Issue link: https://fhpublishing.uberflip.com/i/1003889
NETWORK / 12 / JULY/AUGUST 2018 U tility Week Live set my head spinning. Numer- ous stands and speakers set out their roadmaps to a greener future, championing innovation and new business opportunities. Very impressive - yet why was it so unconvincing? As I read the signs, they indi - cate what we really have ahead is a self-inflicted shambles, which will frustrate custom- ers, add costs to bills, bankrupt entrepreneurs, and cause energy policy failure. The elements of change are encouraging: decentralisation of renewable generation and storage, flexibility of demand, community energy, new energy services and home automation. REGULATION Bring it on. Indeed, be encour- aged by the excellent Low Carbon Network Fund demon- strations and the fresh thinking from parties now knocking on the sector's door. But where is the coherent thinking for the massive change in data systems and automa - tion needed by smarter systems, what arrangements are we mak- ing to interface with the myriad of new parties outside today's change governance and regula- tory oversight. In the absence of co-ordinated development there is potential for serious disruption such as described in the panel on the adjacent page. As indicated, there are numerous potential solutions to avoid nightmare outcomes, but where solutions involve multiple parties, whose job is it and who is accountable? The challenges span policy and commercial boundaries and today no party has accountability for ensuring joined-up outcomes. The system operator has visibility of the transmission system, but that's little comfort now the chal - lenges are coming from beyond the meter. Looking broadly, how do we facilitate essential coordination as technical and commercial complexities ramp-up and we move from silo-based to whole- system challenges? Technology and business models working seamlessly across multiple par - ties doesn't happen by magic. Coordination is essential to ensure a friction-free experience for customers and it concerns It's the wrong kind of disruption Editorial board member and independent consultant John Scott foresees self-inflicted problems for the energy sector. me greatly that I don't hear these issues being debated and I don't see them prominently on policy makers' agendas. For example, I see nothing of this in Ofgem's RIIO2, the ENA's net- work innovation strategy, BEIS smart appliance proposals, or in networks moving innovation to business as usual. At the core is the new charac- ter of future system functional- ity, which presents a discontinu- ity for network companies and regulators. Functionality is now moving across the boundaries drawn up at privatisation. New arrangements are needed, as the silos of ownership no longer align with critical system functions. The implications are serious at all levels with a fundamental problem being the vacuum in whole-system coordi - nation and accountability. Returning to central plan- ning is not the solution. It would struggle to deliver the blend we need of multiple players, open-system methodologies, and enabling coordination roles. Open systems, well established in other sectors, encourage en - try of market players and avoid lock-in to proprietary systems and data. These are key to an effective market - but are never the product of a market itself. Markets have to be created and their operating rules agreed. Raw market power results in 'Might is Right' outcomes, which may be monolithically uniform, but are not true open systems and put a brake on innovation. So, we're facing the 'wrong kind of disruption'. The unin - tended misalignments in today's regulatory arrangements will create disruption that has seri- ous long-term consequences. The deeper conundrum is that the parties themselves may hesi- tate to propose change. For ex- ample, the network companies have a duty to deliver returns to their owners, but those returns are earned under the regula- tory models, risk profiles, and boundaries of today's licences, codes and standards. It is policy-makers who must signal their wish for new thinking to