A Regulatory Framework for Microgeneration and Microgrids

The concept of microgrid (mugrid) has been emerging as a way to integrate microgeneration (muG) in LV networks and simultaneously improve its potential benefits. Technical requirements to connect mugrids to LV networks have been studied in order to make this concept technologically feasible and safe to operate. However, the regulatory framework for economic integration of muG and mugrids on distribution systems, despite being crucial, is still an open issue. The main purpose of this paper is to contribute for the development of an appropriate economic regulation framework that removes the barriers to muG and mugrid development. To do so, the relevant costs and benefits resulting from the establishment of muG and mugrid are identified and a methodology for sharing those costs and benefits among the involved economic agents is presented. The only pre-requisite of such a methodology is that a net benefit to all economic agents exists, which is the case most of the times. An illustrative example is included.