have together delivered a proliferation of MW-scale renewable generators (mainly .... Thanks to the well-established Renewables Obligation (RO) mechanism ...
Embracing an adaptable, flexible posture Ensuring that future European distribution networks are ready for more active roles By Luis(Nando) Ochoa, Fabrizio Pilo, Andrew Keane, Paul Cuffe, and Giuditta Pisano
Electricity distribution businesses around the world will continue to experience significant upheavals in the coming decades. In Europe, especially, the ambitious 2020 climate and energy targets have focused efforts on ensuring that distribution networks become more flexible and adaptable, and so stay relevant to the energy needs of the modern world. The challenge is pressing: as technological advances, various national support schemes and economies-of-scale have together delivered a proliferation of MW-scale renewable generators (mainly wind and photovoltaics) onto distribution networks. Smaller scale technologies are also making their presence felt: countries such as Germany, Italy, France, and the UK continue to see significant uptake of small-scale photovoltaic systems. Indeed, renewable generators are not the only new technology connecting to the distribution network, as electric vehicles and distributed storage devices will continue their rollout in the coming years. Smart meters are already in use in certain European countries, and their deployment is imminent in many others. Amidst these technological developments, a consensus has emerged: distribution network operators (DNOs) must adapt to this new landscape by embracing an adaptable, flexible posture. New smart grid technologies allow networks to be dynamically and intelligently controlled. The proactive adoption of these technologies will allow more renewables to be facilitated at less cost, will avoid wasteful network reinforcements, will boost network reliability, and will minimize power losses. This shift from a passive role to an active one will see the traditional DNO evolve to become an engaged, flexible distribution system operator (DSO) in which tending the physical electric circuits becomes but one of their various roles. As one example of the challenges this shift creates, consider the case of renewables integration in Italy. Here, developments ran so fast that it was not possible to integrate modern techniques into long-established DNO planning and design practices. Massive investments were necessary to integrate renewables, due to overly-conservative passive design principles, where a handsoff, fit-and-forget approach to network planning is assumed. Even with a vast upgrade of the physical network, such phenomena as reverse power flows through primary substations, line congestions and voltage problems in medium (MV) and low voltage (LV) networks are making the life of distribution engineers less placid than in the past. Since new generation is commonly based on renewable sources, local production is unpredictable and has limited dispatchability, and so it can be hard to operate the distribution network within acceptable technical limits. Furthermore, there is a risk of worsening quality of service delivered to customers. If this happens, the DNO could incur penalties imposed by Italy’s strict, performance-based regulations. These are just some reasons that a DNO should embrace innovation, and rightly claim for themselves a new, more active role in controlling their networks.
This article surveys some related challenges that regulatory authorities within the European Union (EU) will face in guiding a path through this transformative time. The realignments of incentives and priorities that will ensure the transition of DNOs to DSOs are discussed in detail for the cases of the UK (regulated by the Office of Gas and Electricity Markets, Ofgem) and Italy (regulated by the Regulatory Authority for Electricity Gas and Water, AEEGSI). Furthermore, some initial findings from the ongoing EU FP7-funded project evolvDSO, which focuses on the evolving roles of European DNOs more generally, are also presented. 1.
The European Regulatory Context
European DNOs are responsible for operating, maintaining, and, as necessary, developing the distribution network. They must also comply with legal unbundling, so DNOs must be legally, functionally, and operationally (in terms of staff) separated from other actors in the supply chain, such as generators, transmission system operators (TSOs), and retailers. However, there is no obligation to separate asset ownership from vertically integrated undertakings (multiple actors of the supply chain under a larger company). In addition, for integrated undertakings serving less than 100,000 connected customers Member States may decide to waive these unbundling rules. In practice, there is a diversity of national implementations of EU legislation on electricity distribution. Although the functional model of a DNO is generally the same, there are significant differences in their number, size and activity profiles across Member States. Differences also exist in the degree of unbundling and in the technical characteristics of distribution networks (e.g., voltage, extent of automation, penetration of distributed energy resources, etc.) 900 800 700 600 500 400 300 200 100 0
Total Number of DNOs
Figure 1 Number of DNOs in selected Member States based on 2016 CEER data
Slovenia
Malta
Greece
Slovak Republic
Slovenia
Luxemburg
Lithuania
Hungary
Netherlands
Latvia
Portugal
Great Britain
Belgium
Estonia
Romania
Denmark
Finland
Austria
Poland
France
Italy
Sweden
Czech Republic
Spain
Germany
Less than 100,000 connected customers
Installed Capacity (GW)
100 90 80 70 60 50 40 30 20 10 0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
France
Germany
Greece
Italy
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Spain
Switzerland
Turkey
United Kingdom
Figure 2 European PV cumulative installed capacity 2000-2015 based on multiple sources
Given the diversity of European DNOs, the EU FP7-funded project THINK concluded in 2013 that there is no need, nor a solid justification, for a comprehensive harmonization of the regulation of future DSOs across Member States. However, that project recommended setting clear minimum requirements in some key regulatory areas. Along these lines, the Council of European Energy Regulators (CEER) addressed in their 2015 report “Future Role of DSOs” a number of key aspects necessary to ensure an adequate regulatory evolution. Some of these recommendations are summarized below. 1.1. Principles and Activities of DSOs According to the CEER, there should be four overriding principles for DSOs: DSOs must run their businesses in a way which reflects the reasonable expectations of network users and other stakeholders, including new entrants and new business models; DSOs must act as neutral market facilitators in undertaking core functions; DSOs must act in the public interest, taking account of the costs and benefits of different activities; and, Consumers own their data and that this should be safeguarded by DSOs when handling data. Furthermore, recognizing the difficulty faced by national regulatory authorities in determining non-core activities in which future DSOs may participate, the CEER also developed a conceptual framework (Figure 3) to help in defining what tasks DSOs should and should not participate in. Within this simple, yet useful, framework for national regulatory authorities, DSOs may be allowed to carry out activities even if there is a potential for competition under certain conditions provided there is specific justification or a cost-benefit motivation. DSO participation might also be considered in cases where it helps to kick-start the development of new or underdeveloped markets with potential benefits for consumers. This process, that must also consider
the country-specific situation, results in three clearly defined main categories of DSO activities: core, allowed under conditions, and not allowed. The CEER acknowledges that, in general, there is no single model for what a DSO can and cannot do. There are, instead, a number of grey areas where this conceptual framework can help, including the provision of energy efficiency advice, the extent of their involvement in flexibility and storage, and engagement with end consumers in relation to network operational issues. The more DSOs are involved in non-core activities, the greater there will be a need for regulatory control. However, the more the market is developed, the less DSOs should be involved in carrying the new activities.
Are there operators other than the DSO that currently carry out the activity?
Is the activity potentially open to competition?
Is the market sufficiently developed?
Does the activity require an active role in the operation of the distribution grid?
No
Is there a special justification or a cost-benefit analysis provides a case that the DSO should carry out such an activity?
Yes Activity Allowed Under Conditions
No
Yes Core Regulated DSO Activity
Yes
Yes
No
Could the activity be carried out by a different entity than the DSO?
Competitive, Non-DSO Activity
Are there compelling reasons to review the outcome?
Figure 3 CEER’s conceptual framework to determine the tasks a future DSO might carry out
1.2. Reimagining the DSO-TSO Relationship The increasing volumes of low carbon technologies and also the future flexibility to be featured by DSOs require significant coordination with the TSO for the power system to be holistically and cost-effectively managed. Some of the key issues affecting the future relationship between DSOs and TSOs were identified by the CEER. This led to the following additional principles:
A whole system approach must be taken in all areas to avoid inefficiencies, especially in network planning and investment, integration of demand side response and distributed generation, and regulation. This will help to foster TSO and DSO innovation. Greater coordination is needed between DSO and TSO in relation to procurement of system services, operational and network planning/development/investment decisions and also in developing greater whole system security including cyber security. Exchange of data between network operators to help coordination and optimization appears promising in proven cases in real or close to real time (especially for security issues that arise when the level of variable RES penetration in distributed generation is very high). Use of flexibility of decentralized demand and generation resources, via suitable markets. Fairer cost sharing should prevent the risk of creating perverse incentives for DSOs to avoid reinforcement, resulting ultimately in higher costs for customers, and vice versa. 1.3. Incentives and Innovation Smart Grid investments, mostly in services and technology, can result in higher operating expenditure (OPEX) and can defer the need for acquiring traditional assets. However, adapting the cost structure of the distribution activity to give a higher weight to the OPEX component raises two issues: 1) there is often a rate of return paid on capital expenditure (CAPEX) but not on OPEX; and, 2) the payback period for Smart Grid investment may be different due to their shorter lifespan compared to conventional investment and this could lead to a serious time lag until its recovery through tariffs. The CEER highlights that regulatory incentives are needed to encourage DSOs to be more innovative and to explore smart and flexible solutions. In this context, some of the measures to promote smart grids and innovation are listed below. Reducing the regulated cost recovery period, and more specifically to take into consideration a shorter depreciation period; Taking into account the degree of risk in innovative investments, due to new technology or other factors; and, Creating specific funds or incentives where necessary to promote the development of innovative investments which have the potential to deliver benefits for current or future consumers. The regulatory regime should not favor any particular type of technology but should focus on the potential benefits for consumers. 2.
Transitioning to DSOs: The UK Perspective
2.1. The UK Context There are 14 licensed DNOs in Britain owned by six different groups: Electricity North West Limited (1 area), Northern Powergrid (2), Scottish and Southern Energy (2), ScottishPower Energy Networks (2), UK Power Networks (3), and Western Power Distribution (4). In addition, there are also a number of smaller networks owned and operated by independent network operators located in areas covered by the DNOs. These are all regulated by the Office of Gas and Electricity Markets (Ofgem).
Thanks to the well-established Renewables Obligation (RO) mechanism (particularly for medium-to-large scale generation) and the more recent Feed-In Tariffs (FITs) (targeted at smallto-medium scale generation) the UK has seen in the last few years a rapid growth in renewables, reducing significantly the generation from carbon-intensive plants. In 2015, 27% of the total 338.9TWh electricity generation came from renewables with 49% from gas and coal. This corresponds to a 17% increase and 20% decrease compared to 2011, respectively. The FITs and other incentives for small-scale low carbon technologies are the main triggers of the changing landscape in UK distribution networks. PV installed capacity increased from 0.2GW in 2010 to 8.4GW in 2015, which is almost 10% of the total installed capacity in Britain. Electric vehicles (EVs) have also seen a remarkable uptake with registrations increasing from 3,500 in 2013 to more than 50,000 by the end of 2015. 2.2. Incentivizing Innovation More than 10 years ago, when the connection of medium-scale wind farms started to boom in the UK, Ofgem recognized that DNOs had to be incentivized to truly adopt a proactive approach towards the connection of such typically renewable distributed generation. In addition to the well-established Innovation Funding Incentive (IFI) targeted at research and development, Ofgem created for the 2005-2010 regulatory period two new incentives: the Distributed Generation (DG) Incentive and the Registered Power Zones (RPZ). Although the corresponding monetary incentives of £2.5/kW/year for new DG connections (DG Incentive) plus £2.0/kW/year if connected in a cost-effective way (RPZ) were relatively modest, they certainly paved the way in making DNOs more active facilitators of low carbon technologies. Indeed, despite the limited number of RPZ at the end of this regulatory period, they served as proofs that the active management of distribution network elements and participants (in this case DG), was technically, financially and commercially possible. For the regulatory period 2010-2015, Ofgem created the £500 million Low Carbon Networks (LCN) Fund for DNOs to try out new technology, operating and commercial arrangements to help them understand how to cost-effectively manage their networks as Britain moves to a low carbon economy. This fund was divided into direct allocations for small projects (Tier 1, based on the size of the license area) and a competitive stream for large, flagship projects (Tier 2, up to £64 million per year). The result of reducing the investment risk associated with Smart Grids –albeit on a trial basis– was more than 60 innovative small and large-scale field projects (some still ongoing) involving distributed energy resources (wind, PV, EVs, storage), the deployment of ICT, the use of advanced network automation, etc. to tackle diverse technical challenges at various voltage levels. Many of these projects have taken truly progressive views of what future DNOs might be able or required to do, increasing network observability and intelligently managing not only new network elements (e.g., DNO-owned storage, LV on-load tap changers) but also participants (e.g., small-to-medium scale renewable DG, household appliances, EVs, storage).
Meshed Networks, 3 Modelling, 3
Community Schemes, 3
Low Carbon Generation, 23
Stakeholder Engagement, 3 Commercial, 3 Fault Level, 3 DG, 5
LV and MV Networks, 20
MV Technology, 7 Demand Side Response (DSR), 17
PV, 8 Active Network Manangement, 8 Electric Vehicles…
Comms & IT, 15 Storage, 10
Network Monitoring, 10
Figure 4 Scope of LCN Fund projects (many with multiple instances) based on 2016 ENA Smarter Networks Portal data
Funding (USD million)
350 300 250 200 150 100 50
Demand Side Response Storage LV & MV Networks Low Carbon Generation Network Monitoring Electric Vehicles ICT Active Management Electric Heat Pumps MV Technology Modelling Commercial Aspects Meshed Networks Fault Management Voltage Control Fault Level Carbon Reduction Resilience Stakeholder Engagement Distributed Generation Photovoltaics Overhead Lines Protection Asset Management Transformers Substation Monitoring Fault Current Community Schemes Measurement Harmonics
0
Figure 5 Aggregated investment of LCN Fund projects per scope (many with multiple instances) based on 2016 ENA Smarter Networks Portal data
The success of the LCN Fund and the clear understanding from Ofgem that Smart Grid investments should be strongly incentivized were key aspects reflected in the new model for the current (and longer) regulatory period 2015-2023: RIIO (Revenue = Incentives + Innovation + Outputs) ED1. The LCN Fund was replaced in RIIO-ED1 by the Network Innovation Competition and the IFI (that continued until 2015) by the Network Innovation Allowance. According to Ofgem, this new RIIO model was designed to encourage DNOs to: Put stakeholders at the heart of their decision-making process;
Invest efficiently to ensure continued safe and reliable services; Innovate to reduce network costs for current and future consumers; and, Play a full role in delivering a low carbon economy and wider environmental objectives. The regulatory evolution of Ofgem in the last decade makes it clear that innovation must be considered key in ensuring the transition to a low carbon economy. Nonetheless, the adoption of new technologies and appearance of new markets and/or business models that could further help in this transition might be limited by current regulation. Further work is being carried out by Ofgem to understand and overcome potential regulatory barriers. 2.3. Ofgem Vision In 2015 Ofgem published a position paper setting out its vision of flexibility in the future electricity system. Flexibility, defined as the ability to modify generation and/or consumption patterns in reaction to an external signal to provide a service within the electricity system, corresponds to a key feature of electricity markets as it can be used by diverse market participants (those that generate, consume or do both) to manage their operations efficiently. In this context, Ofgem believes that the future electricity system will need to be characterized by the smarter and more efficient use of traditional and new flexibility sources in order to benefit consumers as much as possible. LOCAL BALANCING
INDIVIDUAL PROVIDERS
C onsumers could provide flexibility to their local communities. Energy from small-scale, renewable generation could be used locally to reduce the need to transport it on the networks when they are full. DSR or local storage could help communities make the most of the energy they generate, as well as supporting local network management.
C an change how much they demand or supply in response to changing prices or direct signals from flexibility users such as suppliers or the system operator
conventional thermal generation TRANSMISSION NETWORK DISTRIBUTION NETWORK
Renewable generators
Key:
C ommercial customers
Domestic Industrial C ustomers customers (with solar PV) THIRD PARTY AGGREGATION
Solar Power
Wind generator
Energy storage
Smart meter
C onsumers, generators and storage can provide flexibility through an intermediary, combining their outputs to meet the requirements of those purchasing flexibility anywhere on the system.
Figure 6 Ofgem vision of flexibility in the future electricity system
This future system is envisioned to feature an efficient and sustainable mix of generation sources both at transmission and local level, making use of sufficient cross-border electricity flows, and increased and efficient deployment of demand side response. It should incorporate emerging flexibility sources, such as storage, to help manage the system, and also enable new business models to participate, from both existing and new market actors, and support better provision of flexibility. Clearly, in this vision of Ofgem, the role of future DNOs in managing flexibility is fundamental. Crucially, in their 2015 position paper Ofgem also discussed issues that could inhibit flexibility in distribution networks. Two areas were identified where changes are already happening and there is a need for further actions: Established actors such as DNOs and industrial/commercial consumers now have greater opportunities to participate in flexibility, and therefore will need to transition to new roles to make the most of these opportunities; and, Non-traditional business models, such as aggregators or storage providers, are likely to play a larger role in the energy sector. To address the above, Ofgem has started carrying out work to: Engage with DNOs and other stakeholders in clarifying the future role of DNOs, including the transition to DSO roles, and the nature of DSO interactions with the System Operator (SO); Remove any barriers to DNOs transitioning to DSO functions; Consider what steps are needed to effect the transition; Explore how to support more large industrial and commercial consumers to participate in providing flexibility, including in wholesale markets and Smart Grids; Engage with stakeholders to raise awareness of the opportunities and to understand the concerns and needs of industrial and commercial customers; Explore in greater detail the role of aggregators in providing flexibility and clarify their role in the market and the relationship with other industry participants; Clarify the legal and commercial status of storage and explore whether changes to the prevailing regulatory and commercial framework are needed to enable its efficient use, seeking input on options from stakeholders; and, Consider the interactions and implications of a new regulatory framework for storage on all segments of the market, including interactions with energy efficiency policies. The UK regulatory scene makes it clear that significant efforts are required to ensure the adequate transition to DSOs, including defining the future roles of consumers and new players. These initial steps, however, are vital in a process likely to take a few years. 3.
Making it Smarter: the Italian roadmap towards Smart Grids
3.1. The Italian context Enel Distribuzione is the largest operator, with 86% of the total volumes, followed by A2A Reti Elettriche (4%), Acea Distribuzione (3.4%) and Aem Torino Distribuzione (1.3%). The other operators (seven of whom are comparatively large) hold marginal quotas.
In 2014, electricity demand in Italy was above 315 TWh, 85% was covered by national production, while imports accounted for the rest. Out of these 315 TWh, 116.6 TWh were produced by renewables, which recorded a 9% increase with respect to 2009. A remarkable growth was registered in wind production (+29.1%), biomass/waste (+21.6%) and photovoltaic (almost 1600 GWh, compared to 677 GWh in 2009). This terrific growth of energy from renewables was made possible by the connection of more than 18 GW of small to medium power generators, mostly photovoltaic, scattered across MV and LV networks. Nowadays, renewables can feed more than 30% of demand in South Italy (summer) and account for more than 11% of power production on average. The Italian system operator has recently acknowledged that the issues related to high penetrations of renewable distributed generation cannot be regarded as a distribution network problem only. Indeed, high penetrations of DG can expose the whole power system to serious challenges: from system adequacy and security, to ensuring appropriate amounts of reserves, to the risk of losing a significant amounts of DG due to overly sensitive loss-of-mains protections stipulated by DNOs to avoid unintentional islanding. Nevertheless, despite the significant improvements achieved so far, the discussion about the needs of a Smart Grid is still open. Clear actions from the Regulatory Authority for Electricity Gas and Water (AEEGSI) are on the way to incentivize innovation on large scale.
3.2. Smart Grid pilot projects Several Smart Grid and Smart City projects have been completed or are on-track for completion in Italy. Amongst these projects, seven pilot projects are particular noteworthy as they have been used by AEEGSI to set up the regulatory framework for promoting investments for Smart Grids. Table 1 presents each of the Italian DNOs involved and the main features of the projects, which are tested on real networks and involve actual customers. AEEGSI directly financed the projects using the tariff paid by all system users by adopting an input-based incentive (in the form of an increase in the weighted average cost of capital). Table 1 Main characteristics of the Italian pilot projects Feature
A2A (1)
ASM Terni
A2A (2)
ACEA
ENEL
DEVAL
A.S.SE.M.
Bi-directional communication
X
X
X
X
X
X
X
DG monitoring and real-time data provision to SO
X
X
X
X
X
X
X
Active demand
X
X
X
X
X
X
X
Advanced restoration
X
X
X
X
X
X
X
X
X
X
X
Storage EV charging infrastructure Demand response
X
X
X
Despite the fact that the Smart Grid pilot projects were subjected to an input-based regulation mechanisms, the opportunity and the need to promote Smart Grid characterized by large-scale, fully interoperable and replicable solutions with an output-based regulation is clear. Indeed, the maturity reached by available technologies and solutions has led AEEGSI, through the directive 646/2015/R/el, to propose the use of Smart Grid performance metrics based on cost-benefit analysis. The ex-post analysis of the seven pilot projects is briefly summarized in Table 2. The functions can be grouped in three main clusters: monitoring, control, and protection. Table 2 Functionalities of Smarter Distribution Networks Ability to work without communication with users
General Application
DNO
Yes
Monitoring
Voltage regulation
DNO and active users
Yes
Control
Active power management of users
DNO and active users
No
Control
Avoidance of MV islanding
DNO and active users
No (alternative local solutions can be adopted)
Protection
Advanced MV network operation
DNO
Yes (communication with network elements is necessary)
Control and Protection
Storage
DNO
Yes
Control
Smart functionality
Main actor(s)
Observability
3.2.1. Monitoring, Control and Protection From the monitoring perspective, AEEGSI identified four levels of observability, ranked according to complexity, cost and benefits (Table 3). The benefits of these functionalities are: The reduction of the need for balancing and ancillary services for the sake of tertiary regulation thanks to a better observability/foreseeability of DG; The reduction of renewable energy curtailment due to critical balancing problems; The efficient management of critical congestions by reducing the curtailment time of DG; and, The enhancement of planning and operation of distribution networks. In terms of distribution network control, the analysis of the projects identified different levels of implementation for voltage regulation with increasing complexity for both technical and regulatory aspects. These options, each with different communication needs, include the use of on-load tap changers (OLTCs) at primary substations by using the information from secondary substations, the use of local regulators that modify the injection of reactive power, and the centralized control of reactive power production to optimize the voltage profiles along feeders. The modulation of active power generated or consumed by users requires the availability of communication between the control center (or primary substation) and the users. This control
function can be implemented for providing balancing and ancillary services that are useful both at system level and at local level. The use of energy storage was also tested in the pilot projects in order to smooth the active and reactive power at the transmission-distribution interface, to give back-up power during short interruptions, to black-start a limited portion of a network, and to manage the charging stations of electric vehicles. Table 3 AEEGSI’s Levels of Observability Level
Description
Communication
Role players
1
Continuous forecast of DG and load based on weather forecasts and/or historical data from primary substations
Only between the primary sub and the DNO’s control room (already existent) and between DNO and the TSO (to be reinforced)
DNO, TSO
2
Correction of forecasts through the utilization of sensors installed in the primary sub or located in secondary stations already remote controlled
Same as level 1 + between primary subs and sensors (already existent)
DNO, TSO
3
Correction of forecasts through the utilization of production data of sample plants already reached by satellite system managed by the Energy Services Operator (GSE)
Same as level 2 + between DNO/TSO and GSE
DNO, TSO, GSE
4
Correction of forecasts through the utilization of production data sent by the DG plants
Same as level 2 or 3 + continuous communication between primary subs and active users
DNO, TSO, GSE and active users
From the protection perspective, two functions were tested by the pilot projects to reduce the number of costumers affected by network reconfiguration maneuvers. This includes the remote tripping of generators (in less than 200 ms) due to islanding as well as advanced fault location and isolation using low latency communication systems; truly innovative functions tested in the Italian pilot projects. The protection systems developed for the pilot projects allows significantly improving the reliability indices for all network users, including the generators that are normally all disconnected by the loss of mains relay (even when not necessary). Besides avoiding or reducing network investments, this solution could also enable the better reliability in densely populated urban areas in which network reinforcements are not easy to carry out.
3.3. Incentivizing Necessary Investments In order to introduce output-based incentives it is necessary to identify metrics that enable an effective and simple representation of the main benefits attainable through the investments under consideration. The quality of service indicators utilized in the Italian incentive-based regulation (rewards/penalties) exhibit such a trait. Thus, the metrics to be adopted for the promotion of investments in Smart Distribution Systems shall have to be subject to the general criteria below. Reliability: the indicators must not be influenced by variables outside the control of the subject on whom the incentives/penalties rest;
Objectivity: indicators must be measured in an accurate, objective and fair manner, so as to reduce any possible dispute and litigation; Simplicity: indicators must be capable of bearing an immediate relation to the benefit linked with a specific investment; and, Controllability: indicators must be easily detectable through controls that do not necessitate excessive costs for the subjects or for AEEGSI. The above aspects were captured by the 2015 directive 646/2015/R/el dealing with the regulation for the time frame 2016-2019. It essentially recognizes as eligible for remuneration those Smart Grid functions that aim at increasing the observability of the distribution networks and at improving voltage regulation in MV networks. These functions do not necessarily require low latency communication with users, thereby creating a basic infrastructure capable of ensuring broad interoperability. The most critical areas with the highest penetration of renewables and/or primary substations with reverse power flows during more than 5% of a year are both eligible for these incentives. Two levels of observability are considered which require the DNO to be able to send real-time measurements (every 20 sec): 1) Energy production, and 2) Energy production plus estimates of both generation and consumption. In order to be eligible for rewards, the accuracy of estimates must be guaranteed on a monthly basis. Voltage regulation is also rewarded considering two levels of innovation: 1) Use of OLTCs to adopt an optimal busbar voltage obtained by using information about the level of energy production/consumption and the configuration of the network, and 2) Local voltage regulation by producers according to bands sent to a certain number of selected producers. A register of improvements achieved with advanced voltage regulation has to be prepared by the DNO. The corresponding rewards are calculated in a simple fashion. However, at the moment, only the rewards for the first, easier-to-achieve level of observability and voltage regulation have been established. The rewards for the implementation of the most advanced levels have not been monetized yet. AEEGSI is clearly making sure that DNOs are rewarded for innovation to ensure the transition to more active roles. However, as with other national regulatory authorities, this is done considering the particular context and characteristics of the distribution networks in the country. 4.
The evolvDSO Project: Defining the Future Roles of DNOs
Beyond the engineering questions, how should a DNO adjust its functions to respond to a developing technical, regulatory and market landscape? These questions were the foundational theme of the ongoing EU FP7-funded consortium project, evolvDSO, which got under way in September 2013. This project brings together a consortium of stakeholding players from across the EU, embracing DNOs, TSOs, research institutes, and new market players. In all, sixteen consortium members from eight European countries are delivering this forty month project, which is set to wrap up in December 2016.
Figure 7 Partners of the evolvDSO consortium project. Source: http://www.evolvdso.eu/
The project is focused on defining the future roles of DNOs in their transition to DSOs. It has developed various new software tools, and supporting methodologies, to allow DNOs to efficiently fulfil their evolving roles. Concepts central to how the project appraises the potential future development of distribution system operator landscape are scenarios, roles and services: Scenario: Within the evolvDSO project, a scenario is a specific context explicitly defined for each country under consideration, delineating the scope of conceivable future developments in, for instance, load growth, renewables development or uptake of electric vehicles. Roles: An outward-facing function performed by a distribution system operator. Services: A general function that a DSO implements to fulfil one of its specific roles. Though the notion of a service is connected with a specific technical functionality, and therefore a tool, the software tools themselves are not services, but rather facilitators of services. Inevitably, all aspects of the distribution business will be affected by the exciting changes underway across the energy landscape, and the evolvDSO project is steering a steady course into this uncertain future.
Cost Reduction
DSO
TSO
BRPs/Suppliers/Flex Operators
Grid Users
Authorities
Enhance quality of settlement process
Support optimal assessment of balancing needs
Increase trading opportunities for flexibility-based services
Facilitate market participation of demand response
Avoid duplication of infrastructure for data collection and management
Reducing grid investment wihtout reducing RES hosting capacity
Raise liquidity premiums of procurement mechanism for flexibility services
Empower marker participation
Avoid unnecessary cost for data management
Reduce entrance barriers for retail market
Reducing possible increases of the network tariff by RES integration
Process Improvement
Provide means for acquisition and Reduce risk of negative impact from Provide system support to offer and optimal handling of levers for acting on resources at DSO level activate flexivility services constraint management Optimization of grid's hosting capacity
Enhance coordinated use of flexibility-based services
Enhance network planning
Reinforce feasibility of ancilary services provision
Raise investment on TSO's activation of flexibility-based services
Assist with colloborative definition of cascacading processes
Improve DER integration
Ensure smart meter roll-out services Guard defition of and complicance with national and regional policies
Enhanced quality of service
Improved information management
Expanding synergies
Increase awareness of DER
Enhance aggregated information for optimal network planning
Enhance control of grid's data for optimal operation and planning
Enhance data detail
Heighten data detail and availability (via supplier)
Reduce regulatory effort in data management Provide detailed data for energy planning purposes to meet national/regional objectives
Standardized and transparent data sharing Better data-based service management
Reinforce bilateral communication with TSO
Increase visiblity of DER
Increase support of conflict resolution
Better insights for optimal design of network tariffs
Reduce risk of inter-operability problems
Allow for adaptive grid planning and operation
Provide alternative source of flexibility for system purposes
Enhance transparency for market participation
Increase awareness of local issues
Guarantee stansards adequacy
Empower definition of adapted flexibility-based services
Enhance security of supply and system reliability
Revamp communication interfaces Improve TSO's procurement of DER with stakeholders felxibility-based services
Support grid users to understand their power profile (via supllier) Ameliorate support for switching suplliers Gris user empowerment (via supplier)
Figure 8 Value creation for stakeholders - Benefits from the adoption of evolvDSO roles
Using the above framework, the project has examined many aspects of a DNO’s activities, such as planning, operational scheduling, real-time operations, maintenance, and asset management. By workshopping how potential new scenarios could transform a DNO’s fundamental roles, and attendant services, a series of use-cases were collaboratively drawn up. These use-case documents systematically defined the new computational functionalities that would be required for DNO’s to excel in their emerging roles. These use-cases became the basis for the novel software tools that were developed as the second phase of project. In total, ten new software tools were written, each focusing on some changing aspect of how DNOs perform their role in society. The evolvDSO project does not restrict itself to developing notional software tools. The goal is proposing real solution to pressing problems, and it is entirely fitting that these solutions would be tested on real networks. To that end, demonstrations of the developed tools are now successfully underway across the continent. For instance, the Portuguese research group, INESC, are trialing the smart power flow tools they developed on EDP’s INOVGRID test site in
Portugal, as well as on ERDF’s SOGRID test site in France. The Italian DNO, ENEL, are trialing their new network reliability training tool within their Milano Centro Prove facility. UCD are trialing the advancement asset management tool amongst ESB Network’s asset planners. Finally, RSE are demonstrating their contingency simulation tool on ERDF’s VENTEEA test site. This applied aspect of the evolvDSO project again highlights the benefit of bringing together research and industry players in one international consortium. 5.
Conclusions
The challenge for EU Member States is to ensure the timely evolution of DNOs to their future, more active roles, which are necessary to make low carbon societies a reality. While the corresponding regulatory actions will largely depend on the context and characteristics of the distribution networks within each Member State, it is clear that incentivizing innovation should be key in this endeavor. Equally critical is defining the roles of potential future players and technologies in the provision of flexibility (e.g., consumers, aggregators, storage) to prevent new business models being hindered by regulatory barriers. This transition of DNOs to DSOs will certainly bring in the next few years exciting new regulatory environments where the envisioned Smart Grids are likely to finally emerge. 6.
For Further Reading
7.
THINK Project, “From distribution networks to smart distribution systems: Rethinking the regulation of European electricity DSOs,” June 2013 Council of European Energy Regulators (CEER), “The future role of DSOs – A CEER conclusion paper,” July 2015 Office of Gas and Electricity Markets (Ofgem), “Making the electricity system more flexible and delivering the benefits for consumers,” September 2015 Survey for the collection of European smart grid projects. [Online]. Available: http://ses.jrc.ec.europa.eu/survey-collection-european-smart-grid-projects Coppo, M., Pelacchi, P., Pilo, F., Pisano, G., Soma, G.G., Turri, R., “The Italian smart grid pilot projects: Selection and assessment of the test beds for the regulation of smart electricity distribution,” Electric Power Systems Research, vol. 120, pp. 136-149, March 2015 evolvDSO Project. [Online]. Available: http://www.evolvdso.eu/
Biographies
Luis(Nando) Ochoa is with The University of Melbourne, Australia and with The University of Manchester, Manchester, UK. Fabrizio Pilo is with the University of Cagliari, Cagliari, Italy. Andrew Keane is with University College Dublin, Dublin, Ireland. Paul Cuffe is with University College Dublin, Dublin, Ireland. Giuditta Pisano is with the University of Cagliari, Cagliari, Italy.
