ELLEN:
Hello and welcome to our Energy Innovators podcast, I'm Ellen Fraser. I'm a partner in our energy and resources team.
JAMES:
I'm James Constable, I'm a director here in Baringa and I'm a power and decarbonization geek.
ELLEN:
And we're here today with Mike Lockett.
MIKE:
Thank you very much for the invitation. It's a pleasure to be here.
JAMES:
It's great to have you Mike. Thanks so much for coming. And Mike's the UK country chair of Uniper, so we're going to hear a little bit more about what that means and what Uniper is up to and what Mike's up to. Uniper is one of the largest energy supplies, generators in the UK and they're a key player in the country's decarbonization efforts. So Mike, do you want to kick us off and tell us a little bit about your role, what Uniper is up to? Yeah. And just get into it.
MIKE:
Well, thank you for having me on the podcast. It's a pleasure to be here. Yeah. I'm Mike Lockett, the country chair for Uniper in the UK and as you said, we are a generator predominantly in the UK. We also operate gas storage, so we are here to provide secure, flexible supplies of power and gas to help keep the lights on. But as you also said, we've got a big, big focus in the UK on decarbonization, so it's a real big opportunity for us to take that foundation of our existing operations and the services we provide there. And then increasingly to do the hard job of making flexible generation decarbonized, increasingly decarbonized. So this is my main task for Uniper's UK business.
JAMES:
How long have you been doing that?
MIKE:
I've been chair of the UK business since 2019, but given the significant opportunities that the UK presents ... And we'll talk about that in a bit more detail later. We made the decision a Uniper middle of last year for me to focus fully on that. So prior to that I was based in Germany running the power and carbon trading and risk management operation for Uniper. So the trading floor in Dusseldorf with the dispatching real time operation centres around Europe and was then typically one day a week focusing on UK business, trying to pull all the different teams together and coordinate things in the UK. But with the opportunities that we are developing and significantly investing in the UK, we really felt from a Uniper point of view, it was time to really focus fully on that because there are some really, really good opportunities for decarbonization here in the UK. So I left that other role back end of last year and since the end of the summer last year I've been fully focused on UK business.
JAMES:
Okay. Great. So you've mentioned some of the key opportunities there and themes in the UK. Maybe let's expand on that quickly. What is it that's driven Uniper's activity recently in the UK?
MIKE:
Yeah. Well I think the opportunities in the UK stem from a number of multi-year or relatively long-term decisions by various UK governments. That's one of the advantages of investment in the UK. At least over the last 10 years or so no matter which government's been in power, there has been a determination to drive decarbonization. And that consistency even with some tweaks and adjustments and changes, but that consistency of an ambition or a goal for decarbonization of the power system means that we've got policies and frameworks in place in the UK that make it attractive to invest here. So particularly from a Uniper perspective, the cluster sequencing process you're picking as it stands today, at least two areas and hopefully two more to come, but picking two areas where efforts to decarbonize via carbon capture and storage for example are concentrated and projects can come together with operators of transport and storage to give confidence that this will actually fit end-to-end and it will work is one big advantage of the UK and on hydrogen as well.
MIKE:
Many nations around the world have got aspirations around hydrogen, but again, the UK having end-to-end business models that help investors such as Uniper to de-risk and put together a proper business proposition for hydrogen rather than having very important demonstrated projects that we've seen around the world and around Europe and we're actively involved in some of those as Uniper. But we have the opportunity in the UK to put an end-to-end business model together with an ultimate end user of that hydrogen to really start to get that hydrogen economy going. So these are the two big opportunities along with a number of others that are perhaps more common, more known, more established. For example, we're investing in renewables in the UK with CFD mechanisms that are well known and well understood and trusted by investors. But this is the key areas for Uniper in terms of large scale, flexible generation, flexible production of low carbon energy.
ELLEN:
You talked a lot there about the positives and the opportunity about investing in the UK, which is actually as a UK taxpayer almost if you like, and a citizen of UK PLC, it's really, really positive to hear that. You mentioned risk a couple of times. What do you see as the biggest risks in terms of investing in the UK and is there anything that Uniper can do to help mitigate those or is that a broader systems challenge?
MIKE:
Yeah. It is a bit of a cliche to say uncertainty is the kind of enemy of investment and addition of risk. It's clearly something that puts investors off. And on the face you might argue why is the UK so attractive? If you look at the last 10 years we've had turmoil on the surface in terms of Brexit, however many changes of government and prime ministers and at a high level what might appear to be political upheaval. But actually as I was mentioning before, that consistency of an ultimate end goal for decarbonization and that then being put into law and then having very pragmatic routes in order to get there really helps to de-risk investments in the UK. And it's the mechanisms I talked about as well. For example, the CFD mechanisms, if you look again at despite the apparent turmoil from political terms from an energy perspective, the last 10 years has been really providing a great foundation for investments so the capacity market being established and a trusted mechanism of buying security of supply and buying megawatts essentially to ensure that we can keep the lights.
MIKE:
The bedding in of CFD mechanisms and those proving that they can attract investment de-risk projects drive competition and drive costs down as we've seen from a number of technologies. But also wider pragmatic support. So I mean a game changer for me in terms of this de-risking was the six carbon budget report from the climate change committee really acknowledging at that point that you need all technologies working together. Prior to that point if you went to a conference about energy, it really was are you on the fossil side? Are you on the renewable side? And that shifted completely to okay, there's a real pragmatic realism here in the UK in terms of energy policy that says stop the infighting. If you're going to make a system work, you will need large scale investment in renewables and you will need flexible generation and increasingly decarbonized flexible generation to make sure this whole thing fits together and works and the lights stay on as well as driving the decarbonization.
MIKE:
So to give a very long-winded answer to your question, the foundations are in place. It's really about making sure that those foundations then turn into real projects and real initiatives and real business models that actually start to bring that investment forward.
ELLEN:
Yeah. That's super helpful. And Mike, you're one of a number of investors that are working in this space. Clearly you can't share your commercial crown jewels, but how does Uniper win in the market? Agility seems to be something that absolutely you have to be on top of given how quickly things are evolving. But what else is the secret sauce if you like, of an organisation like Uniper?
MIKE:
Think from a Uniper point of view, it's starting from that base of credibility. So we have got a number of existing sites assets and importantly people that have got a proven track record of investing in existing technologies. That are reliable, operated safely. And when we basically say we're going to make an investment and deliver, then we deliver on that. Now that track record over the last 10 years of Uniper's existence has been predominantly around fossil-based generation and fossil-based provision of flexible gas supplies. But it gives us that starting point of when we take our existing sites or existing assets and the skills of our existing teams and apply that to flexible decarbonization of energy, we have a really, really good starting point. There's no doubt about it, we've got to have all the prerequisites in place as well in terms of a great supply chain, in terms of the design capability and putting together a really credible bid for these essentially government-backed competitions. But we've got that great starting point to work from.
MIKE:
I think the other advantage in terms of the competitive element we bring, you have to pick and decide where to develop and make sure that you're attractive to what essentially the nation needs in this perspective. So one of our early carbon capture and storage projects was based around our grain CCGT in the southeast. It's a relatively modern plant that we were planning to retrofit carbon capture to and then ship CO₂ round to the Acorn storage, which would be a track two cluster project. Government have made that clear that shipped CO₂ is a bit further down the line, not one of their priorities and they want to focus on the pipeline connection of CCUS initial projects. So that isn't a competitive project. Nothing against the team that have developed that or the technology that was being worked on there, but we shifted our focus from that as a priority project and our main focus now is on two carbon capture projects that are in the existing track one or track one expansion clusters.
MIKE:
So this is Connah's Quay in North Wales, which is in the HyNet cluster and then the Killingholme project, which is in the Humber region, which could connect to the existing east coast cluster or the potential track two Viking connection when it comes. So of course as with any competitive process, it's a whole range of diverse factors, but having that foundation and being able to be agile and flex to what ultimately your customer wants and needs is the most critical factor.
JAMES:
That's great. When you're thinking about the qualification of a project development ... Obviously a project that's in development, sorry. And you're effectively building new ... For listeners, viewers. Building new gas turbines effectively that we're then going to decarbonize with carbon capture technologies. What do you think are the main things that the government is really looking for when you are bidding in effectively or bilaterally engaging with the government on those projects?
MIKE:
It's an easy answer in terms of the trilemma. It's still very, very important to get all three aspects of the triangle right. We have to make sure that we can deliver reliable supplies. The reason we are building new assets is to make sure ultimately that we can keep providing secure supplies of energy to the UK, whether that be homes, factories, businesses, it's really critical.
JAMES:
So reliability and resilience.
MIKE:
The reliability element, resilience and security of suppliers is critical. There's a decarbonization agenda of course behind this. So everything that we are currently developing is trying to provide that mix of flexible, secure suppliers of increasingly decarbonized energy. And the third one obvious statement, but the affordability. It's critical. So this has to be justified ultimately to bill payers and taxpayers via whichever means is chosen by government. And this is something we're very, very conscious about. Take for example the Connah's Quay project. One of the reasons we developed that is because it's an existing site. It's coming to end of life. It was built in the 1990s. It was expected to close around about now, mid 2020s. But we've invested in it already to take its life through to the end of the decade. But if we don't invest in that site, it will close, it'll come to the end of its natural life and that will be roughly 1.3 gigawatts of flexible generation that's no longer on the system.
JAMES:
Which will have a big impact on the system price.
MIKE:
Which will certainly have an impact on the ability to balance the system in terms of contributing that really flexible power. So developing the project on that site might on the one hand seem obvious, but there's the benefits there in Connah's Quay. We've got the existing people, teams, asset experience. The site was a coal station, so it's been coal, it's now gas and there's a lot of land that we own there where we can make full use of then the existing power connections, water connections, cooling water and the skills of the people on site to develop an additional or a new power plant with that flexible power supply capability. But importantly, Connah's Quay was built to take gas from Liverpool Bay, so there's an existing pipeline coming from Liverpool Bay that used to feed natural gas into the site. We also had a dual connection with the natural transmission system. That pipeline and the depleted gas fields are now no longer in use and that is the pipeline that is intended or will be used by HyNet to take CO₂ out and store it offshore.
JAMES:
Which is a great story.
MIKE:
So the affordability, it's still a significant investment. Low carbon, flexible energy will still be more expensive than unabated flexible energy. But in terms of that whole cost efficiency making full use of the assets we have in the UK, from our perspective we see that as a competitive advantage that we want to bring to the table
ELLEN:
Is the smart money often going into repurposing existing infrastructure therefore as opposed to building a lot of new stuff?
MIKE:
The easy answer to that is you need all sorts actually. The scale of the decarbonization challenge is so huge. It isn't necessarily a case of we must always retrofit because that or we must always make use of existing sites because. Actually we believe we should do that because those are the first projects to get off the ground that have in my opinion, the best chance of being economically viable and also technically viable because we're making full use of the infrastructure and the capability on those sites and that's why we're pushing and progressing those. But the scale of the challenge means we will need to essentially build on a whole raft and range of sites around the UK if we are going to really build enough flexible low carbon generation capacity to help us get to that clean power 2030 target.
MIKE:
So in a similar way to in 2019 when it was renewables or fossil, now it really is about how do we as a UK nation bring a pipeline of these projects together-
ELLEN:
Equal system, isn't it?
MIKE:
Yeah. We think this is something that the UK can have a significant advantage in if we build both the technology on the generating sites, have the offshore infrastructure as well, but also the supply chains to make sure that we keep as much of that value in the UK and really build on that. So we want to see scale in that as well, not just only a Uniper project. We want to see this as an industry rebuilding.
ELLEN:
You're touching on that the industry point there, but many organisations find partnerships hard because they want to do things their way. How do you choose who you partner with and what makes good partnerships really come together and work effectively?
MIKE:
The decision on first of all whether to partner and then if so, who to partner with really significantly depends on the type of project we are progressing. So there are projects around the Uniper business where we always seek to partner and others where we develop ourselves and take that forward as our own Uniper project. So we basically see it depends from project to project in terms of what we need to bring to the party and it may well be that-
ELLEN:
Is your instinct to stay Uniper only as far as you can and then partner thereafter?
MIKE:
Not necessarily. Certainly we want to for the projects I'm talking about Connah's Quay and our other projects around hydrogen and Killingholme in the Humber region. They're Uniper led projects and we will maintain that but we may well seek support and partners from others as we take some of those projects forward. Others of them we'll develop ourselves and take them through into operation. The Humber Hub project is already a partnership. That's a good example in terms of, you talked about perhaps what are some of the risks or the barriers to investment. From a hydrogen perspective it's really critical from Uniper's perspective to get the end-to-end hydrogen business model really working. We've got a great business model for low carbon hydrogen production, but we haven't really yet got the transportation, storage of hydrogen even end user models to really take up that use of hydrogen.
MIKE:
So in the Humber around our Killingholme existing power generation site where we plan to build electrolytic hydrogen production, we've partnered with Phillips 66, the refinery. They are looking to convert some of their on-site processes to hydrogen and the only way we could make that project fly was really working together because if we can produce the hydrogen with a low carbon hydrogen business model, but we need to make sure we've got that guaranteed off take. So in that particular example, that's a really clear example of where partnering was essential because we couldn't de-risk the project otherwise. So there's-
ELLEN:
And that's so often what I think we get involved in, isn't it in terms of trying to find-
JAMES:
Bridge the gap.
ELLEN:
Bridge the gap.
JAMES:
Yeah.
ELLEN:
Commercially viable route to market off-take agreements.
JAMES:
Yeah. Often you have different industries who maybe you don't maybe even speak the same language. So you are clearly power expert, investment development expert. But if you are a data centre or a widgets maker in the area trying to understand actually what is the supply chain risk associated with converting to the new fuel or what impacts that going to have on my bottom line, yeah, that's often where we're brought in to try and help, I don't want to say mediate, but come to an understanding and help everyone understand the economics around and the risks around basically all this new stuff and change that has happen pretty quickly.
JAMES:
You mentioned earlier that the UK is from a hydrogen just almost pointing on the hydrogen element of that. It's really interesting. You mentioned the UK is really well positioned, it's got a lot of support and as you say, there's a lot of infrastructure development and appropriate policies in place arguably to get that rolling. Do you think from a hydrogen economy perspective that more needs to be done to really get people to maybe incentivize or regulate the use of hydrogen at an industrial scale?
MIKE:
I think hydrogen is ... It's a really good example of where an even more joined up approach is important because if you look at the hydrogen projects that have been shortlisted in the HAR2 round for example, many of them have had to put their own essentially end-to-end business models together. In addition to the Humber green hydrogen project I talked about, we've got a number of other initiatives on hydrogen, but the ability to produce hydrogen with a low carbon hydrogen agreement is fine. But if you've not got a raft of off-takers who are willing to sign X year contracts and they've not got the confidence because they're not seeing storage of hydrogen to guarantee a conversion of their industrial process from natural gas to hydrogen, then the system doesn't fit together. And you will get plenty of people nodding and expressing interest. But when it comes to putting ink on a paper in terms of an off-take contract, this is what's missing currently in terms of that join up approach.
JAMES:
Is that an uncertainty risk do you think? A supply chain concern?
MIKE:
It's a hydrogen supply chain uncertainty risk. And I think that there are proposals and there has already been some progress on hydrogen transportation, hydrogen storage. But if you are a major industrial user considering a switch to hydrogen and in your particular area you see no hydrogen network and no plans for storage that would give you that certainty around the security of the supply to your site that you are going to invest significant sums in converting. Then I can understand why you wouldn't be willing to sign up to that. So the real core if we want to get hydrogen going is that it's really for government to link those initiatives models and putting those together.
ELLEN:
That was going to be my ask. If you've got the opportunity to land one or two asks with government what would they be?
MIKE:
We need coordination of the time scales and driving forward the hydrogen transport and storage and ultimately the end user industrial strategy that really pushes the use of hydrogen, bring them into the same step into step and at pace so that you actually bring the production alongside the transportation and storage and utilisation of hydrogen. It's got to be more coordinated. The models are there to de-risk production, but until you've got it really working end-to-end, we will struggle to get really large-scale uptake of hydrogen in my opinion.
ELLEN:
A lot of what you've mentioned today once as you see it's underwritten by government, ultimately it's underwritten by the taxpayer and-
JAMES:
I was going to make that point.
ELLEN:
Household budgets are under a huge amount of pressure at the moment and certainly when you see the political shift it's beginning to swing away from 2030 because people have really clocked how much it's actually going to cost in reality. How do you keep momentum and support from the customer base because that is hard but it's really critical over the next few years.
MIKE:
This is really a really critical point and it links in to the extent I was talking earlier about how things shift relatively rapidly. So even a couple of months ago discussing the topic of consensus among politicians that even if a decarbonized world will take significant investment, all political parties agreeing that this is the right thing to do. Wind the clock forward to today just a couple of months on and in the US we've got a break and a shift in the UK we've got a break and a shift in terms of that political consensus. So the topic of affordability and then reminders about the security of supply elements ... So for example, the Iberian Peninsula blackout recently. These are the things that maybe six months ago we were very firmly in that corner of the triangle saying we have to make these investments for the long-term viability of our economy because we have to decarbonize end up with shorter-term pressures in terms of trying to justify and understand the cost impact. Excuse me. And that tension really has shifted over the past couple of months.
MIKE:
The long-term aim of decarbonization has to remain. The climate crisis is real and we have to tackle the topic. How do we make sure we do it in the most cost-effective way in the short term? And this is one of the examples I perhaps used. I've talked earlier about Connah's Quay approach. Building something unabated is a cheaper alternative than decarbonized flexible energy. You can't question that. But you are then moving away from that decarbonization agenda.
MIKE:
The reality is ... And this is a good thing about the pragmatism of the UK, the clean power 2030 report and the action plan that followed from government acknowledging the role of unabated gas will continue through into the 2040s. But we have to limit that and reduce it and really minimise the amount of unabated gas that's used, but it will be essential, it will be needed to give the most cost-effective way of driving towards clean power, whether that's 2030 or even later, but in the 2030s let's say. So decarbonizing that last 5% would be phenomenally expensive, but being pragmatic and saying okay, we'll get to 95% and in the process we'll be developing at scale the technologies for decarbonization that then by the 2050s or 2060s might be the most effective cost-effective ways forward is giving us the opportunity in the UK to really take a lead in developing that low carbon system of the future in a pragmatically cost-effective way. Not the cheapest but tackling the climate crisis at the same time.
ELLEN:
But it's interesting, isn't it? Because how do you fundamentally balance the tension that clean power 2030 creates in the dash to use available supply chains? Because you're not going to build new supply chains to get to 2030, so you've basically got to use what's there to hit 2030. But actually to hit 2035, hit 2040 is a very different investment profile and if we really chase 2030 hard, we haven't looked over the horizon long enough and we're not therefore laying the foundations for the longer term plan so there's tension in that trade-off, isn't there?
MIKE:
There's absolutely tension there and this is why, again, coming back to the argument of for me it's not one technology versus another. Renewables and particularly offshore wind and floating offshore wind and the ability to build those kind of technologies at scale will be essentially the backbone if we are to achieve clean power 2030. We can continue to push and accelerate the investment in those in order to get us towards that target. But at the same time, we need to start building the supply chains for other technologies. So for example, carbon capture and storage, UK's really making strides in large scale investment here with the two financial decisions that government has backed with the East Coast and the HyNet investments. And those technologies will then form the basis of future supply chains that will run into the 2030s and into the 2040s that hopefully will become also economic value providers for UK PLC as well. And I really do see this as a clear opportunity.
MIKE:
Another example of how things change but can really play into this German government back end of last year when we were discussing what their priorities were, the previous German government had no real ambition for carbon capture and storage. It was all about hydrogen in their view. That coalition government collapsed. We've had a period of hiatus in terms of policy in Germany, but the new coalition has come back with a really strong view about security of supply and recognising that a broader range of technologies are needed. First of all building unabated but with genuine incredible ability to decarbonize at some point in the future, whether that be hydrogen or carbon capture and storage. But that will be much further down the line when they've tackled their shorter term end of the decade supply gap. If the UK in the meantime has started to really build and understand and develop its supply chain in carbon capture and storage, there's a really great opportunity for the UK to start to export its knowledge and experience and supply chain capability outside of the UK.
JAMES:
Sorry. Yeah. And that's a really interesting point because A, you're right in principle, as long as we capture that and we are able to export that knowledge and value from the UK out into the rest of ... Germany's a good example. Another market that's going to need to follow suit if we're leading in that space. From everything you said, it sounds like the government is putting a lot of capital in to these projects and trying to kick start effectively the decarbonization of fossil fuels effectively. So new fuel technologies like hydrogen or not even new but new supply chains around it and obviously the decarbonization of gas.
JAMES:
From an investment point, I get that. So if I was looking at that from Uniper's perspective, I look at that market and I go, great, I've got government subsidy or I've got relief, there's infrastructure being developed, there's a clear plan and I can see how I can engage with that going forward arguably. Do you think there's more of a role to play for the private sector to then maybe have a bit more ... For example, do regulations need to be relaxed so that the private sector can then take control of that market and it evolve more naturally or do you think that's going to be something that will stay underneath almost like a government umbrella going forward? As you say, again to 2030 is one thing, but then to really expand that out to meet the net-zero targets, it's going to need to grow quite significantly.
MIKE:
Those kind of initiatives will naturally transition in my view. You would not find, and we haven't found anybody willing to invest in a carbon capture transport and storage infrastructure on a pure merchant standalone basis, but with the impetus that those government backed clusters have given, there are organisations that are involved around the world in carbon capture and storage and involved in some of these UK government backed initiatives that are also considering merchant development of carbon networks and carbon storage. So having almost like the kickstart and the de-risking is attracting private investment and if that then builds at scale and there's a visible development of this as essentially a new industry and a new business model, then I believe it will start to attract private capital in significant volumes. We started to see that in terms of renewables where there were CFD mechanisms and some merchant developments, pure merchant developments. So these are the kind of things that over time and over the next couple of decades that may well develop.
MIKE:
But this is the key thing from my point of view. You can't wait and hope for that. It may well do, it probably will and we could well find ourselves in a situation in 2050 or 2060 when the market has then decided that it's one technology over another. It could well be by that stage that the carbon capture in Europe market for carbon capture and assets in Europe is done. It's done its job in integrating and developing and we're then developing carbon capture elsewhere around the world and an abundance of renewables and green hydrogen that has got to scale and become so economic that that is then the ability to provide flexibility comes from a combination of renewables and green hydrogen in CCGTs running on hydrogen. May well be the solution by 2060. Might not. We might still be bringing significant amounts of capital investment into technology such as carbon capture. You can't make that decision today and the only realistic way of achieving 2030 and then beyond getting to net-zero is if you develop all of these different technologies in parallel-
ELLEN:
So you're hedging basically.
MIKE:
Yeah. Absolutely we're hedging. This is the point I was just about to ... Perfect segue.
ELLEN:
Pipped it to the post.
MIKE:
Perfect segue because you asked about affordability before and which will be the cheapest technology? I have no idea. I don't know. But if you don't develop them and develop them at scale and give them a chance to compete, then you won't have the optionality that they bring. And look back to the NESO 2030 report and the clean power action plan. Modelled scenarios are everywhere in the energy industry. We know that and you make good business out of understanding and developing those. But you look at the two NESO scenarios in terms of essentially the affordability or the cost to get to a clean power 2030 solution, they produce two broad scenarios, one predominantly based on renewables and one with an increased amount of flexible decarbonized generations such as carbon capture and storage and hydrogen fired generation. In the delta between those two scenarios, the addition of around three gigawatts of additional flexible dispatchable generation and nuclear allowed in their modelling at least a reduction of around 17 gigawatts of offshore wind, battery storage, long duration storage and demand side flexibility, it enabled a more cost-effective overall integrated system. And this is what we are at Uniper playing our part in.
MIKE:
We'll develop the solutions. There's plenty of people developing really large scale offshore renewable developments. We are also playing our part in renewables developing onshore solutions, but we want to be the leader in the UK in terms of large scale flexible dispatchable generation and that will initially for us be around carbon capture and storage and at the same time developing our expertise in hydrogen. So we can also focus on that at some point in the future as well.
ELLEN:
Just as we start to bring this to a close then Mike ... And the answer can't be just come and talk to Uniper to this question, so I'll just put that out there. Or Baringa which is entirely fair. But if you were talking to a large industrial right now who are just playing with all of these dynamics and desperately trying to work out how on earth they navigate themselves through what is really quite a complex and evolving landscape. What suggestions would you make? What council would you give them as they try to chart a path forward?
JAMES:
And also just to build on that as well, I think this is almost the other side of the argument so that we're showing a rounded view arguably, potentially. Is that lots of reports in the press recently UK from an industrial perspective getting more and more expensive to run industry. If I had my kind of Jim Ratcliffe hat on right now share prices falling quite drastically in industrial sectors. That is largely the result of increased op-ex regarding in most direct relation to decarbonization of power and the commodity costs associated with running that business and the pressures to decarbonize. That's quite painful for a lot of businesses. The steel sector is probably a good example of that. Needing to move to electric arc furnaces. And so as Ellen said, that is obviously a big issue. It's not necessarily Uniper's issue to fix, but what are potentially the solutions? Do you think government needs to play more of a role there? Are there other mechanisms that you think need to be available to industry in order to really successfully navigate that profitably, navigate that?
MIKE:
I think you said I can't say just come and talk to Uniper or talk to Baringa. I think genuinely on that one it's talk to government because government decisions around how the decarbonization agenda asset not just power the decarbonization of the UK, a lot of that cost is placed on electrification and the power market and that's a debate for how UK government chooses to drive that decarbonization agenda. And I know there are debates and climate change committee discussing and proposing about adjustments and changes where that burden is placed.
JAMES:
Where does the non-commodity sit et cetera?
MIKE:
These are some of the key questions that my get-out answer is talk to government, but it is clear, it's no doubt it's an issue for industry. The cost of tackling decarbonization more generally is currently landing rather heavily on the power sector. Power sectors making progress and making significant strides and really leading the way globally in terms of its decarbonization. How that then is taken forward in terms of overall competitiveness for the UK that is a government topic.
JAMES:
And I think that comes back to your point earlier around what was the ask? Bringing policy together more so link.ing this stuff together more. Not necessarily having the plan over here for hydrogen CCUS, we have the plan over here for industrial decarbonization actually integrating that a bit more, maybe.
MIKE:
It's integration and it's also pace and progress. So being the head of the UK business and that's the role I have is to try and ... So far we've been very successful in Uniper. Uniper is a European group headquartered in Germany and there's competition for investment for the funds that we have available. My role is to make sure all the different teams in the UK pull together and present the most attractive investment propositions and we've been pretty good at that. Partly because we've got the projects but also we've got those underpinning foundations from government. But if you imagine the discussions how two were supposed to be back end of last year, then it was Q1 and then eventually it was April if you are persuading your investors or your owners or your main board, just wait another couple of months, things will come good. These are the kind of things that actually despite having a great mechanism that investors trust, continual delays really start to dent and damage confidence.
MIKE:
But again, take the example from a Uniper point of view. German new coalition government forms has a really credible, really focused approach to security of supply and decarbonization and Uniper has significant project opportunities in Germany as well. So there's the keeping the pace. Making sure these great foundations are properly coordinated is one element. Keeping the pace and keeping them moving to maintain that investor confidence is another really key one that is from my perspective, really important so that I can continue to fly the flag for investments in the UK. And we will be able to attract significant private investment into the UK if those initiatives really do move forward at pace.
ELLEN:
Thank you so much, Mike for joining us. We always have a good conversation and this has been a really, really rich discussion. Lots of different things have come out of that. Really appreciate your perspective. There's a real sense of clarity and ambition in the perspective that's come across from Uniper. And I think that's quite inspiring in many ways because all of us are trying to navigate through so much uncertainty that seeing organisations that have got a very clear view in terms of where they're playing and how they're going to make that successful is super helpful. So yeah, thank you so much for joining us.
MIKE:
Well thank you from me as well because the challenge of the energy transition and clean power 2030 and low carbon gases is one that motivates and excites me. And also the team at Uniper broadly and here in the UK, it's not an easy challenge. And the ability to have a real impact on society and the ability to really help keep the lights on whilst driving towards a solution for the climate crisis is something that gets me out of bed in the morning. Same for the team at Uniper, the existing assets, the existing team keeping the lights on today, and those that are really striving to make sure that we are supporting a change for the future. So we're really, really glad to have the opportunity to discuss today. Thank you.
ELLEN:
Yeah. Perfect. Thank you. So thank you all for listening, watching along with us. I hope you've enjoyed this episode and please do keep connected to the podcast. We do publish them fairly regularly through LinkedIn, so have a look on LinkedIn and you'll see the rest of the series. Thanks so much and see you next time.
