Innovation and Energy
Regulation Lessons Learned and Messages of the ERRA
Regulatory Innovation Day (ERID)
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dr. Gábor Szörényi General Secretary of ERRA
Bratislava, 2016 October
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What will change?
Moving from centralized power system to decentralized model
The changing process will be full of challenges, but provide
a lot of opportunities!
Source: EDSO for Smart Grids
Everything will change! Climate policy, Customer choice and Innovation driven Paradigm change!
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Driving forces to Change
Climate Policy targets and requirements
Technological development and
changing consumer expectation
Energy Policy (inc. goals of economic development)
Follow up Regulation
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New forecast (June 2016) by
Bloomberg New Energy Finance
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ERRA regulators and innovation
(Report on ERRA Survey in 2016) (1)
• New innovative technologies and
operation modes, and possible regulatory
(http://erranet.org/news/2016/05/18/erra-has-
published-a-paper-on-innovation-and-energy-
regulation)
• Regulation and Innovation (ERRA survey)
• Recommendations for Regulators
• ERRA Regulatory Innovation Day (ERID)
(in the framework of INNOPOWER 2016 in
Poznan; 400 participants)
(http://erranet.org/OtherActivities/workshops/erid2016)
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Lessons Learned and Messages
of ERID
Lessons Learned and Messages (ERID) (http://erranet.org/index.php?name=OE-
eLibrary&file=download&keret=N&showheader=N&i
d=12639)
Can we boost innovation through regulation?
Although it sounds strange, the answer is
yes. While regulators cannot create
innovation themselves, they can definitely
help by creating an enabling environment,
where innovative ideas can thrive and be
realised!
What will happen, when the NRAs do not
support the innovative processes?
The consumers could fail through less developed supply quality and
less consumer choices.
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Lessons Learned and Messages
of ERID for Regulators (1)
• The regulators should consult with researchers,
academic institutions, energy industry experts,
technology developers and customer representatives on
the available new technologies, innovative methods,
behaviour-changes and the thinking/mind of innovators
in order to learn the potential benefits of new solutions
and to find the solution for the new regulatory
challenges.
• The policy makers and regulators should enable creation
of new markets (room for innovation) in every segment of
energy supply chain. Until the new markets developing
the regulators could allow the regulated companies (e.g.
DSOs „grey zones”) investing in new technologies.
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Lessons Learned and Messages
of ERID for Regulators (2)
• The energy innovation chain does not work well because
of weak incentives on the supply and demand side. One of
the consequences of the barriers to energy innovation is
that energy R&D public and private investments are too
limited compared to non-energy industries due to the strict
(price) regulation.
• The regulators – beside the traditional regulatory models,
which focus on long term investments – should find new
regulatory elements which support/ accept the research,
development , test and implementation of new and fast
developing technologies (e.g. Pilot Projects, Cost Benefit
Analysis, shorter depreciation).
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Lessons Learned and Messages
of ERID for Regulators (3)
• Innovators do not wait for regulators to be ready to
innovate, but innovators need regulators to adapt
regulation so that innovations and associated services are
efficiently provided.
• The transition in the energy supply chain can be “brutal” or
manageable, but – it seems to be – we cannot avoid it!
The regulators should ask themselves whether elements
of regulation hamper the support of the smooth transition
process!
• The dilemma of the regulators; How to share the risk of
new technologies during the development, testing and
evaluation period between regulated industry and
consumers?
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Lessons Learned and Messages
of ERID for Regulators (4)
• The clear definitions for storage technologies are
important to more effective regulatory act. Transmission
and distribution grid investment deferrals by storage
technologies are possible in limited countries. In these
countries the regulation allows the system operators to
deploy storage systems on investment deferral purpose
and the system operators are allowed to operate a
storage system if it is proven to be the most efficient
solution for a problem.
• Preparing supportive regulation (and network tariff) for the
different storage technologies allowing these technologies
to compete on the ancillary service markets assisting
system operators and customers to keep the balance.
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Lessons Learned and Messages
of ERID for Regulators (5)
• Developing (or just implementing) such regulatory
incentives of the network operators, which give them
impetus to support the end-user in energy efficiency
measures (e.g. decoupled rates) and in different demand
side response activities are regulatory tasks!
• Supporting smart meter deployment in those consumers
segments, where the pilot projects and the cost benefit
analysis shows positive results; empowering consumers
and addressing data privacy and cyber-security concerns
are important!
• Continuously measuring the expectation and satisfaction
of customers and adjusting the relevant Supply Quality
Regulation accordingly are important!
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Lessons Learned and Messages
of ERID for Regulators (6)
• Regulators should build internal capacity of regulatory
staff in the area of new and innovative technologies and
the impact they have on the regulatory system!
• The regulation should be adjusted to the need of e-
mobility deployment!
• Setting requirements and providing incentives for DSOs
smoothly connecting the distributed generators are
important!
• Create such pricing regimes, which support the
“prosumers” managing the intermittent surplus of their self
generated power!
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Innovation and Energy Regulation
Thank you for your kind attention!
Please, distribute the
ERRA Innovation Report and
Lessons Learned and Messages
among your colleagues!
Questions & Comments are welcomed!