Distributed energy infrastructure paradigm: Community microgrids in a new institutional economics context

Renewable and Sustainable Energy Reviews

Volumn 72, Issue , 2017, Pages 1355-1365

  Gui, Emi Minghui ^a   Diesendorf, Mark ^a   MacGill, Iain ^a  

^a UNIVERSITY OF NEW SOUTH WALES   (Australia)

Author keywords

Community energy system; Institutional structure; Microgrid; New Institutional Economics; Ownership and governance

Indexed keywords

ECONOMICS; INTERNET SERVICE PROVIDERS; INVESTMENTS;

COMMUNITY ENERGY; COMMUNITY ENERGY SYSTEM; DISTRIBUTED ENERGIES; ENERGY SYSTEMS; INSTITUTIONAL STRUCTURE; MICROGRID; NEW INSTITUTIONAL ECONOMICS; OWNERSHIP AND GOVERNANCE; SERVICE PROVIDER; UNCERTAINTY;

UNCERTAINTY ANALYSIS;

EID: 85005847207     PISSN: 13640321     EISSN: 18790690     Source Type: Journal    
DOI: 10.1016/j.rser.2016.10.047     Document Type: Review

References (100)

1. [1] Molyneaux, L., Froome, C., Wagner, L., Foster, J., Australian power: can renewable technologies change the dominant industry view?. Renew Energy 60 (2013), 215–221.
2. [2] Bower, W., Ton, D., Guttromson, R., Glover, S., Stamp, J., Bhatnagar, D., et al. The advanced microgrid integration and interoperability. 2014, Sandia National Laboratories.
3. [3] Pudjianto, D., Ramsay, C., Strbac, G., Microgrids and virtual power plants: concepts to support the integration of distributed energy resources. Proc IMechE A: J Power Energy 222:7 (2008), 731–741.
4. [4] Hawkey, D., Webb, J., Winskel, M., Organisation and governance of urban energy systems: district heating and cooling in the UK. J Clean Prod 50 (2013), 22–31.
5. [5] Garnaut, R., The Garnaut review 2011: australia in the global response to climate change. 2011, Cambridge University Press, Canberra.
6. [6] Rocky Mountain Institute. The economics of grid defection. rocky mountain institute. Available at: 〈〉; 2014.
7. [7] Williams, N., Enabling private sector investment in microgrid-based rural electrification in developing countries: a review. Renew Sustain Energy Rev 52 (2015), 1268–1281.
8. [8] ARENA, Australia's off-grid clean energy market research paper. 2014, Australia Renewable Energy Agency, Canberra.
9. [9] Palit, D., Chaurey, A., Off-grid rural electrification experiences from South Asia: status and best practices. Energy Sustain Dev 15:3 (2011), 266–276.
10. [10] Horne, K., Strahl, J., Bebrin, M., Community microgrid case study and analysis report: analysis and action recommendations for the advancement of community microgrids in New York State based on an assessment of prominent global community microgrid projects. 2015, Navigant Consulting, Inc. [Available at:] 〈http://nyssmartgrid.com/slide/community-microgrid-case-study-and-analysis-report/〉.
11. [11] RMI CWR. Renewable Microgrids: Profiles from islands and remote communities across the globe. Rocky Mountain Institute and Carbon War Room. Available at: < 〈www.rmi.org/island_renewable_microgrids〉> 2015.
12. [12] Haney, A.B., Pollitt, M.G., New models of public ownership in energy. Int Rev. Appl Econ 27:2 (2013), 174–192.
13. [13] Wolsink, M., The research agenda on social acceptance of distributed generation in smart grids: renewable as common pool resources. Renew Sustain Energy Rev 16:1 (2012), 822–835.
14. [14] Ménard, C., Shirley, M.M., The future of new institutional economics: from early intuitions to a new paradigm?. J Inst Econ 10:04 (2014), 541–565.
15. [15] Nye, M., Whitmarsh, L., Foxon, T.J., Sociopsychological perspectives on the active roles of domestic actors in transition to a lower carbon electricity economy. Environ Plan A:42 (2010), 697–714.
16. [16] Lasseter, R., Microgrids and distributed generation. J Energy Eng ASCE 133 (2007), 144–149.
17. [17] Gil, H., Joos, G., On the quantification of the network capacity deferral value of distributed generation. IEEE Trans Power Syst 21:4 (2006), 1592–1599.
18. [18] Su, W., Wang, J Energy Manag Syst Micro Oper Electr J 25:8 (2012), 45–60.
19. [19] Clean Coalition. Community microgrids. Available at: 〈〉; 2015.
20. [20] Rathnayaka, A.J.D., Potdar, V.M., Dillon, T.S., Kuruppu, S., Formation of virtual community groups to manage prosumers in smart grids. Int J Grid Util Comput 6:1 (2015), 47–56.
21. [21] Rathnayaka, A.J.D., Potdar, V.M., Dillon, T.S., Hussain, O., Kuruppu, S., Goal-oriented prosumer community groups for the smart grid. IEEE Tech Soc Mag, 2014, 41–48.
22. [22] MassCEC. Microgrids- benefits, models, barriers and suggested policy initiatives for the Commonwealth of Massachusetts. Massachusetts Clean Energy Center. Available at: 〈〉; 2014.
23. [23] TRCA CDEA. Integrated Community Energy Systems, District Energy and the Provincial Policy Statement: Background Report. Toronto: Toronto and Region Conservation Authority (TRCA) in partnership with the Canadian District Energy Association (CDEA). Available at: < 〈http://www.cagbctoronto.org/files/ICES-DE-PPS_Background_V3.pdf〉> 2012.
24. [24] Mendes, G., Ioakimidis, C., Ferrão, P., On the planning and analysis of Integrated Community Energy Systems: a review and survey of available tools. Renew Sustain Energy Rev 15:9 (2011), 4836–4854.
25. [25] Bolton, R., Foxon, T.J., A socio-technical perspective on low carbon investment challenges – Insights for UK. Energy Policy Environ Innov Soc Transit 14 (2015), 165–181.
26. [26] Kabay, M., Electric power industry as critical infrastructure. 2010, Network World.
27. [27] Bennett, M., Price, C.W., Incentive contracts in utility regulation. Brousseau, E., Glachant, J.-M., (eds.) The economics of contracts: theories and applications, 2002, Cambridge University Press, Cambridge.
28. [28] Productivity Commission, Public infrastructure, draft inquiry report. 2014, Australian Government.
29. [29] Künneke R, Finger M. The governance of infrastructures as common pool resources. WOW4 workshop; 2009.
30. [30] Bolton, R., Foxon, T.J., Infrastructure transformation as a socio-technical process — Implications for the governance of energy distribution networks in the UK. Tech Forecast Soc Change 90 (2015), 538–550.
31. [31] Kopp, A., Transport infrastructure charges as a basis for a quasi-market for road infrastructure services. Routes Roads 332 (2006), 38–51.
32. [32] UNECE. Financing Schemes of Transport Infrastructure. Available at: 〈〉; 2003.
33. [33] OECD, ECMT. Transport infrastructure charges and capacity choice: Self-financing road maintenance and construction, round table 135. OECD and European Conference of Ministers of Transport. Available at: 〈〉; 2007.
34. [34] Coarse, R., The new institutional economics. Am Econ Rev 88:2 (1998), 72–74.
35. [35] North, D., Institutions, institutional change and economic performance. 1990, Cambridge University Press.
36. [36] Williamson, O.E., The New Institutional Economics: Taking stock, looking ahead. J Econ Lit 38 (2000), 595–613.
37. [37] Sykuta, M., Cook, M., A new institutional economics approach to contracts and cooperatives. Am J Agric Econ 83:5 (2001), 1273–1279.
38. [38] Williamson, O.E., Markets and hierarchies: analysis and antitrust implications. 1975, The Free Press, New York.
39. [39] Williamson, O.E., The economic institutions of capitalism. 1985, The Free Press, New York.
40. [40] Williamson, O.E., Economic and organization: a primer. Calif Manag Rev 38:2 (1996), 131–146.
41. [41] Baksh, A., Comparative governance and regulatory restructuring of the electricity utilities industry in the United States. 2006, The University of Utah, Salt Lake City.
42. [42] Williamson, O.E., Transaction-cost economics: the governance of contractual relations. J Law Econ 22:2 (1979), 233–261.
43. [43] Williamson, O.E., The economics of organization: the transaction cost approach. Am J Socio 87:3 (1981), 548–577.
44. [44] Da Silva, C., Saes, M., Governance structure and transaction cost: relationship between strategy and asset specificity Nova. Nova Econ Belo Horiz 17:3 (2007), 443–468.
45. [45] Grossman, S.J., Hart, O.D., The costs and benefits of ownership: a theory of vertical and lateral. Integr J Polit Econ 94:4 (1986), 691–719.
46. [46] Goldthau, A., Rethinking the governance of energy infrastructure: scale, decentralization and polycentrism. Energy Res Soc Sci 1 (2014), 134–140.
47. [47] Stoker, G., Governance as theory: five propositions. Int Soc Sci J 155:1 (1998), 17–28.
48. [48] Henisz, W.J., Levitt, R.E., Scott, W.R., Toward a unified theory of project governance: economic, sociological and psychological supports for relational contracting. Eng Proj Organ J 2:1–2 (2012), 37–55.
49. [49] Khan, J., What role for network governance in urban low carbon transitions?. J Clean Prod 50 (2013), 133–139.
50. [50] Scott R, Triantis G. Incomplete contracts and the theory of contract design. C West Res Law Rev 2005;1: p. 187–201.
51. [51] Local Energy Scotland. Local Energy Scotland. Available at: 〈〉; 2016.
52. [52] Mancarella P, Pudjianto DH3 D. Business cases for microgrids. Advanced architectures and control concepts for more microgrids. STREP project funded by the EC under 6FP. Available at: < 〈www.microgrids.eu/documents/682.pdf〉> 2009.
53. [53] Wüstenhagen, R., Wolsink, M., Bürer, M.J., Social acceptance of renewable energy innovation: an introduction to the concept. Energy Policy 35:5 (2007), 2683–2691.
54. [54] Seidel, T., Inefficiencies of quasi-market solutions from an institutional perspective: a qualitative case study comparison of local public transportation in six cities in Germany and Finland. 2015, University of Tempere, Tempere.
55. [55] Jensen, M., Meckling, W., Theory of the firm: managerial behaviour, agency costs and ownership structure. J Financ Econ 3:4 (1976), 305–360.
56. [56] Koo, J., Yoon, G.S., Hwang, I., Barnerjee, S.G., A pitfall of private participation in infrastructure: a case of power service in developing Countries. 43, 2012, Am Rev Public Adm, 674–689.
57. [57] Mahoney, J., Economic foundations of strategy. 2005, Sage, Thousand Oaks.
58. [58] Hart, O., Firms, contracts, and financial structure. 1995, Oxford University Press, New York.
59. [59] Besley, T., Ghatak, M., Government versus private ownership of public goods. Quart J Econ 116 (2001), 1343–1372.
60. [60] Schmitz, P.W., Incomplete contracts and optimal ownership of public goods. Econ Lett 118:1 (2013), 94–96.
61. [61] Laffont, J.-J., Tirole, J., A theory of Incentives in Procurement and Regulation. 1993, MIT Press, London.
62. [62] Hart, O., Shieifer, A., Vishny, R., The proper scope of government: theory and an application to prisons. Quart J Econ CXII (1997), 1119–1158.
63. [63] Rogerson, W., Contractual solutions to the hold-up problem. Rev Econ Stud 4:59 (1992), 777–793.
64. [64] ITF, OECD. (International Transport Forum). Transport infrastructure investment: options for efficiency. 23rd PIARC World Road Congress; 2007.
65. [65] Diffney, S., Gerald, J.F., Lyons, S., Valeri, L.M., Investment in electricity infrastructure in a small isolated market: the case of Ireland. Oxf Rev Econ Policy 25:3 (2009), 469–487.
66. [66] Mittlefehldt, S., Tedford, C., Benefit or burden? Environmental justice and community-scale biomass energy systems in vermont. Environ Justice 7:4 (2014), 110–114.
67. [67] Chhotray, V., Stoker, G., Governance theory and practice: a cross-disciplinary approach. 2009, Palgrave Macmillan.
68. [68] Batta, J., Factors driving outsourcing in the public sector. 2011, Alliant International University.
69. [69] Podolny, J., Page, K., Network forms of organization. Annu Rev Socio 24 (1998), 57–76.
70. [70] Lenferink, S., Tillema, T., Arts, J.O.S., Public-private interaction in contracting: governance strategies in the competitive dialogue of dutch infrastructure projects. Public Adm 91:4 (2013), 928–946.
71. [71] Joskow, P.L., Electricity sector restructuring and competition: a transactions-cost perspective. Brousseau, E., Glachant, J.-M., (eds.) The economics of contracts: theories and applications, 2002, Cambrige University Press, Cambridge.
72. [72] Glachant, J.-M., Why regulate deregulated network industries?. J Netw Ind 3 (2002), 297–311.
73. [73] Glachant J-M, Hallack M, editors. The robustness of long-term take-or-pay contracts: What we can learn from the trade in gas between Brazil and Bolivia. 5th Int Conf EU Electr Mark; 2008.
74. [74] Kafka, F., Relational contracting in supplier-supplier-buyer transactions. 1997, University of Pittsburgh, Pittsburgh.
75. [75] Van Der Veen, M., Korthals Altes, W., Contracts and learning in complex urban projects. Int J Urban Reg Res 36:5 (2012), 1053–1075.
76. [76] Van Den Hurk, M., Verhoest, K., The challenge of using standard contracts in public–private partnerships. Public Manag Rev 18:2 (2014), 278–299.
77. [77] Michels, R., Political parties. Glencoe, IL. 1962, Free Press.
78. [78] Williamson, O.E., The economics of governance. Am Econ Rev 95:2 (2005), 1–18.
79. [79] Lajili, K., Mahoney, J., Revisiting agency and transaction costs theory predictions on vertical financial ownership and contracting: electronic integration as an organizational form choice. Manag Decis Econ 27:7 (2006), 573–586.
80. [80] District Energy. Connecticut Municipal Group issues RFQ for help with community microgrids. Available at: 〈〉; 2015.
81. [81] Chmiel, Z., Bhattacharyya, S.C., Analysis of off-grid electricity system at Isle of Eigg (Scotland): Lessons for developing countries. Renew Energy 81 (2015), 578–588.
82. [82] Andrade, C.S., Rosa, L.P., da Silva, N.F., Generation of electric energy in isolated rural communities in the Amazon Region a proposal for the autonomy and sustainability of the local populations. Renew Sustain Energy Rev 15:1 (2011), 493–503.
83. [83] Peterson, H., Wysocki, A., Harsh, S., Strategic choice along the vertical coordination continuum. Int Food Agribus Manag Rev 4:2 (2002), 149–166.
84. [84] Rindfleisch, A., Heide, J., Transaction cost analysis: past, present, and future applications. J Mark 61 (1997), 30–54.
85. [85] Yao, T., Jiang, B., Young, S., Talluri, S., Outsourcing timing, contract selection, and negotiation. Int J Prod Res 48:2 (2010), 305–326.
86. [86] Pasonen R, Hoang H. Microgrids and DER in community planning: Practices, permits, and profitability. Available at: < 〈www.vtt.fi/inf/pdf/technology/2014/T189.pdf〉> 2014.
87. [87] Blank, L., Gegax, D., Objectively designing shared savings incentive mechanisms: an opportunity cost model for electric utility efficiency programs. Electr J 24:9 (2011), 31–40.
88. [88] Hydro Tasmania. King Island renewable energy integration project. Available at: 〈〉; 2015.
89. [89] Jones, K.B., Bartell, S.J.S., Nugent, D., Hart, J., Shrestha, A., The urban microgrid: smart legal and regulatory policies to support electric grid resiliency and climate mitigation. Fordham Urb L J, 2014.
90. [90] Lo Prete, C., Essays on microgrids, asymmetric pricing and market power in electricity markets. 2012, The Johns Hopkins University, Baltimore.
91. [91] Whittington, J., When to partner for public infrastructure?. J Am Plan Assoc 78:3 (2012), 269–285.
92. [92] Thompson, A., A theory of natural gas contracting, and a contingent claim method of evaluating natural gas purchase volume options. 1992, University of Washington, Washington.
93. [93] Niu, B., Zhang, J., Price, capacity and concession period decisions of Pareto-efficient BOT contracts with demand uncertainty. Transp Res E: Logis Transp Rev 53 (2013), 1–14.
94. [94] Jia, N., Competition, governance, and relationship-specific investments: theory and implications for strategy. Strateg Manag J 34:13 (2013), 1551–1567.
95. [95] Klein, B., Crawford, R., Alchian, A., Vertical integration, appropriable rents and the competitive contracting process. J Law Econ 21 (1978), 297–300.
96. [96] Hall, D., Lobina, E., Terhorst, P., Re-municipalisation in the early twenty-first century: water in France and energy in Germany. Int Rev Appl Econ 27:2 (2013), 193–214.
97. [97] Beierle, T., Using social goals to evaluate public participation in environmental decisions. Rev Policy Res 16:3–4 (1999), 75–103.
98. [98] Cotton, M., Devine-Wright, P., Making electricity networks "visible": industry actor representations of “publics” and public engagement in infrastructure planning. Public Under Sci 21:1 (2010), 17–35.
99. [99] Fiorino, D., Citizen participation and environmental risk: a survey of institutional mechanisms. Sci Tech Hum Values 15:2 (1990), 226–243.
100. [100] Friedman, A., Miles, S., Stakeholders: theory and practice. 2006, Oxford University Press, Oxford.