Budget boost for the UK’s energy sector?

This week, the UK Chancellor Rachel Reeves delivered her budget – the first from a Labour government in 14 years.

Whilst there were no big surprises for the energy sector, the budget still raised some interesting questions about the challenges in the UK when it comes to channeling private investment, and how effective the funding is going to be.

In this episode, Richard dissects what the announcements and fiscal decisions laid out by the Government will mean for energy businesses in the UK.

Host: Richard Sverrisson - Editor-in-Chief, Montel

Guests: Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy Research; Johnny Gowdy – Director, Regen; Paul Buckworth – Montel Analytics 

Editor: Bled Maliqi

Transcript

Richard Sverrisson - Editor-in-Chief, Montel: 0:06

Hello listeners and welcome to the Montel Weekly podcast where we bring you the latest news issues and changes happening in the energy sector this week. We turn to the UK where we saw the first labor budget in 14 years. We haven't seen a budget before where the theme of net zero is weaved throughout its policies and measures. It's fair to say that there was nothing hugely surprising the announcement itself for the energy sector as much and been trailed. Or released ahead of the budget. Yet the full document does raise some interesting questions around the barriers and outlook for the energy sector in the UK as we look towards infrastructure build and the grid rollouts. And also it raises questions of how to stimulate investment in the uk. That's, I think, one of the key aspects here. Now, I'm gonna be speaking to our main podcast guests shortly, but first. I'm very happy to be joined by one of our Montel consultants, Paul Buckworth. A warm welcome to you, Paul.

Paul Buckworth – Montel Analytics: 1:06

Hello. Yeah, thank you. Yeah. Pleased to be on board.

Richard Sverrisson - Editor-in-Chief, Montel: 1:09

Fantastic, Paul. So what was there in the budget specifically for the UK energy sector? What were your main takeaways, would you say?

Paul Buckworth – Montel Analytics: 1:16

Yeah, there, there were a number of announcements in there specifically on the energy side. I mean, obviously there's a sort of wider macroeconomic stuff that had been well trailed in the mainstream media beforehand. But on in terms of the energy sector and electricity sector there, there were certainly some. Some big ticket items and one that stood out for me was the allocation commitment of 3.9 billion funding to the carbon capture usage and storage and hydrogen projects. And there are three, I think, main projects under that would be captured under that umbrella. There's the high net project over in the northwest and in the industrial cluster there and similar industrial clusters in the northeast and T side. Not too far from the tel office actually. And also on humble side. As well. And those are the three, three main projects that fall under that umbrella. There's also mention of the electrolysis. Projects are hydrogen that sort of fall under the same umbrella, but I think are outside that, that particular pot of funding. So I think those are the 11 electrolysis projects under the hydrogen allocation round. And there's commitment of funding to those, but it's a bit vaguer on the details and those, so that's certainly one of the big ticket items. There's also. Confirmation of GB energy being set up with a hundred million pounds funding and 25 million allocated to set up costs. And that's a government body that'll be set up and and located in Aberdeen. National Wealth Fund as well also stood out that's stated to, or it's objective to catalyze over 70 billion in private investment in UK's clean energy and growth industries as well. And there are a number of commitments around that that, that were flagged.

Richard Sverrisson - Editor-in-Chief, Montel: 2:56

Brilliant. So Paul, what about sort of tax changes, for example that they're going to infect investments into the uk.

Paul Buckworth – Montel Analytics: 3:03

What can you say about that? Mentions of changes to the changes to capital gains tax had have been well trailed, I think in the media. And there's also mention of changes to venture capital trusts and carry interest. I'm not an accountant, I don't understand the details of those, but clearly that will impact the kind of investment regime generally, and certainly for the energy projects. And those are. Factors that developers will have to deal with and in, in progressing the projects that we see under development.

Richard Sverrisson - Editor-in-Chief, Montel: 3:33

Paul, fantastic. Thank you very much for those opening words and I'll let you get back to your, to the busy Montel office in, in the Northeast and and we'll speak again soon, but many thanks. I'm pleased to be joined now by Pranav Menon, who's product manager for the GB Power Renewables at Aurora Energy Research. And Johnny Gowdy, director of Regen, the center of Energy expertise in Great Britain and Ireland. So a warm welcome to you both. So Johnny, if I can start with you, what was your take on the budget that was announced on Wednesday? Anything, did anything surprise you?

Johnny Gowdy – Director, Regen: 4:05

No big surprises, there was a sort of flurry of interest before the budget, whether we might get an announcement around the levies, which in Britain are currently levied against electricity, and we know that at some point we're gonna have to deal with that and possibly move that into taxation or spread those levies to gas. But in hindsight, I don't think the government was in a position to make that sort of announcement without having done. Quite a lot of pre-work and I guess this was a big budget for other reasons. I mean, the government needed to fill a 22 billion hole and raise 40 billion for spending and that was always gonna be the main agenda item. So there's a few announcements related to energy mostly had been trailed or had been announced previously. And I guess you know, the positive is that energy gets name checked a lot and a lot of those initiatives that government is supporting. Are referenced.

Richard Sverrisson - Editor-in-Chief, Montel: 5:02

Yep. How about you Pranav? Anything that surprised you here?

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 5:05

Yeah, for sure. Picking up on what Johnny said it, it was an interesting budget for sure. We saw a lot of commitments towards the general energy transition and decarbonization space, but really the overarching goal behind all of this seems to be trying to crowd in private investment into the sector. And for good reason, because thinking about. Labor's clean power by 2030 plan, that's expected to cost around 200 billion pounds in just infrastructure investment, right? And so you need the private sector to fit a significant portion of that investment, and that needs to happen quickly. So for me, really the big questions are more around how effectively is the capital that's been committed in the budget. Going to be deployed, de-risk financing in these days in technology class as an infrastructure. And also how quickly is this going to be backed by changes to the planning and regulatory framework, just quickly becoming a key bottleneck to decarbonization.

Richard Sverrisson - Editor-in-Chief, Montel: 5:54

And Johnny, how about the change in fiscal rules? How would they affect energy and investment? You perhaps, I've said, clearly that, that's the plan. You need the private sector on board, but are these gonna be enough to generate that kind of the money into the sector?

Johnny Gowdy – Director, Regen: 6:05

Yes. I mean that is, Pranav has summarized it tremendously well, is it is about crowding and private investment and there's a number of sort of mechanisms now in place to do that in including the new a national Wealth Fund, which is basically UK Investment Bank, rebranded. I think the changes, the fiscal rules, they make so much sense, don't they? If you're investing in infrastructure, you need to treat that differently. And in a way, the fiscal rules are there. To give it assurance to, you know, in investors and lenders that the government has got a credible fiscal strategy. And if it can change those rules in a way that keeps the market on board, then I guess that's a sensible thing to do. One sort of big question is. Is this budget going to increase interest rates over time? And what impact might that have? I mean, the changes in national insurance could increase wage inflation, increase in government, borrowing this budget does increase. Government borrowing could put up borrowing costs. I think the OBR has said that it, it will have a net impact on interest rates of about 9.5%, but that's against a backdrop that interest rates are falling. And so I suppose the government, if you're going to. To bring in a budget like this against falling inflation and falling interest rates, now is a good time to do it. So I think overall, private investment in Great Britain will look on this positively and say, yes, the government has got some mechanisms in place to increase infrastructure, investment makes a lot of sense. That's get behind this and support some of these initiatives. There's a lot of goodwill around at the moment.

Richard Sverrisson - Editor-in-Chief, Montel: 7:38

For those listeners who aren't unaware of what the OBR is as the office for budget responsibility, that was set up.

Johnny Gowdy – Director, Regen: 7:43

That's right. That's the watchdog that keeps an eye on the government numbers and gives that extra assurance that the government is credible in what it's saying and its budgets add up.

Richard Sverrisson - Editor-in-Chief, Montel: 7:52

Absolutely. So Pranav. What's your view here? Johnny was talking about the National Wealth Fund, is that gonna meet the key challenges ahead here in, in terms of infrastructure build rollout? Particularly, for example, for the grids, if we're gonna roll out the grids that needs huge amounts of investment.

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 8:06

No, for sure. And I think part of the challenge right now is with the National Wealth Fund and even great British energy, the remit seemed quite wide, right? So the original sort of documentation around this talks about. Investing in projects, developing projects, local power plants, supply chains, a really wide remit, and ultimately, I think with the sort of limited capitalization that's currently communicated to the organization. It's really a question of finding the right place to invest. I think supply chains is a big part of this, both for grid infrastructure, but also more broadly, right? Because what we've seen in GB is a case of domestic supply chains not really expanding despite all of this additional low carbon capacity that we've connected to the system over the past decade. So really thinking about, okay, what is the best place to put my mind money in, especially on the supply chain side. That could lead to widest the logo. Benefits in terms of job creation is also key. So it is very much a case of I, of recognizing that this investment has a high opportunity cost and identifying the best places to deploy it. And historically this has been a challenge. So UKIB for instance did struggle to identify these opportunities and deploy capital. But hopefully that's now changing with the broader remit that's given to the national.

Richard Sverrisson - Editor-in-Chief, Montel: 9:17

Johnny, it's been portrayed in the UK media as very much a tax and spend budget that's announced here. Labor going back to its roots, if you like, as being, as being bandied about that. But how much does the sector then rely on private investment in order to meet the targets of clean power by 2030, for example? We'll probably talk about that later, but,

Johnny Gowdy – Director, Regen: 9:34

with the exception of CCUS, which we might come on to almost entirely relying on private investment. The grid infrastructure upgrades that you're talking about, we think it might be somewhere in the region of 120 to 150 billion pounds to upgrade the grid between now and 2050. At the moment, all of that will come from privately owned, albeit regulated transmission operators. As par said about national Wealth Fund. They've got 300 million, the great British energy, 125 million. These are relatively small numbers, and I think the plan is to use those funds to seed projects, to develop projects, to de-risk projects. So the actual volume of capital is coming from the private sector. I think that's true across the whole of the industry. CCUS slightly different, and nuclear may be slightly different as well, but the renewables that the established technologies will be invested in by the private sector.

Richard Sverrisson - Editor-in-Chief, Montel: 10:29

And what are the challenges involved here? Pranav, 150 billion by 2015. These are eye watering sums.

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 10:36

Yes, and especially picking up on that point on established technology classes, right? So we now in Great Britain have connected significant amounts for conventional renewables like solar and wind. But really the big challenges that we currently see is really long lead times to project deployment. Constrained supply chains and just this overall environment of policy and certainty. And for instance, if you look at the project development times, it's actually quite quite shocking in some ways where if you are an offshore wind developer and you're trying to start a new project you spend about six to eight years and just early development, right? And this is time spent getting a planning permission, securing a seat at lease. And then when you add in the complexity of connecting to the grid. Suddenly you're looking at a total development time of around 13 years. And when you look at that number in the broader context of we really need to triple the rate of deployment to have any hope of getting to that clean power target you do realize how big a bottleneck this is, and this budget does commit some spending towards streamlining this process, mainly through additional capital. The planning authorities to expand their workforce. But ultimately, how quickly is that investment grade to translate into quicker development? I think is the key question.

Richard Sverrisson - Editor-in-Chief, Montel: 11:46

It, it's a first step, isn't it, Johnny? The budget, I mean, we're now moving into the topic of the clean power the targets et cetera. So I think, we'll, we'll, but I, but we'll talk about that more. But how, and in terms of the challenges ahead here, Johnny meeting these target just for 2030 are enormous. If you're taking eight years to build an a, a, to get you know, the first screws into an offshore wind farm, I mean that, that's an astonishing amount of time.

Johnny Gowdy – Director, Regen: 12:10

Yeah. And that has been the problem with particularly offshore wind and grid. The actual construction of these projects, ironically, is pretty much, is pretty low risk. That has a good, track record of on-time delivery and on budget delivery once construction starts. But it's the upfront planning and approval process with grid planning and getting approval from off GM to go ahead and commit the expenditure has been one of the issues. And I think off GM now has certainly changed their approach. They're much more supportive of anticipatory and strategic investment. We saw the Nick WinDor report last year on transmission investment that had to accelerate that. So there's a realization that. Wherever possible government and its regulator needs to get behind these investments and speed things up. When we've spoken to the grid operators, they're less concerned about some of the supply chain issues that we thought were going to be a real constraint. Can they get enough copper and cables and can they actually build these projects? They seem pretty bullish about that. Their main concern is planning and the fact that these projects get stuck in planning for years at a time. So I think that change in planning. It's not necessarily changing planning rules. I have mentioned the new resources going in. I think there's 46 million pounds to recruit planners, and that's gonna help a lot to get these projects going forward. And of course, planners all often will work with the grain of government. So if they're told that this is a national priority and this needs to be done, then they the weight of emphasis is more on giving approval rather than trying to find reasons to object. And I think that's a positive thing about having a net zero plan and a clean power commitment. So I think going back to your question about 2030, it's clear that if a project isn't already in the pipeline, it's not gonna be ready by 2030. We're already, that's baked in, if you like. The Niso the National Energy System operator is currently producing a set of pathways to 2030 to achieve those clean part targets. They're looking at various options and what we're hearing from them is actually the pipeline, as it stands at the moment, does have sufficient capacity. There's an awful lot of projects that are waiting to be built. There's a lot of projects. I've already got planning that could be brought forward quite quickly. Grid is still an issue and getting connections is still an issue. Why? There's a, which is why there's a lot of focus on the connection queue and how we can speed that up so there's a reasonable chance, I think, on paper that we could achieve that clean part planned by 2030. But there's an awful lot to do to deliver those projects and I think that's where, Chris Stark and Mission Control comes in.

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 14:45

Yeah. Sure. And maybe just to add to that, Johnny, I think another point there is also around policy, right? And one of the big things here, of course, is the review electricity market arrangements. It's been out for about over two years now. Really some of the more fundamental questions are around market design still in question. And what this ultimately means is that you are hindering the pace of. Project deployment because this is priced in, into the cost of capital, into decisions being made by businesses that now take longer. And ultimately getting into 2025, still having such a big consultation open and has divided the market quite a lot as well. Again he's a headwind that, that has been slowing down. Deployment.

Johnny Gowdy – Director, Regen: 15:22

I promised I wasn't gonna mention zone pricing because we'll go off on one, but it's hanging over us and it is affecting investment, I think. In particular to the buildup to the contracts for difference allocation round seven. So our next allocation of CFDs I think the government's got to sort that out before we go into that round because this is a really important round to get the capacity that we need for 2030. We're expecting a lot more wind, solar, offshore wind in that round. And if investors are going in with hesitancy and uncertainty about the policy environment, that can't be good.

Richard Sverrisson - Editor-in-Chief, Montel: 15:58

And of course we are moving away from the discussion on the budget, but I think this is a very interesting point here, Pranav about, zonal versus national versus regional pricing. And as Johnny says, these are key fundamental design features that, if you are not gonna deal without uncertainty, you are not gonna get the investment anywhere near the kind of level of investment if any, at all in, in they're years ahead. So what's your view here? Do you agree with Johnny that this needs to be, this needs to be sorted out ASAP?

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 16:23

A hundred percent. I think at the minute the market's looking for clarity, right? We've seen lots of analysis come out from various different bodies. The evidence is there, I think on both sides. I think right now it's a question of really sitting down, coming to some sort of common ground and moving ahead with this. Because ultimately the longer it continues to be open, the more uncertainty there is in the market. And I think, not just on the deployment side of things, but policy uncertainty has been a feature that we've seen in gb. Even on the demand and electrification side of things, right? So really big policy plans are the future home standard, the ban and the sale of internal combustion engine. That goes lots of uncertainty around when this might be deployed, what year it's going to come in. And all of this just means that if you're a business, if you're a developer trying to make investments or are forward-looking long-term investments it just adds the complexity and ultimately increases the cost of that investment, which is ultimately passed on to the consumer. Of course.

Johnny Gowdy – Director, Regen: 17:20

I'm a little bit less on the fence. I guess I think zonal should be put to one side and we should carry on with market reform within the existing rational structure. And one of the reasons for that is if we go for zonal, we're gonna have another two years of consultation and design.'cause we don't actually have a design for zonal that we can plug and play. We're gonna go through an awful lot of time trying to work out how that would work, how grandfathering and mitigation would work to protect investment, et cetera. To me that just introduces an opportunity

Richard Sverrisson - Editor-in-Chief, Montel: 17:50

and delay of course, yeah.

Johnny Gowdy – Director, Regen: 17:51

And delay. Yeah.

Richard Sverrisson - Editor-in-Chief, Montel: 17:52

So do you think, I mean you mentioned this in passing a bit, the permitting issues, are they also, I mean obviously they're quite central here and the new government seems to have put forward ways to, as you mentioned, accelerate the process here. Do you think that's. Kind of been dealt with, or, there's a lot of opposition to, for example, countryside being ruined by pylons. That's gonna keep cropping up now in the years to come, isn't it?

Johnny Gowdy – Director, Regen: 18:14

Yeah. And there's the perception and the reality. So if you listen to some commentators, the whole of the countrysides gonna be covered in pylons, and we're gonna have the mar, the March of the Pylons down the east coast of Britain. In reality, yes, we have got to put in some new pylons and there's a reasonable number there. A lot of this is upgrading existing routes, so just to be pedantic, the number of new pylons might be slightly less than people think, but we may need to have, bigger cables and larger pylons along those routes itself. I think there's a real communication job that needs to happen here and people need to be obviously brought on board. We need to think about some other ways in which we can provide community benefits on the back of some of this infrastructure as well. In terms of changing to actual planning rules. Apart from the change that's been made to onshore wind, which was a tweak basically to, to take out a barrier we haven't seen a lot of actual changes. Some of it's been about providing more resource, providing more direction, et cetera. There is a planning and infrastructure bill, which is due early next year, or we may see more detail in that, but it's actually quite hard to pin down specific changes that suddenly unlock the planning system. In many ways, it's more about the process and. The speed with which decisions are make are made and the timeliness in which the whole process runs and the resources around it. So it's not like there's one thing that we can pull out and all of a sudden these projects get approval and I'm not sure that's what we really want. We still need a robust planning system and we need to have the challenge. We need to. Stakeholders or local people have to have their representation. It's about the speed of which that is done, I think.

Richard Sverrisson - Editor-in-Chief, Montel: 19:53

Makes sense. Yeah. I think you still need the buy-in, you need to have that from the local communities.

Johnny Gowdy – Director, Regen: 19:57

Yeah. It doesn't help when commentators, describe it as. Pylons everywhere, wind turbines everywhere, solar farms covering all our, foods, food, land, et cetera. These are all untrue, but that's the perception that goes out.

Richard Sverrisson - Editor-in-Chief, Montel: 20:10

Absolutely. That's a very unfortunate portrayal of this energy transition that we need to proceed with. Pranav. I'd like to just swing back the discussion, two elements of the budget. Johnny mentioned CCS. I can't, I haven't got the numbers on, on, on the top of my head here, certainly there's a lot of money allocated here to the billions of pounds. What's your evaluation of that and these projects? Is this kind of, what kind of business is that?

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 20:32

Yeah, no, fair enough. And I think the big headline number that grabbed the grab loan attention was 22 billion over 25 years is what they've committed. And ultimately, CCS is one of those technologies that has proved to be quite divisive, but I think it's quite useful to think about this in terms of the overall backdrop of reducing economy wide emissions in the uk. And so far, we've done a pretty good job end of 2022. Total emissions economy wide is about half what it was in 1990. Looking ahead. If you really have to get economy wide net zero, you need to now begin to tackle harder to abate sectors like industry, like heat, like transport. And for some industry like cement for instance, it is quite clear that CCS is one of the key route to emissions abatement. But even in other sectors where electrification is probably more viable, you have to remember that this is going to result a lot of load growth. On the system in general. And what that means is the power system does need to have low carbon dispatchable forms of generation. And the reality is most forecasts, most models do show that CCS is one component of this, right? For me, the big question is around deliverability risk. So we haven't quite deployed CCS at scale yet. Which means that it's quite reasonable to expect that some of these projects might have unforeseen delays. And again, the clock is ticking. When this cluster sequencing process originally started a couple of years ago the plan was to some of these initial projects of now to see funding to be commissioned the mid 2020s. And here we are at the end of 2024 and they've not reached FIT yet. So in, in some cases a question of yes, agreeing that you do need some extent of this technology based on analysis from multiple forecasts, multiple models and ultimately beginning the process of delivering these specific kind projects, which will ultimately result in and vital learning.

Richard Sverrisson - Editor-in-Chief, Montel: 22:23

And what's your view, Johnny, here on, on CCS? Is it expensive, unproven?

Johnny Gowdy – Director, Regen: 22:26

It's very much the same. Very much the same. We've done modeling. We did the day in the life electricity system 2035 for the ECO, a couple of years ago, and it's clear we do need dispatchable generation at the moment. The contenders for that, or CCOS or possibly, hydrogen as a fuel source for power generation. I have a love hate relationship with CCOS. We need it. Everything says that we need it, but why is it being so slow to deliver? And I think that, P'S comment about the clock ticking is really true because if CCOS doesn't deliver within the next five years or maybe eight years, other solutions are coming forward. The cost of batteries is dropping significantly. We could look at a system which is essentially backed up by storage as well. Electrification for industry and the like. So the role that CCOS plays has been shrinking somewhat. And I have a question If CCOS is so important, particularly for the fossil fuel industries, it's the lifeline for the future for gas. Why are oil and gas companies in the private sector not putting far more money in? The numbers we're looking at here, as Pano says, is 22 billion from government to crowd in 8 billion from the private sector. That seems to be the wrong way around. It's completely the reverse in every other sector, but by magnitude. So why aren't we seeing more investment from the private sector and why haven't we seen these projects coming forward before now? It's been painfully slow to watch the progress of CCOS.

Richard Sverrisson - Editor-in-Chief, Montel: 23:54

Yeah, as long as I've been in, in the sector there's been talk of CCS and we haven't really come that much forward. But Pranav, Johnny also mentioned hydrogen and there's certainly a lot of money allocated towards green hydrogen. We've talked about it a lot on this podcast in previous episodes, and we can see some of the projects out there across Europe and certainly Northern Europe as well as some in Southern Europe are falling by the wayside. They're not reaching the FID stage or being just. Gently scrapped. Is this the right way to allocate money, do you think, in the budget? What's your view here?

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 24:28

So I think it definitely makes sense with supporting early stage electrolyze, especially to the hydrogen allocation rounds. I think it is quite sensible way to do things, but the challenge again, behind Kickstarting, the hydrogen sector isn't so much about just throwing money at it, but recognizing that there, there are deeper structural problems that need to be solved there. For instance, these 11 projects that are supported by the first allocation round. Given that we don't quite have. Robust storage and pipeline infrastructure. A lot of them are targeting direct delivery to offtake. And then you begin to have questions around, okay, is there enough credit worthy offtake for hydrogen in GB and challenges like that. So really I think at the minute delivering these projects is quite useful. But ultimately the only way you're going to see a strong growth in the sector is is through transport, through storage, through infrastructure once again, which is part of the overall. Narrative with the budget and I think with the question more is around how ambitious do you want to be around hydrogen? I think the last couple of years we might have been overly optimistic as an industry about the role of hydrogen. I think that's being tempered down quite a lot. But ultimately it is one of the many pieces in the energy transition and recognizing the real challenges rather than just saying that X billion has been dedicated to it, I think is a better way to proceed.

Richard Sverrisson - Editor-in-Chief, Montel: 25:43

Absolutely. Johnny, also, nuclear got owed quite a bit of money as well. Not in in, in terms of billions, but I think size we'll see got certainly a hundred and something million.

Johnny Gowdy – Director, Regen: 25:54

It was a bit more than that. It was 2.7 billion.

Richard Sverrisson - Editor-in-Chief, Montel: 25:56

Okay. Thank you for correcting me, Johnny. I think 2.7 billion does that's a, that's quite a large sum then what's your view here?

Johnny Gowdy – Director, Regen: 26:02

2.7 billion is to basically carry on the development of size world C until a financial decision is made. They said in the budget that the financial, the final investment decision would be made as part of the stent, the spending round two, I dunno, listeners understand, but this budget was essentially a fiscal budget plus a one year spending review. As an interim. The full three year spending review will come next year, and they're saying that they'll make a decision on size. We c at that point. I, not really mentioned in these numbers, but if you look at the budget for desna, the Department of Energy and net Zero. The biggest part of their budget is still the cleanup of old legacy nuclear plants. So there's we're talking about, I think it was 139 billion pounds dedicated to cleaning up old nuclear power stations. So we shouldn't forget that. That is still a big dead weight on our spending and and on the budget. So the sizeable c so it's not a massive investment and it's not a massive decision at this point. I think it's just carrying all the development phase of size. C. No mention Hinkley C is the other big project that we hope will be operational before 2030. That's a big part of the Clean Power Plan 2030. There has been rumors that government might have to put some more cash into that or offer more support on top of the CFT, but there's been no no mention of that in the budget.

Richard Sverrisson - Editor-in-Chief, Montel: 27:26

No. What's your view here? Pranav? Will we see Hinley point C coming online? By, by 2030?

Pranav Menon – Product Manager for GB Power Renewables, Aurora Energy: 27:30

That is the hope. But again it's worth remembering the last nuclear reactor that was delivered in GPU back in 1995. And since then it's just been a continuous story of delays with deliverability. And I think this is, again, part of the wider problem where you talk about problems with CCS. Again, how quickly will this come on? And if nuclear as well, the other key sort of low carbon dispatchable firm power that you're thinking about is also very delayed. Ultimately it's a question of, okay. How do we accelerate that process? And we Think three 20 C, it's again, been a similar case of Yes. Lots of unforeseen challenges. There is room for optimism around size four C especially because it's a lot of the technical challenges are expected to be easier given that it's almost a replica of think three point c. But yes, again, it's a question of, yeah, we do hope that Hinkley comes by the end of the decade. But then after that, making that decision on size welle quickly is very important because you can easily add about 10, 15 years at release of development time. Once that's made,

Johnny Gowdy – Director, Regen: 28:25

we were promised we'll be cooking our Christmas dinners on Hinkley Sea Energy in 2017. So we're only 15 years late. But it is important that the size, we'll see decisions made because. Those that workforce, all those skills that we've developed, all that learning we've developed with Hinkley C should go straight into size world C. If we end up with a ten year of ten year hat as a gap between the projects, then of course we lose a lot of that. So this is really important.

Richard Sverrisson - Editor-in-Chief, Montel: 28:51

Absolutely. That's unfortunately all we have time for today Johnny and Pranav. Thanks for a brilliant discussion and an excellent overview of the budget, but also a lot about the challenges ahead. Gentlemen, thanks very much indeed.