Hybrid distribution network planning to incorporate virtual capacity from distributed flexibility resources

Flexibility, defined as the ability to change load demand and generation injection over time, is touted as a key strategy to overcoming the challenges of increased net-load variability that come with higher penetration of variable renewable energy sources (VRES). Increased net-load variability places greater demands on the electrical grid, whose development pace is targeted as a bottleneck to achieving a decarbonized energy system. Policymakers and regulators want to mitigate the limitations in grid development by compelling distribution system operators (DSO) to consider the locally available distributed flexibility resources (DFR) as virtual capacity providers when planning the expansion of the distribution networks' physical assets. This analysis focuses on flexibility from the DSO perspective, trying to set an end-to-end epistemological common ground for policymakers, regulators and DSOs. It analyses the current public policy framework, setting the conventional planning objectives as a basis to understand the flexibility boundaries, and proposes an optimal capacity planning methodology where flexibility is taken as a new decision dimension, whose value can be obtained using a counterfactual approach, to be used in flexibility markets.