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NETWORK / 13 / NOVEMBER 2016 transport – to support clients in making their own transitions to a low carbon economy. Many of its clients have age- ing power infrastructure – much like the national electricity network itself. In the process of upgrading that infrastructure, UKPN Services aims to help them evaluate new technolo- gies, such as storage or solar PV, that could enhance resilience and improve efficiency. At the same time, it advises them in using this technology to decar- bonise operations and reduce their total power costs. Its third function is to provide financing to companies to support that investment, especially in the shadow of Brexit. But alongside these three main areas of growth in its traditional markets, there could potentially be opportunities for UKPN Services to not only sup- port UKPN in its activities, but to compete directly against it. Energy storage, and who should be allowed to own it, has become a contentious issue in the energy sector. While the government will use the upcom- ing smart systems consulta- tion to inform its decision on a classification for storage, it is only expected to tinker with the current regulatory framework. DNOs could find themselves barred from owning a technol- ogy that would optimise the running of the system. If this is the case, could one solution be for the sister company to own the asset and contract services with the regu- lated business? "It's a really good question," Smyth muses. "Irrespective of government or regulatory policy on storage there will be op- portunities for us to support our clients with storage solutions." UKPN Services will not actively be playing a part in Ofgem in- novation funded projects, can learn from the findings of the largest storage installation in the country being run by UKPN at Leighton Buzzard. As for taking on the owner- ship of storage assets in the future, Smyth, a'er some con- templation, arrives at a position. "I do see it as a possibility, but subject to the regulatory frame- work." If this was the case, the asset and the DNO would be owned by the same parent- funding, but Smyth doesn't see this as a problem. With the opportunity for expansion on his business' horizon into storage ownership, Smyth could be forgiven for siding with those in the industry who believe storage should be allowed to develop in a com- petitive market, but instead his support for DNO ownership is unequivocal. "Why would you preclude an asset management company from using the best available technologies to help make a network more efficient, more resilient and more secure for customers? It would be entirely consistent within the aims and objectives of existing policy and regulation to allow DNOs to use storage as another technology to support that," he says. While uncertainty remains over whether network operators will be allowed to move into new areas, their position in traditional territory may also not be safe forever. Competition has already been opened for offshore transmission assets, with offshore competition due to start in 2017. Smyth does not rule out this being an area of potential expansion in the future, but says "It would depend on the projects coming to market, we would evaluate on a case by case basis." A potentially more promis- ing area for the company would be if competition is extended to distribution assets. The power to do so has been given to the gov- ernment in a recent energy bill, although it has ruled out acting upon them until at least 2023 when the current price control period comes to an end. While not overly familiar with developments in the distri- bution market, Smyth is excited about the concept in principle. "Distribution networks is what UKPN Services is all about, and what we are very, very good at designing, building, operating and maintaining. It's our core business. Obviously as we oper- ate in a competitive environ- ment we would think we are pretty good at that," he says. The business model for DNOs is rapidly changing, and as their future form as DSOs is still a fluid concept, looking at a networks business that must fight every day to survive in a competitive market could be a good place to gain insights, particularly in how to become a distributed energy integrator. Smyth promises his busi- ness will be a market leader in microgrid technologies in the near future, configuring a set of technologies for his clients to "get something more than just the sum of the parts". To all intents and purposes, UKPN Services is already acting as a DSO on a miniature scale, and Smyth is all too aware of the difficulties. "These technologies are smarter than they were tradi- tionally. Integrating them in the right way delivers lots of benefits, but it's not a neutral position. If you get it wrong it can go bad very quickly for you," he says. Getting it right is crucial, and feedback is swi' when things do go awry. "There is definitely something fantastic about being in the commercial sector, you get feedback from your custom- er every day. You are justifying your price, explaining your commercial proposition." For regulated networks currently wrestling with the transition from being purely asset manage- ment companies to customer- centric ones, looking at UKPN Service's business could again provide insight into how the other half lives. While the markets in which they operate are very different, it is evident that all distribu- tion network businesses are working to overcome very similar challenges. But with so many aspects of network operation changing, the clear divide between the two could well become fuzzier as partner- ships and competition form as the market continues to evolve. UKPN Services may operate free of much of the red tape that restricts its regulated counter- parts, but Smyth doesn't think his side of the fence is necessar- ily any greener. But it does have strengths that DNOs could learn from. N "Why would you preclude an asset management company from using the best available technologies to help make a network more efficient, more resilient and more secure for customers? It would be entirely consistent within the aims and objectives of existing policy and regulation to allow DNOs to use storage as another technology to support that." "These technologies are smarter than they were traditionally. Integrating them in the right way delivers lots of benefits, but it's not a neutral position. If you get it wrong it can go bad very quickly for you."