Topic 7: Network Regulation and DE Markets Flashcards
Network Use and Expenditure Trends
Australian Context
- Incentive (light handed) regulation of DNSPs (Distribution Network Service Provider)
- Tariffs
- Reviewed via 5yr AER process
- Need to forecast
Network pricing (thus far) the main contributor to price rises
A failing regulatory system
- Are network investments efficient in the eyes of the consumers long term
- Demand side management needs to be addressed
- Suboptimal investment in network to facilitate large scale RE
Transmission Planning and Regulation with RE - RE and Transmission Planning
Scaling up VRE requires additional transmission infrastructure
Good VRE are not typically located near existing generators
Diversity helps manage variability
Connection costs and network costs need to be recouped
Transmission planning
Centralised best locations and builds lines
Decentralised : generators investment guides planning
New generators typically pay ‘shallow costs’
Long term network costs covered via ‘postage stamp’ payments
Price different regions reflect congestion
AEMO produces National Transmission Network Development Plan (NTNDP) – strategic plan with information about transmission capabilities, congestion and investment
Transmission Planning and Regulation with RE -Current challenges
RE generators are allowed to connect, on a first in first serve basis
- Interconnection requires planning-driven produces leads delay
Resources tend to be concentrated in certain areas, (coordination = efficiency)
Range of recent rule change requires have related to:
- Transmission
- Ability to purchase optional firm access
- Allocation of costs
- Scale efficient network extensions
Distribution Planning and Regulation with DE
PV value and cost depend on their location in the network
- Alignment of PV with peak loads
- Alignment of load and PV on residential feeder is often poor (DUCK CURVE)
New models for network regulation and business models
- Full benefit of innovation will not be delivered if the rights to DE development are restricted to network companies
- Ownership / participation
- Price market planning
- Survival networks
Integrated resource Planning (IRP)
- Traditional planning – load forecast and resource forecasted submitted for approval
- Under IRP utility is required to report its load and resource forecast and use the least-cost resource mix including supply and demand side options
- RIT-D via a reverse auction where augmentation is required
- Number of us state have forms of IRP but usually vertically integrated
Network Planning and regulation
Planning
- Required to facilitate demand-supply balance
- Congestions impacts reliability and cost
- Network costs are mainly capital with low operating costs
- Investment major determinant of cost
As natural Monopolies
- Characteristics in networks
- Cheaper for monopoly to deliver product
- Geographically bound, competition = duplication
- Large barriers to entry - Electricity networks are natural monopoly
- Lack of competitive process
- Market power requires regulation
Regulations of Monopolies
- Single monopoly must be regulated
- Economic regulation includes
- Reducing exploitation of customers
- Create efficiency incentives
- Prices/revenues reflect efficiencies - Challenge information asymmetries between networks and regulators.
Distribution Planning and Regulation with DE - DE challenges
DE Challenges Death Spiral
New models for Network Regulation
Full benefits of DE innovation & implementation will not be achieved if rights to DE are restricted to network companies
Integrated Utility Services: - On-bill financing
Integrated Resource Planning (IRP): - utility is required to report its load & resource forecast & use the least-cost mix, including both supply-side and demand-side resources.
Distributed System Platform Provider:
- More control to distribution network service provider
