Market and regulatory factors influencing smart-grid investment in Europe: Evidence from pilot projects and implications for reform

Publication year: 
2016
Publication Category: 
Journal Papers
Identifier and type: 
doi:10.1016 j.jup.2016.03.003
Author: 
Carlo Cambini
Alexis Meletiou
Ettore Bompard
Marcelo Masera
Publisher: 
Utilities Policy Journal Volume 40, June 2016, Pages 36–47

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Electricity distribution system operators (DSOs) are expected to invest heavily in system innovation in the form of smart grids (SG) in order to help achieve energy policy goals. In this context, regulatory reforms to spur DSOs investments are considered a policy priority. Based on a review of the European regulatory status and using a dataset of 459 innovative SG projects, this study focuses on market and regulatory factors and performs a series of statistical tests to investigate how the different factor levels affecting SG investments in Europe. The results show that (1) lower market concentration in the electricity distribution sector (2) the use of incentive-based regulatory schemes; and (3) the adoption of innovation-stimulus mechanisms are key enablers of SG investments.

Keywords: 
Distribution networks, DSOs, Market concentration, Incentive regulation, Innovation, Smart grid Investment