In fitting with today’s #NCSW17 theme of rising to the challenge, I want to talk about two of the challenges facing us a business in the future, and how we’re preparing to meet them.
We have a regulatory challenge as we get closer to our next price control review. We think RIIO is, on the whole, working, and we have to justify our business plan to Ofgem, demonstrating that what we want to spend on maintaining and improving our gas network is not only justified but also essential to make sure we can meet our consumer’s expectations in the next price control and beyond. Additionally, we think that the current innovation funding is fit for purpose and should remain. It’s clear that the funding has been key in delivering very real benefits for customers now – as well as supporting the work we’re doing designing the energy system of the future.
Designing the energy system of the future is another key challenge for us. It’s not so long ago that commentators and politicians were, rather flippantly, pronouncing gas and gas networks days numbered. Electricity was taking over, and we would be confined to the dustbin of history alongside typewriters and Betamax! But how things have changed! It’s now becoming clear that an affordable, secure and decarbonised energy system is impossible without gas and gas networks. And this isn’t only heating homes. Gas is also – through gas fired power stations – generating electricity to keep the lights on and powering businesses. The flexibility of gas fired power stations (they can turn on and throttle much faster than any other type of plant) allows them to support renewable energy generated by wind turbines and solar panels too, meaning that gas is integral in decarbonising electricity. There are 30 power stations connected to our network alone – generating over 1GW of electricity.
But decarbonising electricity is the easy bit – decarbonising heat is more complex. As a network we’re ahead of the curve on connecting sources of low carbon gas to our network, with just under 20 connections from sources as varied as tomato farms to Wastewater Treatment Works. Additionally we’re working with our sister company NGN on the H21 project that is examining whether switching big cities from one type of gas (methane) to another; lower carbon type (hydrogen) is feasible, while alongside electricity distribution network operator WPD we’re leading Project Freedom, which is assessing the possibility of households ‘smart switching’ between gas and electricity as a source of energy to deliver affordable and flexible energy supplies for customers.
All this work is underpinned by our energy simulator – ‘2050 Pathfinder’, which we’re hoping to launch publically in the next few months. Developed in house alongside consultants, it assesses how different future energy mixes would work in practice. It enables any energy scenario, current or future, to be modelled for a town, city, county or country and the results show the costs, carbon impact and any shortfall / surplus in heat and power supply. We’re confident it will be an essential addition to the toolkit of policy makers, government and utilities, supporting investment decisions and the planning of future infrastructure – and position us at the forefront of work to design the future energy system.
And quite apart from the technological side of things, how do we deliver a future energy system that delivers for future customers – with ever increasing expectations? To say the future is challenging is perhaps an understatement, but I’m confident that as a values-driven business, with our capable, innovative people we’ll be able to rise to future technology and customer focussed challenges.
I hope you’ve found this blog interesting – any questions/queries please do leave a comment and I’ll try my best to get back to you!