House of Commons - The future of Britain's electricity networks

The future of Britain's electricity networks - Energy and Climate Change Contents

5 Network skills

165. The creation of a smart grid in Britain will not be possible without a skilled networks workforce capable of meeting the challenges posed by the need to move towards a low-carbon economy. In this Chapter we examine the current make-up of the sector's workforce and the difficulties it faces. We then consider the current public sector and/or industry-led initiatives that work to raise the profile of the sector and improve its skills base.

Current challenges

166. The sector skills council, Energy and Utility (EU) Skills, characterised the workforce of the energy sector as predominantly white, male and middle-aged.[295] The bulk of those currently employed started working in the sector during the 1970s and the Department expects the industry to reach a retirement peak in 2023.[296] At the same time, there also appears to be a decline in the number of students studying science subjects from 16 to 18, combined with a dramatic reduction in the number of engineering graduates.[297] This is a concern not just for the networks sector, but for the whole energy industry.

167. In addition to demographic factors, the overall size of the networks workforce has also fallen over time because of regulation. Earlier in this Report we examined the impact the RPI-X framework had in reducing firms' capacity to innovate. The focus on reducing operating expenditure has also led to many companies reducing their headcount as well as cutting the level of training provided.[298] Unite—the union told us some distribution network owners (DNOs) did not carry out any training whatsoever.[299] EU Skills argued that the regulatory framework also meant contractors in the supply chain for the DNOs operated on shorter-term contracts that fitted within the five-yearly distribution price control review (DPCR) period, reducing their incentive to invest long-term in skills.[300]

168. However, the networks sector faces a range of new challenges over the next decade as the Government seeks to achieve its targets for renewable energy and carbon emissions. The greater complexity of the energy system resulting from the shift towards more active network management will require the application of new skills. The Renewable Energy Association also told us it was highly likely that a lack of electrical engineers would hamper the deployment of a large increase in renewable generation.[301] Elsewhere, the Department noted that offshore networks will call for skills and experience with high voltage direct current (HVDC) connections, which are at present rare in Britain.[302] The Institution of Engineering and Technology said too that the development of smart grids will also require the industry to persuade consumers that their demand must play a greater role in managing the system. This will call for skills from the social sciences, such as psychology, that have not been applied to this field before.[303] The sector skills council summarised the potential situation, stating: "there is a 50-year programme of work that we need to do […] This is an exciting agenda".[304]

169. The industry faces a massive recruitment challenge. Energy and Utility Skills estimates around 9,000 additional skilled employees, split between the distribution companies and their external contractors, will be necessary to deliver the investment set out in DPCR5.[305] This corresponds to roughly half the existing sector workforce.[306] Skilled workers will be required at all levels, including craft and technician apprentices as well as electrical engineers.[307]

170. EU Skills believes that improving the UK's record on network skills presents a major opportunity for it to become an exporter of new technology services.[308] However, there are some significant challenges to achieving this aspiration. First, there is a negative perception of the industry, which is seen as being of lower status and poorly paid in comparison to other professions.[309] The Institution of Engineering and Technology contrasted this attitude with that held by students in China and India where engineering is seen as a prestigious occupation.[310] The Energy Networks Association acknowledged the networks sector needed to become "more 'career attractive' to young people".[311] Even where people are attracted into the industry, it takes time to train them. The union Prospect told us it can take up to five years to turn a good engineering recruit into an effective engineer, and at least another five years for them to acquire the skills required to deliver the kinds of new investment projects expected in the future.[312] Moreover, the sector's capacity to train new workers is also limited.[313] The sector skills council acknowledged all of these concerns, noting: "[…] the option of doing nothing is not available".[314]

Action to address the skills gap

171. There are currently various initiatives that are seeking to address the skills gap in the networks sector. In 2007 EU Skills established the Power Sector Skills Strategy Group (PSSSG), which is an energy sector-wide group working to address strategic skills issues in the medium and long term. It has developed a strategy for the 2010-15 period, which, among others, aims to develop industry thinking on the impact of new technologies and demands on craft, technical and engineering skills; promote careers in the power sector; and improve the attractiveness of the industry to under-represented groups.[315]

172. The PSSSG and EU Skills are also working together to develop the National Skills Academy for Power. Still at the business planning phase, this will provide national co-ordination of regional clusters of existing training providers. These may include network companies' own training provision, as well as further and higher education, and private sector providers. EU Skills told us its main priorities would be: to raise the skills of the existing workforce, particularly at the craft and technician level; working with schools to improve the attractiveness of the sector; and working collaboratively with the higher education sector.[316] Elsewhere, the Institution of Engineering and Technology runs the IET Power Academy which is a partnership of academic institutions and energy companies that provides financial support for students wishing to study engineering.[317] The Centre for Sustainable Energy and Distributed Generation, which is an academic centre established by the former Department of Trade and Industry, has also received praise for its research on networks in recent years.[318]

173. Finally, whilst the industry must lead in tackling the skills shortage it faces, the regulatory framework must also play a role by providing the right incentives for companies to invest in their employees. EU Skills told us: "[…] there needs to be an understanding of how the regulatory framework can be more helpful to long-term skills investment and the cost of that investment as well".[319] It is unfortunate then that Ofgem's recent emerging thinking paper for its RPI-X@20 review makes no reference to the importance of long-term investment in skills in the same way that it has considered incentives for innovation.

174. The transition to a low-carbon economy will require trained people that have the skills to deliver the many challenges the networks face in the coming years. Yet an aging workforce and a lack of new recruits mean the industry currently faces an acute skills shortage. This problem has been exacerbated by a regulatory framework that has reduced firms' expenditure on skills over time. We welcome the establishment of the National Skills Academy for Power, but believe DECC and the Department for Business, Innovation and Skills need to do more to inspire young people and graduates to take up a career in the energy sector. Network companies too should face improved incentives through the price control reviews. Accordingly, this must form a key part of Ofgem's RPI-X@20 review. Looking forward, firms must also accept their role in ensuring employees have the opportunity to improve their skills. A skilled workforce will be crucial to the development of a cost-effective low-carbon energy system. As one witness put it: "Without the broad skills of all participants within the sector, the UK faces a dirtier, more expensive and less efficient future".[320]

295 Ev 163, para 18 (Energy and Utility Skills) Back

296 Q 430 (Minister for Energy) Back

297 Ev 162, para 13 (Energy and Utility Skills) Back

298 Ev 163, para 14 (Energy and Utility Skills) and Ev 223, para 10 (Prospect) Back

299 Ev 278, para 4 (Unite-the union) Back

300 Q 127 (Energy and Utility Skills) Back

301 Ev 229, para 25 (Renewable Energy Association) Back

302 Ev 150, para 36 (Department of Energy and Climate Change) Back

303 Q 293 (Institution of Engineering and Technology) Back

304 Q 136 (Energy and Utility Skills) Back

305 Ofgem, Electricity Distribution Price Control Review Policy Paper, December 2008 Back

306 Q 114 (Energy and Utility Skills) Back