Market and regulatory factors influencing smart-grid investment in Europe: Evidence from pilot projects and implications for reform. (June 2016)

• Record Type: Journal Article
• Authors: Cambini, Carlo; Meletiou, Alexis; Bompard, Ettore; Masera, Marcelo
• Is Part Of: Utilities policy. Volume 40(2016)
• Page Start: 36
• Page End: 47
• Publication Date: 2016-06
• Subjects: Distribution networks -- DSOs -- Market concentration -- Incentive regulation -- Innovation -- Smart grid -- Investment; L51 -- L94 -- L95; Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2016.03.003
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: Electricity distribution system operators (DSOs) are expected to invest heavily in system innovation in the form of smart grids (SG) in order to help achieve energy policy goals. In this context, regulatory reforms to spur DSOs investments are considered a policy priority. Based on a review of the European regulatory status and using a dataset of 459 innovative SG projects, this study focuses on market and regulatory factors and performs a series of statistical tests to investigate how the different factor levels affecting SG investments in Europe. The results show that (1) lower market concentration in the electricity distribution sector (2) the use of incentive-based regulatory schemes; and (3) the adoption of innovation-stimulus mechanisms are key enablers of SG investments. Highlights: Distribution markets that exhibit low concentration prompt SG investments. An incentive-based regulation may offer the most favourable conditions, spurring the deployment of SG innovations. The adoption of innovation stimulus mechanisms by regulators encourages SG pilot investments.