EURELECTRIC Conference
“How Will Smart Grids Change the Face of Europe’s
Electricity Distribution and Consumption?”
13-14 April 2010, Brussels
Hotel Renaissance, Rue du
Parnasse 19, 1050 Brussels
Session IV:
Predictable Regulatory and Legislative Framework – The Way Forward
“The
Smart Grids debate has been led by technology” Andy Phelps,
Director of Regulation in UK’s Energy Networks Association and
member of EURELECTRIC Networks Committee said while presenting his
views on incentive regulation for smart grids.
“There
will be different solutions for different networks, and different
parts of networks have to accommodate the consequences of moving to
a low carbon economy” he underlined. With regard to regulation,
he stressed the need to create a stable and transparent framework
allowing companies to make a return reflecting the risks involved.
Maintaining investor confidence to ensure that the required
investment will be financed and will be more innovative in allowing
anticipatory investment is also relevant for the new regulatory
framework, as well as providing strong incentives for long term
efficient delivery, defining longer term view of efficiency, and
clearly specifying the roles of the key players.
“Appropriate
demonstration projects and coordination and dissemination of lessons
learned are key challenges for the Smart Grid deployment coming from
regulation” emphasised Manuel Sánchez Jiménez of the
European Commission DG for Energy.
According to
the Commission, network owners and operators are in a position to
initiate the transition towards Smart Grids and will be responsible
for most of the investments. However, “this requires the support
of legislators and regulators to provide the framework for
incentives, criteria and obligations for “smart” investments” he
underlined, adding that “more than € 400 million euros have been
spent on projects for Smart Grids in the last 4-5 years”.
With regard
to the EC Task Force on Smart Grids, the key topics and initial
efforts to consider within the work programme include: expected
services and functionalities, empowering consumers, supporting power
system security, regulated and competitive markets and the
implementation and coordination of the first steps.
“The
current network regulation focuses on efficient network investment,
while the extent of change is not yet clear in future regulation,
but looking for innovation and challenge to current practices”
Sarah Deasley, Director at Frontier Economics said when
introducing the challenges for regulators.
Ofgem has
introduced the Low Carbon Networks (LCN) Fund aiming to incentivise
DNOs to facilitate the move to a low carbon economy, and about
£500m will be made available in the UK for electricity
distribution network trialing over next 5 years.
Collaboration is very
important; new knowledge is fundamentally important and funding
leverage is something in which the industry should have an interest
in. “Network regulation needs to change…to
discover whether change is required”
she concluded.
Concluding the Conference, Peter Birkner, Chairman of the
Networks Committee stressed the need for a predictable and
transparent regulatory framework for the European electricity
market. “We view an appropriate return as a basic prerequisite
for investment, and we also recommend harmonising rules across
Europe as far as possible. We call upon governments and regulatory
authorities to work together towards an optimised business model for
all parts of the value chain, from generators to consumers, so as to
minimise total costs”.
Regulators need to take appropriate measures to support the
development of smart grids, allowing a fair rate of return when DSOs
contribute to meeting efficiency and RES targets, which means
approximately 35 % of all electricity will be generated from
renewable sources. He underlined that “Regulators need to provide
incentives to DSOs for their involvement in R&D work and for the
development and deployment of new technologies supporting smart
grids”. These incentives should be further increased.
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