Work

The Clean Energy Package and Demand Response: Setting Correct Incentives

Year: 2020

Type: article

Abstract: We describe how recent EU regulation affects demand response (DR) and highlight some of the remaining regulatory challenges from a legal and economic viewpoint. With the Clean Energy Package (CEP), the EU has opted for a fully market-based, consumer-centered approach for DR. The development of business models and products is left to a large extent to market forces. However, to enable the efficient development of those DR markets, network regulation has to adapt. (1) Network tariffs have to become more cost-reflective to provide correct incentives to market participants. The capacity tariffs have to increase, net-metering should be abolished, and optional tariff components for providing flexibility may need to be considered. (2) The regulation for distribution system operators (DSOs) may need to be fine-tuned to reflect their new roles. We present three scenarios: (a) a horizontal merger of unbundled DSOs under incentive regulation, (b) a DSO as a subsidiary of an integrated utility under cost plus regulation, (c) a transfer of some activities from DSO to TSO.

Source: Energies

DOI: 10.3390/en13215672

Authors: Bert Willems, Juulia Zhou

Institutions: Tilburg University, Toulouse School of Economics, Université de Toulouse

Language: English

Topic: Energy Law and Policy

Subfield: Information Systems and Management

Field: Decision Sciences

Domain: Social Sciences

SDGs: Affordable and clean energy, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $1,901