Regulatory issues for transmission and distribution grids

Transmission Grid Design

The transmission grid (which operates at very high voltage) is designed to offset the deficits and surpluses between generation and demand in different areas of a country, or between neighbouring countries, and paves the way for establishing national or even international markets. This ensures that the most efficient generation is dispatched, globally speaking, nearly irrespective of demand location.

Distribution Grid Design

Distribution grids, by contrast, carry electric power to most consumers, i.e. the consumers not directly connected to the transmission grid. They transform electricity from their high-voltage (HV) distribution lines, which are densely meshed to be able to receive energy from several nearby nodes, to medium (MV) and low (LV) voltages, where the distribution grid layout becomes more radial. This arrangement is designed to strike the most suitable balance among grid investment costs, energy losses and, especially lately, environmental impact.

Layout and Voltage

The layout and voltage level used for these grids vary with the size of the region covered, the density of electric power consumption and the distance between the main consumer hubs and generating sites.

In most countries, the transmission grid consists of lines and other facilities (such as transformers or circuit breakers), typically with phase-to-phase voltages of 220 kV or higher, although in some electrically small countries voltages may be lower: 132 or even 66 kV.

The phase-to-phase voltage in distribution grids varies more widely. In Spain, for instance, voltages of 132, 66, 45, 20, 6, and 1 kV and 380 V are commonly used.

Transmission grid regulation

Transmission grid regulation should focus on the questions and issues described in the introduction to this Chapter and summarised in Fig. 6.1:

  • Network planning.
  • The definition of suitable business models.
  • Siting issues and fair assignment procedures of network capacity (management of access to the grid).
  • Cost, with the proper performance of the wholesale electricity market as the primary concern.
Fig. 6.1: Network planning

Fig. 6.1: Network planning

In distribution grids, in turn, where the vast majority of end consumers are connected, service quality is an issue of particular regulatory importance. Furthermore, as indicated before, since the large number of distribution grid facilities rules out individually calculating the regulated remuneration for each, global, simplified, procedures need to be deployed, whereas no such procedures are required for transmission grid regulation.

Lastly, as discussed below, in competitive electricity markets, very strict requirements must be instituted to separate transmission and system operation from generation at the wholesale level, because of the need to guarantee an unbiased market operation. Such measures have not been necessary for the distribution grid, although the presence of distributed generation is also forcing a change in the traditional regulatory paradigm.