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Locational signals to reduce network investments in smart distribution grids: What works and what not?

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  • Brandstätt, Christine
  • Brunekreeft, Gert
  • Friedrichsen, Nele
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    Abstract

    Locational pricing can reduce the investment needs arising in distribution networks from the transformation towards smart grids with high shares of renewable generation. We analyse different approaches. Locational signals in a general tariff plan for either energy or network pricing require substantial system reform which impedes feasibility. We propose smart contracts with locational elements as hybrid form. System reform is only modest since contractual solutions emerge in smart grids anyhow. The responsibility for tariff setting stays with the network operator. The regulator’s task is limited to incentivizing efficient network investment and allowing network operators maximum flexibility in contract design.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0957178711000373
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    Bibliographic Info

    Article provided by Elsevier in its journal Utilities Policy.

    Volume (Year): 19 (2011)
    Issue (Month): 4 ()
    Pages: 244-254

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    Handle: RePEc:eee:juipol:v:19:y:2011:i:4:p:244-254

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    Web page: http://www.elsevier.com/locate/inca/30478

    Related research

    Keywords: Network investment; Distribution networks; Locational pricing; Smart grid;

    References

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    1. Faruqui, Ahmad & Hledik, Ryan & Tsoukalis, John, 2009. "The Power of Dynamic Pricing," The Electricity Journal, Elsevier, vol. 22(3), pages 42-56, April.
    2. Barth, Rüdiger & Weber, Christoph & Swider, Derk J., 2008. "Distribution of costs induced by the integration of RES-E power," Energy Policy, Elsevier, vol. 36(8), pages 3097-3105, August.
    3. 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.
    4. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
    5. Shaw, Rita & Attree, Mike & Jackson, Tim, 2010. "Developing electricity distribution networks and their regulation to support sustainable energy," Energy Policy, Elsevier, vol. 38(10), pages 5927-5937, October.
    6. Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
    7. E. Veldman & M. Geldtmeijer & J. D. Knigge & H. Slootweg, 2010. "Smart Grids Put into Practice: Technological and Regulatory Aspects," Competition and Regulation in Network Industries, Intersentia, vol. 11(3), pages 287-307, September.
    8. Brunekreeft, Gert, 2004. "Market-based investment in electricity transmission networks: controllable flow," Utilities Policy, Elsevier, vol. 12(4), pages 269-281, December.
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    Citations

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    Cited by:
    1. Nele Friedrichsen, 2011. "Governing Smart Grids - the Case for an Independent System Operator," Bremen Energy Working Papers 0011, Bremer Energie Institut.
    2. Christine Brandstätt & Gert Brunekreeft & Nele Friedrichsen, 2011. "Improving Investment Coordination in Electricity Networks Through Smart Contracts," Bremen Energy Working Papers 0010, Bremer Energie Institut.

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