Sep 19, 2017

Barrie Cressey on evolving electric distribution networks

Barrie Cressey
4 min
energy distribution
If you speak to any distribution network operator (DNO), they will tell you that customer service and satisfaction is their number one priority. If t...

If you speak to any distribution network operator (DNO), they will tell you that customer service and satisfaction is their number one priority. If there is an outage or failure, they want to be seen to be responsive – giving timely updates and information on when the problem will be fixed. To do that, they are investing in new technologies to improve the design, operation, maintenance and improvement of distribution networks everywhere.

However, traditional electric distribution networks, like our own grid in the UK, weren’t built with today’s technologies in mind. The traditional DNO distribution model focused on one-way delivery of electricity, with clear and reliable definitions of upstream and downstream.

An evolved distribution model

With the evolution of the UK’s energy mix, moving to a more balanced blend of traditional energy sources with distributed generation – from the likes of renewable sources, energy storage and microgrids – the classic DNO model is changing. The upshot of this is a bottom up approach to the modern distribution network and a great deal of confusion. And this isn’t going away. The UK generated more electricity from renewables than traditional fuel sources for the first time at the start of the summer. If renewables are to continue to rise, this will be dependent on how network operators are able to balance the network.

The recent findings from the government-sponsored Future Power System Architecture programme makes for some interesting reading. What’s at stake is the power sector drifting off course instead of focusing on a smooth transition that works for all stakeholders. The fact is, DNOs don’t know where to position themselves as companies. In the future, they may be responsible for balancing the network, in the transition to a more complex, systemic model that accounts for and manages multiple points of variable supply and consumption – far removed from the traditional one-way street of electricity delivery. Employing these modern technologies and practices are what separate a DNO from being a Distribution System Operator (DSO).

The role of the DSO

In order for DSOs to satisfy customers – especially during times of peak demand – they must account for an enormous variety of production and load scenarios, as contingencies rise in step with the number of Distributed Energy Resource (DER) mechanisms added to the network. Accommodating the addition of new part-time energy sources further swells network management complexity.

Distribution generation, demand response, and energy storage mechanisms introduce new variables to any system. These new variables require a more flexible network, not only with respect to its operation, but also investments in new network infrastructure – as well as ways to manage and develop that infrastructure at the lowest cost.

The DSO also faces challenges that the DNO does not. DSOs must deal with flexible demand, and operate networks that can accommodate resources like demand response. They control networks capable of intelligently aggregating many different geographically dispersed inputs and the complications that come with that. For example, demand generation sources can’t always control their own production levels. Increased feed-in can also exceed local load, causing grid congestion, or have voltage variation and other power quality problems. What’s more, demand generation source locations are sometimes less than ideal. For example, they’re not close to the highest loads, where they might most efficiently alleviate peak demand.

DNOs don’t become DSOs overnight, but over time. A long time. And the rate at which that transformation occurs varies. It varies by continent, country, and region. One of the more likely models for the UK to adopt can be found in Australia. Although a geographically larger island, the energy grid there is built in clusters, as opposed to the continent of Europe for example, which runs on an interconnected system.

A permanent step forward

One of the more common concerns expressed by DNOs as they implement automation systems is quite simply the move away from manual controls. Once a system is running decisions led by highly intelligent, computerised tools, machine-based philosophies and models, this marks a clear break from the past. The networks of the future cannot be managed by human intervention alone. It is these systems that will accelerate the evolution of network operation.

While this transition is taking place, the reality is the next decade is unclear. It is going to depend on the stake the government and those running the system will take in modernising the grid.

Barrie Cressey is the Segment Director of Utilities and former Business Development Director of Smart Grids at global energy management specialist Schneider Electric.

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.

The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.

Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.  

In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue. 

Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”  

There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:   

  1. Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps. 
  2. Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold. 
  3. Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice. 

Further consultation on the proposed adjustments to REC price caps can be expected by December.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.

"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."

United Utilities picks up pipeline award

A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.

The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.

“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.

Camus Energy secures $16m funding

Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent VenturesWave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.

As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.

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