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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

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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  • Brandstätt, Christine & Brunekreeft, Gert & Friedrichsen, Nele, 2011. "Locational signals to reduce network investments in smart distribution grids: What works and what not?," Utilities Policy, Elsevier, vol. 19(4), pages 244-254.
    • Handle: RePEc:eee:juipol:v:19:y:2011:i:4:p:244-254
    DOI: 10.1016/j.jup.2011.07.001
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    Cited by:

    1. Azhar Ul-Haq & Carlo Cecati & Essam A. Al-Ammar, 2016. "Modeling of a Photovoltaic-Powered Electric Vehicle Charging Station with Vehicle-to-Grid Implementation," Energies, MDPI, Open Access Journal, vol. 10(1), pages 1-20, December.
    2. Christine Brandstätt & Gert Brunekreeft & Nele Friedrichsen, 2011. "Improving Investment Coordination in Electricity Networks Through Smart Contracts," Bremen Energy Working Papers 0010, Bremen Energy Research.
    3. Meletiou, Alexis & Cambini, Carlo & Masera, Marcelo, 2018. "Regulatory and ownership determinants of unbundling regime choice for European electricity transmission utilities," Utilities Policy, Elsevier, vol. 50(C), pages 13-25.
    4. Banez-Chicharro, Fernando & Olmos, Luis & Ramos, Andres & Latorre, Jesus M., 2017. "Beneficiaries of transmission expansion projects of an expansion plan: An Aumann-Shapley approach," Applied Energy, Elsevier, vol. 195(C), pages 382-401.
    5. Katrin Schmitz & Christoph Weber, 2013. "Does One Design Fit All? On The Transferability Of The PJM Market Design To The German Electricity Market," EWL Working Papers 1302, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Apr 2013.
    6. Nele Friedrichsen, 2011. "Governing Smart Grids - the Case for an Independent System Operator," Bremen Energy Working Papers 0011, Bremen Energy Research.
    7. Claire Bergaentzlé, 2013. "From smart technology to smart consumers: for better system reliability and improved market efficiency," Post-Print halshs-01011169, HAL.
    8. Grimm, Veronika & Grübel, Julia & Rückel, Bastian & Sölch, Christian & Zöttl, Gregor, 2020. "Storage investment and network expansion in distribution networks: The impact of regulatory frameworks," Applied Energy, Elsevier, vol. 262(C).
    9. Roques, Fabien & Finon, Dominique, 2017. "Adapting electricity markets to decarbonisation and security of supply objectives: Toward a hybrid regime?," Energy Policy, Elsevier, vol. 105(C), pages 584-596.
    10. Christine Brandstätt & Gert Brunekreeft & Marius Buchmann & Nele Friedrichsen, 2014. "Information Governance in Smart Grids – A Common Information Platform (CIP)," Bremen Energy Working Papers 0018, Bremen Energy Research.
    11. Grimm, Veronika & Rückel, Bastian & Sölch, Christian & Zöttl, Gregor, 2019. "Regionally differentiated network fees to affect incentives for generation investment," Energy, Elsevier, vol. 177(C), pages 487-502.
    12. Buchmann, Marius, 2017. "The need for competition between decentralized governance approaches for data exchange in smart electricity grids—Fiscal federalism vs. polycentric governance," Journal of Economic Behavior & Organization, Elsevier, vol. 139(C), pages 106-117.
    13. Staudt, Philipp & Schmidt, Marc & Gärttner, Johannes & Weinhardt, Christof, 2018. "A decentralized approach towards resolving transmission grid congestion in Germany using vehicle-to-grid technology," Applied Energy, Elsevier, vol. 230(C), pages 1435-1446.
    14. Farrell, Niall & Devine, Mel T. & Soroudi, Alireza, 2018. "An auction framework to integrate dynamic transmission expansion planning and pay-as-bid wind connection auctions," Applied Energy, Elsevier, vol. 228(C), pages 2462-2477.
    15. Bjoern Felten & Jessica Raasch & Christoph Weber, 2017. "Photovoltaics and Heat Pumps - Limitations of Local Pricing Mechanisms," EWL Working Papers 1702, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Feb 2017.
    16. Felten, Björn & Weber, Christoph, 2018. "The value(s) of flexible heat pumps – Assessment of technical and economic conditions," Applied Energy, Elsevier, vol. 228(C), pages 1292-1319.
    17. Nele Friedrichsen, 2015. "Governing smart grids: the case for an independent system operator," European Journal of Law and Economics, Springer, vol. 39(3), pages 553-572, June.

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