Network Regulation under Climate Policy Review

Per J. Agrell () and Peter Bogetoft

No 2010/67, RSCAS Working Papers from European University Institute

Abstract: Climate change policy, in particular in Europe, will a¤ect the energy sector through the exposure to massive penetration of distributed energy resources or decentralized generation into electricity distribution and transmission grids. As the prerequisites for infrastructure regulation still prevail in the future, the question arises whether the current regulatory model is still valid. In this paper, we chararcterize some of the e¤ects of climate change policy on the network tasks, assets and costs and contrast this with the assumptions implicit or explicit in current economic network regulation. The resulting challenge is identi ed as the change in the direction of higher asymmetry of information and higher capital intensity, combined with ambiguities in terms of task separation. Methodolog- ically, we argue that this may require a mobilization of the litterature related to delegated and hierarchical systems, e.g. team performance, as the externalities are joint products from multiple independent stages where individual regulation may introduce distortions. To provide guidance, we present a model of investment provision under regulation between a distribution system operator (DSO) and a potential investor-generation. The results from the model con rm the hypothesis that network regulation should nd a focal point, should integrate externalities in the performance assessment and should avoid wide delegation of contracting-billing for climate change technologies.

Keywords: network regulation; climate change; investments; distributed generation (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Date: 2010-09-16
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://cadmus.eui.eu/bitstream/handle/1814/14616/RSCAS%202010_67.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:rsc:rsceui:2010/67

Access Statistics for this paper

More papers in RSCAS Working Papers from European University Institute
Address: Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy
Contact information at EDIRC.
Series data maintained by Jacqueline Gordon ().