E-Redes PDIRD-E 2024 Proposta Inicial

E-Redes — Proposta Inicial de PDIRD-E 2024 (Initial proposal for the Distribution Network Development and Investment Plan 2024). E-Redes’ own planning document, covering the 2026–2030 quinquennium. 139 pages (without annexes). Submitted pursuant to Decreto-Lei 15/2022 Art. 128; ordered by Despacho 10756/2024 (12 September 2024) by the Minister of Environment and Energy. Language: Portuguese; all content in this wiki page is translated to English.

This is the primary source document (E-Redes’ proposal). The NRA’s opinion on this document is in Source - ERSE Parecer PDIRD-E 2024.

Issuer: E-Redes (Operador da Rede de Distribuição; Portugal’s sole DSO, formerly EDP Distribuição, renamed 2021); submitted to ERSE and DGEG by the 15 October 2024 deadline

Planning period: 2026–2030 (quinquennial; biennial update cycle per DL 15/2022 Art. 130)

Legal basis: Decreto-Lei 15/2022, Art. 128; also constitutes a programa setorial under DL 80/2015

Investment overview

Five strategic investment pillars (2026–2030) (pillar figures as stated in the plan’s pillar sections, at primary cost before financial contributions; they sum to ~€1,351M, not to the €1,607.6M total-cost figure above):

Tariff impact: near zero in real terms. Average annual change in unit allowed revenue for ORD-controllable costs (2025–2030): 0.1% (central consumption scenario) to 0.9% (lower consumption scenario); on total AT/MT revenue −0.5% to 0.4%. The plan states these nominal increases are well below forecast inflation, so unit revenues fall in real terms, and the effect on the average end-customer price is nil or practically nil.

European benchmarking: E-Redes investment per customer (€83/customer) is 50% below the European peer average (€122/customer). Investment per TWh distributed (€11.57/TWh) is 30% below peer average (€14.96/TWh). E-Redes frames this not as underinvestment but as the result of prior efficiency; European peers are expected to converge upward. The plan itself frames the investment as ~50% above the inflation-adjusted PDIRD-E 2020 proposal, still below the European consensus (~2x current investment), and includes €304M (17%) of avoided investment from condition-based asset-life optimisation and network-management efficiency.

Economic impact: E-Redes’ own study, using input-output analysis (INE 2017 I-O model), estimates the €1.61B investment generates ~€1.26B GDP impact over 5 years; income-side split: ~€573M wages, ~€72M net taxes, ~€611M gross operating surplus.

The flexibility methodology — §2.2 (the central contribution)

This document provides the most detailed published account of how E-Redes operationalizes the “flexibility first” requirement from EU Directive 2019/944 Art. 32 and Portuguese DL 15/2022.

FIRMe programme

E-Redes launched FIRMe (Flexibilidade Integrada em Regime de Mercado — Integrated Flexibility in a Market Regime) in late 2022, in anticipation of the legal requirement, to conceptualise and explore efficient flexibility solutions, adapt to the need to specify flexibility requirements, and stimulate the market by raising awareness among flexibility service providers (FSF) and promoting participation in the new local flexibility market. The plan (§2.2) states that developing flexibility alternatives rests on two pillars:

1. Smart grid data for synthetic realistic load diagrams: as described in §2.1.3.1 (E-Redes’ general probabilistic planning, developed with the national scientific community), installations are segmented using DBSCAN (density-based) and hierarchical clustering into typical daily diagrams by weekday type (business day / Saturday / Sunday) and season (winter/spring/summer/autumn); Markov chain transition matrices (probabilities of transition between states) then generate random daily load diagrams for each installation type
2. Probabilistic network planning: the DPlan (Distribution Planning) tool assesses network performance across the simulated operating regimes rather than only a maximum-load case. Probabilistic analysis of the synthetic diagrams yields the flexibility requirements: maximum power required, service activation windows, and the installations and voltage levels able to help resolve the constraint

Reserve price concept (preço de reserva)

For each investment project, E-Redes calculates the reserve price — the maximum price it would be willing to pay for flexibility services that would make the flexibility alternative economically competitive with conventional grid investment.

Formula:

Reserve price = Flexibility-specific benefits − Benefits lost vs. conventional investment

Where:

• Flexibility-specific benefits: deferred investment (NPV of delayed CAPEX) + higher residual value at end of analysis horizon
• Benefits lost: reduction in technical losses, which only the conventional investment delivers (the plan says flexibility’s contribution to loss reduction is negligible)

Key finding: Because the development-of-network investments in the plan are efficient (mostly benefit/cost ratio > 1), the analysis of a range of flexibility alternatives found the reserve price tendentially negative. The reason: efficient grid investments generate broad co-benefits — particularly technical loss reduction — that cannot be replicated by a flexibility alternative. Even when a flexibility service can fully resolve the identified congestion constraint, the conventional investment also reduces losses across the network, improves quality of service in adjacent areas, and generates benefits beyond its original scope. Flexibility cannot capture these co-benefits.

The wiki’s reading of this: the more economically efficient a conventional investment is, the less competitive flexibility becomes.

Even favourable cases stay negative: the plan reports the reserve price was still tendencially negative in cases expected to favour flexibility — where the flexibility alternative would only be needed for a few years, and where the investment generates a significant share of its benefits late in the horizon (lower present value at year zero).

Probabilistic planning as the flexibility enabler

Because a pure “plan to 100th percentile” approach consistently produces negative reserve prices for development-of-network projects, E-Redes proposes a risk management framework:

• Traditionally, supply-security investments are planned to meet the peak, i.e. the 100th percentile of consumed power, which the plan says leads to investments perceived as inefficient
• E-Redes instead proposes to defer investments whose load is already met by the base network 95% of the time (a limit that may be adjusted with experience), and to manage the risk above that threshold with flexibility services, publishing the corresponding flexibility requirements
• If the market does not respond to published flexibility requirements, the DSO must still ensure supply and the investments in the plan are executed

The plan presents this as the methodology designed to allow flexibility alternatives to be presented at all, despite the negative reserve price for efficient investments.

MQS and PRA projects — why flexibility is largely inapplicable

For quality-of-service improvement (MQS) and asset renovation/rehabilitation (PRA) programmes, E-Redes finds flexibility largely inapplicable due to network topology:

Three failure types are identified for degradation events:

• Type I: fault in an unhealthy network block; the block cannot be energized without feeding the fault; flexibility is ineffective (cannot energize customers without also energizing the fault)
• Type II: healthy antenna block interrupted because of a fault in an upstream (unhealthy) segment, its supply depending exclusively on that segment; the plan considers flexible load management conceivable for types II and III, but the plan’s MQS portfolio contains no type II case (and, for PRA, type II cases are described as less recurrent)
• Type III: healthy block interrupted by an upstream fault, where supplying it in full via reconfiguration would breach regulatory limits because of overload; the plan calls this the case most suited to flexibility, since flexible load management can relieve the overload

The document finds that the causes of degradation addressed by the MQS projects fall essentially into type I; none of the MQS investments named in the plan fits type II or III. Type III (theoretically the most amenable to flexibility) is rare because, where it would arise, the constraint has typically already been resolved by an earlier development-of-network investment.

Exception — PRA of substations/AT lines: These fall predominantly under type III, because the failing asset can be isolated automatically or remotely (e.g., a failed substation’s MT switchboard is isolated from the MT network), allowing the loads to be managed without feeding the upstream fault. PRA of MT lines is predominantly type I, so no flexibility alternatives are identified there. Flexibility can affect only the failure-consequence side of the risk score (via the TIEPI-based Quality of Service value, and only while that is the largest business value), not the health or failure indices. Reviewing the PRA risk portfolios, the plan identifies a single need where flexible load management reduces the risk level: the AT/MT renovation and rehabilitation of SE Valença (Ficha n.º 140), where the flexibility alternative allowed the investment to be deferred from 2026 to 2029.

Projects assessed for flexibility alternatives

The plan states that stochastic models and flexibility alternatives together allow 7 projects to be deferred (executive summary and chapter 9.3.2), but the main document does not enumerate all seven (the flexibility requirements are in Annex C.4, which is outside the raw file). The projects explicitly identified are:

Supply-security projects:

• Fichas 51, 52, 55, 56, 57 (four substations and one MT network reinforcement; the plan does not say which of the five is the MT reinforcement): the projects that eliminate power not guaranteed in N-regime (chapter 3.1.1); of these five, flexibility is a viable alternative in four, so investments are scheduled to start in 2028, taking into account the possibility of short-term contracting of flexibility in the market. The plan does not identify which four. Separately, §2.2 counts “six projects justified by supply security” as Fichas 51, 52, 53, 54, 55, 57, which omits Ficha 56 and includes the Beja and Bragança substations; chapter 3.1.1 treats those two as the separate district-capital objective, so the raw’s two lists do not reconcile
• Fichas 53, 54 (new substations in Beja and Bragança): district-capital supply objective (two-substation feed); flexibility requirements were published in the market but no proposals fully met them, so the plan builds both; Beja: 60/15 kV at Parque Industrial; Bragança: 60/30 kV

Asset renovation project (Ficha 140):

• SE Valença (substation renovation/rehabilitation): the only asset-renovation (PRA) need where flexible load management reduces risk — the flexibility alternative allowed the investment to be deferred from 2026 to 2029. Flexibility works here by reducing the failure-consequence value (TIEPI-based Quality of Service), not by replacing the asset.

Summary: four of the five supply-security projects have flexibility as a viable alternative (scheduled to start in 2028); the Beja and Bragança substations were tested in market and no proposals fully met the requirements; SE Valença is the only asset-renovation case where flexibility deferred the investment.

Digital Transformation pillar

Total €193M. Six categories: IT/OT application ecosystem, digital infrastructure and platforms, distributed computing, network digitalization and innovation, resilient connectivity, cybersecurity. Key technology bets: Digital Twin of the network at all three voltage levels; 5G communications; SCADA/ADMS modernization; smart metering enhancement (bidirectional flow monitoring, consumption pattern prediction); AI and IoT.

Data gaps

• Results of FIRMe Third Auction (H1 2026 expected) — whether the supply-security projects with flexibility alternatives receive adequate market responses

Relationship to other wiki pages

• Distribution Network Development Plan — Portugal/PDIRD-E section; reserve price methodology; probabilistic planning; flexibility-alternative projects
• Source - ERSE Parecer PDIRD-E 2024 — ERSE’s opinion on this document; recommends deeper probabilistic analysis
• Source - E-Redes FIRMe Programme — operational programme implementing this methodology; auction results; Piclo platform
• Flexibility Market — FIRMe as Portuguese local flexibility market equivalent of Swedish SWITCH/NODES
• Distribution System Operator — E-Redes as EU’s most operationally advanced example of Art. 32 “flexibility first” implementation
• Network Code on Demand Response — NC DR Art. 43–44 DNDP flexibility content requirements; PDIRD-E as advanced practice model