What’s Really Stopping UK Solar? - IG Renewables

Imagine you want to build ten thousand homes. The demand is there, the land is there, but the plumbers are booked up, and you can't find electricians who are available to do it. That's roughly where UK solar finds itself. The government wants sixty gigawatts by twenty thirty, a tripling of capacity.

For developers who want to help, the first thing they need to do is to get to the front of the grid connection queue, and that's not easy. The queue has some projects where construction has never looked lightly. In effect, the queue stopped reflecting what was actually going to get built, and that is what connections reform is all about. Today's guest is Matt Black, managing director of IG renewables.

In this conversation, we talk about how clearing up the backlog of projects doesn't necessarily mean an immediate increase in battery and solar projects, and how the transition may rely less on available land and more on the availability of skilled labor. I'm Ed Porter. Welcome back to transmission.

Hello, Matt, and welcome to Transmission.

Hi. Good to be here. I've been listening to the show for for years, so that it's nice to finally be in the hot seat.

Amazing. Amazing. And as ever, would you like to introduce yourself and IG renewables?

Perfect. Yep. So I'm Matt Black. I'm managing director of IG Renewables that we're a renewable energy platform that I lead our UK business.

I also sit on the investment committee, so looking across what we're doing in other markets, principally Italy at the moment. My other hat is as chair of Solar Energy UK. So I've spent the past nine years or so as a director of the organization and past five years as chair during what's been an amazing journey for the solar industry. We've now got about four hundred plus members representing the solar industry and an exec team focused on making sure that the barriers to further deployment are being removed, working with stakeholders and the like.

So I think from those two perspectives that it's been great to be in the deep end in the detail developing, financing, and building solar projects principally in kind of UK and Italy, and also then sat looking at a macro view around how the industry is working across all scales.

We've had guests come on and talk about say the wildlife and the diversity on solar parks. We've also had guests come on talk about sort of batteries getting co located with solar, which we might come on to today. But it's really good to have someone who's really in feet in the in in the solar space and can give us that kind of context. Both of the past, but also let's start off with the future. Right? So we've just got to this position where we've had this connection reform process where essentially we've taken the whole queue of projects that wanted to connect and we've sort of slimmed that down to a smaller bunch of of projects. You as someone who wants to build projects in GB, are you are you happy with where your projects have landed, how that process has been run?

I think that, clearly, it was very necessary that the connections queue had grown out of all proportion to what was needed by the system, that having a process where anyone could apply for and be given a connection and the transmission operator or the distribution operator is obligated to price and design a connection for you moves to a point where it wasn't enabling connections to to be delivered. It wasn't enabling projects to be progressed. I think that with the government having come in eighteen months or so ago and clearly kind of indicating that they're looking for UK to become a clean energy superpower, to be delivering a huge amount of additional capacity to be able to hit their clean power in twenty thirty targets, Things needed to be done that they're talking about trebling solar over the course of this parliament over five years or so, and that only happens if you can unblock things and get things moving forward.

That that there's been various challenges the way that it's been done that I think NEESO, the National Energy System Operator, as an organization was only established in October the year before last, that they had a gargantuan task to kind of come in, establish themselves as an organization and with the governance, but then to be doing the day to day job of actually running the energy system and making sure the lights didn't go out while overseeing these massive connections reforms. So I think that kudos to them for delivering that, that there's been challenges along the way in terms of the software that was used.

I think that that's been spoken about in the past and the connections portal in terms of some of the system modeling that they've done and the Clean Power Action Plan and the technology caps that were introduced, which kind of acts to limit the amount of capacity that is being delivered on the system. I think that that's something that wasn't really a government ambition for a third party to be limiting the amount of capacity for certain technologies that the private sector is kind of lined up to deliver. In terms of the outcome that I think we're getting to a place now that after a two year hiatus that we've now got a pipeline of projects which are moving towards being deliverable, that all of those gate to connection offers need to be delivered, that there's likely to be an amount of attrition, that all of those connection offers are still kind of subject to actually where you're gonna be connecting, when you're going to be connecting, what the cost of that is, which are pretty fundamental.

And no one who's got a preliminary gate to offer at the moment knows any of that information. So that you would expect that a number are gonna fall away at that point in time, that there's also going to be projects that have met the readiness criteria, have been given gate to offer, but aren't actually deliverable. So I think we're moving to a place now where over the next six months or so, the kind of the further shakeout is likely to happen. Those with projects have got that certainty now starting to be able to move towards reaching kind of FID financing, the kind of a financial investment decision, and then into procurement and construction.

The delays that have occurred and the kind of the continued uncertainty means that there's limited deployment that happened last year compared to what it could have been. Limited deployment this year compared to what it could have been, and then it places a huge amount of onus on what's going to happen in twenty seven, twenty eight, twenty nine, that there's still restrictions in terms of procurement of long lead items, and some of these are becoming very large projects. So I think that there's a lot still to be done that stepping back, that hasn't been a good thing, that I think it was required, it's now complete, that there's various challenges to it.

And I think that we can probably go into more of the detail around that, but at least now we're in a position to be moving forward.

Yeah. So so let's let's let's be let's be forward looking. Right? So let's think about the number of solar projects or battery projects that are out there.

I'm interested that the next step that you see is as of today, so we're in January, we will at some point this year, projects will get notified. I'm I'm sorry. They're already notified. They will get formal offers, right, which will provide specifics to their projects.

And once we've got those specifics around like where they're going to connect, when they're going to connect with like precise say substation locations is is one example that's been talked about in transmission that then they can really sort of go through a like last financial process of do we really want to do this and is this gonna be attractive enough for people who want to invest in this space. And so you're saying that this year will kind of be the year that there's this like secondary shakeout. So we've got this kind of selected group of gate what we call gate two projects, and that might get a sort of further shakeout as people go, actually, you know what?

This isn't this project isn't quite right for me. It's not quite in the right location. It's not not quite the right timing, so I'm gonna step away from it.

I think that's definitely the case. I think it's also the fact that potentially most of the projects have been developed by and are currently owned by entities which aren't gonna build them, that they were established as developers, that they haven't got the capital or the kind of corporate structure in place to actually build these things. So that there's a huge amount of m and a activity which needs to happen for these projects to migrate to firms with capital, with the structure, with the governance in place to be able to deliver these projects. I think the intention would be that many of those M and A transactions could have happened over the past couple of years, but the uncertainty has made that untenable.

Now we're looking at an accelerated period when this needs to happen. So I think that we're seeing a flood of projects coming into the market. It's a challenging time to be selling projects in that regard because the supply demand balance isn't necessarily there. I think there's also question marks around who is actually going to be stepping in and delivering all of these projects because that there's been a period of hiatus and now that more of the capacity is being squeezed for delivery into a smaller number of years so that you're looking for huge amounts of capital going out the door over a relatively short period of time.

And and do you feel like somebody puts one of those proposals on your desk today, are you able to actually, like, run an m and a process and and buy that site or sell that site? Like, do we have enough information with the notifications to be able to make a decision? Or are we still kind of are we still waiting?

I think we're still waiting. As things currently stand, you don't know where you're connecting the cost of that connection or when you're connecting. So valuing a project and determining its attractiveness is still incredibly difficult. That you've got signals that start to point towards these things, but connection costs are massively uncertain that there's a huge network build going on.

Those costs are going to be allocated somewhere. And that given the fact that a huge number of connection offers were initially put out predicated upon the full connections queue being built, A large proportion of that is no longer being built. So, logically, that the connection costs that are being allocated are going to be moved around. There's gonna be changes.

Yeah. And people will hear, like, Ed Miliband is wanting to move really fast with solar and wind and see that kind of progression coming through. For the person on the street, they don't really care about gate two. Maybe they do, maybe they don't.

I don't think they do. But they and and they do care about their bill. So like so why does know, what what would they notice about there being a big hiatus in projects not being able to have kind of deployed in the first half of this year, second half of last year? Like, how would that become real for someone who listens to this?

So I think that adding additional renewable capacity isn't likely to be an immediate reduction in bills in the in the next kind of one to two years. So I think that we need to change some of the political narrative around that being the driving force behind trying to deploy things in the short term. Structurally, over time, that you're going to see having close to zero marginal cost renewables as opposed to gas or other things, setting the merchant price should be bringing down the costs. But that's not something that's going to happen just by another solar plant being connected to the network.

I think that we're seeing the continued decarbonization of the grid. That's been a massive success story for the GB over the past fifteen years and something that where we've been kind of close to a world leader through a number of ways and means of of doing so. But I think that, really, it's around the jobs that are being created, that the companies that are being built in the UK, that building kind of a sustainable industry of the future, that we know that solar and battery is likely to become one of the predominant forms of energy generation technology and storage technology across the world.

For the moment, the UK remains one of the kind of the leading countries in that space and that we're seeing our expertise being exported elsewhere. Moto is part of that story that's starting here in the UK and now covering lots of other markets that it's not just in terms of manufacturing that we're seeing kind of GB being a leader, that many of the service understanding the financing construction of projects that the UK has had a leading role in this.

Yeah. And we have the the the quote from government around four hundred thousand jobs being created through the National Green Energy Plan. Right? So, yeah, I think you're right that one of the the things that sort of a slowing down of build out will do is it will sort of filter into jobs and because as you say, the impact of solar parks or wind farms is kind of gradual and cumulative. It might be something like jobs which sees it first.

But hopefully, as as that connection reform comes through, we should then see some return to normality and people be able to being able to deliver projects. Moving then on from the connections reform process, which we've just been in, to the thing that's coming next to this kind of concept of a future plan, a strategic spatial energy plan, SSEP. How do you think that will work? And do you think that's got enough flexibility in it to allow you to operate in the way you want to?

So I think given the fundamental changes that we're looking to deliver in terms of power system in in the UK, much of which is underpinned by a huge build out of network grid infrastructure, it's sensible to have an amount of strategic planning around what network gets built where, ensuring that that's done optimally and meeting demand, having generation best sighted to be able to deliver that. So I think from kind of first principles, that feels like a sensible thing to do. Where you start to come into challenges is how that interacts with the market that has existed historically, that you've had a case where it's been privatized and that you've had individual companies seeking a connection for demand or a connection for generation and being up to the transmission operator or the distribution operator to work on that behind the scenes and to deliver it.

I think the interaction of the introduction of NISO as a kind of a standalone entity tasked with operating the system and planning the system, that the way that the capacity caps that went into the Clean Power Action Plan were delivered has led to a certain allocation of projects and kind of technology mixes, which there's been a number of challenges too that I think that certainly from the solar perspective that there was a sense that solar across all scales from residential to commercial rooftop to ground mounted projects on the distribution and transmission network could have delivered more out to two thousand thirty and certainly out to two thousand and thirty five.

I think one of the challenges that was seen was that this was a government task that was set in order to meet the Clean Power two thousand thirty objectives. But supposedly, so as to give some investor certainty out to two thousand and thirty five, they tacked on a second tranche of projects out to two thousand and thirty five, but without a consequential sustainable level of deployment out to that period of time. So that you get to a place where that there's a massive deployment expected in the kind of the next couple of years, then a huge drop off in the the twenty thirties. Potentially, that's something which is going to be fulfilled by SSEP coming through.

But I think that that there have been enough concerns around the way that NISO have been operating to date, the data that they're using being very transmission focused rather than distribution focused, the limited role that they see for distributed generation versus kind of centralized power plants, which is where their legacy thinking comes from, to have concerns around the role of kind of solar and storage that it would seem kind of institutionally that they're they have a slightly more limited view of solar and storage in the system of the future than perhaps those of us working in the sector and looking at other countries who are kind of further down that transition think is possible.

It's it's definitely that's definitely consistent with with other conversations we've had right around this.

They like to think in like single pots. Think about solar as standalone, think about wind as standalone, think about well, wind is in in two parts. Right? Yeah.

But also as a standalone between onshore and offshore. Think about batteries as standalone. And in reality, right, if you wanted to build out as little grid as possible, you would probably look to do things like bring sites together, try and put batteries collocated with wind, batteries collocated with solar and minimize like, if if your goal was to minimize transmission, build out either or or it could be a distribution network, then you would look to do more of those things. And I think maybe what you're hinting at is by saying sort of they think a little bit institutionally that they are not necessarily looking for solutions that run the whole system hotter.

They're looking for sort of more capacity build out rather than putting flexibility first.

Yeah. So I think there's a number of things on that. Firstly, that we've seen the way that the connections algorithm was was set as to who would get which connections under gate to ended up favoring transmission connected solar at the cost of distribution connected solar, that there were choices that were made as to kind of the the framework there. I think that there's reasons to think that as a system operator, it might be easier for you to run the system if you've got a smaller number of large plants to be able to communicate with and control.

That's the way that things worked in a legacy perspective. But that we're moving to a place where when the initial kind of gate to submission window opened that two percent of Emma Brown mounted solar was transmission connected. Over the next five years, they're looking for thirty three percent of it to be transmission connected. So it's a massive shift in terms of the scale of solar and the type of plant that's going to be built out.

I think it's also the case that by seeing solar and storage as different technologies that they have precluded any colocated projects from really being able to progress. I think it's something that they're not solely responsible for that across the governance of the energy system, we're not really set up for co located yet. Look at the capacity markets, CFD, various kind of grid regulations that we're not yet there, but it feels relatively shortsighted if we're looking at what's gonna be built out over the next ten years. If you're looking at other countries which are further down the line that they're moving to a place where co located projects have become the norm at all scales from residential to commercial to utility that you see?

I think that Australia, in the US, certain European markets, I know you guys are all over this and have got the data probably better than me. It's also the case that rather than just being market led and it being the norm, certain regulators and system operators are seeing this being preferential because then you're better able to manage a solar profile, which is, I guess, delivering too much power at certain points in the day. It makes sense to have batteries sort of co located with that. The way that NISO was has run it, that it's a rare collocated project that was progressed where both the solar and the storage have been allocated capacity.

And then that you've got projects that are potentially untenable because that that they were predicated on both those technologies being there at being collocated. Yeah. Now only the solar or the storage has got capacity to connect.

It's such a weird thing. Right? Because when you talk to people who are behind these programs and processes, right, Julian Nestle was on who is essentially running SCP and talk to him about like how he controls his heat pump or whatever it might be. A lot of people are in this process are are super engaged in like multiple techs on their homes, the heat pumps, storage, solar, EVs, and they're kind of really thinking about, okay, on my own home, I'd really like work on solar and batteries working together and kind of this concept of how you could combine these things to reduce load would be so obvious to them.

Yet as you say, of when you then scale that up to the institutional side, people kind of go well, distribution like or building something on a home, should we actually bother doing that, you know. And I think some other people listening to this will kind of be jumping up and down. We get this comment all the time, which is we would say, oh, this solar park makes sense. And someone would say, well, look, why is it not on top of a car park?

Or why is it not on top of someone's roof? And the reality is that it's slightly more expensive to do that thing, which is why it doesn't happen. But people do ask this question all of the time.

No. No. So I think that two comments I would have is firstly, if you speak to any of the people who have important and challenging roles within any of these organizations, to an individual, I think all of them are trying really hard at doing the right thing in a really challenging situation.

That I don't think that there's necessarily a Machiavellian mastermind behind the scenes trying to stop solar or storage from having its place. I think that these are, in certain cases, unintended consequences or kind of institutional biases that aren't necessarily checked, that these are changes in reforms that were brought in at pace, that there wasn't space for the necessary consultation, that I think there's been a challenge that has been made throughout that NEISO hasn't been as open in the consultations. It hasn't enabled the sector at large and the public at large to be able to engage with things.

I think, secondly, looking at kind of the role of these sorts of technologies, solar and storage are massively sort of scalable and modular technologies so that they make sense for one or two panels on a camper van or on a camping setup or balcony solar through to kind of residential rooftops, commercial rooftops that what we've seen over the past ten years, which has kind of been the mainstay in the UK, which has been distributed distribution connected projects in the kind of the five to seventy five megawatt range. And now we're seeing that these massive up to gigawatt scale projects that are being promoted through to the transmission network, all of that makes sense.

And that there's different drivers, which are leading to the kind of the benefits of those operating at different scales. That some of it is around the benefits to an individual consumer, some of it is around delivering lowest cost energy and being most controllable, but that they're solving for different things.

Okay. Let's move on to then actually delivering some of this stuff, right? So we're going into the sort of gate two process, which is essentially the future plan and we're saying for solar, we're looking at something I think around sixty gigs of solar that they're planning to connect up until twenty thirty. That is a big step change from where we are today. Do you think that we as a sector are set up to be able to deliver that size of increase?

So I think certainly if you're looking at the past in the UK and at an international level, when the economics and the connections have been in place, it's proved to be very elastic in terms of deployment that under the the previous kind of feed in tariff regime that when it became apparent that this was something that made sense, that you saw a massive uptick in terms of the residential deployment and rooftop deployment, that when you had the renewable obligation scheme that was attractive for investors, suddenly that you moved from delivering kind of less than one gigawatts to four gigawatts over over a number of years. So I think that that we've seen that happening that in recent years that you've seen Pakistan as a a solar market go from close to nothing to being delivering an absolutely huge amount, which is no one in the world was expecting.

It was a tens of fifteen terawatt hour reduction in their consumption because they've been bringing so much solar and storage.

Exactly. So so I think that the proof historically and globally is that solar and batteries are very deployable. However, looking then at who is actually going to do it, that we're looking for a huge amount of capital to be coming in to do this, that there's been an uncertain environment, there have been various kind of macroeconomic challenges, that it's ambitious to look from a standing start for that amount of capital to come in. It's not to say that it's not going to, but there's certainly challenges there. If you're looking at the firms who are going to build it, that there's limited EPC capabilities within the UK.

And EPC is essentially someone who just literally builds that site?

Yes. It's engineering procurement and construction that they would be generally the construction firms who are building these projects that we haven't had a particularly active construction market for solar projects in the UK over the past five years. So many of the capabilities have been reduced. Some of the sort of warranties and conditions required by an investor become quite punitive on on those firms.

So a number are choosing just to build for themselves rather than to build for third party clients. And therefore, it's likely to be, in the first instance, European Turkish foreign firms who are going to be filling up the gap in terms of deploying that. And then it's around the humans. So that it is the case that during kind of previous periods when there was a massive build out of solar, that there was a large amount of skilled labor in the UK building these projects.

During those periods that we were still in the EU, that there was a huge amount of European labor that was was doing that, that it's now a more challenging environment to do that. I think from my perspective, looking at the solar industry over the next ten years, that this is an opportunity for us to be delivering jobs, creating good sustainable companies, and that that should be one of the things that we're focused on doing. But to do that, we need to have the right training pathways that we need to have a focus on education and that we need to be supporting UK based companies and actually building their capabilities. That doesn't work in a stop start massive boom and then bust scenario.

And who who is doing that? Right? That just that feels like quite a like a cloudy or nebulous thing. Like like, who who's who's desk does that piece of paper fall onto to say, we need to make sure we've got enough skilled people to make this happen.

If you're looking at who's has the ability to pull the levers on this?

Yes. That's probably that's a better question.

Yeah. Because I think it's everyone's problem that there's various organizations who who are working on this, that many companies within the sector are taking it upon themselves to train people up, to have apprenticeships. But I guess, sets with the government to be determining this, that we had a solar task force which led to a solar road map and a solar council which now meets three times a year that I have the privilege of sitting on that with a number of other people from from industry.

And so is this like front and center there? Like, is is that something that's being looked at where sort of let's say GB Energy's got some money to build some of this stuff. Are are we looking to try and train this this workforce?

Yes. Very much so. So that in the the last solar council meeting that we had, solar quiz was one of the agenda items out of of three. That it's definitely something that the government is focused on.

It's challenging because it cuts across a huge amount of different areas of government, the private sector and kind of devolved organizations that you're needing to deal with education, with kind of workforce development, with trade unions, that if you're looking at, I guess, the training pathways for an electrician, that those don't necessarily fit with the work that's required to be building a battery project or a substation or a solar project at the moment so that You're having to train up electricians in residential or commercial work and then bring them into the energy sector that you're not necessarily able to train them up wholly within the energy sector at the moment.

There's work to do, but we need to be doing it fast because we have an opportunity to be creating a huge amount of jobs. And I think that if we're wanting to keep public support for energy transition, if we're wanting for this to be a just transition, that we need to be creating these good jobs and being able to, I guess, show the benefits across society that especially from a solar and a battery perspective, these are jobs that are gonna be created entirely across the country. If you're talking about nuclear or offshore wind, that they're gonna be very localized, that there's going to be solar and batteries, which are being deployed in every village, in every town, in every street across the country and at all scales.

So I think that this is a technology that has the ability to actually be able to benefit everyone.

Well, let let me ask in a more personal way. So let's say you're sixteen, just coming out of school looking for a job. How do you get a job in the solar industry?

Good question. So SolarWinds UK as one of its work streams has set up a solar careers website as a starting place. I think that going to solar careers is something that is intended to start to build upon and act as a way into the sector. We've also been running recruitment scheme, recruitment zones at a number of the main solar fairs. So Solar and Storage Live in Birmingham and London have had recruitment zones to try and act as a point where the public, anyone off the street, can walk in, find out more and talk to firms who are recruiting in their space, but there's more to do.

Okay. I think that's a great plug for someone listening to this who's thinking, yeah, you know what, I wanna get involved in solar. There's a there's a few tips. Alright.

Let's move back to the deliverability. So we've got this this big pipeline of project that we that that we want to deliver and some of those might see the people people talk about a long pole as being the thing which holds up a project and I was about to say it and I realized that nobody really knows exactly what that means, But the the things that hold up projects, right, so maybe the workforce is gonna be part of it. Maybe it'll be something around the connections being available. But let's also look at the revenue side, right?

So if I if I say I wanna add sixty gigawatts of solar to the system in the UK over the next five years. That's gonna bring down the price that the solar receives and that might mean that some investors are gonna get very cold feet about trying to put all of that solar onto the grid at the same time. How do you how do you think about that type of risk as someone who wants to deploy solar?

So I think that if you were to ask me a couple of years ago, I think that at that point in time that we had merchant prices which were materially higher, that we had kind of a growing corporate PPA market, and that you could see a future where potentially that you would have a third of the projects being delivered by CFDs, contract for difference, a third being delivered by corporate PPAs and the growing proportion maybe up to a third on a merchant basis. I think the world has shifted.

And just to pause there. Right? So on a merchant basis means that you essentially sell to the market and you get the market rate. There's contracts for difference means that you sell to the market rate but essentially you get topped up to like a pre agreed price.

Let's say seventy pounds. So if the market clears at a hundred, you pay the money back and you get seventy or you pay some of the money back and you get seventy or the market clears at forty, you get topped up to the seventy. So essentially you always receive seventy. And the corporate PPA is when you, the solar farm sells to, let's say, Amazon, and you agree a price for it outside of that.

So just just if if anyone's new to the sector, just to sorry to interrupt your flow, but No.

No. No.

Just just to make sure that people are familiar with those terms. So those are the three ways, corporate PPA, CFD, and merchant.

I think that's right. I think that it's very challenging to make a project stack up financially or investable on a merchant basis given where we are at the moment with the current expectations around merchant pricing, especially for a solar profile and looking at further deployment, which is likely to lead to cannibalization, which leads to a reduction in merchant power prices when solar is generating. CFD has been a very investable tool. So I think that it's been incredibly successful at enabling capital to flow into renewable projects in the UK and globally.

Offshore wind has been a success there. We just had AR7, but it's led to kind of further eight gigawatts or so of projects being supported in that manner that we're likely to see the results coming out of the AR seven for solar and onshore wind in the next couple of weeks, probably before this is this is released. And I think that remains the main way that we're likely to see projects coming through, that the corporate PPA market continues to be of interest that I think that we're seeing a lot more activity for behind the meter sort of rooftop solar where the the solar is directly powering the demand there?

Yeah. So that's so if you're a factory and you have a meter to grid, you might put the solar behind that meter so it's on the same network with the demand. So you could meet your own demand from the solar and the meter never turns. Not the meters turn these days, but like in theory, the meter never turns.

Right? So when people say behind the meter, that's what they mean. Behind everything's behind the meter, so it's a bit of a an odd term, but yeah, located collocated with demand. Indeed.

So I think the CFD remains the main way to be able to finance projects at the moment, especially if you're looking to massively increase the amount of projects being connected on the distribution and transmission network over a short period of time.

That is the principal lever that the government have to be able to deliver this. However, that still that you're, as an investor and an owner, exposed to the merchant tail, so that that's the period after the CFD contract on ZAP.

CFD contract has been extended from fifteen to twenty years, but still that we're working generally on these projects having a lifetime of forty years so that you've got There's a twenty year tail that's still a question mark.

Exactly. And I think that if we're backing ourselves to be delivering the decarbonization of the energy system in twenty years, the power market should be looking very different. So that having marginal pricing set by gas is quite possibly unlikely to be the case, that as an investor that you're being forced to take a view on what the power market is likely to look like in twenty years' time, value you're going to be able to achieve there. It's also the case that we're looking at kind of an increasing number of negative hours of pricing, something that I know that you guys have been tracking and communicating across a number of markets. That there's a number of things definitely that needs to be to be considered there. And I think that having some diversification there across different profiles, solar, wind and batteries gives you an amount of diversification around in order to to capture the value across a number of markets. Okay.

So yeah. Yeah. No. That that makes sense to me. Right? So you're worried about there being lots of solar all online at the same time.

Well, if you have solar and batteries, well batteries like negative prices, they're good for batteries because they can charge from those prices and they can hold that through to another period when the sun goes down and the prices go up so batteries can discharge. So as you say that kind of portfolio play makes sense and for people worried about cannibalizations, this concept that power prices will drop very quickly because lots of generators turn on all at the same time. That's that's one sort of nice solution to that. Okay.

Then then moving forward to the broad role of solar. So we we've talked about solar in sort of the very planned SSEP.

Then there is also solar is quite entrepreneurial. Right? There are parts of the world like in Germany is a kind of classic case. We've got this balcony solar where people can go to IKEA, buy a solar panel, plug it into their wall at home and it's such a good technology that you can sort of be allowed to do that. Do do you think that we have enough of a sort of entrepreneurial speed to bring forward solar at that rate in GB and, like, could we be doing more to do that?

Good question. I think that as I was highlighting before that we've seen periods where the economic signals are right and solar deploys massively, be that on rooftop underfit for ground mounted projects and under rock or, I guess, the the size of the pipeline that ended up, causing the the challenges with the connections queue. So I think if we're looking at the next five to ten years, I'm sat here being very confident that solar is going to be deploying at a massive scale, that it's going to be delivering kind of multiples of the deployed capacity and proportion of the energy onto the system from what it is now.

But I think it becomes challenging to predict exactly what scale or what technology is going to be doing that, that we've seen the warm home plans come out warm home plan come out this morning, but that is backing a massive shift in investment into residential electrification. That moving to to solar on on roofs, enabling the decarbonization of heat and transport through heat pumps, through EVs and kind of with with batteries that we've last year already was getting to kind of record levels as judged by MCS, the microgeneration certification scheme, for the amount of residential solar installs that we had.

So we're already in a good place that now this is being turbo boosted.

At commercial industrial level that we're now seeing the case that more and more businesses are putting solar on their roofs. Costs have come down massively in recent years that we're now getting to a place that it becomes increasingly investable that we one of the challenges in the past has been getting to scale in those sorts of portfolios to enable institutional capital to come in, that we're seeing that being delivered now in GB, which it hasn't been that we've seen kind of massive distributed energy portfolios previously being delivered in the US, some kind of European and Australian markets. And then on a ground mounted scale that we've got this pipeline of DCO scale. DCO?

Development consent order?

Development consent order. So that these are projects which are over one hundred megawatts AC now that they are determined from a planning perspective by the Secretary of State rather than at a local level.

Historically, the order of the projects that were supported by the renewable obligation scheme delivered in the in the twenty tens were at the distribution level that we're now moving to a next the next scale. So these are gonna be two hundred and fifty megawatts to a gigawatt scale. But I think it's it's the profusion of different scales and balcony solar. I know that there there are advocates within government for carports, for floating solar, that that it's a technology that that that lends itself to many places. So getting back to your point on entrepreneurialism, I think solar is a technology which is massively modular. It's deployable in various different ways. It's it's going to be delivered that there's various different kind of regulations and macroeconomics which can move it as to which of those is gonna be most attractive.

So like the big grid scale projects will still be kind of stuck in those large processes to get connected. But like you will remember going to school and having a calculator that had a little solar strip on it. Right? So this this kind of this kind of solar getting everywhere because it's a good tech. Like I think I wholeheartedly agree with that. I think we'll see it on balconies. I think we'll see it on all industrial rooftops.

Think I like there's just no once it's a good enough idea and it's so easy to deploy, it's kind of really hard to put it back in a box and and the cost, I think, is is a massive driver.

So the the reduction in costs has been the the primary driver of this being being deployable.

And there are many professional ways of describing that cost reduction. I think if you go on the Internet, you'll see many memes comparing the cost of wooden panels and solar panels and whether like per square meter at the same price or not.

Yeah. Definitely.

You're going to be installing a fence at your home, it may well be cheaper to install a solar fence than a wooden That's just absolutely mind boggling and probably why people make so many memes out of it.

Yeah. Okay. But you just talked about the warm homes plan and I think I just wanna sort of look at that a little bit more because it's a really interesting choice to sort of support solar on homes. So on one hand, generating on a home and meeting demand at home seems to be very sensible.

And if you are labor governments and you're looking to do things that put pounds in people's pockets, solar on homes is a really good way of doing that because you'll get the benefit of that solar directly and you will feel you will feel your bill has been reduced. And it's probably one of the few techs that you can actually deploy within a government cycle. Like if you wanna put if if you get into power and you say I wanna deploy a nuclear power system like no way, like five years is not long enough so you're not gonna win. You have to pick a tech like Solar to to come through.

I suppose it's the the way I'm going with this is it feels really interesting that that feels like more of a policy based decision because it will give people cheaper bills in the next two, three years rather than like a a sort of strategic system plan.

Do we need loads of domestic solar to run our system in the most efficient way or should we to your earlier point be getting the sort of the DCO, the the giant projects that are say eight fields in size. Like I'm I'm trying to work out in my head like which which one's actually the right thing to do. I can I can totally see why we've gone down the the sort of domestic solar pathway, but I like that those two play off against each other for me?

So I think that we need solar at all scales and solar at all scales is likely to be delivered. I think if we're looking at the warm home plan that we're it it's it's delivering a number of things, that it's focused on electrifying homes, that it's something that is going to be felt by the wider population so that if you're looking to keep popular support for the tran energy transition generally, it's something where that you can start to see that happening on your streets. That it's a very tangible action. So getting back to kind of election cycle, if we're looking for what's gonna be deliverable by twenty twenty nine, but I think that that's that.

It's also the case that over the past fifteen years that we've had a massive drop off in terms of the retrofit progress that has been made to the to the UK's kind of building stock. So that there was progress being made, that under the coalition government, the decisions were made to massively set that back. I think that technology has moved on where in the past that it was always fabric first so that you're looking to insulate homes first now that there are certain advocates out there saying it's fabric fifth or fabric last, that really that you're you're looking to to decarbonize Irma, that you're looking to introduce solar, batteries, and heat pumps as a way to be able to to shift homes.

I think that the warm homes plan has a number of measures to support both the able to pay market, which is kind of for middle classes, homeowners who are interested to do it, have an ability to be a funding part of it, possibly through their bills, but haven't necessarily got the whole upfront cost available to do it to book it is to add all of those things. I think you've done all of them recently that you'll know that often that you're talking kind of eight to fifteen thousand or something for for this this type of installation, which is a meaningful amount of money. It's also looking for things in the in the rented sector and for for those who need additional support.

So that I think that it's targeted across a number of different groups. That is something which we're likely to see a significant step forward in terms of the the capabilities at a local level in people engaging with deploying this type of technology. And I think it comes back to the public support that we need to be able to do this and that we have seen in recent years a shift in the political narrative in terms of how some of the mainstream media is reporting some of these technologies and the change we're making and the pickup on on social media, a backlash around net zero, around solar farms, wind farms, batteries.

And I think people being able to see the benefit of it at a domestic level supports some of the the change that we needed to happen.

And I'm not gonna ask this question because I think it is maybe unfair, the the with eco as a former scheme that existed and I think it was maybe called the Green Deal. It might have been going back a very long time like in concept that felt quite similar to some of the stuff in the warm homes plan and then it didn't deliver as much as people would have wanted it to. So I think there's probably and maybe all I'll I'll say on this is it's probably a warning to those like structuring that to think of really about like the financials of how it works because even with like some sort of generous terms, people didn't even I think that was the scheme that essentially encouraged your house to take a loan to get the solar and then that didn't really take off. So we have been here before. It is kind of two parts. People will definitely say yes to free money, but no, people generally don't wanna take a loan for something that they they're not quite sure on.

No. And it it's so much around the detail of the delivery in this and the who are the entities who can be trusted to be out in people's homes, whether you've got the right conduit for capital between a central government and that those installers, whether you are able to have the right level of certification and skilled trusted workforce to be able to deliver it and the right sort of cash flow that is going to be supporting them to do it because there's lots of tradespeople who haven't got the balance sheets to be waiting months to be able to receive the cash for for doing the work.

Yeah. And yeah. I totally agree. Let's move on to two final questions then. So is there anything that you'd like to plug?

I would love to plug the work of SolarWinds UK that I have an interest in this, as I stated, the at the start being chair of the organization. But I think that in terms of the work that an a small team does delivering a massive impact for the sector, advocating the role of solar and batteries in the energy transition and the complexity and the, I guess, the diversity of things that we're talking about now, everything from archaeology and Skylarks to the details of grid reform and SSEP and everything in between that I think that that there's this is the work that needs to be done and that they're incredibly efficient at what they do given the membership. So we've got four hundred plus members at the moment, but I think that there's there's more that the industry can do to enable s s SE UK to be working working more.

Very good. And last question, what is a contrarian view that you hold?

So I've been thinking about this over the past couple of years listening to the podcast. I think in the past that I would have been advocating rooftop solar as something which needed more attention and that wasn't necessarily getting the focuses that there was more more interest in large grid connected projects. We've already been talking about the warm homes plan, but it feels like the time is right now that we've already seen kind of record years for residential solar, and, rooftop solar coming through. But I think looking at things now that I think it's it's a shift in the the scale that solar is being deployed.

So that now that we're moving to the micro level, residential and kind of commercial rooftop, and then the transmission scale, that that really feels like a significant change in the way that that solar is being deployed. That for the past ten years, the main deployment has been for distribution connected solar. Now I think that that's gonna be taking a minority position, and that is going to be deployment is gonna be led by rooftop and this trans transmission scale. And that that feels like a a quite fundamental shift in the way that it's being deployed and something that's not necessarily being worked through yet.

Okay. Super interesting. Yeah. Kind of it's kinda splitting in two directions. Right? Indeed. And the distribution projects are are somewhat being left behind.

Matt, all that's left is for me to say thank you very much for coming on and sharing your expertise. I think people will have understood a lot more about how solar is going to develop going forward. And, yeah, thank you very much.

No. Thank you, Ed and the Moto team.