How should you decide whether to go large?

A chance encounter with a power upgrade scheme, sparks Grant Tuff to ask: “how are companies approaching network capacity when replacing their end-of-life assets?”

I live in a rural part of West Berkshire. Recently, whilst cycling and walking the local tracks and paths I have noticed that Scottish and Southern Energy Networks (SSEN), my local distribution network operator (DNO), is replacing a significant number of pole mounted substations in the area.

The work appears to involve routine, end-of-life replacements. Given the area isn’t connected to the gas grid, I began to wonder if these were like for like replacements or if new transformers with larger capacities have been selected to support a growing use of heat pumps and electric vehicles.

What does the regulator say?

First, I searched for Ofgem’s position in the RIIO-ED2 price control scheme documentation. It is hard to find a definitive statement on how to size assets when they are being replaced at the end of their life.

Ofgem’s regulatory and policy documents on network investment and asset management make it clear that network companies must be able to justify and evidence any asset replacement. They must also invest efficiently.

Providing this guidance is met, it seems sensible that network companies save future reinforcement costs by increasing capacity while replacing assets.

What do the DNOs say?

I then tried to find out what my DNO’s policy says when it comes to sizing the assets it’s replacing. SSEN’s ED2 business plan says it “will invest more to ensure safe network operations, address specific areas of environmental and reliability risk, and provide a network capable of connecting the volumes of low-carbon technology that a net zero future requires.”

I could not find any specific reference to the sizing of replacement assets. This made me wonder: have other DNOs made clearer statements?

What I uncovered was a mixed bag. Here goes:

• UK Power Network’s business plan specifically states that “all asset replacement will be made within the context of the transition to a low carbon economy and the nation’s ambition to be carbon neutral by 2050. We will facilitate this by upsizing specific assets such as low voltage cables, transformers and conductors to accommodate new low-carbon technologies such as EVs and heat pumps, promoting a ‘touch the network once’ philosophy, reducing the cost and disruption to customers.”
• Electricity North West does not appear to address the issue directly in its business plan.
• Northern Powergrid says: “our decarbonisation investment plan is underpinned by our principle to take the opportunity to upsize assets when we are investing in them. This adds additional capacity at low marginal cost, ensuring that wherever possible we are installing ‘net zero ready’ assets in order to minimise the likelihood of the need to intervene at the same location again before 2050.”

It seems the distribution network operators are each taking a different approach to the size of assets at of end-of-life replacement. I wonder if part of the challenge they face is gathering the evidence required to support these investments?

What does the Catapult say?

Energy Systems Catapult can help pull together this data using our whole-systems Local Area Energy Planning tool. This takes a bottom-up approach to understanding the opportunities available to decarbonise buildings and transport in local areas.

We start by understanding every building in the area, creating a detailed picture of the options available for decarbonising each of them and what those options might mean for demands on the energy networks.

This includes whether homes are suitable for different types of heating systems, or solar panels and if they have space for off-street EV charging. We also consider the options for public charging. Detailed data from the local DNO then helps us understand where both buildings and EV chargers connect to the local network.

From the model outputs we can identify areas likely to require reinforcement by understanding the options for electrification of heat and transport and what this might mean for network loads. We can then compare this information to the DNO’s records about the remaining operational lifespan of its assets to evidence which will benefit from up-sizing during replacement.

We could even provide a probabilistic approach by running our model many times, with each run prioritising different decarbonisation solutions.

We regularly speak to players in the energy sector to gauge the positive impacts our insights and support are helping bring about.

It’s encouraging to hear from DNOs that the structured, time-bound data provided by LAEPs are informing network studies, identifying constraints and informing investment decisions, and that this localised intelligence is feeding upwards, ensuring that local priorities are visible in national planning.

When replacing network assets at end of life it makes sense to increase capacity where appropriate to prevent the need for re-work to meet future needs.

If like me, you’re wondering how else you can use local data to make smarter investments for a cleaner energy system, Energy Systems Catapult is on hand to help you explore what cost-effective evidence is available.