Utility Week

7. WHO: CENTRICA/ BRITISH GAS What's the deal? Centrica is the largest supplier of gas to domestic customers in the UK, and one of the largest suppliers of electricity, operating under the trading names Scottish Gas in Scotland and British Gas in England and Wales. It owns Bord Gáis Energy in Ireland and dominates the market for boiler installation and maintenance. Why it matters: When it comes to utilities, Centrica is the big dog. As such, it wields the power to disrupt the industry simply because of its size and influence. This said, 2017 saw British Gas haemorrhage over 800,000 customers and the company knows it cannot rest on its laurels in a time of industry upheaval. Carving out a new lease of life for itself as an energy services provider, it launched Local Heroes in 2017, an online platform that connects customers with tradespeople for household tasks. It has also invested heavily in its smart thermostat business Hive, which is deployed internationally and is recognised as a top smart home device in the UK market. DISRUPTION: WHY THIS LIST MATTERS By Dr Simon Harrison, group strategic development manager at global engineering, management and development consultant Mott MacDonald, and chair of the Energy Policy Panel at The Institution of Energy and Technology (IET). "This list reflects the range of views in the utility sector regarding how radically energy in particular, but also the wider utility space, will be disrupted. If within the foreseeable future we see complete dis- ruption from the network edge, turning business models upside down across the whole sector, we might expect the disruptive drive to come from companies currently marginal to the sector, or even players we can't yet identify by name. If, however, we believe progress will be in the form of continuing incremental change from the status quo, then disruption takes on a different meaning. It would become much more about how existing or new players can disrupt broadly within the existing governance and regulatory frameworks, and points to new entrant or existing suppliers and network companies. It's interesting the only wa- ter sector entry falls in this latter category. Meanwhile, National Grid is perhaps a special case, noting its role as system operator, and its custodianship of what have become the standard scenarios to map electricity and gas industry futures. Looking back over the past few iterations of those sce- narios shows how far what was previously considered wacky has become main- stream thinking, and how issues that were once new and marginal have come to dominate the agenda. So who is missing? Network companies are striking by their absence, except for National Grid. Some might think that a poor reward for the innovation deployed via the LCNI. We've not yet seen many signs of the radical reinvention of the network companies that some futures might de- mand for them to succeed. I know some of them are talking about it internally, but perhaps RIIO2 and AMP7, and delivering on the current price controls, are a dominant focus for most. And which form of disrup- tion would create the most value for consumers? A Silicon Valley-led energy revolution would likely reinvent the consumer value proposition in the hy- per-connected digital era, transforming the consumer experience in a positive way … for those consumers who want it. But it could also threaten resilience and increase network costs unless we adopt proper 'whole system thinking'. The more limited sort of disruption could drive low- er bills and better customer service. But which of these do consumers want? I re- cently attended the launch of the Material Cultures of Energy project at the Science Museum in London. This humanities-based research programme had looked at the societal response to historic energy transitions to see what we could learn. One finding was that energy transitions were messy, partial and proceeded haphazardly over many years. Some consumers benefited from the transformation early on, but for many it was eas- ier to transition gradually with the old and new along- side one other for many years. But will the future be like the past? Nobody knows – but my gut feeling is that the tech company agenda will prove a more powerful engine for change than the utilities in the end – and quite possibly sooner and more disruptively than we might expect." P R E S E N T S 14 | 26TH JANUARY - 1ST FEBRUARY 2018 | UTILITY WEEK P R E S E N T S

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