DSOs to Extend their Central Role in Facilitating an Open and Competitive Market DSOs to Extend their Central Role in Facilitating an Open and Competitive Market Thought Leadership SHARE EURELECTRIC February 18, 2016 The energy sector is transforming fast. Environmental objectives aimed at reducing carbon emissions, increasing penetration of decentralised distributed generation and the electrification of transport are changing the energy landscape. Prosumers, aggregators and distributed storage providers are increasing and progressively interacting with Distribution System Operators (DSOs), forcing changes in the way they operate and plan their networks. Subject to regulatory terms, DSOs are expected to be the independent and neutral operators of new, local market arrangements designed to ensure that evolution is efficient and effective in terms of market enablement and customer empowerment. Hans ten Berge Secretary-General, EURELECTRIC DSOs must continually adapt and extend their central role in facilitating an open and competitive market. Being at the heart of the changes that are happening within their own networks and with a deep understanding of how their own distribution systems work and operate, DSOs are in a position to act as neutral energy market facilitators and coordinators of all customers. In the future evolution of energy networks towards a smarter grid concept, DSOs are responsible for guaranteeing distribution system stability, power quality, technical efficiency and cost effectiveness through the intelligent use of technology. A key part of the DSO’s role in facilitating the energy market is data management. The goal of any data management system does not revolve only around ownership, but rather around correct and fair information sharing in an efficient, transparent, non-discriminatory way. In order to manage their networks in a more active way, policy makers need to clarify the DSO involvement in data management. As competition and choices increase for the customer, new data privacy challenges emerge. The transformation will lead to a ramp-up in information and data flows, leading to the need for appropriate measures to be established to guarantee secure, neutral and efficient data management. As the technical contact point for customers, DSOs are in a unique position to meet their needs and choices in terms of connection, quality, security and continuity of power supply. Hence, DSOs are ideally suited to manage very large numbers of connection points and to balance local grids. DSO activities must therefore be separate from – and complementary to – TSO ones, bearing in mind that DSOs are the only players capable of exploiting the benefits of a local approach in terms of grid management and customer support. To meet the challenges ahead, national energy regulators must recognise the broadening role of DSOs and encourage efficient technological innovation. Performing these new roles will evidently lead to extra costs related, inter alia, to the introduction of smart grid solutions and the increasing complexity of data handling. The new energy reality requires energy regulators to ensure that all these changes benefit customers and other network customers. Costs have to be minimised while competition needs to be encouraged. This is the most efficient way to guarantee a level playing field for all market participants. The evolution of the energy sector towards an efficient and smarter system will only be possible if DSOs play an active coordinating role between all market participants, facilitating markets and services in a neutral and non-discriminatory manner. DSOs are key to upgrading and operating an increasingly more complex network, allowing market parties to enable customers to optimise the way they use energy and benefit from it while keeping costs and complexity at acceptable levels. Hans ten Berge is the Secretary General of EURELECTRIC. About the Author Hans ten Berge has been Secretary General of EURELECTRIC since 2007. Mr ten Berge holds a degree in Chemistry from the Rijksuniversiteit in Utrecht and also graduated from the University of Delft in business administration. Following posts in a number of international companies, including Exxon Chemie and Kemira Agro, he joined ENECO Energie in November 1998 as Managing Director of Energiehandelsbedrijf, subsequently serving as a member of the Board of Management from November 1999 until January 2006. He served for several years as Chairman of the EURELECTRIC Markets Committee, before taking on the full-time post of Secretary-General in June 2007.