Introduction: To develop a market design for the efficient management of constraints on the distribution network, allowing the participation of multiple technology types, and providing a signal to the DNO when it is economically sound to reinforce. This project will not trial this market design, but will result in principles and draft Commercial Heads of Terms for use in any subsequent trial.

Objectives:

The aim of this project is to develop an improved approach to managing distribution network constraints, focusing on three key objectives:

1. Develop market-based mechanisms (i.e. price signalling) to enable more efficient curtailment actions.
2. Being compatible with multiple technology and commercial solutions (wind, solar, batteries, DSR).
3. Providing appropriate signals to the DNO to reinforce when economically sound to do so.

It is also anticipated that this work will provide insights into the future workings of a DSO model. As such, an objective of this work is that the market models investigated address some of the questions that will be important for the DSO model, including:

• The commercial and technical interaction between DNO actions and the requirements of the System Operator (SO)
• The role of third party aggregators, and in particular their interaction with the DNO
• How the DNO’s role changes as it moves towards a DSO function, including real-time constraint management, contracting for commercial services, and potentially providing (or facilitating the provision of) services to the SO.

Expected Benefits: The project is deemed successful if:

1. The proposed solution meets the objectives and industry has been consulted in its development; and

2. The proposed solution is worth progressing to formal trials with market participants.