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Negawatt power is the idea of creating incentives to reduce demand for electricity to ease the load at peak times or alleviate the need to build more generation plants. In theory, these negawatts can be aggregated and an arbitrage market could be created to trade these.

The term was coined by Amory Lovins, who saw a typo — "negawatt" instead of "megawatt" — in a Colorado Public Utilities Commission report. He adopted the term to describe electricity that wasn't created due to energy efficiency.[1]

An electricity supplier that needs more electricity can invite suppliers to bid to supply it and invite customers to bid to reduce demand. The electricity supplier can then compare these quotations to establish the most economic alternative. This comparison can refer to peak load management - how much per additional kW to get the power company through the peak load due to air conditioning on an unusually hot day - or may refer to longer-term investments - comparing the cost of building a new power station with the cost of, for instance, providing customers with low energy light bulbs.

A genuine market for negawatts requires regulatory failure elsewhere: the price of electricity at peak times must be lower than the marginal cost of supplying additional peak demand, or there must be constraints on the installation of new capacity.

Establishing a market may require legislation and cooperation between primary producers, distributors, traders and consumers. For instance, generators' income is commonly derived from selling electricity and their cash flow may be reduced by trade in efficiencies, but increasing supply by raising consumption efficiency is often less expensive than building new powerplants.

New markets have developed in several regions across the United States to allow "demand side resources" to participate in wholesale energy markets. These markets are commonly referred to as demand response.

The naming concept could be expanded; cf. negajoules or negawatt-hours. [2]

See also

External links


  1. ^ Kolbert, Elizabeth. "Mr. Green: Environmentalism's most optimistic guru." The New Yorker, 2007-1-22.
  2. ^ Presentation on European Green Paper on Energy Efficiency p. 12


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