THE FUTURE OF DSOs - Vlerick Business School/media/corporate-marketing/our-expertise/pdf… · to the transmission system operated by transmission system operators (TSOs). Regulatory

THE FUTURE OF DSOsOUR TAKE ON ENERGY COMMUNITIES AND REGULATORY SANDBOXES

2 / The Future of DSOs

PREFACE 4

1 ENERGY COMMUNITIES A.K.A. CITIZENS ENERGY COMMUNITIES 5

1.1 CECs: what they do and why 5 1.2 CECs and DSOs: how to work together 7 1.3 How should CECs be supported? 7 1.4 What next? 8 Takeaways 8

2 REGULATORY SANDBOXES 9

2.1 What’s in a name? 9 2.2 Approved innovations and exemptions granted 14 2.3 Discussion and findings 14 2.4 What next? 15 Takeaways 15

LET’S WORK TOGETHER 16

Vlerick Energy Centre 16 DSO Chair 16 Future Grid Managers Programme 17

CONTACT US 17

ACKNOWLEDGEMENTS 18

CONTENTS

The Future of DSOs / 3

PREFACEThe energy transition is changing the energy ecosystem. Until recently, energy

production was mostly centralised, with relatively few large power plants connected

to the transmission system operated by transmission system operators (TSOs).

Regulatory changes to accommodate the integration of renewable energy initially

focused on the transmission aspect, which resulted in a significant transformation of

the TSOs, while leaving the distribution system operator (DSO) landscape virtually

unaffected. In recent years, however, due in part to advances in renewable energy

technology, power generation and distribution have become more decentralised1.

DSOs now find themselves at the centre of change, operating the grid which all these

new players – producers and prosumers – want to connect to and use. The challenge

is for DSOs to enable and facilitate change, rather than becoming a bottleneck.

In 2018 the DSO Chair organised two workshops to discuss topical issues facing

the future of DSOs: (1) energy communities and (2) regulatory sandboxes.

Despite being selected independently of each other, these two topics turned out

to be interrelated.

Prior to each workshop we interviewed key stakeholders and participants as well

as several experts to gather background information as a basis for discussion.

This white paper provides a round-up of the findings and insights from each

workshop as well as suggesting areas for further exploration.

Saskia BroeckxAffiliated researcher


Samson Yemane HadushResearch fellow

Ariana RamosPostdoctoral researcher

Leonardo MeeusProfessor

1 A situation as described in scenario 3 of our white paper “Who will lead the energy market in 2030?”, November 2015.

COPYRIGHT © 2019 VLERICK BUSINESS SCHOOL, BELGIUMNo part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.


1 ENERGY COMMUNITIES A.K.A. CITIZENS ENERGY COMMUNITIES

Energy communities are poised to revolutionise the energy sector. REScoop.eu, the first European federation of energy cooperatives, was founded in 2013 and has received recognition from the EU. However, they are still very much the new kids on the block and at the time of the workshop, few energy communities and DSOs had actually met. The workshop brought the two parties together with the aim of finding common ground to address many of the uncertainties and obscurities surrounding their respective future roles.

Note: Since the workshop, the world has not stood still. At the time of finalising this white paper, negotiations on the E-Directive, one of eight proposals included in the EU Clean Energy Package, had been successfully concluded. This Directive defines energy communities, stipulating that Member States must provide an enabling legal framework. While in earlier drafts of the Directive these energy communities were labelled “local energy communities”, the final version renamed them “citizens energy communities”. For the sake of consistency, we will use the new terminology from now on (CECs).

1.1 CECs: WHAT THEY DO AND WHYThe E-Directive defines a citizens energy community as follows: “a legal entity which is based on voluntary and open participation, effectively controlled by shareholders or members who are natural persons, local authorities, including municipalities, or small enterprises and microenterprises. The primary purpose of a citizens energy community is to provide environmental, economic or social community benefits for its members or the local areas where it operates rather than financial profits. A citizens energy community can be engaged in electricity generation, distribution and supply, consumption, aggregation, storage or energy efficiency services, generation of renewable electricity, charging services for electric vehicles or provide other energy services to its shareholders or members.”

While some feel this definition seems to describe citizens energy communities (CECs) as overlapping with DSOs, practice shows that the majority of CECs have no ambition whatsoever to own or operate a grid, which was confirmed by the workshop participants.

CECs come in many forms and sizes, but most of them are engaged in one of the following activities2:

• Awareness creation – e.g. Buurtkracht3, the energy-saving initiative of Enexis.

• Collective switching and energy supply, i.e. helping people buy green energy more cheaply, often from community-owned renewable resources (see collective generation investment) – e.g. Enercoop4

in France.

2 Peer-to-peer energy trading was not discussed at the time; see section 2. 3 www.buurkracht.nl4 www.enercoop.fr

1


• Collective generation investment, i.e. citizen-owned cooperatives producing and marketing renewable energy sources to their cooperative shareholders – e.g. Ecopower5 in Belgium, Traais Energie Collectief6 in the Netherlands and SomEnergia7 in Spain. With the exception of Traais Energie Collectief, they are also involved in collective switching.

The German cooperative Elektrizitätswerke Schönau is one of the few examples of CECs doing all of the above, as well as operating a distribution grid (see Box 1).

CECs therefore tackle energy issues in different ways, but what is their motivation? We expected them to be driven first and foremost by sustainability, economics and a desire for energy independence. Yet participating CECs stressed social motives. While there are government programmes to address and reduce energy poverty, for example, these are felt to be too top-down. CECs pride themselves on being bottom-up, grassroots initiatives. Also, technological innovation is on their agenda only insofar as new technologies can be tools for social innovation. It is, however, not a goal in itself.

ELEKTRIZITÄTSWERKE* SCHÖNAUSchönau is a small town in the German Black Forest region. Elektrizitätswerke Schönau, or EWS, is a civil-society initiative, born in the aftermath of the Chernobyl disaster and in response to the intransigent attitude of the local grid operator.

In the late 1990s it was the first of its kind in Germany to take over the grid as well as electricity supply to the local community. As soon as the German electricity market was deregulated, EWS started supplying all its Schönau customers exclusively with electricity generated from renewable and cogeneration sources, i.e. combined heat and power. Once the German electricity market was opened up to private households, EWS began to supply customers with green electricity on a nationwide scale. It also launched comprehensive programmes to subsidise the installation of renewable energy and cogeneration systems.

Over the years, EWS has expanded its portfolio of activities to include the supply of natural

gas and biogas. Separate legal entities are responsible for designing, funding, building and operating environmentally friendly power generation units, including systems that generate energy from wood. The generation portfolio is to be continuously expanded with wind and hydropower units as well as additional cogeneration plants.

FIGURES AS OF DECEMBER 2016• Cooperative shareholders: 5,135• Electricity customers: 164,462• Natural and biogas customers: 12,781• Employees: 110• Subsidised sustainable generation units: approx. 2,600

EWS does more than provide energy; it also wants to encourage people to take matters into their own hands, to instigate change and to take action. The cooperative is also pursuing a political agenda, campaigning against nuclear energy while taking an active part in the legislative process.

Source: www.ews-schoenau.de

* Elektrizitätswerke is German for power plant

5 www.ecopower.be6 http://traaisenergiecollectief.nl7 www.somenergie.coop


8 www.buerger-energie-berlin.de9 www.hieropgewekt.nl

1.2 CECs AND DSOs: HOW TO WORK TOGETHERThe case of Elektrizitätswerke Schönau shows that there are indeed CECs operating a grid, i.e. taking on the role of a DSO, and others, such as BürgerEnergie Berlin8, are trying to follow suit. However, much to the surprise and relief of the DSO representatives attending the workshop, these examples appear to be the exception. Since distribution grids require significant investment and management time and effort, most CECs want to remain connected to the grid in order to be able to provide uninterrupted services, on the condition that they can count on a fair tariff structure.

This caveat should not be ignored, as

cooperative shareholders tend to be more activist, and at times CEC management finds itself having to keep its members in check, convincing them that going off-grid is not necessarily in their best interest. In short, fair tariff structures are essential to ensure continued close collaboration. The draft E-Directive stipulating that CECs can, in principle, own and operate a grid is a proverbial big stick. Although the final version gives Member States leeway to not allow CECs to own grids, thereby tempering this provision, the fact that it was at one point included in the draft suggests a trend in this direction.

1.3 HOW SHOULD CECS BE SUPPORTED?Workshop discussions revealed that both parties, CECs and DSOs, agree that in the future CECs will have a role to play, though opinions may still differ on the nature and extent of that role. In any case, several studies have pointed out that policy support is necessary to enable the social innovation CECs represent. The question is then what form this support should take.

Should there be regulatory incentives, such as tariff design, renewable energy support schemes or tax incentives? Or should support focus on market incentives as regards balancing markets, grid services and capacity mechanisms? Or do we need institutional measures, such as government-supported knowledge platforms to share information

and put the CEC movement on a more professional footing – the platform HIER opgewekt9, a joint initiative of the Dutch government and several DSOs is a case in point.

Participants argued that these are all complementary measures and agreed that a combination would be most appropriate. The proposal to use regulatory sandboxes (see section 2), however, was rejected by the CECs. Not least because of the negative, derogatory connotation of the term sandbox, which suggests something small and experimental, while it is their ambition to become mainstream, challenging the status quo.


1.4 WHAT NEXT?It is worth noting that many national regulatory authorities (NRAs) were initially sceptical about CECs. Most regulators have welcomed the increasing consolidation among DSOs, as benchmark analyses have shown that smaller DSOs are often less cost-efficient. But with the emergence of CECs, do we not risk turning back the clock? NRAs, being chronically understaffed, are nervous about what the future will bring and while strengthening the NRAs might seem like a good idea, budgetary constraints make it unlikely to happen.

In fact, their scepticism and nervousness are more than legitimate: as far as retailers and DSOs are concerned there is robust consumer protection, but what about CECs? Will they be free from regulation? Will they be treated as retailers or as DSOs?

Meanwhile, the EU has dispelled most of these concerns in the latest versions of the E-Directive. The challenge is now to enable and facilitate CECs at Member State level by implementing the E-Directive. And, as we shall argue in the next section, regulatory sandboxes do have a role to play – in some Member States they already do so.

TAKEAWAYS• CECs are mostly driven by social and environmental rather than economic motives.

• Most CECs do not want to go off-grid. Fair tariff structures are essential for continued collaboration.

• Policy support should enable and facilitate further development of CECs.

2 REGULATORY SANDBOXES

Regulatory sandboxes (RSBs) are an even more recent phenomenon than CECs. Only a few countries have experience of implementing them. During the workshop we discussed the examples and lessons learned from Britain, Germany and the Netherlands. Currently, several other European countries are also considering the introduction of RSBs.


2.1 WHAT’S IN A NAME?There is no single comprehensive definition of a regulatory sandbox yet. Is it a means to test new technologies, services and business models in a real-world environment? Or is it a mechanism to experiment with new regulation? And are regulatory exemptions granted on a case-by-case basis or do they apply to so-called regulation-free zones? The examples of Britain, Germany and the Netherlands show that there are different systems depending on their purpose and implementation.

Britain has reserved RSBs for short trials of innovative technologies and business models, explicitly excluding them as a means to change policy or regulation.

On a case-by-case basis, Ofgem, the Office of Gas and Electricity Markets, i.e. the British NRA, grants regulatory exemptions to qualifying projects for the duration of the trial, which is two years from the date of the sandbox being granted. Subsequently, the normal rules apply. It is possible to obtain an extension. Although RSBs are not a priori meant to change policy or regulation, lessons learned are documented and serve as input for future policy development. The number of sandbox projects is not limited, and anyone can apply. So far seven trials have been approved, with the applicants being commercial companies (see also Box 2).


2 REGULATORY SANDBOXES IN BRITAINRSBs are jointly coordinated by Ofgem’s Innovation Link, a “one-stop shop” offering support on energy regulation to businesses looking to launch new products, services or business models, and ELEXON, the Balancing and Settlement Code company for the electricity market in Britain. The service was launched in February 2017.

So far, the following sandboxes have been granted:

CITIZENS ENERGY COMMUNITIES: i.e. (1) Chase Community Solar10, a community benefit society, has fitted PV solar panels to homes owned by Cannock Chase District Council. The project aims to automate time-of-use-tariff selection, balancing community solar and storage and lowering costs by prioritising how and when power is imported from, or exported to, the grid, and (2) Trent Basin11, a brownfield site in Nottingham and part of Project SCENe (Sustainable Community Energy Networks), which looks to develop different ways of generating and supplying locally generated heat and electricity to homes and commercial buildings.

PEER-TO-PEER ENERGY TRADING: i.e. (1) a consortium led by EDF Energy R&D UK12, and including Electron, PassivSystems, Repowering London and University College London, (2) the Empowered project13, which aims to explore the technical, regulatory and economic feasibility of local or regional peer-to-peer networks involving both businesses and households, (3) Repowering London14, a cooperative that has invested in community-owned PV solar panels fitted to the roof of a tower block powering the communal areas; the trial aims to allow residents to benefit more directly from local generation and tests peer-to-peer electricity trading across a distributed ledger platform, and (4) BP, together with an existing licensed energy supplier, runs simulations to understand the opportunities for using a platform to match supply and demand, as well as how customers might interact with and benefit from it.

INNOVATIVE TARIFF OPTIONS: OVO Energy15 is testing an innovative tariff supported by smart home technology, geared towards customers with storage heaters who are currently limited to two tariff options, whilst also enabling grid balancing capabilities.

Although only seven sandboxes have been granted so far, Ofgem has received many more applications. Most of these, however, do not require a sandbox. It appears that innovators do not always know what they can and cannot do, which means Ofgem has had to do more work than expected to understand the applicants’ proposals and identify whether any regulatory barriers existed. Many applicants ended up going ahead without a sandbox. On the positive side, this experience has highlighted the added value of their fast, frank feedback service, another initiative under the Innovation Link umbrella.

The trials enabled by the regulatory sandbox programme are all small-scale projects. It should be noted, however, that energy innovation in Britain is not limited to these small initiatives. A separate programme intended for DSOs, the Electricity Network Innovation Competition, provides funding worth GBP 70 million per year for the development and demonstration of new technologies, operating and commercial arrangements, enabling projects of a size similar to the ones undertaken in, for example, Germany.

Source: www.ofgem.co.uk

10 http://chasesolar.org.uk11 www.trentbasin.co.uk12 www.edfenergy.com/about/research-development13 Forest Lawns Ltd, trading as Empowered (p2ppower.co.uk)14 www.repowering.org.uk15 www.ovoenergy.com

Although not conceived as an RSB, the German SINTEG funding programme enables experiments with new technologies, procedures and business models, while providing for regulatory exemptions. The programme has defined five large-scale showcase regions geographically dispersed across the country, where participants can develop and test renewable energy solutions with a view to rolling them out on a larger scale. A fixed-term ordinance applicable only to the projects in these showcase regions can offset any financial disadvantages incurred to comply with existing regulation (see below). Lessons learned from these projects will be used to update the existing legal framework. The programme, which was launched at the end of 2016 and will run for five years, is now closed for applications. The current projects were submitted by consortia of companies and research institutions (see also Box 3).

In the Netherlands, RSBs are projects to experiment both with regulation, e.g. tariff regulation systems, and with new technologies and business models. Those provisions in the electricity and gas law for which exemptions may be granted have been predefined. Project developers must apply for the exemptions they want, which are then granted by the Dutch authorities on a case-by-case basis. The default duration of an exemption is ten years, but extensions are possible. Lessons learned from these projects will be used to update the existing legal framework. Processing capacity is such that the number of applications is limited to 40 per year. So far only cooperatives could submit projects, but new proposed legislation aims to open up the system to DSOs as well (see also Box 4).



3 REGULATORY SANDBOXES IN GERMANYThe SINTEG programme forms part of a package of measures entitled “Innovative Digitisation of German Business” and serves to help implement the Federal Government’s Digital Agenda. A total investment of more than EUR 500 million is made available for projects that seek to develop blueprints for a smart renewables-based electricity supply that can then be rolled out on a wider scale. The Federal Ministry for Economic Affairs and Energy provides more than EUR 200 million, the remaining funding coming from the private-sector companies involved. This ministry oversees the programme, while the German Bundesnetzagentur (BNetzA), the German regulator for electricity, gas, telecommunications, post and railway markets, implements it.

The five showcase regions were launched either in late 2016 or early 2017 and include:

1. C/SELLS16 in the southern German states of Baden-Württemberg, Bavaria and Hesse. This local flexibility market focuses on solar energy and involves 30 million residents, 800,000 active prosumers, 35 cells, 1 million households and 2,000 controllable facilities.

2. DESIGNNETZ17 spans the federal states of North Rhine-Westphalia, Rhineland-Palatinate and the Saarland and showcases the optimised use of flexibility options. It uses decentralised solar and wind energy to supply large centres of demand and has implemented a hierarchical system to issue requests for flexibility, based on data from some 140,000 meters.

3. ENERA18 is located in the north-west of Lower Saxony. This local flexibility market showcase makes use of

decentralised generation plants and focuses on consumer and storage flexibility. It also showcases intelligent network resources for grid management.

4. NEW 4.0 (NORDDEUTSCHE-ENERGIEWENDE 4.0)19 brings together the city of Hamburg – a large centre of demand – and the federal state of Schleswig-Holstein – a key centre for the generation of wind energy. This local flexibility market project aims to show that it is possible to supply 70 per cent of the entire region’s energy demand from renewable sources by 2025 – in a way that is both secure and reliable. It uses state-of-the-art technology and improved market rules to balance supply and demand.

5. WINDNODE20 spans five eastern German states plus Berlin, which coincides with the balancing zone managed by TSO 50Hertz (excluding Hamburg). This showcase aims to efficiently combine renewable energy generation, electricity grids and energy users through digital networking, and focuses on the use of flexibility options at all levels. It also aims to define market roles and business models as well as developing standards for a new energy system.

Source: www.bmwi.de

16 www.csells.net17 www.designetz.de18 http://energie-vernetzen.de19 http://www.new4-0.de20 www.windnode.de

4REGULATORY SANDBOXES IN THE NETHERLANDSThe Ministry of Economic Affairs and Climate Change proposes the law regulating regulatory sandboxes, while the RVO, the Netherlands Enterprise Agency, implements the exemptions.

So far, the following projects have been approved:

CITIZENS ENERGY COMMUNITIES: i.e. (1) three apartment buildings in Tilburg fitted with PV solar panels, solar heat collectors and heat buffers, (2) Villa de Verademing21 – an apartment complex for 19 households in The Hague that has been transformed into an energy-neutral building with a heat pump, solar heat collectors for hot water, PV solar panels, a wind turbine, a storage system (hydrogen and synthetic fuel) and a smart grid for the entire building, (3) Vereniging Aardehuis22 – 23 low-impact, low-energy earth houses and one larger building that seek to be energy-independent, (4) Energiecoöpe-ratie Bodgraven-Reeuwijk23 – a cooperative supplying 2,500 households with energy produced by a 2.3 MW wind turbine and 16,000 PV solar panels, and (5) Republica Papaverweg24 – a 15,000 m2 development in Amsterdam North, consisting of a hotel, residential buildings, commercial buildings

and a parking structure. It will be equipped with an integrated electrical and thermal microgrid, including ATES (Aquifer Thermal Energy Storage), local renewable energy production sources, EV charging points, large centralised batteries, smart energy management systems and a private distribution network for both heat and power. Construction is planned to start in early 2019.

PEER-TO-PEER ENERGY TRADING: i.e. (1) Amersfoort Duurzame Stad25 involving 820 households and a sports complex using a smart grid with blockchain technology, (2) Eemnes Energie26, a cooperative of 100-200 prosumers of solar energy that aims to grow to 1,500 prosumers within ten years, and (3) Gridflex27, a three-year pilot project in Heeten involving households, companies and knowledge institutes that is striving to make the business case for a local smart grid.

Projects involving power-to-gas conversions and other experiments with transport and conversion of gas or methane were also submitted but are not allowed under the current legislation.

Source: www.rvo.nl


21 www.villadeverademing.nl22 www.aardehuis.nl23 https://energiecooperatie-bodegraven-reeuwijk.nl24 https://spectral.energy/projects25 www.amersfoortduurzamestad.nl/eemstroom-energiecooperatie-amersfoort26 https://eemnesenergie.nl27 https://gridflex.nl/

Flanders has draft legislation to enable the creation of low-regulation zones, i.e. geographically defined areas where temporary exemptions from certain regulatory requirements apply.

Note: Regulatory sandboxes are not to be confused with exemptions included in law, such as those enabling merchant intercon-nections between different countries by granting regulatory exemptions based on security of supply arguments. The Estlink is a good example: this high-voltage connection

between Finland and Estonia was set up as a merchant interconnection to avoid passing on the costs to all consumers in those countries, and instead enabling a pay-for-use service. Merchant interconnections, however, are predefined exemptions. RSBs are meant to experiment with new regulation and/or market arrangements. Put this way, one could question whether the Dutch system actually qualifies as a fully-fledged RSB – the provisions eligible for exemption being defined in advance.


2.2 APPROVED INNOVATIONS AND EXEMPTIONS GRANTEDIn Britain, sandboxes are mainly CECs and peer-to-peer energy trading projects (see Box 2). They are granted grid tariff discounts, double invoicing is authorised – i.e. they can invoice traded solar energy directly – and they are considered licence-exempt suppliers. In order to be able to comply with the Balancing and Settlement Code, these initiatives have to work with a licensed supplier.

In Germany, the five showcase regions include large-scale projects, often local flexibility markets (see Box 3). All projects were granted the same exemptions; however, it is debatable whether these are actually true regulatory exemptions. Strictly speaking, most are refunds of fees paid for partici-pation in the showcase projects. Moreover, project owners need to apply for each refund

separately. The only true exemption relates to DSO cooperation, which means that the more than 800 participating DSOs are each allowed to create innovative market platforms for local flexibility services, without having to engage other DSOs.

In the Netherlands, RSBs are mainly used for small-scale and large-scale peer-to-peer energy trading projects, CECs ranging from three apartments to 2,500 households, and local flexibility markets based on smart microgrids (see Box 4). Without exception, all these projects were granted the same exemptions: the right to own and operate the grid, grid tariff discounts, DSO metering obligations and exemptions from supplier obligations related to invoicing and data management.

2.3 DISCUSSION AND FINDINGSThe design of the RSB determines what kind of trials will be undertaken. This explains why Germany has mostly large-scale DSO-led projects and few if any bottom-up projects such as the peer-to-peer energy trading and small CECs we see in the Netherlands and Britain. This peer-to-peer energy trading also turns out to be one of the most innovative services offered by CECs and is only made possible by RSBs28.

The most important exemptions to be granted are those related to supplier licences and supplier obligations (see Britain and the Netherlands). These exemptions are likely to be the first to be adopted in standard regulation. The Dutch examples also show that exemptions have to be granted not only to the RSB project owners, but also to other parties involved, such as DSOs and suppliers. This adds to the complexity, which is probably what NRAs are not looking forward to.

How long should a trial period last? Interviewees and participants agreed that an exemption period of two years counting from the date the sandbox is granted, as is the case in Britain, is definitely too short. While a default of ten years, the exemption period used in the Netherlands, seems excessive, the Dutch system stipulates that the exemption would be reviewed if regulation were to change during the exemption period.

Though the jury is still out on a uniform definition of RSBs, having discussed the pros and cons of the different systems, it seems fair to conclude that in order to take full advantage of an RSB, it is best not to define the provisions for which exemption may be granted in advance, as is the case in the Netherlands. Dutch practice also shows that if potential exemptions are predefined, project developers by default apply for all of them, whether or not they believe they need them. A public consultation session

28 Peer-to-peer energy trading was not discussed during the workshop on CECs, however.


including participants in RSB projects in the Netherlands has already revealed that the current scope is too limited and that, in principle, all provisions should be up for experimentation. This would enable authorities to identify any unwanted or unintended regulatory obstacles to important innovations.

As to who should coordinate or manage RSBs, most of the workshop participants felt it is only logical that the NRA and any responsible national ministry or agency should cooperate closely. This would avoid situations where innovators are too restricted by regulation or where regulators are faced with consequences that were not anticipated or considered by the other party. How this cooperation would work in practice, however, requires further investigation.

Finally, as with any system, there is always a risk of misuse. The examples discussed show that project owners often resort to RSBs to obtain a tariff discount or other financial advantage, which is not what RSBs were intended to achieve. One of the weaknesses of the RSB system in Britain, for example, is its lack of financial resources. The NRA risks spending time and effort evaluating projects and granting regulatory exemptions to projects that will not materialise due to lack of funding. There is clearly scope for coordination and cooperation between initiatives to support innovation and RSBs, as is the case in the German SINTEG programme. Improper use of RSBs, however, is no reason to abandon the system altogether; rather, it should be an incentive to improve their design.

2.4 WHAT NEXT?With technologies and business models changing at an ever-faster pace, and in a context of ever-more regulation and standar-disation, it has become increasingly difficult to regulate ahead of time or to anticipate the obstacles caused by regulation. Participants in the workshop were unanimous: we will have to accept that we have no choice but to play catch-up, which means RSBs are not only useful, but necessary.

Moreover, given that regulation is increasingly set by the EU and considering the context of EU network codes, i.e. rules governing grid connections, markets and system operation, designed to provide a sustainable, secure and competitive electricity market across the EU, the question is shouldn’t there be an EU regulatory sandbox in order to avoid EU regulation becoming an obstacle?

TAKEAWAYS• Although there is no uniform definition of RSBs yet, there is no doubt as to their added value:

in order to enable energy innovation, RSBs are not only useful, but necessary.

• For both innovators and regulators, RSBs are a valuable learning experience, either to better grasp existing regulation or to identify potential regulatory barriers to innovation.

• The main objective of an RSB is not financial. To ensure proper use of the RSB mechanism, it should be coupled with innovation funding services.

• For the time being and pending an EU regulatory sandbox, RSBs are national initiatives.


LET’S WORK TOGETHER

Since the start of deregulation in the late 1990s, the energy market has undergone dramatic changes and the pace of change is not about to slow down any time soon. At Vlerick, we therefore keep our finger on the pulse of the energy industry.

Do you want to get involved in research projects, training or knowledge exchange? Or are you looking to expand your network? Here’s how we can help.

VLERICK ENERGY CENTREThe Vlerick Energy Centre is a platform for discussing the future of energy, focusing on the roles of DSOs and TSOs. The Centre has had and still has several research chairs, one of which is the DSO Chair. Our flagship international executive education programme − The Future Grid Managers Programme − tackles the management challenges and opportunities specific to DSOs and TSOs in the energy industry in Europe (see page 17). The Vlerick Energy Centre also offers customised training programmes and networking events.

DSO CHAIRThe DSO Chair was founded in 2015 by Dutch DSO Alliander and Belgian DSO and long-standing Vlerick partner Eandis to support and stimulate the ongoing policy and regulatory debate on the future of distribution grid companies. In 2018 Fluvius, the company formed by the merger of DSOs Eandis and Infrax, renewed the DSO Chair, confirming its focus and objectives. Since then and up to the time of writing this white paper, two organisations have joined as members. The Chair remains open to other DSOs.

" During the first three years of our partnership the focus was mainly on joint research and studies. However, as the sector is undergoing significant structural change at an ever-increasing pace, we felt the need for dialogue and debate with other energy players. This is why we decided to set up workshops.

“The strength of these workshops lies in the fact that they are not just open to members of the DSO Chair. For each session there are wildcards to be granted to any company or organisation that could make an interesting contribution to

the discussions. The session about the regulatory sandboxes was a case in point. That workshop provided a forum for stakeholders from across the industry, including regulators from other countries, which enabled a more wide-ranging discussion than would be possible in a one-to-one with our local regulator. I’m confident that this format will get different stakeholders on the same page more readily and quickly for future issues as well. '

Donald VanbeverenDirector of Strategy and Regulation at Fluvius

Chair founder Chair members


FUTURE GRID MANAGERS PROGRAMMEAre you a leader who believes that the future of the industry can be shaped? Do you need to build capabilities to shape the future of your business? Or have you already embarked on a strategic innovation journey and are you now hungry to address cross-departmental or cross-organisational challenges on a scale that goes beyond fine-tuning? Are you looking for a platform to exchange best practices with your peers?

Whatever your needs, the Future Grid Managers Programme will suit you to a T. A joint initiative of Vlerick Business School and the Florence School of Regulation, this modular programme targets senior managers from DSOs and TSOs across Europe.

Upon completion you will have:

• A deep understanding of how sector trends and challenges can impact your organisation

• Enhanced leadership skills – and the tools you need to help your teams develop these skills themselves

• The knowledge you need to develop business cases for your organisation – based on relevant topics like digital trans-formation or citizens energy communities

• A valuable, Europe-wide network of peers, sharing best practices, experiences and ideas

CONTACT USFor more information about this paper or any of our energy-related initiatives, please contact:

Professor Leonardo MeeusDirector of the Vlerick Energy CentreVlerick Business SchoolT: + 32 2 225 41 29E: [email protected]

Isabelle De GanckSenior Business AssistantVlerick Business SchoolT: + 32 9 210 98 58E: [email protected]

ACKNOWLEDGEMENTSWe also gratefully acknowledge the contribution of the participants in the workshops, which were organised in 2018 as part of the DSO Chair.

ENERGY COMMUNITIES:

Peter van Den Heede (ABB), Eleni Diamantopoulou

(ClientEarth), Donald Vanbeveren, Luc Decoster,

Peter De Pauw and Peter Depauw (Eandis),

Jim Williame (Ecopower), Gilles Nativel (Enedis),

Rodrigues Perez Jaime Andres (Enel), Albert Ferrari

(Enercoop), Stefan Lodewijckx (Enervalis),

Caroline Delveau and Jan Van Holder (Engie),

Daan Creupelandt, Josh Roberts, Sara Tachelet and

Roland Tual (RESCoop.eu), Katinka van Beek (Stedin)

and all those who wish to remain anonymous.

REGULATORY SANDBOXES:

Luuk Spee (ACM), Daniel Schwarz (BNetzA),

Donald Vanbeveren, Luc Decoster and

Sven Van den Bosch (Fluvius), Torsten Knop

(Innogy SE), Ronnie Belmans (KU Leuven),

Werner Hengst, Michael Mollner and Thomas Stangl

(Netz Niederösterreich), Christian Jobse and

Katinka Van Beek (Stedin), Paul French and

Daniel Saker (UK Power Networks), Pieterjan Renier

(VREG) and all those who wish to remain anonymous.



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Documents

THE FUTURE OF DSOs - Vlerick Business School/media/corporate-marketing/our-expertise/pdf… · to the transmission system operated by transmission system operators (TSOs). Regulatory