Sinking or swimming? First thoughts on the energy policies of the new UK Government

[00:00:04.520] - Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta. I'm Jon Slowe.

[00:00:09.250] - Sandra Trittin

And I'm Sandra Trittin. And together we are exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

[00:00:21.710] - Charmaine Coutinho

Hi, everyone, and welcome to today's podcast. Just so you know, I'm obviously not Jon Slowe. I'm Charmaine Coutinho. I lead our UK engagement in the energy market here at LCP Delta. And I'm standing in for Jon and for Sandra whilst both of them are taking a break for a few weeks. Technically, I look after the UK, but actually I'm always interested in the European energy transition. So, I'm really, really pleased to be hosting today and hopefully for another few podcasts in the future.

[00:00:51.770] - Charmaine Coutinho

Today we're having a fascinating episode which is poking around the UK's new government and its impact on the energy market. So, for our non-UK listeners, and we won't just talk about the UK today, the UK changed its government after about 14 years about two months ago. And energy was a central part of the pre-election campaigning and the flurry of announcements that came out after the new government was in place. We all know that in whatever country you're in, government really sets the policy, sets the agenda. Government policy really sets the agenda, and that's even more so. Certainly, I've noticed, when it comes to ambition on net zero, around decarbonisations on consumer bills, and especially with hard to decarbonise areas of the market as part of this, or added to this, there's really big infrastructure requirements that are happening, coming down the line, which means there's a real need to encourage investment into energy markets.

[00:01:42.260] - Charmaine Coutinho

And this is particularly challenging for the UK, for all countries, given that finance is effectively mobile, it's global and it can go anywhere it likes. So, today we're going to dig into a bit into these issues with a little bit of a UK focus that my colleagues on the call can kind of talk a little bit more widely. And there'll definitely be a discussion about how we can apply this to other markets, not least in how they make policy and how shifts in power can really impact what's going on in different energy markets. So, a little side note for those of you who are not familiar with the UK political environment, our government is now Labour government as of July, and it's supported by policymakers who work in the department called the Department of Energy and Net Zero, which you might find Josh, Sam and I occasionally drop into abbreviations and calling them DESNZ, which is not the most kind of memorable of abbreviations. And we also have regulators in Ofgem. So, we'll try and keep those abbreviations to a minimum. But just so you guys are aware of that. Okay. Without further ado, I will introduce our guest for today. We have Josh Buckland from Flint Global joining us today. Josh, I don't think everyone will be familiar with Flint and the work and the role that you do. So, if you give us a quick intro to yourself, that'd be great.

[00:02:55.280] - Josh Buckland

Yes. Thanks so much and good to be on today. Flint is a small policy and regulatory consultancy. We effectively help investors and corporates navigate the complex world of political environment, as well as also detailed policy and regulatory issues. We operate across the UK, but also Europe and the rest of the world, including a big focus on Asia. So, very keen to talk about the UK side. I lead our work on energy and sustainability as a company and have a focus, obviously, on the UK, but go further afield than that. Before joining Flint, I was in the UK government working on energy policy in the Prime Minister's office, in the Treasury Department, and latterly, the energy department that you used the horrible acronym for through the world as well. So, that's me.

[00:03:41.510] - Charmaine Coutinho

Great. Welcome. Thanks, Josh. Thanks for coming on. And Sam. Sam, I think some of you, my listeners, might be familiar with Sam, but I'll let himself. Let him introduce yourself.

[00:03:51.630] - Sam Hollister

Thank you very much, Charmaine, and pleasure to be here. Yes. So, I'm Sam Hollister. I head up the economics, policy and investment group within LCP Delta. We support clients understanding the policy and regulatory environment in the UK and Europe. And also, kind of lead on trying to attract further investment into the net zero transition. So, whether that's speaking to asset owners, fund managers, or developers or other market players. So, yep, very keen to get into the weeds of kind of what's been happening in UK energy policy in the last few months.

[00:04:26.280] - Charmaine Coutinho

Super. Yeah, and this is kind of unusual for us, actually, on Talking New Energy, we don't often go deep into policy. Usually comes up when we talk about technologies or start-ups or new markets. So, it's really nice to be able to kind of focus, really, on the kind of policy side as well. So, we're going to be looking at the first two months in the UK, in the energy sector, and some of the biggest challenges they face. And then we will, of course, get around to Jon Slowe's famous crystal ball. You can't wait for that bit. But that does signal the end of the podcast. We're not doing it now, so let's get started. Josh, my first question is for you, and it's really a what would be your first impressions of the government's kind of first two months and the announcement they've made in the energy space?

[00:05:08.240] - Josh Buckland

Well, I think it's interesting. Most of the first two months have been in the summer, which is usually a pretty quiet period in politics, especially in Europe. But it hasn't been the case with the UK government. They've been focused on getting the ball rolling, making an immediate progress, showing they're going to be a different sort of government. And within that, energy has been an absolutely central priority. It's been the kind of positive vision for what the UK can be, which is the kind of moniker that the government are using as a clean energy superpower. And that is what they are very keen for the UK to be positioned as. And that is, in the context, actually quite a negative political discussion in the UK around the fiscal situation, the economic climate. And the new government has been very careful to identify that with a failure of the previous government to resolve some long-standing issues. And so the kind of inheritance that they picked up from the previous government is negative. Are the clean energy pieces the positive vision that they will bring and try to unlock in a way that previous governments have failed to do so for anyone interested in energy, energy is absolutely atop of the agenda in a way.

[00:06:11.350] - Josh Buckland

It hasn't been in the UK for quite some time. And actually, it seems a little bit more like the European experience, where there was a big focus on the Green New deal, or in the US on the Inflation Reduction act. There is now a sudden focus on mobilising the UK as a clean energy leader. Again, that probably kind of flits into kind of three kind of key areas that they focused on in the first two months. Firstly, kind of setting up the UK and the UK apparatus to deliver. So, they've set up new organisations, they set up new individuals working across government on key areas of delivery and policy to all try and deal with some of the big blockers, to investment in clean energy infrastructure, whether they're planning, whether they are supply chain, whether they're skill orientated, and that's a real positive. And obviously, potentially, it deals with some of the issues that are holding projects back. Secondly, they've tried to focus on some quick wins. So, one of the things they've done, which I'm sure will be of interest to people, will be changing the planning rules around onshore wind, which obviously has been held back in England for quite some time, given political concern.

[00:07:10.950] - Josh Buckland

And that also reflects some changes that have happened elsewhere in Europe to try and facilitate more investment in onshore renewables. They've also made some changes to improving large scale projects that are in the pipeline waiting for clearance, which, again, is a real positive. And the final thing they've done, which I'm sure we'll get to in a little bit more detail, is start the process of setting up a new publicly owned energy company, what they call Great British Energy, which for people who are not from the UK, anything that you term Great British suddenly has a strong nationalistic kind of connotation. But it's not meant in that way. It's meant to be giving an identity that makes it a homegrown energy company, is the thesis. And the UK does not have, ever since the period of prioritisation, any real significant public ownership of the energy sector. This is the first reintroduction of that for quite some time. And they set up the process for moving that forward with the right legislation and the right frameworks. Only right at the beginning, to be clear, and I'm sure we can talk a little bit around what GB Energy might actually mean in practise, but that is probably the other key thing.

[00:08:14.640] - Josh Buckland

So, I think generally they started the process, and they started moving forward. Clean energy is a central theme, but obviously the real hard work starts now, when they actually turn to looks, how to deliver their targets and also how they make the most of the organisations they're setting up.

[00:08:28.160] - Charmaine Coutinho

Yeah. So, it's an interesting one, a bit of kind of sweeping out the old, bringing in the new structures. And it's interesting you talk about the kind of Great British Energy as the kind of first foray into some sort of energy ownership since privatisation, because obviously that's completely right. And I remember looking at when. So, the UK has a price cap on tariffs, for those of you not familiar, and it's been around for a while, and that kind of was triggered by a politician wanting to help manage consumer bills, but it was seen at the time by many people as a real interference into the liberalised market dynamics. So, seeing how great residential gets received on, hopefully not on the retail side, will be interesting. Sam, anything to add on kind of big announcements or anything that Josh has said that you kind of want to build on?

[00:09:14.680] - Sam Hollister

No, I think I agree with Josh that the kind of the clean energy superpower was quite clear throughout the campaigning ahead of the general election and certainly some of the immediate actions that have taken place. One of the things that's particularly interesting is almost, we had very ambitious targets under the previous government when it comes to decarbonising the power sector. The government had very stretching targets regarding offshore wind and solar deployment. And what Labour have done is almost kind of supercharged that, in effect, and almost increased the ambition on the power sector to do an incredible amount of work decarbonising to the extent where by 2030, the Labour government have set an ambition for a clean power system by 2030, which is just over five years away. So, quite a lot of space. Maybe not scepticism, but you know how realistic and achievable that target is. Many people kind of know that it has its challenges, but it also shows a real kind of desire to really ramp up the activity in that space. So, for many people that we talk to, it's very kind of positive to see that kind of level of ambition and the opportunities that clean power by 2030 will bring.

[00:10:41.490] - Sam Hollister

But I think if you ask people kind of how achievable is that I think there's kind of quite a few people with doubts as to how much we can deploy in just five years.

[00:10:51.430] - Charmaine Coutinho

Yeah. And so, what, when you say a clean power system for people who are maybe some of our listeners work on, like, proposition development for a product manufacturer, what does that really? What does a clean power system really mean in terms of the government's announcement?

[00:11:05.610] - Sam Hollister

Interestingly, Charmaine, we'll be publishing. We'll be publishing a report at a similar time that this podcast gets released as well, called the GB Power Market Outlook. And like every question, there is no simple answer, really, to what a clean power system actually is defined as for many, it really means kind of. If you take it to its extreme, it means only using low carbon power sources. So, whether that's kind of nuclear or whether that's wind, solar, you know, the kind of the low carbon energy sources. However, I think even the most optimistic person would appreciate that by 2030, it's very unlikely that the UK in particular would have kind of eased itself off gas fired power. That is one of the main sources of power at the moment in the UK. By 2030, even with the amount of wind and soda that the Labour party have set out, there is still going to be a role for gas fired power to be providing backup and ensuring security of supply. So, I don't want to leave listeners under the kind of impression that clean power by 2030 actually means that the UK is run solely on renewables and low carbon sources.

[00:12:25.690] - Sam Hollister

There will be an element of gas we are defining low carbon as a clean power system, but 97% of your generation will be from low carbon renewable power sources. So, even that isn't getting to 100%.

[00:12:45.950] - Charmaine Coutinho

Yeah, I mean, it's a. Yeah, it's an almost often. I don't know if any of our listeners have ever looked at the IEA graphs where they chart the carbon emissions for different countries power sectors, but they're quite interesting. You can see them go back a couple of decades and most people are trending towards lower carbon, but not everyone. You can look at the fuel mixes as generation sources. So, you're saying it looks like it's nearly as close as we can to 100% of clean power, but it won't be that 2030 the UK market, right?

[00:13:15.290] - Sam Hollister

Yeah, the modelling work that we've done to kind of look out to 2030, even says that under a kind of a labour clean power system, we have. I don't want to kind of throw too many kinds of numbers, but 55 gigawatts of offshore wind and 70 gigawatts of solar, which is kind of an incredible amount compared to where we're at the moment. We'll still be using gas in about 50. Well, about half, half the days in the year of 2030 will still be relying on gas to provide some kind of power. So, even though it's only maybe operating, providing 2% of that generation is actually operating in 50% of days, just to make sure that we have a secure energy system, because there's no way the Labour government...

[00:14:01.210] - Josh Buckland

Just to come in on that. I think for me, it's important, therefore, for listeners to remember that this is kind of the target is a moonshot. The target is, let's get as close as this thing as we can, and if we don't get there completely, then at least we made progress. The thing that is really important for people to clog is, irrespective of exactly where they meet the target, it's all about acceleration, so it's all about how much can we deploy as quickly as possible when it comes to low carbon generation, predominantly renewables, some low carbon fibre power, and then, obviously, critically, network investment to support that, as well as also demand side management. And so, the thesis is acceleration, if they don't quite get to 2030, then maybe that's okay, because ultimately the carbon emissions and power states will be lower in the UK's kind of economic story can then evolve as a result of that. So, kind of think about it as a moonshot rather than a kind of definitive target in their own lives.

[00:14:55.900] - Charmaine Coutinho

I'm glad you said that, because I think I've seen a lot of stuff on LinkedIn, which is my primary method of acquiring information on the short-term basis, where people are arguing about hitting that 100%, and the difference between hitting 90% or 100% kind of slightly misses defeat, the object of kind of big goals, right. So, I think that is a really interesting and useful point to add. And Josh, is there anything else from your kind of what you see clean power being, or defined as, or what kind of you taken away from any announcements around that clean power bit specifically?

[00:15:27.970] - Josh Buckland

So, I think the. It is true to say that the for the new government, clean power very much means renewables, renewables, renewables, renewables. That's evidently clear. Offshore wind, onshore wind, solar, and potentially other forms of newer technology as well. And that is their core focus. And supporting that, then a major investment in grid. And one of the things the new government has talked a lot about, including pre-election, is reform to the way we build transmission and connections, putting more investment in upfront, and also thinking about grid connections and trying to reform those to get the generation on stream as quickly as is possible. The grid is obviously an issue that is impacting European energy transitions already, but the UK is just one example of that, and the one big issue being that a lot of the generation will be in the north of the country, potentially in Scotland, and a lot of it, the demand will still be further south, and that creates challenges of its own around pricing. And so, that is the kind of core thesis. The thing they've said less about, which I think a lot of us are more energy wonks are interested to see, is around storage, and around both short and particularly long duration energy storage.

[00:16:31.940] - Josh Buckland

That's something you've kind of identified in previous iterations of the report you've done, because it is an area where there is a lot of need, especially if you are to rely less on gas and very little policy to support major investment in that space at the moment. And that is alongside, obviously, demand side response, which again, the government has said less about, that we understand they are supportive of. And so, for me, the kind of the moonshot idea and the ambition to deliver the majority of that through renewables is broadly known. Exactly how they make the system work and keep overall energy system costs down as a result of having the right mix of storage and demand response is something that we've got to see in the next stage of the kind of delineation of what that target itself actually means in practise.

[00:17:13.080] - Charmaine Coutinho

Yeah, I do feel like sometimes, sometimes, I mean, obviously not. This is when I'm feeling pessimistic, like storage will never have its day, it feels to have gone through these kinds of years and it hasn't been that long. It's probably on five or ten years where it's the next thing and then it's not, and it's the next thing. It's not. But so, I think that is a gap that I've noticed. And I know there's a lot of work going on with various different storage companies and associations trying to kind of push that forward. It's interesting you mentioned the demand side response bit, because I know so quite often in this podcast we always try and talk about the consumer first, and in conversation like this about policy, it kind of ends up being, and this is what it does to tariffs as opposed to kind of what consumers are actually doing. So, I personally will be interested to see how that comes out in consultations and policymaking, beyond conversations around retail price caps and how consumers can play a more active role. But that's me. Yeah. Okay, interesting. So those are big announcements. There's been quite a lot of consultations doing the rounds from Ofgem on lots of different things.

[00:18:15.250] - Charmaine Coutinho

Is that something that you guys have paid much attention to? Do you think it's kind of slightly distracting? Do you think it just comes from the fact that they weren't allowed to do anything whilst the election was happening?

[00:18:25.320] - Josh Buckland

It's probably most definitely a bit of a hangover from what was not published before. I think the thing that has been most interesting for Ofgem is the debate on affordability and what then happens around the retail sector. And Ofgem a couple of weeks ago published some interesting consultations looking at reforms to the standing charge. So effectively, the bit of the energy bill in the UK, that is a fixed amount, irrespective of your usage, that has been going up significantly due to go up even further as we invest in the grid and other kind of fixed costs. And that is creating some political concern around low energy uses and low-income households. And it's also coming at a time where energy bills are increasing as a result of further commodity price increases, which is putting more focus on affordability. And the level of household energy debts in the UK is already at a record level as a result of the recent energy crisis, and further cost increases will only add to that. So the area that the government has thus far talked less about, but is going to have to talk a lot more about as we head into the winter, will be historically high energy bills, further price increases, the cost of living and what they're going to do around that.

[00:19:33.410] - Josh Buckland

So, potentially introducing things like a social tariff, potentially increasing the support that's given to low-income households and off gender regulators are thinking about what they can do, but they only deal with one element of the distribution of those costs, whereas actually government itself inherently control those costs. And that is something that is going to be a really significant political challenge moving forward.

[00:19:52.420] - Charmaine Coutinho

Yeah, I would really like to be able to, if going forward a bit to the crystal ball, like to forecast how people are going to square the grid investment generation, investment around clean power with the bills and how that's going to be messaged people. But that's probably the subject for another podcast. I'm going to go back to touching on Great British Energy. So, you can't get annoyed that I'm going to ask you again. Well, I'm going to ask you to explain something, and I would like to know, truly what great opportunity is, what you think it is based on the announcements and we think it could do and shaping up to do. Sam, do you want to go first this time? Sorry, putting you on the spot.

[00:20:29.050] - Sam Hollister

Yeah, happy to go first. Great British Energy and Josh will probably be able to explain a bit more the politics behind it. But I mean, it's a fantastic tagline, right? And I think it kind of you know, get people interested in. Exactly kind of the UK maximising its own kind of value from its energy resources. That is clearly wind, more so than solar, given our weather patterns. And I don't think even the Labour government quite had it nailed down exactly what it wanted to do with GB Energy. Charmaine, you mentioned earlier that there was a reference to get involved in retail energy supply. That's probably a hangover from a few years ago, where that first idea came from. From previous Labour government leaders who were looking at kind of getting involved into that part of the market and nationalisation. So, at the moment, it's relatively. Information is relatively thin on the ground, exactly what GB Energy is going to do, but what it's. What people would like to see it doing is try to kind of unblock some of those barriers that's going to kind of stop us reaching the moonshot that Josh. That Josh kind of set out.

[00:21:44.160] - Sam Hollister

So, whether that's within planning or whether that's kind of in network infrastructure, whether that's actually directly investing into things like offshore wind farms, I think that's where actually there's going to be a lot of work and a lot of stakeholder engagement from the government to exactly where the barriers are, because depending on who you talk to will kind of have different views on where it's best placed. What everyone is agreeing is it needs to kind of be crowding in private investment and clearly not replacing that private investment that would otherwise have come about. I get asked occasionally whether the 8 billion pounds that GB Energy has been allocated for this parliament is enough. Clearly the answer is going to be no, because by 2050, we think there needs to be about 450 billion spent to get to a decarbonised electricity system. So, whether it was 8 billion or 28 billion, I think was an initial number that was kind of put out there by the Labour government during its kind of campaigning, even that wasn't going to be enough. It's going to be what you use that 8 billion for in order to leverage in private, private money.

[00:23:01.980] - Charmaine Coutinho

Yeah, that's an interesting. Josh, I think that will segue onto the next question, but like, if you just. If we go back to our first question of what do you think GB Energy will do? Be interested to your take on that.

[00:23:14.470] - Josh Buckland

Yeah, so I guess there's a. The political ambition is high, right? The political ambition is create a fully-fledged UK energy developer and kind of the politicians who have talked about it recently in government have talked about UK EDF UK, Vattenfall, various other kind of European major energy developers are available. And the kind of the concept is that they wanted to correct the. In that kind of vein. That said, I think there is a realisation and an understanding, at least at kind of official level, in government, that would take some time and you need to build a capability or portfolio that needs to be done in partnership with the private sector. As Sam alluded to, the amount of money available, it's not significant enough. An individual offshore wind project will cost you four, 5 billion to develop that loan, a portfolio project. And so, I think there is a realisation that it's going to be really challenging and they're going to have to start small, potentially co investing, potentially investing in even existing assets, or alternatively looking at deploying into local energy projects rather than kind of major national level projects, especially offshore. And so, it will be a developing pipeline of projects with developing capability and potentially challenges around getting the right people in on the speed that's required.

[00:24:25.870] - Josh Buckland

The big challenge they've got ultimately, though, is delivery ahead of the next election. So, the real issue will be what can they show that GB Energy has demonstrably delivered by the time of the next election? It's likely to be a major kind of package of projects. It's likely to be smaller, and there will be a challenge as to whether they can show that it's either delivering profit back and reinvested into the country, which is something the politicians have talked about a lot, and whether it is doing anything to cut bills, which I think I and others are slightly more sceptical of. And so that kind of question around what can it really deliver by the time of the next election shows why they're moving on it so quickly. Because they are well aware that there is a real challenge around expectation versus reality on the timelines available.

[00:25:07.920] - Charmaine Coutinho

Yeah, because I think. I mean, just to pick up a couple of points there. So one, getting everyone in place, getting the team GB Energy team in place, and there was a bit of press reports in the UK last week around where they're going to be, and they might be allowed to work from home and all that kind of nonsense, but so, getting the team in place with the right skills. And so, part of my previous role was looking at kind of skills in the energy sector, and there is a, like most other sectors, to do the energy transition or to do, there's a deficit of skills. So, you've got a pool of people that you need to get into place and quite a sophisticated skill set, I think, to be able to understand some of the players and the kind of the global links across everything to do with investors. And then, as you said, getting them to make an impact on those projects in the pipeline, which for those of you who are not energy renewable energy developers, a project can take from two years, if it's quick, maybe if it's a decent sized project, up to more than certain number of many years.

[00:26:06.280] - Charmaine Coutinho

So, trying to do multiple big impact projects within a four-year election cycle is going to be pretty tricky. And then getting those to start being. Generating, to start delivering some of the values. Best case scenario, they might have a year's worth of operational value to show, which is quite hard, right, to show that that's actually a big impact. And I don't know if any of you guys talk to anyone who's got. Who's doing development in the UK sector from a power generation perspective, but I think they've all got the same pipeline numbers, so everyone's talking to the same clients and same landowners. So, it's quite hard to see how. How you can actually, I know, monitor the KPI's on that, for want of a better phrase. It's a tricky one. I think that is tricky. But interesting. And I do. I think it's amazing that the ambition is there and it's kind of big and it's kind of slightly kind of naff branding, but I think you need that kind of visual impact. So, a good thing. Okay, well, maybe we'll come back to GB Energy in a few months time, see what they started to do.

[00:27:10.750] - Charmaine Coutinho

Maybe in a year's time. I'm going to move on to the second bit, which is talking a little bit more around the biggest challenges. So, we've talked a little bit about these, but I'd really like to come back to the investment point that you both touched on. We talked a little bit about co-investment that GB Energy might do, and investment is something that people talk about of how to attract it into the market. Is there anything you've seen that the UK government has done or announced, or you think they will do to attract investment? Or maybe some ideas of how they could, what they could do to attract more investment into the UK? Who wants to go first?

[00:27:50.760] - Josh Buckland

I'm very happy to dive in.

[00:27:54.120] - Charmaine Coutinho

Josh, you go first. Your guess?

[00:27:55.990] - Josh Buckland

I'll go first. Okay. Sorry, we're all too polite.

[00:28:00.590] - Charmaine Coutinho

Yeah, exactly.

[00:28:03.400] - Josh Buckland

The major thing, and I kind of believe this earlier, is planning reform. So, the government is very keen to say, look, if you're going to develop a project in the UK, we will be behind you and we will give you the necessary planning consents to do it. And that is a big change, because infrastructure is delivery in this country is very challenging. They have already signalled somewhat significant changes. I'm sure more will come through. There is obviously a practical reality to that. How accepting can a community be? Will there be pushback? I'm sure there will be. A lot of us wear the scars of trying to push infrastructure too quickly and leading to a community backlash, which changes the politics again. And so that's something you have to watch, but that potentially should be good news for a lot of people looking to deploy capital. The other, and it slightly connects to that is the reforms that are underway to grid connexions. And so there is a lot of work going on to try and think, how do you recalibrate the queue for people seeking connexions in the UK is upwards of 700 gigawatts now in terms of both demand and supply connexions.

[00:29:00.600] - Josh Buckland

And that is obviously causing a real issue around the ability to connect a project and get a project off the ground in time. And so that is, again, an area where there is potentially some really radical thinking being done around revamping the way the queuing system in the UK works for connexions, potentially some things that could carry some quite significant legal risks, but that's the sort of radicalism that a 2013 mission would imply. So, those are probably the two I would pick out of beyond, obviously, the potential revision of a limited amount of public investment.

[00:29:27.330] - Charmaine Coutinho

I do think there is a joke in there somewhere about UK government reforming how the UK developer’s queue. I think there's probably a joke in there about how the British loved queue, but I don't think that's quite right in this case. Sam, you've got anything to add to that.

[00:29:44.770] - Sam Hollister

Yeah, I think if I was looking at the investment coming to the UK, I think Josh has hit on the head with those kind of two kind of big barriers at the moment, and kind of the things that the new government will be looking at. I think I'll be thinking relatively positively about the low carbon renewables that we've spoken about. The government, with their moonshot, is clearly showing where it wants to attract investment. I think probably what I would say that they need to then do is in some of those other sectors where they haven't yet come forward with a plan. I mean, let's kind of remind ourselves, as Josh pointed out earlier, I mean, they've kind of been. It's been about 60 odd days or something since the election and a lot of that over the summer. So this isn't a. They haven't had much time yet, but we are going to need answers on things like long duration energy storage that Josh mentioned. We are going to need a view from government about the role for things like carbon capture and storage or hydrogen in the market, because as I kind of pointed out earlier, it's all very good if you've got 55 gigawatts of wind and 70 gigawatts of solar, but we are going to need what we would refer to as firm low carbon thermal power.

[00:31:06.880] - Sam Hollister

So, we do need these sorts of technologies, and if I was looking to invest in those at the moment, under the previous government, they had started to put together a plan for long duration storage. They'd started some of the CfD kind of allocation around things around hydrogen, started to make some noises around carbon capture and storage and allocating some money on that. But I think I would be waiting to see what the. What the new government is saying in those sectors, and I think that's probably something that the sector will be looking for in due course, and maybe that is. Perhaps there's a role there for GB Energy and those sorts as well.

[00:31:49.970] - Charmaine Coutinho

Yeah, it's kind of harder to invest on the one hand, nice simple story, big announcement, announcements, deal with the kind of more difficult questions later, but they'll still need to deal with them relatively quickly.

[00:32:03.860] - Sam Hollister

There's still kind of big things need.

[00:32:05.570] - Charmaine Coutinho

To happen on those.

[00:32:07.100] - Sam Hollister

The previous government, I don't want to get drawn into this too much because it starts getting to the weeds of UK power policy. But the previous government did kick off a huge review, the review of electricity market arrangements, the acronym of RIMA, that was looking about how you can manage a power system and continue to attract investment into a low carbon power system. Throughout the was offering some quite radical reforms, such as changing the pricing of wholesale power from a kind of national to a local market. That is a huge reform that people were of talking about for several years. And now the change of government, we don't yet know kind of what their views are on that. So, you know, it's things like that that the government are going to need to come out and have a. Have a view on, an opinion on because at the moment, those are the sorts of questions that investors are asking.

[00:33:06.830] - Charmaine Coutinho

Yeah, yeah. I mean, that's a really. And that is a tricky one because you want to take all the good bits from the previous one and get going with all the new bits and where's the time to do all of that? Okay, thank you, Sam. That is interesting. And actually, for those of you that are interested in RIMA, which Sam mentioned, we've got quite a few papers on our website, if you're interested, because there is some quite radical options that were proposed there, some which have quite a lot of evidence base or impact onto kind of other European markets as well. So, it's worth having a little poke around that, but it's not. Doesn't sound like the most exciting thing when you first hear about it. Okay, I'm going to finish off with Jon's favourite question, which is gazing into his crystal ball. So, usually what we do is we ask our guests to talk about their predictions, looking to the crystal ball for what something will happen in 2030. However, given our election cycles, another four years, going to have an election in 2028. I'm going to change the question slightly and think, what do you think is going to be going on the GB Energy market in 2028 as we go into the next GB election?

[00:34:16.200] - Charmaine Coutinho

So, Sam, I'll start with you first, if that's right.

[00:34:19.090] - Sam Hollister

Thanks. So, I was also just on the. As an aside, we're recording this the night before the CfD auction results are out in the UK, which is kind of the Labour's first opportunity to procure offshore wind through the contract for difference mechanism. So, yeah, maybe I should also kind of forecast how much we think we're going to be paying on offshore wind. So, yeah, that'd be an interesting result when that one comes out. So, yeah, we'll be putting up some analysis and I'm sure we'll put that on our website as well. Exactly how that. But longer term, in four years, where are we going to be at? I would like to think that GB Energy has a clear remit and is actually kind of bringing in some private sector investment. I don't think we're going to hit the moonshot. I think there's going to be a little bit of hesitancy on that as to exactly where we're at, 55 gigawatts of wind or 70 gigawatts of solar. But I think we'll have a quite clear plan in how we actually kind of manage that power system in the. That might be then kind of the role for things like long duration storage, carbon capture and the role for hydrogen.

[00:35:38.420] - Sam Hollister

So, I think there's a positive outlook in four years that we, whilst we might not be quite hitting the targets in the manifold manifesto, I think there'll be a clearer direction for what a clean power system looks like beyond 2030.

[00:35:56.780] - Charmaine Coutinho

Okay, that's a great. That's a good answer. And, Josh, what do you think? Where do you think we're going to be in four years time, going into the next election?

[00:36:04.460] - Josh Buckland

Yeah, well, the one thing I'd want to say upfront is just remember the UK does not run on a kind of a requirement that the election only happens every five years, so there's always a risk that they change. The current government have very big majority, but there's a lot of things, a lot of positives happen, so we'll see, but let's assume that's the case for now. I think if you buy the thesis, at least I think we discussed on the call today that the government wants to accelerate clean energy delivery. By that point, we should be in the kind of build phase, so we should be in a process where the planning reform is done, some of the griddenness is done, projects coming through the pipeline more directly, and that will obviously be positive, irrespective as Sam describes, whether we're on course or not to reach the moonshot. I think that's great in terms of UK economic growth, job creation, investment, all those sorts of dynamics. The real challenge will be whether it's publicly acceptable. So, if you do decide to revamp planning and have a much more supportive process for infrastructure build. And that will include significant developments around networks, pylons, lots of big infrastructure.

[00:37:11.350] - Josh Buckland

Are people up for that change? And the government has talked about community benefits. They've talked about more direct support for local communities. But that will be where it really gets real. And whether the public at large, and this is not true just in the UK, it's true across Europe and other economies. Whether the public are willing to accept that, whether they're supportive of that build and whether there is a significant backlash will dictate how the policies evolve. So I think we're already seeing the early signs of that. But that's before we take some of those radical changes. And it will be really interesting to see in a couple of years time just how the public view that issue and whether we can take the positives of the economic investment and economic growth and kind of show that's delivering people, or if we can't do that quickly enough and there seems to be a backlash, whether we start pushing back in the other direction. And so that's, I think, the big thing for me to work.

[00:37:59.380] - Charmaine Coutinho

Yeah, I think that's a really, and that's a really nice place for us to kind of wrap up and close. I think what actually really stood out for me in our discussion today is the kind of this idea about big goal and accelerating. And that's kind of been the theme of the last couple of months. And that is really positive. Right. For all the reasons Josh just mentioned, but also things that some, some of the things that Sam suggested where economic growth and, and actually in the UK, there's a, probably a need for kind of a bit of a positive spin on the economy and social life. But the counteract is how much do the public accept these things? And beyond filling in a survey that says that they're supportive of renewables, when it actually comes down to the crunch, how accepted is it? So, I think that will be the most interesting point. Okay, well, thank you very much. We're going to wrap up there. Thank you very much, Sam and Josh. A pleasure to have you both on and chatting today as ever. While we here at talking new energy would welcome opinions, replies and more in response to any of this or any energy transition topic.

[00:39:05.510] - Charmaine Coutinho

So, you can find Jon or me on LinkedIn or you can email us at talkingnewenergy@lcp.com but until next time, thank you for listening and see you very soon.

[00:39:20.130] - Sandra Trittin

Thanks for tuning in. We are excited to bring you captivating conversations from the leading edge of Europe's energy transitions. If you got suggestions for topics or guests for future episodes, please let us know.

[00:39:32.010] - Jon Slowe

And if you're enjoying the podcast, then please do rate it and share it with colleagues. For show notes, transcripts, and more, please visit lcpdelta.com.