Smarter Grid Solutions Expert Panel: The Development and Future of Decentralised Electricity

To mark the tenth anniversary of the formation of Smarter Grid Solutions the company hosted an expert panel session to take a broad look at the development and future of the growing decentralised electricity domain.

Six panellists presented perspectives:

• Prof Sir Jim McDonald, Principal & Vice-Chancellor of the University of Strathclyde & Co-Chair of the Scottish (Government) Energy Advisory Board presented on innovation, big ideas, trends, people and future directions in distributed energy.
• Dr Simon Gill, Energy Engineer at the Scottish Government gave his views on the Scottish Energy Strategy, related policies, and requirements to meet decentralised, decarbonised energy objectives.
• Steven McMahon, Deputy Director, Electricity Distribution Network Price Controls and Cross Sector Policy at Ofgem gave an overview of regulatory and market drivers for decentralising electricity.
• Scott Mathieson, Network Planning & Regulation Director at SP Energy Networks talked about innovation and investment in the smart, flexible power system, noting several live programmes and examples at SP Energy Networks and in the wider UK sector.
• Stewart Reid, Head of DSO and Innovation at Scottish & Southern Electricity Networks spoke on the experience of SSEN in smart grids and gave customer and community perspectives on smart grid implementation and operation.
• Dr Graham Ault, Executive Director and Co-Founder at Smarter Grid Solutions presented views on the Distributed Energy Resources Management Systems (DERMS) market in the UK and internationally.

The panellist addresses and subsequent discussion aired and explored several important insights into the current challenges, solutions and future directions for decentralised energy. We share a few notable topics identified by the SGS team:

• Energy transition trajectory: The view was shared that the energy transition is only at the beginning (noting some significant changes already experienced). The discussion highlighted that the sector has a long way to go to a fully decentralised system. The sector is in the early years of a significant shift but the imperatives, destinations, timeframes and many of the required changes are becoming ever more clearly articulated and shared. We now just need to get on with it.

• Customer centric energy transition: Several questions and responses pointed to the importance of social, energy democratisation, community and customer focus in the energy transition. Existing and new system participants and stakeholders will need to think about how they address the end customer. Running the network costs each UK customer approximately 35p per day. The many challenges and changes discussed have to be addressed while maintaining or reducing the final cost to the customer. Explaining network congestion and the operation of flexible connections to consumers is an existing challenge. Explanations based on traffic lights with expected, normal, self-protection behaviours (e.g. “stopping when the light is red” compared with “ramp down to keep everybody’s lights on”) and what behaviours should be rewarded in new ways (e.g. “I want to charge my electric car now but it is peak demand so I will wait if there is a reward”).

• Whole system approach: Avoiding a narrow focus on electricity (networks) or heat and embracing a wider view of the energy system to be operated and optimised. Widening that thinking further beyond engineering and technical topics to capture the impacts on society, economics and all possible interactions and complexity was noted.

• Customer behaviour: Instances highlighted by the panellists showed the requirement for grasping and formalising the challenge of behavioural impacts on the whole system. Similar to patterns that exist currently, growth in new energy asset penetration will lead to new patterns in demand/generation behaviour and this needs to be understood and managed. The example of Electric Vehicle (EV) growth and the impact of weather on charging requirements and the opportunity was highlighted. If EVs represent 2% of the current road vehicle fleet and all EVs seek to charge during low tariff periods, this could introduce a near instantaneous 5GW peak in electricity demand.

• Decarbonisation, Digitalisation, Decentralisation – and Disruption: The inclusion of the fourth ‘D’ of ‘disruption’ to three ‘D’s’ of the energy transition was mentioned by a number of panellists. In particular, the example of new market entrants that may challenge and disrupt Distribution Network Operators (DNOs) and other incumbent system participants’ business models.

• Energy storage: While we make the argument to electrify all aspects of the energy system, if we move away from gas then we run the risk of losing a significant volume of gas energy storage already on the system (storage facilities and line packing). The sector needs to think realistically about the volumes of energy we need to run this system, heating and transport included, and consider the use of various conversion technologies to maximise the use of a wide spectrum of energy storage technologies, not just focus on large-scale battery storage. This is viewed as a key challenge and opportunity to address.

• Securing the system and managing the network capacity headroom with flexible Distributed Energy Resources (DER): Issues of network redundancy, back-ups to flexibility services, industry-standard updates, derogations and risk-taking (with accompanying rewards) for DNOs, DER black start providers and others. The potential for DER and end-customer flexibility might be harnessed to make the system more secure, even as the network is utilised more. Related to this is the issue of regulatory mechanisms and incentives to encourage DNO/DSOs to maximise the use of their network assets by deploying DERMS technologies. The increased use of such technology may bring about a reduction in redundancy and capacity headroom in their network and requires similar risk management approaches as for security.

• Energy usage and flexibility incentives: Closely linked to behaviour, one of the questions raised to the panel highlighted a potential problem in customer and responses. If every (or a significant number) of system participants acts in response to a given system or market state (e.g. max demand price) then this would cause a new problem rather than solve the original problem. Therefore, market, incentive, system service and customer interaction specifications need to encourage the right behaviours and responses.

• True partnership and collaboration: SGS customers shared views on the factors that have contributed to SGS success from the initial Orkney Active Network Management (ANM) / DERMS deployment and the product, project and customer gains since. True partnership and collaboration between the DNOs and SGS was highlighted along with a general positivity, energy and enthusiasm from the SGS team in delivering innovative solutions to real system challenges. The accompanying challenge is to ensure SGS and others continue to display these traits and values in the coming challenges.

• Artificial Intelligence (AI): AI was mentioned several times at the event. As networks become more complex with more complex demand and load profiles then many manual analysis tasks and processes will not be feasible nor scalable. AI is expected to play a significant role in the management of future, flexible smart grids and the same practical application of advanced methods will be required to create real value from AI as for the underlying methods in DERMS.

• Seasonal operations: Reflecting on the ANM/DERMS operation on the Shetland Islands (the NINES project) and the different operational challenges between seasons (e.g. more opportunity to activate flexible storage water heating to balance the system in wintertime). This seasonality of smart, flexible system operation is a general problem with strong seasonal demand and behavioural factors (e.g. EVs heading to holiday destinations in holiday periods, lower domestic PV output in winter) that need to be analysed and managed.

This cross section of key issues in the energy transition, with some focus on the future of flexibility and decentralised energy, highlight several areas of development DERMS and their use by DSOs. SGS has invested seriously in innovation, R&D and products and aims to work with their customers and partners to address these issues and more.

This blog post was coordinated and written by Graham Ault, with contributions from Tom Rafferty, Gary Scullion,  Frazer Watson, Robert MacDonald, Mark Collins, Laura Kane, and Rachael Taljaard.