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WPD unveils £125 million DSO transition workplan

Western Power Distribution (WPD) has unveiled how it intends to transition to a Distribution System Operator (DSO), and spend £125 million on doing so.

The Distribution Network Operation (DNO), responsible for the Midlands, South West and Wales regions, released its DSO strategy document late last week, detailing the need for it to adapt to the changing demands of the UK’s power market.

That transition will see the scope of services WPD provides expand and incorporate areas such as flexibility services procurement, grid resilience improvements and drive greater network efficiency. 

It has settled on five key areas of works, made up of smaller “building blocks” which will combine to encompass WPD’s new mode of work. The chart below shows how these building blocks fall into the five main categories which include data integrity, market integration, IT systems, customer propositions and equipment.

These will be rolled out between now and 2023, with WPD expecting a one-off cost of around £75 million to the company. These costs are expected to rise to between £100 and £125 million once recurring costs such as licenses and new employees required to facilitate the transition are taken into account.

The company said that its transition to a DSO was vital to local power networks and without the change in its mandate, “very substantial investments” in the grid would be required. It has already established a £7.1 billion grid investment programme for between 2015 and 2023, the success of which so far has seen it boost a local grid originally designed to manage 14GW of generation to nearly 21GW.

This, WPD said, was only likely to become a more encompassing job due to the “rapid adoption of new forms of electricity demand” that stood to significantly alter standard load profiles.

WPD has highlighted electric vehicles as being one such source of new demand. The UK government has identified EVs as a potential boom industry for the country however there remain concerns about the grid’s capabilities to handle such a boom. A Green Alliance report earlier this year claimed that just six EVs charging in a local area during peak time could be enough to cause blackouts.

Central to WPD’s DSO strategy is a more hands-on approach to network management, which it is rolling out in ‘Active Management Zones’. A new zone will be established every six months with the aim of completing its rollout by 2021.

Meanwhile it will pursue a “top down approach” to network improvements in which the 132kV, 66kW and 33kV networks will be targeted first, with the rest of the network upgraded as and when required.

WPD also said it had developed “significant competence” in a number of areas which came under the DSO remit, specifically in battery storage and new alternative connection agreements available for generators.

These alternative agreements – dubbed ANM, Soft Intertrip, Timed and Export Limited – vary in their complexity and cost but have essentially been aimed at allowing more distributed generation to connect to the network by opening them up to some form of curtailment to avoid more expensive grid reinforcement works.

Last week UK Power Networks, one of the UK’s other DNOs, announced that it was working with National Grid on a similar scope of works which will allow it to ease local constraints through smarter grid management.

Writing for the document’s foreword, WPD operations director Phil Swift said: “WPD recognises that the change from a Distribution Network Operator (DNO) to a Distribution System Operator (DSO) is essential to driving performance and efficiency from our network and to ensure it can meet the future energy demands of all our customers.

“The enhanced capabilities we are developing will also give our customers the freedom to access other opportunities within the developing energy system. WPD views the planning and operation of a more active regional distribution network as a natural extension of its current role and believes it is uniquely placed to lead the management of an efficient and cost effective electricity system at a local level.”