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Can local energy communities and DSO flexibility co-exist?

These are two hot topics that have currently been making headlines across the industry. Let’s take a closer look.

‘DSO flexibility’ refers to the specific value products created by DSOs to incentivise flexibility providers to offer demand-side flexibility services. These services are used to help manage network constraints and/or maintain security of supply. The ‘flexibility’ referred to is the explicit call for demand turn down or generation turn up on the customer side of the meter.

A Local Energy Community (LEC) is a small localised energy system, containing both (renewable) energy resources and consumers. While a LEC aims to achieve some degree of balance between production and consumption of energy, a grid connection remains essential. – from small groups of residential households to a larger group of commercial and industrial sites as well as households. LEC projects offer value propositions benefitting the community. These include maximising the use of local renewables, minimising grid imports, exporting excess renewable production for commercial benefits as well as providing grid services…

Where Local Energy Communities fall within the wider Local Energy System (LES) landscape. Source: Delta-EE Framing Local Energy Systems Report.

DSO flexibility is typically used to manage the distribution grid at the primary substation level (typically 33/11kV). A primary substation usually serves anywhere from 3,000 to 10,000 homes and businesses. This means that for the most part, a local energy community will fall within the area served by a single primary substation and therefore area where a DSO might be looking for some flexibility.

Local energy communities’ multiple generation assets and flexible loads (as well as possible storage assets) means they have what the DSOs are looking for – the ability to shift loads. This suggests not only can local energy communities and DSO flex co-exist, they are complementary!

Local energy communities can tap into DSO flexibility as an additional revenue stream to help build the business case for the community. However, some challenges remain, such as simplifying the process of metering and verification of multiple small-scale distributed assets. Speaking of business cases and challenges, my colleague Jeremy argues in his recent whitepaper that one way to make a return on your savings in the current environment is to invest in a local energy community.

A good example of one type of local energy community is the Centrica Cornwall LEM. It is a local energy market using P2P transactions to incentivise and reward flexibility for the DSO and TSO. The LEM is currently in the trial phase under regulatory sandbox conditions. The assets are owned by Centrica and installed in homes and business to facilitate participation in the LEM. Further proof that Local energy communities are going to be part of this space comes from Piclo. One of the largest active DSO flexibility platforms, Piclo Flex, published a whitepaper last year indicating that 8.5% of bids their platform received were from communities & municipalities.

To conclude:

Yes – DSO flex and local energy communities can co-exist! More than that, they are complementary. However exactly what this interaction looks like could change based on the set-up of the LES and the regulatory regime or solutions provided by other market parties. However, some challenges remain, such as making it as easy as possible for these communities to access the range of value stream out there.

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