Restructuring our electricity networks to promote decarbonisation

......................................................................................................................................3 I. INTEGRATING DG/RE THROUGH INFORMATED, DECENTRALIZED ELECTRICITY NETWORKS.........................................................................................................4 OVERVIEW......................................................................................................................................4 THE ROLE OF THE NETWORK IN PROMOTING DG AND ECONOMIC EFFICIENCY.....................6 II. NEW WINE — OLD BOTTLES NEW TECHNOLOGIES REQUIRE NEW SUPPORTING SYSTEMS .............................................................................................................12 III. THE VIRTUAL UTILITY CONCEPT ..................................................................................15 NEW ACCOUNTING MEASURES ARE NEEDED TO EVALUATE THE VU..........................................17 IV. THE STRUCTURE OF DECENTRALIZED ELECTRICITY NETWORKS..................18 Responsibilities of Network Participants............................................................................20 Discrete Load-Matching: Back to the Future ...........................................................................23 Electricity Mass-Production .....................................................................................................23 Is It Cost-Effective? Valuing DG in the context of decentralized networks and the VU ..........24 Options-Based Approaches.......................................................................................................24 Intermittency and Efficiency .....................................................................................................26 Discrete Load Matching of Dispatchable Applications............................................................27 The Value of Backup power and other ancillary services in a decentralized system ...............28 The Role of bilateral Electricity Markets in Fostering Efficiency ............................................29 V. HOW TO EFFICIENTLY MEET EUROPEAN RET TARGETS INCENTIVE REGULATION AND THE NETWORK OPERATOR .......................................31 Attaining RET Targets with A Three-part Tariff: .....................................................................32 Giving the NOs A Stake in Fostering System Improvements ....................................................33 Meeting RET Targets ................................................................................................................34 VI. THE ROLE OF NETWORK INFORMATION ...................................................................34 The Value of Information..........................................................................................................37 Decentralized Networks: Plug ‘n play Electricity? ..................................................................39 VII. CONCLUSIONS......................................................................................................................41 REFERENCES ................................................................................................................................43 ANNEX: NETWORK REVENUES UNDER A THREE-PART TARIFF.................................47 Total Network operator Revenues ............................................................................................49