Future Governance and Technical Risks in a Net Zero World with Distributed Electricity Systems

This report explores the critical governance, technical, and operational challenges associated with integrating Distributed Energy Resources (DERs) into power systems comprising protection and control devices from multiple vendors. As the global transition to renewable energy accelerates, the widespread deployment of DERs introduces complexities in ensuring effective coordination between diverse protection and control systems, addressing interoperability issues, mitigating technical risks, and developing adaptive governance frameworks. Tackling these challenges is essential for maintaining the reliability and resilience of modern power grids.
Through a systematic approach, this study combines a rapid literature review, technical modelling, and a stakeholder survey to identify key challenges and opportunities. The literature review highlights that while protocols such as IEC 61850 provide a foundation for interoperability, differences in vendor
specific implementations lead to coordination failures, particularly under abnormal operating conditions. Simulations demonstrate the effectiveness of adaptive protection schemes in DER-rich grids, particularly for addressing transient instability and low short-circuit currents. The survey findings
further emphasise critical governance challenges, including unclear risk ownership, fragmented liability allocation, and the absence of standardised service-level agreements (SLAs). Participants also identified interoperability barriers, such as protocol inconsistencies and hardware incompatibilities,
alongside cybersecurity risks related to data privacy and regulatory gaps.

Key insights from this analysis underline the need for collaborative efforts to address these challenges. Establishing standardised governance frameworks and risk allocation mechanisms will enhance accountability in multi-vendor systems, reducing operational inefficiencies. Developing and enforcing consistent interoperability protocols, such as standardised implementations of IEC 61850, can mitigate technical risks and ensure seamless coordination between diverse systems. Additionally, addressing cybersecurity concerns through advanced encryption, real-time monitoring, and regulatory alignment will strengthen system resilience against cyber-physical threats. Emerging technologies, including machine learning for predictive analysis and blockchain for secure data sharing, offer significant opportunities to enhance reliability and transparency in multi-vendor environments. Standardised compliance testing frameworks will also be crucial to ensure interoperability and maintain consistency across evolving DER systems.

The results underscore the urgency of proactive regulatory reform to align technical and governance standards across regions and vendors. Stakeholders must prioritise capacity-building initiatives to address the skills gap in emerging technologies such as Time-sensitive Networking (TSN) and edge computing. By tackling these challenges, the energy sector can create a resilient, interoperable, and sustainable foundation for distributed power systems, accelerating the transition to a net-zero future.