by Roger Hey
Roger Hey of Western Power Distribution explains why the DNO-to-DSO transition must be a top priority for the UK energy sector
Big changes are afoot in the UK’s energy sector. We no longer live in a world where all electricity flows from power stations through the transmission and distribution networks to the customer. Instead, new generation resources—including unpredictable, weather-dependent renewables such as solar and wind—are being connected directly to the local distribution network, increasing the complexity of managing local energy flows.
At the same time, new patterns of demand are emerging. Electric vehicles are quickly becoming mainstream, which will both increase demand and significantly boost the grid’s energy storage capacity. Regulatory change is also ongoing—for example, in 2017, Ofgem updated its plan to encourage more battery storage and to allow households to sell electricity back to the grid.
All of these developments are disrupting the traditional energy usage profiles that today’s network was designed to support. We’re witnessing an unprecedented shift from the old, centralized model of electricity delivery to a more complex, dynamic system that involves multiple points of variable supply and consumption.
At Western Power Distribution, we’ve recognised that we can’t afford to ignore these changing dynamics. That’s why we’ve decided to take the first steps in our transition from a distribution network operator (DNO) to a distribution system operator (DSO).
Electricity distribution, transformed
The transition will fundamentally change the way we operate. As a DNO, we’ve always looked at the maximum capacity we need and built accordingly. But this kind of passive distribution network isn’t very effective at meeting the dynamic generation and demand needs of today’s market.
Evolving into a DSO will see us operate a more active network, in which demand and generation are balanced locally. This will require us to invest in new capabilities. In order to satisfy customers’ electricity needs, especially during times of peak demand, we must account for an enormous variety of production and load scenarios.
We will need better insight into historic and real-time energy flows, so that we can accurately forecast future energy volumes and maintain sufficient capacity across the network at all times. That’s why, for example, we’re currently working on a project with AMT-Sybex to build an Electricity Flexibility and Forecasting System (EFFS) that can predict supply and demand for horizons ranging from a few hours to a few months ahead.
We also believe that the electricity landscape of the future will be a more transparent and collaborative space, where all market participants will work together to ensure that the network is balanced and that assets stay within safe limits. So we’re working on new ways to co-ordinate operational requirements and share data and demand forecasts with other players, including the National Electricity Transmission System Operator (NETSO).
To deliver these new capabilities, we’re investing £125 million in our DSO transition programme. We’ll be expanding our service offering and deploying new equipment to optimise the network topology and create capacity to accommodate changing use. We’re also training our people and recruiting new team members to make sure we have the right skills and knowledge to operate effectively as a DSO.
Seizing the opportunity
While it’s still early days for the new DSO model, that shouldn’t be an excuse for distributors to delay their journey to smarter networks. New technology and market dynamics are already transforming the face of the electricity system, and it’s difficult for the regulator to keep pace with the rate of change. So, as major industry stakeholders, we DNOs need to lead the way.
If we don’t start taking laying the groundwork for the transition today, it’s going to be all the more difficult to overcome the challenges—and make the most of the opportunities—that lie ahead. Although the DSO transition represents a major business transformation, with associated costs and risks, there will be significant benefits too.
For example, according to the Energy Networks Association (ENA), innovation by energy networks has already enabled close to £1 billion of cost savings that will be delivered between now and 2023. As we evolve to local flexibility markets, we expect to increase these cost-benefits by driving even greater performance and efficiency from the network.
Moreover, by actively managing distribution services at a local level, we can help reduce complexity and risk for the NETSO, resulting in a more cost-effective system as a whole. And by creating neutral and open markets, we can promote greater innovation and competition across all aspects of the system. This will provide a level playing field for all participants, and give customers more choice.
Most importantly, becoming a DSO is essential to ensure we can continue meet the energy demands of all our customers and give them the best value for money. It’s an exciting time to be involved in the industry, and we look forward to collaborating with our peers, technology partners and policy-makers to shape a brighter energy future for all.