Need to enable anticipatory investments for Europe’s DSOs – report

In a new report Eurelectric calls for national regulatory authorities to allow Europe’s DSOs to make anticipatory investments to ready the power infrastructure for net zero.

With calls increasing across the board for anticipatory investments in the grid, i.e. those that are not immediately needed for current projects, but which can address near-future needs, the question arises as to how these can be enabled.

The concept is apparent with the long lead times for grid build out, which can lag renewables development.

Moreover in Europe, current regulatory frameworks allow DSOs to invest in building out the power grid only after a connection request is made, raising the possibility of the grid hindering such connections and ultimately putting at risk the achievement of the net zero targets.

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“National regulators must transition to a forward-looking mindset and allow DSOs to proactively invest in the infrastructure needed for net zero,” says Kristian Ruby, secretary general of Eurelectric.

He continues warning: “The cost of inaction for society will be much higher than temporarily investing at a higher level to ensure our grid can deliver all necessary services to society in a decarbonised economy.”

Eurelectric defines an anticipatory investment as “… one that proactively addresses expected developments, looking beyond immediate needs of generation or demand, assuming with sufficient level of certainty that new generation and demand will materialise, notwithstanding potential low utilisation in the short term”.

Among the proposals in the report are that national regulators must remove barriers and incentivise DSOs to invest ahead with fair remuneration and a stable investment environment.

As they are the ones managing delivery of electricity, DSOs should be entrusted to plan grid expansion and digitalisation, which in turn means stronger cooperation with the TSOs and local authorities in infrastructure planning in line with decarbonisation objectives.

To avoid complexity, anticipatory investments should be included within the existing tariff framework and incorporated into EU countries’ network development plans to ensure coordination and clarity.

To achieve these, specific policy actions suggested by Eurelectric include revising regulatory frameworks to include and define anticipatory investments, publishing relevant EC recommendations and ACER guidelines for the national regulatory authorities, and appointing adequate governance organs and indicators.

TSO and DSO cooperation also should be enforced and EU funds allocated for distribution and transmission network investments to deliver on the REPowerEU and Fit for 55 targets.