20/03/2020: Random thoughts for turbulent times

I have done several written updates since my last at the back end of last year but didn’t get round to posting them. I have spent the day making chilli pastes, spice mixes and beautifying the dogs and cats. But I don’t want to slide into bad habits. So I cannot put this one off any longer.

The last few months have been a bit weird really, even before all this awfulness about the virus. I have struggled to get used to working without corporate support and have pulled my Smarter Norwich project at least for the time-being and exited from my proposer’s role for BSC modification P379, which looks to enable multiple trading arrangements behind the meter. Smarter Norwich might be revived if and when normal business is resumed but only if I decide to take on new resource. But I have elected to move away from one organisation, and don’t really want to build another. P379 has been picked up by another BSC party. I took both of these decisions with a heavy heart as they are super ideas and remain at the vanguard of commercial innovation in the sector.

Smarter Norwich is all about engagement with consumers, of which there is still much too little. But the device provider has changed its strategy and decided the project – albeit at 300 units – is too small, and it elected to not supply the units. And without a smart energy assistant there is no data and therefore nothing to analyse even if I had the resource.

P379 – allowing volumes behind the meter to be split – also remains a great idea, and I am pleased GridBeyond have taken this over. But I was placed in the position of having to pay for analytical support at close on market rates although I derived no financial benefit from the work myself, and I also had to cover the £500/month BSC fees for the honour of leading what I consider to be an industry good work-stream. So much for supporting innovation! Bizarrely I have subsequently received a note from Elexon saying I am being kicked out of the BSC for not making a physical supply (not that I signed up as a supplier), but that I couldn’t leave until I paid my March invoice.

This of course is bonkers. When are we going to get a real move on in simplifying energy governance? Its almost 10 years since the first phase of Ofgem’s Code Governance Review kicked off and, despite frequent lip-service to the need to open up processes to different business models and innovators, we are still stuck with a myriad of complex and inflexible codes with byzantine goverance.

The withdrawal and handover in no way, in my view, detracts from the real merits of the P379 proposal. Workable solutions have been identified by the working group and, while clunky, this complexity arises from the existing baseline not from the proposal of itself and because the solution is being progressed alongside another modification P375. If assessed fairly, I believe there could be significant benefits in terms of competition and choice to consumers, with new markets being opened to a range of service providers who would not need to be the meter registrant. The current rules place a powerful barrier to competition behind the meter, but the performance assurance provided by the proposed P379 solution will open up competition and dilute this market power.

During the progress of the mod to date I have had discussions with a range of participants who are interested in applying it for a range of energy-related services in new emerging markets (e.g. EV charging, battery aggregation, sharing of output from local low-carbon generation). It would, I believe, if implemented, greatly boost roll-out of non-traditional supply models without the necessity of revisiting the supplier hub.

I wish the Elexon team and GridBeyond all the best in taking the mod to the next stage.

Another, though much more foreseeable disappointment given the virus, is the postponement of the event I have been organising with Low Carbon Homes on energy efficiency in the built environment. This had been planned for 6 May in Norwich but will be deferred, probably now until the autumn.

But there are many positives that I can report too.

The Net Zero Governance event hosted by Patton Squire Boggs and supported by the ADE on 27 February was a storming success. Catherine Mitchell gave a content-packed and entertaining keynote speech about lessons from the past and what it means going forward. We had great sessions too overseen by Simon Skillings of Trilemma and the irrepressible Laura Sandys of Challenging Ideas. Plus, I did my bit to point out the need for more local coordination and clearly defined action plans to drive

bottom up action to deliver Net Zero. There was great engagement and feedback from the audience, who filled the room. A separate blog on this will follow.

I am also delighted to be involved with the launch of Hydrogen East, alongside collaborators at Opergy, Clean Power Hydrogen and TCP Group. Its bizarre that in an area like East Anglia with an abundance of renewable resources and a gas hub supported by a significant gas transportation and distribution system that there is so little focus on new hydrogen opportunities. None of the innovation monies exceeding £20mn earmarked for the technology by BEIS has gone to the region. At the same time local businesses are already very active in the hydrogen fuel chain, so I am sure there is scope for raising awareness and helping push things along.

I have also been very focussed on the work with UK Power Network’s Customer Engagement Group, and I am leading the work in the EPN area alongside Ann Bishop, who magnificently chairs the Core Group. There’s a long way to go in providing rational challenge to the business plan being developed by UKPN but the focus will clearly be on establishing customer needs and preferences, including their willingness to pay, and helping the company set meaningful and challenging commitments to all of its stakeholders.

This work almost takes me almost full circle since my early days in supporting the setting of the first generation of electricity network price controls that were locked in in England and Wales in 1990. I was also involved in setting the price controls of the Victorian network companies in the mid 1990s and in South Africa in the early noughties. I have also managed to locate a couple of studies I did pre Cornwall Insight. The first is with Alex Henney looking at electricity network regulation in several jurisdictions in the run up to the shift to RIIO, acting as a strong advocate for change at the time. The second is a report supporting Stephen Littlechild on work we did for Ofgem on the merits of shifting to negotiated settlement models in the run up to [email protected] Looking back I think there is a lot to be proud of in this work, and the thinking has stood the test of time.

Against this background, I am developing a new project. It seems only logical that I should do a new report on this area of shifting complexity to help folk in the sector pick their way through the issues as no-one else seems to be doing this. Its provisionally titled A Rough Guide to RIIO-2. So I already have a structure and a couple of introductory chapters, and this will be my main focus over the coming weeks while we are all grounded.

Last but very much not least, I am looking into vlogging. It’s essential that for the foreseeable future we stay in touch and engage with each other, providing mutual support in these difficult and uncharted times. I just need to master the technology and get on top of the nerves. Watch this space!

Thanks for reading this, and until the next time keep well and safe. I’m now off to preserve some lemons and clean out the bird cage.