The move to a DSO model picks up the pace

Electricity network companies are beginning to roll out innovative technologies as they prepare to transform into DSOs. Tom Grimwood looks at what they’re doing.

Distribution network operators (DNOs) have already spent years trialling innovative technologies and new business models as they prepare for their transition into distribution system operators (DSOs).

Up until fairly recently, this transformation has appeared somewhat distant – always on the horizon, but never quite moving to the foreground.

However, things now look like they’re beginning to change. Successful trials are starting to be rolled out as part of business as usual. The vision for the future is becoming clearer and more defined.

Take, for example, UK Power Networks’ (UKPN’s) launch in July of a new active network management scheme to boost transmission capacity across the south east of England in collaboration with National Grid.

“This is business as usual, both in the way it’s run and the way it's funded,” says UKPN head of smart grid development Sotiris Georgiopoulos. “There we are trying to jointly tackle some of the emerging issues on the southern coast of the UK, looking at how transmission and distribution can work together to resolve some of these challenges in the most cost-effective way.”

In September, the DNO also launched a new flexibility tender to manage specific constraints at the distribution level. “It’s really going to the core of what a DSO does,” adds Georgiopoulos.

He says their control centre is now staffed by a DSO and smart operations manager, whilst their connections team is preparing for the large-scale rollout of rapid charging points: “Wherever you look in UK Power Networks’ operations you will start recognising the effect of the low-carbon transition and its becoming core to our everyday business.”


A nationwide effort

Across the country, DNOs are rolling out, or have already rolled out, flexible connections offerings to their customers.

Steve Cox, engineering and technical director for Electricity North West, says there are now more than 700 generators connected up on flexible contracts in the southern part of their license area alone: “You’ve seen a real shift – almost every connection offer going out the door today is for a flexible connection managed by a very DSO-like service.”

Cox says the company is not only introducing new technology, but also changing the way it interacts with its customers: “Certainly, what we learned during the innovation trials for flexible contracts, is it is very important to have a close relationship with customers where you talk about flexibility and take on board their needs in terms of what is the most amount of flexibility they can take within the contract.

He continues: “I think as well as offering contracts, what you will now find if you talk to customers is that… they really value that one-to-one discussion, particularly industrial and commercial demand customers, and generation and storage customers.

Even within the innovation trials themselves, there is evidence that the transition is beginning to kick into gear. Northern Powergrid, for instance, recently announced plans to create a ‘virtual’ local energy market to simulate flows of energy, payments and information across networks, and develop strategies to coordinate network and market operations.

“This project is a way of helping us to select the right technical, regulatory and commercial models and actually make it a reality on the ground,” explains Northern Powergrid policy and markets director Patrick Erwin.

“There’s a lot of work on the engineering going on but there’s been a real gap in some detailed thinking about how you make the underlying commercial, economic and regulatory system works,” he adds.

Erwin says the ultimate outcome of their efforts will hopefully be a model for local energy markets which is “coherent across the industry and across the UK, but with appropriate regionalisation”.

This will require collaboration and Stewart Reid, head of DSO and innovation at Scottish Southern Electricity Networks, claims this is another area in which the networks have been upping their game.

“If you were to look at where we are now compared to a year ago, the first thing that is very obvious is the level of collaboration in the industry has stepped up ten-fold,” he tells Utility Week

“A year ago, the DNOs were all going off and testing aspects of DSO and sharing the learning, but now they’re actually siting down around the table with a whole range of stakeholders and working out what that solution looks like. We’re converging on a model of the DSO rather than diverging off into a whole range of different options.”

Reid says the Electricity Networks Associations’ Open Networks project is central to this work and has been “quite a big step forward… That whole planning front, that coordination front, is moving forward at quite a pace.”


Collaborative working

This collaboration will be crucial to addressing the challenges which the DNOs face.

One is the huge uncertainty over the demands which will be placed on their networks, most notably when electric vehicles will start to be adopted en masse and what they will play in the decarbonisation of heating. “If low-carbon heat and electric vehicles hit the network at the same time that will be a really big challenge,” cautions Erwin.

Another is how to protect and support vulnerable customers in a system which will provide substantial benefits to those who have the resources to become active participants in the market.

“What we’re doing here is deploying a whole load of smart technology, digitalisation and big data, and that’s going to provide a load of opportunities for people with electric cars, with batteries and with solar panels to trade those assets and make money out of them,” he adds.

“As well as making sure the technology is accessible to the most vulnerable, we also need to think about how to recast the system, so we don’t put them at a disadvantage and we maintain the fairness and the equity in the system.”

Support from government and Ofgem will be essential to overcoming these hurdles. It is therefore encouraging that they received universal praise from the DNOs Utility Week has spoken to.  

They said BEIS and Ofgem have really stepped up to the plate with the publication of the Smart Systems and Flexibility Plan in June and more recently Ofgem’s working papers on charging and connection arrangements.

“I would like to recognise the huge amount of work that Ofgem and the government have been doing in this space over the last year or so,” says Georgiopoulos. “The Smart Systems and Flexibility Plan is giving us some clear actions and some clear directions to work in.”

Erwin says the connections paper in particular was “a really thoughtful piece of work and is addressing exactly the right kinds of questions. The proof will be in the pudding, but I think Ofgem is doing exactly the right thing there. I’m very impressed.”

Cox describes the relationship with BEIS and Ofgem as “very positive”, adding: “They are quite rightly challenging the ENA and the networks businesses to move this forward at pace.” 

The DNOs may be making good progress, but they cannot afford to rest on their laurels. The transformation has only just started and there is plenty more to come.

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