S.L. 545.34 Art. 30Incentives for the use of flexibility in distribution networks.

(1) The Minister shall provide the necessary regulatory framework to allow and provide incentives to the distribution system operators to procure flexibility services, including congestion management in Malta, in order to improve efficiencies in the operation and development of the distribution system. In particular, distribution system operators may procure such services from providers of distributed generation, demand response or energy storage and make use of energy efficiency measures, where such services cost-effectively alleviate the need to upgrade or replace electricity capacity and support the efficient and secure operation of the distribution system.

(2) Distribution system operators shall procure the services referred to sub-regulation (1) in accordance with transparent, non-discriminatory and market-based procedures unless the Regulator has established that the procurement of such services is not economically efficient or that such procurement would lead to severe market distortions or to higher congestion:

Provided that where market-based procedures are not possible the distribution system operator may procure flexibility by offering connection agreements to users of the network and/or propose network tariffs designed to encourage network users to alter their behaviour for a more efficient use of the distribution network.

(3) (a The distribution system operator, subject to the approval of the Regulator, shall, in a transparent and participatory process that includes all relevant system users and transmission system operators, establish the specifications for the flexibility services procured and, where appropriate, standardised market products for such services at least at national level;

(b) The specifications shall ensure the effective and non-discriminatory participation of all market participants, including market participants offering energy from renewable sources, market participants engaged in demand response, operators of energy storage facilities and market participants engaged in aggregation;

(c) Distribution system operators shall exchange all necessary information and shall coordinate with transmission system operators in order to ensure the optimal utilisation of resources, to ensure the secure and efficient operation of the system and to facilitate market development:

Provided that the distribution system operator shall be adequately remunerated for the procurement of such services to allow it to recover at least its reasonable corresponding costs, including the necessary information and communication technology expenses and infrastructure costs.

(4) (a) The development of a distribution system shall be based on a transparent network development plan that the distribution system operator shall publish at least every two (2) years and shall submit to the Regulator.

(b) The network development plan shall provide transparency on the medium and long-term flexibility services needed, and shall set out the planned investments for the next five-to-ten years, with particular emphasis on the main distribution infrastructure which is required in order to connect new generation capacity and new loads, including recharging points for electric vehicles. The network development plan shall also include the use of demand response, energy efficiency, energy storage facilities or other resources that the distribution system operator is to use as an alternative to system expansion.

(5) (a) The distribution system operator shall consult all relevant system users and the relevant transmission system operators on the network development plan.

(b) The distribution system operator shall publish the results of the consultation process along with the network development plan and submit the results of the consultation and the network development plan to the Regulator. The Regulator may request for amendments to be made to the plan.