Transforming the grid

The transformation of electricity systems requires new networks. However, network regulation has mainly aimed at cost reduction of existing networks via incentive regulation. This book analyses if and how network regulation can accommodate these new challenges. It takes the network integration of distributed (DG) generation as an example and examines the cases of the UK and Denmark. The research question is broken down according to different governance issues: DG connection and integration, network innovation and transformation. The liberalisation literature holds that additional objectives can be incorporated in the market and regulation framework through price signals. However, a large body of literature based on evolutionary economics argues that innovation and systemic transformation require governance mechanisms that complement the price mechanism of the market to overcome the lock-in of the existing system and coordinate innovation processes. Against this general background, the study shows the potential of the standard model of regulation to pursue new objectives as well as the need to broaden the scope beyond governance based on economic incentives.