Metering & Smart Energy International spoke with João Torres, CEO of EDP Distribuição, as part of our Leadership Insight Series.
The interviews in this series include leaders in some of the world’s biggest companies: examining their leadership style, and giving them a chance to share their specific thoughts on the development of the utility sector globally.
EDP Distribuição, the Portuguese distribution system operator serves more than 6 million customers. After serving two consecutive terms as Chairman, Torres remains dedicated to the common interests of the sector at European level – acting as vice chairman of EDSO for Smart Grids, the association representing DSOs providing more than 70% of the electricity consumed in Europe.
What do you consider as the top attributes of a successful leader?
There is no silver bullet, since there is neither a single leadership style nor a typical leader. The person itself, the organisation and the context, all play a role in meeting the requirements of each situation.
However, there are some common traits of experienced and effective leaders with which we could try to agree, as many have done before.
From my own experience, I would like to pick up on three of them that are hard to keep up with but that can help us to make a difference: namely to keep a positive attitude, to be flexible but knowing where to go, and to motivate and being effective in getting the work done through others.
It may seem paradoxical, but in modern times, in this era of digital sharing and information, it is also important to learn rapidly and sometimes to be quick in sizing up situations and making decisions, even with limited information.
Lastly, some hard work is also to be considered, but it is important to come to terms with what “work-life balance” means.
Which values do you feel you demonstrate?
When living my values, I also need to remain conscious about the values of the organisation. Together with ethics, they are central to any company.
The core values that we enjoy sharing at EDP Distribuição (EDP) are initiative, demonstrated by our own behaviours and attitudes; the trust our shareholders, customers, suppliers and other stakeholders put in us; the excellence in the way we deliver; the search for sustainability, for better quality of life for current and future generations; and innovation to create value in the different areas in which we operate.
Among other values, a leader earns the respect of others through integrity; for example, by possessing the strength, passion and enthusiasm to serve for the sake of a greater cause and play for something bigger than ourselves, and very importantly, by respecting others regardless of differences.
How do you motivate a team after experiencing a defeat at a time of low energy and enthusiasm?
It is quite common to experience defeats during long journeys, and it is very important to not lose focus on the long term objectives. It is also up to the leader to ensure that the team readjusts expectations with a view to the future and the next challenges to overcome.
The way to realise this is through clear commitment. From a personal point of view, commitment may be seen as a core value and a strength that is particularly useful in times of uncertainty. At the organisational level, it provides guidance and support. In the case of our company, we are committed to people, customers, sustainability and results.
Enthusiasm and initiative, ethical conduct and professional standards, as well as an emphasis on teamwork, are part of the way we commit to people. Up skilling, career development, and a healthy work-life balance are fundamental to success.
Having a correct understanding of how our operations allow us to take on the social and environmental responsibilities and contribute to the development of the regions in which we operate and to social welfare, would also serve as a source of additional motivation.
Furthermore, putting ourselves in the place of our customers and trying to anticipate their needs, also enhances our ability to lead and to uphold standards of excellence in everything we do.
What do you see as the biggest challenge for the utility sector going forward?
I should start by saying that in Europe, the policy framework is being set up at a lively and interesting pace. We need a greener future, where consumers are at the centre, and where load meets supply by intelligently adapting to the available variable generation.
This is meant to be supported through a more competitive, secure and sustainable energy system.
To get from here to there, society needs to become more electrified and electricity more decarbonised. Decentralisation will mean more energy generated, stored and distributed closer to where it will be used, and in accordance with customer preferences.
Digital technologies are set to make energy systems more connected, intelligent, efficient, reliable and sustainable. The electricity sector will be the central player since it is deeply interconnected with different sectors.
This also means that, after a period, yet unfinished, of relevant efforts to deploy large-scale renewables, integrate markets, make regulated activities even more efficient, and to consistently improve quality of service, the entire value chain is just about to be really challenged under the less visible motto of “achieving more with less”.
Here, I would like to focus this short answer on the challenges facing system operators.
DSOs are key players to make the transition happen. They are confronted by the need to integrate highly volatile, intermittent and distributed generation, the increase of load and capacity due to electrification of transport and heat, and a decentralisation process that is being pushed by resources that will promote different behaviours and create numerous challenges, and which mainly connect to distribution networks.
Whilst distributed resources are expected to provide flexibility services to different parties, through distinct markets, and in many timeframes, in the opposite direction, “traditional” investments in the networks are expected to be gradually replaced or postponed through the provision of dedicated flexibility services for the end users and their own DERs. These changes should be done without endangering the provision of a universal, reliable and secure service by the system operators. Combining all these factors will bring about a very challenging environment, and DSOs will have to “square the circle”.
The time now is to transform challenges into opportunities. Thus the biggest challenge is to get all responsible parties– specifically those with decision-making power, policy makers and regulators –aligned in understanding and supporting the sustainable and cost-effective development of the sector in which DSOs play a central role.
What are your top three technology predictions for the sector for 2018?
Simply put, I would say digital and smarter grids, intelligent data handling and analytics, and the rise of different new services offered through distributed energy resources.
2018 should be a year to express firm commitments to clear roadmaps that will further develop the concept of the distribution system as the platform that drives the future of the electricity sector by also providing the testbed and the real framework for future models.
Being part of the DNA of distribution companies, innovation is a crucial area which requires further development and external support. DSOs have been leading the investment in the deployment of smarter grids, but more regulatory support is needed to overcome the challenges ahead. We need to invest now to benefit from the transition across the entire European economy.
The degree of digitalisation of the networks and the future market design will prove decisive in facilitating the activation of flexible resources, unlocking key flexibility potential both at the system and market level, and equipping the DSO with the necessary tools to perform its system operation and active neutral market facilitation roles. Distribution systems and local markets will be increasingly interlinked, and energy will need to be kept balanced at a more local level to ensure system resiliency and to reflect changes in the context, resources, businesses and players.
Citizens, consumers and customers now have the chance to make a difference. By owning electrical resources, in isolation or within a portfolio, and with the help of technology to release them from unnecessary cognitive efforts, they will be confronted with the possibility of living more sustainable lives in a more cost effective way, if they choose correctly how to serve their best interests and those of society. A competitive, secure and sustainable energy system is a new space to give new opportunities but also to share responsibilities.
New and innovative products and services, some based on distributed ledger technologies, will come to life to exploit new opportunities on a large scale or around smaller niche markets. The right balance must be achieved between consumer needs, market players, and system operators to ensure feasibility and sustainable growth.
The benefits of the transition should be shared by all citizens, regardless of their capacity to play a more active part in the process. This is a challenging exercise, but is part of the Energy Union to which Europe is deeply committed.
Data is instrumental in fostering this transition. We are key players in the process, and securely handling and providing data to the different parties has been part of our daily activities over the last decade. This is going to accelerate even more and we are preparing ourselves in close cooperation with all relevant stakeholders to enhance our ability to actively facilitate the market in a neutral way.
In addition to market activities – such as planning, asset management and revenue assurance, to real-time actions – distribution system operators are also required to build on data coming from the smarter grid, markets, and many other distinct sources.
As a simple example, during extraordinary weather events, which are becoming increasingly frequent, the volume of real time data can easily increase twentyfold, and we need to deal with it in very short periods of time.
All this means that DSOs are working hard to unlock value through data to benefit consumers and society.
What are your top three strategic predictions?
In a sector with so many challenges and needs, it is hard to guess what is going to happen next. Based on our own priorities, I would stick to the evolving roles of DSOs, the digitalisation of the sector and, the most certain of them all, a greater focus on human capital.
The roles of DSOs in future will be deeply connected to the increasing importance of fostering active customer engagement, to the uptake of new services and the development of new markets, and to the sharing of responsibility in managing the overall system side by side with TSOs, taking care of the growing local dimension.
The digitalisation of the sector, with all its implications and opportunities, reflects that digitalisation of the sector is truly instrumental to each and every part of the value chain and to all players, without a single exception. This is a journey that is unstoppable.
Regarding people, I will take the liberty of returning for a moment to something I have said more than once.
People make the organisation. People make the difference. The ongoing process will change the workplace of the future and an important part of it will be shaped by our capacity to adapt, upskill, be resourceful – often visionary – and take the lead without regrets.
At EDP, we have achieved goals and recognition along the journey, but none is more important than the real engagement of our people in the transformation.
Featured image: Culpwrit