Assessing the potential value from DSOs

Published: 11 July 2019

Introduction

As the energy system becomes more distributed and incremental demands such as electric vehicle charging are added, the role of Distributed System Operators will be pivotal to the efficient, effective use of energy resources to support the system.

This report estimates the value that DSOs can deliver to Great Britain plc compared to the existing arrangements.

Drawing on the potential future worlds characterised by the ENA’s Open Networks project, this independent report adds to the debate by exploring the potential configurations of the current and future system operators and flexibility providers. The potential value generated by improved coordination between national and regional operations is reviewed, as well as more qualitative considerations affected by different arrangements of the relevant parties.

This thought piece provides insight into how the DSO role could support the power system of the future, and the key issues around how future flexibility could be put to best use for all parties.

Key points

  • Impact of diverging peaks can lead to inefficient solutions. The lack of coincidence between local and national peaks leads to the possibility of inefficient system solutions when the same resource can be used to address network issues at both levels, with impacts on costs increasing over time. However some demands, such as the electrification of heat and transport will also be the source of the additional flexibility. As a result this demand and flexibility will arrive at the same time and in the same location.
  • Local flexibility resources should be used at the local level. There is a higher value from using local flexibility resources to address local network issues (due to lack of alternative options).
  • Network investment is the main driver of cost differences across our Frameworks. The ‘Current Position’ Framework features the highest cumulative total system cost at £563bn, over £7.2bn more expensive than the ‘Perfect  Information’ Framework.
  • Revealing the true value of flexibility to the distribution or transmission system will deliver the greatest benefits. However these require more fundamental changes in information/data flows, commercial arrangements and regulatory incentives.
  • The ‘Frameworks’ share many of the same features. Therefore it should be possible to transition from one to another without too much disruption.