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Electricity distribution networks and the energy transition: opportunities and challenges (part 1)

Electricity distribution networks will increasingly come under the spotlight as the energy transition gathers pace. 

Distribution networks are entering a brave new age. They have done their job excellently in Europe in the previous decades – distributing electricity from the transmission system to households and businesses in an increasingly efficient, cost-effective, reliable manner. 

But the nature of their job is changing radically. A large part of the energy transition will take place at or close to customers, and so directly impact distribution networks through: 

  1. Connecting large amounts of renewable generation – and grid-scale batteries – to networks 
  2. Accommodating increasing electrification of transport and heat. 

No longer can DSOs (distribution system operators) solely rely on their traditional toolkits such as network-reinforcement and in some cases direct load control to accommodate such developments. New tools – both technology and market-based – are emerging and being increasingly pushed forward by regulators and policy makers, often enabled by digitalisation, AI and Machine Learning, and the Internet of Things. Smart control (ADMS and DERMS), markets and smarter use-of system tariffs are some of the tools in DSOs’ new toolkit. Many of these tools involve working much more closely with customers and communities than DSOs are used to. 

But mastering these new tools – while maintaining a cost effective, reliable and safe network is just one challenge.  

DSOs need to pay more attention to transmission, wholesale markets and retailers as the silos between the different parts of the electricity value chain break down – what some call ‘whole (electricity) system thinking’. For example, DSOs can’t effectively procure flexibility to manage their networks without considering and where appropriate coordinating with wholesale markets and transmission system operators.  

To complicate matters further, the silos between different energy vectors – electricity, natural gas, heat (and in the future hydrogen) will also break down, with DSOs needing to embrace interplays between these vectors as they plan and manage their networks.  

New business models are evolving that necessitate transacting over distribution networks, as my colleague Jeremy Harrison wrote about in his recent blog. DSOs and their regulators need to understand these models, the ways in which DSOs can get involved, and ensure they treat these innovative business models in a way that both facilitates the energy transition and is equitable across all customers. These business models can even involve operating parts of the network autonomously, and with greater community involvement or even ownership.  

Finally, DSOs will have to contend with more extreme events and climatic conditions as the impacts of climate change gather pace. This will become even harder to manage as electrification gathers pace, and the impact of interruptions will be more keenly felt as we rely more and more on electricity. 

As the energy transition gathers pace our electricity systems will become much more about ‘bottom up’ rather than the previous system that was largely ‘top down’. Optimisation will take place more and more at household, local and regional level, meaning that DSOs will have bigger roles to play.  

So, it’s an exciting time to be in or working with DSOs and their regulators. Their ‘jobs’ are certainly becoming bigger, but so are their responsibilities. When I talk with some DSOs they express frustrations that they can’t accommodate a solar farm, for example, as their network is full. Equally, some take great pride in finding innovation approaches that can enable such customers to connect to their networks, excited about the work they are doing that enables more renewable generation to come online.  

At Delta-EE we’re excited to be playing our role through our Distribution Network Service, and to discuss how distribution networks are rising to the challenge on our podcast, such as our recent episode ‘Smart Grids in Action’. On 29th July, we are holding a panel discussion with leaders from three European DSOs to talk about how they see the challenges and opportunities that the energy transition is bringing them. I’ll follow up this blog with the key take-aways from that discussion in part 2.  

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