For the better integration of distributed and renewable generation, new investments in innovative distribution networks, such as active distribution networks and smart grids (SGs), are required. Regulators should decide what incentives are desirable to create a flexible economic regulatory framework that can drive distribution system operators to invest in innovation and in active distribution networks.

An innovative method that allows regulators assessing the impact of incentives related to investments in innovation in an electrical distribution network is presented in this paper. The method is flexible enough to allow different stakeholders like regulators, distribution companies, and developers to evaluate the long-term economic effects of their decisions. The effectiveness of the proposed method, based on nondominated sorting genetic algorithm and on multi-period optimal power flow, is verified on a 69-bus network.

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