Western Power Distribution has outlined how the cost of flexibility procurement over the next five years could reach £9.3 million in its first Distribution Network Options Assessment (DNOA).
The document explains the reasons behind investment decisions made by WPD in order to deal with constraints across its four license areas, showing the areas it expects these constraints to be in and whether it thinks these can be managed through flexibility, reinforcement or a mixture of both.
The distribution network operator (DNO) used local planning data, demand pipeline data and local engagement to create a range of credible future scenarios that predict growth over the next 30 years. These four base scenarios were then amalgamated to create a fifth scenario representing WPD’s expectation of the most likely future growth. This – called WPD Best View – is used to inform investment decisions.
When it comes to the East Midlands – which has 2.7 million customers and a maximum demand of around 4.8GW – WPD is expecting a resurgence in demand growth driven by development plans from local authorities’ that will result in strong growth in domestic, industrial and commercial demand.
It is also expecting substantial growth in the connection of distributed generation, with 3.7GW of generation connected to WPD’s East Midlands network already and a further 3GW accepted but not yet connected.
As a result, significant reinforcement and flexibility procurement is required, with 41 schemes considered in the DNOA and an estimated £4.5 million worth of flexibility procurement over the next five years recommended. This will defer some of the £134 million reinforcement works required to address the constraints.
The West Midlands is somewhat of a similar picture, with 2.5 million customers and an annual maximum demand of around 4.6GW. It is showing similar signs of resurgence in demand growth based on planning developments by local authorities, and has 1.7GW of generation connected to the network with 2GW accepted and not yet connected.
For the West Midlands, 19 schemes have been considered, with an estimated £1.35 million worth of flexibility procurement over the next five years recommended to defer some of the £48 million reinforcement works required.
Its third license area, South Wales, conversely only requires an estimated £626,000 worth of flexibility procurement over the next five years to defer some of the £34.5 reinforcement works. The area - which has 1.1 million customers and a maximum annual demand of around 1.9GW - has approximately 2.2GW of generation connected and a further 3GW accepted but not connected.
Lastly, the South West license area has an annual maximum demand of around 2.6GW with 1.6 million customers. It is an area where distributed generation is particularly evident, with this partly driven by the abundance of renewable resources in the area, which has around 2.3GW of generation connected with a further 1.1GW of accepted but not yet connected generation.
WPD considered 27 schemes for the South West, with an estimated £2.7 million worth of flexibility procurement over the next five years recommended to defer some of the £57.5 million reinforcement works required.
DSO manager Ben Godfrey said: “Our aim is to build market confidence. Although we only provide procurement contracts of between one and four years, the DNOA shows our longer-term thinking.
"Where flexibility is a more economic option than reinforcement, market participants will be able to read the signals contained within the DNOA.”
The full DNOA document can be found here.