Digitalisation at the core of energy networks: the backbone of the energy transition. A brief assessment on the infrastructure investment regulatory framework

The transition to a decarbonised economy requires a significant increase in electrification and new generation and demand paradigms to achieve the Paris agreement's objectives. Smart networks, which digitalisation makes possible, become critical infrastructure for this evolution to take place. Digitalisation, with large doses of automation, allows to observe and control the network in real-time and makes it possible to integrate a large volume of renewables despite the intermittency of its primary wind or solar energy. Demand flexibility, backed with storage, also made possible by digitalisation, saves generation tips and associated greenhouse gas emissions. The European 2030 decarbonisation target of the economy requires multibillion investments in networks. The study will focus on distribution networks as a critical infrastructure to connect a large part of renewable generation plants. The distribution grid is also the enabler for flexibility and demand-side management and a key element to empower consumers to participate in the Energy Transition. The regulatory framework for the remuneration of DSOs (Distribution System Operators) for installing, maintaining and operating the networks remains anchored, fundamentally, in the technological paradigm of centralised energy system: more cable and thicker. The purpose of the study is: first, to describe the most common regulatory approaches, with a special focus on the Spanish one, in terms of remuneration of DSOs, and to determine the extent to which they incentivise digitalisation or promote investments in line with the previous technological paradigm. Second, to identify which regulatory guidelines can articulate a remuneration system that boosts digitalisation to achieve environmental sustainability and, at the same time, promotes competition between different operators.