Community DSO: enabling energy communities to balance renewable energy generation and demand to improve network resilience

The Community DSO project envisions a future where localized energy communities, organized into “cells,” take on the role of balancing distributed energy resources (DERs) and low-carbon technologies (LCTs) within low-voltage (LV) networks. By leveraging transactive energy principles, these cells align economic signals with energy flows, promoting local balancing and reducing reliance on costly grid reinforcements. Acting as de facto Distribution System Operators (DSOs), energy communities enhance network resilience, optimize renewable integration, and lower energy costs. The management and operation of physical infrastructure will remain with the DNO; a Community DSO cell’s focus is staying within the constraint levels for their specific location as set by the DNO. As long as this level is not breached, the Community DSO is free to play in flexibility markets at higher voltage levels. This paper highlights critical regulatory, economic, and business factors enabling community-based DSOs. A multi-phase economic modelling approach underscores the value of “revenue stacking,” where flexibility services and resilience enhance returns beyond traditional energy sharing models. Aligning local demand with generation—especially with technologies like micro-CHP, wind, micro-hydro, and battery storage—significantly lowers the Levelized Cost of Electricity (LCOE). However, regulatory barriers, such as market access and supplier obligations like balancing responsible party (BRP) services, remain challenges. Drawing on case studies and analyses, the project demonstrates that local energy cells can maximize self- consumption and lower system costs if supported by appropriate policy reforms. This work provides actionable insights for policymakers, utilities, and energy stakeholders to build a more resilient, sustainable, and socially equitable energy future.[1]