Unlocking Decarbonisation through Deep Digitalisation

by Dr Richard Dobson and Laura Sandys CBE?

Following on from the publication of our report Delivering a Digitalised Energy System, we are very pleased to produce an additional set of papers covering the delivery pathway for our recommendations, a deeper dive into security measures and a wider examination of governance.??However, the most important of these annexes is the Delivery Plan that helps decision makers with an outline of the “How” to implement these recommendations.???

Many of our recommendations are adopted from other sectors so the complexity of the development of these digital assets is minimised despite them requiring adaptation for our energy system.??

Our Recommendations

We have developed our report around 6 core set of recommendations all aiming to deliver exciting consumer propositions, a stable and resilient system, accelerating decarbonisation and optimising the whole system.?

We set ourselves the challenge of what should digitalisation do to enable decarbonisation – and all that that implies.??People talk all the time of how flexibility from demand assets will optimise the system to manage intermittency, peaks, and troughs – but seldom tell us how this will be achieved and managed to bring down carbon and cost.??

We are going to have millions and millions of assets on the system from EVs and heat pumps through to company-based renewables and storage.??These cannot be managed as in the past.??No ability to ring someone up to tell them to ramp up or down.??This dramatic change in scale will only be achievable through digitalisation and building effective, safe algorithms to manage the system.??This requires customers to trust and have control over what is being done with their assets and that is why we believe that a common customer consent dashboard is crucial (page 21).???These customer assets need to be smart enabled to deliver that flexibility and so we call on Government to mandate all assets over x to be smart as we are still installing heat pumps that are dumb (page 22).

One of our use cases was “Prices to Devices”

And so, with millions of assets how are they should do at any time???There is no point in one part of the system telling an asset to export energy when another part is telling it to store energy.??So, interoperability is crucial to ensure that the whole system works effectively and that conflicting signals doesn’t bring it down.??We are proposing a very thin layer of common interoperability through our recommendation to develop a digital spine – the HTML equivalent for the energy sector (page 31).??This must be complemented by deepening the data sharing fabric and emerging standards that we also recommend (page 30).?

These very limited, public interest digital assets need to be developed independently from the sector and driven forward quickly to help accelerate decarbonisation.??We are proposing that BEIS establishes a Digital Delivery Body that develops these assets in the public interest to ensure speed of deployment and free from vested interests (page 38).??This body would be time limited and disband once the task was completed with the public interest assets passed to others within the sector.?

Carbon flows are also an important part of our report.??As we are very focused on decarbonisation, it is surprising how limited the carbon transparency of the system is.??Whilst many actors report on carbon, it is not shared with actors throughout the system and not in a standard manner.??We are recommending that carbon monitoring is embedded into assets and communicated with consumers and their proxies by using a common and agreed standard. (page 53)?

Digitalisation of the system is not a free pass however and we have looked at some of the key risks and challenges from security through to on-going governance and consumer protection.?

Security has been a big focus for the Taskforce, we have worked with very experienced cyber and system resilience experts to develop a series of core requirements that will mitigate the risks of interconnectivity (page 46).??On security issues, new developments, new threats, and new risks are always emerging so this will always require vigilance.??However, we are satisfied that our recommendations for deeper digitalisation can be managed from a security perspective.

In addition, governance of digital assets has some different characteristics to those of fixed assets. We propose a series of key principles that can guide Ofgem and others in how new governance approaches need to be employed. Including how public interest assets need to be managed going forward. There needs to be oversight of algorithms that have significant impact on the system and that there are new interdependencies particularly with telecoms that need to be addressed. (page 39)

?One of the recurring themes throughout our consultation has been around the “clash” of cultures between digital experts and traditional energy practitioners.??There is no silver bullet to change this, but we feel that there is not enough recognition of both the value of digital assets and their ability to deliver wider benefits to existing companies.??We also recommend that ratings agencies and investors start to understand the new value in digital investment.??(page 58)

There are many people who will be able to add to these recommendations, but we believe that we are proposing the key steps for the start of this digitalisation journey that the energy sector needs to embark upon to enable decarbonisation at a sensible cost.

We so look forward to your thoughts and hope that we might be able to share the exact recommendations in more detail.

We would like to say a huge thanks to BEIS, Ofgem and Innovate UK for their support throughout the development of this report and to their great teams.