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Incentive Regulation and Network Innovations
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1028-3625
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EUI RSCAS; 2011/02; Loyola de Palacio Programme on Energy Policy
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BAUKNECHT, Dierk, Incentive Regulation and Network Innovations, EUI RSCAS, 2011/02, Loyola de Palacio Programme on Energy Policy - https://hdl.handle.net/1814/15481
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.