SUMMER SPECIAL Episode 1: CEO of Energy UK

This is the first episode of Plugged In’s five-part CEO summer series, where Richard interviews prominent leaders in Europe’s energy sector. 

In this episode, Richard speaks to Dhara Vyas, CEO of Energy UK about the state of the UK’s energy sector one year on from the Labour government coming into power. 

They discuss the UK’s renewable energy targets, the UK government’s green energy policies, and the problem of rising energy prices. 

Presenter: Richard Sverrisson - Editor-in-Chief 

Guest: Dhara Vyas - CEO of Energy UK

Editors: Bled Maliqi, Sarah Knowles

Producer: Sarah Knowles

Transcript

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

Hello listeners and welcome to Plugged In - the Energy News podcast from Montel, where we bring you the latest news issues and changes happening in the energy sector. Over the next five weeks, we'll be taking a break from our usual format in the summer holiday season in the Nordic region. But not to worry 'cause during this time we'll be bringing you a series of prerecorded interviews with key energy leaders. We'll be tackling the big questions. What have been the biggest changes in the sector of the past 20 years? What are the greatest threats to Europe's energy markets? Will Europe reach net zero in time? And what does the future of Europe's energy mix really look like? In this first episode of our CEO summer series, I speak to Dhara Vyas CEO of the Trade association Energy UK. This July marks one year since the labor government came into power. Since then, we've seen offshore wind projects paused and nuclear plans go full steam ahead. So how are things looking for the UK's energy sector for the rest of 2025? I speak to Dhara about the UK government's energy policies, power prices, and the sentiment in its energy sector. I hope you enjoy this episode. A warm welcome to the podcast, Dhara.

Dhara Vyas - CEO of Energy UK: 1:28

Thank you so much for having me.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:29

I just wanna start off really, the UK energy sector's undergoing quite a lot of change at the moment. What would you say is the sentiment amongst your members?

Dhara Vyas - CEO of Energy UK: 1:39

I think my answer is probably always different to this question when you are, when I'm being asked it. So, we are talking, we're coming towards the end of June right now, and there are lots and lots of positive things happening and what I would say is. 11 months into this government. The industry as a whole, we were asking for ambition and certainty. That's what we really wanted from the next government. Back in July 24, when we're in the run up to the general election, we wanted government that would deliver on ambition and certainty for our industry. It was increasingly difficult to make investment decisions because of the chopping and changing of policy and programs and the direction of travel. When it came to all things energy. So it is really important to acknowledge the government's done an awful lot in 11 months, particularly on clean power and particularly on infrastructure. And the two go hand in hand obviously, but the ambition around the government's clean power plans and the ambition around the infrastructure build out and modernizing infrastructure. Everything from the planning and infrastructure build to GB energy deserves to be commended. Your question specifically about how is the industry feeling right now? The reality is that despite all of that, there's still a lot of uncertainty. Whilst we're talking, we're still really conscious that. There are significant changes for the next auction round. The auction round is happening later than I think anyone would've wanted it to anyway in the year. And it's just squeaking in the timeframe

Richard Sverrisson - Editor-in-Chief, Montel News: 3:12

the auction round for offshore wind that is there. Sorry to interrupt

Dhara Vyas - CEO of Energy UK: 3:14

the auction round for offshore wind. Yeah. For, so AR seven, the contract for different and. That matters because, projects have being planned around bidding into that, and lots of the parameters are changing everything from, timescales to different pots. So it's, any single change is generally kind of something to discuss and overcome and, address. Lots of changes are, it compounds risks. So on the developer side, I think that there's some uncertainty. There's few, there's far too many unknowns. And of course, as we're talking, we're awaiting the outcome of the REMA decision on zonal or Reform International pricing. And again, that factors into how you account for risk when it comes to projects. Particularly, you know. The high upfront cost of capital. So there's still some uncertainty on the investment side for that part of the industry. I think, on the Invis side we don't represent networks and at the at Energy uk. They are also awaiting their draft determinations, and that's significant for that part of our industry. And then if we want to talk about retail, look, we've got 400 billion pounds of debt owed right now by customers to energy suppliers and energy suppliers. They bill for the whole industry. So debt and affordability is an ongoing challenge for our industry. Then there's one last piece that I'm gonna squeeze into this very long response, which is we haven't seen enough on demand and electrification. I think it's really important that we are talking about positivity, optimism. Yes, of course it's, we have seen ambition, we have seen certainty. Government does deserve to be commended for that. But there are these other things that we also need to try and address in order to start unlocking delivery.

Richard Sverrisson - Editor-in-Chief, Montel News: 5:08

So what would help, what would you like to see from the government then now Dhara in terms of, creating more certainty or providing the right kind of I mean the signals are there, there's maybe some of the framework that isn't actually in place yet.

Dhara Vyas - CEO of Energy UK: 5:21

Yeah, look, it is exactly what we talked about. So the decisions about the changes to the auction round seven, the contrast with different scheme that we've got coming up. It is a decision on rema. You know, we do need to see a decision so that we can all stop. Moving on and fi figuring out what's next. We do need a bit of a plan for what's happening with regulation. I think, you could argue there's perhaps a bit of a disconnect right now where you've got treasury in number 10, talking a lot about regulating for growth and unlocking some of the, perhaps the barriers, or maybe barriers isn't the right word. Maybe some of the ways that regulation might hinder or delay investment. And I think that's really important and we need the department for energy to also be thinking about that as well as the customer protections angle. Of course, the customer protections angle is front and center, but we need Ofgem to be able to be nimble so that all of the market can respond, I think.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:13

Absolutely. I mean, you mentioned the ambition and certainly the UK's renewable energy targets are very ambitious. You can't fault that, but how realistic are they?

Dhara Vyas - CEO of Energy UK: 6:23

I think it depends what you want from that sort of political, north Star. I think they set a direction of travel. They set out clearly what this government wants to achieve. I think the clean power action plan was actually really useful. Getting fixated on the date isn't where we ought to be right now. There will be challenges along the way, but it is a really clear signal to the market that this government has a target. It is seeking to meet that target and it has a plan. One of the areas where I think it's working really well is actually on the infrastructure side. I think what the Minister Michael Shanks is doing there, working with the transmission network operators, really thinking about those key connections for the electricity market. Just that I think is. It's a really hands-on approach, but it's really important because that is the backbone of our modern infrastructure. What I would say as well on the 2030 target is we have to think about energy in two ways, right? We have to think about our industry as the. An industry that will deliver great jobs, really good skilled jobs, it'll skill up new people will, be transitioning workforce from perhaps traditional fossil fuels into clean energy. So this huge ambition for our industry, the investment we bring in, the jobs and skills, the way we kind of contribute to productivity across the country. That's what our industry is. It's really powerful and really important. As one of many industries across the country, but it also, it is our industry that will power growth right across the economy. We're in, we are what, in mid-June? Late June. We've just had the industrial strategy and the industrial strategy has eight growth sectors in it, and the first one that they announced was clean energy. And it makes absolute sense because without. A significant investment in unlocking the potential for clean power. We will not deliver on powering the next industrial revolution. It has to be powered by clean energy. We've made huge strides when it comes to decarbonizing our power sector. We now need to decarbonize the rest of our economy.

Richard Sverrisson - Editor-in-Chief, Montel News: 8:36

Absolutely. And that's obviously a huge challenge, especially in areas like steel, which is obviously struggling. But Dhara, how about. The demand for power. Where's future growth gonna be? Where do you see it? I mean, do you see it in, you know, obviously the hot words at the moment are data centers. Is that something also that you'd con confer agree with that? That's where a lot of the demand growth is gonna happen?

Dhara Vyas - CEO of Energy UK: 8:58

Yeah, I think that, I think data centers, AI technologies of the future. They are clearly another key industry, another key area where this government is putting significant emphasis on where the Chancellor has put emphasis, where the Prime Minister has. And they're also quite demanding, right? They're demanding on our natural resources. They're demanding on electricity, and they're demanding on water as well. And they have climate impact, right? And so if we can bake in from the beginning, a real approach to decarbonization, if we can have sensible conversations about co-location of energy assets and power generation of all sorts, right? They need firm power. SMRs provide a huge root in for this. There's massive potential, I think, for the energy industry to work hand in hand with other key sectors to really make a difference here.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:49

Absolutely. I was also gonna ask you about permitting because that's obviously been a bit of an issue and it still is a major issue or in, in slowing down the infrastructure build, particularly for. For grids. I know you don't deal with the grids, but is this something that you see that has been expediated, has accelerated, or that has improved under the current government.

Dhara Vyas - CEO of Energy UK: 10:10

We don't represent grid, but we are really active on the issue around infrastructure because without modern, efficient, digital effective infrastructure, the energy industry can't continue. And we need to upgrade infrastructure and we should come back to it because actually when we talk about infrastructure, we're always talking about pylons and cables. But actually there's lots of different aspects to energy infrastructure. On, on that point around permitting the planning and infrastructure bill is again, I think something the government does deserve commending for. It's really difficult. Anything in this space, we are moving from the success of decarbonizing, the power sector. We are moving towards that grittier conversation about demand in buildings, in businesses, in homes for transport. That's a significant shift. The way that interplays with infrastructure is about where are assets, where are the substations? Where do the pylons go, how does it look? How does it affect nature and beauty and all of that. All of that deserves a proper and rigorous conversation with local people. It deserves to be aired, but ultimately there are going to be times where government does have to make decisions about what's in the national interest. And that takes courage. I think that takes political conviction and courage. And I think the planning infrastructure bill is really sensitive because we gave evidence to the planning infrastructure bill during its committee stage and there was so much thoughtful conversation about community benefits, about how you talk about consenting, about speeding up the process. And one of the things I think it's worth sharing is that. I think from all of the examples I've seen across the energy industry, whether we're talking about peatlands or kitty wakes or any other, great Christ News, w whatever we're talking about in terms of flora, fauna, nature, beauty, diver, biodiversity, the energy industry has great examples of having been on the front foot, consenting and working with local people, local groups, way before any of the statutory expectation on them is placed because they are businesses who have been in this space for some time. They know the importance of working with local people. Might not get it right all the time, but the whole point is to have that conversation. So I'm really proud of where the industry is on this, in this, and I think that we've got a lot more to do, and I think that legislative changes make a big difference in helping us to get this done.

Richard Sverrisson - Editor-in-Chief, Montel News: 12:48

I mean, I was wondering as well how do you build that community, that acceptance? Do you, to enable community to take some share of the revenue as well, feel that kind of sense of involvement in these big projects? How you know that? Because obviously public acceptance is hugely important here.

Dhara Vyas - CEO of Energy UK: 13:04

Yeah it's an option, isn't it? I think the reality is there's no one size fits all when it comes to community benefits or community engagement in some places, it absolutely will be right to talk about whether there's an opportunity to share in some of the revenue. In other places, it might be an investment into a local area. It might be, actually, what's something else that could be done? Could you put some solar panels on a school roof? Could you help, maintain a local area? We talked about peatland already. There's really good examples of different ways to do it. I do think we would be doing the people of this country a disservice if we decided to take a one size fits all for this.

Richard Sverrisson - Editor-in-Chief, Montel News: 13:42

I think, a lot has been made in the mainstream media, British media in particular about, unsightly, windmills, solar panels. And do you think, is there a sense maybe that the pendulum is swinging against renewable energy or would that be making too much out, out of what sort of out the noise that there appears in some circles.

Dhara Vyas - CEO of Energy UK: 14:02

I think so. I think all of the polling seems to bear out. People care about climate change. People want more renewable energy. There is definitely a stronger difference of opinion on assets like infrastructure assets and, but even then, I think the way that people do care about future generations, children, grandchildren, the future of the planet is not at odds with the rollout of clean power and the investment in clean power. What I do think it's at odds with is the affordability question. Because whilst people want to invest in clean power, they want to see government really going down the route of energy security. And energy security is an investment in domestic clean power. We have to, start to distance ourselves from this dependence on imported fossil fuels. That because of the volatility of the price and of the price of wholesale gas is traded internationally. So we do need to really be investing in clean power generation. But the affordability question is paramount. We've talked about debt. We shouldn't forget the learning from the energy crisis. It was only a couple of years ago and global events right now. But I suspect at the time of airing this show as well. Global events remain unpredictable. Increasingly volatile. They have an impact on the price of wholesale gas. They have an impact on the price that we all pay. The only way to cut that is by investing in clean power. So affordability is key. I'm gonna say one thing here, there. I don't think that the investments we make today will necessarily deliver on a stable, affordable prices in the immediate future. It takes time to do this wholesale big change that we're planning right now. Investment in clean power technologies right across the grid, whether we're talking storage, hydrogen, CCS, nuclear build out as well as renewables. These investments, they have long horizons. We're talking 5, 10, 15 years longer in the case of some of the assets and people need to see and experience and feel stable, affordable prices now. And so there is work to be done on that side of the industry. We need to have a sensitive conversation with government, need to challenge government about where the policy costs for all of this investments sit. And how you could perhaps rebalance some, whether there is any option to actually take some into taxation, which would be fairer. It is less regressive and. I guess there's a link here, isn't there? We're talking about government making decisions, whether that's about clean power, whether it's about how to help people with the affordability question, whether it's about making the decision between national equity and local diversity. Those are all why we elect governments. It's why we have a democratic system in this country to what democracy's for you have to make decisions otherwise you can't move forward.

Richard Sverrisson - Editor-in-Chief, Montel News: 17:01

Absolutely. And I think, at the same time, there isn't this magic money tree. I know that's been talked about before as well, but it's clear that, the government did promise that bills a week coming down by 2030. But from what you're saying, Dhara doesn't, they will come down, but it's gonna take a lot longer than that.

Dhara Vyas - CEO of Energy UK: 17:17

I don't have a crystal ball in terms of the price of gas, and right now without significant action, it is, we are at the mercy of the price of gas, and I think that's the point. 44 billion pounds was spent during the energy crisis to support homes and businesses. I don't think the Jeca can afford that again, nor do I think we necessarily should do that as a country. Again, it was so important that the then government took that decision to help and support people and to keep the lights on and to make sure people could stay warm, to make sure businesses could stay afloat. We need to be able to better target help and support next time. If we are in that situation again, we need to target support because not everybody should necessarily have received all of the same support. There are some people, some homes, some businesses who might have been able to weather it in a different way. And it's a huge cost to the public.

Richard Sverrisson - Editor-in-Chief, Montel News: 18:11

Absolutely. There are just a couple more questions that I'd like to put to you, and then the one you mentioned, SMRs and this government has come out as previous ones, have firmly in favor of nuclear. It's committed certain spending to new nuclear. What makes 2025 different from say, my hair's all gray. I remember when it was back in two, the early two thousands. When, in the noughties when Tony Blair announced similar plans or similar ambitions. What makes 2025 different?

Dhara Vyas - CEO of Energy UK: 18:40

What makes 2025 different? I guess it's because we're not having this conversation in isolation. We are not talking about SMRs in isolation. We are living through. We are coming towards the end of the first year of a government that has not rested on its laurels. We've had the mission focused government, the Clean Power Mission has absolutely it. The firing line. They were there, they were straight on, they knew what they wanted to do. Christop leading it, working across the department it makes a big difference. So you've got mission government, you've got Clean Power Mission. We've recently had a 10 year infrastructure strategy, so at the Center, cross Treasury. Significant thought being given to, what is happening across infrastructure. Where's the learning? How do you make sure you're thinking about it strategically as part of that? Darren Jones, the Chief Secretary of the Treasury, is talking about mega projects and Sizewell is one of those as is HS two, Dread Knot. You know those mega projects that are over 10 billion pounds. Yeah. It's so significant to giving projects. So you know from the center you've got that real thought and care about infrastructure and big projects. From the business and trade side again, end of June, we've had the industrial strategy eight key sectors, clean energy being one of them. We haven't seen this sort of cross government ambition. Certainly not since I've been working on energy. And it's also the case that, look, I, I started working on energy in 2009. The price of gas was a lot cheaper then, and the conversation was very different. Energy was one thing. Probably the most politically contentious, the most kind of headlines and airtime you got were around fracking. It's incr. It's very different now. When I joined Energy UK the crisis had just begun to really hit home. Prices were going up, companies were going out of business. On the retail side, we had fancy companies go outta business. I don't think energy has been off the front pages since then. And that was November, 2021. The industry and its importance to this economy. Has not in any way been underplayed by this government, nor was it by the last. I think that all parties, whilst they are disagreeing very publicly around targets, around ambition, around climate change, I would say there is a recognition about the role and importance of energy right now that we haven't had.

Richard Sverrisson - Editor-in-Chief, Montel News: 21:09

It's certainly very central, to the economy at the moment and the growth. And I think you're absolutely right in saying that this government is certainly moving very quickly, not standing still. We had the the CEO of Gem on the podcast a few months ago. He was, he came, he came out and was very much in favor of zonal pricing and splitting UK zones. I know you, you represent a lot of different types of members but do, does Energy UK have a view on this?

Dhara Vyas - CEO of Energy UK: 21:34

Look, thanks for asking about zonal. Right now, we're at the end of June. We haven't yet had a decision from the government. This whole REMA process kicked off in 2022. It's. For quite a while. There is a difference of opinion across the industry. There are merits, I think, to zonal and the potential for the money it could save. But if the government is fixed on its, you know, on its plans, on clean power introducing risk and uncertainty pushes up prices and we don't have enough information yet about what the arrangements are for. For assets and how you would think about what you call grandfathering, the kind of what are the legacy arrangements? That's probably a better language. It's probably what are the legacy arrangements for assets and how do you build that in? And so one thing I think we do know is for investment. Uncertainty not knowing enough about the plans that compounds as risk and risk then features in prices, and that we already have concerns about the cost of projects in terms of supply chain.

Richard Sverrisson - Editor-in-Chief, Montel News: 22:39

Dhara, thank you very much for being a guest on plugged In - the Energy News Podcast.

Dhara Vyas - CEO of Energy UK: 22:45

Thank you so much for having me.

Richard Sverrisson - Editor-in-Chief, Montel News: 22:47

I hope you enjoyed my chat with Dhara. Join us next week for the second episode of our CEO Summer Series where I speak to Leonhard Birnbaum, CEO of Eon about the state of Europe's power market.

Leonhard Birnbaum - CEO of Eon: 22:58

Where Earth has taken me is by surprise, is not the speed at which renewables developed, but the speed at which they took the rent out of the market. And that is actually a good reminder once an innovation comes in, the innovation changes. All fundamentals faster than you believe.

Richard Sverrisson - Editor-in-Chief, Montel News: 23:19

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