Europe’s distribution system operators (DSOs) face a growing need for investment to cope with moves to more distributed forms of generation, according to an industry spokesman.

Paul Wilczek, manager for distribution and market facilitation at the industry body Eurelectric, said DSOs in an increasing number of European countries were having to deal with energy flows that grids were not designed for. The DSOs “have a changing role,” he said.

“You have a past where all the power plants were big power plants that were not connected at distribution level,” he explained. “The ones that were connected at the distribution level were households. They were passive. Now it’s totally changed.”

With the advent of low-voltage residential energy devices such as rooftop solar, batteries and heat pumps in markets such as Germany and the U.K., “there’s much more going on,” Wilczek said.

DSOs that previously only had to budget for mundane tasks such as cable maintenance were now being forced to support novel applications such as peer-to-peer energy trading, he said.

In Europe, more than 90 percent of renewable energy generation, including onshore wind and solar PV, is connected to distribution networks, he said.

Vehicle electrification is expected to further add to the burden, with Europe leading the planet in terms of the number of countries planning to phase out internal combustion engines.

European DSOs will not only have to take on the role of gas stations, but could also be called into supplying electricity for other forms of transportation, such as ferries and possibly even aircraft. Wilczek said these changes were putting pressure on DSOs in a variety of ways.

To begin with, DSO infrastructures were not designed to connect significant generation assets, such as wind farms and solar plants, at the edge of the network. This means many DSOs may have to reinforce the grid edge in rural areas as Europe’s energy transition progresses.

Grid reinforcement is likely to be a requirement within large load centers such as cities, too, mainly to cater for fast charging of growing electric vehicle fleets.

European DSOs will also have to invest in more sophisticated operational control systems, to handle applications such as peer-to-peer energy trading. The DSO of the future will have “more of a software sophistication need,” Wilczek said.

A knock-on effect of this is that DSOs will have to recruit people with new skills, such as software engineering, and will have to gain expertise in new areas, such as cybersecurity. It is clear this will all require new investment, but nobody knows just how much.  

The economics of the transition are difficult to gauge because some DSO infrastructure will need upgrading anyway, and some types of upgrade, such as adding demand response capacity to the grid, could offset the need for other investments.

This lack of clarity around the required investment could make it harder for DSOs to put a convincing case to national regulators, or even for regulators to make an informed guess or obtain a reliable third-party estimate.

“It’s a difficult exercise for a regulator if a national monopoly changes completely to something different,” said Wilczek. “What is clear is it must be properly recognized this is not a short-term exercise any more. There are many more factors to be taken into account.”

For now, Eurelectric is working to make regulators aware of the changes ahead. In January, the industry body commissioned a report from EY, the global accountancy firm, on the changing roles of DSOs in Europe.

“Enabling the energy transition and guaranteeing network stability in the context of distributed generation make the role of DSOs crucial,” it said.

European regulators will have their work cut out in assessing what investments will be needed while fighting to keep rates low for ratepayers, Wilczek said. But it’s not an issue regulatory bodies can ignore.

If the right levels of investment don’t come through, said Wilczek, “you will not connect the customers that are knocking on your door, be it renewables or the new consumer types — the guys with storage systems in their factories. You will just have to say no to them.”





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