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Welcome to Baringa’s Energy Innovators Podcast, where we help you make sense of the energy transition’s greatest challenges and opportunities.
Hello, and welcome to Beringa's Energy Innovators podcast, where we help you make sense of the energy transition's greatest challenges and opportunities. I'm James Constable. And in this podcast series, I speak with the leading industry experts to learn how they're putting people first and creating impact that lasts to fuel their energy transition.
Hannah:You've gotta have a project that is in close proximity to the planned infrastructure assets that are gonna facilitate that decarbonization. So that is a c o two pipe that goes to a store or a hydrogen pipe that goes to a planned blue hydrogen project and also to hydrogen storage. And, obviously, that project and also to hydrogen storage. And, obviously, that planned blue hydrogen project also needs a c o two pipe that goes to a store. Hi, everyone.
Hannah:Thanks for joining. Today, we
James:are joined by Hannah Bronwyn, who is the director of business development for SSC Thermal, where she's responsible for growth of low carbon thermal generation, hydrogen production, and storage, and Chris Thackery, who's our global CCS lead in Baringa. Today, we're gonna be talking about the role of thermal generation in the future UK energy mix, and some of the quite significant challenges, facing the the need for flexible generation, as we move ahead with decarbonizing the system. It's a really interesting, very detailed conversation, and I hope you enjoy. Hannah, you are basically responsible for the growth of that kind of thermal generation and that, you know, low carbon p p position, and hydrogen production and storage. Just a little bit of intro about Hannah.
James:So before joining SC Thermal, Hannah worked at the energy systems catapult, and before that, at at Bayes, which is, obviously, now Desnares, where she was responsible for initiating the RAB model for financing new gigawatt scale scale nuclear. So, we won't necessarily touch on nuclear today, but that's super interesting. Yeah. So super. Chris, do you wanna give us a bit of an intro about yourself, why we're talking about this today, and then any kind of scene setting around the current policy landscape?
Chris:Abs absolutely. So I lead the practice on CCS advisory. So I help policymakers, investors, and developers to commercialize CCS projects. So that involves, advising around policy, commercial strategy, and and deal execution. So to today's discussion is is to cover decarbonization of, the, the the thermal fleet on the power system.
Chris:The government's got an ambition to decarbonize the grid by 2,035, and crucially, that's subject to security of supply. So that means that the government needs to make decisions in order to both decarbonize the system, but also keep the lights on and maintain sufficient electricity capacity to meet peak demand. So there needs to be a sufficient amount of capacity to meet winter peak demand, so a certain number of gigawatts above the the peak demand so that the system operator has enough options for balancing the system. The generation mix on the system is changing with coal coal plants, so coal fired power stations almost gone from the system. An aging gas and nuclear fleet with expected plant closures, and government intends to provide much of our bulk power with renewables, which is absolutely the right strategy given our abundant offshore resources, but it will also need to supplement this with interconnectors and flexible power sources such as storage and power generation from, from thermal sources.
Chris:So it's crucial that we've got sufficient flexible capacity durations to to of output to cover peak demand. Demand, of course, is forecast to increase substantially as we electrify transport and heat, and with the intermittent intermittency of renewables and an aging fleet of generation, the with an expected, series of closures of large amounts of capacity, this will leave it likely that there's a substantial capacity gap to fill in order to meet that peak demand. So Baringa was recently commissioned by UK government to do analysis on this capacity gap, for for for for government. And the analysis suggests that the gap could be as high as 28 to 30 gigawatts by 2,035, and that that gap could be emerging by 2028. So to put that in context, today's gas fleet is just over 30 gigawatts.
Chris:So it's a substantial capacity need that that that the government will need to make decisions on investment policies to to incentivize that build. So the government's, of course, got the capacity market to incentivize new capacity on a market wide basis, but it's also got new mechanisms in place to, to incentivize investment in flexible power sources at scale, such as the the dispatchable power agreement for Power CCS. It's minded to do a dispatchable power agreement for hydrogen power, and it's looking at considerations around, for example, a cap and floor for for long duration storage. So it's developing these additional mechanisms to bring forward major, levels of of of new firm flexible low carbon power. SSE Thermal is a key player in this space with existing thermal assets and plans to decarbonize those assets, and that includes power CCS.
Chris:It includes hydrogen production, generation, and storage. So I think Hannah is the perfect person to have a conversation around these topics with to understand whether what government is doing around policy is going to incentivize sufficient investment to both keep the lights on and to decarbonize the electricity system.
James:Super. Thanks, Chris. Great overview as well. I mean, that's a lot a lot covered there, but that's that's fantastic. So my key takeaway from that is that we need thermal generation.
James:Obviously, a load of other different flexible technologies as well to match that. So really interested to hear from SSE's position, you know, how are you dealing with that? Because it's not a insignificant challenge. Right?
Hannah:Yeah. Absolutely. So, I mean, first of all, to say really echo and agree with Chris's analysis of the situation. So renewables will be the backbone of the the future energy system, and SSE is heavily invested in delivering that with behemoth projects like Dogger Bank and Seagreen and Barrick Bank's very important offshore wind portfolio, but it's not always windy. And so, you know, even with batteries and solar on the system, and that's an important part of our portfolio as well, we are going to need a significant amount of power with an on off button, that can run for more than 2 to 4 hours.
Hannah:And so that's the challenge that the the business is facing. Thermal plant currently does a lot of the heavy lifting for that in the UK and in many other countries around the world, but we need to decarbonize that thermal plant. Now fortunately, there are other technology solutions enabling us to do that. So Chris mentioned power with carbon capture, so that's basically take a CCGT, you put a carbon capture plant off the back of that, take the off gas, strip out the CO 2, and then safely sequester that in depleted gas fields or aquifers. Fortunately, the UK has a lot of these.
Hannah:Mhmm. Hydrogen for power is another option. So you can fuel switch from natural gas to clean hydrogen, and that can then be burnt in a CCGT without releasing c o two into the atmosphere, and also long other forms of medium and long duration storage like compressed air, liquid air, etcetera, probably slightly further down the line, but also very interesting. We're gonna need all of these. The CCC, so the the the Independent Climate Change Committee, produced a report in March of last year, which set out their view on what would be needed to deliver a reliable decarbonized power system.
Hannah:They estimated around 17 gigawatts of low carbon thermal plant would be needed to get to a net zero power system by 2035, a mix of power, CCS and hydrogen power.
James:Is that current or is that incremental to the current position? So it's the total
Hannah:Well, there is none of that currently on the system, so it's only incremental.
James:Right. It's all incremental.
Hannah:And I guess the challenge that we're facing, which kind of Chris outlines there, is that is a heck of a lot of new capacity to bring in online, to bring online 20 you know, if I put a grid application in now, I get the wrong side of 2035. So how are we going to bring all of that about? It's not just about building the CCGTs. It's also to get to the the decarbonized solution about building the whole value chain infrastructure. So that's the carbon transport and storage systems for hydrogen for power.
Hannah:That's hydrogen production. A lot of that is gonna be blue, so actually also needs the carbon transport and storage systems. And again, the the CCC really focused in on that, hydrogen pipelines themselves, and large scale hydrogen storage and salt caverns. So you need all of this infrastructure, and, you know, that we're we're only 10 years away from trying to deliver this. So what we're seeing is we are running out of time.
Hannah:We know government is low on money. We're gonna need a pragmatic solution to to get there.
Chris:So men many of those assets you just mentioned, so offshore c o two storage, hydrogen storage, high hydrogen c o two pipelines, even power plants, they they take 7, 8, 9 years to to develop from inception to to delivery?
Hannah:At at least, probably. I mean, what? 3 or 4 years to build an average CCGT, 10 years at least to develop a low carbon CCGT. Plus, as you say, you've got these other bits of the infrastructure, and in some ways, everyone is having to work together to knit these things, together in a a first of a kind value chain.
Chris:So is that so is the decarbonization of power target in any way achievable? So are we are we heavily relying on the subject to security of supply, after the after the comma?
Hannah:I think what we have to do is lean in to get as much of this built as quickly as possible. I think on the upside, you know, we do have the the technology is is pretty much there. Power CCS is there. Hydrogen for power is developing, and there's OEMs developing that technology for large scale, 100% hydrogen fired CCGTs by 2030. The instruments to support that, the business model, so the dispatchable power agreement, which you mentioned, Chris, is there.
Hannah:The the support models for the rest of the c o two value chain are there. They just need to be allocated at pace. And then for hydrogen, it's a bit behind the curve, but it's catching up. And as you say, government's minded to issue a dispatchable power agreement for hydrogen as well. Hydrogen production business model is obviously there, and transport and storage.
Hannah:Those business models are being developed and refined in parallel with an allocation mechanism, which is looking to kick off this year. So I I think on the whole, we have got the tools that we need in the toolbox, but they need to be deployed a lot more quickly. And we need to recognize that we might not get all of them deployed at the pace needed to get to that 17 gigawatts, give or take, by 2035.
James:It sounds like there's a lot of good work going on with market mechanisms and government incentives and support structures around all of this stuff. Right? But when you combine this with other things that are also going on, like, this isn't happening in isolation. You've also got electrification of transport. You've got other renewables assets fighting for that same network capacity.
James:Got all these other issues compounding the same problem, electrification of industry. Right? So all of this adding additional strain onto, you know, this lens that we're looking through. So it sounds like a pretty sizable issue. Maybe we aren't gonna hit target unless there is a pretty serious intervention here.
Chris:So I think Hannah's Hannah's point around we've got a lot of the tools in the toolbox to to deliver much of this requirement is is right. I think what government probably needs is 2 main things to to to to to deliver this. 1 is to ramp the ambition in this specific set of sectors. So hydrogen to power, long duration storage, and power CCS, particularly to have a clear, ambitious ambition to deliver a certain level, not necessarily specific technologies, but certainly a level of firm, flexible, low carbon power.
James:At the moment, there's there's
Chris:There isn't. So so There isn't. No. There isn't. So you've got Power CCS has an ambition by the middle of this decade to have at least 1 power station.
Chris:One power station's 800 megawatts out of that 70 30 gigawatts. I'm sorry. That we're talking about by 2,035. So and and then to your point, James, about there's lots going on in other sectors. Yeah.
Chris:And lots of those other sectors have clear ambitions, and therefore, the capital and interest flows into those sectors where you do have clear ambition. Okay. So it's important for whilst to keep a level of competition, not necessarily having specific technology targets, but at least to have a level of ambition for the outcome that you wanna get. So that's the firm, low carbon, flexible power for me is a really key element to this. And it'd be good to get Anna's view on this sort of investor developer view on on that kind of ambition.
Chris:I think the the the the the the the second thing is you need a level of funding allocated, ring fenced for for this kind of effort. So, you know, the the dispatchable power agreement for Power CCS is funded through consumer levies, very much like renewables, Presumably, other power models that come forward, dispatchable power going for hydrogen, long duration storage, etcetera, will be funded in a similar way. And there needs to be a sort of funding settlement that sets out, yeah, you've got an ambition, but there's also the the the money from from consumer levies to to to fund that, or other mechanisms that the government wants to put in place. And what consumers are getting is is power capacity and security supply in a decarbonized way. So it makes sense for consumers to pay that that that that that for that funding, but there's not a clear line of sight for investors and for developers at this point on both the ambition and also the funding to achieve it.
James:Yeah. I
Hannah:agree with that. And I think it that ambition is really important, not just for us as developers of the the power assets themselves, but also for the other players in the value chain to know we should prioritize linking up with a power developer. So, you know, if you've got a c o two, transport and storage system that you're developing, power is actually not an easy emitter to absorb into that system. It's it's intermittent. By our very nature, we only wanna turn on when it's not windy enough to otherwise generate the electricity.
Hannah:So we're the the flip side of the intermittency of wind. And that actually technically is quite difficult for the c o two transport and storage systems to absorb. They will do it if government asks them to, if government sets out that this is something that we value because we want to decarbonize the electricity sector because we have an early target for decarbonizing the electricity sector, because we know that the whole of the rest of the energy system is reliant on electric electrification in order to decarbonize, and you can only do that if you get to a net zero power system. So those signals you know, those ambitions, I think, are really important. Obviously, they need to be backed by money, and they need to be achievable.
Hannah:And, you know, we see with Scotland stepping back from their 2030 goal, it's not helpful to have a target that's not achievable. I think this is with insight, but it is a I guess we've got a very, big hill to climb and we've not gone quickly enough. So now it's very steep as well as very big. That that would be my analogy here. And so in doing that, I think we also need to think about, incremental steps.
Hannah:So one of the things I think the UK has done really well is this cluster concept of, building low carbon ecosystems around c 02 clusters. That that that's a great move. But with the the cluster fit concept, I guess the focus has been getting all of the ducks in a row at one go and going, right, we've got our ducks in a row. We're gonna take cluster fit. And I'm not sure we've got time to get all of our ducks in a row now.
Hannah:I think we might need to build infrastructure ahead of need. We might also need to build CCGTs that are decarb ready that can, you know, run off natural gas but then decarbonize as soon as the infrastructure is in place. And and different locations might have, you know, the infrastructure ready first or the CCGTs ready first, but we're gonna have to have that bit of flexibility in order to get to that 2035 target.
Chris:So there's huge co coordination problem there of building sufficient power stations under different different policy mechanisms and getting all the financing and and and and funding for those for those plants, whilst also coordinating with all the relevant networks, be that hydrogen fuel in or be that c 02 out. And so that that feels to me like a real really difficult coordination problem, to to do all at such a such a great pace. I think with respect to building the facilities, the power stations, you know, the the precedent of the the sort of dash for gas period, we built in excess of a gigawatt a year of gas fired power stations. So you it can be done in terms of delivering the power plants if you've got a pipeline and the right incentives, as in a pipeline of projects and the right incentives. But it needs that clear ambition and funding, and it needs maybe a bit of pragmatism around decarbonization, at at different points in time for the assets.
Chris:So you might wanna build, as as Hannah suggested, some assets that decarbonize later. You burn gas to begin with and then decarbonize later. It resolves that coordination and timing problem a little bit.
James:You can see as well. Right? I I totally get that, but, like, you can see how that might be a little bit of a PR nightmare. Right? So we're building out new thermal plant that will decarbonize later, yeah, whilst we're also investing in heavily in offshore wind.
James:And so you can kind of see if you were in maybe a political position or policy position, that'd be quite a hard thing to maybe achieve. Right? Is that a fair I mean, you know
Chris:I think it's a fair I think it's a fair challenge. I think the reality though of this of the current situation is the base case is that we will build new gas fired power stations through, say, the capacity market, and that will just be, be sort of constructed where wherever investors see, valuable, sort of investment case on the electricity system rather than any kind of real commitment from government as to the decarbonization plan for that particular asset. So I wonder if there's a space for a conversation about could you, develop a mechanism or incentives to to build stations that are committed to decarbonization, and there is a commitment to that decarbonization plan with the necessary infrastructure to connect, be that a CO 2 pipeline or a hydrogen pipeline. There's a similar policy mechanism that's been developed in, in in Germany where they have a similar sort of policy problem and, you know, Germany is a a sort of climate leader within Europe, but is seeing the need for flexible thermal power Right. On a on an unabated basis that will then later be fueled by hydrogen.
Chris:Germany is not currently planning to do just to to power CCS, though it will now be allowed. It's not it's not within the sort of plans for for incentivizing investment. So I I think that there's sort of precedence even, you know, in sort of equally climate leading countries across across Europe as well for these kind of mechanisms. So for me, if we're gonna meet that sort of decarbonization ambition over the long term, I e 2050, whilst maintaining security of supply in the in in the short to medium term, we're gonna need to plug the capacity gap. And there's a really key point there, which is we're gonna take consumers, and and citizens with us on that on that journey.
Chris:Right? Because if if you start to see power cuts because of decarbonization, that's gonna be a really bad position to be in. Right? And, you know, new gas fired power stations are pretty efficient. They still have emissions, but they're much more efficient than the old coal fired power stations or even old gas fired power stations.
Chris:And so there there's still a really positive story for wider decarbonization of the UK economy with the progress that we've made. And so I think maybe it's it's it's now time to be a little bit pragmatic and and think about how can we maintain secure supply with some some new assets, but then with a commitment to to decarbonization later.
James:And how's that how's that affecting your role within SSE and, you know, on a daily, monthly, or in a basis in terms of the decisions you guys are making?
Hannah:Yeah. So, I mean, I I agree with what Chris has set out there. And, you know, I I think it's interesting. In the UK, we have had the privilege of taking security of supply for granted for for a long time now, and that is partly, I think, because we've we've got the 27 gigawatts, whatever it is, that that's online at the moment that will be, aging as we speak. And it's partly because the capacity market has actually worked to date.
Hannah:Now it's very we've got an interesting perspective, I think, as SSE because we also have a business in Ireland, and Ireland has been in a very different situation. So it's been household news over the last couple of years that they do have a security of supply crisis, and that has led to emergency generation in parliament, emergency generation being built, and that's, you know, highly, highly suboptimal. So we do need to wake up to the fact that this is a risk. It is not a risk that people will tolerate or that their elected politicians will tolerate, and therefore action is needed. And actually, the environment is changing a bit because whilst the capacity market has in the UK works well to deliver the capacity that we needed, I think 2 things are different now.
Hannah:1 is the scale of the challenge is is huge. So this kind of 30 gigawatt gap by 2035, and actually we've got 27 gigawatts of plant online at the moment, which is a you know, it gives you a sense of the scale there of the challenge. It kind of indirectly managed to get our own Kidby 2 built, although we actually took FID, slightly, you know, challenging decision. I'm sure I wasn't in the organization at the time, but we took FID without a capacity market contract. But we probably wouldn't have done that if we hadn't had that mechanism there and then we got a contract shortly after.
Hannah:That's it. EGRA has now got a capacity market contract, and, you know, we'll we'll see there where that goes. But it hasn't actually managed to bring forwards large scale CCGT in any really significant quantities. It's brought forwards much less efficient peaking plant, but that's not gonna be enough to solve our problem. So much bigger problem.
Hannah:In fact, we don't necessarily have the right tool to address that. I think that that's one point I would make. And the the solution to that the obvious solution to that is lift the £75 cap on the the cap mech. So that is, I think, essential. The other challenge is we do not want to, bake in carbon to the system.
Hannah:You know, that is in the past, the capacity market hasn't needed to be a low carbon tool. It hasn't been that, but that has to change. Otherwise, we risk baking in emissions. And my concern you know, I I I hear your point around the the political challenge of saying we need to build more thermal fleet. And maybe 2 years ago, I would have thought that's unthinkable, but our prime minister just came out and said that, and no one really battered an eyelid.
Hannah:And lay labor kinda went, yeah. That's true, or something a little bit more articulate than that. But it's amounted to something along those lines, I seem to recall. So actually, my concern is not that it's going to be politically unacceptable to say that this needs to get built. My concern is that people aren't gonna focus on decarbonizing it enough and that we need these really robust tests to make sure that we do not build something that isn't properly able to be decarbonized as quickly as possible.
Hannah:And that that that needs to be really, really strict, that set of tests. And I guess my other concern is that there perhaps isn't a level of realism sufficiently yet around what is gonna be needed to bring forwards that that capacity. So, you know, like, the lifting capacity market cap and showing a mechanism by which plants can off ramp off the capacity market onto a low carbon, instrument, so dispatchable power agreement if it's power CCS, or indeed if it's hydrogen for power, if the government lands on that as a solution so that you can switch track essentially from an unabated capacity market contract to an abated, low carbon dispatchable power agreement with the same plant. And by doing that, avoid baking in carbon emissions or having a generation of stranded assets.
Chris:I think and I think what we're also sort of saying here, and good to get your view whether you agree with us, Hannah, is that government's got an increasing role to to think about and plan for decarbonization of those kind of assets. Because, you know, if you're building assets through the capacity market and then we want to decarbonize those later, that decarbonization broadly looks like hydrogen to power or power CCS, and therefore, you need infrastructure the government is making a decision on building, in the particular location that it that it needs to be built to decarbonize those sort of pretty pretty large assets. And so government's got an increasing role, it seems, to think further ahead than the, say, the capacity market capacity, sort of timing. So it currently sets a a capacity target 4 years ahead, And and so it's got a an increasing role to think further ahead and to think a little bit more deliberately about what assets need to be built where on the power system, but also on on the sort of low carbon infrastructure side.
James:Okay. So so this isn't, you know, a kind of my deep understanding, but I kind of what I'm hearing, and you correct me if the summary's wrong, is effectively there's an opportunity to build out additional gas thermal assets. But and and, you know, and and economically that that's an opportunity that exists. But, actually
Hannah:Well, doesn't quite exist is what I'm saying, but could exist
James:Could exist.
Hannah:With a with a few tweaks.
James:With, yeah, with tweaks on the current the current current policy landscape. Okay. But, actually, your main concern is making sure that they are delivered in such a way that are you know, can be decarbonized in the future and are incentivized to to put that, I'm assuming, additional capex in now or, you know, to to to do that. Okay. And then and if and if no interventions are made or if there's no improvement, what is, you know, the kinds of factual we're working against?
James:Is it that this won't happen? Or
Chris:So so the the the brewing analysis shows a capacity gap starting to emerge around about 2028 with our current current sort of analysis and and assumptions. And that's based on policy that's already in place, and it's based on, sort of committed build. So it it it sees, for example, net zero t side power plant being built, but no more power CCF after that. Right? So there there absolutely is opportunity for government to procure more capacity, both through the capacity market and through its new mechanisms, so the the Power CCS, mechanism, as well as additional things like interconnectors through the, often, cap and floor windows and so on.
Chris:So I think there really is an an opportunity for government right now to to to sort of increase that ambition to try and seek that funding settlement that's required to to fund this new infrastructure build out and to maintain security of supply, but do it in a way that does lead us to a path to long term decarbonization. So even if it's not a 100% decarbonization by 2,035, we're getting a significant level of decarbonization into the, thermal thermal fleet that that that enables that longer run decarbonization of the whole economy by 2050. That should be the the aim.
James:Great. Great. And for you, Hannah, from your position?
Hannah:Yeah. I just wanted to pick up on your point around the, the the tests of ensuring that this really can be properly decarbonized. And I think for for me, they are you've gotta have a a project that is in close proximity to the planned infrastructure assets that are gonna facilitate that decarbonization. So that is a c o two pipe that goes to a store, or a hydrogen pipe that goes to a planned blue hydrogen project and also to hydrogen storage. And, obviously, that planned blue hydrogen project also needs a c o two pipe that goes to a store.
Hannah:And and so quite quickly, you get very focused on regional planning in these kind of roles because you look at the map and you just go, that would work, that would work, that wouldn't work. That question mark depends whether government's gonna do something around, c o two for dispersed sites, for example. And and I think, you know, that's an interesting question because we've got a bunch of assets around the country which are not approximate to c o two stores or to, you know, the the cluster infrastructure that's developing around them. So you got a couple of choices as us, SSE, but also as government when you look at that. You either say, well, that will run to the end of its life and then it will close, at which point, you've got a grid a grid connection there, a brownfield site, but no ability to use that to bring in place new low carbon dispatchable generation.
Hannah:Or you say, well, we don't wanna waste that grid capacity because we know that's like gold dust on the country as well. And in fact, you know, it's got all of the others. It's got water. It's got the science. It's gonna get planning.
Hannah:We've got a workforce. Let's not forget the just transition and giving these people future jobs. So we will find a way to facilitate through non pipeline transport of CO 2 and ability to turn you know, create a new power CCS project, for example, at this site. And
James:So it all has to be joined up. It has to have
Hannah:to be joined up. And if you're not gonna do that dispersed site solution for CCS, then you've gotta build, you know, twice the grid connection at t side, for example. And that is comes down to sort of system planning set of decisions and choices. And I suppose the role of NESO it's interesting because they are taking on you know, there's a strategic planning for electricity, gas. They will be given the strategic planning for CCS.
Hannah:So sorry, for hydrogen, but not necessarily for CCS. I think it's that way around. So that's interesting because you've got sort of 3 out of the 4 of the the jigsaw puzzle pieces that that I'm working with. And, actually, you know, I think they're also looking at regional energy planning or local area energy planning. A lot of these are the same concepts, but it needs to be applied at an industrial scale and and thinking about this power sector challenge that we're discussing today.
Chris:So such a such a crucial role that organization is gonna play in the whole of the decarbonization effort increasingly, to to look across those different systems and to plan the the relevant infrastructure that's required to enable it all, it it seems like a really crucial role. And I think more of that being done by sort of experts in, you know, network and system operator companies, the the the the better. Right? Because they have the information and the capability to to to be able to do that. And it's great that the government has delegated some of those roles into into the National Electricity System Operator.
Chris:I think the institutional design across CCS, hydrogen, and and, power decarbonization does need a bit of further thought. I I think having the right roles and responsibilities around all of the metering arrangements and the the the settlements and so on around CCS, and all of the things needed to make the sector tick still needs a bit of thought. And I know government's doing a lot of that work through through the cluster sequencing program and also through the the CCS vision work that it's recently kicked off. So that that's that's all great to see, but I think that institutional design piece does need need sort of further work and thought. And, as Hannah mentioned, you know, that it there's a a a not certainty about who's gonna be doing the CCS network planning.
Chris:Is that gonna be transmission and storage companies, or is it gonna be a coordinated effort across the National Electricity System Operator?
James:It sounds like there's a hell of a lot of, not just work to do, but also decisions to be made, right, in terms of how this is all gonna be this is all gonna be Not an
Chris:easy challenge.
James:Yeah. This is one of the sounds like one of the biggest challenges we have.
Hannah:And one of the things I slightly worry about is you know, and you see in the CCS vision, this desire from government to step away from the CCS process. Now I I definitely think we can build on the success of the cluster process by clarifying the role of government and that, you know, there are different places that you can draw the line there, but I do not think government can step out of the picture. Otherwise, who is making those decisions?
James:Yeah. Who's guiding it? How's it, yeah, how's it gonna be thrown together? Yeah. Okay.
Chris:There's a decision making role, and then there's a sort of funding and liability role. Right? And I and I do think, over time, as much as possible, whilst still maintaining pace and and scale of delivery, government stepping back from the funding role and also the liability underwriting role is gonna be necessary to get to the kind of levels of deployment for CCS and for Hydrogen that that we need. So more of that sitting with the private sector is is absolutely gonna be necessary. Can't all sit on government's balance sheet, as a as a liability.
Chris:But doing that in a in a way that's, deliberate and measured and maintains investability whilst also ensuring that there's sufficient incentives through carbon pricing and product standards is is gonna be necessary. And and having the right decision making framework is is crucial as well, as as Hannah mentioned. So the right decision is sitting in the right places where the information is. I I I agree though that the government is is going to be a decision maker in the in the CCS and hydrogen sector for a for a long time to come.
James:Great. Well, I mean, what a fascinating area, and it's gonna be exciting to see how this builds out. Any parting words from you, Hannah?
Hannah:I guess my my sort of oh, should I give you my Christmas list? Yeah. I mean, it's too far away. Can we do it sooner
Chris:than later? Let's do it.
Hannah:I think, you know, recognize the size of the challenge and the need for incremental steps. Yeah. And, you know, Chris and I both, touched on that. And to do that, strong decarbonization tests for any unabated gas that is gonna be brought forward as an interim measure so that we don't bake in carbon emissions, addressing the the changes that are needed for the capacity market in order to facilitate that, but also then the off ramp into the low carbon business models, and then critically investing, you know, alongside need, ahead of needs. Don't be don't let the perfect get in the way of the good in all the surrounding infrastructure, including, you know, blue hydrogen, c o two storage, and pipes, pipes, pipes, pipes.
James:Okay. You want more pipes. Great. And what about you, Chris?
Chris:Yeah. So so, look, I think, as I said earlier on, the setting a clear ambition for the outcomes that you want from your policy framework and your investment. So in this context, therm low carbon thermallowcarbon flexible power, having an a clear ambition about what level we need to procure, what level we need to deliver through investment and and and delivery is is crucial. I think having a funding settlement that backs that up is absolutely crucial as well so that investors can see the line of sight to, to an investable proposition. And I think deploying competition where it's where it's needed, and where it's possible, but not necessarily, you know, going down a a a route that is competition for competition's sake.
Chris:I think some deliberate procurement of particular assets with that long term planning view in mind and then keeping a pragmatic attitude to decarbonization in the short term such that we can achieve our 2050 goals. So allowing maybe some some asset build of of, of unabated gas that can then be deliberately decarbonized later.
James:Great. Thank you, guys. Thanks both. That was, really interesting. And, if you've got any questions, please reach out to, Chris on the Boringa side, or Hannah, if you wanna I'm sure, Hannah, if you if you've got others, people out there in the market that wanna hear more about what you're doing or wanna work with you in SSE, that would be that would be great.
James:So thank you both. Thanks.
Hannah:Fantastic. Thank you.