Law for Decentralized Electricity Systems

Decentralization plays a significant role in democratizing the energy sector. Decentralization describes a process in which there is a shift from centrally planned, financed and operated electricity systems to a more diffuse, decentralized system where the planning, finance and operation of the system is shared between an increasing number of parties.1 Decentralization can come in many shapes and scales. This chapter focuses on the electricity sector where electricity production can be decentralized via solar panels, wind farms or diesel generators as well as decentralized network solutions and offgrid solutions such as microgrids.2 In other words, decentralization can occur on many levels of the electricity value chain. Decentralization can also take place within the household of a single consumer or at a larger scale on local and national levels. Overall, decentralization describes a process in which the relative influence and role of large, centralized production and network units decreases in favour of small, decentralized or distributed units of society, such as municipalities, residential blocks, communities and individual citizens and consumers. It also entails a shift from the supplyoriented market model, where centralized producers and large electricity companies are the key players, into a more polycentric system, where the contribution of distributed resources and demandside actors – consumers – becomes more important.3 In other words, decentralization is not only a change on the