Regulatory capital and social trade-offs in planning of smart distribution networks with application to demand response solutions

Abstract

Under the current UK regulatory framework for electricity distribution networks, asset upgrades are planned with the objectives of minimising both capital costs (and thus customer fees) and social costs such as those associated with carbon emissions and customer interruptions. This approach naturally results in economic trade-offs as network solutions meant to reduce social costs typically increase (sometimes significantly) capital costs, and vice versa. This can become an issue in a smart grid context where new operational solutions such as Demand Response (DR) may emerge. More specifically, even though there is a general belief that smart solutions will only provide benefits due to their p..