RIIO ED2 Engineering Justification Paper (EJP)

RIIO ED2 Engineering Justification Paper (EJP)

Secondary Distribution Transformers

Investment Reference No: 68/SEPD/LRE/STransformers

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Contents

1 Executive Summary ...................................................................................................................................... 4

2 Investment Summary Table ......................................................................................................................... 5

3 Introduction ................................................................................................................................................. 6

4 Background Information .............................................................................................................................. 7

Secondary Distribution Transformers .................................................................................................. 7

4.1.1 Ground Mounted Transformer .................................................................................................... 7

4.1.2 Pad Mounted Transformer........................................................................................................... 8

4.1.3 Pole Mounted Transformer.......................................................................................................... 8

Licence Obligations and Industry Standards ........................................................................................ 9

Primary Investment Drivers ................................................................................................................. 9

4.3.1 Maximum Demand ....................................................................................................................... 9

4.3.2 Utilisation Factor ........................................................................................................................ 10

4.3.3 Secondary Distribution Transformers Lifespan and Operating Conditions ............................... 10

4.3.4 Transformer failure due to Overloading .................................................................................... 10

5 RIIO-ED2 Load Forecast .............................................................................................................................. 12

6 Optioneering .............................................................................................................................................. 14

Summary of Options .......................................................................................................................... 14

CBA Analysis Summary ....................................................................................................................... 16

Secondary Distribution Transformers Investment Strategy .............................................................. 16

6.3.1 Stage 1: Defer Investment to ED3 .............................................................................................. 16

6.3.2 Stage 2: Flexibility solution to defer investment ....................................................................... 16

6.3.3 Stage 3: Asset Upgrade or Additional Asset ............................................................................... 18

6.3.4 Summary of Options Approach .................................................................................................. 18

7 Summary of Cost and Volumes .................................................................................................................. 19

SEPD Costs and Volumes .................................................................................................................... 19

SHEPD Costs and Volumes ................................................................................................................. 21

8 Deliverability .............................................................................................................................................. 22

9 Conclusion .................................................................................................................................................. 23

Appendix 1: Technical Specifications and Data.................................................................................................. 24

Ancillary Equipment for Ground Mounted Transformers.............................................................................. 24

Ancillary Equipment for Pole Mounted Transformers ................................................................................... 24

Loading Permissible Factors ........................................................................................................................... 24

Appendix 2: Whole Systems consideration ....................................................................................................... 26

Appendix 3: Relevant Policy, Standards, and Operational Restrictions ............................................................. 28

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Definitions and Abbreviations

Acronym Definition

CAPEX Capital expenditure

CBA Cost Benefit Analysis

CI Customers Interrupted

CML Customers Minutes Lost

CT Consumer Transformation

DFES Distribution Future Energy Scenarios

DNO Distribution Network Operator

DSO Distribution System Operator

EJP Engineering Justification Paper

ENA Energy Networks Association

EREC Engineering Recommendation

EV Electric Vehicle

GIS Geographic Information System

GM Ground Mounted

GMT Ground Mounted Transformer

HP Heat Pump

HV High Voltage

IDP Investment Decision Pack

kVA kilo volt-ampere

LCT Low Carbon Technology

LRE Load Related Expenditure

LV Low Voltage

MVA Mega volt-ampere

PM Pole Mounted

PMT Pole Mounted Transformer

SEPD Southern Electric Power Distribution

SHEPD Scottish Hydro Electric Power Distribution

SSEN Scottish and Southern Electricity Network

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1 Executive Summary

This paper identifies the need to carry out works on the SSEN (SEPD and SHEPD) secondary distribution transformers asset class category to accommodate the forecast load growth. This includes the 6.6/11kV ground mounted and pole mounted transformers which will be overloaded under our stakeholder supported DFES. The primary driver of the proposed expenditure is capacity-related (demand or generation).

SSEN’s stakeholders have informed the network planning studies during RIIO-ED2 to adopt the DFES 2020 Consumer Transformation scenario as the baseline scenario where the impact of EVs and HPs forecasts have been assessed. It has been found that approximately 10% of SSEN secondary distribution transformers are expected to exceed thermal capacity limits by end of RIIO-ED2 due principally to LCT uptake.

Following optioneering and detailed analysis, as set out in this paper, the proposed scope of work can be summarised as follows.

• Reinforce 1034 6.6/11kV Transformer (Ground Mounted)

• Reinforce 3784 6.6/11kV Transformer (Pole Mounted)

• Procure approximately 77 MVA of flexibility services

The cost to deliver the proposed solutions is £49.3 million and the work is planned to be completed during the ED2 period (2024-2028).

This proposed secondary distribution transformers expenditure programme delivers the following customer outputs and benefits:

• The uplift in network capacity needed to meet the ongoing capacity needs of our customers.

• Facilitates the efficient, economic, and co-ordinated development of our distribution network to support and facilitate the delivery of net zero.

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2 Investment Summary Table

Table 1 below provides a high level summary of the key information relevant to this Engineering Justification Paper (EJP) and the management of SSEN’s Secondary Distribution Transformers.

Name of Programme Secondary Distribution Transformers

Primary Investment Driver

Load Related (thermal capacity)

Investment Reference/Mechanism Or Category

68/SEPD/LRE/Stransformers

Output Reference/Type 6.6/11kV Transformer (PM)

6.6/11kV Transformer (GM)

Cost £49.3m

Delivery Year RIIO-ED2 price control period (2024-2028)

Reporting Table CV2: Secondary Reinforcement

Outputs included in RIIO ED1 Business Plan

No

Spend Apportionment (£m)

ED1 ED2 ED3+

SEPD - 44.5 -

SHEPD - 4.77 -

SSEN/Total - 49.3 -

Table 1 Investment Summary

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3 Introduction

Our Load Annex sets out our methodology for the Distribution Future Energy Scenarios (DFES) used to determine our Baseline View. The Baseline View includes activities and associated expenditure that we propose to undertake during the ED2 period where there is compelling evidence of need. This encompasses capital investment to create smart, flexible, local energy networks that accelerate progress towards a net zero world through collaboration and whole-system.

This Engineering Justification Paper (EJP) describes our proposed load-related investment plan for secondary distribution transformers portfolio, which is the expenditure SSEN requires to ensure our networks can facilitate the change in demand and generation at the distribution level. LRE improves network resilience, enables the connection of new load and minimises the frequency and duration of outages our customers might have to experience.

Secondary distribution transformers distribute electricity to domestic and commercial customers. It is essential to maintain the transformer loading within permissible range of nameplate rating. Failure to do so is likely to lead to the unplanned failure of assets in operation – with the associated customer supply interruptions. With anticipated LCT uptake during RIIO-ED2, it is expected that there will be substantial growth in demand, which will require adequate availability of capacity on secondary distribution transformers. Our assets characteristics and background information are provided in section 4. A brief of our RIIO-ED2 planning forecast is provided in section 5.

Section 6 describes our strategy that we have developed to manage our secondary distribution transformers portfolio and associated expenditure. Key features of this strategy are set out in this EJP and provide the basis and justification for our decision-making. The LRE strategy for the HV and LV networks is described in more detail in the ED2 Load Annex1.

Section 7 presents the volumes needed and associated costs during RIIO-ED2. The deliverability plan and potential risks are explained in section 8. Finally, our proposed investment plan conclusion is drawn in section 9.

1 ED2 Business Plan Load Annex, Section 5.

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4 Background Information

This section provides background information and description of the secondary distribution transformers under consideration, the relevant SSEN and industry policies, and the approach used to identify those assets that will require reinforcement during RIIO ED2.


SSEN operates secondary distribution transformers also known as secondary substations (11 kV or 6.6 kV to 400V) to distribute electricity to the community. SSEN installs three types of transformers on the network including ground mount, pad-mount, and pole mount transformers. Error! Reference source not found. shows the quantity of secondary distribution transformers within the SSEN licenced areas.

Number of Units

Asset Category SEPD SHEPD

Secondary Distribution Transformers (GM)

30,500 7,900

Secondary Distribution Transformers (PM)

22,700 45,000

Table 2 SSEN Secondary Distribution Transformers Approximate Counts

The design of the particular network in which the substation will be employed influence the type of equipment that is selected for the particular application including the type of transformer and HV/LV protection arrangements. All SSEN transformers shall comply with the general requirements of BS EN 60076 and ENA TS35-1.

A standardised range of distribution transformers are utilised as detailed:

4.1.1 Ground Mounted Transformer

A ground mounted transformer is free breathing, ground mounted unit. It may be either a cable connected type or a unit type with a kVA rating in the range of 500 kVA to 1500 kVA. The transformer is usually two winding oil-immersed and naturally cooled and may be single or three phase. It is in a dedicated firmly locked fenced site. It could be situated indoors or outdoors depending on application with the appropriate ventilation as in Error! Reference source not found..

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Figure 1 Indoor Ground Mount Secondary Substation

4.1.2 Pad Mounted Transformer

The Pad Mounted transformer is a compact, free breathing, ground-mounted, unit style cable connected transformer complete with a high voltage fused cable box and low voltage fused pillar installed within an integral earthed metallic enclosure. It is suitable for siting as a substation without the use of a fenced enclosure. It could be a single or three phase two winding oil-immersed naturally cooled design, suitable for outdoor service. The Pad Mount is also known as a “rural” with rated power in the range 50 kVA to 200 kVA. It is usually used to supply small load centres primarily in rural locations.

4.1.3 Pole Mounted Transformer

It is a transformer suitable for outdoor service and designed to be mounted on the support structures of overhead lines connected by open bushings as shown in Figures 3 and 4. It is usually installed in rural areas. It could be either single phase or three phase oil-immersed types with natural cooling by air. Rated power is up to 200 kVA.

Figure 2 Outdoor Ground Mount Secondary Substation

Figure 3 11kV/LV 25kVA Pole Mount Transformer Figure 4 11kV/LV 100kVA Pole Mount Transformer

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Licence Obligations and Industry Standards

It is a statutory requirement that SSEN plans the network to meet the ESQC regulations. It is also part of the License Conditions to comply with the industry codes such as ENA Engineering recommendations Security of Supply P2/7, G98 and G100 etc.

According to ENA EREC P2/7 a ‘circuit’ is the part of an electricity supply system between two or more circuit breakers, switches and/or fuses inclusive. It may include transformers, reactors, cables and overhead lines’. Furthermore, a circuit should not be loaded to a point where it would suffer unacceptable loss of life.2”

“Circuit Capacity is the appropriate continuous rating or cyclic rating or, where it can be satisfactorily determined, the appropriate emergency rating, taking into account the relevant environmental conditions and the expected demand profile, should be used for all circuit equipment and associated protection systems”.

We fulfil this standard through strategic system planning, taking into consideration the health indices and load requirements of the network. Targeted investment for the reinforcement and replacement of our distribution system is designed to ensure compliance with our mandatory licence obligations and industry standards.

Primary Investment Drivers

The primary investment driver relates to load growth, where the anticipated uptake in LCTs will increase customer demands (as well as significantly alter the cyclic profiles) and this additional load results in transformers approaching or exceeding thermal capacity limits.

According to the latest scenario analysis3 4, in all DFES scenarios it is expected that there will be in excess of 4.3 million EVs connected by the 2040s in SEPD and over 800,000 in SHEPD within the same time period. The UK Government’s commitment to stop the sale of petrol and diesel engine vehicles by 2030 is a huge contributing factor. The switch of domestic and non-domestic heating to electric heat pumps is less certain, however there is still expected to be substantial uptake across both licence areas (c. 1.7 million properties in SEPD and c. 700,000 properties in SHEPD) in some of the DFES. In addition, some 600,000 new houses are expected to be built in SEPD and around 112,000 in SHEPD across all scenarios by 2050.

It is not certain how LCT uptake will take shape throughout ED2 however, it is expected that we will start to see the changes in demand patterns from customer LCT uptake, and some areas of network will approach, reach or even exceed thermal capacity limits during the ED2 price control period.

4.3.1 Maximum Demand

The maximum demand is derived by type of customer and number of customers connected. Profile classes are used to differentiate between customer types. This differentiation is based on when the customers consume electricity across the day. A profile is made of up of estimated consumption in each half hour across a 24-hour period based on generic customer characteristics and the tariff which a customer is on. For instance, a domestic customer is more likely to have higher consumption on weekday mornings and evenings and lower during the daytime. A non-domestic customer is likely to have higher consumption in the daytime but lower (or none) in the morning and evening. This is not considering the shifting demand patterns that have resulted from the COVID-19 pandemic and more people working from home and offices being closed. It is assumed this shift will revert to a large extent before the start of ED2.

2 It should be noted that EREC P2 is not applicable to individual end customers and so specific solutions can be designed as per customer requirements. 3 Distribution Future Energy Scenarios 2020 Southern England licence area Results and Methodology Report, December 2020 https://www.ssen.co.uk/WorkArea/DownloadAsset.aspx?id=20282 4 Distribution Future Energy Scenarios 2020 North of Scotland licence area Results and Methodology Report, December 2020 https://www.ssen.co.uk/WorkArea/DownloadAsset.aspx?id=20283

https://www.ssen.co.uk/WorkArea/DownloadAsset.aspx?id=20282


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As stated in the previous section, LCT uptake could shift demand patterns further, with higher than usual load overnight as customers charge their EVs. And winter peak could rise significantly as more heat is electrified.

4.3.2 Utilisation Factor

The utilisation factor is a measure of how much capacity is being utilised and indicates the spare capacity that is still available on the transformer, and where intervention is required. The utilisation factor is calculated where the maximum demand as a proportion of the transformer nameplate rating. However, the secondary distribution transformers are capable to operate within permissible limits of nameplate rating (appropriate emergency rating), taking into account the relevant environmental conditions and the expected demand profile, without compromising the asset lifespan. Figures 5 shows the existing utilisation percentage of SSEN’s secondary distribution transformers.

Figure 5 SSEN Secondary Distribution Transformers Utilisation

4.3.3 Secondary Distribution Transformers Lifespan and Operating Conditions

Distribution transformers installed within SSEN must comply to BS EN 60076. Transformers specified to BS EN 60076 are designed for a forty-year life when operating at continuous maximum rating at an annual average ambient temperature of 20◦C leading to a winding temperature of 98◦C.

There is direct correlation between the transformer lifespan and the loading and ambient temperature. If the transformer is loaded according to nameplate rating at correct ambient temperature stated by manufacture, therefore, it will not affect its lifespan. However, if the transformer consistently operates beyond its nameplate rating or in an ambient temperature higher than what it is designed for, the aging of the transformer is accelerated and reduces the design lifespan.

The rate of degradation of transformer insulation approximately doubles with every 6◦C increase in winding temperature above the normal aging rate at 98◦C. Typical winter and summer ambient peak temperatures in SSEN license areas are 15◦C and 25◦C in SEPD, 10◦C and 20◦C in SHEPD. SSEN adopts a conservative approach to sustain the life of its transformers.

4.3.4 Transformer failure due to Overloading

There are risks associated with overloading transformers even for short periods of time. For undesirable events, the magnitude of the risks depends on the quantity of free gas, moisture content of oil and insulation, and voltage. The gases produced due to transformer failure are hydrogen, acetylene, and carbon monoxide.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0-20% 20%-40% 40%-60% 60%-80% 80-100% >100%

Tras

nfo

rmer

s C

ou

nt

Utilisation Band

SEPD SHEPD

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In case of a minor fault, the transformer may be left in service providing the accumulation of gas is slow. If successive alarms occur within a week then it should be taken out of service and examined. In case of a major fault, an explosive gas is generated which rapidly displaces the oil causing the solid insulation to burn and the transformer circuit breaker to trip. Therefore, the transformer should be taken out of service immediately, irrespective of the time taken for the accumulation of gas.

In the event of transformer failure, customers are disconnected and offered alternative supply either through LV back-feeds depending on network arrangement and available spare capacity; or load shifting on HV level. In some instances, standby diesel generators are used to temporarily supply those affected customers until the transformer gets replaced.

Therefore, a fault on a transformer or transformer failure due to overloading can have a direct implication for customer supply, SSEN’s CI/CMLs, and the environment.

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5 RIIO-ED2 Load Forecast

To understand the future pathways for LCT demand on our HV and LV network, SSEN has carried out extensive scenario studies – the Distribution Future Energy Scenarios (DFES). The basis for this work is National Grid’s Future Energy Scenarios (FES) 2020. This framework comprises four potential pathways for the future of energy based on how much energy may be needed and from where it might come. The variables for the four scenarios are driven by government policy, economics and consumer attitudes related to the speed of decarbonisation and the level of decentralisation of the energy industry. We have worked closely with our partner Regen to develop the forecasts between 2020 and 2050 through enhanced engagement with the local authorities, local enterprise partnerships, devolved governments, community energy groups and other stakeholders.

Regen produced a high granularity projection for low carbon technologies uptake in both the North and South SSEN licence areas, down to the level of secondary distribution transformers and to individual LV feeders. This level of granularity corresponds roughly to a post code or street level analysis. A bottom-up assessment of local resources, constraints and market conditions was carried out to develop the four scenario forecasts for each technology. Locational data and GIS analysis were used to understand the potential for technologies to develop through geographical distribution, local attributes, and constraints. The key low carbon technologies expected to increase the electricity demand on HV network are electric vehicles chargers and electricity fuelled heating technologies (air source and ground source heat pumps, hybrid heating and direct electric heaters).

Based on the enhanced stakeholder engagement feedback, we have chosen Consumer Transformation as the baseline scenario for our investment. In order to protect consumer’s bill against forecasting uncertainties, our baseline funding only includes load related investment required in the first two years in the RIIO-ED2 period unless it is also required by other net zero scenarios. Full details on our DFES methodology, stakeholder input and regulatory treatments of load related investment can be found in the Load-Related Investment Annex.

The detailed SSEN DFES 2020 datasets allowed us to model the potential impact of demand and technology changes on the HV/LV network and to understand the scale and range of network reinforcement that might be needed during RIIO-ED2.

The demand projections associated with the CT scenario were added to the existing baseline demand of each secondary transformer and compared to the transformer appropriate emergency rating5. One key assumption at this stage was to use the winter cyclic load profiles as LV demand is predominately domestic with higher, cyclic demands in the winter months. Table 3 and Table 4 provide the impact of the LCT projections on the secondary transformers utilisation during RIIO ED2.

Utilisation Band Unit 2024 2025 2026 2027 2028

0-20% Sites 9,080 7,740 7,920 7,298 6,866

20-40% Sites 12,698 10,230 11,093 10,240 9,635

40-60% Sites 11,339 10,690 11,154 11,019 10,685

60-80% Sites 6,831 8,120 7,690 7,956 8,123

80-100% Sites 3,450 4,848 4,285 4,755 5,150

100-120% Sites 1,557 2,442 2,084 2,437 2,718

5 The methodology to identify the forecast demand is available in RIIO-ED2 Business Plan, Load Strategy Annex, Section 5

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>120% Sites 1,728 2,613 2,457 2,978 3,506

Total Sites Sites 46,683 46,683 46,683 46,683 46,683

Table 3 SEPD Secondary Distribution Transformers Utilisation with LCT Forecast

Utilisation Band Unit 2024 2025 2026 2027 2028

0-20% Sites 14,902 13,847 12,626 11,467 10,472

20-40% Sites 11,967 11,940 11,461 10,917 10,360

40-60% Sites 6,060 6,294 6,705 6,901 6,987

60-80% Sites 2,882 3,245 3,734 4,212 4,645

80-100% Sites 1,281 1,517 1,830 2,307 2,737

100-120% Sites 647 746 955 1,147 1,404

>120% Sites 1,229 1,379 1,657 2,017 2,363

Total Sites Sites 38,968 38,968 38,968 38,968 38,968

Table 4 SHEPD Secondary Distribution Transformers Utilisation with LCT Forecast

The investment is triggered if the load forecast exceeded 120% of nameplate rating for outdoor ground or pole mounted transformers; and 110% of nameplate rating for indoor ground mounted transformers. The total number of secondary transformers that are expected to be overloaded due to LCT uptake and require intervention by the end of ED2 are around 6224 in SEPD and around 3767 in SHEPD. These overloaded sites represent approximately 10% of SSEN’s secondary distribution transformers.

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6 Optioneering

This section sets out the investment options that are being proposed to manage overloaded secondary distribution transformers in ED2. As described below, a holistic approach is taken to ensure investment options are chosen which are both least regrets and represent best value for money for network customers.

Conventional (constructed) network solutions and flexibility services are alternative potential solutions to alleviate network thermal overloads.

Network Solutions increase network capacity but do not specifically aim to reduce peak demand. An example includes uprating transformers or adding new transformer.

Flexible Solutions aim to reduce peak demand, either by shifting energy consumption out of peak demand periods or by reducing energy consumption overall. Encouraging local generation of power to offset demand – particularly at times of peak – can also be an effective means of matching supply and demand and avoiding or postponing conventional reinforcement. Demand side response, energy storage systems, time of use tariffs, hybrid heat pumps and smart electric vehicle charging schemes are all sources of flexibility service. In addition, energy efficiency approaches may also provide ‘inactive’ flexibility services although these approaches are still yet to be tested in real network scenarios, SSEN as well as other DNO’s have trialled the use of such approaches though innovation projects such as SSEN’s Solent Achieving Value through Efficiency (SAVE) Project.

Flexible solutions at LV level are still under continuous development where new opportunities are coming into the market gradually.

We have additionally considered the potential for using Whole System solutions (involving collaboration with third parties) to deliver this investment programme. We set out our assessment in Appendix 2. This follows our standardised approach for embedding Whole System considerations into our load and non-load investment decisions (in line with Ofgem’s ED2 business plan guidance), as described in our Enabling Whole System Solutions business plan annex.

Our assessment enables us to take a proportionate consideration of Whole System options, based on the feasibility of such options existing and materiality of the costs involved.

In this case, our Whole Systems assessment finds that this programme is not expected to have any wider Whole System interactions and there are no feasible Whole Systems solutions.

Summary of Options

Table 5Table 1 below provides a high-level summary of the investment options under consideration along with the advantages and disadvantages associated with each.

Option Description Advantages Disadvantages

1.Do Minimum

No investment: utilise network back-feed capability when required to provide additional capacity

- No CAPEX - Low upfront cost

option for assets with acceptable health index rating

- Risk of License obligation non-compliance

- Accelerate deterioration of asset health and lifespan.

- Limited spare capacity for additional load

- Increase in required switching actions

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to enable back-feed

2. Asset Upgrade Replace the transformer with higher rated transformer.

- Improved network reliability given new transformer

- Reduce network losses

- Readiness to accommodate desired network capacity without delays.

- Maximum improvement in asset lifetime

- Highest CAPEX option

- Potential disruption to network stakeholders

- Civil costs required.

- Additional carbon footprint

3. Install LV monitors to existing transformers

Monitor demand on existing transformers to allow a more informed investment decision to be made

- Increased efficiency

- Lowered carbon emissions

- Lower CAPEX costs - Lower civil costs

required

- Additional LV monitors procurement, installation and operational costs

- Data processing required to analyse monitoring data

4. Additional Transformer

Installing additional transformer next to existing transformer

- Increased network capacity

- Lowered carbon emissions

- Reduce network losses

- Higher CAPEX - Additional

installation costs - Civil costs

required including site purchase in certain schemes

- Additional inspection and maintenance cost

5. Flexibility Procurement

The procurement of flexibility services from network customers to defer/avoid transformer uprating

- Can defer the need to replace the transformer

- Increased efficiency

- Reduces the risk associated with increased maintenance.

- Provides an additional source of revenue for

- The flexibility market for LV load related purposes is still uncertain.

- The price point for flexibility services is often uncompetitive with conventional solutions

- Limited market Liquidity in various

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flexibility providers.

- Supports DSO capabilities

regions of SSEN’s network.

Table 5 Summary of Investment Options for Secondary Distribution Transformers

CBA Analysis Summary

A detailed exercise has been undertaken to support the investment strategy that is described within this EJP. A Cost Benefit Analysis has been undertaken to determine how we should invest in the secondary distribution portfolio in ED2. Three CBA options have been considered: reinforcement of LV circuits, flexibility procurement, and installation of LV monitoring to monitor demand for two years and then reinforce. The preferred option has been found to be asset upgrade, due to the lower capital cost of transformers in comparison to other options. However, the option to upgrade all identified overloaded assets has been found to be implausible solution at this stage, as it will not align with our Business plan ambition; DSO objectives; and there is potential risk of deliverability due to high volumes. To manage the whole portfolio, recognising that a single CBA is not sufficient to reflect the investment needs of the assets, we have taken an investment strategy approach as described in section 6.3.

Secondary Distribution Transformers Investment Strategy

As per the LV Monitoring Strategy and associated EJP, LV monitors will be installed to cover all secondary distribution transformers (and indeed other LV assets) with a loading of 80% or above. This will allow more informed investment decisions to be made in future. For secondary transformers loaded at 100% or above of emergency rating, the following solutions have been proposed to reflect the best value for money to customers and the most efficient way to ensure our network is equipped to support the expected demand growth in ED2 and beyond. The proposed investment approach consists of three stages as follows:

6.3.1 Stage 1: Defer Investment to ED3

Based on the hot spot analysis conducted, we have determined that 20% of the secondary distribution transformers noted as being lightly loaded (i.e. marginal overloading 100% precisely) of emergency rating in ED2 can have investment deferred to ED3. It is expected that these transformers will only be overloaded for very short time intervals (less than four hours per year) and do not pose an unreasonably high risk of fault or failure in ED2. Short term overloads can be managed by switching or back feeding if necessary.

For stage 1, there will be no investment taking place during RIIO-ED2 period. The transformers inspection and maintenance activities continue as normal as per the relevant policies. There will be no innovation or flexibility considered.

6.3.2 Stage 2: Flexibility solution to defer investment

A key investment solution that will be implemented by SSEN during RIIO-ED2 is the procurement of flexibility services and this is reflected in our Flexibility First approach6. This approach will be a key enabler of SSEN’s aspiration to have distribution system operation capabilities. These flexibility services will be procured to defer or avoid the need to carry out costly network reinforcement and investment in network assets. The exact nature of the flexibility services to be procured in ED2 is not yet known, however it is expected to include options such as smart charging of EVs, local generation and demand side response services or customer time of use tariffs.

6 ED2 Business Plan, DSO Annex A21

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It is likely LV Flexibility Services will mature significantly within the price control period and as such be

applicable for a greater percentage of schemes, however, at this stage we are taking a moderate view of roll-

out capabilities. We determined that 10% of the secondary transformers noted as being loaded to 100% or

more in ED2 will be suitable for LV flexibility service procurement. Of that 10%, flexibility services will manage

load growth and peak demands such that investment can be deferred to ED3 on half of these circuits (i.e., 5%

of the total number of overloaded secondary transformers). The other half of these circuits are expected to

require investment after two years because it is expected that the demand growth will exceed the amount of

flexibility capacity that can be procured; and the ongoing flexibility service costs will no longer offer better

value to customers than investment.

Deploying flexibility has significant potential to reduce investment needs, unlocking savings for consumers. The scale of these savings has been estimated below in Error! Reference source not found., based on the avoided cost of asset replacement during ED2 from the use of flexibility schemes we have put into our baseline proposals, as well as the time value of benefit obtained from deferring for two years.

Deferred out of ED3 Time value of money of

other deferrals Total

SEPD benefit (£m) 4.96 0.35 5.31

SHEPD benefit (£m) 0.30 0.02 0.32

SSEN benefit (£m) 5.26 0.37 5.63

Table 6 Benefit Estimation of Flexibility Deployment

Furthermore, flexibility procurement has the following potential for load and non-load related purposes:

• Reduces the rate of asset degradation by reducing peak network loading (thermal strain) on high-risk assets.

• Allows DNOs to secure the network prior to planned outage events, in some cases avoiding the need for mobile diesel generation support.

If the market test is successful, a Flexibility Solution will be employed offering value to SSEN and our customers in terms of investment deferral and optionality. Should the market test fail or only partially succeed in identifying the required Flexibility, SSEN will utilise the CEM Framework or alternative CBA mechanism to assess the optimal, secondary solution for this location, be that a further market test for full Flexibility, accelerating the Conventional solution or a Hybrid Scheme.

Further detail of our Flexibility First approach and assessment methodology can be found in Appendix 6 of the DSO plan – Delivering value through Flexibility.

It is possible that LV flexibility services can be procured on a larger scale during ED2 however, since the market is still maturing, we are taking a moderate view of roll-out capabilities at this stage. However and to ensure no opportunities are missed and in line with our Flexibility First approach, we will perform a CBA for all schemes and for secondary substations which are identified as having potential for Flexible Solutions, we will carry out Flexibility market tests to establish the cost, location and technical capabilities of the available flexibility before making a final decision on the optimum option to progress. Should flexibility only offer time-limited benefits, after two years assets will be upgraded or new assets will be added.

For secondary transformers sizing, a standard approach is applied, based on post ED2 load projections. The size selected should ideally mean that at the end of ED2, the new asset is no more than 60% loaded (with respect to nameplate capacity) under peak conditions. Analysis of the CT scenario in 2050 has shown that this

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rule will ensure the asset is fit for our current best view of 2050, minimizing the risk of needing to revisit the asset to enable Net Zero. The minimum GMT size be will be 500kVA to minimise network losses according to SSEN’s Losses Strategy7.

It may be the case that achieving the previous condition requires a change in solution type- for instance moving from a Pole Mounted to a Ground Mounted Transformer. This is because each solution type has a maximum practicable capacity. These solution types, in capacity order, are PMT, GMT, and adding a parallel GMT.

Changes to the solution type normally have significant cost implications, so to mitigate this, if the largest capacity solution of the same type would be less than 100% loaded in 2050, this is also acceptable even if it violates the 60% rule at the end of ED2.

The full replacement of the transformers will still be coordinated with any wider substation works if required such as the replacement of the substation protection equipment.

6.3.3 Stage 3: Asset Upgrade or Additional Asset

Based on the hot spot analysis, 70% of the 100%+ loaded secondary distribution transformers will require reinforcement in ED2 to mitigate overloading and provide spare capacity for LCT uptake. Transformer sizing approach described in sub-section 6.3.2.

Any Existing transformers with 1 MVA rating that will require reinforcement during RIIO-ED2 will have an additional transformer added to ensure compliance with SSEN’s 11kV Networks policy and standards, otherwise, any overloaded secondary transformer will be replace with a higher rated new transformer. This will increase network capacity, enhance network reliability, and facilitate the transition to electrification of transport and heat.

The options generated were then tested against the planned interventions driven by non-load related purposes from other parts of our plan- the same asset that could require intervention to facilitate capacity may also have been identified for intervention due to its condition, or due to environmental factors such as associated SF6. To ensure no double counting, any assets with more than one driver for intervention were identified, and ensured interventions were only captured once in the data tables.

6.3.4 Summary of Options Approach

Recognising that investment in the secondary distribution transformers asset portfolio is very important to ensure SSEN provides a safe, reliable network with sufficient capacity to accommodate customer LCT uptake. Meanwhile, flexibility markets are evolving quickly, more innovative options are being investigated through innovation programs and the pace of change in local and domestic energy use is unparalleled. Despite this the inherent risks of failing to replace assets and reinforce networks in a timely fashion remain so our proposed approach endeavours to strike a balance between ambition and caution to ensure investment is carried out efficiently in ED2, while leaving the opportunity to increase the use of flexibility and innovative approaches within an agreed investment level. A summary of our approach to implementing the investment options during ED2 is provided below.

Investment will be deferred to ED3 for 20% of identified overloaded secondary transformers a. Flexibility services will be procured for 10% identified overloaded secondary transformers

where: i. Investment can be successfully deferred to ED3 for 5%.

ii. Investment can be successfully deferred for two years for 5% then asset reinforcement will be carried out.

b. Asset reinforcement will be carried out on 70% of identified overloaded secondary transformers.

7 SSEN Distribution’s RIIO-ED1 Losses Strategy, March 2021

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7 Summary of Cost and Volumes

Our draft RIIO ED2 Business Plan costs are derived from our outturn RIIO ED1 expenditure. We have modified costs per activity, capturing and reporting those adjustments in our cost-book. By tying our costs back to reported, outturn, real life data this approach provides multiple data points on which both the Regulator and we can benchmark cost efficiency. It provides a high level of cost confidence in our Business Plan cost forecast for RIIO ED2.

Unlike asset replacement, load projects will include more unique and site-specific costs. For example; civils, waterway, road or rail crossings; and local planning considerations. Many years ahead of delivery, projects are not fully designed. We have therefore reflected the cost impact of this future scope refinement within the adjusted unit costs we have applied. Further detail on our unit cost approach, cost efficiency and cost confidence for RIIO-ED2 can be found within our Cost & Efficiency Annex.

We expect that as our Business Plan continues to develop, project scopes and costs will be refined, especially with valuable stakeholder feedback on our draft proposals. In our final Business Plan submission in December our cost forecasts will contain that refinement and the changes captured within our supporting Plan documentation. Development of our Commercial Strategy and updated project scope for the initial year of RIIO ED2 is expected to drive much of this refinement.

This section of the report provides an overview of the volumes and costs associated with the proposed secondary distribution transformers investment approach in ED2.

SEPD Costs and Volumes

Table 7 and Table 8 provide costs and volumes for secondary distribution transformers investment in the SEPD licence area of SSEN for ED2. Average unit cost for a ground mounted transformer is £25,600 and for a pole mounted transformer is £7,700. It should be noted that in Table 8 the costs of asset reinforcement include those where flexibility has been used to defer investment by two years.

Asset Category Unit 2024 2025 2026 2027 2028 Total

6.6/11kV Transformer (GM) # 168 213 214 215 125 935

6.6/11kV Transformer (PM) # 354 477 545 546 302 2224

Total # 522 690 759 761 427 3159

Table 7 SEPD 6.6/11kV Distribution Transformers - Volumes for RIIO ED2

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6.6/11kV Transformer (GM) £m 4.3 5.5 5.5 5.5 3.2 23.94

6.6/11kV Transformer (PM) £m 2.7 3.7 4.2 4.2 2.3 17.12

Total £m 7.0 9.1 9.7 9.7 5.5 41.1

Table 8 SEPD Cost Breakdown of 6.6/11kV Distribution Transformers

For LV flexibility service procurement, SSEN has taken guidance from recent LV flexibility tenders run by other UK DNOs and the assumed cost of this is £47.58/kW/year. Based on the number of secondary distribution transformers and the required flexibility capacity, the costs, and volumes of LV flexibility for SEPD in ED2 is presented Table 9.


Number of Sites # 82 105 105 105 60 457

Capacity required MVA 8.5 20.4 15.0 17.5 11.5 72.9

Cost of procuring capacity (£m) £m 0.41 0.97 0.71 0.83 0.55 3.47

Table 9 SEPD Secondary Distribution Transformers Flexibility Costs and capacity required

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SHEPD Costs and Volumes

Table 10 and Table 11 provide costs and volumes for secondary distribution transformers investment in the SHEPD licence area of SSEN for ED2. Average unit cost for a ground mounted transformer is £12,000 and for a pole mounted transformer is £4,000. It should be noted that in the costs of asset reinforcement include those where flexibility has been used to defer investment by two years.


6.6/11kV Transformer (GM) # 21 19 22 22 15 99

6.6/11kV Transformer (PM) # 280 361 358 358 203 1560

Total # 301 380 380 380 218 1659

Table 10 SHEPD 6.6/11kV Distribution Transformers - Volumes for RIIO ED2


6.6/11kV Transformer (GM) £m 0.1 0.2 0.1 0.1 0.1 0.6

6.6/11kV Transformer (PM) £m 0.6 0.8 0.9 1.1 0.5 3.9

Total £m 0.8 1.0 1.1 1.1 0.5 4.5

Table 11 SHEPD Cost Breakdown of 6.6/11kV Distribution Transformers

For LV flexibility service procurement, SSEN has taken guidance from recent LV flexibility tenders run by other UK DNOs and the assumed cost of this is £47.58/kW/year. Based on the number of secondary distribution transformers and the required flexibility capacity, the costs and volumes of LV flexibility for SHEPD in ED2 is presented in Table 12.


Number of Sites # 40 51 51 51 29 222

Capacity required MVA 0.47 0.73 0.9 0.61 0.59 3.52

Cost of procuring capacity (£m) £m 0.04 0.07 0.09 0.06 0.05 0.27

Table 12 SHEPD Secondary Distribution Transformers Flexibility Costs and capacity required

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8 Deliverability

This investment for this asset category is part of the wider load-related investment portfolio in RIIO-ED2. SSEN have developed a strategy to deliver a much larger volume of work in comparison with the level of investment in ED1. We have engaged with our supply chain to negotiate the most effective unit costs. We have carefully planned the future workforce with the right skills and competencies to deliver capital projects in ED2.

Our deliverability strategy detailed in Chapter 16 of the Business Plan describes our approach to evidencing the deliverability of our overall plan as a package, and its individual components. Testing of our EJPs has prioritised assessment of efficiency and capacity, and this has ensured that we can demonstrate a credible plan to move from SSEN’s ED1 performance to our target ED2 efficiency. We have also demonstrated that SSEN’s in house and contractor options can, or will through investment or managed change, provide the capacity and skills at the right time, in the right locations. This assessment has been part of the regular assessment of our EJPs, CBAs and BPDTs, and we will further refine our bottom up efficiencies and work plan phasing for our final submission in December through the ongoing development of our ED2 Commercial & Deliverability Strategy and engagement with our supply chain.

Our deliverability testing has identified a major strategic opportunity which is relevant to all EJPs.

• In ED2 SSEN will change the way Capital Expenditure is delivered, maximising synergies within the network to minimise disruptions for our customers. This is particularly relevant for a Price Control period where volumes of work are increasing across all work types.

• The principle is to develop and deliver Programmes of work, manage risk and complexity at Programme level and to develop strategic relationships with our Suppliers and Partners to enable efficiency realisation.

• The Commercial strategy will explore the creation of Work Banks (WB) and identify key constraints. The Load work will be the primary diver for a WB, supplemented by Non-Load work at a given Primary Substation. This approach will capitalise on synergies between the Load and Non-Load work, whereby the associated downstream work from a Primary Substation will maximise outage utilisation, enabling the programme to touch the network in a controlled manner with the objective of touching the network once. Where there is no Primary Load scheme to support the Non-Load work, these will be considered and packaged separately, either insourced or outsourced dependant on volume, size, and complexity.

• Transparency with the Supplier in terms of constraints, challenges, outage planning and engineering standards will capitalise on efficiencies, supported by a robust contracting strategy.

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9 Conclusion

The purpose of this Engineering Justification Paper is to set out the overarching investment strategy that SSEN intends to take during RIIO ED2 for the load related investment of secondary distribution transformers.

To address thermal capacity constraints due to LCT uptake during RIIO-ED2 price control period, conventional and flexible solutions are considered as potential interventions that will depend upon the attributes of each secondary distribution transformer project requiring investment (rate of load growth, flexible market availability, etc.). During RIIO ED2 a detailed Cost Benefit Analysis (CBA) will be performed on a case by case basis to identify which option represents best value for money for network customers and can be considered least regret.

As described within Section 6, a holistic approach has been taken to establish the secondary distribution transformers investment strategy. This included a hot spot analysis of SSEN’s existing HV and LV assets, future network trend analysis and careful consideration of the financial, safety, and environmental implications of each investment option. The current proposed investment strategy to manage secondary transformers portfolio during RIIO-ED2 is as follows:

• Stage 1: Defer investment to ED3 for 20% of identified overloaded assets

• Stage 2: Procure flexibibility services for 10% of identified overloaded assets to defer investment to ED3 and defer constrained LV mains investment by two years

• Stage 3: Reinforce 70% of constrained LV feeders

The stages listed above have been assessed against RIIO ED2 strategies as follows: meeting license obligations, steady performance, and leading reliability. A thorough stakeholder engagement was undertaken to gather feedback on each of these strategies to determine which approach should be proposed within SSEN’s RIIO ED2 business plans.

The total cost of £49.3 million to deliver the proposed Load-related secondary distribution transformers portfolio needed during RIIO ED2. The delivery of the proposed investment strategy will be a key in enabling the achievement of our strategic ambition to facilitate the connection of 1.3m EVs and 800,000 heat-pumps by the end of ED2. As well as releasing capacity and enabling the connection of LCT, our investments will also provide further benefits to consumers. These include a positive impact on long-term network reliability associated with the number and duration of supply interruptions. In addition to compliance with mandatory network planning security standards.

The delivery of this scheme will be measured throughout RIIO-ED2 by the volumes delivered, and the reduction of CI/CML’s.

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Appendix 1: Technical Specifications and Data

Ancillary Equipment for Ground Mounted Transformers

SSEN utilise a standard range of ring main units; LV distribution cabinets and pillars, built to compliment the SSEN standard designs.

Ancillary Equipment for Pole Mounted Transformers

SSEN use a single bolt hanging and single pole platform design for mounting all single-phase transformers up to 50kVA. Single bolt hanging transformers shall have a mass less than 400kg.

Transformers up to 800 kg (such as free-standing 100kVA transformers) could be installed on single pole platforms fitted with a back stay to compensate for the forward weight of the transformer.

Whereas transformers above 800 kg (such as free-standing 200kVA transformers) could be mounted on ‘H’ pole platforms. The maximum allowable installed mass is 1400 kg. The centre of gravity of all types shall be as low as reasonably practical.

Loading Permissible Factors

The permissible factors that could be applied to continuous and cyclic ratings to maintain a hot spot temperature of 98◦C are given in Table 13. These ratings are be applied to all distribution transformers. These transformers are suitable for long term operation at these ratings at normal ageing.

Factor to apply to nameplate rating

Daily Load Curve Continuous

24-hour load Location Ambient

Temperature A B C D

Outdoor

0◦C 1.31 1.28 1.25 1.23 1.16

5◦C 1.27 1.24 1.21 1.19 1.12

10◦C 1.23 1.19 1.17 1.15 1.08

20◦C 1.15 1.09 1.09 1.05 1.00

25◦C 1.11 1.01 1.05 0.99 0.96

30◦C 1.06 0.93 1.00 0.92 0.91

Indoor with good or forced

ventilation

0◦C 1.27 1.23 1.21 1.19 1.12

5◦C 1.23 1.19 1.17 1.15 1.08

10◦C 1.19 1.14 1.13 1.10 1.04

20◦C 1.10 1.01 1.04 0.98 0.95

25◦C 1.06 0.95 1.00 0.93 0.91

30◦C 1.01 0.88 0.95 0.88 0.86

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Indoor with poor

ventilation

0◦C 1.23 1.19 1.17 1.15 1.08

5◦C 1.19 1.14 1.13 1.10 1.04

10◦C 1.15 1.09 1.09 1.05 1.00

20◦C 1.06 0.93 1.00 0.92 0.91

25◦C 1.01 0.88 0.96 0.87 0.86

30◦C 0.96 0.83 0.91 0.82 0.81

Table 13 - Permissible Factors to Nameplate Rating

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Appendix 2: Whole Systems consideration

In augmenting our decision-making processes to consider Whole System solutions, we have introduced an assessment to identify where a Whole Systems CBA would be a useful decision making tool for ED2 load and non-load schemes. While our work with the ENA to undertake Whole Systems CBAs is ongoing, we have introduced the ‘Whole Systems CBA test’ to identify where a scheme may be suitable for a Whole Systems CBA to be conducted. Where a Whole Systems CBA is determined to be a useful decision-making tool, these would be conducted in addition to the standard Ofgem CBA and/or SSEN’s flexibility CBA. We have introduced this test in line with Ofgem’s expectations for “proportionality when submitting a Whole System CBA. For example, smaller or simple projects following the standard CBA template, whereas larger or more complex projects requiring bespoke analytical approaches” (Ofgem BPG, section 4.28, p.34).

The ‘Whole Systems CBA test’ involves assessing each investment scheme of over £2m (the threshold to develop an EJP for load and non-load investments) against 5 tests. These 5 tests help determine whether a Whole Systems CBA is a useful decision-making tool based on the characteristics of the scheme, including whether it will have wider cross sector or societal impacts.

Details on each of the tests are provided in case study 6 in our Enabling Whole System Solutions business plan annex. Tests 1-3 are aligned with the ENA’s guidance for Whole System CBA tests. We have added Tests 4 and 5 to clarify whether a Whole Systems CBA is required based on the materiality / proportionality of the investment (Test 4) and whether a flexibility CBA only is sufficient (Test 5). Table 14 below outlines our Whole Systems CBA test for secondary distribution transformers investment.

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Scheme

Test 1: Are there Whole

Systems interactions, or

is there potential for

it?

Test 2: Could a Whole

Systems CBA drive you to

make a different decision?

Test 3: Is a Whole Systems

CBA reasonable?

Test 4 - Is the project valued at over £2m?

Test 5 - Is the investment

plan related to procuring

flexible solutions only?


No – We consider there to be limited potential for Whole Systems interactions with third parties to deliver this investment programme, and accordingly we do not consider there to be potential for Whole Systems solution(s).

No – As noted under Test 1 we do not consider there to be potential for Whole Systems solution(s) in this case.

No – As noted under Test 1 we do not consider there to be potential for Whole Systems solution(s) in this case.

No No

Table 14 Whole Systems CBA test for SSEN’s Secondary Distribution Transformers Investment

As the result of tests 1, 2 and 3 above is “No”, a Whole Systems CBA is not required for this investment. It is not expected to have any wider Whole System interactions or potential Whole Systems solutions.

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Appendix 3: Relevant Policy, Standards, and Operational Restrictions

The policies, manuals and standards and operational restrictions which govern the management of 6.6/11kV Distribution Transformers are listed below in Table 15.

Policy Number Policy Title

ENA Engineering Recommendation P2, Issue 7, 2019

PR-NET-NPL-010 Planning Standards for 11 kV and 6.6 kV Distribution Networks

PR-NET-NPL-001 Planning Standards for Low Voltage Distribution Network

TG-NET-SST-201 Secondary Substation Plant Catalogue

TG-NET-SST-026 Guidance on Ratings of Oil-Filled Power Transformers

TG-NET-SST-005 Secondary Distribution Substations; Common Clauses - Design and Installation Standard

ST-NET-ENG-010 SSEN Distribution Network Investment Strategy RIIO-ED1

PR-NET-ENG-026 Asset Management: Substation Inspections Procedure

Distribution Future Energy Scenarios 2020 Southern England Licence Area


Distribution Future Energy Scenarios 2020 North of Scotland Licence Area


SSEN Distribution’s RIIO-ED1 Losses Strategy, March 2021

Table 15 6.6/11kV Distribution Transformers Relevant Documents



RIIO ED2 Engineering Justification Paper (EJP)

Documents

Transcript of RIIO ED2 Engineering Justification Paper (EJP)