Utility Week

16 | 31ST JANUARY - 6TH FEBRUARY 2020 | UTILITY WEEK Policy & Regulation installed fleet, and that installed base, as much as we do the new things that we are bringing on to our system." Responding at scale This "emergency", says Ennis, needs a concerted change in approach. No one part of the net-zero jigsaw can do it alone. "And I think therein lies one of the biggest chal- lenges for the UK – the co-ordination of the people and the partnerships who will need to be involved to deliver what needs to be done. "The other thing, of course, is just the extent of the job. Yes, you do need technology for these projects, and we, along with others, do have it. And the technology is well proven. The challenge for the UK and local govern- ments is, how do you scale up?" Siemens, he said, has been working with Local Enter- prise Partnerships (LEPs) on this very issue, including on a report with Hull which it launched at the Northern Poorhouse conference. "It was to show the activity needed if we are to hit net- zero carbon by 2050. And even we were surprised at the scale of what needs to happen." While there were calls at the Hull conference for achieving net zero by 2030, and Ennis admired the senti- ment, he views such messages as audacious goals. Even 2050, he believes, is already looking a difficult target. "If we don't start acting now, at scale, there is no pos- sibility for any of those targets. Then we will have set in stone the climate emergency. And it will be terribly dif- ficult, and very expensive, to reverse the effects that will be taking place by that time." Local response With such huge tasks ahead, can renewables projects and regional planning really keep up with delivering on net zero, even by 2050, I ask Ennis? How can industry hope to respond in time? Brushing away any adverse conjecturing, he responds: "A lot of the tech we need has already been proven, either in the UK or overseas. "While the heat environment and green hydrogen may be somewhat lagging, there are still plenty of things we can get on with. It is o˜en less about the technology, and more about that will and stability." And a can-do mindset will be vital going forward, said the CEO, who recalled how when the offshore renewables market started 15 years ago, some thought it would never scale, that it would lack clarity and be too expensive. "In fact, what we saw was what can happen when government sets a vision and creates that market, by priming the pump with funding to help the developers. "A lot of the money that's been spent in the creation of offshore renewables has been private equity. Yet gov- ernment did start it. And what it did – absolutely, cru- cially – was to create a stability of the regime. "People knew a programme was coming. That allowed the supply chain to organise itself, and it drove costs – to the point that even deep offshore renewable wind is half the cost of nuclear. "That's what happens when you get clarity of policy and stability of policy over the long term." Interview Ground forces The success of offshore renewables was made easier, admits Ennis, by there being a smaller number of play- ers involved. It was also mainly driven centrally, by government. A new energy system which will, and will need to be, much more decentralised, has the inherent difficulty that it will need to start working at city level. "So, one of the questions for me is how effective are cities at creating that stability of regime? I think that is the challenge, rather than any technical one. But I do think it's possible. "For instance, we had a really good conversation last week with the Northern Powerhouse 11 [a grouping of the 11 northern local enterprise partnerships that works with the Northern Powerhouse minister to support the government's vision for the concept] and they seem to be trying to work as one voice. "And I know that Andy Burnham [Manchester mayor] is very passionate about creating that environment, where that stability can be created." Funding change One of the things to come out of the climate change debate and the election campaign, adds Ennis, has been an acknowledgement from the main political parties about the huge cost of addressing climate change. "There's a recognition that some of the investments we need to make to transition the UK to net zero are massive by anyone's assessment, whoever happens to be right. In order to attract commercial funding to deliver it, because that is where a lot of this will have to come from, it's about creating a stable environment. "So, if I invest £50 million in electric vehicle [EV] infrastructure in downtown Manchester, I know I am going to be able reap the rewards over a period because of the stability of the environment to make that happen." "We are a business. We have to provide a reasonable rate of return for our shareholders, and broader stake- holders. But when we see that stability, we will make that investment. "There is not a lack of capital out there to fund this transition. What there seems to have been is a lack of alignment and certainty as to the returns we are likely to get. Nobody is looking for guaranteed returns. I think most commercial environments accept some level of risk, but the risk at the moment seems disproportionate to the returns you are likely to get. That balance needs to change." Seizing the opportunity Regardless of who secured the keys to Number 10, the net zero challenge was always going to be apolitical, believes Ennis, because it is a global challenge. "One of the comments at the Hull conference was that, given the UK is a relatively small emitter in the scheme of things, should we worry? "My response to that is that this is a perfect opportu- nity for us to lead, to show our capability and to sell that capability to the world. "One of the best ways to grow our economy in the UK is to export. We could become a global expert in "There's still a lot more to do with renewables at a decen- tralised level. That's not to underestimate the value of what we've achieved. But we shouldn't convince ourselves the job is done." continued from previous page

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