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Incentive Regulation and Network Innovations

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  • Dierk Bauknecht

Abstract

Smart Grids require innovations in the electricity networks, mainly on the level of the distributed system operator (DSO). A main objective is to increase the share of distributed generation (DG) connected to that network level, but also to enable load management on the demand side. This paper analyses network innovations in the context of the regulatory framework, namely incentive regulation. It is structured as follows: The first section examines how cost-based and price-based regulatory schemes influence RD&D by regulated companies. This is followed by a discussion of various regulatory instruments to stimulate innovation. The third section provides a more general discussion of the pros and cons of promoting network innovations via network regulation.

Suggested Citation

  • Dierk Bauknecht, 2011. "Incentive Regulation and Network Innovations," RSCAS Working Papers 2011/02, European University Institute.
  • Handle: RePEc:rsc:rsceui:2011/02
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    Cited by:

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    2. 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.
    3. Cambini, Carlo & Congiu, Raffaele & Jamasb, Tooraj & Llorca, Manuel & Soroush, Golnoush, 2020. "Energy Systems Integration: Implications for public policy," Energy Policy, Elsevier, vol. 143(C).
    4. Stronzik, Marcus, 2013. "Investitions- und Innovationsanreize: Ein Vergleich zwischen Revenue Cap und Yardstick Competition," WIK Discussion Papers 379, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    5. Carlo Cambini & Raffaele Congiu & Golnoush Soroush, 2020. "Regulation, Innovation, and Systems Integration: Evidence from the EU," Energies, MDPI, vol. 13(7), pages 1-18, April.
    6. Stronzik, Marcus, 2011. "Zusammenhang zwischen Anreizregulierung und Eigenkapitalverzinsung. IRIN Working Paper im Rahmen des Arbeitspakets: Smart Grid-gerechte Weiterentwicklung der Anreizregulierung," WIK Discussion Papers 357, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    7. Schittekatte, Tim & Meeus, Leonardo & Jamasb, Tooraj & Llorca, Manuel, 2021. "Regulatory experimentation in energy: Three pioneer countries and lessons for the green transition," Energy Policy, Elsevier, vol. 156(C).
    8. Nele Friedrichsen & Christine Brandstätt & Gert Brunekreeft, 2014. "The need for more flexibility in the regulation of smart grids – stakeholder involvement," International Economics and Economic Policy, Springer, vol. 11(1), pages 261-275, February.
    9. Jesse D. Jenkins & Ignacio J. Pérez-Arriaga, 2017. "Improved Regulatory Approaches for the Remuneration of Electricity Distribution Utilities with High Penetrations of Distributed Energy Resources," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    10. Jamasb, Tooraj & Llorca, Manuel & Meeus, Leonardo & Schittekatte, Tim, 2020. "Energy Network Innovation for Green Transition: Economic Issues and Regulatory Options," Working Papers 18-2020, Copenhagen Business School, Department of Economics.
    11. Gert Brunekreeft & Julia Kusznir & Roland Meyer, 2020. "Output-orientierte Regulierung – ein Überblick," Bremen Energy Working Papers 0035, Bremen Energy Research.
    12. Marques, Vítor & Costa, Paulo Moisés & Bento, Nuno, 2022. "Greater than the sum: On regulating innovation in electricity distribution networks with externalities," Utilities Policy, Elsevier, vol. 79(C).
    13. de Sépibus, Joëlle, 2013. "The Integration of Electricity from Renewable Energy Sources in the European Union Electricity Market – The case for “Smart Grids”," Papers 621, World Trade Institute.
    14. Nykamp, Stefan & Andor, Mark & Hurink, Johann L., 2012. "‘Standard’ incentive regulation hinders the integration of renewable energy generation," Energy Policy, Elsevier, vol. 47(C), pages 222-237.
    15. Spiros Livieratos & Vasiliki-Emmanouela Vogiatzaki & Panayotis G. Cottis, 2013. "A Generic Framework for the Evaluation of the Benefits Expected from the Smart Grid," Energies, MDPI, vol. 6(2), pages 1-21, February.
    16. Ribeiro, Beatriz Couto & Ferrero, Luciane Graziele Pereira & Bin, Adriana & Blind, Knut, 2023. "Effects of innovation stimuli regulation in the electricity sector: A quantitative study on European countries," Energy Economics, Elsevier, vol. 118(C).
    17. 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.
    18. Biancardi, Andrea & Di Castelnuovo, Matteo & Staffell, Iain, 2021. "A framework to evaluate how European Transmission System Operators approach innovation," Energy Policy, Elsevier, vol. 158(C).
    19. Rahmatallah Poudineh & Donna Peng & Seyed Reza Mirnezami, 2020. "Innovation in regulated electricity networks: Incentivising tasks with highly uncertain outcomes," Competition and Regulation in Network Industries, , vol. 21(2), pages 166-192, June.

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    Keywords

    incentive regulation; price-based regulation; cost-based regulation; Rd&D; network innovations;
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