In a two essay dissertation, I study trends in demand side management and on-site generation affecting the electric sector.

My first project studies the interactions between two demand-side management programs, demand response and energy efficiency. Demand response programs offer an incentive to shift electricity consumption from peak periods to off-peak. Energy efficiency programs provide incentives to install appliances and machinery that draw less power. Both programs are beneficial, but their interactions have not been rigorously examined. Using a representative model of a firm's production and society's energy generation, I show that a larger incentive to participate in demand response leads to a reduced investment in energy efficiency. I re-examine the energy efficiency gap caused by environmental externalities of electricity generation and find that policies aiming to close or reduce the energy efficiency gap may fail to achieve their desired outcomes when firms participate in demand response. This analysis facilitates the coordinated design of energy efficiency and demand response incentives.

My second project studies decentralized combined heat and power (CHP) plants. CHP plants generate power, and the exhaust heat from generation is used by an on-site firm. CHP plants are more efficient than a typical power plant and can be configured to maintain operation during grid outages. CHP plants are typically owned and maintained by private operators, but I examine the conditions under which a utility would install CHP plants near customers. I find that the utility's best generation investment strategy follows a Modified Invest/Stay Put/Disinvest Policy, where the Stay Put region of the central inflexible, renewable, and flexible generators is modified depending on which CHP plants are built. Emission taxes are the most effective environmental policy to entice utilities to install generation options that are in society's best interests.