Utility Week

22 | 15TH - 21ST DECEMBER 2017 | UTILITY WEEK Operations & Assets Analysis D istribution network operators (DNOs) have already spent years trialling innovative technologies and new business models as they prepare for their transformation into distribution system operators (DSOs). Up until fairly recently, this transfor- mation has appeared somewhat distant – always on the horizon, but never quite moving to the foreground. But now suc- cessful trials are starting to be rolled out as part of business as usual. The vision for the future is becoming clearer and more defined. Take, for example, UK Power Networks' (UKPN's) launch in July of an active network management scheme to boost transmission capacity across the southeast of England, in collaboration with National Grid. "This is business as usual, both in the way it's run and the way it's funded," says UKPN head of smart grid development Soti- ris Georgiopoulos. "There we are trying to jointly tackle some of the emerging issues on the southern coast of the UK, looking at how transmission and distribution can work together to resolve some of these challenges in the most cost-effective way." In September, the DNO also launched a flexibility tender to manage specific con- straints at the distribution level. "It's really going to the core of what a DSO does," adds Georgiopoulos. He says the control centre is now staffed by a DSO and smart operations manager, while a connections team is preparing for the large-scale rollout of rapid charging points: "Wherever you look in UKPN's operations you will start recognising the effect of the low-carbon transition and its becoming core to our everyday business." A nationwide effort Across the country, DNOs are rolling out, or have already rolled out, flexible connections offerings to their customers. Steve Cox, engineering and technical director at Electricity North West, says there are now more than 700 generators connected on flexible contracts in the southern part of its licence area alone: "You've seen a real shi – almost every connection offer going out the door today is for a flexible connec- tion managed by a very DSO-like service." Cox says the company is not only intro- ducing new technology, but also changing the way it interacts with customers: "What we learned during the innovation trials for flexible contracts is that it's very important to have a close relationship with custom- ers where you talk about flexibility and take on board their needs in terms of what is the most amount of flexibility they can take within the contract. He continues: "I think as well as offering contracts, what you will now find if you talk to customers is that… they really value that one-to-one discussion, particularly indus- trial and commercial demand customers, and generation and storage customers." Even within the innovation trials, there is evidence that the transition is beginning to kick into gear. Northern Powergrid, for instance, recently announced plans to create a "virtual" local energy market to simulate flows of energy, payments and information across networks, and develop strategies to co-ordinate network and market operations. "This project is a way of helping us select the right technical, regulatory and commer- cial models and actually make it a reality on the ground," explains Northern Powergrid policy and markets director Patrick Erwin. "There's a lot of work on the engineering going on but there's been a real gap in some detailed thinking about how you make the underlying commercial, economic and regu- latory system works," he adds. Erwin says the ultimate outcome of the company's efforts will hopefully be a model for local energy markets that is "coherent across the industry and across the UK, but with appropriate regionalisation". This will require collaboration, and Stew- art Reid, head of DSO and innovation at Scottish and Southern Electricity Networks, claims this is another area in which the net- works have been upping their game. "If you look at where we are now compared to a year ago, the first thing that is very obvious is the level of collaboration in the industry has stepped up tenfold," he tells Utility Week. "A year ago, the DNOs were all going off and testing aspects of DSO and sharing the learning, but now they're sitting around the table with a range of stakeholders and work- ing out what the solution looks like. We're converging on a model of the DSO rather than diverging into a range of options." Reid says the Energy Networks Associa- tion's (ENA's) Open Networks project is cen- tral to this work and has been "quite a big step forward… That whole planning front, that co-ordination front, is moving forward at quite a pace". Collaborative working This collaboration will be crucial to address- ing the challenges DNOs face. One is the huge uncertainty about the demands that will be placed on their networks, most nota- bly when electric vehicles start to be adopted en masse, together with the part networks will play in the decarbonisation of heat. "If low-carbon heat and electric vehicles hit the network at the same time, that will be a really big challenge," cautions Erwin. Another issue is how best to protect and support vulnerable customers in a system that provides substantial benefits to those who have the resources to become active par- ticipants in the market. "What we're doing here is deploying a whole load of smart technology, digitalisa- tion and big data, and that's going to provide a load of opportunities for people with elec- tric cars, with batteries and with solar panels to trade those assets and make money out of them," he says. "As well as making sure the technology is accessible to the most vulner- able, we also need to think how to recast the system, so we don't put them at a disadvan- tage and we maintain fairness and equity." Support from government and Ofgem will be essential to overcoming these hurdles, and they received universal praise from the DNOs Utility Week spoke to. They said Ofgem and the Department of Business, Energy and Industrial Strategy (BEIS) have stepped up to the plate with the publication of the Smart Systems and The DSO transformation Electricity network companies are beginning to roll out innovative technologies as they prepare to transform into distribution system operators. Tom Grimwood looks at what they're doing.

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