Professor Betzer, holder of the Chair of Finance and Corporate Governance, had prepared the report in collaboration with Prof. Dr Richard Stehle (Humboldt University of Berlin) and Dr Samed Krüger (university of Wuppertal) on behalf of the Federal Network Agency. The study focuses on the question of whether an additional premium is required when determining the return on equity for electricity transmission system operators.

Return on equity and debt in the electricity transmission network

The academic dialogue was attended by academics, representatives of regulatory authorities and experts from the energy sector. The aim of the event was to discuss the latest academic findings on the structure of returns on equity and debt in the electricity transmission network.

The level of the regulatory rate of return on capital employed plays a decisive role in investment in electricity grids. It influences whether grid operators have sufficient incentives to invest in the urgently needed expansion of infrastructure – a key prerequisite for the success of the energy transition. The report provides scientifically sound insights into determining appropriate equity costs, thereby supporting the fact-based further development of regulation.

Exchange between academic research and regulatory practice

“This academic dialogue demonstrates how important the exchange between academic research and regulatory practice is. Scientifically sound analyses can make a significant contribution to creating sustainable investment incentives in the long term, whilst at the same time taking due account of consumers’ interests,” says Prof. Betzer.

The invitation to the academic dialogue highlights the long-standing expertise of the Department of Finance and Corporate Governance at the university of Wuppertal in the field of regulatory financial market research. Since 2018, Professor Richard Stehle and Professor André Betzer have been jointly producing academic reports on the determination of cost of equity and market risk premiums for regulatory authorities, including the Federal Network Agency and the Austrian Schienen-Control GmbH.

The intersection of finance, regulation and energy policy

“Through its research, the university of Wuppertal is helping to develop solutions to socially relevant challenges at the interface of finance, regulation and energy policy,” explains André Betzer. Close collaboration with authorities and other industry partners demonstrates how academic findings can inform political and regulatory decisions.

The report can be found on the Federal Network Agency’s website.