Utility Week

Utility of the Future: Business models and skills UTILITY WEEK | 17TH - 23RD JANUARY 2020 | 7 T he threat of rena- tionalisation may have lied, but increased financial and environmental pres- sures will continue to be exerted on water and energy companies. Com- bine this with greater consumer expectations and advancing technology and it all adds up to not being business as usual. How can energy retail become more efficient and what part do non-regulated business arms have to play as energy companies transition to a new way of working? And can they be charging for energy in a dif- ferent consumer friendly way that encourages and helps users save energy? In the third pillar of our util- ity of the future coverage we look at some of the ways that firms will be shaped by these forces, what it might mean to the way they operate and the skills that might be required. Our Business models and skills pillar will explore in the coming weeks for example: • The networks and what it means to transition to a DSO – what changes this entail and how much progress is being made. • What types of skills will be necessary for water compa- nies to tackle the huge chal- lenges they face in terms of improving resilience and improving efficiencies – will the workforces be available. • How utilities transition to become digital entities – where will the skills come from and what priorities are needed to become a digital water company? • How should energy compa- nies charge for electricity – is new thinking required? We kick off with a look at the ambitious target that water com- panies have set out to become net carbon zero by 2030 and what will it take for the one of the UK's most energy-intensive industries to cut their carbon dioxide emissions. Denise Chevin, intelligence editor, denisechevin@fav-house.com T he deluge of rain and floods that hit many parts of England in the months leading up to Christmas, not to mention ferocious bushfires in Australia, provided further evidence of the devastating impacts of global warming and the need for drastic action to drive down greenhouse gas (GHG) emissions. As the fourth most energy-intensive industry in the UK, the water sec- tor is a major national contributor to emissions, responsible for around five million tonnes each year, roughly equivalent to 378,000 cars. Aware of the impact, water compa- nies in England and Wales have joined forces with an ambitious commitment to achieve net zero emissions by 2030, ahead of the government's 2050 net zero target for the country as a whole. The pledge could signal a major turning point and is one of five vol- untary public interest commitments agreed by the sector. A roadmap for implementation of net zero is currently being developed by trade body Water UK in collaboration with consultants Ricardo and Mott MacDonald. Experts are predicting fundamen- tal changes to water infrastructure systems, plus greater interaction with other infrastructure sectors, the envi- ronment, wider society and the econ- omy. Some projects, such as a plan to plant 11 million new trees that will suck CO2 out of the atmosphere, are already under way, while other activi- ties will require more effort, research and investment. The net zero plan must deliver GHG reductions yet still accommo- date rising environmental standards of water quality and Ofwat's require- ment to cut annual consumer bills. It also raises serious questions for sup- ply chain activities and infrastructure assets. Brian Cox, water management consultancy practice director at con- sultancy Atkins observes: "The com- mitment will require collaboration across the supply chain to ensure that emissions are reduced across all sup- pliers rather than simply being dis- placed. Bold decisions will be need to consider whether carbon-inefficient assets with years of life remaining are better replaced sooner." Decarbonising water Can water reach net zero by 2030? Water companies have ambitious plans to reach net zero carbon by 2030, ahead of commitments made by other industries, but how will the strategy work, what changes to technology and infrastructure are required and who will foot the bill? Stephen Cousins reports. The water sector's five Public Interest Commitments In a sector-wide initiative, water companies have made five big promises. • Triple the rate of leakage reduction across the sector by 2030. • Make bills affordable as a minimum for all households with water and sewerage bills more than 5% of their disposable income by 2030 and develop a strategy to end water poverty. • Achieve net zero carbon emissions for the sector by 2030. • Prevent the equivalent of 4 billion plastic bottles ending up as waste by 2030. • Be the first sector to achieve 100% commitment to the Social Mobility Pledge. continued overleaf ☛

• Cover