Let Local Net Companies Be Responsible for Selling Physical Electricity
Authors: Andersson Nils , Energikonsult Nilsan 
Published: April 2015

There is a fast on-going development in Smart Grids. This development urges for the Local Net Companies to be directly responsible for both selling and distributing physical electricity to all Customer in their nets. Today countries in Europe have divided the Electricity Market so that net companies are only responsible for distributing physically electricity. Retailers are responsible for selling physical electricity and are also responsible for balancing the electricity use for each Customer. There are several good reasons for changing these rules.

1. Balancing electricity use

If the Local Net Companies will be responsible for all customers electricity use the balancing will be much easier. It will be only one balancing exchange for all Customers in every net. Depending how the electricity is measured the cost of balancing the electricity can be distributed on all Customers. It is only Customers who want to participate in Price Management that have to have advanced measuring equipment. All other Costumers can be balanced through fixed templates.

2. Price and Volume Risk Management

A very important task for Retailing Companies today is to help Customer with Price and Volume Risk Management. This will be much easier when the Local Net Companies take care of the Balancing Agreements. As the Volume Risk on the Balancing Market will be handled through the Local Net Companies several new Actors can participate in Price and Volume Risk Management on the Financial Markets such as Insurance Companies and not only Electricity Retailers.

3. The possibility for Customers to participate in Price Management

A very important development in the Smart Grid area is to let Customer participate directly or indirectly in Price Management on the Spot Market and on the Balancing Market.

The Local Net Company is the best Actor to have an overview of the potential for Customer activities in this field. The Local Net Company can easily collect information from every Customer of how much capacity in regulating electricity use that is available from time to time. The Local Net Company than form bids to put in on the Demand curve that the Local Net Company sends to the Spot Market and or to the Balancing Market.

This capacity will appear especially in the direct electricity heating and in Heat Pumps. It is a very big advantage that the Local Net Company can handle all Customers in its net. In the long run you can foresee that even small Customer can participate in Price Management. It depends on how fast technology will develop.

4. Energy Efficiency

Electricity will play an important role in Energy Efficiency. One example is more electricity in the transport sector. The Local Net Companies have to distribute charging equipment in the local nets so that Electrical Vehicles easily can charge the batteries. The Local Net Companies are also very suitable to help its Customers to use electricity efficient.

5. Handling Taxes an Fees

It is more conveniently that the Local Net Company will be responsible for collecting Taxes and Fees. In Sweden we have energy tax and green certificate fees that the Local Net Company should be responsible to collect.