Making the most of DER: international insights for regulating transformation in distribution networks

A Q&A with Dr. Gabrielle Kuiper was published on Forbes on March 5, 2019.

How do you create policy and regulation for a complex multi-way energy system to fast-track emissions reductions and improve consumer outcomes?
 
In October 2018, America’s Power Plan Director Mike O’Boyle team had the pleasure of meeting with Dr. Gabrielle Kuiper, who was awarded a Churchill Fellowship from Australia to visit North America and Europe to search for answers to this question, especially the regulation of distribution networks.  Since that meeting, Dr. Kuiper has interviewed dozens of experts and regulators from leading regions around the world, including New York, the United Kingdom, Canada, France, the European Union, and Norway.
 
Kuiper recently released her report on this topic, with insights and recommendations highly consonant with America’s Power Plan.  Dr. Kuiper’s research shows that international regulators are exploring many of the policies U.S. states find suitable to maximize cheap but variable renewables, take advantage of demand flexibility, and reshape utility business models away from capital intensity toward system optimization. For example, the report finds the U.K., E.U., and Norway are exploring models for optimizing demand-side resources through a distribution system operator model, similar to (and in some cases inspired by) New York’s Reforming the Energy Vision (REV) process.
 
Here are some other key policy recommendations coming from international regulators and experts:
 

  • The need to revise the role of the distribution utility into a distribution system operator and optimizer (DSO).  This is a live, but nascent, conversation in each jurisdiction Dr. Kuiper visited, including the European Commission, which is requiring member states to develop flexibility markets through their DSOs.
  • Distribution system planning.  Like many U.S. states, the U.K. and Norway are updating system planning to include flexible demand and other non-wires solutions.  Norway provides a case study for integrating high levels of electrification into these plans.
  • Performance-based regulation (PBR) as a key tool for balancing societal and customer outcomes.  The UK is refining its approach to PBR after RIIO (Revenue = Incentives + Innovation + Outcomes) led to improved consumer outcomes but very high utility windfalls. Norway, the UK, and Ontario are using benchmarking to evaluate the performance of their distribution utilities.
  • Benefits valuing distributed energy resources based on time and location.  The European Commission’s Clean Energy Package puts time-varying rates at its center by giving customers a right to aggregate their services to the wholesale market, access dynamic pricing, self-generate, and access a smart meter.

 
In addition, Kuiper evaluated what regulatory reform characteristics make for a successful alignment of public policy objectives and utility regulation. Kuiper found that at the outset of reform efforts, clear leadership, and vision articulated by a legislator and regulator, is necessary to drive the process toward meaningful reform.  Once goals are set and articulated to the relevant agencies, other important regulatory design characteristics include transparency, robust stakeholder participation, and flexibility and agility in regulatory decision-making.
 
These models help to put some perspective on ambitious reforms in the U.S., like REV and California’s Distributed Energy Resources Action Plan.  Though these models are resource intensive and not replicable in many states today, resonance with international markets facing similar policy and technological shifts indicates they are being followed by other outside the US.  But having additional models can help regulators figure out what approach might fit them best – so we invite you to dig into Dr. Gabrielle Kuiper’s research!