CIRED 19 th International Conference on Electricity Distribution Vienna, 21-24 May 2007 Paper 76 CIRED2007 Session 6 Paper No 76 Page 1 / 4 USE OF SYSTEM CHARGES METHODOLOGY AND NORM MODELS FOR DISTRIBUTION SYSTEM INCLUDING DER Dr. J. DEUSE*, Dr. S. GRENARD*, D. BENINTENDI**, Prof. P.J. AGRELL**, Prof. P. BOGETOFT** *Tractebel Engineering (Belgium), **FEEM (Italy), jacques.deuse@tractebel.com ABSTRACT As the design policy of current distribution networks was based on the principle that only demand is connected to the network (i.e. a unidirectional flow existing from high voltage to low voltage networks), potential technical problems could occur following DER connections. Similarly, regulatory frameworks currently in place were not designed with micro generation schemes in mind. Therefore, the existing rules could be a barrier in relation with the introduction of DER in the system and their profitability. To face these matters, the methodology developed in the EU-DEEP project starts from an electro- technical background. It focuses on two main concerns: the incidence of DER on distribution system costs and the use of system charges allocation between local generation and load. This paper discusses the set up of norm models enabling the tightly coupled interaction between technical and regulatory aspects. It is illustrated by presenting the incidence of different DER types on the development costs of distribution networks and on distribution system losses. The paper also discusses a method for “use of system charges” allocation presented earlier by the University of Manchester, but now adapted for being applicable to MV and LV systems. INTRODUCTION The design and the operation of the incumbent distribution network and the associated regulatory and market rules were decided on the basis of a unidirectional flow in the distribution network –since only demand was connected to the network. Therefore, the current integration of Dispersed Energy Resources (DER) poses a valid challenge to both utilities and regulators due to technical and regulatory issues. The potential technical problems are well documented and a careful examination of these questions shows that a large margin exists before DER introduction leads to technical difficulties. However, the introduction of DER in distribution networks touches two core issues related to the existing regulatory frameworks: the impact of DER connection on distribution network cost drivers from which rise the network design decisions and the corresponding investment costs; and the allocation of use of system charges allocation between local generation and load. Per-se, these concerns are both closely related to the technical context. Therefore, the methodology developed in the EU-DEEP project and presented in this paper starts from an electro-technical ground. The introduction of DER in the system, their profitability and their efficient introduction in the electric market (often referred as “levelling the playing field”) requires three main questions to be solved. They concern (1) the incidence of DER on system costs, (2) the “use of system” charges allocation between production and demand; and (3) the compatibility of new allocation schemes with EU treaties. In the regulation context, the set up of normative engineering regulation models (also called norm models) is of interest for regulatory bodies, particularly because this process permits illustration of the tightly coupled interaction between technical and regulatory aspects. This is discussed in the first part of the paper, while results obtained with an optimising tool on the incidence of DER on the development costs of the distribution system and the cost of losses are presented in the second part. Finally, the third part focuses on an existing use of system charges allocation methodology and extends its application range to the medium and low voltage parts of the distribution network. NORM MODELS AND DER Long-term planning of the distribution system is an essential part of the activities of a distribution network operator. Its main purpose is to determine the optimum network arrangements, and its corresponding investments to obtain maximum benefits. Normative models are a conscientious attempt to model such a complex planning problem without duplicating the industry planning system. They are a good compromise between benchmarking methods which usually do not consider inherent and inherited characteristics of utilities, and a really precise modelling of the network which is difficult to handle particularly when medium and low voltage parts of the distribution network are studied. Therefore, they are attractive from a regulatory point of view as they avoid the regulator to micromanage the utilities and they could help the regulator overcome the difficulties faced due to the lack of information. As examined in a survey carried out in EU-DEEP, norm models in general, are just special cases of engineering cost functions with varying level of information requirements leading to a high level representation of the considered network. They must, however, be able to include all distribution network cost drivers in order to enable us to find the right balance between these cost drivers and the investment required in the network. By doing so, the connection and reinforcement costs, as well as the benefits obtained with DER could be quantified from a system point of view. IMPACT OF DER ON DISTRIBUTION SYSTEM DEVELOPMENT COSTS Tool description The objective of a study using the “Dimensionnement” model is to establish long-term network development criteria at the planning stage for the electrical transmission and distribution system of a given area [1]. Development