‘It’s great to power a world city like London’
The chief executive of UK Power Networks tells Jillian Ambrose how he is readying the grid for a revolution in renewable energy
This is why I love coming here.” Basil Scarsella looks towards the twinkle of lights emerging as the early winter darkness draws in. Between the rooftop of London’s newest electricity substation and the glitter of Canary Wharf lie dozens of construction sites where thousands of homes, businesses and schools will soon emerge as part of London’s steady march towards the east.
Scarsella and his team of engineers are tasked with connecting the former Docklands wasteland to the UK Power Networks’ (UKPN) grid of more than 100,000 miles of wire and cables. The £17m project is part of the largest regeneration programme in Europe.
It is also one of Scarsella’s smaller challenges as the chief executive of Britain’s largest distribution network operators. The company behind the electric pulse of Britain’s capital city is at the centre of the energy industry’s biggest revolution in more than a generation.
Scarsella has previously described the change as being “as significant for electricity as the advent of broadband was for telecommunications”.
Electricity networks are at the forefront. Simply put, they serve as the regional B-roads to the vast electricity motorway, which carries high voltage power from Britain’s largest power plants to cities and towns across the country. UKPN quietly delivers electricity to more than a quarter of the British population across 11,000 square miles of densely populated areas in the south east of the country. Last year alone this required investment of well over half a billion pounds to maintain the grid as new users steadily plug in.
But Britain’s energy landscape is fast changing in what is proving to be a major subversion of the traditional relationship between suppliers and consumers.
Home owners have already begun to flip from energy consumer to energy generator with the help of rooftop solar panels. Home battery storage and electric vehicles make the flux between these roles all the more complex. It’s a revolution accelerating with the boom in smart technologies, which could soon mean small business owners can sell self-generated power to their neighbours directly in small-scale regional power markets.
“It sounds hard to believe. but it’s happening,” says Scarsella. “People say the transition is coming. But I’d say the transition has been here arguably for 10 years.”
The momentum behind the roll-out of solar panels and wind turbines was already building by the time Scarsella joined UKPN as chief executive in 2011.
“At first, people were asking how networks would manage to connect the influx of renewables. Well, we’ve connected a level of renewables projects at a rate that was 15 years ahead of the most optimistic forecasts,” he says.
Already UKPN has had applications for it to connect 16GW worth of battery storage to its grids. He admits the rate of change is set to accelerate rather than decline. The trick is trying to prepare for the future, without trying too hard to predict it.
“Invariably you will get it wrong. If you invest in areas that then are found to be redundant then you’ve wasted customers’ money. So what we try to do is to retain the flexibility to be able to respond,” he says.
Electric vehicles are a case in point. UKPN is working closely with Transport for London, the Greater London Authority and major taxi companies to help respond to the switch from diesel to electric vehicles (EVS). “London is particularly interesting for EVS because there won’t be as much off-street parking. You need to ask what sort of charging infrastructure you can have, and what does that mean for the network?
“Cables trailing out of people’s windows into the street is not sustainable,” Scarsella says.
“But then, some motor vehicle manufacturers say not to worry too much about charging infrastructure because batteries are developing so quickly that by 2020 we’ll already have batteries with a range of 300-400 miles. Then charging becomes a bit more like petrol. Petrol stations could become recharging stations,” he says.
“There is a lot happening but no one is able to say exactly how things will change and what needs to be done. So what are we doing? We’re trying to retain our flexibility so we can enable the transition rather than become an obstacle,” he adds.
One way in which UKPN will foster neighbours using blockchain technology. Whereas once energy networks were the forgotten cogs of Britain’s energy machinery, they are poised to take a front-and-centre role in an industry step-change, which has never been more focused on the consumer.
The new visibility comes at a time when utilities are under increasingly intense scrutiny over the value they offer cash-strapped consumers.
A few years ago the idea of nationalising utilities was almost unthinkable beyond the furthest realms of the Left-wing agenda. Today, the threat is very real.
A recent independent report from Professor Dieter Helm into the cost of energy, mandated by government, called for all regional energy networks to return to public ownership.
The Energy Network Association hit back saying the move would derail the billions in private investment that operators attract into the industry. By 2020 around £80bn-worth of investment will have been made in energy networks since 1990, while costs have fallen 17pc in real terms. Scarsella is more measured.
“I wouldn’t want to dismiss the report. There are a lot of important ideas there, some of which need more work to understand, but it’s a starting point for a discussion,” he says.
A clearer dialogue is exactly what Scarsella believes could prove redemptive for networks, too often tarred with the same brush that has painted a gloomy picture of energy suppliers in recent years.
“I don’t sit here and say that we’re being treated unreasonably. Energy prices have gone up and energy forms a large part of people’s expenses. But I’d like to see energy bills that are itemised to show the distribution charge, so we’re not rolled into the same conversation as other energy companies,” he says.
For the 8.2 million homes powered via UKPN the average cost of their service makes up £78 a year on an energy bill of around £1,000.
“So, if I had a bill every month that showed that the distribution cost was roughly £6 a month and is likely to stay pretty constant …”
He trails off. It is half a question, and half an answer to the problem of winning consumer trust.
“There’s no question that as an industry we haven’t helped ourselves in terms of communicating our value to the wider public,” he continues.
“It’s easy to look back and say ‘look at the performance we’ve delivered’. But we also need to communicate what we’re doing today, and what we will do in the future.”
UKPN is perhaps more comfortable with the pressure that comes with a higher profile than its smaller peers. An exploding pavement along Oxford Street attracts far more criticism than a similar fault in a rural area. There is also more pressure powering the expansion of Europe’s financial hub, challenges Scarsella relishes.
“It’s great to power a world city like London, but you do need to accept that you’re in the frame every day,” he says.
“It’s challenging but it makes the day go quickly,” he laughs.
‘There’s no question that as an industry we haven’t helped ourselves in terms of communicating our value’
Basil Scarsella, chief executive of UKPN, top right, inspects a substation with his team. Above, electric vehicle charging in London poses a major infrastructure challenge, he says