TSO – DSO: do we want a winning team?

The continuity of a transmission network (TSO) and a distribution network (DSO) is obvious, both for the electrons and for us, observers. However, for technical, organizational and market reasons, these networks have been developed separately and managed by different entities. My initial observation allows us to question the articulation and cooperation between these actors.

Are they sufficient today? Can they be threatened by ongoing developments in energy systems? Can we imagine better functioning of these actors of the regulated world?

Electricity distribution has long been organized by a system centered on the TSOs: they are responsible for the balance of their network and have developed many tools to achieve this (balancing mechanisms, reserves, frequency regulation). They have mobilized for this purpose the biggest power generators with whom they have a privileged dialogue and, recently, smaller producers or consumers, aggregated for this purpose, that are both connected to the distribution networks.

In this organization, DSOs undergo and adapt.

The development of renewable, distributed and intermittent energies, has all the reasons to unbalance this situation:

  • More generation of distributed power connected to distribution networks will mean less centralized generation connected to the transmission grid. The balance managed by the TSOs will therefore require more and more participation of actors with whom they have no privileged relationship and who will often participate through the aggregators. In addition, using such flexibilities will eventually destabilize distribution networks.
  • More intermittent energy, means a balance that is constantly shaken by production variations and therefore more difficult to achieve.
  • In the absence of more appropriate balancing mechanisms, TSOs will continue as today to disconnect renewable production or to modify the production schedules of plants located upstream and downstream of congestions to ensure the balance of their network.

I fear that the situation will become more and more difficult for the producers concerned by the disconnections and for the DSOs in increasing difficulty to manage their operations.

It seems inevitable to question our model and establish a functioning based on the TSO-DSO tandem.

This implies adapting market mechanisms to take into account the needs of each (several models are technically possible) and, perhaps, to modify the governance of the associated markets. This mainly involves developing cooperation between actors in the process of change.

  • Following the separation of regulated and unregulated activities, they have to accept to be in the “business” and learn to be cost centers focused on excellence in their business.
  • The TSOs will have to make a second mourning by losing a part of domination.
  • DSOs are “threatened” by cities that are increasingly engaging in energy management. This threat will be real if the DSOs do not develop the necessary coordination with the local energy players in each city of their territory (this will naturally be easier for territorial DSOs, Stadtwerke in Germany, Services Industriels in Switzerland)

Greater cooperation between DSO and TSO is essential in Europe and will have to be developed rapidly, despite the changes and uncertainties I have just mentioned.

The benefits of such cooperation will go beyond those related to improving balance mechanisms. We can also expect better solutions offered to producers wishing to connect to distribution networks at connection points where these networks are undersized, to a better optimization of investments on the network, and therefore to a decline in them.

DSOs are very different from each other and are not represented by a single instance. As a consequence, the TSOs, grouped within ENTSO-E, have to take the lead, without this initiative being perceived by the DSOs as a new proof of a world centered on the TSOs. Some tact will be necessary.

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