Is the UK an attractive customer for the global electricity supply chain? It is just one among many countries who are transitioning their electricity sectors from fossil fuels to renewables, and are faced with reconfiguring and expanding networks as a result.
When I talk about this issue with Matthew Knight, head of policy and markets at Siemens Energy, he agrees the UK’s CP2030 transition “is happening against a backdrop where global demand [for grid technology] is growing.” He puts growth at about 18% per year for the last couple of years and says it is likely to be similar for the next couple of years. “So if there was 20% spare in the global supply chain last year, it is all used up this year and it is going to be short next year.” That means, “It is important for the UK to be able to buy in bulk and be attractive to get the bit of the supply chain it needs.”
Other countries have seen this coming. “Two years ago [Dutch and German transmission operator] Tennet signed a ten year deal for HVDC. That really tied up a lot of the resource – so much so, that it caused some offshore wind developers to look at AC rather than DC [connections] just to be able to get access to the supply chain.”

some offshore wind developers look at AC rather than DC [connections] just to be able to get access to the supply chain.

The good news for the UK is that “Generally the confidence of the supply chain in the pipeline of work from the UK is stronger than it has been”. And that is because “for the first time in 35 years, we actually have a plan.”
The government’s ‘Clean Power 2030’ action plan and so-called ‘Mission Control’ provide clarity on direction and a single routemap – a marked change from recent years, when the system operator used a variety of future energy scenarios .
He says “having the really ambitious plan is very helpful. I’ve said for years that the first prerequisite for the supply chain to invest in anything, whether it is training an apprentice or building a new factory, is confidence in a pipeline of work that we have a chance of winning”.
He is hoping for a “bumper” allocation round for new renewables projects this year. But in fact, “What would probably be best for the supply chain is delivery at a steady rate well into the 2030s.”
Without that pacing there is a delivery risk. He notes there are 88 network projects in the current action plan and “the risk is that they all hit the supply chain at the same time. We have moved from a world where we don’t know what is going to happen, to one where we don’t know precisely what is going to happen but we know it is going to be quite a lot and we may not be able to cope with it.”
With the recent Early Procurement Mechanism Ofgem has given network companies the ability to secure equipment earlier, but Knight says the need to expand the workforce is equally challenging: “We can find ways of extending factory capacity, but it is very difficult to train a senior project engineer – you can’t do that overnight”.

We can find ways of extending factory capacity, but it is very difficult to train a senior project engineer – you can’t do that overnight

He says, “We need a comprehensive workforce strategy”. That means ‘selling’ a career in the industry to recruit people, but he adds, “once we have recruited these people we need to train them. We need to invest in more training centres and more training people and n the best way to do that is to do it across the whole industry. One company can’t do this on their own: we can train someone and then they get poached by someone else”.
He adds, “Once we have trained them, we need to set them to work on sites and they will go up a learning curve in the real world. So you need experienced people next to them, and you need to allow extra working hours on sites so people can get up to speed and learn.” Again, that requires a ‘whole industry’ approach – including the regulator, who has to allow for the fact that people on their sites will be training new staff and therefore need extra hours.
He says, “Last year we did about 600,000 hours on site, in two years time we are already forecasting over a million hours. So that’s the scale that our workforce has to grow and it is probably typical of the whole industry. This is not incremental growth, this is doubling or tripling and in particular skills that can be really challenging.” He illustrates the challenge in securing experienced staff: “of the 150 odd people recruited in the grid team in the last year, 46% were from overseas. That’s not because they are cheaper – they are more expensive and it is much harder to bring people in from outside than use local people. But we cannot find local people.”
He adds, “because grid in particular is booming around the world we can’t rely on a stream of people from overseas. We have to grow our own.”

Electricity is first in decarbonisation
Speaking more broadly about Net Zero, Knight says that “It’s an exciting thing, the idea that electricity goes first. Then the offer to the rest of the economy is that you plug in and go green. If we have a 95% decarbonised electricity system, switching your home heating to a heat pump or your driving to an electric vehicle is the obvious thing to decarbonise heat and transport.”
In contrast to his excitement over green electricity, when I ask Knight whether an alternate vector – hydrogen – is past the early ‘hype’ period, he says “I hope so”. He explains: “The fundamental physics of hydrogen remains: it’s never going to be a cheap fuel, so therefore we should use hydrogen for the things where it has real value. The last thing we should be doing with it is burning it for low grade heat, especially not when heat pumps work better.”
He says, “There are a few things that you really need to use hydrogen for. That is replacing it as a chemical, niche particular high-temperature industrial stuff and a bit of transport – but we aren’t talking about road transport, more marine and aviation.”

The fundamental physics of hydrogen remains: it’s never going to be a cheap fuel

He adds, “The big thing we need hydrogen for is storing renewable electricity. Every country is different and its path to clean energy is different. If you are in North Africa or the Middle East, you have reliable solar every day” so with battery storage you can cover green electricity needs. In contrast, the UK’s assets are shallow seas and strong winds “and that means you have to have enough energy stored for the one period in ten years when the wind doesn’t blow for a week”.
Up to now, we had that storage ‘by accident’ from gas reserves in the North Sea. That and our Norwegian supply will soon both be in decline, so “The future of gas supply in this country is going to be increasingly LNG imports. Then you really are relying on other countries around the world being willing to sell it to you, and being able to afford the price that they are prepared to charge you.” Hydrogen from renewables can alleviate that dependence.
This is important in connection with Knight’s view that we are moving to a different energy era. He says that politicians talk about Net Zero as a cost rather than an investment: “they often miss the fact that we have an awful lot that we have to catch up on.” What is more, they compare the future with the past, rather than an alternative future. “The alternative futures for the UK are either a future that is dominated by wind and some energy storage, and clean, or a future that is dominated by importing LNG from whichever country that is prepared to sell it to us that is going to be incredibly expensive and not so secure.”
The danger in making the wrong comparison is, “Unfortunately, while we have greater clarity on direction, we have lost the [political] consensus”. Until recently parties had the same end point in view (ie Net Zero), with discussion over the speed of change. But Reform, for example, takes a different view. So, “there is a different type of risk creeping in, particularly if you are looking at a long term investment. What if the government changed and what would their view be?”
Going back to the current ‘sellers’ market’ for the electricity industry supply chain, he reiterates that uncertainty is costly, because “Confidence gets built over time when stuff happens the way you were expecting and politicians repeat the same things, and it can be damaged overnight”.
Knight can list real-world examples of the need for confidence. He says Siemens Energy has designed and built the world’s first 100% hydrogen turbine, at its Lincoln site but , “We had to take it to France to test it because we couldn’t find a project here to test it”.
He adds, “We signed an agreement with SSE to build the world’s first large scale hydrogen -fuelled plant at Keadby”. For Siemens Energy it means “tens of millions of pounds in investment and upgrading our test facilities”. Ideally it will be built by 2030, which means SSE will probably have to take an investment decision next year. For that to happen the right policy has to be in place to ensure there is a viable business model. It has to be a collaboration between industry, our customers, government and the regulator.

it’s going to happen and no-one ever saved money by slowing a project down

He says that is all very do-able – if confidence is there.
He adds “We can’t do it any faster than this and we shouldn’t do it any slower”. “The energy transition is unstoppable, and looking back on his early days as a project manager, he says the only way option is to go as fast as we can: “it’s going to happen and no-one ever saved money by slowing a project down”.

In Itatiaia, the capybara was king – and so it should be, as the world’s largest living rodent. When Jaguar Land Rover developed land in the mid 2010s for a manufacturing plant in the area, up-state from Rio de Janeiro, it found that preserving the capybara’s natural habitat (in particular local forestry) was dear to the hearts of regional authorities and residents alike. The company expected education and environmental protection to be central to its partnership with the region – and it remains so today – but the capybara was one local element that had to be understood and respected.

The fundamental upgrade of our energy grids across the UK, facilitated by new legislation announced in the King’s Speech (17 July), will require the same willingness to learn about the localities where we develop new networks and upgrade old ones. That will not change with the shift in emphasis towards central infrastructure planning decisions.

Rachel Reeves delivered a speech at the Treasury on the Government’s first full working day (8 July), affirming that decisions on large developments will be taken nationally not locally, giving “priority to energy projects in the system to ensure they make swift progress”. She added: “We will build on the spatial plan for Energy by expanding this to other infrastructure sectors… we will ask the Secretaries of State to prioritise decisions on infrastructure projects that have been unresolved for too long.”

it was inevitable that the new government would have to tackle planning

Given its ambitious carbon reduction targets, it was inevitable that the new government would have to tackle planning, shortening decision timescales and streamlining the consenting process. The Planning and Infrastructure Bill will accelerate the development of significant infrastructure, but it will not reduce the requirement for public engagement by utilities. Quite the opposite.

The key provisions of the bill envisage:
• A Simplified Consent Process for significant infrastructure schemes, “reducing the bureaucratic hurdles that currently delay project approvals”.
• Modernised planning committees to speed up application processing. This is expected to accelerate decision-making and maintain project momentum.
• Reformed Compulsory Purchase compensation, to ensure that compensation to landowners is “fair but not excessive”, balancing the need for development with the rights of property owners.
• More development sites by improving land assembly processes (for example bringing together separately owned parcels of land).
• Funding for nature recovery initiatives, to balance environmental conservation with the need for development.

Quick and effective implementation of all this and more is essential, if the UK is to have a hope of securing grid upgrades for electricity demand that is expected to rise by 50% by the mid 2030s. Add to that a new hydrogen backbone, to be built between major industrial centres, and the imperative to streamline these processes is ever more acute.

The recent track record of major infrastructure planning supports legislative change. Decision-making timelines for Nationally Significant Infrastructure Projects have slowed this decade, with the average Development Consent Order taking more than four years, up from two-and-a-half years in the decade to 2021. Legal challenges have also increased since 2021 (four successful challenges out of 15), swallowing up time as well as reams of actual and virtual paper on expanded impact assessments.

These policy developments should not be a surprise. Labour’s manifesto was clear: “The current planning regime acts as a major brake on economic growth. We will set out new national policy statements, make major projects faster and cheaper by slashing red tape, and build support for developments by ensuring communities directly benefit. We will also update national planning policy to ensure the planning system meets the needs of a modern economy.” Note the point about communities. How do we build widespread support for infrastructure developments, and what are the ingredients for oiling the wheels and providing an effective legitimate, clean and transparent community benefit?

the scale of engagement the industry needs to have with communities over the next decade is unprecedented and daunting

Whatever the new legislation and regulations enabling utilities to deliver projects, the scale of engagement the industry needs to have with communities over the next decade is unprecedented and daunting.

The idea that local protests may be more easily overcome by a central directive also makes it more likely that local residents and business may feel “done to” by national authorities and large corporates. The energy industry and government should strive to avoid this outcome. The National Energy System Operator will deploy its public-facing Regional Energy System Planners (RESPs), which will help by providing a broader canvas for any local engagement that takes place, but RESPs are also embryonic and it is too early to know how they will work with any new planning regime.

In the meantime, while the extensive consultation of a development consent order (DCO) process can be protracted and painful, it does steer developers into a full and genuine engagement with affected communities and other planning participants. When it comes to regional or national scale infrastructure, development and construction directors shoud profit from retaining the best of the process, albeit streamlined. The discipline and method is systematic and sound, even if all the formal steps prove to be unnecessary.

The engagement and support flowing from a thorough approach is also helpful in ensuring regulatory funding; it was partly widespread support through a DCO that was instrumental in (then) National Grid Gas Transmission gaining approval to complete the Feeder 9 transmission tunnel underneath the Humber estuary in 2020, after a negative initial ‘minded to’ position by Ofgem. Two years later, the tunnel was transporting a third of Britain’s gas as part of the massive effort to secure European gas security following Russia’s invasion of Ukraine.

National security aside, ultimately planning is about people. If we do not take enough time to involve customers and communities meaningfully and consistently (especially on the most difficult material issues) they will be reluctant to listen to us when we need acknowledgement or acceptance of the work that we intend to do. As an industry, we have the privilege of being permitted to develop important infrastructure in their neighbourhoods, and thereby make a massive contribution to UK society and its economy. We must remember to take care of the capybaras as well as the capital.

Andrew Marsh is an interim corporate communications manager in the utilities and automotive sectors.

REA is “everything else – the whole of the renewable energy landscape apart from offshore wind”

He explains that a number of the challenges are cross-sector – skills, or green finance, for example. He says government is often accused of not having a systems view and if it did have, “perhaps you would have predicted the grid constraint we are suffering, the shortage of skills, or challenges in the future where the role of the consumer will be central. It’s one of the real strengths of the REA to look across that piece as well as diving into single technology areas of importance to our members.”
REA has absorbed a number of trade associations and technology groupings over the years and alongside that ‘whole systems’ view Hutchings notes that “we have in-depth verticals in power, heat, green gases, solar, so we are the best of both worlds. We have around 500 members, many of which participate in our policy groups. They value the role that we play in forming the industry’s view on policy areas and advocating those policy changes into government.” Looking across the system, but also into the depth of policy work: “That’s the offer to the market, “ he says.

Getting to technology readiness
Later, when we discuss some other aspects of the REA’s work he highlights another offering. He says, “We have an important subsidiary company, REAL, which looks after a number of assurance and certification schemes for the industry. [The schemes] range from supporting interoperability to provide a more frictionless experience with EVs, to supporting consumers through the Renewable Energy Consumer Code.”
He says REAL and REA make, “A really interesting blend, if you think about how technologies mature. “If technology is at an earlier stage, our members want the REA to understand the technology, look at the policy and regulatory landscape, and look at what has to be done to support it. Then as the technologies mature and become mainstream, assurance and scheme administration becomes more important and that is where the REAL functions come into play. We are providing a rounded service to our members through that journey”.
He says that in future, “I think REAL can do more. There will be more areas required for market assurance that are a key part of the delivery landscape. The deployment of renewable energy technologies in homes is in its infancy and the consumer will have to become so much more engaged and interact with different technologies”. That could fill some of the gaps in consumer protection around, for example, domestic renewables.

I think REAL can do more. There will be more areas required for market assurance that are a key part of the delivery landscape.

Talking about the REA’s offer to government, he says, “we want to help the administration on its progressive agenda by convening industry to advocate policies that will help deliver government objectives. When a government comes in after a long period in opposition it doesn’t always have the depth of analysis; it hasn’t had the civil service there to help produce real detail.” He highlights some “impressive moves” from Labour, like removing the de facto ban on onshore wind and he praises, “that general rhetoric of positivity and being clear that this is an important part of the growth narrative for this country. I think that sends really clear signals to the investment community that stretch beyond individual announcements and that is very positive.”

the real detail needs now to be taken forward and that is where the REA will be very important

He says REA can help the new government with the “difficult part” – implementation. He says, “things like setting up GB Energy, and some of the other commitments they have made, … the real detail needs now to be taken forward and that is where the REA will be very important to support that policy development”.
I ask whether the REA’s ‘everything else’ offering can be part of the new ‘whole systems’ approach to energy. Hutchings says that approach is sorely needed, and “Many commentators would say that a lack of systems thinking has held us back”, for example not predicting constraints in the development of the market.

Whole system thinking
The REA’s ‘pillars’, where it has policy groups to produce thought leadership and policy positions, are heating and cooling, power and flexibility, transport, circular bioresources and finance. That gives the organisation a broader view of the decarbonisation challenge. Hutchings says that was the right place to start. “But we have to tackle these bigger areas”.
He highlights, for example, REA areas of expertise like green gas, “which have a role where things can’t be electrified. If it won’t be hydrogen in the gas grid now, which I don’t think it will be at scale, there is the potential for biogas to replace natural gas in parts of our grid.” That is an area he thinks has been too much under the radar, but “The gas networks and others are waking up to the challenges around replacing natural gas with hydrogen in the network and I would encourage them to think further about the potential for biogas.”
In transport, the electrification of the wider vehicle fleet, “is very exciting, but somewhere where we don’t have enough policy to really get the rollout done in the most cost efficient way and in a way that gives most confidence for the consumer. It’s not frictionless. The rollout, standards, consumer complaints, interoperability – many things feel very clunky and it’s an area where we do a lot of work”.
When I ask Hutchings more about the whole system and what it means with regards to government touch points, he says, “You very quickly get into transport, into telco, into some of the data and digital technologies. All of this is coming together to facilitate the transition. What we are saying to government is that you have to look across the piece, because there are dependencies.”
He is “most encouraged” by the new ‘Mission Control’ headed by Chris Stark, saying it is “absolutely vital” to pull other departments into the transformation: “Defra has a huge role to play both for land management and waste resources policy. DfT for EVs, DLUHC on the built environment and building standards and obviously Treasury. So we need to see the new government drive performance across multiple departments to pull in the same direction.”
He believes, “One of the strengths the REA brings is that we can see from the outside where there are discrepancies and where policies are inconsistent or they rub up against each other. That is a real value that a single technology trade association wouldn’t offer.” He adds, “I would like REA to become even more impactful – the go-to trade association for those pan-sectoral issues.”

I would like REA to become even more impactful – the go-to trade association for those pan-sectoral issues

He especially wants government to include industry in its policy development, saying “We are going to be the industry who will drive the growth. We represent companies from very large corporates to SMEs, so we can bring that insight to support policymaking ambitions.”
Similarly he hopes REA will provide ‘whole system’ expertise to the new National Energy System Operator (NESO). Once again he says REA’s broad membership is a strength: “Many local authorities are our members and we are growing our membership in that area. They have a hugely important role to play in initiatives like EV charger rollout, waste management and the circular economy and heat networks”.
Waste to energy is a good example of different perspectives on systems : “From a local authority perspective it’s often about waste management, for NESO it is about energy, there can be air quality issues and it is about heat for homes. It’s a system and you can’t think about any one of those things in isolation.”

A typical map of the UK’s low voltage distribution network owners (DNOs) shows a handful of companies that operate monopoly licence areas covering the whole of the country. Zooming in would show a more nuanced picture, with thousands of small areas of network – industrial estates, multi-use areas like airports, office groups, even new housing – served by so-called ‘independent DNOs’ (IDNOs). This group of companies – currently numbering around 20 – provide ‘last mile’ connections to new developments, but also often own and operate small network areas under long term licences issued by the energy regulator Ofgem.
Spencer Thompson is the chief executive of one such company, Eclipse Power Networks, which is ultimately owned by the Octopus group.
I first ask him about how changing homebuyer expectations in the home fabric (such as solar panels, electric vehicle (EV) chargers, power showers, heat pumps and induction hobs) are altering the business for IDNO connections. He acknowledges that change, but says at the moment the major problem for housebuilders, as well as other new developers, is simply trying to get connected to the grid.
Thompson agrees that expectations are changing in new-build housing, but says even without those bigger loads, the electricity connection – which is a small part of the cost to build out a new housing estate – can be a major blocker to development. For example, “We were talking to a customer the other day about 4000 homes. They needed a 20MVA supply from a local DNO. The DNO said the connection would be delayed by six years because of transmission reinforcement upstream. More and more housing developments are being delayed by getting connections to the grid.”

More and more housing developments are being delayed by getting connections to the grid

It has long been a problem for solar and battery projects, he says, and he highlights other new facilities, especially EV point installations which, “in the last six months has increased exponentially. There are so many developers out there trying to develop EV connections,” serving fleets such as delivery companies as well as providing public chargers.

Microgrids needed
He says the answer, for forward thinking developers, is to move on to a smarter approach to the connection. In response to grid constraints, smart developers are looking to create a microgrid behind the meter, with community batteries, solar and other assets that work together to meet the site needs with least possible interaction with the grid. The microgrid “could be community owned assets, or it could be developer owned, it could be a mix of both”.
He admits, “They’re realising that the grid connection, even though it’s a small cost item, is absolutely constraining, but we’re only really seeing those proactive, smarter developers do that”. Nevertheless, “That’s the thing that’s really taking off at the moment for us. And we’re specializing. We are launching a sister company in private networks and microgrids this year for this very demand.”
I ask him for an example, and he says a new development like the 4000 houses mentioned is usually a ‘five-year plus’ development that is built and connected in batches of 100-500. But at the moment “sometimes they can’t even get that first connection, and that’s becoming a more and more common issue. So the more you can do behind the meter the better”. He says that one development initially sought a 20MVA connection, but using a microgrid “you could reduce that down to a 5MVA connection. “If you can reduce the power demand, subject to a few technical issues to solve, you’re going to reduce the cost to connect to the grid, which isn’t necessarily the big driver, but you can reduce the lead time.”
He adds, “The other angle to microgrids is that there is a revenue model here behind the scenes. It can be developer owned, it can be a network company like us, or it can be community owned by the local residents, or it can be a combination of those three.”
But Eclipse currently specialises in industrial and commercial (I&C) networks and here, he says, “you could have even bigger wins. If you imagine industrial parks full of solar, with a battery, you could absolutely reduce the demand [on the grid].”

You are unlikely to go off grid, but could you get to a zero bill scenario?

Eventually a microgrid could be “virtually off-grid” or stay connected and alternately buy energy from the market or supply it back. Thompson says that depends on the ambition of the microgrid and the developer. “You are unlikely to go off grid, but could you get to a zero bill scenario? How can you maximize your solar and your battery?” EV chargers multiply the energy at play, and “if you really want to get ambitious there is the vehicle to grid or vehicle to business angle.”
It is a smart network future that has been in the background for government and industry for a long time. But at the moment, Thompson acknowledges, there are a few barriers to pass. Some are around governance: in the residential sector, “there are some regulatory restrictions around how much microgrid or how much private network you can have, which does need unlocking by the regulator and the various distribution code changes”.

De-clogging the queue
There are technical issues as well that apply to any connection. “There’s a lack of monitoring on the DNO networks as well as the IDNO networks,” he says, which means DNOs and the connecting party have to take a cautious approach (considering peak demand and a 40year+ asset life) to the size of connection needed, which is “clogging up the grid”. He sees “lots of connections that are asking for 2,3,4-8 MW, that when you model it only need a quarter of that”.
DNOs are adding more monitoring but it is very slow, he says – not surprising when DNOs have thousands of miles of network and customers would have to fund the installation. Thompson says, “DNOs won’t do it, necessarily, because they are not currently incentivised by the regulatory model. It needs a joined-up approach, and it needs a steer from Ofgem and central government.”
That would require a directed approach. Thompson says, “you prioritise hotspots, for example in the urban areas and the cities. But I think there needs to be more to prove the concept that this would work to unlock unused capacity, reduce the grid capex and new build which is clogging up the queue.” Innovation projects are under way, but they are small scale and “they’re often quite slow moving, because the main focus for utilities [DNOs] is around their CapEx and OpEx plans, and RIIO [ie five-yearly agreed business plans.”
Thompson is keen to talk about the microgrid option as a new business model. He says an IDNO’s return comes entirely from distribution use of system (DUoS) charges, while DNOs also get income from the return on their regulated asset base and connection charges. “So, we have to be lean and agile. But if you have a microgrid behind the meter with renewables, it does reduce power consumption, which reduces DUoS and drives towards net zero.”

the DSO should have the ability to create local solutions for a small urban area or a small hotspot, and it should have powers for that

Thompson is in favour of the DNOs’ new responsibilities in local markets as distribution system operators (DSOs), saying it will help bring forward these types of solution. He says, “I call it devolution. I support the DSO thinking. You’ve got the NESO that’s going to become a government entity. They’re going to try to be the impartial arbitrator and set the policy for the UK grid, which is a really good move. But you also need DSOs locally. DSOs know their region much better than anyone else. If you drill down back to your hotspots, your heat map, the DSO should have the ability to create local solutions for a small urban area or a small hotspot, and it should have powers for that.” The regime is still emerging “But you’ve got to promote local thinking. If you look at France and Germany, as an example, they have hundreds of distribution companies, often township or mayor led. There’s pros and cons for that, of course, but local solutions are happening more quickly. And I think it is a trigger to promote microgrids, which ultimately would reduce all the grid CapEx that needs to be spent.”
Thompson acknowledges battles with incumbent DNOs but says we have “some really good relationships.” He says, “We’re in the middle between the DNO, and the customer. And also we’re trying to challenge policy, which sometimes can be outdated. We spend a lot of time trying to translate the grid issues to the customer, and vice versa. They have millions of customers. We have tens of thousands. So, we’re able to pick up the phone and talk to them about the situation – given our agility.”
Again, he has an example, of a new build customer expecting to connect in 2026. DNO modelling with the transmission company put that date back to 2029, which was “completely unexpected at the time. And you think about this customer that’s building a solar farm and battery storage. They have a huge amount of time and money invested. Changing it to an IDNO connection we challenged some of their policies, the technical standards, and tried to broker what it is that the customer wants, versus the DNO assumptions that were not appropriate.” He also has examples where “the DNO were proactive with working with us and the customer to get a solution. So, you can do it at a local level. The local knowledge is important because technical standards are not consistent, even between licence areas within a company – an issue that is being very slowly resolved over many years.”

Change the model
Thompson’s general complaint about the connection queue is that “Every single connection was modelled worst case, which means you need to spend vastly more grid CapEx and the delays in the queue are equally extended across the country. They’ve changed the modelling recently, to help that situation. But they are still not modelling on what the customer wants. If they did that, they would improve the situation again.”
Some of the DNOs have done this really well, giving projects a really detailed profile of curtailment that either killed it or gave it a lifeline. Microgrids would come in to optimise such a project.

developers are beginning to work with data centres and even green hydrogen, balanced behind the meter in a microgrid.

In fact, large energy companies have tended to move towards energy parks, rather than single assets, with solar and battery providing several revenue streams, says Thompson. He says “now developers are beginning to extend that to work with data centres and even green hydrogen, balanced behind the meter in a microgrid. That’s going to be one of many keys to unlocking the connection queue over the next five to 10 years.”
He thinks the new energy system operator NESO can help make that a reality. “If we were more joined up regarding where solar, battery, hydrogen and data centres were built around the country, to suit the network as well, then that would help enhance the network in a more efficient way. At the moment, the rules are you can connect anywhere. Which means all you’re doing is creating this hugely inefficient network. But you could control within reasonable rules, but still keep some flexibility of where these technologies connect, where the network gets the benefit.
NESO could create greater markets to do this: they have schemes like Pathfinder, where they’ve got voltage issues, or system inertia issues. They targeted procurement events to connect that technology and they got a very competitive bids to build out those assets.”

When I talk to Steve Brittan he is just six months into his role as chief executive of Xoserve, the data services company for the gas industry, but he knew what to expect after taking on a non-executive director role for the company in 2020 and a career history in technology and innovation.
Xoserve’s key role in data transfer between the country’s gas networks, suppliers and shippers is largely invisible to consumers, but it underpins billion-pound payments across the industry and its importance was illustrated during the recent energy crisis. The government’s Energy Price Guarantee scheme required the company to mobilise fast to put in place the systems that enabled the government to enact its policies around the price cap. Brittan says, “From ministerial instruction to the system being operated was about six weeks. We had to move an awful lot of things quickly that normally take a lot longer”. He says GB’s heavy reliance on natural gas for heating meant that for a short period, “We were the largest drain on government finances,” distributing billions to gas suppliers through an agreed formula each week.
Perhaps that experience underlies Brittan’s caution about the speed with which decisions should be made about how to decarbonise home heating. He says, “Decarbonisation of the electricity grid by 2035 means essentially replacing gas in the electricity mix – and that’s the easy bit in decarbonisation of energy. The hard bit is replacing the gas provided for heating and the stats show it is about four times the amount of energy provided by the entire electricity grid during the winter.” He agrees there will be a role for heat pumps and other solutions such as district heat. But he says the right solution will vary from area to area and, for example, “There could be at least two million homes where it would probably never be the right solution to use a heat pump for a variety of reasons,” not least the electrical loads required.
He says, “so far the debate has been largely at the very high level of hundreds of terawatt hours” for the country as a whole. That has been “absolutely the right thing to do,” because of issues like winter ‘wind drought’ periods, which mean the UK and its European neighbours see cold weather and low wind speeds coincide for several days or longer. But now, he says, that has to be complemented with local ‘bottom up’ information on energy networks.

“My strong view is that you need to keep backing all [technologies], because none of them have scalable technologies that can do this economically, with the required resilience as yet.”

In a new project Xoserve is planning to work with electricity data transfer company Electralink and an energy network operator to look at the energy provided by gas at the localised level. For each zone – possibly just a few streets – it will look at what would happen if gas users in an LDZ move to electricity and how it would affect load on the electrical distribution network. The project is now at a very early ‘proof of concept’ stage, but Brittan says it is “the first one that I’m aware of that brings real-world electricity and gas data together to see the effect of decarbonisation at a local level”.
Brittan is sceptical of suggestions that we could switch entirely to electricity, and especially of suggestions that it could be done quickly. He says, “One thing that policymakers are grappling with at the moment is how many horses we continue to back. My strong view is that you need to keep backing them all, because none of them have scalable technologies that can do this economically, with the required resilience as yet.” He agrees that the vast amount of energy required for heat won’t just be hydrogen, but he points out that several of the large scale electricity options, such as nuclear, are not meeting expectations for timescales, and energy storage is still at a very small scale, and expensive.

Changing the framework
Decarbonising the UK is a whole-economy project. When I ask Brittan about Xoserve’s role he talks about some fundamental parts of the energy governance framework – the Codes that regulate different parts of the industry.
Changing industry codes is currently painstaking and slow, but it is key to delivering change. He says a review of the codes by regulator Ofgem is, “an opportunity for Xoserve to put forward a prospectus to talk about how we could help to develop the gas codes to move the industry forward more efficiently and effectively for the future, taking into account strategic direction from government”. He explains that Xoserve’s systems “put into digital form what the codes are asking for in terms of processes and data. We face into about 60% of the Unified Network Code (UNC), covering gas transport and suppliers and we are involved with the process of code development.”
Xoserve is looking at several areas of code reform, including longstanding plans like bringing together the codes for traditional distribution networks and so-called ‘independent’ gas networks and making the landscape of different administrators ‘more coherent’. But there are other changes needed to code management, as highlighted in recent Ofgem consultations.

“Having systems in place that can handle [gas blending], for example handing the changes in calorific value of the gas, is challenging.”

When Brittan talks about reform, he says future code development should look more like a structured programme than a series of discrete changes, which can seem to be ad hoc. At present, code changes are not prioritised but considered individually, in submission order, and that could stifle transformative change: “When we look at the types of changes that might come through in the next few years, you start to think about the blending of gases such as hydrogen. Having systems in place that can handle that, for example handing the changes in calorific value of the gas, is challenging. We can do it, but the issues are around how we get UNC code development for the future to happen more quickly than we do things today, and also to ensure that we have the digital systems that can implement what is required, which will need an upgrade of the systems we have today.”
Instead of considering single modifications, ““We need to look at what is needed in the next five to ten years, be strategic and ask what we are trying to achieve, and what code changes are required, and this needs to be closely co-ordinated with development of the digital systems to implement that”.

Gas blending
Gas blending – including biogas (which is largely methane, as is natural gas) and hydrogen – “is a very good example of where we need to go away and think about what is needed and where we are aiming”. He says it “is probably for the next few years the most pressing change issue for us, alongside system upgrades”.

Gas blending “is probably for the next few years the most pressing change issue for us, alongside system upgrades”

That is not just because of potential hydrogen blending in GB but because we have gas interconnectors with other countries. “Suppose Europe has gas blending and we don’t… You have the potential for mixed gases going into the networks. That doesn’t work .. and from an Xoserve point of view it is more difficult because you would have to work out whether you are dealing with blended or unblended gases.”
There are some very practical issues around blending hydrogen and methane, because they carry different amounts of energy (described as so-called ‘calorific value’ or CV, expressed in kWh). Consumers are billed on energy content of the gas they use, but gas meters (whether domestic or within the gas network) measure the volume of gas that passes, and from that the energy content is calculated. Brittan says “once you start getting to large volumes of biomethane or hydrogen, a calorific reckoner has to be put into place to make sure customers pay for the energy they use, not the gas volume they use.” There are other complexities.
Brittan says that the point at which the mix becomes significant is very much dependent on the gas mix. A 3% blend of hydrogen by volume will mean a 1% reduction in energy supplied and clearly that will be questioned quickly by a large energy user.
That is one of a number of issues being investigated: “We have convened a group of stakeholders and started to think this all through.” A blend of 20% hydrogen is already proven possible “but where do you blend it, where is the feed, how do I make sure it is still 20% across the network, because we want to make sure that no-one is miss-charged”. The investment required will probably include adding new sensors to the network to ensure the hydrogen blend is as expected.
Brittan says, “We have started asking what it means for the codes and what processes you have in place to address this, and we don’t know all the answers yet, far from it. But they are all things that will have to be done if you want to blend gases in future.” He thinks significant scale of mixed gases are “unlikely this decade, but clearly is an option for the future” but at this stage there is uncertainty over whether it will be required at all.

Grid defection
A few years ago the rise of solar PV and other forms of self-generation raised the possibility of ‘grid defection’, where consumers large and small have little or no connection to the network. I ask Brittan how important similar ‘grid defection’ is for the gas network. My example is large gas users whose demand helps ‘pull’ gas through the pipes; if they switch to electric it may mean more compression is needed to ‘push’ gas through. But there is also an economic aspect, as domestic and business consumers switch to electricity.

“One issue is around whether we continue to allow individual houses or companies to get heat pumps with no co-ordination. If you do that it could be chaotic.”

Brittan says, “With others, we are starting to model the effects. First is mainly a question of economics. You have a fixed network; if the number starts to fall, the fixed cost goes up. Second, at what point does the network become sub-optimal? I suspect there is no single answer. It will vary by network zone.”
He adds, “We’re beginning to answer more detailed questions about what it means to decommission the network or to support blending. One issue is around whether we continue to allow individual houses or companies to get heat pumps with no co-ordination. If you do that it could be chaotic. At some point that network would become unviable – economically and perhaps also technically”.
He warns, “People say we switched from town gas to natural gas” and then suggest a hydrogen switch will be similar, but “It’s not necessarily a fair comparison as the town gas conversion project was planned over an extended period, and essentially mandated.”

Replacing the platform
Brittan has mentioned the need for a technical upgrade for Xoserve’s UKLink platform several times.
That could raise fears among industry members who recall the previous upgrade, dubbed Project Nexus, which was delayed by years and cost far more than was estimated. Brittan says there were a number of problems with Project Nexus: “The requirements capture was not very good. There were also several major changes made to the UNC code while the digital systems being developed were being put in place, so it was being designed against a moving target and that is always a bad place to be.”

Project Nexus “was being designed against a moving target and that is always a bad place to be.”

This time, he says, the company will do better. But at the same time we need “a co-ordinated approach between code development and the digital systems needed to implement it – they need to be brought together more coherently. We think that is one of the key opportunities afforded by Code reform and something we have to get our hands round for the upcoming codes review. We will be making the case to Ofgem that the way the digital estate is developed and the way the code is developed have to become much more unified than they are at the moment.” For example, in our discussion of gas blending Brittan says there is a decision to be made: “if UKlink upgrade has to be capable of processing systems with blended gases in the future, do we build it in now, as part of the planned upgrade ?” That may be wasted investment if blending does not happen, but on balance he thinks it should be actively considered.
But whatever its final scope, when it comes to replacement Brittan points out that there is no alternative, because the SAP platform on which UKLink operates is going out of service in at latest by 2030. He says, “Given how long it takes to build these things, we are starting now”.

From Summer 2024, GB’s energy sector will have a new ‘guiding mind’ in the National Energy System Operator (NESO). In replacing the electricity system operator it will have to ensure that the energy system is fit for a much expanded role in a ‘Net Zero’ economy, delivering a ‘whole energy system’ for the future encompassing not just electricity but gas, and potentially heat, hydrogen and carbon dioxide.
Julian Leslie is the new body’s director of strategic energy planning. He says, “once you have this independent body you really can be the glue that sits at the heart of the whole energy transition”. NESO’s decisions will be independent of government (and free of any perception around NGESO as a National Grid subsidiary that it would favour new networks over a market solution).
He says “because we do not make money from doing one thing over another … the decisions we make will be in the best interests of the priorities of the government and the priorities of the regulator and protecting consumer value.” The company will be regulated on being efficient and on delivering its outcomes but as a ‘not for profit’ it will not have financial incentives and “we are still working through the fine detail of what that regulatory relationship will be like.” But he thinks it will be more responsive, “if we can see an opportunity to accelerate decarbonisation or save consumers money, we should be able to make a business case that shows that benefit and undertake the work.”
The NESO will be responsible for the real-time operation of the electricity system, as it is today, but not of the gas system because it has a different risk profile and the implication on the HSE safety case if we were to split the owner and maintainer of the asset in the gas network from the real-time system operation”. However NESO will be the long term network planner for gas transmission and it will be designing new markets for gas, hydrogen and other vectors.
I ask whether NESO can be truly agnostic on energy vectors, given it is evolving from the electricity ESO.

We don’t want to be an electricity business with a bit of gas stuck on the side

Leslie says, “It’s one of the key things we are conscious of. We don’t want to be an electricity business with a bit of gas stuck on the side.” He says that input is necessary, so when different futures for the system are modelled “you can see by the modelling the impact that decision has on the electricity networks, the methane network, on the potential hydrogen networks of the future. So we are really baking that in from day one.”

Stakeholder engagement
Leslie says, “Timescales are tight” for NESO’s first deliverables. “We have committed that the first whole energy system network transmission network plan will be delivered at the end of 2026. Working back, we need to have a Strategic Spatial Energy Plan (SSEP) in place by mid 2025, … so that work really starts now.”
He expects that a commission from government for the SSEP will start to have some indication of policy decisions around GB’s future energy networks and, for example, the scale of large nuclear, hydrogen of offshore wind. He says, “We can use that to build a range of potential network options, thinking about environmental, community cost and deliverability issues”. Following the SSEP “we need to do Strategic Environmental Assessment [SEA], so there will be a national consultation on the SSEP, then following the results and the conclusion of all that we will publish the first SSEP, which will be endorsed by government at some point in 2025.”
Late last year the new company was also given responsibility to set up and work through Regional Energy System Planners (RESPs) and there is less clarity over the next steps for the these. “Ofgem are very clear that this was initial thoughts and that most of the design process hadn’t been done. They wanted to do it in collaboration with us, but also other network operators and local authorities, metro mayors, etc. We are very much in that detailed design phase with the regulator bringing in stakeholder views to understand how this process could and should be shaped”. But he is conscious that the electricity distribution network operators (DNOs) will be considering plans for the price control period from 2027 – and gas distribution networks (GDNs) are writing business plans now.
These groups will have to be public-facing and Leslie says “we need to grow that capability” because at the moment there are very few people who can talk knowledgeably about what the whole of the new NESO is doing. He says, “If we are in one region talking about a regional energy plan, we’ll also need to be talking about the spatial plan along with the recommendations to build a new substations and lines.” Along with the RESPs responsibilities, the NESO’s strategic market position has to be made clear to all the stakeholders.

Regional plans
Leslie says, “The regional energy system plan won’t be a full set of regional plans but it will be providing a lot of the inputs into that next [DNO] price control. So we need to have a common set of input assumptions, and a common set of outcomes that we are looking to achieve by region that the DNOs can feed into their price control submission”. Leslie says, these type of whole-system planning roles “don’t exist in GB, therefore we have the opportunity to build them on a whole energy system basis from the ground up”.

“The regional energy system plan won’t be a full set of regional plans but it will be providing a lot of the inputs into that next [DNO] price control”

Another of the NESO’s new roles is the Resilience and Emergency Management (R&EM) – a co-ordinating role across the energy vectors to ensure security of supply. Leslie explains, “in the past there was a separate ‘Winter Outlook’ [consultation] for both the gas and electricity networks, NGESO will need to look at availability of generation, the price and availability of gas and other security elements. R&EM “is bringing all of that together, so we know we will meet security of supply in all the elements across all the vectors.”
I suggest resilience in gas and electricity present different challenges, such as maintaining pressure in the gas network against declining use. Leslie says the NESO will be “thinking about what investments you need in the long term such that you can operate the system under all conditions. As we pick up the gas planning and network development roles, this will be a key outcome of those plans to ensure that the gas network remains as reliable as it is today under all future conditions.”

Other changes in gas network use may include transporting hydrogen: “and how long a tail does methane have in this process?”

“How long a tail does methane have?”

Leslie talks about the whole system again: “One of our big questions as NESO about the gas transmission network is can you start to repurpose some of those big pipelines for the transport of hydrogen or the transport of carbon dioxide.” If it can be technically achieved, NESO’s role will be to determine the economic benefit compared with other options. Similarly, is it better to pipe hydrogen or transport electricity and produce hydrogen close to where it is needed?

New roles at the NESO
The new organisation clearly needs gas specialists. Leslie’s team will nearly double, adding 100 people to deliver strategic spatial energy planning and the regional energy system planning. But Leslie says, “We also need – as we haven’t before – the environmental and stakeholder personnel. SEA is a public consultation with the nation and to make the plan that we finally deliver acceptable to the public they want to be brought on the journey and communities have to have their voice heard.”
The same is true of RESPs. There are existing Local Area Energy Plans (LAEPs) designed by elected authorities in each region “and we have to respect decarbonisation strategies and whatever else is out there. So a lot of this is about collating data and information that is already there. We are working now on a strategy that will build GIS capability that can suck in all this regional locational-specific information and present it back to the analysts and engineers and whoever needs to look at it to see how all this stuff starts to fit together.”
That has to be digital-first, because there will be around 13 regions across Britain all of which will pull in data from councils, developers, energy networks and other sources. Leslie says, NESO will not duplicate work but instead – at the regional level especially – add co-ordination and collaboration, along with common input assumptions and the common output assumptions as to what the region is trying to achieve. He cites as an example a GDN investing in fully hydrogen for domestic heating in the same area a DNO is investing for full electric heat, where that doubling of investment is not required.
The RESPs’ other function will be to read back forth between and regional and national plans and feed back areas of over or under investment. Leslie says the NESO may be able to tell one region it can slow down, for example on CCS, because another will deliver national targets. “No-one is doing that centralised co-ordination today, to bring all that together.” He adds, “Once we are in it it will be a continuous cycle of updating, and reflecting back up and down, but obviously doing the first one will be a challenge.”
The NESO will soon start to recruit for RESPs and Leslie says “I want this to be regional people in the regions working for NESO”. He wants quickly to have two or three people in each region building relationships, for example with Mayors. He cites his experience with one industrial cluster where “there is no co-ordination, and no-one has any decision-making authority” to direct energy network expansion – a power he hopes the RESP will have. He suggests that as with transmission, where the SO makes a recommendation to build and the regulator makes the allowances available, he hopes the RESP over time “can start to make some of those investment decisions” if it sees a network’s plan makes economic sense and it fits in with the broader strategy for the region.
He is not yet sure where decisions would be made: “There has to be regional decisions made by regional people, but sat in that broader framework and consistent with the national plan.”

“I want this to be regional people in the regions working for NESO”

The RESPs’ relationships with local stakeholders will clearly be crucial and Leslie says “We don’t want to have the GDN in the door one day, DNO the next, then us the next day asking what the plans are. We need to be efficient with this because there are so many stakeholders with so many drivers.”
He insists NESO will not duplicate anything already happening, “And if it is a predominantly electrification thing and the DNO is already has a great relationship with whoever is there, like an industrial park, we will rely on that.”
Via RESPs, NESO could be talking to a very large number if stakeholders. Where does it draw the line? “That’s something we need to continue to work on. At a minimum level you could work with the DNOs, GDNs…. and it is ‘job done’. But that isn’t going to give you the whole value so where do you go from there? How do we get our own knowledge?” He believes that will become clear over time “because we will grow, we’ll see the people engage with us more as they see the benefits.”
He says, “We are not going to be doing street level planning. But we can and we will be saying ‘based on what we know …’. In mid Wales there are no gas pipes and there are not going to be any. The decision is already made – it will be electrification – so the only question is over what time period and what is the level of generation that will connect”. Similarly, what does it mean that Leeds wants to be a hydrogen city, and does a city like London need district heat and heat pumps? He says, “it’s about understanding the implications”.”
He says, “At the moment regions are frustrated because they have big plans but not the means to make it happen because they don’t control the funding, the prioritisation of the network companies.” In future, he hopes “the RESP can say it agrees with the need for an investment and ask Ofgem to do what is necessary to allow it to be built”.
Can the NESO deliver this? It has to, says Leslie. “This can only be successful if it makes a difference.”

The gas network has provided a large part of the nation’s heating and industrial energy for many decades. But what is its future? When I discuss this issue with Oliver Lancaster, chief executive of the Institution of Gas Engineers and Managers (IGEM), it is against a background of declining use of gas for domestic heating, where insulation has improved the building stock. But Lancaster notes that at the same time there is increasing demand for other uses. He says, “the future of the gas grid is talked about in relation to homes, and separately about flexible power generation and supply to industry. But what we find across most areas of the gas grid is that pipes are shared, between homes and distributed industry and flexible power generation”. That makes the conversation about its future very complex.
During our conversation we talk about several examples of other gas network users.
Arrays of small gas engines have been installed over the last decade that provide peaking power to the electricity grid and can switch off and on faster than large gas turbines to respond to fluctuations in demand. They now total thousands of megawatts.

New users
Another use that has expanded in recent decades is combined heat and power (CHP) plants, which have been installed as an energy efficient way of supplying new housing or industrial and commercial developments. Lancaster says, “CHP in buildings is a hidden capacity. It is hard to try to understand the size of it. Effectively, electricity is brought to the building in molecule form and as well as meeting on-site electricity demand there may be times when the facility is exporting surplus electricity to the grid”. Most are owned and operated at building owner level, so aggregating the data is difficult, but it too may represent thousands of megawatts. Some CHP owners are moving away from gas – perhaps by replacing it with a heat pump – but Lancaster says there are complex interactions between the gas and electricity loads, especially as there is increased need to reinforce the electricity network. If the business has been using CHP supplied from the gas grid, its electricity need has been hidden.

CHP in buildings is a hidden capacity. It is hard to try to understand the size of it.

Lancaster also points out that there are also new industries injecting gas into the system, notably biomethane. Biomethane sites have not been injecting as much gas as they could, but he says they are getting closer to delivering most of their capacity at fairly flat rate throughout the years. “The capacity of these sites is quite substantial”, he says, with one network seeing plants in the build phase that would together supply enough biomethane for 500k homes in a few years. “ If you drop into the equation the potential use of that biomethane in hybrid heating (with the heat pump when you have wind and the boiler when you don’t) that will be enough for 2.5 million homes”.
In fact, planned new biomethane injection sites are currently outstripping the ability to connect them. To try to maximise biomethane injection Lancaster says one option is reverse compression, in which demand is created in a higher pressure tier to draw it up into the wider network, instead of using it locally. That requires investment to convert stations to be reversible that were only used in the past to send gas one way (from the high pressure transmission network to medium pressure local pipe networks). That is at the pilot stage in GB but it has been done elsewhere – Denmark, for example, has a fully reversible gas grid.
At the moment most biomethane customers are truck fleet operators, who are taking some of their fleet off diesel and moving them to biomethane. In fact, heavy transport is another new user of the gas network. In this application trucks use compressed natural gas (CNG) instead of diesel, delivered via CNG refuelling stations.
Other biomethane customers include Scottish distilleries and it would be far from impossible to run small local networks using biomethane instead of fossil gas. Lancaster notes that GB still has seven small standalone gas networks, each with up to a thousand homes plus businesses – that were too far to be connected when the country’s local gas networks were linked into a national network. Lancaster explains that such networks could be switched to biomethane: “There is a defined profile of demand over the year. LNG is delivered to them by tanker and stored, then it is vaporised into the local network. You have a good understanding of what is required for a 1 in 20 winter, what the profile of supply needs to be and whether there is a local circular economy of feedstock for a biomethane supply and how much storage has to be built into that to deliver for peak days.” In fact, on that model, “you could also sector off parts of the network for biomethane that are not discrete now but could be in future, with enough of a higher tier pipeline to give storage capacity.”

Shrinking network
If there are some new gas users, there are equally some areas where gas use is declining. I ask how the government’s drive to introduce heat networks, generally in town centres, will affect the balance of costs of running the gas network there. Lancaster has some questions about the practical delivery of retrofitting heat networks in cities: “looking down a hole into a street that has been dug up it is very congested. Weaving a new large-diameter trunk pipe through there is very difficult – not just weaving but getting other utilities to move out of the way – is in some respects an insurmountable issue”. He says a heat network requires “a minimum number of customers connecting to it to make it a viable starter. I think it is a great opportunity where you have geographically high demand densities – high rise blocks – but then the question is whether all the flats in one block are owned by one landlord, or if you have a mixture of social and privately owned that will be a challenge to switch over to something else.” He says it is positive for new developments, but up to now, as above, “a lot of them have used gas CHP. I think in the last five years heat networks have done this – whether they have a steady supply of heat from one source or another – that can be topped up from gas CHP.”
That need for a minimum number of users also clearly applies to the gas network, but Lancaster says, “the operational cost of the low pressure gas network, once it is plastic, is negligible and it is 75-80% plastic now”. Distribution pipes that are not plastic are either beyond 30m from a building or are at the lower risk end of the prioritisation scale.

“It may be there are some areas where [the gas grid] is just domestic – no flexible power generation and no industry – and there is a question to be asked there around whether the future for that offshoot of the network is that they retain some option to have a gas supply or hydrogen supply or whether they go to something else.”

The new gas network users we have discussed have a tendency to cluster, and options like heat networks are also obviously very local solutions. Lancaster admits, “It may be there are some areas where [the gas grid] is just domestic – no flexible power generation and no industry – and there is a question to be asked there around whether the future for that offshoot of the network is that they retain some option to have a gas supply or hydrogen supply or whether they go to something else.” He warns, “Then you get in the world of cutting off choice for some people … politicians are probably quite wary about what the public think about this.”
That means understanding the interaction between gas and electricity networks also requires a local dimension. “What would really help is a plan that is national, regional and local,” says Lancaster. There is a role for local councils, but “they can’t do it on their own. There is going to be a balance on what is going to be flexible and economic to deliver between national, regional and local.”
Part of that will be network planning as a ‘whole system’, with gas and electricity down to regional levels and the Future System Operator (FSO) “has a huge role to play in this”. Lancaster says, “It would be a lot of resource for FSO to engage at the bottom end of local everywhere. It has to have its arms around national infrastructure, security of supply, peak demand, ramp rates, energy needs and so on and trying to deliver the right blend of capacities across the energy system, so the assets we invest in are utilised well. There is lots of underutilised asset out there”.

The FSO at the moment doesn’t have much gas experience, so getting its arms around the gas system as well as the hydrogen angle and system options for the future is going to be key

He adds, “The FSO at the moment doesn’t have much gas experience, so getting its arms around the gas system as well as the hydrogen angle and system options for the future is going to be key. Between them and Ofgem there will have to be key regional planning representation working with those who need to be engaged, like electricity and gas networks, and those who are keen to be engaged and looking to deliver. There has to be a clarity of needs and of opportunity that flows between regional and local.”
Long term, he says there may be discrete areas that remain on biomethane supply, and “One or two industries may retain a natural gas pipeline, and they would have to have CCS or some negative emissions elsewhere. But the vast majority of the network will be repurposed for something else and yes there might be some parts of it that close down, that aren’t used anymore, that are decommissioned.”
Lancaster says repurposing may be with hydrogen, where areas of the gas grid would be used to carry that gas. Hydrogen is likely to be the fuel for the other gas network users we have been discussing and at the same time industry that is not within an industrial area might be seeking a hydrogen supply in future. The population of domestic properties around those facilities has to be understood on a case by case basis.

Deprioritising hydrogen
Overall, though, recent government comments have tended to deprioritise hydrogen use in homes. Of two potential hydrogen network trials (so-called ‘Hydrogen Villages’) one has foundered on local opposition and there is clearly a question over public acceptance. I ask Lancaster what the gas industry has taken from the smart meter rollout, as any domestic hydrogen programme would require significant work inside people’s homes. He says, “There is probably learning from a range of rollouts including the transition to digital TV. I think something similar for hydrogen would be beneficial.”
As the users we have discussed illustrate, the existing gas network has often been the first port of call for new energy solutions. Lancaster also notes that its direct or indirect roles in system flexibility are also taken for granted. He says, “Currently the buck is always passed onto the gas system to be there when it is needed. I think there will be an integrated molecule and electron future that serves across multiple sectors but overall it has to work in symbiosis with the least possible cost.”

The energy transition has to move from ‘top down’ to an inclusive ‘bottom up’ process that allows for many different approaches. That was the message from Angela Wilkinson, chief executive of the World Energy Council (WEC) as the organisation published the latest iteration of its ‘Pulse’ survey. She says the WEC’s ambition “is to have a faster, fairer and more far-reaching energy transition” .
She explains, “I’m very clear that the world energy system is not fit for purpose. I represent the community that is supposed to build – and rebuild – the world energy system to make it fit for purpose. We are the original energy transitions community and we are asking ‘how do we make it happen?’. Everybody is giving us road maps, but there is a big gap between knowing where you want to go and getting there.”
She says that in the most recent Pulse snapshot, published in May, “Everyone is concerned that the pace is going slower … everyone is concerned about affordability, access and acceptability issues.” She say, “bottom-up engagement is really lacking”.
In a recent blog post Wilkinson talked about the transition being ‘messy’ and this chimes with responses to the survey: “We see lots of people talking about faster, we see people talking about fairer – but they use a lot of different vocabularies and it involves a lot of different actors.”
Although they want to go faster, respondents showed a marked lack of interest in multilateral organisations. Wilkinson says, “We talk about the social transformation, not just the technology agenda, and that includes institutional innovation. Everyone is worried that the gap between technology innovation and policy innovation is getting bigger. Policy innovation is moving at a glacial speed. That is partly because the government is still geared towards the 19th century industrial revolution. Now we are in this 21st century next industrial revolution”.
In responding to the Pulse survey, oil and gas companies appeared most confident that investment for the transition would be forthcoming. When I ask Wilkinson later in the conversation how to get them to move faster, she talks about the difference between them and the electricity sector. Any electricity company building a transmission line has to get agreement from multiple communities, she says, and you are in the community. In contrast, “When you are an oil and gas company you have something called a fenceline community and you keep the community out of your business for as long as possible. It has big centralised gas producing and money producing assets where there aren’t any people.” Oil and gas companies “tend to think about inclusivity in terms of workers – not communities – and ask whether they can do a skill transition.”
She talks about companies in the Middle East who are investing a huge amount of their profit into economic diversity, such as new technology like hydrogen, renewables and sustainable aviation fuels. But she thinks oil and gas companies will be eventually be hit by the need to talk about so-called ‘Scope 3’ emissions. That will bring use of their products under examination, rather than the 2% of their emissions that comes from their own activities.

Heading to Net Zero by different routes
Talking about the global direction towards Net Zero, Wilkinson says there is no lack of political will: countries, cities and communities are all heading there, although the target dates depends on local circumstances. But she believes it is time to move on from ‘top down’ roadmaps that “look at where we want to be and then back cast, and say this is the technology we need and this is the money we need. In none of that do we hear about people and communities and users.” She asks, “How do we close the implementation gap if we never hear about solutions? [We need] stories about people and communities, about behaviour changes, and that is what we want to dig into.”
She says there are hundreds of examples from across the world where multiple communities are at the table, and that is making a difference in terms of pace and fairness and depth of transition. “And yet institutionally we still seem to have multilaterals who want to talk to investment bankers and big companies with technologies. I think we have exhausted that.” Now we have to ask, “where is the new enabling eco-ecosystem? That means multiple industries, and multiple communities and the new voices at the table. Where are those bottom-up engagement mechanisms?”

“where is the new enabling eco-ecosystem? That means multiple industries, and multiple communities and the new voices at the table. Where are those bottom-up engagement mechanisms?”

She says taking these differences on board means engaging with a “diffuse and messy” space. “Top down it looks so clean and tidy, but bottom-up [it is not]. I do worry that even in the UK we seem to have implicitly a model that says elites will move first and then we will have trickle-down. We are going to have to do scale through mess.”
She says the ‘trickle down’ model privatises infrastructure. “If you have a solar panel on your roof, and you can charge your car on your drive, and you have a heat pump, the infrastructure is privatised – you own it. If you live in a multi-occupancy set of flats you do not have any of those options. So where are the returns going from this? Where are the benefits?
“If you really want to mobilise the silent majority they want to know what is in it for them”.
I ask how we can ensure the energy transition focuses around the ‘messy’ societies, rather than big new technologies. She says, even for technology “you have to have social pull, which means you have to have skills and capabilities and understanding of the choices. We seem to have individualised the transition, so everybody has to make individual choices and optimise the system for themselves. That is never going to work.” She asks, “Where do you involve communities and what is the community financing,” bearing in mind they are place-based, so the options in Huddersfield are very different than in Cardiff or Oxford.
“We have taken it [the transition] to hyper individualisation but that is not the same as localised,” she says, “there are scaling mechanisms that are not around technology or markets, they are around skills or sharing or demand, or something else around the system”.

Learning lessons of past transitions
When thinking about the current energy transition Wilkinson has a warning from recent decades, when, “we have had previous energy transitions and we don’t seem to be learning from them.”
She explains, “In the coal to gas energy transition in this country we left abandoned communities and stranded workers. That impact – which was only in the 1980s – still influences the politics of today. People have a memory in this country of the last energy transitions, so we are not painting on a blank canvas. But we don’t seem to want to engage with any of that.” Although there are opportunities, “The new jobs will require different skills and a different location.” Wilkinson lives in Oxford and she asks “where is the conversation in Oxford around energy transition and what it means nationally and for the city?”
On the national and international scale the Pulse survey showed clear differences in attitude between different geographies, with African respondents, for example, tending to be more interested in the transition as an economic opportunity. That goes back to Wilkinson’s point about a ‘messy’ transition that takes different forms.
“If you have access to pipes and wires you have different issues. In parts of Asia and India they are still trying to get their energy, so they have an [energy] addition, as well as a transition, to sort out.”

“It is going to be hundreds of and thousands of smaller steps, not one technology moonshot”

Whatever the scale, Wilkinson says there has to be a conversation about the difference between technology price and customer affordability. “The shorthand says that prices are getting cheaper so the affordability is getting better… but affordability is ability to pay, willingness to pay and value in use”.
She says, “We need to hear from more communities and multiple industries, because the energy transition is not made in the energy sector, it is made across the economy.”
We need to understand who are the winners and losers, because “It is going to be hundreds of and thousands of smaller steps, not one technology moonshot”.

Dr Nina Skorupska CBE FEI, chief executive, Association for Renewable Energy and Clean Technology (REA):
“Despite positive moves that will get vital renewable technologies delivered, we still need stronger ambitions to cement the UK’s position as a world leader in our sector. The UK is now in an international race for investment and needs to keep pace, as well as urgently delivering on Net Zero ambitions.
“Highlighted by the recent CCC and IPCC reports, it could not be clearer that we need to move faster, and today’s announcements leave significant gaps in vital policy that will provide a route to market for the speedy decarbonisation of power, heat and transport, while moving to a circular economy and addressing the joint climate and energy crises. A full range of renewable and clean energy technologies are needed to decarbonise our energy systems, many of which continue to be missing from today’s plans.
“Whilst making this clear, we do recognise that a number of ambitious measures have been released today which highlight that Government are finally committing to several programmes long awaited by industry. The REA welcomes government’s recommitment to Net Zero and green industries in Britain.
“The REA look forward to working with government to see delivery of today’s announcements and to address the substantial policy gaps that remain.”

Nick Molho, Executive Director, Aldersgate Group:
“Delivering net zero will require simultaneous and carefully co-ordinated action across multiple parts of the economy. It is therefore encouraging to see policy and funding interventions being announced today in a wide range of sectors from energy efficiency, heat pumps and grid infrastructure to carbon capture and hydrogen. It is positive to see the Prime Minister and Chancellor of the Exchequer rightly recognising that the net zero transition is a key part of achieving the UK’s energy security and economic policy goals.
While many announcements move in the right direction, there is still much work to do to meet the economic and environmental ambition called for in the recent Skidmore review and the latest IPPC report. In particular, further policy detail in areas like home energy efficiency and heating, heavy industry and surface transport is urgently required to meet the challenge presented by increased global competition from the US and the EU, and attract the scale of private investment needed in the UK’s low carbon infrastructure. Plugging these outstanding policy gaps must be accompanied by the creation of a Net Zero Delivery Body as recommended by the Skidmore review. This body has a vital role to play in ensuring the necessary levels of co-ordination across Whitehall to hit the UK’s net zero target.”

Lawrence Slade, Chief Executive, Energy Networks Association:
“Investment and innovation in Great Britain’s electricity and gas networks is crucial if we are to reach net zero in time. That’s why we have thousands of innovation projects under way and are investing billions over the next decade to get our grids net zero ready. The clock’s ticking and we need planning, regulation and policy to keep pace. It’s great to see this being recognised by government today.”
“Alongside the immediate steps our members are already taking, we hope the Electricity Commissioner’s review of planning and connections will help identify and remove barriers for customers looking to connect to the grid and speed up the development of vital energy infrastructure.
“Alongside massive amounts of electrification, developing our hydrogen economy is crucial if we are to decarbonise industry, businesses, transport and homes. Decisions on hydrogen still remain, especially around hydrogen blending and business models for hydrogen transport and storage. We need to see progress there.”

Kate Gilmartin, chief executive, British Hydropower Association:
“While we welcome the government’s support for new and unproven technologies, like CCUS and Hydrogen, the government also needs to ensure that proven technologies like hydropower continue to be deployed, mitigating the risk if these technologies are not delivered on time. The announcements in the last few weeks are great examples of industry and the Welsh Government investing in putting hydropower back on the agenda. To make real progress, it can’t be industry or government making the move but both, working in partnership, and we will continue to champion this collaborative approach to ensure that we deliver energy security and a fair net zero transition for all.”

Greg Jackson, CEO and Founder of Octopus Energy:
“We’re delighted the Government is looking to remove outdated levies from electricity bills. A cheaper, greener, more secure future is an electrified future – and ending these taxes on increasingly clean electricity is essential.
“The government redoubling its commitment to heat pumps is hugely welcome. These are the most efficient way to heat a home and the UK could create hundreds of thousands of clean jobs as we make our homes warmer, more comfortable and cheaper to heat.”

Ruth Herbert, Chief Executive, CCSA:
“We have repeatedly made clear to the government that it needs to move forward boldly on CCUS or risk losing the UK’s supply chain to countries who are now joining the industrial decarbonisation race with major interventions. If the project list published today is too timid, we may well see investment in the wider CCUS project pipeline fall away, unless the government provides reassurance that unsuccessful projects and new clusters and projects will have a clear route forward in the near-term.”
Sue Ferns, Senior Deputy General Secretary, Prospect union:
“This Powering Up plan is a paring down of ambition. The long overdue launch of Great British Nuclear is welcome, but needs to be backed by proper funding for a nuclear new-build programme that invests in gigawatt-scale plants alongside SMRs to be a success. Without it, this launch is just a recycling of old announcements.
“Ministers are allowing the UK to fall behind in the global race for green jobs and industries. They are doing too little to address the race to the bottom on costs in the offshore wind industry that is putting clean energy projects at risk. We are also yet to see a comprehensive strategy for decarbonising the power sector by 2035, which depends on rapidly accelerating investment in our energy networks.”

Rt Hon Stephen Crabb MP, chair, Welsh Affairs Committee:
“On the back of last week’s announcement on freeports, it is very welcome that the Government has now launched a funding scheme to encourage investment in infrastructure to support Floating Offshore Wind. This could turbocharge efforts to see open up the Celtic Sea to the green energy revolution, offering enormous economic opportunities for Welsh communities. It is essential that Welsh ports receive a fair share of the £160 million package.”
“For some time the nuclear sector has called for greater clarity on the government’s ambitions, and the policy announcements today on nuclear energy is in line with what we have been calling for. The full launch of Great British Nuclear should go some way to reassure the sector and motivate them to invest. I wish its interim Chair and Chief Executive the best in their endeavours, and look forward to seeing the detail of the Small Modular Reactor technology competition when it launches. It is absolutely right that the government is looking to match global competitors so we are not left behind in establishing and reaping the benefits of gigawatt scale nuclear, as well as from small modular reactors.”

Rt Hon Philip Dunne MP, chair, Environmental Audit Committee
“From boosting low carbon heating to harnessing renewable energy, and addressing carbon leakage to furthering hydrogen and carbon capture and storage, the Government outlines some promising ideas today. The Committee will carefully consider the policy announcements set out within the Energy Security Plan, the government’s response to Chris Skidmore’s Net Zero Review and the Green Finance Strategy. We shall be looking carefully at the detail to see whether these new policies have added flesh to the bone on long-term plans to achieve Net Zero Britain.”

Martin McTague, National Chair, Federation of Small Businesses:
“FSB has led a cross-industry campaign for a small business support scheme that matches practical information to reduce energy use, alongside funding for green improvements that small firms cannot afford. Our proposals were backed by a dozen leading business groups across the economy and adopted as one of Chris Skidmore’s 25 recommendations in his Net Zero Review. We are pleased to see it adopted today, in the form of the SME energy advice service alongside an audit and grant scheme – as a pilot. We are keen to help the Energy and Business and Trade Departments’ outreach to the community to make sure the pilot is a success, and to get it up and running as soon as possible – certainly in time before energy use rises next winter.”

Andy Willis, founder, Kona Energy:
“The biggest obstacle on our path to net zero remains unmoved. Without significant grid connection reform, vast potential of clean energy development will linger trapped behind red tape and bureaucratic delays. Investment and funding into the industry is not the issue – it’s connecting these projects to the grid where the real frustration lies. Kona has approved battery storage facilities that could be built and pumping power into countless homes in a matter of months, but due to the archaic system that will now take years. It is not uncommon to hear of connection dates in the late 2030s. This is entirely unsustainable to expect international investment to keep coming if it won’t see returns for almost twenty years.
“The time for consultations and committees is over – the industry needs to see comprehensive and well-funded action to retain trust in the government’s commitment to net zero. An action plan ‘later this year’ is not good enough.”

Rachel Skinner, Executive Director, WSP:
“Many of the measures announced today are welcome and we support the government’s ambition and focus. Progress towards a diverse, clean energy supply and decarbonisation of our housing stock are clear priorities, so continued support for offshore wind and nuclear power, acceleration of carbon capture and hydrogen, and provision for increased home energy efficiency, is all positive.
“What we must not lose sight of, however, is the pace, direction and scale of change required and the twinned complexity of decarbonisation and climate resilience when set against the ever-shorter time to act, not only in the UK but globally. The recent IPCC and Climate Change Committee reports could not be more clear: we are losing the battle to limit global warming to 1.5C and we are unprepared for the impact this change will have on our infrastructure, natural resources, supply chains and daily lives. The slower we are to respond to these immense challenges, the higher the cost and risk will be as we try to cope with the issues they create in the years to come. Focused action and investment at a faster pace will help to unlock the full economic potential of net zero for the UK.”

Bean Beanland, Director of Growth & External Affairs, Heat Pump Federation:
“The target for 600,000 domestic heat pump installations by 2028 remains but is now underpinned by enhanced policy. The commitment to significant progress on gas vs. electricity price rebalancing by the end of 2024 has been a core Federation ask, and is fundamental. The extension to the Boiler Upgrade Scheme out to 2028 will drive investment in the supply chain and skills; it is now up to industry to partner with government in boosting awareness and uptake. Couple these to the confirmation of the intention to phase out installations of new and replacement fossil fuel heating systems in buildings off the gas grid, starting from 2026, and the full implementation of the Future Homes Standard in 2025, and the target remains in the sights.
“There is a huge amount of material still to digest, but it’s already clear that the electrification of heat at all scales is now the embedded strategy in government, which Heat Pump Federation members support and welcome, enabling them to invest in growing skills and capacity in a policy environment that is now that much more certain.”

Kieran Sinclair, Heat Network Policy Manager, ADE:
“It is clear that zero carbon heat networks will have to become the mainstream way of heating buildings in the near future, and the ADE is glad to see Government recognise the importance of taking action now, not later, to accelerate their adoption. Combined with the heat network zoning powers and regulation that will put into law this year, this funding will help heat networks to rapidly scale up across the country and provide cheap, green heat to homes and businesses.”

Tom Williams, Head of Energy & Infrastructure, Downing LLP:
“The UK Government’s revamped plan to reach net zero is more a tortuous route map. While we welcome the ambition to fully decarbonise the domestic power system by 2035 and recognition of energy supply security, we question why such security needs to be a caveat to decarbonisation. We do take some comfort from the Government’s decision to go against potential planning rules that would constrain solar development. It now remains to be seen whether the rest of the report’s recommendations will come to fruition and deliver concrete action quickly.”

Chris Pateman-Jones, chief executive, Connected Kerb:
“Accessibility, reliability, and convenience are three crucial elements to a successful nationwide charging network, particularly for those unable to charge at home. The LEVI Fund will allow local authorities all over the country to deliver on ambitious net zero targets and accelerate us towards every UK resident living within a few minutes walk from a charging point. At Connected Kerb, we are continuing to deliver infrastructure at scale, and we hope the LEVI Capital Fund will give local authorities the confidence they need to deliver thousands of charge points, not hundreds.”

Mick Gornall, Managing Director, Cavendish Nuclear:
“Moving UK nuclear onto a path of deployment can revitalise the industry nationally. The Xe-100 builds on the long experience we have in high-temperature gas reactor technologies, leveraging local and national experience in operations as well as manufacturing and construction. X-energy and Cavendish Nuclear are ready to engage with UK regulator on generic design assessment.”

Anthony Ainsworth, COO, npower Business Solutions:
“..one point in the corresponding Net Zero Growth Plan that will be of interest to business is the potential extension of the Industrial Energy Transformation Fund (IETF). Although this is currently ‘subject to business case approval’, increasing funding to £500 million and opening a Phase 3 of funding in 2024 is a welcome move.However, at the moment it looks like there aren’t any additional incentives for businesses that are keen to accelerate their energy efficiency efforts right now. The government has acknowledged the crucial role businesses and private investment will play in both our energy security and net zero ambitions. We know from our Business Energy Tracker that they believe in net zero and are proactively investing in sustainability and energy reduction measures – hopefully the policies announced today will help drive action even further.”

Jeff Vander Linden, Chief Operating Officer EQTEC:
“The drive to encourage the development of green hydrogen is welcome, although there needs to be more support specifically for production of low carbon hydrogen beyond electrolysis, and more pressingly, for renewable natural gas as an immediate alternative to natural gas obtained through legacy means. The UK’s energy security would be better served utilising its own waste to deliver local-for-local energy solutions, rather than depending on imports or expensive and carbon-intensive alternatives from offshore. There needs to be more recognition from government on the role that waste-to-syngas technology will play in achieving the UK’s net zero targets.”

Chris Wickins, Technical Director, Field:
“There are a lot of very welcome initiatives in here, but beyond the UK British Infrastructure Bank stepping up its focus, specific mention of the energy storage sector is conspicuously absent. To meet net zero and build a reliable, flexible and green grid, we need to massively invest in energy storage, alongside wind and solar generation. While we welcome the focus on the infrastructure needed to reach net zero in here today – especially efforts to speed up planning processes – it seems storage has somehow fallen off the grid.
“We’d also have liked to see more on investment in the grid that’s needed to connect the generators supported today. National Grid and Ofgem have been making good progress on grid connection reform here and the Government would do well to throw their weight behind that crucial initiative.”

John Kent, Chief Energy Transition Officer, energy services business Kent:
“The mess the government has made of the outward positioning of their climate policy should not overlook the fact that the UK is still one of the world leaders in renewable energy sources, particularly offshore wind, hydrogen and committing to carbon capture technology. As well as the additional investment in their energy security plan, they have promised to reform the planning process of energy infrastructure, specifically citing solar and offshore wind, to speed up the process and attract investment. For those involved in making a renewable energy future a reality, like Kent, this is a critical piece of the puzzle and must not be overlooked.”