Please use this identifier to cite or link to this item: http://hdl.handle.net/10071/8254
Author(s): Marques, V. M.
Bento, N.
Costa, P. M.
Date: 2014
Title: The "Smart Paradox": stimulate the deployment of smart grids with effective regulatory instruments
Volume: 69
Pages: 96-103
ISSN: 0360-5442
Keywords: Technological change
Economics of regulation
Price-cap
Cost-plus
Smart grids
Abstract: The concept of SG (Smart Grids) encompasses a set of technologies that raise the intelligence of the electrical networks, such as smart meters or instruments of communication, sensing and auto-correction of networks. Nevertheless, the cost is still an important obstacle for the transformation of the current electricity system into a smarter one. Regulation can have an important role in setting up a favorable framework that fosters investments. However, the novelty with SG is the disembodied character of the technology, which may change the incentives of the regulated network companies to invest, affecting the effectiveness of the regulatory instruments ("cost plus" or "price cap"). This paper demonstrates that the solution to this "Smart" paradox requires strong incentive regulation mechanisms able to stimulate the adoption of SG technologies. Moreover, the regulation should not jeopardize conventional investments that are unable to be substituted by SG. Thus, a combination of performance regulation and efficiency obligations may be necessary.
Peerreviewed: Sim
Access type: Embargoed Access
Appears in Collections:DINÂMIA'CET-RI - Artigos em revistas internacionais com arbitragem científica

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