The role of Distribution System Operators in the energy value chain used to be clear. Energy was produced centrally, transported over large distances via the transmission network, and then distributed via the distribution network to end-consumers. DSOs were in charge of the distribution networks. Today there are however many new activities in the energy value chain, and it is not always clear to whom these activities belong. These grey areas are an interesting and exciting domain for regulatory practice and research.
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The emerging regulatory practice for new businesses related to distribution grids
New FSR policy brief
by: HADUSH Samson, MEEUS Leonardo
Activities related to new businesses, such as market facilitation (e.g. data hub operation), electrical storage, and electric vehicle- charging infrastructure are grey areas in regulation; In these grey areas, there is potential for a market approach, but there are also conditions which can prompt the involvement of DSOs; By taking stock of the emerging regulatory practice, we have identified the main elements that regulators need to consider when moving into these grey areas; If the approach is market based, the regulator needs to design the market; and check whether there is a need to correct market failures. To involve the DSOs is one way, but not the only way, to correct the market failures for new businesses; If the approach is to engage with the DSOs, the role of the regulator is to define the scope of the DSO involvement; to consider dedicated quality of service regulations for each of the new businesses that the DSO is involved in; and to make sure that the DSOs have sufficient incentives to innovate when investing in new businesses; The role of the DSOs in the energy value chain is diverging in Europe, which might be an issue for the ongoing market integration.