Should all-male boards put themselves on their own risk registers?

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive of the Energy Institute, surveys the Energy Barometer’s findings on sector diversity.

It would be strange for a business to needlessly surrender market share. Or cut into its profit margins for no good reason. But the evidence is stacking up that many of the biggest corporates in the UK energy sector are doing exactly that.

In January, research from McKinsey found that companies with the most gender diverse leadership teams are 21% more likely to experience above-average profitability than their less diverse competitors.

Cue the POWERful Women initiative, which last month crunched the latest numbers and found that almost 9 in 10 board members at the UK’s top 80 energy firms are men. Half of those boards have no women on them at all.

Against this backdrop, the Energy Institute’s Energy Barometer, which provides a representative snapshot of opinion among energy professionals working in the UK, this week entered the debate.

The report found the benefits of a diverse workforce, in terms of gender as well as ethnicity and other measures, are understood by a healthy majority. Two thirds see it as important for the future success of their company or sector. This rises to more than three quarters among younger professionals in the first 5 years of their careers.

The main benefits identified by respondents are an increase in skills and capabilities, the introduction of a wider perspective and an increase in the ability to attract and retain staff. No doubt, these are precisely the factors that underpin McKinsey’s findings.
Now comes the but.

1 in 10 respondents to the Barometer survey continue to see diversity as unimportant and a further 16% are ambivalent. Furthermore, 30% of respondents do not believe there are any obstacles to diversity in their company or sector. This is either encouraging or rose-tinted.

Given POWERful Women’s findings, I find it hard to see it as anything other than a cause for continued concern and action. Ambivalence risks unconscious bias and this underscores why all companies in our sector should be upping their game to foster inclusive corporate cultures.

The evidence connecting diversity with financial performance and enhanced reputation is mounting such that if all-male boards do not correct this – perhaps by putting themselves on their own risk registers – their shareholders will surely intervene and do it for them.

All this talk of business benefits helps make the case. But let’s not lose sight of the reasons all of this ultimately matters.

First – if humankind as a whole is to rise to the twin challenges of climate change and global access to energy, we’re going to need every bit of talent available to us. Building a modern, diverse energy system demands a modern, diverse workforce.

And second – women have a right to play an equal part in an exciting sector of the economy, one that offers some of the most rewarding careers.

As tomorrow is International Women in Engineering Day, and during the Year of Engineering, I want to end with a special shout out to the women who are thriving in energy, helping to solve some of the world’s most pressing challenges, and changing the sector for the better.

This blog first appeared as a blog post in Energy Live News on 22 June 2018.

Thickening Brexit fog obscures future for UK energy

Steve Holliday

Steve Holliday FREng FEI, Vice President of Energy Institute and former CEO of National Grid

Energy and politics don’t make good bedfellows in the same way that investment lead times don’t fit well with election cycles.

There are various ways that business and logistics can rub up horribly with politics. Policy can suffer at the hands of kneejerk decision making, the complexities of technologies and markets don’t readily translate into headlines and tweets, and physical interconnection across national borders can jar with parochial national interests.

And yet energy is essential to our economic prosperity and social wellbeing. Ministers need work with the industry to make sure demand is met, emissions are cut and bills are kept under control. This has always been the case, but Brexit throws the challenges of keeping all these plates spinning into even sharper relief.

A year ago, the Energy Barometer – the annual ‘state of the nation’ survey from the Energy Institute – revealed acute concern among the UK’s energy professionals about the impact of Brexit.

They advised ministers to seek means of continued close cooperation with the EU in this area. Existing EU energy laws governing how our markets work need to be seamlessly transferred into UK law. A comprehensive energy and climate chapter needs to be stitched into the future trade agreement with the EU.

Workforce availability was also singled out a significant concern for energy professionals, with 60% of them anticipating struggles in employing the skilled workers the sector needs.

What a difference a year doesn’t make.

Twelve months on and the fog of uncertainty has, if anything, thickened. The new Energy Barometer, published yesterday, shows Brexit is now the second-most pressing concern for energy professionals in the UK.

There are no clear answers on the future immigration regime, or the UK’s anticipated relationship with the EU single energy market.

During my decade leading National Grid, I was acutely aware of the interconnected nature of the UK’s energy system.

More than 40% of the gas we use is imported through pipes joining us to the European mainland. About four per cent of our electricity is already imported via four power lines from Europe. This could move closer to ten per cent if some of the dozen or so proposed new cross-border interconnectors go ahead.

Membership of the EU isn’t essential to a fruitful relationship with our European neighbours – after all Norway provides up to a fifth of the UK’s gas. But the efficiencies that we have developed through trading energy freely with our EU partners have brought huge benefit to the price paid by consumers, the resilience of our economy and the prospects for the climate.

The lack of clarity around the future of the Northern Irish border muddies the already complex process of establishing the island’s integrated single energy market and casts doubt over the proposed new North-South electricity interconnector.

The sad irony is that these problems are emerging just as extraordinary things happen in the energy system of the UK. Cost reductions in clean electricity have all-but wiped out coal and low carbon sources now provide more than half of the power flowing over our grid. Similar moves are expected for road fuels even before the government’s proposed 2040 ban on new petrol and diesel cars takes effect.

In the Barometer, professionals do acknowledge some possible long-term benefits for a more ‘global Britain’ – new trade deals, flexibility around infrastructure investment, greater control over carbon pricing policy and export strengths in energy services and smart technology know-how. Under better circumstances, I would be shouting all of this from the rooftops.

But, with March 2019 fast approaching, answers to the biggest questions are needed. The stakes are high. Energy is critical to the UK’s economic prosperity and social wellbeing. It must not be left to chance.

This blog first appeared as a comment piece for politics.co.uk on 20 June 2018.

Now for an energy record really worth celebrating

Steve Holliday

Steve Holliday, Vice President of Energy Institute and former CEO of National Grid

Steve Holliday reflects on the 10th anniversary of the UK’s last generation-related power cut, and a decade in which the grid has coped admirably with an ever cleaner electricity mix.

Almost every week it seems that Britain’s energy transition breaks new records. Already this year we have had the longest period (three days) without using any coal generation since coal generation began, while we have also seen that on one perfect early summer’s day solar was the biggest source of electricity in the nation. On both the demise of coal and the advent of renewables we had better get used to the records coming thick and fast.

This weekend, however, we should be celebrating a different milestone in Britain’s energy progress – one that is, I would argue, much more profound. Sunday 27th May marks the 10th anniversary of this country’s last power cut caused by a problem with electricity generation. We do of course have local power cuts, but they are virtually all caused by breakages in the local electricity distribution networks, when, for example, a workman cuts through a cable or wind brings down a power line. Despite occasional outbreaks of doom-mongering headlines, outages caused by a shortage of electricity generation simply haven’t happened – one of the reasons why Britain can boast one of the most secure energy systems in the world.

The events of 27th May 2008 demonstrate just how bad things have to be before a generation problem compromises our electricity supply. The problem began when Scotland’s biggest generator, the coal-fired power station at Longannet, went offline unexpectedly. Five minutes later, in a completely unrelated incident, Sizewell B nuclear power station in Essex followed suit. The odds of such a twin outage are vanishingly low; even so, we almost coped. Managers reduced the voltage on the grid, which normally would have kept things stable until another power station could fire up. But on this occasion, incorrectly set controls on smaller generators meant that the voltage drop tripped them out too. The only solution then was to cut power to an estimated 580,000 homes, for an average duration of 20 minutes.

Our historical records are not perfect, but I believe this was the only power outage that anyone in the UK has suffered caused by a lack of electricity, as opposed to the lack of an intact cable, in well over two decades. The lights stayed on during the Didcot B fire in 2014, when two nuclear power stations were also shut down for unexpectedly long periods; stayed on too during the 2016-17 winter when a large chunk of the French nuclear fleet was shut down for urgent safety checks. This winter as the Beast from the East cast its icy blast across the country and the gas supply faltered, again, we had no issues.

Britain’s energy security record is worth celebrating for two reasons. One is simply that energy is the lifeblood of a modern developed nation. From the pensioner in a council flat to the boffins in the high-tech data centre, a constant, reliable supply of electricity is essential. And Britain’s electricity system provides it.

The second reason is that our energy system is in the middle of what some observe as a messy-looking transition. We need first to shut our coal-fired power stations (which will be done within seven years) and then clean up gas generation, while continuing to increase the use of wind and solar power with their rapidly falling costs and contribution to decarbonising the system. Ten years ago, grid engineers warned that deriving more than 20% of our electricity from variably-generating wind turbines and solar panels would put too much stress on the system. That is one prediction that emphatically missed the mark: in the first quarter of this year, wind and solar generated nearly 20 per cent of our electricity – and the system coped just fine.

Which is good news, because we will certainly see that 20% proportion increase. Onshore wind and large-scale solar power are now the cheapest forms of new electricity generation we can build – and so long as we also invest in technologies like battery storage alongside them, the lights will continue to stay on, in fact arguably more securely than 10 years ago when two giant power stations could abruptly remove five per cent of our generation by failing simultaneously.

Although National Grid should take a lot of the credit, this is not a paean of praise for my former employer. Other countries – Germany is one – obtain an even higher proportion of their electricity from wind and solar energy than we do, and their energy security record is just as good as ours. The point is that modern electricity systems are highly reliable – and the word ‘system’ is the important one. Generators, transmission and distribution operators, regulators and a government department steering change proactively and facilitating innovation – this is the system that thus far has proved the scaremongers wrong. The lights are staying on securely as we cut damaging carbon emissions – and that is worth raising a glass to this Bank Holiday weekend.

This blog first appeared as an article on BusinessGreen on 25 May. 

The energy industry needs more female Energy Superheroes

Isabelle - Big Bang Fair

Isabelle Wilton, Communications Officer, Energy Institute

Volunteering at the Big Bang Fair last week I hoped to have the chance to understand more clearly the reasons for the continuing shortage of women in science, technology, engineering and maths.

As coachload after coachload from schools across the UK filed into the NEC’s cavernous halls to get their hands on the mind-boggling exhibits laid on by Engineering UK and its partners, I saw engagement, fascination and enthusiasm demonstrated by both girls and boys.

And, as my colleagues from the EI and I set about polling more than 1,300 of them – who we subsequently labelled Energy Superheroes – about their views on energy and climate change, if anything, I found girls to have a stronger sense of the intergenerational issues at stake.

And yet women are under-represented in the energy industry, and in engineering. As someone relatively new to working in this area, the numbers make tough reading.

Only a third of those taking STEM subjects through to A level are female. In fact, girls are underrepresented in all STEM A level subjects except for biology and chemistry, despite making up the majority of all A level entries.

Furthermore, only 8% of those starting engineering-related apprenticeships are female.

This hit home to me when speaking to the children at the Big Bang Fair about a future career in engineering. While many of the boys I interviewed appeared excited about working in this field, when I brought this suggestion up with girls, the same did not seem to be the case.

Many didn’t appear to make the link between their desire to take action on climate change and the possibility of a career in engineering being for them.

It’s easy to say this is rooted in centuries of male-dominated social norms, going back generations.

But it’s also attributable to signals in the present day. It’s not surprising, when you look to the top of the UK energy industry and find only 5% of executive board seats are held by women, that girls don’t see it as a world for them.

Progress is being made, however. I’m lucky to work with a female Chief Executive who leads an organisation that outstrips the industry it represents in terms of valuing and exhibiting gender diversity.

In my short time at the Energy Institute I’ve also had the privilege of meeting some inspiring female winners of our EI Awards.

Last year’s highly commended young energy professional was Rose Atkinson who works in Uganda transforming the lives of East Africans by providing them with quality solar energy and financing solutions. It’s people like Rose that will help inspire the next generation of female energy professionals.

I’m hopeful that the Big Bang Fair and the Year of Engineering more generally will succeed in getting more young women to join the pipeline of fresh talent in these important professions. And with initiatives such as POWERful Women supporting senior female energy professionals into leadership positions – the future also looks bright.

Only by succeeding at this, drawing fully on the diverse ingenuities of men and women, can the energy industry hope to find the best solutions that serve us all.

So, while the findings of our Big Bang poll won’t be published for some weeks (watch this space!), my experience at Big Bang Fair has left me sure of one thing – that the future Energy Superheroes must be – and can be – men AND women.

 

Climate action must enter DNA of oil and gas industry

Malcolm crop 2

Malcolm Brinded CBE FEI, President of the Energy Institute

There’s an elephant in the room of the global energy system and it’s called natural gas. It looks like a golden age for gas in many ways, with unconventional production soaring and global liquefied natural gas (LNG) trade forecast to more than double by 2040. But at the same time the world has committed to keeping global temperature increases within 2°C, requiring net zero emissions in the second half of this century.

Even natural gas’s cleaner-than-coal and friend-to-renewables advantages will not be enough to square this circle. For it to fulfil its potential long-term role in the future low carbon world, more must be done to clean up how it is produced and how it is burned.

At last year’s International Petroleum Week in London, the UNFCCC’s Patricia Espinosa applauded action to tackle greenhouse gas emissions by some in the oil and gas industry, but called for it to enter the DNA of all.

The International Energy Agency has since assessed that much more could technically be done during production and distribution to reduce leakage of methane, a greenhouse gas 28–36 times more potent than CO2 over 100 years, to a large extent at net zero cost. Further, it suggests that one of the reasons why this potential exists is lack of awareness.

So the Energy Institute, which works closely with its members and partners to ensure energy is produced safely and securely, decided to gauge this awareness by surveying the views of professionals working in oil and gas around the world.

Could it possibly be the case that awareness and behavioural – not just technological – issues are holding back progress towards a viable, long term role for natural gas in the future low carbon energy system?

Most respondents are bullish about the role of natural gas through to 2050. They expect it to still play a major role across the heat, industrial and power sectors, but also in transport, where it currently plays only a minor role. Such growth is expected to be partly due to conversion to hydrogen – and inevitably will come at the expense of oil. Much of this use of natural gas is expected to be abated, particularly in the electricity sector. While this is an encouraging assessment, a gap still exists to achieve the ambition set out in the Paris Agreement.

Oil and gas professionals take a largely positive view of the potential to tackle carbon emissions from combustion. Those surveyed believe carbon capture and storage (CCS) has the greatest potential of any technology to reduce emissions in the natural gas lifecycle. Of those working in potentially relevant organisations, just over half report that their organisations are active in advancing the CCS case. It is likely that moving from a few demonstration projects to full-scale implementation will require much more widespread policy support. However, nine out of ten respondents believe that industry has a role to play in developing and implementing CCS, with half of these emphasising the need for government-industry cooperation.

But on methane leakage during production, the Institute’s findings are less encouraging. Too many professionals underestimate the significance of fugitive emissions, and the possibilities for reducing it cost effectively. Two thirds of respondents expressed surprise at the extent of the problem and these possibilities.

This lack of awareness around methane suggests a significant opportunity may be being missed by the industry within its own operations – an opportunity that is likely to be very cost-effective compared with other greenhouse gas reduction measures.

The Energy Institute, as the sector’s independent professional body, is here to help address the realities of the energy system. In most scenarios gas has a significant and positive role to play for decades into the future. Similarly, the evidence around climate change, and the need to avert its worst impacts, are beyond doubt. The solution to this particular elephant will be technological, but must also be behavioural.

The Institute’s findings are a call for action across the industry to make ‘the best’ ‘the normal’. Just as health, safety and environmental protection are now embedded in operating cultures, tackling climate change in all ways needs to become equally – and profoundly – part of business-as-usual. It is central to our future licence to operate; it must enter all our DNA.

You can read the full Future of Gas report here.

Unsung professionals putting safety first

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

In December the Forties pipeline system was closed, as a precaution, following the detection of a hairline crack just south of Aberdeen.

As a result, 40% of North Sea oil and gas production was shut in, and the media’s attention understandably focussed on supply impacts, prices at forecourts, and the wider market.

But that is not the full story. Look behind the headlines and there are skilled professionals working day in, day out, often in very challenging conditions, to keep our energy system safe.

In this case, although the root cause of the crack was still under investigation at the time of the writing, technicians and engineers worked in sub-zero winter weather to assess the damage, prevent any danger of oil and gas release into the local environment, and set about repair.

Thankfully, in the final days of 2017, the pipeline owner Ineos announced that repair work and pressure testing had been completed, and the system had been returned to full functioning order.

For me, this story hits home the often unsung role of energy professionals. Before any of the commercial interests that influence our industry, we find their skills and dedication guarding the real bottom line – health, safety and environmental protection.

The Energy Institute has over the decades been central to supporting the development and recognition of individual professionals; to building the body of the health, safety and environment guidance used by the sector, and to the training that helps improve practices across the industry.

Looking back over 2017, we produced more than 50 technical guidance documents – more than any previous year – helping ensure installations offshore and on are safely operated and maintained. And, as oil and gas installations in the North Sea and elsewhere near the end of their lives, our work on asset integrity and corrosion will play a vital role in their responsible decommissioning.

But there is even more to the EI’s role and ambition in the fast changing world of energy.

Around 20,000 individual members see EI accreditation as the key to a successful career, in 120 countries, across the entire energy system.

As the international community’s determination to shift towards a low carbon economy has intensified, the EI has focused on transferring its expertise and activities into the new, low carbon technologies needed to keep global temperature increases within 2C of pre-industrial levels.

You are now as likely to find EI members working in energy efficiency, low carbon finance or offshore wind, as in oil as gas.

We are home to the G+ Global Offshore Wind Health and Safety Organisation, working with nine of the biggest players to promote and maintain the highest possible standards of health and safety throughout the life cycle of offshore wind farms.

This coming year we turn our attention to energy storage, one of the most critical technologies needed to support the decarbonisation of the energy system, with guidance for battery storage operators covering fire safety, maintenance risks, disposal, and working with local planning authorities.

And we will continue to extend the international reach of our health and safety expertise, with a second health and safety forum being hosted in October in the Middle East.

Safety is paramount

Health and safety is paramount to our industry. Whatever energy sources or technologies they operate in, energy companies have a duty of care to their workforces, the wider public and the natural environment. Shareholders, too, have a heightened interest in the very best standards of operation.

There is a premium on ensuring energy supplies to the public and wider economy are maintained in line with standards, guidance and expertise developed independently, at arms length, insulated from any suspicion of commercial influence or interest.

That is what the EI has always been here for and it is why more and more energy players, from conventional oil and gas through to the most innovative renewable and smart energy technologies, see collaboration with us as central to their health and safety strategies.

Postscript

As I write the close of this column, severe snow storms have for the second time this winter hit the UK, interrupting power supplies to tens of thousands of homes. And I am once again reminded of the individuals working in the harshest of conditions to restore supplies safely and securely to the public, and proud of the Energy Institute’s role in this profession.

This blog first appeared as an article for the Feb 2018 edition of Petroleum Review.

Warming up low carbon heat

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham of the Energy Institute (EI) surveys the prospects for low carbon heat…

This is proving to be a year of symbolic firsts on the UK energy system’s road to its low carbon destination.

One weekend in March, there was so much distributed solar PV on the system that the amount of electricity demanded of the grid was, for the first time ever, lower during the day than it was during the night. In April we saw our first day without any coal power since the 1880s. And in September offshore wind projects were awarded contracts at record-low strike prices, challenging new gas on cost competitiveness.

This is the energy transition happening before our eyes, it builds on a decade of tremendous progress in the power sector, something that’s crucial as large parts of our economy will in future be shifting onto the grid.

But we have yet to see comparable milestones in relation to low carbon heat.

Heat accounts for about 40% of UK energy consumption and about 20% of greenhouse gas emissions, the majority from residential use. Reducing heat emissions is therefore non-negotiable if the UK is to reach its climate targets.

At present only about 2.5% of heat comes from low carbon sources, compared with more than 45% for electricity. The Committee on Climate Change believes UK heating must be virtually zero-carbon by 2050.

This is not for want of solutions, many of them increasingly cost effective, even in a country with such a mixed housing stock and large dependence on a natural gas distribution system for heating and cooking.

Recent work by the Energy Technologies Institute estimates for example that the UK could save up to £30 billion through the adoption of district heat networks, supplying heat to homes and businesses through pipes carrying water heated using waste heat from power stations and large-scale heat pump deployment.

The Energy Institute’s recent Energy Barometer survey found a majority of UK energy professionals foresee a gradual transformation of the sources of heat used in the UK.

While gas is expected to remain the dominant heat source, its share is predicted to decrease from 70% in 2015 to 55% in 2030. Interestingly there was significant variation between the survey’s respondents – with previous assumptions about heat decarbonisation being achieved by way of electrification being superseded by a multiple technology approach involving bioenergy, hydrogen, solar thermal, waste heat and heat pumps.

This perhaps reflects uncertainties following a period of frozen government policy. 60% of energy professionals believe policy to date on developing low carbon heat has had either a negative or negligible effect and a majority see the need for new financial incentives and mandatory standards in this area.

But despite the uncertainties, the mood of the low carbon heat industry remains confident. The upside of a challenge this big is the scale of the market opportunity, and it was clear from November’s Heat and Decentralised Energy conference, hosted by the EI and the Association for Decentralised Energy, that this industry will be the next big player in the UK energy system’s journey to low carbon.

The conference heard from a BEIS official about the recent Clean Energy Strategy, which gave renewable heat a welcome shot in the arm.

The existing Renewable Heat Incentive is already being refocussed on longer term decarbonisation options such as heat pumps and biogas. It will spend £4.5bn to support innovative low-carbon heat technologies in homes and businesses by 2021. A new £10m innovation programme will support new heating technologies in homes and commercial buildings and policy is proposed to phase out installations of high-carbon fossil fuel heating in homes not connected to the gas grid.

But more heavy lifting is needed on low carbon heat. The Clean Growth Strategy recognises the need to set out further detail, which is promised over the next twelve months. That’s an opportunity for industry, to help an interested Government fill in the gaps.

Almost ten years on from passing the Climate Change Act, the UK has so far met its statutory carbon targets. Emissions are now 42% lower than the 1990 baseline.

But from here on in the task gets more complex. Reaching the fifth carbon budget of a 57% cut by 2030, and delivering on our commitments under the Paris Agreement, will require real and concerted inroads into decarbonising how we heat our homes and power our industries.

This blog first appeared as an article for the Dec/Jan 2018 edition of Network magazine.

10 gigawatts and counting – offshore wind in the UK’s sails

Jonathan Cole, Scottish Power Renewables offshore manging director.

Jonathan Cole, MD Offshore Wind, ScottishPower Renewables

As Offshore Wind Week is marked in the UK, Jonathan Cole, Managing Director Offshore Wind at ScottishPower Renewables and Chair of the G+ Global Offshore Wind Health and Safety Organisation sees a technology in robust health.

The journey for offshore wind has been far from plain sailing. Challenge after challenge has been thrown at us. Our sector has been required to mature and industrialise a supply chain, whilst building ever more physically challenging projects, at the same time as maintaining health and safety and achieving huge cost reductions. Those waters are choppy enough, but when you also consider the volatile macro-economic, regulatory and political conditions of the last few years, it is amazing that we haven’t capsized.

Yet we have more than clung-on. In fact, the good news is that we’ve risen to meet and surpass every challenge. There is 10 gigawatts of offshore wind now in operation or construction, 8 million homes are being powered by our clean energy every year, and £30bn of private capital has been deployed. This has seen 10,000 high quality, well-paid jobs supported, many of them in parts of the country that need them the most. To top it all off, now we’re delivering at a lower cost than any other large scale low carbon source.

Shared vision is also helping to drive our sector forward. Our Fifty50 Vision is to meet 50% of UK’s electricity demands from Offshore Wind (which is around 50GW) and to create more than 50,000 new high quality jobs in the process. And this shared direction is also evident on all matters Health & Safety, which needs to be prominent in our minds as we deliver more and more challenging projects at a larger scale. The G+ group is helping to ensure that the highest safety standards originating in Britain will be exported globally, and that projects around the world can be delivered safely.

We do have more challenges ahead, but our sector has a history of turning challenges into opportunities. For example, we’ve turned the problems of an immature supply chain into an industrial opportunity, and we should view our future challenges in the same way.

Many people refer to the problems of integrating high volumes of variable generation into the grid system as we decarbonise our electricity sector. This isn’t a problem caused by offshore wind, nor is it a problem that only the UK faces. But there is an opportunity for both offshore wind and the UK to perfect the solutions. All developed nations are moving to energy systems which better correlates demand and supply of electricity, that has flexible generator technologies, as well as smart grid and storage capabilities. Maybe once we meet these challenges in the UK, we will create more opportunities for our supply chain companies to export these solutions all around the world.

The momentum behind offshore wind continues to grow even stronger. We have moved from being a niche part of the energy sector, to the backbone of our modern power system. Offshore wind continues to ride the wave of challenges it faces successfully, and the future holds much promise for our sector. The recent successful CfD auctions and continued support from Government in the Clean Growth Plan highlight that we have come a long way in a short time, but we have far from reached our peak.

Clean energy is a smart move for British exports

Malcolm crop 2

Malcolm Brinded CBE FEI, President of the Energy Institute

The Government’s support for clean energy technology is right for the planet and for Britain’s future as a global trading nation, says Energy Institute President Malcolm Brinded CBE FEI.

Climate change is a threat. It threatens the delicate balance of the Earth’s ecosystems and the plants and animals that inhabit them. And according to recent polling across 38 countries it ranks alongside ISIS as the biggest threat to security.

But can a threat also be opportunity? For UK ministers seeking to marry the need to meet ambitious carbon targets with maintaining Britain’s global economic standing post Brexit, there is certainly potential.

This was the rationale behind the Smart Systems and Flexibility Plan and the Faraday Challenge announced recently by Greg Clark, “to put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”

It was music to the ears of an industry that has been waiting for a fresh sense of leadership from ministers.

Brexit and the snap election have left their mark. Clean energy investment plunged in the first quarter of 2017 to around $1bn, the lowest since 2010. Three quarters of professionals surveyed for the Energy Institute’s Energy Barometer agree with the Committee on Climate Change that meeting our 2030 carbon target will prove challenging.

All eyes are therefore on the Government’s Clean Growth Plan and Industrial Strategy and, if July’s announcements were the preamble, I am encouraged. Energy professionals rank smart grids and energy storage as the most important changes needed to develop our energy system.

Ministers are right not to be caught napping. New technologies have too often been viewed with suspicion, rather than as an opportunity to build a more efficient energy system. Smart grids, storage and interconnection could save consumers up to £8bn a year by 2030.

But this isn’t just important for our domestic goals. It’s also central to maintaining the UK’s place on the world stage through applying our ingenuity to the challenges posed globally by climate change and the pressing need for improved access to energy in developing nations – where lack of affordable and reliable energy remains a major barrier to economic and social development.

The UK has already accumulated considerable exportable expertise. But we need to be cannier about commercialisation and acquiring intellectual property if we are to grab a share of huge potential global markets. It’s estimated small scale battery storage alone will be worth $250bn by 2040.

Clean energy research, innovation and early stage technology piloting are vital. If smaller British innovators are to succeed, government funding needs to flow more quickly, calculated risk-taking is needed in backing early stage innovators and the rules of the game need to be simpler and more predictable.

The prospects seem good for the Faraday Challenge, which will I hope break the mould of recent stalled government competitions.

If we get this and other initiatives right, far from a retreat from the international stage, we could see great British invented, designed, manufactured, exported and project-managed technology right at the heart of the global green technology boom.

This blog post first appeared in Politics First on 15 September 2017

Ministers must act to attract energy investment

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Brexit uncertainty is scaring off investors, and with the UK set to lose £2.5bn in European Investment Bank loans and EU funds, we need long-term policy to boost confidence.

With Brexit eclipsing all other debates, plus the hiatus caused by the snap general election, climate and energy policy has largely been on hold for more than a year. This political uncertainty is contributing to a risky investment climate in energy and it’s affecting immature low-carbon technologies most acutely.

I hear this message frequently from senior figures across the industry, and it’s reflected in the recently published Energy Barometer survey of Energy Institute (El) members, who rank Brexit-related uncertainty among the five most pressing concerns.

Due to its complexity, investment lead times and the potential loss of EU funds, energy is in critical need of an effective, clear and far-sighted government strategy.

So what’s our prescription? First, the transposition of EU energy legislation into UK policy post-Brexit must be a top priority for the government. Retaining energy-related EU directives in UK law across the system, from air quality and emissions controls, to regulations on energy efficiency and renewable energy is a clear preference. Only in the case of state aid rules would most El members prefer to change or abandon the legislation.

Second, we need continued cooperation and resource sharing with European counterparts. Britain may be an island, but even post-Brexit. it would be a mistake to treat the energy system in that way. While most of our members surveyed view the UK as an appropriate level for policy decisions in the areas of energy security, energy efficiency, research and innovation, and energy markets, a large minority of members feel that the EU is an appropriate level for policymaking in these areas. Perhaps the
best example of this support for continued cooperation with the EU is our concern about the planned exit from the EU atomic energy regulator, Euratom. which could negatively impact the cost and delivery of new nuclear projects as well as the supply chain in the UK.

Third, we need to see government efforts to ensure a sufficient supply of workers to the industry, prioritising engineers as well as qualified and unskilled manual workers. Nearly 60% of Barometer respondents expect a fall in the number of skilled workers, and more than 40% foresee a drop in qualification levels if free movement of labour is curtailed after Brexit. Mitigating measures should include training to facilitate transition from other industries, providing apprenticeships and vocational courses, encouraging closer cooperation between academia and industry, and allowing immigration of skilled labour.

Finally, clear and long-term government policy that boosts investor confidence in specific technologies and the system as a whole is critical. Bloomberg New Energy Finance reports investment in clean energy plunging in the first quarter of 2017 to around $lbn, the lowest since 2010. It was encouraging to see the recent publication of the government’s smart systems and flexibility plan, but ministers still need to press play in other key policy areas and. in particular, deliver on the much-delayed clean growth plan and the evolving industrial strategy.

Clear and long-term state policy that boosts investment confidence is needed as the UK will lose EU funds and European Investment Bank loans, which account for around £2.5bn of the UK’s energy-related infrastructure, climate-change mitigation and R&D funding per year.

Replacing EU funding will be a challenge if domestic spending constraints are maintained, and should be a central focus for the government’s industrial strategy. Support for energy infrastructure and R&D should flow from the National Productivity Investment Fund, alongside indirect incentives such as tax breaks for R&D and support for academia-industry collaboration.

Getting both energy strategy and the post-Brexit relationship with the EU right will determine how we successfully deliver a secure, clean and affordable energy system, vital to sustaining our economy and society.

This blog first appeared on ENDS Report online on 11 August 2017