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Restructuring Revisited Part 1: Competition in Electricity Distribution Systems

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  • Scott P. Burger, Jesse D. Jenkins, Carlos Batlle, and Ignacio J. Pérez-Arriaga

Abstract

This paper addresses the implications of the emergence of distributed energy resources (DERs) for competition in the electricity distribution systems. The regulations on industry structures in place today were designed in an era characterized by centralized resources and relatively price inelastic demand. In light of the decentralization of the power sector, regulators and policy makers must carefully reconsider how industry structure at the distribution level affects competition, market development, and cost efficiency. We analyze the economic characteristics of distribution network owners and operators, DER owners, and aggregators and retailers. We translate the foundational theories in industrial organization and the lessons learned during the previous wave of power system restructuring to the modern context to provide insight into three questions. First, should distribution system operations be separated from distribution network ownership in order to ensure the neutrality of the DSO role? Second, should DNOs be allowed to own and operate DERs, or should DER ownership be left exclusively to competitive actors? Third, does the emergence of DERs necessitate a reconsideration of the role of competition in the provision of aggregation services such as retailing? This paper is the first part of a two-part series on competition and coordination in rapidly evolving electricity distribution systems.

Suggested Citation

  • Scott P. Burger, Jesse D. Jenkins, Carlos Batlle, and Ignacio J. Pérez-Arriaga, 2019. "Restructuring Revisited Part 1: Competition in Electricity Distribution Systems," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    • Handle: RePEc:aen:journl:ej40-3-burger1
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    Cited by:

    1. Daglish, Toby & de Bragança, Gabriel Godofredo Fiuza & Owen, Sally & Romano, Teresa, 2021. "Pricing effects of the electricity market reform in Brazil," Energy Economics, Elsevier, vol. 97(C).
    2. Karim L. Anaya & Monica Giulietti & Michael G. Pollitt, 2022. "Where next for the electricity distribution system operator? Evidence from a survey of European DSOs and National Regulatory Authorities," Competition and Regulation in Network Industries, , vol. 23(4), pages 245-269, December.
    3. Gonzalez Venegas, Felipe & Petit, Marc & Perez, Yannick, 2021. "Active integration of electric vehicles into distribution grids: Barriers and frameworks for flexibility services," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    4. Rebenaque, Olivier & Schmitt, Carlo & Schumann, Klemens & Dronne, Théo & Roques, Fabien, 2023. "Success of local flexibility market implementation: A review of current projects," Utilities Policy, Elsevier, vol. 80(C).
    5. Luka Strezoski, 2023. "Distributed energy resource management systems—DERMS: State of the art and how to move forward," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 12(1), January.
    6. Giulietti, Monica & Le Coq, Chloé & Willems, Bert & Anaya, Karim, 2019. "Smart Consumers in the Internet of Energy : Flexibility Markets & Services from Distributed Energy Resources," Other publications TiSEM 2edb43b5-bbd6-487d-abdf-7, Tilburg University, School of Economics and Management.
    7. Csereklyei, Zsuzsanna & Kallies, Anne, 2022. "A legal-economic framework of electricity markets: Assessing Australia’s transition," MPRA Paper 114191, University Library of Munich, Germany.
    8. Bovera, Filippo & Delfanti, Maurizio & Fumagalli, Elena & Lo Schiavo, Luca & Vailati, Riccardo, 2021. "Regulating electricity distribution networks under technological and demand uncertainty," Energy Policy, Elsevier, vol. 149(C).
    9. Pedro H. Perico E Santos & Olivier Massol, 2022. "Electricity Distribution Systems in Europe : An Overview of Contemporary Regulatory Challenges," Working Papers hal-03897936, HAL.
    10. Schittekatte, Tim & Meeus, Leonardo, 2020. "Flexibility markets: Q&A with project pioneers," Utilities Policy, Elsevier, vol. 63(C).

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    JEL classification:

    • F0 - International Economics - - General

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