Utility Week

UTILITY WEEK | MAY 2022 | 31 Networks needed to optimise the system. That's meant to be compensated for through network charging pricing structures, but frankly that doesn't happen. "Recent charging reforms have actually weakened rather than strengthened the price signals." She went on to say that if Ofgem and gov- ernment does not give real priority to getting price signals all the way through to custom- ers, "we're going to lose a massive opportu- nity" in the coming years. A starting point would be "workarounds in the short term that can keep the current smart tari• s in the market alive", she said. She highlighted that the few smart tari• s currently on the market, including Octopus's Agile tari• , were being o• ered at a loss and purely as proof of concept. She said: "I really worry that just as we're seeing electric vehicles (EVs) really take o• , we're also in a situation where o• ering EV users the opportunity to be rewarded for charging o• peak is not commercially viable. "So we have a real mismatch in tim- ing here which needs some sort of manual workaround while we sort out the enduring arrangements." Fletcher made the case for releasing the potential of the energy retail market to innovate quickly and deploy new products at scale, saying: "What we need, ultimately, is the reward to do that, which is currently very, very thin indeed." David Watson, Cadent's head of energy transition, agreed that the incentives need to be in place to drive innovation around ‰ ex- ibility and storage. However, he said, this must include a wider pool of actors than is currently the case. He pressed the need to break down bar- riers to entry for companies o• ering new and innovative solutions and for mechanisms to enable open data right across the energy industry, including to new entrants. "If we create the markets and give them the tools to do it, the innovation will happen. And it will happen in a way that will be much more engaging to consumers than if it was the likes of just energy companies doing it." He described the current regulatory tools to drive forward innovation, digitalisation and decarbonisation as "clunky and ineŒ - cient", including an "in‰ exible" approach to price controls. Watson said a starting point would be reform of the way net-zero reopeners are handled within the price controls. And he wanted this to go further with price controls for gas and electricity aligned, to "enable a whole systems plan for gas and power at the same time". Ofgem's deputy director for onshore net- works, price control setting, Steve McMahon, responded to the point, saying there were bene' ts in the current system in terms of being able to respond to a changing land- scape and carrying over lessons from multi- ple price controls. He said: "There's a broader question here in terms of that alignment. You don't neces- sarily need to align the price control time periods themselves to make that happen. There's lots of other enablers that you've got in place and that will be something we will look at as part of the RIIO3 considerations. "That will be one of the questions we ask. Do we need these price controls to be com- pletely aligned or are there other arrange- ments that we can put in place?" Whole systems thinking This need for a whole systems approach to decarbonisation was a key discussion point throughout the day, with several speakers presenting their own de' nition of the term as well as the ideal next steps. For Kayte O'Neill, head of markets at National Grid Electricity System Operator (ESO), the key was to broaden the debate away from a "networks-driven lens". She said: "The missing part of the debate is the conversation all the way through from production to consumption. How do we bring the consumer much more into the conversa- tion when we talk about whole systems?" Fletcher echoed these comments, point- ing out that the energy transition has largely been an internal process for the utilities sec- tor to date but that the next stage would be "all about the consumer". Watson brought the debate back to the trilemma, saying the key was to ensure that all technologies able to play a role in decar- bonisation are used in the optimal way to safeguard net zero, energy security and a• ordability. Van Heyningen's response, given before publication of BEIS and Ofgem's response to a consultation on the Future System Opera- tor (FSO), indicated that there was a key role for the FSO in taking a whole systems approach to the transition. Energy Systems Catapult's chief technol- ogy oŒ cer, Eric Brown, said the issue needed to be examined from a local as well as a national level. "It involves considering infrastructure, business models, markets, policy regulation, and people. And critically, it involves under- standing the interactions and interdepend- encies and trade-o• s that you have to make in the system to satisfy the needs of that var- ying group of stakeholders." He added that frameworks alone would not enable a whole systems approach and that agility would be needed. "You need a plan, but it has to be adap- tive. It needs to be recognised that there's going to be change over time." How far have we gone? A whole systems approach to net zero has been a mantra for many years, but how much progress has actually been made? Brown said: "When I ' rst joined the energy sector some 10 years ago, it wasn't part of the vocabulary to talk about whole systems and now it de' nitely is. "I think whole systems thinking has been very helpful in giving us insight into what we have to do, but I also think we're still chal- lenged with how we do it. Now is the time that we need to really look at how whole systems approaches can have a much bigger role in helping us to coordinate the e• orts of the broad spectrum of stakeholders that are going to be needed. "That's a very much coordinating task. It's not central control or central planning. It's a central coordination function that needs to be established. And I guess I have great optimism for the FSO in that regard." James Wallin, editor Future Networks conference Headline Sponsor: Capula Co-Sponsors: Ecomomic Insight Open dataso S&C Electric "You need a plan, but it has to be adaptive. It needs to be recognised that there's going to be change over time." Eric Brown, chief technology o cer, Energy Systems Catapult "You need a plan, but it has to be adaptive. It needs to be recognised that there's going to be change over time." Eric Brown

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