What do future utilities need: consent and dissent from incumbents and policy makers in decision theatres

Dr Christoph Mazur, Imperial College

Overview and relevance

We are currently examining the opportunities for new and incumbent electricity utilities in future low-carbon scenarios and demonstrated there are different revenues and returns available to utilities. In all scenarios we found the current utility model business model will have to evolve to access new revenue, meet expectations of consumers, adopt new technologies and adapt to future regulation. Similar findings for industrial strategies and policies. Given the multitude of different perspectives (especially with regards the role of consumers) and lobbying positions, it is difficult to determine or agree on the most important changes are to enable this evolution. This work tackles this question using the novel method of Decision Theatres.

Methodology

We held four Decision Theatres with senior commercial and state actors – two in the UK with policy and regulation, and the industry, one in Europe, with key industrial actors who were familiar with the UK case, and one in the USA, with a mixed industrial and state group.

Decision theatres use primary data and anthropological processes to arrive at group consent over a priority action.

All our decision theatres addressed the same question:

What are the most important CHANGES needed to enable utilities to access new markets in the [UK] energy transition?

Results

The decision theatres show that there has been consensus in four key areas:

• the need for an open platform for flexibility services
• the necessity for a strong national strategy for electrification of heat and transport
• the need for deep revolution of regulatory structures
• the need for a long term political commitment to carbon pricing and/or other support structures.

On the other hand, three areas of conflict also emerged:

• there is a need for consumer protection from price risk
• there may be a risk for data security
• an explicit commitment to a single pathway scenario and/or national strategy is needed.

Furthermore, there was difference between European and North American views on the role of consumers, their needs and their protection.

Conclusions

This study finds imminent changes are needed in order for incumbent electricity utilities to deliver energy transitions. Some of these decisions relate to existing policy choices, but others require new thinking and bold decisions which will exclude, enable, and lock-in different futures, and this cannot be avoided. This has been well acknowledged by the incumbents as well as by the policy makers.

Finally, given the need to engage on the consumer side of the meter, the ability to fix these issues with purely economic and price policy is over.

References

Wegner M-S, Hall S, Hardy J, et al., 2017, Valuing energy futures; a comparative analysis of value pools across UK energy system scenarios, Applied Energy, Vol:206, ISSN:0306-2619, Pages:815-828