Utility Week

UTILITY WEEK | 7TH - 13TH FEBRUARY 2020 | 7 Utility of the Future: Business models and skills T he Ofgem-regulated distribution network opera- tors (DNOs) are on a journey towards becoming distribution system operators (DSOs), with a minor change in terminology hiding a vast change in the scope of their responsibilities. As DSOs, it's expected that they will coordinate and balance regional grids; maintain and manage new con- nections; procure demand-side management - exibil- ity, including at the grid edge; create new markets with maximum participation from innovators and community groups; capture, process and share network data while maintaining cyber-security – and all within a pro‚ t-limit- ing, cost-sharing regulatory environment that Ofgem has yet to spell out. But while there's general agreement about the nature and scope of the transition, there is still some uncer- tainty about the de‚ nitions, milestones and timescales. As independent energy consultant John Scott sums up: "I don't think I've ever seen clearly described what a DSO actually is intended to be. There is plenty of PowerPoint- level material, but it's incredibly vague and generalised." At the Association for Renewable Energy and Clean Technology (REA), which represents many of the low carbon generators that will operate in this new territory, head of policy Frank Gordon is also in the dark: "What exactly is a DSO? If we knew, we could track the require- ments, but it's not ‚ nalised as of yet. No-one knows exactly what it means, the Energy Networks Association [ENA] and the networks have their 'road maps', and there are various consultations on what it might look like, but it's still quite ambiguous as to how it turns out." The ENA-brokered Open Networks Project, active since 2017 and drawing in representation from the DNOs, the Department for Business, Energy and Industrial Strategy (BEIS), Ofgem, academics and trade bodies, aims to clarify objectives for the transition, and facilitate the collaboration necessary to achieve them. As part of its consultation on its programme for the coming year, it recently announced that it would publish a "DSO Imple- mentation Plan" by summer 2020 – a document that will no doubt help to ‚ ll in gaps in the sector's knowledge. The ENA also highlighted the progress it had made in 2019, where it published its commitment to exploring the markets to procure - exibility; a "system resource regis- ter", a web page giving access to the six DNOs' published data on their distributed energy resources; and guidance on how the DNOs would collectively manage connection queue management. Future networks Why the DSO transition must accelerate Network operators need to make big changes to transition to 'DSOs' if we are to meet decarbonisation targets. But how much progress are they actually making? Elaine Knutt investigates. The DNOs themselves express con‚ dence in the pro- cess. At Electricity North West, regulation and commu- nications director Paul Bircham says: "We've got a clear sense of direction overall, so the steps we need to take are pretty clear. What's really helped us make progress is having all the DNO, National Grid and other stakehold- ers working together through the Open Networks Project to scope out functions, especially where we are engaging with other markets and can seek standardisation. I think we're quite aligned [with the other DNOs], we're making progress, and we also have a sense of alignment with Ofgem." Nevertheless, there are perceptions in some quarters that the transition process, and the stewardship of the Open Networks Project, has lacked momentum. "There have been lots of good noises around the transition, but we echo what Ofgem said in its open letter to the ENA [in July 2019]. It talked about a lack of clarity on timelines and the need for tangible objectives," says Conor Maher- McWilliams, head of - exibility at Ovo-owned Kaluza. "It needs to create concrete, tangible objectives against which success can be measured. There have been delays and no clear ‚ nish line." Scott fears that, in the absence of clearer guidance from the Open Networks Project and Ofgem, DNOs' boards and shareholders may be steering in the right direction, but not hitting the accelerator. "Are the inves- tors saying to the chief executives, 'OK do your part, do some trials, but until Ofgem shows broadly the direction it wants to see, don't go too far?'" Scott suggests. "Ofgem needs to indicate what it means by the DSO role, and how DSOs will earn their revenue." At Smarter Grid Solutions, whose Distributed Energy Resource Management So¢ ware (DERMS) is currently used by four UK DNOs, executive director Graham Ault shares a similar view. "A year or two ago, there was lots of thinking and ideas; now people are trying to work out "I don't think I've ever seen clearly described what a DSO actually is intended to be. There is plenty of PowerPoint-level material, but it's incredibly vague and generalised." John Scott, energy consultant "I don't think I've ever seen clearly described what a DSO actually is intended to be. There is plenty of PowerPoint-level material, but it's incredibly vague and generalised." John Scott, energy consultant continued overleaf

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