourage each ratepayer to consume energy efficiently, contributing to lower carbon emissions.

These economic, social, and environmental benefits are core to Powerweave's mission. The local electricity markets supported by Powerweave’s system provide load flexibility for energy service providers, local electricity trading for individual participants, and AI-powered integrations for smarter and cleaner energy consumption. By aligning financial incentives for all stakeholders, Powerweave aims to serve as a community tool for an economically and socially just clean energy transition.

You can support Powerweave by following us on LinkedIn. If you are part of an energy service company and would like to learn more about the benefits of local electricity markets, contact us at contact@powerweave.io.