What‭ the energy transition looks like from inside the grid‬

Intro

Rebecca

Hey, Joe.

Joe

Hey, Rebecca.

Rebecca

So Joe, this has been a pretty interesting summer for British and European power. You probably know more about this since you’re living in the UK, but I just learned over the weekend that not only has Europe been grappling withsometimes record-breaking heat this summer,it’s also the first time in history thatsolar power has been the biggest source of electricity. Usually the number one source of supply is nuclear, which I actually wasn’t aware of.

Joe

I am also surprised by that. I guess I knew Germany shut down all their nuclear plants post Fukushima. But then France has a lot. And the UK is starting to emerge from its nuclear slumber as well, so I suppose it’s not actually that surprising.

Rebecca

I also want to mention one more interesting fact I learned over the weekend, which is that coal was down 8% in the EU from last year, meaning it now represents the lowest percentage of energy generation on record.

Joe

Wow.

Rebecca

Yeah. So, all of this is obviously very interesting and exciting, and it makes it the perfect time to share a conversation you and I had with Steven Holliday, the former CEO of National Grid, which is the British utility company.

Joe

Yeah, it was a fascinating and wide-ranging conversation with someone who has really been at the forefront of running a grid and seeing it transform over the past few years. And he had some great insights into what it will take to transition our global power grids to run fully on renewables.

Rebecca

In the conversation, you’ll hear us cover the concept of baseload power and how utilities should be prioritizing where power comes from, we also talked about the role nuclear, including small modular reactors, can and should play in the future of energy

composition, the importance of demand response, and why people should actually want power companies to control their washing machines.

Joe

As long as they don’t mess with my Xbox, I’m happy. We also discussed VPPs, the double-edged sword of AI when it comes to the future of the power grid, and a bunch of other things.

Rebecca

We hope you enjoy the conversation. And now, we bring you, Steve Holliday...

Interview

Rebecca

Steve Holliday. Welcome to the show.

Steve

Delighted to be here.

Rebecca

So, you oversaw the UK's national power grid for almost a decade between the years 2007 and 2016. Under your leadership, the National Grid went through a significant transformation. There was a period of rising renewable energy, changing energy markets. One of the things that you're still known for from that period is this idea that baseload power is an outdated concept. Can you explain what baseload power is, and why you think it's an outdated concept?

A new way to conceive baseload power

Steve

Well, it's funny how something that you say in an interview comes back and bites you many, many times in the future, which is what happened here. When you are running the control center in the UK and thinking about how you're going to meet supply, the first piece of the stack was always nuclear. That was the baseload power. And the last piece of the stack was often very flexible, gas-fired power generation, and above that, actually hydro, which is hugely flexible. That's the old system as you built it up.

I made a comment in an interview as solar was coming onto the system, that thinking about nuclear as baseload was flawed because solar power is free. So, if you were thinking about building up an energy system from the bottom up, what's the stuff that you never want to switch off? Which was exactly the case in nuclear, you don’t play around or switch it off, it's solar. So, the new baseload was solar.

I remember actually saying that, and then getting a phone call from Van Sant de Rivas, who was a good friend, who was running EDF at the time, who was outraged that I was demeaning nuclear power. And I said, I wasn't going to do that! What I was saying was that the old way of thinking about the way the baseload is is a different way of stacking it. We should be stacking it from what's free, first and foremost, that we should not switch it off, and thinking about it that way.

That's in many ways the way the grid is run today. We obviously have a lot less nuclear power in the UK than we had back in those days. But also, we don't want to switch off our solar, and we can come and talk about that because that is a world that we're almost in today. Whereas the National Energy System Operator is no longer part of National Grid, and is looking at how to balance the load in the UK this summer. It is concerned about the amount of solar that's now on the system. And actually, it might have to switch some of the solar off because you have to have generation coming into the transmission system just to maintain the frequency, and there's so much solar embedded in the UK now that's not connected to the transmission system. It's all local.

It shows up as negative demand, essentially, and you end up having to shut an awful lot of the big power stations down. So there are some interesting discussions going on about whether there’s a tipping point of having too much solar on a day where there's not enough power demand, which might require us to switch a bit of that solar off for the first time.

Rebecca

And there's not enough pumped hydro capacity to absorb that excess at the moment?

Steve

It's interesting for people who don't sit in the control room. All of the solar in Great Britain is connected to the distribution system. It's local, and it shows up when you're looking at the transmission system as negative demand. You don't have any demand in Devon and Cornwall. All of a sudden, it looks like there’s hardly any demand down there. But of course, there's lots of demand. It's just that it’s all been fed from solar. So, it shows up as negative demand.

Rebecca

And forgive me if this is an overly simple question, but you were talking about previously, the way the system was set up was having nuclear at the bottom of the stack, because you don't want to turn it off. It's very complicated to turn off a nuclear reactor. And then, previously at the top, you would have something like a peaker plant that can be spun up or spun down very rapidly, depending on the demand. And so with this shift to solar, I guess the piece that I'm missing is, doesn't it turn off for roughly 12 hours a day, every day?

Steve

You're absolutely right. Of course, we don't get solar for 24 hours a day. We get it for 12 or 15 at best. I was using the baseload to try and make a point about the way we were stacking it was to do these physical capabilities. And in the future, as we start to think about how we should stack it, we should actually stack solar because it’s free, quite clearly. It doesn't change the physical reality that you can't wind up or wind down a nuclear power plant. So that's still going to be how they're operating.

You can also stack things in terms of carbon. I want all my low-carbon first and foremost right now. So, any carbon-intensive generation I want to use to the absolute minimum, and by and large, that's pretty much what's happening today. So our gas plants are the last things on the system. But there's a combination of the physical reality and the economic reality.

Rebecca

So what you're talking about is a system that is going to prioritize buying power from solar or wind, whatever is available, and then the last piece, whatever is needed, would come from something like a traditional combined cycle plant. A stacking of prioritization in terms of purchasing power. Is that what you mean?

Steve

Yeah. And that's the way the system works. It picks the cheapest source of power. So nuclear can bid into the system on a daily basis at zero. So you bid the nuclear in at zero, and it’s going to set the system price. That way, you don't have the inflexibility

issue there, because the solar is just spinning into the system, as is the wind, and that's going to continue to be the case. But this is where batteries then come in and demand side management.

So the way the system is being managed today, the way it will be increasingly managed, is something that we've talked about for well over 10 years now, which is the flexibility of demand. And you can read about it all the time, about the opportunity for people to charge their cars when power is free.

So there’s a huge amount of wind, often at two o'clock in the morning, because there’s an extraordinarily low power demand, quite obviously. So how do we just make sure that we’re doing all the charging for people who are charging their car at home in that sense, at that time? How do we make sure that we’re using our devices, washing machines, and dish washing, etc., when that surplus power is available? There's a lot of technology today that's available that we're still not using. So that's a big piece of the next five or six years, in particular, I think, of getting a huge amount of flexibility on demand. Then the other piece is storage.

The future of nuclear

Joe

I actually saw a headline today in Bloomberg about how, particularly in France, where they have massive nuclear capacity, they too have too much solar, and in the UK, the UK Government seems very keen on renewing our kind of nuclear ambitions, both large reactors and small modular reactors. So do you think that that's a wise course of action?Do you think nuclear renewal is the way to go, given how cheap solar is?

Steve

Yes, I do, and let me answer your question by going off at a slight tangent, if I may. All of the things I often said, and I continue to say today, is that we're calling this the energy transition, which is exactly what it is. But transition kind of implies smooth order. It’s an energy revolution actually. Our job is to try and make it feel more like a transition. So try and plan things, in a sense. But to me, it was always likely that as we go from the old fossil fuel system to a renewable system, a system that's more linked into demand, demand is more flexible.

That roadway is going to be bumpy, and the circumstances that France has seen, circumstances I'm describing here, are bumps along the road. But the reason why we still need a nuclear renewal, Joe, is because we're looking at a peak demand on the transmission system. Today, it's designed for about 80 gigawatts, 80,000 megawatts.

When you fast forward the clock to 2035, and beyond, and you look at the electrification of transportation and electrification of heat in this country, that system is 120 gigawatts.

So we need more electricity generation. These are some of the bumps along the way, but we're going to need lots more power generation. And nuclear is a zero-carbon source, and I'm very enthusiastic about two forms of nuclear. One is the small modular reactors. That's a great opportunity for the UK to rebuild in places where you couldn't put a huge nuclear power station. And then the really exciting piece, which is further down the road, is fusion, which I often commented I wouldn't see in my lifetime. That still might be true. But yeah, if plans are fulfilled, we'll have a pilot plant running in West Berton in England by 2040, and that's an amazing source for the future.

VPPs

Joe

You said that there are lots of technologies that we could be using today to influence demand that we're not using at the moment. Could you expand on that?

Steve

Yeah. We are not as flexible on demand today as we could be, which is the point I'm making. There's a lot of technology that's available, so it's not a matter of inventing something. Why aren't we using it? Well, so it’s partly because the market designs systems that aren't available today, but they’re all coming down the track pretty quickly. And one of the things that I’m always keen for people to understand, therefore, is that once everything is available, how can we get consumers to behave that way pretty quickly, because that is such an enormous economic opportunity.

The flexibility of demand is much greater than anyone would ever imagine. Just to try to give an indication, the data might be slightly out of date now. But refrigeration in supermarkets consumes about four percent of the power in the UK. Now, often we have a margin of four percent flexibility. Well, you can just switch off all the refrigerators for half an hour. The food is not gonna go off at that stage, and then back on again, four percent off the system. So there are some big industrial consumption flexibility opportunities.

But when you get into the household, there's also an enormous amount. So there is a need for us to build enormous amounts of storage, enormous amounts of surplus generation to plan for these moments when there's an extraordinary peak in demand, which is the way the system all over the world has been set up.

Systems in every country are built a bit differently, but they're all designed to meet the highest power demand we can imagine getting on one day every 10 years or 20 years. And let's build a system to actually fulfill that. You sit back and think, “That’s crazy.” What other part of the world works like that? And it doesn't need to in the future. The more we electrify heat and transportation, we're just adding layer upon layer of flexibility opportunity.

Rebecca

So we're starting to get into the territory of terms like virtual power plants. And I want to dig into more specifically defining those terms, but before we do that, I just want to ask you, when I talk to people who study energy markets, at least in the US, one of the concerns they've brought up, or two of the concerns I guess, that they've brought up, are one that the cost of developing the software to do this distributed control of a lot of different demand assets, but also, distributed energy resources, is very high, and so that's one of the things that is standing in the way of developing something like a true virtual power plant.

And then the other is that, and probably this is more true on the side of smaller consumers, like a household, that the economic incentives for them are not sufficient yet to incentivize them to invest in a smart thermostat and allow the power company to have a control system that can operate it. Maybe it's that there's more incentive for something like a big grocery store that has a lot of demand. But what is your response to concerns like that, that the economic incentive on the side of the consumer is not there yet?

Steve

Well, that's a deep subject, actually. Just go back to your first point about software. I've never heard that. And as we get into the world of AI and how much software can be developed artificially, now that just doesn't make sense to me a bit. But coming on to your point, you've accurately portrayed the situation. It's different in different countries, and it's different in different regions for all sorts of reasons, and the frustrating thing, to an extent, is that some of the technology and the software exist today. So there are some market structures that are stopping that, and there's some consumer awareness.

On the industrial side, it's really interesting. I know some businesses in the UK that provide hardware for controlling heating and ventilation systems, essentially, that are then linked back into the market, and they'll sell the hardware into big hospitals, big hotels, big university complexes, and install the hardware for them. They'll control the systems, and they'll share the benefits. So, say we're going to peak shave your demand. You are going to be essentially a power plant, because you're putting power back into the system by shaving it down for half an hour and everything else. And they’ve got a tremendous job on selling that. And they’re having to hard sell this all the time.

Rebecca

And hospitals are finding that the amount that I am saving if I allow you to, you know, clip my demand at a certain time is enough, I'm getting enough savings on my power bill to make it worth it.

Steve

It is. But as I'm saying, it's quite a hard sell. I think, as I hear from some of these people who started these businesses up, it's partly just not high on these businesses’ agendas. Okay, you can do all this stuff, and you're going to save me a bit on the power. It's just a long way down the list of things that they're interested in doing.

People who’ve got slightly more ESG credentials are really determined to make a difference and help here. But it's extraordinary, and it appears to me how hard that is to do. If you then turn to domestic consumers, there have been a lot of pilots, and in National Grid, back in my day, we ran a series of pilots in Massachusetts and New York looking at putting technology into homes, four tiers of technology, the ultimate being that one will control your washing machine, your dishwasher automatically, turn your refrigerator and your freezer down a bit, etc. Here's what we're going to do.

And we wanted a certain number of homes to try the simple tech, tech two, tech three, and tech four, etc. One of the most interesting social pieces of information that came back was that consumers didn't want tech four. This all-singing, all-dancing, super sexy technology that I naively assume, “Wow, someone's gonna knock on my door so I can get all this stuff for free as part of a pilot? I'm gonna jump at this, aren't I?” People didn't want it.

Rebecca

Do you know why?

Steve

Big brother.

Rebecca

Oh.

Steve

Absolutely, they did not want the utility knowing what was going on in their home, and just be able to plot their power demand all the time and control things. So we ended up, in order to get the information back from the pilot, having to then pay people extra as well to take this technology. I’ve never forgotten that, and actually, I never piloted in the UK. It's been a similar story to a certain extent. It's, “Oh, so you can actually monitor exactly how much power I'm consuming every hour of every minute of every day? I'm not sure I really want that invasiveness.” So I think there are still some social issues that we have to overcome that aren’t just pure economics.

Joe

When you connect all that stuff up to the internet, basically, obviously, you get tremendous efficiency benefits, but doesn't it also leave the whole system much more vulnerable to digital malfunction or even digital attack?

Steve

Cyber is an issue here that is constantly being thought about on a global basis by businesses and by governments. There's a huge amount of work done both in the US and the UK. There are already cyberattacks on our energy systems all the time. People are getting in control of things. Unfortunately, it's a fact of the world in which we live.

And you’re right, Joe. So, the more you get into the households, where do you put the layers? Where do you put the firewalls in place so that the system isn't threatened, even if the individual household is more threatened? Of course, our grid systems are incredibly secure. Everybody's trying to penetrate the IT systems at a simple level all the time. There are people who try and hack their way in.

There are four layers to get through, and no one's ever gotten through an energy system thus far. But, you know, it's a concern the world over in the sophistication of people to infiltrate through extraordinarily strong security and then put something in a system that ultimately will cause it to shut down. As a piece of essential infrastructure, energy systems and other systems as well, are constantly having to invest in keeping up with the latest threats that are there and putting in place more and more protection systems.

Rebecca

So let's, let's take a step back for a second, because again, I feel like we've talked a little bit around elements of what people mean when they talk about a virtual power plant. But can you just give your quick pitch for what a virtual power plant is to someone who doesn't necessarily think about these things?

Steve

Well, it is everything that we've been talking about. So the combination of distributed generation and management of demand means that you can actually create a power plant that’s a virtual power plant. I'm reducing my demand, so I'm putting power into the system, and you link that up at a local level, then you end up with an ability to act like a power plant, which is already happening today, in a sense.

Let's talk about the amount of data we've got in the system to help us optimize that. And let's think about how we have flexibility on demand. Those things create this virtual world in which, of course, we've not talked about AI. We have the opportunity to have extraordinary intelligence help us optimize on a microsecond-by-microsecond system.

Joe

Yeah, we need to talk about AI. There has been a lot of talk about the AI energy nexus, as it's been called, and data centers seem set to put basically great strain on the grid, but, as you say, on the other hand, AI has the potential to really help optimize all of these distributed generators. What's your take on the potential strain that AI could have, or the potential benefits?

Steve

Well, it is both, as you rightly say. So AI is already having benefits, for sure. Thinking about digital twins, as you design systems, the ability to have extraordinary insights is alive today. This whole distributed and balancing of the load, AI has an enormous part to play in there, quite clearly as well. Twenty, thirty years ago, the amount of data that came back was pretty simplistic.

There are data points everywhere now. So with every transformer, you've got information across the whole system and enormous amounts of data, which, again, allows you to manage the system in a very sophisticated way in the future, assisted by AI.

The flip side of that is the demand for power as a result of AI, and some extraordinary numbers are being bandied around. I can't possibly claim to be an expert. To comment, I would just make a few observations. I think the in Europe there's a pipeline of data centers planned in Europe for 170 gigawatts. And data centers are measured in gigawatts, because that's what they are, big power consumers. Well, that's a 30% increase in the power demand in Europe. So talk about the electrification of transport and heat.

First of all, that's not all going to happen. These pipelines are always larger than what's required. I'm sitting here thinking, okay, yes, we are going to build a lot more data centers driven by the need for them, because of AI, sure. But the technology is going to keep changing, and the GPUs are good in terms of energy consumption, and are going to come down and down and down, as we've seen with chips in the past. I suspect the amount of extra power that's going to be required is nowhere near what people are forecasting today.

And you've seen that Microsoft and Apple are both looking at building massive centers that are colocated with generation, but Microsoft has got one with a small nuclear power plant alongside as well. So there are some real opportunities in terms of those colocation things too, which takes the need out for big infrastructure, and you don't need loads and loads of wires if it's there next door.

Data center load is pretty inflexible. SMR, small nuclear reactor, perfect match. So there are some really exciting things going on. My point is that some of the heady numbers that are being bandied around, I suspect, are too big. And it’s not going to be anything like the incremental power load some people are forecasting.

Rebecca

So it sounds like you're saying, if I can just kind of paraphrase, it sounds like you're saying that, on balance, the opportunity that AI presents to help optimize, for example, the power markets do things like predictive maintenance, making sure that various assets are running at their peak performance. All of the ways in which AI can play a role in helping us stabilize and transition to renewable energy outweigh the potential problems that it would present in terms of demand, because A, it might not actually require as much power as people are projecting. And B, there are other solutions, like small nuclear, modular reactors that could be paired with a data center to try and offset some of that huge demand. Is that right? On balance, it sounds like you're saying they're going to be more beneficial than problematic.

Steve

Yeah, that'd be my view, and the SMI isn't offsetting the demand. The demand is still there.

Rebecca

Oh sure.

Steve

What is offsetting it is the need to build enormous transmission infrastructure to move the power to a location. So there are some clever little things in the last decade on colocation that have been going on anyway. So, as an example, there are a couple of data centers that have been built in the UK next to a waste plant where they found energy from waste and then are having, rather than putting it into the system and being transported somewhere, they pipe it over the wall, so it just goes from the waste plant into the data center next door.

And the data center generates a lot of heat, and then you can take some of that heat and put it back into the pre-heat on the incinerator for the waste plant as well. So, they are colocating some of those things. I'm so pleased that so many of those ideas are now being pursued, and I suspect there'll be a lot more to come.

Joe

Can we talk about batteries as well? Because I feel like you've mentioned it in passing a couple of times. Grid-scale storage, kind of seen as a way of, as you said, smoothing gaps in demand and supply from intermittent renewable generation. But it doesn't seem yet to have really got off the ground or made a significant dent in the whole energy network. Is that true? And if it is true, what's behind that slow progress?

Steve

Why do you say it's not made a dent?

Joe

Well, it seems like a problem, that it’s, when I read about this stuff, it's always stated as a problem. Oh, we don't have the storage. We don't have the grid-scale storage. This is the problem with renewables. They don't generate constantly. And we don't have the storage at the grid level to bridge gaps in demand and supply.

Steve

Yeah, I asked you the question, Joe, because I think there's a societal issue that we see everything as a problem rather than an opportunity. So the human nature of the 21st century, I would argue, is driven a lot by journalism in the sense, “Let me find the negatives and the problems.” But in life, a problem is always an opportunity at the same time, isn't it? So I suspect you're right, there are some untold successes in here, to a great extent.

As I said, we've got four and a half thousand megawatts of battery storage in the UK now. It's not all at the transmission level. Some of it’s smaller stuff at the local level, and there's not a lot of domestic storage at the moment. There were a few, but there's not a lot here in the UK. There are more Tesla Powerwalls installed in the US than there are here in the UK. They're doing many functions, though.

The obvious one that I think everyone gets is, okay, I’ve got too much power this time of the day, but I don't want to switch it off because it's free, it’s solar. How do I store it? And then I can use it in the night when we don’t have the sunshine. So, that's just balancing the load.

But when you're running an energy system, there are lots of other factors that you have to have, just between the supply and demand. The inertia in the system, something called reactive power in the system, is something that batteries can also provide.

So batteries are providing on the grid system today a whole series of services that I don't think anyone was thinking about 10 years or so ago. They were thinking these things have traditionally only been provided by spinning generation, so they are an essential partner of the grid system we've got here today, and are working well. I was interested in asking you about them because we've not used the batteries that we've had in the UK as well as we might have done, because we've been catching up with the systems in the control center of the National Grid, and have been catching up with, how do I utilize these?

It's a new technology. They're behaving exactly the same way as a gas pipe power plant. And there’s been some experiential learning, to an extent, about just realizing what a cheap option they are and how they can be used, which is getting better. But here in the UK today, it’s a GB system actually. In Great Britain today, there are still moments during the course of a day when the cheapest option would have been to deploy a battery that's been charged and use it in the system. But it doesn't happen.

Rebecca

How come?

Steve

Well, the phrase is skipping. So we've skipped the best option. We've gone to the next best option, which is a gas-fired power station. And that's just because the education of the individuals who are running it and all of the software systems that they're developing aren't keeping pace at the moment. So it's a lot of work for the energy system operator to make sure that they're not skipping the best option.

So you're right in a sense. They haven't made the impact that they might have done by not using them as well as they should have. But that's going to get ironed out in the very near future, for sure. But then you've got the other issue of storage, which you'll read about and hear talked about more, which is long-duration storage.

Batteries are two hours these days, so discharge the battery, that's what it is. It's set up to discharge in two hours. Well, so how are you going to do an eight-hour gap? Or, moreover, when you've got a system like we're going to have here with a huge amount of wind on it, and we do have those moments where we get hardly any wind for days and days on end. How are we going to get ourselves through that situation, and that's going to be long-duration storage. The best technology we've had at the moment has been hydro. There are people who are looking at all other sorts of technologies. At the moment, the government is trying to invite that. And I don't think we've cracked that problem yet.

If you fast forward to 2035, and think we've really got 50 gigawatts of offshore wind, offshore wind is more reliable than onshore wind, but there are still moments when you see it drop off enormously. And I go back to where we started this whole conversation, to a certain extent. That's why demand-side response is so important. Demand-side response for just flexing those obvious things economically, but when we get into really stressful circumstances, we might need to call on people to conserve lots of power. So that’s why I think the demand-side response piece of this equation is a big part of the future as well. The plan here in GB is for 27,000 megawatts of battery storage by 2030. That's an enormous amount of storage.

Rebecca

That’s specifically electrochemical batteries, we’re not including pumped-hydro? Because sometimes people talk about pumped hydro as a type of battery.

Steve

That they do. And heat sources and compressed air, which you’ve got in Texas, that use pressure in their facilities as well. And then the tremendous question is, will hydrogen be part of that in the future? It’s very, very, very expensive. There are quite chillier notions, and we've got lots of wind blowing. So let's make some green hydrogen. If it surplus?

Let's store that, and then we can use it in these opportunities. Yes, physically, of course, that's doable. Economically? Goodness, that's an extraordinarily expensive piece of energy storage right now.

Rebecca

I also think about too, with AI applications in material science, what sort of opportunities for new types of batteries might that unlock that we haven't even considered yet?

Steve

It's a personal frustration of mine because I get to meet some people, and I've been to a series of universities that are doing great research on battery chemistry. And in the competitive world in which we live, there's a phenomenal amount of battery chemistry research going on on a global basis. I often see it and think, well, if we could just put all this stuff together and share some of this, we would probably move at a faster pace than we're going to, but the next set of battery technology is just around the corner.

I mean, you may have read recently about the battery that's been created next generation of cars that will do a 1000-mile range, that's just going out of the lab now. These things are just around the corner, and there’s the pace of that change, so you're absolutely right to identify AI. The ability to get this data and actually use it with digital twinning technology as well, and start to advance designs and test them so much faster, it's right in front of us as well. Which is why electrification is at the heart of the future energy system.

So there are some people out there who will still argue that we shouldn't be electrifying everything. My personal view is that in a lot of the world, heat will be electrified. That's the answer. And transportation will be as well. And despite some of the issues of the transition, ultimately it will be a cleaner, better, more reliable, and hopefully cheaper energy system as well.

Rebecca

Like we said at the top of the show, you oversaw the UK's National Grid for nearly a decade. What advice would you have for people who are in you know, either in your position in the UK, or comparable positions overseeing power grids around the world, facing all of these considerations and unknowns that we've just been talking about, like from the experience that you gained during your tenure. What advice would you have for people now?

Steve

It's a good question. I remember back early 2000s, the people who ran the control systems in the UK, which is now the National Energy System Operator, doing a piece of analysis to try and work out how much intermittent renewables the grid could handle. And a theoretical piece of work based on lots of experience in Denmark as well, which was further ahead at that stage, the answer was at 23% of renewables, we think the grid's unstable, and we might not be able to contain it.

Rebecca

Because of the rotational inertia issue?

Steve

A whole bunch of issues to do with the inability for us to manage supply and demand, and voltage. And you know how wrong that was. We have 60% renewables on the system on a regular basis today. And these are systems that need big investments over multi-generational time frames. So how do you plan when you've got so much uncertainty and so much unknown? I think that's the biggest change. People have to be much more flexible on their scenarios, which is exactly what National Grid is looking at.

So let's look at four big scenarios. What should we invest in? What should we change that’s going to probably work in all of these, rather than backing something? And all that's true again today. We can talk about the energy systems in the future, but technology is emerging. Consumer habits are changing, and demand is increasing. We talked about how big AI is going to be. It's really hard to draw a map and say this is exactly where we're heading over a 10-year time frame. Other than the underpinning of “We need to decarbonize our energy systems so we know that's going to be happening,” there's an awful lot of uncertainty. So the big change is about the agility and the flexibility, and that makes it intellectually interesting, but also very challenging when you know you are investing in systems now that are going to be paid back by consumers over a 40-year time frame as well.

So that puts a lot of challenges on people, but it also encourages people to take a bit more chance on some technology as well, where they really see an opportunity that if this technology works, it's going to save consumers in the medium term enormous amounts of money, and there's a lot going on right now on how much more transmission system we need in the UK, onshore and offshore, for the energy systems of the future.

So you've got this gradation of I can invest in this, because it's consumers that ultimately are going to pay for this, and the unlikely chance of that being wrong is incredibly small. But the stuff that I'm not quite sure about is how do I find a flexible way of not investing on behalf of consumers too soon, as well. And yet, the future is coming towards us.

So if I underinvest as well, that has huge consequences all of the time. People talk about why we’re switching off the wind farms in the UK. Well, that's because we didn't build the infrastructure to make sure we could get the power to where the power was needed. We didn't have the courage to invest early, and we're suffering some of the consequences of that now. I think all those national rambleys say agility and flexibility are the two key words.

Rebecca

Referring back to a point you made earlier about anything that could be characterized as a challenge can also be characterized as an opportunity, right? It’s just sort of about a mindset shift, which is not just applicable to people who are working in power, that’s really applicable to all people existing on the world.

Steve

Yeah, I think that’s absolutely right. In my career, we've had these conversations with people who look after essential infrastructure. There's always a sense of, yeah, but it's essential, so we can't take any chances. Yeah, this is something we can't get wrong. Of course, of course, we can't get it wrong, but let's not confuse getting it wrong with not innovating at the fringes, where you can innovate without risk. So the world over is innovative, and there's going to be an enormous amount of innovation, so people have to accept the ability to manage risk, not completely remove risk.

Outro

Rebecca

That's our show for today.

Joe

You can follow Steve Holliday on LinkedIn.

Rebecca

And you can find us on all podcast platforms, plus YouTube. And if you like the show, please rate and review us. It really helps us get the word out.

Joe

You can also find us on OurIndustrialLife.com. Every two weeks, we publish a new batch of stories. And our latest batch includes pieces about the long history of the assembly line, deep-sea mining, weatherproofing skyscrapers, and what’s really behind the rise in reshoring.

Rebecca

We’re also on Substack and LinkedIn, and you can email us at our.industrial.life@aveva.com.We’ll see you nexttime!