Author: Ayan Kanhai Aman, Policy and Markets Lead, Electron
In my last blog, I outlined how system operation could help US network utilities to increase grid resilience while reducing costs and supporting investment decisions.
Now, let’s turn to some lessons from the UK in how that distribution system operation can be set up.
How has the UK set up distribution system operation?
Developing DSO capabilities is a dynamic journey shaped by local needs and evolving roles. It’s a set of shared functions like DER integration, customer engagement, and market coordination. What matters is that these services get delivered – whether by utilities, ISOs, or others – through collaboration. Utilities already have a lot of the tools at their fingertips, it’s now simply a question of using them in the right way.
UK distribution network operators (DNOs) have all taken different approaches to how they’ve developed system operation capabilities. Some have chosen to set up a distribution system operator (DSO): a separate legal entity for managing power flows and the operation of the grid. This exists and runs alongside the DNO.
Some have chosen to retain the DSO function within the DNO.
Others have chosen to transition the DNO to a DSO. The new entity is still responsible for the maintenance of the network. However, it also has new responsibilities around running flexibility markets and ensuring the resilience of the grid as more renewables connect every day.
For example:
- Monitoring and planning, using smart metering data to create a network model of constraints to help DSOs plan investments
- Network reconfiguration, to manage constraints
- Fault management, using commercial arrangements and tools to monitor and manage the network when there are faults
- Voltage management, using customer response and network assets to keep voltage within legal limits
- Distribution system balancing for generation and demand across the network
How does flexibility fit in?
Flexibility is key to the DSO mindset. It unlocks smarter investments, faster connections, and whole-system value.
With the right tools already in hand, utilities can build DSO capabilities step by step, avoiding complexity while enabling broader participation and a more resilient, responsive grid.
How have flexibility market platforms helped UK DSOs set up DSO capabilities?
Flexibility markets play a big part in the UK DSOs’ responsibilities; the current price control framework, RIIO-ED2, incentivises flexibility.
Neutral market platforms – such as ElectronConnect – help system operators run and coordinate those flexibility products and services, expanding upon individual programs or bilateral contracts.
The DSO, using flexibility, ensures the efficient and optimal use of the distribution network. DSOs can use flexibility market platforms to:
- View and access a range of sources of flexibility from one single application. This creates visibility of all resources and technology types across all voltage levels.
- Standardise the services they are accessing, when and where they are accessing them, and how they are rewarding providers. This streamlines the operation and orchestration of multiple flexibility services across all timeframes, locations, and network needs.
- Automate the operation of flexibility services through Information Technology (IT) / Operational Technology (OT) integrations such as grid planning/forecasting, ADMS and DERMS. This brings the needs of the system and capabilities of the resources connected to the network closer together.
Different DSO implementation models will have different requirements when it comes to those flex market platforms.
For example, Electron’s three pillars for Net Zero grid optimisation – more markets, more often, more connected – promotes an open ecosystem approach. That approach focuses on lowering barriers to entry through open data standards and interoperability. With this approach, DSOs and flexible distributed energy resource (DER) can benefit from a modular, “plug and play” experience, picking the best solution for their individual needs.
This increases DER uptake. Local flexibility markets help DERs earn more, with new ways for them to offer their flexible capacity into the grid.
How could system operation translate to the US?
For the US, the consultancy Black and Veatch has previously proposed how system operation could be implemented. As in the UK, it recognises the need to avoid a “one size fits all” approach.
Models for system operation
How the grid is owned and operated in the US varies across states, with different energy technology types and geographical particularities.
This calls for an adaptable approach to implement any new DSO functionalities. In essence, it boils down to how to bundle the responsibilities. Should they sit within a single entity or be spread across external organisations, such as third-party aggregators?
The consultancy therefore suggests six potential models for US grid operators that wish to set up system operations. These range from retaining the DSO responsibilities at the transmission level in a centralised way to operating at the local level in a decentralised way, with substations acting as “nodes”.
System operation responsibilities for the US
The system operation responsibilities themselves can more clearly defined. Camus Energy suggests three main responsibilities:
- Real-time operations for monitoring the grid and dispatching resources in real time
- Forecasting, procurement, and scheduling local resources – including managing flexible loads
- Enabling energy resources to monetise their assets in local and wholesale markets
While establishing or becoming a DSO or system operation capabilities clearly provides benefits, it doesn’t need to be a huge endeavour. In fact, many electric utilities and grid operators are already deploying the responsibilities above to different degrees.
If you’d like to learn how a neutral market platform can help support a DSO mindset, get in touch today.
