Network September 2018

Issue link:

Contents of this Issue


Page 38 of 43

NETWORK / 39 / SEPTEMBER 2018 will look like is anyone's guess. Could this nally provide a solution to the long-running problem of customer disengage- ment as many are hoping? One participant pointed to the issue of cyber-security in particular, which he said inherently involves a high-level of uncertainty. In the cat and mouse game between attackers and defenders, one sure- re way to lose is to become predictable. Democratisation and disruption The attendees added a few more Ds to the list, the fourth being democratisation. With Labour calling for renationalisation of the energy networks, who owns and gov- erns the energy system is up for debate in a way which hasn't been the case since privatisa- tion. Many local authorities are also returning their attention to the energy sphere following a long hiatus, whether it be through community energy and district heating schemes or the rollout of EV charging infra- structure. The € h D was disrup- tion. Wherever you look in the industry the old order is being upended, o€ en by players from outside the sector. There were various suggestions as to what will be single biggest source of disruption – from innovative business models and aƒ ordable long-range storage to arti cial intelligence and the Internet of Things. The conversation then moved on to how to deal with this uncertainty. Having had little di… culty in identifying the problems the industry faces, attendees understandably found it harder to come up with solu- tions. There was agreement that regulations are failing to keep up with the pace of change, with several attendees arguing this has become an inevitabil- ity. They said regulators should not try to get ahead of new developments for risk of sti† ing innovation, and should instead seek to be as agile as possible – reacting quickly to problems as they arise. Some called for the crea- tion of a multi-utility regulator to re† ect the move towards whole-system thinking. Among the more radical proposals was to create competition between multiple regulators which con- sumers could choose between. There was also broad con- sensus that policy-makers and regulators should be pragmatic – focusing on the ends rather than the means. No option should be oƒ the table if it pro- duces the right outcome. Protecting consumers Everyone agreed consumers should be central to decision- making. They pay the bills and will have to live with the results. There were calls for more public debate over issues such as the decarbonisation of heat which could have a very notice- able impact on their daily rou- tines and require their buy-in. Many thought one of the best ways to deal with uncertainty is to create market arrange- ments that properly compensate participants for the value they bring, whilst also charging them appropriately for the costs they impose. This would help to facilitate the dynamic optimisation of the energy system, lowering energy bills, and allow new products and services to nd their place, even if they were unanticipated. However, several attendees raised concerns over the impli- cations for equity and vulner- able customers. Whilst strong price signals might be appropri- ate for electric vehicle charg- ing, said one, this would be unacceptable for heating where high prices during periods of peak demand could have fatal consequences. This is one of the conun- drums which Ofgem is looking to resolve as it examines grid ac- cess arrangements and network charges via two signi cant code reviews. There are plenty more ques- tions still le€ to answer. Views from the speakers: "The choice really is about how much you rely on market- based signals to govern decentralised decision making around the system and how much you try and centralise through regulatory interventions on rules. I think the jury's out on that one." Akshay Kaul, director of net- work price controls, Ofgem "One of the answers is making sure you have a framework in place that allows proper interactions between the local and the national and you have correct allocation of prices and risks." Jason Mann, senior managing director, FTI Consulting "Everyone has posed questions and the reality is decisions need to be made in the next few years about some of these things." Mark Brackley, project director for RIIO2, National Grid "Figure out what is it you want, give the right incentives to the companies, and then let them go and deliver." Suleman Alli, director of strat- egy and regulation, UK Power Networks Sponsored by:

Articles in this issue

Archives of this issue

view archives of Network - Network September 2018