As the electricity networks gear up for the next price control period, and the water networks get to grips with new deliverables under Asset Management Plan 7 (AMP7), companies in both sectors face considerable challenges.
Fundamentally, they need to optimise their existing assets – cutting losses and leaks, adding connections and customers – to meet the expectations of Ofgem and Ofwat, while also re-shaping their businesses to achieve full and rapid decarbonisation.
Not surprisingly, organisations in both sectors have latched on to the promising buzzwords we hear today – digitalisation, innovation, “smart systems”.
But how can they really drive through change programmes that are transformative enough to hit net zero yet still geared to legal and regulatory compliance, technologically advanced and ready for “interoperability” in areas where no technical standards are yet in place, while also being open to new innovations and services and never losing their focus on the customer?
For anyone in charge of strategy or future direction at an energy or water network company, the potential tensions are clear – and of course it’s all set against a background of constrained budgets.
Many have realised that collaboration and sharing best practice are vital in reaching shared goals: if every network works individually, we won’t get to net-zero quickly enough. So, companies are looking at what their peers are doing, and sharing inspiration between different sectors.
The appetite for new ideas, and embedding the good ones further afield, is one reason for the popularity of events such as the Network Awards.
But information never flows quite as freely as we might like, and it’s difficult to replicate outcomes across different organisation when there are inevitable differences in culture, technical specifications and other constraints.
Another approach that Ofwat has consistently stressed, including in AMP7, is “systems thinking”, or taking a wide-angled, joined up view of all an organisation’s interdependent functions, and considering how modifications in one area will impact on wider operations.
As it outlined in its 2017 “Resilience in the Round” report, “… companies will need to adopt a more truly integrated view taking full account of the interactions between disparate areas of their business. In short, companies need to adopt a systems thinking mindset at all levels of their businesses.”
Ofgem has been a less enthusiastic adopter of the term, but it also likes to refer to a “whole systems approach”.
Essentially, systems thinking means thinking of the network as a whole rather than the sum of its parts. An organisation can optimise one element believing it’s for the greater good, but then might not be looking at the whole system. A systems-based approach means choosing the right problems to focus on, not optimising one corner that creates knock-on issues somewhere else.
That topic is going to be explored further in a webinar, on 12 December, with three key speakers from Costain: water sector director Gerard Shore, client director John Bryan and Paul Eastwood, head of systems thinking.
The trio will be discussing a systems based approached to running a network, and bringing the discussion to life with a few examples: one project in the water sector, and also examples from the power and defence sectors.
When the networks are all grappling with the same challenges – affordability, compliance, the pressure to innovate – Costain will explain how a systems-based approach can provide an underlying framework for action, and a means to focus on the right solutions.
A water company might have a brilliant idea about improving the efficiency of pumps, but is that investment best spent on pumps, or on how the network of pumping stations interact with one another?
An energy company might be investing in sensors and data analytics to give it a dashboard view of every conceivable network parameter – but if that’s not translated into actionable insights, how much is it really achieving?
Innovation is an important driver of change, but energy and water organisations have to be sure they’re not just innovating for innovation’s sake, but with their eye on multiple – and moving – targets.
As the webinar will discuss, a systems-based approach can be one way of helping them to achieve that.