Introduction and Key Messages from the DG-GRID project

Transcription

1 Introduction and Key Messages from the DG-GRID project Martin Scheepers ECN Policy Studies (project coordinator) DG-GRID & ELEP Final Seminar, Brussels, June 5,

2 What is the DG-GRID project? EU research project: DG TREN Duration: January 2005 June 2007 Budget: 957,890 (EU contribution: 50%) Carried out by: Main Objective: Benefit: 9 research institutes and universities Improvement of regulatory arrangements between distributed generation and the electricity distribution network Larger deployment of distributed generation at lower costs and secured reliable electricity supply 2 June 5,

3 Project partners 3 June 5,

4 Results of the DG-GRID project 1. Review current regulatory framework 2. Effect of a large DG penetration on operational and capital expenditures 3. Impact on the regulated DSO business 4. Innovation and network regulation 5. Recommendations and guidelines 4 June 5,

5 1. Review current regulatory framework Dominating Barriers Survey EU 15 Lack of incentive for DSO (11 MS) Electricity Directive Connection charges Procedural barriers network access Market access Physical network constraints (8 MS) (8 MS) (8 MS) (7 MS) 23/1f 6/3 14/7 Lack of benefit for DG Lack of unbundling Procedural barriers market (4 MS) (4 MS) (3 MS) 23/1f 15 5 June 5,

6 DG-operators Regulator profit Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment Connection charges Use of System charges (Transport + system services) Transport services Ancillary services TSO Connection charges Use of System charges (Transport + system services) Consumers DSO Energy loss compensation Large power producers Distribution grid 6 June 5,

7 2. Effect of a large DG penetration on operational and capital expenditures Problems to solve - DG in rural networks causes voltage rise problems. - DG in urban networks causes fault level increase. Reinforcement costs - At low DG penetration levels reinforcement costs are zero, but they will increase progressively with higher DG penetration. - Also DG-density causes cost increases. Energy losses - DG may initially reduce energy losses, but with higher DG penetration losses will increase. Distribution asset replacement value - DG may reduce power flows through high voltage T&D network assets and possibly postpone network reinforcements. This benefit reduces in case of high DG penetration and high DGdensity. 7 June 5,

8 2. Effect of a large DG penetration on operational and capital expenditures Type of DG - The type of DG (non-intermittent and intermittent) influences network capacity and losses. - Effects are different for rural and urban networks, also because of the different types of DG connected. 8 June 5,

9 DG-operators Regulator profit Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment Connection charges Use of System charges (Transport + system services) Transport services Ancillary services TSO Connection charges Use of System charges (Transport + system services) Consumers DSO Energy loss compensation Large power producers Distribution grid 9 June 5,

10 DG-operators Energy loss compensation Ancillary services Regulator Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment profit Connection charges Use of System charges (Transport + system services) Transport services Ancillary services TSO Connection charges Use of System charges (Transport + system services) DSO Consumers Smart Distribution grid (Active Network Management) 10 June 5,

11 2. Effect of a large DG penetration on operational and capital expenditures Active network management - Reinforcement costs can be reduced with active network management. However, in some high DG-penetration cases costs will be higher than passive network management. - Operational costs (i.e. energy losses, curtailment compensation, labour costs) will increase. This results in higher total costs in some cases. 11 June 5,

12 3. Neutralizing negative effect on the DSOs revenues Extra DSO expenditures - DG may induce extra operational and capital expenditures DSOs should not be compensated through DG connection charges - to guarantee non-discriminatory network access DG connection charges should be based on shallow costs (i.e. direct costs of the connection) DG-integration costs should be socialized - DG-integration costs socialized among consumers and DG operators through Use of System charges - Use of System charges should be cost reflective - Preferably differentiated by location and time of use - Should be positive (if network costs are increased due to DG operation) or might also be negative (if the network savings are greater than the costs) 12 June 5,

13 3. Neutralizing negative effect on the DSOs revenues DSOs revenues should be calculated taking into account the incremental effect on OPEX and CAPEX related to DG integration - Allowance for DG in regulated asset base (RAB) - Allowance for a direct revenue driver - DSO benchmarking considering DG as cost driver - Tariff adjustment factor (ex post) 13 June 5,

14 4. Innovation and network regulation Need for innovation - Innovation is necessary to accommodate a rising DG share more cost efficient - DSOs have a role to play in developing network innovations, but have mainly been risk averse resulting in a low innovation business Role of regulators - Regulator needs to provide incentives for innovations - At the moment many regulatory approaches hamper innovations - Short-term efficiency instead of long-term development and innovation System transformation - Transformation of the overall network structure beyond incremental innovations - Is incentive regulation sufficient to coordinate different actors changing different system components? - Development of regulatoy scenarios with a shared vision 14 June 5,

15 5. Recommendations and guidelines At two levels - General recommendations formulated at the EU level - Specific recommendations for current regulation in 8 EU member states In two categories - Improvement of DSO regulation for enhancing the share of DG - Economic signals to DG to achieve its active integration in distribution networks 15 June 5,

16 5. Recommendations and guidelines DSO unbundling - R1: National compliance on DSO unbundling - R2: Exemption clause on DSO unbundling DSO revenues and incentives to integrate DG - R3: Network planning taking into account DG - R4: Incremental OPEX + CAPEX due to DG - R5: DSO performance on energy losses - R6: DSO performance on quality of service DSO incentives for innovation - R7: Network innovations to integrate DG and long-term network transformation Enhancing DG network integration - R8: DG support mechanisms - R9: Connection charges - R10: Use of system charges - R11: DG ancillary and other network services 16 June 5,

17 Thank you for your attention DG-GRID & ELEP Final Seminar, Brussels, June 5,