Set to shape the future of DSOs

Alliander and Eandis, founding partners in a joint Chair

30 September 2015 was a special day for our new Dean with the signing of not one, but two Chair partnerships. Belgian DSO Eandis renewed its Chair and, together with Dutch DSO Alliander, entered into a new one, the “DSO Chair”. As part of the Vlerick Energy Centre, it will support and stimulate the ongoing policy and regulatory debate on the future of distribution grid companies. This Chair remains open to other DSOs.

“I would very much welcome other partners to join us in due course,” says Eandis Head of Strategy, Donald Vanbeveren. “Our aim is to become a platform for knowledge creation, debate and confrontation of ideas and positions, which we hope will enable us to take more proactive action so that we can make the most of the challenges and opportunities coming our way.”

The DSO landscape is facing significant changes, impacting the short as well as the long term. “What we’re looking for with this Chair is an in-depth analysis, providing arguments and facts and figures on which to build our strategy, especially for the long term,” adds Ruud Berndsen, Director of Regulatory Affairs at Alliander. “By their very nature, our investments have a long-term character. If we want to be able to adapt to a changing environment, we need to have a sound long-term plan.”

First row from left to right: Kenne D’Hoker (Manager Vlerick Energy Centre), Daniel Dobbeni (Chairman Vlerick Energy Centre), Donald Vanbeveren (Head of Strategy Eandis), Marion Debruyne (Vlerick Dean), Joost Gottmer (Policy Advisor for Regulation Alliander).
Second row from left to right: Samson Hadush (Post-doctoral researcher Vlerick Energy Centre), Simon Van Wijmeersch (Corporate Communications Manager at Eandis), Professor Leonardo Meeus (Director Vlerick Energy Centre), Professor Ronnie Belmans (principal adviser to the Chair), Ruud Berndsen (Director of Regulatory Affairs Alliander).

Fact & figures

“Emerging business areas, such as electric vehicles, charging infrastructure and other new technologies required for the transition to a sustainable energy system, will radically change the DSOs’ business models,” explains Chair Professor Leonardo Meeus. “And because DSOs are operating in a regulated environment, we must avoid regulation stifling their innovation, i.e. we also need to innovate the regulatory framework, and for this reason we will also be working with Jean-Michel Glachant, Director of the Florence School of Regulation, in this Chair. We’re based in Brussels, so we’re close to the European institutions, close to the policy and regulatory debate. Only, so far this debate has lacked factual foundation. We want to participate in the discussion, providing quantitative data – research-based facts and figures.”

Making the shift

“The survey we launched a couple of months ago, the results of which will be published shortly, could be a good starting point for discussions with the European institutions,” Donald Vanbeveren suggests, and he goes on: “As DSOs, we have to make the shift from distribution grid operators managing technical assets, such as cables and meters – which is what we actually are today – to true distribution system operators managing a system of electricity generation and storage and all kinds of new stakeholders making a business out of the grid.” On a serious note, he adds: “One member of a European institution recently said that the next decade will be the one of the DSOs. That’s all very well, but I’d like to add that we have to make sure we’re still around the decade after that.”

Asking the right questions

Principal adviser to the Chair, Professor Ronnie Belmans, agrees that the challenges are manifold and mentions one particular example: “There’s a lot of talk about the integration of ICT, or telecoms, and power supply. But so far it’s proved to be rather complicated because two regulators are involved: one for telecoms and the other for energy. Who’s going to regulate the integrated system? In Ireland, the grid operator and Vodafone are working together to install a broadband network. This would be impossible in Belgium, given the current regulatory landscape. I’m not sure it’s a good idea to make it impossible, though. Completely new business models are emerging and we should rethink who should be regulating what.” And although the Chair aims to impact EU policy and regulations, he also suggests looking at case studies from outside of the EU: “In Japan, for example, the smartening of the grid is driven by technology companies, whereas in Korea it’s a government-led initiative. These frameworks are very different from the unbundled system we have in the EU.”

Harmonising the vision

Ruud Berndsen again: “To pick up on what Professor Belmans just said: all these different systems have their own merits and they’re a matter of choice, but this differentiation also adds to the challenges we face. And that’s why this Chair is so important: it will give us the opportunity to look at potential issues with different systems and learn from best practices how to develop systems on a larger scale, beyond the constraints of our own country. If we’re able to take steps towards harmonising the vision, of everyone involved, on the future of DSOs, then this Chair will be a success. The TSOs have already managed to set up a European system of energy provision. As DSOs, we haven’t achieved this… or at least not yet.”

Addressing the entire value chain

Daniel Dobbeni, Chairman of the Vlerick Energy Centre, nods in agreement. “DSOs are local businesses; they’re not used to working internationally. This Chair is really an opportunity for DSOs from different countries to challenge ideas and develop a common view. And with new market players such as aggregators, telecom operators and electric car manufacturers knocking on their door, the question is not whether change will happen, but how and when! With more than 2,000 DSOs in the EU alone, there’s plenty of potential to develop this Chair. Our Energy Platform has several research chairs: one for TSOs, one for advisers to the sector and with this new Chair for DSOs we add another piece to the jigsaw puzzle. We’re well on our way to addressing the entire energy value chain.”

Expanding a community

Professor Marion Debruyne comments: “I’m a happy Dean today. This Chair will not only directly benefit its founding members. The research findings and the knowledge gained will be fed back into our teaching practice, which will benefit all the participants in our flagship programme, DSOs and other organisations alike. At Vlerick, we encourage the collaboration of experts from academia and industry, companies and other key stakeholders, providing platforms of knowledge sharing and knowledge creation. This Chair is a case in point. We’re building a community and if, in a few years’ time, this community has grown further, I’ll be even happier.”

About the research

The activities of the Chair actually started back in April with a scenario workshop, led by Paul Schoemaker, an expert from Wharton School. During this workshop, four power grid scenarios for 2025 were developed, based on input from an extensive survey, as mentioned by Donald Vanbeveren, among C-level executives from DSOs and TSOs in the EU.

Furthermore, two research streams have been identified. The first focuses on the development of an empirical simulation model that will provide the facts and figures for a regulatory impact analysis, and the second will develop a series of case studies analysing the different approaches taken by regulators in the EU to stimulate innovation by DSOs.

Vlerick is taking a multidisciplinary approach to this Chair, calling on the expertise of several faculty and researchers as well as external experts, such as Daniel Dobbeni, Chairman of the Vlerick Energy Centre and Chairman of GO15, the association of the world’s major power grid operators, and Professor Ronnie Belmans, Executive Director of the Global Smart Grid Federation, who were both present at the signing. The Chair can also rely on the expertise of Jean-Michel Glachant, Director of the Florence School of Regulation.