Utility Week Energy Summit: The revolution has started

Energy leaders had a great deal to debate at the Summit as the industry works out how to manage the challenges arising from the UK’s vote to leave the EU and the inexorable shift of market power towards the consumer. Saffron Johnson reports.

The revolution is upon us. Dramatic political uncertainty as Britain prepares to leave the EU and an extensive range of remedies from a market probe have landed on the energy industry, giving speakers and delegates at the Utility Week Energy Summit plenty to debate.

Former shadow energy minister Alan Whitehead insisted the changes within the industry are not a transition “but an energy revolution”, before sharing his concerns about security of supply post-Brexit.

“We’ve still got to have substantial interconnections and back-up capacity across the system. The prospect of getting the levels of interconnection we need to back up the system are fairly remote,” he said.

The MP added that “the best we can hope for” is if negotiations result in the UK looking like Norway.

Centrica chief executive Iain Conn spoke of another revolution within the industry: one being driven by customers. “The fork in the road which I believe is upon us in the energy market is the irreversible shift of significant market power towards the customer,” he said.

“We are in the early stages of a customer revolution in our industry. Perhaps not every­one has realised… But that is our destination and I think it is an exciting prospect.”

Conn added that resisting the power shift is “futile”. This view was echoed by EDF Energy’s chief executive Vincent de Rivaz, who said the company was “excited by changes empowering customers”.

This customer shift is not only related to impending changes from the Competition and Markets Authority investigation into competition and engagement in the market, but also the evolution of technology. According to de Rivaz, technology such as smart meters can help to tackle disengaged consumers, and also climate change. He said he saw a world where “all technologies can play their part in addressing the energy trilemma”, adding that the task ahead was to work out which mix of technologies is right.

Energy minister and former contender for prime minister, Andrea Leadsom, was clear on her aims to tackle climate change and support renewable technologies. She took a personal line, pledging that it was an essential responsibility “held towards our children and grandchildren”.

“However we choose to leave the EU, let me be clear: we remain committed to dealing with climate change. Our job now is not to predict the future, but to create the conditions for innovation,” she added.

The uncertainty that filled the room on Brexit was not limited to future policy. Most speakers were clear that policy stability was crucial in the short and long term. Energy UK chief executive Lawrence Slade argued that the issue was how quickly we can get a policy framework in place.

The Renewable Energy Association’s chief executive, Nina Skorupska, was outspoken about the need for clarity on the Levy Control Framework (LCF).

“I’ve not heard anything new in the past year about what that policy is around the LCF,” she said, while EDF and Centrica called for an overhaul of how policy and network costs are charged to energy bills.

Among warnings from Conn that there would be “winners and losers in this change” and a stark message from the chair Paul Dorfman of the Energy Institute, University College London, that we have a “narrow window of opportunity to adapt”, questions from the floor moved the debate forward with views from all corners of the industry about the challenges and opportunities our future energy system will hold.

The revolution is here and it is now down to the industry to embrace it.

Views from the top table

“Energy security is non-negotiable and is our top priority. Our approach has to be to make some strategic investments, and to put in place a system that will deliver a rational result.”

Andrea Leadsom, energy minister

“The Tory government came in and found out the Levy Control Framework was bust up to 2020 for a lot of different reasons. There is no clarity. What’s going to happen beyond 2020? There is so much that has to be sorted out.”

Nina Skorupska, chief executive, Renewable Energy Association

“Let’s not waste the fantastic asset we have in the UK’s extensive gas network as we tackle decarbonisation of heat.”

Nina Skorupska, chief executive, Renewable Energy Association

“I worry in a ­post-Brexit world we will learn less from the lessons learnt in the other European countries if we are not round the table ­talking about the energy system together.”

Iain Conn, chief executive officer, Centrica

“By choosing – and it is the right choice – to support renewables, we’ve ended up making choices on carbon pricing, on new technologies, and that’s created a fractured market that we have to live with.” 

Dorothy Thompson, chief executive, Drax Group

“In terms of primary energy supply we are in an age of plenty… innovation will ensure we have enough resources at our disposal to meet demand.”

Dev Sanyal, chief executive, ­alternative energy, BP, ­executive vice-president and group ­executive committee member