Ljubljana, 6 June 2024
Significant enhancement in electricity grid capacity is needed to realise Europe’s decarbonisation objectives and ensure a high level of security of supply. New grid build-out is just one way and proving to be the costliest way to do it. Despite their advantages, innovative solutions are not yet spearheading investment choices.
In the context of the European Commission’s EU Action Plan for Grids, ACER is looking at best practices to promote smart grids and network efficiency technologies through tariff design. Our focus is on legitimate concerns about costs, including more efficient operational expenditure (OPEX) and the capital expenditure (CAPEX) bias, as well as on benefit sharing, affordability and the impact on consumers’ energy bills and whether these concerns will be met (or not) by the choices made in the years ahead by governments, grid owners, energy regulators and others.
ACER has thus commissioned the Florence School of Regulation (FSR) to conduct a study on existing regulatory frameworks and how regulators could incentivise a more efficient use of existing and future electricity grids.
What is in the consultant’s report?
Building on the previous research conducted by FSR on behalf of ACER, this new report by FSR presents:
- An overview of regulatory practices in Europe, the United States and Australia that promote innovation and efficiency in electricity transmission investments.
- A new regulatory scheme which:
- Not only addresses the CAPEX bias (e.g. when regulation incentivises utility companies that favour capital over operational expenditures) but also the common failure of many regulatory frameworks to promote minimum-cost solutions.
- Focuses on the value projects bring (i.e. benefit) and not on their costs. By sharing this benefit between the grid-user and grid-operator, a stronger incentive for technology-neutral solutions is created while mitigating the tariff increase (in comparison to the business as usual, e.g. investing into infrastructure alone).
Access the presentation from today’s launch event.
What’s next at ACER? Have a look at our upcoming events and public consultations.