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Investing in Smart Grids: Assessing the Influence of Regulatory and Market Factors on Investment Level

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  • Yvonne Vogt Gwerder, Nuno Carvalho Figueiredo, and Patricia Pereira da Silva

Abstract

This paper explores how market and regulatory factors affect stakeholders' investments in smart grid projects in Europe. Distribution System Operators (DSOs), universities, and technology manufacturers are leading investors, with a cumulative 2286 M€ financed since 2002. Statistical tests were conducted on these groups' investments in smart grid projects in the EU-28, Norway, and Switzerland from 2008-2015, to evaluate the influence of the following factors on investment: the level of distribution sector concentration, the regulatory mechanism in place, and the existence of innovation stimulus mechanisms. The level of distribution sector concentration did not significantly influence investments by these three groups. Market-minded stakeholders, such as DSOs and technology manufacturers, invested more in countries that employed hybrid, incentive, or innovation-stimulus mechanisms; meanwhile, collaborative knowledge-seeking institutions, such as universities, were not swayed by these factors. Taking these findings into consideration will help policy makers design adequate incentives for stakeholders.

Suggested Citation

  • Yvonne Vogt Gwerder, Nuno Carvalho Figueiredo, and Patricia Pereira da Silva, 2019. "Investing in Smart Grids: Assessing the Influence of Regulatory and Market Factors on Investment Level," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    • Handle: RePEc:aen:journl:ej40-4-figueiredo
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    Cited by:

    1. Clastres, Cédric & Khalfallah, Haikel, 2021. "Dynamic pricing efficiency with strategic retailers and consumers: An analytical analysis of short-term market interactions," Energy Economics, Elsevier, vol. 98(C).
    2. Artur Felipe da Silva Veloso & José Valdemir Reis Júnior & Ricardo de Andrade Lira Rabelo & Jocines Dela-flora Silveira, 2021. "HyDSMaaS: A Hybrid Communication Infrastructure with LoRaWAN and LoraMesh for the Demand Side Management as a Service," Future Internet, MDPI, vol. 13(11), pages 1-45, October.
    3. Pereira, Guillermo Ivan & Pereira da Silva, Patrícia & Cerqueira, Pedro André, 2020. "Electricity distribution incumbents' adaptation toward decarbonized and smarter grids: Evidence on the role market, regulatory, investment, and firm-level factors," Energy Policy, Elsevier, vol. 142(C).
    4. Cédric Clastres & Haikel Khalfallah, 2021. "Dynamic pricing efficiency with strategic retailers and consumers: An analytical analysis of short-term market interactions," Post-Print hal-03193212, HAL.
    5. Norouzi, Farshid & Hoppe, Thomas & Elizondo, Laura Ramirez & Bauer, Pavol, 2022. "A review of socio-technical barriers to Smart Microgrid development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    6. Cédric Clastres & Haikel Khalfallah, 2020. "Retailers' strategies facing demand response and markets interactions," Working Papers hal-03167543, HAL.
    7. Kingsley Ukoba & Kehinde O. Olatunji & Eyitayo Adeoye & Tien-Chien Jen & Daniel M. Madyira, 2024. "Optimizing renewable energy systems through artificial intelligence: Review and future prospects," Energy & Environment, , vol. 35(7), pages 3833-3879, November.

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    JEL classification:

    • F0 - International Economics - - General

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