bined? The Oeko-Institut is pursuing this question with other cooperation partners in the research project “Innovative regulation for intelligent networks” (“Innovative Regulierung für intelligente Netze”, IRIN).

Regulation and promotion
Experts see great potential in the possibility of strategically complementing incentive regulation with incentives for innovation, and taking explicit account of research and development costs as part of regulation. This means that the regulator allows network operators to pass on this type of expenditure directly to customers. The cost risk would then be transferred to the network customers, although they also stand to benefit from the innovations. Alternatively the companies could also be rewarded solely for their success; in other words, for the actual outcomes of their research. On the strength of successful innovations, network operators would then be permitted to raise their network charges. All the more incentive to carry out research as efficiently as possible.

Regulation, which has previously tended to hamper innovation, is also capable of providing a sophisticated range of instruments to enable network operators to be not only more efficient but also more innovative. “Nevertheless, we doubt that it will be enough to prepare the grids for renewable energies and the infrastructure for the switchover to sustainable energy systems," says Dierk Bauknecht critically. And why should network customers who happen to be connected to the grid of an innovative company be required to fund the costs of smart grids?

For Dierk Bauknecht, this raises the question of whether innovations should not also be dealt with outside of the incentive regulation regime. For example, by means of a “Low Carbon Network” like the recent initiative operated in Great Britain. All network operators there can apply for the funding of innovation projects from one fund to which all network users contribute. The regulator participates in the decision on which projects are selected, which depends quite significantly on the extent to which they contribute to the implementation of political objectives.

“The most attractive way forward appears to be a combination of both options: Every company receives a limited budget for network innovations. Anyone who wishes to exceed it must apply to a fund," as Dierk Bauknecht assesses the situation. Whichever mix of instruments ultimately proves to be most effective in practice – one thing is certain: Where innovations are developed, costs and risks are incurred. It is absolutely fundamental that the Federal Network Agency recognises this and clearly articulates to the companies that their innovations are wanted. And to facilitate the politically desired switch to sustainable energies, they are also desperately needed. Katja Kukatz

info: d.bauknecht@oeko.de | www.bremer-energie-institut.de/irin

Components of a modern energy supply

Appropriate and modern planning procedures which take account of acceptance, supply security, environmental and nature conservation and affordability

An expedient economic regulatory framework

Construction of new, decentralised power plants based particularly on renewable energies

Reconfiguration and upgrading of distribution networks in readiness for the connection of numerous new decentralised plants

Reconfiguration and upgrading of transmission networks to carry surplus electricity to distant centres of consumption

Development and implementation of new electricity storage technologies

Development of intelligent network concepts known as “smart grids” for better electronic communication and dispatching in the networks, and between energy producers, storage facilities and consumers; for example, to combine individual power plants and consumers into virtual power plants, manage load flows more effectively, keep more precise track of capacity limits in real time, or react better to fluctuating generation volumes