An analysis of the effect of regulation, investment uncer­tainty and actor network on the investment behaviour of Dutch distribution system operators

This thesis represents the culmination of six months of research into the investment behavior of Dutch DSO’s in the context of the energy transition. Through a combination of interviews, analyses of annual reports and a qualitative analyses based on principal-agent theory, I tried to find the effect of the actor network, regulatory regime and investment uncertainty on the investment behavior of the DSO’s. This research is important due to the fact that the Dutch grid is currently experiencing increasing levels of congestion due to grid over-taxation, a problem that is actively discussed within the Dutch political arena. I found that there exists a misalignment of goals within the DSO actor-network, with government principals pushing towards realization of the energy transition, whilst the regulator is still mainly advocating efficiency incentives. Because the regulator is in a rather dominant position with respect to the DSO’s, these efficiency incentives are causing mainly risk-averse, or tentative, investment behavior. Solving the investment problem requires a change that can be found in two directions, regulation or by tackling the investment risk through a reduction of uncertainty. In my research, I found that the notion of changing the regulation substantially is not viewed as a particularly realistic solution, with parties strongly preferring to keep the current system in place and tweak it as necessary. Therefore, the current solutions target the reduction of uncertainty through the creation of programs such as the regional energy strategies. Less investment uncertainty leads to higher, and easier DSO investments and can serve as a key solution to the congestion problems. By creating a more centrally coordinated approach to the development of renewable energy infrastructure, through programs such as the regional energy strategies, a more open forum of information can be created that could allow the DSO’s to make the required additional investments within the bounds of the current system. In the end, this thesis shows how the combination of the uncertain investment climate and the regulatory influences has created a system with very little room to manoeuvre for the Dutch DSO, but that they are actively trying to work on solutions within the bounds of the system