Cost, reliability and regulation in electricity networks: mapping the issues

2002 ◽  
Author(s):  
V. Ajodhia
Keyword(s):  
Electricity Networks

An assessment of the tools of incentive regulation in electricity networks

2012 ◽  
pp. 121-152
Author(s):  
Haikel Khalfallah ◽  
Jean-Michel Glachant
Keyword(s):  
Smart Grid ◽  
Cost Efficiency ◽  
Energy Systems ◽  
Active Role ◽  
Incentive Regulation ◽  
Efficient Manner ◽  
Electricity Networks ◽  
Regulatory Aspects ◽  
Key Features

Network regulation is playing an active role in a context of restructuring energy systems for long term transition to a smart grid. Regulation of network companies' activities should consider both cost efficiency objectives and other objectives such as quality and network innovation. It is in this context that incentive regulation tools are discussed and assessed in this paper. The aim is to show their key features and how they could be aligned with the main regulation goals. This paper concludes that they should be considered as complementary tools to address conflicting regulatory aspects in an efficient manner.

scholarly journals Innovation in regulated electricity networks: Incentivising tasks with highly uncertain outcomes

2020 ◽  
Vol 21 (2) ◽  
pp. 166-192 ◽  
Author(s):  
Rahmatallah Poudineh ◽  
Donna Peng ◽  
Seyed Reza Mirnezami
Keyword(s):  
Cost Efficiency ◽  
Risk Attitude ◽  
Risk Profile ◽  
Natural Monopoly ◽  
Innovation Activity ◽  
Project Proposal ◽  
Electricity Networks ◽  
Key Policy ◽  
Uncertain Outcomes ◽  
Regulatory Models

Traditional regulatory models of natural monopoly network utilities are designed to incentivise cost-efficiency, subject to the firm achieving a certain level of reliability. With the rise of decarbonisation as a key policy goal, facilitating innovation in electricity networks has become of vital importance. Innovation and cost-efficiency may overlap and exhibit the same risk profile. However, we show that when there is a difference in their risk profile, incentivising these two tasks using the same incentive scheme is ineffective. This means incentive regulations need to be enhanced with additional modules that take into account the level of risk to which companies are exposed to for their stage of innovation activity. We also demonstrate that the issue of risk can distort the outcome of a competitive scheme for allocating innovation funds when bidders are heterogeneous in their risk attitude and there is uncertainty about recovering initial investments needed to prepare the project proposal. Thus, competitive schemes need to be designed such that they factor in risk attitude heterogeneity among bidders.

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