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NETWORK / 13 / JUNE 2016 To be involved in energy networks is to understand the true meaning of rules. There are rules for prices, rules for connection, rules for pipe replacement; every aspect of a gas or electricity network's daily activity is tightly monitored and controlled. Many players in a competitive market would baulk at the prospect of such relentless regulation, but for heat networks it is becoming clear the grass might truly be greener on the other, regulated side of the fence. It is because of their rules that gas and electricity networks have long been considered attractive investments, o ering steady, guaranteed rates of return. There will be plenty of potential buyers for National Grid's gas distribution business and a share of SSE's stake in SGN. Conversely, heat networks have an uphill battle. Without regulation the rates of return being o ered by heat networks do not make them enticing propositions for large investors, and this must change if the sector is to grow at the rate necessary for the UK is to meet its carbon-reduction targets. At an event last month to discuss a potential new investment model, the ƒ rst question ƒ red at Decc's head of heat networks policy was: "Yes, £320 million of funds is welcome, but what about market rules? When will the right frameworks be put in place?" Attendees were promised they will come. Issues such as business tax rates are being considered by the heat delivery team. The Association of Decentralised Energy believes the right rules could on their own level the playing ƒ eld and bring home the investment. The problem is that the world of energy technology is changing fast, but the changes to the old rules of market engagement moves at a far more sluggish pace. This means that new parts of the sector are being allowed to spring up un-propped. At the start of the sixth month of the year, the call for evidence from Decc has still to come despite being promised for the spring. The government is expected to publish its proposals for energy storage in the autumn, but how long it will take for these to ƒ lter through government and come into e ect is anyone's guess. In the meantime, the market is striding ahead, with storage owners about to bid into National Grid's upcoming frequency tender without knowing the shape of the market they will operate in. D E P U T Y E D I T O R : I T ' S A G A M E O F R U L E S LUCINDA DANN DEPUT Y EDITOR NET WORK S M A RT M E T E R I N G: D O N ' T FO R G E T T H E N E T W O R K O P E R AT O R S Stephen Haw, partner, energy and resources, Baringa The GB smart metering con- versation is generally about meter deployment and the relationship opportunities between the customer and energy supplier. But we must consider what the introduc- tion of 53 million smart meters means for energy network operators. There are operational challenges as- sociated with meeting their own mandated requirements but opportunities will also present themselves, subject to the pace of adoption. Network operators and the regulator have already accounted for an uplift in work driven by meter instal- lation, with many looking to outsource such opera- tional activity. However, the interaction between the sup- plier and network operator throughout the installation still needs careful considera- tion. Many have worked out how to optimise operational effectiveness throughout the installation, but managing the customer experience where hand-offs from sup- pliers to network operators occur is more diffi cult. Conversely, there are opportunities for network operators. Signals from the meter will quickly inform the network operator that a power outage has occurred or that there is a quality of supply concern. Reducing the time to fi x faults will inevitably improve customer satisfaction. Of substantially greater benefi t is the information, and eventual wisdom, that will be derived from smart meter data to drive improved business performance. We must understand how to analyse, query and combine this data with existing and new sources in a smart grid. Network operators will have to become organisations that treat data as a core business capability. Before network operators change their current op- erations, there must be a number of meters on the wall to make the change worthwhile – likely upwards of 60% licence area adoption. The focus in the near term should, therefore, be on exploring the information buried in smart meter data and further leveraging the innovation funding mecha- nisms that have successfully generated learnings to date. Network operators will have the opportunity to differentiate themselves if they successfully integrate smart grid, smart meter and conventional data to inform operational and strategic business decisions. How to do this remains a challenging question, but network opera- tors should take learnings from those who have already made positive progress – by taking an agile and bite- size approach rather than enterprise-level investment programmes.