With 25 years of experience in the energy sector, most people become jaded or lose that sense of joie de vivre – but not Paul Massara. When the former Npower chief executive sat down with Utility Week recently, he was positively brimming about the opportunities and developments currently facing the industry that has been his professional home for more than two decades.
So, when he says “there hasn’t been a boring moment in the energy market in 25 years”, you believe him, and right now, he adds, “it is on the cusp of some very big changes”.
Massara has seen the future and it is decentralised energy, smaller and more “nimble” companies, and a changing role for the National Grid. Changes do not get much bigger than these.
Last month, it was announced that Massara, who is now chief executive of North Star Solar, has joined the board of the energy blockchain development company, Electron. It might seem like a leftfield appointment to some, but Massara is almost evangelical about the benefits that blockchain could bring to the energy market. “Blockchain excites me, because it allows costs to reduce and new innovation to happen,” he says.
“If people can switch faster and get a more efficient market to tie in with community energy, that benefits everybody,” he adds.
“Quicker switching is good,” he explains. “But let’s be clear, people want accurate switching. Quicker switching that is not accurate will undermine confidence among consumers, and that’s not what we want. We want to have smarter switching, and smarter switching is enabled by blockchain.”
Massara also sees a role for blockchain in allowing consumers to trade excess energy from their home batteries, as well as linking distributed generation for local solar or wind-powered systems.
With his North Star Solar hat on, he is understandably excited about the possibilities of linking solar with home batteries, which he predicts will be a “game changer” for the energy market. “What you will see is much more embedded generation coming onto the system,” he predicts. “Everybody is talking about this now.
“I was at a conference recently, and I was asked how much of the market I would have solar, battery, or solar and battery,” he recalls. “I said about 10 per cent of the domestic market, but about half of the audience said they thought between 30 and 50 per cent would have battery, or battery and solar, by 2025.
Vision of the future
“We need a vision from BEIS and a strategy from Ofgem that says we are going to support this smarter grid,” adds Massara. “The changes we’ve seen recently with embedded generation can lead to a distortion of the amount of batteries that will come onto the system. If they are going to make changes on embedded generation, transportation and distribution charges, they need to have a view on how they will stimulate the market for batteries in the context of that.
He adds that there also needs to be a “mature discussion” about future investment and expansion plans for the national grid.
“Personally, I am worried we are talking about investing in grids at a time when people will be using them less and less,” he says. “We know that batteries mean you don’t need to build upgrades or backup, but we need to look at the whole grid and ask, what does a smarter grid look like?
Massara also sees big changes afoot for the older and bigger players in the energy market, who, he adds “will have to adapt their business models very quickly”.
“What’s different this time is that this is a technological change, being driven by people outside the industry,” he says. “It’s not a choice between coal or gas. This disruption is coming up from the electrical side, smart data and from batteries.
“That’s why I think innovation will come from smaller companies. They are more flexible. They are better at partnering and that’s going to be a key issue. I think you will have small companies that will grow to be bigger players on the market, because they haven’t got incumbency issues.
“Npower has its own problems,” he says, turning to his former employer. “It’s still in a turnaround phase. It had a difficult billing system. The trouble is it’s got to rebuild that faith with consumers, and that’s difficult.
Speaking before next month’s snap general election was called, Massara adds that he believes the Conservative government will make good on previous threats to intervene in the energy retail market.
“I think the most likely position is that they cap the differential between standard variable tariff (SVT) and non-SVT deals for a portion of the market,” he says.
At the time of writing, the Conservatives have yet to publish their general election manifesto, although they have given several clear indicators that they plan to intervene on price rises. It is also not clear what other energy policies a future government will adopt, but Massara is bullish about the road ahead.
“If you’re talking about a post-Brexit world, where we want to develop smart technology and become leaders in the world, we should be spending more money on research and development. Battery storage, smart grids and blockchain are exactly the areas the government needs to be encouraging and incentivising,” he says. “This good for UK plc.”