The energy sector is in transition. Traditionally, we’ve relied on national grids powered by large plants: generating electricity via the burning of coal or gas, or nuclear power. Today, however, 45.5% of electricity generation in the UK is produced by renewable sources, according to government statistics.
Part of that shift has been driven by renewable energy investment into microgenerators: small, renewable energy sources like solar panels, typically owned and run by individuals or small organisations who are selling the surplus energy they produce. Thousands of small producers are flooding the grid, and this inevitably leads us to a more decentralised energy system, varying in supply and demand from region to region. As a result, electricity will become more of a commodity than a utility in coming years.
To face the changing definition of electricity supply head-on, energy companies need to transition and undergo digital transformation to become a Distribution System Operator (DSO).
What is DSO transformation?
Distribution Network Operators (DNOs) are the entities that currently move electricity from the grid to people’s homes and businesses. However, due to the decentralisation of the energy grid, these bodies will need to become more regionalised, adopting something close to a system operator role. Becoming, in essence, Distribution System Operators (DSOs).
The new, smarter energy system is on its way, made possible by the advantages of renewable energy. If we want to participate in, and profit from, its arrival while also reaching Net Zero before 2050 to address the UK Government’s targets, DNOs must transform into DSOs.
How will the energy grid become decentralised?
There are a few technologies that will be vital to decentralised energy. The priority will be technology that accelerates renewable deployment. This is why advances in battery storage, artificial intelligence, machine learning, and electric vehicles have become central to the energy system – with charging stations springing up all over the country.
The advances in battery technology are particularly impressive, having contributed to the increasing adoption of utility-scale storage. This kind of battery storage makes our power systems more agile, ensuring that we can make best use of inconsistent electricity sources like wind and solar power, as well as become less reliant on centralised production and distribution.
This takes us on to the National Grid’s ReStart project. Distributed ReStart is attempting to solve specific technical challenges, such as restarting higher voltage networks. The Grid has been carrying out live trials on three case studies this summer, including using renewable generation as a black start (i.e. from a shutdown). As such, this may protect against future blackouts as the nature of our electricity production network continues to change.
The Open Networks project is already underway to standardise and align contracting approaches for system services between the Energy Supply Electricity System Operator (ESO) and DSOs. To deliver value for the consumer, we must learn from DSOs’ experiences in their emerging flex markets and enable digitalisation in the energy sector.
The people behind this campaign are also making sure that Asset Network Management doesn’t stop distributed energy resources, such as the network of smaller producers, from participating in ESO services. The decentralisation of the grid is driven by smaller producers, so alienating them from the distribution of their product would be counterproductive.
However, despite the importance of flexibility in these sensitive times, building infrastructure can be equally important for the efficiency of long-term energy networks. For DSO transformation to flourish, flexibility will be crucial both now and in the future, and we must be conscious of occasions when infrastructure investment would be the more efficient option.
How are microgenerators driving the decentralisation of the energy grid?
Energy microgeneration has graduated from theory to practice. It’s the practice of individual households, businesses, or communities providing energy to the grid on an ad-hoc basis. Take, for example, every home or farm around the country with its own solar panels or small wind turbine.
Despite the soaring price of solar panels from 2021, they remain hugely popular. In fact, the popularity of renewable energy purchases for individual consumers has risen sharply, year on year, as a whole – with renewable energy generation 9.3% higher this year than it was at the same time last year.
More and more of these microgenerators are emerging daily. Their owners are enthused by the potential to sell back their unused energy and reduce or even cancel out their annual energy bill. Localised energy is becoming a real possibility for homeowners and communities all across the UK and current wholesale gas prices are pushing individual households to seek out renewable production sources.
This is driving the decentralisation of the grid, as big providers no longer have the same control of the market as they once did. Instead, they must adapt and innovate with cutting-edge technologies like IoT and analytics to create smarter transmission and distribution networks, turning data from physical assets into actionable insight.
Does a decentralised energy grid work for everyone?
A more decentralised grid is good for consumers, companies, and country alike. As DNOs look for the best ways to stay on top of a more localised approach to the energy system, the benefits from a DSO transformation will drive increased demand from their customer base.
This includes accommodation of low-carbon, intermittent supplies, and a decentralised grid which can increase competition and drive down prices as the number of providers on the market grows.
With a smarter grid, we can have it all. We can manage the rising demand for electricity for many years to come, without the need to construct new power plants and grid networks at great cost and effort.
To see the way that energy companies are already investing to transform energy storage and distribution networks, as well as meet government guidelines, click here.
To find out how we can help you use technologies such as the Internet of Things (IoT) and data analytics to better manage assets, evolve towards predictive maintenance, and boost operational efficiencies, get in touch today.