The structural transformation of the energy supply sector presents electricity network operators with previously unknown challenges. Transmission system operators must integrate intermittent power from decentralised solar and wind farms into the power grid, enable the electrification of the transport and heating sector, and digitalise grids while ensuring security of supply. At the same time, climate change and extreme weather events are increasingly threatening physical infrastructure. Meanwhile, the Austrian regulatory framework has remained largely unchanged since 2010 and was developed for a static network to achieve (short-term) cost reductions; dynamic developments and necessary changes are not sufficiently reflected.

Together with the Austrian transmission system operator APG, NERA Managing Director Tomas Haug, Associate Director Marco Schönborn, Senior Consultant Lorenz Wieshammer, and Economic Analyst Jakob Lutz assessed the current regulatory framework on the basis of economic standards of good regulation and developed three suggestions for further development:

1. Taking the current market environment into account when determining the cost of equity and ensuring the financeability of network operators;
2. Developing remuneration options for new tasks taken on by APG; and
3. Strengthening focus on outcomes with additional, long-term incentives (e.g., for the necessary network expansion), guaranteeing security of supply and innovations that benefit consumers.

The results of the project were summarised in a position paper and presented at a conference on regulation organised by APG and TransnetBW on 5 November 2021. The complete video of the conference is available online (in German).

Click here to view the video.