Utility Week

UTILITY WEEK | FEBRUARY 2022 | 21 Electricity strategic system thinking, this is likely to be largely at transmission level, with some model of Distribution System Operator (DSO) sitting underneath to manage and plan local networks separately from asset ownership. Sitting alongside DSOs will be local authorities, who will have to take on an increasingly active role in local planning, especially for heat. DSOs are increasingly working with local authorities to bring for- ward their plans for net zero, but one network operator said it would expect the FSO to lead on setting the approach to local planning. The issue of local planning is complicated by the number of parties involved – includ- ing low-carbon hubs, city authorities and new cleantech clusters – all of whom move at di• erent speeds, have di• erent targets, and access di• erent sources of funding, yet all our able to mobilise change. The attendee added that supporting local authorities and other bodies to create invest- able plans "cannot wait". "It would be great to have the trust in the FSO to be able to have a discussion about a region without it being an invested discussion." There was consensus around the table that the FSO could play a role in either pro- viding advice directly to local authorities or in setting the approach to local planning. However, one attendee was cautious in their thoughts as to how much the FSO will be able to do at a local level. "When you look at the scale, it seems unlikely the FSO is going to get involved in local engagement in the next 10 years – let's not get carried away," they said. Meanwhile, it would make sense for the FSO to set a consistent approach for DSOs and other parties to engage with local authorities to support them to create their plans. "I feel we are in a very bad place with local plans, and they are really important. "The FSO isn't going to be an organisation that can plan right to the kettle, so as well as DSOs we need a consistent comprehensive approach to the institutions that are going to do local planning. "The FSO could set that approach; it has a light but important role to play." Making sure consumers are not forgotten One area that was conspicuously absent from Ofgem's proposals was any detail on how to ensure the FSO delivers what custom- ers need, despite being ultimately for the bene‰ t of consumers. "Maybe we should be taking the system and turning it upside down," said one mar- ket expert. Thinking of customers ‰ rst would impose good discipline on decisions makers, ensur- ing all customer needs around EV charg- ing, heating, industry and commerce are considered right at the start of any strategic thinking. "There is a lot there that is impactful on, and will be impacted by, the rest of the energy system. "It's a massive missing element." The traditional top-down approach of thinking about the energy system has already undermined some of National Grid's projec- tions in its Future Energy Scenarios (FES). While immensely helpful, the last FES got its forecasts around demand-side man- agement "potentially dramatically wrong", which will have enormous cost saving impli- cations for the system and customers. Baking a customer-centric approach into the FSO from the start will be crucial, not least of all to ensure that vulnerable com- munities are not le" behind during the transition. "If you start at the top end with the cus- tomer, but also with the community at the heart of your thinking, how far does that take you in a di• erent direction?" What will it take to push the development of the FSO forward? Although the conversation around the FSO has moved on in the past few years, all agree that urgent action is needed to push the development of the FSO forward. The recent Covid-19 vaccine rollout is a great example of where a "coalition of will- ing parties" acted together to bring about change in two years rather than 10, giving many participants hope that an FSO could be in place by the end of the decade when big investment decisions need to be being made. Achieving such pace would be a question of funding, pragmatism around reducing "background noise" and getting the strategic vision in place as quickly as possible. One attendee put forward the sugges- tion that National Grid ESO could be proac- tive and try and get on with putting in place some of the necessary elements rather than wait for funding from Ofgem, or alternatively it could work out how much it would cost to achieve by a given date and put that to Ofgem. Others agreed: "We – and that's the whole industry not just Ofgem or BEIS – have to be prepared to carry more risk and think about it in a non-sequential way. "What can we get on with?" One attendee drew comparisons back to the covid vaccine rollout, and how its suc- cess was based on the acceptance of risk. "Vaccine companies made the vaccines before they knew they were going to be suc- cessful – they accepted that as a potential loss. However, the same energy expert also cautioned industry taking to much of a lead in the creation of the FSO. "With industry-driven initiatives there is always a danger for patchwork responses to emerge." Lucinda Dann, features editor in association with The view from Mott MacDonald Craig Lucas, director of energy transforma- tion, who took part in the discussion, said: "It's clear that setting up a truly independ- ent FSO is a very important step in getting our industry aligned around the real urgency of our net-zero targets. The breadth of the debate we have had really shines a light on the challenges the new organisation will face. "The sense of urgency is clear, and the need for pragmatism came across clearly too. Nevertheless, I came away from this conversation with two important issues which must be front of mind. "First, keep the consumer, and their needs as the energy system changes, at the centre of the discussion. Second, there is the challenge of facilitating action in a way that facilitates regions, cities and locali- ties who want to be ambitious and move rapidly, while protecting/supporting those who are less engaged." Meanwhile, Simon Harrison, Mott Mac- Donald's group head of strategy, said: "It was great to be part of such an energised group. It's clear that we can't wait for due process before getting on with this. Net zero is too important to delay, and big decisions need to be taken soon. We need the shadow organi- sation to be making a contribution quickly, even whilst the details of its future remain under development". group. It's clear that we can't wait for due process before getting on with this. Net zero is too important to delay, and big decisions need to be taken soon. We need the shadow organi- sation to be making a contribution quickly, even whilst the details of its future remain under development". "It's clear that setting up a truly independ- ent FSO is a very important step in getting our industry aligned around the real urgency of our net-zero targets. The breadth of the debate we have had really shines a light on the challenges the new organisation will face.

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