IEEE Power & Energy Magazine - September/October 2016 - 18

900
800
700

Total Number of DNOs
Fewer Than 100,000 Connected Customers

600
500
400
300

Croatia

Malta

Greece

Slovakia

Slovenia

Luxembourg

Lithuania

Hungary

The Netherlands

Latvia

Portugal

Great Britain

Belgium

Estonia

Romania

Denmark

Finland

Austria

Poland

France

Italy

Sweden

Czech Republic

Spain

Germany

200
100
0

figure 1. The number of DNOs in selected member states based on 2016 CEER data.

on the evolving roles of European DNOs more generally, are
also presented.

The European Regulatory Context
European DNOs are responsible for operating, maintaining,
and, as necessary, developing the distribution network. They
must also comply with legal unbundling, so DNOs must be
legally, functionally, and operationally (in terms of staff)
separated from other actors in the supply chain, such as generators, transmission system operators (TSOs), and retailers.
However, there is no obligation to separate asset ownership
from vertically integrated undertakings (multiple actors of
the supply chain under a larger company). In addition, for
integrated undertakings serving fewer than 100,000 connected customers, member states may decide to waive these
unbundling rules.
In practice, there is a diversity of national implementations of EU legislation on electricity distribution. Although
the functional model of a DNO is generally the same, there
are significant differences in number, size, and activity
profiles across member states. Differences also exist in the
degree of unbundling and in the technical characteristics of
distribution networks (e.g., voltage, extent of automation,
and penetration of distributed energy resources). This is
illustrated in Figures 1 and 2.
Given the diversity of European DNOs, the EU FP7funded project THINK, in 2013, concluded that there is no
need, nor a solid justification, for a comprehensive harmonization of the regulation of future DSOs across member states.
However, that project recommended setting clear minimum
requirements in some key regulatory areas. Along these lines,
the Council of European Energy Regulators (CEER), in its
2015 report "Future Role of DSOs," addressed a number of
key aspects necessary to ensure an adequate regulatory evolution. Some of these recommendations are summarized below.
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Principles and Activities of DSOs
According to the CEER, there should be four overriding
principles for DSOs:
✔ DSOs must run their businesses in a way that reflects the
reasonable expectations of network users and other stakeholders, including new entrants and new business models.
✔ DSOs must act as neutral market facilitators in undertaking core functions.
✔ DSOs must act in the public interest, taking account of
the costs and benefits of different activities.
✔ Consumers own their data, and this should be safeguarded by DSOs when handling data.
Furthermore, recognizing the difficulty faced by national
regulatory authorities in determining noncore activities in
which future DSOs may participate, the CEER also developed a conceptual framework (Figure 3) to help in defining
what tasks in which DSOs should and should not participate. Within this simple, yet useful, framework for national
regulatory authorities, DSOs may be allowed to carry out
activities even if there is a potential for competition under
certain conditions, provided there is specific justification or
a cost-benefit motivation. DSO participation might also be
considered in cases where it helps to kick-start the development of new or under-developed markets with potential benefits for consumers. This process, which must also consider
the country-specific situation, results in three clearly defined
main categories of DSO activities: 1) core, 2) allowed under
conditions, and 3) not allowed.
The CEER acknowledges that, in general, there is no
single model for what a DSO can and cannot do. There are,
instead, a number of grey areas where this conceptual framework can help, including the provision of energy efficiency
advice, the extent of their involvement in flexibility and
storage, and engagement with end consumers in relation to
network operational issues. The more DSOs are involved in
september/october 2016

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2016