Future of Utilities Summit returned to London in September 2021 to reunite the energy and water sectors to tackle the most critical issues currently facing the industry. The opening session brought together CEOs and Directors from leading energy companies to discuss milestones for the route from the pandemic to Net Zero. Ian Funnell, the CEO for UK & Ireland at Hitachi Energy, joined a panel that focused on transformation, innovation and industry change and shared what priorities should be front of mind for the changemakers on this journey.

Future of Utilities caught up with Ian after the panel discussion to dig a little deeper into the opportunities and challenges facing network operators in the run up to Net Zero.

As the industry manages this transition, network operators really need to understand the reliability and availability of the network. This is where digitisation plays a key role.

“The network operators need to understand how their network and assets are performing,” said Funnell. “You cannot run your assets efficiently if you do not know how they are performing. And as you go further into the network, into distribution, you need to know how they are utilised. At a high level, the operators have this information but now they need it at a granular level. When it comes to medium and low voltage networks, understanding how they operate and how much power is in them at any one time will be key.”

This insight can be used to help operators design smart systems for more efficient operation of the networks, particularly as electric vehicles go mainstream, creating new supply and demand dynamics.

“Decarbonising the electricity network, that’s the number one priority.”

“Whether charging or feeding back into the network, this management of electric vehicles should be done without the need for any intervention by the network operator or the consumer,” said Funnell. “The degree of penetration of digitalisation of network operators need to go down to a level of granularity we have not seen yet.”

This granularity is possible due to advances in technology, not least the reduction in the cost of sensors. Operators now have no excuses not to be constantly monitoring their assets. “These days they are the price of a cup of coffee,” said Funnell. “When you think the consequences of not monitoring something or not replacing an asset early, there’s no comparison.”

This isn’t just about efficiency and cost savings, however. “Decarbonising the electricity network, that’s the number one priority,” said Funnell. “We need smart local networks, that’s where the focus needs to be. And we need to think about multi-vector systems, not just electricity.”

“New business models will evolve and adapt to bring in new revenue pools”

As organizations adapt to this fast-changing future, new business models will evolve and adapt to bring in new revenue pools. Yet this journey we will not be smooth, with energy companies facing a number of obstacles on the road to Net Zero.

Among the challenges ahead is building a workforce fit for the future. “There are certain traditions and skills that are required to operate and maintain networks and that’s not going to change any time soon,” said Funnell. “But there will be another tranche of skills coming in to help organisations understand AI systems and programme how the specific network needs to operate. There’s a lot of opportunity for digital natives to come in and guide the more traditional utilities and help them anticipate what comes next.”

Indeed, the coming years will require innovation at a speed and scale this conservative industry is, as yet, unused to. Funnell says the industry has to get smarter at innovation.

“There’s some great innovation going on in individual companies but we do not seem to be able to copy and paste throughout the country,” said the Hitachi CEO. “Over the last decade there’s been more than 500 smart distribution pilots in Europe but we don’t need 500, we don’t even need 50. We need about five to ten to understand the technology and the protocols that are needed to run smart energy systems.”

“We need to work smarter not harder.”

He stressed the importance of collaboration. “This is not a competition with each other, it’s about being the best UK plc can be,” he said. “We need to work smarter not harder.”

However, operators should be careful not to innovate for the sake of innovation. “Whatever we invest in R&D, we have to make sure the solution is commercial,” said Funnell.

He also stressed that innovation isn’t always about out-of-the-box thinking. “There’s a lot of value in taking technology that currently exists and adapting it for new applications,” he said. “About 75-80 per cent of what we invest in is the D side of R&D, with the rest being the blue sky thinking of R. This repurposing of existing technologies can transform parts of the network.”

This is important. The clock is ticking and anything that can move the needle needs to be thrown at the decarbonisation effort. “We only have 10,500 days until Net Zero,” said Funnell. “Pace is important, we have to pick up the pace.”

Rethinking Net Zero is a hot topic at this year’s Future of Utilities: Smart Energy. With deadlines on the horizon and the massive impact of digitalisation, Brexit and the pandemic still playing out, join us in-person in March to learn how you can rethink strategies to deliver the crucial pace of change.