234. Is GB Energy Starmer’s missing growth plan?

0:10Hello, welcome to The Best is Money with me, Steph McGovern. And with me, Robert Peston. So what treat have we got today, Steph? We have got an interview with Jürgen Meyer, who is former CEO of Siemens UK. He's now the chair of Great British Energy. So this is the UK's publicly owned clean energy companies, how they describe themselves. But I guess we want to talk to him about what exactly it really is. That's right. And the thing about GB Energy is, you know, it was one of this government's or the Labour Party's big promises, big plans when it was campaigning in the general election, big part of the election manifesto.

0:54So there's an enormous amount of money, billions actually being provided by the taxpayer to GB Energy. But weirdly, we've heard almost nothing of any real detail about what it's doing, what its ambitions are. But, you know, the government makes very general big claims for it, which is that it's somehow going to transform for the better the energy landscape for all of us here in the UK. Without providing the detail. So there is one man who we think can provide the detail and he's on the show today. Yes, Jürgen Mayer, who is the chair of GB Energy. Let's hear our interview with him. Jürgen, lovely to see you.

1:41Thanks for coming in for a chat. Great to be here, Steph. I talk to you a lot about skills. You and I have chatted loads over the years. And obviously when you were boss of Siemens UK, I'd been to various plants of yours and things like that. Now you've got a different role, chair of GB Energy. I think I spoke to you in May last. And at the time you were talking about the vision for GB Energy, the world felt like a very different place back in May, despite it not being that long ago. Where are we at with it? What's going on? Tell us a bit about GB Energy now. Now, is it, you know, has your vision changed?

2:15What have you been doing in the last few months since I've seen you? Yeah, indeed. My goodness, it's been a busy year for sure. And, well, the first milestone was that it was around May that we actually sort of passed officially the bill, which means this is now a proper company established as Great British Energy. And, look, I'm really pleased with the progress. We've got a really excellent board. We've got our chief executive on board. We're making some early good investments. People listening might have heard about the solar panel scheme that we're putting on schools and hospitals, saving energy bills for schools and hospitals.

2:58We've just made our first investment in a new technology, which is we're calling it deep water wind. So this is wind farms that float a long way off the sea. And we've made an investment into those. And very importantly, we've now launched our full strategy. So for everybody to see what our strategy is, the sorts of things we're going to be investing in. And I'm very proud of the fact that we are growing a publicly owned energy company. and just explain what exactly you will be because the Labour Party in opposition and then in government its view about what great British energy would be has changed quite a lot there was a period when it was going to be a genuine competitor to the big energy giants uh even for a period uh you know a player that would have a direct relationship with customers but that is no longer the case.

4:03So tell us what exactly GB Energy, government owned, is. Yeah, so we are definitely building to be an energy company. Now, you are right, we're not going to take the huge, the SSEs and the Scottish powers and the RWEs head on. We want to actually collaborate with them. But we are very clear, we are going to be owning, generating energy. But you won't have a Correct relationship with customers. Correct, yes. So we're putting renewable energy into the energy system and obviously the retailers then have the responsibility to take that energy. So you will sell your energy to the likes of Octopus, for example, or ARWE.

4:45Exactly that, like any other energy producer does. Now, the very important differentiator of what we do is that we're sort of calling it public energy ownership with purpose. And by purpose, what we mean is that we are very much focused on the societal impact of what we're doing. And look, energy is such an important commodity, isn't it, for all of us leading. And isn't it right that the public have some ownership and also get some benefit out of it? And the benefit that we can help bring out of it is helping employ lots more local people. And I'm sure we'll get on to that a little bit more. And the B is to help make the energy more affordable, which I'm sure we'll get onto also.

5:31So when you talk about investments and you mentioned a couple of them, where is that money coming from? And, you know, like, is it private investment with public money? How does that work? It's all public money. So, you know, we have been so there was an overall pot of 8.3 billion gone to Great British Energy. Two billion of that is Great British Energy Nuclear, which is not my remit. And there's six billion, which is the rest of all renewable energy. But when you do a deal, though, to invest in something, surely you're encouraging private investment as well. Of course. Yeah. So what we've actually set out in the strategy that we just launched is that over the next five years, we want to help enable an additional 15 gigawatts of renewable energy on the grid to give you some idea any normal day, 45 gigawatts a day, as worth of energy.

6:20So this is a lot of energy. So just to understand this, you are saying that your aim is to have a third of energy capacity in the country? Well, no, I just said on any one day, it's about 45 gigawatts that's being used. The capacity is actually about double that. Oh, OK. So in terms of capacity, it's 15 out of nine. That is still a very significant amount of the energy capacity of the UK. So this will be a big generator. Yeah, absolutely. Now, look, in some of that, we will be minority investors. In some of it, we will be actually owning the assets. So when you're getting outside investment, you will get not only debt investment, you'll also get equity investment.

7:03So you might end up being the minority owner of a big generator. Yeah. And in the wind farm that I just said that we've invested in, the floating wind farm, which is called Pentland of the north of Scotland, of that 15 gigawatt, very nice number to remember, we want to crowd in about 15 billion of private finance. So we're definitely crowding in. And so as well as this obviously being a focus on renewable energy creation and, as you say, employment of local jobs and things, there is also potential for profit to be made for the UK economy here from owning these assets. Absolutely. Yeah. Look, I mean, all energy companies are making a profit.

7:39Now, look, we're a startup, so it's going to take us some time to get there. But, you know, the portfolio that we will invest in a lot, I've started going straight into the most difficult of the portfolio, which is floating offshore wind. We also want to invest in solar and in battery systems. Now, our USP and our space in that is going to be that we're doing that on public buildings and public land because, you know, we're a publicly owned entity. So we are going to be covering solar, batteries, offshore wind and the whole portfolio. So there's a sort of a higher risk taking part of it. And then there's a bit more of a mature part of it.

8:17And overall, of course, we will make returns. And can I just, you mentioned solar. These plans to put solar panels on hospitals, put them on schools, is that you? Are you doing that? Yeah, so we have put the money up to do that. Now, the truth is there was already a scheme up and running, and we backed onto that. But all of that is now, as we're creating Great British Energy, all of that is coming into Great British Energy. And absolutely, we are the people putting those panels on the roof, obviously with contractors, with external people, again, creating local jobs, local people. and involving local communities in that.

8:54And so in terms of this increase in capacity, this energy creation generation, when is this going to happen? What's your time frame in terms of this 15 gigawatt then? That's over this parliamentary term, so it is actually only four years left now. But look, we've made an early start. And yeah, there will be quite a regular drumbeat of you hearing the sorts of things that we're investing in. And again, just to come back to it, I mean, the important thing is we're investing and we're beginning to help generate power. But the thing that I'd really like us to talk about also is with this, we're market creating.

9:34Floating offshore wind, deep water offshore wind. The UK currently has 73 % of the global projects that we can invest in and take forward in the whole globe. That doesn't mean the rest of the globe is not interested. Japan is very interested, South Korea is, China and other countries. But our waters lend themselves well for this. So by us getting involved early, taking an early risk, we give confidence, we crowd in private investors, we help get these schemes running off the ground, and here's the real beauty. We give the potential for more engineering and supply chain companies to get involved in this so that we can create more local jobs here in Great Britain that are developing this technology.

10:19And we definitely want to talk about that because I know there's loads to talk about in terms of employment and skills and things. But just on, because obviously we're obsessed on this show with investment and how we encourage that, how are you finding the appetite from private investors to invest? Because we've talked a lot about how, you know, we have struggled as a country to get the investment we need. What are you finding out? Well, do you know, I find this fascinating. I mean, look, are we in the easiest market climate? Have I worked in easier market climates? Yes. And it's, you know, it's tough.

10:53Supply chain costs have been going up for quite a few years now. You know, prices are rising everywhere. You know, money from the public purse is tight. The environment is not that easy. But we are getting projects off the ground. I've just talked to you about one Berwick Farm project off the east of Scotland. Biggest wind farm that is going to exist in the United Kingdom off the ground. Another wind farm off Morecambe has just had the go ahead. We've got three floating wind farms that are now consented and will go ahead in the Celtic Sea. So, you know, the projects are happening. happening. Yeah.

11:32Well, yeah, just but just on the financing, one of the things we are concerned about on this podcast I've talked about is the fact that, for example, our institutional money pension funds don't take enough risks when it comes to younger companies. But investing in projects like yours should be a no brainer for a British pension fund because you can more or less guarantee returns over the long term. Are British pension funds, you know, essentially showing enthusiasm for your projects? Well, look, I have engaged and we have started conversations with the so-called Mansion House Accord, which I know you've discussed on this podcast before, so the previous mayor of London pulled together.

12:16And so, look, there's absolutely a will, you know, conversations are happening, and I'd love to draw some of that. But have you seen any real money yet? Not yet. Right. And are you slightly anxious that in the end that they're not prepared to take the... No, look, I'm hopeful. And I think what we've got to do is we've got to change the narrative, haven't we? We're still talking about some of these technologies like they're waiting to happen. I mean, these are actually mainstream technologies. Last week, there was a day where 50 % of our energy was being produced by wind power. I mean, 50%, this is not 3 % or 5%.

12:58These are mainstream technologies, and I can tell you floating offshore wind is going to be mainstream as well. What has changed is the political narrative. So people obviously feel a bit cautious because we've got these people who are pointing and saying it's all too expensive or whatever. But the truth is the money is being invested in these technologies. So just on that, we better come back to these criticisms that it's too expensive. But just before we get on to that, this is a government that made a pledge that by the end of the decade, essentially all power generation would be from renewables.

13:38Is there any prospect of that being achieved? Well, I mean, the plan, you know, was and is to get it to 95%. Now, look, it's one heck of an audacious goal. and I love audacious goals because it's focused the mind. Look, at the end, I'm sure whether we're going to hit exactly 95%, it's going to be a tough call, I tell you. But look, if we hit 90%, that's a bloody good job done and I'm not naming a new target here. We are going to get damn close. Because the other issue, as we were saying there, is that there was a lot of support for renewables. There was a sense that there was all these different schemes to encourage you to, for example, get electric cars or get solar panels or heat pumps in your house or whatever else.

14:25It does feel like that's going backwards, though, now, that people are more, you know, there isn't the support there. The government and, for example, electric vehicles now, there's going to be this three pence distance miling on that. Is there still the appetite there for clean energy? I mean, I guess the corollary of that is you've got the two main opposition parties on the right, Tories, and reform having dumped any kind of climate change targets, right? Does that make it harder for you to raise the kind of finance that you want? You've got the deputy leader of the Reform Party, Richard Tice, sort of warning people not to invest in wind power because if reform is in government, he says reform would cancel those contracts.

15:16How difficult a backdrop is it for you to raise money? Well, look, it's unhelpful, you know. And look, I mean, the interesting thing is we've been driving sort of change for a cleaner world for a very long time, haven't we? You know, if you think, you know, we took lead out of petrol, we took asbestos out of buildings, we, you know, got rid of our old incandescent, ugly light bulbs and got the new one. Remember, nobody liked that change, did they? But at the time, you know, basically we had political consensus and all of this stuff. And political consensus has broken down. But it's purely because change is difficult.

15:52And in the difficult change, it's easy for the opposition to make their arguments against. It's much harder to say what's the alternative. You know, the Reform Party aren't telling you what's the alternative to all of this. And if they're saying the answer is lots more gas-fired power station, you know, let me tell you, you know, actually, that's not going to be any cheaper. It's actually going to be more expensive. So, you know, yes, it is making it more difficult. The good news is those of us who are in it, who are business people, who are looking at the detail, who can see where the trend is going, we know where the future is.

16:28And the future is renewable, clean power and electrification of our economy. The last time I spoke to you, Jürgen, you were talking about stability being important, though, for what you were doing. You were talking about, you know, you could see then there was stability and longevity in the government. It's really uncertain again, though, isn't it? Is that going to impact you? Well, on the generation side, I honestly think, look, and let's be clear, I'm not a politician. I'm a business person who's been asked to lead Great British Energy, been asked to lead it in an apolitical way, to be very clear.

16:57And I think that's important for the listeners of this podcast. but genuinely I will say that we've got the most stable policy platform for the energy generation side we've had for a very long time we have a plan of where we're going to get to by 2030 we're developing that be beyond that we have our policy framework about how we can provide subsidies for some of the new technologies that we want to bring on board so you know it's it's it's it's You know, where we're looking at it from a business and investor community, it's pretty good. But, yeah, publicly, the debate wouldn't appear as such. And there's also quite a difficult political environment in respect of Scottish politics here.

17:46So I haven't been to Aberdeen actually for a few years. But my friends who know Aberdeen well say that this is a town in decline. And when I talk to trade union leaders, they are actually in despair about the loss of the oil and gas jobs. You, your headquarters are in Aberdeen. How many jobs can you, are you creating within Aberdeen? How much of a countervailing force can you be to the decline of oil and gas? Yeah, look, so I have been to Aberdeen many times since taking this role. And the first thing to say is that I totally empathise. And when I came to this country, if I may just go back a little bit in time, you know, I moved to Leeds in 1974 from Austria.

18:38And my step family were all from where you were from, Steph. They were all Northeasterners and from Northumberland. And my family, step family, new family, were all being made redundant and on strike when we were closing the coal mines. and you know so you know I I do feel the angst I do empathize with the people in uh in in Aberdeen and look we should have started this journey to look to create more local jobs as part of the renewable revolution we should have started it 10 years ago we've arrived a little bit late but you know there is a difference between what happened in the coal mines and what's happening now is there is something new and the new is called renewable energy.

19:23The good news is people are transitioning jobs from oil and gas into the new. It's just not happening fast enough. Do you help with the training? Well, we're not yet helping with the training. Will you? Well, we're certainly going to collaborate with all of the local people. And, you know, we have now established an Aberdeen task force, Great British Energy Aberdeen task force, consisting mainly of people in the oil and gas industry, where really what we want to do is create the bridge and say, look, what can we do to help? And the answer to your question is, yes, we're going to help create thousands of jobs for people who are going to be working in the renewable sector.

20:01Just the one relatively small offshore wind farm is destined to create 1 ,000 jobs. Now, you know, that's just 100 megawatt is that small floating offshore wind farm. Now, you imagine as we scale this up, we get more of the fabrication made in the UK. We get the anchors, the wiring systems, and all of that made in the UK. We can create a lot of jobs. But look, it's not arriving fast enough. We need to accelerate. And this is the other reason why the naysayers are so wrong, because slowing down is an attack on the new jobs. Two questions I want to ask you off the back of that. What is those thousand jobs that you were talking about?

20:40What type of jobs are they? And are they like, will people who've worked in the oil and gas sector, and obviously coming from Teesside, a lot of my mates, do work in it, they've worked in Aberdeen, lost work in the oil industry and are now trying to work out what they're going to do. Is there an obvious transition and what type of jobs are we talking about? Well, the good news is that we have picked a technology, A, because we believe the technology is great for Britain and the globe. We think it's going to scale globally. But B, it so happens that this technology most maps to the skills that are in oil and gas.

21:14So Robert Gordon University has done some mapping of that. And it is about 80 % of the jobs that are mapped because a lot of it, you know, it's basically it's piping, it's welding, it's platforms. You know, these are big floating platforms, pretty similar to a platform that you would use for oil and gas. But it isn't only those jobs. You know, there's also lawyers, contract people, project managers, you know, support people in the office. So, you know, it's all of those people that we want to help give opportunities in these in these new companies. The other thing I wanted to ask you is when you were a Siemens boss and you were opening up the factory in Hull to make the blades, there was a whole transitioning thing there, wasn't there?

22:00Because it was something like, what is it, a thousand, two thousand people employed there. And that involved reskilling people who worked in the local community and completely other jobs that you took people from supermarkets. We did. Petrol garages. Is that, you know, what did you learn there from that and how can that be used in this? Well, the thing I learned from it is one that is probably one of the best examples we have in the UK to show to people how green re-industrialisation creates prosperity. And it's something that has fascinated me for all of my career here in the UK. Why we don't recognise more how the green re-industrialisation creates jobs.

22:44and actually creates jobs in exactly the places where we need it, in the coastal regions around the United Kingdom. We've talked about the North East, Hull, etc. So that's number one. And the second thing I learned is how bad we are at actually preparing ourselves for the skills that are needed in that industry. Look, and we are at Great British Energy, you're not going to become a skills provider, but what we do want to do is to help signpost much more as to what we're investing in, what's happening and to help the education sector prepare people to either come into the sector as new or to transfer from adjacent industries.

23:23But on one aspect of that, which is British manufacturing jobs, you know, one of the, you know, I regard this as heartbreaking, you know, one of the worst aspects of so much infrastructure building in the UK over the last 20 years is so much of what's gone into that infrastructure has been imported um and so for example with offshore wind how much of the value of the equipment uh that will be going into it will be made in the uk look this is such an important point and uh and again i was fascinated that when we created initially the biggest market in the world for fixed bottom offshore wind you you know, all of those windmills out there.

24:11There weren't enough, you know, the real manufacturers, engineering companies that located in the UK. I mean, I was part of a company that did, Siemens. We put our money where our mouth was and created just now well over 1 ,000 jobs. And look, the truth is there are actually 55 ,000 people working in this industry in the UK. Again, so let's not talk it all down. There are 55 ,000 people working in a sector where 15 years ago there was virtually none. So is that renewables, you mean? No, that's just in the wind sector. Right, okay. Broader green economy, broader all of that. But you haven't told me how much, nonetheless, by value.

24:50Great that there are 55 ,000 jobs, but what percentage of what's going to be in the ocean or the sea will be made in Britain? So first of all, the point I was coming to, to say, it should be a lot more. Now, we are actually just launching another part of the Great British Energy Programme, which is called Energy Engineered in the UK. Exactly the question that you are asking. So this is a programme where we're saying, right, we're now looking at some brand new technology areas. We in the UK can get our act together. We can get involved now and engineer these, because the truth is we didn't engineer fixed bottom offshore wind.

25:27It was engineered in Germany and Spain and other places. So here we want to engineer more. Now the truth is... When you say we, do you mean Great British Energy? No, no, no. Sorry, by that I mean Great Britain. Sorry, I may be getting a bit too grand. But I mean, we in Great Britain will engineer more. So how will you help? What is your role? How do you help that? Well, so through the program of Energy Engineered in the UK, we're going to help. So we're, first of all, identifying the technology areas, which we believe are particularly suitable to the UK. In our skill set, what we can do, what fabrication, what platforms, what anchorage, et cetera, et cetera.

26:08So we're helping identify those. Then companies that want to develop those, we're going to have a grant program, actually, to help those companies. So you will provide the grants. So we're actually going to be a grant provider in that. This is all literally just launching as we speak. And then the second thing we're going to do is we're also going to be a strategic equity taker. So where we see particularly important technologies where we think we in the UK could play a real role, we're going to be prepared as a publicly owned company to take a stake. And in that, we want to help create some of the larger sort of supply chain companies in this renewable energy technology that we don't currently have today.

26:52Now, Robert, I can't tell you exactly which companies those are yet because the technologies are just emerging. But to answer your question, I think more than 50 % of what we're going to be putting in the North Sea ought to, in the future, be engineered, designed and manufactured here in the UK. Of course, there will be a collaboration with other great engineering nations like Norway, Denmark, Japan and others. But, you know, we've got a clear aim to do a lot. To more than half. But so on that, though, how much of a problem are procurement rules, government procurement rules? Because, you know, I'm assuming that with your solar programme for schools and hospitals, almost all of those are going to come from China, aren't they?

27:33Because they are the cheap producer. Well, exactly that. And, you know, and that is exactly what we want to do here. You know, we don't want the future of now deep water offshore wind to be the next sort of, you know, it's all made in China or it's made somewhere else. Now, look, it's just to be clear, though, on that. It is too late, is it, for solar in the UK? We've missed the boat. You know, the solar rollout that you're going to do, that will all be Chinese kit. Well, we run far too late. weren't in the game at all so China have got the largest market share and they will have. Now look, I'm an innovator and I'd also like to think that I can spot the odd entrepreneurial solution and look, there are still opportunities.