Incentive from network regulation for distribution system operators to integrate distributed generation: The Portuguese case

Increasing amount of distributed generation (DG) connected to distribution grids is likely to affect the operation of the grids themselves, for example by changing the magnitude and, in some cases also the directions, of the power flows in the networks. This can have different economic consequences on the Distribution System Operators (DSOs) depending on the different enforced network regulations. This paper proposes a method for how to calculate the incentive for DSOs to integrate DG into their grids. The calculation of this incentive is carried out for the Portuguese case. Only the operational aspects are considered to calculate costs and benefits for the DSO, including network tariffs, ancillary services costs, Operation and Maintenance (O&M) costs, and economic treatment of losses. The IEEE 34 Node Test Feeder is used to perform power flow analyses under different scenarios of DG penetration. The analysis shows that the Portuguese DSO would have an incentive to integrate a low level of DG penetration; in case of a higher level of DG penetration, however, this incentive would turn into a small disadvantage for the DSO. In both cases, the regulatory treatment of network losses turns out to be the relevant factor to determine such a result.