Redesigned Electricity Institutions with Micro-Nodal Competitive Markets Reduce Electricity Costs Substantially and Induce Dynamic Energy Innovation

The electricity grid is a collective good that tends toward monopoly. It links private electricity generation to private electricity use. Its institutions converged near-globally at the end of the 20th century. Large-scale producers have separated ownership from transmission system operators. Quasi-markets link them. New challenges and opportunities render that design obsolete. Solar and wind energy are low-cost but intermittent. Decentralized secondary electricity is also becoming low-cost. Fast switches enable real-time adjustments in electricity production and use. Low-cost High-Voltage-Direct-Current lines centralize while also enabling decentralized frequency control. These centralizing and decentralizing options do not fit the currently fragmented markets-and-grids. Their integrated redesign is due, globally. Design elements include: a multi-layered meshed grid; multiple independent grid nodes; market rules that prohibit ownership of multiple linked nodes; real-time nodal pricing; equal prices for all purchasers at a node; and automatic equilibrium across nodes and the entire grid. The new driving mechanisms improve the electricity system’s efficiency and resilience, contributing to several SDGs. They include a single real-time integrated market, car batteries replacing in-grid batteries, and system expansion linked to low-cost renewables. Cost-reduction estimates are high in North America and Northeastern Asia, and are extremely high in Western Europe-Mediterranean, which is very fragmented.