• Energy Research

The importance of independent aggregators has been acknowledged in the recently adopted EU Clean Energy Package (CEP). The CEP obliges all Member States to develop a regulatory framework to allow these players to enter the market, but it leaves many of the details of implementation to the national level. In this paper, we take stock of current practices in regulating the contractual relationship between the supplier and the independent aggregator. The actions of an independent aggregator can cause an imbalance in a supplier’s portfolio, and suppliers have also asked for a compensation payment for forgone revenues. We find that the first issue has been handled with a perimeter correction in most countries, while the second issue is more controversial. The need for a compensation payment has been challenged and many different compensation models are being tested. We distinguish between the regulated, the corrected, and the contracted model. We conclude that more guidance is needed at EU-level for convergence on a more harmonized approach.

Abstract The role of DSOs is evolving due to the increasing penetration of intermittent and distributed energy resources in the distribution system. On the one hand, TSOs are accessing flexibility resources connected to the distribution grid. On the other hand, DSOs are actively managing distribution grid congestion, moving away from the conventional fit and forget approach. As a result, the need for DSO-TSO cooperation has become increasingly important. In this study, we first discuss market and grid operation issues related to different system states and the corresponding congestion management approaches, in the context of the European electricity market design and regulation. Second, we discuss viable solutions that are inspired by inter-TSO cooperation solutions as well as solutions that are being adopted by DSOs. Our findings show that the issues are rather similar both at transmission and distribution level; however, the need for cooperation and the solutions will depend on where structural congestion will occur and which borders will be managed. We also note that cooperation between DSOs as well as between DSOs and microgrids could become more important with the development of local energy markets in the long term.

Nowadays, the European electricity systems are evolving towards a generation mix that is more decentralised, less predictable and less flexible to operate. In this context, additional flexibility is expected to be provided by the demand side. Thus, how to engage consumers to participate in demand response is becoming a pressing issue. In this paper, we provide an analytical framework to assess consumers’ potential and willingness to participate in active demand response from a contract perspective. On that basis, we present policy recommendations to empower and protect consumers in their shift to active demand response participants.

In this age of low-cost capital and stimulus packages, is it the best time to heavily invest in tomorrow’s energy networks and research infrastructure? In the academic literature it is widely acknowledged that innovation is key to decarbonising the energy sector and fostering sustainable development. However, post liberalisation has been struggling to promote R&D and innovation. Is this a case of business, regulatory, or policy failure, or are there other factors involved? In this paper, we discuss the reasons for slow uptake of new technologies in energy networks and propose some remedies for the European context, where innovation in the area of energy networks is crucial for the implementation of the Green Transition. The solutions to address this shortfall need to be considered in an overarching manner. The specific points raised here are based on incentive regulation, the establishment of competitive funding models like Ofgem’s Low Carbon Network Fund, and a large European collaborative research hub.

Abstract In 2001, the European Commission (hereafter “EC”) formulated an ambitious target of 21% of total community electricity consumption to be generated with renewable energy sources by 2010. Moreover, national indicative targets per Member State were specified. In practice, the latter are implemented in all Member States as national production targets, achievable exclusively through an increase of the domestic production of electricity produced from renewable energy sources (hereafter “RES-E”). However, in this article it will be shown that this is not in line with the EC's intent. Looking at the legislative process resulting in the Directive on the promotion of RES-E, it is demonstrated that instead the EC aimed for European trade in renewable electricity through national consumption targets. It is shown that the legislative process has resulted in confusion on both the nature (absolute or proportional figures) and the subject (consumption or production) of the RES-E targets that are being aimed for. Despite the EC's attempt to clarify this confusion, the reality of national production targets remains, hindering the attainment of the European RES-E target in the most cost-efficient manner.

From a national market perspective, taking transmission capacity into account reduces current concentration measures, although they remain fairly high even after substantial capacity increases. From an international perspective, a more efficient use of current transmission capacity by coupling regional markets can increase competition. That suggests it may not be appropriate to assess market concentration using national market shares.

Abstract The European Union (EU) market integration is leading to increasingly monopolistic electricity market infrastructures, which has opened a debate on the regulation of these so-called power exchanges. In this paper, we start by stating that there are two types of power exchanges in Europe, i.e. “merchant” and “cost-of-service regulated” power exchanges. We then discuss how regulation can be used to better align their incentives with the main power exchange tasks. We conclude that adopting the cost-of-service regulated model for all power exchanges in Europe could be counterproductive in the current context, but that regulation can help ensure that the benefits of the EU market integration materialize. Promising regulatory actions include tempering the reinforced market power of power exchanges, and quality-of-service regulation for the ongoing cooperation among power exchanges to organize trade across borders.