Pleasure to welcome you all to One Great George Street for another Energy UK Annual Conference. Once again, standing room only and another packed line up.
We will hear from the Secretary of State, Shadow Secretary of State, Keith Anderson, Fintan Slye, Jonathan Brearley, Alice Delahunty and many others.
• Thank you to LCP Delta,
• Mesh AI,
• Engage Consulting,
• Murray McIntosh,
• Uniper,
• National Grid and
• Newton Europe for sponsoring parts of the day.
Special thank you to ScottishPower for being the headline sponsor this year. I look forward to hearing from Keith Anderson, CEO of ScottishPower, fresh after the company secured a contract for their offshore wind farm, East Anglia TWO, a site that will produce power for 950,000 homes.
This conference would not be possible without the amazing team at Energy UK and colleagues at One Great George Street – and our British Sign Language interpreters, who are here to ensure our Conferences are accessible to all.
Our conference always comes at a pivotal time of the political year – with the autumn decision on the retail energy price cap, fiscal events and party conferences, and the cooler weather approaching which puts energy in the headlines.
This year I get to thank the same two politicians for coming to speak with the industry – although they have swapped jobs since our last Conference.
Many thanks to both the Secretary of State, Ed Miliband, and Shadow Secretary of State, Claire Coutinho, for making time to be here today in this busy time of year, as well as Jonathan Brearley, CEO of the regulator.
The sector appreciates your enthusiasm for the energy sector: deciding to stick around or even come back, despite having worked with us before!
What have we learned?
This is also the first conference in five years where we are gathering without an unexpected external crisis to deal with in energy: the pandemic, the energy crisis, geopolitical change, extreme weather, and political and economic challenges.
But over these past years, we’ve learned the wider value of energy. And therefore, the need to advocate boldly for putting the energy transition at the heart of plans for economic prosperity.
Energy costs underpin economic performance. Russia’s invasion of Ukraine sent inflation in the UK to over 10%, with a third of that directly due to rising gas prices. Energy also underpinned other costs: the 40% increase in the price of tomatoes is because of energy inputs like making fertilisers and heating greenhouses.
This has affected the wider cost of living where too many homes and small businesses like corner shops and pubs have struggled with bills. The levels of Direct Debit failures for energy bills are three times what they were pre-crisis, and debt stands at well over £3 billion officially (these are higher in reality). The OBR now estimates that another fossil price shock would cost the economy 2 – 3% of our GDP in the 2030s.
There has also been a shift to protectionism and competition for capital for this new industrial revolution: China is now estimated to hold 80% of the market share for technologies of the new energy age: renewables, electric vehicles, batteries. The UK will fall to the bottom of the G7 by 2030 for the growth of clean energy.
Aside from the moral imperative to act; solving the cost-of-living crisis, enabling businesses to thrive, offering skilled employment and industries, and driving prosperity across the country could in turn help stem the rising tide of populism in the world’s oldest democracies.
So we can say the last five years have broadened our definition of energy security and made clear the link between political stability, economic prosperity, and energy.
The question is, with Labour’s explicit commitments to forming new relationships globally, growing the economy, and – yes – delivering Clean Power by 2030: how much will change over the next five years?
What to do next?
When we think about the five years ahead, the main challenges are building the energy system at speed AND supporting people through the energy transition.
Firstly, on supporting people, we need to make sure that those still struggling can heat their homes through this winter. Ideally, we need to make sure that we come up with an enduring solution to support for those that need it for winters to come.
Energy UK works closely with consumer groups and charities through the Independent Vulnerability Commitment and other schemes. We know that suppliers are already moving over a half a million pounds of additional support to customers in need each year, over and above regulatory requirements.
In the run-up to the Election we called for targeted support to increase, doubling the Warm Homes Discount and for the Government to “rebalance” some of the policy costs on gas and electricity bills.
But I have been heartened to see so many other good ideas to help coming forwards from industry and charities. We will be back around the table with Ministers again soon to discuss winter support and debt.
Long term bills and homes
We are also excited to see energy efficiency, surely the Cinderella of energy policy, go to the ball in the Government Warm Homes Plan, but want to see fabric measures combined with a plan to reduce gas demand from heating: even with the return of Rough Storage, importing so much gas leaves us exposed to fossil prices.
And sorting the economics of electrification technologies like EVs, heat pumps, and batteries, and allowing them to participate in a smarter, flexible energy market, would help the private sector offer financing, new tariffs, and support to customers.
This means we have suppliers offering free electricity days now, but it also reduces the cost to the public purse of scaling new products. I have long believed that the energy suppliers and companies offering innovation on the demand side can help us reduce bills with new technologies and reduce emissions.
The cheapest energy is the energy you don’t use. We agree with that. But even in the most efficient, smart, system forecasts, we know must build a lot of stuff, fast. This is the next big challenge ahead.
Infrastructure
By 2030, National Grid estimates that five times as many pylons and underground lines need to be constructed than in the past 30 years.
Although Chris Stark in Mission Control has tasked the (now finally legislated!) National Energy Systems Operator to model what a 2030 Clean Power system would look like, let’s assume it will need a lot more generation (Fintan Slye is speaking to us later).
The recent CfD auction commissioned around 5GW of new offshore wind capacity and more than 4GW of other renewables, including a record for solar. This is exciting, but we will need even more coming from the next auctions, as well as decisions on technologies to decarbonise gas, new nuclear, storage and so on.
The last time we did a power upgrade of this scale, there were Government information films on Pathe newsreels in every cinema, and adverts in Country Life magazine about why the CEGB was building pylons through England to allow Welsh farmers to get electricity.
Public attitudes
Now, as then, there will be a need to talk honestly with the public, even though they broadly support climate action.
We know we need to demonstrate the tangible benefits of the infrastructure we are building, and make sure host communities get something in return too. But there will also be times where Government will make tough choices between local and national interests (Although, I never thought I would see a “YIMBY” interest group for backbench MPs, but there is one: 2024, everyone).
So, we welcomed the Chancellor talking about planning reform, just 72 hours into Government, and we welcomed the Secretary of State boldly authorising new solar farms and allowing onshore wind into planning.
This new Government has wasted no time in stressing how central clean energy is to its ambitions, but meeting these aspirations relies on bold choices and critical decisions being made today – and going beyond just power generation, to heat, transport and other areas of the economy . It means industry delivering an energy transition that delivers tangible benefits for people across the country.
We have just 60 months if you’re aiming for 2030, or 100 quarters to reach Net Zero in 2050. We cannot get this done without planning reform, or rapid grid connections.
Mission Possible
If all this – the look back, the look forward, leaves you feeling overwhelmed, then you should know that we titled the work we did in the pre-election period “Mission Possible”. You cannot cure our sector of our optimism.
Through all the turmoil, the sector has remained clear about the moral imperative of tackling climate change, but also of the economic opportunity for our industry:
Oxford Economics performed some analysis for us last year which suggested a more ambitious pathway to Net Zero compared to current policies could result in an economy 6.4% (£240 billion) larger by 2050.
Around two-thirds of the capital needed for the energy transition will come from the private sector, and public investment into new energy technologies in the past has given more back: the Green Investment Bank saw more than £3 invested by the private sector for every £1 of Government spending.
But when energy underpins the economy, the energy sector must work with Government: this is a partnership, where regulation and policy help deliver outcomes for the economy or society faster than the market otherwise will, and where private capital and innovation gives us the pace we need.
Finally. You should not doubt that a lot can happen in five years. When I took this job, my oldest child was a babe in my arms, and she just started school. She will be the age I was when she was born in 2050 – my tiny human alarm clock for how much things change, and how much we must still do.
I’m excited to be here again today, and it is a privelege to work with the hopeful and inspriring people in this room. At Energy UK, we know our strength is our membership. If you are one of the companies who are considering membership, I’d encourage you to talk to us today about joining our powerful network.
If you are interested in helping us build that network to be fit for the future, then I’d also encourage you to join the Young Energy Professionals network and get involved in our work with other bodies on EDI and skills.
Just over a decade ago, coal was responsible for around 40% of electricity generation and in just a few weeks, we will close the final coal-fired power station in this country at Radcliffe. I once campaigned for coal phase-out and let me tell you that this industry has achieved things that we ourselves said were impossible.
We called our case for this new Government Mission Possible because we believe we can do the impossible, once again. Or at least, it’s worth a bloody good try.
On that note – and what a note – I would like to welcome the new Secretary of State, Ed Miliband MP, to tell us what the Government plans to do next.