State of play of Distribution System Operators in Eu- Eu-ropeEu-rope

knowledge, a first benchmark on European DSOs indicators have been achieved.

2.1.1 State of play of Distribution System Operators in Eu-rope

The Paris climate conference (COP21) held in December 2015 has seen 195 coun-tries declaring a common action plan agreement to set an ambitious goal of limiting global warming to 1.5°C [6].

Subsequently the Paris agreement, the Clean energy for all Europeans package (one

Directive on common rules for the internal market for electricity Unbundling for Distribution System Operators (DSOs)

The unbundling regime of DSOs laid down in Article 26 Electricity and Gas Di-rectives remains in substance unchanged as compared to the preceding regime.

The DSO is part of a vertically integrated undertaking, the basic elements of this unbundling regime are the following:

(a) legal unbundling of the DSO from other activities of the vertically integrated undertaking not related to distribution;

(b) functional unbundling of the DSO in order to ensure its independence from other activities of the vertically integrated undertaking;

(c) accounting unbundling: requirement to keep separate accounts for DSO activ-ities;

(d) possibility of exemptions from the requirement of legal and functional un-bundling for certain DSOs.

of the six initiatives of the energy union framework) marks a serious step forward in the implementation of the energy union strategy which sees as a key goals the economy decarbonisation, energy efficiency improvement, energy security boost as well as the creation of a fully integrated internal energy market [7]. It puts empha-sis on 5 main domains: energy performance in buildings, renewable energy, energy efficiency, governance regulation, electricity market design. It will enter into force by summer 2019 with 8 legislative acts (directives and regulations). The most two relevant proposals tackling the distribution sector are the Directive on common rules for the internal market in electricity (e-Directive) and the Regulation on the internal market for electricity (e-Regulation).

The directive 2009/72/EC [3] defines the distribution system operator as: ..a nat-ural or legal person responsible for operating, ensuring the maintenance of, and if necessary, developing the distribution system in a given area, and where applicable its interconnections with other systems and for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity.

The articles 26 (shown in the box above) and 32 of the same directive also oblige DSOs that were part of a vertically integrated company to unbundle functional

and legal tasks, thus accounting and ownership, for those DSOs serving more than 100,000 connected customers. The separation of the vertically integrated company may undertake two choices: the company can still keep the shares in the network company, thus allowing it to control the network, but a functional unbundling is required; or it can give up the control over the company (i.e. by selling shares) in order to not be anymore legally bundled.

At the current status not much is known about the European DSOs and the network they manage and operate. This unawareness is mainly attributed to the confiden-tial nature of this information as well as the heterogenity and enormous number of DSOs in Europe [8]. The first point related to confidentiality is linked to the fact that often DSOs are not aware about their network topology and the interaction with the transmission system operator (TSO) can be considered negligible due to the non reciprocal sharing of data. Concerning the second point, there are more than 2,600 electricity distribution companies spread across the 28 European Mem-ber State serving 260 million customers with 2,700 TWh of energy per year. Of those 2,600 DSOs the unbundling applies to only 13% based on [9]. Even if this number may seem small, these DSOs serve more than 220 million users and thus keep this industry sector rather concentrated.

The DSOs’ situation varies radically for each country, because of historical, geo-graphical, legal, political and economic reasons. This variety is plotted in the radial bar chart visible in Figure 2.2, on a logarithmic scale per geographical area. The numbers are related to all DSOs operating in each country, which it means also those not unbundled. It is clear that the southern countries in Europe, except for Italy that has 151 DSOs, have a relatively limited number of operating DSOs. A common trend in all regions is the fact that there are one or few dominant DSOs for each Member State and many smaller players sharing the remaining market.

Germany is a unique case due to the significant number of operators: 885 of which 75 are subject to the unbundling procedure [10]. Indeed in some Member States there is only one DSO (i.e. Cyprus, Lithuania), while in others there are tens (i.e.

Belgium, Portugal) or hundreds (i.e. Germany, France) of them operating their networks on a municipal or regional level. A panoramic view of the current status

is summarized in Table2.2 which highlights the wide difference across countries re-gardless of the country geographical size, population or economic value [8]. Indeed similar countries, such as Germany and France have rather different granularity in total number of DSOs, and even more accentuated for unbundled DSOs. Further differences are related to the operating voltage levels, DSO-TSO interaction, smart metering deployment, technical features, the level extension of unbundling as well as the activities and scope of DSOs. For the reasons explained above, it becomes crucial to deepen the knowledge of distribution grids and operators.