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Insight
Stakeholder View:
Marcia Poletti, head of European system change, Octopus Energy
Marcia Poletti gives her independent assessment of the role DSOs have to play in the GB energy transition, acknowledges some influential milestones from SSEN and flags areas for collective industry focus in 2024.
Octopus Energy is an ardent pioneer of energy flexibility. It has undeniably been a powerhouse in the development of options for consumer participation in demand side flexibility markets and, as demonstrated in recent industry boughts over REMA and the sidelining of nodal pricing, it is committed to tackling head on any issues which it perceives to be barriers to improvement and growth in this area.
Octopus is therefore a key stakeholder for any DSO and SSEN is no exception. It has already collaborated with Octopus and its off-shoot research organisation, the Centre for Net Zero, on a number of initiatives designed to improve understanding about the risks and opportunities inherent in operating a decarbonised power system where dynamic matching of supply and demand is the norm.
Reflecting on the benefits this work, and the establishment of DSOs more broadly, have brought, Marcia Poletti, head of European system change at Octopus comments: “Our energy transition has hit an inflexion point and the role of DSOs in managing our way through it is critical.
“Demand has historically been pretty flat. But is it about to increase significantly – the growth in electric vehicles is exponential and the amount of managed load – including EVs – is increasing exponentially, not just via platform like Intelligent Octopus but also the likes of EV Energy, Flexitricity and others who are doing really interesting things to help support sustainable operation of the system.
“Then too there is exponential growth in renewables and all these things are colliding on distribution networks. This puts DSOs at the centre. With all these developments converging, unless a DSO is able to understand what is happening at low voltage levels on their network and bring forward methods for managing that, we will run into problems.”
“It’s interesting to see some emerging similarities in how different networks around the world are responding to similar challenges.”
Poletti applauds SSEN’s proactive approach to getting to grips with some of the more challenging changes that rapid growth in managed load and flexibility signals driven by volatile wholesale market prices are bringing home. In particular, she references the network’s open minded attitude to the need to develop a new methodology for assessing maximum possible demand on local networks.
“Networks have long relied on the ADMD (After Diversity Maximum Demand) formula for understanding the maximum stress which might occur on local networks. But when we start herding consumer devices based on a wholesale signal which is triggered by the availability of excess renewable power, that approach is no longer relevant. SSEN has recognised this and started to look for new ways to manage.”
A solution under investigation, which Poletti is keen to see pursued, is the introduction of “dynamic network pricing”. Essentially this is a smart operating model which aligns with wholesale market pricing, which is more volatile and unpredictable in a decarbonised power system than the historical peak load times used to define more expensive network use windows.
“In this future, our peak shifts from the traditional 5-8 o’clock at night to whenever the wholesale price prompts it. The peak will be dynamic and driven by when there is too much renewable energy on the system and we want everyone who has an EV of a battery to start consuming – drawing down that excess energy. That might be 2pm or 2am on any given day. In that kind of system, network charging also needs to be dynamic.”
Poletti says a Swiss DSO has also now trialled this kind of charging approach with some success and she is keen to see the results of SSEN trials this year. “It’s interesting to see some emerging similarities in how different networks around the world are responding to similar challenges,” Poletti comments, adding that SSEN is also exploring the merits of using “a dynamic capacity allocation” approach to managing the above implications of the energy transition. “There’s an Australian DSO with a very similar model which it is calls a ‘dynamic operating envelope’. The point is the same. They are developing new tools to help them manage impacts on the low voltage network that are going to make historical approaches redundant very soon,” she comments.
Following this train of thought, Poletti worries that many DSOs – and other system participants – may be underestimating the pace at which these new approaches to network operation need to be brought forward.
As SSEN’s Roper points out in the introduction [link to introduction section] to this report, Poletti says authoritative predictions of the rate of growth in key technologies are repeatedly being shown up as underestimations. In particular, she points to the surging numbers of electric vehicles being adopted in the UK, and internationally.
“It’s very hard to predict the future and we often get things wrong,” Poletti observes. SSEN is “doing great” in recognising this and building out its strategic investment capability, but Poletti adds: “We all need to be doing more to stress test our understanding of network development needs and see if current plans will cope with much stronger than forecast growth in load, especially from EVs.”
“We don’t have time not to collaborate. We need to get to net zero and we need to get there fast. That means huge amounts of collaboration across the industry.”
As well as heavier stress testing of plans, another area Poletti wants to see focus on in the next couple of years from the DSO community is standardisation for engagement with flexibility markets.
“We need to move to a single platform for flexibility. This is going to be so crucial to enabling greater participation and enabling the full scope of flexible resources to help manage our system. If we have a single platform with a common way of tendering, procuring and activating flexibility, you will enable all participants to seamlessly interact with the market.”
While Poletti acknowledges the important role the new market facilitator will play in this process of standardisation, she worries that it will be unable to achieve much in its first year of operation when core administrative issues will dominate. In the meantime, she suggests the onus is on the DSOs to begin collaborating in earnest to overcome barriers to common ways of working.
Indeed it’s Poletti’s parting shot to the DSO community, to Ofgem and to all stakeholders in a flexible energy future, to make 2024 a landmark year for collaboration.
“None of us has the answers. We need to do a better job at learning from each other. All the DSOs need to come together to ensure we are not individually reinventing the wheel. We need to be ready to use solutions that work that have been developed elsewhere. And where there aren’t solutions to problems, we need to be open about that and talk about possibilities together.
“We don’t have time not to collaborate. We need to get to net zero and we need to get there fast. That means huge amounts of collaboration across the industry.”
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