The clean energy package and demand response: Setting correct incentives

Bert Willems, Juulia Zhou

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Article number5672
JournalEnergies
Volume13
Issue number21
DOIs
Publication statusPublished - Nov 2020

Keywords

  • CONSUMERS
  • ELECTRICITY PRICES
  • FLEXIBILITY
  • GENERATION
  • HEAT-PUMPS
  • IMPACT
  • MANAGEMENT
  • MARKET
  • POWER-SYSTEMS
  • VEHICLES
  • clean energy package
  • demand response
  • incentive regulation
  • network tariffs

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