Regulation of distribution system operators with high penetration of distributed generation

The increase of distributed generation (DG) in distribution networks is an important challenge for distribution system operators (DSOs). DG integration not only impacts on DSO short-term costs but also involves new risk uncertainty regarding system reliability, security and network planning. Therefore, because DSO is mainly a regulated business, it is clear that new regulatory mechanisms should be designed. This paper analyzes how the traditional model of DSO regulation is impacted by increasing penetration of DG. A set of proposals on how this model can be improved are presented. Finally, some guidelines on regulatory improvements for the transition between the current and future situation with high penetration of DG are recommended.