Network May 2019

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NETWORK / 43 / MAY 2019 I N A S S O C I A T I O N W I T H Hinkley Point C remains the only project currently under construc on. Unsurprisingly, this has raised concerns about how the UK's long-term baseload will be provided. For the water sector, the future is no less challenging. Back in March, the Environment Agency's chief execu ve, Sir James Bevan, delivered a rallying speech at the annual Waterwise conference in which he warned chronic water shortages could plunge England into the "jaws of death". Adding to the complexity of industry trends impac ng u li es, organisa onal stability is a signifi cant challenge faced by both energy and water companies. "In the energy market, conven onal business models are increasingly being challenged by agile businesses adept at naviga ng the new energy landscape," says Ted Hopcro , energy and u li es expert, PA Consul ng. "For water companies, the background threat of re-na onalisa on, aligned with what looks to be a tough price control, is causing companies to review their business fundamentals." According to Hopcro , both water and energy companies are seeing regulators tackling the cost of capital with a renewed vigour. There is a clear determina on not to repeat the post- fi nancial crash scenario where perpetual low interest rates provided great opportuni es for asset businesses. U li es are facing immense cost pressures at a me when customers are also expec ng an increasingly personalised service. Toby Siddall, managing director and UKI u li es lead at Accenture, says that energy suppliers in par cular are tackling a complicated environment. Suppliers must respond to the price cap, while also mee ng obliga ons from the smart meter rollout, and commitments to faster switching in a marketplace awash with new entrants. "While compe on is intense, the marketplace is simultaneously addressing supplier failures and safeguarding the interests of customers impacted," says Siddall. "It is a complicated environment in which to transform your service and customer rela onship, as well as equip your business for a future that benefi ts both customers and shareholders. But this is what needs to happen, and fast." THE THREE DS For energy supplier Centrica, there are three major trends that are transforming the way the company does business and the way it serves customers: decarbonisa on, decentralisa on and digitalisa on. Alongside the shi towards renewables and fl exible energy sources, there is a simultaneous movement away from power being produced in large centralised power sta ons. "This is a hugely posi ve development but one that is crea ng fresh challenges for energy networks," says Sam Salisbury, labs director, Centrica Innova ons. The impact of these market changes has been amplifi ed by the emergence of new technologies that are fundamentally altering the tradi onal energy landscape. "The arrival of electric vehicles, coupled with advances in connec vity, ba ery CENTRICA'S GUIDING PRINCIPLES As part of the transi on facilitated by Centrica Innova ons, the company is working to embed three guiding principles within its business units: 1. Purpose: working on big and meaningful problems leads to sustained value crea on. Profi t and purpose live together, not separately. This enhances the focus on the customer. 2. Test and learn: spend less me planning and analysing and more me doing and evalua ng. Move faster, with more convic on in a less certain environment. 3. Do it with partners: partners can accelerate the pace of innova on. "We don't have to do it all ourselves," says Salisbury. LEEP UTILITIES IN FOCUS Mul -u lity operator Leep U li es is a joint-venture between Ancala Partners, a mid-market infrastructure investment manager, and the Peel Group, a private real estate investment and infrastructure fi rm. As an IDNO, Leep says it can off er a fl exible and commercially advantageous alterna ve to the incumbent distribu on network operators (DNOs) in the adop on of electricity networks on new and exis ng developments. Under its regulatory licence, the company can adopt electricity networks that have been constructed by Na onal Electricity Registra on Scheme-accredited independent connec on providers (ICPs) in return for a fi nancial contribu on. This cannot be off ered by an incumbent DNO. Leep's adopted network por olio includes MediaCityUK, the technology and media hub home to the BBC and ITV in Manchester; Princes Dock, a vibrant neighbourhood and integral part of the Liverpool Waterfront; and Canary Wharf Group's Wood Wharf district, a new mixed-use waterside community comprising more than 3,300 homes and alongside shops, restaurants and community facili es.

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