Europe’s DSOs – Fit for 55?

Although trying their best to be on track for Fit for 55, DSOs are dependent on the right framework conditions and adequate support to be able to live up to their role, a recent paper from the DSO Entity states.

The paper, aimed to identify DSO best practices to addressing some current challenges, points to the key role – as Europe’s sector organisations have frequently highlighted – of the DSOs in achieving the region’s energy and climate objectives, with much of the decentralisation taking place on the distribution grid.

However, physically enforcing and digitally smartening the power infrastructure cannot be delivered in the blink of an eye, the paper states.

DSOs remain heavy infrastructure actors and regulated entities that are dependent on the right framework conditions to deliver.

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Further, the current situation of increased uncertainties such as disrupted supply chains, staffing shortages and long permitting procedures, additionally aggravates the conditions.

DSO challenges

The seven core but non-exhaustive challenges that are identified are the high demand for renewables connections in a short time, capacity constraints, investment and financing needs, permitting, the network tariff regime, the regulatory framework and technical rules for grid connections and staff and skills shortages.

The description of these challenges shows that DSOs are often confronted with obstacles on different levels and ill-fitting framework conditions, the paper says, stating that it finds that DSOs attempt to overcome some of the obstacles by launching proactive initiatives and/or fostering close cooperations with relevant actors to make it work.

Lessons from shared practices

The paper entitled ‘DSOs Fit for 55‘ identifies several lessons for DSO practices reviewed:
● A transformed energy system requires an adapted, i.e. forward looking, regulatory investment framework to thrive and enabling practices such the introduction of capacity tariffs as a form of network tariff reform.
● Transparency between DSOs and renewables developers/investors leads to better results with for example the DSOs able to provide about the available capacity in their networks.
● Early involvement and cooperation with DSOs are key for a smooth connection process, with approaches such as permitting bundling able to overcome several obstacles.
● Incentives for a grid-supportive behaviour of customers and investors can accelerate a cost-efficient and faster deployment of renewables, with demonstrated practices including a geo-dependent standard connection fee as in Denmark or a capacity tariff as in Belgium.
● The benefits of smartening the grid displayed in practice can evoke further innovations, with an example the way smart metering functionalities have enabled improved visibility on the network.
● Managing external factors, such staffing shortages, must be a collective effort with sufficient support from the national and EU levels and can include for example the secondary and tertiary education systems.

The paper concludes that despite proactive DSO action, some challenges remain and more fundamental changes in the current framework are necessary to empower DSOs and ultimately customers.

Only then can DSOs remain enablers of this energy transition and not develop into bottlenecks, states the paper.

“Without upgraded, smartened and well-equipped power grids this historic transition towards a renewable energy system will not materialise.”