The transition to a carbon-neutral economy requires electrification of large portion of the transport and heating of the buildings, which significantly increases the consumption and production of energy that needs to be connected to distribution networks.
The increasing reliance on variable renewable energy sources such as wind and solar also poses new challenges for grid management related to balancing intermittent generation.

In addition, the growing number of electric vehicles (EVs) and the increasing use of distributed energy resources (DERs), such as home solar panels, rechargeable batteries, and demand-side management technologies, makes managing the distribution grid increasingly complex.

This changing environment requires network operators to move from the traditional role of a distribution network operator (DNO), focused primarily on infrastructure maintenance and upgrades, to a more proactive role of a distribution system operator (DSO), where the focus expands to coordinating, optimising and integrating a variety of variable energy resources to ensure a stable, efficient and sustainable energy supply.

The transition to the role of distribution system operator involves a number of difficult choices and inevitable trade-offs. Grid companies are confronted daily with questions that they must find solutions to any generator, customer or prosumer. For example, when is it worth using non-firm connections to bring forward the connection of low-carbon generation (and avoid reinforcement costs), at the cost of sometimes having to curtail that generation? And how much investment in technologies like network monitors or data sharing can be justified? The costs and benefits of such activities affect the whole energy system, not just electricity networks. Therefore, network operators need to take a systematic approach to evaluating their decisions.

Frontier works with SP Energy Networks (SPEN), part of the Iberdrola Group, which owns and operates distribution networks supplying over 3.5 million customers in the UK.

Together with SPEN, Frontier has developed a comprehensive framework for assessing the societal benefits of the wide range of activities that distribution system operators perform. Based on best practices for societal assessment, each operator activity is mapped against a “logic model” that clearly shows its impact on energy markets and beyond. This model is complemented by a quantitative cost-benefit analysis tool.

Frontier estimates that SPEN’s distribution system network activities alone will deliver long-term net benefits to society of £563m (over €640m) in 2024/25. This is due to activities such as:

• Offering flexible connections, allowing generation, storage and demand to connect faster and with lower network reinforcement costs;
• the roll-out of low voltage network monitors to allow SPEN to get more capacity out of its current network, reducing reinforcement costs;
• the use of flexibility to manage planned and unplanned outages, reducing the number of times that customers experience a loss of supply;
• contracting with flexibility providers when and where it is cheaper than carrying out immediate reinforcement.

All these activities bring significant benefits to users. However, the largest source of benefit (£541.5m) relates to the provision of flexible connections. The activities of DSOs that facilitate the connection of new generators have an impact that goes far beyond the network component of bills, helping to reduce the cost of energy for all consumers. This demonstrates the crucial role of DSOs in the transition and the importance of applying a whole system approach in assessing their activities.

More details on Frontier’s project with SPEN can be found at the following link: DSO BENEFITS ASSESSMENT