DSOs in energy transition
The mission of DSOs is to operate and maintain the distribution grid infrastructure connecting consumers and businesses with the local network and, through the TSOs, to the European transmission network. DSOs are the backbone of the energy transition that integrate up to 70% of renewable energy sources and enable consumers to participate in an increasingly decentralised energy system.
TSO
Solar Park
Nuclear Power Plant
Fossil Fuel Power Plant
Hydroelectric Power
Storage
Wind Parks
DSO
High Voltage Substation
Medium Voltage Substation
Electric Vehicle
Commercial Buildings
Storage
Find more information about the illustration here.
Energy System in Transition
Energy infrastructure or the energy system in transition
Given the rising numbers of decentralised renewable installations, the electrification of transport and heating and more active consumers, the role of DSOs has drastically changed from a formally passive distributer toward an active enabler and facilitator of the transition. Our energy system is in the midst of transforming from a primarily fossil-based, centralised and static (uni-directional) system towards a decarbonised, decentralised and digitalised (bi-directional) one in which DSOs take centre stage.
Distribution grids are the backbone of this transition, which will only be successful if DSOs are equipped with enough resources to expand, renew and smarten their grids.
The European Commission’s Communication “Grids, the missing link – An EU Action Plan for Grids” stressed the investment needs of the distribution level to €375-425 billion until 2030. This is an increase of 50-70% in the 2020 decade compared to the previous decade.
More recent publications already reassessed those number upwards. Eurelectric, in their Grid for Speed report, estimate investments in the that distribution grid should increase from an average €33 billion to €67 billion per year from 2025 to 2050.
Source: eur-lex.europa.eu/legal-content
A recent study showed that there are investment needs of €375-425 billion until 2030 for the distribution grid. This is an increase of 50-70% in the 2020 decade compared to the previous decade. Since the numbers were published before the ambitious goals of REPowerEU were set, these estimates will still have to be revised upwards.
Source: www.eurelectric.org/news
Trans-European Energy Infrastructure (TEN-E Regulation (EU) 2022/869))
For the last decade the Trans-European Networks for Energy Infrastructure Regulation (TEN-E Regulation) supported the linking of the energy infrastructure of EU countries and the removal of bottlenecks. The focus of the funding opportunities was primarily on high-voltages grids / TSOs (eleven priority corridors) and smart grid projects played a minor role.
The growing relevance of the decentral level and DSOs was acknowledged in the latest revision of the TEN-E Regulation in 2022, which facilitated the preconditions to apply for smart grid projects. Thus, for the application of a smart grid project as Project of Common European Interest (PCI) the cooperation of two DSOs in two Member States is enough and the involvement of a TSO is not compulsory anymore. Further, the strict requirement of proving a positive physical cross-border effect was abolished.
In addition, DSO Entity was given a special role in several aspects, for instance in the scenario building process for the TYNDP (Art. 12), the methodologies for the CBA (Art. 11) and in the regional groups (ANNEX III).
Eu Green Deal - Fit for 55 I – Fit for 55 II
REPowerEU and EU Solar Strategy – Electricity Market Design
European Green Deal
The European Commission (EC) proposed binding targets to cut the EU’s greenhouse gas emissions by 55% by 2030 and achieve Europe’s carbon neutrality by 2050. More than a year later the objective was ratified in the form of the first “European Climate law”.
Fit for 55 Package I
A new target of 42.5%of renewable energy sources in the EU’s energy mix by 2030 was negotiated. The EU’s climate, energy and transport-related legislations were revised under this package to speed up the energy transition and reach its 2030 and 2050 ambitions.
- Renewable Energy Directive (RED III) entered into force on 20 November 2023.
- Energy Efficiency Directive (EED) entered into force on 10 October 2023.
- Alternative Fuels Infrastructure Regulation (AFIR) entered into force on 13 April 2024.
Fit for 55 Package II and Gas Package
The proposed revision of the existing gas market legislation was negotiated to promote renewable and low-carbon gases including hydrogen. It planned for the integration of gas and hydrogen DSOs into DSO Entity.
- Gas package was provisionally agreed on 21 May 2024 and is waiting official publication to enter into force.
- Energy Performance of Buildings Directive (EPBD) entered into force on 8 May 2024.
REPowerEU and EU Solar Strategy
In the aftermath of the war in Ukraine, the European Commission published the REPowerEU Strategy to accelerate the deployment of renewables in the EU in order to cut the EU’s energy dependency from Russia. The European Commission proposed a ‘rooftop solar obligation’ that requires the installation of solar panels on every public building by 2025 and on new residential buildings by 2029.
Electricity Market Design reform
The European Commission proposed a reform of the EU’s electricity market design as a response to the high and volatile energy prices in 2022. The proposal sets up relevant provisions for DSOs, on the topics of Dedicated Measurement Devices, flexibility assessment, tariff regimes and investments, grid capacity, and energy sharing.
The reform specifically assigned to DSO Entity, alongside ENTSO-E, the task of developing a methodology to assess flexibility needs by April 2025
DSOs are key enablers of the implementation of the Fit for 55 Package and other European energy and climate legislation. EU legislation has direct repercussions on DSOs:
Alternative Fuels Infrastructure Regulation
DSOs play a major role in the deployment of electric vehicles by connecting charging points to the distribution grids and are directly impacted by the new obligations on the deployment of publicly accessible charging points and smart charging.
CO2 Emission Standards for Cars and Vans Regulation
With the ban of sales of internal combustion engines by 2035 in Europe, DSOs will be central in integrating the electric vehicles into the grids. By 2030, 30 million of electric vehicles are expected to be on the EU roads.
Renewable Energy Directive
The EU set a new objective of having 42.5% of its energy mix coming from renewable energy sources by 2030. DSOs will be instrumental in the promotion and connection of renewable energies. Up to 70% of renewable capacity will be connected to the DSO grid by that time and 80% by 2040.
Energy efficiency Directive
DSOs will implement new requirements for data sharing.
Energy Performance of Buildings Directive
DSOs are key to connect the new private charging points for electric vehicles and rooftop solar which will be installed on European buildings to the distribution grids.
EU legislation also has indirect effects on DSOs as they are the technical enablers of the EU’s vision of a more decentralised, decarbonised and digitalised energy system. This development is especially facilitated by DSO Entity’s work on Network Codes, in cooperation with ENTSO-E.
DSO Entity’s work and expertise contributes to the following regulations:
Development and implementation of the Network Code Cybersecurity
(entry into force on 14 June 2024).
Development of the Network Code Distributed Flexibility:
DSO Entity and ENTSO-E submitted a joint proposal to ACER on 24 May 2024.
Development and implementation of the Implementing Regulations related to data interoperability and data access
within a Joint Working Group with ENTSO-E established in 2023
Amendment of Grid Connection Network Codes for connecting renewables:
NC Requirements for Generators (RfG), NC Demand Connection (DCC) and NC Voltage Direct Current Connection (VDC).
Data & Digitalisation
Action Plan on the Digitalisation of the Energy System (DESAP)
In the coming years, DSOs will go through a major transformation to make their distribution grids smarter, more resilient and digitalised. The DESAP identified DSO Entity as a main contributor to the initiatives planned to digitalise the European networks, especially when it comes to ensure cyber-secure energy systems, coordinate investments in the electricity grid and promote connectivity, interoperability and seamless data exchange.
DSO Entity was entrusted with ENTSO-E to develop:
- A “Digital Twin” of the European electricity grid and to provide guidance and support for network operators on sustainable.
- Cost-effective smart investments by the development of a tailored set of “Smart Grid Indicators” (SGIs).
Digitalisation of Energy Action Plan
The 5 Areas
exchange framework
of the ICT sector
literacy, skills, digital
tools to empower citizens
Grid momentum (2023-2024)
The Grid Action Plan and DSO Entity
On 28 November, the Grid Action Plan was published at the occasion of the 4th PCI Energy. The Action Plan identifies grids as the backbone of the energy transition and highlights the key role of DSOs in the new decentralised, decarbonised and digitalised energy system.
The Communication identified and addressed seven core challenges faced by grids in delivering on the net-zero targets. 14 actions points were proposed to support grids over 18-months long implementation time engaging key institutional stakeholders.
The Grid Action Plan also recognises DSO Entity’s institutional role by assigning us the delivery of seven of these action points, mostly jointly ENTSO-E.
To know more about DSO Entity’s involvement in the Grid Action Plan, please check out:
Objectives
- Support for grids during implementation
- Grids as EU-success story but now challenge for the delivery of energy targets
- Especially, challenges of high investment needs to DSOs are highlighted
Contents
- Non-legislative initiative of the European Commission with measures meant to support the grid during the implementation phase of existing energy legislation
- The Action Plan describes 7 challenges and 14 Action Points that should support implementation in the next 18 months
Assessment
- DSOs and the decentralised level are in the focus like never before
- Right challenges are identified, and meaningful measures proposed often specific measures are mentioned for DSOs (e.g. permitting, funding, remuneration schemes)
- DSO Entity appears as a key-actor and is responsible for the delivery of 7 out of 14 Action Points (often together with ENTSO-E)
Green Deal or Industrial Deal? Why Grids Always Matter
Following the 2024’s European election, new EU’s strategic priorities will be defined with a shift towards a stronger focus on competitiveness and security of supply. The next EU term will need to ensure the Fit for 55 is implemented and the energy transition happens on the ground with grids more relevant than ever.
To know more, read DSO Entity’s article available here.
Data Strategy and related aspects
As outlined in its Data Strategy (2020), the European Commission strives for high standards in personal data protection and for a more open data society with easier access to (reusable) data.
Both aspects are relevant for DSOs which act as guardians for the (personal) smart metering data of their customers but also oversee (sensitive) non-personal data of their critical infrastructure assets.
Further, adequate data access and exchange is vital for facilitating flexibility solutions. Ongoing horizontal (E-Privacy, Artificial Intelligence, Data Act) and sectoral (Digitalisation for the Energy System - Action Plan, Energy Data Spaces) activities of the European legislators in the data area are highly relevant for DSOs.
Implementing Regulations on Data Access and Interoperability
DSO Entity actively supports the European Commission in the development of Implementing Regulations which aim to facilitate data access and sharing by setting interoperability requirements (Electricity Market Directive (2019/944/EU), Art. 23-24). These regulations are highly relevant for the activities of DSOs to manage consumption and contribute to empowering consumers.
- Implementing Regulation (EU) 2023/1162 to improve the access to electricity metering and consumption data: The Regulation assigned DSO Entity with ENTSO-E the task of establishing a Joint Woking Group (set up in 2023) to provide guidance to Member States on reference models.
- Implementing Regulation on data required for switching (to be published and enter into force in Q1 2025)
- Implementing Regulation data required for demand response: The Regulation is being developed alongside the Network Code on Demand Response to ensure consistency between the two regulations due to the strong links between the upcoming binding rules on demand-side flexibility and digital applications (such as smart metering, smart grids and trustworthy data management – without which flexibility solutions cannot be carried out).
