Energy Networks and Regulation


Learning Goals

The student,

  • understands the business model of a network operator and knows its central tasks in the energy supply system,
  • has a holistic overview of the interrelationships in the network economy,
  • understands the regulatory and business interactions,
  • is in particular familiar with the current model of incentive regulation with its essential components and understands its implications for the decisions of a network operator
  • is able to analyse and assess controversial issues from the perspective of different stakeholders.

Content of teaching

The lecture “Energy Networks and Regulation” provides insights into the regulatory framework of electricity and gas. It touches upon the way the grids are operated and how regulation affects almost all grid activities. The lecture also addresses approaches of grid companies to cope with regulation on a managerial level. We analyze how the system influences managerial decisions and strategies such as investment or maintenance. Furthermore, we discuss how the system affects the operator’s abilities to deal with the massive challenges lying ahead (“Energiewende”, redispatch, European grid integration, electric vehicles etc.). Finally, we look at current developments and major upcoming challenges, e.g., the smart meter rollout. Covered topics include:


  • Grid operation as a heterogeneous landscape: big vs. small, urban vs. rural, TSO vs. DSO
  • Objectives of regulation: Fair price calculation and high standard access conditions
  • The functioning of incentive regulation
  • First major amendment to the incentive regulation: its merits, its flaws
  • The revenue cap and how it is adjusted according to certain exogenous factors
  • Grid tariffs: How are they calculated, what is the underlying rationale, do we need a reform (and which)?
  • Exogenous costs shifted (arbitrarily?) into the grid, e.g. feed-in tariffs for renewable energy or decentralized supply.

Averch, H.; Johnson, L.L (1962). Behavior of the firm under regulatory constraint, in: American Economic Review, 52 (5), S. 1052 – 1069.

Bundesnetzagentur (2006): Bericht der Bundesnetzagentur nach § 112a EnWG zur Einführung der Anreizregulierung nach § 21a EnWG,

Bundesnetzagentur (2015): Evaluierungsbericht nach § 33 Anreizregulierungsverordnung,

Filippini, M.; Wild, J.; Luchsinger, C. (2001) : Regulierung der Verteilnetzpreise zu Beginn der Marktöffnung. Erfahrungen in Norwegen und Schweden, Bundesamt für Energie, Bern,

Gómez, T. (2013): Monopoly Regulation, in: Pérez-Arriaga, I.J. (Hg.): Regulation of the Power Sector, S. 151 – 198, Springer-Verlag, London.

Gómez, T. (2013): Electricity Distribution, in: Pérez-Arriaga, I.J. (Hg.): Regulation of the Power Sector, S. 199 – 250, Springer- Verlag, London.

Pérez-Arriaga, I.J. (2013): Challenges in Power Sector Regulation, in: Pérez-Arriaga, I.J. (Hg.): Regulation of the Power Sector, S. 647 – 678, Springer-Verlag, London.

Rivier, M.; Pérez-Arriaga, I.J.; Olmos, L. (2013): Electricity Transmission, in: Pérez-Arriaga, I.J. (Hg.): Regulation of the Power Sector, S. 251 – 340, Springer-Verlag, London.