Source - 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.

Metadata

• Author: E-Redes (Operador da Rede de Distribuição; Portugal’s sole DSO, formerly EDP Distribuição, renamed 2021)
• Date: October 2024 (submitted to ERSE and DGEG by 15 October deadline)
• Document type: Proposta inicial (initial proposal) for sectoral programme
• Subject: PDIRD-E 2024 (Plano de Desenvolvimento e Investimento das Redes de Distribuição de Energia Elétrica)
• 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
• Raw file: Raw/proposta-pdird-e-2024-sem-anexos.pdf → extracted to Raw/proposta-pdird-e-2024-extracted.txt

Investment overview

Five strategic investment pillars (2026–2030):

Tariff impact: near zero in real terms. Controllable cost perunit revenue change: 0.1%/year (central scenario) to 0.9%/year (low consumption scenario) — well below forecast inflation, so tariffs decline in real terms despite nominal increases.

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 PDIRD-E 2024 investment itself is 79% above the prior quinquennium in nominal terms.

Economic impact: Using input-output analysis (INE 2017 I-O model), Ei estimates the €1.61B investment generates ~€1.26B GDP impact over 5 years; ~€573M in wages + tax; ~€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, specifically to develop the flexibility alternative methodology ahead of the legal requirement. FIRMe uses:

1. Smart grid data for synthetic realistic load diagrams: probabilistic characterization of each network node using DBSCAN (density-based) and hierarchical clustering, producing typical daily diagrams by weekday type (business day / Saturday / Sunday) and season (winter/spring/summer/autumn); Markov chain transition matrices to generate random daily load profiles for each installation type
2. Probabilistic network planning: Monte Carlo-based simulation engine (DPlan — Distribution Planning) that assesses network performance across the full distribution of possible operating states, rather than only the worst-case peak

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 (lower resistance = lower losses = real economic value; flexibility services have negligible contribution to loss reduction)

Key finding: For efficient development-of-network projects (those with benefit/cost ratio > 1), the reserve price is typically 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.

This creates a structural barrier to flexibility competition: the more economically efficient a conventional investment is, the less competitive flexibility becomes — precisely backwards from what “flexibility first” rhetoric suggests.

Partial exception: the reserve price is less negative (closer to zero or positive) when:

• The investment generates most of its benefits far in the future (lower present value of co-benefits)
• The analysis horizon is short (less time to accumulate loss-reduction benefits from conventional investment)
• The congestion is local and transient rather than structural

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:

• Plan grid to satisfy consumption with 95% confidence (not 100%)
• For the remaining 5% of operating states (peak hours that exceed the 95th-percentile threshold), contract flexibility services to manage risk
• If the market does not respond to published flexibility requirements, revert to conventional investment (the ORD obligation to ensure supply is unchanged)

This is the conceptual innovation that makes flexibility alternatives viable at all for the supply-security project category.

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 block isolated due to upstream fault in an unhealthy segment; flexibility cannot restore supply to an isolated block
• Type III: healthy block overloaded because upstream supply is curtailed; flexibility can help by reducing load on the healthy block

The document finds that most MQS projects in the current portfolio fall into type I. 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: When the failing asset can be remotely isolated (e.g., a substation’s MT busbar can be isolated from the HV fault), the remaining healthy load can be served via flexibility. The document identifies one project where this applies: SE Valença (Ficha n.º 140) — a substation renovation deferred from 2026 to 2029 through flexibility contracting.

The 7 projects with flexibility alternatives

Supply-security projects (Fichas 51, 52, 53, 54, 55, 57):

Six development-of-network projects justified by N-regime (not N-1) load satisfaction needs:

• Fichas 51, 52, 55, 57 (four substations) + Ficha 56 (one MT network reinforcement): five projects, four with flexibility as a viable alternative; scheduled for 2028 start, allowing time for market contracting before construction is committed
• Fichas 53, 54 (new substations in Beja and Bragança): district capital security projects; flexibility requirements were published in the market but received no adequate proposals; conventional investment required regardless; Beja: 60/15 kV at Parque Industrial; Bragança: 60/30 kV

Asset renovation project (Ficha 140):

• SE Valença (substation renovation/rehabilitation): the only case where flexibility has actually changed the investment timeline — deferred from 2026 to 2029. Flexibility here acts as a risk reducer for the consequence of failure (TIEPI-based), not a substitute for the investment.

Summary: of 7 projects, only 5 have flexibility as a currently viable alternative; 2 were tested in market (Fichas 53/54 for Beja/Bragança) and found no takers; 1 (SE Valença) uses flexibility to defer rather than replace 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

• Annex C.4 (detailed flexibility requirements for each of the 7 projects) — available in the full annexes version
• Annex G.5 (E-Redes/INESC-TEC study on grid planning with distributed flexibility management) — the methodological foundation for the probabilistic planning approach
• Results of FIRMe Third Auction (H1 2026 expected) — whether the 6 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; 7 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