Third article in our series about microgrids
By Casey Freeman
The combination of new technology and the free market has given average people access to goods and services that until recently were readily available only to the upper echelons of society. For example, ordering a nice car to your door to chauffer you around town is now available to anyone with a smartphone.
By virtue of this combination’s ability to inspire innovation, it (commonly referred to as the sharing, peer-to-peer, or neighbor-to-neighbor economy) has leveled the socioeconomic playing field. It has increased competition between companies, and it forces businesses to continually innovate in order to offer the highest quality for the lowest cost. Companies like Uber, Lyft, and Airbnb have made certain commodities more accessible to the general populous.
However, the sharing economy may not be limited to the housing and transportation sectors. As discussed in the prior post, because of microgrid technology, the next neighbor-to-neighbor breakout platform could be the energy sector. Under microgrids, individual residencies and businesses own the generation capacity, giving them authority over how they use, store, and perhaps, even sell the energy they produce. Here at the Independence Institute, we have named this possible new market structure, “Uber for Energy”—and we believe everyone stands to benefit from it.
“Uber for Energy” reduces the need for transmission lines and electric utilities, which could potentially cause rates to fall. Contracts will exist between one neighbor and the next, and remaining utilities will have to compete with peer-to-peer owners and operators. It’s a model where service has the potential to be highly personalized, with much less red tape and unnecessary regulation that strips the consumer of their autonomy. For those disadvantaged by a monopoly system, converting to a decentralized business model will give the average person more control over how his or her electricity is bought, stored, or sold.
It’s a transition that also will offer individuals an ability to supplement their income by selling excess energy, just as an Airbnb host does by renting out a spare room. This is perhaps the most enticing aspect of a microgrid business model. Entrepreneurs and people interested in making a few extra bucks will be able to install higher generating capacity and sell the extra wattage to neighbors and the surrounding community.
Moreover, neighbor-to-neighbor electricity markets also have social benefits. They could help form new communities while strengthening existing ones because of the face-to-face business dealings that accompany a market with a more individualized approach.
Currently, the power sector provides very few alternatives for consumers. And as evidenced by Texas, transitioning to a deregulated market may not be the solution to what many Coloradans endure under our regulated system.
Here at Independence, we believe “Uber for Energy” is poised to alter the energy market and liberate ratepayers from the electricity cartel. Microgrid technology is an option for the individual. It’s the freedom to choose and the freedom to sell. Like Airbnb and Lyft, “Uber for Energy” is an exciting free market solution to an outdated business model.
Casey Freeman is an intern in the Energy & Environmental Policy Center at the Independence Institute. She is pursuing a bachelor’s degree in political science with a focus on legal studies from the Metropolitan State University of Denver.