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- [00:00]
A
I'm your host Ed Porter. Welcome back to Transmission. A solar array next to a hospital near Hull saves it about a million pounds a year, enough to fund more than 50 nurses. That saving sat there for years unbuilt until today. GB Energy calls itself an activist investor chasing down the frontiers. Private capital moves too slowly on deep water, wind, long duration storage, solar on hospitals and schools. So what happens when a state backed company starts making the bets that private money won't make first, our guest today is Dan McGrail, CEO of GB Energy. He's the one setting the strategy on how consumers see the biggest benefit from this newly formed entity. If you have any questions about the build out of batteries, solar or wind in GB or Europe, that's what CO is for. Head to Motoenergy.com to try now for free. Let's jump in. Hello Dan, welcome to Transmission.
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B
Thank you for having me, Ed. It's lovely to be in an air conditioned studio on a day of this impossible heat.
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A
Yeah, we're into second heat wave of the British summer and the power prices in this one aren't quite so exciting, exotic as what we had in the first one.
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B
Thankfully.
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A
Thankfully. Okay, let's get straight into it. So what is one thing that everyone gets wrong about GB Energy?
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B
I don't think it's one that everyone gets wrong but it's one of the common themes is that you know, GB Energy is a, is an energy company and our aspiration is to build an energy company in the model of other European state owned energy companies. So like an edf, like yeah, Ored or Vatten Fowl or so on and so forth, you know, and so those are our long term aspirations and sometimes people approach us in the thought of, you know, can we, that we're a government department and you know, yes, we're owned by the government, we're owned by and Desnaz is our shareholder. So we're very closely engaged with the whole world of energy policy. But we are a company and it's independently managed and operated in the interest of our shareholder who is ultimately the British public. So you know, I kind of want to make sure that people understand in the long run that we, you know, are, the business we're building is in the mold in the vision of having a British energy champion in the way that the Danes, the Norwegians, the Swedes, French have equivalent organizations.
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A
And so perhaps reading between the lines of that, is that more saying that as a company there's that commercial focus on the projects that you would engage in Rather than how, say, Desnes might look at a market, Desness might look at a market and say, we need to sponsor this very early stage project because it needs development money and it needs sort of a high risk attitude. But you would say, and the same way that an EDF or a Vattenfeld might say, they'd say, well, look, does it make sense for our investment committee to do this?
- [03:11]
B
Yeah. And so we operate in exactly that way. We have an investment committee. But I do think there's the one thing that a publicly owned energy company has done differently is a duty and a responsibility to identify the frontiers where you're trying to move the energy market towards. And you know, the way I kind of tend to encapsulate this is where do we have high levels of national ambition, whether that's in, you know, the deployment of energy projects or whether it's in the technologies that underpin them. But the private capital isn't moving as freely or as quickly as we'd like it to. And that takes you down certain avenues. And when the way we developed our strategy and the way we thought about it was very much along the lines of, okay, yes, being additional to the energy market matters, but in the long run, we hope that that additionality in certain fields of technology will lead you into a space of sort of leadership. So if you take Orsted as an example, you know, they started, yes, they were an oil and gas company that just a huge corporate transformation to offshore wind and in doing so, built like really deep competence and know how and became a leader in offshore wind to the extent that, yes, they are publicly owned, but they're publicly owned and a market leader. And that's sort of, my hypothesis is that you have to choose areas where you can build competence and ultimately differentiation in the long run in that aspiration of building an energy champion.
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A
So it's not just that you're sort of naturally drawn to the frontiers, but there is this. If you, if you commercially want to try and get ahead, you need to think not just to do the same thing that all the other companies are already doing, you're trying to find the niche and the edge where you think that there's not quite so much activity today and you can build up that expertise. And then in the long run, that would allow you to then hold a much bigger position.
- [05:09]
B
Yeah. And also, you know, you got to be careful not to crowd out private capital because, you know, there are areas where the energy market is doing, you know, superb work. And if you just look at what's been done in this country over the last, you know, decade or so in terms of like moving generation capacity, particularly on the generation side.
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A
Right.
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B
I think, you know, there's lots of areas where that they've, you know, they've been sort of slower progress. But on the generation side, you know, that transformation of the, the energy system towards a much more renewables heavy system, the exit of coal, that has been driven by policy and it's been driven by private innovation and private capital. So we clearly don't want to go into spaces that just crowd out. You know, that's, that's working well. We want to go into the spaces. We're actually trying to do the converse, we're trying to crowd it in. So an example of that is, I know that will come on to storage later but if you, you know, maybe just to stay with generation for a second. If you take offshore wind, we've done a really good job in Britain of sort of building out the pipeline but we're getting to the point where, you know, we need to build offshore wind in deeper and deeper water and that frontier hasn't been crossed yet and there are companies that are willing to take that but they kind of need the patient activist investment of a GB Energy to help, you know, build that pipeline into the future and sort of carry the confidence across that frontier. So you know, that's why we've kind of very early in our development we saw let's make an investment in that space and we continue to explore it. And other areas are like long duration energy storage where you know, I think nobody's really cracked deploying aldes at scale. So you know, that's a clearly an area where we think yes, there's a role for an activist patient investor. But at the same time whilst we're doing that work we can build knowledge and capability along the way.
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A
Yeah, I think this sort of activist investor is a nice way of describing it. When you sort of originally said we're a government owned company but we are sort of commercial in nature and then you went to say, well if all of these sort of commercial companies are already doing this thing so we're going to go and do something else, I felt oh, that's like if I look at the other sort of national energy companies, they don't really do that actually lots of them crowd around each other doing the same thing. They chase sort of safe projects. But as you're saying, if you describe yourself as that activist investor then you with a sort of slightly longer term view then that to me Explains why you're not doing exactly the same thing as others. And you might be looking for things like floating wind. Maybe. Let's follow through floating wind. I know wind's your background as well, which is a nice place to be. Where is floating wind today in terms of its development in gb and how did GB Energy see it? How are you getting involved?
- [07:52]
B
Well, first thing we've tried to do is change the narrative from being just about floating wind to be about deep water. We talk about deep water a lot because there's a technology maturity and convergence that needs to happen in that space. And what we've done in Britain, in, in this, in this world is obviously we've exploited very well the shallower sea. Yeah, We've even pushed the frontier of what we think shallow is into sort of working into deeper and deeper territories. But we're probably push the, the boundary of what's possible with, with let's say conventional fixed bottom wind, you know, a
- [08:28]
A
monoc scaffolding or a monopoly or a
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B
jacket as the industry calls it, you know, which is basically, as you say, like a kind of modular steel structure. So you get to a point where you have to find different ways to, to do this. And you know, we see, you know, what we've, what we've done as a country is we've leased in Scotland and in the Celtic Sea significant parts of the seabed for development of, of these deeper water projects. That was done to a certain extent with quite a lot of fanfare and optimism, I think at a time in history, in 2021, Scotland, where economic conditions were quite benign, you know, in a post pandemic world, you know, interest rates were low, geopolitical situation was relatively, you know, maybe benign's the wrong word, but, you know, we were kind of coming out of the pandemic maybe with a degree of sort of optimism for, for growth. And then Ukraine happened and we saw inflation in supply chains kind of move the economic dial on nascent technology of various different types, in fact, energy technology of all types of particularly because there's a big, you know, the cost of steel went up, the cost of aluminium, the cost of nickel, you know, all of these kind of key components that we need to build energy infrastructure.
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A
And critically, the cost of capital and
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B
the cost of capital went up, you know, and that's really crucial now. Does the world's. Does, does our need for those technologies fall away? No, we need, you know, we're. Energy transition is, you know, is ongoing. It is going to continue for quite some time. And electrification of the economy. You know, the kind of calls for all sorts of new technologies to be brought about. But that's an area where I think of where Frank, you know, it's not made the progress that we want and it's because of those externalities. So what we, you know, then kind of conclude is look, you know, some injection of confidence that this is important in the long run. And I often say about deep water, wind and floating, what have you is that you, you need to have real faith in the destination in order to set off on the journey. And the reason that is the case is because, you know, building these types of wind farms at scale requires, you know, big investment in port infrastructure, big fabrication facilities, a lot of investment in skills. And that's just to kind of get you on the Runway. So you know, you've got to have that kind of long term infrastructure thinking to be able to do it. And, and, and that's why we felt it was a very clear role for us.
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A
Yeah.
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B
Because you know, we can see that, we believe, we have faith in the destination but also I think we as a, you know, as a sectoral, you know, base body who, in other words people who understand the market and, and the technology that we would be bringing a clarity on not only what needs to happen but also how it should be done to, to, to the landscape.
- [11:35]
A
Well, let's follow this kind of thread through because I think it's a, it's a, it's a good example, right. To get straight into with this, with the concepts of sort of deeper offshore, offshore wind. How well is, is it your role? So you talked about this kind of onshoring or making sure the ports are fit for purpose and you have the kind of capability that sits around those sites. And I agree with you. Like if you're going to develop those projects, you have to have the capability within the country to enable supply chain and enable construction of these, of these floating wind turbines. But is it your role to do that as a sort of an energy company backed by government or government owned energy company? Should you be thinking about an investment in infrastructure like the ports? Or is your role not to say, well somebody else should think about the port and we should be thinking about the project itself. That's the floating offshore.
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B
And I think, you know, look, big infrastructure investments like pause. So let me take a step back. Okay. If I may. So we know we've embarked on a strategy which has kind of got three pillars and one thing that's overarching and I'll come back to Your question in a moment. But the three pillars of offshore and deep water onshore in particular focus on, you know, a couple of aspects. One is sort of eldes, one is utilizing public land more effectively and then local and community, very different, very discreet parts of a business.
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A
And ELDES is long duration energy storage.
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B
Yeah, sorry, yeah, forgive me for the first sort of jargon, utilization today. And then right the way across that is the subject of supply chain. And, and we think supply chain is important for a number of reasons. One is for a resilience reason. You know, I think increasingly there are areas where, you know, we need to sort of to, to, to de. Risk our, our, our, our future of energy transition and reduce dependency on, on, on other, other sources or other countries. But also because look, you know, this is fundamentally one of the most interesting economic opportunities. We live in a time when, you know, the big things that are happening in the world are, you know, AI, demographic change, urbanization and an energy transition or you know, climate related stuff. And I feel quite strongly that there needs to be prosperity that arises locally out of that. If you think about the way that the energy system used to look, you know, a big coal fired power station or a big nuclear powered station. Power station would have a massive local impact and a massive local benefit basically in terms of jobs and renewables is different in that regard because it has a big local impact but it has a distributed benefit. And that is arguably one of the brakes on the energy transition is people feeling that they're not benefiting from hosting infrastructure in their community or. And that's why I think, you know, what people really care about isn't necessarily where their electricity comes from or you know, the people switch their electric, their light on in the morning or they plug in their electric car or wherever it might be and you know, we ought to take it for granted. But what they do care about is whether their children have got employment opportunities or an apprenticeship or you know, aspiration in their local area. So bringing it back to your question about this about wind, it's like, you know, you're right, there are other actors who are much better positioned to invest in things like ports. But what we want to do is unlock the things that go on them, okay? The factories, the service companies, the technology companies that drive employment, you know, innovation and long term footprint. Because when you finish building the wind farms and we've done the energy transition, the legacy that I would like there to be afterwards is that we have built deep international know how that when those other, when other countries around the world are going through their transition that they rely on engineering and technology and jobs that are here in Britain now that can't be across everything. It's got to be in areas where you are, you know, excellent and you decide that you're going to be excellent. But you can do that within many aspects of the energy transition. So again within floating wind, we in Britain are excellent at subsea engineering. You know, we have done this through the oil and gas industry. We kind of pioneered off offshore wind, sorry offshore oil and gas. We pioneered working in really deep water to the extent that almost, you know, any offshore oil and gas project in the world was probably engineered at least partially from Britain. So and my aspiration simplistically is that we end up in the same place with the renewables transition and in the case, in this case with deeper water, offshore wind.
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A
Yeah, I think it's, I think it's fascinating because it's kind of the, the, the competition between a company wanting to be commercial and then also this kind of longer term vision of jobs which I would say most other companies don't think about too much as a like top priority. Like they probably, they worry more about the sort of the bottom line before they worry about sort of the long term of jobs for the particular country they're based in. So that is different. I think there's also this, this concept that you're thinking about exporting skill sets. I mean I look at the energy industry in gb, we have a lot of other national energy companies that have brought their expertise in to gb. I mean there's loads of examples, I mean maybe to leave PH stuff for a second, there are loads of examples of trading businesses where trading expertise from Europe also plays in the GB market as well. And so that clearly happens one way. I would be very excited to see GB exporting once again. Lots of its infrastructure know how to other parts of the world. But I wonder, and maybe this is kind of where we're going to get to on this, I wonder whether it's the role of a sort of a company that is trying to maximize profit to do that or whether it's the role for like a government to try and do it and you sit in this kind of like gray zone in between. Which is why I think it's quite interesting.
- [18:06]
B
Yeah, I think the difference is you use the word, you know, maximize profit and I think there's the, you know, commercial and commercial instinct doesn't necessarily need to lead you down the road of maximizing stuff. It can lead you into the, the World of saying, okay, and, and I would argue, look, I used to. I've spent most of my career in the private sector. I'm a very much, you know, a private sector thinker. But I would say that the company that I started my career in, you know, I didn't join a company whose mission statement was all about maximizing profits. I joined a company whose mission statement was very much about, you know, impact and legacy. And, you know, I think that, you know, there were various different strap lines, make real what matters, or, you know, technology for every day and stuff like that. You know, you kind of have a purpose that goes beyond return, and that's what makes companies last a really long time. And the other thing I'd say is, look, and you know, maybe the reason why things are get coming one way and not come the other is because there have been companies in, you know, in Sweden and Denmark and Norway who've had a purpose that goes beyond, you know, if it's just about return, then it's, it, it leads you down certain roads. It's leads you down the roads of maybe lower risk or maybe leads you down the road of, you know, taking more risk, but only doing so because you really want to maximize return. For us, we might take more risk because we want to maximize benefit. We might want to maximize impact and the return matters, but it isn't, it isn't. The, the reason. The reason is, is something more.
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A
Yeah.
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B
And that's what I think public ownership can deliver for people, as opposed to just wholly private ownership. And I'm not saying it's either or. That's the thing. It's not either or. It can be. Those two things can coexist quite comfortably. I don't talk about public investment very much, but I talk about public entrepreneurship. This is about us understanding how to share risk, how to work with the private sector together and doing so with outcomes in mind. And whether those outcomes are employment or they're about, you know, accelerating the transition or, you know, making sure that there's more specific regional outcomes. And we should talk about other areas of our strategy, but ultimately about making sure that, you know, there are transition opportunities for other industries. These can all be comfortable missions that sit alongside each other.
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A
And I'm, and I'm really next, I want to go to local energy and the role you're playing in local energy, because I think that's really interesting and it's kind of, it's another part of that strategy leg. But just before we go there, you mentioned just working alongside other private companies. So how do you get that right? When you're working alongside other private companies? Where is the, are they sort of excited to see you on projects together because it's like an equity injection type thing, or are they sort of just trying to sound out exactly how GB Energy is going to function? What's the right role that you play alongside private in investment into these projects?
- [21:15]
B
So look, I, I, maybe again I'll take a step back to answer the question. When I was early in my career at Siemens, we spent some time developing a wind turbine factory which I led in, in Hull now. And when I was developing that project I took it to the board of the company and the question from the board of company very reasonably was, well, what, what happens if the UK government changes its mind on offshore wind? Yeah, what should we do? I think that's a question that any board responsibly would ask about building a business in, you know, a nation area and the present. I, I, I, One of the things that drew me to working for GB Energy and leading this was the thought, the concept that actually if there had been a GB Energy around when I was taking that project through approvals, I'd have been able to answer that question easier because I've been able to say, look, you know, the government is putting its, or the, the British public are putting the stake in, in this and sharing the, the risk and the, and the opportunity that comes from it. So I probably would have been able to deliver that project sooner because I'd have been able to answer that question quicker. And so, so I, I came into this job with a hypothesis that the market would like the idea of this to work alongside. And to my pleasant surprise when I joined, when I started, I mean, that way GB Energy had received inbound inquiries of like north of 50 gigawatts, which for the energy, you know, sort of layperson, that's about the same amount of energy as the whole British energy system at the moment. Peak demand is when the aircon's on.
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A
Yeah, you know, exactly.
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B
So this was without cultivating the market, this was just unsolicited inquiries.
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A
And when you say inbound, that's people who were saying, pitching a project to you and say, exactly, Dan, would you like to come along and invest in investing it?
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B
So you know, we had to unpick that and work out, okay, where do we think the best places are for us to act? But as a, as a sort of, and to your question, as a confirmation of the interest of the market in having, you know, GB Energy participation That's, that was really strong sort of confirmation to me.
- [23:41]
A
So, so yeah, so going back to that question, there was, my question was how do you work alongside private capital, private investment? And you're saying it doesn't really matter. They just wanted to come and work with us straight away because they could see our.
- [23:53]
B
It's not that I'm saying it doesn't really matter because there are things that matter to us now. That was when I started. Now I'm like, you know, a year in we started to build it. We've built a strategy and the strategy, you know, is a, built around the three pillars that I mentioned. And, but, but also look, you know, there are time. We are open minded to coming into projects at the development phase, for example, to work alongside and share the risk in development capital because development capital is probably the riskiest part of projects. We're open minded to coming into projects at the investment decision point during construction risk and we are open minded to taking ownership in assets in the long run. Now that is different depending on the various different technologies. Clearly an investment in a big offshore wind farm for example, at, you know, into enduring operation is a much bigger ticket than, than, you know, it was owning a, you know, a solar farm or a battery storage project or so on and so forth, you know, so we have to be selective about how we use our capital in that regard. But, but we are working with people at various different points of the value chain where we think it really helps to, to, to increase that confidence of the private sector.
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A
Okay, thank you. That's. And I did promise I was going to get onto local energy and I, and I, and I do definitely still want to get there. But I want to ask one more question first, which is you're very interested in supply chain and you're very interested in enabling and this sort of activist investment side. When I look at the energy market in, in gb, I think one of the things that worries me the most is probably the sort of electrically qualified or epc, so the, the companies that would construct some of these projects. I worry that we don't have enough people to do the work that we need to do. And I think it's really high risk. And, and my brain is kind of like as simple as it is, it's just saying hey, look, could this, is this something that GB Energy could be involved in? I think from your, from your question, your answer so far, I would say no because that's more of a sort of almost, that's more of a government type initiative rather than and this is
- [25:58]
B
some ways back to your first question is like, we're not, we're not, we're a company, we're not a government department. And I think, but, but, but to your point on skills and skills development, you know, there, we are publicly owned, so there are things that we should be exemplar in, in the skills landscape. We should make sure that we are driving, you know, apprenticeships, we should be supporting local development of skills. We should be where we are investing in supply chain. We should be using our influence to ensure employment standards are excellent. That, you know, if, if there's an opportunity for the role of trade unions, if that makes sense, you know, so there are spaces where we can use our influence as a publicly owned investor for, for good.
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A
Okay.
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B
What I would say about the wider skills transition is I think I agree with you, at least conceptually, but I think when you get to start to break it down, and in my old role at Renewable uk, we did a lot of work looking at the skills required to deliver just the offshore wind industry's needs. And when you, you know, you look at the big numbers and you go, oh, crikey, there's a lot of people needed in offshore wind.
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A
Would.
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B
The industry employs about 55,000 people today. About 100,000 are needed to deliver the sort of upper limits of the government's aspirations. Now, a lot of those numbers are not constrained skills and it should be framed more as opportunity. There's loads of opportunity for all sorts of different types of people from all sorts of different backgrounds, but there are some scarce skills. And, you know, so electrical, electrically qualified people, I think is a real national issue that goes beyond any one sector. But I think industries have a huge responsibility and soul in that because they know better than anyone what they need.
- [27:47]
A
And you should be exemplar in terms of how you're finding those people to join your projects. But it's not your responsibility.
- [27:53]
B
I think it's GB's and skills is a, you know, it's also a devolved issue. It's a very local issue and, and therefore it's more about being an active part of an ecosystem that solve this. And, and, and to your point, on electrically qualified people, you know, there are huge range of variations on that. We'll need people to install EV chargers, heat pumps, solar panels on roofs. Yeah, people understand how to install batteries. Electrification is just this huge national change. People are used to working with internal combustion engines, but need to work with batteries. People used to working with gas boilers need to work with heat Pumps, you know, so you've got this kind of mechanical to electrical switch. And I think that that transcends energy, automotive, construction, and therefore that's an education issue, a skills issue, which sits at a level you know, beyond any one sector. But we all need to come together.
- [28:49]
A
So as a, as a fun question and maybe taking off a GB energy hat for a second, if I was to ask you at age 16, if you can dial back the clock to when you were 16 or 22 coming out of university, and if you were in those shoes that people are today, like, where would you go in the energy sector, where do you think your first job would be if you got the chance to choose again?
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B
Well, when I was 16, everyone was going off to work in oil and gas. So it was like, you know, that. But, but the world changed. And so if I, if I was, you know, now to a really good question, look, I say to my children, maybe that's the better thing. You know, I say to my, I don't really try to encourage my children to think about engineering as a profession and technical skills and enjoy maths, enjoy science. If I was to look back at myself at 16 and probably said, well, why didn't you listen in physics a little bit more, you know. But I think if you build up that base level of understanding of mechanical, electrical and software and probably AI, you know, that opens up. And my dad said this to me when I was 16, and I say it to my kids now, the best thing you can have is options. And one thing about having those, if you have those sort of four areas, is you've got loads of options because you can go into high voltage, you can go into working in automotive, you can go into work in infrastructure. But if you can give yourself those sort of core base, sort of understanding in the technical world, then that gives you the most options whatsoever. So I know that is an answer to your question.
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A
I was gonna say, but I don't
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B
think it's fair for me to say. I think one thing is better than the other. But energy transition is going to go on for a really long time and therefore there is a generational career in this. And I think that, that, you know, that's a, I think is a really exciting thing for people.
- [30:35]
A
There's a fascinating, like 10 to 20 years of transition going on. And if you're thinking about where to go, like, I hope you're excited about that. We certainly are. Let's move on to local energy because I promised it earlier and we should, we should get there I don't, I don't know, maybe, maybe I'm a bit of a skeptic on it, but let's, let's get into it. So how does it, how does it fit into your overall strategy? And maybe to my skeptic side, why do we need it?
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B
So I think I would be the first to admit I come from big infrastructure. So when I came into this, this role it was important to learn. And I think, I think skepticism is fine if you're willing to learn about it. And if you're skeptical because you just don't believe, then then that's probably just, you know, ignoring it. And what I think what is the most powerful thing is to go and see it in action. And it's not about, it's not about, it's not about the wind turbine or the solar farm. It's about the impact. And so I go to, to a place called Shapon, say in the far in or it's an island off or where I went to. I spent a few days in or. It was fascinating because embedded local energy is really normal. Orkney's got about 22000 people who live there. There are 800 wind turbines, I mean, you know, distributed across a number of islands which is a, in terms of a concentration is really high levels of EV uptake, levels of heat pump uptake, levels of solar uptake are way above national average. And one of the reasons why, and it's. This isn't without a world, without its challenges, but one of the reasons why is the huge benefits. And at shop and say they put up a 900 kilowatt turbine and they'd done it a time during, let's say following the financial crisis in which funding had been caught by the local authority and they were sort of out of necessity thinking what do we, you know, what do we do here to fund our essential services? So they built this turbine and it's owned by a development trust by the island which has then gone on to become the biggest employer on the island because the gen. The profits that are generated from that scheme are then reinvested in the community. Now I know you will probably be asking your question and the skeptical question from an energy system perspective, but I kind of wanted to start at it from the kind of human end because that, that, that development trust now is building social housing, it's improving insulation for, for people who have got fuel poverty issues. They're funding bus services so people can get around the island. They've put it on extra ferries so that they can people can get to work on time and stuff like that. So it's having a social impact that far outweighs a wind turbine.
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A
Right.
- [33:39]
B
And, and I think that, that you've kind of got to start with that potential to come to your energy system. I think angle, I think there's a huge role for, in the, in the long run for sort of smart local energy systems to sort of act as, as sort of spongy nodes on the system where we can sort of manage supply and demand. I don't think it's all about energy generation, I think it's about how you optimize generation, demand storage in concert with the wider energy system. And I don't think that's about any one solution. I think it's about how you work out the right role that energy can play in a local environment and in a local setting. So one last point on this is that the impact that this can have in the public sector and outcomes. I went to a hospital in, near Hull where they had a field next to their, that hospital and they built a solar array which was saving them about a million pounds a year as a hospital, saving them a million pound a year. Now I don't know how they're spending that money but if they wanted to, that million pound a year could fund north of 50 nurses.
- [34:59]
A
And GPMG's done a lot of work, right, putting solar onto hospitals, onto schools. Absolutely where the opportunity has been sat there all this time. But until GPNG came along and said hey look, we're pushing this, it, it didn't come through.
- [35:10]
B
And, and you know, if you are running a public sector organization, capital is scarce. You're going to prioritize the things that are the closest to your core mission. So if you need, if you have
- [35:21]
A
capital in hospitals, training new nurses, not building pv, that's, that's unnecessary, I don't need it.
- [35:26]
B
It's, and it's of course one of the things that was interesting. I'll give you another example. I went, I went to a school where it was a multi academy trust. They had some 28 schools in this trust and during the energy crisis their cost of electricity across that estate had gone up by half a million pounds. So it's not core. Energy is not core for a school. But as soon as the cost goes up by half a million pounds across, across a number of schools, then it becomes pretty important. And they had put in solar, not on all 28. They'd done it, managed to do it. You know, not every building was appropriate for it. But they had significantly deployed it. It was Probably, I'd say 20 to 20, 23, something like that of their, of their school estate. And more than offset that to the point that the, their payback period was under five years for that investment. That's phenomenal. That's phenomenal. But they had done it and they'd been able to do it because they were, they had the way they were, the unique way they were financed and also because ultimately this cost had become core. Our point on this is, look, this can be not only transformational for the education and the healthcare outcomes and you know, we can think about all the settings where this can be done, but also in settings like social housing where you can kind of give a direct benefit to households, especially if you start to combine that with battery storage. Because, you know, things like charging our evs in the future is going to be an important matter. And making sure people have access to low cost energy to do that is going to be really important.
- [37:03]
A
It is, it is so important to get the battery storage alongside the solar. If you just have the solar on all of these demand centers, effectively you create a demand that gets really spiky around the peak.
- [37:13]
B
And so, and we saw what happened in Germany when that, you know, the feed in tariff was sort of massively oversubscribed, you know, a long time ago. And what that did is it MEANT There was 35 gigawatts of energy coming onto the network every morning and coming off every night. And then the result was the, you know, balancing that with brown coal and it creates stress. So, so it's the strat. You do need to avoid that. And I think you're absolutely right. Making sure that you balance that. And, and again that, that make, that makes the challenge even bigger for, you know, social housing providers or for schools or hospitals is they, you know, you know, batteries have just increased the capital cost of doing this really well. And if we come at it from an energy sector perspective, understanding that those outcomes that I referred to earlier in terms of the communities, but also in terms of the public sector, when we think about them and we bring an energy lens to it, we can maybe do it better than if it's done in a kind of disorganized way at
- [38:16]
A
a lower cost, that disorganized thing, that's, that's the bit that I'm a little bit worried about. So I have a solar panel and I have more than one solar panel. I've got 10. It's exciting. And a battery together. Well, I love it. I love It. So this has been a double think. I'm a huge advocate of having that on your home. But at the same time the bit that worries me is a little bit like Germany's distribution network operators. There's kind of one grid in Germany, effectively. Well, there's four transmission network operators and then there's 800 plus distribution network operators. And I kind of think, Christ, running a system with like 800 individual network operators, isn't that just the most chaotic thing possible? And that to me is a little bit of the worry about local energy is that if you had to run 800 or 10,000 local energy companies it could be a real nightmare. But if you have governance that means it's all sort of run efficiently from one sort of mother company, perhaps then perhaps it could be done very nicely. I'm not sure where I land on this, but that's the bit that worries me a little bit.
- [39:10]
B
I think maybe it's in the language. So I agree, I think you have lots of network operators then it would become complex. But if you've got lots of system operators and it's smart, and it's smart from the get go and it's integrated, then it can work in a different way. So I don't think it's necessarily about how it's. I mean, and we live in an era where, you know, the sheer potential for autonomous thinking and stuff to happen here is massively interesting. But you've got to get there in a way where you create rules of the game and do it in an integrated way, I think.
- [39:54]
A
Okay, I want to ask two more questions. There was a headline around 8.3 billion. I think that's the right number for GB Energy originally. How are you getting on with spending that? How much is left? How much has been committed?
- [40:07]
B
Oh, look, we're just getting, being realistic, we're just getting started. And whilst I mean I won't get into the numbers in detail, they're in the public domain if people want to research them. But clearly no one expected us to do all that in week one. Right. So we're at the end of year one. So we had an act of Parliament on the 15th of May 2025. We're sitting here today in July 26th and thankfully the planning allowed us some time to get match fit, build our business, build our team. We have started with, we've made investments in the Pentland offshore wind farm. We've made investments in ITM Power, the hydrogen electrolyzer manufacturer. We've got a number of more, a number of Investments, you know, obviously commercially sensitive, I can't talk about, but that we are working on. This year we've launched our first fund on the supply chain investments and grants. So we are making progress and. Yeah, and we'll publish an annual report and everyone can read the details in that.
- [41:05]
A
Okay. Okay. No, no, no firm answer, but I did enjoy the World cup reference sneaking in about match fit, which is, which is great to see. Okay, which leads me to my final question, which is around a contrarian view. So what is something that you believe in, energy markets that not everyone believes?
- [41:21]
B
Probably a few, but I maybe stick with the kind of industrial bit. So I think recent history has shown us that people believe the best way to deliver energy markets or to deliver energy outcomes is to build markets and let's, and let the, and buy the cheapest. Get work out how to get the cheapest thing. And I believe that for a very, very, you know, small change in behavior, we can build real industrial legacy in Britain. And it's not because it's all about us having local content. It's because we value industry and we should value industry more than perhaps we have, but we also have something to offer. And I give you the exact example, maybe somewhere close to where I started, which is in like if you take wind turbine blades, you know, we in Britain are fantastic aerodynamic engineers. There's a reason why we make wings for aircraft here. We are brilliant. Where there's also a reason why we have all the Formula one teams here because we're great aerodynamic engineers. We're also brilliant with composite materials. Composite materials again, aircraft wings, we got some world class composite capability. They are in adjacent sectors. And the more that we draw them in to wind turbine blades, we can become world class at not only the making them, but how you make them, how you engineer the future of them, how you make them more efficiently, how you do it with higher quality. So you become like a world center in that particular thing.
- [43:10]
A
Yeah.
- [43:11]
B
And again, like my, you know, my, if I come back to aerospace, you know, aerospace has a strategy that says we do four things really well in Britain. We do wings, we do landing systems, we do propulsion systems, and we do avionics. Those are the four things Britain is world class at. And I think we should be developing an industrial approach to energy that says and these are our four things or five things or whatever it is and that we really invest in that with our whole innovation ecosystem, all our public finance ecosystem and become a real center of excellence. And that isn't about having 50, 60, 70% local content. It's about having 50, 67, 70% global market share in those areas. And I think that's where we should
- [43:59]
A
become because the narrative would be this all exists in China and China does it so well at such low cost that you just can't even compete with it. And you're saying I'm not trying to make a manufacturing supply chain that is a replica of China's tomorrow. I'm saying we should try and find parts of this where we are genuinely excellent and we can contribute to a global supply chain of this rather than try and stand up our own version of a replica industry.
- [44:23]
B
100%. That's what I'm saying is that what is our value proposition as Britain to the world in energy transition? And I mentioned like wind turbine Blaze is a great example. It could talk about subsea technologies, subsea cables, all of these kind of things where we could become real global champions and build industries that out survive the energy transition in this country and are exporting to the world for many years to come. That's my aspiration and hope.
- [44:52]
A
Dan, thank you very much for coming on transmission. You've been a wonderful guest.
- [44:54]
B
Thank you very much indeed. No pleasure.