Consumer Insights on the Future of the Gas and Electricity Distribution Networks in Scotland - September 2020
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Consumer Insights on the Future of the Gas and Electricity Distribution Networks in Scotland September 2020
Contents Contents 2 Executive Summary 3 Introduction 6 Background and policy context 8 Consumer Awareness of the Gas and Electricity Distribution Networks in Scotland 10 Consumer Satisfaction with Gas and Electricity Distribution Networks in Scotland 13 Consumer Priorities for the Gas and Electricity Distribution Networks in Scotland 18 Flexibility and the future of heat in Scotland 23 Consumer attitudes to the future of domestic flexibility in Scotland 28 Consumer attitudes towards a Just Transition 33 Delivering ‘Whole System’ solutions for Scotland 35 Putting consumers at the heart of the energy transition 37 Conclusions and Recommendations 42 2 Consumer Insights on the Future of the Gas and Electricity Networks in Scotland
Executive Summary
Throughout the UK, governments and local This report summarises research conducted in
authorities have declared a climate emergency. 2019 which aimed to provide consumer insights
The Scottish and UK Governments have also of the changing energy landscape in Scotland.
passed legislation that requires 100% reductions With GB’s gas and electricity networks and
to net greenhouse gas emissions by 20451 and the Electricity System Operator (ESO) engaged
20502, respectively. This will require a rapid and in planning for the first price control to be set
fundamental shift in consumers’ relationship with against statutory net zero targets, we were
energy and will necessitate significant changes particularly interested in exploring consumers’
to the way in which homes, businesses, industry, views on and experiences of the gas and
and transport are powered. electricity distribution networks in Scotland, their
priorities for distribution network investment, and
Gas and electricity transmission and distribution
their understanding and opinions of some of the
networks currently form vital components of
technologies that are envisaged to aid the energy
the GB energy system, linking gas producers and
transition. We also explored consumers’ attitudes
electricity generators with domestic, industrial,
towards a potential increase in the electrification
and commercial end users, and improving energy
of heat in Scotland, and their enthusiasm for
security through connections with the energy
and opinions of future opportunities to provide
systems of mainland Europe and the island of
flexibility to their electricity distribution network
Ireland. However, the transition to net zero will
operator (DNO).
place significant new demands on the energy
system, and substantial investment in GB’s Our research found that:
energy networks will be required to support the
> Overall consumer awareness of the gas
UK’s climate change commitments.
and electricity distribution networks in
Citizens Advice Scotland (CAS) represents the Scotland is shallow, and energy literacy
interests of current and future energy consumers among consumers in Scotland is low. More
in Scotland. We aim to ensure that the transition than 93% of consumers in Scotland cannot
to an energy system capable of supporting a net identify their DNO or (where applicable)
zero economy is realised in such a way that no gas distribution network (GDN) by name,
consumers are unfairly disadvantaged, delivering while a significant majority conflate the
maximum consumer benefits while minimising roles of the gas and electricity distribution
consumers’ costs. Ensuring that consumers networks with those of electricity
are genuinely engaged with and empowered generators, gas producers and shippers,
by decision makers involved in the planning gas and electricity transmission networks,
and delivery of the future of heat and electrical and / or regulated energy suppliers. This
power in Scotland will be vital to achieving this, has implications for networks’ ability
and it will be particularly important that the to engage effectively with consumers
needs and interests of low income consumers in vulnerable situations, with only 9%
and consumers in vulnerable situations are of digitally excluded gas and electricity
incorporated from the outset. consumers in Scotland indicating that
they would contact their DNO or GDN
in the event of disruption to their gas or
electricity supplies.
1
http://www.legislation.gov.uk/asp/2019/15/pdfs/asp_20190015_en.pdf
2
https://www.legislation.gov.uk/uksi/2019/1056/pdfs/uksi_20191056_en.pdf
3 Consumer Insights on the Future of the Gas and Electricity Networks in Scotland
Executive summary
> 78% of consumers in Scotland are satisfied networks’ investment in support for
with the overall level of service they receive consumers in vulnerable situations. Older
from their DNO and (where applicable) consumers, consumers in vulnerable
GDN. This is largely attributed to the situations, and consumers in lower SEGs
perceived reliability of the regulated energy view these additional services as being
networks in Scotland, with consumers particularly important and express
noting a decrease in the frequency and particularly strong support for continued
duration of supply interruptions since investment in this area.
privatisation – particularly for electricity.
> Environmental concerns also resonate
Though only a small proportion of
with the majority of gas and electricity
consumers have contacted their DNO
consumers in Scotland. Though no
(14%) or GDN (8%), around 80% of those
consumer profile prioritises investment in
who have are satisfied with the level of
environmental impact mitigation above
customer service received.
that designed to improve the affordability,
> Vulnerable consumers in Scotland are reliability, or safety of Scotland’s gas
significantly more likely to have contacted and electricity distribution networks, it is
their gas and / or electricity distribution recognised that this is an area in which
network than other consumer profiles energy networks should be allowed to
and report particularly low levels of invest. Support for such investment is
dissatisfaction with DNO / GDN customer found across all consumer profiles but
service (2%). However, overall awareness of is particularly strong among younger
the Scottish gas and electricity distribution consumers and consumers in higher SEGs.
networks is no higher among consumers in
> Current levels of energy literacy and
vulnerable situations than it is among other
awareness among consumers in Scotland
consumer profiles. Up to 68% of Scotland’s
mean that many consumers struggle
vulnerable consumers may therefore be
to envisage how the energy industry’s
unaware of the additional support which
predictions of a smart, flexible, and
could be made available to them by
responsive future will be realised. While
their DNO, while up to 51% of vulnerable
not viewed as unimportant, the majority
consumers may be missing out on support
of consumers therefore currently display
from the GDN.
relatively low levels of support for gas and
> Consumers in Scotland generally prioritise electricity distribution network innovation.
measures to improve the affordability,
> Satisfaction among traditional electric
reliability, and safety of the gas and
heating users in Scotland is low when
electricity distribution networks when
compared with that of consumers who
asked to provide views on network
make use of other space heating solutions.
investment plans. While all consumer
These negative preconceptions are likely
profiles rank affordability concerns
to prove a barrier to the acceptance of any
highest overall, consideration of gas and
future increase in the electrification of heat
electricity distribution network costs is
in Scotland.
particularly strong among older consumers
and consumers in lower socio-economic > A significant majority of consumers in
grades (SEGs). Scotland (80%) are willing to change their
energy behaviours to reduce their energy
> The majority of consumers in Scotland
costs. However, almost half would only
welcome gas and electricity distribution
4 Consumer Insights on the Future of the Gas and Electricity Networks in Scotland
Executive summary
change their behaviour by a small amount, income households to engage with the
with many consumers stating that their energy transition. 50% would also be
ability or willingness to achieve more supportive were distribution networks to
significant change would be limited by their provide targeted investment to aid with
lifestyle and / or real or perceived concerns the provision of smart, low carbon heating
regarding loss of convenience or control systems for low income households, or
over their energy use. Older consumers and funding to reduce the cost of other smart
consumers in higher SEGs are considerably technologies that would make it easier
less likely to consider significant behaviour for consumers to passively engage in the
change a practical or desirable route to energy transition by providing flexibility
reducing household energy costs. to their DNO without having to engage
in significant behaviour change. Such
> Interest in and views on new ways of
initiatives are perceived to offer mutual
engaging with the electricity system
benefits to consumers and the energy
as a means of reducing energy costs is
distribution networks by increasing levels
also mixed. Between 30% and 40% of
of energy efficiency, comfort, and demand
consumers in Scotland are interested
flexibility, while decreasing network stress
in smart electric vehicle (EV) charging,
and consumers’ energy costs.
domestic battery storage, or smart
electric storage heaters. Though 59% of Recent studies have shown that informed
consumers in Scotland are interested in the consumers are significantly more likely to
development of smart Time of Use (TOU) become engaged in measures designed to
tariffs, many consumers are concerned support the energy transition3, but electricity
about the impact of such tariffs on those distribution system operator (DSO) pilots have
who are unable to modify their energy been descoped when project partners have been
consumption profile to avoid peak or super- unable to secure funding for the provision of
peak energy pricing. facilitative technologies4. Improving consumers’
energy literacy and their awareness of the
> There is a high level of concern among
challenges presented by the energy transition
consumers in Scotland that lower income
will therefore be crucial to securing support for
households might be left behind by the
any future increase in the electrification of heat
energy transition, and for the impact that
and transport in Scotland. Strong community
this could have on the future household
engagement in the development and delivery
energy costs of some of the most
of Local Heat and Energy Efficiency Strategies
vulnerable consumers in Scotland.
(LHEES) will also be vital to realising the Scottish
> 79% of consumers are worried that Government’s climate change commitments.
lower income households will be unable However, a reliance on market forces alone to
to afford new technologies designed to deliver the required investment where and when
minimise energy costs. These households it is needed is unlikely to deliver decarbonisation
are perceived to be among those most in at lowest cost to consumers, and opportunities to
need of a reduction in energy costs, yet are share the benefits of the energy transition fairly
felt likely to be least able to benefit from with consumers will be missed. In some cases,
technologies that enable them to do so. it may therefore be necessary for Scotland’s
> 80% of consumers in Scotland would gas and electricity networks to provide funding
support the DNOs and the GDN if they and practical support to secure the strength
were to provide assistance for lower of consumer response required to deliver on
these objectives.
3
https://save-project.co.uk/
4
https://www.ninessmartgrid.co.uk/
5 Consumer Insights on the Future of the Gas and Electricity Networks in Scotland
Introduction
Scotland’s Citizens Advice network empowers set the next price control (RIIO-2). This will last
people in every corner of Scotland through our for 5 years beginning 1 April 2021 for gas and
local bureaux and national services by providing electricity transmission, gas distribution, and
free, confidential, and independent advice. We the ESO, and for 5 years from 1 April 2023 for
use people’s real-life experiences to influence electricity distribution.
policy and drive positive change. We are on the
The RIIO-2 price control is particularly important
side of people in Scotland who need help, and we
as it will be the first price control to be set
change lives for the better.
against statutory climate change targets that
The Fair Markets policy team at Citizens Advice require 100% reductions to net greenhouse
Scotland (CAS) uses research and evidence to gas emissions by 20456 in Scotland and 20507
put people at the heart of policy and regulation across the whole of the UK, the RIIO-1 price
in the energy and water sectors in Scotland. We control having been set against a UK-wide
work with government, regulators, and business target to reduce net greenhouse gas emissions
to put consumers first, designing policy and by 80% of the relevant baselines by 20508.
practice around their needs and aspirations. We Significant changes to how and where energy is
aim to represent the views of different consumer produced, generated, and used will be needed
profiles using evidence of consumer views and if these revised targets are to be met, but this
supporting research wherever possible. will have a profound effect on the scale and
activities of GB’s gas and electricity networks.
CAS works with the gas and electricity networks
Consumers’ relationship with the GB energy
sector in Scotland to ensure that consumers’
system is therefore also likely to have to change
interests are represented in the planning
considerably as the energy transition progresses.
and delivery of network investment, and in
discussions about network access and charging. Ofgem has been keen to ensure that consumers’
With 25% of households in Scotland in fuel views are incorporated in the development of
poverty and certain demographics considerably networks’ plans for RIIO-2, and CAS has been
more likely to be fuel poor than the national an active participant in the consumer and
average5, we believe that it is particularly stakeholder engagement work that has been
important to ensure that the interests of low undertaken by Scotland’s gas and electricity
income consumers, consumers in vulnerable networks and the GB ESO. Our advocacy in this
situations, off-gas consumers, and consumers in area is particularly important as the Scottish
remote and / or rural locations are protected as Government’s net zero commitments may mean
policies and markets evolve. that decarbonisation needs to proceed more
quickly in Scotland than elsewhere in GB. Any
The regulatory framework in which GB’s gas and
adverse consumer impacts arising from the
electricity networks must operate is subject to
energy transition may therefore be felt first by
periodic review by the energy regulator, Ofgem,
consumers in Scotland.
and their activities are dictated by a series of
price controls. At the time of writing, Ofgem is To aid with this engagement, we commissioned
working with the gas and electricity networks Accent to undertake research designed to
and the Electricity System Operator (ESO) to ascertain consumers’ awareness of and
5
Scottish House Condition Survey: 2018 Key Findings
6
http://www.legislation.gov.uk/asp/2019/15/pdfs/asp_20190015_en.pdf
7
https://www.legislation.gov.uk/uksi/2019/1056/pdfs/uksi_20191056_en.pdf
8
http://www.legislation.gov.uk/ukpga/2008/27/pdfs/ukpga_20080027_en.pd
6 Consumer Insights on the Future of the Gas and Electricity Networks in Scotland
Introduction
satisfaction with Scotland’s gas and electricity were screened to be responsible for paying
distribution networks; consumers’ attitudes for their household’s energy consumption
towards potential changes in electricity use and and quotas10 were set against the following
the future of heat in Scotland; and the priorities parameters to ensure that the sample was
of consumers in Scotland for gas and electricity representative of the overall population:
distribution network investment. This study built
> parliamentary constituency
on research conducted in 2017 which reviewed
the support offered to consumers in vulnerable > urban / rural status
situations by the Scottish gas and electricity > on / off gas grid
distribution networks and explored opportunities
for improvement in this area9. This previous > age
research found that: > gender
> Scottish specific circumstances need to be > socio-economic grade
reflected in GB-wide policy development
and regulatory programmes such as RIIO. Data was then weighted to correct for any over-
or under-representation of particular groups.
> A strategic and forward-looking approach
that puts the needs of consumers at its Following completion of the survey, a series of
heart requires to be adopted by Scotland’s discussion groups and 1-to-1 in-depth interviews
DNOs to ensure that no-one is left behind was conducted to explore the views of a range of
in the transition to a smarter electricity energy consumers, including those in vulnerable
network. situations. Collectively, this provided a robust set
of results and an understanding of why certain
> Whole system planning is necessary to views were held among the survey participants.
ensure that Scotland’s energy networks are
properly integrated into LHEES. This report is published alongside a summary
of the key findings of our research and the final
> Scottish DNOs should invest further and report compiled by our research partner, Accent.
increase the reach of programmes for It provides evidence of consumers’ experiences
consumers in vulnerable situations across of Scotland’s gas and electricity distribution
Scotland, supported by the appropriate networks, and their priorities and needs in terms
organisations and Ofgem. of future network investment. It also explores
> An open, consumer-orientated policy the views of consumers in Scotland on potential
debate on the future of the Fuel Poor changes to the way in which energy is used
Network Extension Programme in Scotland that may be required by the transition to a net
is needed, and fuel poor consumers who zero compatible energy system, and considers
are off the gas grid must be given priority how Scotland’s gas and electricity distribution
support while decisions are made. This networks can help redefine consumers’
could be targeted at fuel poor electric relationship with the energy system in support
heating customers as a priority. of Scottish and UK Government climate
change policies.
Our latest research involved a survey of 1,507
consumers from across Scotland. Participants
9
https://www.cse.org.uk/downloads/reports-and-publications/fuel-poverty/policy/energy-justice/energy-networks-in-scotland-and-
their-changing-role-with-consumers.pdf
10
Quotas were set on the basis of demographic data from the 2011 census, the National Readership Survey for January – December
2016, and the Scottish Government’s urban / rural classification.
7 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandBackground and policy context
The way in which energy is produced and used Government responded by amending the Climate
in GB is undergoing significant change. For more Change Act 2008 to commit the UK to becoming
than a century, the majority of the nation’s a net zero emitter of greenhouse gases by 205016.
electricity demand was met by a series of large The Scottish Government has gone further still,
thermal power stations burning carbon-intensive with the introduction of the Climate Change
solid fuel extracted from the coalfields of Central (Emissions Reduction Targets) (Scotland) Act 2019
Scotland, Central and Northern England, and committing Scotland to achieving net zero status
South Wales. However, in recent years the rollout by 204517. 75% net reductions on the relevant
of a multi-billion pound network of distributed baseline greenhouse gas emissions levels are
renewable power generating assets has allowed also due in Scotland by 2030, with 90% net
GB’s reliance on coal-fired electricity generation reductions required by 2040.
to diminish significantly. By April 2020, only 3
The scale of the challenge in meeting
coal-fired power stations remained operational
these statutory targets is significant. The
in GB11, with coal accounting for just 2.1% of total
transformation of the nation’s energy system
GB electricity generation in 2019/2012.
into one that is decentralised, decarbonised, and
Once the mainstay of GB power production, the digitalised will require substantial investment in
UK Government has announced that by no later new infrastructure and the rollout at scale of a
than the end of 2025, coal will effectively have wide variety of new technologies and services. It
no place in the GB electricity generation mix13. will also demand that solutions are found for the
However, growing evidence of climate change sustainable transport of both people and goods;
also calls into question the long-term future of that the nation’s homes and businesses meet
natural gas, both for electricity generation and stringent energy efficiency standards far beyond
as a source of heat. Despite significant steps those typical of properties today; and that
having already been taken to reduce the carbon significant changes are made to the way in which
intensity of GB electricity generation, such space heating and hot water are provided.
progress must therefore mark the beginning of a
The Scottish Government has proposed that
much larger effort to decarbonise the wider GB
each of Scotland’s 32 local authorities will be
energy system.
required to prepare LHEES18. These will build
Recognition that an average global temperature on the data from Scotland’s Heat Map19 to
increase of more than 1.5°C will lead to produce local plans for the decarbonisation of
significant adverse economic and environmental heat in all communities in Scotland. This is a
impacts14 led the UK parliament to declare significant undertaking and will both rely on
a climate emergency in May 201915. The UK and have major implications for Scotland’s gas
11
http://www.powerstations.uk/coal-countdown/
12
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/877047/Press_Notice_
March_2020.pdf
13
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/672137/Government_Response_
to_unabated_coal_consultation_and_statement_of_policy.pdf
14
https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf
15
https://hansard.parliament.uk/Commons/2019-05-01/debates/85FE0864-18D1-42BA-9D3C-CB2D0958D067/
EnvironmentAndClimateChange
16
https://www.legislation.gov.uk/uksi/2019/1056/pdfs/uksi_20191056_en.pdf
17
http://www.legislation.gov.uk/asp/2019/15/pdfs/asp_20190015_en.pdf
18
https://www.gov.scot/binaries/content/documents/govscot/publications/research-and-analysis/2019/09/local-heat-energy-
efficiency-strategies-phase-1-pilots-technical-evaluation-report/documents/local-heat-energy-efficiency-strategies-phase-1-pilots-
technical-evaluation-report/local-heat-energy-efficiency-strategies-phase-1-pilots-technical-evaluation-report/govscot%3Adocument/
local-heat-energy-efficiency-strategies-phase-1-pilots-technical-evaluation-report.pdf
19
https://www2.gov.scot/heatmap
8 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandBackground and policy context
and electricity networks; efforts to decarbonise However, one of the most significant barriers
space and hot water heating are likely to result to the delivery of a net zero compatible energy
in levels of electrification beyond the current system is arguably found in the relationship
capabilities of the electricity networks, while between consumers and the energy
the displacement of natural gas with hydrogen industry itself.
and / or biomethane as combustible fuels,
In Scotland, the majority of gas and electricity
and a significant rise in the prevalence of heat
consumers are currently disengaged22 from
networks, are likely to impact on the future role
what is a relatively simple energy market that
and extent of the mains gas network.
relies almost entirely on the interaction between
At present, GB’s gas and electricity transmission consumers and energy suppliers. With an
and distribution networks are privatised, increase in the use of electricity for heat and
regulated, monopoly businesses on whom transportation coinciding with an increased
the vast majority of domestic, industrial, reliance on sources of electricity generation that
and commercial energy users rely for heat, are less dependable than traditional thermal
light, and electrical power. Although there power stations, the ability of the ESO and DNOs
is no direct billing relationship between the / DSOs to match demand to both network
regulated energy networks and consumers, the capacity and variable levels of available supply
costs attributable to the activities of GB’s gas will become increasingly important. New and
and electricity transmission and distribution more complex energy markets will develop as
businesses currently comprise 23.77% of a typical a result23, but without the widespread uptake
GB consumer’s dual fuel bill20. With 25% of of technologies designed to facilitate consumer
households in Scotland in fuel poverty in 201821, engagement in these markets the energy
the question of how the energy transition can be transition is likely to take longer and cost more
funded without increasing inequality is therefore to achieve. Without suitable support, this will
both complex and pressing. impact on those in society least able to afford an
increase in essential living costs and jeopardise
The technical and financial challenges presented
efforts to ensure a just transition24 to net zero.
by the energy transition are considerable.
20
https://www.ofgem.gov.uk/consumers/household-gas-and-electricity-guide/understand-your-gas-and-electricity-bills#thumbchart-
c6544416133875424-n83314
21
Scottish House Condition Survey: 2018 Key Findings
22
https://www.cas.org.uk/news/new-data-shows-huge-differences-across-scotland-energy-switching-rates
23
https://www.theade.co.uk/assets/docs/resources/Lets_Talk_About_Flex_DigitalRep_FINAL-min.pdf
24
http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/documents/publication/wcms_432859.pdf
9 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Awareness of the
Gas and Electricity Distribution
Networks in Scotland
GB’s gas and electricity networks have undergone > 66% of consumers in the SPEN distribution
significant change since the end of the Second area stated that they did not know the
World War. The pace of this change has name of their DNO.
accelerated since the mid-1990s as privatisation
> 66% of mains gas connected consumers
has matured and regulation has evolved, with
stated that they did not know the name of
numerous mergers, demergers, and rebranding
their GDN.
exercises undertaken over the past 25 years.
However, the gas and electricity transmission and > Only 1% of consumers in the SSEN
distribution networks of today continue to play distribution area identified ‘Scottish and
as fundamental a role in the safe and reliable Southern Electricity Networks’ or ‘SSEN’ as
delivery of energy across the country as ever. their DNO.
Despite their importance, consumers in GB have > Only 3% of consumers in the SPEN
traditionally had very little direct contact with distribution area identified ‘SP Energy
the regulated energy networks as the structures Networks’ or ‘SPEN’ as their DNO.
adopted by the post-privatisation gas and > Only 6% of mains gas connected
electricity industries place energy suppliers at the consumers identified ‘SGN’ or ‘Scotia Gas
heart of their interactions with consumers. In the Networks’ as their GDN.
absence of a direct billing relationship between
the regulated energy networks and consumers, While a significant minority of survey participants
most consumers therefore normally only have volunteered the name of a predecessor brand
cause to contact their DNO or GDN to arrange a when asked to identify their DNO (23% in the
new connection, or in the event of planned or SPEN distribution area and 33% in the SSEN
unplanned interruptions to their gas or electricity distribution area), comparison with answers
supplies. Contact between consumers and the provided for the GDN suggest that these figures
gas and electricity transmission networks is even are likely to have been inflated by the vertically
more limited in its extent. integrated nature of the post-privatisation
electricity system in Scotland and consumers’
Given the above, it is perhaps unsurprising that conflation of the activities of electricity
when asked to name their DNO and (where generation, transmission, distribution and supply.
applicable) GDN:
> 56% of consumers in the SSEN distribution
area stated that they did not know the
name of their DNO.
10 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Awareness of the Gas and Electricity Distribution
Networks in Scotland
For example, when presented with a range of > 45% of consumers in Scotland believe
possible DNO functions, only 22% of consumers that the DNOs and the GDN sell gas and
from the SSEN distribution area were able to electricity to end users.
identify all of the relevant roles correctly; this
It can therefore be inferred that the majority
compared to 32% of consumers in the SPEN
of consumers in Scotland have a very shallow
distribution area. In the Highlands and Islands,
understanding of how the energy industry is
where gas network penetration is particularly low
structured, and that their understanding of
and where non-Economy 7 restricted electricity
the role of the gas and electricity distribution
meters are deployed at scale, consumers’ correct
networks that operate in Scotland is limited. This
identification of a DNO’s functions was just 14%25.
has a direct impact on consumers’ understanding
Our survey also found that: of the role of their DNO or GDN in the event
of an interruption to or problem with their
> 70% of consumers in Scotland believe that energy supply, with only 31% of those surveyed
the DNOs and the GDN are responsible indicating that they would contact their DNO in
for the national gas and electricity the event of a power cut and 51% of mains gas
transmission infrastructure. connected consumers indicating that they would
> 48% of consumers in Scotland believe that contact their GDN if they had a problem with
the DNOs and the GDN produce, generate, their gas supply.
or source gas and electricity for consumers.
Figure 1: Awareness of gas and electricity distribution networks’ role in the event of supply disruption
57
55 54
43 44
42
% Participants
35 34 35
33
23
20
AB C1C2 DE 16 - 29 30 - 64 65+
Socio-Economic Grade Age
Aware of who to contact in a power cut Aware of who to contact about a gas supply problem
Sample: surveyed consumers with a mains electricity supply (n=1,505) or mains gas supply (n=1,110)
25
Until September 2017, very few suppliers other than SSE were able to supply the most common types of non-Economy 7 restricted
electricity meter employed in the North of Scotland. This resulted in a sizeable number of SSE customers whose ability to switch to an
alternative supplier was extremely limited. Consequently, SSE maintained a dominant market share of supply to these customers. With
conflation of SSE’s electricity generation, transmission, distribution, and supply businesses widespread among consumers it is therefore
unsurprising that those in the Highlands and Islands were least able to correctly identify a DNO’s functions in the test as they are more
likely to have remained a customer of SSE than consumers elsewhere – see https://www.cas.org.uk/news/new-data-shows-huge-
differences-across-scotland-energy-switching-rates
11 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Awareness of the Gas and Electricity Distribution
Networks in Scotland
Significant variation in consumers’ awareness of consumer profiles. Notable examples of those
the role of a DNO or GDN in the event of supply with lower levels of awareness include:
disruption was also found between different
For Gas For Electricity
Those with no children in the household Those resident in urban areas
(47% vs. 64% with children) (29% vs. 42% rural)
Those resident in the SSEN electricity distribution area Those with no children in the household
(44% vs. 54% in the SPEN electricity distribution area) (29% vs. 38% with children)
Those with health problems Women (27% vs. 35% men)
(45% vs. 54% without health problems)
In addition, just 9% of digitally excluded gas and through the deployment of smart grids, demand-
electricity consumers in Scotland indicated that side response (DSR) technologies, and other
they would contact their DNO or GDN to report flexibility and balancing services. This will require
problems with their gas or electricity supplies. the transition from distribution network operation
With 21% of Scots lacking in basic digital skills26, to distribution system operation. Many of these
this figure is particularly stark. interventions are also likely to significantly alter
consumers’ interactions with the energy system
Taken together, these findings suggest that
and may require the uptake of new technologies
Scotland’s gas and electricity distribution
at scale, but without strong brand recognition
networks need to rethink how they engage
and consumer trust it may be difficult for DNOs
with consumers – particularly those who are
/ DSOs and 3rd party market participants to
unwilling or unable to access services and
convince consumers to engage in the energy
information online.
transition in a mutually beneficial way.
These findings also underline the scale of the
Similarly, the proposed deployment of hydrogen
challenge faced by Scotland’s regulated energy
for space and hot water heating in Scotland
networks as the energy transition progresses.
is likely to require the development of gas
For example, the anticipated increase in the
microgrids and the systematic replacement or
electrification of both heat and transport
upgrade of gas boilers and other gas burning
is expected to result in increased electricity
appliances by a defined terminal date. It will
network stress at times of peak demand or low
therefore be essential that consumers and
renewable electricity generation. In addition to
landlords are provided with clear, consistent, and
work to increase the capacity of the electricity
unambiguous information on the local future of
transmission and distribution networks, it
heat in Scotland to limit consumers’ exposure to
is envisaged that this will require electricity
asset stranding risk.
distribution networks to have the ability to
constrain network access and time-shift demand
at both primary and and feeder substation level
26
https://storage.googleapis.com/scvo-cms/digital-participation-charter/tackling-digital-exclusion-in-scotland-a4.pdf
12 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Satisfaction with
Gas and Electricity Distribution
Networks in Scotland
Our representative survey of more than 1,500 of regulated energy distribution network
consumers in Scotland has revealed that the functions, consumers’ overall satisfaction with
majority of consumers are unfamiliar with some those networks is high (78% for both gas and
or all of the roles played by their DNO and (where electricity distribution), and compares favourably
applicable) GDN. However, our survey also found against consumers’ attitudes towards regulated
that when provided with a better understanding energy supplier27.
Figure 2: Satisfaction with the overall level of service received from the Scottish gas and electricity
distribution networks
Don't Know 7
8
Extremely Dissatisfied 1
1
Fairly Dissatisfied 2
2
Neither / nor 12
11
Fairly Satisfied 41
34
Extremely Satisfied 37
44
% Participants
Electricity Gas
Sample: consumers with a mains electricity supply (n=1,505) or mains gas supply (n=1,110)
Qualitative discussions revealed that consumers It was also apparent that many of those
recognise the essential role that the gas and who took part in the survey believed that the
electricity distribution networks play in the reliability of their gas and electricity networks
energy supply chain. With an increasing reliance has improved since privatisation. Furthermore,
on electricity to power the nation’s homes, where interruptions to supplies do still occur,
businesses, and transport, it is also recognised the consensus view among consumers in
that the reliability of the energy networks is Scotland is that the duration of outages has
increasingly vital to the success of both the decreased, and that communication relating
Scottish economy and consumers’ quality of life. to such interruptions has improved. Consumers
in Scotland therefore appear to value the
emphasis that has been placed by Ofgem and
27
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/906452/BEIS_PAT_W34_-_Key_
findings.pdf
13 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Satisfaction with Gas and Electricity Distribution
Networks in Scotland
the regulated energy networks on reliability and profiles to have contacted their DNO or (where
have come to expect that their DNO and (where applicable) GDN (29% vs. 3% of consumers with
applicable) GDN will maintain or improve on no vulnerabilities), awareness of the Scottish gas
current levels of resilience in the future. and electricity distribution networks is no higher
among consumers in vulnerable situations than it
Only 14% of the survey participants could recall
is among other consumer profiles. This suggests
having made contact with their DNO, with 8%
that while the support provided to consumers
having contacted the GDN. However, the vast
in vulnerable situations by Scotland’s regulated
majority of those who had contacted a regulated
energy distribution networks is welcomed by
energy distribution network were satisfied
those who rely on it, up to 68% of vulnerable
with the level of service with which they were
electricity consumers and 51% of vulnerable
provided. Overall levels of dissatisfaction with
gas consumers in Scotland may be unaware
DNO / GDN customer service are low and were
that such support is available. More therefore
found to be significantly lower among consumers
still needs to be done to increase awareness
who self-identified as vulnerable than those who
of the gas and electricity distribution networks
did not (2% vs. 11%). However, while consumers
in Scotland and their role in the wider energy
with multiple vulnerabilities were found to be
system if the benefits of that support are to
significantly more likely than other consumer
reach all those in need.
Figure 3: Satisfaction with Scottish gas and electricity distribution network customer service
Don't Know 3
0
Extremely Dissatisfied 2
4
Fairly Dissatisfied 2
4
Neither / nor 16
7
Fairly Satisfied 29
27
Extremely Satisfied 48
57
% Participants
Electricity Gas
Sample: surveyed consumers who have contacted their DNO (n=216) or GDN (n=90)
14 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Satisfaction with Gas and Electricity Distribution
Networks in Scotland
Figure 4: Reasons for satisfaction with the Scottish gas and electricity distribution networks
Good value for money 4
5
Service is responsive 10
5
Service is reliable 8
7
No / few supply interuptions 22
17
No problems - happy with service 53
64
% Participants
Electricity Gas
Sample: surveyed consumers who are satisfied with their DNO (n=1,169) or GDN (n=864)
Analysis of the responses provided by different with the value for money they receive from
consumer profiles reveals that overall satisfaction their DNO and (where applicable) GDN, with
with Scotland’s gas and electricity distribution little variance between the gas and electricity
networks tends to be higher among higher SEGs, distribution networks. Younger consumers and
and increases with age. There are no significant consumers in lower SEGs were found to be
differences by urban / rural status or by regulated particularly concerned about the impact of gas
energy distribution network. However, all and electricity distribution networks’ activities on
consumer profiles were found to be less satisfied household energy costs28.
28
Participants were asked about value for money after having been presented with information on the amount that households pay,
on average, towards the activities of the relevant DNO and (where applicable) GDN, and a description of regulated energy distribution
network roles and responsibilities.
15 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Satisfaction with Gas and Electricity Distribution
Networks in Scotland
Figure 5: Satisfaction with the Scottish DNOs by Consumer Profile
90 91
84 87
% Participatns
82 82
78 77 78
71 72 72 72
65 65 64
58 57
AB C1C2 DE 16 - 29 30 - 64 65+
Socio-Economic Grade Age
Satisfied with DNO Overall Satisfied with DNO Reliability Satisfied with DNO Vaue for Money
Sample: surveyed consumers with a mains electricity supply (n=1,505)
Figure 6: Satisfaction with the Scottish GDN by Consumer Profile
87 89
82 85
% Participants
81 79 79 81
75 77
71 69 69
66 65 66
58
55
AB C1C2 DE 16 - 29 30 - 64 65+
Socio-Economic Grade Age
Satisfied with GDN Overall Satisfied with GDN Reliability Satisfied with GDN Value for Money
Sample: surveyed consumers with a mains gas supply (n=1,110)
16 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Satisfaction with Gas and Electricity Distribution
Networks in Scotland
Among the small minority of consumers who consumers’ ability to pay for their household’s
expressed dissatisfaction with their DNO or energy needs.
GDN, reasons provided were found to focus on
Many participants – and particularly those on
issues of cost and service. Qualitative discussions
lower incomes – felt that more should be done to
revealed that these complaints were principally
keep bills affordable.
driven by concerns about affordability and
Table 1: Reasons for dissatisfaction with the Scottish gas and electricity distribution networks29
Theme Reason for dissatisfaction Gas (n=29) Electricity (n=39)
Too expensive 10 9
Cost % of energy bill is too high 3 2
Focus on profit 2 1
Requires improvement 2 6
Should be more responsive 2 5
Customer
Unhappy with service 4 3
Service
Little or no contact 0 1
Communication problems 2 1
Reliability Problems with supply 1 7
Awareness Didn’t know about the distributor 1 5
29
As the number of participants who expressed dissatisfaction with their DNO or GDN was very small as a proportion of the overall
sample (2.6%), the data shown is expressed as the absolute number of participants who expressed dissatisfaction (n) rather than as a
percentage of the overall survey. Not all participants provided reasons for their dissatisfaction and some respondents selected more
than one reason, so the sum of the responses does not equal n.
17 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Priorities for the
Gas and Electricity Distribution
Networks in Scotland
The Scottish and UK Governments have There is little in the way of detailed government
established legally binding targets for policy currently available on how net zero can
decarbonising the economy, with 100% or should be achieved. However, the ESO’s
reductions to net greenhouse gas emissions 2019 Future Energy Scenarios33 illustrated that
attributable to human activity required by 204530 electricity demand throughout GB is likely to
and 205031, respectively. However, while the increase significantly over the course of the
direction of travel is now clear there remains next 30 years, regardless of the specific route(s)
a great deal of uncertainty about what the chosen to reach net zero. This will require
transition to a net zero economy will mean for the electricity transmission and distribution
individual consumers, not least because the long- network operators to upgrade and expand
term future of heat in Scotland is still undecided. their networks, while the transition away from
As a result, the future role and extent of the gas reliable, centralised, and synchronous methods of
distribution network in Scotland remains unclear. electricity generation will also require the rollout
at scale of technologies providing flexibility,
The substitution of natural gas with hydrogen
energy storage, and system balancing services.
or biomethane has been proposed as a possible
net zero compatible means of providing space 25% of households in Scotland are currently in
and hot water heating to mains gas connected fuel poverty34. With the cost of the country’s
consumers throughout GB. However, the gas and electricity networks ultimately paid
combined demands of heat, power generation, for by consumers, it is therefore essential that
transport, and industry are likely to outstrip the investment required to support the energy
the availability of such fuels even if hydrogen transition is targeted appropriately to avoid
production can be delivered at scale via the consumers bearing unnecessary expense.
reformation of natural gas32. It is therefore However, in the continued absence of clear
likely that in many areas of the country that policy signals from government on the chosen
are geographically distant from large industrial pathway(s) to net zero, it may be necessary
clusters, the drive towards a net zero economy for the country’s regulated energy networks
will rely heavily on an expansion in the use of to initially focus their investment on a core of
renewable and low carbon electricity for heating least regrets options that facilitate a range of
and transportation. future energy scenarios while also meeting
the current needs of both consumers and the
networks themselves.
30
http://www.legislation.gov.uk/asp/2019/15/pdfs/asp_20190015_en.pdf
31
https://www.legislation.gov.uk/uksi/2019/1056/pdfs/uksi_20191056_en.pdf
32
Steam methane reformation (SMR) of natural gas is currently used in the industrial production of hydrogen. When combined with
Carbon Capture, Utilisation and Storage (CCUS), it has also been proposed as a net zero compatible route to the production of hydrogen
at sufficient scale for use in the decarbonisation of industry, heat, and transport. However, current processes are energy intensive
and typical SMR efficiency is less than 75%. The grid scale displacement of natural gas with hydrogen produced by this method may
therefore require significant sources of low carbon electricity and could result in an increased reliance on imported natural gas, reducing
energy security.
33
http://fes.nationalgrid.com/media/1409/fes-2019.pdf
34
Scottish House Condition Survey: 2018 Key Findings
18 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Priorities for the Gas and Electricity Distribution
Networks in Scotland
With this in mind, we asked a representative GDN affordability ahead of all other investment
sample of more than 1,500 consumers in areas, and GDN safety was prioritised ahead of
Scotland what the future investment priorities GDN reliability, consumers in higher SEGs, those
of their gas and electricity distribution networks from more rural parts of the country, and those
should be, having first introduced them to the resident in the SSEN distribution area prioritised
type of challenges that are likely to be faced by electricity distribution network reliability ahead of
the networks as the energy transition progresses. electricity distribution network safety.
Consumers were each given a ‘budget’ of 10
The second grouping of DNO / GDN investment
tokens for their DNO and 10 tokens for their
areas saw consumers prioritise investment
GDN, and were asked to allocate these against
in measures designed to protect vulnerable
the following 7 areas of potential network
consumers and in reducing the environmental
investment:
impact of the gas and electricity distribution
> safety networks. Older consumers, consumers in
vulnerable situations, and consumers in lower
> reliability
SEGs tended to prioritise investment in measures
> affordability to protect vulnerable consumers, as did those
> environmental impact from more rural areas and those resident in the
SSEN distribution area. Younger consumers and
> protection for vulnerable customers consumers in higher SEGs were more inclined to
> customer satisfaction prioritise networks’ efforts to mitigate and reduce
the impact of their activities on the environment.
> innovation
Lowest on the priority list across all of the
The consumers who took part in the survey consumer profiles who took part in the survey
prioritised the 7 investment areas into 3 distinct were investment in innovation and in improving
groups, with the delivery of gas and electricity customer satisfaction, with older consumers
distribution networks that are affordable, safe, and consumers in lower SEGs more inclined to
and reliable considered to be of paramount prioritise investment in customer satisfaction,
importance among each of the consumer and all other consumer profiles more inclined
profiles surveyed. Overall, the concern of to prioritise investment in innovation. However,
older consumers, consumers in vulnerable while neither of these areas was generally
situations, and consumers in lower SEGs as considered to be unimportant, the affordability
to the affordability of their gas and electricity of the gas and electricity distribution networks
distribution networks’ activities placed cost received roughly twice as many tokens as either
considerations comfortably ahead of both safety customer satisfaction or innovation across the
and reliability in terms of ranking. However, survey as a whole.
while all consumer profiles prioritised DNO and
19 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Priorities for the Gas and Electricity Distribution
Networks in Scotland
Figure 7.1: Priorities for Scottish DNO investment by consumer profile
25
20
% Priority
15
10
5
0
AB C1C2 DE 16 - 29 30 - 64 65+
Socio-Economic Grade Age
DNO Safety DNO Reliability DNO Affordability
DNO Environmental Impact DNO Vulnerability DNO Customer Service
DNO Innovation
Sample: surveyed consumers with a mains electricity supply (n=1,505)
Figure 7.2: Priorities for Scottish DNO investment by consumer profile
25
20
% Priority
15
10
5
0
Urban Rural SPEN SSEN Vulnerable None
(inc. 75+)
Urban / Rural DNO Region Vulnerability
DNO Safety DNO Reliability DNO Affordability
DNO Environmental Impact DNO Vulnerability DNO Customer Service
DNO Innovation
Sample: surveyed consumers with a mains electricity supply (n=1,505)
20 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Priorities for the Gas and Electricity Distribution
Networks in Scotland
Figure 8.1: Priorities for Scottish GDN investment by consumer profile
25
20
% Priority
15
10
5
0
AB C1C2 DE 16 - 29 30 - 64 65+
Socio-Economic Grade Age
GDN Safety GDN Reliability GDN Affordability GDN Environmental Impact
GDN Vulnerability GDN Customer Service GDN Innovation
Sample: surveyed consumers with a mains gas supply (n=1,110)
Figure 8.2: Priorities for Scottish GDN investment by consumer profile
25
20
% Priority
15
10
5
0
Urban Rural SPEN SSEN Vulnerable None
(inc. 75+)
Urban / Rural DNO Region Vulnerability
GDN Safety GDN Reliability GDN Affordability GDN Environmental Impact
GDN Vulnerability GDN Customer Service GDN Innovation
Sample: surveyed consumers with a mains gas supply (n=1,110)
21 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandConsumer Priorities for the Gas and Electricity Distribution
Networks in Scotland
Qualitative discussions with consumers that took Qualitative discussions revealed that despite
part in our survey revealed that the relatively low having been provided with an overview of the
priority afforded to customer satisfaction in this energy industry’s vision of a smart, flexible, and
exercise was influenced by high baseline levels of responsive future, consumers still struggled
overall satisfaction and a relatively low incidence to envisage how this will be realised at scale
of direct interaction with the DNOs / GDN within without significant disruption to daily life.
the sample. In addition, among the minority of
Nevertheless, it is notable that among those who
those who took part in the survey that had prior
took part in our survey, younger consumers were
experience of contact with their gas or electricity
more inclined to allocate priority to innovation
distribution network, around 8 in 10 reported
than those in older age groups (and significantly
that they were satisfied with the service they
so for electricity distribution). This suggests
received, and dissatisfaction levels were low. The
that younger consumers are more aware of
currently distant relationship between consumers
the need for change in response to the climate
and the gas and electricity distribution networks
emergency and may well be more receptive
and the limited experience among the survey
to the adoption of new technologies providing
participants of DNO / GDN customer service
services such as flexibility and energy storage.
issues may therefore mean that consumers
However, if the energy industry is to deliver a
struggled to see value in investment to improve
future where domestic consumers play a key
customer satisfaction when so few customer
role in in providing flexibility, it is clear that much
interactions currently take place. However, it is
work is still required to educate consumers as
also possible that with overall levels of DNO /
to the requirement for and benefits of such an
GDN satisfaction already high, consumers believe
approach. The question of what flexibility will
that significant investment to achieve further
look like for consumers is therefore one of many
improvements in this area is unnecessary.
that needs to be addressed, and overall energy
In contrast, the low priority given by the literacy needs to improve if consumers are to
consumers who took part in our survey to become sufficiently engaged in the energy
investment in innovation gives a further transition.
indication of the scale of the challenge with
which gas and electricity distribution networks
are faced as the energy transition progresses.
22 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandFlexibility and the future of heat in
Scotland
Flexibility is seen by the energy industry as key to at economic cost38. With both of the Scottish
the cost-effective delivery of GB’s future energy DNOs set to tender for significant flexibility in
system, with a network of smart, responsive 202039 and beyond, overcoming this barrier will
technologies working in harmony with the energy become increasingly important for consumers in
networks to better match energy demand to Scotland. Much is therefore riding on the success
available supply and network capacity. This is of projects such as SPEN’s FUSION40, flexibility
particularly crucial for the electricity networks as trading platforms like Piclo Flex41, and the
electricity generation continues to move away Energy Network Association’s efforts to develop
from fossil fuels and the electrification of both standardised flexibility contracts42, if flexibility
heat and transport place additional demands markets are soon to fulfil their potential.
on the system at both a national and local level.
One of the challenges with flexibility is that its
However, our research has found that consumers’
benefits tend to be highly locational. For this
awareness of these challenges and the solutions
reason, it is unlikely that sufficient flexibility can
that will be required to overcome them is
be secured through I&C DSR to meet the future
currently shallow, presenting a significant barrier
needs of Scotland’s DNOs in all areas. With DNOs
to the widespread uptake and efficient use of
currently prevented from owning energy storage
aggregateable flexibility services in a domestic
assets, in many cases it is therefore likely to be
setting.
necessary to procure significant flexibility from
At the time of writing, the vast majority of domestic consumers, creating new markets in
flexibility secured by GB’s energy networks which a sizeable proportion of consumers may
has come from a combination of industrial need to participate if the requirements of the
and commercial (I&C) DSR35 and grid-scale DNO are to be met at lowest cost.
batteries36. Among GB’s 8 DNOs, UK Power
While many consumers may be unfamiliar with
Networks and Western Power Distribution have
the term “flexibility”, or with aggregation services
been most active in this area37 as they seek to
offered by companies like Kaluza43, the provision
find innovative ways of alleviating constraints
of domestic flexibility is far from a new concept
on their networks. However, in an immature
for consumers who have experience of electric
market both have reportedly found it difficult
storage heating.
to secure the scale of flexibility tendered for
35
https://gridbeyond.com/demand-side-response-dsr-what-is-it-why-do-it/
36
https://www.solarpowerportal.co.uk/blogs/uk_battery_storage_market_reaches_1gw_landmark_as_new_applications_continue
37
https://www.energynetworks.org/electricity/futures/flexibility-in-great-britain.html
38
https://theenergyst.com/ofgem-dnos-must-make-progress-with-flexibility-this-year/
39
https://theenergyst.com/ena-gets-closer-to-standardised-flex-contract-as-dnos-eye-2gw/
40
https://www.spenergynetworks.co.uk/pages/fusion.aspx
41
https://picloflex.com/
42
https://news.energynetworks.org/news/market-changing-standard-contract-for-flexibility-delivered
43
https://www.kaluza.com/
23 Consumer Insights on the Future of the Gas and Electricity Networks in ScotlandYou can also read
