Active distribution is key to deploying decentralised generation

The world is moving towards decentralised generation, and essential to this transition is the active operation of distribution networks, says Simon Bradbury.

The European Commission’s Clean Energy Package signals a step change away from large-scale, centralised generation. It promises to place active customers, 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 flexibility as the generation fleet decarbonises and patterns of production and consumption become more variable. The goal is to create a framework that supports smart, decarbonised energy systems of the future.

With all eyes increasingly focused on decentralised resources, the gaze inevitably drifts to the role of distribution networks, since it is the lower voltage parts of the system to which these resources are most likely connected. Can the networks and their operators handle the changes? A lot rides on this being a yes.

The anticipated increased role of decentralised resources has significant implications 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 implication of unlocking the flexibility of such resources. Looking forward, the deep decarbonisation of the economy will rely on new uses of electricity in transport and heating, which may significantly increase total demand on the low-voltage network.

This places different demands on the network 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 distribution network to date has been passive, with distribution system operators (DSOs) ensuring power flows safely and securely over the system and losses are appropriately managed. Remote control of distribution network switching points has been commonplace for many years, but largely focused on operational flexibility and improving supply restoration time during outages.

Active management, where flows into and out of – as well as across – the network are managed in real time, was not previously part of the standard job description for a DSO. Active network management connections are already commonplace on distribution networks, where demand and generation are offered interruptible connections in exchange for lower connection costs. This allows a distribution business to optimise 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 system reinforcement. Control of load and production 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 primarily focuses on asset management is a thing of the past. The advent of active distribution system operation is upon us.

It is time to embrace active distribution system operation. With its increased emphasis on activities at lower voltages, what does the Clean Energy Package look to do to push forward active distribution system operation? Quite a lot on the face of it.

The package recognises both the challenge and the opportunity facing distribution 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 application of innovative solutions.

The distribution business role is, therefore, following a similar path to that of transmission system operators, with the ability to procure services as part of an actively managed system. Given this overlap, the need for co-ordination between distribution businesses 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 transmission 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 system. But how will it work in practice?

The new framework requires a change in mindset to enable distribution network operators to develop into distribution system 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 system operator (TSO). How will products be designed to allow the same resource to offer services to a TSO and a DSO? How will synergies 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 management of the lower voltage parts of the system must be a feature of the future and that the Clean Energy Package is trying to create a framework that supports this.