Taking the next steps on network innovation

Marcia king headshot

Marcia King

Head of RIIO 2 strategy
10th April 2018
Areas covered:
Electricity
Gas
Quicker connections for generators, fewer power cuts and lower costs for managing the energy system. These are just some of the benefits that innovation by Britain’s energy network companies can help to deliver. Even drones have a role to play.

 

They help cut the costs of carrying out checks on network infrastructure. Perhaps the most eye-catching schemes involve robots that repair gas mains, some of which are strong enough to cope with the force equivalent to a tackle by a rugby player. 

Following privatisation in energy, research and development took a back seat while the focus was on cost cutting. Network companies were right to prioritise efficiency and the price controls we set encouraged them to do this. Over the past decade our regulation has incentivised companies to step up their use of innovation to help them, amongst other things, accommodate much more local, renewable generation on the energy system.

Gas networks are also using innovation to find out how new sources of gas such as hydrogen and biomethane can be used transported on the networks.

Innovation must become ‘business as usual’ 

We want to get a better deal for consumers on network costs and in doing so we want network companies to embed innovation so that it becomes ‘business as usual’ rather than a ‘nice to have’. In our consultation on the framework for the next price controls we say that the controls will continue to include specific innovation funding for network companies.

This funding should encourage companies to focus more on challenges currently facing the energy sector such as accommodating the increasing use of electric vehicles, the decarbonisation of heat and the move to more locally sourced energy. 

Developing a ‘culture of innovation’ within network companies

We are asking for views on the best way to achieve this. Around £150 million of innovation funding is available for each year of the price controls and the companies must compete for a large portion of it through a yearly competition. We are thinking about whether we should continue with this format or make changes.

Ultimately we want the companies to move away from their reliance on these programmes for developing and demonstrating innovative solutions. We want to see a ‘culture of innovation’ developing within all network companies, where taking smarter approaches and using new technology becomes a core part of their daily working practices. 

Drone over LondonMore co-ordination needed on energy network innovation

Network companies need to be working with a wider range of companies and technology providers, including those with new business models, that want to enter the energy market. This could pave the way for quicker and better solutions to managing the networks.

In some cases, non-network companies will want to test technology they have developed on the network, so we will explore how best we can help the development of these innovations and whether there is a case for providing a more direct route for these companies to price control innovation funding.

Between 2015 and 2021 the Government has made £2.5 billion funding available for research and testing of innovation which can help to reduce carbon emissions. We want to ensure that innovation projects funded through the price controls are more coordinated with this wider innovation funding and support so that we can deliver greatest value.  

High levels of investment needed at lowest cost to consumers

Through our Innovation Link service we have helped more than 150 new businesses over the past year with advice and support on entering the energy market. If businesses that come to use this service have ideas that can benefit network innovation, then we should support their engagement with network companies.

We want to set price controls for energy networks that continue to deliver high levels of investment, reliability and innovation at the lowest cost to consumers from 2021. Network companies have made good progress on developing innovation, however they need to go a step further. The next decade will bring more challenges, some of which are unforeseen. For network companies to stay ahead of the curve, daily use of innovation and new technology must become second nature. 

Your views

We’re consulting on our price control framework proposals until 2 May. Have your say or register to attend our upcoming event in April.  

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