ESAP Expert Workshop IV: Network Investments and Regulation

Background

The electricity sector is at a critical point in the transition to low-carbon sources for generating power. Electricity market design and the regulatory framework for transmission and distribution networks have been efficient in initiating the transition phase, but they need to be substantially revised in order to manage the increasing amount of variable renewable energy sources including wind, solar PV and distributed resources such as demand response.

Although distributed resources are expected to play an increasing role, the electricity system cannot function without its distribution and transmission networks and the services they provide. The way these networks operate and develop will largely determine the future cost-efficiency and reliability of the overall electricity system as it continues to decarbonize. To date, increasingly effective regulatory arrangements have allowed for more efficient use of network capacity. Nevertheless, the large scale deployment of variable renewable energy will magnify the dynamic and regional nature of power flows, which will in turn create new hurdles for maintaining reliability and raise new investment challenges.

An effective policy approach should seek to facilitate network investments and system operation in a cost-efficient way. It should also ensure that these costs are adequately reflected in network tariffs that are equitably applied to all customers benefiting from the security that access to electricity network infrastructure provides.

More than ten years of regulatory experience is now available in many unbundled energy markets in IEA countries. Lessons can be learned on how to improve the design of network regulation, and new regulatory arrangements have been tested and introduced in several countries to adapt to the fast changing structure of the overall electricity market.

Against this background, the IEA and CEER are organizing a workshop to discuss potential regulatory developments and to present views on improvements in electricity regulation that are needed to ensure necessary investments in electricity networks as well as efficient and secure operations. The aim is to enhance our understanding of regulatory issues through sharing experience and lessons learned as well as from the presentation of reforms being proposed in a cross-section of countries.

The expert workshops will inter alia cover the following questions:

• How should regulation be developed in order to ensure the necessary investments in network infrastructure?
• Which responsibilities will distribution system operators have in the future and how can they cope with them?

The results of this event workshop will provide an essential contribution to the IEA activities on electricity security and market design. The meeting will be informal in nature and held under the Chatham House Rule.

Attendance is by invitation only.