According to the power sector regulator, Ofgem, “The fastest route to NetZero is via data and digitalisation”. The endeavor of making energy data open presents a significant challenge — but power companies can take reassurance and learn valuable lessons from the success of the UK’s rapid implementation of Open Banking.
This is not the first time a regulator has challenged the regulated to transform how a sector manages data and makes that data available on an open basis. Since 2016, the banking sector in the UK has been required to transition to Open Banking, making data available with consent, to those who can create new value from that data, faster and in the interests of the customer.
Already, Open Banking has broken down silos between the UK’s largest banking groups and the ecosystem of new third-party innovators that are accessing their Open APIs to develop new value. The resulting internal and external scrutiny has significantly improved IT service quality to all participants. The transparency of the Open API services and the data that can be accessed through them is allowing the banking industry to access a much wider resource of innovation.
In this new ecosystem, the UK’s banks are realising that they don’t have to deliver all the value to customers themselves. They can focus instead on where they add unique value. And while they are relinquishing some control, they are far from losing out – the UK banking sector expects to recoup its Open Banking investment within five years.
So let’s remind ourselves of the timescales and requirements for this immense challenge in the power sector, and why it makes sense to take time early in the transition to learn from Open Banking in order to move more efficiently and effectively later.
The UK has signed the 2015 legally binding international treaty on climate change, called the Paris Agreement, to achieve NetZero carbon emissions by 2050. By 2030 the UK will reach a major milestone with the end of internal combustion engine car sales in the UK. At this point it is forecast that 56% (or just over 1.1 million based on 2019 data) of new cars sold in the UK will be electric vehicles (not hybrid). That requires a vast amount of new intelligent power infrastructure and smart charging points at home, work and on the UK’s road network.
In the words of one power distribution company, “Responding to the immense challenge of climate change requires a radical transformation to deliver a clean, safe and sustainable society for future generations. Dramatically decarbonising the electricity system while also electrifying everything from transport to heating is an essential part of the solution.”
In 2021, data and digitalisation requirements come into effect for power transmission companies. From early 2023, similar incentivised licensing conditions (RIIO-ED2) will come into effect for power distribution companies to deliver digitalisation and data across all areas of power distribution infrastructure, monitored by the regulator Ofgem, every six months.
Deep insight, automation and real-time data on how consumers live, work and play in this new low-carbon world is now mandatory. The openness of this data will not only underpin regulatory compliance, it will also fuel innovation by providing transparency into how consumers use power at home from their solar panels; how smart car charging systems prevent local overload and how drivers can give back power to the grid from their under-utilised car batteries.
The power sector can learn today from the banking sector, how best to position and structure their open data initiative, where to focus for the greatest value, how to lead the organisation with trail blazing teams and how to create and manage a portfolio of open APIs to share data services. Digitalisation and data are not just the fastest way, they’re the only way to enable transformation of the nation’s power infrastructure to support NetZero emissions.
Leveraging Scott Logic’s technology capabilities and relationships within the power and banking sectors, we will be facilitating knowledge exchanges to allow the power sector’s IT and business leaders to learn more from Open Banking.
On 18th March, we’re hosting an online event that will bring together an expert panel: Ofgem’s Head of Data Steven Steer, Northern Powergrid’s Head of Information Systems Paul Fitton, and NatWest Group’s Head of Open Banking Technology Jonathan Haggarty. They will explore the challenges and opportunities ahead for the power sector, and the practical lessons that can be gained from a global corporate that has been on the same journey, and is now leading the way into the retail banking world of tomorrow.
Register here for Open Data: Lessons from Open Banking.