Networks need ‘healthy tension’ between competition and collaboration

A senior figure at a distribution network operator (DNO) has insisted that while regulated companies must seek to collaborate more closely, it is essential to maintain a spirit of competition.

Suleman Alli, director of strategy and customer service at UK Power Networks (UKPN), was among the sector leaders invited to a recent Utility Week webinar – hosted in association with Oracle Construction and Engineering and available to watch on demand – to discuss what it takes to deliver RIIO2 business plans and the role new technologies can play in supporting project management teams.

Speaking just days before DNOs submitted their final business plans for RIIO2-ED2, Alli said: “Collaboration can always be improved but in reality you need both collaboration and competition […] There is good scope for collaboration in open networks or mutual support that we provide each other in cases of system emergencies and storms.”

UKPN is no stranger to taking a different approach to other DNOs. Earlier this year, while other DNOs released fully costed business plans, UKPN only published an executive summary.

Commenting on the use of regulatory incentives to encourage collaboration, Alli added: “I would hate if we all had to talk to each other because Ofgem told us to. We should be competing with each other. There is a healthy tension […] That’s what a competitive market is about.”

But maintaining that “healthy tension” is a difficult task as utilities look to deliver projects against a backdrop of uncertainty.

David Moon, director of asset investment at Cadent, set out the simultaneous pressures that are currently impacting many firms across the sector, including stakeholders’ rising expectations, turbulent market conditions and the looming net zero target.

Moon added that the net zero agenda is forcing utilities to rethink traditional solutions and foster more innovative approaches to decarbonising the network. But Moon warned that in order to achieve decarbonisation objectives, investment in innovation must start now and utilities need to be “nimble, responsive and innovative” as they manage through that minefield.

Katie Tattersall, programme director at National Grid, is similarly tackling a broad range of market challenges, as well as navigating a period of significant structural change within the business.

National Grid is in the process of selling a stake in its gas transmission arm and recently acquired Western Power Distribution (WPD). Tattersall said: “With all that in the mix, there’s a huge amount that we’re focussing on and really driving to be a much more agile organisation. It’s hugely exciting but with it comes a lot of uncertainty.”

Balancing the organisation’s transformation with expectations from consumers and shareholders is key, as well as an increased focus on local stakeholders and communities. Tattersall explained that this approach is becoming “more and more embedded” in National Grid’s ways of working. However, she warned that trying to find the right balance between these core demands can detract from agility, pace and driving down costs.

According to Tattersall, working more collaboratively and earlier engagement with the supply chain will help to build capability across capital delivery teams. “At a local level, where we have project interactions, we are having one-to-one project discussions but it’s not yet at a regional view. We need to move to a more regional approach, understanding the wants and needs of multiple parties and then how we build a solution,” she said.

Considering the sizeable challenges on the horizon, UKPN’s Alli said he expects firms with the capacity to “flex and adapt to different levels of demand” will be best equipped to prosper in this context of significant change. He added: “Gone are the days of big capital programmes that we can plan in years. That’s just not going to happen. There might be pockets, but it will not be the norm for everything.”

Looking ahead, Geoff Roberts, director of energy industry strategy at Oracle Construction and Engineering, outlined the three key areas that he believes are critical for the sector’s approach to capital projects delivery over the next five years and beyond:

• Connectivity – by moving away from manual approaches, digitisation of processes offers the opportunity for increased standardisation of data, as well as better collaboration and connectivity between people, across organisations and within the supply chain.
• Empowering individuals – valuable, real time data has the potential to improve the decision making process across projects by giving individuals the necessary tools and insight to make timely and informed decisions.
• Synchronisation – with increased data capture across organisations and the wider supply chain, bringing that information together into a common environment is critical to help facilitate increased collaboration and innovation across projects.

To watch the webinar on demand, click here.