I’m pleased to share the next in the series of blogs linked to the delivery of our next Transmission Business Plan (RIIO-T3 Business Plan) in December this year. In this blog, I discuss how we will power up our workforce and supply chain to provide the resilience and agility to deliver our RIIO-T3 programme effectively, ensuring we are responsive to changes in workload and external factors. If you’re looking for a short summary of this blog, scroll to the end or jump to the top 3 key points.
Introduction
As a transmission and distribution network owner, we keep electricity flowing to homes and businesses throughout Central and Southern Scotland, North Wales, Merseyside, Cheshire and North Shropshire. We play a critical role in enabling the transition to a cleaner, greener future and enabling Government policy of turbocharging the UK to clean power by 2030, reaching Net Zero by 2045 (Scotland) and 2050 (UK).
ScottishPower’s recent ‘Green light for Growth’ recently highlighted the need to “double down on grid investment” to “unlock investment, drive economic growth, and deliver clean energy security.”
Our next Transmission Business Plan, to be published in December this year, will set out our proposed investment in the transmission network in Central and Southern Scotland for the 5 years between 2026 to 2031. Our investment plan will be critical in enhancing energy security for Scotland and beyond, alongside helping protect society from the dangers of climate change whilst supporting a just transition by delivering economic growth through good, green jobs and community benefits.
A period of change
“Decarbonisation of the energy system is the challenge of our generation.”
Future Energy Scenarios (FES) 2024.
This is a critical period of change for the industry, where significant investment is required in our people and wider supply chain to ensure our plans will be deliverable in a sustainable and timely manner.
We have proven supply chain strategies which have served us well over the last decade, however we recognised that our model needs to evolve, to address current market conditions, the increasing workload; and ensure we have a strong focus on delivery at pace. This is not abandoning what has and continues to serve us well but responding positively to what our supply chain partners and valued stakeholders are telling us, by introducing new levers to maximise the efficiency and flexibility of our approach.
“More than twice as much transmission network needs to be built in the coming five years than the previous ten, along with accompanying enabling works, connections and distribution network strengthening.” National Energy System Operator (NESO) Clean Power 2030
The scale and pace of investment required needs to happen at a time when global demand is placing constraints on the availability of equipment and lengthening manufacturing lead times.
We have embraced these challenges and to create the right platform for success we have been busy changing our supply chain framework and shaping our workforce strategy.
Engaging with stakeholders
Supplier and Contractor engagement is embedded in our business-as-usual processes and directly influences our ongoing procurement and wider engagement strategies. In addition, specifically for RIIO-T3, we have engaged with the market and external consultants over the last 18 months to understand market conditions and contracting options. We have listened to our industry partners and key stakeholders with the feedback directly influencing the development of our Supply Chain & Workforce Resilience Strategy. Our engagement includes:
- Direct engagement with 148 companies via a supply chain survey;
- Detailed meetings held with 14 key suppliers; and
- Webinar virtual launch held with over 60 companies
Acting on this feedback, in late 2023 we were proud to issue our £5.4bn Strategic Agreement Frameworks tender to the market. The level of interest in our frameworks provides significant confidence that our plans are achievable and have the support of the wider supply chain.
Our contracting approach
Over the years, we have relied on a delivery model we refer to as our ‘Disaggregated Model with Direct Contracting’. It is an approach where we have retained all responsibility for designing solutions and managing programmes of work while using small to medium sized subcontractors (known as Tier 2 contractors) to provide specialised areas of work such as civils, overhead lines, cable installation and the supply of equipment.
The ‘Direct Contracting’ element is carried out through one-off tenders or via the creation of frameworks with Tier 2 contractors.
The Disaggregated Model has worked well with recent market conditions and the mix of work involved in transmission network development However, we must adapt our approach to reflect the compressed timescales required to deliver our RIIO-T3 programme and the significant increase in procurement activity.
Our supply chain framework needs to retain elements of what has worked well so far, but it also needs to ensure the quantity of contracts and individual procurement events remain proportionate, that our partners can deliver a mix of regular and complex projects at pace and that our suppliers have the confidence to commit resources to fulfil our orders for equipment.
To address these issues and following detailed engagement with key stakeholders and the market to understand the emerging landscape, we have developed a hybrid delivery model based on a combination of Direct Contracting and Engineering Procurement and Construction (EPC) Contracting depending on a project’s characteristics.
EPC contracts feature a single agreement covering all stages in a project. We engage EPC Contractors to carry out the design, construction and commissioning on a turnkey basis (meaning the network infrastructure is ready for immediate use when our EPC contractor hands it over to us). EPC contractors – owing to their size, expertise and portfolio of work – tend to have access to their own equipment suppliers, subcontractors and engineering experts and are ideally placed to deliver large scale strategic projects.
Supply Chain & Workforce Resilience Strategy
Our contracting strategy has been developed with the objective to improve resilience and long-term certainty with our supply chain partners. To enable us to achieve this goal we are introducing a new Contractor Management Team. This will enhance our ability to support and manage our partners, providing a vital link to drive more efficient planning and utilisation.
Enabling our delivery teams to work collaboratively with our contracting partners to allocate projects and plan effectively to ensure efficient utilisation of contractor resources.
- This is how we will build a highly flexible supply chain and delivery model, by leveraging the proven benefits of our disaggregated model with our industry leading inhouse design and delivery teams, along with the scale and efficiencies EPC contracting model will bring.
- This is how we deliver value for money for the consumer by balancing our overarching desire to accelerate the delivery of critical infrastructure with the need to provide value for money for the consumers.
Stakeholder Engagement
You can Register as a Stakeholder to be kept up to date with engagement opportunities relating to our RIIO-T3 Business Plan. Members of our Independent Net Zero Advisory Council (INZAC) will also be supporting the development of our Business Plan, scrutinising both the technical plans as well as ensuring any emerging customer issues are fully considered.
The top 3 takeaways from this blog are:
- We are developing our next Transmission Business Plan (RIIO-T3 Business Plan) which will be published in December 2024.
- We have the ambition to be the client and employer of choice and our Supply Chain & Workforce Resilience Strategy will set out how we are evolving to meet the future demands. This means ensuring that we are preparing our workforce with the skills they will need to meet the demands of the future, and working closely with our supply chain partners to ensure they are ready and able to deliver for our valued customers and stakeholders.
- Register as a Stakeholder to be kept up to date with engagement opportunities relating to our RIIO-T3 Business Plan.
Stay up to date via our dedicated RIIO-T3 page which will be updated regularly with new blogs, our progress and opportunities for engagement. If you have any enquiries about our RIIO-T3 Business Plan, please email us on riio-t3pmo@spenergynetworks.co.uk