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It's a commonly talked about barrier to storage deployment which Smart Power too highlighted, yet recent statements made by Ofgem in front of the Energy and Climate Change Committee (ECCC) make it clear that those hoping the regulator's ra of reforms will include a new licence condition for stor- age are likely to be disappointed. Andy Burgess, Ofgem's associate partner, energy systems, told the ECCC that this was "not the immediate solution". Furthermore, Burgess flatly turned down the idea that the effective application of storage technologies – and the realisation of system flexibility – could be rapidly scaled up by allowing dis- tribution network operators (DNOs) to own and operate the technology – something they are currently barred from doing. What are Graham's thoughts on these developments? Despite the fact that they seem at odds with Smart Power's inclina- tions, he is unfazed and neutral. "Whether when it comes to the crunch the right answer… is a change to the way storage is classified or whether there are other ways you can achieve the same end goal – we are not in a position to say," he says, diplo- matically. "What is clear is any single regu- latory change on its own will not solve the problem." And what about the ability of DNOs to engage and become more commercially driven – again something the NIC seemed to advocate? Here Graham is more asser- tive: "We came up with a pretty strong rec- ommendation that moving distribution networks into a position where they are more actively operated is absolutely crucial as you move to a more distributed generat- ing system, as you move to smarter uses of power." The changes and complications inherent in that transition "might well lead to DNOs thinking more commercially and operat- ing some of the kinds of markets that the transmission operator does at the moment", he says. Pushed on just how much commer- cial opportunity regulated utilities should be given in order to allow and incentivise investment in transformative technologies, Graham pauses for thought, and concludes – again diplomatically – that it is an area with potential. He apologises for not being more decisive (or controversial), but expands, "the objec- tive here is not to have commercial distri- bution network operators. The objective is to have effective management of those net- works, and you'd have to look at the advan- tages that came from introducing those commercial incentives and opportunities, balanced against the other impacts it might have on that objective". NETWORK / 10 / APRIL 2016 → Third parties and innovation A step on from the potential of DNO com- mercialisation takes us to Smart Power's thoughts on networks' relationship with third parties. Network engagement with external partners is a topic that has enjoyed growing interest in recent months, espe- cially in relation to innovation schemes. The NIC's perspective on this is that establishing new and improved ways for networks to share risk with third parties might facilitate the realisation of decentral- ised and diverse energy systems – the plan- ning requirements for which are uncertain and infinitely more complex than the rela- tively formulaic transmission and distribu- tion system of today. Networks try to install the minimum level of capacity needed in any particular area, with the guarantee of a resilient sup- ply, at the least cost to customers. But this is near impossible when they do not have a complete and finalised picture of the area's plans for transport, housing, energy genera- tion and storage – for instance. "It's not [networks'] job in the long run to be planning and working out and making decisions about where developments ought to be located or what scale they should be at," states Graham. "The system doesn't really allow for it at the moment, but if the infrastructure owner could work with the developer or the local authority responsible for the special plan that the infrastructure is designed to support, then between them there ought to be better information to man- age risks and to understand what a viable but not unnecessarily expensive long-term plan is – and to deliver that." This fairer division of risks sounds like a positive step, but is it enough? Despite the flurry of activity driven by innovation funding in recent years, networks are still generally considered slow-moving and risk averse. When it comes down to it, does Gra- ham think networks are innovative enough to realise the transition the energy system needs? It's clearly not the first time he's been asked such a question. "My impression is that they are very interested in this. They like talking about it and they are very keen on being involved in it. And certainly the larger players – National Grid – are taking it forward. "I think the difficulty is – and this comes back to why getting the market structure and the regulatory system right is so impor- tant – that they are really good at it and really interested and keen to talk about it – on a pilot basis. Or on a small-scale basis where a bunch of grants have been given out for them to try new things. "For the most part they still haven't got the structures in place to take the results of those pilots and roll them out on a large scale." In short, despite their willingness, net- works have not been able to hit the point where they can look at an innovation project finding and decide: "OK, that worked there. Now how can we roll it out, significantly more widely." Demand response and next steps for the commission With the NIC looking for radical change in the energy system by 2030, the current situation must be frustrating. Is there a seg- ment of the NIC's vision for the future which Graham thinks will be quicker or easier to achieve than the rest? Going back to the three key elements of the Smart Power report – interconnection, energy storage, and demand response – he considers each in turn aer stating the obligatory caveat that they mostly all move forwards together. "Interconnection is happening," he says. "There are a whole set of projects in the pipeline, a number of which have regulatory approval including the first 'long' intercon- nector out to Norway. "The objective here is not to have commercial distribution network operators. The objective is to have effective management of those networks." → INTERVIEW