Accelerating clean British power with Merlin Hyman (Chief Executive @ Regen)

The current mechanism is not going to get us to the twenty thirty target at that kind of scale. So they're going to have to do something different if they want the scale of renewables that you you we need. One of the things that really gonna make a difference is number one is we do need a plan. We need to know what the power system that we're looking for is gonna look like broadly. What are we working towards?

The way that particularly the battery space is changing is that batteries have gone from being, like, it's five or ten megawatt projects to all of a sudden being a hundred or two hundred to five hundred. Not a planning professional. Yeah. Couldn't tell you whether that's more work or less work, but it feels like less work to do the planning around a five hundred megawatt project than fifty, ten megawatt projects.

The strategy of what we need, assets we need, and where should become first, and we should then make sure that the the planning and infrastructure can cope with that. I I wouldn't wanna look that gift toss in her mouth. Fantastic. Let's bring it on.

Hello, and welcome back to Transmission.

In their first month, the new government has taken significant steps towards net zero targets. But there is still much more that needs to be done. Today's episode with Merlin Hyman, chief executive at Regen, takes a look at Regen's recently published paper, Accelerating Clean British Power, as well as a wider look at the impact of market reforms, developments in the industry, and much more. If you're enjoying the podcast, please hit subscribe so you never miss an episode, and leave us a review wherever you listen. Let's jump in.

Hello, and welcome to another episode of Transmission. Today, I am joined by Merlin Hyman, who is the CEO of Regen.

This is going to be a fantastic conversation, but also forms parts of a small mini series that we're looking to do as the Labour government has come into the UK and is looking to enact lots of changes that will hit all across the spectrum, but effectively, we'll try and bring our energy policy as close to where we needed to be for low carbon power ASAP. So without much further ado, Merlin, welcome to Transmission.

Thank you very much. Good afternoon. Good to be here.

Very good. And so just to get us started, I wanted to do a little bit on Regen and also on kind of the context for Regen as well. So could you just talk us through how did Regen start, how many people are there now, and as a as a kind of as a as a company, like, what are you trying to achieve?

Okay. Yep. Delighted to do that. So Regen was actually created over twenty years ago now, and its original incarnation was as the kind of energy agency for the southwest of England. Okay. So it was based on the kind of concept that there's something in this renewables thing, and there might be some jobs in it as well and the funding was kind of just to set up an independent body, but funded by the public sector to try and make good things happen in in renewables. And in that world, it did everything from supporting sort of early stage solar installers to helping create Wavehub off the coast of Cornwall to test out wave devices.

So that was the history, then the the whole kind of regional structure which funded it was shut down.

And we, I guess, looked at Reden at that time and said, we think we've really got something here. We've been working with the industry quite closely for a number of years, and we've got a lot of knowledge, expertise, contacts, kind of relationships.

And we think we can build this into from a kind of regional energy support agency into a kind of national body that's leading thinking on the energy transition.

So that's what we, evolved Reden into. So it is its mission is to accelerate the transition to net zero power. It's not for profit. It's independent, and it's very kind of whole system transformation Okay. Focused.

And from a battery storage side, many of our listeners will know the ESN. Yeah. So could you give us a quick overview of ESN?

Yeah. So Regen in its kind of mission has always had a membership. In fact, we are owned by our members who are kind of people who are working in the energy system transformation space. And a few years ago, the electricity storage network came to Regen and said we need a home.

We're an independent, organization. We're struggling, essentially, to make that work and and asks us to take on management of the ESN. So ESN members are formally members of Regen as well. They are full sort of voting members in in our in our AGM.

But ESN, we we does sort of have its own brand, and it may well take its own positions reflecting its membership, which are perhaps slightly different to Regen as an independent think tank might might sometimes take.

But the broad goal within both entities is very much around policy and the enablement of low carbon power systems.

Exactly. It's that trans it's the, you know, transition we all talk so much about. It's how do we accelerate, enable this transformation of our of our energy system from where it has been, you know, to the sort of net zero low carbon system of the future? What are the barriers to that? How do we overcome them? You know, what are the opportunities? And and how can Regen and ESN, you know, in our role, sort of address some of those barriers and help accelerate that transformation.

And and kind of before we get into a load of problems, which is kind of a list of questions which are mostly based around, you know, things that we need to fix. Yeah. I think maybe just put a positive spin on it. If you were to kind of step back now and say, oh, actually, having been in in kind of in the business for twenty years looking back on this, we always hear about, like, a renewal penetration of maybe five percent was possible, maybe ten percent was possible. We now certainly see that actually what's happened over the last twenty years and we look at kind of where the sector is right now. I feel broadly very positive about our ability, not maybe not to deliver something by twenty thirty in terms of a a total zero carbon system, but in terms of like actually the the pathway to delivering this, the tech that we have now at at our kind of fingertips is almost far beyond what we could have imagined ten years ago. Is that?

I mean, I'm I'm thinking back to, you know, starting sort of fifteen years ago at Regen, and and I remember with a talking with a colleague about the kind of pick up of take up of renewables and looking at what was really quite a slow development, you know, and thinking, you know, is this and we're you know, and I remember him saying, you know, I'm pretty disappointed what we've achieved in the last five years. And I said, well, I I think, you know, we are laying the foundations here, and what you may well see, we hope, is a kinda hockey stick graph and that first doubling and the next doubling is in, you know, is important because, you you know, once you start to get that momentum, then that's when things take off.

You know? And as a broad statement, I would say that, you know, in terms of the future energy system in the UK and internationally, it's you know, in the longer term, it's game over. I think a high renewable system with a lot of flexibility, a lot of storage is where the UK will end, and and it's where most of the world, I think, will will end. The question is pace, you know, both from a UK point of view as to jobs, economic opportunities, and also from a a climate point of view.

You know, we we we don't have time. So and that's why those those problems you're talking about, you know, the challenges probably wouldn't if we had long enough, this would just happen fairly not naturally now, I think, the tech but we don't have long. We need to accelerate, and that's why there's so you know, it's challenging and and hard because we're trying to do this at pace.

Yeah. No. I think that's a that's a really nice summary. And then, obviously, with the context of that sort of positive place in terms of where we are right now, maybe coming on to the the problems and the and the challenges that we've got. So Regen recently published the Accelerating Clean British Power report. Could you could you kind of run run us through a few of the highlights of that and the kind of the key recommendations that that was making?

Yeah. So got a new government coming in with a, you know, clean power mission, you know, one of five core missions and, you know, talks about being a mission driven government. So, you know, you wanna be optimistic and positive. I mean, you know, for all of us, the idea that we have a new government with us as one of its five missions in life, you know, it's hard to get much better than that. That's, you know, there's a mission board chaired by Keir Starmer just on us, you know, fantastic.

But this is hard challenging, stuff. So what, you know, what are the real priorities? What's gonna shift the dial and try and make this stuff happen faster? You know, we know there's loads of stuff stuck in the grid.

We know planning can be difficult. You know, we know that the balancing mechanism, you know, when our storage assets aren't always being called off. You know, what what what are the things that really gonna make a difference? And I guess our pitch overall is number one is we do need a bit more a plan.

You know, we can't we need to know what the power system that we're looking for is gonna look like broadly. What are we working towards? And we then need to start aligning the remits of the key institutions, so Ofgem and NISO, with that plan.

And we then need to get stuck into issues like grid connections, planning reform, markets with a really clear idea of what what's the thing we're trying to achieve and therefore the forms that are needed in in these in in these mechanisms to deliver that. And, you know, we can talk a bit more about some of the details of those. But that's the kind of overall thinking there.

And I think we definitely should take a couple of the points out of that report because I think they are that that is really important. And I think it kind of talks to a little bit of what you're saying earlier, which is, actually, we've started to get a bit more certainty about some of these solutions. We now know that some of them aren't so much maybes. We know their noes.

Yeah. And we can definitely kind of come on to that in a second. But I did promise I would call you out on any kind of acronym and that people might not be able to follow. Ofgem, I hope people know.

Yeah. But NISO, do you wanna give it just a little bit of context as to what as as to what NISO is?

Yeah. So I think that's just moving into the stage where people will know that the non National Energy System operator, strictly speaking, it doesn't exist yet. It's it's still part of National Grid, and it's the electricity system operator.

But we have the act of parliament, and we have you know, it's a sort of the new government just needs to sort of get the mechanics over the line to change it from a private sector entity part of National Grid into a public sector strategic body governing the the energy system.

And the the goal of NESO in terms of why the change has been made and why it's been set up?

Yeah. I think, firstly, it's whole system thinking. And secondly, you know, in a time of when maybe when you're just running a fairly steady state system, you could argue that a sort of privatized body is very efficient. You know, it should be efficient, you know, and it's that's sort of part of the thinking of privatization.

But when you're trying to transform the power system and it's so critical to the UK's strategic economic, social, environmental goals, I think people recognize that that that has to be a public sector body that's governing that. You know, is is it it's overseeing that, and it doesn't have any vested interests anymore. You know, everyone knows it's entirely it's there for the public good, and it can think about the whole energy system, not just the the the electricity system. You know, this was an example of Tory, nationalization, which perhaps little known example, but but an important one.

Yeah. No. I I I totally agree. I I kind of I maybe incorrectly assume that Nissan will have a kind of, a network's lean in it just because of where it has come from. But I think that is probably incorrect in terms of its mandate that it should look for kind of all solutions.

I I think, you know, these things I I remember going to see, Finton, the chief chief exec, not sort of the six months, a year ago, maybe, mate. And it it was pretty clear that it would already made a pretty big switch away from National Grid. It was already running pretty separately. It was in pretty different offices and and the like. So I think a lot of that transition is in so let's put it this way. In the minds of the people that work with it, I think the transition's already happened.

Mhmm. Okay. So then talking about some of the the recommendations within Accelerating Clean British Power, there were, I think, sixteen.

It was yeah. Okay.

Can I go through all of them?

No. Can I go through all of them? Absolutely not. What I did was I wrote I kind of, I went through and I wrote down some things that I liked and some things I didn't like. Yep. Yep. Hydrogen for heating.

The position you have on that which is I think very clear and very precise around where we now sit and what the reports now say and where they should go. From regen, that's a clear no.

See that kind of we should see that come through in terms of decisions that are being made. Connection reform, first ready, first served. Mhmm. That to me feels like a a a great step forward, and lots of people are waiting for that. The devil will be in the detail, I'm sure. Talk to me about the buy it now for for for wind.

So I think that we've seen, just as we came on air, the announcements of the, of the latest auction round, auction round six for for contracts for difference.

And I as I understand, they've increased the budget from one billion to one point five billion, and we won't get into the details exactly what those budget means. But they're they're sort of a future. What would the what would these these assets cost the the government if you if you guess what the future price of power will be once they're actually built and and running. They may actually not cost anything.

They may pay back if if electricity bills are higher, remember it. But if you look at what that current that or Tramram supports, I think people are talking about and and I haven't looked at the details, but something like maybe six gigawatts of offshore wind. And we need, what, I don't know, twenty five plus to meet the government's targets by twenty thirty. So so it's a kind of so the current mechanism is not going to get us to the twenty thirty target at that kind of scale.

So they're going to have to do something different if they want the scale of renewables that you you we need and scale offshore wind that that we need. And the the kind of what this process works by annual auctions, It's a bit of it's very competitive, which drives good value for money, but it does it is a bit of a hunger game kind of, you know, process. It's a very you know, is a survival of the fittest. It's a long process for the people bidding.

There's a lot of risk and challenge in in that process.

And I just wonder if at the moment, it's really just putting out there. Is there a logic that says, if this is a national priority twenty thirty, you know, we really wanna get this stuff built. We know we've done the price discovery through the auctions this time, so we know what the price is in the competitive process. So we got value we know what value for money for the consumer is.

You know, could you have the kind of right. You can go into the next auction, but if you can if you can do us build us projects right now by twenty thirty at a price that's maybe even lower than the the recent auction price, you know, you get the eBay buy it now price. You can you can click on that and go right now. Now there may be some problems and challenges with that.

I'm not claiming to afford it through in great detail. I'm just we're just trying to say, you know, there might be different ways to think about this. It's this massive national priority, a clean power mission.

You know, maybe we can think about this in in in some different ways.

So you're saying kind of, yes, we do the price discovery for the auctions, but if we know that the price is fifty pounds Yeah.

And we know that there are projects out there that are more or less fifty pounds Yeah.

That could also come through by two thousand and thirty Yeah. Isn't it critical enough to actually just get those to go rather than to force them to wait for another allocation round, which may have another Hunger Games element to it and not everyone might make through.

Yeah. It's it's worth asking the the question. I think so. The the you know, there there are there are some challenges in that and maybe now isn't the time for a detailed conversation of the theories of CFDs, but, yeah, I think it's worth asking a question.

And maybe from the, like, the the theory of those market processes to the real pragmatic delivery of these projects. There was a particular piece in there about about planning offices. Yeah. How much of that is driven by the conversations that you're having with people who are really trying to deliver these projects?

Yeah. All of it. So Regen runs a a planning working group, which, so it's a there's an overall Regen group, which ESN members, attend.

And then we have specific ESN groups to just to, without getting too too too detailed structures.

And we we we've had a couple of meetings in that planning working group. We got them together recently, and we also invited in some people working in local authorities and some people working in someone actually on a planning committee and talked about the practicalities of these things. And what you're seeing is a flight of talent away from the public sector, you know, underpaid, not enough planning officers, underpaid planning officers. And we put some stats in a report recently which showed the amount of public sector planning officers that have moved to the private sector recently. It was a bit scary. But, you know, this is again, it's these projects, storage, wind, solar, are now massive national priorities.

Mhmm.

And you can't on the critical path is is planning. And if you don't have, you know, highly skilled planning officers with the time to do the pro do the work, then they're not gonna get built. So, you know, that seems pretty much a a no brainer that that we need investment to get those planning officers in place quickly.

And when we talk investment, so, kind of my mind goes to sort of a little bit of how people have been brought into the teaching profession, which is or in the nursing profession, you say, come in and do this profession. We will pay you, an upfront of this amount of money, which will bring in new people into the space.

When you think that people like GB Energy exist with eight point six billion, I think your report was talking about a thousand planning officers.

We probably have the money for sort of a five thousand, ten thousands bonus to get people started into Yep.

I'm sure any planning officers listening, it'll be music to their ears. Yes. Maybe we need a retention bonus as well. And, you know, then it's not huge sums of money in the in the context that we're talking about, but it is, you know, critical. I think actually in the Labour Party manifesto, they did actually pledge some extra money for one of the very few things that got extra money pledged Yeah.

For this. But I think we when we say a thousand, we're being a bit more bullish if you think there's, what, a few hundred planning authorities in the in the country, you're talking, you know, three or four or so so each.

And I think this is this is a really, really consistent message actually from pretty much everyone who I've talked to on the the project development side is that in each of these projects, they're just there will be a stage where whether it's on the planning side or whether it's on the connection side. Yeah.

Qualified professionals that are in the that have the ability and the experience to take decisions on progressing these projects Yeah. Are so, so critical, and we just don't have enough of them.

Absolutely. And and just to I think there's a there's a sort of wrinkle in the grid reform stuff that I'm not sure everyone has has registered that's gonna drive more planning applications and that the new grid connections process will, at a certain stage, require you to get on and put in planning permission put in for planning, or else you're out the queue. You've lost you you lost your connection queue. And so we're putting in a a major, you know, codify driver for people to get into planning early next year at the time. So you're gonna see you know, you've seen a real rise in the number of projects coming into planning recently, and we're just about to you know, we know we're just about to drive a much bigger rise, so we really do need to get prepared for that.

I I suppose in some in some senses, the way that particularly the battery space is changing is that batteries have gone from being, like, a five or ten megawatt projects to all of a sudden being a hundred or two hundred to five hundred. Not a planning professional. Couldn't tell you whether that's more work or less work, but it feels like less work to do the planning around a five hundred megawatt project than fifty, ten megawatt projects.

I think that's probably true.

The bigger projects do obviously get more scrutiny. Mhmm.

I think yeah, so I think I think that that's true. I'm I mean, I think there are and I think we ought to be able to enable a range of sizes.

I'm not, I suppose, would be my only Okay.

Caveat there. I'm not sure that our strategy for the type of assets we have and where they go should be driven purely by, you know, recruiting enough planning officers. I think we're you know, the the strategy of what we need assets we need and where should become first, and we should then make sure that the the planning and infrastructure can cope with that.

Okay. And let and let's go let's talk about Labour. So they've now been in power. I think, can we now say that the grace period, have we given them enough grace to be able to say, how have they done so far? I think we're maybe still in that grace period, But what have they done so far and and sort of what what is the early stage review of that?

So I had my first, phone call with, Michael Shanks, who's the energy minister today early today, actually. And for those who haven't sort of noticed, his his portfolio was essentially everything that, I guess, those listening to this podcast will, you know, principally care about. And, you know, a lot of enthusiasm, and and I think everyone in this there's a lot of goodwill, I think, in the sector. You know, they've hit the ground running.

You know, it it I don't know. Other other word than joy to watch, and this is how sad I am to watch Ed Miliband's parliamentary statement and the subsequent debate. I think it may have been last week or the week before. I put a link on LinkedIn for those who love their parliament TV, you know, just just to hear him.

The answers he's giving to some of the people is just, you know, it it's great. We're getting rid of the ban off onshore wind straight away. Hopefully, today, reasonably positive announcements and the uplift of the contract for difference. We'd like more, but, you know so we're seeing setting up with your onshore wind task force, re reenergizing the solar task force.

I mean, some of you may notice not a lot said there about storage and flex, so I can come back back to that. But, you know, I I think we're all there's a feeling of positivity and energy amongst, you know, everyone in in the in this area at the moment. So I wouldn't wanna be, you know, I I wouldn't wanna look that gift also in the mouth. Fantastic.

Let's bring it on.

It feels like a absolute breath of fresh air, I think it's fair to say.

It it it does. You know, maybe it's the democratic process working, you know, you know, governments get tired, and new lot come in, and they're full of energy and dry putting aside the politics and and and, you know, just just that sense of breath of fresh air, as you say.

Of of progress. So you can kinda see where we're going. I suppose the other half of this question is clean power by two thousand and thirty Mhmm. Which is the manifesto pledge from Labour.

Yeah.

How realistic do you think that is?

Well, in a way, I'm not really I mean, I don't they haven't actually defined what clean power is for a start, so there's a bit of wriggle room there. They've also said they will still have some gas fired power stations as a national strategic reserve.

So you can see them getting in there. That's a kind of wriggle room early. I think they're gonna have to define it because they're gonna have this mission control the kind of, you know, sort of program management function and they're gonna be asking NISO to deliver it. So they're gonna have to tell them what it actually actually means.

But the way we would like to look at it is thinking in terms of the carbon intensity of the the power system, which is what was when Regen was set up five hundred grams per Yep. Kilowatt hour. We're about a hundred and fifty now. It goes down to what's lowest, I think, nineteen, I think.

Nineteen. Yeah.

Grams per kilowatt hour.

The record grams per kilowatt hour. You know, if we could get it down under fifty by twenty thirty, you know, such we now have electricity system which can then provide the kind of low carbon power that can then power start to power transport and heat as well, then we're really talking about energy system decarbonisation.

If it's, you know, thirty forty or thirty, twenty you know, the exact definition I'm not that fussed about. If we're down at that sort of levels and we're moving in the right direction, then personally, I think that that that's great. That's in line with our carbon budgets.

That that's that's great. If, so, you know, that's the way I see it. You know, it's a positive stretch target.

If there's a slight risk that if we took this too literally and too absolutely, you might start to do some things which weren't sensible longer term Okay.

Things to do because you're so desperate to hit some twenty, thirty objectives. So as long as they don't do that, which I think they won't, then I'm I'm relaxed. I'm feeling positive.

And by that, do you are you kind of referring to those gas plants?

Well, exactly. You you if you're just thinking about two thousand and thirty, you you, yeah, you might look at sources of flexibility that you, for example, that you could deploy very, very quickly and ways perhaps propping up, as you say, gas and trying to that maybe are not this long the the medium term, longer term sensible, solutions.

And so, yeah, you do we need to. Let's aim for two thousand and thirty, but with two thousand and thirty five and beyond in in in mind.

Yeah. I mean, just to kind of reiterate a little bit of that, the progress we've seen in terms of modular, low carbon generation from solar and wind, we see that kind of clean sweep coming of exceptionally low power prices. Mhmm. We also then have things like batteries providing a lot of flexibility at low cost.

Mhmm. That is all exceptionally exciting. Yeah. And that is part of the reason why we can see that that that sort of progress.

Mhmm. I think one thing you said there was really interesting and but I think it's worth talking about. So we have the capacity mechanism. Yep.

We have the capacity market. Sorry. Yep. And that ensures that we have suitable capacity online and pays a lot of money for certain assets to be available.

Yep. Namely things like gas fired power stations. But in there, you said something about reserve. And so I think it's interesting that when we think about gas, at the moment we have that capacity market, But in the future, as it runs less and less, potentially, we might see some of the the sort of day to day flexibility coming from wind and solar and battery storage.

That's very much how ninety, ninety five percent of the of of power is generated and and low carbon power.

But then in a short small other period, which doesn't exist yet Yeah.

Potentially a strategic reserve might come in, which is something actually floated in Rhema. But I was just interested to hear because you you mentioned it there very briefly. But do you is that a way that you think the market might move?

Yeah. I mean, I I actually, if you look at the manifesto, Labour talks about a national strategic reserve, of gas fired power stations. And, I mean, I I think just stepping back and thinking about the realities and the politics, I mean, what minister you know, you if you're the minister of energy, what do you want? You don't want to be there when the lights go off, and, you know, you really don't. And you don't wanna sort of have the treasury on your back too much. So, you know, to be there when bills go up too much.

So, you know, you've got a bunch of gas fired power stations there as a as a backup, as a strategic reserve, giving you I just can't see no one's gonna switch those off until, you know, just until they're really, really sure Mhmm.

That that there is no circumstances in which we're at risk as a country and, you know, resilience, security. I just I just can't see the politics of that. So the question then becomes, you know, how do you do that? And there are lots of different ways that you could manage that.

In our various papers, we have floated the idea of, you know, let's take these out of the of the standard market mechanisms, perhaps even the capacity mechanism and the capacity market, and have them as a you know, only to be called on under very specific system conditions, which is basically what we did with coal fired power Yes.

In the law in the last few years. That that should, I think, be the direction we're we're looking at.

And there's a potential that that might come through. I mean, in the capacity market, we've seen minima being floated, which is this concept that certain characteristics can be procured via the capacity market. And that could be a way we might get there.

I think maybe one of the really interesting things about this is that actually the UK is quite far ahead of other markets, not ahead of all markets, but certainly ahead of some. And lots of markets are looking for ways to implement the capacity markets. And maybe they were listening to this thinking, where do we go? I think it's almost like we're seeing the next we've seen the capacity market for ten years. We're now into the next stage of it, which is, okay, how do you take a capacity market through into a clean power system, keep the reserve element of your gas Yeah. But allow wind and solar and low carbon flex to dominate?

Yeah. Yeah.

Yeah. Super interesting question.

It it it is, and one one that sort of Rheem has been been grappling with, and I'm not sure there's anyone's got the, you know, you you see various suggestions and ideas, and we've put ours out in the, you know, in the various responses. But yeah. No. As you say, we're moving into that stage and let's just build some renewables, you know.

And it turns out we can get quite a long way building renewables and the system coped. But we are getting to that point where that comes back up as a, you know, as a how do we make this overall system work? And as you say, you know, think how do we design our market mechanisms to to to drive that? And I suppose coming back to Labour and, you know, that is not something they've said talked a lot about in their manifesto.

It's not there's something they've talked a lot about in their first twenty six days or whatever we are we are on. And it was something I talked to to the minister, to Michael Shanks about today, and I've written to Ed Miliband this week to say, I think, you know, we we'd like to see that same kind of strategic thinking and engagement with industry as we're seeing for onshore wind and for solar and offshore wind with the storage and flexibility sector. So and I'm I'm hope I'm hopeful that that we will see that start to develop.

I mean, we are in a needs must situation. So right now, we have London in a heatwave. I can see Izzy, our producer, fanning one of our cameras to to keep it keep it operational. So this this couldn't be this couldn't be more critical. Yeah. So I wanted to touch on two two more elements of both Rhema publications, but also one of the views within that. So just you mentioned Rhema, so the review of the electricity market arrangements, essentially the the the the biggest change to electricity markets since electricity market reform.

And one part of that, and I think probably the most discussed part is this kind of, nodal, zonal, or national pricing. Yeah. And Regen, very much in this report, talks around the desire to go to a or to stay with a national price and be progressive. Yeah. The nodal price is off the table, but the zonal very much seems like there are some people who are very much wedded to it, and it doesn't seem like the market's decided. So where where do you see that going?

Well, firstly, I don't think it'll happen, putting aside rights and rights and wrongs. I think it's if you're gonna go in, there there is no settled view across the industry and stakeholders.

And the evidence base, while it's strongly promoted by some of its opponents, if you look at, you know, you look at it in a dispassionately and you you you look at the academic reviews of the evidence based behind which, you know, which is the best market arrangement for this new high renewables, high flexibility system, then there there isn't, you know, there is no consensus. And I think launching what will inevitably be a very long, complicated process. I mean, I remember sitting through electricity market reform. It was about eight years.

And I think there was one guy that sent out all the consultations, and I think when he came when Chris or someone like that at DEC at the time and I think on the about the eightieth consultation, I just sort of wrote back, you know, I surrender.

Yeah.

So do do do do do whatever you like comes up.

Like. I've I've had it. Yeah. So I've been through that process. It's a you know, and a major restructuring in the market is a is a big, complicated, long process.

So firstly, I don't think it'll happen.

When when you say it, sorry, you mean zonal? So do you mean Rhema as a whole?

No. Zonal. Zonal. Okay. Zonal or, you know, and there there is no market design at the moment of zonal. There is no number of zones, central dispatch, self dispatch. There's no, like, I there is no alternative on worked out on the table that we can properly assess.

And, certainly, I don't, you know Reidad's position is we shouldn't go down that that road, and I don't think it's credible really to say we have a, you know, clean power mission by two thousand and thirty, but we're gonna spend those five years rethinking our market structures. I mean, I can't see how you can do that and expect investors not to go, well, great. Thanks. Yeah.

You know, we'll we'll we'll focus elsewhere for a while and, you know, do let us know, Britain, once you've sorted you sorted it out.

I think it was one of our associates, Gareth Miller, used to run Cornwall Insight who who who did a blog suggest describing this a bit like, you know, you're in a Formula One race, you're dicing at the front, you're called in to oil change and and change the tires, and and someone says, oh, actually, we're gonna rebuild the car. Yeah.

And you think, well, we're probably not gonna win that Yeah.

Race, are you? So I think just fundamentally that the concept of a radical change like that at the moment is is, you know, there's too much disruption.

And then finally, I just well, that I don't think the case when we it is proven that you can't achieve the same benefits through reform of our existing wholesale self dispatch market structures.

And I think, you know, I think we need to lean into the kind of future, the kind of stuff that people listening to this are very much involved in of smart digital, you know, algorithms, big data to optimize the system. Yeah. You know? And so think about how do we really make this market and system work much more effectively rather than trying to restructure the plumbing of the whole Yeah. The whole system that, you know, that that's not where we need to be at at the moment.

So you rejoined us after some cameras overheating, and we were just talking about Rima and national pricing versus zonal pricing.

Mhmm.

And you're making a very good argument for why we need national and essentially around just the speed at which we need to carry out those actions. And I think there is still still some discussion on zonal because we do still see big parties in the GB market. There's not that many of them, but they are still vocal around supporting zonal, and I personally see there being some merits to a zonal system. And I think it's quite interesting just to just to talk through that. And maybe one example we might take is, just talking about, the way that that mark that market is working at the moment. So in a national market with a locational true up in the balancing mechanism, You could have one dispatch being implied by a national price, and then you have a zonal or locational signal then having to come through another process, be it the balancing mechanism.

And I could see how in some ways that zonal system might be more straightforward and more easy to understand than having a system that relies on national price with a with a balancing mechanism correction, so to speak.

Yeah. And so there you know, one question is how how much and what do you try and put in the wholesale market? And how much do you use other market signals and other signals, you know? And you can see the sort of theoretical attraction of, you know, one price that tells the perfect the perfect story. How achievable that is in practice, I think, is is the kind of question as we get into the more theoretical debate, or whether there are ways of sending locational signals through, you know, our strategic spatial energy plan, our grid charging regimes, etcetera, which achieve the same effect for much less, you know, and perhaps a bit more directly and easily than trying to get the sort of perfect wholesale market.

But in a way, this is an interesting theoretical argument to me, but you we have, you know, if having been through major market reform before, it is a complicated long, you know, long time process. It'll take a huge amount of effort. And so I think we have to have if we're gonna go down that, we have to have a really strong, you know, benefits case that basically has broad agreement about the industry about. And I just don't think we're there.

I think that the benefit benefits case is highly debated, and you can look at our progressive market reform paper, all hundred and twenty page of it, for how we argue that other I'm sure you've enjoyed reading every word of that, and that how we argue that other mechanisms, other progressive reform agendas within the exist the national wholesale market can achieve the same effects perhaps more effectively in a more targeted way. And lots of others have people making the same the similar case. So so, you know, we have to have you know, I think the proponents of this kind of change, the burden of proof is on them to, to show that this is you know, the benefits are sufficiently great that we should really stop and rebuild the whole market just at the time, just at the time, we are trying to get the biggest investment in generation and flex and storage this country has ever probably ever seen.

And just at that moment, we're gonna stop and rethink the whole market structure when, you know, our argument would be that there are other mechanisms for for achieving that, which taken together are pretty radical market reform agenda, but don't involve kind of redoing the whole, you know, structure of of of of the market.

So it's it's you're kinda saying that if, yes, we'd kind of need almost almost unanimous support to to make that to make that change considering how long it's going to.

And so if the market was sat, say, fifty two, forty eight Yeah.

It's probably something that we shouldn't we shouldn't progress.

It it's this is at the from this is where so this is this is Regen point of view. I think electricity storage network and the storage industry as we see a a kind of mixed feelings, I know as you're kind of articulating there. There are some people that are concerned that anything that delays the renewables investment will affect the business, you know, the the drive in the business case for storage, and there are others that see the arbitrage opportunities and and the like. And ESN has has reflected that.

But I think what you see pretty unanimous amongst the market out there is they don't want to go back to central dispatch. They want and as far as I'm aware, the designs that we've seen so far from moving to no laws, no norm mechanisms, pretty much predicated on the idea of a shifting to a, you know, twenty four hour, you know, all powerful central algorithm for dispatch in in the future. So we haven't seen a kind of a a zone of market design with self dispatch out out out there, you know, yet. Okay.

So I think that's an another thing that we all we need to consider.

Maybe one kind of final piece to pick out from Regent's work is is just on the long duration energy storage. Obviously, we've seen consultations out there talking about cap and floor. Where where did you land on this?

So I think that the critical thing here is that the, you know, the public good, you know, in terms of the bringing in a mechanism that provides value to encourage various technologies to come forward should reflect what is the system need and should send a really clear signal to market.

What duration of storage do we need of what sort of sorts? And then let the market respond in a technology agnostic, fashion. And I so that that was our sort of core message is I think we need a clear message for, you know, this the ESO or Nissan or, you know, system operator to be able to say, you know, in this system of the future, this is the this is the missing kind of bit of a long duration storage flex that that we need in the system. You know, that that, you know, we value that at this amount, and whoever can come forward and provide that service, you know, that that's what we'll value. And and I've I I think that was the bit we felt the consultation didn't perhaps quite kinda nail it. Got a little bit it didn't seem technology agnostic.

It seemed and it seemed, not to be not entirely clear on exactly what the system needed was trying to address And was.

And perhaps to a point borrowed from an earlier argument, if you are looking for price discovery, you're looking for the cheapest way to do this for consumers, run the process, see what comes in.

Exactly. I think it's a good you know, it's not always possible, but I think it's a good policy principle where possible for policy makers to say, you know, this is the the need of the system. This is the public good that we are seeking to get through this market intervention, and then let the market respond in the in the inappropriate in in the most efficient and and commercially effective way. So, you know, I I I hope they'll bring that thinking into the long duration storage constant a capital four mechanism.

I hope so. I hope so. And moving on to two final questions. First one is, is there anything that you would like to plug?

So it'd be remiss of me not to plug the electricity the electricity storage network. I think we're now at a hundred just about a hundred members. So that's grown very rapidly in the last few years. It's a strong and vibrant network of pretty much well, hesitate to say to your audience that all the key players are in it in case there are any of your audience who uncountably lost the membership form down the back of the sofa. But, you know, seriously, if we want to shape policy, you know, it's important that the sector gets together and has mechanisms to articulate its voice in a grown up, you know, way, that's the way that Regeneration will always work in a you know, where we we're we're trying to drive value for the, you know, for the for the energy system and the con and consumer rather than just sort of shout, you know, rah rah, technology.

But, so that that's that's the ESN. I hope I hope people will get involved. And ESN has a conference in the autumn, so, where we'll be talking about many of the issues we've talked about today. I'm I'm sure it's annual conference, and it'd be great to see as many of your listeners there as possible.

Very good. Very good. And your controlling view, so something that you believe that a large chunk of the market doesn't.

So I've always taken the view that the scale of change of the energy transition, is something that can't happen without bringing people along with us. And that's probably not a contrarian view. I think that might be a given, but I think it's something we need to take very seriously. We saw it with sort of onshore wind when enough people got upset and they complained to their MPs and then we kind of, banned it. And many years ago, I was involved in the development of a concept of shared ownership, which was a requirement for large scale energy generation assets, and you you possibly could argue that it was around storage as well, to make an offer to the local community of a share in the ownership of those of those assets.

In fact, Ed Davey took, legislative powers to do that. There was a shared ownership task force I sat on, and then it kind of got lost in the political changes back in twenty fifteen.

And I think that would have been, you know, a a tremendous thing for direction for the industry to go down, to to have an industry where all of your assets, you know, the the thing you're trying to do, the communities across the country have an actual involvement and stake in that process, I think would be transformational for the kind of politics of that and for bringing engaging communities and people across in in this transition. So, I'd, you know, I'd still love us to see see us go back to that kind of thinking of how do we really give people a stake in this transition. And I think there are mechanisms and ways of doing it, and I guess that's contrarian because people trying to develop these assets probably won't want something like that, you know, the complexity of that, like a hole in the head sometimes.

And I I can see, you know, might be challenging, but it that it's been done, and I think we could find mechanisms that would work smoothly and and be transformational for for the energy system transformation.

Very good. Very good. I do know that a lot of battery storage sites that that are operational today do have those community funds that kind of work alongside them, but it'd be nice to own a portion of it. You know? Some people see a a win site and think, oh, I I personally love it.

Some people maybe look at it and don't like it, but everyone likes money in their pocket.

Well, it's a different thing, isn't it? If you if you have a stake in it in an asset as a community, and I think it would be done, you know, as a community Mhmm. Own owning a stake with with value going to lots of people in that in that community, not just the those able to invest. So I think there are ways of doing this. I think I think that it's a different thing.

And if then when the government comes in, you know, maybe in the future, they wanna ban something and, you know, people communities across the country are motivated to say, hang on.

No. I No. I I like this.

I like this. I own some of this. You're you know, that's my my my thing. So, yeah, that that's the I think the the industry, you know, would benefit from taking really seriously the importance of working fully, engaging with working with communities.

Okay.

Brilliant. Thank you, Merlin. Thank you very much for coming on Transmission. It's been a fantastic conversation and really looking forward to seeing those next, we had twenty six days, quick Yeah.

Some math. Seventy four days left. Yeah. So very excited to see what those seventy four days bring.

Yeah. It should be an interesting time.

Thank you for listening to Transmission, a MODO Energy podcast. Transmission delivers conversations from industry leaders and experts exploring energy markets and the operations and technologies related to grid scale battery energy storage. Check out our other episodes by searching Transmission wherever you get your podcasts.

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