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16 | OCTOBER 2020 | UTILITY WEEK Build Back Better Interview 'we should have an inde- pendent system operator' is the wrong way round. We need to look at what we need to achieve, and then how we wan t to set ourselves up to do it. "And then you ask, what do you need to be able to do at BEIS level? What needs more of a day-to-day more detailed policy develop- ment? What needs regulation and oversight? And what needs operational delivery? Shaw says it's also beneficial to "have someone incentivised to keep balancing costs down. And having that bit, close to the cutting edge of day-to-day life, because it's minute-by-minute, is really important. She adds: "I don't think it's a good idea to just move that into the public sector or whatever, because our system is more com- plex, with more players, and with a more ambitious target for change, than almost any other system in the world. That's very much the British way, we require a lot of our infrastructure." So, having ESO as part of the group works perfectly well? "Yes. I think they are very transpar- ent about what they do, and we have good separation arrangements in place. I can see a case for more jobs to be done as we tran- sition. And where those jobs get done is worthy of consideration, as the government is doing." A single voice for zero transition Shaw is in the camp that thinks it would help the transition to net zero having a sin- gle body overseeing it, pointing to the myr- iad of bodies you need to for electric vehicle infrastructure alone – BEIS, DoT, Treasury, and Office of Low Emission Vehicles, and more recently Ofgem. "So, who is actually making the policy decisions? How are they being made, being implemented? How quickly? "If we had an organisation whose job it was to think across all systems – heating, electricity generation, and transport – how to deliver net zero, to think about all the issues and make sure they get implemented in the right place, I can see there would be a benefit." One can see a new role for our National Grid mascot… Griddles moves to Whitehall. Denise chevin, intelligence editor, Utility Week Interview "I worry that whatever the best cost is for consumers in the next year or two is not going to drive the best cost for consumers over the next 15." Alistair Phillips-Davies, chief executive, SSE A listair Phillips-Davies is speaking to Utility Week on the back of a call with Boris Johnson to discuss the role of the energy sector in Building Back Better. SSE's chief executive says the prime min- ister was "very engaged" with the topic and clearly sees the benefits of embedding the net zero transition in the economic recovery. Johnson certainly has no shortage of options when it comes to Phillips-Davies' list of immediate steps that can be taken on the path to 2050. These have already been summarised in SSE's "greenprint", which has five key planks: • Getting the mechanisms in place to build a net zero power system by 2040; • Strategic investment ahead of need in energy networks; • A "clean industrial revolution" based on hydrogen and carbon capture and storage infrastructure (CCS); • Electric vehicles; • Green jobs with decarbonised heat. Exploring these themes in detail, Phillips- Davies continually returns to the need for long-term thinking and, crucially, to ensure the UK builds the supply chains necessary to support this work. As the head of a generation, transmis- sion and distribution company, on the eve of a new set of price controls, it is of course in Phillips-Davies interest to accentuate the positive of greater investment. But, he points out that the country is not operating in isolation on decarbonisation and needs to ensure that the necessary fund- ing and skills are not lost through delay. "I think we will see more and more coun- tries competing for supply chain here", he warns. "And I'm worried that the cost could go up." He adds: "We need to build up that sup- ply chain earlier rather than winning highly competitive auctions based on having things lined up from around the world." Phillips-Davies says showing ambition now is a "win-win" for the UK, adding: "It's a real pivotal moment for government. If they ensure there is strong carbon pricing and drive legislation sensibly on things like CfDs then we have a lot of pent-up demand from global finance. "Investing in green infrastructure is attractive to the market and there are compa- nies that want to do it. The pump has been primed and the opportunity in the economy is there, from home insulation to more aggressive rollout of electric vehicle (EV) infrastructure." Regulation must move with the times As well as having clear sight of the policy framework to support investment in the future, Phillips-Davies reiterates his view that regulation also needs to look to the future. SSE's transmission business saw around a third of its requested totex allowance of £2.4 billion for the T2 price control shaved off in Ofgem's dra determinations. The regu- lator also proposes applying the maximum £32 million penalty to the company under its Business Plan Incentive programme. He agrees with the principle of regulation driving down costs for consumers but argues that at this critical juncture it cannot be the only measure of success. "Ofgem needs to acknowledge net zero through the price controls and in everything else it's putting out there," he says. "I worry that whatever the best cost is for consumers in the next year or two is not going to drive the best cost for consumers over the next 15." It is equally important that a "bottom-up" continued from previous page