Scottish and Southern Electric (SSE) and Northern Powergrid, two British electricity distribution network operators (DNOs), have announced proposals to explore a transition in their business models towards becoming what they’re calling ‘distributed system operators,’ (DSO) in an effort to better integrate distributed energy resources (DERs) using smart grid technologies.
This sort of transition could become an increasingly common strategy for utilities, which have collectively had their core markets disrupted by the rise of cheap renewable energy. DERs present challenges and opportunities to the DNOs, but could mean dramatic saving for the operators and a cleaner grid, if properly utilized.
The DSO model is focused on enabling customers, as cheaply as possible, to buy and sell services from solar panels, electric vehicles (EVs) and home batteries, that can be used to help balance demand on the network and make it more efficient – an approach called Demand Response (DR).
Growing volumes of renewable generation capacity are a critical factor behind these two DNOs exploring a wider and faster adoption of smart grid technologies. Large volumes of renewable capacity can cause the network to become overloaded – due to their variable generation output.
SSE alone has 5GW of wind and solar connected to its network, and has said that battery storage and DR technologies are needed to manage the peak load of its renewable generation capacity. In transitioning towards becoming aggregators of energy between customers and the grid, SSE and Northern Powergrid will try and enable customers to take part in network management and reduce the pressure placed on the grid by renewable generation capacity.
SSE and Northern Powergrid are already part of the Open Networks Project, an effort focused on the delivery of smart grid tech in the UK, and managed by the Energy Networks Association. The project is focused on developing a model by which DNOs can transition to DSOs, a shift that will help meet the needs of a flexible and de-carbonized electricity system, whilst ensuring the network remains resilient and affordable.
As part of its work with the Open Networks Project, SSE led the Northern Isles New Energy Solutions (NINES) project. Conducted between 2012-2017, NINES was the first time Active Network Management (ANM) was deployed at scale in the UK, costing $24m. NINES also used a 1MW battery system.
The ANM managed five renewable energy schemes connected to the same distribution electricity network. According to SSE, using the technology to manage how and when the energy is used enabled a trebling of renewable energy capacity – by storing energy at times of low demand in the battery.
The system also caused a significant reduction in diesel generation requirements, which are traditionally used to meet fluctuations in supply and demand. SSE’s commitment to exploring its transition to becoming a DSO will mean evaluating the feasibility of how such a project can be scaled across its entire network.
Northern Powergrid launched its initial $2.5m ‘Customer-led Distribution System’ project this week, as well as a consultation on how to reduce losses. The aim of the project is to work out how it can enable its eight million customers to trade power and services using their home solar, battery systems and electric vehicles.
Researchers at the University of Bath and Newcastle University will develop models and laboratory demonstrations of distributed energy systems, local energy markets and network operations, tracking the flows of energy, payments and information. This virtual system will enable them to explore and simulate different approaches, using data from real networks, and will also allow them to develop strategies that may be used to coordinate network and market operations.
Northern Powergrid will try to identify the best use of the different smart grid technologies in a future smart energy system and the business models and policies necessary to support them. We would expect that these groups would most closely investigate technologies such as blockchain, advanced meter infrastructure and battery storage, all of which make the smart grid possible. The project will report back on how it will manage the transition and the current market structure at the end of the Q1 2018.
Northern Powergrid is readying itself for continued growth in DERs and central renewable generation capacity, and will seek to link together 3.9m homes in the North East, Yorkshire and northern Lincolnshire – to insure the energy network is not negatively affected by these trends.
Linked to the transition project, Northern Powergrid is also launching a consultation plan to manage power losses which cost its customers around $134m a year. Much of this waste occurs as electricity is converted to heat as it flows through the network, and to combat this, the company is looking at solutions such as increasing cable sizes and reducing voltages.
Northern Powergrid is already engaged in smart grid projects, such as Energise Barnsley initiative, which will explore how to use home batteries to relieve pressure on the network caused by solar panels. The trial uses 40 Moixa home batteries is expected to halve residents’ energy bills, enable more solar power to be installed without upgrading local distribution networks.
Notably FTSE 100 power company SSE and DNO Npower, owned by Innogy of Germany, announced a merger that will cut the “big six” UK utilities to five, and create a new UK-listed energy company with 11.5m customer accounts. If a deal is reached, the impact of SSE’s DSO transition strategy could reach a much wider customer base, however, regulatory approval will likely take a long time to achieve.