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Electricity distribution networks: Changing regulatory approaches

Nature Energy volume 1, Article number: 16139 (2016) Cite this article

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Increasing the penetration of distributed generation and smart grid technologies requires substantial investments. A study proposes an innovative approach that combines four regulatory tools to provide economic incentives for distribution system operators to facilitate these innovative practices.

The rapidly increasing adoption of distributed energy resources (DERs) is transforming the delivery of electricity services and the use and management of distribution systems in many countries. Distribution system operators (DSOs) now need to provide connections to both standard consumers and users of DERs. New network investments such as network reinforcements and new lines, transformers and switchboards — as well as additional operational expenditures — are required in order to connect to the electrical grid and to manage the activity of DERs. Therefore, DER integration not only impacts the short-term costs borne by DSOs but also involves risks and uncertainties regarding system reliability, security, and network planning1 that affect the entire cost structures of DSOs and their long-term financial stability. Consequently, the integration of DERs should be explicitly included within the regulatory framework of DSOs to achieve efficiency in all network-related functions. Writing in The Energy Journal, Jesse Jenkins and Ignacio Pérez-Arriaga from MIT and Comillas Pontifical University now provide a regulatory approach to account for the high penetration of DERs while guaranteeing an appropriate level of remuneration for the DSOs2.

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Figure 1: The ex ante regulatory process (top) represents the activities necessary to define the evolution of the network costs and expenditure over the upcoming regulatory period.

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  1. Carlo Cambini is in the Department of Management and Industrial Engineering, Politecnico di Torino, Corso Duca degli Abruzzi 24, 10129 Turin, Italy.,

    Carlo Cambini

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  1. Carlo Cambini
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Correspondence to Carlo Cambini.

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Cambini, C. Electricity distribution networks: Changing regulatory approaches. Nat Energy 1, 16139 (2016). https://doi.org/10.1038/nenergy.2016.139

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