Negawatt Power - Market

Market

Those who know of negawatts argue that creating a negawatt market would be very difficult to achieve on a large-scale, and may only have a "modest chance" of succeeding. The creator of the term negawatt, Lovins, defines the negawatt market as a way to reduce the gap between the cost of making and saving electricity.

The negawatt market can be thought of as a secondary market where electricity is allocated from areas of less use to areas of greater use. This would be a secondary market, due to the fact that it would reallocate electricity from one consumer to another within the already existing energy market. Some feel that to establish a viable market, legislation and cooperation between primary producers, distributors, traders and consumers, may be required. This proposal would encourage the market to have legislative regulations, while still allowing the market to work within itself to set prices and allocate resources. Emerging markets in carbon trading may ultimately provide a model.

A negawatt market would allow "demand side resources" to participate in wholesale energy markets. These markets are commonly referred to as a demand response. Demand response can be defined as "enrolling large users of energy in programs to lower their usage in return for compensation, which helps take pressure off the grid" This market would help take pressure off the grid because electricity could "be treated as a commodity just like copper or sowbellies," and therefore traded to areas that need it more than others. As any commodity, negawatts would have to be "tradable across time and space" to be an effective market. Being able to trade negawatts across time and space would allow for an international trading system. To create a market for negawatts, energy companies will need to put more focus toward energy efficiency. This shift in focus would require a new "business structure that will thrive in the 'negawatt market'", which has not yet been developed. Market possibilities are being implemented internationally, implying that one day an official negawatt market will become a reality.