In Part 1 of this series, we noted that we spend a lot of time in the energy sector talking about improvement: faster connections; smarter grid management; more efficient price controls. These conversations matter. But they all share a common assumption, that the system and structure we're working with is suitable. We're not sure it is.
We proposed some design principles for future networks and offered some thinking for each.
With those design principles in mind, in this article we focus on one of the key enablers of this re-design: Digitalisation at scale.
To rapidly, and sustainably, deliver future-proof networks we need to embrace, and exploit digitalisation, in all its forms, across the energy sector. Three themes stand out for us.
Three priorities for digitalisation at scale
Coherence
We need to think of the energy system in a different way. Go beyond the obvious silos of physical, digital, electrical etc and think instead of a single coherent energy system of systems. This embraces the inevitable integration of digital into physical operations; governance and decision-making; and, investment planning and prioritisation.
Done well, this will drive real efficiencies across the sector, improving returns on investment and, ultimately, driving greater value for money for shareholders and citizens alike.
Capability
To realise the benefits of digitalisation across the energy system we must improve access to and increased use of digital engineering experience and expertise. This includes planning and leadership, not just execution.
Across the energy system leaders need to ‘upskill’ or be reinforced or replaced by those with the requisite skills to be able to exploit digital in all its forms. From the field force to back-office, from the boardroom to the depot, we need to build digital capability.
This is not simply a technology challenge. As we discussed in our recent article on digital maturity, governance, accountability and leadership capability are just as important as the underlying technology itself.
Networks need to start thinking less of FTE and contingent support (contractors, consultants etc) and more of a blended capability set, drawing upon the ‘best athlete for the race’ to ensure this system of systems is built and operated effectively and efficiently. We need to build long-term digital partnerships, in the same way networks are starting to build long-term supply chain partnerships, and for the same reasons: access to the best resources, value for money and strategic, competitive advantage.
Customer focus
Through creating a blended system of systems, networks will ‘lean into’ putting customers truly at the heart of their business (which many espouse). While the more obvious customer themes of flexibility and vulnerability draw all the attention, we would like networks to take a broader customer view.
There is a huge increase in the opportunity for customers to interact with the energy system in ways they never could before, through the ‘power of digital’.
This might include:
- Flexibility platforms
- Smart charging applications
- Aggregator services
- Community energy systems
Whichever channel is selected, customers must be able to connect simply, reliably and securely.
In facilitating this, networks expand the system of systems to include customers, driving engagement and participation and placing customers and their needs in the centre of the new energy system.
A view to what next
With ED3 decisions just round the corner, and some indicators coming out already, we expect an emphasis on coherence, capability and customer focus from network operators and regulator alike. This will demonstrate a shift in thinking, and a move towards a system of systems in order to rapidly and sustainably digitalise the network, opening the path to accelerate the transformation of our energy system and make it truly fit for the future.
The entire sector needs to focus on the consumer at the heart of the energy revolution, and design (and deliver) a system to sustain us all in a flexible, net zero future.
The organisations that will shape the next chapter of UK energy are those willing to engage with the structural questions now instead of simply reacting to the next consultation.
Ask yourself:
- Are you thinking strategically or tactically in relation to digital at scale?
- What are you doing to ensure the energy system is fit for purpose rather than your small part of it?
- What are you doing to support your organisation’s stability and growth; nurturing customer loyalty, developing processes, securing long-term investment, innovating?
- What would a whole-system view of your priorities look like, and how far is it from your current plan?
Finding the answers
There are no easy answers here. But it’s worth asking the right questions.
At BFY, we welcome the chance to explore the answers with you. We work with network leaders on strategy, regulatory engagement, and long-term investment planning. We challenge assumptions, ask even more difficult questions, and act as a critical friend to organisations thinking through decisions that matter.
Contact our team to discuss the opportunities for your organisation.
