EVALUATION

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AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF DNO capacity to undertake innovation as illustrated in Figure 19. Projects may not get rolled out into business as usual if the current landscape is not yet ready for them, for example demand side response projects. Figure 19 – Identified life cycle barriers Complexity of bid preparation and review challenge for SMEs All innovation ideas Constraints of LCNF Too risky, non demonstrable business case, partners unable to contribute, Concerns re treatment of IP Conditions for roll out not in present time BAU Rolled out by other DNOs Fixed SDRCs and timetable Difficulties with customer engagement Lack of ability to innovate during project / pressure to demonstrate success Internal resistance to change / inherent conservatism Resultant conservative projects DNO resource constraint, appropriate skills to work with non technical partners External dependencies – smart meter roll out - EV take up 4.4.3.4 Suggested changes to LCNF Questions: What would you change about the LCNF in retrospect? The response to changes to the LCNF covered the immediate scheme governance and DNO regulation with a view to enabling innovation and the importance of fitting the LNCF into the overall GB energy vision. Specific points are detailed in Figure 20. PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 66
AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF Figure 20 – Suggestions for changes to LCNF: summary of questionnaire responses Governance Project direction and management • Active management of risk – Risk/benefit/management/Ofgem awareness to encourage wider innovation • Ideally the regulatory model should encourage DNOs to dedicate funds and resources to R&D on the basis that benefits would be shared equitably and proportionately between shareholders and consumers • Simplified change request process • Recognition that embedding new technology and business process in BAU is not trivial • Present emphasis is on strategic integration of proven technology and commercial innovation – assistance to funding and business development challenge for start-ups to bring forward and develop innovative ideas at the lower end of the TRL spectrum • Extend access to competition outside DNOs • Successful national Low Carbon Energy Strategy needs to exploit the synergies between energy vectors − include cross energy vector trials • Overarching view needed of how innovation projects fit together to achieve common goals • Ofgem should further commit to developing − innovation cultures − sector innovation capabilities − good practice and excellence in innovation − project delivery − exploitation • Recognition of innovation benefit to GB plc 4.4.4 Effect of LCNF on private sector innovation and third-party access to LCNF funding Questions: Do you believe that LCNF has prevented, or otherwise discouraged, private sector innovation? Do you think third party access to LCNF funding would improve the quality of innovation projects and if so why? 75% of respondents did not think that the LCNF has discouraged private sector innovation, with several respondents suggesting LCNF had encouraged it by providing an opportunity to demonstrate and prove technology on the DNO environment. 8% felt the LCNF has had no effect on private sector innovation. This question was not answered by 17% of the respondents. Responses to the question about third party access to funding varied with 28% of respondents saying yes, 22% saying no and 36% having mixed opinions. Whilst third parties can currently lead projects with a host DNO, this question questioned the idea of undertaking projects without a DNOs direct involvement. The pros and cons of third party access to funding identified by responses are summarised in Table 13. A number of respondents felt that the involvement of a DNO, in some form, remains critical to the relevance and success of the project. PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 67
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EVALUATION

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