E.DSO & GEODE Joint Paper “Revenue Regulation for Electricity Distribution System Operators: An exploration of seven European frameworks”

E.DSO and GEODE have published a joint paper analysing how revenue regulation in seven EU Member States enable DSOs to plan, finance and deliver the investments needed to reinforce electricity distribution grid infrastructure and deliver on the energy transition.

Building on GEODE’s 2024 principles for effective DSO revenue regulation, the paper examines frameworks in Austria, Finland, Ireland, Italy, Poland, Spain and Sweden.

The findings show that although some countries perform better on criteria such as predictability, CAPEX–OPEX balance, cashflow adequacy or innovation incentives, no framework excels across all of them. At the same time, for each principle, at least one country demonstrates strong regulatory design, indicating that effective approaches already exist within Europe.

Drawing on these assessments, the paper identifies opportunities for more convergence in regulation that supports anticipatory investment, strategic planning and long-term financial sustainability. It also outlines recommendations for regulators and policymakers aimed at creating investment-ready frameworks across Europe, including:

1. Embed stability with structured flexibility through multi-year periods and clear mid-term adjustment rules.
2. Make Network Development Plans holistic, forward-looking tools that guide anticipatory investments, in alignment with tariff cycles and with appropriate recognition of digitalisation.
3. Keep the RAB and depreciation aligned with real costs and asset lifetimes and ensure EU grants and essential system costs like cybersecurity are properly reflected in cash flows.
4. Set a predictable, risk-reflective WACC based on transparent, forward-looking methodologies, with scope for higher returns on higher-risk anticipatory and innovative investments.
5. Ensure CAPEX–OPEX neutrality so DSOs can choose the most efficient technical and operational solutions, including through flexible benefit-sharing or TOTEX-based approaches.
6. Guarantee timely and predictable approval of investment plans and remuneration through clear procedures, deadlines and, where appropriate, automatic or standing approvals.
7. Promote innovation, digitalisation and transparency via stable, targeted incentive schemes and robust stakeholder engagement, while safeguarding liquidity through working-capital allowances and timely cost true-ups.