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Speaker 1: Welcome to Zero. I am Akshradrati this week. The UK's

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Speaker 1: publicly owned energy champion, the Labor Government, was elected last

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Speaker 1: year to much hope from climate advocates. One reason was

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Speaker 1: a big promise to develop a new state owned energy company.

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Speaker 1: It was imaginatively named Great British Energy, or GB Energy

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Speaker 1: for short. It's almost exactly one year since its creation

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Speaker 1: and it's only in June that the government announced GB

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Speaker 1: Energy would receive a budget of five point eight billion

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Speaker 1: pounds to spend over the next four years and get

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Speaker 1: the organization off the ground. Sounds like a lot of money,

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Speaker 1: but is it and what exactly will GB Energy do

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Speaker 1: with that money? How can it have maximum impact in

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Speaker 1: cutting UK's emissions and energy costs? And which technologies does

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Speaker 1: the company believe will help UK achieve its targets. I

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Speaker 1: put these questions to Dan mcgrail, interim CEO of GB Energy,

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Speaker 1: in an interview that was recorded live at Bloomberg's Sustainable

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Speaker 1: Business Summit here in London. Then, welcome to Bloomberg and

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Speaker 1: welcome to a live taping of the Zero podcast. The

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Speaker 1: Labor Government has big plans for GB Energy. It's been

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Speaker 1: nearly a year since it was announced and created. You

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Speaker 1: lead Greed British Energy, and on eleventh of June under

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Speaker 1: the spending review you've got an allocation of five point

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Speaker 1: eight billion pounds. Greed British Energy Nuclear, which is a

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Speaker 1: separate entity with a separate governance, got two point five

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Speaker 1: billion pounds. So let's focus on the bit you run

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Speaker 1: and give us a big picture. Say in twenty thirty five,

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Speaker 1: ten years from now, what do you hope gb Energy

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Speaker 1: will have achieved. Well, first of all, thank you for

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Speaker 1: having me hearing.

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Speaker 2: Good morning.

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Speaker 3: Great Brish Energy is an innovation from a policy perspective,

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Speaker 3: which from my point of view, and starting really at

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Speaker 3: the sort of the big picture and the motivation is

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Speaker 3: I think it's fundamentally a good idea to give British

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Speaker 3: people a stake.

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Speaker 2: In the energy transition. I mean, we're here.

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Speaker 3: Today because we see this as being one of the

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Speaker 3: great economic opportunities of our times, and I think it

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Speaker 3: is right therefore that we find ways to create a

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Speaker 3: dividend for British people. And I think that's a motivation

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Speaker 3: in of itself. But as an energy industry professional and

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Speaker 3: having worked in the sector pretty much all my career,

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Speaker 3: I actually think there's a discreet role for a state actor.

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Speaker 3: The private sector has been incredibly effective at mobilizing where

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Speaker 3: we've had sort of policy and political stability, wider economic stability,

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Speaker 3: and you know, things like the growth of offshore wind

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Speaker 3: were possible partly because you know, the conditions were quite benign.

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Speaker 3: Whereas we look today, the world is more complex and

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Speaker 3: yet we have a series of mature technologies and as

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Speaker 3: we strive to achieve that energy security, independence and abundance,

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Speaker 3: we have a series of mature technologies which we know

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Speaker 3: the private sector can mobilize, but there are some frontier

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Speaker 3: technologies which we know we're going to need, which by

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Speaker 3: twenty thirty five need to become pretty mainstream where private

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Speaker 3: sector activity is comparatively low at the moment, So we

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Speaker 3: see a role for gbmergy to invest alongside the private

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Speaker 3: sector to really target areas where there's a natecency in

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Speaker 3: the technology. Obviously, we believe in the trajectory, so it's

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Speaker 3: not speculative, it's fundamental and you know, we can talk

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Speaker 3: about some of the examples, but you know the role

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Speaker 3: that we can play to catalyze investment to bring that

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Speaker 3: additional confidence that look, the UK government as a country,

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Speaker 3: we believe in the role of these technologies and therefore

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Speaker 3: we build our capability and our strategy around them.

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Speaker 1: So let's talk about specific technologies. You've said gb Energy

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Speaker 1: is the first publicly on company in seventy five years,

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Speaker 1: and you're very proud of being able to give it

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Speaker 1: a shape and ability to do something. Now, five point

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Speaker 1: eight billion pounds a big sum, but let's put it

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Speaker 1: in perspective. The Clean Energy Mission, which is supposed to

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Speaker 1: get the UK to ninety five percent clean power by

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Speaker 1: twenty thirty is going to be needing two hundred billion

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Speaker 1: pounds in investment. So how exactly do you plan to

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Speaker 1: invest or spend this five point eight billion for maximum impact?

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Speaker 3: So it's a really it's a really good point because

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Speaker 3: you know, it is a large sum of money. And

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Speaker 3: bear in mind this is you know, a sum of

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Speaker 3: money to start the organization up right. So we're you know,

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Speaker 3: our aspiration by twenty thirty five is to start to

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Speaker 3: build towards the scale of you know, other comparable state

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Speaker 3: owned energy companies such as you know or Stared or

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Speaker 3: VAT and FEL. So this is this is the sort

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Speaker 3: of endowment that gets us moving.

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Speaker 2: But we do.

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Speaker 3: You're right, we have to invest intelligently, and you know,

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Speaker 3: we know that the cost of one offshore wind farm

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Speaker 3: or a major investment is you know, is already in

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Speaker 3: similar numbers. So we have to initially invest in sort

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Speaker 3: of the spaces where we really think that can.

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Speaker 2: Have maximum value. So give you a couple of examples.

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Speaker 3: We know by twenty thirty pretty much every offshore wind

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Speaker 3: farm in the UK is going to have to be

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Speaker 3: in water, which is deeper than eighty meters. Now that's

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Speaker 3: quite a technical point, but basically what it means is

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Speaker 3: that those wind farms are going to have to float, right,

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Speaker 3: which is you know, is an area of investment which

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Speaker 3: is you know, at the moment quite challenging. There's a

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Speaker 3: significant amount of private sector capital deployed, but it's.

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Speaker 2: Slowing down in its progress.

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Speaker 3: So we're going to look to come in at that

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Speaker 3: riskier stage of projects in their development phase, prior to

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Speaker 3: the major investment decisions, when we do expect private capitals

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Speaker 3: to come in and we may deploy some of our

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Speaker 3: capital as a minority partner, but ultimately to send a

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Speaker 3: signal to the wider investment community that the UK government

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Speaker 3: believes in the trajectory of these technologies and we will

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Speaker 3: believe in the long run because it takes four or

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Speaker 3: five years to get to the investment decision. So bridging

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Speaker 3: that risky gap where you've got to go through consenting,

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Speaker 3: where you've got to secure the green connections, where you've

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Speaker 3: got to go through the whole development at risk, that's

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Speaker 3: a space where we think we can deploy you know,

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Speaker 3: ms of capital which are meaningful, but then get you

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Speaker 3: to the point where you can crowd in the private capital.

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Speaker 1: So what you're mentioning there is floating offshore where you

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Speaker 1: don't have these wind turbines actually tethered to the floor

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Speaker 1: with a big concrete base, which is what current offshore

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Speaker 1: tends to be. And the UK has a good track

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Speaker 1: record in taking a frontier energy technology and then lowering

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Speaker 1: its price, but the UK doesn't have a good track

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Speaker 1: record on building businesses around those technologies. So there is

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Speaker 1: no British company that's going around the world building offshore

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Speaker 1: wind farms today.

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Speaker 2: Dispute that I think there are some you know SSA

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Speaker 2: for example.

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Speaker 1: Yeah, but they're not doing it at the scale that

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Speaker 1: an oorster is doing or button Fall, the two examples

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Speaker 1: that you brought up right Austin does that How exactly

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Speaker 1: do you think with five point eight billion pounds could

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Speaker 1: you create an industry or a set of companies on

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Speaker 1: maybe one big champion that would do floating offshore, not

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Speaker 1: just in the UK but globally.

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Speaker 3: Well, clearly we've got to work on how we target

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Speaker 3: the investment around partners who we really believe can create

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Speaker 3: that scale and whether we can build be part of

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Speaker 3: that in terms of building capability and experience over time.

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Speaker 3: But the other part and the important narrative around gb

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Speaker 3: Energy is the role that we will playing co investing

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Speaker 3: in supply chains as well, because ultimately we've chosen to

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Speaker 3: locate in Aberdeen for a reason there is a really

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Speaker 3: really accomplished boiling gas supply chain which is specializing in,

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Speaker 3: amongst other things, everything that happens below the waterline. Talking

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Speaker 3: specifically about floating offshore wind here, there is no offshore

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Speaker 3: wind farm that's been built in the UK that hasn't

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Speaker 3: had a role for some Aberdeen supply chain as part

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Speaker 3: of it. So we think there's a role to build

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Speaker 3: UK domestic champions in the technology that helps scale, and

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Speaker 3: it isn't just isolated to wind. It's also we can

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Speaker 3: go beyond that and look at carbon capture and storage

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Speaker 3: or long duration energy storage, things that we know we're

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Speaker 3: going to need in the future, but right now require

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Speaker 3: some of that seed capital and that confidence in the

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Speaker 3: projects to build few through to the future.

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Speaker 1: So any of June there was an additional announcement saying,

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Speaker 1: at least in the press release it said the government

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Speaker 1: is announcing additional seven hundred million pounds going to gb

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Speaker 1: Energy for building up these supply chains. Is that new money?

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Speaker 1: Is that additional money beyond.

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Speaker 3: The part of our overall budget, but that we're allocating

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Speaker 3: specifically towards supply.

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Speaker 1: Chains And can you give me an idea of how

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Speaker 1: exactly do you invest in creating that supply like specific example.

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Speaker 3: So part of it will be in the traditional way

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Speaker 3: of given of supporting it with grants, and that will

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Speaker 3: be a part of our business, which frankly is you know,

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Speaker 3: non commercial. And then there can you know, we also

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Speaker 3: look to take equity positions. We'll work also with partners

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Speaker 3: like the National Wealth Fund to look at how we

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Speaker 3: can invest in companies that we believe in their technology,

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Speaker 3: believe in their trajectory, and then support that with the

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Speaker 3: pipeline of projects so that their technologies get the play.

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Speaker 1: In this audience. You're going to have many investors, many banks. However,

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Speaker 1: your conversations with those entities gone because you're going to

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Speaker 1: have to co invest with them given you want to

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Speaker 1: multiply then the sum that you have been allocated.

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Speaker 3: Look, I've just come from a meeting this morning with

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Speaker 3: a major, well known UK bank and their sustainability practice

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Speaker 3: and genuinely, and this is one of the things that's

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Speaker 3: really heartening for me, is that the inbound inquiries into

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Speaker 3: GB Energy, the amount of people who are bringing us

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Speaker 3: opportunities is kind of proving that the fact that the

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Speaker 3: fact that the market wants and the role of this

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Speaker 3: kind of long term missed maybe greater risk appetite player

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Speaker 3: in the market to work alongside the private sector. So look,

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Speaker 3: I'm encouraged by the quality of the conversations, the breadth

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Speaker 3: of the conversations that we're having with banks, with institutional

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Speaker 3: investors and ultimately with developers as well.

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Speaker 2: One thing we.

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Speaker 1: Didn't talk about in the technology set is about thirty

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Speaker 1: percent of UK's emissions come from running gas in homes

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Speaker 1: home heating. Is GB Energy going to look at decarbonizing

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Speaker 1: heat and how.

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Speaker 3: Our priority is probably around power and electrification. And over

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Speaker 3: the next three to four months we're going to be

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Speaker 3: working quite consultatively with the sector on understanding how we

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Speaker 3: develop a long term strategy. The biggest, most frequent question

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Speaker 3: I get asked is what's gb energy going to do? Right?

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Speaker 3: And I need to answer that question in fairly short order.

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Speaker 3: So you know, our intention is to be really you know,

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Speaker 3: precise on where are the areas of technology that we're

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Speaker 3: going to invest in. And I'd say another point on this,

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Speaker 3: which is, look, if you look at those other European

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Speaker 3: publicly owned energy companies like your Steed and vatent File

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Speaker 3: that have been set up, they all set up with

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Speaker 3: a technology strategy around them. So you know VAT and

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Speaker 3: File and stack Craft were hydro companies or steaed offshore,

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Speaker 3: when DDF nuclears, so on, so forth.

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Speaker 2: So we need to I think create.

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Speaker 3: Capability around certain technology feels and right now heat, I

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Speaker 3: mean we see ourselves in the kind of business to

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Speaker 3: business space. Heat is very much in the communit consumer space.

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Speaker 3: That said, we do see scope for community and local

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Speaker 3: energy within our strategy. It's certainly something that the government

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Speaker 3: envisages being part of the strategy, and you know there

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Speaker 3: will therefore be a you know, an intersection with you know,

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Speaker 3: the electrification of heat, and so we have to explore

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Speaker 3: exactly how that might work in practice.

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Speaker 1: It'll be your anniversary of creation on fifth of July

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Speaker 1: in twenty twenty five. But in that period, what exactly

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Speaker 1: have you built. There's one project announcement that I've seen

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Speaker 1: around getting rooftop solar for schools and for hospitals.

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Speaker 2: What else.

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Speaker 3: To be precise, the anniversary of the government is on

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Speaker 3: the fifth of July. We actually got royal ascent. I

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Speaker 3: can't remember exactly the date, but something like the eleventh

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Speaker 3: of May. So our legal existence is a matter of

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Speaker 3: weeks rather than a year. Having said that, it's not

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Speaker 3: like we've been doing nothing. So we've been building the

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Speaker 3: organization up, recruiting people, which is an important place to

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Speaker 3: start and also prioritize in some early activities. You reference

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Speaker 3: the rooftop solar scheme and you know this is an

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Speaker 3: area where we're really looking to learn and build capability.

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Speaker 3: So we've chosen to invest part of our budget into

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Speaker 3: investing in around two hundred schools and hospitals rooftop solar schemes.

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Speaker 3: The effect of these is really interesting because we went

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Speaker 3: to visit one hospital in Hull which had built a

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Speaker 3: five megawater array on a field that it just had

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Speaker 3: next to the hospital, and you know, they're.

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Speaker 2: Fortunate enough to have the capital available to.

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Speaker 3: Do it, but it's saving them just under two million

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Speaker 3: pounds a year, which funds about fifty ban five nurses

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Speaker 3: or thirty fully qualified doctors.

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Speaker 2: So this is an outcome.

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Speaker 3: It's using energy and sustainability as a vehicle to achieve

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Speaker 3: a better outcome. And equally, I went to a school

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Speaker 3: in Sheffield right in the middle of a pretty deprived

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Speaker 3: area where you know, they were able to fund teaching

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Speaker 3: assistance and so you improve in educational outcomes and they're

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Speaker 3: engaging the kids in it. So this is a really

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Speaker 3: logical thing that we should do more of. Now. These

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Speaker 3: first investments really help us learn and see what the

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Speaker 3: scope and the potential of this is. But we see

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Speaker 3: the local aspect of how we can use public sector

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Speaker 3: real estate as effectively an anchor tenant to build smart

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Speaker 3: local energy networks as a business model that can be

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Speaker 3: scaled and can be outcome focused as well as just

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Speaker 3: being about purely electricity.

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Speaker 1: You said the word invest but my understanding is this

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Speaker 1: is grant money.

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Speaker 3: This is initial grant money, but it's the long term

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Speaker 3: runway for this is how do we turn this into

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Speaker 3: a business.

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Speaker 1: And what of the fiber and eight billion pounds will

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Speaker 1: be roughly grants and what will be invested in companies?

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Speaker 3: About a billion pounds in grants all together. Albeit, we

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Speaker 3: will work intelligently with the business community to see whether

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Speaker 3: actually somewhere where you know, is a grant the right solution,

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Speaker 3: where actually equity could be a better solution. So we'll

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Speaker 3: try and have a degree of flexibility and how we

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Speaker 3: approach that.

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Speaker 1: We'll be back after the break with more of my

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Speaker 1: conversation with Dan mcgrail, interim CEO of GB Energy. And Hey,

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Speaker 1: if you're enjoying this episode, please take a moment to

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Speaker 1: rate and review the show on Apple Podcasts and Spotify.

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Speaker 1: You have feedback really matters and helps new listeners discover

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Speaker 1: the show.

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Speaker 2: Thank you.

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Speaker 1: Another thing that we haven't talked about is transmission. Now,

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Speaker 1: in the seven hundred million pounds announcement on apply chain building,

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Speaker 1: there was a mention that transmission would be included in

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Speaker 1: that spending transmission is a key bottleneck for electrification in

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Speaker 1: the UK. There's too much wind in Scotland and there's

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Speaker 1: much more demand in the South. The Clean Energy Mission

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Speaker 1: and the Department have a plan to try and build

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Speaker 1: more transmission cables going up and down. How exactly does

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Speaker 1: gb Energy take part in this? Is it in just

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Speaker 1: traditional investments or is it advanced technologies, because there are

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Speaker 1: quite quite some very interesting ideas for taking the same

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Speaker 1: cable and sending three times the amount of power in them,

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Speaker 1: for example.

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Speaker 2: I think the show answer is both.

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Speaker 3: I mean, I think we have to act in the

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Speaker 3: short term to alleviate capacity in the market and build capacity,

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Speaker 3: and it's actually part of our energy independence narrative because

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Speaker 3: the reality at the moment is that people building wind

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Speaker 3: farms or transmission networks are competing with transmission operators and

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Speaker 3: other markets for factory slots. And interestingly, I don't think

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Speaker 3: it's just about factory capacity, It's also about skills capacity.

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Speaker 3: I mean, electrical technology is probably the most complex part

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Speaker 3: of the value chain in terms of understanding and building capability.

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Speaker 2: So we've got to work actually quite.

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Speaker 3: Coherently here in terms of on one hand, building out

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Speaker 3: capacity in the short term building skills that can act

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Speaker 3: alongside that, and we won't do it on that, you

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Speaker 3: know that on our own because there's a big ecosystem

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Speaker 3: of actors around building skills. But in the long run,

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Speaker 3: when I think what's going to ground capacity here in

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Speaker 3: the UK for twenty thirty fifty years, it's going to

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Speaker 3: be innovation. If you look at the aerospace industry, the

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Speaker 3: aerospace industry has we make wings, we make landing here,

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Speaker 3: we make avionics and propulsion systems in the UK because

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Speaker 3: we have the best innovation ecosystem that drives that. It's

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Speaker 3: not because we're low cost country or we buy more

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Speaker 3: planes than anyone else. We just have to build deep capability.

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Speaker 3: So for me, it's really important that when you're looking

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Speaker 3: to add manufacturing, you add that manufacturing ring as part

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Speaker 3: of an ecosystem or an innovation pathway which is then

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Speaker 3: become self sustaining.

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Speaker 1: So we've talked about the idea that GB Energy could

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Speaker 1: try and unlock more private capital, could try and advance

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Speaker 1: some of the frontier technologies. But one driving principle that

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Speaker 1: this government has been trying to work on is to

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Speaker 1: lower the cost of energy. How exactly does GB Energy

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Speaker 1: satisfy that need.

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Speaker 3: I've always believed from the beginning that lowering energy costs,

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Speaker 3: you know, is a national endeavor. You can't delegate that

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Speaker 3: responsibility to one organization. So the role I think we

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Speaker 3: can play partly we've talked about already, which is about

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Speaker 3: crowding in the private capital. The more we crowd that in,

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Speaker 3: it will be more, it will bring more competition, it

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Speaker 3: will bring more availability, but it also I think the

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Speaker 3: other area that then is helping to alleviate capacity constraint

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Speaker 3: in the supply chain. And then the third area where

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Speaker 3: I see as playing a role is doing more to

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Speaker 3: build these really coldly transformative smart local energy systems where

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Speaker 3: we bring at the moment the limit to those being

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Speaker 3: built out further is much more about capital availability and

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Speaker 3: the business models and the bankability. It's not about technology,

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Speaker 3: it's not about innovation. It's just about how do we

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Speaker 3: turn this into a model which makes it accessible to

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Speaker 3: more social housing providers, more local authorities, more hospitals. So

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Speaker 3: we might not necessarily be there focused on the overall system,

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Speaker 3: but it will be about how do we bring targeted

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Speaker 3: benefits to the communities within which we can work, And

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Speaker 3: ideally that is a scalable thing which we focus on

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Speaker 3: those that need it most.

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Speaker 1: In the first instance, we started the conversation by talking about,

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Speaker 1: let's lay out what would be specific achievements that you

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Speaker 1: think GB energy will have in twenty thirty five. Now

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Speaker 1: we've gone through sort of the ideas that you have,

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Speaker 1: but let me come back to that question. Because you

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Speaker 1: didn't paint a specific enough set of achievement that you

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Speaker 1: would hope and I'm not saying you know what will happen,

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Speaker 1: but if you were to dream, what would be the

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Speaker 1: twenty thirty five achievements that you'd be proird of.

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Speaker 3: Look, I mean, let me start with the local angle,

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Speaker 3: because we just talked about it. I would like to

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Speaker 3: see right the way across the country smart systems where

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Speaker 3: we're integrating solar on schools or on private businesses or

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Speaker 3: on local authority land, together with battery storage and you know,

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Speaker 3: maybe some EV charging. You know, we've got a big

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Speaker 3: challenge in bringing evs to people who don't have off

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Speaker 3: street parking, for example, So you know, how do we

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Speaker 3: bring those things together, turn them into business models which

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Speaker 3: ultimately allow people to get access to that at sensible

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Speaker 3: prices and sort of democratize the electrification of society to

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Speaker 3: as many people as possible, so that I would like

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Speaker 3: to see Great British Energy's logo on hospitals and schools

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Speaker 3: right the way across the country and other local community organizations.

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Speaker 3: I would like to see as invested in these frontier

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Speaker 3: technologies that we know that we need. I'd like to

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Speaker 3: see floating offshore wind arms spinning in the North Sea

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Speaker 3: with supply chains behind them, thriving in the northeast of

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Speaker 3: Scotland and Aberdeen where we've helped alleviate the impact of

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Speaker 3: transition and make sure that that creates jobs and opportunities

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Speaker 3: for people who may be affected by the decline of

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Speaker 3: some other industries. And I'd like to have some really

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Speaker 3: smart British companies exporting their know how and maybe GB

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Speaker 3: Energy is part of that ecosystem exporting that know how

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Speaker 3: to other countries and whether that's in long duration storage

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Speaker 3: or carbon capture and storage. I think the scope for

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Speaker 3: that ten years, that's my mission.

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Speaker 1: The initial announcement when it was made was GB Energy

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Speaker 1: will have eight point three billion pounds. You've had to

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Speaker 1: give up two point five billion of that to GB

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Speaker 1: energy Nuclear. Does that under mine your ability to live

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Speaker 1: up to the stream.

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Speaker 2: Yeah, to turn that into a negative.

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Speaker 3: I mean, ultimately, the founding statement was very clear that

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Speaker 3: there would be a joint of it. But look, we're

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Speaker 3: starting the company, or we secured six billion pounds, that

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Speaker 3: is a lot over four years to catalyze a company,

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Speaker 3: you know, I see that budget as a huge actually

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Speaker 3: a challenge to think how do we deploy that intelligently

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Speaker 3: and maximize the impact and the return, whether that's on jobs,

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Speaker 3: on growth, on returns. That's a huge opportunity for isn't

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Speaker 3: that you know? I certainly don't see it as an inhibitor,

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Speaker 3: put it that way.

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Speaker 1: Last question for you, perhaps the most difficult one. Your

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Speaker 1: title has interim CEO in it. You know, GB Energy.

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Speaker 1: The government created it on fifth July twenty twenty four.

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Speaker 1: You say the legal entity didn't exist until May, but

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Speaker 1: you've been in terim CEO since March. For energy companies,

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Speaker 1: there should be no shortage of applicants wanting the job

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Speaker 1: of a CEO, wanting to build a vision that you've

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Speaker 1: just painted. Why is it taking so long to get

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Speaker 1: a full time CEO?

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Speaker 2: Why is it taking so long?

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Speaker 3: Look, I mean interim came in because about speed. You know,

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Speaker 3: actually it was about you know, wanting to stand the

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Speaker 3: company up quickly, and you know, I work in the

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Speaker 3: industry and I'm you know, incredibly enthusiastic about this.

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Speaker 2: So to be asked to.

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Speaker 3: Come and you know, go on loan as it were,

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Speaker 3: to do this was a huge privilege. And then, to

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Speaker 3: be honest, the really important point is that when you

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Speaker 3: go through these appointments in the public sector, there has

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Speaker 3: to be a thorough process and that process, for anyone

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Speaker 3: who's ever worked for the government will probably understand that

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Speaker 3: that process is not something that you can do overnight.

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Speaker 3: It takes time, but it's I think it should be

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Speaker 3: it should.

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Speaker 2: Be clear soon. Put it that way. Thank you, Dan,

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Speaker 2: Thank you very much, indeed.

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Speaker 1: And thank you for listening to zero. Now for the

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Speaker 1: sound of the week. That's the sound of a wind

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Speaker 1: turbine from two hundred and fifty meters away spinning in

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Speaker 1: wind speeds of forty kilometers per hour. If you like

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Speaker 1: this episode, please take a moment to rate and review

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Speaker 1: the show on Apple Podcasts or Spotify. Share this episode

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Speaker 1: with a friend or with someone who likes offshore wind turbines.

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Speaker 1: This episode was produced by Oscar boyd Our. Theme music

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Speaker 1: is composed by Wonderly Special thanks to Rachel Morrison, Will Mathis,

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Speaker 1: Eleanor Harrison, Dngate, Jessica Beck, Samersadi Mosses andam and Showan

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Speaker 1: wagner I am Akshatrati back soon