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UTILITY WEEK | 11TH - 17TH MARCH 2016 | 25 Operations & Assets Analysis From talk to action Can too much talk about energy system transformation lead to inertia and confusion? Jane Gray asks how the sector can move forward. I t seems logical that better understanding our challenges should help us move forward with greater confidence and purpose. But such is the complexity of change in the energy system today, that discussion of transformational trends oen feels like it has le us none the wiser about the way ahead. Indeed, talk about transformation encompasses the ways in which different elements of the system are squaring up to the trilemma, radical changes in business models and disruptive technologies. Is such language overblown? Duck below the crossfire of vision- ary statements, and on the whole, you'll still find a system that is functioning reliably if not always as efficiently or economically as it might, a fact that might lead us to believe the inevitability and extremity of system transformation is overstated. And then there are events like the Young Energy Professionals (Yep) debate in Edinburgh to convince us that it is not, or at least not much. Yep was launched in 2013 by Energy UK and EY to engage bright young things in the energy sector in a debate about some of the most formative events and trends that are shaping it. The idea is that it will help them both understand and develop responses to sec- tor challenges as they progress on their trajectory towards leadership. Participants in the debate included representatives from all rungs on the career ladder. Seasoned industry leaders through to recently recruited graduates and students gathered to ask: "Where will the value be found in the GB electricity market in the coming years?" This is a critical question for companies to be able to answer, but not one that anyone seems to have a confident response for. Short presentations, delivered by an industry panel before a Q&A session, highlighted the extent of this uncertainty. They showed the declining profitability of most large, traditional energy suppliers, and independents struggling to be profitable too. They considered the difficulties of justifying investment in new thermal generation and the unflattering light in which many inves- tors are increasingly viewing opportunities in the energy sector – especially investments in the mid-ground of risk-reward ratios. Other presentations referenced more heavily the trends of decar- bonisation and decentralisation that are now widely accepted to be shaping the future energy system – especially electricity – and also identified that looking for value in the electricity system alone might be a mistake for traditional participants in this market. Increasingly, it seems, multi-vector value streams are emerging and this under- mines the conventional market structure. But although all these developments were recognised, a clear path through them to a stable and profitable future was much less easy to define. How, both in terms of practical operational changes and in terms of strategic intent, are companies responding to the changes we know are taking place in the energy system, and can organisa- tions with traditionally low-risk, low-reward investment profiles take their traditional investors with them on that journey? These are questions I look forward to exploring with attendees at Utility Week's Future Networks Conference later this month. Utility Week assistant editor Jane Gray will be chairing the Future Networks conference on 15 March. For more information, visit: www.uw-futurenetworks.net be on an overall project basis rather than individual component basis. Similarly, costs may not be representative of future "business as usual" purchase prices because these may be influenced by a vari- ety of parameters, including the project procurement framework, the technologi- cal readiness of the devices and systems, and future developments and economies of scale. • When evaluating R&D projects, eco- nomic results should be used as a means to identify relevant drivers of revenues and expenditures to optimise the use case for further deployment and rollout across a business. • Economic results should be updated peri- odically to reflect new benefits or cost information that will influence the cost- benefit ratio or improve the accuracy of the results (particularly for assessment of the impacts on operational processes). • Beyond the differences in costs for a DSO rolling out an innovative solution across its network, the economic results depend on the context of the use case – the char- acteristics and topology of the network where the use case has been implemented, the existing operational processes, the architectural fit of selected use cases to existing equipment and the level of smart grid functionality already deployed in the network, the DSO's procurement systems and internal cost structures, and the regu- latory framework. The approach developed through Discern indicates that economic analysis of smart grid use cases provides significant value by helping identify which aspects of the devel- oped solution and technology have the greatest impact (positive or negative) on the derived costs and benefits. This is especially useful when scaling the solution across a business or when planning to replicate the solution in other network environments. From the initial work undertaken within Discern, we can conclude that the considera- tion of potential developments through time and further analysis and appraisal based on increasing experience are necessary to fully explore and describe the benefits provided by smart grid solutions. This experience will also further assist the development of sophisticated economic models to support assessment of the potential benefits and rep- licability of solutions. Alan Birch, principal consultant, networks, market and strategy; Daniel Grote, senior consultant, policy and regulation; Katrin Spanka, consultant, energy business processes, DNV GL – Energy