IEEE Power & Energy Magazine - July/August 2015 - 76

IMAGE LICENSED BYINGRAM PUBLISHING

E

Distribution
Pricing

ENERGY TRANSPORTATION COSTS TYPICALLY
make up a quarter of consumers' electricity bills, and
most of this amount (90% in the United Kingdom, 75% in
Brazil and Spain, and 60% in India, for example) is due to
energy transportation through the distribution network. This
cost could escalate over the next few decades as distributed energy resources are expected to grow substantially in
response to the financial incentives many governments have
created for renewable and efficient generation to meet their
CO2 reduction targets.

Digital Object Identifier 10.1109/MPE.2015.2416112
Date of publication: 25 June 2015

76

ieee power & energy magazine

The cost, however, can be minimized if distribution network operators (DNOs) have an appropriate distribution
pricing scheme to influence existing and new network users
concerning when and where to use the network. Through
an economic pricing scheme, DNOs could take the lead in
promoting efficient investment and effective use of distribution networks for the long-term interests of consumers and
society as a whole.
Furthermore, economically efficient pricing is vital
in encouraging significant growth in distributed energy
resources (DERs), as DNOs can be rewarded for reducing
network losses and building new infrastructure, and also for
reducing the cost of energy supply. Moreover, with advances

1540-7977/15©2015 IEEE

july/august 2015



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IEEE Power & Energy Magazine - July/August 2015 - Cover3
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