1. THE ROLE OF DISTRIBUTION NETWORK OPERATOR IN PROMOTING COST-EFFECTIVE DISTRIBUTED GENERATION: LESSONS FROM THE UNITED STATES FOR EUROPE
Karim L. Anaya, Michael G. Pollitt, Thomas Greve
Energy Policy Research Group
University of Cambridge – UK
23th International Conference on Electricity Distribution
Session 6, Paper 1218

2. Contents Aim of the paper Case studies
Competitive connection arrangements in Europe
A competitive mechanism proposal to the UK
Final remarks
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

3. Aim of the paper
Evaluate competitive and decentralised mechanisms applied by electric utilities from US in promoting cost- effective DG
Proposes an example of auction design with a focus on the UK context
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

4. Case studies Focus on the US and on Wholesale DG
Based on the large experience that US has in competitive procurement mechanisms
States with high Renewable Portfolio Standards (RPS)
Two types of competitive mechanisms:
Request for Proposals (RFP):
Medium/large size projects, evaluation criteria: quantitative, qualitative
Renewable Auction Mechanism (RAM):
Small size projects, evaluation criteria: quantitative
Other mechanisms: FIT, Bilateral contracts
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

5. Case studies Table 1: Case studies summary
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

6. Evaluation & Bidding process
Case studies
Figure 1: Main findings
Product
Renewable and non-renewable technologies
Variable total capacity
Capacity cap (project),up to 280 MW
Ownership options
Evaluation & Bidding process
Bid price (including upgrade costs/additional services)
Individual/multiple proposals
Quantitative and qualitative evaluation
Independent evaluator
Bid evaluation fee (fixed, variable)
Competitive process
Contractual terms
Variable length of contract (1-25y)
PPA pro forma (online)
Deposits
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

7. Competitive connection arrangements in Europe
Previous schemes represent well-documented decentralised competitive mechanisms
A similar auction design can be put in place by the DSOs from Europe, however….
Unbundling rules should be taken into account: DSOs with more than 100,000 customers are not allowed to purchase electricity
Two ways to deal with this:
DSOs only, where the cost of connection is bid
DSOs and third party suppliers, where the cost of connection and energy price are bid
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

8. A competitive mechanism proposal to the UK
The DNO proposes the Point of Connection (POC) and available capacity
POC: Only those POC where reinforcement is not required
Reserve price: DNO estimates the connection costs at the POC (£/MW)
Pre qualification criteria (without scoring)
Each DG bids a maximum willingness to pay/MW connected >= reserve price
Winners: those with maximum bids (£/MW)
DG owners responsible for trading energy
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

9. A competitive mechanism proposal to the UK
Table 2: Auction Design
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

10. Final remarks
A similar behaviour is observed across utilities in the way in which competitive mechanisms are managed
Auction design elements can be applied to any DSO
The bid price should reflect the total costs/benefits
Competitive mechanisms allow the market to define the price and also..
Help DSOs to manage the increase in the number of DG connection enquiries
Energy regulators could oversee more decentralised competitive strategies
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218

11. THANK YOU
Anaya, K.L., Pollitt, M.G., Greve, T. - UK – Session 6 – Paper 1218