Utility Week

UTILITY WEEK | APRIL 2021 | 13 Countdown to COP idea of the framework being volumetric and whether that is t for purpose. The UK has a long way before it hits that problem but it will have to answer the same questions eventually." Green gas Power Assets' Australian companies have also made signi cant progress in introduc- ing hydrogen to the gas grid – with support from the government. There are two separate projects, one injecting 5 per cent hydrogen and another in New South Wales trialling 10 per…cent. It is also commissioning a 10MW electrol- ysis plant to convert excess wind and solar into green hydrogen. Tsai insisted that the UK government needs to show similar ambition on hydro- gen. "It would be great if the UK government would make a decision as to whether it will embrace hydrogen. I think it should because it is the way forward if you really want to hit net zero. "I'm not saying it should be a simple choice between hydrogen or electricity. They have to co-exist." Tsai went on to compare the challenge in decarbonising transport, saying: "I think it should be electric for light vehicles and hydrogen for heavy vehicles. A bus loaded with batteries is just going to consume so much energy carrying the batteries around, whereas hydrogen would make it much lighter and would mean it could charge in ve minutes rather than eight hours parked in the same location. "If you look at energy as a vector, it has to co-exist with every medium possible, so heat pumps for some homes, hydrogen for others and then in outreach areas you might just have to rely on LPG." He pointed to the role the Chinese govern- ment has played in incentivising the mass take-up of electric vehicles, building out the charging infrastructure but also creating incentives for private companies to create new charging solutions. He said: "If the government waits for the private sector you get a chicken and egg situ- ation. The government has to lead. The pri- vate sector can't lead here." So what leadership would Tsai like to see from the UK government? "At COP26 I'd like to see them commit to the gas system eventually being run on hydrogen. If we get that commitment, all the distribution networks would work towards that goal. We are ready to act but we need to have that con dence that only the govern- ment can provide." James Wallin, digital editor "The old model of incremental innovation and incremental investment is not going to get us to net zero in 25 years." M ichael McNicholas, managing director of asset management at Omers Infrastructure, admits that for investors in UK utili- ties "life was much simpler in the past". He explains that back then it was about " nding the right long- term investments in large-scale critical infrastructure and then put- ting excellent leaders in place to run those businesses". For Omers, a pension fund for municipal workers in Ontario, Can- ada, with assets of $22.1 billion under management globally, there is now a clear expectation that its investments will be a force for good. The company states its ambition to embed Environmental, Social and Governance (ESG) principles across its investments. McNicholas sits on the boards of both SGN and Thames and says that part of his role is to develop those conversations about investing in social value. He adds: "If that means deploying resources then we would not only support that, we would actively encourage it." The framework for discussing the response to climate change dif- fers between Omers' investment in UK utilities, however. "The challenges for SGN and Thames are almost diametrically opposite, in that one has a long-term, critical, clear need to be there and it's not critically impacted by net zero, but it must play its part. Whereas you could say SGN is existentially impacted by net zero." McNicholas insists Omers sees this as an opportunity, with the potential to be in the vanguard of a transition to green gas. He points to the H100 project, where the gas distribution network is creating green hydrogen-to-homes heating network on the Fife coast, as an example of SGN taking a lead on decarbonisation. Meanwhile, Thames continues to grapple with the challenge, faced by the whole water sector, of decarbonising its operations. McNicholas says: "The bigger issue is around addressing the infrastructure needs so we ensure long-term delivery of safe and clean drinking water but also the environmental issue of treating that water. We need to get the industry and all stakeholders to net zero on pollution as well as on carbon." But McNicholas stresses that "utilities can't do this alone" and ultimately "net zero needs a policy response". "The old model of incremental innovation and incre- mental investment is not going to get us to net zero in 25 years. You look at the journey oŸ shore wind has gone over the past few decades and it's great but we have to go much faster and be even more ambitious." This comes down to creating the right investment framework where long-term investors, as opposed to "high risk/high return" venture capital is incentivised to swing substantial backing behind net zero. "It cannot be about winners and losers. There has to be a solution where there's a balance of outcomes and everyone is appropriately rec- ognised and rewarded for it and customers are not le¢ picking up an unfair share of the costs. There is so much 'good capital', long-term responsible investors, out there looking to invest in the right projects that I think that's eminently achievable." "Net zero 'cannot be about winners and losers" clean drinking water but also the environmental issue of treating that water. We need to get the industry and all stakeholders to net zero on pollution as well as on carbon." But McNicholas stresses that "utilities can't do this alone" and ultimately "net zero needs a policy response". "The old model of incremental innovation and incre- mental investment is not going to get us to net zero in 25 years. You look at the journey oŸ shore wind has gone over the past few decades and it's great but we have to go much faster and be even more ambitious." This comes down to creating the right investment framework where long-term investors, as opposed to "high risk/high return" venture capital is incentivised to swing substantial backing behind net zero. "It cannot be about winners and losers. There has to be a solution where there's a balance of outcomes and everyone is appropriately rec- ognised and rewarded for it and customers are not le¢ picking up an unfair share of the costs. There is so much 'good capital', long-term responsible investors, out there looking to invest in the right projects that I think that's eminently achievable."

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