New framework for forward-looking long-term planning of smart distribution grids
ISGAN has developed this framework to support key actors in the complex task of planning and developing smart, sustainable distribution grids for the future. Based on the key messages of the ISGAN Policy Brief, the framework offers a structured approach to improving understanding and facilitating the multilateral dialogue required for advancing global distribution grid planning.
It is intended to help actors navigate system complexity and respond to multidimensional uncertainties. At its core, the framework is a tool for fostering shared understanding and strengthening collaboration in addressing common challenges in the long-term planning and implementation of distribution grids.
The framework consists of three fundamental components:
- Framework conditions underpinning a forward-looking planning process
- Five phases of long-term planning and implementation
- Key actor groups with formal roles and responsibilities in the planning process
Framework conditions enabling a forward-looking planing process
Long-term planning of smart distribution grids requires reliable and supportive legal and institutional conditions over the long term. Undoubtedly, legal and governance frameworks at national and international levels have a significant impact on strategic planning and, consequently, on all phases up to implementation.
In many countries, responsibilities and mandates for grid planning are distributed among various actor groups and across national, regional, and local levels. In some countries, regulations require operators of medium- and low-voltage electricity grids to provide long-term plans covering time horizons of 10 years or more.
A key challenge is that all those involved in concrete grid planning must navigate a regulatory landscape that can shift unpredictably due to changes in political priorities, technological advancements, and environmental concerns.
In order to reduce these planning uncertainties, reliable, effective and efficient institutional structures (laws, regulations, standards, etc.) and governance processes must be established. To successfully navigate the transition towards future smart grids, it is also crucial to orchestrate and coordinate strategies and planning processes between incumbent and new actor groups.
National energy policymakers and regulatory bodies must provide the legal, political and governance structures that form the framework. More specifically, national energy policymakers, who make strategic decisions within the broader context of megatrends, can implement policy measures (e.g. incentives, ordinances, etc) or even amend the legal framework. Depending on their mandate, regulatory bodies may intentionally or unintentionally incentivise or discourage various paths or solutions considered in long-term planning.
Key issues:
- General legal and regulatory certainty (including beyond the electricity system) is a prerequisite for long-term strategic planning.
Legal, political and governance-related uncertainties must be eliminated or reduced as far as possible. Alternatively, the relevant legitimised law-making and executive public bodies must facilitate conditions for the sharing of risks and uncertainties, in order to provide favourable preconditions that enable long-term planning processes.
Regional or national policymakers can and should provide legally binding decisions, as well as politically legitimised rules, regulationd, plans, visions, and goals, which are key framework conditions for distribution system planning by utility companies and distribution system operators. These include formal visions, strategies, and decisions that may be of a more general nature, extending beyond the realm of electricity, but which have a significant impact on long-term planning. Examples include urban development plans, climate policy goals, human rights declarations, universal basic services, and declarations of a climate emergency with the status of constitutional law. This also includes national climate policy goals that are binding under international law (e.g. the COP28 pledge relating to renewable energy components in Nationally Determined Contributions (NDCs) [1]), national grid infrastructure plans (primarily related to the transmission systems level), other energy infrastructure plans (e.g. heat/cold, hydrogen etc.) and plans in related sectors (e.g. ICT, mobility).
Clear policy signals should be maintained through legally binding frameworks. These are often energy policies, but not exclusively so. Labour and social welfare policies often heavily influence grid planning (e.g. socially focused tariff structures).
It is of the utmost importance that the laws, regulations, standards, and other steering frameworks provide a reliable and foreseeable foundation to achieve the best possible outcomes in supporting the energy transition and modernising the grid edge and its many local smart grids.
Uncertainties may also be reduced if lawmakers set clear goals for regulatory bodies related to decarbonisation goals, provide flexibility to incentivise forward-looking grid investment planning or reduce uncertainties in grid planning [2].
- Concerns regarding political continuity (e.g. related to election cycles) have been raised by actor groups in several countries.
Favourable preconditions for planning can be achieved through broader societal consensus and guaranteed rights and responsibilities relating to universal access to electricity, grid reliability, and energy as a universal basic service. This could be achieved through greater stakeholder engagement from all societal groups [3].
- Legal uncertainties concerning national infrastructure priorities need to be clarified with regard to the construction of new grid infrastructures (e.g. power lines).
As grid infrastructure has a significant impact on society as a whole and the environment, many aspects must be considered. Guidance on which societal aspects to consider and how to prioritize factors in a fair and socially accepted way should be provided.
The most important thing is societal responsibility related to the grid infrastructure. Grid planners must provide options that meet capacity, security of supply and power quality requirements in order to fulfil the country-specific obligations of grid operators to provide electricity as an essential service to individuals and businesses, and to uphold people’s right to energy as a universal basic service. In countries that try to guarantee these requirements through market mechanisms, the obligation to fulfil them in cases of market failure and crisis situations tends to be undervalued when assessing grid infrastructure resilience.
Accelerating grid infrastructure requires striking a balance between societal and environmental considerations. In some countries, the current situation regarding national priorities is unclear, and there is ongoing discussion about the role of different public institutions is ongoing (e.g. should political decisions be prioritised based on urgency criteria, or should court judgements play a larger role?).
- Clear mandates, and related responsibilities for all groups of actors should reduce governance uncertainties.
The search for actors and groups involved in this project revealed that mandates and responsibilities vary depending on the institutional context, and that governance uncertainties are partly caused by the growing number of actors involved, new regulations (e.g. the 10-year planning cycle for European DSOs), changing ownership structures, and the states’ responsibility to guarantee universal basic services.
Regulatory frameworks must adapt to the emergence of new actors and define their roles, rights, and obligations. The roles and responsibilities of more traditional actors may also need to be redefined and clarified.
Regulation must also address rights and responsibilities relating to the growing volume of available data (e.g. smart grid data). For example, regulatory requirements will have to address cybersecurity and personal integrity.
- Incentive structures must be put in place for those responsible for planning the construction of agile and resilient grids, while avoiding of disincentivisation of innovation (including from regulators).
Experts from several countries and different actor groups have raised concerns that the rules and regulations established in recent decades are hindering the transition to future smart grids (e.g. formally binding approval procedures for development plans, monopolists’ rights to depreciate investments and incentives for short-term efficiency).
Financial steering mechanisms play a crucial role and must enable the utilities to select the optimal solution from a holistic perspective, considering both the options within their own network and coordination with other networks. It is important to consider more agile and realistic network investment mechanisms, as well as developing adequate schemes that justify the increased costs and risks implicit in the additional responsibilities of DSOs to implement flexible products.
The consideration of resilience and the inclusion of risk assessment criteria such as climate adaptation, calamity precautions and critical infrastructure security should be included, will also have a significant impact on grid development. This is why guidance on these subjects is also important, e.g from regulatory authorities.
[1] IRENA, 2023. NDCs and renewable energy targets in 2023: Tripling renewable power by 2030. International Renewable Energy Agency, Abu Dhabi.
[2] An example is the pilot regulation by the Italian regulatory body ARERA, which incentivises demand response behaviour for EV charging as a regulatory innovation experiment.
[3] E.g. the European Strategic Foresight Report for 2023 (European Union, 2023) calls for a new social contract to address broader societal challenges.
Uncertainties in distribution grid planning and implementation are high, as are the complexities of economic and societal dynamics, which present challenges for all actor groups and stakeholders in the energy transition.
As this can lead to conflicting priorities and strategies among actors and stakeholders, collaboration and coordination are crucial. Dynamic collaboration enables grid planners (including grid owners, utilities and distribution system operators), policymakers (including energy policymakers, lawmakers and regulators, as well as regional and urban policymakers and planners), and other energy sector stakeholders to reconcile their differences and make decisions that address the challenges of planning and implementing the energy transition.
How can effective collaboration be fostered to enable coordinated distribution grid planning and implementation among diverse groups of actors?
Key issues:
- Promoting interaction at all levels of the grid planning process, by engaging and orchestrating the identified actor groups and other stakeholders with which they interact (including TSOs, producers, consumers, flexibility providers and regulatory bodies)
Actors and stakeholders who were consulted in the several workshops as part of the Lighthouse process have a shared understanding that a broad range of established and new actors will have to be involved in long-term planning for the development of future grids.
It is therefore of the utmost importance to design effective forums for stakeholder interaction to involve as many actors and impacted stakeholders as possible in the grid planning process. This will help to collect, identify, and coordinate needs across different levels (TSOs, DSOs, industry, municipalities, end users at the grid edge, etc.).
Opportunities should be created to bring together groups of actors and stakeholders, and collaboration between the government, energy system actors, technology providers, researchers, innovators, and other societal actors should be promoted to enable the efficient sharing of knowledge and the co-creation of solutions for effective grid development. In the initial foresight and strategic intelligence phase of specific grid planning projects, in particular, dedicated platforms for public engagement and stakeholder interaction should be established to facilitate productive collaboration, permitting and decision-making, particularly with local communities. This process should be fair and efficient in terms of time, costs, and human resources.
Dialogue is also necessary between TSOs and DSOs and between DSOs and DSOs, since their planning often impacts each other, including in terms of risk and uncertainty management.
Building trust between stakeholders will foster better collaboration and planning. Building alliances and orchestrating activities helps shape the necessary framework conditions, such as laws and financial frameworks.
- Understanding divergent and convergent perspectives is important when establishing a collaboration.
To understand partners in collaborative efforts, it is helpful to have a holistic perspective on grid development. Agreed definitions provide a basis for this, helping to avoid misunderstandings.
- Forums for “safe” knowledge exchange and confidence building, free from fear of reprisals (e.g. for admitting errors), are needed.
This is relevant at all levels: intranational, regional and international, depending on your context.
- Collaborating should be forward-looking, not backward-looking.
Shared regional, national and local development projections shall be created with published assumptions, to form a reference for grid planning. This will help to overcome reactive planning practices based on reported demand and supply reported at short notice.
Due to increasing complexity, it is overwhelmingly difficult to have in-depth knowledge of all relevant aspects. Therefore, good information sharing between different groups of actors is crucial. Knowledge infrastructures for data and information requirements (based on interoperability standards) provide the framework for all phases of the distribution grid planning and implementation. Once established, these infrastructures would enable efficient and reliable information sharing between different systems and applications (e.g. via distributed ledgers), which is becoming increasingly important.
Key issues:
- Shared language and agreed definitions
Since many actors and stakeholders need to be involved in the full long-term planning and implementation cycle, it is important that there is a shared language and agreed definitions between actor and stakeholder groups. - Data strategy and infrastructure
The increasing complexity of new tools and interactions between a growing number of actors requires a cross-sector data strategy. This should include adequate ways of managing data and information exchange, addressing technical aspects as well as governance issues such as transparency, access, data protection and data security.
Technical and governance issues include:
- Common interfaces to exchange information across different standalone tools.
- The development of interoperability standards (including data exchange, power quality and physical interfaces) is a prerequisite for the strategic developed of shared business models, enabling planning across actor groups and energy vectors. Standardisation is important for setting up the regulation.
- Open APIs for easy data exchange and publication.
- Data should be made available and shared in adequate ways (e.g. considering data privacy and protection issues). Data availability should consider all interests, from grid operators to planners, and vice versa. Public data availability enables third parties (neither planners nor investors) to conduct evaluations (simulations), providing more credible feedback.
- The quality of the available data is also essential for realistic scenario development.
- Skills and competences
Skills and competences are crucial at all levels to understand the transition process leading towards a future smart distribution grid.
This includes technical and strategic knowledge for policymakers, as well as skills and competencies for management and planners in utilities and DSOs. Research within academia, research institutes and industry is therefore of the utmost importance in establishing a knowledge infrastructure. It is equally important to find ways to make this knowledge available and easily accessible to the relevant actor groups.
In light of the critical shortage of human resources, it is crucial to develop strategies for recruiting and training a skilled workforce to meet short- and long-term competence requirements. In order to address the challenges posed by an uncertain and complex grid planning environment effectively, substantial investment and collaboration between education, government, research, and industry stakeholders is imperative to attract and nurture a skilled workforce and to provide adequate training environments.
Throughout the planning process, experts from diverse backgrounds and with distinct competencies are required. These include expertise in policy and regulation, engineering, environmental impact assessment, urban and rural planning, and the social sciences.
The five phases of long-term planning
Which forms of strategic intelligence are essential for making informed decisions and deploying effective steering mechanisms in distribution grid planning?
How can they be realised, and what challenges are related to this?
What specific knowledge is necessary to conduct thorough needs assessments?
Foresight and strategic intelligence play a crucial roles in informing long-term strategic decisions regarding the planning of future resilient distribution grids, particularly in the context of climate change and the ongoing energy transition, which are highly uncertain and complex environments.
This phase is critical for ensuring that strategic decisions and plans are based on robust and actionable information — even when accurate predictions of future grid requirements cannot be made.
By systematically incorporating foresight and strategic intelligence, actor groups with a stake in strategic grid planning can ensure that decisions made today are aligned. Building on shared intelligence and stakeholder engagement will make decision-making more resilient, forward-looking, and adaptable to future challenges and opportunities.
The aim is to develop a comprehensive understanding of the needs and challenges of future resilient distribution grids, and to identify viable pathways on which the long-term grid planning pathways.
As a foundation for long-term strategic decision-making, foresight examines the economic, technological, institutional, and policy landscapes, identifying potential pathways for the energy’s system’s transition and possible futures. This allows decision-makers to prepare for various options related to reconfiguring electricity grids.
This initial phase provides the concrete data and analysis needed to navigate these futures effectively by analysing trends and drivers in the social, technological, economic, environmental, and political contexts.
Strategic intelligence provides the concrete data and analysis required for effective navigation of these futures, analysing trends and drivers in the aforementioned contexts.
Key activities
- Data collection and analysis: Strategic intelligence is used to collect qualitative and quantifiable data, identify future energy trends, and pinpoint the drivers of change in all landscape dimensions (including demographic and environmental changes, as well as emerging technologies). This is achieved through horizon scanning and other analytical methods that deal with the assessment of uncertainties and risks.
- Long-term scenario development explores potential scenarios and develop multiple future pathways to anticipate different outcomes and challenges, providing a basis for strategic decision-making and planning.
- Actor and stakeholder engagement aims to engage with key actors and experts, to gather insights, align perspectives, and develop long-term visions, decisions, and plans.
A strategic foresight report is prepared to inform strategic decision-making in the next phase, guiding subsequent strategic and operational planning processes.
Who is involved?
The CEOs of the DSOs/utilities, public and private grid infrastructure owners, local/regional governments, and energy policymakers.
Regulators contribute to this phase by providing strategic insights and regulatory advice and presenting the policy context. Experts in strategic intelligence and facilitators support the foresight process.
Key issues to consider
Participatory foresight processes
Stakeholder engagement is a strategy for navigating uncertainties and complex environments. Engaging with relevant actor groups and stakeholders in participatory foresight processes helps to explore possible future scenarios and identify strategic grounds for transition pathways. This is important because well-established forward-looking and strategic intelligence methods, such as horizon scanning, scenario development, backcasting, and roadmapping, as well as more elaborate forms of engagement, help to reduce uncertainty by sharing distributed knowledge, understanding interests, and forming shared views on the future development of distribution grids.
Agreed scenarios and pathways can be used for strategic decision-making by multiple stakeholders beyond the organisations that create them.
Perform a broad horizon scan
Well-founded decisions rely on identifying trends and drivers. Given the fundamental uncertainties and risks involved, good strategic intelligence and foresight practice therefore includes performing a broad horizon scan.
Reflect on the basic assumptions
The basic assumptions underlying planning practices of the past few decades are becoming increasingly outdated and may obscure a clear view of the new challenges. In order to prepare for the expected changes in the power system sector, including those resulting from massive electrification, it is important to reflect on how these assumptions align with the new or emerging energy landscape.
Consider societal, environmental, and economic perspectives
Societal, environmental, and economic perspectives should inform the analysis and development of scenarios and pathways. This means focusing not only on the role of distribution grid infrastructures in providing affordable, and clean energy, but also situating distribution grid planning within a broader societal and environmental context. This involves considering the benefits and impacts of distribution grid planning beyond the electricity sector, such as its effects on education and mobility, and taking into account environmental threats related to climate change.
Understanding the perspectives of other actor groups and grid users
Developing a strong understanding of the different actor groups’ perspectives is important. In particular, scenarios should consider the interactions between the transmission and distribution grids, sector coupling, and the creation of value across the economy.
Apart from their key role as end users of energy services at the grid edge in terms of planning future loads, grid capacities, and smart grids features, the roles of other grid users in future grids should not be overlooked in long-term planning. Households and businesses may play a more active role in the future as flexible consumers, prosumers, and energy communities. This could offer new parameters with the potential to provide flexibility-related grid services for load shedding from behind the meter, such as demand response and electricity storage.
Guidelines for developing a robust basis for long-term strategic decisions
In order to establish a framework that can guide strategic decision-making for bankable and resilient long-term plans, guidelines are needed for developing a robust basis for strategic decisions. These should be shared research efforts on how to develop these guidelines, for example, by adapting analytical tools and models for long-term load scenarios and appropriate forward-looking approaches to requirements.
Transparency and trust in the outcomes of the foresight process
It is essential to be transparent about the strategic intelligence and analysis, the participatory process and the outcomes to guide decision-making and planning. This can be achieved by publishing a strategic foresight report that includes pathways and models, for example. Documentation on how to utilise the outcomes of the process must be provided, including information on their scope, underlying assumptions, and limitations.
What strategic decisions are necessary within each actor’s organisation to determine how grid plans are developed?
How should these decisions, which are essential for establishing an adequate framework for long-term planning and implementation, be made and formulated?
During this phase, each actor or organisation mandated with strategic long-term grid planning is advised to formulate a clear strategic position, which is ideally based on the shared intelligence and participatory foresight processes from the initial long-term planning phase.
This involves defining how the future grid should be developed and what the new grid infrastructure configuration should look like, in line with the organisation’s mission and mandate, while setting strategic priorities, making long-term investment decisions, and ensuring compliance with relevant policy frameworks.
Each actor or group of actors must focus on making informed decisions that will shape the long-term direction of grid development, particularly in terms of how the grid can serve those at the grid edge. This requires analysing multiple scenarios and potential development pathways from their perspective and selecting the most appropriate course of action to ensure the grid’s future resilience, sustainability, and efficiency.
Insights and learnings from the stakeholder coordination and engagement process in the Foresight phase can inform scenarios and pathways towards future smart grids can be informed. This phase benefits from a shared understanding and narrative between actor groups, facilitating coordination and cooperation towards common strategic goals.
The objective of this phase is to define a clear strategic direction for grid development from each actor’s perspective. This involdes deciding how to prioritise investments and initiatives that align with the organisation’s long-term needs and the broader interests of stakeholders. Strategic decisions concern both the overall network planning (e.g., determining required capacity) and more specific decisions on ensuring access to that capacity.
These decisions should incorporate criteria for resilience and guarantee access to electricity as a universal basic service or essential services, respectively, for all households and businesses at the grid edge.
Key activities
- Identify strategic options for developing future smart grids, building on the strategic intelligence collected and the results from the Foresight phase.
- Multi-criteria analysis: Assess alternative planning options based on multiple criteria, including technical, financial, social, and policy dimensions.
- Risk assessment: Assess the risks and uncertainties associated with various strategic decisions and prepare for resiliency measures, or eliminate non-viable options.
- Policy alignment: Ensure that decisions align with national and regional energy policies and regulatory frameworks, as well as with those of other stakeholders.
- Strategic guidelines: Develop basic principles and guidelines for subsequent phases in the long-term planning process. This involves setting strategic priorities, making investment decisions, and ensuring policy compliance.
Outcome
A strategic document or white paper to serve as the foundation for and provide guidance on the organisation’s strategic and long-term planning, in alignment with other actor groups and stakeholders. It should provide an in-depth analysis of trends and drivers, and identify potential opportunities and threats. It can therefore inform the strategic direction and consequences of the forthcoming steps in the planning process.
Who is involved?
The CEO of DSOs and utilities, public and private grid owners, local and regional governments, energy policymakers, and regulators are engaged in making their own strategic decisions, as well as coordinating and collaborating with other stakeholders.
Key issues to consider
Adapting organisational goals and long-term missions to changing realities, complexities, and uncertainties
- Adapt to national and regional frameworks that influence the development of distribution grids.
- Collaborate with other actors shaping the context for future smart grids. This includes new actors and strategic partners.
- Consider technical alternatives to traditional grid reinforcements, beyond investing in “cables.”
Determining key principles and criteria
The key principles and criteria that will guide subsequent phases of the planning process should include:
- The level of security and reliability of supply, based on an agreed understanding of electricity as a universal basic service, or essential services agreed upon in the national and regional context, and the role of grid infrastructure in guaranteeing this.
- The resilience of electricity grids should be considered, taking into account climate adaptation, calamity precautions, and critical infrastructure security.
Reliance on “smart grid” solutions, such as digitalisation and the engagement of actors at the grid edge, to guarantee grid resilience (e.g. by providing flexibility services from local generation, storage, and end use).
What are the key prerequisites for identifying and formulating options in concrete long-term grid planning options that align with development needs while adhering to regulatory and organisational frameworks?
Long-term planning involves elaborating on the grid development plan by preparing one or more technical solutions to address identified grid development needs.
These solutions must ensure the technical integrity and reliability of the grid, as well as compliance with relevant technical standards and regulations.
Long-term planning also involves assessing the financial implications of the proposed solutions and the associated risks. The resulting plan should be based on the basic principles and strategic priorities outlined in the strategic guidance developed in the previous phase. It forms the basis for formal reporting, approval, and decision-making.
Through thorough long-term grid planning and evaluating options that address identified development needs, planners establish a foundation for robust and sustainable grid development, informed by foresight and strategic intelligence.
To ensure cost-efficient grid expansion, alternatives to grid-only investments should be considered, such as demand- and production-side flexibility and smart grid technologies. In some cases, these alternatives may be the only realistic way to meet rapidly increasing demand in time.
By evaluating whether potential solutions comply with technical standards and regulatory requirements, grid planners can be confident that the solutions they propose meet the fundamental criteria defined for ensuring security of supply, power quality, and resilience.
Key activities
- Determine grid capacity needs: This is often based on scenario analysis from the Foresight phase and includes known connection requirements and reinvestment needs.
- Identify appropriate grid development options: This is performed through various studies that identify solutions capable of meeting the identified needs in an affordable, sustainable, and reliable way.
Outcome
Concrete options that meet the identified grid development needs. This forms the basis for the long-term grid development plan, which provides the foundation for formal reporting, approval, and decision-making.
Who is involved?
The CEOs and CTOs of DSOs/utilities and grid owners are heavily involved in preparing suitable solutions. In many countries, the regulator plays a significant role in approving the plans.
Other relevant decision-makers from outside the DSO/utility/grid owner may also be involved in order to reach an agreement on the financial implications and risks.
Key issues to consider
Plan for an affordable, reliable, and sustainable grid
Grid development must ensure that distribution grids are affordable in the long term, capable of meeting demand with acceptable service and power quality, and able to integrate the required level of electricity from renewable energy sources (RES).
Plan for resilience
Distribution grids should be designed to be resilient, taking into account critical infrastructure and cybersecurity. When evaluating threats, climate adaptation and climate change should also be considered. Given that policies can and do change, planning should prioritise resilient solutions that are durable and less vulnerable to policy shifts.
Plan for adaptable solutions
The investment timeframe for distribution grid hardware is often up to 40 years, highlighting the uncertainty of policy changes during the assets’ lifetime. Since changes may be necessary even before implementation, due to policy or other factors, adaptable solutions are beneficial.
Coordinate the planning
To maximise the potential for RES integration and reduce planning costs, it is essential to coordinate grid planning and storage planning. Coordination between different grid infrastructures is also important. Furthermore, as flexibility is primarily found in distribution grids but can also be used for transmission-level services, close coordination between transmission and distribution grid planning is necessary.
Need for enabling tools and methods
Grid development affects many stakeholders and is influenced by various factors. Grid planners require planning principles, tools, and methods that enable them to address both system complexity and different types of uncertainty, including uncertainty about the quantity, location, type, and timing of new production and consumption, as well as low-probability, high-impact events such as extreme weather.
Therefore, it is important to develop and apply a complementary and integrated set of tools and methods within a coherent planning process to ensure that all critical aspects are addressed.
Which factors and criteria should be considered during the assessment and decision-making process, and how should they be weighed ?
How can a sound assessment and decision-making process be achieved, and what challenges are related to this?
A comprehensive, well-founded ex-ante assessment of the available options provides decision-makers with the necessary evidence and decision support to initiate the investment and implementation process. This assessment is based on the concrete options prepared during the previous long-term planning phase.
As distribution grid development is a vital part of infrastructure and plays a pivotal role in the energy transition, it is crucial that plans are based on well-informed decisions that consider a broad spectrum of factors.
Key factors include the economic, social, and environmental dimensions of grid development, along with uncertainty, risk, and resilience considerations.
The criteria used in the assessment and their prioritisation represent important strategic decisions.
Key activities
- Grid development options assessment: A thorough evaluation of the available options is carried out, taking into account their potential and impact across multiple criteria and dimensions. Tools for assessment include cost-benefit analysis and multi-criteria analysis. Methods must be available for both traditional grid reinforcement and alternative solutions, allowing for a fair comparison.
- Decision-making for implementation: Strategic guidance should be provided on how to weigh and prioritise criteria when assessing the available options.
- Stakeholder consideration: The potential impact of decisions on different stakeholders must be clearly understood and appropriately considered.
Outcome
A grid development decision that initiates the investment and implementation process.
Who is involved?
This phase primarily involves the CEOs and CTOs of DSOs/utilities, as well as the grid owners. They are typically supported by assessment professionals who prepare the necessary qualitative and quantitative evaluations.
Obtaining grid infrastructure permits is often a challenging process that requires broad collaboration and mutual understanding. Local and regional governments and regulators play a critical role in minimising conflicts.
Key issues to consider
Multiple factors must be considered in grid development decisions
Key factors include the economic, social, and environmental dimensions of grid development, as well as uncertainty, risk, and resilience. It is important to include all relevant dimensions in the assessment. Although current cost-benefit analysis methods cover traditional power system metrics such as operational security, they often fail to capture the broader societal value of grid development.
Examples of elements to include in the assessment are:
Environmental impacts
Investment costs
Cost of energy not supplied
Cost of losses
Risk of blackouts and their societal costs (as a possible consequence of inadequate grid development)
Value creation outside the energy sector (e.g., via cross-sectoral socio-economic analyses)
Operational or indirect costs of alternatives (e.g., storage and demand-side flexibility) compared to pure grid investments.
The criteria used in the assessment, and how these will be prioritised, should be defined in earlier phases.
Value all the benefits of an investment, and the consequences if it is not realised
Incorporating all the benefits of increasing grid capacity is essential for properly valuing grid development projects and accounting for the consequences of inadequate grid development, especially in the context of deep decarbonisation. However, the risk of stranded investments must also be considered, so a thorough assessment of long-term plans is crucial.
Enable possibilities to update grid development plans
In today’s rapidly changing environment, the planning and implementation cycle must include activities that enable the continuous re-evaluation of grid development plans.
Which aspects require special attention when implementing the chosen option(s) for distribution grid development?
The implementation phase involves putting the chosen grid development option(s) into action. This includes several substages, such as preparing more detailed designs.
The implementation of solutions must ensure the technical integrity, resilience, and reliability of the grid, as well as compliance with relevant standards and regulations.
In order to develop a sustainable distribution grid that will enable grid operators to manage future challenges, it is important to implement solutions that are resilient and will support secure operation despite increasing uncertainties.
Enhanced digitalisation in the distribution grid provides opportunities for improved visualisation and control. However, it also introduces new challenges, such as cybersecurity and personal data protection.
It is important to consider standards-based solutions and procedures during implementation, as these enable future grid development and help ensure interoperable and trustworthy solutions.
Key activities
- Secure financing: Ensure that all aspects of the solution’s implementation are financially viable.
- Permit-granting process: Prepare and apply for all required permits.
- Detailed design of the solutions: Conduct thorough technical and/or market-based studies and design work for the solutions. This includes the design of control, protection, and information systems.
- Contracts and procurement: Prepare contracts and procure the necessary materials and services.
- Deployment: Plan and execute deployment, including stage approvals (e.g., factory acceptance tests), personnel and on-site management, documentation, and handover of the final commissioned installation.
- Stakeholder engagement: Engage with relevant stakeholders, including those involved in granting permissions and those connected to the transmission or sub-transmission grid.
Outcome
Finalised technical and/or market-based solutions in place to modernise the distribution grid and meet identified needs.
Who is involved?
The grid owner, along with the DSO’s CEO and CTO, is involved, representing in ownership, capital responsibility, procurement, design, implementation, and construction of well-functioning solutions.
Local and regional governments and regulators are also involved if grid infrastructure permits are required at this stage. Solution providers responsible for deploying the final installation are also involved.
Key issues to consider
Ensuring the availability of materials in a sustainable way
The procurement of materials and services must focus on securing their availability across the entire supply chain in a sustainable and resilient manner.
Ensuring economic risk management
Economic risk management is becoming increasingly important, particularly in the context of significant investment requirements and accelerated implementation timelines.
Design reliable, sustainable, resilient, and efficient solutions
The detailed design of technical solutions and market-based services should enable the distribution grid to operate in real time in a reliable, sustainable, resilient, efficient, and future-proof manner.
Standards enable interoperability, but present the challenge of a slower pace.
One challenge in deployment relates to choosing between standardised and non-standardised solutions. The development of new solutions often outpaces the creation of relevant standards. While standardised solutions are crucial for interoperability, market competition, and reliability, novel solutions may offer added value that is not yet supported by existing standards.
The availability of skilled human resources is a critical success factor.
When implementing both hardware and software solutions, access to skilled personnel is essential. A key concern is how to increase the number of professionals in the electricity sector to meet the growing demand for qualified personnel.
