Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/780324
22 | 3RD - 9TH FEBRUARY 2017 | UTILITY WEEK Operations & Assets Market view T he European Commission's Clean Energy Package signals a step change away from large-scale, centralised generation. It promises to place active cus- tomers, aggregators and smaller scale, decentralised resources, such as demand- side response and storage, at the heart of the markets. The ambition is to unlock the potential of such resources to provide flex- ibility as the generation fleet decarbonises and patterns of production and consumption become more variable. The goal is to create a framework that supports smart, decarbon- ised energy systems of the future. With all eyes increasingly focused on decentralised resources, the gaze inevitably dris to the role of distribution networks, since it is the lower voltage parts of the sys- tem to which these resources are most likely connected. Can the networks and their oper- ators handle the changes? A lot rides on this being a yes. The anticipated increased role of decen- tralised resources has significant implica- tions for distribution businesses. In general, low-voltage networks were built to handle flows from the transmission system, then down through the voltage levels and to the end consumer. But this is not the vision for the future. Flows from consumers on to their local network and from aggregated resources on to the wider system are an inherent impli- cation of unlocking the flexibility of such resources. Looking forward, the deep decar- bonisation of the economy will rely on new uses of electricity in transport and heat- ing, which may significantly increase total demand on the low-voltage network. This places different demands on the net- work in terms of its capabilities, and also on the operator, to ensure that the system is operated within tolerances and without requiring significant new investment. In most cases, management of a distribu- tion network to date has been passive, with distribution system operators (DSOs) ensur- ing power flows safely and securely over the system and losses are appropriately man- aged. Remote control of distribution network switching points has been commonplace for many years, but largely focused on opera- tional flexibility and improving supply resto- ration time during outages. Active management, where flows into and out of – as well as across – the net- work are managed in real time, was not previously part of the standard job descrip- tion for a DSO. Active network management connections are already commonplace on distribution networks, where demand and generation are offered interruptible connec- tions in exchange for lower connection costs. This allows a distribution business to opti- mise use of its existing network capacity. But this also opens up opportunities for DSOs. The presence of flexible resources on distribution systems creates the potential for DSOs to procure third-party services to support system operation. Additionally, this can offer an alternative to conventional sys- tem reinforcement. Control of load and pro- duction will also begin to reach beyond the meter and into the home. All of this additional complexity will make management of the system much more challenging. What is clear is that the traditional model of a passive distribution business that pri- marily focuses on asset management is a thing of the past. The advent of active distri- bution system operation is upon us. It is time to embrace active distribution system operation. With its increased empha- sis on activities at lower voltages, what does the Clean Energy Package look to do to push forward active distribution system opera- tion? Quite a lot on the face of it. The package recognises both the chal- lenge and the opportunity facing distribu- tion businesses. In response, they are to be given a clear mandate to define and procure services from storage, demand response and distributed generation to support system operation. Such activities will be part of a regulatory incentive framework, intended to promote enhanced efficiency and applica- tion of innovative solutions. The distribution business role is, there- fore, following a similar path to that of trans- mission system operators, with the ability to procure services as part of an actively man- aged system. Given this overlap, the need for co-ordination between distribution busi- nesses and transmission system operators in terms of procurement and utilisation of such services is noted. Distribution businesses are to be on a more even footing with transmis- sion system operators, in this regard. This concept of active system operation at lower voltages is a central tenet of the future arrangements. Many of us in the industry think this sounds good as part of the route map for a smart, decentralised energy sys- tem. But how will it work in practice? The new framework requires a change in mindset to enable distribution network operators to develop into distribution sys- tem operators. There will be more emphasis on buying solutions from service providers rather than investing in capital. This means distribution businesses are expected to swap technical, asset-based risk for commercial, contract-based risk – a significant departure. At a more practical level, there is the interaction with the transmission sys- tem operator (TSO). How will products be designed to allow the same resource to offer services to a TSO and a DSO? How will syner- gies be realised and conflicts managed? Is it feasible for there to be more than one active operator of the system? This could go one of a number of ways. For example, system operation at different voltages could remain separate but within a framework that allows effective co-ordination or system operation across the voltages to be merged. Quite how things will pan out is unclear, but it is certainly the case that active man- agement of the lower voltage parts of the sys- tem must be a feature of the future and that the Clean Energy Package is trying to create a framework that supports this. Simon Bradbury, principal consultant, Pöyry Management Consulting Active distribution is key The world is moving towards decentralised generation, and essential to this transition is the active operation of distribution networks, says Simon Bradbury. "Control of load and production will also begin to reach beyond the meter and into the home"