Networks need to stay in the background – and keep saying yes

Energy networks need to be preparing now for the increased scrutiny and demands on their services that will arise from the energy transition.

This was the view of participants at a Utility Week roundtable, hosted in association with Salesforce, into what energy networks of the future will look like.

The gathering of senior figures across gas and electricity networks came on the back of a landmark report from Utility Week and Salesforce. This delved into the shape of the future energy system, the role of gas networks, boundaries between gas/electricity and distribution/transmission and the extent to which they are blurring, as well as the challenges of digitalisation and the changing skillsets this requires.

The roundtable heard views on all of these topics, with participants warning that networks risk being portrayed as blockers to net zero if they cannot get on the front foot.

One electricity network director described the evolution the sector faces by saying: “In the past good meant not being noticed. Those days are gone. To a limited extent now, and to a much greater degree in the future,  the average customer will need a relationship with their distribution network operator (DNO). That’s millions of first impressions, and they all count.”

They added: “Our job is to stay out of the limelight and keeping saying yes to the customers. But in order to do that, we probably need to be more vocal about the other things that need to be done to make that possible.”

A gas network executive agreed, saying: “It’s relatively new for us to even think about having a relationship with the customer beyond mains replacement, traffic lights etc. But the future of gas is going to have an impact on ordinary people – whatever happens. So customers will have to engage with us. Are we ready for that? Well, we better be.”

Participants discussed the evolving nature of customer engagement, through communities, local authorities and even engaging social media influencers to target new audiences.

There was a recognition that as well as a challenge on resources there was an opportunity for networks to be associated with the benefits of decarbonisation and a facilitator of net zero.

One participant said: “This is about a revolution happening in your street. It’s happening to your neighbours, to you and the network is the key to that revolution. So we’re moving from a situation where contact with a network was necessarily a bad thing – either we’re digging up your street or there’s blackout – to a future where your network is allowing you to do something new and exciting.”

Business case

While this swell of customer engagement in the energy transition may be at an early stage, there was a recognition that businesses may be the canary in the coal mine.

As one energy sector figure put it: “For business customers, the network finished being built in the 80s and then nothing really happened. And now suddenly, an awful lot is about to happening. Particularly in the current climate you’re getting businesses identifying the huge impact energy has on their bottom line and also the new opportunities open to them. They are awake to the potential but there is a massive communications piece for the sector to explain how long connections take and also what our role in the wider system is. There’s a risk of pointing fingers and we need to get ahead of that and give people the information about the whole process.”

Another participant added: “There are entire industries we’d never even heard of 10 years ago and probably didn’t take seriously even when they were emerging. Just look at all the delivery companies with 3,000 EVs on the road. That’s sort of crept up on us but it’s an example of where we need to be keeping our eyes open.”

In terms of heavy industry, one participant pointed to more existential questions about their relationship with energy, saying:  “Just look at something like the ceramics industry. They’re saying electrification won’t work for us and hydrogen might not do it either. They need answers. Who is going to give them? It might not be networks but if they come to us with the question we can’t just shrug our shoulders.”

In response to this, one senior figure in energy networks pointed to the need for international collaboration.

“The ceramics industry in the UK can’t be hugely different to industries around the world. How are they solving the problem? Looking at it that way takes networks away from the traditional role as regional monopolies to become the gateway to solutions.”

However, solutions need to be funded and several participants pointed to the need for a wider conversation around paying for net zero.

One said: “One of the big sticking points is that for businesses, infrastructure is seen as someone else’s problem. If you talk to a motorway service operator or a port, they are engaged, they understand what they need to do. But it comes back to the question of, who is going to pay for the infrastructure? That’s a conversation we need to have. Because in the past that’s always been done for them. What’s the model for the future? If they’re on a 10-year lease on a site, why would they agree to fund something that takes 40 years to pay back?”

The future is local

As regional networks, covering an often diverse network of local authorities, energy networks are clearly in a position to take a leadership, or at least a guiding, role in the energy transition.

Again, this is a significant change in the traditional relationship between councils and their local energy network.

One DNO director gave this summary in response to a question of how their relationship with local authorities had changed: “It didn’t exist and now it does.”

They added: “If you roll back a few years the Electricity System Operator (ESO) did the future scenario planning and we’d then do a distribution run on that. It’s only in the past few years that we’ve started to go out to local authorities and say does this match with what you’re thinking.

“Going out and doing that, what we found is that the local authorities are all different. Budgets and resources are a huge challenge. I can name you lots of areas where they are well advanced on electric vehicle infrastructure. And that is because they have an officer in charge of that who is not also overwhelmed with social care, dustbin and schools. They need the resources to deliver. We can help with that but we’re part of the solution, not all of it.”

Another participant gave a similar summary, adding: “Some get it , some don’t. The ones that get it tend to be the ones that are well resourced and they tend to be the ones that have a leadership that’s bought into the net zero journey and been able to take the electorate with them. That’s hugely powerful when you have a regional figure saying that, as opposed to Westminster.”

A senior figure at an electricity network pointed to the clear potential of local authorities to kickstart the energy transition, saying: “These are actors that are going to be hugely engaged. Not only are they hugely influential in their areas but they have a significant portfolio in their own right. You see that in America, where there’s a real focus now on electrifying things like school buses, which as well as being the right thing to do creates this huge asset of batteries that are only actively being used a few hours a day across relatively short distances.”

While networks can play a leadership role locally, there was consensus that they are just one element of the wider evolution of the energy system. Participants pointed out that networks need the strategic direction of government, Ofgem and the system operator.

One surmised: “Who is there that can stand up and lay out unpalatable messages about the way the world needs to change to deliver net zero? Politicians are naturally short-term thinkers and there isn’t anyone else that has the authority to be telling people how their life needs to change.”

Another added: “It’s a thorny political problem at the moment but we are on the cusp of people seeing how they benefit from net zero, not what it takes away from them.

“Networks  have a role to play in that, in making it easier for people to decarbonise and communicate how it benefits them. But we can’t do it alone and the risk is we suddenly find ourselves on the front line having to account for things that are beyond our control.”