Utility Week

18 | 31ST JANUARY - 6TH FEBRUARY 2020 | UTILITY WEEK Policy & Regulation traditional energy market model, and networks in particular – if cities such as Manchester, for example, were to become microgrids. However, it's a transition that Ennis views as perfectly feasible. "We have supported tech trials in parts of Manches- ter, such as the Triangulum project, where we took the Oxford Road corridor and all of the assets there and operated it as a microgrid with a reduced carbon foot- print. So, it is possible for those things to be scaled up at city level." Yet how disruptive is it for incumbents? "It's abso- lutely clear that the distribution level has been installed for more than 100 years. It is a relatively dumb network. In order to be relevant in the new environment they are going to have to create an intelligence on the network that doesn't exist yet. "So, it's not that we don't need it [the network], it's just that it is going to have to develop into an intelligent bi-directional network as opposed to a uni-directional one." And there will be issues for the national transmission network, he believes. "We've already seen a challenge to the national transmission network because of this move- ment away from centrally generated power. And I see more and more challenge to the transmission network. "But I also think that it would be wrong for us to sug- gest that some level of central generation is not relevant – it is. Because if you just had completely separate micro- grids with no interconnectivity, you've then created a vulnerability on the network that you really don't want to have." Regulation for the regions Under such a decentralised system, how much would regulation need to change, I ask Ennis? Do we need to think far more about its future role, and quickly? The current model is quite traditional, with a traditional price control approach. Do we need to rethink its boundaries? "I think regulation, as with all elements of an evolv- ing solution, has to evolve at the same time. To think we can treat the system the same way we treated it ten years ago would be wrong," he says. "You're right that there is probably quite a tradi- tional approach to how we are valuing the network, and that's not going to be appropriate going forward. "But I do still think we need it. This is not about deregulation and unregulated networks; that would be fundamen- tally wrong. I do see a role for regulation, but it will evolve to suit the purpose of the new system. That's very important." Decentralisation dividend So does Siemens see a major potential opportunity to make money from a new decentralised system, I ask? "Yes, we see the potential. We see the money there and we see need there. We're not the only player in this space but would argue that we're probably the one that could fill almost all elements of the heat, energy and transport space. "And we could do that in a co-ordinated and inte- grated manner, which is really, really, key. We see this as a great opportunity – both for in the UK itself and for us as a global player – to take that competency and apply it around the world." Northern star With the policy of regional growth now a clear political issue, has the raising of the debate pleased Ennis, I ask? "Yes, because I think – particularly on these topics – the solution is that while it may be a national framework, it will be delivered regionally. "I think the North over the past 100 years has shown itself to be capable of leading revolutions. The last we had was the industrial revolution, now we are talking about the energy revolution. "And I think you'd be surprised how innovative the regions can be. When given a little bit of space and sup- port, they o–en come up with the answer." Suzanne Heneghan, editor, Utility Week l Next Week: Henri Murison, chief executive, Northern Powerhouse Partnership, on why utilities will be key to regional growth Siemens fact file • Siemens is a major employer across the North of England with ten significant facilities in the region, employing more than 6,000 people and more than 200 apprentices. • Activities include the manufacture of variable speed drives in Cheshire, the production of gas turbines in Newcastle, and the development of the UK's first wind turbine blade manufacturing facility in Hull. • The company has recently announced plans to establish a new state-of-the-art factory to manufacture and com- mission trains in Goole, a development that could see an investment of up to £200 million. • It is investing in the North's graduate and R&D capacity, recently opening two digital innovation labs at Newcas- tle University and Sheffield University. It also partners with Manchester University on technology research; Trafford College, the University of Salford by supporting an automation degree; and technical colleges in Shef- field, Hull and Crewe. Interview continued from previous page "Nobody is looking for guaranteed returns. I think most commercial environments accept some level of risk, but the risk at the moment seems dispro- portionate to the returns you are likely to get. That balance needs to change."

• Cover