In the 1990s, the energy industry went through a transformation – moving from regional delivery of monopoly services to a model that allowed the introduction of competition.
This change had been clearly signposted by the privatisation of the preceding decade. There will have been fewer than fifteen organisations involved in discussing and designing the market arrangements.
In the mid 2000s work started, amongst the businesses that had been created by the introduction of competition, on the plan to replace over 50 million meters in every property in the country with smart meters. Taking part were six energy suppliers, a couple of distributors and two or three meter manufacturers.
Both transformations have been fundamental in enabling the UK to be a world leader in the next challenge facing the energy industry – achieving net zero targets. But they both took a very long time to agree and implement. In taking the bold steps needed to deliver the 2030, 2035 and 2050 targets, we simply don’t have that amount of time.
Engage Consulting has been central to the evolution of the market arrangements for energy settlements, and was in the room, holding the pen as independent experts, as the design for smart metering was agreed. We are still embedded at the heart of these programmes.
But we always have one eye on the challenges and opportunities ahead – particularly the impact that net zero will have on our industry and the clients we serve.
Flexibility and the services to deliver flexibility will be critical to achieving net zero, and an area experiencing exponential growth today is the adoption of electric vehicles. But this is not a change being designed to meet a policy requirement or a regulatory obligation – it’s already an established and highly competitive ecosystem of interdependent businesses.
We looked at the work of the Energy Systems Catapult and their EV Taskforce, looking to see where Engage could help. What surprised us most the sheer breadth and number of established companies already working in the UK electric vehicle ecosystem.
We suspect this is also only a partial view of the iceberg, and that the pull from consumers and push from Whitehall will see things shift rapidly over the coming months.
There are no incumbent monopoly energy businesses, or even a single regulator, to consider impacts and develop a central programme to ensure one way of doing things which will work to serve all participants. In contrast to the orderly approach to energy competition, or smart metering, it will not be possible to gather over 200 companies and try to achieve even majority consensus on how to make sure the market that is being created helps to deliver those carbon targets at the same time as protecting consumers.
The electric vehicle industry is evolving and disrupting itself, and quickly. New business models are emerging that could cause significant challenges for energy retail and network businesses. And there is competition right throughout the value chain – which is great for innovation.
Although early adopters take on a new technology with their eyes open, this innovation does place a ‘buyer beware’ risk on consumers. As electric vehicles enter the mass market, who is making sure that customers don’t end up driving Betamax cars in a VHS world?
Perhaps we are already past the point of no return. It’s going to be fascinating to be a part of.