Today, CEER publishes its Paper on Whole System Approaches which aims to support energy regulators’ and stakeholders’ discussions on energy system integration. This CEER paper further develops the Whole System Approach (WSA) concept (first introduced in a 2016 CEER paper on future of TSO and DSO relationship), by describing three possible WSA layers, which should be considered to reach a better (in theory optimal) outcome:
Layer 1 “whole-network-approach” - An integrated view of the regulation of distribution and transmission networks with a main focus on network operation and planning;
Layer 2 “whole-chain-approach” - An integration across a sectoral chain (e.g. in electricity or in gas), i.e. expanding beyond networks to for instance, include demand, generation, system operation and retail, both in terms of interaction with network operators and in terms of the impacts on them; and
Layer 3 “cross-systems-approach” - An integration across different energy areas, e.g. the integration of regulation of the electricity, gas and heat sectors, including with transport.
The paper shows that to adopt a WSA essentially means to consider the societal net benefit for the entire system, in line with the applicable energy policy objectives. A WSA also encourages network operators to consider the consequences of their decisions on other actors of the value chain. This is crucial, because when certain incentives or interests only cover specific areas (e.g. the network operator's own network activities), results could well be suboptimal.