Counting the benefits of innovation
Through a diverse array of innovation projects, National Grid Gas Transmission (NGGT) is working to create an efficient and reliable future network that brings clear value to its customers. On the release of its first innovation mid-term value report, Pauline Walsh, Director of Gas Transmission Owner tells us more.
Counting the benefits of innovation
“I’m delighted we can capture and are able to share the value delivered through our innovation projects in our innovation value report”
Pauline Walsh, Director of Gas Transmission Owner.
Benefits realised so far from our portfolio are £6.9m. This brings a positive benefit ratio of approximately 4:1 against costs already incurred.
Source: National Grid Gas Transmission.
Here in Gas Transmission, we’re committed to creating real value for our customers through innovation. But what does that really mean?
An innovative idea is like an uncultivated seed. For it to flourish into a workable solution takes drive, passion and commitment.
By taking ideas from our employees, who understand the challenges we face, we are able to generate real, measurable value. The challenge is to take these ideas even further, so they become fully embedded in how we do business.
Only then do qualitative benefits become quantitative ones. Real numbers that show the true value of innovation.
Innovation at our core
Our business is funded by a price control mechanism which is agreed and set by industry regulator Ofgem. The framework for this is called RIIO, which stands for Revenue = Incentives + Innovation + Outputs. It offers network companies significant incentives to invest in and deliver innovation for the benefit of consumers.
RIIO supports two innovation funding mechanisms, Network Innovation Allowance (NIA) and Network Innovation Competition (NIC). And both of these have successfully supported innovation throughout the industry.
They’ve provided our Gas Transmission business with more than £10m of investment to build a strong and diverse portfolio of more than 100 projects within NIA.
Each project meets a clear business need or aims to solve an existing or future challenge. These include everything from replacing ageing assets, to improving the service we provide to our customers – and making our network as economical and secure as possible.
Greater value from a great idea
Our ambition is to maximise the value that these projects deliver to consumers. And in the past 12 months, we’ve been focusing on continuing to implement new learning and project outputs into the day-to-day operation of our business. This is a crucial part of transforming smart solutions into tangible financial benefits.
As part of this commitment, we recently published our first mid-term innovation value report, which outlines the benefits our innovation portfolio is bringing. It’s referred to as ‘mid-term’ because we’re at the mid-point of the RIIO price control – four years in, with four to go. Our report focuses on assessing the value already delivered and committed across 10 key case studies.
It shows that the benefits realised so far from our portfolio are £6.9m. This brings a positive benefit ratio of approximately 4:1 against costs already incurred.
Among the financial savings we’re making on projects in the portfolio are:
- £4.6m on Building Information Modelling (BIM). The BIM process allows us to create data-rich 3D models of our assets and use them to identify potential savings in cost, carbon impact and on project schedules. The use of BIM during upgrade works at our Peterborough and Huntingdon compressor stations helped engineers identify alternative security measures on the site that saved £3.1m. Its use on Feeder 9, another key construction project, allowed engineers to find and eliminate several potential construction hazards and streamline the construction process at a very early stage, generating savings of £885k. At our Bacton site, BIM provided improved safety and supported faster project delivery, which saved £647k.
- £471k on our impact protection slabs project. This saw us develop polyethylene slabs as an alternative to concrete for protecting against pipe damage when heavy machinery is used nearby. The savings come from having a lower purchase price and installation costs, and by removing the risk of the concrete corroding or damaging the pipe. As we roll the new slabs out across the country, future savings will be significant.
- £60k on our customer ramp rate studies. These are required when a customer requests a new connection to assess the consequences of bringing it online. The project developed a new tool for developing these studies, which have traditionally been complex and time-consuming. The new approach includes intelligent software algorithms, new methods of analysis and the development of in-house capacity and expertise. As a result, savings delivered to customers for the six studies completed so far are £60k, with each study taking 25% less time to complete.
This is just a snapshot of some of our more established projects; it is an insight into their current performance on a longer innovation journey. You can read much more about these and other innovations by downloading the full report here.
Open to new ideas
Collaboration is key to success in innovation, which is why we surveyed our internal and external project partners as part of the report. Responses were positive, with the 43 respondents highlighting the key strengths of our innovation approach – for example, the valued support of our innovation team, and our openness to new ideas – as well as discovering areas where further value can be created as we move forward.
With more benefits to come across our portfolio, we estimate future benefits in the region of £100m. This success is only possible because of the determined work done every day by our project leads and partners, their flexible approach and a commitment to continuous learning.
We’ll continue to work towards improving our processes and embedding innovation into business as usual to make sure we bring ever greater customer value.