July 3, 2025 • 23 mins
When the UK handed the Labour party a parliamentary majority last July, it promised to build a new state owned energy company called Great British Energy. It's almost exactly one year since its creation, and GB Energy now has a budget of £5.8 billion to get the organization off the ground. It sounds like a lot of money, but is it? And what exactly will the organization do with all of it? On Zero this week, Akshat Rathi spoke to Dan McGrail, interim CEO of GB Energy, to find out the answers.
Explore further:
- Watch the video of this conversation
- Great British Energy website
- UK’s New State Energy Company Will Spend £1 Billion on Grants - Bloomberg
- UK to Spend £300 Million to Draw Offshore Wind Supply Chain
Zero is a production of Bloomberg Green. Our producer is Oscar Boyd. Special thanks to: Jess Beck, Eleanor Harrison-Dengate, Sommer Saadi, Mohsis Andam and Siobhan Wagner. Thoughts or suggestions? Email us at zeropod@bloomberg.net. For more coverage of climate change and solutions, visit https://www.bloomberg.com/green.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Zero. I am Akshradrati this week. The UK's
publicly owned energy champion, the Labor Government, was elected last
year to much hope from climate advocates. One reason was
(00:23):
a big promise to develop a new state owned energy company.
It was imaginatively named Great British Energy, or GB Energy
for short. It's almost exactly one year since its creation
and it's only in June that the government announced GB
Energy would receive a budget of five point eight billion
pounds to spend over the next four years and get
(00:45):
the organization off the ground. Sounds like a lot of money,
but is it and what exactly will GB Energy do
with that money? How can it have maximum impact in
cutting UK's emissions and energy costs? And which technologies does
the company believe will help UK achieve its targets. I
put these questions to Dan mcgrail, interim CEO of GB Energy,
(01:08):
in an interview that was recorded live at Bloomberg's Sustainable
Business Summit here in London. Then, welcome to Bloomberg and
welcome to a live taping of the Zero podcast. The
Labor Government has big plans for GB Energy. It's been
nearly a year since it was announced and created. You
(01:30):
lead Greed British Energy, and on eleventh of June under
the spending review you've got an allocation of five point
eight billion pounds. Greed British Energy Nuclear, which is a
separate entity with a separate governance, got two point five
billion pounds. So let's focus on the bit you run
and give us a big picture. Say in twenty thirty five,
(01:52):
ten years from now, what do you hope gb Energy
will have achieved. Well, first of all, thank you for
having me hearing.
Speaker 2 (01:59):
Good morning.
Speaker 3 (02:00):
Great Brish Energy is an innovation from a policy perspective,
which from my point of view, and starting really at
the sort of the big picture and the motivation is
I think it's fundamentally a good idea to give British
people a stake.
Speaker 2 (02:14):
In the energy transition. I mean, we're here.
Speaker 3 (02:16):
Today because we see this as being one of the
great economic opportunities of our times, and I think it
is right therefore that we find ways to create a
dividend for British people. And I think that's a motivation
in of itself. But as an energy industry professional and
having worked in the sector pretty much all my career,
I actually think there's a discreet role for a state actor.
(02:36):
The private sector has been incredibly effective at mobilizing where
we've had sort of policy and political stability, wider economic stability,
and you know, things like the growth of offshore wind
were possible partly because you know, the conditions were quite benign.
Whereas we look today, the world is more complex and
yet we have a series of mature technologies and as
(02:58):
we strive to achieve that energy security, independence and abundance,
we have a series of mature technologies which we know
the private sector can mobilize, but there are some frontier
technologies which we know we're going to need, which by
twenty thirty five need to become pretty mainstream where private
sector activity is comparatively low at the moment, So we
(03:19):
see a role for gbmergy to invest alongside the private
sector to really target areas where there's a natecency in
the technology. Obviously, we believe in the trajectory, so it's
not speculative, it's fundamental and you know, we can talk
about some of the examples, but you know the role
that we can play to catalyze investment to bring that
(03:39):
additional confidence that look, the UK government as a country,
we believe in the role of these technologies and therefore
we build our capability and our strategy around them.
Speaker 1 (03:49):
So let's talk about specific technologies. You've said gb Energy
is the first publicly on company in seventy five years,
and you're very proud of being able to give it
a shape and ability to do something. Now, five point
eight billion pounds a big sum, but let's put it
in perspective. The Clean Energy Mission, which is supposed to
get the UK to ninety five percent clean power by
(04:11):
twenty thirty is going to be needing two hundred billion
pounds in investment. So how exactly do you plan to
invest or spend this five point eight billion for maximum impact?
Speaker 3 (04:24):
So it's a really it's a really good point because
you know, it is a large sum of money. And
bear in mind this is you know, a sum of
money to start the organization up right. So we're you know,
our aspiration by twenty thirty five is to start to
build towards the scale of you know, other comparable state
owned energy companies such as you know or Stared or
VAT and FEL. So this is this is the sort
(04:44):
of endowment that gets us moving.
Speaker 2 (04:45):
But we do.
Speaker 3 (04:46):
You're right, we have to invest intelligently, and you know,
we know that the cost of one offshore wind farm
or a major investment is you know, is already in
similar numbers. So we have to initially invest in sort
of the spaces where we really think that can.
Speaker 2 (04:59):
Have maximum value. So give you a couple of examples.
Speaker 3 (05:02):
We know by twenty thirty pretty much every offshore wind
farm in the UK is going to have to be
in water, which is deeper than eighty meters. Now that's
quite a technical point, but basically what it means is
that those wind farms are going to have to float, right,
which is you know, is an area of investment which
is you know, at the moment quite challenging. There's a
(05:22):
significant amount of private sector capital deployed, but it's.
Speaker 2 (05:26):
Slowing down in its progress.
Speaker 3 (05:28):
So we're going to look to come in at that
riskier stage of projects in their development phase, prior to
the major investment decisions, when we do expect private capitals
to come in and we may deploy some of our
capital as a minority partner, but ultimately to send a
signal to the wider investment community that the UK government
believes in the trajectory of these technologies and we will
(05:50):
believe in the long run because it takes four or
five years to get to the investment decision. So bridging
that risky gap where you've got to go through consenting,
where you've got to secure the green connections, where you've
got to go through the whole development at risk, that's
a space where we think we can deploy you know,
ms of capital which are meaningful, but then get you
(06:11):
to the point where you can crowd in the private capital.
Speaker 1 (06:14):
So what you're mentioning there is floating offshore where you
don't have these wind turbines actually tethered to the floor
with a big concrete base, which is what current offshore
tends to be. And the UK has a good track
record in taking a frontier energy technology and then lowering
its price, but the UK doesn't have a good track
(06:34):
record on building businesses around those technologies. So there is
no British company that's going around the world building offshore
wind farms today.
Speaker 2 (06:43):
Dispute that I think there are some you know SSA
for example.
Speaker 1 (06:47):
Yeah, but they're not doing it at the scale that
an oorster is doing or button Fall, the two examples
that you brought up right Austin does that How exactly
do you think with five point eight billion pounds could
you create an industry or a set of companies on
maybe one big champion that would do floating offshore, not
just in the UK but globally.
Speaker 3 (07:05):
Well, clearly we've got to work on how we target
the investment around partners who we really believe can create
that scale and whether we can build be part of
that in terms of building capability and experience over time.
But the other part and the important narrative around gb
Energy is the role that we will playing co investing
in supply chains as well, because ultimately we've chosen to
(07:28):
locate in Aberdeen for a reason there is a really
really accomplished boiling gas supply chain which is specializing in,
amongst other things, everything that happens below the waterline. Talking
specifically about floating offshore wind here, there is no offshore
wind farm that's been built in the UK that hasn't
had a role for some Aberdeen supply chain as part
of it. So we think there's a role to build
(07:48):
UK domestic champions in the technology that helps scale, and
it isn't just isolated to wind. It's also we can
go beyond that and look at carbon capture and storage
or long duration energy storage, things that we know we're
going to need in the future, but right now require
some of that seed capital and that confidence in the
projects to build few through to the future.
Speaker 1 (08:09):
So any of June there was an additional announcement saying,
at least in the press release it said the government
is announcing additional seven hundred million pounds going to gb
Energy for building up these supply chains. Is that new money?
Is that additional money beyond.
Speaker 3 (08:24):
The part of our overall budget, but that we're allocating
specifically towards supply.
Speaker 1 (08:29):
Chains And can you give me an idea of how
exactly do you invest in creating that supply like specific example.
Speaker 3 (08:35):
So part of it will be in the traditional way
of given of supporting it with grants, and that will
be a part of our business, which frankly is you know,
non commercial. And then there can you know, we also
look to take equity positions. We'll work also with partners
like the National Wealth Fund to look at how we
can invest in companies that we believe in their technology,
believe in their trajectory, and then support that with the
(08:57):
pipeline of projects so that their technologies get the play.
Speaker 1 (09:00):
In this audience. You're going to have many investors, many banks. However,
your conversations with those entities gone because you're going to
have to co invest with them given you want to
multiply then the sum that you have been allocated.
Speaker 3 (09:12):
Look, I've just come from a meeting this morning with
a major, well known UK bank and their sustainability practice
and genuinely, and this is one of the things that's
really heartening for me, is that the inbound inquiries into
GB Energy, the amount of people who are bringing us
opportunities is kind of proving that the fact that the
fact that the market wants and the role of this
(09:35):
kind of long term missed maybe greater risk appetite player
in the market to work alongside the private sector. So look,
I'm encouraged by the quality of the conversations, the breadth
of the conversations that we're having with banks, with institutional
investors and ultimately with developers as well.
Speaker 2 (09:57):
One thing we.
Speaker 1 (09:57):
Didn't talk about in the technology set is about thirty
percent of UK's emissions come from running gas in homes
home heating. Is GB Energy going to look at decarbonizing
heat and how.
Speaker 3 (10:09):
Our priority is probably around power and electrification. And over
the next three to four months we're going to be
working quite consultatively with the sector on understanding how we
develop a long term strategy. The biggest, most frequent question
I get asked is what's gb energy going to do? Right?
And I need to answer that question in fairly short order.
(10:30):
So you know, our intention is to be really you know,
precise on where are the areas of technology that we're
going to invest in. And I'd say another point on this,
which is, look, if you look at those other European
publicly owned energy companies like your Steed and vatent File
that have been set up, they all set up with
a technology strategy around them. So you know VAT and
(10:52):
File and stack Craft were hydro companies or steaed offshore,
when DDF nuclears, so on, so forth.
Speaker 2 (10:58):
So we need to I think create.
Speaker 3 (11:00):
Capability around certain technology feels and right now heat, I
mean we see ourselves in the kind of business to
business space. Heat is very much in the communit consumer space.
That said, we do see scope for community and local
energy within our strategy. It's certainly something that the government
(11:22):
envisages being part of the strategy, and you know there
will therefore be a you know, an intersection with you know,
the electrification of heat, and so we have to explore
exactly how that might work in practice.
Speaker 1 (11:35):
It'll be your anniversary of creation on fifth of July
in twenty twenty five. But in that period, what exactly
have you built. There's one project announcement that I've seen
around getting rooftop solar for schools and for hospitals.
Speaker 2 (11:52):
What else.
Speaker 3 (11:53):
To be precise, the anniversary of the government is on
the fifth of July. We actually got royal ascent. I
can't remember exactly the date, but something like the eleventh
of May. So our legal existence is a matter of
weeks rather than a year. Having said that, it's not
like we've been doing nothing. So we've been building the
(12:15):
organization up, recruiting people, which is an important place to
start and also prioritize in some early activities. You reference
the rooftop solar scheme and you know this is an
area where we're really looking to learn and build capability.
So we've chosen to invest part of our budget into
investing in around two hundred schools and hospitals rooftop solar schemes.
(12:39):
The effect of these is really interesting because we went
to visit one hospital in Hull which had built a
five megawater array on a field that it just had
next to the hospital, and you know, they're.
Speaker 2 (12:51):
Fortunate enough to have the capital available to.
Speaker 3 (12:53):
Do it, but it's saving them just under two million
pounds a year, which funds about fifty ban five nurses
or thirty fully qualified doctors.
Speaker 2 (13:03):
So this is an outcome.
Speaker 3 (13:04):
It's using energy and sustainability as a vehicle to achieve
a better outcome. And equally, I went to a school
in Sheffield right in the middle of a pretty deprived
area where you know, they were able to fund teaching
assistance and so you improve in educational outcomes and they're
engaging the kids in it. So this is a really
logical thing that we should do more of. Now. These
(13:27):
first investments really help us learn and see what the
scope and the potential of this is. But we see
the local aspect of how we can use public sector
real estate as effectively an anchor tenant to build smart
local energy networks as a business model that can be
scaled and can be outcome focused as well as just
(13:47):
being about purely electricity.
Speaker 1 (13:49):
You said the word invest but my understanding is this
is grant money.
Speaker 3 (13:52):
This is initial grant money, but it's the long term
runway for this is how do we turn this into
a business.
Speaker 1 (13:58):
And what of the fiber and eight billion pounds will
be roughly grants and what will be invested in companies?
Speaker 3 (14:04):
About a billion pounds in grants all together. Albeit, we
will work intelligently with the business community to see whether
actually somewhere where you know, is a grant the right solution,
where actually equity could be a better solution. So we'll
try and have a degree of flexibility and how we
approach that.
Speaker 1 (14:29):
We'll be back after the break with more of my
conversation with Dan mcgrail, interim CEO of GB Energy. And Hey,
if you're enjoying this episode, please take a moment to
rate and review the show on Apple Podcasts and Spotify.
You have feedback really matters and helps new listeners discover
the show.
Speaker 2 (14:44):
Thank you.
Speaker 1 (14:53):
Another thing that we haven't talked about is transmission. Now,
in the seven hundred million pounds announcement on apply chain building,
there was a mention that transmission would be included in
that spending transmission is a key bottleneck for electrification in
the UK. There's too much wind in Scotland and there's
(15:15):
much more demand in the South. The Clean Energy Mission
and the Department have a plan to try and build
more transmission cables going up and down. How exactly does
gb Energy take part in this? Is it in just
traditional investments or is it advanced technologies, because there are
quite quite some very interesting ideas for taking the same
cable and sending three times the amount of power in them,
(15:37):
for example.
Speaker 2 (15:38):
I think the show answer is both.
Speaker 3 (15:40):
I mean, I think we have to act in the
short term to alleviate capacity in the market and build capacity,
and it's actually part of our energy independence narrative because
the reality at the moment is that people building wind
farms or transmission networks are competing with transmission operators and
other markets for factory slots. And interestingly, I don't think
it's just about factory capacity, It's also about skills capacity.
(16:03):
I mean, electrical technology is probably the most complex part
of the value chain in terms of understanding and building capability.
Speaker 2 (16:11):
So we've got to work actually quite.
Speaker 3 (16:13):
Coherently here in terms of on one hand, building out
capacity in the short term building skills that can act
alongside that, and we won't do it on that, you
know that on our own because there's a big ecosystem
of actors around building skills. But in the long run,
when I think what's going to ground capacity here in
the UK for twenty thirty fifty years, it's going to
(16:34):
be innovation. If you look at the aerospace industry, the
aerospace industry has we make wings, we make landing here,
we make avionics and propulsion systems in the UK because
we have the best innovation ecosystem that drives that. It's
not because we're low cost country or we buy more
planes than anyone else. We just have to build deep capability.
So for me, it's really important that when you're looking
(16:57):
to add manufacturing, you add that manufacturing ring as part
of an ecosystem or an innovation pathway which is then
become self sustaining.
Speaker 1 (17:06):
So we've talked about the idea that GB Energy could
try and unlock more private capital, could try and advance
some of the frontier technologies. But one driving principle that
this government has been trying to work on is to
lower the cost of energy. How exactly does GB Energy
satisfy that need.
Speaker 3 (17:25):
I've always believed from the beginning that lowering energy costs,
you know, is a national endeavor. You can't delegate that
responsibility to one organization. So the role I think we
can play partly we've talked about already, which is about
crowding in the private capital. The more we crowd that in,
it will be more, it will bring more competition, it
(17:45):
will bring more availability, but it also I think the
other area that then is helping to alleviate capacity constraint
in the supply chain. And then the third area where
I see as playing a role is doing more to
build these really coldly transformative smart local energy systems where
we bring at the moment the limit to those being
(18:06):
built out further is much more about capital availability and
the business models and the bankability. It's not about technology,
it's not about innovation. It's just about how do we
turn this into a model which makes it accessible to
more social housing providers, more local authorities, more hospitals. So
we might not necessarily be there focused on the overall system,
(18:27):
but it will be about how do we bring targeted
benefits to the communities within which we can work, And
ideally that is a scalable thing which we focus on
those that need it most.
Speaker 1 (18:37):
In the first instance, we started the conversation by talking about,
let's lay out what would be specific achievements that you
think GB energy will have in twenty thirty five. Now
we've gone through sort of the ideas that you have,
but let me come back to that question. Because you
didn't paint a specific enough set of achievement that you
would hope and I'm not saying you know what will happen,
(18:59):
but if you were to dream, what would be the
twenty thirty five achievements that you'd be proird of.
Speaker 3 (19:03):
Look, I mean, let me start with the local angle,
because we just talked about it. I would like to
see right the way across the country smart systems where
we're integrating solar on schools or on private businesses or
on local authority land, together with battery storage and you know,
maybe some EV charging. You know, we've got a big
(19:23):
challenge in bringing evs to people who don't have off
street parking, for example, So you know, how do we
bring those things together, turn them into business models which
ultimately allow people to get access to that at sensible
prices and sort of democratize the electrification of society to
as many people as possible, so that I would like
(19:44):
to see Great British Energy's logo on hospitals and schools
right the way across the country and other local community organizations.
I would like to see as invested in these frontier
technologies that we know that we need. I'd like to
see floating offshore wind arms spinning in the North Sea
with supply chains behind them, thriving in the northeast of
(20:06):
Scotland and Aberdeen where we've helped alleviate the impact of
transition and make sure that that creates jobs and opportunities
for people who may be affected by the decline of
some other industries. And I'd like to have some really
smart British companies exporting their know how and maybe GB
(20:27):
Energy is part of that ecosystem exporting that know how
to other countries and whether that's in long duration storage
or carbon capture and storage. I think the scope for
that ten years, that's my mission.
Speaker 1 (20:38):
The initial announcement when it was made was GB Energy
will have eight point three billion pounds. You've had to
give up two point five billion of that to GB
energy Nuclear. Does that under mine your ability to live
up to the stream.
Speaker 2 (20:54):
Yeah, to turn that into a negative.
Speaker 3 (20:55):
I mean, ultimately, the founding statement was very clear that
there would be a joint of it. But look, we're
starting the company, or we secured six billion pounds, that
is a lot over four years to catalyze a company,
you know, I see that budget as a huge actually
a challenge to think how do we deploy that intelligently
and maximize the impact and the return, whether that's on jobs,
(21:18):
on growth, on returns. That's a huge opportunity for isn't
that you know? I certainly don't see it as an inhibitor,
put it that way.
Speaker 1 (21:27):
Last question for you, perhaps the most difficult one. Your
title has interim CEO in it. You know, GB Energy.
The government created it on fifth July twenty twenty four.
You say the legal entity didn't exist until May, but
you've been in terim CEO since March. For energy companies,
there should be no shortage of applicants wanting the job
(21:49):
of a CEO, wanting to build a vision that you've
just painted. Why is it taking so long to get
a full time CEO?
Speaker 2 (21:56):
Why is it taking so long?
Speaker 3 (21:57):
Look, I mean interim came in because about speed. You know,
actually it was about you know, wanting to stand the
company up quickly, and you know, I work in the
industry and I'm you know, incredibly enthusiastic about this.
Speaker 2 (22:10):
So to be asked to.
Speaker 3 (22:12):
Come and you know, go on loan as it were,
to do this was a huge privilege. And then, to
be honest, the really important point is that when you
go through these appointments in the public sector, there has
to be a thorough process and that process, for anyone
who's ever worked for the government will probably understand that
that process is not something that you can do overnight.
(22:34):
It takes time, but it's I think it should be
it should.
Speaker 2 (22:38):
Be clear soon. Put it that way. Thank you, Dan,
Thank you very much, indeed.
Speaker 1 (22:45):
And thank you for listening to zero. Now for the
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(23:08):
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(23:29):
wagner I am Akshatrati back soon
Welcome to Zero. I am Akshradrati this week. The UK's
publicly owned energy champion, the Labor Government, was elected last
year to much hope from climate advocates. One reason was
(00:23):
a big promise to develop a new state owned energy company.
It was imaginatively named Great British Energy, or GB Energy
for short. It's almost exactly one year since its creation
and it's only in June that the government announced GB
Energy would receive a budget of five point eight billion
pounds to spend over the next four years and get
(00:45):
the organization off the ground. Sounds like a lot of money,
but is it and what exactly will GB Energy do
with that money? How can it have maximum impact in
cutting UK's emissions and energy costs? And which technologies does
the company believe will help UK achieve its targets. I
put these questions to Dan mcgrail, interim CEO of GB Energy,
(01:08):
in an interview that was recorded live at Bloomberg's Sustainable
Business Summit here in London. Then, welcome to Bloomberg and
welcome to a live taping of the Zero podcast. The
Labor Government has big plans for GB Energy. It's been
nearly a year since it was announced and created. You
(01:30):
lead Greed British Energy, and on eleventh of June under
the spending review you've got an allocation of five point
eight billion pounds. Greed British Energy Nuclear, which is a
separate entity with a separate governance, got two point five
billion pounds. So let's focus on the bit you run
and give us a big picture. Say in twenty thirty five,
(01:52):
ten years from now, what do you hope gb Energy
will have achieved. Well, first of all, thank you for
having me hearing.
Speaker 2 (01:59):
Good morning.
Speaker 3 (02:00):
Great Brish Energy is an innovation from a policy perspective,
which from my point of view, and starting really at
the sort of the big picture and the motivation is
I think it's fundamentally a good idea to give British
people a stake.
Speaker 2 (02:14):
In the energy transition. I mean, we're here.
Speaker 3 (02:16):
Today because we see this as being one of the
great economic opportunities of our times, and I think it
is right therefore that we find ways to create a
dividend for British people. And I think that's a motivation
in of itself. But as an energy industry professional and
having worked in the sector pretty much all my career,
I actually think there's a discreet role for a state actor.
(02:36):
The private sector has been incredibly effective at mobilizing where
we've had sort of policy and political stability, wider economic stability,
and you know, things like the growth of offshore wind
were possible partly because you know, the conditions were quite benign.
Whereas we look today, the world is more complex and
yet we have a series of mature technologies and as
(02:58):
we strive to achieve that energy security, independence and abundance,
we have a series of mature technologies which we know
the private sector can mobilize, but there are some frontier
technologies which we know we're going to need, which by
twenty thirty five need to become pretty mainstream where private
sector activity is comparatively low at the moment, So we
(03:19):
see a role for gbmergy to invest alongside the private
sector to really target areas where there's a natecency in
the technology. Obviously, we believe in the trajectory, so it's
not speculative, it's fundamental and you know, we can talk
about some of the examples, but you know the role
that we can play to catalyze investment to bring that
(03:39):
additional confidence that look, the UK government as a country,
we believe in the role of these technologies and therefore
we build our capability and our strategy around them.
Speaker 1 (03:49):
So let's talk about specific technologies. You've said gb Energy
is the first publicly on company in seventy five years,
and you're very proud of being able to give it
a shape and ability to do something. Now, five point
eight billion pounds a big sum, but let's put it
in perspective. The Clean Energy Mission, which is supposed to
get the UK to ninety five percent clean power by
(04:11):
twenty thirty is going to be needing two hundred billion
pounds in investment. So how exactly do you plan to
invest or spend this five point eight billion for maximum impact?
Speaker 3 (04:24):
So it's a really it's a really good point because
you know, it is a large sum of money. And
bear in mind this is you know, a sum of
money to start the organization up right. So we're you know,
our aspiration by twenty thirty five is to start to
build towards the scale of you know, other comparable state
owned energy companies such as you know or Stared or
VAT and FEL. So this is this is the sort
(04:44):
of endowment that gets us moving.
Speaker 2 (04:45):
But we do.
Speaker 3 (04:46):
You're right, we have to invest intelligently, and you know,
we know that the cost of one offshore wind farm
or a major investment is you know, is already in
similar numbers. So we have to initially invest in sort
of the spaces where we really think that can.
Speaker 2 (04:59):
Have maximum value. So give you a couple of examples.
Speaker 3 (05:02):
We know by twenty thirty pretty much every offshore wind
farm in the UK is going to have to be
in water, which is deeper than eighty meters. Now that's
quite a technical point, but basically what it means is
that those wind farms are going to have to float, right,
which is you know, is an area of investment which
is you know, at the moment quite challenging. There's a
(05:22):
significant amount of private sector capital deployed, but it's.
Speaker 2 (05:26):
Slowing down in its progress.
Speaker 3 (05:28):
So we're going to look to come in at that
riskier stage of projects in their development phase, prior to
the major investment decisions, when we do expect private capitals
to come in and we may deploy some of our
capital as a minority partner, but ultimately to send a
signal to the wider investment community that the UK government
believes in the trajectory of these technologies and we will
(05:50):
believe in the long run because it takes four or
five years to get to the investment decision. So bridging
that risky gap where you've got to go through consenting,
where you've got to secure the green connections, where you've
got to go through the whole development at risk, that's
a space where we think we can deploy you know,
ms of capital which are meaningful, but then get you
(06:11):
to the point where you can crowd in the private capital.
Speaker 1 (06:14):
So what you're mentioning there is floating offshore where you
don't have these wind turbines actually tethered to the floor
with a big concrete base, which is what current offshore
tends to be. And the UK has a good track
record in taking a frontier energy technology and then lowering
its price, but the UK doesn't have a good track
(06:34):
record on building businesses around those technologies. So there is
no British company that's going around the world building offshore
wind farms today.
Speaker 2 (06:43):
Dispute that I think there are some you know SSA
for example.
Speaker 1 (06:47):
Yeah, but they're not doing it at the scale that
an oorster is doing or button Fall, the two examples
that you brought up right Austin does that How exactly
do you think with five point eight billion pounds could
you create an industry or a set of companies on
maybe one big champion that would do floating offshore, not
just in the UK but globally.
Speaker 3 (07:05):
Well, clearly we've got to work on how we target
the investment around partners who we really believe can create
that scale and whether we can build be part of
that in terms of building capability and experience over time.
But the other part and the important narrative around gb
Energy is the role that we will playing co investing
in supply chains as well, because ultimately we've chosen to
(07:28):
locate in Aberdeen for a reason there is a really
really accomplished boiling gas supply chain which is specializing in,
amongst other things, everything that happens below the waterline. Talking
specifically about floating offshore wind here, there is no offshore
wind farm that's been built in the UK that hasn't
had a role for some Aberdeen supply chain as part
of it. So we think there's a role to build
(07:48):
UK domestic champions in the technology that helps scale, and
it isn't just isolated to wind. It's also we can
go beyond that and look at carbon capture and storage
or long duration energy storage, things that we know we're
going to need in the future, but right now require
some of that seed capital and that confidence in the
projects to build few through to the future.
Speaker 1 (08:09):
So any of June there was an additional announcement saying,
at least in the press release it said the government
is announcing additional seven hundred million pounds going to gb
Energy for building up these supply chains. Is that new money?
Is that additional money beyond.
Speaker 3 (08:24):
The part of our overall budget, but that we're allocating
specifically towards supply.
Speaker 1 (08:29):
Chains And can you give me an idea of how
exactly do you invest in creating that supply like specific example.
Speaker 3 (08:35):
So part of it will be in the traditional way
of given of supporting it with grants, and that will
be a part of our business, which frankly is you know,
non commercial. And then there can you know, we also
look to take equity positions. We'll work also with partners
like the National Wealth Fund to look at how we
can invest in companies that we believe in their technology,
believe in their trajectory, and then support that with the
(08:57):
pipeline of projects so that their technologies get the play.
Speaker 1 (09:00):
In this audience. You're going to have many investors, many banks. However,
your conversations with those entities gone because you're going to
have to co invest with them given you want to
multiply then the sum that you have been allocated.
Speaker 3 (09:12):
Look, I've just come from a meeting this morning with
a major, well known UK bank and their sustainability practice
and genuinely, and this is one of the things that's
really heartening for me, is that the inbound inquiries into
GB Energy, the amount of people who are bringing us
opportunities is kind of proving that the fact that the
fact that the market wants and the role of this
(09:35):
kind of long term missed maybe greater risk appetite player
in the market to work alongside the private sector. So look,
I'm encouraged by the quality of the conversations, the breadth
of the conversations that we're having with banks, with institutional
investors and ultimately with developers as well.
Speaker 2 (09:57):
One thing we.
Speaker 1 (09:57):
Didn't talk about in the technology set is about thirty
percent of UK's emissions come from running gas in homes
home heating. Is GB Energy going to look at decarbonizing
heat and how.
Speaker 3 (10:09):
Our priority is probably around power and electrification. And over
the next three to four months we're going to be
working quite consultatively with the sector on understanding how we
develop a long term strategy. The biggest, most frequent question
I get asked is what's gb energy going to do? Right?
And I need to answer that question in fairly short order.
(10:30):
So you know, our intention is to be really you know,
precise on where are the areas of technology that we're
going to invest in. And I'd say another point on this,
which is, look, if you look at those other European
publicly owned energy companies like your Steed and vatent File
that have been set up, they all set up with
a technology strategy around them. So you know VAT and
(10:52):
File and stack Craft were hydro companies or steaed offshore,
when DDF nuclears, so on, so forth.
Speaker 2 (10:58):
So we need to I think create.
Speaker 3 (11:00):
Capability around certain technology feels and right now heat, I
mean we see ourselves in the kind of business to
business space. Heat is very much in the communit consumer space.
That said, we do see scope for community and local
energy within our strategy. It's certainly something that the government
(11:22):
envisages being part of the strategy, and you know there
will therefore be a you know, an intersection with you know,
the electrification of heat, and so we have to explore
exactly how that might work in practice.
Speaker 1 (11:35):
It'll be your anniversary of creation on fifth of July
in twenty twenty five. But in that period, what exactly
have you built. There's one project announcement that I've seen
around getting rooftop solar for schools and for hospitals.
Speaker 2 (11:52):
What else.
Speaker 3 (11:53):
To be precise, the anniversary of the government is on
the fifth of July. We actually got royal ascent. I
can't remember exactly the date, but something like the eleventh
of May. So our legal existence is a matter of
weeks rather than a year. Having said that, it's not
like we've been doing nothing. So we've been building the
(12:15):
organization up, recruiting people, which is an important place to
start and also prioritize in some early activities. You reference
the rooftop solar scheme and you know this is an
area where we're really looking to learn and build capability.
So we've chosen to invest part of our budget into
investing in around two hundred schools and hospitals rooftop solar schemes.
(12:39):
The effect of these is really interesting because we went
to visit one hospital in Hull which had built a
five megawater array on a field that it just had
next to the hospital, and you know, they're.
Speaker 2 (12:51):
Fortunate enough to have the capital available to.
Speaker 3 (12:53):
Do it, but it's saving them just under two million
pounds a year, which funds about fifty ban five nurses
or thirty fully qualified doctors.
Speaker 2 (13:03):
So this is an outcome.
Speaker 3 (13:04):
It's using energy and sustainability as a vehicle to achieve
a better outcome. And equally, I went to a school
in Sheffield right in the middle of a pretty deprived
area where you know, they were able to fund teaching
assistance and so you improve in educational outcomes and they're
engaging the kids in it. So this is a really
logical thing that we should do more of. Now. These
(13:27):
first investments really help us learn and see what the
scope and the potential of this is. But we see
the local aspect of how we can use public sector
real estate as effectively an anchor tenant to build smart
local energy networks as a business model that can be
scaled and can be outcome focused as well as just
(13:47):
being about purely electricity.
Speaker 1 (13:49):
You said the word invest but my understanding is this
is grant money.
Speaker 3 (13:52):
This is initial grant money, but it's the long term
runway for this is how do we turn this into
a business.
Speaker 1 (13:58):
And what of the fiber and eight billion pounds will
be roughly grants and what will be invested in companies?
Speaker 3 (14:04):
About a billion pounds in grants all together. Albeit, we
will work intelligently with the business community to see whether
actually somewhere where you know, is a grant the right solution,
where actually equity could be a better solution. So we'll
try and have a degree of flexibility and how we
approach that.
Speaker 1 (14:29):
We'll be back after the break with more of my
conversation with Dan mcgrail, interim CEO of GB Energy. And Hey,
if you're enjoying this episode, please take a moment to
rate and review the show on Apple Podcasts and Spotify.
You have feedback really matters and helps new listeners discover
the show.
Speaker 2 (14:44):
Thank you.
Speaker 1 (14:53):
Another thing that we haven't talked about is transmission. Now,
in the seven hundred million pounds announcement on apply chain building,
there was a mention that transmission would be included in
that spending transmission is a key bottleneck for electrification in
the UK. There's too much wind in Scotland and there's
(15:15):
much more demand in the South. The Clean Energy Mission
and the Department have a plan to try and build
more transmission cables going up and down. How exactly does
gb Energy take part in this? Is it in just
traditional investments or is it advanced technologies, because there are
quite quite some very interesting ideas for taking the same
cable and sending three times the amount of power in them,
(15:37):
for example.
Speaker 2 (15:38):
I think the show answer is both.
Speaker 3 (15:40):
I mean, I think we have to act in the
short term to alleviate capacity in the market and build capacity,
and it's actually part of our energy independence narrative because
the reality at the moment is that people building wind
farms or transmission networks are competing with transmission operators and
other markets for factory slots. And interestingly, I don't think
it's just about factory capacity, It's also about skills capacity.
(16:03):
I mean, electrical technology is probably the most complex part
of the value chain in terms of understanding and building capability.
Speaker 2 (16:11):
So we've got to work actually quite.
Speaker 3 (16:13):
Coherently here in terms of on one hand, building out
capacity in the short term building skills that can act
alongside that, and we won't do it on that, you
know that on our own because there's a big ecosystem
of actors around building skills. But in the long run,
when I think what's going to ground capacity here in
the UK for twenty thirty fifty years, it's going to
(16:34):
be innovation. If you look at the aerospace industry, the
aerospace industry has we make wings, we make landing here,
we make avionics and propulsion systems in the UK because
we have the best innovation ecosystem that drives that. It's
not because we're low cost country or we buy more
planes than anyone else. We just have to build deep capability.
So for me, it's really important that when you're looking
(16:57):
to add manufacturing, you add that manufacturing ring as part
of an ecosystem or an innovation pathway which is then
become self sustaining.
Speaker 1 (17:06):
So we've talked about the idea that GB Energy could
try and unlock more private capital, could try and advance
some of the frontier technologies. But one driving principle that
this government has been trying to work on is to
lower the cost of energy. How exactly does GB Energy
satisfy that need.
Speaker 3 (17:25):
I've always believed from the beginning that lowering energy costs,
you know, is a national endeavor. You can't delegate that
responsibility to one organization. So the role I think we
can play partly we've talked about already, which is about
crowding in the private capital. The more we crowd that in,
it will be more, it will bring more competition, it
(17:45):
will bring more availability, but it also I think the
other area that then is helping to alleviate capacity constraint
in the supply chain. And then the third area where
I see as playing a role is doing more to
build these really coldly transformative smart local energy systems where
we bring at the moment the limit to those being
(18:06):
built out further is much more about capital availability and
the business models and the bankability. It's not about technology,
it's not about innovation. It's just about how do we
turn this into a model which makes it accessible to
more social housing providers, more local authorities, more hospitals. So
we might not necessarily be there focused on the overall system,
(18:27):
but it will be about how do we bring targeted
benefits to the communities within which we can work, And
ideally that is a scalable thing which we focus on
those that need it most.
Speaker 1 (18:37):
In the first instance, we started the conversation by talking about,
let's lay out what would be specific achievements that you
think GB energy will have in twenty thirty five. Now
we've gone through sort of the ideas that you have,
but let me come back to that question. Because you
didn't paint a specific enough set of achievement that you
would hope and I'm not saying you know what will happen,
(18:59):
but if you were to dream, what would be the
twenty thirty five achievements that you'd be proird of.
Speaker 3 (19:03):
Look, I mean, let me start with the local angle,
because we just talked about it. I would like to
see right the way across the country smart systems where
we're integrating solar on schools or on private businesses or
on local authority land, together with battery storage and you know,
maybe some EV charging. You know, we've got a big
(19:23):
challenge in bringing evs to people who don't have off
street parking, for example, So you know, how do we
bring those things together, turn them into business models which
ultimately allow people to get access to that at sensible
prices and sort of democratize the electrification of society to
as many people as possible, so that I would like
(19:44):
to see Great British Energy's logo on hospitals and schools
right the way across the country and other local community organizations.
I would like to see as invested in these frontier
technologies that we know that we need. I'd like to
see floating offshore wind arms spinning in the North Sea
with supply chains behind them, thriving in the northeast of
(20:06):
Scotland and Aberdeen where we've helped alleviate the impact of
transition and make sure that that creates jobs and opportunities
for people who may be affected by the decline of
some other industries. And I'd like to have some really
smart British companies exporting their know how and maybe GB
(20:27):
Energy is part of that ecosystem exporting that know how
to other countries and whether that's in long duration storage
or carbon capture and storage. I think the scope for
that ten years, that's my mission.
Speaker 1 (20:38):
The initial announcement when it was made was GB Energy
will have eight point three billion pounds. You've had to
give up two point five billion of that to GB
energy Nuclear. Does that under mine your ability to live
up to the stream.
Speaker 2 (20:54):
Yeah, to turn that into a negative.
Speaker 3 (20:55):
I mean, ultimately, the founding statement was very clear that
there would be a joint of it. But look, we're
starting the company, or we secured six billion pounds, that
is a lot over four years to catalyze a company,
you know, I see that budget as a huge actually
a challenge to think how do we deploy that intelligently
and maximize the impact and the return, whether that's on jobs,
(21:18):
on growth, on returns. That's a huge opportunity for isn't
that you know? I certainly don't see it as an inhibitor,
put it that way.
Speaker 1 (21:27):
Last question for you, perhaps the most difficult one. Your
title has interim CEO in it. You know, GB Energy.
The government created it on fifth July twenty twenty four.
You say the legal entity didn't exist until May, but
you've been in terim CEO since March. For energy companies,
there should be no shortage of applicants wanting the job
(21:49):
of a CEO, wanting to build a vision that you've
just painted. Why is it taking so long to get
a full time CEO?
Speaker 2 (21:56):
Why is it taking so long?
Speaker 3 (21:57):
Look, I mean interim came in because about speed. You know,
actually it was about you know, wanting to stand the
company up quickly, and you know, I work in the
industry and I'm you know, incredibly enthusiastic about this.
Speaker 2 (22:10):
So to be asked to.
Speaker 3 (22:12):
Come and you know, go on loan as it were,
to do this was a huge privilege. And then, to
be honest, the really important point is that when you
go through these appointments in the public sector, there has
to be a thorough process and that process, for anyone
who's ever worked for the government will probably understand that
that process is not something that you can do overnight.
(22:34):
It takes time, but it's I think it should be
it should.
Speaker 2 (22:38):
Be clear soon. Put it that way. Thank you, Dan,
Thank you very much, indeed.
Speaker 1 (22:45):
And thank you for listening to zero. Now for the
sound of the week. That's the sound of a wind
turbine from two hundred and fifty meters away spinning in
wind speeds of forty kilometers per hour. If you like
(23:08):
this episode, please take a moment to rate and review
the show on Apple Podcasts or Spotify. Share this episode
with a friend or with someone who likes offshore wind turbines.
This episode was produced by Oscar boyd Our. Theme music
is composed by Wonderly Special thanks to Rachel Morrison, Will Mathis,
Eleanor Harrison, Dngate, Jessica Beck, Samersadi Mosses andam and Showan
(23:29):
wagner I am Akshatrati back soon
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