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UTILITY Week 13th November 2015

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6 | 13TH - 19TH NOVEMBER 2015 | UTILITY WEEK National Grid special report Analysis T he headline in last week's Daily Mir- ror "Blackout fears mount as National Grid begs energy companies for more power", is surely a taste of things to come. As the UK enters the winter of its tightest yet capacity margins, National Grid will be in the spotlight as never before. Meanwhile, the company is dealing with transformational change to the electricity system, a new and emerging policy landscape and challenges to its sizeable US business. Stepping into this quagmire is John Pettigrew, National Grid veteran and currently executive director, UK. Pettigrew's 25-year experience across all parts of the organisation will stand him in good stead as he grapples with a host of issues. National Grid has a diverse business, and each part faces challenges. The most obvious is in its role as system operator for the UK electricity grid, where it faces huge changes in the nature and volume of power distributed. Its US businesses are a sizeable chunk of the portfolio, and the challenges here are around perceived ongoing under- performance. National Grid also has a finger in the UK distribution pie, with its four gas distribution businesses – which are to be sold next year, it was announced this week. First up, the changing landscape. Pet- tigrew's predecessor, Steve Holliday, has been increasingly vocal about the nature and scale of the change facing power in the UK. Just last month, Holliday told World Energy Focus: "We used to have a pretty good idea of what future needs would be. We would build assets that would last decades and that would be sure to cover those needs. That world has ended. Our strategy now is centred on agility and flexibility, based on our inabil- ity to predict or prescribe what our custom- ers are going to want." That is a big change – and according to the messages National Grid has been put- ting out ahead of its 2015 update to the Sys- tem Operability Framework at the end of this month, it is coming even faster than thought. The company faces deep engineering chal- lenges, for example around voltage and fre- quency – some of which are arising for the first time. The next couple of years will be a crucial time to find solutions that will last into the next decade and beyond. As Holliday told World Energy Focus: "I made a comment to the energy minister four years ago that there was little probability we would have 20,000MW of solar in the UK. Now three of our scenarios have more than 20,000MW of solar by 2035." Meanwhile, the UK is entering a period of capacity crunch as the capacity market gears up. With its role at the centre of Elec- tricity Market Reform (EMR), National Grid is responsible for managing the newly tight margins, and is firmly in the frame should anything go wrong. As one source close to government says: "We don't want to be in Changing the guard National Grid CEO Steve Holliday is stepping down at a time of unprecedented change for the sector. Ellen Bennett reports. "Steve is full of charisma. He's one of those people you notice when they walk into a room." So says a former National Grid staffer, voicing an opinion shared by employ- ees, national media and the financial mar- kets alike. After nine years at the helm of National Grid, 59-year-old Steve Holliday's reputation as a big personality with a steely strategic mind and a knack for keeping the markets on side is secured. But what will he be remembered for? During his time as chief executive, and in his six years at National Grid preceding the top job, Holliday has steered the business back to its core operations. He has put the company at the heart of policymaking, work- ing hand in glove with government on such key initiatives as Electricity Market Reform. He has seen shareholder value soar, with returns of 136 per cent over the period, and the company now trading 80 per cent higher than when he took the reins. Despite the odd blot on an otherwise stellar record (the ongoing underperformance of the US opera- tions, the unpopular rights issue a couple of years back), Holliday leaves the company in good shape, with the warm satisfaction of a job well done. His strategic influence on the company predates his time as chief executive. Hol- liday joined National Grid as board director responsible for the UK and Europe in 2001. One of his first actions was to sell four of the gas distribution businesses for £6 billion following the merger with Lattice Group in 2002, creating the gas distribution land- scape as we know it today. Holliday won the top job when Roger Urwin left in 2006, taking the reins at the start of 2007. He will be remembered for placing National Grid at the heart of policy- making, ensuring the company had a place at the table. One former staffer recalls how in the early days he used to say: "We want to be welcomed for our presence rather than noted for our absence." The strategy worked. A source close to government tells Utility Week: "National Grid is more at the heart of energy policy than ever before." Holliday saw the business through a period of organic growth, successfully navi- gating it through the introduction of the RIIO regulatory settlement. Holliday, who has also championed the skills agenda, steps down with reputation and track record firmly intact. As John Petti grew will be only too aware, he will be a hard act to follow. Holliday's Legacy

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