Study of the European regulatory framework for smart grid solutions in future distribution systems

Abstract

Electric distribution systems in Europe are facing significant challenges due to climate change goals, changing market frameworks and technological innovations, which will significantly impact the role of the distribution system operators. The nature and scale of these challenges are strongly driven by the European vision and strategies on climate and energy. This study identifies which policies can become barriers for distribution grid innovation and the implementation of advanced smart grid solutions developed within the UNITED-GRID project. After an extensive review of new policy priority areas within the energy and climate framework and electricity market design, and subsequent discussions with three partner distribution system operators, five priority barriers are identified. The results show that ambitious decarbonisation targets and changing expectations on the distribution system operators' role in the energy system would require more flexible and efficient network management. However, binding income frameworks, lacking incentives for innovation and regulatory uncertainties hinder modernisation in distribution systems. It can be concluded that these concerns increase the risks for distribution system operators and have to be considered by research projects and developers of smart grid solutions in order to implement and achieve market uptake of the developed solutions within the next 5-10 years.