Chapter 14. Regulating European distribution systems to achieve net zero: untapping flexibility efficiently

To enable deep electrification of the economy, a significant expansion of grid distribution capacity will be required. However, how much grid investments eventually will be needed depends on how the grid is expected to be used. This chapter first details the three prominent regulatory tools that are currently being promoted in Europe to unlock flexibility in grid usage at the distribution level: distribution network access tariffs; smart connection agreements; local congestion markets. Besides refining and coordinating these regulatory tools, it is argued that the regulatory framework around the Distribution System Operator (DSO) also needs to be revised to avoid conflicts of interest. Finally, the chapter questions the coordination between DSOs and transmission system operators (TSOs) which naturally surfaces when new market mechanisms involving DERs are put in place. It is argued that in the longer run, one can imagine a new reorganization of tasks between TSOs and DSOs.