Policy makers


The 2008 IEA study for Europe quotes investments in excess of €1.5 trillion over 2007-2030 to revamp the European electrical system. Part of the generation investment will be dedicated to decentralised electricity generation means, both from renewable energy sources and combined heat and power facilities in order to meet the decarbonisation targets of the electricity system. They will also address transmission and distribution networks issues in order to increase their capacity to allow for DER connection into the network, without compromising system reliability and power quality.


  • Could distribution networks accept large amounts of Distributed Energy Resources (DER) by 2010 and beyond?
  • How to increase the share of DER-based generation?
  • How to decrease the needs for public subsidies?


EU-DEEP demonstrates that existing networks can already host large amounts of Distributed Generation (DG)

Electrical power systems have been designed to meet the demand from centralised generating units. Distributed Generation can have positive and negative impacts on the network. DG that produces reliably during peak load demand period has a positive impact. As long as the present network design criteria are complied with, it is possible to host a significant amount of DG. This hosting capacity is site and technology dependent. For instance, the integration of 1 kW of combined heat and power units in the residential market of north-west Europe is quite easy, which is just the opposite for 5 to 10 kW of peak power photovoltaic units in the same area.

Roughly speaking, with the present design of distribution network 50% of the customers could be equipped with 1 kW Combined Heat & Power (CHP) units but less than 10% with 5 kW Photovoltaic (PV) (at feeder level, excluding power curtailment), showing that in the mid-term the limit for certain technologies will be defined by the market and not by technical issues.

The hosting capacity of existing networks can be further increased by managing the system differently

A loss of voltage control is probably the main technical concern when increasing DER penetration levels in distribution networks. Indeed, voltage profiles can increase and decrease along the various feeders, depending upon the load and generation locations. Adjusting the operational voltage as a function of network conditions allows for connecting larger amounts of DER units without requiring network reinforcement and abandoning previous design principles.
Roughly speaking, with active management of the distribution network all private customers could be equipped with 1 kW CHP units but less than 20% with 5 kW PV (at feeder level, without power curtailment).

New network design approaches will be needed to incorporate even more Distributed Generation

Further increasing the DER hosting capacity requires network reinforcements based on new network design criteria. They can easily be developed whenever clear objectives for DER integration are agreed upon.
These objectives should be defined by policy makers, but should be implemented with the participation of the electrical supply industry to make sure that all the technical requirements are taken into account. This will require “exogenous” deployment objectives, similar to the ones developed within the “renewable energy action plans” which the Member States will have to adopt in 2009 (see the draft directive on the promotion of the use of energy from renewable sources). For instance, limits could be put on deployment plans such as limited generation capacity per connection, minimum level of DER penetration in distribution, and generation curtailment authorised under specific operating conditions.
In such case the penetration limits are related to the adopted design. This means that even 10 kW PV could be acceptable for all customers, however this supposes increased capacities 6 to 7 time higher than currently) for rural cases and for an intermittent resource.

Making DER competitive is possible if DER can access all the values it creates for the system

Distributed Generation can be a benefit for the electrical system. Yet the value that its brings to the system may vary: it depends on the DER technology, on the location in network and on the way the technology is operated. In addition to the energy delivery value (selling electricity, heating or cooling), Distributed Generation can be seen as a substitute to network investment if it coincides with consumption peaks (network value) or as a complementary service when aggregated with other DG units. The competitiveness of DER should be assessed on the basis of an in-depth analysis of all these value components. EU-DEEP designed proposals to make such value components explicit. For instance, EU-DEEP developed new tariffs principles. Based on large scale interval metering infrastructures (meter measuring usage in short time interval: 10, 15 or 30 minutes), they permit to assess the footprint of load and generation on distribution networks, thus allowing an accurate valuation of DER as a network replacement.

EU-DEEP presents new businesss approaches for DER units that gradually reduces the need for public subsidies

Aggregation of Distributed Generation and Demand Response will play a key role in revealing the different values of DER: it is a way to integrate these local resources into the global dynamics of the market. The role of aggregators is to use the flexibility of DER, reach a size that permits to enter energy markets, and provide services to the network operators. EU-DEEP carried out an in-depth assessment based on field tests of three contrasted aggregation business models set in three different European countries. Some business models of aggregation could bring a fair rate of return to aggregators within several current regulatory contexts, while creating value for the other stakeholders, for example, reduction of the end-user’s bill, new flexibility routes for the system operators, reduction of CO2 emissions, etc. In all of the 2020 scenarios studied, the added value of aggregation increases. For the business models that are still based today on support schemes, aggregation allows a progressive reduction in the need for public subsidies.

EU-DEEP proposes principles for regulatory harmonisation and standardisation for minimum cost DER integration

Today, national regulatory regimes define the economic terms of service to the Transmission and Distribution Operators. These existing rules play against DER expansion:

  • manufacturers need to adapt their products to this diversity increasing the DER integration costs;
  • aggregators cannot deploy successful business models easily as the regulation barriers change from one Member state to the other;
  • heterogenous and transient DER regulation and support schemes increase the investor risk premium and decrease the penetration rate.

EU-DEEP new regulation principles address the fundamentals of DER regulation in relation to market and grid interaction, the standards to be developed to promote coordinated and least-cost expansion, as well as the priority areas for harmonisation of regulatory regimes.


Challenges not covered by EU-DEEP
  • What are the detailed CO2 balance assessments of the three aggregation tested business cases?
  • What are the other benefits that DER deployment could bring to the regional economies upstream and downstream?
  • How to mix several application sectors (like housing and transportation) to catalyse DER expansion in Europe?
  • What are the optimal large experiments required to help successful deployment schemes in the wake of the Third Energy Package to be scaled up?

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