Utility Week

14 | 7TH - 13TH JUNE 2019 | UTILITY WEEK Policy & Regulation Energy Summit preview UW: Could you explain how much of Uni- per's energy generation in the UK/around the world uses natural gas, and how this is likely to change over time. Uniper is an international energy company. We're active in more than 40 countries world- wide, with our core markets in Europe and Russia. We are one of Europe's largest gas storage operators and manage a diverse port- folio of pipeline gas deliveries into Europe, and we have a global LNG portfolio. We own and operate around 37GW of power generation assets across Europe and Russia, comprising gas, hydro, nuclear and coal. Half of our capacity uses natural gas. We expect to see gas use grow as coal is phased out across Europe and is replaced, largely with gas and wind; with gas genera- tion providing the flexibility to back up the growth in renewables. UW: There would appear to be a limited future for natural gas in a low-carbon UK? In the UK, gas-fired generation is going to be needed at least until 2030 and for some years aˆer. We expect to see the same or even more gas generation capacity on the system over this period, but it will run less oˆen. The Committee on Climate Change's recent Net Zero report indicates that there will be a role for gas-fired generation with carbon capture and storage (CCS) by 2050. It may be possible to fuel power sta- tions on alternative low-carbon fuels such as hydrogen in that time frame. Having power stations in strategic locations, close to potential CCS or hydrogen production infrastructure, and ready to switch from nat- ural gas to a low-carbon alternative in the future will help the country meet its climate change goals. UW: Do you expect that the UK will have a reliance on gas for some time to come, and if so do you think the policies are in place to encourage investment? As the energy mix becomes more weather- dependent, both the flexibility and efficient baseload capability that CCGTs provide will continue to be an essential part of the mix, but gas plant will run infrequently and for shorter periods to cover gaps in wind and solar output. Paying for capacity to continue to be available is crucial; the capacity market pro- vides for a cost-effective way of buying that capacity. UW: Do you have any views on the future of hydrogen or biogases as a replacement for natural gas? Gas will have a role to play in decarbonising heat, transport, industry and power genera- tion, providing gas itself can decarbonise. And hydrogen has great potential across all of these sectors. Gas capacity likely to increase Speaker Mike Lockett sees a future for gas in the UK – providing flexibility to back up a growth in renewables. 2050 with the same costs, rather than pre- scribing how it should be done. "You could definitely imagine doing it with more decen- tralised renewables, and less offshore wind or whatever," he says. "We're not wedded to the scenario we pre- sented, and there are aspects I would say we didn't get quite right. The numbers add up, but I think we've got too much fossil genera- tion, too much fossil hydrogen production, and I think we could probably use more renewables." Is Ofgem a help or hindrance? The recent announcement that the rate of return on investment for networks is to be set at 4.3 per cent for RIIO2 has been poorly received by the networks. Some have accused Ofgem of being out of touch with the demands and risks that lie ahead as we move towards net zero carbon. Joffe says he can't comment on whether they're in tune, or whether the rate of return is the correct one. "What I would say is that as part of the work we've done, we've identi- fied a real opportunity for saving the coun- try money by rolling out electric vehicles as quickly as we can – and by 2030 we think that's going to be saving us money. "But if we don't strengthen the electricity networks and put in place the charging infra- structure, we're not going to be able to have as many electric vehicles, and we'll be saving ourselves less money. We need to make pro- gress in the 2020s on strengthening electric- ity networks, and when we're doing that, we ought to future proof them, so we don't have to dig up the roads again in 15 years' time. "So there's a real opportunity to get it right now, but it's not clear to me if that opportunity is embraced by Ofgem. I don't know what their position is, and we think there's a significant role for a more proactive approach to making investments, rather than justifying exactly how many people happen continued from previous page "We've identified a real opportunity for saving the country money, by rolling out electric vehicles as quickly as we can – and by 2030 we think that's going to be saving us money"

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