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Collectively DNOs have pledged over £23bn in investment over the next price period. Image: Getty.
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How DNOs can put their RIIO-ED2 words into action

Collectively DNOs have pledged over £23bn in investment over the next price period. Image: Getty.

The figures quoted in the recent RIIO-ED2 proposals from Great Britain’s distribution network operators (DNOs) would raise an eyebrow or two around any boardroom table. The six DNOs want to invest £23.2 billion in total, ranging from Electricity North West’s (ENW’s) £2 billion through to Western Power Distribution’s (WPD’s) £6.2 billion.

Yet that level of proposed spending illustrates the scale of the challenges – and the opportunities – that lie ahead if the UK is to hit its legally-binding target of reaching net-zero by 2050. Collectively the DNOs have based their expenditure need on forecasts of approximately 2.6 million heat pumps and 6.4 million electric vehicles (EVs) that will require to be connected to the low-voltage networks between 2023 and 2028.

All this electrification of heat and transport will add pressure to Great Britain’s already creaking electricity distribution grids. Demand will surge, especially at peak periods during the winter when everyone wants to heat their homes and businesses, and during potential new peaks at night, when sleeping Britons will expect their EVs to be charging ready for the morning commute.

Even though Great Britain hasn’t fully decarbonised all the electricity we’re using now, the target is about to double, with National Grid Electricity System Operator’s (ESO’s) net-zero analysis predicting that peak demand will grow from 60GW today to 115GW by 2050 as heat and transport are electrified. That means we need a massive rise in the number of low carbon energy devices being connected to the network, along with grid-scale batteries to store the power until it’s needed.

As well as networks coming under pressure from an increase on the “demand side”, there will also be added congestion from the “supply” side. Infrastructure that was designed for electricity to flow in one direction – from the “trunk” of the transmission grid into the “branches” of the distribution networks – is now having to cope with more renewable energy devices, such as wind turbines and solar panels, being connected at the periphery of the distribution network.

While major projects such as offshore wind farms will continue to be connected to the main transmission system, smaller sites will still need to be linked to local distribution networks, whether it’s roof-mounted solar panels on housing developments, factories erecting their own wind turbines, or batteries to store power. Connecting more batteries to the grid will not only help to solve renewables’ intermittency problems but will also give owners the chance to earn income by selling electricity to the wider system when it’s needed.

Several core themes were clear in the DNOs’ submissions: increasing the use of flexibility; connecting low-carbon technologies; digitalisation; and increased data provision to customers to inform decision making, such as evaluating connection options or taking market positions. Each of those elements will require DNOs to step beyond simply looking at physical infrastructure such as wires and cables and instead turn their attention to the data and computer systems required to enable these key commitments.

Using digital technology holds the key to allowing DNOs to fulfil the promises they’re making in their RIIO-ED2 submissions by turning their words into actions. Harnessing digitalisation will also create business opportunities for DNOs as they continue their journeys to becoming distribution system operators (DSOs) by making data-driven decisions on the most cost-effective way to deliver hosting capacity and reliability.

DSOs need to assess whether build (adding infrastructure) or buy (using flexibility) to manage existing infrastructure is the most effective way to meet all kinds of operational challenges, from load growth and connections through to outages. To make those decisions, DSOs need digital tools to make forecasts, conduct analysis, run scenarios, evaluate options and, importantly, share the results with customers and other stakeholders. The clear expectation from the regulator is that flexibility should be assessed as a real alternative, rather than assuming physical works are the answer.

All this data and analysis needs to be transparent so that customers can model their own scenarios and then run their operations so that they don’t compromise network reliability. Providing high quality and accessible data to customers to increase their understanding of the network and its capability at any time is a given. Bad data equals bad decisions, and DNOs have recognised this dilemma in their RIIO-ED2 submissions to Ofgem. For example, WPD has identified £35 million to upgrade high-voltage monitoring and SPEN 14,000 low-voltage network monitors to cover three quarters of their customers.

Use of existing and new data sources as well as harnessing new platforms, such as distributed energy resources management system (DERMS) also gives DSOs the tools to optimise flexibility procurement decisions as services move closer to real-time. This also delivers real-time control capabilities to provide back-ups and safeguards, and facilitate secondary trading of network access and direct peer-to-peer energy transactions. These data sources and new digital platforms provide the advanced grid analytics needed to model flows, contingencies and operational study scenarios that allow DNOs to use long-term and short-term forecasts to operate the system much more efficiently and securely.

DSOs can also use DERMS to build customer portals to share their decisions on whether to build infrastructure, use flexibility or both, along with the supporting data. They can also be used to coordinate with National Grid ESO for system balancing and management of transmission constraints, so more connections become commercially firm.

Such digitalisation of our electricity grids lie at the heart of many of the plans that DNOs have filed with the regulator. SSEN wants to spend £400 million digitalising its systems, while SPEN believes digitalisation of many of its operations as part of a wider systems redesign will save its customers up to £60 million.

Working with each of Great Britain’s six DNOs has demonstrated to us that there’s a real appetite within the industry to harness digital technology. Our DNOs are at the forefront globally of what it requires to become a DSO and we hope that Ofgem supports the need to invest in DSO capability at the scale that’s really required.

Alan Gooding's photo

Alan Gooding Executive director, Smarter Grid Solutions

Alan Gooding is co-founder and executive director of energy software company Smarter Grid Solutions.

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