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Distributed Generation and Cost Efficiency of German Electricity Distribution Network Operators

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  • Just, Lisa

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Wetzel, Heike

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract

In this paper, we use a comprehensive and unique data set of financial, technical and structural characteristics of German distribution network operators from 2011 to 2017 to estimate both the transient and persistent cost efficiency of German distribution network operators. In addition, we analyze the effect of an increasing capacity of distributed generation from renewable energy sources on the total costs of distribution network operators. Our results indicate an average cost reduction potential of approximately 12 percent in the short term and approximately 18 percent in the long term for German electricity distribution network operators. Furthermore, we find that distributed generation from renewable energy sources is a significant cost driver in the production process of network operators. Our study thus contributes to the ongoing debate on incentive regulation and efficiency benchmarking in electricity distribution industries and provides valuable insights for policymakers and regulators.

Suggested Citation

  • Just, Lisa & Wetzel, Heike, 2020. "Distributed Generation and Cost Efficiency of German Electricity Distribution Network Operators," EWI Working Papers 2020-9, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    • Handle: RePEc:ris:ewikln:2020_009
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    References listed on IDEAS

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    Cited by:

    1. Just, Lisa, 2021. "Unobserved technological heterogeneity among German electricity distribution network operators - a latent class analysis," EWI Working Papers 2021-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Arnold, Fabian & Jeddi, Samir & Sitzmann, Amelie, 2022. "How prices guide investment decisions under net purchasing — An empirical analysis on the impact of network tariffs on residential PV," Energy Economics, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Electricity distribution; regulation; transient cost efficiency; persistent cost efficiency; distributed generation; stochastic frontier analysis;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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