Energy System: The DSO of the immediate future

 

Energy System: The DSO of the immediate future

The "energy system transition" involves the transformation of electrical networks, and their digitization goes beyond their equipment. It is a new paradigm based on radical changes in the traditional vertical way of operating networks towards horizontal management. This change is driven by the penetration of renewable energy system generation, batteries, and e-mobility through the integration of ICT and energy system management by distributed intelligence.

DSOs must continue to manage the voltage (voltage level) in the networks as always, but with increasingly complex variables, conditions, and elements to take into account. Ensuring the security of supply and proper maintenance of the electricity network is and will always be the "raison d'être" of the DSO. But now it's time to innovate!

In the coming years, more and more customers will have smart meters installed, and the use of electronic invoicing is increasing rapidly. Countries, where smart meters are deployed, will be able to improve the relationship between utilities and customers. There is already a significant shift towards more technical issues in customer questions and needs (how to connect to the grid, how to install EV chargers and solar panels... They are also wondering about capacity needs or how to react to capacity cues). The DSO must facilitate the connection of the customer's new technology to the network.

However, at a time when the role of the DSO is becoming increasingly important in a more complex and decentralized energy system, the DSO remains the invisible actor. That must change.

The current network is the result of 100 years of history during which the network was operated the same way as day one. The networks were designed to send energy in one direction only (from the point of production to the point of consumption) and for a connected consumer who only consumes (professional consumers and active consumers are only now beginning to be regulated). Today, whether the prosumer supplies its surplus electricity or requests it from the network, in both cases, the DSO must ensure a reliable and uninterrupted connection. The DSO network was also built to be managed in a non-interconnected way. This does not facilitate efficient integration of distributed generation, which in turn involves more intermittent energy flows,

So, on the one hand, we have more planned interconnections, storage, e-mobility, sector integration, demand response, smart grids, and other emerging flexibility solutions. These solutions are essential for the energy system transition. On the other hand, we have obsolete DSOs whose main purpose for a hundred years has been to ensure that there are no power outages and to restore power as quickly as possible, which in turn required relatively little innovation and strategic thinking (compared to other companies facing much greater competition).

From now on, the DSO will have to cooperate with other system operators and new participants and exchange data. Digitization is a sine qua non, but digitization alone does not guarantee the survival of DSOs in an ever-changing market. They need to start adding value with new energy system services because the global energy value chain is about to be structurally disrupted.

DSOs risk ending up in a death spiral, with lost revenue for less-connected consumers. Just imagine horizontal real estate buildings organized as a local energy system community with a single connected consumption point, instead of having as many points as apartments. In addition, DSOs face new costs, including network modernization and resilience. Eventually, costs could overwhelm revenues and many DSOs could perish under the weight of their intransigence and archaic structure.

But the DSOs are no dinosaurs, ignoring any signs of their impending and fatal extinction. DSOs know their killers and can optionally befriend them and/or impersonate them. DSOs need to react now to be ready to play in the market and team up with other market players. If they do, we will see the rise of digital multi-utilities.

I believe that eventually, consumers will no longer pay for energy, but rather for services and products that allow them to interact with the network without losing their comfort or improving their energy experience. Just as we stopped paying for the number of minutes of the telephone conversation, we will stop paying for the number of KWh we contracted.

This major change could indeed present certain analogies with the revolution of the telecommunications sector at the end of the 20th century. The telecommunications sector, traditionally rooted in a natural monopoly, has been exposed to international competition; political pressure pushed for unbundling, and there was consumer pressure to deregulate access to infrastructure.

Utilities could be in the next decade(s) what CLECs were in the 1990s, taking advantage of regulatory openings that allow new operators to offer new services that customers could potentially pay more for while guaranteeing them access to the incumbent operator's network for a small fee. The telecommunications bill has risen steadily for the average consumer, not because of increased tariffs to pay for intangible benefits like network resiliency, but because customers see the value in new services, like the ability to track a real-time yoga class in the Himalayas through their cell phone on Wall Street. For many, these services are worth the extra expense.

Until now, as a consumer, I have only been concerned with low energy prices and reliability (and lately also with the renewable origin of my energy supply). So what could utilities give me that would make me happy to continue using them and even pay more for them? For example, could someone take care of the active engagement that has been expected of passive consumers so far? Because honestly, anything that takes more effort than paying the bills and turning the light switches on and off isn't very appealing to the average person.

Self-consumption, storage, e-mobility, micro-grids,  energy system communities, and off-grid trends bring new opportunities and alternatives for the customer. But they also pose challenges, because customers don't always know how to do it. DSOs enable all of these new developments from a technical perspective, and they should partner with customers to facilitate their increasingly active role in the energy market as a reliable and trustworthy partner. The DSO should be a catalyst enabling customers to take advantage of the services offered by energy suppliers. The DSO can guide customers to find the best solutions for them and the network, while always ensuring a consistent connection to the network.

The new developments mentioned above could threaten the security of supply by entailing certain risks regarding the new way of managing the network without the appropriate advanced tools. DSOs should help and facilitate the flexibility expected from customers, guaranteeing the security of the system as a whole. The market organization is essential and DSOs, as neutral actors, are perfect for effectively providing the necessary coordination and cooperation to all participants.

In addition, strategic communication is crucial. DSOs' traditional passive approach to customer communication has come to an end. The DSO must anticipate the information customers need and address it with tailored technical data. In other words, DSOs must build trust and become trusted partners for customers 24/7. Their goal must be to reduce complexity, providing them with early and fast response times and high-security standards in the world of big data.

In conclusion, in a scenario with prosumers, decentralized energy system, and new modes of production and consumption, DSOs must actively create greater value for the connected consumer and explain the unknown benefits of staying connected to the grid so that parties concerned can benefit from all the advantages of the distribution network which has begun to transform.

DSOs must strategically communicate their level of excellence in what they have always done: keep the light on. This was largely taken for granted, probably because we're all used to networks working extremely well. DSOs have the opportunity to position themselves for the future right now. As we enter this new decade, it's time for them to adapt.