[00:00:04.660] - Jon
Welcome to Talking New Energy, a podcast from Delta EE, the new energy experts. We'll be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition. Hello and welcome to the episode. Today we're looking at the topic of local area energy planning and local infrastructure. As we transition towards Net Zero, what will local infrastructure need to look like in terms of electricity, gas, hydrogen, heat distribution in the future? How do we plan for that? How are decisions made? So, to help me explore this topic, I've got two guests with me today. Andrew Conway, who's a principal analyst at Delta-EE, and Matt Hindle from Wales & West Utilities. Matt's, Head of Net Zero & Sustainability. Let's say hello and start unpicking this topic. Hello, Matt, welcome to the podcast.
[00:01:09.480] - Matt
Hi, Jon. Thanks for me on.
[00:01:11.370] - Jon
Thanks for joining. So, Matt, Wales & West, not all our listeners may know of Wales & West, but you distribute gas in South Wales and the west of England. In a nutshell, what does your job as Head of Net Zero Sustainability entail?
[00:01:27.490] - Matt
Well, I'm responsible for thinking about what the role of a gas distribution business like Wales & West is going to be in a future Net Zero energy system. So my team looks after our regional energy planning, working with local regional bodies, thinking about the energy system of the future, what that's going to mean. Working with stakeholders like major industry businesses across the areas that we serve, thinking about what their energy needs are going to be, how they interact with the network, either as users of or producers of energy. Developing our evidence and approach around hydrogen and delivering projects, research and development innovation, which are going to move us forward and help define the role of hydrogen, the role of biomethane, and ultimately the role of a gas network in the Net Zero system.
[00:02:23.310] - Jon
Now, you've probably just answered the question I was going to ask and the last things you said there, but today you're distributing natural gas. Your job title is head of net zero. I guess biomethane and hydrogen are two examples of gases you'll be distributing in the future, which will enable you to play a big role in us reaching that zero.
[00:02:47.850] - Matt
That's the plan exactly. We already distribute biomethane. We have 20 sites connected to our network in Wales and the southwest of England, so that's transporting about enough gas for the average demand of 156,000 homes. But we have two and a half million customers connected to the network. So we've got a long way to go in terms of getting the volumes of green gas that we want to see in our network. And we think that that's going to take, yes, more biomethane, building on what we have today. And that's also going to take a very significant role for hydrogen across our network, starting probably with the big industrial users the energy demands, which are very hard to find other solutions for, but also playing a role in heat, in transport and power generation.
[00:03:43.090] - Jon
Yeah. Okay, so we're not quite a bit beyond the starting line today in your work with biomethane, but we're much nearer the starting line than we are the finishing line in terms of everything that's got to be done.
[00:03:53.110] - Matt
I think that's a fair summary.
[00:03:56.810] - Jon
Andrew, say hello to you now. Welcome to the episode.
[00:04:00.420] - Andrew
Hi there, Jon, good to speak to you.
[00:04:02.860] - Jon
Thanks for joining. Andrew, I'd like to ask you about the term local area energy planning and that might be a new phrase to some of our listeners or they might have a blurry concept of what this means. What exactly is it? Why is it a growing topic and you're not allowed to answer the questions just by saying it's planning energy on a local basis or anything like that!
[00:04:29.210] - Andrew
Yeah. Okay, great. So I guess in the broadest sense, when we talk about local energy planning, this is usually done by a local authority, some kind of local government doesn't have to be, but is kind of looking at the future energy needs of an area and kind of planning out what actions need to be taken to decarbonize. That might include the investment that needs to be looked at in demand but also in generation as well. I think about these as in the broadest sense of local energy planning, but then there are some specific methodologies. So Jon, you mentioned the local area energy planning, which is a methodology that was developed by Energy Systems Catapult, that has a specific and kind of detailed set of kind of steps and methodologies around, but they're also kind of other methodologies. So in Scotland there's a local heat and energy efficiency strategy that focuses on heat and energy efficiency and there are other methodologies as well.
[00:05:47.590] - Jon
And is it returning? If we went back 20 years ago, energy would be planned a national at a macro level. This area will build a gas network here. This area will be electric heating. Is it turning that on its head? Maybe that's a bit dramatic, but allowing local authorities to take a far more active role in what makes sense in their area and doing it bottom up rather than top down? Or is that too simplistic?
[00:06:17.220] - Andrew
I think in a sense maybe it's a bit more strategic in the sense of these are usually done in the kind of thinking about net zero. And what does a local area need to do to ensure that it is playing its role in kind of meeting the climate emergency. But I think you asked about why it's such a big thing now and I think it has been something that's been building for a long time. You know, the sort of, I guess the kind of green movement, the environmental movement has been thinking about how to decarbonise for a long time through sort of community energy schemes in the UK, the sort of transition town movement started thinking about, OK, how do you plan local energy? But I think it's become a really significant thing most recently in the last kind of two to three years with both the sort of Net Zero legislation and a real sort of growing pressure and kind of political will at the local level to kind of take on that challenge and take responsibility. You've got something like, I think a last count it was about 80% of local authorities in the UK declaring climate emergencies and beginning to set targets.
[00:07:52.270] - Jon
And then wanting presumably to do something about that to influence how energy is used, generated, distributed in their areas.
[00:08:01.460] - Andrew
And I think it's partly a kind of system needs things as well. There's talk around we're kind of moving into a next phase of decarbonising the energy system. We've started to do well. Whether it's the easy bits. I'm not sure. But rolling out large kind of offshore onshore wind generation infrastructure and now we're kind of moving to a phase where actually there's a lot of low carbon technology that needs to go in people's homes or people need to be engaging with the energy system and being flexible. Or there's a kind of local infrastructure that's needed to be built and people need to engage with such as heat networks and I think these things kind of coming together mean that actually there's a real need as well to engage people at local level and coordinate the investment that's needed there.
[00:09:00.220] - Jon
Matt, how do you see it from your side? Do you see many local authorities, town cities coming to you or asking for your input or what role? How have you seen things changed over the last years at Wales & West in this area?
[00:09:15.850] - Matt
Very much see that interest and that pressure from local authorities to for us as a local gas distribution network to help them understand the options and the tradeoffs within areas. I think it's fair to say there's a bit of variability still in the capacity of local authorities to really engage with energy system questions, but the trend is very much towards more interest in shaping what that's going to look like for communities that they serve and having a stronger role in decision making. And that's posing some really interesting and thorny questions from a national regulatory point of view because our regulatory systems tend to assume that energy planning is done on a more national sort of level. And I think there's a bit of a journey for the network industry and the energy sector in general to go on to work out what the right sort of balance of national and local decision making needs to be to deliver net zero and how we can meet the sort of level of ambition which Andrew has just described, that a lot of local authorities have. But I absolutely see the enthusiasm and the keenness to help shape that future coming from coming from local areas and local politicians.
[00:10:49.010] - Jon
So we had one podcast with Bristol City Council talking about their ambitions a while back and the work they're doing, this public private partnership that they're developing to help decarbonise the city of Bristol. Matt, what would your role be in a project like that be at Bristol or any of the other towns or cities in your region? What sort of questions are you getting or what sort of dialogue are you having? Can you bring it to life a bit and give us an example?
[00:11:19.980] - Matt
Yeah, for sure. Well, picking up directly on the example of Bristol within the work that the City council is doing to look at and deliver the transition to net zero, we've been using a tool that we developed over the past five years called Pathfinder, which is an energy system model. It can look at a national energy system, it can look at an energy system down to sort of individual house or small area. And the purpose of that tool is to see what the kind of real impact would be of different scenarios that you'd plan around use of technology in the home, use of different generation technology and what that does to the system as a whole, looking at a local area, but in the context of a national system. So we've been supporting that work by using the tool to look at the impact of different interventions that you might make and how big a difference they make from an overall emission sort of perspective and more generally across the areas that we serve. I think the question we increasingly get around hydrogen is how quickly are we going to be able to develop the projects, the collaborations that actually make either blended or dedicated hydrogen an option for the areas that we serve.
[00:12:59.210] - Jon
Yeah, okay. And I can imagine will I have hydrogen in my area? When will I have it? Will it be an option to decarbonize these particular industries? You can't give a definitive answer to that, can you? But I guess that's part of the discussion that will take us towards answers that's, the journey towards answering those questions.
[00:13:22.120] - Matt
I do wish my crystal ball was a little more reliable, but yeah, it's how we move that forward. And a lot of that is around developing the right sort of collaborations. We're a gas distribution network, we own and operate pipes. To manage that transition, we're going to need to work with the local areas, people who live there from a domestic perspective, the businesses, the industry, transport operators. But also crucially, we're going to need the producers of hydrogen and a massive scale up, of course, in low carbon hydrogen production and government policy from a national perspective is very much encouraging that. But we are at the early days, so it's finding those clusters, finding those early sort of customers, but starting to think from an infrastructure perspective, beyond just those first production and use projects, and how we're actually going to scale that to an extent that it can meet the ambition that local areas have and that we have for the gas network.
[00:14:34.540] - Jon
I want to pick up on this word collaboration, I think you mentioned it, Matt, and Andrew, you mentioned it as well. If we've got more and more interactions between hydrogen and electricity, gas and electricity, we've got local areas, local authorities, cities taking an active role, we've got planning done at a national level as well. Strikes me we're going to need much, much more collaboration between more people, more organisations than we have in the past. Andrew, you used to work at the regulator Ofgem. Is it the regulator's job to set the framework for that collaboration, or is it anyone's job to set a framework for that collaboration rather than it be a messy free-for-all yeah, that's a good question.
[00:15:25.460] - Andrew
I think that the regulator certainly has a role in that and they're undertaking work at the moment. They published a call for input on the role of local energy and local institutions. That was earlier this year, just after Easter, and are continuing to look at that, but obviously national government has a big role in that as well. I think Matt picked up on one of the challenges at the moment, that local authorities maybe don't quite have the resource at the moment. They certainly don't have a mandate to do sort of local energy planning.
[00:16:12.860] - Jon
Easy to set a target, easy to set in a climate emergency, but hard then to follow that up.
[00:16:17.880] - Andrew
That's right. And I think we see a range of some local authorities, especially combined authorities. Greater Manchester, the example I always come back to, because they're doing a really good job, but there are others west Midlands, GLA, sorry, that's Greater London Authority. They have had funding from central government to do some of this and have really taken it on themselves to kind of push this forward. And are they themselves playing a kind of coordinating role across some of the districts in Greater Manchester, but also they're at a scale where they can coordinate effectively with their local electricity and gas network operators. So I think there's a sort of collaboration role across local government network companies, national, but also there's a sort of geographical scale element to this as well.
[00:17:37.090] - Jon
Okay, so that coordination role is really critical and if local government is at the sufficient scale, it can potentially play that coordination role.
[00:17:46.450] - Andrew
Yeah.
[00:17:49.840] - Jon
Can it take decisions, do you think, Andrew? Is it up to the Manchester Authority, for example, to make a decision about, OK, well, this area is where we're going to, we want this area to be supplied by hydrogen or this area will be an all electric area.
[00:18:07.500] - Andrew
So I think this is a really challenging part of this and I think this is something that government and the regulator need to sort of take hold of and be able to sort of lay out the framework for how some of the decision making will work. So another point that Matt sort of mentioned about this local, national, where is the decision making? It's quite a quite a thorny issue. What happens if one region, for whatever reason, decides they do want hydrogen or they don't want hydrogen? How does that influence the kind of national level infrastructure planning? So I think it may be a case that some decisions at some level are kind of pushed down the scale, so it's more local, but then some decisions may need to be made at a more regional or national level, depending on what kind of decision and the infrastructure needs that are involved.
[00:19:20.260] - Jon
I guess for different decisions will be best to be made at different levels. It depends who's got the best views to make the optimum decision.
[00:19:28.020] - Andrew
Yeah, I think that's right. Just one other thing to add, maybe on the collaboration, we often talk about the national to local level or a local government and networks, especially when we talk about planning, probably the key actors involved in the planning stage. But we've got to implement this at some point. There's no use in having a good plan without implementing it. On the network side, that will be the network companies. But there's also the private sector, and I think we sort of mentioned the Bristol City Leap. I think really, this is a massive opportunity for the private sector. Just to give you a couple of numbers, I think it's UK 100 said about £100 billion worth of investment could be delivered by 2030 in kind of local decarbonisation infrastructure. I've seen some other similar numbers. UKRI, I think they put it about 50 billion by 2030. Now, obviously, that builds as we go past that 2030 date to get to net zero. But this is a really big opportunity for private sector involvement and I think the delivery aspect of this has to be that coordination, collaboration between local government and the private sector.
[00:21:00.250] - Matt
Just building on that a bit, and I completely agree with Andrew's point. I think what we're going to need to see from regulation as we develop this a bit further and to really embrace local area planning is a little bit of acceptance that we're not always going to get things right. And Andrea's point that we need to get some of this moving. It's not just about coming up with better and better plans on paper. It needs to be about delivery, can only work if we accept that there are some potential trade offs around the local and the national. Or around the sort of investments that we need to make that we're probably going to look back on with hindsight and say it wrong. But we need to make sure that we get those early projects delivered so that we can start to see what does work in different areas and start to meet some of that ambition. And if you look at the heat challenge alone, we've got about 28 million homes in the UK, most of which are going to need some form of intervention or change to meet net zero, a lot of them quite substantial intervention. Potentially. We've got less than 28 years to deliver that. So the scale of the challenge is absolutely enormous and we'll only get there if we start taking some of those early moves.
[00:22:31.180] - Jon
And those early moves, could that be, for example, the hydrogen cluster you talked about moving forward with? That maybe ahead of having every definitive bit of evidence as to whether that's the right thing to do, I think.
[00:22:47.250] - Matt
We're going to need to move forward with those major projects. Absolutely. We won't necessarily know exactly how big the role for hydrogen in heat or hydrogen in transport will be, but all of the evidence, Committee on Climate Change reports, the government reports, say that hydrogen has an enormous role to play in a net zero energy system because of its storability, because of the need to meet quite substantial peaks in demand. So I think we can make those kind of decisions in a relatively low regrets way. As long as we're thinking about the system as an integrated system and not just about individual producers, individual users, we won't get it exactly right when we're doing everything on paper, but if we can see a big enough role, we should be able to move forward with those investments. And we think in the area that we serve that core industrial clusters are a good way forward in that. So we work with the South Wales industrial cluster with major industry across there. We've launched an organisation this year called Hydrogen Southwest. Which is looking at the greater Bristol area and the wider southwest. And opportunities, particularly in the aerospace industry there. As potential first movers with hydrogen and of course work with the other gas networks in the UK. Including the HyNet cluster. Which is in the northwest of England. But also potentially feeds North Wales as well. So that those are good prospects. But we also need to remember there are local areas, there are authorities and communities who are not necessarily connected to those clusters, who are keen to move on to net zero solutions as well.
[00:24:57.110] - Jon
Well. I was thinking about the term local area planning or local area planning, maybe. Actually, we need as much emphasis on local area delivery or local area energy delivery, we could plan until the cows come home.
[00:25:10.860] - Matt
Local area action?
[00:25:14.440] - Jon
Yeah. As a gas distribution company, Matt. Do you try and be independent or can you be independent or is it your role to be perceived as independent if local authorities are coming to you? Because do you ever get an element of, well, you would say hydrogen is the answer, or do you think you can be a trusted partner? Or is it a case of Wales & West and the local electricity distribution companies working in combination to be trusted partners?
[00:25:49.950] - Matt
I think we do need to work with the local electricity distributors.
[00:25:56.440] - Jon
Is that happening already?
[00:25:58.360] - Matt
It's starting to happen. And we've had some good collaboration around projects. We've looked at hybrid heating solutions alongside electricity companies. We've started to deliver other projects in that kind of space. I think there remain some challenges to taking that collaboration to its sort of fullest role. So one is the lack of alignment between the price control processes for our gas and electricity companies? So the UK gas price control is two years ahead of the UK electricity distribution price control, which means the planning happens in different phases. And when we're looking at whole systems and the sort of local energy institution consultation, which Andrew mentioned earlier, I'm not sure we're getting the breadth of whole system thinking quite right at the moment to really sort of encourage understanding of the potential options and tradeoffs between gas and electricity planning. But I think we should be seen as trusted partners. We're clearly going to come with a view and an approach around how we can best use our infrastructure to deliver net zero. But if we get those kind of institutional and regulatory questions right, I think we can bring a lot of sort of understanding about the tradeoffs, the impact of peak demands, the way in which customers use energy from our system at the moment.
[00:27:50.440] - Andrew
If I can just add a view there as well. I think it's a really good question about not just the gas networks, also the electricity networks, how they can engage with this in a way where there aren't the perceived or real sort of conflicts of interest in their engagement. They clearly have to be involved. They have a lot of the information, the expertise, the knowledge, and I think a lot of really good people there who really want to actually make this work. But the issue still exists and I think it really underlines for me that the kind of need for the kind of accountability. Mandates and funding. Really. To kind of be there for a kind of potentially local government or some body that is publicly owned or has strong representation from local government. And for that to be well funded to ensure that it can kind of deal with those conflicts.
[00:29:07.260] - Jon
Yeah. So it can't just be a side job of someone in local government. It's got to be. It's a really big role.
[00:29:12.780] - Andrew
Exactly. Yeah.
[00:29:15.040] - Jon
Time is getting the better of us, I'm convinced sometimes time goes at double speed on the podcast as we're recording it. So let's bring up the talking new energy crystal ball now, and I'm going to set the dial this week to 2030. And, Andrew and Matt, the question I'd like to ask is, how will we be making decisions in 2030 around local energy infrastructure, and you can answer that in whatever way you want. Maybe I hope that we'll be doing it in this way or that the reality that things may take more time than we think they will. So, yeah. Matt, do you want to go first and then Andrew, about how we'll be making local energy infrastructure decisions in 2030?
[00:30:03.340] - Matt
I'll try and take an optimistic but pragmatic approach, Jon, and I think the two big things for me would be I hope that by 2030 we have clear mechanisms through which devolved regional and local administration's views ambitions. Delivery of energy infrastructure can be taken into account of in our national regulation, so that the regulators are able to point to clear evidence within a framework that then justifies decisions made around the system, and that we as a network are able to plan within those clear frameworks and bring evidence from the areas that we serve into that to the national discussion. That will help, I think everyone understand the trade offs involved and the opportunity. And I also hope that we will genuinely be thinking about the system as a whole, because the challenges around heat, around industry, around transport, electricity generation and maintaining security of supply across all of those are so interconnected that the answers need to be interconnected as well. I think we've got a journey to go, but I think by 2030, I hope we'll be making decisions much more on that basis.
[00:31:40.390] - Jon
Okay, so one point on the regulation of energy distribution and networks will always be regulated, having a really clear mechanism process for those local decisions to feed into that.
[00:31:53.020] - Andrew
Exactly.
[00:31:53.790] - Jon
And secondly, it's not about local or national, of course. It's about balancing the two on a whole system approach. Okay, Andrew, how about your 2030 answer to the crystal ball question?
[00:32:12.340] - Andrew
I'd agree with much of that, actually, what Matt has said, just maybe to build on it, I think we need to see sort of detailed planning across the whole of the UK or whatever region you're thinking about, and not just the sort of patchwork that we have at the moment. It needs to be coordinated across the local, regional and national level so that you get that kind of whole system built up kind of view. I think it needs really strong sort of democratic engagement and public engagement. I think local government taking on a leadership role is great. I would actually like to see more direct engagement with local populations through things like climate assemblies or other kind of participatory sort of measures, because there are some big tradeoffs that we have to make and they're not just economic.
[00:33:12.580] - Jon
So these things aren't necessarily done to people, but people don't feel they're done to them. They feel they have a voice and do have voice.
[00:33:19.470] - Andrew
People need to be bought into the process, and I think what we need is a framework that's set out by BEIS and Ofgem that kind of really gives a kind of clear accountability and clarity of roles across different institutions. There may need to be more new institutions set up and proper funding for those institutions to do it. And I think, just in terms of what the prize is here, that framework really needs to be focused on unlocking the investment that's needed in the energy system broadly, but also in the networks. We need that sort of strategic level investment that's coordinated with the energy system. And I think this is critical to meeting net zero and certainly critical to meeting at zero at the lowest cost or an affordable cost. So I think it's a really important aspect of thinking about the energy system here.
[00:34:32.660] - Jon
So we've got to get a move on. Well, I just noted down some points what you're saying, Andrew. A framework coordinated coordination or funded coordination and democratic. And if we can do that in a way that gives the private sector confidence to invest in, so we better leave it there. Matt, thanks very much for joining and giving us your views today.
[00:34:58.710] - Andrew
Pleasure. Thank you.
[00:34:59.130] - Jon
Andrew, likewise. Thanks for your contributions.
[00:35:03.090] - Andrew
Great. Thanks a lot.
[00:35:04.140] - Jon
And thanks to everyone for listening. This is, I think, a topic that's at different stages in different countries. We looked at the UK today, relatively advanced Netherlands is also quite far forward with this. I think all across Europe, coordinating local energy infrastructure is going to become a bigger and bigger topic and one will be coming back to in the podcast for sure. So thanks, everyone for listening to the podcast today. We hope you enjoyed it and learn some new perspectives and look forward to welcoming you back next week. Thanks and goodbye.
[00:35:37.910] - Jon
If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcasts on your chosen podcast platform. If you like the podcast and like sharing, then please do rate us. And to listen to archived episode, to read transcripts and to see the latest Delta-EE insights, then please visit www.delta-ee.com.
