With the European energy transition demanding closer inter-DSO cooperation in the interest of customers and society at large, the European associations representing DSOs (distribution system operators) – CEDEC, EDSO for Smart Grids, eurelectric, Eurogas and GEODE – have been working together constructively now for several years. 

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Their work resulted in two reports, one for electricity and another for gas. Both reports together provide a holistic overview of how DSOs can use flexibility and thus contribute to the transition towards a more decarbonised and sustainable European energy sector. They present a set of solutions to enable DSOs to use flexibility as a tool to operate their grids in a cost-efficient way.

The reports also provide clear recommendations to policymakers on how the regulatory framework should evolve to make better use of flexibility, both by the DSOs as well as by other stakeholders.


Executive Summary:

An integrated approach between electricity and gas

The European Union is looking at cost-efficient ways to make the European economy more climate-friendly and less energy-consuming. The biggest challenge facing the EU energy sector is to pave an effective and cost-efficient road towards decarbonisation. Energy related emissions account for almost 80% of the EU’s total greenhouse gas emissions.

The energy challenge is therefore one of the greatest tests which Europe has to face. The EU energy system needs a transition to carbon neutral and sustainable energy sources. Many of these energy sources, in particular renewables tend to be volatile e.g. solar and wind energy.

Furthermore, the new generation sites using these more distributed energy sources are to a large extent connected directly to the distribution system, as opposed to traditional centralised power generation units which are usually connected to the transmission system. As a result, electricity generation is gradually moving from a centralised to a largely decentralised perspective.

On the customers’ side, the demand for mobility and heating is also shifting. Traditionally, fuel for transport has been derived from oil, but this sector also has its own specific decarbonisation targets. It is highly likely that in coming years, road transport will significantly change its energy source from oil to electricity, gas and hydrogen.

The heating and cooling sector for buildings is also set to undergo important changes in the near future. Whereas heating is now achieved mostly through classic energy sources (often with natural gas) alternative technological solutions such as heat pumps and micro-cogeneration are rising.

It is therefore evident that the energy transition will not only see profound changes in the way energy is produced, but also in the way energy is used, stored and consumed. This is set to increase in the future and will have a huge impact on distribution grids.

This is where flexibility will have a critical role to play. Besides the technical grid solutions, flexibility is needed both on the generation and on the demand side. In order to benefit from the storage capabilities of natural and renewables gas it is important that the electricity and gas sectors cooperate in order to develop integrated solutions, such as power-to-gas.

The unique features of both energy systems can be complementary to each other and can contribute towards developing cost-efficient technological solutions. Gas can be an important flexibility solution for electricity. The EU DSOs in electricity and gas have agreed to collaborate and share their competencies and knowledge. This partnership will contribute towards the development of an adequate and coherent regulatory framework to improve the development and exploitation of flexibility’s potential in the European energy system.

The large diversity of DSOs in the EU in terms of size, activities or organisational structure will not be able to cope with a “one size fits all” future model. However all DSOs face the same challenge: connecting more than 90% of customers and ever growing numbers of local renewable generators in a fast-changing, more decentralised and digital energy world.

The electricity flexibility report

In a joint effort advocating for smarter, flexible and digitised distribution networks, the four DSO associations, CEDEC, EDSO for Smart Grids, eurelectric, and GEODE call on policymakers and regulators to integrate these new roles for DSOs in flexibility in all future electricity market legislation.

They should ensure that DSOs, as neutral market facilitators, are able to oversee, utilise and coordinate the impacts of flexibility operations on their networks through the necessary control architectures, as part of their active system management responsibilities. Smarter distribution network tariff structures that are costreflective and more capacity based can support this development.

DSOs must be allowed to use flexibility to manage their network, including grid congestion, and to optimise their grid capacity for better market-functioning, irrespective of the flexibility model used and the technology chosen.

The use of these technologies should not lead to market disturbance, and whenever more efficient, a marketbased solution is preferable. While storage services which can be bought by DSOs should remain a market activity, DSOs should be allowed to own and operate grid-scale storage for their needs, in order to secure the technical operation of the grid within the approved regulated activities.

For efficient market procurement, regulatory oversight is needed to avoid that flexibility providers make simultaneous offers based on the same flexibility resources through different services in the same timeframe.

Coordination and information exchange between both systems operators is key to manage one single system. This must be done to avoid double flexibility activations at the same time, as well as any kind of activation of a distribution connected grid user by TSOs without any previous notification or means in place to block any potentially damaging control signal.

DSOs should always be in control of the use of DSO congestion management services in their grids, supported by locational information and well-defined product specifications. If these services both serve TSOs and DSOs, they should be placed under mutual governance. A single flexibility marketplace for both balancing and congestion management for TSOs and DSOs is unlikely to be a sustainable solution in the future. Among others, it imposes strong restriction to aggregation and high barriers for new small market parties.

The basis for an overall functioning system is the unity of task, responsibility and decision-making. System operators (TSOs and DSOs) hold the remit for operating their own networks securely and reliably, and bear responsibility for doing so. Accordingly, each system operator must be able to make decisions in its own system. A cascaded collaboration between system operators evidently supports this principle.

Finally, the methodology and implementation of the data format and data exchange between significant distribution connected customers and the DSO or TSO, should be agreed upon between DSO and TSO. The responsibility of data quality and data delivery should lie on the system operator to whom the customer is connected, but its implementation may vary according to local and/or national circumstances and agreements, including realisation through joint DSO/DSO or DSO/TSO implementation arrangements.

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