DNOA 2024: Delivering network capacity at lowest cost to our customers

A year after establishing the Distribution System Operator, UK Power Networks has released the Distribution Networks Assessment Methodology 2024 and latest report. Here we take a deeper dive into what the DNOA means for our DSO and our industry.?

“We are committed to delivering the network capacity required for the transition to Net Zero at the lowest cost to consumers and our DNOA Methodology is the fundamental tool that delivers that.” – Sotiris Georgiopoulos, Director of UK Power Networks DSO?

?? About the DNOA?

As more people opt for low-carbon, electric alternatives, the demand on the electricity network continues to rise, forecasted to double by 2050. Our role as a DSO is to find new, innovative ways to tackle this and prepare our network for the transition to Net Zero.?

The DNOA is an annual publication and governance process to help optimise future investment decisions. It outlines where, when and how UK Power Networks will seek to secure additional electrical capacity in the next five years to meet demand – be that through flexibility or by building new infrastructure. We use it to showcase the options available and make recommendations for the lowest-cost option for our customers, based on market testing, which we then submit to our Supervisory Board for approval.?

This year marks the first end-to-end application of the DNOA process. Since its first release in 2023, we have incorporated customer feedback to finetune the DNOA methodology, make improvements to the data included and outline a roadmap for future improvements.?

?? What it means for our customers?

?? Transparency at its core?

The DNOA provides transparency to the industry on the investment decisions we are taking to meet the capacity needs across London and the South and East of England over the next few years.??

Our DNOA methodology gives very specific detail on the processes we are implementing and how they are tailored to meet specific needs, namely:??

• Challenges across the wider electricity network?
• Capacity needs to accommodate additional demand??
• Capacity needs for additional generation and battery storage connections

Sharing our recommendations, findings and methodology not only upholds our commitment to safeguarding our customers’ best interests, but also, provides the opportunity to feed into our network planning and DNOA Methodology, gain insight and shape the development of their own low-carbon projects accordingly. All while helping customers understand more about flexibility and how to participate – opening up new revenue streams.?

?? Exploring new solutions?

One of the main ways we are preparing our network for the forecasted uptake of electric vehicles and other low carbon technologies is by developing the flexibility market – a cost-effective way to get additional capacity on the network at peak times without investing in new infrastructure.?

This year, we market tested capital expenditure across our network whereby instead of defaulting to new infrastructure, we hold tenders to find more cost-effective flexible solutions. Following a review of the key recommendations by our independent DSO Supervisory Board, we will be progressing network interventions of ￡37.2m and awarding ￡7.6m in flexibility contracts. In some areas, this flexibility is projected to fully meet future demands, saving our customers millions. We will continue to contract flexibility to meet remaining capacity needs over the coming years.?

You can find out more about flexibility on our DSO website .?

?? Wider system benefits?

We are also working with our fellow distribution and transmission network operators across the whole electricity system to tackle network and operability challenges and benefit a wider spectrum of customers – far beyond our regional boundaries.??

Since 2022, we have been working closely with our neighbouring DNO, Scottish & Southern Electricity Networks (SSEN) and other local stakeholders to explore options to meet capacity needs in the Willesden area of West London, just outside of our licence area. By absorbing some of this capacity need on our network, we can release capacity on the transmission grid and effectively get SSEN customers connected more quickly.?

Our work with the ESO through our Regional Development Programme has also facilitated the connection of approximately 1GW of renewable generators in South of England, at no additional cost at transmission level.?

Read the full DNOA on our website: https://www.ukpowernetworks.co.uk/our-company/distribution-network-options-assessment-dnoa ??

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? What next??

Consultation with our stakeholders and sector colleagues has demonstrated a few key focus areas for our next DNOA:?

Optimising across multiple Distribution Future Energy Scenarios?

So far, we have based our DNOA Methodology and our respective recommendations on the Consumer Transformation Distribution Future Energy Scenario – our best-view scenario. However, we do acknowledge the inherent uncertainty around the various paths to Net Zero. Next, we will explore how we can structure the DNOA Methodology to develop recommendations that deliver benefits against multiple scenarios.?

Strategic interventions on our network?

We also identified the need to incorporate options around the cost of curtailment and/or hybrid solutions, including the market-based operation of DER over different horizons.??

This year, we will once again be coming to our customers and sector colleagues to help improve the process – working together to benefit the entire electricity system.?

If you have any feedback on the DNOA Methodology or would like to find out more, email [email protected] . ?