ISGAN BRIDGE Distribution Remuneration and Flexibility (2026)

Miguel A. Ruiz, José Pablo Chaves and Matteo Troncia (IIT, Universidad Pontificia Comillas), The Role of Electricity Distribution Remuneration in Promoting Flexibility from connected users, joint ISGAN WG9 and BRIDGE Regulation working group discussion paper, April 2026. Funded by the EU BeFlexible project (grant 101075438). ISGAN describes its discussion papers as work in progress that lay “the groundwork for further research”, not final advice to decision-makers. It is short (10 pages) and leans on two Comillas papers that are not held in full here: a 2026 quantitative analysis (Ruiz, Gómez, Chaves-Avila, International Journal of Electrical Power & Energy Systems), whose full text could not be fetched, and a roadmap working paper summarised in Source - Comillas Regulatory Roadmap for Distribution Remuneration (IIT WP, 2026).

The argument

Flexibility solutions are mostly operating expenditure (OPEX), for example an annual contract to reduce consumption at peak; network reinforcement is capital expenditure (CAPEX). The remuneration scheme therefore decides which the DSO prefers. The paper cites CEER and researchers on the importance of neutral OPEX/CAPEX incentives.

Survey of 11 jurisdictions

A questionnaire to ISGAN and BRIDGE working-group contributors (results in figures that did not extract as text; the jurisdictions are not named in the text):

• Most jurisdictions have innovation incentives such as pilot projects and sandboxes.
• 6 of 11 have not yet included flexibility solutions in their remuneration schemes.
• 7 of 11 use a cost-of-service or hybrid scheme, a barrier to using flexibility for investment deferral.
• About 70% face barriers to using flexibility that reappear when pilot support ends.

Recommendations (BeFlexible regulatory roadmap)

In priority order: (1) move from ex-post to ex-ante schemes with profit-sharing; (2) decouple investment plans from the ex-ante revenue calculation and add drivers that adjust it, to reduce allocative inefficiency; (3) enable adaptable planning under high uncertainty; (4) last, a mechanism for neutralising incentives as an alternative to TOTEX with a fixed capitalisation rate. The paper puts neutralisation last because a revenue cap with a sufficiently high profit-sharing rate already mitigates much of the CAPEX bias. It states that regimes should support flexibility procured through markets, bilateral contracts and flexible connection agreements.

Relevance to existing wiki topics

• RP5 Revenue Cap Methodology (2028–2031) and Track 1 of the tariff reform: an outside view on the CAPEX bias that Ei’s TOTEX benchmarking addresses. Note the two use “TOTEX” differently: in this paper it means a remuneration scheme with a fixed capitalisation share of OPEX (the UK’s “slow money” is one such design), while the Swedish sources describe TOTEX as the basis of the efficiency benchmark. The vault’s sources do not say whether Ei’s RP5 design includes a fixed capitalisation share, so the paper’s OPEX-bias finding is not shown to apply to Ei’s method.
• Flexibility (CAPEX bias section) and Flexible Connection Agreements: the paper names flexible connection agreements among the solutions remuneration should not penalise.
• COM(2026) 600 Art. 18(2)(a) and (c): the proposal’s cost-base and flexibility-incentive criteria address the same question; the paper does not mention it.

Limits

A discussion paper with a small unnamed sample and no data tables in the text; its quantitative claims are cited to papers not held here, so they should be read as the authors’ summary of their own work. It is European and international in scope and does not mention Sweden.