EVALUATION

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AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF already have access. The rest of those that answered believed access would not improve the quality of innovation projects. B.2.3.2 DNO Key Role Essential Six respondents made the point that a DNO would always have to play a key role (in order to be able to trial the technology etc.) due to their role in the network even if a third party was leading the project. B.2.3.3 Third Parties Have Access One respondent made the point that it already is accessible to third parties, saying the majority of their NIC/NIA projects are third parties working with them to develop solutions. They go onto say they encourage this, and ensure they publish a lot of material to assist prospective partners in understanding their network challenges and the influence of these on their innovation priorities. The respondent also says they are happy to be the one to contact the DNOs if the project requires network distribution cooperation. One respondent also mentioned various sources of innovation funding that are funded through tax revenue and are provided as grants. Also mentions Ofgem’s electricity network innovation stimulus packages – funded by electricity bill payers and are not structured as grants – the eligibility requirements for the NIA and NIC help networks secure appropriate commercial terms on behalf of the electricity consumers from all parties participating in NIA or NIC funded projects. B.2.3.4 Third Party Access Would Improve the Quality Four respondents felt that third party access would definitely improve the quality of the projects. The first gave their reasoning as smart solutions not always being in the DNO’s favour. The second believes it would open up the market and lead to a wider range of projects covering a wider range of challenges. They believe to do this the third party could lead the development with a DNO as a partner to deploy the solution as a trial onto the network – the point of a DNO needing to play a key role was reiterated by several respondents, regardless of their view that it would or would not improve the quality. The third respondent in the group thought that since the DNOs did not spend all of the money available to them this shows they are short of ideas, and with third party access the whole fund would be utilised. They believe, regarding Electric Avenue, that they took on the role of project lead better than the DNO due to their expertise and various skillsets. Also project partners can be chosen to best meet proposal goals as specialised project teams will be created to utilise the skillsets available, skillsets that would not be held by DNOs. Finally, the last respondent in the group thought third party access could improve it as DNOs are (rightly) concerned about consistency, safety, etc., they may miss potentially significant improvements simply because the funding has already been carefully approved and there is no appetite or funds for it, whereas third parties may be able to make these improvements. But they also conceded that DNO co-operation would be needed to do any trialling. This response also mentioned that if technology could be developed independent of DNOs (i.e. abroad or at PNDC) it would be more feasible to have a third party lead the project. PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 146
AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF B.2.3.5 Third Party Access Would Not Improve the Quality This view that access would not improve the quality was shared by eight respondents. Another reason given by a respondent was that having so many invested parties will slow down and complicate the process. Another respondent somewhat seconded this making the point that the number of applications may become excessive. Another respondent pointed out that there is opportunities for a third party to lead an innovation project at National (Innovate UK etc.) and European (H2020 etc.) level. A further reason against third party access highlighted by one respondent was the requirement of DNOs to have innovation funding as they do not have access to excess revenues due to regulation and customers cannot be exposed to the risk of an innovation project. One respondent is of the opinion that innovation should be driven by network owners and operators with the interests of consumers at heart, and bring in third party access may take away from that with these parties utilising the fund to benefit themselves more than consumers. DNO BAU Operations Two respondents the point that the evaluation criteria for the projects was geared towards the chosen projects being transferable to DNO BAU operations, this required an understanding of DNO business plans, which third parties would not have. It is key that the projects actually relate to challenges the DNO has, and nobody has a better understanding of that than the DNOs. Other Observations The point was made by a respondent that it is crucial for DNOs to be able to fund the participation of the third parties required for their expertise as this leads to quality innovative solutions – the collaboration of the DNOs with other industries was emphasised. B.3 LCNF Scheme Overview B.3.1 Initial Communication of Information on the LCNF by Ofgem (Q3.1) Questions: How well did Ofgem communicate information regarding the introduction of the LCNF effectively? Were you aware of the LCNF from the outset? Was there sufficient information to enable you to understand how you could get involved with the scheme? B.3.1.1 Summary of Responses The responses were mixed overall – with more than half of the respondents (11) of the view that the information was communicated well. Three of the respondents did not answer this question. B.3.1.2 Awareness of the LCNF Respondents were made aware of the LCNF through a range of mediums, with some aware of it from the outset and others aware shortly after: PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 147
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EVALUATION

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