Incentive Scheme for Efficient Utilization of Electricity in Sweden

As a result of the 2012 Energy Efficiency Directive, the Swedish regulatory authority for energy, the Swedish Energy Markets Inspectorate (Ei), has introduced new rules regarding an efficient utilization of the electric power system. To incentivize distribution system operators (DSOs) to operate their networks in an efficient way, Ei has developed financial incentives within its revenue cap regulation. This paper describes the newly developed incentive scheme in Sweden that aims to incentivize DSOs to a more efficient utilization of power systems; first implemented during the regulatory period 2016-2019. The indicators that are used for measuring to what extent the grid is utilized efficiently are: network losses, cost of the feeding grid and average load factor. This paper aims to act as reference material and inspiration to others as well as a chance for Ei to receive feedback valuable for future development.