Smart-grid investments, regulation and organization

Grid infrastructure managers worldwide are facing demands for reinvestments in new assets with higher on-grid and off-grid functionality in order to meet new environmental targets. The roles of the current actors will change as the vertical interfaces between regulated and unregulated tasks become blurred. In this paper, we characterize some of the effects of new asset investments policy on the network tasks, assets and costs and contrast this with the assumptions of the current economic network regulation. To provide structure, we present a model of investment provision under regulation between a distribution system operator and a potential investor-generator. The results from the model confirm the hypothesis that network regulation should find a focal point, should integrate externalities in the performance assessment and should avoid wide delegation of contracting-billing for smart-grid investments. (C) 2012 Elsevier Ltd. All rights reserved.