In conversation with.... Tom bean, ESB

The challenges of utilities and energy retailers to become more customer led, and develop compelling products and services for customers, is one of the biggest in the energy transition. In this episode, Jon Slowe talks to Tom Bean from the Irish utility ESB, where he’s responsible for innovation and new products for their customer-facing businesses.

Episode transcript

[00:00:01.850] - Jon

Hello and welcome to the Episode. Today I'm talking with Tom Bean from the Irish utility ESB. Tom is responsible for innovation and new products for ESB's customer facing businesses. Now, as regular listeners will know, I think the challenge for utilities and energy retailers to become more customer led, to develop compelling products and services customers, this is one of the biggest challenges of the energy transition. So I'm really excited to be talking with Tom today to explore how ESB is rising to these challenges. Hello, Tom.

 

[00:00:37.930] - Tom

Hello, Jon. How are you? Good to meet you.

 

[00:00:40.750] - Jon

Thanks for joining. Tom, for our listeners that don't know ESB, can you start by giving us a few facts and figures about ESB and maybe focusing on your customer facing business?

 

[00:00:52.470] - Tom

Sure. So we're effectively the state utility formed in 1927. So we're nearly coming up on 100 years and we've got about 30% share of the generation market here. In the mid 1930s, we owned the distribution, the ESB Group owned the distribution network, owned the transmission network operated by EirGrid. And the customer solution business has about 1.2 million customers, about a million residential and a couple of hundred thousand business. We're the largest utility in Ireland. We've been going for nearly 100 years and we've recently launched a really exciting new strategy which hopefully we'll get to talk about.

 

[00:01:34.270] - Jon

Okay, well, give us the title of the strategy to tempt our listeners into here.

 

[00:01:39.390] - Tom

The title of the strategy is just fantastic and if you wanted to work in an organisation that had it, it's net zero by 2040. So our objective is to try and get all our generation fleet to net zero by 2040. Now, that's such a huge task and such an ambitious task. And really, if you look at what's happening across the globe, it's ten years ahead of where lots of other people are trying to get to. So we're excited about that. I think the whole organisation is really fired up internally about getting it done and, yeah, me, I'm just lucky, I have a super job and I hopefully play an important part in getting to that target.

 

[00:02:45.990] - Jon

So, Tom, your role in this, your formal job title, is Director, Innovations and New Products for your customer facing businesses. Put the formal job title to one side. Tell us a bit about your role in this mission that you just described.

 

[00:03:02.730] - Tom

Yes, so I'm not a big fan of titles and that's more of a kind of a working title I use to try and describe to the outside world, what I do, but really, what do I do? What is my job and what do I see it. So my role, I guess, is kind of the three E’s as I see it, really, I've got to try and engage people around the challenges we have around getting to zero and to carbon neutral. So that's a huge bit around both engaging our internal people and our customers, our internal staff and our stakeholders. So that's really one of the first three E’s that engage. The other bit is educate. So what we really want to do is educate, both internally and externally. I go to dinner parties and when I worked at Vodafone years ago, I went to the table and we were talking telecoms and people were telling me things would never happen. And of course it exceeded my imagination. On Saturday night, it was a huddle around heat pumps and I was having it and my wife kind of going, oh, my God, somebody's asked them the wrong question…..

 

It's time to get out, the babysitter will be on the clock. No, but on a serious note, I think we have a huge amount to do to educate. The utilities have a real responsibility to educate, what it really means to get to net zero and what it means for people. And then the final thing that I spend my time doing kind of internally is the enable. So providing products and services that are moving us to net zero and providing not just technical, but financial products as well, and connected products to get there. So those three E’s are the things that I focus around, which is that engagement, the education fit and the enablement.

 

[00:04:53.090] - Jon

Can I come up with that mission for a second? So you said decarbonize ESB's generation fleet entirely by 2040. Now, the energy transition, as you know, involves both big assets on the utility side of the meter, but a huge transformation on the customer side of the meter as well. On heat pump, on homes, on solar panels, on roofs and so on energy efficiency. So what? Weight within ESB? Is the majority of the focus very much on your own assets and generation? How much maybe ask the question another way. How much focus is on enabling customers and working with customers to decarbonize their homes, their businesses, to get those assets behind the meter?

 

[00:05:36.670] - Tom

Yes. So we've been on this journey for quite some time in terms of trying to electrification. So I see this decade, actually, I think it's going to be the two decades of the electrification of everything. Clearly, if our assets and our generation assets, and that's just not our own, but the entire systems generation assets don't all get to net zero, then we're not accelerating fast enough. So that is a precursor, although not the responsibility, of the bit of the business I work in. What we're trying to do really is just, I guess, electrify as best we can people's lifestyle. Two big axes that we look on is the electrification of transport and the electrification of heat. You know, the average home in Ireland uses 11,000 kilowatts of heat and it uses about just under 4000 kilowatts of electricity. So the huge prize here is heat. It's a massive prize and we really, really need to electrify it. And the way we see that happening primarily is around heat pumps and people obviously being energy efficient in their homes, because if we don't kind of shore up the holes in the homes, it doesn't matter how much energy you combat, it's still going to come out.

 

[00:06:50.210] - Tom

And we need people to live in warm, comfortable homes. So our focus is on educating people. Right now, I think we're in the educated, the education phase, engage phase, I think, has got there. Certainly the recent crisis has accelerated that because there's a cost implication. But I think we've now come into a really good, you know, a Goldilocks spot where we've really arrived at a place where I think people believe it's the right time now to start making changes. And I think we're starting to see that happen.

 

[00:07:17.690] - Jon

Well, I was going to ask you, Tom, in terms of the market for electrifying customers, help customers heat their homes, their transport makes them more efficient. Whether how much you see this is a pull market or a push market, and I guess that depends on that spectrum of engage, educate, enable. So is it more push, is it more pull, do you think, in those dimensions?

 

[00:07:43.810] - Tom

Well, based on the dinner party on Saturday night, it's very close to vertical uphill, and it's a push because people are still actually nervous about heat pumps. I don't know what it is, but once the story gets out about heat pump not working or it was installed incorrectly or wouldn't heat your home, I think a lot of people get very, very nervous. And clearly we need to make sure that we address that. So I think let's just call, just let's focus just on heat. I think there's still a huge challenge and this huge, that education piece to do around heat pumps. I have a heat pump in my house for the last eight years. It works really well. I actually feel really good that I don't use gas, even though our electricity network is still at about 400 grammes per kilowatt hour. So we still do have a grid that that needs to be reduced. But that's, that's actually down from, you know, over 1000 when you go back to 1990. So where, yeah, we really are making this difference. And, and so I think this market right now still remains a real, real push market.

 

[00:08:44.250] - Tom

I think government incentives are good. They're focusing us on that. There are really great grants in Ireland for putting in heat pumps. So I think we're getting there. But I would say if you ask me, push or pull it's easily push.

 

[00:08:58.150] - Jon

Yeah. Okay, would you respond to that then? Because you're a retail business you've got to make things stack up commercially. Yes, you might have a mission but you're still bottom line counts. So how do you square having if you are purely money driven, you might look at a vertical push market and walk away from it but that's not your mission. So how do you attack that while remaining competitive in the retail market and while making things stack up on the bottom line?

 

[00:09:31.620] - Tom

Yes, so we try to put our customers and think customer first in all the things that we do and how does this all square up really? So we've tried a couple of things, let's say on solar where we've actually financed the solar installation. So we've done it ourselves where we've basically said to customers put a solar panels, put two, three kilowatt, four kilowatt solar panels on your roof, pay 20% upfront and then pay the balance over 36 months. That has been really successful. Now we're in the process of looking at it and we think that will work for heat pumps as well. I mean, it's just the finance. But where we need to go is that that's not where we want to deploy at a group level. Our capital. Not saying we won't spend some, but we really want to deploy it at other things. More commercial side of things, in terms of going more digitised and certainly at a group level, in terms of building out a grid network and building out our generation plant. So that's the deployment of capital that we see happening there. What we now need to do is, and I think this enables it hugely, is finance.

 

[00:10:37.700] - Tom

It's going to be all about finance. And where I see that coming really important is a great report, Canadian report by Willis Towers Watson, whatever they're whatever they're called now, excuse me the name. But the basically simple thing they were saying that, you know, it's 25, 27 times more effective to direct your pension towards green investments than it is to stop flying, go vegan, watch out how you use water. So we can focus on the wrong things here. If we think about the finance business a little bit and I'm just kind of wandering off a little bit there in the pension funds but if you look at what's going to happen with the market, the banks will have ESG initiatives and they want to, I guess, decarbonize or green their loan books. And a fantastic place to start is to start with the heating in a home. It's got to be the number one place. And so we're in discussion with some of the banks in Ireland around about how do we finance this, so how do we make this work now? It's a hard conversation when prices of energy are going up, we have inflation going up, people's mortgages are going up, price of food is going up.

 

[00:11:46.180] - Tom

So we're kind of in a tricky, hard place for massive adoption, Especially when people are talking about spending tens of thousands of pounds or even £5000. So I think we we're trying to get ready. We're trying to get ready so when the pressure comes off a little bit, and so when the prices hopefully start to drop a bit, when inflation comes back, that we'll be ready with the right products and propositions for our customers to actually be able to decarbonize themselves.

 

[00:12:14.330] - Jon

You've still got to turn it into a compelling proposition for customers there, haven't you? Because the finance removes that upfront barrier. But that dinner party story you recounted around heat pumps, and oh - I'm not sure about that first of all, heating can be a distressed purchase. People try and do it at the lowest possible upfront cost. They want to do something quick, risk free or minimise what they perceive as the risks. So how - does that come back to the educate part of the three E's that you talked about at the beginning? Can you give us a flavour for some of the things you're doing to help make this less of a push at the moment?

 

[00:13:04.970] - Tom

I guess one of the things we're doing, I guess, is that finance bit, so that does help with the process. I think there's somewhere in the region about 300,000, 400,000 heat pump ready homes in Ireland. In other words, what we measure them is a thing called heat loss indicator, which says if you put a heat pump in, your house doesn't lose so much heat that the heat pump won't work. Because without becoming the engineer here on the call, it's all about a system that's your house and what you're trying to do to heat it is you have to put in energy faster than the house loses it. The most important thing to do is energy efficiency. Really, that's where you have to start. And we have another side of our business, in our retail side, where we've teamed up, we've kind of, I guess, invested in an organisation that was already doing this. So we've got Electric Ireland super homes, and what we do is we do full retrofits, so that is external insulation, attic insulation, heat pump and whatever the customer needs. So that is one way to go about doing it. But we could only do so many we're not builders, where I think we play a very important role, and that's for us to work through as well, is policy.

 

[00:14:19.090] - Tom

We need to stop installing gas boilers. No new homes. I don't know what sure what the date is with the cut off of gas boilers in Ireland, but we should not be putting in gas boilers. We definitely shouldn't be putting in oil boilers. And I think that the key here is really that education piece, is because I think once people realise we come up with this phrase get on the curve. In other words, we have a decarbonization curve. It is going to zero or it'll be going as close to zero as you can. There's going to be some niggly gas there that will be very difficult to displace at the end. Hydrogen is the hero here. So I think once we communicate clearly to customers, I think the early adopters will basically say, I've done it. Like I put in solar 15, 16 years ago when it costs about five times, four times more than it does now. But you see a lot of people say, oh, that's really good, and oh, I'm going to do it. I've got some spare cash and I'll do it. What you're going to see hopefully over the next while I'm going to experience at dinner parties, I'm not going to be the only side of the table for a heat pump.

 

[00:15:17.820] - Tom

I'm going to have one of my friends and they'll be saying, do you know what? I put in a heat pump as well. And you know what, maybe right now it's the same price or it's a little bit less or whatever it is. But I really feel good that I'm on a decarbonization journey and I think that is going to become the lingua franca way more around. The early adopters will actually talk less about cost and more about decarbonization. We're trying to get into the era of people. So one of the big things that we're doing is we're redirecting our brand to those messages. So our brand communications on the bill of communications, email communications around about this transition that we're going through and why people need to be part of it. And that's very exciting for us to be involved in.

 

[00:16:01.810] - Jon

You said at the beginning you're engaging, educating, and enabling or doing part of those things with your own teams, internally as well as externally. If I wind the clock back, I remember actually first conversation doing some work with one of your ex colleagues at ESB on heat pumps several years ago. And that was, I think, the beginning of ESB's learning curve on heat pumps. So if go back to seven or eight years ago, heat was probably not something that was talked about at all at ESB. How much work do you still need to do internally to build the capacity, the knowledge, the enthusiasm, the motivation around decarbonizing heat in customer zones?

 

[00:16:48.290] - Tom

Lots. I think we still have to do lots, and I think that will be the same for any utility to answer. I think we'll always have lots to do, by the way. I don't think we'll ever not have that. But I do think that we have to educate everybody. We have to educate our salespeople, we have to educate our marketing people, our finance people, our HR people. So we have to educate. So when we're trying to recruit somebody in and somebody got heat pump experience, we have to be able to say the reason we want to bring them in is the future. Same for business cases, as you said. How do you put business cases together when you're trying to be commercial and you might lose money? Some of the early business cases might not have the same return on investment or harder rates that we had in the past for different products, but we have to go there. And are we going to be the early adopters? Yes, we probably are. Are we going to be at the bleeding edge? Well, we're going to be probably pretty close to it, but you can't set yourself a really exciting, demanding, stretching target of getting to net zero and not have a little bit of pain on the front edge.

 

[00:17:53.910] - Tom

I think we're going to do it. I think there is still a lot of internal and I think the pushback has gone away. Nobody's kind of saying Tom stop talking about heat pumps as an example, but people are saying, how can we help you? What do you need? What does it look like from an IT system point of view? Obviously we've got over a million smart meters in Ireland and we're launching tariffs on the back of those to allow for top ups to maybe aim to ask electric vehicles at the moment. But you can see that a heat pump is probably the best way to dispatch curtailed wind if you had a chance, including charging up a car, we can go down that flexibility route and that brings in another whole load of other discussions. But I think we have a lot of work to do. I don't anticipate this being easy. This is not going to be excuse me, Jon, this is not going to be like it was back on Vodafone in the late 90s, 2000s where you just couldn't get enough Nokia phones to sell. It's not that type of sale.

 

[00:18:55.170] - Tom

This is long, hard, inter-decade challenge that we need to kind of address.

 

[00:19:00.380] - Jon

So I've got two follow up points I'd like to discuss. Tom on that. One is I take your point that you always need to educate. Education will never stop. But if they think simplistically on a one to ten scale, where ten is you’ve fully educated ESB around heat, heat pumps, it's part of your DNA, it's part of what everyone thinks about. One is you're at the very beginning of that journey and no one knows what a heat pump is. Heat? Why are we talking about heat? Where would you say you are on that one to ten scale at the moment?

 

[00:19:30.460] - Tom

I think we're six, seven, eight, maybe six, seven. I think we're well up there. I mean, as part of our group strategy, we called out that we would connect 1 million heat pumps and 1 million heat pumps and electric vehicles to the grid. That's our grid company.

 

[00:19:45.930] - Jon

They're not all from your retail business, but a big chunk of them will be.

 

[00:19:49.530] - Tom

Yeah, half them in theory or something around that will be from half it. And what we're really trying to work out now is exactly what do we do? So is our capital best deployed in installing heat pumps? Is our capital best deployed educating and putting incentives in place? Or is it best like just tariffs, where we say it makes complete sense for you to use electricity to heat your home and clearly using a heat pump? We're working through this. We don't have the answers.

 

[00:20:21.550] - Jon

Okay?

 

[00:20:22.410] - Tom

But we know where we're going, which is, I think, important.

 

[00:20:25.300] - Jon

And when you've got a challenge that is, as you described, really hard, it's going to take several years, the product is not going to fly off the shelf like a Nokia mobile phone. The leadership at the top of the organisation needs to be committed and maintain that commitment and to get through the pain points, being on the bleeding edge, to be resilient around that commitment. Now, some of your leadership colleagues might be listening, but characterising Tom, would you say you have that in ESB? When did that happen? Or is that a journey the leadership team is on?

 

[00:21:01.970] - Tom

So I think we have always, just by our very DNA and our very nature, have been an integral part of our society. I mean, we were the first to bring electricity to Ireland and to do rural electrification, so our DNA is very, very strong and our DNA around how we impact society is very, very strong. Prior to the current CEO, we had a CEO called Pat O'Doherty and he really started this ball rolling with a vengeance and did a fantastic job of communicating to us as staff and to the wider staff around the importance of the journey that we were on to deliver, I guess, carbon free electricity. And Paddy Hayes, who's our new CEO, was in about a year and he's taking this on and the net zero strategy has come out of that and it's unambiguous to every staff member, what our strategy is. Nobody who doesn't know what it is. I think that's leadership. I think leadership is the ability to communicate clearly the strategy of the business. That's really important. It is how do you implement it, and through the systems and the processes and everything that we do. And I think we're on a journey, so we're signing up to science based targets.

 

[00:22:22.570] - Tom

So that whole scope one, scope two, scope three. Now, without going into all of that, because I think that's probably another podcast, we're signed up to this and what we're trying to say is, okay, let's take the number, let's figure out what we need to do in terms of our emissions. Both the stuff that we burn ourselves. We obviously scope two emissions for a lot of people because we sell the electricity, but also the downstream stuff, how our products are used. So I think there's a real commitment. Certainly you're going to see our sustainability report becomes an ESB report. So we're not just focused yes, we're focused on the environment and energy. That's our core business. But we've got this DNA around this social responsibility that we have. We've always had really good governance processes. We've been very strong on all those things. I say to people, this is an incredible place to work. This is in a place with a fantastic mission, in a sector that's absolutely hopping. The electrification of everything is going to go on for two decades. This is a great place to work and I'm personally really excited about it.

 

[00:23:26.360] - Tom

And I think it's my role to excite the people around me and I think it's their role to excite all the people who work for them. I see that as a key part of my job, is to be relentless in this education internally and creating a buzz about it, because it is.

 

[00:23:42.470] - Jon

I think it's tremendously exciting. I think you couldn't think of a better cause to be striving towards, in my view. And the mix of challenges. You've got the financial challenge that you talk about, how do you finance heat pumps, for example? You've got behavioural science aspects to this, you've got proposition development, so you've got the technology around it, you've got the whole mix of disciplines. Now, you talked about having the commitment of the organisation, but figuring out how you break this column down, not where you start because you’ve started, but where you focus in terms of understanding what will make this as much like a Nokia or mobile phone. Using that analogy that you talked about earlier as possible, how to get customers leaning forward and going, I really want one of them, or that sounds like a fantastic proposition. What keeps you awake at night most about that? Or how worried are you, in fact, about getting from a push market towards more of a pull market?

 

[00:25:05.790] - Tom

Yes. So what keeps you awake at night? I want to tell you what kept me awake last night was that I was wondering, had I packed everything for my skiing trip that I'm going on? But as I reflected on that, even today, I thought to myself, my God, I'm taking a flight, how the slopes are doing. So I've got this awareness going on on myself, thinking, gosh, is this the right thing to do? And who knows? Look, that's maybe a bit more philosophical question, but what really kind of I've got a really curious mind, so there's a couple of things that keep me awake at night. The first thing right now is I'm really thinking about how do I use Chat GPT, open AI to maximise the output for my team and our communications or documentation or research or whatever it is, to bring it to our business. That's really exciting. That's really exciting. So I'm just really looking forward to that and how we could use it. I'm always thinking about complex, how do we take the complex and turn it into simple. Like the heat pump is insulate your home and what does all that mean?

 

[00:26:14.620] - Tom

And people talk about you values and heat loss indicators and there's BER ratings. It's all very complicated.

 

[00:26:20.470] - Jon

It's an engineer's language at the moment. And it needs to be an everyday consumer language.

 

[00:26:27.360] - Tom

Yeah, exactly. And I think the language that we're going to talk about is carbon. I think we're going to say, what's our carbon footprint? And I think we're going to start what's our home's carbon footprint and how are we going to impact or change that? I think that's the language we're going to start using. That's something that keeps me, that's what keeps me kind of awake. Okay. The other one that really keeps awake was the start I heard recently, which is 94% of all energy heating energy in Ireland comes from fossil fuels. 94%. If you take out biogas, it goes higher. So we've got this huge opportunity. Yes, you might say a challenge, but like, we have to change all this, so we have got to get these heat pumps in. We have a climate action plan that says we'll put in 400 retrofitted homes with heat pumps. The climate action plan is a state plan, 400,000 retrofitted heat pumps by 2030 and all new homes will have heat pumps. That's really driving us that way. So I re worry about that. And then global was what keeps me awake at night, you know, so I'm it's now about 02:00 a.m. I still awake and I haven't, I haven't solved my first two problems and I'm still thinking about ideas and I'm I'm writing down notes about how, you know, what questions I could ask a chat GPT.

 

[00:27:42.230] - Tom

And I think is the scale of this challenge is sometimes daunting. We've one coal power station in, in Ireland. China's over 1000. The world is over 6000 and they're still going. How do we solve this at a global policy levels? That does keep me awake at night.

 

[00:27:59.260] - Jon

Yeah, that keeps me awake at night as well, Tom.

 

[00:28:03.440] - Tom

Yeah. And China's 2060, India, 2070. And how do you do the just transition for the African countries that, you know, have already got going?

 

[00:28:12.120] - Jon

And but what focuses my mind is if we in countries like here we are in Europe, you're in Ireland, I'm in the UK. A lot of our listeners in continental Europe, if we can't make this work in relatively affluent countries with the right policy support, with customers that are pretty engaged in decarbonisation. So in a way, we have a duty to make this work, to show that leadership.

 

[00:28:41.910] - Tom

But can I just say something on this? And I think just talking about the African countries, what we saw happened in, in Telecoms is that they jumped over the fixed line. Yeah. You know, they, they went straight to Mobile, you know, and, you know, Africa, I think the number is, is it 40, 50, 60%? Of all the global renewable energy, mainly solar, hits the continent of Africa, yet 1% of the renewable investment has happened there. So that just is wrong. And so I think how do we change the financial, like at a policy level, a big policy level, how do we change financial institutions? So the redirect of capital, the trillions of pounds are in the pension funds. How are they actually spent in Africa getting them economically viable? Because there's a direct correlation between electricity usage and GDP. So we know that if we deliver if we deliver electricity, we get GDP growth. Same for Ireland. We deliver electricity, we get GDP growth. Okay? So we need to figure out a way joining those two up. And that's beyond the remit of my role in our customer solutions business. But it's certainly something that I think the debate needs to accelerate on.

 

[00:29:47.180] - Jon

Agree. I think that hopefully it's keeping a lot of people awake at night and working hard to find ways forward with that. Coming back to what you said about making things simple for customers, the AI and the amount, the 94% stat that you threw out, I agree. I think a huge amount of this is about engaging it's the first E that you talked about engaging customers. I think I genuinely think, and our research backs this up, that most people want to do the right thing, they want to decarbonize and the level of understanding of both the people's current situation, that it's not all about electricity, it's about electric consumption at the moment. It's about heating. It's about those heating fuels and what the options are. Taking the technology out of it, making it simple. I think that's where, as the energy industry, we've got still got a huge amount of work to do because too many of us come at this from a technological engineering point of view within ESB. What's your view of that balance? Are you still quite technology led? Are you on that journey? Have you got your behavioural science, your marketers, fully focused on this, or is that something you'd like to do more of?

 

[00:31:11.110] - Tom

Yes, I think we have to do more on that. I think behavioural economics is going to play a huge role in it. And I tell you a little story about just me. So I have solar on my house. I've got a heat pump, so obviously I'm the bore in the corner at dinner parties. But I also had a Leaf and I remember charging it up. And then I play golf as well. And I was driving my Leaf down to the car, to the golf club, and I was able to say to somebody, you know, I charge this up on solar power. This car is driving on solar energy. And it really made everybody think, just the fact that I said that this was solar powered. And then here's a really interesting thing that I did. I came back, the sun was shining. Okay. And I plugged my car in again. Now, I knew that the draw on the power from my house into the car was going to be greater than the solar panels in the roof, so I would have had to import from the grid and pay extra for it. Or I could leave it to night-time and use night rate electricity, which would have been cheaper.

 

[00:32:09.090] - Tom

But emotionally, I felt this change inside me and I really was personal where I said, no, I want to use the solar, I want to put the solar into my car and I don't mind if I pay a bit more. I think if we can tap into that psyche that I mentioned before, it'll be early adopters. I think that could be really exciting. The other bit that we've just done some work on, and it's really interesting to look at it is oil versus a heat pump. So let's say a typical bungalow in Ireland, somebody out in the countryside on oil today, if they use their oil, they create about four tonnes of carbon. And if you look at a heat pump today, it's about 1.7 tonnes of carbon. Okay? So that's four and 1.7. If you go out 20 years, that four tonnes of carbon stays the same. The boilers might get a little bit more efficient or whatever, but not much. A heat pump goes down to 0.2, so it goes from 1.7 down to 0.2. So 20 years out the curve, you're looking at four versus 0.2. It's so big. But do the integration, add it all up.

 

[00:33:12.850] - Tom

Okay, do it all up. Over 20 years, that's 78 tonnes of carbon and 14 tonnes from electricity from a heat pump. And I think they're the messages. And at the same time, you're actually going to save money.

 

[00:33:26.050] - Jon

You can always flip it, can't you, Tom? So if you flip it, does it become socially unacceptable to pump out those 78 tonnes of carbon instead of decarbonizing your home and putting in a heat pump?

 

[00:33:38.130] - Tom

Yeah, there's that boundary between socially unacceptable, uncomfortable and where we go. But if you look at the speed at which we need to go at, maybe there is a little bit of uncomfortableness that we need to make people feel. I wouldn't like to. I think if we make it socially unacceptable, we'll end up I don't think.

 

[00:34:00.190] - Jon

You got social unacceptability comes as a consequence of lots of positive marketing. It's not how you market, but it's a bit like, I don't know, I can't pick the right analogy right now, but I'm not suggesting we should set out with that message. I think by starting with a positive message, we may well reach a point where, why would you do that? Do you realise what you're doing? You get that type of discussion.

 

[00:34:26.700] - Tom

Yeah, and I think there's lots of ways to do this. There's direct marketing, there's training of our sales teams, there's putting messages on IVRs. There's a lot of little you can all the social media we have a lot of social media channels, and I think we need to do that just bit by bit. We need to try and convert. It is going to change rapidly. The grid is going to we're going to change our generation fleet from 400 grammes of carbon per kilowatt hour by 2040, down to 140 sorry, by 2030. Excuse me, down to 140 and zero by 2040. So this message, get on the curve. And it's all about electrification. It's about your heating and your transport. They're the two big ones that are really discretionary from a point of view in your home. And if we get those over the line, I think we're on it. I've got an electric vehicle, solar on my roof and a heat pump. If we could get everybody to do what I have, and I'm not holding myself up as the chosen one here, but if we could get everybody to go there, I think we would be in a really good place.

 

[00:35:25.880] - Tom

I think our networks colleagues need some time to catch up and build a network out of generation need to do it. But if we can say that's where we're going, there'd be another target after that. But at least, I think, try and shape this and say to people, live in a warm, comfortable home, have your house the right temperature at the right time, but knowing that it's cost efficient and it's low carbon. So there's a lot to do. And I think energy efficiency also, I said again, has a huge bit to play. We need to kind of block up the leaky houses.

 

[00:35:57.810] - Jon

Time’s getting the better of us…

 

[00:35:59.240] - Tom

Sorry, just one thing there, Jon. When I say block up the leaky houses, I don't mean with concrete blocks, I mean with insulation and energy efficiency, as opposed to put a barring order on the house.

 

[00:36:12.070] - Jon

Yeah, no, I know what you mean. So, Tom, we better bring out the talking new energy crystal ball out and move towards the end. So I want to set I think you've set a really good vision for 2040. I want to set it up to 2030 and maybe focusing in on the steepness of that push market that you talked about.

 

[00:36:34.590] - Tom

Yeah.

 

[00:36:34.980] - Jon

So by 2030, you talked about it earlier as a vertical push market today for heat pumps. How would you think you'll characterise that in 2030? Imagine we're in 2030. Now, how would you answer that question?

 

[00:36:49.330] - Tom

Yes, so, first of all, I don't think we'll install any more gas boilers or oil boilers. I think that's going to be critical. So where I'd love to see it under red heat is that people have managed to put solar on the roof. I think that's really critical for as many businesses as possible. And we've been involved in both residential and large scale solar with SES, we've put a large system in for Merck Sharp & Dohme behind the meter. I think driving around the countryside seeing solar panels on roofs, you'll see it in southern Germany because they've incentivized over ten years ago, you see all the solar. I think I'd love to see that. I think that what I'd love to say is if we could create a challenge for our networks colleagues so that there were so many heat pumps and even a challenge, I think there'll be a very quick challenge on the supply chain, not only for heat pumps, but for the plumbers and the installers. I think that's going to be a pinch point for us, because at the same time we're trying to build new houses, we're also trying to do retrofit, deep retrofits, but we're also trying to put in heat pumps.

 

[00:37:51.660] - Tom

There's only a certain amount of resources that we're going to be able to do that and I think that will become really critical. And I think government policy on education and training of trades will become a real critical part of the integrated policy for us to get to net zero.

 

[00:38:06.090] - Jon

So would you describe it 2030? Would you go as far as saying it's a pull market for heat pumps in or still a push market?

 

[00:38:12.830] - Tom

No, I think the pull market will kick in before then. Maybe 2027, as you say, it's a crystal ball. I think that's going to happen faster and I think the energy crisis has accelerated with the fact that people are having discussions around it. I mean, if you were an energy engineer five years ago, you were in the corner and not probably that engaged with anybody around heat pumps.

 

[00:38:42.430] - Jon

People say about the theory with tipping points is they always take longer to happen than people think, but when they happen, they happen a lot faster than people think. So maybe the late 20s will be that time for heat pumps.

 

[00:38:54.910] - Tom

Yeah, and I think if you look at some of the stuff, Tony Seba always had some good diagrams around horses in New York and then cars in New York, and it happens. I think we'll because of the physical challenge, so everybody says, oh, lobby, sort of by technology. And what they really often think about is, well, look at the speed at which Apple or any of these people grow. But this is heavy, hard work, this involves civil. This involves electrical, this involves..

 

[00:39:22.940] - Jon

Floorboard surface, all these things.

 

[00:39:25.030] - Tom

Yeah, if you look at Chat GPT, go back and say it one more time, it's kind of got ten users one day and 10 million the next day, and the service will work. It doesn't work like that in installing heavy engineering. So it's a long slog. But my prediction is this, is that I think we will be a little bit behind in 2030, where we'd like to be, but we'll be further ahead in 2040 than we think we could get to. Because I think that the time it takes that policy to kick in and the time it takes all those activities come in. We don't have six years now left or so, so I think that will be a little bit slower, but I think that curve will start to really accelerate. So by the time we hit 2040, I think we'll have achieved more than we thought we would. That's my prediction. I'm optimistic.

 

[00:40:11.810] - Jon

Tom, your optimism has shone through on this discussion, so we better draw a line there. Thanks so much for your time and it's been great to hear about the ESB's mission, the leadership commitment, your enthusiasm and how that's slowing down and permeating the whole organisation. As you say, a lot more to do, but the best of luck in continuing to drive that forward through your engagement, education and enabling. Thank you very much.

 

[00:40:38.460] - Tom

Yes, you're welcome. And thank you very much for asking me all the questions. As you can tell, I love talking about this stuff. I think it's really important. I think the final thing I would just say is we all have a role to play here. Don't leave it to somebody else. Don't think because there's problems in other parts of the world that we can't make a difference. I think we have to make a difference, and I think one of the key areas that we can make a difference is in education and encouraging our children and the next generation to really take up the mantle and drive this because they can change things faster than we can. Greta Thunberg has done a fantastic job on this stuff and I think we need that. So would encourage people to encourage their children to focus on this and do as much as they can.

 

[00:41:20.280] - Jon

Completely agree. Tom, thanks very much and thanks as always to everyone who listened to the episode. We hope you enjoyed it and some of the enthusiasm and the discussion has rubbed off on you around electrification as well. Thanks and look forward to welcoming you back to the next episode next week. Goodbye.