On the panel were:
- Javier Cavada, CEO Highview Energy
- Fintan Slye, director, UK systems operator, National Grid
- Humphrey Cadoux-Hudson, managing director, nuclear development, EDF Energy
- Tom Burke, chair E3G
Read edited summaries of each of the panellists’ opening statements here.
Following the opening statements, the audience, comprised of Prospect members, energy industry leaders, policy experts, academics and journalists, were invited to put some questions for the panel to consider.
Here is an edited transcript of the wide-ranging audience Q&A.
Q. Do we need to redefine cost for the long-term, and cost effectiveness? It’s not just the cost to the consumer.
Fintan Slye: We do need to think about cost in different way. One of the key things is to realistically price carbon into the decision. That could potentially be transformative but it is very difficult to implement in a public policy sense.
Humphrey Cadoux-Hudson: The biggest thing we can do today as a country is to agree on the technologies that can get us down to zero-carbon, or very low level, and to start building the asset base that can get us there. The idea that we can go by step, by step, by step is an erroneous idea.
Tom Burke: There’s a real danger that we need ‘all of the above’. The problem if we try a bit of everything is that we don’t do enough of any of them. We’ve got to make some choices. Yes, there will be some risks in those choices. It’s a risk management question rather than economic. I make a point about energy services, not energy commodities. One day you’ll pay for access to the service, like Netflix, not the volume you’re using. That will need completely different regulation.
Fintan Slye: On the Netflix model, it might happen in two stages. We’re thinking about how we’re charging the networks and it runs a real risk of of it being socially unjust. So in the first instance we’re thinking of charging the networks differently and I do agree that over time we’ll move to energy being charged as a service, not a commodity. Maybe more akin to how data is charged on mobile networks than Netflix. We’re moving away from the vast majority of energy on the system being supplied by generators with marginal cost curves to a huge proportion of it being generated with zero variable costs.
Q. Is energy policy still running behind the technology?
Humphrey Cadoux-Hudson: It’s very important that we create cross-party support for whatever we do. Thinking back to my time getting Hinckley Point off the ground, I can count 13 secretaries of state, four UK governments and then presidents of France and presidents of China. Through all that we had consistent policy, but I don’t feel that at the moment. We need to help both of the main parties to have a joined up view of the future so that we can have a stable basis to finance innovation.
Javier Cavada: Nobody regulated to make Netflix or uBer to happen. We’re in a huge emergency around global warming but policy moves slowly. Current assets have lives of 20-30 years, so it’s difficult to make changes overnight and to replace them with renewables so fast. Communities need to survive these radical changes too. Innovation should be at the forefront and we need sense of urgency. This is a global crisis.
Tom Burke: In terms of the policy-technology interface, all the players: investors, consumers, businesses, environmentalists should all be able to see their point of view inside a framework. That’s why I propose a national, public wiki. It’ll be completely transparent and make their judgements on the basis of a very technical public debate, rather than asking, ‘Who do I trust?’ Largely, the media headlines are uniformed and irresponsible. Brexit has collapsed the political parties. The idea that you’re going to get cross-party consensus seems very optimistic.
Q. Is Ofgem a hindrance to zero carbon?
Fintan Slye: Ofgem have done a good job to date in terms of regulations to meet the market. I think though it is coming under strain. The scale and pace of change in the industry that will enable the innovation we need is increasing. We need Ofgem to step up and realise that, particularly around the business model innovation that I talked about earlier.
Tom Burke: We need to remember that Ofgem operates inside a mandate given to it by government. The approach they’ve been asked to take is the problem. We’re learning that there’s going to be lots of technology and innovation, and the regulator will need to learn as well. It’s very difficult because you want your regulator to be consistent, but you also want them to be able to adapt, as different business models are starting to be introduced as we discussed earlier.
Humphrey Cadoux-Hudson: We’re talking hundreds of billions worth of investment. When we think about what needs to be done, we need a long-term vision but also a stability of the institutions. The element of risk is really important. An organisation like Ofgem, we’re very reliant on it to deliver sensible decision-making over a long period of time to help inform the people who put money into the assets. Consumers already take a high burden and the consensus for low carbon will be destroyed if we create an asset that is too expensive for customers to consume.
Q. What’s the role of local devolved governments?
Tom Burke: I couldn’t agree more about the importance of cities. We need to get the heat load down a lot. It’s really possible to do and we can do it much more cheaply than anything else. Cities can play a real active role in that. It’s more than just lofts in houses, it’ll vary from place to place. Try different things in different cities and see what works and what can be replicated elsewhere. It’s difficult to experiment on a national scale but it can be done locally. There’s lots of potential out there.
Fintan Slye: There’s no way we’re going to make this energy transition unless we bring people with us. That needs local and regional administrations and national governments all lined up. Days of mandating it from on high are gone. This is a big learning for system operators who used to live in our ivory tower and just decree what was right. Cities are increasingly a key determinant in whether we’ll succeed in tackling climate change.
Q. We haven’t talked much about demand today? Isn’t supply the easy bit, but demand the difficult bit?
Fintan Slye: I agree we need to better work out how we enable demand to be a better participant in the energy market. Consumers won’t do it if it is tricky or difficult. They won’t wake up in the middle of the night to turn their dishwasher on, just because it’s cheaper. We need to make it easy for them, or for new business models to emerge that will make it easier. It also needs to be joined up: we also need to solve heat and solve transport.
Javier Cavada: Yes, supply is the easy part. Look at where we are: trying to decarbonise and bring innovation. The speed of change is increasing. We need to create competition, which will create innovation. The last three years we have decentralised the supply but we still need to be closer to the demand. We also need to decentralise the policy-making. We need to enable cities and consumers to decide and to challenge policy-makers.
Q. There seems to be strong public support for renationalising the energy sector. Will that help or hinder 100% renewables?
Tom Burke: The public is right to distrust the energy industry. But is that solved by the question of ownership? I don’t think the nationalisation issue is as important as the other issues we’ve discussed today.
Humphrey Cadoux-Hudson: I’m very proud of the impact we’re having on jobs in the UK and the south west through Hinkley Point C. We’ve made an enormous effort through the UK supply chain and in training and I think it’s having a real impact. For me that demonstrates the importance of building up regional economies.
Q. Many wind turbines are not made in the UK. How do we find the balance between generating clean electricity and generating jobs?
Javier Cavada: Definitely sustainability is not just about decarbonising. We are talking about moving from traditional sources of power to new sources of power – they are much less labour intensive. They can be totally unmanned. That is a big challenge, not just here but for every country. Clean energy also means new jobs with totally new qualifications. It’s new demands for schools and universities too. But at the same time it does create new challenges for the existing workers. I don’t have an answer. We need another panel to discuss the important issue of social fairness.
Humphrey Cadoux-Hudson: The UK compromises by using regulation as a form of government control over private assets. All the businesses in this sector need to improve our service to consumers but we’re in a very controlled environment. In effect, our industry is controlled, as much as it needs to be, through public regulation and I think it’s a good balance that the country has come to. We need to concentrate on making it work better.
Fintan Slye: To address climate change and transform the energy sector we have to bring people and communities with us. Ownership isn’t the issue, it’s about trust. I think the high levels of innovation that are needed will be better addressed through private sector investment. We can’t just have an energy policy without a social policy. Everything needs to be joined up and deliver for communities – that includes jobs, security and affordability. Given the scale of change, there is an obligation to join up all those dots.