UK networks: Making the switch from DNO to DSO

Western Power Distribution has set out a strategy to transform from a distribution network operator to a distribution systems operator.
Published: Mon 10 Jul 2017

As power networks need to transform with the shift to a decentralised system, so too do the roles of some of the players.

This is particularly the case at the distribution level, where the impacts are most likely to be felt, both from a technical and economic perspective.

Distributed small-scale generation connected to the distribution grid brings new network management demands while revenues could drop as owners purchase less energy from their supplier.

In the UK, while the architecture of the new energy system is under investigation in the Future Power System Architecture initiative, a newly launched parallel investigation is being conducted into how the role of the local electricity networks will change.

Open Networks project

Named the Open Networks project and being led by the Electricity Networks Association (ENA), a national trade association representing the transmission and distribution networks, the initiative will “lay the foundations of a smart energy grid in the UK,” according to an ENA factsheet.

“The project will enable the UK’s energy networks to move from their traditional role of delivering electricity in one direction from centralised power plants to our homes and communities, to one where they act as a smart platform that enables a whole range of new energy technologies that generate, consume and manage electricity.

“Local networks in particular will become more active managers of supply and demand within their area, which will require new services and interactions with the wider network.”

In the first phase this year, objectives include developing improved transmission-distribution processes around connections, planning and shared services, assessing the gaps between the experience customers receive and what they would like and considering the charging requirements of transmission and distribution systems.

According to the ENA, innovation by the energy networks has already enabled close to £1bn of cost savings that will be delivered between now and 2023, clearly demonstrating the economic potential of smarter networks.

DNOs to DSOs

Another strand is focused on what is regarded as the essential transition of UK distribution network operators (DNOs) into distribution system operators (DSOs) – a subtle but far-reaching change, which is envisaged to take place over the period to 2030.

Currently the DNOs control and maintain the transmission and distribution networks. Under the DSO model, the operator will take a more active role in managing local electricity generation and use.

Specifically, under the ENA’s new definition the DSOs will securely operate and develop an active distribution system comprising networks, demand, generation and other flexible distributed energy resources. They will enable competitive access to markets and the optimal use of distributed resources on distribution networks in the support of whole system optimisation.

They also will enable customers to be both producers and consumers; enabling customer access, customer choice and great customer service.

“Defining the changes to our local electricity networks will create a platform for exciting new opportunities for them to engage in the energy market, enabling households and businesses to have greater control over their electricity and unlock the potential from new technologies like battery storage and electric vehicles in their everyday lives,” says Director of Policy Tony Glover.

Underpinning these new roles is the greater use of digitalisation and data analytics.

Western Power Distribution releases DSO strategy

While the ENA has developed a roadmap for DSO development, individual DNOs also putting out strategies with apparently the first to do so being Western Power Distribution.

The network operator for the Midlands, South Wales and southwest, WPD’s four-point plan encompasses expanding the existing rollout and application of smart network solutions to the higher voltage networks, prioritising areas which are the most likely to benefit; contracting with customers and aggregators for non-network solutions; coordinating at the transmission/distribution interface; and protecting the integrity and safety of lower voltage networks.

According to WPD, across its four license areas, the networks, traditionally designed for 14GW of demand, have already been re-engineered to be able to accept a total of 21GW of embedded generation. Further, over the past five years, over 23,000 strategic network switching points have been upgraded.

To date WPD has issued over 2GW of alternative connection offers to customers. With its strategy, the company aims to achieve active management of its entire network by 2021 with other areas of work to be rolled out by 2023.

“WPD recognises that the change from a DNO to a DSO is essential to driving performance and efficiency from our network and to ensure it can meet the future energy demands of all our customers,” says Operations Director Phil Swift. “The enhanced capabilities we are developing will also give our customers the freedom to access other opportunities within the developing energy system.”

WPD estimates the total cost of the transition at £125m, taking into account recurring costs such as licences and new employees.

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