Time to create new consensus together
By Henrik Jensen, Senior Vice President, Kamstrup Electricity
In the power supply we find ourselves at a crossroad. A successful electrification of our societies requires great courage and engagement across stakeholders in the industry. Old habits of running a utility must be challenged by new ideas and new ways of working and should be followed by investments in innovation and digitalization. We need to acknowledge the fact that willingness to take risks and new ideas and solutions is a certain necessity.
A core job for the distribution system operators (“DSO”) has for many years been operating and running a stabile power supply and the precondition for stability has for more than 20 years remained, to a large extent, the same. That goes for both energy sources and power consumption. Therefore, a clear framework and continuity in operation is a deeply inherited part of their professional nature. Throughout the years, the DSOs in Denmark have greatly managed the role of securing this stable power supply and therefore we have experienced a high security of supply. Refining and operating an efficient supply could be done without disruptions. Habits and continuity therefore for many years was a factor ensuring stability but now looks to represent a challenge to operations due to significant increase in the pressure on the electric grid as well as the needed integration of renewable energy sources. The electrification is expected to two or three double the power consumption in Denmark within a decade and so the DSO’s must be prepared to face this demand and tackle even the highest peaks in consumption.
Here comes the hard part. We need to leave our habits if we are to match the ambitions for electrification as a key to the green transition. Across the industry we need to be prepared and willing to take risks by investing in innovation, new ideas and a new reality of operating a modern electricity grid. The low-voltage grid is the key if we are to successfully accelerate the electrification. To succeed there are basically two deciding factors. Better conditions on legislation and resources enabling investments across DSO’s alongside a stronger sense of team-effort in the industry.
”Climate is a team sport”
Those were the words from Danish Minister of Climate, Energy and Supply Lars Aagaard at a national energy conference. Collaboration is truly a deciding parameter when it comes to bringing all stakeholders into play and finding the best solutions – as a team.
The Challenge
The low-voltage grid is under increasing pressure. Among the challenges is fluctuating energy sources including private home sun panels and the ’noise’ they create in the grid. A general growth in industry, connecting new factories to the grid, partly electrifying district heating and sector coupling are all in the same way part of the electrification challenging the low voltage grid. Based on factors such as these we are currently seeing a supply and industry acting despite a lack of support through regulation frameworks. It reminds you of the wild west. Across Denmark projects are initiated and the work is piling up. The same goes for the amount of permits and pending approvals that need to be granted from local or national authorities. Last but not least there is a hard competition to gain the needed resources and competencies to get the work done. That represents another bump on the road towards electrification.
The speed that is required for the transition of the low voltage grid and the supply / demand side is new to the whole industry. It is something never tried before. Several factors point towards increased cohesion and a significantly increased collaboration across the industry as well as a new and innovative approach to operating the critical infrastructure – our distribution grid. How we qualify and prioritize projects will be key to ensure a responsible transition where all relevant stakeholders contribute with constructive input. This way we can ensure the required speed in the development needed.
Are we ready to take risks?
Innovation, new ideas and investments may sound like long term solutions but not a solution to the situation here and now. Nevertheless, at this point you could argue that it is a matter of better late than never. We need to create the DSO of the future – now. A grid operation that through digitalisation stands ready to meet the demands of increased electrification and renewable sources.
After operational habits it is worth taking a closer look at legislation. DSOs are subject to earning limits that makes investing and taking economic risk difficult and thereby also inhibits the acceleration of electrification. The granting of resources and in the longer term, the license to operate, depends on how you as company live up to the economic benchmark that is defined across utilities. Practically speaking, this means you risk punishment for making investments that may impact your economy negatively in the short term. This makes it hard to see how multiplication of the electricity demand is to be supported by the DSO’s without enabling the necessary resources and investments.
Despite the difficult circumstances one could conclude that the time for change has come. At this point our industry has the digital solutions at hand and proven to an extent where we in Kamstrup as well as other companies can guarantee a minimal risk in the transition to a digital DSO. As a stakeholder in the private sector we are fully invested – we are also ready to take a larger responsibility as well as risk as an active player in the team effort. We are also depending on a common willingness to cooperate since we have large investments in solutions and innovation, that risk not being put to use to the benefit of energy efficiency and electrification. Now is the time to test new ways of working and collaboration models to build the necessary experience with working as data driven DSO . A successful green transition waits for nobody. Suppliers to the utilities need to step up. We are all on the same team here – that also goes for the local and national authorities. Legislation, approvals, permits – the whole process needs to be refined to support the accelerated electrification.
At this point, data insights are ready to show us how to efficiently prioritize and ultimately make the optimal use of our available grid capacity. This knowledge is critical to make full use of going forward across authorities and utilities to ensure that certain projects are reprioritized and others are accelerated in areas where the need is critical.
A distribution grid ready to meet the demands of the future is a grid we have the full insight into. That ensures to maximize the output of the existing capacity before expanding it. To do that, we need to put software solutions to work – insights need to be turned into actions and clear priorities. While doing this, it is crucial that suppliers to the utilities delivers the highest possible quality of products and data.
This will pave the way for detailed insights for data driven decision making, which in the end creates the flexibility that is expected to save billions in investments for the DSO’s.
So, how big is the need for new projects, that strengthens our distribution grid to withstand the future demand? That is an evaluation that legislators needs to make based on recommendations from our utilities. Software and digital tools will help them decide on priority and timing of investments. The solutions to remove bottlenecks already exist.
Full consensus is the solution
In the case of the Danish DSO’s several factors points us in the direction of a great need for fellowship across the industry stakeholders. Core tasks in the DSO’s has changed. A new digital reality needs to pave the way for efficiency and prioritizing of projects. Projects that enable a flexible distribution grid, higher demand for competencies that can turn valuable insight from data in the grid into decisions and actions to the benefit of our society.
I hereby wish to urge colleagues in the industry and openly invite you to help create consensus about how to manage and operate the grid in the future in the most optimal way to support the green transition and the imposed consequences hereof. Which are the new core tasks for the DSO’s? And what are the tasks and challenges that we need to clear from our desk, to enable an efficient and digital power supply in the years to come. In other countries we see examples where external stakeholders, specialists in data, communication, hosting and other disciplines, work closer together with the utilities to enrichen and qualify data, than we see in Denmark.
Our legislators and authorities must take a closer look at the framework under which the DSO’s are controlled. Private companies need to deliver and develop both new and well-tested solutions and last but not least our utilities need to reach out and create a sense of teamwork. We should be ready and willing to take the necessary risks when leaping into the future of operating and managing our low-voltage grid in a secure, safe and cost-efficient way. Both to the benefit of the end customer and our society as a whole.
