Innovating grid regulation to regulate grid innovation: From the Orkney Isles to Kriegers Flak via Italy

In the current context of a decarbonizing electricity system, grid innovation is needed to deal with the main challenges of integrating distributed generation, demand and storage, and large-scale renewable energy sources. Grid companies however have disincentives to innovate under the conventional regulatory framework, and if they do innovate, they are confronted with grid users that have disincentives to participate in the innovation. This paper analyzes three empirical cases where state of the art regulatory frameworks have been successful at stimulating grid innovation. The main lesson learned from the cases is that there is experience with addressing the disincentive of grid companies to innovate, but the participation of grid users in the innovation is much more an open issue.