Scottish and Southern Electricity Networks (SSEN) Distribution published its first Distribution System Operator (DSO) Action Plan on 24 March 2022, setting out how it intends to accelerate the delivery of DSO services for customers, communities and market participants1.
The plan is framed around three core DSO functions: forecasting and planning future needs, developing a flexibility marketplace, and delivering network flexibility. It covers an initial two-year period, with a dedicated online portal to track progress against key commitments and metrics, including for subsequent years1.
On money, SSEN said it will grow investment in its DSO capability by over £73m over the next price control period, 2023 to 2028, and expects to deliver over £460m of benefits through deferred reinforcement and avoided capital expenditure over the same period1.
"We have ambitious plans to build our DSO capabilities in the years ahead and deliver the smart, flexible system that will be fundamental to achieving a just transition to net zero. By 2028, we aim to procure at least 5GW of flexibility, grow our flexible connections to 3.7GW of capacity and avoid over £460m of reinforcement costs."
SSEN also commissioned a review of potential governance models from economic consultancy NERA. That independent report assessed costs, benefits and overall economic impact and concluded that any form of DSO separation beyond ring-fencing would be likely to lead to negative net effects, because the costs of separation or ownership unbundling would exceed the anticipated savings potentially available to DNOs. The report also cautions that legal separation of the DSO functions could jeopardise the UK's net zero goals1. NERA recommended that Ofgem adopt more limited ring-fencing rules, which it said would be less costly for customers, provide reassurance to flexibility providers as the market develops, and leave open the option of more stringent business separation rules later if evidence emerges that they are required1.
SSEN describes itself as the electricity Distribution Network Operator responsible for delivering power to over 3.8 million homes and businesses across central southern England and the north of Scotland1.
Why it matters for households
DSO functions sit behind the practical questions a household faces when it adds a low carbon technology: whether the local electricity distribution network has capacity, how quickly a connection can be arranged, and whether a flexible connection is available in that area. SSEN states that the DSO functionality being embedded within its network is intended to ensure sufficient system capacity is available to incorporate the low carbon technologies and services that will support a fair transition1.
The flexibility products and markets in the plan are the mechanisms through which homes with generation, storage or controllable demand could in future be paid to shift or reduce their use, rather than the network being reinforced with new cables and substations. SSEN's stated expectation of over £460m in avoided reinforcement costs over 2023 to 2028 is its own estimate of what that approach saves against conventional network build1. The governance question matters to bills because the costs of any separation model would fall on customers; NERA's conclusion was that ring-fencing is the cheaper route1.
The plan does not set out household-level rates, eligibility or payment terms, and none have been reported1.
What happens next
The plan covers an initial two-year period, with an online portal tracking progress against key commitments and metrics, including for subsequent years1. SSEN said it will continue to engage with market participants, industry stakeholders and policy makers to help further shape the Action Plan1. The investment figures and the 5GW flexibility procurement and 3.7GW flexible connections aims are stated for the 2023 to 2028 price control period1.