Utility Week

10 | SEPTEMBER 2021 | UTILITY WEEK Interview its reach up to 10-12 million homes. CityFibre's business model is to make the initial investment itself and then sign up service providers including TalkTalk and Vodafone. "So it's a utilities sort of business. We are the shipper of data," he says. There are currently 25 contractors working for CityFibre rolling out the programme, including building 250,000 access points for 5G. He draws comparison with his time at National Grid, which he ran for almost a decade to 2016. "It's still infra- structure, which I've been around for a long time. It's exciting infrastructure, because it's building brand new infrastructure, as opposed to refurbishing old gear." What could water and energy sectors learn from telecoms? "There are differences. We're trying to build as much of our network as possible without digging up the streets, which requires us to use existing infrastructure – that's part of the emerging regulation in the UK. Ofcom has required Openreach to allow others to access their poles and ducts. "There's no parallel there, because in the electricity and gas sector, the infrastructure is generally a single monopoly. Whereas consumers will have a choice, on some streets, who provides their data network" It's a natural segue to talk more widely about national infrastructure policy and just how effective he thinks it is at the moment. Generally speaking, it's a thumbs-up from Holliday on the overall direction, but he understandably points to the missing details. "The ambition on cars is great, but there's quite a lot of infrastructure to put in place before that is a reality, both on the electric system and on the fibre system. There remain some questions over whether we've got the right regulatory incentives. And there's a lack of clarity about where the investment actually goes. Although we need more power production capacity today we've got spare capacity a lot of the time. This requires us to be smarter about when you use it. However, at a local level, there's new infrastructure to put in place." Then there's the whole issue around heat, which a lot of people would argue we've ignored for a decade. Have we le" it too late? Holliday chooses his words carefully. "There is no question that acting on generation first makes sense. It's absolutely right to green up the energy supply system first and foremost. And transport was always going to be easier than heat. "People are waking up to the heat problem now. If there is a lost opportunity, it's that we could have put some new construction requirements in place earlier." He's talking about government rowing back on its policy in 2015 to require new homes to be net zero. "We've got to be careful that we don't fall into the trap of saying 'this one thing is the right answer'. I think there's going to be a number of solutions. With hydro- gen, we need to be careful. Producing green hydrogen is high cost. And therefore, we want to apply that expensive fuel in areas where it's most efficient, which may well be industrial areas, as opposed to completely re-plumbing all the heating systems around the UK. "We're used to thinking about 'what's the big solu- tion?' as opposed to having to incentivise different options in different parts of the country. "In areas where you've got huge amounts of surplus wind energy, it's not going to make any sense to use expensive hydrogen. So, this whole notion of designing from the bottom up rather than the top down is the most exciting change for the energy sector in a long time." Holliday observes that the basis of our system today is predominantly still the way it always was, although there is greater under- standing of what needs to happen in the future. "There's a huge amount of uncertainty too. And the utilities industry has got much better at thinking about how future situations are going to play out, much to its credit." One area he's not so charitable is utilities' commu- nication technology: "The backbone of fibre investment that is happening is happening for all sorts of busi- nesses, schools, government, and of course our homes, yet we o"en overlook that it's a very important part of the energy transition. "If we are to successfully transition to localised energy grids then there's no question that the capacity and the speed of communications are going to have to go up orders of magnitude from where they've been in the past, to manage a system in the way we envisage it working in the future. That's going to require full fibre," says Holliday National Grid revisited Holliday is complimentary about National Grid's decision to sell its gas transmission stake and spend £7.8 billion buying Western Power Distribution. "If you look at where the energy is going to be coming from in our transport and heat systems, the future is going to be electricity, so there's a lot to do in that space. The integration of that business makes an enormous amount of sense to me." But he's more circumspect about the government's decision to enforce separation of the ESO. "My word of warning always was be careful that you don't lose the sharpness of commercial incentives ESO had. And I o"en commented 'don't confuse non-profit with efficiency'. All that means is that all your costs are passed to consumers. And National Grid, because of the incentives, was always working hard to keep the costs to consumers very low." The next 10 years will be critical in reaching net-zero goals. "If we don't start to get the trajectory right in the next 10 years, then hitting our 2050 targets will be very difficult. "In the UK, we are building renewables at scale, and we've got to keep that journey going. There is a question on replacement of nuclear, which is another conversa- tion [he's hopeful on small modular reactors]… With transportation, the path there is well set. We're going to electrify it and we've got some strict targets in place for phasing out internal combustion engines, but the deliv- ery of the infrastructure behind it has to be the priority. "And then heat. We've got to get on the trajectory of making sure that we are moving ourselves away from a fossil fuel-based heating system in the next 15 or 20 years. "All the bits of the jigsaw are there, we just need a little bit more joining up. But we've got a great structure in the UK with the Climate Change Committee. We've got an independent body that sits there and observes whether we're hitting the targets that we've set for our- selves. That's a unique structure in the world. That's one of the best pieces of policy that we've put in place." Denise Chevin, contributing editor "My word of warning always was be careful that you don't lose the sharpness of commercial incentives ESO had. " continued from previous page

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