Goals

The research project aims to develop the institutional framework that guides efficient and effective network development towards smart grids. Central research questions are:

• How to design an incentive regulation that guarantees necessary investments while at the same time preventing inefficient investment?
• Which advancements should be made to incentive regulation to adequately account for network innovation and transformation?
• Are changes to the current legal framework required?
• Which network pricing system sends effective signals for efficient coordination of network, generation and load installations?

Network regulation and innovation are conflicting goals. As smart grids call for enormous efforts in research, development, and investments it is an open question how to advance the current incentive regulation and complement it with innovation oriented governance mechanisms.

Further it has to be investigated whether the present legal framework for energy is adequate for the envisioned smart grids and how it should be advanced. Important keywords in this respect are system responsibility of (local) distribution network operators, public service obligations, interactions with renewable energy law (priority rules for RES, CHP) or municipal law with regard to the important role of municipal utilities in smart grids.

Ambitious functional unbundling regulations present a clear conflict to contingent system wide optimization. Hence, it will also be studied which governance structure for virtual power plants and which specification of functional unbundling are adequate for supporting both competition and distributed generation.