| dc.description.abstract | The electricity value chain is facing several challenges. The transport sector is electrified, the
electricity system digitalized, and generation decentralized. These trends transform the
outlook of the electricity system. In the Norwegian electricity system, new consumption
patterns and changing load profiles increase an already apparent need for reinvestment in the
aging network infrastructure.
Increasing network capacity through investment in physical infrastructure is costly. Network
operators model network capacity based on the few hours of year with peak demand, resulting
in low utilization rates of excess capacity. Thus, network operators consider alternative ways
of increasing capacity, which are less costly and more flexible. One such option is end-user
flexibility provided from the demand side of the electricity system.
The analysis is based on an investment case provided by Skagerak Nett. We discuss different
scenarios of utilization, flexibility volume and predicted load increase, and investigate how
different compensation methods affect the benefits of utilizing end-user flexibility to defer
investments. We find evidence that utilizing end-user flexibility to defer investments have cost
saving effects under certain conditions, depending on flexibility volumes, utilization level and
compensation method. Network operators can reduce costs by using end-user flexibility to
manage malfunctions in transformers and peak loads in normal operations.
A key finding in the thesis it that the choice of compensation method has a large impact on the
change in revenue cap and efficiency in the regulatory model. By issuing direct payments,
end-user flexibility results in a lower efficiency, although a higher revenue cap, while
redistribution of network tariffs have a marginal effect on changes in efficiency and revenue
cap. Through redistribution of network tariffs, the network operator can defer investments
without a notable increase in the revenue cap or change in efficiency. The results from the
different end-user flexibility cases highlight some of the future challenges the regulator face
in setting a regulatory framework for end-user flexibility | nb_NO |
