The Need for more Flexibility in the Regulation of Smart Grids – Stakeholder Involvement

Bremen Energy Working Papers No. 13, February 2013 

(published in International Economics and Economic Policy, 11(1), 2014, 261-275)

Nele Friedrichsen, Christine Brandstätt, and Gert Brunekreeft

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Energy and climate policy drive large scale integration of distributed generation and demand side management, with massive consequences for distribution grids. New technologies and actors shape the transformation of electricity networks towards smart systems. We argue that future regulation of smart grids needs to allow more flexibility. Firstly, the core of network monopoly starts to weaken allowing for more third party involvement. Secondly, the increasing number and heterogeneity of stakeholders makes “one-size-fits-all” regulation simply less suitable, whilst regulation needs to take account of various interests. In this paper we discuss stakeholder involvement and make policy recommendations to render regulation of smart systems more flexible.