Network

NETWORK / 10 / JULY/AUGUST 2017 What are the main drivers of change for networks? Change is being driven by the transition we're seeing in di er- ent types of generation coming on the system and di erent forms of supply and demand. The fundamental drivers for me are around how we manage the potential transition from a world where we have a fairly simple model of centralised genera- tion and networks to one where the services that each of them provide has become much more fungible. The big change going on in networks is that they are becoming part of a system where the services they provide can be provided by other tech- nologies as well. How di erent will RIIO2 be to RIIO1? We think that RIIO 2 will be similar to RIIO1 in broad struc- ture, something that is incen- tive based and broadly remains ex-ante and focused on outputs, which we think is working well. There are within that a set of questions we are asking our- selves about the shape of RIIO2. I think the - rst one is around how we manage the scale of change that's happening within the electricity industry and potentially across the whole of the sector by thee 2030, and therefore how we ensure that a price control that gives stability is able to adapt to those chang- ing circumstances. As part of that we'll be think- ing hard about the building blocks for RIIO1 and we'll be looking at issues like the length of the price control – does eight years deliver the bene- ts that we've hoped, and are the costs of doing those eight years worth those bene- ts? Secondly, we'll be looking at how we incentivise companies, what sort of busi- ness planning process works and so on. Thirdly, as you would expect us to, we will look at the cost of capital that should be applied given current - nancial market conditions. Overall, there's a lot still to play for in terms of how we go about it. Do you see the shi• towards proactive asset management continuing? A. Yes we do, we see the work we're doing on Network Operations & Management, for example, as really valuable but it's too early to tell in what form and how that would work. That's something we'll have to work through as part of the process. What is the biggest ga- mechanger for networks in terms of asset management? A. To my mind, the biggest gamechanger is most likely to be twofold: one is continuing to re- ne and develop our meth- odology for understanding our asset health and therefore our asset replacement and repair strategies. Two is managing our portfolio in this world where things are potentially changing quite fast. How we manage as- sets in that world is something that I think is quite important. How do you see Ofgem's role changing by the end of RIIO2? Given that the end of RIIO2 could be 2030 it would be dangerous to predict no change in Ofgem's role over that period of time. We're not perfect at getting predications right in the energy industry. Do I see broadly Of- gem's role changing? Not funda- mentally. In essence, I don't see our statutory role changing a huge amount but I do feel there may be a big change in what sort of regulator we want to be, given the way the industry is changing. I think Ofgem itself needs to adapt, I think you'll - nd us becoming more agile and more responsive to those changes and that might mean us working in a very di erent way to how we've worked previously – and that goes beyond network regulation. We need to move away from the old world where we have very long consultation periods before making decisions to something that is a bit more ' exible and a bit more agile, otherwise we risk being le" behind by the latest develop- ments. ASSET PERFORMANCE CONFERENCE 2017 HIGHLIGHTS 2017 Jonathan Brearley will be just one of the industry leaders taking to the stage at Network's annual Asset Performance Conference. The event takes place in Birmingham on 21 September 2017. The conference will: ● highlight the latest regulatory thinking; ● explore the opportunities created by new technologies, including predictive asset management; and ● tackle the impact of climate change as we move to an era where innovation is at the heart of operations and strategy alike. To fi nd out more, and to book your place, visit http://events.networks. online/asset Managing assets in a time of change Ofgem's Jonathan Brearley considers the future of energy networks – and their regulator. Managing assets in Headline sponsor: Co-sponsors: SPONSORS

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