We are keen to receive views and input from a wide range of stakeholders to ensure that further investment will enable us to:

• Meet our net-zero carbon operability ambition

• Continue to remove barriers to entry for energy providers and encourage participation in the market

• Operate within increasingly challenging system conditions

• Shape an optimum transition path between our current and future balancing capability

We have a number of engagement activities planned and will be talking to you and the industry through our usual channels. We will be holding a number of forum events which will focus on;

• Outlining our understanding of the existing capabilities and customer challenges and seek your feedback

• Challenge and review of the new capabilities that we need to develop, considering cost of development and prioritisation

• Considering what the roadmap for the transformation of our balancing capabilities looks like and how we progress together

Our existing balancing capability in its current form will not be able to support our ambitions for the future. Transformational change to our existing or new balancing systems and architecture is necessary to facilitate the significant changes expected in the energy industry. We are also aware that, due to the rate of change across the industry, it is not in the best interest of customers to maintain the existing legacy balancing systems.  

There are transformational RIIO-2 deliverables across all three roles which are dependent on an enhanced balancing capability to realise their benefits. Precise planning of all this interconnected delivery is required to transition from the existing balancing capability to the new capability whilst continuing to deliver safe, secure, and economical system operation. Given the rapid pace of change in the energy industry, we must also ensure our approach to planning and delivery is flexible and can adapt in future to the evolving needs of our customers. 

The ESO has been working with external IT suppliers and academic institutions to design modern IT architectures supporting innovative solutions ensuring that our future plans are built on best practice as informed by external partners. Our techniques for cost estimation and option analysis are undergoing independent external audit to validate them.  

Our understanding of the complexity and scale of the balancing capability transition has developed greatly since we submitted our first RIIO-2 business plan. As a result, we have decided to undertake a strategic review of our plans in this area and to reconsider our overall approach to planning. This review is necessary to ensure that the delivery of this critical capability is supported by a cost-efficient and robust delivery schedule. The scale of the change is unprecedented in the energy industry, in terms of its scale and complexity, along with the need to maintain current levels of operational performance and minimising the impact on society and consumer bills. We will look to learn lessons from other sectors, such as banking and telecommunications, that have gone through comparable digital transformations.

In recent times the industry has changed at a rapid pace that directly affects the capabilities needed to operate the Transmission System in a secure and economic way. We also know market participants need us to have more flexible architecture. Some of these changes were well understood when we developed our RIIO-2 plans, others have accelerated, and some have emerged since that point. These include: 

• Energy prices have become a major challenge for society   

• Major market reform is under consideration  

• The energy mix has changed quicker than expected   

• More small units, less large ones  

• Units are now aggregated across GSP Groups whereas our traditional paradigms worked on single GSPs  

• There is a need for new market services requiring co-optimisation and greater opportunities for units to “revenue stack”  

• Interconnectors have moved to hourly gates  

• We have left Europe and cannot use EU platforms meaning we must develop new bilateral capabilities  

• Dynamic operation has led to the need to consider multiple scenarios in real time    

• NG ESO is moving to a world where predictive tools are used rather than traditional scheduling  

• We are learning more about consumer behaviour through market trials 

   

Firstly, our existing IT systems were built to support a very different world from the one outlined above. This way of modelling the Transmission System is embedded in the very design of these applications meaning that, over the years, we have had to develop smaller standalone applications that take data from the main systems, transform it, and then put it back. This has resulted in multiple workarounds with decreased situational awareness and a reduced ability to optimise over multiple services. To transform our existing applications would involve a complete re-write to support the new model of a net-zero landscape. 

Secondly, change is constant. Our Pathfinders, RDPs and the development of new market services show that we need to adapt to new Transmission System characteristics such as low inertia, low short circuit levels etc. The more we implement change across multiple systems the more this increases costs which is why we want to seek guidance from industry. 

Finally, some of our existing IT systems require a technology refresh including upgrading hardware, operating systems, and databases so that we can ensure we maintain security and have the high availability expected by the industry. The ESO wants to avoid a “big bang” when it comes to upgrading our existing IT estate. We have learnt lessons from previous projects that smaller, agile steps are the best way to approach the development of new IT. 

Our current philosophy is to replace components of existing IT systems over a period of time, until we get to the point where we can totally decommission our older systems, but we need input from industry participants on the best way to do this – what are our joint priorities and how can we be transparent during the development of new applications going forward? 

As part of this review, we need your help to decide on the best option for a future the transformation of the tools we use and the applications all parties interact with.