Utility Week

UTILITY WEEK | JUNE 2022 | 27 Electricity distribution ine the long-term purpose and structure of TNUoS charges. It said this work may eventu- ally require yet another SCR. Distribution connection charges These developments meant the network access SCR had a much narrower scope by the time Ofgem issued its final decision at the beginning of May, mainly focusing on changes to network distribution connection charges, that like its reforms to residual use- of-system charges will reduce the dispari- ties between users connecting in different locations. The regulator said the new arrangements, which will come into effect for the beginning of the RIIO-ED2 price controls in April 2023, will bring forward investment in low-carbon technologies such as electric vehicles and heat pumps and allow distribution network operators (DNOs) to reinforce their networks more strategically, ahead of customer need. Customers connecting to distribution networks currently have to pay for all of the new assets required to extend the network to them. If existing shared assets need to be reinforced to accommodate the connection, they are also required to contribute towards the cost of that reinforcement, up to one volt- age level above their point of connection. Ofgem said these "shallow-ish" connec- tion charging arrangements share the cost burden of reinforcement between connecting customers, which may receive a locational price signal encouraging them to connect where there is spare capacity on the net- work, and the wider customer base, which pays for any reinforcement from two voltage levels above the point of connection through DUoS charges. However, the regulator said there are mul- tiple issues with these arrangements: • Ineffective price signals and the "free rider" effect. The current arrangements do not provide consistent or fair price sig- nals for network reinforcement because they exist only for the specific customers whose connections trigger reinforcement. This incentivises prospective customers to free-ride by waiting to request a connec- tion until reinforcement has already been triggered by another customer, unneces- sarily delaying connections and hindering the uptake of low-carbon technologies. • Incremental reinforcement. The current arrangements encourage DNOs to take an incremental and reactive approach to reinforcement rather than investing in anticipation of wider network needs. • Barrier to net zero. The current price sig- nals may be too strong for some users and T he energy sector is at a critical stage in the tran- sition to a decarbonised energy system. The develop- ment of new distribution system operator capabilities, the increasing role of decen- tralised renewable generation, the electrification of transport, and emerging electrification of heat will all be key factors in the transition's success. Another critical success component will be continued improvement in the reliability and resilience of electricity networks facing increas- ingly frequent and severe weather events. Regulators and network companies, when focusing on customer interrup- tions and customer minutes lost, o"en exclude excep- tional events to gain a better understanding of underlying performance and incentivise improved performance for blue-sky days. Ironically, such events are o"en when homes and businesses are most affected by interruptions. These impacts will continue to grow as society decarbon- ises with the electrification of transport and heat. In its "RIIO-ED2 Methodol- ogy Decision," Ofgem focused on network asset risk metrics and climate resilience as well as the business plans the distribution network operators have put forward to achieve improvement. The importance of resilience is being recog- nised internationally as well. In Australia, for example, several distribution network service providers recen tly collaborated on a paper on network resilience, and in Canada utilities have recog- nised resilience as a key part of their network strategies. It is important to consider the options available for improving reliability and resil- ience, while tackling perfor- mance with exceptional events included. The options include investing in further network segmentation and distribution automation to automatically detect outages and reconfigure the network to restore power to the greatest number of customers. Targeted undergrounding is becoming a more economic option as the frequency of severe weather increases. Greater focus also should be placed on reliability and resilience at the grid edge because major storms o"en have the most impact on long rural spurs that include the worst-served customers. Targeted investment in improv- ing power restoration on these spurs can drive improvements for worst-served customers while reducing short inter- ruptions, which are becoming increasingly important as network reliance grows. Investment must be made to ensure the distribution grid is resilient not only for today's system and weather condi- tions, but also for a decarbon- ised system in 2030, 2040, and 2050. This is why we are at a critical stage. Ofgem's dra" determinations for the electric- ity distribution sector will be key to putting the foundations in place for success in Great Britain. Christopher Watts, Regulatory Affairs Director, S&C Electric Company EXPERT VIEW CHRISTOPHER WATTS, S&C ELECTRIC COMPANY Network Resilience: Key for a Successful Energy Transition continued overleaf

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