The Impacts of the Operating Conditions and Energy Transition in the Regulation of the Electricity Distribution Networks

The energy transition is progressing, and distribution system operators (DSOs) have an important role in this change. It is critical and essential that the economic regulation of the monopoly sector supports and ensures this energy shift towards carbon-free future. This paper evaluates the existing regulation model in Finland and the conflicts between regulation objectives and steering effects. In the other words, the regulation influences profitability of investments and thus, it affects the development of the electricity network. In the paper, we propose justified alternatives and modifications to the present regulation. Based on a comprehensive survey of the various regulation models in Europe, it is suggested the future Finnish regulation model to include support for innovations and increased transparency.