By Sarah Sheehy, Principal Consultant at TNEI
Exploring the potential in local communities
As electricity networks adapt to support the transition to low carbon technologies, finding cost-effective ways to manage growing demand is becoming increasingly important. Our analysis, presented at CIGRE Paris Session 2026, explored how coordinated flexibility within energy communities could help address these challenges while delivering benefits for both network operators and consumers.
Introducing the Community DSO concept
The Community Distribution System Operator (Community DSO) concept seeks to capture and coordinate flexibility within physically connected energy communities. Rather than focusing on large-scale network management alone, the concept operates at the lowest levels of the electricity network through local “cells” (see Figure 1), which can be based on individual secondary substations or even single feeders.
Figure 1: Community DSO cells concept diagram
Within each cell, a Community DSO coordinator manages local energy flows and coordinates flexible demand to help keep aggregate demand within network limits. This approach aims to balance supply and demand locally while making better use of the flexibility already available through technologies such as batteries, electric vehicles and other low carbon technologies.
By coordinating flexibility at a local level, the concept seeks to create mutual value for both energy communities and network operators while supporting wider decarbonisation objectives.
Why coordination matters
Many consumers already adjust their electricity usage in response to time-of-use (ToU) tariffs, shifting demand away from periods when electricity is more expensive. However, the paper highlights that the price signals driving this behaviour are not always aligned with conditions on the local electricity network.
As a result, actions that help consumers reduce electricity costs do not necessarily deliver the greatest benefit to the Low Voltage (LV) network. In some circumstances, uncoordinated flexible behaviour can even exacerbate local constraints.
The Community DSO concept takes a different approach by coordinating flexibility specifically to manage local network conditions. Rather than responding solely to market signals, flexibility is deployed with the objective of reducing peak demand and helping to prevent network constraints from occurring.
What the analysis found
To assess the potential impact of the Community DSO concept, our consultants developed a model incorporating network data, community characteristics, demand profiles and an optimisation engine capable of coordinating flexibility. The analysis compared Community DSO-coordinated flexibility against a counterfactual scenario where the same participants responded to ToU tariff signals.
The results showed that coordinated flexibility consistently delivered lower peak demand than the tariff-driven alternative. In the modelled scenarios, batteries responding to ToU tariffs tended to discharge as soon as higher-priced periods began. While this reduced costs for customers, it did not significantly benefit the local network. By comparison, Community DSO coordination sought to flatten demand by optimising the timing of charging and discharging activity. Furthermore, the analysis demonstrated that peak demands were generally lower on Community DSO days than on non-Community DSO days across the simulated scenarios. These results suggest that coordinated community flexibility could be more effective at managing peak demand at the local level than flexibility driven solely by standard ToU price signals.
Demonstrating a measurable impact
The analysis went further by applying hypothesis testing to determine whether the impact of the Community DSO concept could be clearly detected when compared with existing flexibility mechanisms.
Across every participation scenario examined, the results produced extremely low p-values, indicating that the reduction in peak demand was statistically significant. The findings suggest that the impact of the Community DSO concept would be measurable even when compared against existing flexibility arrangements driven by ToU tariffs.
Notably, the results indicated that participation from batteries alone could be sufficient to demonstrate the presence of the Community DSO effect, highlighting the value of coordinated flexibility even before wider engagement from domestic customers is achieved.
Looking beyond peak demand reduction
The findings build on previous work examining the wider value that Community DSO could deliver if deployed more broadly.
Earlier analysis referenced in the paper estimated that, under conservative assumptions, Community DSO could generate a net present value of approximately £160 million across Great Britain*. The concept was also found to have the potential to defer or avoid some network reinforcement requirements by making more effective use of local flexibility.
Beyond network management, the approach aims to support local decarbonisation efforts and encourage greater participation in energy communities by enabling customers to play a more active role in balancing local supply and demand.
*Estimation is based on previous Community DSO work
From modelling to real-world trials
This work forms part of the wider Community DSO project, a five-year Network Innovation Competition (NIC) funded initiative delivered by Northern Powergrid in partnership with TNEI and other project partners.
While the modelling results are promising, physical trials are already underway to test and refine the Community DSO concept under real-world conditions. These trials are exploring how participation can be encouraged, how flexibility can be coordinated effectively and how the concept could eventually be implemented as a business-as-usual solution.
The analysis concludes that coordinated community flexibility can reduce peak demand by a statistically significant margin compared with flexibility guided solely by ToU tariffs. As electricity networks continue to evolve, this type of locally coordinated approach could help energy communities play a greater role in supporting the future energy system.
Interested in the future of energy communities and coordinated flexibility?
Sarah Sheehy will be continuing conversations around these topics at upcoming industry events. Get in touch if you’d like to discuss the Community DSO concept or the role of energy communities in the energy transition.
This article is based on the paper “Community DSO: Assessing the impact of coordinated flexibility from energy communities”, first presented at CIGRE Paris Session 2026 and co-authored by Harvey Dawson, Owen Patrick, Gordon McFadzean and Sarah Sheehy at TNEI.
The paper summarises work carried out to support the design and analysis of the Community DSO Network Innovation Competition (NIC) project trials, building on findings published in the “Community DSO Networks & Analysis Iteration Report” (December 2025). More information is available here.
