Increasing penetration of renewable and distributed electricity generation and the need for different network regulation

The amount of decentralised electricity generation (DG) connected to distribution networks increases across EU member states. This increasing penetration of DG units poses potential costs and benefits for distribution system operators (DSOs). These DSOs are regulated since the business of electricity distribution is considered to be a natural monopoly. This paper identifies the impact of increasing DG penetration on the DSO business under varying parameters (network characteristics, DG technologies, network management type) and argues that current distribution network regulation needs to be improved in order for DSOs to continue to facilitate the integration of DG in the network. Several possible adaptations are analysed.