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The Topic: Transformation TRANSFORMATION THE TOPIC 12 | 21ST - 27TH JULY 2017 | UTILITY WEEK Severn Trent has set itself a mis- sion to become the most trusted water company by 2020. Its cus- tomers have told the company this means delivering outstand- ing experience and with the best value service and environmental leadership. Living up to these expecta- tions means focusing on inno- vation, which Seven Trent is doing. It has doubled its R&D budget over the past five years and invested in innovation pro- ject management systems to pri- oritise resources across a wealth of technology trials, pilots and demonstrators. Helping Severn Trent along the way with these transforma- tive investments have been Ofwat's PR14 outcome delivery incentives, which made it easier to frame a business case for how innovations could affect service and the bottom line. This is not to say that all innovation ideas get support. Many fail to make the grade: at the outset of the AMP period Severn Trent was involved in 130 innovation projects and these were narrowed down to ten, with some cast aside aer months of work because of disappointing or inconclusive results. Traditionally, Severn Trent – like other utilities – has placed an emphasis on innovation that can provide cost-saving pay- backs in the near or medium time. But increasingly, the water company has tried to take a long- term view. To help it do this it conducted a scenario planning exercise looking at different scenarios of business need for the next 20 years. This included not only scenarios for macro trends such as population growth and cli- mate change but also changes in the political or regulatory envi- ronment, such as the evolving competitive environment and the UK's departure from the EU. Innovating for the long-haul Severn Trent has a mission to fulfil, and it requires innovation with a long terms view, learned delegates in Utility Week Live's Water Theatre. James Brockett reports. Report sponsored by: One theme that came out of this exercise was the circu- lar economy and promoting resource recovery from waste- water. Building on this theme, the utility decided to concen- trate particular effort on innova- tion in the field of phosphorus removal and recovery. This field not only met a key regulatory need and had the potential to boost the water company's envi- ronmental performance, but also provided potential commercial opportunities. Severn Trent invested £4 mil- lion creating a test facility at its Packington sewage treatment works in Leicestershire, where it trialled six phosphorus removal technologies: membrane filtra- tion; non-particle embedded ion exchange;, pile cloth media filtration; ballasted coagula- tion and clarification; immo- bilised algae bioreactors; and absorption media reed beds. The technologies were particularly appropriate for smaller treat- ment works where solutions need to have a small footprint in terms of energy use, chemical use, and manpower. Three of the technologies were brand new and being tested for the first time, while three had were already available as "off the shelf " technologies. However, in each case, the utility took a collaborative approach with the supplier or partner: the creators of the technology were asked to show a willingness to adapt the technology to suit the needs of the utility, while Severn Trent did not seek to acquire intel- lectual property on any of the innovations. The approach has yielded fruit: the pile cloth media filtra- tion and ballasted coagulation/ clarification solutions have been approved for rollout, with the former installed at three sites already and projects in the pipe- line at ten further sites. 1 "Institutional memory" is a challenge: the high turnover of ministers and cuts to civil service staff make it difficult to sustain change momentum. 2 The regulatory cycle needs to recognise the speed of technological development and uncertainty about the impact of this on the system: for energy networks, it's likely RIIO2 will be shorter and there may be a move to align the price controls of gas and power transmission and distribution to support whole-system investment planning. 3 Code governance must become more nimble and include a wider range of players – on an equal footing with incumbents. 4 Collaboration and com- munication between diverse stakeholders is essential – and a common language about transformation is needed to facilitate this. 5 Mechanisms for accom- modating failure need to be developed so that business models and market mecha- nisms can be trialled in live environments. See more about system transformation challenges in Utility Week's breakdown of the recent Future Power System Architecture report, available at: www.utilityweek.co.uk FIVE POINTS ABOUT SYSTEM TRANSFORMATION