Grid regulation in Austria: smart grids incentives or disincentives?

Abstract

On European and national level grid initiatives, technology platforms as well as other stakeholders are debating how the future grid structure should be organized to cope with upcoming challenges like increased distributed deployment of renewable generation. In Austria smart grids are currently one of the most popular suggested grid infrastructure solutions. But on the regulatory level many open questions still remain to be answered. The purpose of this paper is to discuss the question, whether the current regulatory regime in Austria is able to provide sufficient incentives for distribution grid operators to invest in such innovative grid structure options, especially if this requires less capital-intensive investments. Thereby, the actual power of the so-called carry-over mechanism is discussed and an analytical framework demonstrates the required shape of the carry-over rate in order to impose sufficient incentives. Additionally, an inherent rate-of-return regulation -literally through the back door -within the current price cap regime in Austria is identified.Netzregulierung in Ö sterreich: Anreiz oder Barriere f€ ur Smart Grids?Sowohl auf europ€ aischer Ebene als auch national diskutieren Netzinitiativen, Technologieplattformen, aber auch andere Stakeholder € uber die M€ oglichkeiten der Gestaltung zuk€ unftiger Netzstrukturen, so dass aufkommende Herausforderungen -wie die zunehmend dezentrale Integration erneuerbarer Energien -bew€ altigt werden k€ onnen. In Ö sterreich sind Smart Grids momentan eine der popul€ arsten L€ osungsvorschl€ age f€ ur die Netzinfrastrukturen. Auf regulatorischer Ebene gibt es jedoch noch viele offene Fragen. Das Ziel dieses Beitrags ist die Diskussion der Frage, ob der aktuelle regulatorische Rahmen in Ö sterreich gen€ ugend Anreize f€ ur Verteilnetzbetreiber zur Verf€ ugung stellt, um diese dazu zu bewegen, in solch innovative Netzstrukturoptionen zu investieren. Vor allem, wenn dies weniger kapitalintensive Investitionen zur Folge hat. Dabei wird der aktuelle und so genannte "Carry-overMechanismus diskutiert. Weiters wird analytisch demonstriert, wie der "Carry-over-Faktor gew€ ahlt werden muss, damit gen€ ugend Anreize entstehen. Zus€ atzlich wird eine im Rahmen des aktuellen Price Cap-Mechanismus auftretende Rate-of-Return-Regulierung identifiziert.

The Impact of Regulation on a Firm’s Incentives to Invest in Emergent Smart Grid Technologies

“…Evidence of little incentives for the DSO to invest in SGs instead of conventional "copper and iron" investments was found in the cases of Germany (Nykamp et al, 2012) and Austria (Prüggler & Bremberger, 2011). The cost structure is expected to change with the deployment of SGs -towards a more significant weight of operational expenditures in overall costs -which has to be taken into account in the calculation of grid tariffs in the future (CEER, 2015).…”

How to engage consumers in demand response: A contract perspective

“…As congestion management through demand response implies an increase of operational expenses instead of capital expenses, a DSO or TSO might prefer grid investments that can be added to the regulatory asset base. Such an element of traditional rate of return regulation would hinder the deployment of innovative solutions that are less capital intensive (Prüggler and Bremberger, 2011). If the regulatory framework in place does not provide a level playing field between demand response and other sources of flexibility, intermediaries' business models that target regulated flexibility services might be seen as infeasible as the procurers of these particular services, i.e.…”