New trends demand an update to electricity security frameworks

A sound electricity security framework needs to map how these trends will alleviate certain security concerns while increasing others.

Ensuring security of supply requires proper governance

Most large interruptions have multiple causes, and therefore policy makers need to account for many different dimensions in the institutional framework that governs the power sector. This emphasises the need for rigorous analysis to underpin the decision-making behind ensuring reliability and more general security of supply.

As the electricity system continues to evolve due to the energy transition and emerging trends such as cyberthreats and climate change, governments and regulators will need to continue to update the legal and regulatory requirements on all stakeholders to ensure that electricity security is maintained in the face of these changes.

There are already cases of legislative changes to redefine frameworks, roles and responsibilities for various institutional actors in the electricity system to adapt to ongoing transformations in the power sector. The passage of the so-called EU Clean Energy Package is an attempt to restructure the institutional framework for EU electricity markets, including electricity security, in the face of ongoing changes to the fuel mix and increasing interconnectivity across electricity systems. It is a gradual evolution from earlier European legislative initiatives, or packages, for the electricity system published in 1996, 2003 and 2009. These started from an unbundling and market perspective, but increasingly cover security-related provisions.

Regulators, in particular, will have an important role to play in ensuring electricity security amid the energy transition. Either with changes to law or stemming from existing statutory authority, they will need to adjust market designs and standards to reflect greater variability of supply and demand. They will also need to account for new threats such as cybersecurity and climate change.

For example, to support the secure integration of renewables into the grid and manage risks stemming from the retirement of baseload generation and lower utilisation of other plants, the US Federal Energy Regulatory Commission issued Order 842 in February 2018. It requires all new generators (regardless of size or technology) to be capable of providing primary frequency response – a specific ancillary service used to cope with sudden changes in supply and demand – as a precondition for grid interconnection. Similarly, the European Union established a legally binding grid code in 2016 across all its member states that requires all new connections to have essential ancillary service capabilities. This paves the way for future operational rules and balancing markets with ever higher shares of VRE and distributed resources.

Integrated planning beyond jurisdictional borders is needed, involving a complex set of players

New and emerging threats to the reliability of power systems present challenges to electricity planning frameworks. This is true across market structures, ranging from competitive markets with extensive private-sector participation to more vertically integrated utility models. The implications of such developments for the electricity sector should be taken into consideration together with the fundamentals of generation, transmission and distribution.

In many jurisdictions, increasingly integrated and co‑ordinated planning frameworks have played a vital role in the cost-effective and secure transition to a new electricity mix. They increase transparency and provide information to market participants and to all stakeholders in general, informing project developers, grid operators and authorities. These frameworks are increasingly co-ordinating investment in generation and grids. They are also useful for foreseeing the potential outcome of low-probability but high-impact events. New approaches are emerging for co-ordinated and inteqrated planning practices that expand the traditional scope:  

inter-regional planning across different jurisdictions and balancing areas

integrated planning across a diversity of supply and demand resources (and other non-wire alternatives)

integrated planning between the electricity sector and other sectors.

These new approaches are expanding and reaching into distribution networks, which have historically depended on power supplied by the transmission network. The situation is changing as more generation resources are added locally to the distribution network at low- and medium-voltage level. Where deployment of many smaller distributed plants is concentrated geographically, reverse flows from the distribution network up to the transmission level become increasingly common and must be managed securely. Most distribution networks are physically capable of managing two-way flows of  power, although a number of upgrades and operational changes in voltage management and protection schemes can be necessary.

Closer co‑ordination between transmission system operators and distribution system operators is important for dealing with this change. Policy makers can help ensure that transmission and distribution planning processes are better integrated with generation planning, particularly as the latter begins to take system flexibility into consideration. Appropriate planning rules will play a crucial role in the expansion of the electricity sector