Navigating the future energy system: Five key takeaways from Utility Week Live
This week, our energy and resource specialists headed down to Birmingham to attend Utility Week Live to hear first-hand how the UK utilities sector is preparing for a decarbonised future. The global energy price spike has fast-tracked the need for the sector to find new means of keeping the lights on in an increasingly volatile world.
Here are five key takeaways:
1. We cannot waste another year pre-election – recognising the resilience risk of climate change
Chris Stark of the Climate Change Committee gave a compelling opening keynote outlining how the power system is on the frontline of climate risks and there is no time to waste. He highlighted how we need to build a resilient, reliable, decarbonised power system by 2035 that is primed to tackle the complexity of the challenge at hand.
The more power we use, the more exposed we are to climate risk, which means critical infrastructure needs to be better prepared. Government must ask themselves – do we have the institutions in place to deliver? Has the Future Systems Operator (FSO) been given the appropriate orders? Is the supply chain ready?
We cannot waste another year pre-election. We need to plan now to realise the UK’s Net Zero ambitions. Critically, we must not ignore resilience as we invest in our power generation story. All investment must accommodate climate hazards and be resilient, while all assets on the system must be supported by the right policies. The utilities sector needs clear outcomes and actions with consistent climate mandates across regulators. To bring together net zero and climate resilience – we need to think big.
2. Re-wiring Britain – delivering the energy transition at pace
In her fireside chat, Cordi O’Hara OBE FEI, President, UK Electricity Distribution at National Grid explored how the distribution network needs to prepare for a step change with rapidly rising demand and increasing volume of connections as we look to deliver the energy transition at pace and scale across the UK.
National Grid will deliver five times the amount of infrastructure in the next seven years compared to the last 30. This is going to require a different form of enablement to integrate renewables into our network. In her view, some of the key dependencies for getting things right for a decarbonised power system are:
- Planning reform – reducing timescales for new infrastructure (either planned or constructed)
- Taking communities with us – critical infrastructure needs to be hosted in new places and can create burden. Communities need to see and understand the significant enduring benefit
- Activating the supply chain – anticipating the investment and ensuring sufficient regulatory clarity so order books can be created seamlessly with the supply chain
- Queue connection reform – contracts need to evolve with tighter milestones on delivery, and strategic projects should be given priority to move up the queue
New infrastructure and manufacturing capabilities require upfront commitments and programmatic alliance across the energy eco-system. This means effective communication and engagement strategies with key audiences will be critical.
3. Hydrogen – the clock is ticking
During the conference, it was clear that the hydrogen industry has some catching up to do when it comes to selling the public and policymakers on the use of hydrogen in domestic heating. While heat pumps are becoming more and more commonplace in UK homes, the roll-out of hydrogen in domestic settings is still some way away.
A delegate from the hydrogen industry made clear that they believed the challenge for the industry was one of communication and engagement, not one of technical feasibility. The reporting in recent months around the proposed hydrogen village trial has shown that many homeowners have reservations about the use of hydrogen in their homes. Over the next twelve months, assuring the public about the benefits and safety of hydrogen as well as ensuring that policymakers have confidence in the industry’s ability to scale up production will be vital for hydrogen’s future.
4. Consumer vulnerability – a winter’s tale
Ofgem Chief Executive Jonathan Brearley used his keynote to highlight that while wholesale energy prices have fallen from the unprecedented levels of the past 18 months, they are unlikely to return to 2020 levels any time soon. As a result, the regulator challenged the sector to find more innovative ways to identify and support vulnerable customers moving into winter 2023/24.
This includes supporting Government initiatives to develop a sustainable Social Tariff, enhanced data sharing between different utilities’ Priority Services Registers (PSRs), and finding new methods of identifying consumers experiencing temporary or seasonal vulnerability.
Brearley noted archly that the regulator retains the right to intervene within the market if retailers and operators failed to adequately support their customers through the challenging months ahead.
5. Greenwashing – a reputational risk
With the UK water sector facing near universal criticism for endemic pollution of British rivers and beaches with untreated sewage, the Water UK stallholders faced a tough challenge defending the industry’s performance.
This task was made more challenging by member companies trumpeting their marginal progress in decarbonising their own operations through use of less carbon-intensive materials. An audience member at one presentation was heard loudly asking “Why should we care if the concrete you use emits less carbon, when you haven’t been using any for the last decade to replace any of your aging infrastructure?”
The exchange illustrates the reputational risk of highlighting innovative decarbonisation initiatives while your wider operations are seen as falling short of public and political expectations.
These five takeaways highlight the key debates that are currently taking place within the energy sector. The move to net zero is undeniably posing a number of challenges for the industry, however there is no doubt that it is a very exciting time for companies involved in this space, with lots of opportunities.
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