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Urgently needed interventions for long term energy resilience are being hobbled in a mire of market disincentives for investment and strategic ambiguity, according to energy network leaders.
Investment in resilience has become “a bogeyman” in the energy networks industry. This was the view expressed by one senior power sector veteran at a recent Utility Week roundtable held in association with S&C Electric Company.
The event, which explored the increasing vulnerability of the energy system to the impacts of climate change, as well as other threats to resilience, stirred strong feelings among the assembled industry leaders. As the debate spanned issues from regulatory incentives and strategic frameworks to tactical points on tree felling and mutual aid agreements, opinions forged and hardened at the sharp end of network operations were plainly expressed.
Pressing home his views on the disparagement of resilience investment in recent years, our power sector leader condemned what he termed as the “fashion following” tendencies of companies and Ofgem. “Whatever ‘next big thing’ is coming down the road we get hooked on it and seem to feel the need to create a bogeyman [to fight against]….for the last few years, because we’ve wanted to see more [energy] flexibility and move to DSOs [distribution system operators], we’ve made reinforcement ‘bad’.
“But we need reinforcement for resilience and reinforcement is perfectly natural for any community where you know the demand is going to be there forever – or for the lifetime of the next set of assets.”
These comments elicited nods and harrumphs of agreement from the assembled group of network experts – including from a former regulator who added that an “efficiency mindset” in regulation and pursuit of “just in time” operations as an ideal, is “no longer fit for purpose”. “All of that runs counter to the idea of allowing for redundancy, which you need for resilience,” they said.
In an event which came hard on the heels of the final determinations for ED2, others frankly stated that the regulator’s confident message that these settlements will deliver futureproofed infrastructure at no extra cost to consumers was “misleading”.
“The evolving nature of the resilience threats means the sector does not only need to consider solutions for this winter, but also for 2030, 2040 and beyond.”
Grant McEachran, regulatory affairs director, S&C Electric Company
Change urgently needed
Finding a better way forward is a matter of urgency. Evidence that climate change is driving increasingly frequent and intense extreme weather events is mounting. In 2021-22 six named storms ravaged the UK, including Storm Arwen which resulted in the loss of power supplies for over 1 million customers. As networks struggled to respond the widespread damage a small but significant minority of customers were left without power for as long as 13 days.
And it’s not just storms which are causing problems. The summer of 2022 saw temperatures hit record highs across the UK – exceeding 40C in some locations. The unprecedented nature of this heat in the UK caused real problems for a number of networks with fault volumes spiking on underground assets and the capacity of transmission lines reduced due to swelling cables.
Furthermore, climate change poses complex resilience challenges far beyond the impacts of extreme weather. As the UK seeks to decarbonise, converging reliance of the power system to support EV charging, electrified heat and new forms of energy production – such as the manufacture of green hydrogen – presents another front on which network operators must fight to maintain reliable and secure supplies.
So, notwithstanding perceived disincentives in the regulatory framework for investing in resilience, how should networks respond to mitigate these interlinking threats to the reliability, safety and security of supplies?
“Perhaps we need to have a conversation with consumers where we say, its going to be more economic for you if you accept a lower level of resilience. But until we can measure it we can’t have that conversation.”
What is resilience?
The answer is frustratingly unclear, according to our debate participants. Perhaps most strikingly, this is because there is no consensus around what we collectively mean by “resilience”. There is no common measure for appraising how resilient today’s energy system is or how resilient we might need or want it to be in the future. Without this common understanding, it is therefore very difficult to mount sophisticated strategies for resilience that extend beyond very short term tactical actions, said our industry leaders.
“Part of the solution must be to have some kind of agreed definition of resilience that can be used to shape network design standards,” commented one participant. Another senior engineering director with experience in both power transmission and distribution agreed that a better set of resilience metrics would help the regulator determine “what is poor performance from a network versus an indication that there is a genuine need for resilience investment.”
Developing this idea, a former networks regulator recognised the existence of Network Asset Resilience Measures (NARMS), but said these have some significant limitations. “They are really just about the condition of the asset,” they said. “Not about its resilience in a meaningful sense.”
“There is definitely a call for some new thinking here,” continued our regulatory expert. “It probably needs to be at government level and indeed the National Infrastructure Commission has called for guidance from government on resilience standards.”
But industry is not simply leaving the creation of new resilience standards and measures to government. A number of debate participants made it clear they are on the front foot in this space, collaborating with academia and infrastructure owners in other geographies to come up with useful ways of quantifying resilience, both to specific threats and in a broader “hazard agnostic” sense.
Useful reference cases were mentioned with regards to utilities in Illinois and Florida in the USA and the approach of the New Zealand regulator to monitoring responses to “exceptional events” was also commended. In short, said one former networks regulator at the table, “we can see that a lot of jurisdictions are trying to find a way of measuring resilience better. But no one’s cracked it yet.”
One of the major stumbling blocks for international efforts to establish better resilience measures, according to one expert at our event, is that the challenges of climate change and decarbonisation require a shift away from a traditional focus on resilience of infrastructure and assets and a better appreciation of what constitutes “community resilience”.
Others agreed that this is a critical but thorny area. There were some complaints about Ofgem’s expectations for networks to provide extensive community facilities “at point of use” in emergency scenarios. More than one network leader pointed out that the Civil Contingencies Act puts Local Resilience Forums and Local Resilience Partnerships directly in the frame for providing this kind of response while networks should be allowed to focus on “getting the lights back on”.
As a direct counter-argument to this however, other attendees pointed out that chronically under resourced and under skilled local bodies cannot be relied upon to mount robust resilience strategies for their communities and responsible infrastructure owners must shoulder responsibility for the wellbeing of their customers.
From a more strategic perspective however, it was generally agreed that growing interdependency between different infrastructure networks and common domestic services – including utilities, telecoms, broadband and transport networks – is making resilience more complex. To try and tackle this complexity, utilities need to collaborate proactively with other infrastructure owners and local government bodies to build a picture of resilience at community, local and regional levels.
The live question in the room was whether this understanding of local resilience should be built with a top-down approach – starting with a national governance framework and vision for resilience. Or from a bottom-up perspective which would allow more flexibility for immediate progress, but raise challenges around integration of local and regional resilience strategies going forward.
While one participant argued strongly for the former approach, there was a general feeling that, while bottom-up development of localised resilience might come with inefficiencies, the need for immediate progress should override the pursuit of an optimised system – at least for the time being.
“The reality is that this will have to happen organically,” commented one DNO operations leader, adding that it is “unrealistic” to expect the required level of coordination and political will to support a centralised approach – especially given that major uncertainties remain in the overall strategy for the UK’s transition to net zero, many of which are tied to the need for different regional solutions.
Building on the idea that making incremental, locally relevant resilience gains should be encouraged, our roundtable participants bemoaned the lack of regulatory support for opportunistic asset and network upgrades in the interest of resilience.
As a simple example, one networks leader described the potential opportunity following storm events to replace broken wooden poles for overhead lines with sturdier but more expensive options. “The investment case for this just doesn’t stack up at the moment. Like-for-like replacement is the norm. But this is a missed opportunity for building resilience.”
“Technical debt is a big issue. There’s a lot of outdated kit still in use which has, for one reason or another, never met the investment criteria the we need to get it off the network.”
Others agreed, with more examples of issues caused by “lowest common denominator” asset specifications, driven by a focus on short term cost, causing operational problems and resilience issues further down the line. There was unanimous agreement that Ofgem could do more to remove distinctives for networks to “do the right thing” on asset replacement.
One leader argues that this was critical if energy networks are to address the increasing challenges posed by “technical debt” across their asset bases.
“Technical debt is a big issue. There’s a lot of outdated kit still in use which has, for one reason or another, never met the investment criteria the we need to get it off the network,” they said, adding that this was the root cause of major issues in the wake of Storm Arwen.
The air of frustration spilled over into an exchange of experiences about tree felling – a key tactical consideration for improving resilience, but one which is currently fraught with difficulties for network operators.
In a storm scenario, power losses – especially in rural areas – are frequently tied to fallen trees hitting overhead lines or transformers. Networks are keen to make more interventions to clear trees and branches to a safe distance from vulnerable lines. However, our assembled leaders exchanged colourful anecdotes about their encounters with land owners who are deeply unwilling to allow for this.
One operations leader said they have been driven to mount legal action to enforce clearance on a key stretch of their network. “I am going to have to go to court. If I play softly-softly, gently-gently I can’t do the section I really want to,” they said. Another power network leader at the table said they are similarly preparing their teams for an increase in legal cases to mandate tree clearance due to mounting frustration with “land ransom cases”.
Among the many reasons why tree felling difficulties were agreed to b a “massive problem” for the industry relates to strain on skilled engineering and technical resources in storm response scenarios. As one attendee pointed out, “If we could do more clearance then we wouldn’t have to send out so many guys to repair damage after a storm. That would really ease the strain on what is a limited pool of skilled people.”
“We do not suspend the guaranteed standards on any planned work during the period of a storm…if you’re the donating entity in a mutual aid situation, you are accepting risk by sending your resources to support a different company.”
This proved to be a rich seam for conversation. Across the board, our attendees expressed deep seated worry about diminishing numbers of experienced linesmen who can be mobilised for emergency response scenarios.
While mutual aid agreements between networks have been enormously helpful in recent years, supporting swift mobilisation of personnel to wherever the point of greatest need might be on a national level, there was consensus that these arrangements are in need of review.
The justifications for this were varied, but a key argument hinged on the current lack of relief from performance standards for networks sending aid to their peers. One participant described the current situation in which networks are “held to peace time standards when they are fighting a war and helping partners elsewhere,” as “an anathema”.
“After the storms in 2013 we took a good step forward with modernisation of the NEWSAC mutual aid agreement,” they said. “But what we didn’t deal with – which I think is getting worse as customer expectation increases and dependence on electricity as a single point failure node increases – is that we do not suspend the guaranteed standards on any planned work during the period of a storm. What that means, is that if you’re the donating entity in a mutual aid situation, you are accepting risk by sending you’re resources to support a different company for the greater good. You get no relief from the risk. For me, its been an anathema for quite a while.”
Others agreed that risk exposure is “the elephant in the room”. There was lively discussion of potential options for allowing better risk relief in future, including following a US model for the creation of a distinct emergency response industry. One senior engineering leader confessed a personal interest in establishing a storm response business should the temptation to leave their current day job ever arise. “There’s got to be a commercial model there,” they said – though others were sceptical that the UK market would provide sufficient demand, even with forecast increases in extreme weather demand.
In a discussion which covered myriad resilience interests and roused passionate opinions, it was clear this event only scratched the surface of the issues which the energy industry must grapple with to safeguard the prospect of reliable supplies in a climate stressed future. The total challenge is immense. But as our group made clear, there are many “low or no regrets” actions which could be taken today to make a “material difference” to long term resilience. For networks to feel at liberty to make these however, our leaders asked for greater freedom to “make the right choices” on asset replacement and, critically, to release resilience investment from its “bogeyman” casting.