Comments on: How to lower electricity prices in Europe https://www.euractiv.com/section/electricity/opinion/how-to-lower-electricity-prices-in-europe/ EU news and policy debates across languages Fri, 12 Apr 2019 10:58:17 +0000 hourly 1 https://wordpress.org/?v=4.9.9 By: Mike Parr https://www.euractiv.com/section/electricity/opinion/how-to-lower-electricity-prices-in-europe/#comment-335681 Fri, 31 Aug 2018 07:35:29 +0000 https://www.euractiv.com/?post_type=opinion&p=1266679#comment-335681 Whilst there is much to agree with in what the writer says a key assertion made is wrong. “By connecting and intelligently controlling power plants, grid-use can be optimised leading to lower grid fees paid by both consumers and industry”.

I do not dispute the usefulness of VPPs which have a role to play both in distribution and transmission networks as aggregators of distributed generation and demand response. However, “grid fees” for the most part are based on a return on a given network operators asset base. Change this return and you change the costs that end users have to pay. There was a court case in Germany recently in which the regulator/gov lowered the return on the asset base – the German TSO were unhappy – hence the court case. I believe that in Germany the return on the asset base is around 8%. This seems a large amount of money for simple operation and maintenance.

In the late 1980s the rationale for privatising the transmission and distribution networks in the UK was that privatisation would “drive out the flab”. Perhaps it did. However, I’d suggest that a different type of “flab” has crept back in to (mostly privatised) distribution and transmission companies: the idea that they have a right to a given rate of return & thus follow tactics that maximise investor returns regardless of costs to what is laughably called “the customer base” – or would that be mugs that have no where else to go?.

I do not dispute that with an EU “energy transformation” there will be considerable change needed to distribution and transmission networks. However, the current “model” on which DNOs & TSOs are remunerated (return on asset base) encourages gold plating of projects, (the HVDC connection Figueras (Spain) – Perpignan (France) is but one example of many) assent base inflation, better returns to DNO/TSO owners and higher costs for electricity customers.

Possible solutions to the above problem include pulling the DNOs and TSOs back into public ownership – although this goes against the “private good – public bad” mantra that flows from EU institutions.

To conclude: I’m an ex-DNO engineer and thus have more than a passing understanding of how power networks function, how said networks are remunerated and the interesting abuses perpetrated by those literally “in-power”.

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