EVOLUTION

Summary

Learnings

Documents

The high level scope of this project is to demonstrate the UK's first trial of the Distribution System Operator concept: exhibiting how operating a localised balancing market can reduce customer bills through efficient provision of services and optimised network performance while facilitating cost effective growth in local generation, demand side response and energy storage services.

To deliver this SP Energy Networks has identified several discrete Work Packages, each subject to stage gate reviews, to be delivered under the project:

Work Package 1: Market Design

WP 1 will focus on the design of the DSO Market. The key tasks in this work package include

Detailed assessment of existing marketing including existing procedures and services
Identify high level requirements for new contractual arrangements
Identify contractual and regulatory requirements
Identify incentive scheme for trial
Consult and map responsibilities, financial and data flows between stakeholders including Ofgem,
National Grid, Demand Response Commercial Aggregators, Generation Developers, Industrial and Commercial Customers.

The market design work package is focussed on identifying process improvements and integrating market requirements with smart commercial interventions to develop the market under the GSP.

The market design will determine the appropriate level of incentives to apply to DSO participants. The work package will begin with a literature review of existing DSO market structures around the world and then consider the specifics of the SPD/SPT licence area.

Work Package 2: Technical Solution Design

The technical solution design will focus on the interface between different market participants. It will consider the key enablers and will be focussed upon the enabling technologies that are required in order to get the appropriate visibility and control of devices and DER to undertake the trial. Enablers include communications, control systems, trading platform, interaction with National Grid, balancing & settlements and billing.

The key tasks in this work package include:

Identify high level requirements for the new system interfaces
Design the interface with SO, implementing processes for solicitation services to National Grid Energy Balancing System (EBS)
Design the interface with customers
Design control and communications processes

Work Package 3: Industry Consultation and Dissemination

WP 3 will involve disseminating the project knowledge including market principle recommendations to the wider industry.

The key tasks included in this work package include:

Knowledge dissemination
Industry consultation and recommendations
Closedown report

Benefits

The project will be considered successful if the aforementioned objectives are realised.

Learnings

Outcomes

The project was registered under the NIA as an enabler of a holistic approach to energy systems. This was primarily about active network response / active network management – the rationale for the EVOLUTION project.
The project team concluded that a whole system approach is crucial and looked into two case studies: heat and hydrogen. These elements of a new type of whole energy system will be of great importance going forward as conventionally they are not part of an electricity response.
Based on the initial source, there are two main follow-on initiatives that have emerged out of the EVOLUTION project:
- SPEN’s £5.5 million ‘Re-Heat’ project supported by the Scottish Government and SSE which seeks to install heat pumps and heat batteries in homes in remote communities in central and northern Scotland.
- An investigation into what level of flexibility hydrogen could provide for the EVOLUTION project, with SPEN submitting our ‘Holistic Hydrogen Approach to Heavy Duty Transport (H2H)’ proposal to the Strategic Innovation Fund (SIF) in 2022.

Lessons Learnt

The following lessons were learnt during the course of the EVOLUTION project:

We will take onboard Ofgem's response to our unsuccessful NIC bid for project EVOLUTION as we seek to develop the DSO concept further through this NIA project. We consider that there is a need for a sustainable model for the provision of network balancing services which should provide Distributed Energy Resources (DERs) with a market to trade ancillary balancing services and additional capacity for renewable generation.
The SPEN DSO vision document and subsequent consultation response reports provided key learning:
- A high proportion of stakeholders (56%) felt the Vision had managed to outline the technical requirements for a DSO with a similar level agreeing with the proposed trial areas. Respondents noted the modular approach would help to ‘tune’ a DSO although there were also a number of constructive views questioning whether it was wise to focus the attention on two relatively similar rural locations with limited urban network. It was suggested that trialling DSO in areas with less network constraints may allow for an increased level of alternative options to be investigated. Moreover, it was further suggested that whilst a modular approach has worked well when trialling smart grid initiatives in Europe and United States caution should be taken to not end up with lots of disparate solutions, making significant investments and ‘regret spend’ before the full benefits can be realised.
- Overall, there was more of a mixed response for the commercial orientated questions, with the majority (47%) having no set position as to who should own and operate storage, preferring instead to let the lowest cost, most flexible solutions drive the answer. There was closer alignment with stakeholders regarding whether a DSO should be a regulated or unregulated entity, with 53% favouring regulated and 18% an unregulated approach.
- The majority (71%) responded positively with the SPEN opinion that DNOs are the right organisations to lead the transition towards becoming DSOs. The impartiality of DNOs was generally seen as a positive feature (71%), however a number of constructive comments suggested other organisations could offer customers similar levels of confidence.
- When asked whether they agreed with SPENs DSO vision, 82% either fully agreed, or agreed but with some suggestions, stating the evolution towards DSO has the potential to deliver improved outcomes for both customers and networks operators. One respondent did not agree with this position believing DSOs should be separate from DNOs to avoid regulatory confusion and further delay. A similar split responded positively to the proposed timeline, believing in general that it is a good roadmap to developing DSO technologies.

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