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10 | 20TH - 26TH MAY 2016 | UTILITY WEEK Interview It's a commonly talked about barrier to storage deployment that Smart Power high- lighted too, yet recent statements made by Ofgem in front of the Energy and Climate Change Committee (ECCC) made it clear that those hoping the regulator's ra of reforms will include a new licence condition for storage are likely to be disappointed. Andy Burgess, Ofgem's associate partner, energy systems, told the ECCC that this is "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 distribution net- work operators (DNOs) to own and operate the technol- ogy – 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 inclinations, he's 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 comments, diplomatically. "What is clear is any single regulatory 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 recommendation that moving distribution networks into a position where they are more actively operated is absolutely crucial as you move to a more distributed generating system, as you move to smarter uses of power." The changes and complications inherent in that tran- sition "might well lead to DNOs thinking more commer- cially and operating some of the kinds of markets that the transmission operator does at the moment", he says. Pushed on just how much commercial opportunity regulated utilities should be given in order to allow and incentivise investment in transformative technologies, Graham pauses for significant thought, and concludes – again diplomatically – that it is an area with potential. He apologises for not being more decisive (or contro- versial), but expands: "The objective here is not to have commercial distribution network operators. The objec- tive is to have effective management of those networks and you'd have to look at the advantages that came from introducing those commercial incentives and opportuni- ties, balanced against the other impacts it might have on that objective." A step on from the potential for DNO commerciali- sation takes us to Smart Power's thoughts on networks' relationship with third parties. Network engagement with external partners is a topic that has garnered ris- ing interest in recent months, especially 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 reali- sation of decentralised and diverse energy systems – the planning requirements for which are uncertain and complex. "It's not [networks'] job in the long run to be plan- ning 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 infrastruc- ture owner could work with the developer or the local authority which is responsible for the special plan that the infrastructure is designed to support, then between them there ought to be better infor- mation to manage 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 for networks which, despite the flurry of activity driven by innovation funding in recent years, are still generally considered slow moving and risk averse? Does Graham 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 was that they are very inter- ested 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 important – 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. "They still haven't got – for the most part – the struc- tures in place to take the results of those pilots and roll them out on a large scale." In short, despite willingness, networks have not been able to hit the point where they can look at an innovation project finding and decide: "Okay, that worked there. Now how can we roll it out, significantly more widely." A big ramp-up in deployment for smart solutions is increasingly urgently needed to support climate change commitments and service changing consumer wants. But the power system cannot come up with a way of doing this on its own. Going forward, there will be far more interdependency between the evolution of transport and communications infrastructure – as well as big ques- tions to be answered about the relationship between electricity and other parts of the energy system and co- ordinating these will be tough. Happily, the NIC is poised to produce insights into this spaghetti-plate of infrastruc- ture challenges. An interview with Philip Graham also recently appeared in Utility Week's sister title, Network. You can read this at networks.online. "Networks still haven't got – for the most part – the structures in place to take the results of pilots and roll them out on a large scale" Hinkley – it's all about legacy In the ongoing 'will-they-won't-they?' saga of the Hinkley Point C investment, critics of the scheme have increasingly voiced the view that it is an outdated solution to the UK's decarbonisation and security of supply concerns. In a future where the power grid is more flexible, where generation is more responsive and where intermittent power generation can be stored, they say Hinkley is a dinosaur. Graham doesn't agree, saying that while new approaches will reduce the amount of new capacity needed in the future, there will still be a "significant" amount of new generation required. He also adds that Hinkley is about more than one power station and the size of its price tag. It's about legacy. "If you haven't been investing in nuclear capacity for many decades, when you come to make that step change the first step will always be the most difficult and the most expensive. That doesn't lead me to a view that Hinkley definitively was or wasn't the right thing," he says. "It leads me to the view that when we come to look at the long-term costs and benefits of Hinkley, it won't be just on the basis of what that power station provided and how much that power station cost. It will be on the basis of how much it opened up the supply chain for new nuclear and the costs of subsequent new nuclear plants."