Monthly Archives: February 2018

Demand for change

Francesca Moll explains why an active demand side is the key to unlocking some of the greatest challenges in the energy and water sectors.

Lawns paved over. Cars going unwashed. Sirens in public showers.

This is everyday life for ordinary people in drought-stricken Cape Town, South Africa. The city has been experiencing the worst drought in 100 years, and will shortly approach a ‘day zero’ where the majority of the city’s water supply is shut off and water rationed through collection points around the city.  This gives us an early foretaste of the formidable environmental challenges energy and water may face in the coming years.

Pippa Malherbe, resident of Cape Town suburb Somerset West, is one of the many South Africans who have had to adapt to the city’s new normal. She has installed a host of water efficiency measures in her home to help her and her family keep within the allowance of 50 litres a day per person.

She has pipes to collect used water and runoff from her shower, gutters and washing machine, which is used to water her garden and flush toilet cisterns. She reports not using municipal water for this purpose for over a year. Rather than shower every day, Pippa and her husband bathe in their pool, which they keep topped up with water they buy from those lucky enough to have access to boreholes.

This drought has cost us a lot of money and hardship. Every night I must use the grey water to water my plants in the garden, by hand.  Physios are making a killing as so many women… have neck, shoulder and back pain due this excessive carrying of water,’ says Pippa.

However, despite these personal struggles, the adaptability and resilience of ordinary people like Pippa in the face of the Cape Town water crisis shows how an active demand side can help manage a challenge such as a serious drought.  And although sun-drenched South Africa may be the other side of the world, the problems they’re facing are not a million miles away for us in the UK. According to WaterUK, there is a 12% chance of ‘severe’ drought in the East / South East of England over a 25 year period.

In the process of Sustainability First’s New-Pin project, we have identified an active demand side as one of the key enablers of the energy and water systems of the future.  It can help deliver value for money, and hence ease affordability pressures, along with helping deliver long-term resilience.

In recent years there have been huge developments which have made active and engaged participation by consumers in their energy and water systems a growing reality. With the smart energy meter roll-out, and the opportunities represented by digitisation and data, there is the possibility of tailored services and greater customer engagement with the energy and water they’re using. This can prompt behaviour change such as a reduction in usage and the installation of efficiency measures.  This can help keep bills down.

Other technological innovations, such as heat storage and grey water reuse, can work to save customers even more money by reducing their need to draw on the water system, or giving them the chance to buy energy at cheaper times. With the possibility of household generation, customers can even become ‘prosumers’, selling energy back to the grid. ‘Smart power’ i.e. interconnection, storage and flexible demand – could save consumers up to £8bn a year by 2030. Storage capacity could increase from 3GW to 4-11GW by 2030.  These changes can reduce systems costs, potentially benefiting all consumers if they lead to a reduction in the amount of peak capacity needed.

Approaches to resilience have traditionally been top down and supply-side focused. But with the range and unpredictability of the challenges energy and water may face in the coming year – through extreme and unpredictable weather along with new risks such as electricity dependency – old ideas may have to be rethought. An engaged demand-side can provide the diversity and flexibility to respond to this uncertain future.  It can also push back the need for new investment until such time as there is greater clarity on future need or when technology costs have fallen or new innovations have come to market.

However, the engaged demand side of the future is far from inevitable. The biggest barrier is trust. At the moment there is a crisis in trust in existing structures- in the UK, barely 1 in 10 people believe ‘the system’ is working for them (Edelman trust Barometer).  This will have to be overcome to encourage consumer behaviour change and engagement in their water and energy systems. Consumers and citizens will be paying for future investments – they need to be ‘on side’ of any changes.  Their contribution to the demand side cannot be taken for granted.

We must also be careful to proceed with an eye on the distributional impact of this change—as it is likely to be more well-off people who have the resources and knowledge to innovate and as early adopters gain the benefits of efficiency measures and household generation / water re-use.  Given energy and water are essential services, it would not be acceptable for vulnerable consumers to be left behind in the new smarter world.

Nevertheless, there is no doubt that the demand side represents a real opportunity, if we can find ways of unlocking its potential.

Our full findings in this area are detailed in our final major New-Pin Report, which is being launched at the New-Pin final wrap-up conference on 28 February 2018.

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Making sure the public interest is not lost in translation

Before we create the energy and water systems of the future, we have to ensure we’re all on the same page. That’s why the New Energy and Water Public Interest Network – New-Pin’s -consensus-building work is so vital.   In this blog, Francesca Moll and Sharon Darcy explain what we’ve been doing.

How do we hear the public interest voice in the energy and water sectors?  It isn’t always easy to have a constructive discussion.

Rightly or wrongly there is a feeling that voices of ‘ordinary people’ remain unheard at the heart of the energy and water industries. Companies faced with this charge may see things through another lens; how best to meet the challenges of climate, socio-demographic and technological change whilst operating under an intense political spotlight and delivering a significant amount of policy and regulatory change.  Government and regulators may have a different perspective again, often focussed on the need to address short-term affordability pressures within electoral and regulatory cycles.

Given such divergence, how do we find a way forward? What does fairness look like? Who is responsible? And how do we ensure we’re future-proofing our energy and water systems so that they continue to serve majority needs in the future?  Fairness, after all, is relevant not only within generations but also between generations.

These questions have never been more vital. Energy and water face huge upheaval. With the technological revolution represented by digitisation and the smart energy meter rollout, a polarised political mood, the need to prepare for a low carbon future and the risks represented by climate change, it is clear that the stakes are high.

To navigate through this, society needs to agree some basic definitions, develop a common language and begin to build consensus on broad directions of travel.  Without this, misunderstandings can result and it can be difficult to make progress.  With this in mind, how discussions about energy and water are framed is crucial.

If framed narrowly (e.g. in terms of the challenges facing each sector separately and a particular group of consumers at a particular point in time), the challenges that both energy and water sectors may need to tackle as part of more complex systems, and people may also face as citizens living in communities, may go unrecognised in key deliberations.  The risks and opportunities revealed will clearly be influenced by the time-frame applied and scope of the discussions that take place.

In periods of significant transition, such as that being experienced currently in the energy and water sectors but also in society more widely, when existing ways of doing things are being questioned and new approaches are coming to the fore, it is important that all relevant perspectives on an issue are heard.  If debates are framed in a limited way, they may be seen as excluding those that may have a legitimate interest in the area being discussed – and potentially self serving for existing players and institutions.

Taking a more inclusive approach to change also enables the revisiting of what have traditionally been seen as the social and environmental ‘externalities’ that characterise the energy and water sectors.  It can lead to fresh insights as to how we as a society overcome the tragedies of the commons and of the horizon.

It was with this in mind that Sustainability First set up our New-Pin project in 2015.  We brought together citizen, consumer and environmental representatives with regulators, government representatives and energy and water companies, to encourage frank and constructive discussion on the hard topics in the sectors today.  We wanted to bring the disparate voices with an interest in the sectors together and to share experiences.

These different interests can sometimes find a win-win solution.  However, this is not always possible.  It’s important to recognise that there will sometimes be conflicting interests and that these need to be balanced in a manner that is as transparent and fair as possible.

To begin this process, we started with a ‘Straw Man’ definition of the public interest: The public interest is the aggregate well-being of the general public, both short and long-term. It comprises the combined interests of consumers, citizens, the environment and investors for both today and tomorrow.

Over the course of three years and ten New-Pin workshops, we have tested and refined this definition with our participants, and through a process of deliberative engagement, further developed it into a New-Pin Public interest dashboard. This sets out desirable long term public interest outcomes, featuring both typically ‘consumer outcomes’ (towards the left) and ‘citizen outcomes’ (towards the right). Consumer outcomes include quality of service, value for money, and efficiency, while citizen outcomes involve thinking about long-term environmental sustainability, resilience, place / community based well-being and fairness issues.

This dashboard features in our upcoming final New-Pin Final report, alongside 8 practical Public Interest Agendas and Levers for Change for decision makers to use to help them deliver public interest outcomes. We hope that these can begin to point the way towards greater consensus and shared understanding.   The report will be launched at our major New-Pin conference on the 28th February.

New-Pin has started to build consensus around a public interest ‘voice’ for water and energy. However, this is something that needs to be continually worked at.  As our energy and water systems and indeed society go through significant transformation, maintaining a continuing public dialogue as to what the long-term public interest is in the sectors and how public interest outcomes are best delivered will be vital so that change happens with people rather than being done to them.