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Towards a future with large penetration of distributed generation: Is the current regulation of electricity distribution ready? Regulatory recommendations under a European perspective

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  • Cossent, Rafael
  • Gómez, Tomás
  • Frías, Pablo
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    Abstract

    The European Energy Policy promotes renewable energy sources and energy efficiency as means to mitigate environmental impact, increase security of supply and ensure economic competitiveness. As a result, the penetration levels of distributed generation (DG) in electricity networks are bound to increase. Distribution networks and distribution system operators (DSOs) will be especially affected by growing levels of DG. This paper reviews the current regulation of distribution in the European Union Member States, focusing on those aspects that might hinder the future integration of DG. Several regulatory issues that may hinder a successful integration of DG have been identified. Recommendations to improve the current situation are proposed. Regarding economic signals sent to DG, connection charges and cost-reflective use-of-system charges together with incentives to provide ancillary services are the key aspects. Concerning DSOs regulation, unbundling from generation and supply according to the European Electricity Directive, incentives for optimal planning and network operation considering DG, including energy losses and quality of service, and innovation schemes to migrate to active networks are the most relevant topics.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 37 (2009)
    Issue (Month): 3 (March)
    Pages: 1145-1155

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    Handle: RePEc:eee:enepol:v:37:y:2009:i:3:p:1145-1155

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    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Distribution system operator Distributed generation Regulation;

    References

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    1. Maribu, Karl Magnus & Firestone, Ryan M. & Marnay, Chris & Siddiqui, Afzal S., 2007. "Distributed energy resources market diffusion model," Energy Policy, Elsevier, vol. 35(9), pages 4471-4484, September.
    2. Joskow, Paul L., 2005. "Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks," Working paper 255, Regulation2point0.
    3. Pepermans, G. & Driesen, J. & Haeseldonckx, D. & Belmans, R. & D'haeseleer, W., 2005. "Distributed generation: definition, benefits and issues," Energy Policy, Elsevier, vol. 33(6), pages 787-798, April.
    4. Jamasb, Tooraj & Pollitt, Michael, 2003. "International benchmarking and regulation: an application to European electricity distribution utilities," Energy Policy, Elsevier, vol. 31(15), pages 1609-1622, December.
    5. Reiche, Danyel & Bechberger, Mischa, 2004. "Policy differences in the promotion of renewable energies in the EU member states," Energy Policy, Elsevier, vol. 32(7), pages 843-849, May.
    6. Giannakis, Dimitrios & Jamasb, Tooraj & Pollitt, Michael, 2005. "Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution networks," Energy Policy, Elsevier, vol. 33(17), pages 2256-2271, November.
    7. Rodri­guez Ortega, Mari­a Pi­a & Pérez-Arriaga, J. Ignacio & Abbad, Juan Rivier & González, Jesús Peco, 2008. "Distribution network tariffs: A closed question?," Energy Policy, Elsevier, vol. 36(5), pages 1712-1725, May.
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    Citations

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    Cited by:
    1. Richard Green and Nicholas Vasilakos, 2012. "Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    2. Pagani, Giuliano Andrea & Aiello, Marco, 2014. "Power grid complex network evolutions for the smart grid," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 396(C), pages 248-266.
    3. Miskinis, Vaclovas & Norvaisa, Egidijus & Galinis, Arvydas & Konstantinaviciute, Inga, 2011. "Trends of distributed generation development in Lithuania," Energy Policy, Elsevier, vol. 39(8), pages 4656-4663, August.
    4. Mah, Daphne Ngar-yin & Wu, Yun-Ying & Ip, Jasper Chi-man & Hills, Peter Ronald, 2013. "The role of the state in sustainable energy transitions: A case study of large smart grid demonstration projects in Japan," Energy Policy, Elsevier, vol. 63(C), pages 726-737.
    5. Blokhuis, Erik & Brouwers, Bart & van der Putten, Eric & Schaefer, Wim, 2011. "Peak loads and network investments in sustainable energy transitions," Energy Policy, Elsevier, vol. 39(10), pages 6220-6233, October.
    6. Cossent, Rafael & Gómez, Tomás, 2013. "Implementing incentive compatible menus of contracts to regulate electricity distribution investments," Utilities Policy, Elsevier, vol. 27(C), pages 28-38.
    7. Niesten, Eva, 2010. "Network investments and the integration of distributed generation: Regulatory recommendations for the Dutch electricity industry," Energy Policy, Elsevier, vol. 38(8), pages 4355-4362, August.
    8. Tapia-Ahumada, K. & Pérez-Arriaga, I.J. & Moniz, E.J., 2013. "A methodology for understanding the impacts of large-scale penetration of micro-combined heat and power," Energy Policy, Elsevier, vol. 61(C), pages 496-512.
    9. Lo Schiavo, Luca & Delfanti, Maurizio & Fumagalli, Elena & Olivieri, Valeria, 2013. "Changing the regulation for regulating the change: Innovation-driven regulatory developments for smart grids, smart metering and e-mobility in Italy," Energy Policy, Elsevier, vol. 57(C), pages 506-517.
    10. Dupont, B. & De Jonghe, C. & Olmos, L. & Belmans, R., 2014. "Demand response with locational dynamic pricing to support the integration of renewables," Energy Policy, Elsevier, vol. 67(C), pages 344-354.
    11. Skoufa, Lucas & Tamaschke, Rick, 2011. "Carbon prices, institutions, technology and electricity generation firms in two Australian states," Energy Policy, Elsevier, vol. 39(5), pages 2606-2614, May.
    12. Cossent, Rafael & Gómez, Tomás & Olmos, Luis, 2011. "Large-scale integration of renewable and distributed generation of electricity in Spain: Current situation and future needs," Energy Policy, Elsevier, vol. 39(12), pages 8078-8087.

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