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Smart-grid investments, regulation and organization

Author

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  • AGRELL, Per

    () (Université catholique de Louvain, CORE and LSM, B-1348 Louvain-la-Neuve, Belgium)

  • BOGETOFT, Peter

    () (Copenhagen Business School, Department of Economics, Denmark)

Abstract

Worldwide, but in particular in North America and Europe, the grid infrastructure managers are facing demands for reinvestments in new assets with higher on-grid and off-grid functionality in order to promote energy efficiency and low-carbon conversion of the energy sector. To meet societal policy objectives in terms of carbon dioxide emissions, both the composition of the generators in favor of distributed energy resources (DER) and the load, promoting integration with downstream energy useage, will change. In this paper, we chararcterize some of the effects of new asset investments policy on the network tasks, assets and costs and contrast this with the assumptions implicit or explicit in current economic network regulation. The resulting challenge is identified as the change in the direction of higher asymmetry of information and higher capital intensity, combined with ambiguities in terms of task separation. To provide guidance, we present a model of investment provision under regulation between a distribution system operator (DSO) and a potential investor-generation. The results from the model confirm the hypothesis that network regulation should find a focal point, should integrate externalities in the performance assessment and should avoid wide delegation of contracting-billing for smart-grid investments.

Suggested Citation

  • AGRELL, Per & BOGETOFT, Peter, 2011. "Smart-grid investments, regulation and organization," CORE Discussion Papers 2011072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2011072
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    References listed on IDEAS

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    Cited by:

    1. Koliba, Christopher & DeMenno, Mercy & Brune, Nancy & Zia, Asim, 2014. "The salience and complexity of building, regulating, and governing the smart grid: Lessons from a statewide public–private partnership," Energy Policy, Elsevier, vol. 74(C), pages 243-252.
    2. Crispim, João & Braz, José & Castro, Rui & Esteves, Jorge, 2014. "Smart Grids in the EU with smart regulation: Experiences from the UK, Italy and Portugal," Utilities Policy, Elsevier, vol. 31(C), pages 85-93.
    3. Agrell, Per J. & Brea-Solís, Humberto, 2017. "Capturing heterogeneity in electricity distribution operations: A critical review of latent class modelling," Energy Policy, Elsevier, vol. 104(C), pages 361-372.
    4. Martin-Martínez, F. & Sánchez-Miralles, A. & Rivier, M., 2016. "A literature review of Microgrids: A functional layer based classification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 1133-1153.
    5. repec:eee:appene:v:206:y:2017:i:c:p:22-31 is not listed on IDEAS
    6. Boßmann, Tobias & Eser, Eike Johannes, 2016. "Model-based assessment of demand-response measures—A comprehensive literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1637-1656.
    7. repec:eee:rensus:v:81:y:2018:i:p1:p:524-535 is not listed on IDEAS
    8. Fadaeenejad, M. & Saberian, A.M. & Fadaee, Mohd. & Radzi, M.A.M. & Hizam, H. & AbKadir, M.Z.A., 2014. "The present and future of smart power grid in developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 828-834.
    9. repec:eee:rensus:v:81:y:2018:i:p1:p:1329-1349 is not listed on IDEAS
    10. Agrell, Per J. & Bogetoft, Peter & Mikkers, Misja, 2013. "Smart-grid investments, regulation and organization," Energy Policy, Elsevier, vol. 52(C), pages 656-666.
    11. de Reuver, Mark & van der Lei, Telli & Lukszo, Zofia, 2016. "How should grid operators govern smart grid innovation projects? An embedded case study approach," Energy Policy, Elsevier, vol. 97(C), pages 628-635.
    12. He, Yongxiu & Xu, Yang & Pang, Yuexia & Tian, Huiying & Wu, Rui, 2016. "A regulatory policy to promote renewable energy consumption in China: Review and future evolutionary path," Renewable Energy, Elsevier, vol. 89(C), pages 695-705.
    13. Hall, Stephen & Foxon, Timothy J., 2014. "Values in the Smart Grid: The co-evolving political economy of smart distribution," Energy Policy, Elsevier, vol. 74(C), pages 600-609.
    14. Paulo Moisés Costa & Nuno Bento & Vítor Marques, 2014. "Dealing with Technological Risk in a Regulatory Context: The Case of Smart Grids," GEMF Working Papers 2014-11, GEMF, Faculty of Economics, University of Coimbra.
    15. repec:eee:enepol:v:109:y:2017:i:c:p:794-806 is not listed on IDEAS
    16. Francesco Pasimeni, 2017. "Adoption and Diffusion of Micro-Grids in Italy. An Analysis of Regional Factors Using Agent-Based Modelling," SPRU Working Paper Series 2017-09, SPRU - Science and Technology Policy Research, University of Sussex.
    17. Ruester, Sophia & Schwenen, Sebastian & Batlle, Carlos & Pérez-Arriaga, Ignacio, 2014. "From distribution networks to smart distribution systems: Rethinking the regulation of European electricity DSOs," Utilities Policy, Elsevier, vol. 31(C), pages 229-237.
    18. Munish Manas, 2015. "Development of preferential regulations, transmission tariffs, and critical technological components for the promotion of smart grid globally," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2015(2), pages 107-130.
    19. Balta-Ozkan, Nazmiye & Davidson, Rosemary & Bicket, Martha & Whitmarsh, Lorraine, 2013. "The development of smart homes market in the UK," Energy, Elsevier, vol. 60(C), pages 361-372.

    More about this item

    Keywords

    regulation; energy; networks; investments;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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