It seems to me that potential innovators need to be able to survey the future. In many sectors, that may not be that difficult, but in energy it is quite difficult at the moment.
There are models of what the future might look like – good ones – from Decc, National Grid, ETI and others. But we need to make sure that those models are accessible and usable for the wider community.
Read Utility Week’s Inoovation report, including this interview here: http://read.utilityweek.co.uk/i/512337-innovation-report
Furthermore, for progressive innovation, our visions for the future need to be shared, and be equally as accessible, to incumbents as they are to new players. This is because, while it’s not unheard of for incumbents to bring forward really disruptive change, often the innovation comes from new players. So that confidence in what the future may hold needs to be accessible to all.
A crucial tenet for innovators is then to be able to build confidence in the future that they behold. That doesn’t mean I’d like to move toward “picking winners”. But it’s important that people are able to understand the potential sources of value, and how they will interact with them.
Innovators need to have access to skills, and to funding. Funding seems to be the thing that people spend a lot of time talking about but skills are very important too and – as Utility Week has covered many times – there continue to be significant concerns out there as to whether there are sufficient skilled people around.
When we do think about funding, we need to acknowledge that it is limited. Therefore we need to be confident that we take forward the things that really need to be taken forward and, critically, that funding is not available to the things which have very little chance of success.
Again, this is not about picking winners, but it is about having an intelligent view of the future.
Once we understand the landscape, innovators need to get their heads around the way that money flows so that ideas get linked, as quickly and efficiently as possible, with sources of funding.
Speed is important. It is essential that companies, and the UK, gain a leadership position from developing these ideas. We need to be ahead of the rest of the world.
Do utilities struggle with that speed to market? I think we have to remember the role of regulation here. I would say that in the UK regulation has evolved pretty sensibly and could, from many points of view, be regarded as the most enlightened in the world when it comes to regulated utilities.
However, it is certainly also true to say that regulation tends to be developed to meet the problems that have happened in the recent past.
We need to work a lot harder at making sure that the regulation we need in order to bring forward products and services for the market of five years’ time, ten years’ time, twenty years’ time, exists today. We are entering a much bigger transformation of our energy system than we have ever had, and so regulation is going to have to be more forward looking than it has been.
Leaders in utilities need to be passionate about the future and about innovation.
Regulators need to make sure they develop a package that offers the right incentives for innovation.
Of course there are things that the companies can do on their own behalf, but you won’t find many privately owned com companies, or publically owned companies, just doing things that seem like a good idea, when there’s no association between the financial wellbeing of the organisation and what is being delivered.
If regulation is aligned with what’s needed for the future than you’ll get utilities displaying the right behaviors.
In Europe, transmission companies invest 0.4 per cent of revenues in innovation and technology. It’s almost certainly not enough for the future challenge and it’s bound to the need for enlightened regulation because the biggest barrier to more money flowing in is that regulators don’t allow for any return on investment – in terms of recovering the cost from customers.
Innovation needs an infrastructure to connect partners. Because, in many cases the smart mind that comes up with an innovation does not have any of the future big picture or funding that I have talked about – nothing but simply that idea – in order to get the product or service to market.
Leaders in utilities need to be passionate about the future and about innovation. They need to be open to ides and really spend a lot of their time thinking about what the future systems will be like because they are going to change much more than they ever have done in the past and the pace of change is going to be much faster over the next 20 years. We are looking at profound change across lots of vectors.
About Nick Winser CBE
Having served 11 years on the board of National Grid, Nick Winser is currently:
- Chair of National Grid Gas and National Grid Electricity Transmission
- President of the European Network of Transmission System Operators for Electricity
During his time as executive director at National Grid, Winser was influential in the design of the RIIO price control system. He originally joined the firm as engineering director in 2003.