Energy Energy Networks

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1 The Voice of the Networks Energy Energy Networks Networks Association Association Electricity Network Innovation Strategy: Feedback from stakeholder engagement Insert presentation title here March 2018 Name Position Date

2 Table of contents - Introduction - Consultation Participants 1. First Consultation Online consultation results What we ve done 2. Second Consultation Online consultation results Stakeholder Workshops feedback LCNI Conference feedback What we ve done 2 The Voice of the Networks

3 Introduction We organised a series of stakeholder forums throughout the course of the Electricity Networks Innovation Strategy development process. The purpose of these events was to enable us to engage with a wide range of stakeholders and to obtain feedback on the strategy as we developed it. This process enabled us to capture a wide range of views and perspectives from the various groups impacted by the innovation initiatives lead by the Electricity Network companies. It also allowed us to consider their opinions and reflect them in the strategy. 1. The First Online Consultation. This online survey shared our initial work on categorisation of innovation themes and categories. It also shared the long-list of innovation challenges with the stakeholders. We invited the responders to indicate whether, in their opinion, the list is correct/exhaustive and what is the timeline for each of the challenges. This consultation enabled us to reach consensus on the list of innovation themes and challenges. 3. The Workshops We held three workshops (one in London, one in Glasgow and one at the LCNI conference in Telford), where we described the strategy and held Q&A and breakout sessions to gain further stakeholder feedback. The workshops also enabled us to update the draft strategy with feedback from a very diverse range of stakeholders. 4. LCNI Conference Alongside the Gas Networks, we gave a high level presentation on the draft strategies and hosted a panel session with our innovation representatives. We used an interactive voting system to encourage audience involvement and obtain feedback. 2. The Second Online Consultation This online survey shared the draft Electricity Networks Innovation Strategy document with a broad range of stakeholders and asked them targeted questions on each chapter of the document. This consultation enabled us to update the draft strategy with feedback from a wide range of stakeholders. 3 The Voice of the Networks

4 Consultation Participants Telecoms 8 16% First Consultation (51 responses) Generation 2 4% Gas & Electricty Networks 0 0% Academia/Research 5 10% Community Energy 0 0% Consulting 11 21% Second Consultation & Stakeholder Workshops (total of 137 participants) Telecoms 18 13% Generation 10 7% Gas & Electricty Networks 2 1% Academia/Research 15 11% Community Energy 2 1% Technology Provider 13 25% Supplier/Aggregator 2 4% Industry Association & Non-profit Organisations 3 6% Government/Ofgem/ Funding Body 7 14% Technology Provider 26 19% Supplier/Aggregator 5 4% Industry Association & Nonprofit Organisations 15 11% Consulting 31 23% Government/Ofgem/ Funding Body 13 10% 4 The Voice of the Networks

5 5 Energy Networks Association 1. First Consultation

6 First Consultation Introduction In developing the Electricity Network Innovation Strategy, we sought stakeholder feedback to ensure that we devise a Strategy that is representative of people who use the networks, and addresses issues faced by the entire industry. The first public consultation supported the categorisation of challenges. The consultation was structured as an online questionnaire. Survey stats Opening 27 th September 2017 Closure 8 th October 2017 Runtime 12 days Respondents 51 Wish to stay involved / opt out 100% / 0% 6 The Voice of the Networks

7 First Consultation Feedback on high-level themes Most important innovation themes Agreement with list of innovation themes #3 New technologies and commercial evolution #2 Transition into a low-carbon future % Yes: 37 No: 12 #1 Network improvement 19 #4 Internal innovation #5 Customer and stakeholder focus #6 Safety, health and environment Key suggestions Consider rephrasing the innovation themes to reflect the range of key challenges. Specifically mention penetration of DER and electrification of transport and heat. Facilitating the transition from DNO to DSO should be the main theme of the strategy. Make sure the underlying principle of maintaining security of supply is not forgotten. Most themes are BAU whereas #3 should be out of scope of DNOs. 7 The Voice of the Networks

8 First Consultation Feedback on high-level themes Innovation theme Agreement Timing Key statements Network improvements 54% Medium-term Value of existing assets is not adequately addressed and not defined. Demand and generation forecasting and network planning is too broad. Broader aspects of reliability and power quality as well as flexibility should be addressed. Transition into a lowcarbon future 59% Medium-term New technologies & commercial evolution 69% Medium-term Internal innovation 69% Medium-term Customer and stakeholder focus 80% Short-term Facilitate new markets and structures that allow greater competition. Better coordination between the SO and DSOs is important. Change of transport is more than electric vehicle charging. Energy storage and CCS not sufficiently addressed. More information needed on cyber security. Regulatory support is important to scale-up innovations. Data availability should be more transparent. Most important is how to integrate innovation in BAU situation. More collaboration needed, also between DSOs. Need to build upon learnings of previous projects. Improve consumers understanding of the value proposition. Need to develop service offerings that will appeal to customers while minimizing disruption to the costumer when new services are delivered. A link should be made between the heat, gas and power network. Consider beyond the meter solutions and impacts on customers, systems, markets and DSO business models. Safety, health, and environment 69% Short/ medium-term Safety and environment should be two separate challenges. The challenge on audio and visual impact is not adequately addressed. Education is requires to understand the value of sustainability. 8 The Voice of the Networks

9 First Consultation #1 Network improvements Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Improve network resilience to power outages Improve demand and generation forecasting and network planning processes 54% Yes: 26 No: 22 Improve asset management processes Maximise the value and capacity of existing assets Height represents number of responses Position represents average response 9 The Voice of the Networks

10 First Consultation #2 Transition into a low-carbon future Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Create value from the introduction of smart meters Efficiently facilitate the electrification of transport 59% Yes: 29 No: 20 Efficiently facilitate the electrification of heat Enable RES penetration and low-carbon demand Demand side response solutions Enable flexibility in the GB low carbon transition Facilitate the transition from DNO to DSO Improve network visibility and controllability Height represents number of responses Position represents average response Cross-sector planning and forecasting 10 The Voice of the Networks

11 First Consultation #3 New technologies and commercial evolution Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Extract value from continued growth in webbased, digital-enabled services and big data 69% Yes: 34 No: 15 Cyber security Maximise benefits provided by new technologies Use new technology to develop and optimize commercial business models Shape and comply with evolving regulations and standards Height represents number of responses Position represents average response 11 The Voice of the Networks

12 First Consultation #4 Internal innovation* Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Find ways to efficiently transfer innovation projects into BAU Realise the full value of previous innovation expenditure 69% Yes: 34 No: 15 Incorporate innovation into the heart of running the business * Based on stakeholder feedback, this theme was incorporated into the Delivering Benefits from Innovation and Collaborative Innovation sections of the strategy Learning dissemination Improve methods of managing risk Height represents number of responses Position represents average response 12 The Voice of the Networks

13 First Consultation #5 Customer and stakeholder focus Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Improve the understanding of changing customer needs Involve customers in the innovation work 80% Yes: 39 No: 10 Improve affordability for customers Continuously improve the customer experience Improve employee skills and resources Support the fuel-poor and meet wider social obligations Enable customer choice Actively seek collaboration with stakeholders and partners Height represents number of responses Position represents average response 13 The Voice of the Networks

14 First Consultation #6 Safety, health and environment Recommended timeline Short-term Mediumterm Long-term Agreement with list of innovation categories Strive to continuously improve safety and reduce impact on the environment 69% Yes: 25 No: 11 Protect the public, staff and contractors Reducing the visual and audio impacts of assets Height represents number of responses Position represents average response 14 The Voice of the Networks

15 First Consultation What we ve done Overall, stakeholders agree with the overarching innovation themes and highlighted clear priorities. However, there was less agreement with the specific innovation challenges per innovation theme. Recurring feedback on scope which we have addressed: Connect the dots between the overarching innovation themes Set clear boundaries and address existing overlaps between innovation themes Clarify what is within and what is outside of the responsibilities of the electricity networks 61% of the respondents suggest that we expand the overall boundaries of the strategy Drive cross-vector innovation and adapt innovative technologies from other industries to create additional benefits Wider innovation and collaboration: It was acknowledged that some innovation required will need to go beyond the restrictions of NIC/NIA and we have committed to discussing this with Ofgem We need to drive innovation while also trialing new commercial products and services Cross-collaboration between operators (and non-license holders) and sharing of lessons learned should be facilitated To reflect stakeholder feedback, the following changes were made: Collaborative innovation was instilled across all themes The categories were updated to reflect the following challenges ICT, Energy Storage, audio and visual impacts, sustainability, cyber security, customer needs and machine learning If you would like more detail about the first consultation, a full summary of the first consultation and our response to specific feedback can be found on our website: Summary of First Consultation Response to First Consultation Feedback 15 The Voice of the Networks

16 2. Second Consultation Online Consultation Results 16 Energy Networks Association

17 Second Consultation Introduction In developing the Electricity Network Innovation Strategy, we sought stakeholder feedback to ensure that we devise a Strategy that is representative of people who use the networks, and addresses issues faced by the entire industry. Does the strategy address the gaps and the challenges facing the industry? The purpose of the second stakeholder consultation was to seek the views of wider industry stakeholders on the draft copy of the Electricity Network Innovation Strategy document. The consultation was structured as an online questionnaire, covering all parts of the strategy. 75% Yes: 12 No: 4 Survey stats Opening 17 th November 2017 Have the public consultations and stakeholder workshops provided you sufficient opportunities to contribute to the innovation strategy? Closure 15 th December 2017 Runtime Respondents 28 days 20 (inc. 15 that participated in the 1 st consultation) 83% Yes: 10 No: 2 Wish to stay involved / opt out 100% / 0% 17 The Voice of the Networks

18 Second Consultation Introduction to Network Innovation Do you think section 3.1 highlights the purpose and objectives of the funding initiatives described? Do you think there are any additional innovation funding initiatives which should be captured? Include funding related to whole energy system integration; There might be inclusion of infrastructure projects that could serve wider innovation in the longer term such as test systems or demonstrator sites that could be used in the medium to long term by future projects. This may be test houses, such as the Salford Energy House, or mini-networks; Development of systems / working practices to address operational enhancements; 93% Data strategy to develop best practice to ensure that new data sources can be fully exploited; There is a heavy emphasis on networks with little on what private investors are doing; It will be important to identify and secure alternative sources of funding; Phase 3 of The Future Power System Architecture Programme (FPSA) will explore opportunities for new more inclusive, iterative and agile forms of governance with a view to overcoming barriers to transformational (as opposed to incremental) change that are inherent in today's change governance arrangements; Yes: 14 No: 1 If the market can provide the build out of innovation, then it should do so as this transfers risks and costs from the consumer to independent investors. Only when innovation cannot be provided by the market should Ofgem consider using innovation funding. 18 The Voice of the Networks

19 Second Consultation Analysis of innovation projects conducted to date Do you think we have adequately captured the innovation activity which has been delivered to date? Do you agree with the high-level analysis of the gaps? 100% Yes: 13 No: 0 86% Yes: 12 No: 2 Do you think this analysis is reflective of the volume/value of innovation activity within each category to date? 69% Yes: 9 No: 4 Do you see any major gaps in addition to the ones identified, or conversely, do you feel these gaps are being address elsewhere? Whole energy system integration e.g. the interaction between gas and electrical systems, the role of CCS and hydrogen; The tendency has been to avoid behind the meter; There should be more promotion of projects on customer/ stakeholder focus and technology innovation as these should deliver the most benefits; Enabling fit for purpose digital communications infrastructure; Perhaps a more joined up focus on Communications, Networking and IT would benefit everyone and ensure compatibility and consistency across the DNO/DSO s; we do not see enough responsibility pushed back to government for the innovation momentum and regulation needed; 19 The Voice of the Networks

20 Second Consultation Observations Do you think that there are additional areas for further innovation that should be highlighted? Enhanced communications solutions are core to many new developments but it is unclear that there is co-ordination in terms of design and ultimately learning across projects that have a communications component; There is no obvious benchmarking between innovation projects to establish best practice in terms of project organisation and delivery; A gap is in respect of the ability of the industry to effect change at a scale and pace that low carbon transition implies. However, this particular gap is currently being addressed by the FPSA programme; Not specifically innovation project in traditional sense, however improvements around transitioning projects into normal business processes, addressing bottlenecks, business barriers and facilitating replication of innovation value across DNOs if proven to save customer money and improve service; There should always be more identification of the commercial benefits of the innovation and the value to the end consumer; Innovation projects needing to bridge a range of stakeholder groups outside of the energy network licensees. For instance if innovation is to take a more customer centric stance then network innovation projects will need to include energy suppliers, community groups, hardware manufacturers etc; Introduction of fit-for-purpose digital communications infrastructure needed to meet the future challenges of smart, flexible energy networks should be a specific focus area under the new technologies theme; There should be more focus on the end consumer and delivering a market based solution centred around consumer s interests; Supplier engagement with customers on behind the meter energy solutions will likely have an impact on areas highlighted for further innovation. It is increasingly important to understand what changes may be required to the grid to accommodate for this innovation; Data Analytics and Customer Innovation on Future Services could be additional areas of focus; Virtual Data Centre / Mobile Edge Compute technology necessary to collect data for DSR grid parity and load management that is only aggregated today from central perspectives and inertia; Field area networking 4G / LTE technology either private (Ofcom / MOD spectrum release) or public using Services providers with correct SLA / cost points. 20 The Voice of the Networks

21 Second Consultation #1 Network improvements and system operability Do you think we have adequately captured the innovation activity which has been delivered to date? Do you agree with the assessment of the level of innovation activity across the listed categories? Innovation category Priority (out of 10) Improve network resilience to avoid unplanned power outages (particularly moving towards the low carbon world) % Yes: 9 No: 6 Improve demand and generation forecasting, and network planning processes 6.9 Improve asset management processes 5.7 Do you agree with the assessment of the future innovation opportunity across the listed categories? Maximise the value and capacity of existing assets 6.4 Optimise cross-sector coordination between DNOs, TNOs and SO, as well as licensees from other sectors (e.g., gas) and other countries % Yes: 12 No: 3 21 The Voice of the Networks

22 Second Consultation #1 Network improvements and system operability Do you have any comments on the timeline of innovation activities? Improve demand and generation forecasting, and network planning processes should be a short to medium term requirement; Network Visibility & Controllability should be expanded to include digital connectivity; Optimise cross-sector coordination should be prioritised in the Medium Term rather than Long term. Especially as this element is, at least in part, being addressed as part of the current Open Networks Project and there are already some ongoing projects in this area between the SO and DNOs; A comment made by several people during the innovation workshops is that the priority timeline question doesn't necessarily frame the issue fairly. Many innovations require attention in the short term but are likely to require continued attention through to the long term. There was confusion as to what timeline should be selected in those cases; Firstly, Optimisation of cross-sector coordination between DNOs, TNOs, and SO starting already in the short/medium term as this element is one of the key features of the transition from DNO to DSO; Forecasting requires effort in both short and medium terms. Do you foresee any external influence or policy changes that would change the timeline of when the challenges will need to be addressed? The Regulatory Cycle and any changes to the Policy context that would result in changes to the Policy landscape, i.e. Government Policy on renewables; Cross-sector coordination requires effort in the medium term to enable benefits to be delivered in the long term; Wider UK Energy Policy and requirements resulting from pre-brexit EU regulations (and possibly post-brexit regulations depending on any future agreement for UK participation in the Internal Energy Market); Progress on Open Networks Project; There are many different policy initiatives that would change the timeline of the challenges, including the transition to DSO, the creation of local flexibility markets and the uptake of electric vehicles; There is very real potential for excitement over new technologies to slow down given the uncertain nature of applications at a scale and successful integration into business models and markets. It is key that any innovation strategy is mindful of these changes and be able to adapt quickly if needed. 22 The Voice of the Networks

23 Second Consultation #2 Transition to a low-carbon future Do you think we have adequately captured the innovation activity which has been delivered to date? Innovation category Priority (out of 10) Create value from the introduction of smart meters and work collectively to deliver the wider public policy and public interest benefits from data Efficiently facilitate the adoption of low carbon technologies supporting the electrification of heat and transport Enable flexibility in the GB low carbon transition (e.g., increasing role of demand side response) Facilitate the transition from DNO to DSO, enabling the provision of new platforms, market participants and value streams Develop advanced whole energy system planning and forecasting methodologies 6.9 Do you agree with the assessment of the level of innovation activity across the listed categories? 80% Yes: 12 No: 3 Do you agree with the assessment of the future innovation opportunity across the listed categories? 81% Yes: 13 No: 3 23 The Voice of the Networks

24 Second Consultation #2 Transition to a low-carbon future Do you have any comments on the timeline of innovation activities? UK needs to accelerate a 2-3 year plan; The timescale should take into account how the innovation projects would fit with the enabling regulatory framework. Do you foresee any external influence or policy changes that would change the timeline of when the challenges will need to be addressed? Smart meters remain an open question - when will the roll-out be completed? How easily will DNOs be able to access the data, and at what level of detail? The recent Statement by Dermot Nolan on regulation needing to be ready for revolution should seek to help bring about the benefits of innovation earlier. We must future-enable our systems and markets to unlock the benefits and to do that we must bring about change in a more flexible and responsive manner. We must be able to design, assess and implement change quicker; Adoption of the Active Buildings measurement as part of the Energy Efficiency and Performance of Buildings European Directive. This would act as a key indicator in helping to commercialise energy efficiency products, boost the potential of smart meters and DSR services; The uptake of electric vehicles should influence the timelines/effort of Efficiently facilitate the adoption of low carbon technologies supporting the electrification of heat and Transport. If it accelerates, quicker and more action will be required. If is delays, slower and less action will be required; Developing skills and know how that is exportable on a world stage needs action now from the transformation of DNO today to DSO tomorrow. 24 The Voice of the Networks

25 Second Consultation #3 New technologies and commercial evolution Do you think we have adequately captured the innovation activity which has been delivered to date? Innovation category Priority (out of 10) Extract value from continued growth in web-based, digitalenabled services and new and improved sources of data 6.8 Maximise cybersecurity and data protection in respect of privacy and commercial sensitivity 7.5 Maximise benefits provided by new technologies, with particular focus on network services provided by electric vehicles and energy storage 7.3 Facilitate the adoption of commercial business models that leverage low carbon technologies 7.1 Shape and comply with evolving regulations and standards 6.5 Do you agree with the assessment of the level of innovation activity across the listed categories? 73% Yes: 11 No: 4 Do you agree with the assessment of the future innovation opportunity across the listed categories? Inform the development and ensure compliance with new markets and structures that allow greater competition in the energy markets 6.3 Facilitate sharing of services and business functions between DNOs, TNOs, and SO 6.9 Leverage cross-sector "smart technology" benefits and lessons % Yes: 16 No: 0 25 The Voice of the Networks

26 Second Consultation #3 New technologies and commercial evolution Do you have any comments on the timeline of innovation activities? There is much work to be done at the boundaries, particularly at the building level, where multiple innovation priorities will be in play at a single instance - i.e. electrical heating, storage, electric vehicles and smart and connected homes. There is a question about unbundling these issues and creating a little more of an obvious space for this kind of cross issue working; Extract value from continued growth in web-based, digital-enabled services and new and improved sources of data should also be considered from the short to long term; Majority of the activities are foreseen to take place in the short term, with a lifespan leading to the long-term. Extract value from continued growth in web-based, digital-enabled services and new and improved sources of data probably needs to be short term as well - web and data based services tend to be very quick to develop; The timeline appears to be too long, when a significant amount of work has already been done to date. We suggest that the roadmap is broken down to show when quick wins and learnings from early projects can be implemented; Time needs to be shortened to bring stimuli to the space and reap net benefits within 2-3 year timeframes; Do you foresee any external influence or policy changes that would change the timeline of when the challenges will need to be addressed? Energy policy has been a little unstable at the moment - this strategy should have laments that inform and driven these issues in a stable informed and evidence based way; The extent to which BREXIT will affect the regulatory context; Industrial Strategy Challenge Fund programmes including the Faraday Challenge, Prospering from the Energy Revolution and Buildings Construction challenges; 26 The Voice of the Networks This category is of utmost importance. More inflexible, distributed and microgenerative sources, electric vehicles and localised storage will exert greater pressures on the networks, and also opportunities. Although each areas for innovation is important, it is the management and optimisation of these factors on a whole system level (whether community, municipality or national scale) which requires greatest innovation. Digital technologies will be the glue that holds this together and where there is need for significant innovation; Shape and comply with evolving regulations and standards will clearly be determined by external decisions (if it goes ahead).

27 Second Consultation #4 Customer and stakeholder focus Do you think we have adequately captured the innovation activity which has been delivered to date? Innovation category Priority (out of 10) Improve the understanding of changing customer needs, particularly in regard to the electrification of heat and transport 6.3 Improve involvement of customers in the delivery of the innovation work 6.3 Continuously improve customer experience and affordability, and support the fuel-poor; 6.4 Enable customer choice; 6.3 Maximise the transparency of information and the quality of accessible data; 7.1 Improve employee skills and resources; 5.4 Do you agree with the assessment of the level of innovation activity across the listed categories? 75% Yes: 12 No: 4 Do you agree with the assessment of the future innovation opportunity across the listed categories? Facilitate community energy; 6.3 Actively seek collaboration with stakeholders and partners; 6.6 Facilitate behavioural change initiatives to promote energy conservation and sustainability The Voice of the Networks 81% Yes: 13 No: 3

28 Second Consultation #4 Customer and stakeholder focus Do you have any comments on the timeline of innovation activities? Facilitating community energy will possibly need to be done over more than just the short term. It is likely that this will require more work over the medium term too; Acceleration is needed in light of Government Industrial investment recognition; It is positive to see that all activities are envisaged to take place in the short term. However, these should not be part of innovation projects. Do you foresee any external influence or policy changes that would change the timeline of when the challenges will need to be addressed? There is a major issue about access of consumers to their energy information and hope this can link with the wider smart home. We raised this at the recent Smart Meter Bill reading - consumers are generating valuable information, yet they have no way to fully access and flexibly use this - this is an important issue if we want to transform the energy market and consumer experience; Regulation changes to allow third party use of networks (eg. competition); Facilitating community energy in the EU winter package and the UK interpretation of this will have a large impact on any community energy activity; Similar interventions could have an impact on improving affordability at network level. 28 The Voice of the Networks

29 Second Consultation #5 Safety, health and environment Do you think we have adequately captured the innovation activity which has been delivered to date? Do you agree with the assessment of the level of innovation activity across the listed categories? Innovation category Priority (out of 10) Continuously improve safety and reduce impact on the environment % Yes: 12 No: 2 Protect the safety of the public, staff and contractors 5.7 Reduce the visual and noise impacts of assets 4.4 Do you agree with the assessment of the future innovation opportunity across the listed categories? Do you have any comments on the timeline of innovation activities? Continuous improvement would suggest continuous work. That being said, we believe SHE to be BAU so should not be included. 93% Yes: 13 No: 1 29 The Voice of the Networks

30 Second Consultation Areas of focus for future innovation projects What are your views on our forward-looking innovation themes? I would encourage an emphasis on establishing the role of communications networks in facilitating the 'smart grid' future; Greater autonomy, auto control and management of networks, community grids (still interconnected); Given the underpinning nature of digital connectivity in ensuring many of the ambitions set out in the innovation strategy, a world class energy generation and distribution system in the UK requires an equally world class digital communications infrastructure to underpin it. Enabling fit for purpose communications infrastructure therefore deserves to be identified in the strategy both as a theme in its own right - perhaps within Innovation Theme 3 (New technologies and commercial evolution) as well as being recognized as a vital enabler for many of the other priorities; The Network companies should be a neutral facilitator of the transition to a low carbon future, innovation must provide substantial benefits compared the status-quo. It s not clear how areas for focus will provide benefits to customers and what the values of these benefits would be. Any innovative effort must be driven by the potential benefits to customers, not the networks and their revenues. New technology and commercial evolution Ensuring that networks have a good level of understanding of how new technology will affect their infrastructure will be important. Commercial evolution, in terms of how new DSOs will deal with commercial stakeholders in a two way relationship going forward, will be important. DSOs should not be looking to commercialize their assets in any way outside of the regulatory framework; We believe a large amount of activity included in this consultation to be BAU as thus not classified as innovation. Notably activities included under SHE and initiatives on customer and stakeholder focus. If DNOs need additional revenue in order to be socially responsible, build efficiency, monitor networks, or act with corporate responsibility, as suggested by this consultation, then this is an issue with existing BAU funding and should be discussed with Ofgem outside of this innovation work stream; There should be innovation tracks which can create a 2-3 year deployment today for creating distributed system connectivity and also evolve into 5G as that becomes tangible for future comms requirement in serving the power grid. 30 The Voice of the Networks

31 Second Consultation Delivering benefits from innovation Are there ways in which we can improve the delivery of benefits from innovation? Leverage new technologies to improve the network and stability; Throughput to the DNO business from the innovation and building on previous projects; Undertake benchmarking to identify performance before and after the implementation of the outcome from innovation initiatives to best quantify the impact; Far greater openness and communication of outcomes eg. via the Energy Systems Catapult Energy Knowledge Exchange and the UKERC EDC; The approach described in section 5 seems systematic and well thought out. The specifics will vary from project to project, but the main shortcoming of the existing approach is viewing customers only as end users, when many new innovations require customers to be engaged and on board to succeed (the roll out of smart meters being an example of customers not being engaged or on board). More processes could be brought in to get customers to engage with new methods and technology as they are transitioned into business as usual; Keep on ensuring any short-term benefits are delivered as well as ensuring any change is going in the right direction of the longer term vision; Increased transparency around the costs of innovation and the benefits that they provide to network users and ultimately end consumers. It should be clear how the list of stakeholder benefits correspond to the list of future innovation projects in the previous section; 31 The Voice of the Networks It s important to learn from projects that weren t successful to avoid making the same mistakes in the future; Where the benefits are clear from a piece of innovation, it should be clearly mandated that it is rolled out across all DNOs. We do not see a lot of evidence of such practice so far and the innovation strategy should contain a clear procedure for UK-wide roll out for successful innovation; All innovation results and learnings should be open source and transparent. It should also be communicated to industry in a constructive and easy to understand way that allows other stakeholders to benefit from the innovation work completed; This innovation does not belong to networks, but to all network participants. At the end of the day, these are customer-funded schemes and the outcome should be customer benefit, whether that comes in the form of reduced network costs or otherwise; Take a view from early adopters in countries like China, who have 100% coverage in smart meters and have deployed innovation already; Media, Traditional and Social, are not embraced enough. ENA should consider new ways of marketing communication beyond the initial stakeholders;

32 Second Consultation Collaborative innovation In an ideal world, what do you think the best arrangement for enabling collaboration would look like? In an ideal world it would mean working together on a daily base, rather than meeting only for conferences or working groups; It might be that there is an ongoing network of DNOs, but also their partners. A formal community of practice with sub-groups funded as an ongoing activity might help build better partnerships and also serve as a vehicle for sharing; Open and transparent sharing of information and ideas to achieve the optimum outcome through full collaboration; Networks have a much more open approach to external parties (ie. pulling innovation rather than acting as blockers); Innovation can arise from either a problem or an opportunity, and in some cases both. Therefore, it would be good to have a platform which lists the problems that have been identified by network operators, and the skills they expect to need to address them. This would have to be combined with an open opportunity for collaboration around ideas which have not been identified by the network company, but could still deliver value for customers; Top-down strategy from government, fully joined up with BEIS, then Ofgem as regulator and then across the relevant bodies, industries, and market players; Exploring the opportunity of setting up an industry wide sandbox (similar to Ofgem's existing sandbox). This would enable innovators to have a onestop shop for regulatory and technical advice on how to implement their technology, and in exceptional cases give derogations to regulation to trial new technologies. This would enable innovators to navigate the complex environment of the energy industry quicker and also identify opportunities for innovation funding or collaborations; The competitive structure of recent network innovation funding needs to be replaced with collaboration as a default approach; A cross sector steering group; An alliance that has common ground, perhaps a subset of the ENA today, where representation of industry, licensees, government and academia collaborate to deliver a new business model against set criteria; Collaboration could be enhanced by a consortium-type approach whereby a group of DNOs and other interested stakeholders would work in close cooperation for continuous exchange of experiences between network operators and their customers. 32 The Voice of the Networks

33 Second Consultation Collaborative innovation Are there any other ways in which Network Companies could collaborate with each other more effectively? In addition to collaboration within the electricity sector, and indeed across utility organisations, it is important that greater collaboration takes place with adjacent sectors such as the digital industries. Coordination of NIA/NIC projects. Is there the potential for projects between multiple DNOs (it's common for a DNO to work with the TO/SO); Potentially a neutral collaboration space, run through another organisation (academic, regulatory, consultancy, as appropriate); ENA should establish a communications infrastructure working group, or task force, perhaps in conjunction with techuk (the trade association for the digital industries in the UK). In addition to membership from all the DNOs, the working group should also include representatives from the digital communications sector (to ensure cross sectoral understanding / expertise) and from Government, Ofgem and Ofcom; Talk and share information and learnings more freely. It is about time that learning from one project was taken forward by the rest of the DNOs into BaU. It is difficult to see how a case can be made for continued innovation funding without real evidence of change resulting from past schemes; Removal of variances to allow a common set of goals to be administered. E.g. with micro grid we can see the issues of 1000 of mini me DNO type silo s that would be a magnification of the DNO collaboration issues. Removing variances down to common denominators would foster some joint working efforts across the innovation scene. Are there any other ways in which Network Companies could collaborate with third parties more effectively? Bring resource into organisations from third parties on a secondee basis to ensure full sharing of knowledge and expertise; Perhaps third parties should be in the lead rather than the networks; NIA and NIC projects facilitate this, but some network companies are more open to collaboration than others. Large academic projects and research hubs have the potential to facilitate this, for example identifying the most appropriate expertise or sharing network innovation challenges within the research community; Encouragement of joint R&D efforts across new technologies that could foster supplier momentum and help things into mainstream. 33 The Voice of the Networks

34 Second Consultation Collaborative innovation Do you believe there are additional barriers to network collaboration or have suggestions for how these could be overcome? Lack of appropriate resource to support the diversity of activities underway; Fears around safety, security of supply and loss of income are the existing barriers; We encourage a high level of transparency and continued dialog as part of the thought process; There is a perception that some challenges faced by Network Companies are not being suitably addressed, due perhaps to a lack of understanding. Therefore, we would recommend specific Task Forces are set up to focus on those areas e.g. Networking/Communications; Setup an alliance in which DNO s can create cross network collaboration. Indeed, a specific NIC award could be to demonstrate mutual benefits. Are there any other ways in which Network Companies could encourage Cross Energy Vector or Cross Sector collaboration? Yes; such matters need to extend into CCS. Collaboration with CCS specialists; Interaction with bodies that are already doing this, potentially specific additional NIA/NIC funding for this purpose; We believe that it is important that the gas and electrical network innovation strategies are linked and aligned. There will be efficiencies in understanding how the two vectors can interact in the future which are not clearly being addressed. We support Energy UK and believe there are differences between the two innovation strategy consultations which need to be realigned; Leverage of Academia as an accelerator in which the normal term times are used to prove/demonstrate concepts in conjunction with industry. Examples include Strathclyde where many key projects are currently being examined for the future of grid services. 34 The Voice of the Networks

35 Second Consultation Collaborative innovation How can we improve the level to which third parties are informed about, and involved with, innovation projects? Promote the website where the projects are described, however, it may not be much known outside the Network Companies; Energy Knowledge Exchange; Publish frequent updates online for the projects, demonstrating the value for customers. Hold workshops/consultations to discuss future projects with customers, this will ensure that projects are built around the customer s interests; We believe that third parties are more than aware of the money available under the innovation banner; The language and content used in this consultation and in workshops needs to be made less technical in order for third parties to be able to participate more fully; Host regular Webinars and solicit input in a more granular fashion rather than mass consultation which is taxing to digest and administer. How would you like to be involved in innovation with the Network Operators in the future? We see our role as an ongoing strategic relationship. We are trying to provide a link with the built environment and the energy network, as the coupling of these two issues is increasing. We would like to establish an ongoing relationship with our local DNO, but would be happy to engage more widely; Stakeholder meetings; Seek to establish an innovation workstream and governance arrangement to support the development of the communications needs of the operators as part of the DNO to DSO transition; Workshops, webinars and consultations; Only in scale trials to prove technology in the context of new business models that support the whole system approach; We would like to be involved in the Open Networks project looking at the DSO transition, and also in the formation of future innovation strategies; Continued communications from ENA with opportunity to input, network and provide feedback; By being asked to submit specific technology themes or buckets that can be part of a wider eco system and adopted, e.g. communications technologies. 35 The Voice of the Networks

36 Second Consultation Final remarks Are there any additional areas of innovation that should be reinforced? How do they relate to the challenges? Whole system integration, looking at discontinuous change, CCS, gas and power linkages, and energy storage; Communication solutions are likely to be central to many of the market developments anticipated with the DNO to DSO transition and in enabling the Low Carbon Future. It has been noted that communications solutions are a component of many of the innovation activities and as such greater coordination would be beneficial across the initiatives / priorities underway and in the future; Possibly related to the above where academia can start to create / foster training on Digital Energy; No additional areas but narrower and more pertinent focus is needed. Why do you think this strategy is important to you and the wider UK? Radical change is required in our energy system to meet decarbonisation obligations; Because electricity is essential to our lives and the electric system is experiencing numerous challenges, therefore a strategy is important to prioritise how to tackle them; We are in the middle of a major transition, brought around by lower cost storage, renewables, ICT; It has the potential to increase efficiency and support the establishment of a much more dynamic and competitive energy future to the benefits of citizens and business; It is all about unlocking the benefits of innovation and technology change to the end consumer and ensuring customer bills are appropriate for the future energy system landscape; Network operators are a key group in the transition to our new energy system. The infrastructure and demands upon it are of keen interest to Innovate UK and we are looking to support companies which will help make the transition a successful one whilst also stimulating economic growth for the UK; The availability of a world class energy network is a must if the UK is to remain at the forefront of economic and social development; Our business is fundamentally linked to the development of the UK electricity industry and the use of customer money to fund innovation wholly underpins the costs we pass through to customers. It is therefore imperative that we understand where the money is going and why; Networks make up 25% of the final customer bill and this will likely have upwards pressure in the future through greater electrification of heat and transport. Innovation in this area can help to put a downwards pressure on this cost, which is important to both maintain competitiveness in the UKs industries and also for domestic consumers where costs have considerable political focus currently; This strategy is important because it should be able to show us which innovation projects DNOs are looking to pursue. 36 The Voice of the Networks

37 2. Second Consultation Stakeholder Workshops 37 Energy Networks Association

38 Second Consultation Stakeholder Workshops Introduction As part of the second phase of the consultation on the Electricity Network Innovation Strategy, the ENA and its members hosted two free public stakeholder workshops to facilitate more open and in-depth conversation on the draft strategy. The first workshop took place in Glasgow on Tuesday 21 st November. The second workshop was held in London on Thursday 23 rd November. The Glasgow workshop had around 30 stakeholders attending, and the attendance at the London workshop was over 100. A very wide range of stakeholders attended, representing all parts of the energy industry. The agenda included the presentation of the draft innovation strategy, a panel discussion with network innovation leaders, Q&A sessions and interactive breakout sessions to gather in-depth input from all of the stakeholders. The feedback from these workshops was combined with the online consultation responses and fed into the development of the final Electricity Network Innovation Strategy. 38 The Voice of the Networks

39 Second Consultation Stakeholder Workshops Key takeaways London Workshop Communications technology is the key part of the transition; The importance of automation AI etc; End-point metering and access to information is another crucial element; Building resilience, so that you don t rely on communications for systems to operate; Consensus is required on how we access customer data; Rise of the prosumers local solutions and local technology; Automation scheduled activities, planning. Shift towards systemisation; Not all customers are alike different groups have different expectations and needs; Reliability and security of supply most of the RE systems are electronic, therefore they are very sensitive. Impact on the security of supply; Cybersecurity of the network; A lot less certainty in investment cases; Bundling of services, energy being one of them; Holistic top-to-bottom approach; Getting the infrastructure ready for the big data storage and processing platforms; Networks having access to smart meter data is key; Glasgow workshop 39 The Voice of the Networks It may not be one solution fits all, get a sense of bottom up versus top down development of the sector where will the direction of travel for innovation lie? What impact individual consumers will have on how the energy system of the future will look like? As engineers, we are underestimating the power that the individuals will have on the future; We are going to have many more active devices and the uncertainty is huge. We need to start building equipment that is fit for the future. A lot can go wrong if we don t have the information to make the right decisions; Far more significant involvement of the customers and general population. Not focusing on how they use energy, but engaging the society in achieving a lower carbon future; Uncertainty of demand that is driven by the decarbonisation theme. One of the biggest challenges is that those alternative ways of meeting those demands do not look that attractive in the eyes of the customers. Right now, it looks like it requires some sort of governmental intervention to facilitate the change; Is there a role that gas can play in the future? Maybe hydrogen will make it easier for a consumer to transition; Be aware and learn from what happens internationally; As we look to 2035, we need to consider that we invested billions in infrastructure to date. How do we make the most of it, given the externalities? Continue making the best use of what we have, we can always expand the network and capabilities, but we need to deliver value; We place a lot of effort on security and reliability. We have the requirement to keep the lights on all the time, but we also need to find a balance between security and providing flexibility; Electricity generation will be decreasing. The balance of what the grid ought to do becomes flexibility and balancing, rather than the underlying base of generation assets. That s what the consumer will be paying for; The electricity markets are quite competitive now, but the market is finite and there will be tipping points in terms of how much prices can be depressed; Innovation can be taking us off the path of tested solutions that could successfully be implemented; Much chaos is a result of the lack of central policy. Hopefully by 2035 we will have an energy policy that will take away much of the uncertainty.

40 2. Second Consultation LCNI Conference 40 Energy Networks Association

41 Second Consultation LCNI Conference Introduction The Low Carbon Networks & Innovation (LCNI) Conference brings together experts from across the energy sector who showcase the latest electricity and gas network innovation projects and technology crucial in supporting the sector s transition to a low carbon and flexible energy future. The 2017 LCNI conference took place on the 5 th 7 th December in Telford. On the 6 th December both the Gas and Electricity Network Innovation Strategies were discussed during the main plenary session. This session introduced the audience to the high level themes in the strategies and encouraged interested parties to participate in the online consultations which were open during this time. On the 7 th December the networks held an interactive session on both the Gas and Electricity Networks Innovation Strategy. The session included significant opportunity for Q&A with a panel made up of innovation leaders from both gas and electricity network companies. Approximately 35 stakeholders attended the breakout session, which was run using the interactive online tool, Slido. The audience was encouraged to use this tool on their smartphones or laptops, and it allowed them to respond to polls and questions in real time, as well as submit questions to the panel. A wide range of questions related to the innovation strategies were covered, and the results of these can be seen in the following slides. Again, this feedback was also fed into the development of the final Electricity Network Innovation Strategy. 41 The Voice of the Networks

42 Second Consultation LCNI Conference Feedback 42 The Voice of the Networks