Investments for smart grids

Power systems around the world are going through profound changes. Historically, the power grid was built to transmit power from large power plants (nuclear and hydropower plants in Sweden) to consumers. Technological improvements and public policies are leading to increased penetration of renewable energy sources (e.g. solar and wind) and increasing possibilities for demand-side flexibility. These changes are also posing challenges for power distribution system operators (DSOs), who own and operate the power grids.

DSOs can meet of the challenges by adopting smart grid technologies – solutions that allow for communication between different parts of the power system, thereby giving increased flexibility and automation in the power system.

The investments that DSOs make are influenced by the regulation imposed on them. The forum for Swedish Smartgrid wanted to know if the current Swedish regulatory model provides the right incentives for Swedish DSOs to adopt smart grid technologies.

The main conclusions of our study are

• Our study finds that the current regulatory models do not promote the evolution of a smart grid in Sweden.
• The current regulatory model skews investments towards ’traditional’ copper-and-iron investments rather than new technological solutions. Companies would rather invest in new cables than sensors that monitor the performance of components.
• The regulatory model should to be changed to better reflect the true costs and benefits of investing in smart grid solutions.

The study is commissioned by Swedish Smartgrid