Transition to the DSO Model - The whys, pros & cons

Transition to DSO Model (Image Reference below)

For folks who have been following my blog, I extend my apologies for the extended hiatus between posts. A key objective for 2024 is to maintain a more consistent blogging schedule, which I am committed to achieving alongside my other goals. 😊 I hope everyone enjoyed a refreshing holiday break and is now energetically embarking on the new year.

As we approached the end of the year, I came across an intriguing study by the Ontario Energy Association (OEA). It examines various Distribution System Operator (DSO) models under consideration for Ontario, along with their potential cost benefits. This study (link to the report is here) sparked my deeper exploration into DSOs, leading to this very blog post.

First, let us delve into the current state of grid operations in North America (US and Canada), particularly from a distribution standpoint. In today’s Distribution Control Centers (DCCs), the primary focus is on grid management, specifically managing outages and operating SCADA (supervisory control and data acquisition) and non-SCADA devices to restore power. Grid engineers within these DCCs also conduct load studies and analyze grid performance for both short-term and long-term planning, ensuring that the grid is equipped to manage shifting loads over time. With the advent of advanced ADMS platforms, roles have expanded to include network modeling teams, ADMS application support, and specialized IT teams for backend infrastructure management. Currently, the energy market at the distribution level is minimal, as most power buying and selling occurs at the ISO (Independent System Operator) level.

Now, coming back to the DSO model the transition that is being proposed in Ontario and other parts of Canada and the US. Let us begin by defining what is the DSO model. With the proliferation of Distributed Energy Resources (DERs) like solar farms, wind farms, commercial scale battery banks across the distribution landscape, the distribution grid operations can no longer be singularly focused on grid management or look at grid planning from an annual or decade long timeline. There is an emerging need to evolve the distribution grid operations to be an active participant/operator of a energy market along with grid management and grid planning that is more real-time and more aware of the current state of the grid by taking into account both the active loads as well as all the energy sources (solar, wind and battery storage) that are available at the distribution level. The DSO model, though not new and varying in maturity globally, offers diverse implementation strategies, few of which have been discussed in the OEA study discussed above.

So, now that we understand what the DSO model would constitute, let us talk a little about why this change in the distribution operations is now coming to North America.

1. Regulatory compliance – With the FERC order 2222 (a quick explainer for what it is can be found here), there was a push to integrate DER aggregators into the overall existing energy markets at the ISO/RTO level who balance and manage the transmission network back in 2022. This brought about its’ own level of complexity and challenges. And now, there is a recognition that the said market should work with the stakeholders on the distribution side of the business to setup a hybrid model that works for all parties at hand.

2. Efficiency – With the large-scale renewable energy integration into the power grid, there is an opportunity to improve the efficiency of grid operations by Incorporating data from DERs can lead to more effective grid planning and smarter investment in network upgrades.

3. Enhanced Grid Operations – With the proliferation of DER resources, it because critical for the DCC and the grid operators to be able to see the real time status of the power grid at the distribution level that will enable better decision making for a more reliable and resilient grid.

However, transitioning to the DSO model presents several challenges:

1. Collaboration across all key stakeholders – One of the key aspects of this transition is to understand that the DSO consists of several stakeholders i.e., DER aggregators, ISO/RTO, Distribution utilities, regulators, to name a few, who have their specific roles and responsibilities currently defined. Based on the regulatory environment in your region/state and country, it will require all those key stakeholders to sit at the table and discuss the best way forward for those folks as well as the end customer who will be looking to gain the most value in terms of higher reliability of power and reduced costs over time in their energy bills.

2. Market design complexities – As mentioned above, there are a certain set of regulations that are already at play, and we already have a market designed for the transmission system. To design a brand-new market for the DSO’s or to even modify the existing market model will require extensive collaboration and specialized expertise to have a design that works for all.

3. Workforce skills upgradation – Whenever a new concept designed and implemented at this size and scale with this level complexity, the various participants will need to hire expert resources with these highly specialized skills as well as train the existing staff to be able to understand and operate the new DSO model. This will be a major investment for utilities/ISOs that will be looking to move the DSO model for their grid operations.

4. Data and Security Implications – Since the DER data will be integrated into a highly secure environment where all the grid operations platform currently reside, there will need to be extensive security testing (penetration testing) as well as data model standardizations to ensure that some of the latest communication protocols like IEEE 2030.5 and IEC 61850 can be perform bidirectional data transmission appropriately.

In summary, integrating DERs into the power grid is crucial for creating an energy market where private capital investments yield returns as well as contribute to reducing the carbon footprint of the power grid. With the large-scale integration of DERs there is a need to re-access the current state of both the energy markets as well as the distribution grid operations, paving the way for the implementation of a new DSO model that reflects these changes.

For folks who have read this far and are interested in connecting with me on how I can help you in your journey, then feel free to reach out to me via email – abhinav@grid-transformation.com or via cell - +1-437-427-5155.

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Image Reference - https://www.irena.org/publications/2020/Jul/System-Operation-Innovation-Landscape-briefs

For folks who have read this far and are interested in connecting with me on how I can help you in your journey, then feel free to reach out to me via email – abhinav@grid-transformation.com or via cell - +1-437-427-5155.