Low carbon networks: Company and country reputation building

There’s always a risk with early adopters of new regulations and technologies that if they go wrong, reputations can be harmed.

Set against this is the kudos gained from being the first-mover; not only do the media sit up and take notice but customers and investors are reassured that these forward-thinking companies are willing to take controlled risks to move ahead of the competition and to anticipate, rather than simply react to, regulatory changes.

The utility sector is facing huge challenges as it begins the transition to a low-carbon economy. On the one hand, its products-and-services offering is about to get much more complex as centralised generation gradually gives way to a decentralised system, with the introduction of smart meters and customers able to sell power back to the grid; on the other, grid infrastructure needs to be upgraded to cope with the increasing complexity. The challenge is to do this without disrupting energy supply, customer service and potentially companies’ reputations.

The regulator Ofgem has played a key role in mitigating these risks by including relationship-building measures within a new regulatory regime. The RIIO framework for network regulation (RIIO: Revenue = Incentives + Innovation + Outputs), which the regulator introduced late last year, is designed to encourage companies to be more customer-focused.

This article was written by Nicholas Chrysanthou, energy consultant analyst at Alva and released in full on Energy Business Review.