Vicky Parker: I'm Vicky Parker, Head of Power and Utilities at PwC. I'm absolutely delighted to be joined by Dhara Vyas, CEO of Energy UK, and Peter Hill, Senior Advisor to PwC and former CEO of COP26. Today, we're going to be reflecting on the recent government announcements on the energy sector and what it means for the energy sector, but also businesses in the UK. Welcome to you both.
Dhara Vyas: Thanks, Vicky. So, I think first thing to say, it was a really interesting budget announcement. It didn't major on energy, and I think that's right because we've had an awful lot from this government on its clean energy mission since it took power in July. But what we did get was some really interesting language around changing the fiscal rules and really recognising the long-term investment horizons that we have when we look at business in the UK and energy investment more generally. And it also did really feature on that sort of the necessity of energy as the real driver of the economy in the UK. And when I say that, I mean, you know, investment in clean energy will deliver growth, productivity right across the country. It's not something that's based in one part of the country. And it really does have an impact on people's lives and livelihoods.
Vicky Parker: Yes, I would agree and I think interesting that regional aspect really came through and how it touches everybody's lives, as well is very important. I mean, Peter, just turning to you it'd be great to hear your perspectives on what you see, some of the challenges, but also, opportunities going forward as well.
Peter Hill: Yeah. I mean, start with the opportunities. I think they’re legion. So there's obviously, growth, local growth, particularly in places that in the UK that, maybe not quite as productive as others. There's huge opportunities there, high quality jobs. So the quality of jobs, the wages in this sector I think will be higher than average. There's obviously opportunities in the supply chain, build out supply chain that will need to be balanced between imports for speed and building capacity domestically. Then there's particular niche sectors where the UK can really show leadership. So whether that's the whole range of grid capabilities and skills or data and digital where I think, you know, there's a huge amount that the sector can do for itself and to catch up with others. I think there's a big opportunity and need for local and national partnership. I think this is one of those areas where that is absolutely essential. For the 2030 mission an enormous delivery challenge. And so I think the question is focus and pace and for the Government to be absolutely relentless in chasing down all the things that are getting in the way of delivery. And I think the role of government, more than anyone is to bring everybody together and get them aligned and drive and stop those dependencies becoming a blockage because I think that, you know, we shouldn't be in any doubt about what a significant organisational delivery challenge we've got over the next six years.
Vicky Parker: I think that is a great segway, actually, into the recently published, National Energy System Operator plan, which sets out a forward view of how you could potentially get to 2030 and how and what the steps would need to be taken to do that. But Dhara, it would be great to get your initial reactions to that report, but also some of the steps around the detail, around what that looks like in achieving clean power by 2030 as well. Yeah, sure. So the NISO’s report for government is really ambitious. But what crucially, the crucial thing it says is it's achievable that this 2030 target, whilst ambitious it is achievable. And these are the challenges and this is how we overcome them. But I think what's really important is the next step is government actually thinking about what the policy is to unlock some of it. So what NISO is saying is that you we will need to make sure that we have swift action, we make progress, we unblock the blockers, as Peter was saying, you know, this is about tackling the issues in the planning and consenting systems, making sure that there is investment in, yes, in offshore wind and other established technologies, but also in storage and in hydrogen and carbon capture. It is very much around kind of a big focus on generation and infrastructure. What I think we need to see is, look, it's ambitious and we welcome it. I think it's really good. It's a strong direction of travel. Government's response will be about the policy and the legislation that we need to reach that target. What we also need to see is what's happening on the demand side.
Peter Hill: Yeah, I think, NISO said what's technically possible, it's now up to the Government to say what they're going to do with that. And there's a number of challenges in that planning being front and centre. And it's very clear that some of the things that need to get done, they need to start not in 12 months, but in six months or sooner. So I think there's a real challenge thrown down to the Government there. The other thing I thought was important in that was that, however, the Government is approaching 2030, it's not an end. It's an important point on the journey. And I think that NISO is saying would be helpful to take a ten year view of which 2030 is obviously the critical, the critical point, I think is important, not least because some of the things that will keep the lights on in the 2030s require decisions really quite soon. But if I were the Government, I'd be sort of pretty pleased with it because it sets the bar, it gives me a clear target to aim at, and I've now got to organise to deliver.
Dhara Vyas: The focus on mission driven government, I think is really interesting here because we're seeing new institutions and new governance arrangements coming in right across the piece in the energy sector. And we're also seeing a rhetoric and a language and an approach which is all about partnership, working with industry. And that doesn't mean we're always going to agree, but it does mean we should all be at least facing in the same direction. So I think that's going to be really interesting.
Vicky Parker: I think that's right. That relationship and it's coming out incredibly strongly. The relationship between the public and the private sector has to work both from the pure skills capabilities, which will come on to talk about that need to happen, but also purely from accessing the finance you talked about. I think the report talks about 40 billion a year, didn't it, annually, which is a significant sum and will need to be mobilised for private sector capital going forward.
So looking at the opportunity within the UK to deliver clean power by 2030, but also the 2030s, there's a huge amount that needs to be done within that. And part of that is really around mobilising the right supply chain. Dhara it'd be great to get your perspectives from what you've seen from Energy UK with respect to what needs to be in place to really give that confidence to the supply chain, to make some of those decisions, to invest for the long term as well.
Dhara Vyas: The energy shock that we've experienced over the last four years has meant that we are in a race with other countries to really expand our investment in clean power generation, and that pushes prices up, alongside the inflationary pressure we're facing right across the world. So, you know, we were really pleased to see the budget for AR6, increased by the previous government and then increased again by this government. I think it the outcome was really good for the country in terms of the generation that we did secure in AR6. And it's a good indicator of why and how important it is to give the supply chain confidence and also to be paying the right rates right through the system.
Vicky Parker: Thank you Dhara. So I think it's a great example, and I think it also reflects the need for that certainty, particularly as many of the items we're talking about, long lead times as well. So when you're competing on those long lead times, it requires you to have a really good, forward view in terms of what's required is [Dhara] you know, if you're able to say, I've got a project which is going to generate five gigawatts and it's going to be a three year build, and this is how we're going to do it, you can encourage, you know, investment in UK supply chain and procurement. If you can't give certainty then you can't give your supply chain certainty. And I think that's the big message from developers.
Peter Hill: Yeah, I mean, the first. So of course, all the private sector will say they need clarity from government. And I think that's absolutely fair. You need clarity, predictability and a long-term visibility of what the plan is. So that's why the 2030 plan is important. That's why you know, what comes in two years I think the spatial energy plan will be important. And the industrial strategy plans are important. So that's how you would normally line up. You would have a plan and then you would do your infrastructure and your skills plan on the basis of it. So I think all that is good stuff and will allow people, as you say, to contract and to develop the supply chain. And I think, you know, I would say this, but I think energy is absolutely critical enabler of the productivity of the rest of the economy. And I think that's the message the Government's giving. But with all these other competing demands, I think that's one of the things the industrial strategy will need to give a sense of, which is prioritisation, both overall and in terms of, you know, the sequence of what gets done well. Because some of these things just come down to choices, right? You can't do everything. And so there will be an arbitrage about certain if even if it's down to financial envelopes or political time or parliamentary time. So I think a sense of prioritisation, is important if you're to, if you're to really move the dial. And I think, I think the Government's been pretty clear about that to date.
Vicky Parker: So a key part of delivering on 2030 is supply chain, capital but people as well, you know, the energy sector is about assets. But someone has to put the assets up. They have to maintain the assets. They have to ensure that the end to end supply chains work. Skills has been an ongoing challenge, hasn’t it, I think, in our sector, both to even maintain what we've got, but also make sure we've got the right skills and capabilities going forward. So against that backdrop, Dhara, it’d great to get your perspective on how we move the needle for once and for all, really, and start to put the right level and focus into the types of skills, which is quite a broad gambit, the type of skills that we actually need to deliver on this.
Dhara Vyas: You’re right it's really broad. You know, we could be talking about smart meter engineers. We could be talking about call centre operatives. We could be talking about nuclear engineers. We could be talking about people who go, you know, steer the ship out to the offshore wind turbines. There's a whole load of different skills that we are going to need, and we're going to need them for the next five, ten, fifteen years and beyond. And one of the most interesting things, I think, in this space is that what we understand, this has been a really big focus on postgraduate, apprenticeships and for people who have been through university. But really, so many of the jobs and the gaps that we need to fill are about vocational qualifications. They can be in post 16 post 18. And there's not been as much focus on that, I think, in the skills brief from the previous government. So this government's talked about aligning its industrial strategy and its skill strategy in its for plan for skills going forward with Skills England. And I'm really excited to see about what that means, particularly for people who don't go to university and who are going through not an academic route, because there are vast numbers of really interesting, good, well-paying jobs that will really move this country forward. So it's quite an exciting opportunity.
Vicky Parker: To get there, investing in skills requires a number of different signals, oesn't it, around that. So how do you create that confidence or that momentum to really start that movement, to really drive the skills agenda forward, Peter?
Peter Hill: There is an important message about momentum. And that can come from both government and non-government. So I think, you know, keeping a focus in your comms and your messaging about this being an important sector for this country for the long term.
Vicky Parker: Peter, Dhara, thank you so much for joining me today. I’ve absolutely loved the conversation. Thank you very much. It's been a truly insightful discussion. We've covered an awful lot of topics, and there'll be so much more to say on this topic over the next coming months, as the UK Industrial Strategy starts to take shape.
