Examination of Witnesses (Questions 340-344)
ENERGY NETWORKS
ASSOCIATION
31 OCTOBER 2006
Q340 Chairman: That is very helpful.
One final question from me to these dinosaurs, according to Mr
Bone, which is very unfair! I do not often disagree with Mr Bone
but on this occasion I do! But if you are dinosaurs you are largely
foreign-owned dinosaurs and so you have a lot of international
experience to draw upon. Do you think that Britain is good enough
at learning from the experience in other countries? Do your members,
does the government, does Ofgem look enough around the globe and
see how others are tackling these same challenges?
Mr Goodall: I think emphatically
so to all of the above points. The UK was very early in electrification;
the UK was in the vanguard of liberalisation as well. We get asked
all the time as to what we would do differently if we were doing
it, and in turn we ask, "How are you learning from the benefit
of our earlier adoption of these innovations?" At ENA we
spend a great deal of time in Brussels, a great deal of time—
In fact sitting behind me is my opposite number from the ENA Australia.
Q341 Mr Hoyle: G'day!
Mr Goodall: We will see that in
the transcript! We discovered that we have mirror universes. We
talked about exactly the same issues—only the seasons change,
and even they are becoming blurred as we understand about management
of networks in an increasingly climate changing world. There is
no one country that has the monopoly of knowledge; it is about
constantly referring to peers and learning from them both what
works and what does not work. I think if I left you with one thought,
that if we did not have an energy system we probably would not
build exactly what we have today. The challenge for us is in moving
from what we have into what we now believe would be better in
a way that serves the interests of customers, which we all are—because
we all want the lights on—in a way that is timely and efficient.
We think that the combination of the technical solutions to the
challenges that we have seen from around the world—because
many of these innovations are working in other networks—a
long-term approach to a political framework and with it the regulatory
incentives that go with it, would probably enable the UK to continue
to have the quality of network reliance it has had for the past
50 years. The risk is that if we find ourselves vulnerable to
short-term intervention that we may miss the unique opportunity
that has been presented by the fact that we are now at that approximate
50-year asset cycle where we can make very astute investments
now to ensure that we have those networks for the decades to come.
Mr Phelps: Can I just say one
thing? In looking around Europe it is clear that the fact that
we are in a sense an unbundled industry, where we have separated
our functions, makes it far easier and the barriers far lower
to distributed generation than in some of these other countries,
and it is almost an essential prerequisite for distributed generation
that this unbundling has taken place. It is clear in looking at
other countries, where they have large generators, often state-owned,
who are not totally separate from their grid operator, that there
is much more risk of discrimination occurring and therefore barriers
being put up to the smaller, local developments. So it is something
that we are, in a sense, ahead of the game on—at least structurally
ahead of the game.
Q342 Chairman: So they should be
learning from us, not us from them?
Mr Phelps: As ever!
Chairman: It is not thus ever, I fear!
Q343 Mr Clapham: Very quickly, Mr
Goodall mentioned the fact that we should be looking perhaps over
the period at more astute investment. Would that be in a hybrid
system?
Mr Goodall: I do not think that
there is anybody who wants to prescribe what the future will look
like. We do not yet know what the future might hold in terms of
impacts of climate change, the appetite for investment, emerging
technologies, the cauterisation of some technologies, but we do
know there will be a requirement for networks. The anticipation
of what those networks will need to be able to cope with is actually
the nub of all of this, and that requires constant monitoring
of all the intelligence that is out there. Advocating a hybrid
network is rather like saying that it should be completely centralised
or completely ultra distributed. We know that even relatively
recent history has taught us that sometimes it is the unexpected
that happens and networks need to be flexible and adaptable to
meet that, and if I can leave you with one thought that is probably
what it is. Somebody once said that the future will probably look
a lot like today but only different, and I think I have to agree
with that point.
Q344 Mr Clapham: It is important,
Chairman, because it knocks one of the conclusions of the Sustainable
Development Commission because their conclusion was that if we
went for nuclear, God forbid, then what would happen is that we
would have a central system and we would be locked into the central
system. But given our discussion this morning on the system that
is not correct because there are other ways of being able to ensure
that all contributors can be accommodated.
Mr Goodall: I think there is an
almost understandable fear and almost a necessary position that
one has to take if one has a very strong view in any direction.
As I said earlier on, we are very technology neutral; we have
and continue to cope with the flexing mix of fuels that are out
there. If we assume that we will see more distributed generation—which
is not an unreasonable assumption, although the type and scale
and location is unknown—we know what needs to be done to
the existing networks, which is what we have in order to accommodate
them.
Chairman: I think we will have to draw
to a conclusion now, I am afraid, which is very frustrating because
I am fascinated by what you have just been saying and I am very
grateful to you for some genuinely interesting remarks. Thank
you very much indeed, you have been very persuasive witnesses;
I am grateful.
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