Integration of distributed generation in distribution networks: regulatory challenges

This paper analyzes how traditional regulation of distribution system operators (DSO) has to be improved to accommodate higher levels of distributed generation (DG). In addition, new economic signals to be given to DG operators for system efficient integration are proposed. Regulatory improvements at the European level are recommended. Recommendations are centered on schemes for DSO revenue compensation to consider incremental network costs due to DG, distribution network planning integrating DG, and DSO incentives for improving network performance with active integration of DG. Regarding DG economic signals, recommendations are focused on the design of DG connection and use-of-system charges, the revision of current DG support mechanisms based on flat feed-in tariffs, and the provision of ancillary services by DG for network voltage and flow controls and islanding.