Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240494 
Year of Publication: 
2020
Series/Report no.: 
IFN Working Paper No. 1351
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
In a 'smart' electricity distribution network, flexible distribution resources (FDRs) can be coordinated to improve efficiency. But coordination enables whoever controls such resources to exercise market power. The paper establishes the following efficiency rankings of market structures: Aggregators competing for FDRs are more efficient than a distribution system operator (DSO) controlling resources, which is more efficient than no FDR market. A no- market solution is more efficient than an FDR market featuring either (i) both DSO and aggregators; or (ii) a monopoly aggregator also supplying generation to the real-time market. The paper also characterizes a regulation that implements the efficient outcome.
Subjects: 
Aggregator
Distribution system operator
Market power
Real-time market
Regulation
Smart grid
JEL: 
H41
L12
L51
L94
Document Type: 
Working Paper

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