WEBVTT 1 00:00:04.440 --> 00:00:08.000 With Laurent segle End from London and Gerard Read from Berlin. 2 00:00:08.519 --> 00:00:11.000 This is redefining Energy Today. 3 00:00:11.039 --> 00:00:14.160 On Redefining Energy, we're going to talk about the future 4 00:00:14.400 --> 00:00:16.399 of the energy system in the UK. 5 00:00:16.920 --> 00:00:20.160 Because people complain a lot, but in fact there's a 6 00:00:20.160 --> 00:00:22.920 lot of things happening. But you need a three sixty 7 00:00:23.039 --> 00:00:26.719 vision and that's exactly what our guests bringing. But first 8 00:00:26.719 --> 00:00:28.440 of all, from our partner, A. 9 00:00:28.519 --> 00:00:31.719 B Loco Energy is Europe's premier leaser of ten foot 10 00:00:31.800 --> 00:00:36.799 container mobile batteries built in Europe with COTL best LFP cells. 11 00:00:37.359 --> 00:00:42.679 A Bloco Energy serves fourteen European countries, including France, Germany 12 00:00:42.759 --> 00:00:45.960 and the UK. A Bloco's batteries can be leased for 13 00:00:46.000 --> 00:00:49.200 any duration between six weeks and six years and they 14 00:00:49.240 --> 00:00:53.039 are monitored by the Dutch award winning platform school A 15 00:00:53.119 --> 00:00:56.079 Blocko Energy. Make your life easier, make. 16 00:00:55.960 --> 00:00:59.200 Your business more flexible. Back to the show, Yeah, what 17 00:00:59.240 --> 00:01:01.719 we decided to do is bring in Penton's lie, who 18 00:01:01.960 --> 00:01:06.000 is the CEO of the independent system operator in the UK. 19 00:01:06.079 --> 00:01:09.359 And this is quite unique because Penton's job really is 20 00:01:09.400 --> 00:01:12.480 to oversee the gas grid. 21 00:01:12.959 --> 00:01:16.120 And the electrical grid in Great Britain. 22 00:01:16.439 --> 00:01:21.120 NSO National System Verider has so much roles, so I'm 23 00:01:21.120 --> 00:01:25.000 going to list them. Real time system operation, so keep 24 00:01:25.079 --> 00:01:29.799 supply and demand balance every second. All system planning is 25 00:01:29.840 --> 00:01:35.599 putting everything together, provides impartial recommendation to the regulator. Is 26 00:01:35.640 --> 00:01:39.359 therein to market design and operations with design and run 27 00:01:39.359 --> 00:01:44.599 electricity market, he is planning the transmission system, the gas 28 00:01:44.799 --> 00:01:48.400 and of course he needs to follow the policy of 29 00:01:48.879 --> 00:01:51.359 net zero, so he's doing so much thing at the 30 00:01:51.400 --> 00:01:53.280 same time. But I would say in a way, it's 31 00:01:53.359 --> 00:01:56.400 great that it's one organization doing it and those things 32 00:01:56.400 --> 00:02:00.799 are not scattered all over place. Makes it much more fission. 33 00:02:00.840 --> 00:02:05.280 Absolutely and systemic. In other words, because it's not just 34 00:02:05.319 --> 00:02:08.719 about the electricity system. Obviously gas is a huge part 35 00:02:08.719 --> 00:02:10.879 of it because it as provides heat and also gas 36 00:02:10.960 --> 00:02:15.120 also provides power or fuel for electricity. Yeah, I would 37 00:02:15.159 --> 00:02:16.159 say we bring them on the show. 38 00:02:16.840 --> 00:02:18.479 Fintn, welcome to the show. 39 00:02:18.919 --> 00:02:20.400 Thank you very much. Great to be here. 40 00:02:21.039 --> 00:02:23.960 It's great to have you kick off with just if 41 00:02:24.000 --> 00:02:26.520 I look at this energy transition, it's been going on 42 00:02:26.599 --> 00:02:28.560 for quite a while and I just feel we're at 43 00:02:28.599 --> 00:02:30.840 an inflection point where you've got sort of in a 44 00:02:30.840 --> 00:02:33.599 lot of countries, you've got too much renewables, and obviously 45 00:02:33.599 --> 00:02:36.280 we've got this crisis ongoing crisis in the Gulf and 46 00:02:36.360 --> 00:02:39.639 all this. How do you, as someone who's really meant 47 00:02:39.680 --> 00:02:41.560 it to have to take a systemic view of that 48 00:02:41.800 --> 00:02:44.719 UK system, how do you look at the moment that 49 00:02:44.840 --> 00:02:46.360 we are at a present? 50 00:02:47.240 --> 00:02:50.039 So I think it is at an inflection point for 51 00:02:50.159 --> 00:02:52.639 various reasons, some of which you talked about, Jared, But 52 00:02:53.000 --> 00:02:56.599 if you look at what the UK is trying to achieve, 53 00:02:56.599 --> 00:03:00.520 so it is a very clear policy ambition, and in 54 00:03:00.560 --> 00:03:05.479 particular decarbonization of the electricity systems. Government has set a 55 00:03:05.639 --> 00:03:09.159 target to get to clean power by twenty thirty and 56 00:03:09.199 --> 00:03:12.840 that effectively means ninety five percent of the generation comes 57 00:03:12.879 --> 00:03:15.800 from clean sources by twenty thirty and that is hugely 58 00:03:16.080 --> 00:03:19.919 ambitious and will require a huge lift right across the 59 00:03:20.000 --> 00:03:23.360 industry in order to get that and to achieve it. 60 00:03:24.439 --> 00:03:27.240 And for two reasons I suppose we're at an inflection point. 61 00:03:27.280 --> 00:03:32.120 One, the current crisis in the trade of Hormuz and 62 00:03:32.240 --> 00:03:37.039 the previous crisis when Russia legally invaded Ukraine have shown 63 00:03:37.479 --> 00:03:43.000 the risks associated with relying on imported fossil fuels, and 64 00:03:43.680 --> 00:03:46.599 especially where those prices of those fossil fuels are set 65 00:03:46.800 --> 00:03:50.639 on international markets. The UK is seeing the impacts of 66 00:03:50.680 --> 00:03:54.840 that now with rising prices, and therefore that to some 67 00:03:55.039 --> 00:03:59.520 extent has catalyzed that transition and sort of reinforced the 68 00:03:59.639 --> 00:04:03.879 logic behind that transition to clean power by twenty thirteen. 69 00:04:04.680 --> 00:04:08.120 The other inflection point you're seeing is even within that transition, 70 00:04:08.280 --> 00:04:12.680 we're moving from the policy part and the enabling part 71 00:04:12.960 --> 00:04:16.959 into the real hard delivery on the ground. So it 72 00:04:17.040 --> 00:04:20.240 is that inflection we need to make is a move 73 00:04:20.600 --> 00:04:24.279 to real on the ground delivery. Cranes in the air, 74 00:04:24.439 --> 00:04:29.000 shovels in the ground, and delivery of infrastructure is really hard. 75 00:04:29.560 --> 00:04:32.480 This is a huge scale of transformation in terms of 76 00:04:32.519 --> 00:04:35.720 the clean generation that needs to be delivered, the new 77 00:04:35.759 --> 00:04:38.120 storage that's coming on, and the network that needs to 78 00:04:38.160 --> 00:04:38.639 support it. 79 00:04:39.319 --> 00:04:40.120 So for all of. 80 00:04:40.040 --> 00:04:42.839 Those reasons, it is at an inflection point, but I 81 00:04:42.839 --> 00:04:44.399 think one that has momentum. 82 00:04:44.480 --> 00:04:45.560 Certainly in gb. 83 00:04:46.240 --> 00:04:49.079 Well Finton you're the ELM, which means you need to 84 00:04:49.199 --> 00:04:51.639 ensure relevety twenty four to seven and you need to 85 00:04:51.800 --> 00:04:55.120 plan for the future at the same time. At the 86 00:04:55.160 --> 00:04:58.240 yet of nisso I calculated since you were at the 87 00:04:58.360 --> 00:05:03.000 end of natural greed stumble writer precis organization. You have 88 00:05:03.079 --> 00:05:08.079 had nine minister secretary from a politics point of view 89 00:05:08.680 --> 00:05:11.720 above you. So how do you manage a long term 90 00:05:11.800 --> 00:05:16.879 vision and mission with unfortunately a lot of politics rotation? 91 00:05:17.519 --> 00:05:19.800 Or is it stronger than short term politics? 92 00:05:20.680 --> 00:05:24.839 The advent and the creation of NISO actually is an 93 00:05:24.879 --> 00:05:31.399 opportunity to embed some of that longer term systemic, system 94 00:05:31.480 --> 00:05:37.000 wide thinking that allows for continuity through different political cycles. 95 00:05:37.040 --> 00:05:40.480 And you're always going to have changes in government, changes 96 00:05:40.480 --> 00:05:43.519 in secretary of state, those things are always going to happen. 97 00:05:44.240 --> 00:05:47.639 But I think the important thing is that alongside that, 98 00:05:47.720 --> 00:05:50.639 you do need an element of continuity, in particular in 99 00:05:50.680 --> 00:05:54.279 an energy system where you have large scale infrastructure that 100 00:05:54.439 --> 00:05:57.279 is delivered over multiple years. 101 00:05:58.160 --> 00:05:59.040 And the thing that the. 102 00:05:59.120 --> 00:06:03.120 Advent of NISO has enabled is the creation of that 103 00:06:03.319 --> 00:06:07.279 long term strategic plan for a great Britain's energy system 104 00:06:07.319 --> 00:06:10.879 and the transition that allows you to have that long 105 00:06:10.959 --> 00:06:14.959 term view, that confidence that enables people to invest and 106 00:06:15.079 --> 00:06:18.120 enables those longer term decisions to be taken and for 107 00:06:18.199 --> 00:06:23.439 them to be robust to changes in administration, whether that 108 00:06:23.639 --> 00:06:27.000 is government or secretary of State, et cetera. So it's 109 00:06:27.040 --> 00:06:29.480 a real issue or on. I think though that the 110 00:06:29.560 --> 00:06:32.040 creation of needs and the way it has been established 111 00:06:32.040 --> 00:06:37.000 as a public corporation but operationally independent for government, with 112 00:06:37.120 --> 00:06:40.079 its own board, its own chair, make sure that you 113 00:06:40.199 --> 00:06:42.639 can have that longer term view. 114 00:06:43.480 --> 00:06:46.360 Vincel I think myself in Laurmo will both share the 115 00:06:46.439 --> 00:06:50.199 same view, which is, look, an independent system operator is 116 00:06:50.240 --> 00:06:52.959 what we need to do going forward, because the word 117 00:06:53.000 --> 00:06:56.560 independent is really critical because you're not incentivized to put 118 00:06:56.600 --> 00:06:59.360 in one solution or the other. What you're there is 119 00:06:59.360 --> 00:07:02.439 to do the best. Had society really on that note there, 120 00:07:02.439 --> 00:07:04.959 I'd be very interested to hear how when you look 121 00:07:05.000 --> 00:07:08.160 at the future, the whole thing of non wire solutions 122 00:07:08.199 --> 00:07:10.360 versus wire solutions, how do you look at that. 123 00:07:11.519 --> 00:07:15.439 The exact model and how appropriate is I think differs 124 00:07:15.439 --> 00:07:18.360 for different jurisdictions. So if you look across the world, 125 00:07:18.439 --> 00:07:22.839 people have organized transmission system operators, independent system operators, regional 126 00:07:22.879 --> 00:07:26.839 trul in various different ways of different sets of responsibilities. 127 00:07:27.240 --> 00:07:31.160 The right answer in any given country is dependent upon 128 00:07:31.240 --> 00:07:34.519 the specifics of what's going on there and their current 129 00:07:34.920 --> 00:07:41.680 institutional arrangements. From our perspective, NGB, the thing that MESO 130 00:07:41.759 --> 00:07:45.399 allows us to do is in terms of planning one, 131 00:07:45.879 --> 00:07:49.680 you have that system wide planning because we're also responsible 132 00:07:49.720 --> 00:07:52.560 where the gas system planner as well, so we do 133 00:07:52.839 --> 00:07:57.879 genuinely have that whole system perspective and the strategic special 134 00:07:58.000 --> 00:08:01.560 energy plan that will develop. How has that view across 135 00:08:01.759 --> 00:08:04.839 all of those different energy vectors. And then also the 136 00:08:04.879 --> 00:08:07.839 thing you talk about, Jared is that ability to see 137 00:08:08.160 --> 00:08:11.480 you know, non wire solutions and so how can storage 138 00:08:11.519 --> 00:08:13.920 play a role in this? How can demand side response 139 00:08:14.000 --> 00:08:17.600 play a role in this? Are there advanced technologies you 140 00:08:17.680 --> 00:08:20.480 can deploy to sweat the assets more and get more 141 00:08:20.519 --> 00:08:23.199 out of them? How can AI help you with that? 142 00:08:23.360 --> 00:08:26.560 And being constructed and set up and governed in the 143 00:08:26.600 --> 00:08:30.720 way we are ensures that the strategic plans that we 144 00:08:30.839 --> 00:08:35.440 ultimately produce will actually deliver in the best interests of 145 00:08:35.600 --> 00:08:38.480 society and the economy because of the way we're set up. 146 00:08:39.240 --> 00:08:42.399 And I know it's a subject you're not directly responsively off, 147 00:08:42.519 --> 00:08:45.000 but I mean it's in the zone. Is a lot 148 00:08:45.039 --> 00:08:48.799 of people complaining that the price of electricity in the 149 00:08:48.879 --> 00:08:54.039 UK is much higher than in other even your open countries, 150 00:08:55.120 --> 00:08:57.159 and it's not really linked to the price of electricity 151 00:08:57.240 --> 00:08:59.960 po say, you know, link to a certain number of 152 00:09:00.159 --> 00:09:02.559 tuxic levies of charger which are added on the top 153 00:09:02.600 --> 00:09:06.519 of that, which of course is going to slow directification, 154 00:09:06.759 --> 00:09:09.879 especially of heating if you have in your opinion on it, 155 00:09:10.639 --> 00:09:13.200 How could we reduce the price of power for the 156 00:09:13.279 --> 00:09:14.039 end consumer. 157 00:09:14.759 --> 00:09:17.159 A lot of that comes down to policy choices by 158 00:09:17.200 --> 00:09:21.080 governments and regulators right and are not within our remat 159 00:09:21.960 --> 00:09:26.279 but certainly the price of energy in the UK absolutely 160 00:09:26.320 --> 00:09:29.840 needs to come down. We've seen price of energy rise 161 00:09:30.360 --> 00:09:32.720 as a function of what's happening in. 162 00:09:32.840 --> 00:09:33.720 Straight up our moves. 163 00:09:33.720 --> 00:09:36.200 We've seen it previously with Bush's a legal invasion of 164 00:09:36.200 --> 00:09:40.720 the Ukraine. Definitely it is contributing to the cost of 165 00:09:40.720 --> 00:09:44.919 living crisis right around the country and is not helping 166 00:09:45.000 --> 00:09:48.559 in terms of overall helping the economy grow, right. So 167 00:09:48.679 --> 00:09:51.919 definitely we need to find ways to get prices down, 168 00:09:51.960 --> 00:09:54.360 and that is through a combination of having a long 169 00:09:54.480 --> 00:09:59.279 term plan that actually does deliver secure, sustainable power but 170 00:09:59.399 --> 00:10:03.600 out of four prices, having a set of market arrangements 171 00:10:03.960 --> 00:10:07.440 that ensure that you get competitive forces, that you drive 172 00:10:07.440 --> 00:10:10.440 down price and you get the most competitive and economically 173 00:10:10.440 --> 00:10:16.720 efficient outcomes for consumers, and that you identify and progress 174 00:10:16.799 --> 00:10:19.440 those projects that can deliver that. And one of the 175 00:10:19.440 --> 00:10:21.720 big things that we're doing at the moment is reforming 176 00:10:21.759 --> 00:10:25.919 the connection queue, So trying to get down from what 177 00:10:26.000 --> 00:10:27.960 was the connection queue of seven to eight hundred giga, 178 00:10:28.039 --> 00:10:31.320 what's down to the two to three hundred giga, what's 179 00:10:31.360 --> 00:10:35.039 that are ready to go strategically aligned with government policy 180 00:10:35.600 --> 00:10:39.039 and making sure that you build out then the right 181 00:10:39.120 --> 00:10:41.919 network to support them. So I think there's a series 182 00:10:41.960 --> 00:10:44.399 of things that are in train that that should help. 183 00:10:45.080 --> 00:10:48.919 I also think that from a GB perspective, the price 184 00:10:48.960 --> 00:10:52.720 of electricity is very dependent and tied to the price 185 00:10:52.759 --> 00:10:56.080 of gas, which is set on international markets, and therefore 186 00:10:56.559 --> 00:10:59.600 that move towards clean power and getting away from the 187 00:10:59.639 --> 00:11:01.879 price of gas set in the price of electricity will 188 00:11:01.879 --> 00:11:03.399 be helpful as we progress that. 189 00:11:04.120 --> 00:11:06.120 I suppose the other thing that it is is the 190 00:11:06.200 --> 00:11:10.279 more you electrify, you could argue that the cheaper it's 191 00:11:10.360 --> 00:11:13.039 going to be for electricity because you've got more units 192 00:11:13.039 --> 00:11:15.480 to kill a lot of hours running through these wires. 193 00:11:16.120 --> 00:11:18.039 The only issue with that is that you sort of 194 00:11:18.080 --> 00:11:20.919 have to have the capex for the new grid before 195 00:11:21.039 --> 00:11:24.039 maybe you have the demand. And I suppose, going finding 196 00:11:24.080 --> 00:11:26.279 off with what Yourna said is I think what we 197 00:11:26.360 --> 00:11:30.279 scratch our heads about is just the incentive to electrify 198 00:11:30.399 --> 00:11:34.080 is not there because electricity is too expensive. And if 199 00:11:34.120 --> 00:11:35.919 you don't have the incentive to do that, you're building 200 00:11:35.919 --> 00:11:37.960 grid out. What you're actually doing is push the price up, 201 00:11:38.039 --> 00:11:41.159 which gives you the disincentive to electrifier. So it's a 202 00:11:41.200 --> 00:11:43.200 bit of a crazy situation that you're in. And I 203 00:11:43.240 --> 00:11:46.440 know it's not your job because you're not the government 204 00:11:46.519 --> 00:11:48.840 or anything like this, but I presume you really do 205 00:11:48.919 --> 00:11:52.080 have an important role and let's say, brainstorming with the 206 00:11:52.120 --> 00:11:54.159 government in around what they should and shouldn't do. 207 00:11:55.279 --> 00:11:57.879 So you're absolutely right to the extent you electrify and 208 00:11:57.919 --> 00:12:01.039 you spread fixed capital across up costs over more units 209 00:12:01.039 --> 00:12:03.799 of electricity than the cheaper that is, and that is. 210 00:12:03.799 --> 00:12:05.720 Helpful a lot of though. 211 00:12:05.759 --> 00:12:10.799 The infrastructure, the transmission infrastructure needed in GB right now, though, 212 00:12:10.919 --> 00:12:16.399 is around getting new renewable sources of generation and moving 213 00:12:16.440 --> 00:12:20.639 that generation to where the existing demand is as distinct 214 00:12:20.679 --> 00:12:25.159 from significant increases in demand. So the transmission infrastructure that 215 00:12:25.200 --> 00:12:29.039 we're looking at at the moment largely is driven by 216 00:12:29.600 --> 00:12:34.279 the fact that the new sources of generation are in 217 00:12:34.440 --> 00:12:37.080 very different places to where the ould sources of generation 218 00:12:37.240 --> 00:12:38.799 used to be, and that is sort of a move 219 00:12:38.840 --> 00:12:42.919 away from coal fired power plants located various sort of 220 00:12:42.960 --> 00:12:47.720 discrete locations around the country to offshore wind in the 221 00:12:47.759 --> 00:12:51.279 north Sea or on shore wind or solar at different 222 00:12:51.320 --> 00:12:55.159 places around the country. As we move further through the 223 00:12:55.159 --> 00:12:58.720 twenty thirties, etc. Then you start to see the demand 224 00:12:58.799 --> 00:13:00.759 growth part of a pick up as well. 225 00:13:00.840 --> 00:13:01.120 Jered. 226 00:13:01.240 --> 00:13:04.679 But I think in the first instance that transmission investment 227 00:13:04.840 --> 00:13:08.200 is around getting those renewable resources on and. 228 00:13:08.159 --> 00:13:10.519 The key is trying to match the timing. 229 00:13:11.200 --> 00:13:13.519 So you don't want to build the network ahead of 230 00:13:13.559 --> 00:13:17.080 time and it be there sitting not being used. Similarly, 231 00:13:17.120 --> 00:13:21.159 if it's late, you get additional constraint costs associated with 232 00:13:21.240 --> 00:13:24.080 generation that can't get to demand. So how do you 233 00:13:24.120 --> 00:13:26.720 marry up those two timelines. And what we're seeing in 234 00:13:26.759 --> 00:13:30.360 reality on the ground is that lee times for transmission 235 00:13:30.399 --> 00:13:33.559 over the last ten years have got significantly longer. It's 236 00:13:33.679 --> 00:13:37.200 taking significantly longer to get the planning, consenting, the construction, 237 00:13:37.320 --> 00:13:40.320 the commission, and the delivery of transmission. So those lee 238 00:13:40.360 --> 00:13:43.279 times are now longer than it is to typically deliver 239 00:13:43.399 --> 00:13:45.480 any of the generation resources. 240 00:13:46.320 --> 00:13:50.600 That's very interesting. So you end up with balanks in costs, 241 00:13:50.639 --> 00:13:53.799 which in fact costs a lot because there's just too 242 00:13:53.840 --> 00:13:56.960 much win. You known Scotland, and there's what is it 243 00:13:57.000 --> 00:14:00.039 by your four by US six which are and I 244 00:14:00.159 --> 00:14:03.039 know you and National Grid are working on it. With 245 00:14:03.159 --> 00:14:06.159 those subsey cables just going to go full of course 246 00:14:06.159 --> 00:14:09.240 they're going to be probably more expensive than overground, but 247 00:14:09.679 --> 00:14:13.440 at least it's relatively predictable. Was the system has been 248 00:14:13.519 --> 00:14:16.879 launched And to people who complain about balancing caers, I 249 00:14:16.879 --> 00:14:19.440 would say two things. Okay. Number one, geography it is 250 00:14:19.440 --> 00:14:24.120 what it is well along stretch it's you know, we're 251 00:14:24.159 --> 00:14:27.639 not Germany. And the second thing is, even if there's 252 00:14:27.639 --> 00:14:31.000 a lot of curtailment overall, the amount of gas we 253 00:14:31.080 --> 00:14:35.600 didn't need to import, it's certainly superior that whatever balancing cars. 254 00:14:35.679 --> 00:14:39.440 So it's kind of a teething issue, which I understand 255 00:14:39.519 --> 00:14:42.360 can be very irritating, but people need to see both 256 00:14:42.399 --> 00:14:46.080 sides of the ledger. Now very interestingly, you start talking 257 00:14:46.120 --> 00:14:49.600 about demand and I saw you made a great quote 258 00:14:49.600 --> 00:14:55.000 in the ft about Scotland. Data centers or data centers 259 00:14:55.080 --> 00:14:57.480 is the old rage right now? How do you plan 260 00:14:57.559 --> 00:14:59.720 to accommodate with data centers. 261 00:15:00.159 --> 00:15:02.080 Before we go on to data center on just on 262 00:15:02.200 --> 00:15:05.039 your point right balance and costs, there are two things to. 263 00:15:05.000 --> 00:15:05.759 Bear in mind. 264 00:15:06.279 --> 00:15:09.840 So one, where you get a mismatch between generation connecting 265 00:15:09.879 --> 00:15:12.120 before the network is delivered, you are going to get 266 00:15:12.559 --> 00:15:16.200 balancing costs and absolutely we should be driving to get 267 00:15:16.240 --> 00:15:18.720 those down. The other part is, of course you'll never 268 00:15:18.720 --> 00:15:21.480 get balancing costs zero. They shouldn't be zero. You would 269 00:15:21.519 --> 00:15:24.679 have absolutely goal plated the network if you built it 270 00:15:24.759 --> 00:15:28.600 such that there was never a pound spent on balancing costs. 271 00:15:29.240 --> 00:15:31.159 And what we try and do is find out what 272 00:15:31.360 --> 00:15:36.320 is that appropriate most economic balance that builds the right 273 00:15:36.360 --> 00:15:37.840 amount of grid to meet. 274 00:15:37.679 --> 00:15:39.759 It and deliver the most efficient one. 275 00:15:40.200 --> 00:15:43.720 On data centers, there's a huge focus on them at 276 00:15:43.720 --> 00:15:47.320 the moment due to the advances made and being made 277 00:15:47.320 --> 00:15:50.960 in AI, but also just their impact on the grid 278 00:15:51.080 --> 00:15:54.480 is just so significant, Like we are looking at gigawattscale 279 00:15:54.639 --> 00:15:58.440 data centers being delivered now. The first thing to say 280 00:15:58.480 --> 00:16:03.600 is that the UK government and has huge ambition about 281 00:16:03.919 --> 00:16:07.759 AI and associated with that the data centers that are 282 00:16:07.799 --> 00:16:10.519 needed in GB to do it, and we're really focused 283 00:16:10.519 --> 00:16:13.519 on making sure that we support them in that and 284 00:16:13.600 --> 00:16:16.919 ensure that GB can sort of benefit from the build 285 00:16:16.960 --> 00:16:21.320 out of that sort of AI infrastructure in GB. So 286 00:16:21.360 --> 00:16:24.639 the connection queue on the demand side is now over 287 00:16:24.679 --> 00:16:29.120 one hundred gigawatts of demand and the connection queue of 288 00:16:29.159 --> 00:16:32.840 that almost one hundred is data centers and that is 289 00:16:32.960 --> 00:16:36.120 all looking to connect broadly in the region between now 290 00:16:36.360 --> 00:16:40.120 and twenty thirty. And typically data centers have really short 291 00:16:40.240 --> 00:16:43.360 lead time sort of commitment to having the data center 292 00:16:43.519 --> 00:16:46.759 up and drawing power. I think if you look at 293 00:16:46.799 --> 00:16:51.240 the UK's ambition around data centers and actual delivery on 294 00:16:51.279 --> 00:16:53.480 the ground of what's needed in terms of data centers, 295 00:16:53.519 --> 00:16:56.840 it's not the one hundred gigawats that's in the queue. Actually, 296 00:16:56.879 --> 00:17:00.080 it's probably somewhere between eight, ten or twelve gigawats and 297 00:17:00.200 --> 00:17:02.360 a little bit on time horizon use on. 298 00:17:02.440 --> 00:17:04.960 But in the sort of twenty thirty time horizon that's. 299 00:17:04.799 --> 00:17:07.720 Broadly where you land and THEREFO we have a question 300 00:17:07.799 --> 00:17:09.839 of which of those data centers of the one hundred 301 00:17:09.880 --> 00:17:12.640 that are in the queue, which of those will go ahead, 302 00:17:12.799 --> 00:17:14.440 how do they get built out, et cetera. 303 00:17:15.200 --> 00:17:16.480 I think you can look around the. 304 00:17:16.440 --> 00:17:20.319 World and you can see where data centers have been 305 00:17:20.359 --> 00:17:23.319 managed really well and their integration on the grid has 306 00:17:23.319 --> 00:17:25.599 been managed really well, and you can see places around 307 00:17:25.599 --> 00:17:30.200 the world where actually it's been cost price rises and 308 00:17:30.240 --> 00:17:34.680 there's been a backlash against them. I think from our perspective, 309 00:17:34.680 --> 00:17:38.319 there's probably three things that we look at in order 310 00:17:38.400 --> 00:17:42.160 to make sure that data centers are additive to, or 311 00:17:42.319 --> 00:17:46.880 sympathetic with, or helpful to the grid. The first is location. 312 00:17:47.559 --> 00:17:51.119 At the moment, the main constrain some power flow in 313 00:17:51.720 --> 00:17:55.039 the grid are moving power north to south, and that 314 00:17:55.119 --> 00:17:57.240 is typically when it's windy, a lot of upfshore wind 315 00:17:57.279 --> 00:17:59.759 and trying to get it down to the south of England. 316 00:18:00.640 --> 00:18:02.720 So therey if you can put data centers to the 317 00:18:02.759 --> 00:18:06.200 north of that transmission constraint i e. In Scotland, that 318 00:18:06.359 --> 00:18:09.079 is more beneficial to the grid than putting them on 319 00:18:09.160 --> 00:18:12.039 the M four corridor, for example, in the southeast. So 320 00:18:12.359 --> 00:18:15.559 the location is really really important, and put them in 321 00:18:15.599 --> 00:18:18.319 the right place you need to build less new infrastructure, 322 00:18:18.400 --> 00:18:20.720 you'll be able to get them connected quicker. So that's 323 00:18:20.759 --> 00:18:24.119 the first one. The second one is around flexibility that 324 00:18:24.160 --> 00:18:27.279 those data centers can provide. I think you don't have 325 00:18:27.359 --> 00:18:30.119 to go back that far. When a data center load 326 00:18:30.279 --> 00:18:33.240 was almost entirely inflexible. It was going to come on, 327 00:18:33.400 --> 00:18:35.440 it was going to consume what it wanted to consume, 328 00:18:36.000 --> 00:18:38.440 and that was going to be it. I think though, 329 00:18:38.440 --> 00:18:40.440 in the last number of years, what you've seen is 330 00:18:41.000 --> 00:18:44.440 data center technology has got better and the need for 331 00:18:44.519 --> 00:18:47.799 them to be flexible has become really really important in 332 00:18:47.839 --> 00:18:50.480 their ability to get connected as more and more of 333 00:18:50.519 --> 00:18:53.119 them have gone on and grids have got constrained and 334 00:18:53.200 --> 00:18:57.640 they've responded and there are now increased levels of flexibility 335 00:18:57.680 --> 00:19:00.960 of different types available from data center and in some 336 00:19:01.039 --> 00:19:03.799 places that's been provided on a voluntary basis, in some 337 00:19:03.880 --> 00:19:07.000 places of contractual basis. Indeed, are's examples of where it 338 00:19:07.079 --> 00:19:11.440 is actually mandated as part of the legislation. But that 339 00:19:11.480 --> 00:19:16.559 flexibility makes a huge difference to security, supply margins, and 340 00:19:16.920 --> 00:19:20.440 ability to manage the grid. And then the third things 341 00:19:20.440 --> 00:19:23.759 around data centers that really matters is what is the 342 00:19:23.799 --> 00:19:27.559 timeline and the ramp up of capacity, because what you 343 00:19:27.640 --> 00:19:31.079 want to be able to do is to match the 344 00:19:31.200 --> 00:19:35.359 increase in demand with a similar increase on the supply side, 345 00:19:35.440 --> 00:19:39.160 such that you don't end up with the demand coming 346 00:19:39.200 --> 00:19:43.279 on significantly ahead of the generation or the supply side 347 00:19:43.279 --> 00:19:45.440 coming on, because that's just going to drive prices up. 348 00:19:45.440 --> 00:19:48.599 I mean this pretty straightforward economic theory that says that's 349 00:19:48.599 --> 00:19:51.200 just going to drive prices up. But if you can 350 00:19:51.559 --> 00:19:55.880 match the supply side with that ramp on the demand side, well, 351 00:19:55.920 --> 00:19:59.640 actually you have more units of energy over which to 352 00:20:00.000 --> 00:20:02.799 tribute some of the fixed costs, and as we talked 353 00:20:02.839 --> 00:20:06.759 about earlier, that could then overall reduce the per unit 354 00:20:06.839 --> 00:20:10.319 cost of electricity. But you've got to manage that timing 355 00:20:10.359 --> 00:20:14.000 really well. So location, flexibility, and timing are the sort 356 00:20:14.000 --> 00:20:16.440 of three critical things, and if you can manage them well, 357 00:20:17.160 --> 00:20:19.880 then I think data centers can be integrated and can 358 00:20:19.920 --> 00:20:23.559 be overall helpful to the system, and ultimately from a 359 00:20:23.599 --> 00:20:28.559 GB perspective, will help with that strategy around building GB 360 00:20:28.720 --> 00:20:30.160 as sort of an AI center. 361 00:20:31.279 --> 00:20:33.759 Finton just I want to just change it something slightly. 362 00:20:33.799 --> 00:20:37.400 And I suppose asked the question, your job, your huge responsibility. 363 00:20:37.799 --> 00:20:40.240 Your responsibility is one to make sure that people have 364 00:20:40.480 --> 00:20:43.599 gas electricity twenty four to seven. I suppose in that 365 00:20:43.680 --> 00:20:46.000 regardless was I was really coming from an energy security 366 00:20:46.039 --> 00:20:47.799 point of view. Is there anything where you really look 367 00:20:47.839 --> 00:20:49.599 at and say, I'm worried about that you need to 368 00:20:49.599 --> 00:20:53.039 get that sorted or do you literally sleep every night going, 369 00:20:53.279 --> 00:20:54.599 We've got it under control. 370 00:20:54.799 --> 00:20:55.319 That's it. 371 00:20:55.319 --> 00:20:55.960 It's done. 372 00:20:56.880 --> 00:21:00.400 So maybe two things from an energy security point of view, 373 00:21:00.559 --> 00:21:02.960 like don't go home and worry about any sort of 374 00:21:03.039 --> 00:21:07.200 macro threats or things that I don't believe are being 375 00:21:07.640 --> 00:21:08.599 gripped either. 376 00:21:08.440 --> 00:21:10.839 By us or by government or the regulator. 377 00:21:11.359 --> 00:21:14.240 But the world is a really uncertain place at the moment, 378 00:21:14.319 --> 00:21:19.720 right and we've seen that and is becoming increasingly more dangerous, 379 00:21:20.240 --> 00:21:24.880 and we're seeing energy security and national security becoming ever 380 00:21:25.000 --> 00:21:29.720 more intertwined. So those sort of things, yes, sort of 381 00:21:29.799 --> 00:21:32.720 those sort of unknown things outside. 382 00:21:32.359 --> 00:21:35.839 Of your control, you always worry about whether. 383 00:21:35.599 --> 00:21:38.319 That is also just you know, something happening like really 384 00:21:38.359 --> 00:21:41.039 bad storm or a fire or something that that takes out. 385 00:21:41.079 --> 00:21:43.720 So the thing you can do is prepare right so 386 00:21:43.759 --> 00:21:48.599 that you have a team, a control center, system managers 387 00:21:48.640 --> 00:21:50.200 that can respond to that. 388 00:21:50.519 --> 00:21:53.480 In the moment. That is really really important. From a 389 00:21:53.519 --> 00:21:54.599 company point of view. 390 00:21:54.640 --> 00:21:57.359 The more macro thing maybe is that I worry about 391 00:21:57.480 --> 00:22:00.880 is around social license to operate, Like are we doing 392 00:22:00.920 --> 00:22:03.680 the right thing? Like are we hitting the right balance 393 00:22:03.759 --> 00:22:09.359 between security, affordability sustainability, Like are we acting in the 394 00:22:09.400 --> 00:22:16.119 interests of GBPLC consumers, businesses, society because we're not for 395 00:22:16.160 --> 00:22:21.480 profit business. We're a public corporation and ultimately we exist 396 00:22:21.599 --> 00:22:25.599 to serve society in the economy and we're only able 397 00:22:25.640 --> 00:22:27.880 to do that so long as we actually do a 398 00:22:27.880 --> 00:22:31.359 good job at it. So that's the bit overall from 399 00:22:31.359 --> 00:22:34.680 a sort of a company perspective, that you're always trying 400 00:22:34.720 --> 00:22:37.559 to make sure that you're creating that right balance there. 401 00:22:37.559 --> 00:22:40.240