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Chapter 4:
The case for investment
ENW's Andy Howard says the ongoing scepticism towards the effects of voltage reduction on energy consumption has made it more difficult to secure the funding they would like to continue rolling out on-load tap changers at secondary substations: “Every time we ask for additional funding, be that through an innovation project or an innovation rollout mechanism or as part of an engineering justification as part of a price review, Ofgem will ask their independent experts to pass a technical comment on it.
“And we are used to some of those independent technical experts asking this type of question. They will say you're not going to get the response now or you're not going to get the response in the future.”
He says: “Our response has generally been: ‘Well, we’re getting the response now. And we can show with second-by-second data, and the fact that NESO is paying for this service, that this response is real’.”
“I don’t think those questions will stop but the longer this goes on, the more evidence we will have from day-to-day operations that these are real and measurable responses,” he concludes.
Despite these challenges, ENW was able to secure £18 million of funding through the Innovation Rollout Mechanism to install on-load tap changers at 180 substations during the ED1 period, and another £78 million through an ED2 price control deliverable to, among other things, install them at another 1,000 secondary substations.
In its ED2 final determinations, Ofgem said the claimed savings from this investment of £38 per year per customer may be overstated and “may deteriorate over the lifetime of the project as domestic consumption profiles change due to the expected uptake in low carbon technologies.” Even so, the regulator said it still believed the rollout would provide a net benefit to consumers.
Howard says the energy savings they are seeking to realise can to some extent be achieved at higher voltage levels, as Northern Powergrid is trying to do through its BEET project and ENW is already doing with its CLASS system. But he adds: “When you're trying to get the voltage as low as possible, and keep it as low as possible, having the control at the nearest possible point is better.”
“When you’re trying to get the voltage as low as possible, and keep it as low as possible, having the control at the nearest possible point is better.”
Andy Howard, innovation programme manager, Electricity North West
He says even substations right next to each other and seemingly serving similar customers may respond differently to actions taken at higher voltage levels. These actions therefore need to account for the “worst case,” reducing savings across the wider network.
Importantly, Howard says the granularity of control provided by on-load tap changers will also bring benefits in terms of dealing with the increased volatility about which SSEN is most concerned.
“If you have a lot of PV and the PV is trying to up the output voltage, it will raise the voltage at the individual properties, it will tend to raise the voltage at the distribution substation, but the on-load tap changer can respond to that and effectively force the tapping at the local transformer to bring that voltage down,” he explains.
“You are minimising the overall rise of voltage across the whole network because you've got that point of control.
Howard says investment in on-load tap changers at secondary substations will not completely resolve the issues they are likely to face in the future “but it does buy us extra time and extra control".
“Ultimately, in some of the extreme scenarios we are basically going to have to put more copper in the ground and install more substations.”
Howard says the price has risen in recent years due to world events and varies by transformer type and size, but on average the installation of an on-load tap changer at a secondary substation now costs around £20,000. He says ENW has “a couple of projects in the pipeline” to bring down the price tag, and also to enable on-load tap changers to be fitted to transformers mounted on overhead lines “so that we can try to tackle some of our more rural customers and give the same benefits to them”.
As they install more, he believes they will be able to “shave away at commissioning and operating costs”.
Picking priorities
Stewart Reid, head of future networks at SSEN, agrees that fitting on-load tap changers at secondary substations will be beneficial in many instances. But he does not believe there should be a blanket rollout. They should instead be deployed selectively when and where the needs and benefits are clearest.
He also warns against focusing too heavily on the claimed energy savings from consumers when making the case for investment: “We need to present the full richness of the value proposition, not just one aspect and potentially mis-sell it because we can actually do a lot more with the technology.”
When asked whether reducing voltage levels would, in general, reduce energy usage, Reid says there is “no clear, simple answer to that question.”
“It’s going to be pretty difficult to come up with a definitive answer that says on every day of the year on this network, this is the impact you’re going to get,” he adds.
Reid says trials like Smart Street have “provided some really good data and evidence to inform this whole discussion” but he says DNOs also need to be thinking about “all the other things we could be doing with voltage at the same time.”
“If you look how much the system operator is spending on reactive services, it could be there's far more money to be saved for UK bill payers by focusing voltage on that for most of the time,” he suggests.
A spokesperson for NESO told Utility Week an increase in reactive power transfers from distribution networks has been a contributing factor in a growing problem of high voltage levels on some parts of the transmission network.
To address this issue, NESO has held a series of ‘Pathfinder’ tenders for reactive power absorption. The parties contracted in the first two tenders for the Mersey and Pennines regions began delivering the service in May 2022 and April 2024 respectively. NESO announced the results of a third tender for London and the north of England in December.
According to its most recent Operational Strategy report from December 2023, the problem of high voltage on the transmission network is “not limited to low demand periods during the summer, but rather experienced throughout the year.” Over the last decade, the report said falling demand for reactive power on distribution networks has meant more “spilling” onto the transmission network, with excessive exports from certain grid supply points proving “difficult and expensive” to resolve.
The spokesperson said NESO has been discussing this topic with DNOs through the Energy Networks Association but more needs to be done to understand why reactive power transfers from distribution networks have increased.
They said lowering voltage on the distribution network would require the absorption, or generation of, reactive power, meaning less is transferred onto the transmission network. However, in some circumstances, they said lowering voltages could also exacerbate voltage issues on the transmission network and so further investigation is required.
The spokesperson said NESO is developing an innovation project to identify the root causes of reactive power transfers between distribution and transmission and they will be reaching out to DNOs for help with this.
Reid says DNOs do not currently have any obligations or incentives to help NESO meet its reactive power needs.
When pressed on whether there should be, or whether DNOs should be able to participate in some sort of market mechanism, he does not have a definitive answer. He says SSEN’s “default position” is that DNOs should not be selling services to the NESO due to real or perceived conflicts of interest, about which there has been “quite a toxic discussion”.
Reid says this could lead to a situation whereby “if we run our network in a way that’s bad for the system operator, we’ll get paid in a market to make it better again.”
If Ofgem was to introduce a licence requirement to help NESO manage voltage on the transmission network, he says there would need to be accompanying funding for any equipment upgrades they have to make.
“If you look how much the system operator is spending on reactive services, it could be there’s far more money to be saved for UK bill payers by focusing voltage on that for most of the time.”
Stewart Reid, head of future networks, SSEN
Reid says the transmission issue highlights how DNOs will need to weigh up multiple objectives when managing voltage on their networks. Often these aims will be “pulling against each other” and which ones they want prioritise will likely vary by time and place: “What you do in the middle of a storm voltage-wise might very different what you do in an extremely sunny day when there's PV all over the place.”
Fulfilling their objectives in a coherent manger is the aim of ENW’s latest innovation project Quest, which is seeking to create an integrated system, incorporating both CLASS and Smart Street, that optimises voltages across all levels. In the absence of an overarching system, Howard says the actions taken at one level can undermine those taken at another.
If its CLASS system reduces the voltage on its high voltage network, this will cascade down to the low voltage network: “The local control will see that and respond to it and bring the local volts back within the target range it's after.” Rather than leaving one system to respond to the other, Howard says Quest system can co-ordinate actions at both levels.
As part of this ongoing trial, which commenced in 2021, ENW has also installed ASCs at the bulk supply points where the distribution network connects to the transmission network, extending its control further up the network.
Reid says the innovation projects by ENW and Northern Powergrid are providing the sector with the “components and systems” that will be needed to deliver the “dynamic approach” to voltage control he envisions: “The tricky bit now is how you weave it all together into something that provides the optimal value from that combination of solutions.”
Whatever that looks like, Reid says the task for DNOs could be made easier by revisiting the UK’s voltage limits and releasing the additional footroom that they should be able to leverage: “There's been a discussion at the ENA for over a decade now about aligning the voltages with the European voltages so basically broadening it out even further than it is at the moment.”
It was previously concluded that this could lead to “quite a large volume of issues... popping up all over the place” due to the still "reasonable population of legacy products out there that were designed for the higher original UK voltage.”
“Now it could well be the time to revisit that and look at broadening out that voltage range because it just gives you much more flexibility in the system,” says Reid.
One thing he is keen to emphasise is that DNOs are looking to tackle the issue of voltage proactively, rather than waiting for things to get worse. He says choosing to “stick your head above the parapet” is always nerve-wracking but: “We've not waited for a scandal.”
Over the last several years electricity networks have taken a lot of flak over the long and growing wait times for connections. The last thing they want now is for voltage to become another reason they are seen as the bottleneck in Britain’s energy transition.
