Critical Friends Panel 11 - EPN. 12th November 2015

Transcription

1 Critical Friends Panel 11 - EPN 12th November 2015

2 Simon Gray, CEO, East of England Energy Group (EEEGR) and Independent Chairman of EPN Panels Welcome from the Chairman 2

3 Safety and housekeeping No planned fire alarm Emergency exits Fire assembly points Toilets Mobile phones Data Protection - we record our findings and publish a report of the proceedings and our follow-up actions 3

4 Objectives for today To explain how we are developing our engagement practices To share our approach to forecasting electricity demand and generation To show how we re still innovating to deliver continued improvement To demonstrate how we plan to implement our losses strategy Most importantly, we would very much welcome your feedback on all of these topics. 4

5 Today s Agenda Time Subject 9:30 9:40 INTRODUCTIONS 9:40 10:00 DEVELOPING OUR APPROACH TO STAKEHOLDER ENGAGEMENT 10:00 10:30 ECONOMIC ASSUMPTIONS FOR LOAD FORECASTING 10:30 11:00 INNOVATION REFRESH UPDATE 11:00 11:20 BREAK 11:20 11:50 LOSSES STRATEGY OVERVIEW 11:50 12:20 Q&A Importance of engagement Improvement opportunities Planned changes Housing forecasts Industrial and commercial growth forecasts Low carbon technology forecasts Where we ve come from Continuous improvement Implementing best practice UK Power Networks strategy overview What are network losses Implementation of the strategy and next steps 12:20 12:30 AOB & CLOSE 5

6 Keith Hutton Head of Regulation Developing our approach to Stakeholder Engagement 6

7 The importance of stakeholder engagement The Energy Industry Trilemma Affordability The Energy Industry Sustainability Reliability 7

8 Listening to our stakeholders - successes You said We did Outcome Customers told us they found it difficult to contact us during major incidents such as severe weather events We trained an additional 870 employees from across the business to take emergency calls. Our average telephone response times during severe weather events reduced from 36 to 5 seconds. Distributed generation developers wanted us to speed up the connection process and reduce the cost of a renewable generation connection Developed an innovative Flexible Distributed Generation (FDG) connection and released this 6 months early. Some projects completed up to 2 years faster with over 14m saved in connection costs Stakeholders asked us to focus on increasing the customers on our Priority Service Register (PSR) and to raise awareness of our services for vulnerable customers We engaged with 121 Councils, 1500 Parish Councils and 25 other partners to promote our services Our message reached 4 million homes and resulted in a 40% increase in PSR registration 8

9 Stakeholder engagement time to take stock 1. The new RIIO ED1 regulatory review period 2. Disappointing outcome to the 2014/15 stakeholder submission Make stakeholder engagement a business as usual activity Move to a position of thought leadership Focus on a few key themes Clear linkage between Stakeholder Engagement and company strategy Ensure our engagement activities focus on outcomes Improve how we tell the story 9

10 Themes of engagement linked to the trilemma Sustainability Operate safely and protect the environment Resilience and security of supply Low Carbon Technology Have we chosen the right themes? Delivering excellent customer Service Delivering value for money Affordability Reliability Enable economic growth Focus on Vulnerable & Fuel Poor customers 10

11 What does success look like? Delivering defined outcomes from all of our stakeholder activities. Are these success criteria appropriate? Be seen as a leader in the Low Carbon transition. Receive positive publicity from our stakeholder engagement activities. Being ranked better than peers in the annual industry stakeholder schemes. Become a point of reference so that UK Power Networks is acknowledged as an example of best practice by stakeholders. 11

12 Colin Nicholl Head of Business Planning Economic Assumptions for Load Forecasting 12

13 Objectives for today To share our approach to forecasting electricity demand and generation To present changes we are proposing to make to our short term forecasts and seek your feedback To present our approach to modelling long term low carbon technology take up rates and seek your feedback 13

14 Domestic consumption modelling Historic housing growth Energy Saving Trust modelling Forecast housing Energy requirement by housing type Total domestic demand Energy efficiency assumptions 14

15 Domestic Consumption Key Driver(s): Housing growth Technologies: -LIGHTING -APPLIANCE -COOKING (ELECTRIC) -HEATING -WATER HEATING -HEAT PUMPS Key proposals and questions - Whilst there are variances within years, cumulatively our housing forecasts were reasonably accurate - 91,782 forecast against 85,559 observed. - Forecast profile has been revised to reflect actuals Original Forecast Actuals Updated Forecast 15

16 Non-Domestic consumption modelling GVA growth Jobs growth Element Energy modelling Forecast Floorspace by sector Energy consumption per m 2 Forecast Industrial & Commercial consumption growth Historic floorspace data Energy efficiency technologies 16

17 Industrial & Commercial Consumption Key Driver(s): GVA, Employment, Floorspace Technologies: -HEATING & WATER -COOLING -LIGHTING -PROCESS -COMPUTING -CATERING - OTHER Key proposals and questions - We are not proposing to change the industrial and commercial proposals until more data is available - We would welcome views on other approaches to calculate non domestic demand Floorspace GVA Jobs 17

18 Electric Vehicles Key Driver(s): Total car stock Technologies: -BATTERY ELECTRIC VEHICLES (BEVs) -RANGE EXTENDER-EVS (RE-EVs) -PLUG IN HYBRID EVS (PH Evs) Key proposals and questions - Electric vehicles have not seen the growth that was initially forecast. - 6,214 EVs forecast as of 2014, but only 4,797 registered within the EPN area as of the end of Q We are also assuming that the current 5,000 Government incentive no longer applies post It only applies for the first 50,000 vehicles Original Forecast Actuals Updated Forecast 18

19 Small Renewables Generation PV (Solar) Ofgem Feed-in Tariff/ROC data Leading indicators modelling Ofgem Feed-in Tariff/ROC data Leading indicators modelling Small Onshore wind Average installation capacity Average installation capacity Forecast PV Capacity Forecast Wind Capacity Average irradiance profiles Average wind profiles Forecast PV Generation Forecast Wind Generation 19

20 Photovoltaics Key Driver(s): Leading Indicators Technologies: -DOMESTIC (0-5kW) -MEDIUM (5-50kW) -LARGE (50+kW) Key proposals and questions: - We propose to update the incentives to reflect the recent Government changes in both the Feed in Tariff and Renewables Obligation certificate and the impact of declining technology costs - The impact of the national caps is not built in Small/Medium/Large PV Original Forecasts Small/Medium/Large PV Actuals Small/Medium/Large PV Updated Forecasts 20

21 Onshore Wind Key Driver(s): Leading Indicators Technologies: -Onshore wind, various capacities and wind conditions Key proposals and questions - Overall, forecasts were slightly underestimating capacity - 289MW forecast v 331 MW actuals - We are proposing to reflect the impact of the new incentive rates - We have not included the impact of allowing local communities a greater say in placement of wind farms Original Forecast Actuals Updated Forecast 21

22 Heat Pumps Key Driver(s): Leading Indicators Technologies: -MICRO COMBINED HEAT & POWER -GROUND SOURCE HEAT PUMP -AIR SOURCE HEAT PUMP ATW -FUEL CELL COMBINED HEAT & POWER Key proposals and outcomes: - Lack of available data around heat pump uptake in our region - Any possible sources? - The projections below reflect our original Business Plan submission - We expect the forecasts to reduce in the near term due to the uncertainty around the policy framework Original Forecast 22

23 Constructing different technology take up scenarios The policy framework around low carbon technologies is uncertain Current policy is reducing incentives on low carbon technology in short to medium term However, the UK is still committed to meeting its carbon targets Concern that there is a policy gap Significant ramp up from 2020? Our approach is to have a range of take rates for each of the key technologies High, central and low The key drivers behind each uptake are: Technology cost profile Incentive rates - Size of Levy Control Framework Policy targets e.g. EU emission targets Barriers to uptake Particularly relevant to EVs and Heat Pumps where customers have alternative technology choices 23

24 Example of how we will vary key take up rate drivers Key scenario factors Policy incentives Technology cost Barriers to Entry PV/Wind Size ( M) of levy control framework which will influence incentive rates Rate of degression of incentive rates Rate of decrease of /kw of solar cells N/A - we see the PV choice as principally an economic one EVs EU emission levels Upfront capital cost of EV compared to alternative Rate of decrease of battery costs Access to charging infrastructure Public attitude to EVs Heat Renewable heat incentive rates Rate of degression of incentive rates Capital costs of heat pumps relative to other options Hassle factors e.g. additional insulation, groundworks for GSHP 24

25 Conclusion We want to continue to improve how we model future demand growth on our networks We would welcome your views on the drivers we are modelling and how we are modelling them We recognise that storage is an emerging issue The policy framework around low carbon technologies is both rapidly changing and uncertain We would welcome your views on how you think this area will develop and how we are proposing to develop alternative take up rates 25

26 BREAK 26

27 Colin Nicholl Head of Business Planning Innovation Refresh Update 27

28 Objectives To share our approach to innovation and have your feedback Brief overview of the range of our innovation portfolio Understand how we can idea-share with you and other external organisations 28

29 2. Goals Our Innovation goals Innovation will support in the delivery of our RIIO-ED1 commitments and drive continuous business improvement Continuous improvement within DNO groups, as measured by our targets for network reliability, safety, cost efficiency and customer satisfaction. To be consistently credited as a facilitator to, and not an obstacle to, the Low Carbon Transition. To be held up as a benchmark for adopting and exploiting best practice from around the world. 29

30 3. Supporting Targets Where Innovation can support our targets Safety (incl. Public) Best 25 Company Investors in people: Gold Seek to avoid forced redundancies Protect employees jobs Reward based on performance Reputation Relationship with Ofgem Broad Measure of Customer Service Managing major events CIs and CMLs Quality of Assets Underspend against allowances Replace legacy systems/processes Deliver RIIO outputs and 77 commitments Efficiency improvements 30

31 4. Innovation Approach Our Approach to Innovation Continuous business improvement Research, development, trials & business realisation Serving customers Supporting economic recovery Facilitating Government s carbon reduction targets Condition-based maintenance, timely replacement and fault response Strategic investment and construction cycle Maintenance free solutions Plan maintenance and replacement Fault restoration 1. Forecast need 2. Develop options 3. Secure rights-of-way Minimise disruption from necessary works Customer Service 4. Procure and prepare to construct 5. Construct

32 5. Strategy Innovation Strategy Refocus innovation purpose Do the right things Do things right Broaden definition of innovation Innovate to remove the impediments to delivering our vision strategy Prepare us for the future: Lead thinking on future processes and the likelihood of reaching tipping points first Define the priority problems to solve Selecting the right ideas to adapt and implement Routine and organised engagement - internal and external Elicit new innovation from supply chain, other sectors and overseas The best in the UK at rapidly scaling up successful innovation to deliver value Process the ideas and turn them into solutions Embed change in the business to exploit the innovation

33 6. Definition & Principles Definition & Principles Innovation: any approach which is seeking to get to our objectives faster, more cheaply, or to a higher standard, using unconventional methods. We will be open to all ideas from all sources and all levels of the organisation. Are these principles appropriate? We will look for the business case or payback first, not exactly how we will fund the idea. We will not have a not invented here attitude. When we use funding the deliverables are a tool, not an outcome. We will deliver as a team. 33

34 7. Portfolio Overview of our Innovation Portfolio Smarter Network Storage 20 live Network Innovation Allowance (NIA) Projects Flexible Plug and Play Innovation Portfolio energywise to 40 live Innovation Funding Incentive (IFI) and Low Carbon Network Fund Tier I projects from Low Carbon London 2010 FUN-LV 2013 Members of: KASM

35 8. Idea-sharing & Reporting Idea-sharing & Reporting Focus area Elicit new innovation from supply chain, other sectors and overseas Strategies a) Optimising our approach to idea-sharing and reporting i. Increase the visibility of innovation already implemented and delivering value ii. Be a fast follower by capturing ideas from across the world, be best at identifying them and fastest at adopting them iii. Remove all previous barriers or silos (e.g. we only do technology innovation ) and engage external supply chain and other external organisations Average UK worker typically suggests six innovative ideas a year* How can we listen to your ideas? What practices are used by your organisation? How can we idea-share company-to-company? Have you got examples where this has been done well? How would you want to be kept up to date on UK Power Networks innovation delivery? *Everyday Innovation Report, WAZOKU

36 9. Conclusion Conclusion We want to continue to innovate to deliver on our RIIO- ED1 commitments and driven continues business improvement We would welcome your views on our innovation definition, strategy and core principles We would welcome your views on how you think we can idea-share and keep you up to date on our innovation activities We need your ideas and we would like to hear from you 36

37 10. Over to You We need YOUR ideas & We want to hear from YOU Increase customer self-service and channel choice A way to drive customers through high customer satisfaction channels that do not involve agent staff Wifi and charging points on vans A way to address customers major concerns during power outages and drive customer satisfaction Tell a story and keep customers informed A way to use social media platforms (e.g. Storify and Instagram) for major incidents and for fault work Live engineer tracking for booked services A way to name, state the location and when the engineer will arrive so that customers can track progress (in the future enable customer to select an engineer in real-time) Making the number easier to find links to single emergency number I work from home, and I have to rely on the internet links to WiFi access They could have explained it more, instead of putting it down on paper so it can't be understood - links to simplifying the connections journey The application process was very difficult and complex and it should have been something a lot easier to understand and follow - links to simplifying the connections quote, over the phone Get in touch with us: InnovationCall@ukpowernetworks.co.uk

38 Allan Boardman Network Design Standards Manager Losses Strategy Overview 38

39 Overview Background UK Power Networks strategy overview What are network losses Technical losses Non-technical losses Implementation of the strategy Challenges What next? Summary Questions

40 Background In 2013, losses, as a proportion of demand on GB s networks were estimated to be 7.2 per cent 27TWh Transmission Losses 6.4TWh Distribution Losses 19.6TWh Continuously for 1 year Theft 1TWh

41 UK Power Networks losses strategy 3 key areas of focus Maintain current levels 1TWh of cumulative improvement 14 key target areas RIIO ED1 ambition 47m discounted net benefits opportunistic approach

42 What are network losses? Energy into Distribution Network Energy out of Distribution Network Circa 6% Technical Losses attributable to the action of distributing energy, predominantly governed by the laws of physics, and generally presented in the form of heat. Non Technical Losses where energy is used but not accounted for i.e. Theft, misallocation etc.

43 Technical losses Fixed losses Associated with plant Variable losses P = I²R Transformer magnetising losses Reactive power requirements such as cable charging currents Increases non-linearly with increasing load Effects worsened by highly resistive components e.g. small conductors, long circuit lengths

44 Technical losses UK Power Networks focus: System management opportunities Major project opportunities Optimised transformer specifications Rationalised conductor sizes Network architecture and voltage rationalisation Legacy network design rationalisation Voltage and power factor management

45 Technical losses UK Power Networks focus: Power quality management Improving phase balance and load sharing Optimising energy usage at operational sites Demand side response Active network management DG support New technologies

46 Non-technical losses Three main focus areas Theft from suppliers Customer has a meter but has bypassed it. Theft in conveyance Situations where there is no Supplier associated with the premise. Under-declaration of unmetered supplies.

47 Implementation of the strategy Implementation of technical losses strategy Understand losses desktop studies mainly; low cost; pro-active Plan and Design start changing policies, initial implementation, more involved; mainly proactive Build and operate deploy changes on the network; significant cost; partly pro-active but mainly opportunistic driven by other triggers

48 Challenges Contradicting investment drivers; DNOs are encouraged to: Utilise the network as close to capacity as possible To maximise the life of assets To accommodate Low Carbon Technologies Costs are incurred by the DNO, benefits are realised by the consumer

49 What next? October 15 November 15 December 15 January 16 Publish revised losses strategy Losses stakeholder event Further development of knowledge and understanding including use of smart meter data to pinpoint target areas Evolve strategy to include benefits to wider GB community Innovation projects to complement the more technologically advanced aspects of the strategy LDR tranche 1

50 Summary Started ED1 with a comprehensive strategy Now looking to further justify, expand and implement The strategy is very DNO focussed. We will now look to develop it to be more outward looking, considering wider GB losses and actively seeking collaboration with relevant stakeholders Development of concepts will be undertaken and lessons learnt available to all relevant stakeholders

51 Questions What do you consider important for UK Power Networks to incorporate in to their losses strategy? How are losses currently affecting you? How would you prefer to engage with UK Power Networks regarding future losses discussions, stakeholder engagement and sharing of best practice? Anything else?

52 Review of objectives To explain how our engagement strategy is changing and to seek your feedback To share our approach to forecasting electricity demand and generation and seek your feedback To show how we re still innovating to deliver continued improvemen t and seek your feedback To demonstrate how we plan to implement our losses strategy and to seek your feedback UK Power Networks. All rights reserved 52

53 Next steps Before we finish: Please complete your feedback form Send us additional thoughts, particularly on todays subjects UK Power Networks. All rights reserved 53

54 Thank you