20170130_R4
Source: BBC Radio 4: Today
URL: N/A
Date: 30/01/2017
Event: Steve Holliday: "The new world is about being flexible on demand"
Credit: BBC Radio 4
People:
- Steve Holliday: Former CEO, UK National Grid
- Sarah Montague: Presenter, BBC Radio 4: Today Programme
Sarah Montague: We've long been warned there's a danger of blackouts, that we haven't adequately prepared for the end of coal-fired power stations and our old nuclear power stations being decommissioned. Well, that's wrong - at least according to the man who ran the National Grid until the middle of last year. He's Steve Holliday, its former Chief Executive, and he's here in the studio - good morning to you.
Steve Holliday: Morning, Sarah.
Sarah Montague: What has changed, or was it never a problem and it was always exaggerated?
Steve Holliday: It was always exaggerated, is the reality. You know, for ten years we've enjoyed, I think, the story of "the lights might go out this winter". The reality is we've got one of the most reliable power systems in the world. And, as of the end of this week, the government will have procured enough capacity to make sure that we've got more than enough supplies, versus the peak demand, for the next four years. So it really is time we stopped doom-monger-think and thinking about blackouts. The other thing that's going on of course, in the background, is: that is the old way of thinking about it. The old way of thinking about is: what is the peak demand we're ever going to get this year for one half-hour period? And let's make sure we've invested in huge power stations to make sure they can supply it. The new world is about being flexible on demand. And there's a revolution going on in the UK right now - 700 organisations flexing their demand, willing to be paid just to shift that peak half an hour, that's what the new world's all about, Sarah.
Sarah Montague: Okay, but to go back, you say it was never a problem. Who was ramping up? Because there is an argument that actually this was the power companies who were deliberately exaggerating the risk because then they can get more money to provide more power and capacity out of the government.
Steve Holliday: That's an awful theory, I think, isn't it - I mean, the reality is that the energy -
Sarah Montague: Is that too cynical?
Steve Holliday: I think - I think it's too cynical. I think the energy industry's always been conservative, as you'd expect, and no-one wants there to be a power blackout. But the reality is: you know, we've been quite clearly, in the last few years as a country, quite tight, and have come through very, very easily. But we should consign this, now -
Sarah Montague: But they are getting considerable sums from these subsidies now, aren't they.
Steve Holliday: Who's getting sums from subsidies?
Sarah Montague: The power - the - those who are, sort of, effectively trying - who would be in - have to step into the breach if there is a shortage -
Steve Holliday: This is the auctions I'm referring to - the government have run, to make sure there's enough capacity for the next four years, right through to 2021, to ensure that there's more than enough supply versus demand. But the key point is this flexibility point. This world's changing now, in a - there are 700 organisations already doing it, the systems are getting smarter, smart meters will be in our homes soon. As of April this year, all businesses have to meter their electricity half-hourly - that means they'll see the prices - if they're consuming lots of power during the peak period - and they'll stop by becoming more flexible as well. It's going to be a much smarter system in the future.
Sarah Montague: Okay, so the wind's not blowing, the sun isn't shining, we're still fine, because...?
Steve Holliday: Because we've still got big nuclear power stations, we've still got a lot of central generation, and we're going to get a lot more flexible in how we consume our power in the future.
Sarah Montague: And that's -
Steve Holliday: You saw, in the Industrial Strategy last week, of course, a massive focus on battery technology - how can we make the UK a leader in batteries. And we need to start changing the rules about how they get connected onto our system as well. That's the next step-change. So it's all going in the right direction.
Sarah Montague: And you're not being complacent, here?
Steve Holliday: I, personally - no, I - I mean, I'm looking at this from the point of view of some of the work I do with the Energy Institute and others. And it's pretty clear to us the world's about flexibility, on demand response, going forward, and battery storage, and we can stop thinking about blackouts.
Sarah Montague: Because that's not my word - the phrase "naively complacent" was used about the National Grid by Justin Bowden, who's the GMB Union's National Secretary - he said it in August last year.
Steve Holliday: Did he? Well, I don't know where that came from. We have an energy system in the UK - not just the National Grid, our power generators - 25% of our energy today comes from renewable power. And who would have imagined that, ten years ago? We've handled it very, very well. We're at the vanguard in a global sense, and I think we're moving in the right direction, with our demand flexibility -
Sarah Montague: And we're not overpaying?
Steve Holliday: And, over time -
Sarah Montague: Via the government, the taxpayer is not overpaying...
Steve Holliday: No, we're not overpaying, as customers, and over time, the more flexible we are with our demand -
Sarah Montague: As taxpayers?
Steve Holliday: - that's the way we'll keep our bills low -
Sarah Montague: As taxpayers, are we?
Steve Holliday: As bill payers.
Sarah Montague: No, I get that, but we're also effectively subsidising, aren't we, via the -
Steve Holliday: Through our bills. It goes through our electricity bills.
Sarah Montague: Steve Holliday -
Steve Holliday: Flexibility is the future.
Sarah Montague: Steve Holliday, thank you very much.