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The Role of Distribution Network Operators in Promoting Cost-Effective Distributed Generation: Lessons from the United States for Europe

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  • Karim L. Anaya
  • Michael G. Pollitt

Abstract

We explore the different competitive mechanisms applied by electric utilities from the USA in promoting cost-effective Distribution Generation (DG) resources and the challenges that they face due to the increase in DG connections. Case studies from California, Oregon, Colorado and New York are discussed. The case studies refer to two kinds of competitive mechanisms: Request for Proposals (RFP) and auctions (Renewable Auction Mechanism). The study proposes an auction design with a focus on the UK context and examines the role of energy regulators in auction mechanisms. We think that the experience described in the four case studies can be replicated by Distribution System Operators (DSOs) in Europe, however unbundling rules established in the EC third package need to be taken into consideration.

Suggested Citation

  • Karim L. Anaya & Michael G. Pollitt, 2014. "The Role of Distribution Network Operators in Promoting Cost-Effective Distributed Generation: Lessons from the United States for Europe," Cambridge Working Papers in Economics 1448, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1448
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    References listed on IDEAS

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    1. Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
    2. Mastropietro, Paolo & Batlle, Carlos & Barroso, Luiz A. & Rodilla, Pablo, 2014. "Electricity auctions in South America: Towards convergence of system adequacy and RES-E support," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 375-385.
    3. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
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    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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