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The European Union (EU) transition to a smarter and more sustainable electricity sector is driven by climate change adaptation and technological developments. For the electricity distribution industry, this has contributed to a growing need to understand how these network monopolies should adapt their role, activities, and responsibilities for a redesigned electricity market, given the growth of distributed generation, and the increased control and monitoring capabilities. Considering this, a foresight study on business model innovation, technological adaptation, and market design policy alternatives is presented. A Policy Delphi method was applied, involving two iterative survey rounds and 207 European experts, which assessed 57 policy alternatives. The results highlight adaptation challenges for implementing new technologies and business practices. Experts support innovation and transition to new roles, and innovative services, while warranting that core electricity distribution activities are secured. This shift in roles is expected to be achieved through research and development (R&D) support policies, innovation friendly regulatory frameworks, and concerted actions at the EU and Member States level. The results provide policy-adaptation guidelines for electricity distribution industry stakeholders. [ABSTRACT FROM AUTHOR]

Abstract This paper proposes a set of roles that organizations could play to support the evolution of the electricity distribution business. Role theory is used to describe responsibilities and collaboration patterns for the proposed role set. The study also covers a framework outlining the adoption of roles by third parties and the timeframe for their adoption. Our research shows that the role set responds to the challenges faced by stakeholders in electricity distribution systems. Results from the assessment suggest that most of these roles are expected to emerge by 2020. [ABSTRACT FROM AUTHOR]

This paper brings together several contemporary topics in energy systems aiming to provide a literature review based reflection on how several interrelated energy systems can contribute together to a more sustainable world. Some directions are discussed, such as the improvement of the energy efficiency and environmental performance of systems, the development of new technologies, the increase of the use of renewable energy sources, the promotion of holistic and multidisciplinary studies, and the implementation of new management rules and "eco-friendly and sustainable" oriented policies at different scales. The interrelations of the diverse energy systems are also discussed in order to address their main social, economic and environmental impacts. The subjects covered include the assessment of the electricity market and its main players (demand, supply, distribution), the evaluation of urban systems (buildings, transportation, commuting), the analysis of the implementation of renewable energy cooperatives, the discussion of the diffusion of the electric vehicle and the importance of new bioenergy systems. This paper also presents relevant research carried out in the framework of the Energy for Sustainability (EfS) Initiative of the University of Coimbra, linking the reviewed areas to the multidisciplinary approach adopted by the EfS Initiative. To conclude, several research topics that should be addressed in the near future are proposed. [ABSTRACT FROM AUTHOR]

Abstract Russia is the first and thus far only country that has separated ownership of electricity distribution and transmission and then, a few years later, reunified these services under one company. We examine the impact of these changes on the quality of service in electricity networks and the operating costs of electricity distribution companies. We find no evidence that ownership unbundling increased the service quality in electricity networks. Furthermore, our results indicate that ownership unbundling resulted in higher operating costs for electricity distribution companies. This study thus contributes to discussion on the importance of the balance of structural remedies and transparent independent regulation in the development of competitive energy markets in emerging market economies. Highlights • Cost efficiency and quality of the Russian electricity distribution is examined. • Ownership unbundling did not improve service quality in the electricity distribution. • Power losses decreased during the pre- and post-unbundling periods. • Ownership unbundling increased costs in the Russian electricity distribution. [ABSTRACT FROM AUTHOR]

Smart grid solutions offer great potential for achieving more efficient integration of renewable energy in the distribution network. Numerous pilot projects have been launched to test smart grid solutions in real-life systems. However, the results observed are subject to the specific context of the demonstrators. Therefore, the conclusions drawn may not be directly applicable to the implementation of the same solutions in different locations or at a larger scale. The scalability and replicability analysis (SRA) of smart grid implementations aims to understand the effect of the context and to infer the impacts that may be expected from smart grid solutions. SRA is a very valuable tool to support policy-makers and the industry in shaping the strategy for sustainability and smart grid deployment. This paper reviews existing approaches and proposals for the SRA of smart grid solutions, and describes European research and demonstration projects that have dealt with SRA from various perspectives. Subsequently, a comprehensive methodology for the SRA of smart grid solutions is described in detail. The core of the SRA methodology is technical analysis based on simulation that lets the impact of smart grid implementations be quantified under different conditions. Additionally, the methodology incorporates the analysis of economic, regulatory and social aspects to identify drivers and barriers for scaling-up and replication of smart grid implementations. Furthermore, the proposed methodology is illustrated through its application to the case of medium voltage automation to improve the continuity of supply. [ABSTRACT FROM AUTHOR]

The energy sector is undergoing substantial changes in order to promote better efficiency, increase the use of renewable energy, reduce emissions and effectively deploy technologies to trade off costs and benefits One emerging solution is the application of the Power-to-Gas technology, which can be used for different purposes. In recent years, Power-to-Gas has been studied to understand the role it could play in the electrical system. This paper has the aims of analysing the existing literature about the Power-to-Gas technology in detail, by considering some solutions that have a direct impact on the electrical system (in particular electrolyser and CO 2 production) and applications in the different sectors of the electricity value chain (i.e., generation, transmission, distribution and utilisation). This paper sets out the conceptual aspects that are necessary to include Power-to-Gas facilities in a more comprehensive analysis framework of the operation of the electrical system in various sectors. Some perspectives concerning new Power-to-Gas applications are also presented for each sector, and some promising aspects that are expected to play a relevant role in the future technical and economic evolution of electrical systems are discussed. [ABSTRACT FROM AUTHOR]

This study examines the hypothesis that changes to high-powered incentive regulations have a positive efficiency and productivity growth effects in a regulated electricity distribution industry. We estimate an input distance function using the stochastic frontier analysis method to compute technical efficiency scores for 121 Norwegian utilities over the period 2004-2012. We explore sources of productivity growth by parametrically decomposing the Malmquist productivity index into efficiency change, technical change, and scale change. Unlike previous studies, we examine the difference in performance across two regulatory regimes: yardstick competition (2007-2012) and RPI-X incentive regulation (2004-2006). Results show significant efficiency and productivity growth improvements with embodied technical change as the main driver. [ABSTRACT FROM AUTHOR]

The aim of this ecological study is designing a quantitative model to evaluate the efficiency of similar and homogeneous decision-making units through the development of a mathematical model called data envelopment analysis (DEA) on the basis of principles of mathematical ecology, so that it gives more precise figures for efficiency of decision making units than the current DEA models. According to the importance of the electricity industry in ecosystem the subject of this study is the electricity distribution sector in Iran environment. In order to answer the main questions of this research, the methods of determining the multicollinearity of variables (using the index VIF (Variance Inflation Factor)) and Principle Component Analysis, linear and nonlinear estimates and expansion of the DEA model in a non-linear form model were used. [ABSTRACT FROM AUTHOR]

This study aims to evaluate the performance of electricity distribution utilities with the use of a single global index based on a Multi-Criteria Decision Analysis (MCDA) method. The proposed approach allows the ranking of service quality according to three dimensions: supply continuity, voltage conformity and customer satisfaction. The challenge of aggregating various indicators into a single global index was overcome with the Analytic Hierarchy Process (AHP) and Preference Ranking Organization Method for Enrichment Evaluations (PROMETHEE) methods. This ranking facilitates regulatory assessment of the distributors' performance, and thus improves the quality of services offered by utilities. [ABSTRACT FROM AUTHOR]

This paper discusses a Bayesian approach to analyzing cost efficiency of Distribution System Operators when model specification and variable selection are difficult to determine. Bayesian model selection and inference pooling techniques are adopted in a stochastic frontier analysis to mitigate the problem of model uncertainty. Adequacy of a given specification is judged by its posterior probability, which makes the benchmarking process not only more transparent but also much more objective. The proposed methodology is applied to one of Polish Distribution System Operators. We find that variable selection plays an important role and models, which are the best at describing the data, are rather parsimonious. They rely on just a few variables determining the observed cost. However, these models also show relatively high average efficiency scores among analyzed objects. [ABSTRACT FROM AUTHOR]

Electricity distribution operators are regulated as monopolies around the world. Incentive regulation is further applied to relate their allowed revenues (revenue cap) to cost efficiency and investment. Incentive regulation varies cross countries and has evolved over time for individual countries. Norway is one of the first countries reforming the network distributors by incentive regulation. Using the long time series data, we evaluated the impact of the Norwegian regulation regimes on firms’ investment. The panel data model includes common time-varying factors to control firm heterogeneity. The cross-section dependence test is further employed to test the relationship between investment and revenue cap in different regulation regimes. The empirical findings confirm a dynamic pattern of investment behavior between regimes, in terms of both the unobserved common factors and the cross-section dependence between investment and revenue cap. This study provides an interesting solution for incentive evaluation and contributes to the management accounting literature in terms of econometric techniques.

Electricity distribution infrastructure causes fewer wildfires than most other sources of ignition. However, these fires have been associated with more severe consequences than those from other causes. This paper examines whether fires caused by faults in electricity distribution infrastructure occur more often during periods of elevated fire danger, thereby increasing their consequence. The occurrence of wildfires caused by electricity distribution infrastructure were compared to those attributed to other causes during periods of elevated fire danger across the State of Victoria, Australia, where historically such fires have had significant impact on lives and assets of value. The results provided strong evidence that fires caused by electrical faults are more prevalent during elevated fire danger conditions and that they burn larger areas than fires ignited by most other causes. As a result the consequences of fires caused by electricity infrastructure are worse than fires from other causes. This knowledge highlights the importance of mitigating ignition-causing faults in the electricity network, particularly on days of elevated fire danger. [ABSTRACT FROM AUTHOR]

Voltage unbalance is a relevant problem that causes a less efficient operation of the system due to higher energy losses and lower hosting capacity. Unbalance has often been neglected by distribution system operators due to the lack of monitoring data in the low voltage (LV) grid. However, the massive deployment of smart metering in recent years in many countries provides very valuable information to detect unbalance. Moreover, in the current context of increasing presence of single-phase distributed energy resources connected to LV networks, such as electric vehicles (EVs) and photovoltaic (PV) generation, unbalance is bound to increase. This article investigates the technical impact of future integration of EV and PV in LV unbalanced networks. This paper has assessed the daily energy losses and voltage problems as load unbalance gradually increases, based on load flow analysis on an hourly basis, considering residential demand and homogeneously distributed EV and PV. The analysis has been carried out for several rural and semi-rural LV networks and various scenarios of demand level and penetration degree of EV and PV. The three-phase load flow analysis is computed using the forward-backward sweep algorithm. Furthermore, this work discusses the implications for the deployment of supervision and monitoring solutions based on advanced metering infrastructure (AMI). Their implementation should be prioritized in more loaded and longer networks where high integration of distributed energy resources is expected so that unbalance can be detected and corrective actions can be applied. [ABSTRACT FROM AUTHOR]

In this paper we estimate the short-run, long-run and overall efficiency of Norwegian electricity distribution companies for the period 2000-2013 controlling for both noise and company effects. Short-run inefficiency is the part of inefficiency that is allowed to adjust freely over time for each company, but long-run (persistent) inefficiency remains constant over time, although it is allowed to vary across companies. For robustness check we also consider two additional models in which either company effects are not controlled or these are treated as inefficiency. The production technology is represented by a translog input distance function in all three models. We find that technical change and returns to scale are quite robust across the models. However, the efficiency scores across the three models we consider are not correlated strongly. We conclude that the regulators and practitioners should take extra caution in using the proper model in practice, especially when the efficiency measures are used to reward/punish companies through incentives for better performance. [ABSTRACT FROM AUTHOR]

In this paper, a methodology was developed to analyze the results of energy efficiency programs used in the electricity distribution sector in Brazil. Analyzing the gains obtained through the investments made, and classifying which actions resulted in the best performance, contributed to decision making on the best allocation of investments to obtain the greatest energy savings. The Brazilian Energy Efficiency program was analyzed with a developed non-parametric model, using the data envelopment analysis method, and the categories of projects with better performance were determined. A database of the results from 1704 projects, from 2008 to 2016 in the Energy Efficiency program in Brazil's electricity distribution sector, was used. The results obtained show that the best performance was achieved by projects in the industrial and cogeneration categories; however, in Brazil these constitute only 4.24% of the projects presented and 5.28% of the total investments in the last eight years, indicating a need to review the regulatory strategies for energy efficiency in this country. [ABSTRACT FROM AUTHOR]

After a brief historical introduction to the hosting-capacity approach, the hosting capacity is presented in this paper as a tool for distribution-system planning under uncertainty. This tool is illustrated by evaluating the readiness of two low-voltage networks for increasing amounts of customers with PV panels or with EV chargers. Both undervoltage and overvoltage are considered in the studies presented here. Probability distribution functions are calculated for the worst-case overvoltage and undervoltage as a function of the number of customers with PV or EV chargers. These distributions are used to obtain 90th percentile values that act as a performance index. This index is compared with an overvoltage or undervoltage limit to get the hosting capacity. General aspects of the hosting-capacity calculations (performance indices, limits, and calculation methods) are discussed for a number of other phenomena: overcurrent; fast voltage magnitude variations; voltage unbalance; harmonics and supraharmonics. The need for gathering data and further development of models for existing demand is emphasised in the discussion and conclusions. [ABSTRACT FROM AUTHOR]

Since the 1990s, electricity distribution networks in many countries have been subject to incentive regulation. The sector regulators aim to identify the best performing utilities as frontier firms to determine the relative efficiency of firms. This paper develops a nested latent class (NLC) model approach where unobserved differences in firm performance are modelled using two 'zero inefficiency stochastic frontier' (ZISF) models nested in a 'latent class stochastic frontier' (LCSF) model. This captures the unobserved differences due to technology or environmental conditions. A Monte Carlo simulation suggests that the proposed model does not suffer from identification problems. We illustrate the proposed model with an application to Norwegian distribution network utilities for the period 2004-2011. We find that the efficiency scores in both LCSF and ZISF models are biased, and some firms in the ZISF model are wrongly labelled as inefficient. Conversely, inefficient firms may be wrongly labelled as being fully efficient by the ZISF model. [ABSTRACT FROM AUTHOR]

Under increasing penetration of distributed resources, regulators and electricity distribution utilities face greater uncertainty regarding the evolution of network uses and efficient system costs. This uncertainty can threaten revenue adequacy and challenges both cost of service/rate of return and incentive/performance-based approaches to the remuneration of distribution utilities. To address these challenges, this paper proposes a novel methodology to establish allowed utility revenues over a multi-year regulatory period. This method combines several "state of the art" regulatory tools designed to overcome information asymmetries, manage uncertainty, and align incentives for utilities to cost-effectively integrate distributed energy resources while taking advantage of opportunities to reduce system costs and improve performance. We use a reference network model to simulate a large-scale urban distribution network, demonstrate the practical application of this regulatory method, and illustrate its performance in the face of both benchmark and forecast errors. [ABSTRACT FROM AUTHOR]

Electricity industries are experiencing upward cost pressures in many parts of the world. This paper focuses on productivity trends in electricity distribution. We apply two methodologies for estimating productivity growth--an index based approach, and an econometric cost based approach--to data on 73 Ontario distributors for the period 2002 to 2012. The resulting productivity growth estimates are approximately -1% per year, suggesting a reversal of the positive estimates that have generally been reported in previous periods. We implement flexible semi-parametric specifications to assess the robustness of these conclusions and discuss the use of such statistical analyses for calibrating productivity and relative efficiency within a price-cap framework. [ABSTRACT FROM AUTHOR]

The increased penetration of volatile and intermittent renewable energy sources challenges existing power-distribution methods as current dispatch methods were not designed to consider high levels of volatility. We suggest a principled algorithm called message passing, which complements existing techniques. It is based on statistical physics methodology and passes probabilistic messages locally to find the approximate global optimal solution for a given objective function. The computational complexity of the algorithm increases linearly with the system size, allowing one to solve large-scale problems. We show how message passing considers fluctuations effectively and prioritise consumers in the event of insufficient resource. We demonstrate the efficacy of the algorithm in managing load-shedding and power-distribution on synthetic benchmark IEEE data and discuss the role of weights in the trade-off between minimising load-shedding and transmission costs. [ABSTRACT FROM AUTHOR]

The Brazilian regulator has applied weight restrictions to Data Envelopment Analysis (DEA) for estimating the regulatory expenditures of distribution system operators. An ad-hoc procedure is currently being proposed, using a previous model without weight restrictions to estimate upper and lower boundaries using a data-driven approach. Nevertheless, DEA is subject to multiple solutions that may be achieved with a random switch of the dataset rows. In brief, the proposed methodology is extremely sensitive to multiple solutions. Using a simulation study, we see regulatory operational expenditures may vary close to US$ 42 million, thus compromising the financial integrity of companies. [Display omitted] • Regulatory OPEX for Brazilian Distribution System Operators are estimated using Data Envelopment Analysis. • Weight restrictions are included in the model. • An ad-hoc procedure to estimate the weight restrictions is proposed by the regulator. • The procedure is extremely sensitive to multiple solutions. • Specific order of the data set rows changes regulatory OPEX by 10%. [ABSTRACT FROM AUTHOR]

The economic efficiency of distribution network tariffs may be enhanced by applying marginal cost pricing principles. This paper investigates the Long-Run Incremental Cost (LRIC) methodology, a marginal cost-based approach that has been applied in Great Britain since 2012. The long-term social welfare achieved under a coincident peak tariff set according to three different methods, i.e., LRIC, traditional historical cost-based allocation, and a theoretical benchmark, is analytically derived. The resulting social welfare is compared for a range of key system characteristics and the underlying mechanisms are discussed. The results provide evidence that LRIC is more efficient than historical cost-based allocation. • We assess the economic efficiency of distribution network cost allocation methods. • Varying levels of demand growth, elasticity, and upgrade costs are considered. • Long-Run Incremental Cost (LRIC) raises welfare compared to a historical cost method. • Social welfare gains of LRIC are not always driven by network cost savings. [ABSTRACT FROM AUTHOR]

Almost in the entire history of 20th century, vertically integrated monopolistic companies have controlled the electricity industry. In this traditional method, these firms were the only service provider in their territory; including power generation, transition, distribution and retail. Necessity of economic efficiency deployment, resulted in structural reform in electricity industry that has created variety of subjects such as restructuring, unbundling, deregulation, reregulation and privatization. Electricity industry restructuring means breaking up vertical monopolistic control of governments on industry through unbundling into competitive and uncompetitive sectors. Electricity distribution sector essentially has natural monopoly characteristics therefore is not competitive and should work under regulation. The main objective of this research is to find the most efficient incentive regulation model for electricity distribution sector of Iran by which social welfare function may be maximized. Price and revenue cap models are the most prevalent incentive schemes that have been compared with each other. To design this model, cost function of 38 electricity distribution companies has been estimated and marginal cost of each company has been assumed as the first best price. Efficiency of these companies has been calculated by means of data envelop analysis method. Afterward 2 price regulation schemes has been modeled for years 1388 until 1390. Finally, residential electricity demand function has been estimated by means of autoregressive distributed lags method. Calculation of the difference between total welfare of each model with the first best price; indicates that without considering air pollution externalities, price cap scheme maximizes total welfare. However, considering the externalities, revenue cap model is found to have better effect on total welfare.

Microgrids could be utilized to improve the distribution network resiliency against weather-related network outages and increase the security of power supply of rural electricity consumers. Whereas underground cabling is expensive for the distribution system operator (DSO), an alternative microgrid investment could benefit the DSO and consumer, provided the necessary changes were made in the network regulation. A rural detached house customer microgrid is analysed in comparison to underground cabling, considering the uncertainties in the calculation parameters through a sensitivity analysis. Adequacy of the microgrid power supply during unexpected network outage for a reasonably long duration is assessed, as well as the economics of the feasible microgrid setup consisting of variable generation, controllable generation, and electric storage. The total costs and benefits for the DSO and consumer/prosumer are considered. A microgrid would likely be a more cost-efficient option overall, but not as-is for the consumer. The battery energy storage system (BESS)-related cost-sharing strategies are suggested in this paper in order to assess possible break-even investment solutions for the related parties. The sensitivities of the microgrid and cabling investments were considered in particular. Cost-sharing strategies under network regulatory framework would need to be developed further in order for both the consumer and DSO to benefit from the solution as a whole.

This paper analyzes the joint cost structure of electricity and natural gas distribution investments. Assessing the joint costs is critical for urban development and public policy regarding competition at the local level. The paper accounts for the urban and geographic factors at the local level, while the previous literature primarily used company-level data with a few or no site-specific variables in joint cost analyses. An empirical analysis of the multi-utility capital costs suggests that the local urban and geographic conditions affect such costs, with economies of scope present in electricity and natural gas both in terms of total costs and underground investment costs. Hence, the joint service provision makes economic and environmental sense for urban policy makers.

The new Spanish Power Sector Law (Ley del Sector Eléctrico, LSE) 24/2013 regulates self-consumption facilities for the first time, and in particular domestic PV panels. The paper analyzes the approved regulation. It is concluded that energy prices and access tariffs should faithfully reflect actual supply costs, in order not to distort consumer incentives when choosing between distributed PV equipment and grid supply. However, the discussed regulation intends to “correct” the impact of taxes and levies unrelated to supply costs. This approach is found wanting. A stable and efficient regulation must be designed alongside an energy, preferably environmentally oriented, tax reform. [ABSTRACT FROM AUTHOR]

Improving electricity demand response (DR) to support the operation and planning of distribution networks is an essential component of the European Commission strategy to increase economic efficiency in electric power systems across Europe. Due to the lack of the appropriate infrastructure, end consumers have traditionally been blind to wholesale market conditions as well as from the real costs they cause on the network and the power system operation. With the recent deployment of smart metering and communication technologies, provided an appropriate regulatory environment exists, new forms of local DR involving distribution system operators and small consumers could be developed. In a context where many EU Member States are still in the process of opening their retail sectors up to competition and being any active distribution management procedures still to be defined, DR is materializing at a very slow rate. It is the role of regulators to provide a suitable regulatory framework to allow DR to become effective at distribution level. This paper revises the main regulatory barriers that slow down the successful development of demand response mechanisms addressed to small consumers and an active distribution network management across Europe. In order to illustrate this discussion, an overview of six particular national examples is provided: France, Germany, Italy, Spain, Great Britain and Sweden. Finally, recommendations for policy makers and regulators are given. [ABSTRACT FROM AUTHOR]