Utility Week

UTILITY WEEK | 29TH JUNE - 5TH JULY 2018 | 9 Interview W ithin minutes of meeting Elexon's busy chief executive, Mark Bygraves, it's easy to spot he's a trained lawyer. Sharp, measured and commit- ted to sticking to a polite but firm line, you quickly real- ise he is totally focused on achieving three key goals in his role with this cornerstone operation of the wholesale electricity market. The first is to raise awareness about Elexon and the Balancing and Settlement Code (BSC) for which it is responsible – and to demystify its work to newcomers. Another is to do all he can to enable new entrants to join the electricity market. Third, he is keen to communicate his vision of how much more Elexon could do to sup- port the industry in the relentless transformation of our energy system. We are meeting at the operation's modern, welcom- ing home – on the fourth floor of a swish central London block on Euston Road – a world away from some expec- tations of what a code administrator's office might look like. Which is appropriate, because Bygraves, who has been in the sector for 25 years following a law career in private practice, is committed to changing any miscon- ceptions about the operator and the market's acces- sibility – particularly to the growing number of new participants, and those with fresh business models, faced with navigating the complexities of the system. Elexon deals with more than 400 electricity sector "BSC parties" or "customers" across Great Britain, including suppliers, generators, distributors, traders, and energy importers and exporters, to administer the whole- sale electricity code, procure services to implement it and calculate any costs when a difference occurs between the agreed and actual activity among all those working parts. And while established by the energy industry, Bygraves prides himself on Elexon's impartiality, point- ing out that it is independent, funded on a zero-profit basis and receives consistently positive customer service reviews. But he recognises it needs and wants to do more. Our meeting has come about following the first in a series of Utility Week CEO Insight premium reports revealing what leaders of the UK's major utilities really think about the economic and political climate in which they're operating – including its complex regulation. Refreshingly, Bygraves – who joined Elexon in 2011 before taking up the chief executive reins in 2014 – con- curs with some of that disquiet and, what's more, is keen to join the conversation. "I share their concerns that across our sector we are subject to a large and increasing amount of regulation," he says. "It is therefore incumbent on us all to see how we can work with customers [BSC parties] and new mar- ket entrants and business models – firstly to help them through that regulatory landscape and, better still, to find ways to simplify that landscape." Elexon, he believes, is well-placed to make a major contribution. It has long believed the market's mecha- nisms should be doing more to facilitate innovation and change, which led to its recent white paper outlin- ing how it could help enable consumers to buy power from multiple providers, as opposed to the existing "supplier hub principle" arrangements. It will follow up with another soon, looking at the local balancing activi- ties that would arise, as the distribution network opera- tor (DNO) landscape shis to one of distribution system operators (DSOs). "We think we have a track record and expertise that could be really usefully applied for industry in that space." W hen it comes to new market entrants, Bygraves accepts that ensuring the BSC is straightforward and fit for purpose is vital in a changing energy world. "It is detailed. And that does mean we are conscious that it can be difficult for the smaller parties or the newer entrants to fully participate in those arrangements." It is also why, unlike other code bodies, he says, it has operational support managers (OSMs) dedicated to spe- cific parties – something that came out well in independ- ent customer surveys and was highlighted in Ofgem's cross-code body survey. Last year his market entry and OSM team of a dozen people helped more than 65 new entrants or busi- ness models come to market by joining the balancing mechanism. Some were acting as traditional suppliers, some more niche, others were companies aiming to become aggregators. There were also generators, the vast majority in renewables. It's a fluid picture but, as revealed in its white paper, Elexon has some big ideas on how to help more people enter seamlessly into the system, including community schemes and peer-to-peer trading. A key move by Elexon is the introduction of its BSC "sandbox", aimed at allowing entrants to benefit from a derogation from some of the BSC obligations for a limited time to trial how ideas work in the real world. "I think we can all agree this sector is already going through more change now than it has since the introduction of competition in 1998 – and yet we're only in the foothills. There is even more coming, driven by the three 'ds' [digitalisation, decarbonisation and decentralisation]."

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