Episode 5 – Ofgem’s 2022-‘23 Strategic Innovation Fund Challenge Areas (2 of 2)

Welcome to episode five of Bright Spark. In this podcast from Innovate UK, we’re talking all about innovation in energy networks. We’re looking at the huge challenges facing the energy sector on the way to net zero and how Ofgem’s Strategic Innovation Fund or SIF is opening up big opportunities for energy networks and their partners who are ready to shake things up a bit. I’m Matt Hastings. This is the second of two episodes focused on the four Round 2 challenges that the Strategic Innovation Fund is currently focusing on. We talked about two of those challenge areas last time: supporting a just energy transition and preparing for a net-zero power system. We’ve got two more for you right now: energy system resilience and robustness and accelerating decarbonisation of major demands.

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Coming up, we visit University College London where Professor Liz Varga talks us through how net-zero energy systems of the future need to be robust and resilient.

You need to be using less materials. You need to be using local materials, local knowledge and local skills. That way, you can prevent accidents more quickly because people have more familiarity and knowledge of the system.

Yselka Farmer is also in that chat. She’s from BEAMA, the organisation that represents the energy system’s supply chain.

The supply chain aspect of resilience is so often forgotten when we’re talking about energy security. I think we’re in a different era now of quite unprecedented change in the way we manage our system and the amount of new infrastructure we need to deliver.

We’ll then head across London to City Hall to chat with Rick Curtis who works on energy systems transition at the Greater London Authority. The focus there is decarbonising major energy demands.

London has got several million buildings and ultimately, we need to decarbonise them all by either switching out boilers for heat pumps or connecting them to a low-carbon heat network.

It’s another busy episode with plenty to explore and take in. I’m looking forward to this one, not least because we’re joined for the second time by my Innovate UK colleague, Manu Ravishankar. Manu, how are you doing?

Hi, Matt. Great to be back again. I’m very well. How are you?

Yeah, I’m on good form, thanks. Looking forward to this episode. It feels like an absolute cracker again, focusing on these two key challenges.

Yeah, it’s really good. As you say, it’s a great time to be talking about this. In just the world that we live in, these two topics have really risen up the agenda. It’s come up in the public consciousness I feel in the last few months and so it feels like a great time to be opening up the hood on these topics and talking a little bit more about what SIF and other innovation opportunities there might be. So, yeah, I’m really looking forward to it.

I completely agree.

The reason we’re back together for this episode is that this is really a follow-on from episode four. For listeners, do go back to the Bright Spark podcast feed to listen to that one. These two really come as a pair. Before we jump into this episode, Matt, shall we first do a quick recap and overview?

Sure thing. So similar to Round 1, the Strategic Innovation Fund has set four new challenges for Round 2. That’s what we’re going to really focus this year’s funding on. We arrived at these four challenges by talking to loads of people from right across the energy sector – over 150 in total – to identify the most pressing priorities and Ofgem accepted our recommendations. These are the areas that we want innovators and energy networks to target as they develop their ideas, bring in new partners and work collaboratively to find solutions. That’s the most important part of all of this. How are we going to really solve these problems with innovative solutions that are going to deliver value to consumers?

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So, Manu, what’s your role in all this?

I really see my role in this particular challenge-setting phase in three main areas, Matt. The first one really is to help identify innovation challenges that can mitigate barriers and really create opportunities to deliver net zero from an energy network’s perspective. The second is to identify key stakeholders in this process and of identifying those challenges and really bring them into a process, give them and voice and listen to them about what issues and problems they face and how innovation can help. Finally, I think it is to develop these challenges in a way that is aspirational but still actionable to allow a diversity of ideas that have a real shot at creating impact.

I think it’s really interesting how no one individual or organisation can solve net zero on their own. We have to work collaboratively and collectively to solve some of these huge challenges and the work that you’ve been doing around fostering new types of partnerships, working with the networks and new innovations, not just within energy but across other sectors too, and bringing them in to focus on these specific problems has just been fantastic. I think we’re already starting to see the fruits of your labour in some really interesting Discovery applications which have already started to be submitted.

Let’s have a quick think about what last time looked like and just to recap, we had supporting a just energy transition and preparing for a net-zero power system in the last episode. That leaves energy system resilience and robustness and accelerating the decarbonisation of major demands for this episode. Talk us through what you’ve been up to, Manu, and what you’ve been finding out.

Sure. Thanks, Matt. As we discussed, I think resilience and robustness are really important and quite timely topics for the energy system. Before we delve into the details, maybe let’s set out a few definitions for the listeners. From a resilience perspective, it’s really the time it takes for a system to recover after it’s had an interruption or a disturbance and to then deliver, from the energy system’s perspective, power and gas to the customers. Systems do go down and that includes energy systems and this can be due to mechanical or electrical faults, human faults and weather events like flooding or lightning strikes. As the system becomes more digital, there are also growing and emerging risks on the cyber front like faults or something more malicious like targeted cyber attacks. That’s really the resilience part of the challenge. Robustness is the ability of a system to remain functioning under a disturbance. You can almost think of it as the opposite of system vulnerability. It’s how hardy the system really is. As we know, the energy system is changing and we have new sources of generation. We have different ways by which we are balancing the system. We are becoming more decentralised and more digitalised. Alongside this, the landscape of risks is also changing. We live in a climate that’s more volatile. We live in a world where cyber attacks are more common and terrorism as well and also the whole geopolitics of the more volatile world that we live in. So in the context of all of this, we really need to better understand how resilience and robustness change as we introduce new technologies and new conflagrations and ensure we can take advantage of these new approaches to strengthen the system. Also, we need to do this cost-effectively whilst delivering a good consumer experience. That’s really at the heart of this challenge.

One of the beauties about the Strategic Innovation Fund process is the ability to have new challenges every year that really reflect where consumer needs are and where broader system user needs are too. Especially with winter coming up fast, having that resilience and robustness is going to be ever-critical and given, as you say, the geopolitical environment at the moment, having a really focused effort on cyber security across the UK energy system will only make the UK more secure as we develop our net-zero value propositions moving forward. So I’m really excited about this episode. Looking forward to hearing more.

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In a while, we’ll look at some of the big hurdles that have to be cleared on the net-zero journey and how to decarbonise major energy demands but first, with energy system resilience in mind, I’ve been to another of the UK’s top universities.

So I’m here outside the Chadwick Building in University College London on quite a beautiful autumn day to speak to Professor Liz Varga and Yselkla Farmer and it’s going to be, I think, quite a fascinating discussion because these are two people with very different but important perspectives on energy system resilience and robustness and why it’s really important for all of us to understand this to make the net-zero transition as successful as possible.

My name is Liz Varga. I’m Professor of Complex Systems at University College London. Both UCL and the Infrastructure Systems Institute that I lead are doing work on infrastructure resilience, particularly energy systems resilience. The urban environment is especially relevant here for us because we converge at a point where lots of networks come together. We have new networks trying to be created that conflict with the existing structures that are there and create barriers to innovations, particularly for net-zero energy systems. Increasingly, we see people almost going it alone on building system innovation for energy systems resilience so that buildings can become self-sufficient and sustainable but even then, they require or want to connect to the grid and those are the challenging crossover points because not only do they still need energy from the grid, they want to give energy back to the grid or sell it back as a commercial enterprise.

So it feels like we’re at the hub of resilience and robustness research. I can see around me that there are a lot of screens with some of your research and findings. Can you just talk us through what we’re seeing and what they say?

Yeah, sure. The paper that we’re looking at now is called A Resilience Toolbox and Research Design for Black Sky Hazards to Power Grids. Obviously, power grids are critical for the supply of energy. We had some case studies in here – some experience also – of power grid failures and we’re seeing that happen more and more. The next article we can see here is about very recent work that we’ve developed with the United Nations Office for Disaster Risk Reduction which is on Principles for Resilient Infrastructure and we’ve identified six principles and 33 key actions. The adoption of these key actions will ensure that we have systems resilience generally and particularly, energy systems resilience.

Professor Liz Varga has quite kindly assembled a set of about ten monitors that are presenting, in tandem, some of the key research work she and her team have been undertaking in resilience and robustness. It’s quite an interesting walk-through of all the great research that happens here. Now, you spend most of your working day thinking about resilience and robustness but it’s a topic that’s not really well-known in the energy sector. So I want to take us right back and in the context of a net-zero transition, energy security and climate change, can just unpack at a high level what these terms mean and why it matters in these contexts.

Traditionally, resilience is about recovery. So if you go back to the Latin meaning of resilience, it is on the recovery focus. These days, and particularly with Cabinet Office direction, we’ve included what they call the Five Rs of Resilience and that includes also robustness and also reliability. It puts this emphasis on maintenance but the robustness aspect of it is very much about preventing an attack on your system. You can prevent, you can manage, you can contain a disruption and then you can recover from a disruption but then there’s also this idea of continuously improving, learning and putting mechanisms into systems so that you can have early warning of potential hazards so that you can be prepared and stop the hazard interrupting the operation of the system. Robustness is a really important aspect of resilience now. We also see that, increasingly, sustainability is now feeding into resilience. No longer do we have these multiple objectives where you want to be sustainable, you want to be resilient and you want to be cheap and everything is bundled under resilience because resilience is about the whole system operation. In order to be resilient, you need to use things like green and blue infrastructure. You need to be using less materials. You need to be using local materials, local knowledge and local skills. That way, you can prevent accidents more quickly because people have more familiarity and knowledge of the system and you can also recover because of the availability of the skills and the knowledge of the system. It’s about making solutions relevant to your context, particularly these days with supply-chain challenges and the whole production from the point of the source of the raw materials all the way to the end of life. We’re seeing the whole idea of the circular economy coming together with sustainability but also coming together with the innovations that the supply chain can offer as they bring in their new ideas, new components and new mechanisms that will now have a contribution to net zero.

I think that is quite an interesting 40,000 ft overview of resilience and robustness and one of the interesting points that was picked up was the supply chain and availability of resources. I think it’s the perfect time to turn to Yselkla. Yselkla, you represent the supply chain that really needs to help deliver the transition to net zero. From your and your membership’s perspective, what do resilience and robustness mean for you?

BEAMA is the UK trade association representing manufacturers of energy technologies. We represent around 200 manufacturers from multinationals to SMEs. For us, we’ve seen, in previous years, the supply chain aspect to resilience is so often forgotten when we’re talking about energy security and delivery of energy system needs in the UK. It’s assumed... don’t worry, the orders will be placed and the supply chain will deliver. I think we’re in a different era now of quite unprecedented change in the way we manage our system and the amount of new infrastructure we need to deliver that we have got to think about the supply chain in this holistic view that Liz presented there. We’ve done quite a lot of work in the last couple of years with the Energy Systems Catapult and our membership, the manufacturers, to try and understand, at a detailed level, what the requirements will be in terms of volume and demand on the supply chain to get to net zero by 2050; so effectively, modelling the future energy system and looking at the demand that will be placed on certain key products and technologies that we need to deliver on net zero. That’s really demonstrated to us the unprecedented scale of investment that will be required in the supply chain. It really is not business as usual for manufacturers. It’s not business as usual for investors. For that reason, we really need to take a different approach to working with governments and the rest of the industry to figure out how we plan for this deployment and we help the supply chain build up capacity. I think it’s worth noting as well that the UK isn’t the only one that is doing this and facing these challenges. This is a global problem. This is a global delivery and we will be competing with other countries for demand on the supply chain. That’s really a very important factor when we’re also looking at trying to develop this local supply of materials and skills that Liz mentioned which is so important to us and to our members. The UK needs to be competitive in that global marketplace. We can’t ignore the fact that these delivery challenges are against this backdrop at the moment of an energy crisis which places the resilience of our energy system front and centre of the minds of everybody but also there are global geopolitical pressures that we are fully aware of that are impacting on supply chain delivery. With some components and materials, we’re finding that the prices have gone up 30 times what they were a couple of years and this is a really important factor to consider. For that reason, you could argue the resilience of global supply chains is lower than it was before. So we need to take action now to look at this longer-term, net-zero investment that’s needed and the innovation we need and look at the supply chain pressures which won’t all be short-term. They are likely to last a few years or even shift global supply in a way we haven’t seen before and we really need to start to try and tackle some of those issues. From BEAMA’s perspective, we look at it from two angles. One is about this delivery aspect of the supply chain and the other one is that our members manufacture the key technologies that Liz mentioned which are key to integrating buildings of the grid and enabling this new energy system functionality that we need for net zero.

I want to pick up on that point a little bit. The energy system itself is in a state of flux. We’re moving towards a new energy system that’s going to have greater renewable energy generation. There is going to be greater coupling between the sectors which is something Liz picked up around transport, energy, telecoms and water is starting to connect more. Also, the energy networks themselves are undergoing a fundamental transition in terms of being more digital and more distributed. What does this mean for resilience and robustness? Is that something that we need to think about and how this changing system is becoming more resilient or is that something that’s going to happen as part and parcel of this transition? Maybe, Liz, if I can start with you.

Yeah, it’s a really interesting question because with greater transparency, we can have a better understanding of what’s happening at different scales in different sectors and even different subsectors like modes for transport in rail and road, for example. But actually, with more transparency comes the greater risk of a disruption because you’re increasing the amount of information that’s out there for people who might deliberately want to create an interruption to services. It also means that with the information, we can make much more informed decisions. So there is this idea of digital which you mentioned, Manu, particularly with data science and artificial intelligence. There is this ability to start using data science for automating decision-making but we need that data to be still collaborating and, of course, organisations tend to control data sets. You need lots of non-disclosure agreements and it becomes very difficult to operationalise things like that into practice. But with that, actually, we could probably have a more resilient system provided we’ve got that collaboration across organisations and across sectors so that we can be better informed and have better decision-making; not fully automated and with the human in the loop somewhere but at least some of the detailed information not being so publicly visible.

Moving to Yselkla, what does the system look like in the future? What are our assumptions about how much the supply chain needs to scale up, particularly from an energy network’s perspective? Could you talk us through some of the key findings of relevance to resilience and robustness?

For a least-cost approach to net zero by 2050, the amount of investment we need to bring forward pre-2035 is a lot more than we anticipated. That ramp-up in demand and volume on the supply chain is going to come much, much earlier. Really, we need to be looking at this right now as a matter of urgency. I also thought it was a good opportunity to come back to a point that Liz made earlier about sustainability and what resilience means. The sustainability of the products that go into the system is a key part of this resilience point. We’ve been looking at this really carefully, stemming from the project that we did with the Energy Systems Catapult. We’ve looked at this with our members a lot and we’re doing a lot of work with other parts of the industry to understand how we can create a market for more sustainable products that are installed on the energy system.

I think we’ve already started to pick up some themes of where innovation activity might be required to move the needle on resilience and robustness from an energy system and net-zero perspective. What areas would you like to see more innovation from your own work and evidence that you’ve gathered that could really move the needle on resilience and robustness?

The first thought that comes to mind is this idea of systems thinking. We need to think of wider than just the energy system or subsections of the energy system because we don’t exist in isolation. The energy system is so connected to everything else and so systems thinking is absolutely critical. With that, I think collaboration; so this idea of working together as partners and joining up across organisations and across sectors. We see this already with the Joint Board of Regulators. We already have that situation where we’ve got regulators talking to each other and we need to do that at different scales for solving different problems. There’s obviously the technical aspect. We need to bring in more recent technical scientific ideas. Obviously, we want to do things like, for example, data science, some neural computing and much faster nanotech solutions that will help us make decisions more quickly or at least alert us to challenges that are going on but we also need to understand the consequences of those findings. If we’re detecting that and we can do the data science and detect there’s something going on, where’s the analysis? Where’s the modelling? Where is the theory creation? So we need to invest also in what it’s telling us and what we should do best for the long-term so that we avoid making decisions now that are going to lead us on a track that we can’t come off because end up locked in, as we have done in the past, to fossil fuels.

Great collaboration, greater use of data and digital technologies and better decision-support systems so that we don’t lock ourselves into a high-regret pathway on the system transition. Great. Yselkla?

Coming back to my point about carbon reporting, I think there’s a whole scheme of work we should be innovating around under procurement for net zero. We can’t procure infrastructure and deliver it in the same way we’ve done it in the past. We need to do this at speed, at a speed we’ve probably never done it before and we need to procure sustainable products as well. I think that’s a huge area of work and one I know there’s already activity going on for but I think more needs to be done. Coming to the point around collaboration as well, I think this is absolutely vital. We have tried to make steps recently off of the back of the work we’ve done with the Energy Systems Catapult to start to build some of that collaboration from a supply chain point of view. On 7th September, we launched the UK Electricity Products Supply Chain Council with the government sat around the table in a listening capacity with the whole of the electricity supply chain to discuss some of the immediate issues in terms of supply chain pressures that we face but also this longer-term investment challenge for net zero to ensure we assess the resilience of our supply chain to deliver on these needs. I think that’s been a really crucial step forward. It’s a level of collaboration we haven’t had before as a supply chain and we’re quite encouraged with where that’s going.

Great. It sounds like a really great milestone, so I look forward to seeing what that delivers.

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That was great. Firstly, huge thanks to Professor Liz Varga and to BEAMA’s Yselkla Farmer. We’ve got two people who are really at the heart of understanding and analysing system resilience and robustness and it was so great to have been there to capture the discussion. Some of the key points that I took away from that really interesting discussion were, firstly, the importance of taking a systems approach to these problems. We live in a world where these systems are highly interconnected; so power, gas, internet, telecoms and water, etcetera. It’s really important to ensure that we take a holistic view to avoid unintended consequences; that is we might strengthen telecoms but weaken energy systems or vice versa which, from a societal perspective, is one step forward and three steps back. So we should definitely take that into account. The second is the implications for resilience, particularly from a supply chain’s perspective which was great to hear from Yselkla. We have a huge mountain to climb in terms of getting these assets on the ground and then also getting the network development done. So we really need innovations around procurement and market signals to ensure resilience is really considered to avoid favouring short-term decisions because these are real, long-term issues that we need to deal with.

Recently this year, we’ve seen Russia’s attacks on Ukranian infrastructure, particularly around the power plants and whilst it’s chilling and heart-rendering on one level, from an energy system resilience perspective and a system interdependency perspective, we’re seeing the fact that once the electricity goes out, then obviously, the water goes off too. Not everyone realises that the amount of electricity required just to pump water around the system is so significant that if we lose electricity and water, then suddenly, we’re got a really difficult issue. If you combine then some of the potentials for cyber security issues on top of that, then we’ve got really quite severe issues here. So understanding those dependencies and putting in place, I think, a wide variety of different solutions to deal with them – like you say, Manu – these complex systems - is really where there’s significant value for consumers. The other opportunity here, and I think this links back to our Round 1 challenges around data and digitalisation, is that a fully digitalised energy system enables us to deal with these systemic complexities in a way that we couldn’t historically with an analogue system. I’m looking forward to seeing the kinds of artificial intelligence and machine learning applications that we can utilise to manage that complexity in a way that keeps it simple for consumers and network users. So I’m excited to see this one moving forward.

I completely agree with that. I think digitalisation and system development really does offer opportunities for us to be more systems-oriented and interconnected. Yeah, likewise, I really look forward to where some of the Round 1 SIF projects go with this and also what we receive in terms of ideas going forward.

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There is one challenge area left to explore. We’ve called this one accelerating decarbonisation of major demands. Do you want to help me set the scene for this one? What do we mean by major demands?

So, ultimately, what we’re talking about here is electricity and gas demands on the system. From a domestic perspective, everyone is very aware that we need to get to about 600,000 heat pumps and replace some of our gas-fired boilers over the course of the next few years. That’s a massive increase in electricity demand and then you overlay things like heat pumps with the increase in electric vehicles where we’re seeing, again, a really significant uptick in the amount of connections that we’re going to need for EVs moving forward. That’s just on the domestic side. When you start to include the industrial and commercial side and the business demands here, we can take those issues and expand them significantly. For example, an awful lot of businesses have quite large fleets; not just necessarily the service businesses who run around fixing those boilers or, indeed, the networks and the water companies who are maintaining their infrastructure but we’re also starting to see large electric vehicle fleets operating across the logistic space, whether that’s delivery services, food services or whatever it may be. That layering of domestic demand, plus industrial and commercial demand and even as we move up into other spaces such as how we create big, big industrial facilities, say, to incorporate things like hydrogen and some of the demands that we might need to process hydrogen on the system, we’re talking about an exponential increase not just in the physical size of the network but in the intelligence and the innovation that we’re going to require to manage those demands. So it’s a particularly pertinent challenge. We also know that the timeframe here is really, really important not just around the connection of new generation, which often makes the headlines in terms of the generation side and how long that can take, but we know that we’re living in a growth economy and we want to stimulate a growth economy. That means we want businesses to grow and to scale which means they’re going to need more electricity and potentially more gas so that they can employ more people, create more jobs and ultimately, deliver the kind of GDP growth that we want to see. So that, plus the technical challenges that we’re going to encounter moving forward, really puts this challenge absolutely front and centre of the kinds of initiatives that we want to see.

You are listening to the Bright Spark podcast from Innovate UK. To find out more about our work at the Strategic Innovation Fund, just head online to Ofgem.gov.uk/SIF. We’ve also put that link in the description that accompanies this episode in your podcast player. Right, the next step for me is a short trip across London for the second part of this episode to The Crystal, a really striking building that is the headquarters of the Greater London Authority.

Hi, I’m Rick Curtis, the Strategy, Markets and Innovation Lead in the Energy Systems Team at the GLA.

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We are in East London in the Royal Docks at The Crystal building which was initially designed and built by Siemens in 2012 with the goal of being the world’s most sustainable building as it were. The GLA bought the building in 2016 and now it’s become City Hall.

That’s amazing. I can’t think of a better place to have this conversation. So I want to start with the net-zero goals that London has set itself. It is one of the most ambitious targets out there. What does acceleration of decarbonisation of demands such as heat and transport mean? Where does that sit within this context of the net-zero goals that London has?

Yeah, as you know, our target in London is 2030 which is incredibly ambitious, as you say, and the decarbonisation of heat and transport are going to be absolutely key to realising that, both in terms of the size of the emissions they equate to but also where the Mayor’s existing powers are to give us the levers to try and tackle them. On the transport side, probably the more straightforward one is that the Mayor is already doing a lot of work through a range of policies and infrastructure decisions. On the policy side, as an example, we’ve got the Ultra Low Emission Zone which is trying to get rid of petrol and diesel vehicles and ultimately, encourage electric vehicles to take over. I should say that there’s actually a separate policy where we’re trying to minimise vehicles altogether to obviously, encourage journeys by foot or by cycle which is obviously the best way to minimise congestion and emissions upfront. Also, the Mayor has some control through Transport For London (TFL) over London’s public transport system. There is a really, really ambitious bus decarbonisation or electrification strategy in place. I think I’m right in saying that the goal or the expectation is that by the end of this year, 10% of London’s buses will be electrified. Through things like the EV Infrastructure Task Force, we’re also seeing the highest rate of EV charge points across the country here in the city. There are some great steps there already but clearly, a lot of those levers also sit with central government in terms of the right incentives to remove petrol vehicles from the roads. The Mayor is doing what he can really on the transport side. On the heat side, it’s far more challenging for us right now given the lack of a national framework and strategy for heat. London has got several million buildings and ultimately, we need to decarbonise them all by either switching out boilers for heat pumps or connecting them to a low-carbon heat network. Again, we’ve got some levers to do that. The London plan is a really great example and actually, I think we’re the only city to have net-zero emission building standards for homes and commercial developments. That’s on the new development side. It goes far further than the national targets. Again, when we start looking at the private sector, both from an energy efficiency perspective or a heat decarbonisation perspective, clearly, that’s really, really challenging at the moment until we get a bit more investment and policymaking from central government.

That’s really interesting, Rick. Thanks for setting the context in terms of demand decarbonisation and the really ambitious goals that you have. I want to talk about something that both of us have spoken about at length previously which is how we integrate all of this technology. As you know, the Strategic Innovation Fund looks at how best to enable the energy networks and system operators to move to net zero and all of these technologies need to be integrated and operated in an efficient way. What do you see are some of the integration challenges of demand decarbonisation from this kind of wider system perspective?

That’s a really great question. One of the initial challenges, the obvious one for us, is how our accelerated ambition and target fits with some of the national timelines, particularly around allowing the regulatory and market reform needed for the investment case for a lot of these technologies to actually stack up. To be clear, we’re struggling at the moment to get some of these electrified assets in place, let alone think about integrating them. When we do think about integrating them perhaps by building in flexibility, those business cases aren’t stacking up yet. In terms of the second point, I think, which is really important to make is this question of roles and responsibilities which I think you’re alluding to. Right now, it’s very, very difficult for London to know where it needs to be deploying a lot of its generation demand assets and ultimately, we’re all committed to a whole system decarbonisation because that’s going to be the lowest cost and lowest carbon release that it should be but in order to do that, there does need to be some more certainty on what that system looks like and whose responsibility it is to take up various parts. We, at the GLA, are increasingly exploring those types of conversations. One example is through Local Energy Planning. We’re working very closely with our DNOs, UK Power Networks (UKPN) in particular, to understand what is needed to ensure that the London-wide view of decarbonisation fits with the national system but also, what does a local view of decarbonisation look like at a London level? We have 33 boroughs across London. We also have TFL and we have the Met and the Fire Brigade. They all obviously will be decarbonising on their own patch but at some stage, we need to look across those different levels and make sure that adds up to a really consistent picture at a London level.

So is it fair to say that getting these technologies in the timelines is almost the first-order priority and then the next is almost integration challenge, flexibility and all of that kind of underpinned by clear roles and responsibilities between local and national actors?

Yeah, I think you’re right. I think, in truth, they need to happen in parallel. We absolutely do need the investment cases for those technologies to stack up. Right now, electrification is a key lever for decarbonisation but if you want to invest in, say, a heat pump, solar PV or battery storage, the costs just don’t stack up largely because electricity prices are pegged to gas prices and that absolutely has to change because we can’t integrate anything if you haven’t even got that electrified demand there. You’re absolutely right that secondly, I think there’s a really interesting discussion around those roles and responsibilities which I think we’re only going to work out by learning and by doing. One thing I would say, which is really important, is the urgency of this. What we know is that whether you’re making an infrastructure decision or you’re building in flexibility, you have to have that investment well ahead of need. You can’t wait for the capacity to be there and then do it. So it really is critical that we have more dialogue with government and with Ofgem and they start to understand where is it that local and regional authorities are best placed to affect decarbonisation. We believe that’s on the ground. We don’t think you can coordinate across power, buildings and transport on the ground in a centralised way. We need to work together to ultimately solve these challenges.

I would like to pick up on a specific point in terms of what you see as some of the integration challenges of decarbonising heat and transport and then using heat networks from an energy network and wider system perspective.

As we’ve discussed, I think the first priority is for some of that demand to come forward but then when it has, there’s a really key question around how we integrate that into the network. We have an issue at the moment in West London where, essentially, a housing pipeline is having to be delayed because the grid isn’t quite ready for that new capacity to come online and the GLA has played an important role there in trying to broker those conversations between the DNOs and between National Grid and Ofgem. As I understand it, that’s an issue we’re seeing across the wider country. To me, it points to the importance of working closely with DNOs, having a really, really good pipeline of what is coming on and then trying to either invest ahead of need or, ideally, identify some flexibility opportunities and work collaboratively to develop that pipeline of flexibility and use that wherever possible to delay any upgrades that are needed. I think we’re just at the start here and particularly with heat as a demand, there are a lot of uncertainties as to where that’s going to appear and how we’re going to integrate that. What we do know is that as we electrify heat and we electrify transport, that’s all going to add to the huge power peaks that we see at the moment and I think it’s a bit uncertain for everyone.

I think this really reaffirms why we feel local authorities are critical stakeholders in working with energy networks to deliver the Strategic Innovation Fund. In meeting these challenges, where do you feel innovation can play a role and what would you like to see more of?

I think assuming we use a broad definition of innovation that really is just about trying new processes, approaches and ideas, I think we’re going to need innovation across the board. This is a really, really complex challenge of both integrating the technologies and integrating, as I’ve mentioned, across those many different organisations and spatial scales. I think the area that I’d like to see more is collaborative innovation between some of the traditional energy system actors like the regulator, the energy networks, the energy supply companies and your non-traditional or your newer actors like local and regional authorities and also citizens and consumers. I’d really like to see, which is obviously what the SIF is all about, greater collaboration between the networks and local and regional authorities at the outset. The other area I think we really need some innovation is around how we engage consumers in this. Right now, consumers are often quite passive in the energy system and the emphasis is on providing protections to them and trying to give them choice but really, it’s a bit of a false choice. There are very, very few products and services available or even tariffs that enable them to become active agents in the country’s decarbonisation and that really, really has to change. My feeling is that if the benefits are explained properly and their role is explained, then citizens would want to become much more involved in the energy system, not least because I think they feel a little bit helpless right now. We hear a lot about trying to protect consumers from high bills as a result of fossil fuels but the way to do that is not to subsidise new investment in fossil fuels. It’s to create the framework and conditions for new products and services that ultimately, consumers can choose to opt into and, therefore, play an active role in decarbonisation.

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Thank you so much to Rick Curtis for taking the time to chat. It was so good to hear Rick’s perspectives on some of the challenges and also opportunities in terms of decarbonising major demands from a London perspective. Just to make clear, Rick is speaking in a personal capacity. He is an expert in energy systems and, therefore, speaking not as a voice representing the Greater London Authority.

So, Matt, we’ve now gone through all the four SIF challenges. It’s really exciting stuff. Where do you think the biggest opportunities are?

The biggest opportunities are almost in the headlines or should we say the lack of headlines. We know, from a risk and resilience perspective, that when storms hit or cyber issues occur, they tend to make the press and what we would hope that these challenges deliver in terms of opportunities is, ultimately, less headlines to do with the kinds of impacts that we might face from severe storms or cyber security issues. In terms of the decarbonisation of major demands, wouldn’t it be fantastic if we could get into a position where we’re less worried about getting these assets in the ground and connected to the network and, ultimately, consumers are being able to secure them in the time and at the simplicity that they need to in order to deliver net zero? I think there’s an urgency issue here that we often highlight on the podcast which is really where the big opportunities lie. Can we expedite the delivery of net zero within the UK and can we turn the UK into this Silicon Valley of energy which ultimately creates this incredible start-up ecosystem to rival the Silicon Valley in the US and where we can see great businesses grow and scale in this country but delivering great products and services to network users and to consumers to ensure that their lives become much more prosperous from the UK transitioning as the fastest economy in the world to deliver net zero?

We do have an amazing opportunity in front of us for creating that ecosystem and really generating prosperity. I want to go back to a recurring theme in our conversations which is the interconnected nature of the energy system. I think across all of the four challenges, what we really find is that whilst the focus is an energy system innovation challenge, this is really a cross-societal or cross-infrastructure sectoral issue. From that perspective, what advice do we have for people and companies looking to take part in the SIF?

It’s really important that individuals and organisations get in touch with the Innovate UK team if they want to engage with the programme. The easiest way to do that is simply by emailing SIF_Ofgem@IUK.UKRI.org. Our team is really here to help both discuss your idea but also to help you form partnerships with the networks that ultimately may be able to help you to deliver your projects moving forward. The first thing is to get in touch. The other thing is to keep an eye out not just for the podcast episodes but also signing up to our newsletter and the easiest way to do that is simply to go to www.Ofgem.gov.uk/SIF and there you’ll see a great opportunity to sign up to keep informed but most importantly, get in touch. Let’s have a conversation and see where things could go.

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So as we record this episode in the autumn of 2022, we can already see that some exciting proposals are coming in for new ideas to tackle the challenges we’ve talked about in the current Discovery phase of the competition. This Discovery phase closes soon for applications but this is a journey of many years and not a one-off. Fresh competition rounds start each year. In fact, we’ve already started thinking about what the Round 3 challenges could look like and we’re engaging lots of different individuals and organisations around that. The innovation process runs all the time and by that, we mean the ideation, the incubation and the acceleration of ideas and organisations as part of the programme. So it’s really important to join in our ideation process to help keep the flow of new ideas and innovations coming. Please don’t be shy. I can’t wait to see the best ideas reach business as usual over the coming years. It’s a key part of the programme. We love projects but we love products and services in the hands of consumers even more. These really help the SIF to make a real difference in speeding up the journey to net zero, like we’ve said, at the lowest cost to consumers and also turning the UK into the Silicon Valley of energy. We’ve got a massive opportunity in this country. We just need to work collaboratively and collectively as one strong team to deliver. Manu, as always, thank you so much for your input on the podcast and thanks for all of the incredibly hard work that you and the team have put into this. It’s meant a huge amount.

Thanks, Matt. No problem. It was great to be a part of it.

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To find out more about the Strategic Innovation Fund, just head online to Ofgem.gov.uk/SIF. We’ve also put that link in the description that accompanies this episode in your podcast player.

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Bright Spark is a Bespoken Media Production for Innovate UK. Thanks for being with us. Look forward to seeing you next time.

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