Mike Reynolds [00:00:00] Hello everybody, and welcome to the latest edition of the Energy Impact Center Podcast. Today, we are coming from the U.K. again, and we are joined by another esteemed person from the U.K. energy field. We're joined by Guy Newey from Energy Systems Catapult. Guy, good morning.

Guy Newey [00:00:18] Morning, Mike. How are you?

Mike Reynolds [00:00:19] I'm wonderful. I'm locked in a booth, so there's no background noise, hopefully. I've got you unobstructed for 30 minutes, which is exciting.

Guy Newey [00:00:30] Fantastic. I'm delighted to be here.

Mike Reynolds [00:00:33] So, what I'd love you to start with, Guy, is just telling us a little bit... I think our listeners are always interested to find out how did people end up doing what they do. How did you end up in your role? What's your history? What's your background?

Guy Newey [00:00:46] So, I had a very strange journey into clean energy and where I've ended up now at the Energy Systems Catapult. After university, I was a journalist. So, I was a journalist for three or four years in Birmingham, in the U.K. covering crime and murder and courts and fires, all that exciting stuff. After I had kind of done my training as a cub reporter in Birmingham, I went over to Hong Kong and reported on Hong Kong and China for a newswire called AFP, Agence France. And I was writing about the growth of China, really, and the boom in China. From 2006 to 2009, I was out there. The Beijing Olympics, political challenges there.

Guy Newey [00:01:39] I got into energy and environment issues because I was in Hong Kong. I had this wonderful office on the 62nd floor overlooking Victoria Harbor in Hong Kong, which is one of the world's kind of great vistas. And probably for a third of the days of the year, I couldn't see anything out of the window. It was very bad. And I guess I got hooked on that question of could you have all the benefits of growth that you were seeing for China and for Chinese people coming out of kind of decades of backbreaking poverty? Could you have all of the benefits of that without screwing up your environment, whether it's air pollution or climate change, etc.?

Guy Newey [00:02:28] I started writing about that story more and more. And unlike lots of journalists, I realized I needed to know more about it. And so I did. I went back to university, went back to college in the U.K., and did a Master's in Energy.

Mike Reynolds [00:02:48] Crikey, that's brave.

Guy Newey [00:02:49] Yeah, it was, kind of. I was 30, 31. Just got married. I was quite a catch. Like, "Great, I'm going to become a student again." And so I did that. I went to Imperial College in London and did that for a year. And then got involved in policy, energy and environment policy at think tanks in London and then eventually started working for OVO Energy, which was then one of the big suppliers in the U.K., and now, one of the big energy retailers. It's a kind of upstart, growing very fast, medium-sized enterprise.

Mike Reynolds [00:03:27] It was a challenger brand, wasn't it?

Guy Newey [00:03:30] It was very much a challenger brand. Causing trouble, trying to disrupt, all of that stuff.

Mike Reynolds [00:03:38] Also doing really revolutionary things like serving customers, answering the phone, billing people with accurate data.

Guy Newey [00:03:46] That's right. All these radical propositions which were quite transformative.

Mike Reynolds [00:03:59] And what were you doing there? What was your role?

Guy Newey [00:04:01] So, I was on the policy side. I was Head of Policy at OVO, trying, in many ways, to grapple with the question of growing this fast. You're trying to do things totally different in the energy industry, but it's a really heavily regulated and kind of policy intensive industry. For all sorts of sensible safety reasons, etc., how do you push up against the boundaries of what's acceptable from the regulator that allows the innovation, you know is better for consumers and for the planet but doesn't get you into too much trouble. And that was basically my job.

Mike Reynolds [00:04:43] Yeah, it's quite an interesting one because for me, one of the challenges I think with policy in energy is that you have to get quite specific quite quickly. You can't just deal in general platitudes and big statements. And that's a really good example of that. Can you talk a little bit about some of the specificity that you had to kind of get into as the guy fresh out of Imperial College who'd been a journalist? You certainly assisted with ministers going, "I need to talk to you about metering specifications."

Guy Newey [00:05:10] Yeah, I'd I done three or four years beforehand, so I had a bit more energy experience before I got to OVO. The big question when we were there was actually about... Well, there were various things around smart metering and how we were doing the rollout of smart metering in the U.K., which was a bit of a challenge and certainly a risk hindering some of the flexibility innovations which we were trying.

Guy Newey [00:05:43] I guess my lesson on how you tell that story with regulators or ministers is don't dive into the detail too quickly. You're telling a story, right? The key is, "This is the big picture we're trying to get to. Do you agree with that? Here's one of the things that is relatively small that could be transformative for my business, but we don't really see as the risk." And the energy industry is full of these weird anomalies, whether it's kind of if you install a heat pump, how far that can be from your neighbors fence, to lots of stuff around metering grid connections, which are just not going to be fit for purpose in the world we're moving to. So yeah, my kind of my steer at that point was to try and tell it so you can show why it's better for consumers. Don't start with why it's better for us as a business.

Mike Reynolds [00:06:41] Right. And how do you do that? Can you give us some live examples of how you create that kind of longer-term picture of how something is better for a consumer group or for a supply chain to roll out or to regulate, actually. Like, it's certainly being easy to regulate. It's sometimes quite a driver.

Guy Newey [00:07:03] I mean, it will depend on different situations. But the big one is... If you're talking to government in the U.K. or a European context, everyone talks about this smart, flexible, renewable-heavy system that we're going to move towards. And there's general consensus about that at a kind of conceptual level that that's...

Mike Reynolds [00:07:34] The big picture view. Yeah.

Guy Newey [00:07:35] The big picture view. But then you get into the important thing. And I think it's important for everyone in the transition to think about. This is an enormous transition and the implementation challenge is not just a technology challenge. It is about business models, it's about interoperability, it's about all of those questions. And those are as big challenges as can we make a wind turbine a third of the price? Or, can we get the cost of nuclear power down? All of those questions.

Guy Newey [00:08:09] And you need to tell that big picture story because the danger is that everyone buys into the kind of future vision and then doesn't realize how difficult it is to get there and how risky it is to get there. And I think that's where we are on the kind of story. You need to get people excited about that transformative vision, and then you need to get them kind of sober about how significant the change is.

Mike Reynolds [00:08:38] It's funny because my dad worked in the telecoms networks between the sort of '70s, '80s, 90s, early '00s. And he was one of the guys that went around Europe switching analog to digital. And the scale of transformation and investment that had to happen, particularly in the '80s, was ridiculous. And it was a less complex system than the energy system is, the telecom system. It's just lots of wires and hubs connected.

Mike Reynolds [00:09:07] But actually, the thing that happened relatively quickly was that you had agreement on how you were going to do it at quite a high level. Like, some principles got mapped out relatively early between the telecoms businesses but also with governments. Like, "We need to do it like this," which meant that suddenly you had interoperability, you could do the same thing in the U.K. that you could do in Belgium. You didn't end up with weird local systems.

Mike Reynolds [00:09:33] It strikes me that energy could learn a little bit from this. But also, the system's very complicated; the energy system's very complicated. We are moving from a dumb system where you kind of... I had a friend who used to describe it, a vegan friend... He used to describe it as it was like foie gras, a goose. You stuff as much energy down a pipe as you possibly can and the consumers at the other end gobble up and no one cares. And we need to move to a much more sophisticated system.

Mike Reynolds [00:10:04] I know this is spinning away from your history, but how have you been successful in the last 15 years of getting stakeholders to buy into that? It's not the conceptual vision. It's that next level down. It's the, "Okay, and therefore strategically, this is what we therefore need to do." Have you got some examples of where that's starting to work?

Guy Newey [00:10:28] If I look over the last 15 years since I first started, writing about it then, but now delivering on the innovation side... We were nowhere in 2006, 2007. There's big stories about, "Oh, somebody's been able to put up a wind turbine in West Wales and it's operational now so it can power...".

Mike Reynolds [00:10:59] Yeah, 250 kilowatts.

Guy Newey [00:10:59] I exaggerate, right? It was a real kind of cottage industry. And now you've got... On the scale, we're talking about absolutely huge. So, the way I tend to think about it, in the last 15 years, we've been incredibly successful, but particularly around the kind of upstream technologies. In particular renewables, wind, solar, but also electric vehicles. On a technology kind of S-curve, as it were, we're at that stage where it's going absolutely gangbusters and making huge progress and huge strides.

Guy Newey [00:11:44] On the next wave of challenges... I always think these things come in waves. On the next wave of challenges, which is the thing my team and I at Energy Systems Catapult are starting to think more about, is about what you said. It's about how all this is actually going to work. How is the energy system, and include transport in that, how is that actually going to work together?

Guy Newey [00:12:06] And the the truth is I think we're only in the foothills of that. We're only in the foothills of understanding what digitalization is going to do to energy in the way that it has changed telecoms and obviously, other industries in a significant way. But energy is still really unsophisticated by comparison. And so, how you're going to get that kind of integration of those technologies to make sure that it all works in practice when you've got 40 million electric vehicles and 30 million heat pumps on the system or whatever the numbers are, I think we're only starting to grapple with that, which is a risk because we are piling on more...

Mike Reynolds [00:12:57] Running out of time.

Guy Newey [00:12:58] Yeah, running out of time in terms of climate change. And from a system integrity point of view, we're piling on more and more renewable technologies, which is a fantastic success story, but creates challenges for our system. And you're just starting to see the system in the U.K. context, and it's happening in loads in other markets, start to creak. And those creaks are going to get louder if we don't sort it out.

Mike Reynolds [00:13:22] Well, right. I mean, we've had more coal use this winter to generate power, for example, for exactly that reason. One of the challenges is we're decommissioning all of our nuclear baseload in the U.K., but we're not replacing it with new nuclear baseload fast enough. So, what's the quickest, easiest thing you could turn on? Coal and gas. So unfortunately, the proliferation of renewables in the U.K., which is, I agree with you, a huge success story, is having a flip-on effect, which is to offset that variable generating merge, you need that baseload. And the only baseload available is coal and gas. So, we're increasing the amount of coal and gas that we're generating now.

Mike Reynolds [00:13:59] So, let's go back to your journey. You had the policy role and you were trying to convince government that there was a better way of serving customers than the crappy old Big Six, and a smart digital future was part of it. Then you moved into politics, didn't you?

Guy Newey [00:14:20] Yes. So, the 2015 election happened in the U.K., and rather to everyone's surprise, the Conservative Party won and became the majority party. Because of various contacts I had, I knew there was a chance of me getting a role as what's called a Special Adviser in the U.K. context. So, somebody who is kind of the right hand person to the person who runs the department. The Secretary of State at that time was Amber Rudd, and I managed to get that job as Special Adviser. They tend to have two or three doing that. And so, I went from...

Mike Reynolds [00:15:02] How do you get that job? Describe the process of getting that job. There's people who listen to this who'd be like, "Oh, that sounds cool. I'd like to be a SpAD." How did that happen?

Guy Newey [00:15:12] Because of the job before OVO and because of OVO, I've been in the policy world for probably four or five years. I worked at a think tank, and so I got to know loads of people in government on the civil service side. Lots of politicos, lots of energy industry people of different sorts. And so, my network was kind of strong. The truth is these things are a bit opaque how you actually get the job. I just needed to get my CV into the hands of, ultimately, to Amber Rudd. But I couldn't get to her directly, so how do I get it through other people? So, it's a bit of a kind of who you know kind of question. And there was a process as well that they went through and interviewed a few people after that. But the truth is...

Mike Reynolds [00:16:01] You also had to be good.

Guy Newey [00:16:04] Yeah. Well others can make that judgment. But yeah, it was a bit of kind of who do you know and a lot of what do you know, because that's certainly what Amber was interested in. She was interested in my take on what were the top five things we've got to do.

Mike Reynolds [00:16:22] What are you going to bring her, yeah.

Guy Newey [00:16:23] Yeah, exactly.

Mike Reynolds [00:16:25] Okay. So tell me about this SpAD role, then.

Guy Newey [00:16:28] So, I did three years inside government in various, different advisor roles. One for Amber Rudd and one for others. And I think these are incredibly intense roles inside government, because you're basically trying to avoid the minister making any massive cock-up. That's at the heart of what you're trying to do, as well as trying to drive them forward.

Guy Newey [00:16:57] The primary job is to, first of all, make sure you read everything that the department is putting out. And when I say everything, you get what are called ministerial boxes which come through. And they're kind of an inch thick every night. And I'm reading that two or three days before I go to the minister to try and give a political read or kind of a risk read on any of that. So, just a vast amount of material to cover. So, anything that happened in energy for three years, I read all of it. That was one part of it.

Guy Newey [00:17:31] Secondly is then, like anyone running any business, the most precious asset for a minister is time. And there are endless calls on their time. So, a big part of what I saw as my role is how do you prioritize the areas that are really important for Amber's success in what we want to do? And then you try and organize a diary around that, etc., because there are so many calls and pressure to meet people and see others. If you don't do that... Same way to anyone in any job, if they don't prioritize properly they're never going to achieve anything. So yeah, that was a big part of the focus. Bits of dealing with the media, bits of trying to get the department to do things that the ministers wanted to do. But it was just a kind of, absolutely full-on, phone was always on, working every weekend, all that kind of...

Mike Reynolds [00:18:34] Relentless. And you didn't fancy doing that for the rest of your life? Staying in politics?

Guy Newey [00:18:43] I did that for three years. And it was an absolutely incredible job because being in the room where it happens is incredible. It's just wonderful.

Mike Reynolds [00:18:56] Intoxicating, yeah.

Guy Newey [00:18:57] Intoxicating is the right word. I think what I found after three years is, basically, I became a person who knew how to say no to lots of things and stopped being the slightly naive person at the start who would say, "No, we can close coal-fired power stations," or, "We can take a risk here," etc. And I think once you become that kind of voice of no, rather than that voice of yes in those roles, then you're not adding anything. So, I think for all sorts of reasons, I decided it was time to leave. It was also, to be frank, a pretty frustrating time, generally, in the U.K. and...

Mike Reynolds [00:19:40] Yeah, tough times.

Guy Newey [00:19:41] Our exit from the European Union and all of those questions, those were dominating political tensions. So to compete with that with big energy questions was just...

Mike Reynolds [00:19:49] It was bad timing, yeah. And actually, it's interesting how much of what's been successful in U.K. energy came out of the policies that were written in the sort of, I want to say like 2007 to 2013 or 2014 age. You had that period, especially when Cameron came in... Was it 2010? And really put a sort of turbo up the wind industry in a big way. But yes, I think the last five years, particularly, we've seen a slowdown in momentum. So anyway, tell us about the Energy Systems Catapult, because that was the move, right?

Guy Newey [00:20:25] Yeah. So after I left government, I joined the Energy Systems Catapult where I'm now CEO and I've been CEO for about six or seven months. We're an innovation center. Our job is to help companies... From the smallest companies, kind of pre-revenue, certainly pre-investment, right up to big multinationals, take advantage of this transition. So, that's the heart of our job. Somebody comes to us with a widget, can we help them turn that into a business model which is going to be sustainable and going to work?

Guy Newey [00:21:09] That's our big focus, helping them. And that's whether that's testing products and services with real consumers, thinking about what the market size might be using our modeling assets. But it's also a lot of thinking about what the future energy system will be. Because it's so regulated, because it is so policy heavy, if we don't advise government to say, "These are the rules and regulations you need to change if you want to unlock the kind of innovation you need." So, as well as that kind of getting your hands dirty and helping others grow, it's crucially thinking about what they're growing into, so what the future system is going to be. So, we do a lot of policy work, et cetera.

Guy Newey [00:21:53] We're about 250 people, based up in Birmingham in the U.K. Funnily enough, about 100 yards from where my first job was as a newspaper journalist. An extraordinary life coincidence. And it's a mixture of engineers, of consumer insight experts and policy people, of digital refugees from other sectors who are trying to understand what the hell energy is about and bring innovation from other sectors into the space. So, it's an incredible group of talented people who are trying to help others really thrive in this future space.

Mike Reynolds [00:22:30] Yeah, it's interesting actually, how the name of Energy Systems Catapult really stuck. It's also the name carries further than you would expect the number of people to take it. So, you punch quite well above your weight. Can you give us some examples of the last five or six years of the successes that ESC has had, Catapult has had. Where you were kind of particularly proud of the work that the team has done and where it's actually manifested in the market moving in a different direction or technologies coming through that were not getting penetration they needed.

Guy Newey [00:23:01] Yeah, good question. I'll do that on two levels. In terms of the SMEs that we work with, I mean, there's been hundreds that we've supported over the past six or seven years since we've been going. Ones that I'm most excited about... This is really unfair because this is like naming your favorite, but one particularly... You know, we spend a lot of time in the heat space where we see a big innovation challenge. So, companies like Sunamp, based up in Edinburgh, who do thermal batteries. So phase change material, and very useful use cases across the spectrum on heating.

Mike Reynolds [00:23:52] And just describe that technology a bit more for us.

Guy Newey [00:23:55] This is an alternative to hot water tanks, really. It's a way of storing heat, heat storage materials. And instead of doing it by heating up water and then dispersing it, they use phase change material, which is much, much denser. So, they can come up with much smaller units for the equivalent amount of heat. And that's very useful in the U.K. context where we've ripped out lots of our hot water tanks over the last 15 years.

Mike Reynolds [00:24:27] The loft conversions.

Guy Newey [00:24:28] Yeah, exactly. Loft conversions, et cetera. But we're going to need storage technologies if you increase heat pumps. But there are loads of other use cases. In industrial heat, in lots of other areas which are really important.

Mike Reynolds [00:24:45] Does it have a direct electricity input to generate heat? Does it sit next to a heat generating unit of whatever type it is and it's just the heat storage?

Guy Newey [00:24:56] You can set it up in in different ways, but the input into it typically works with a heat pump. We're providing heat into it in that way, which you can either do electrically or elsewhere. But then it's discharge, probably in the U.K. systems because we tend to have wet heating systems, would be like a boiler's, heating up water very quickly, in that sense. So a discharge into a wet radiator system, as it were. So, it'd be a more central heating in that sense.

Guy Newey [00:25:37] So, Sunamp's one we're very excited about. Evergreen, up in Manchester. They have a device called a Homely device which is about joining up heat pumps with the wider energy system. So, actually turning on your heating slightly earlier so you don't see any difference in a consumer experience, but it reduces the pressure on the grid at peak times, et cetera. They've got various other devices they're working on to try and make the the smart system work.

Guy Newey [00:26:13] There's company called Cero in Wales, who are doing kind of zero carbon buildings and trying to get all of those working. But there's just a kind of a massive stable of cool companies that we've worked with and are moving further up the TRL level.

Mike Reynolds [00:26:31] And a lot of these sound like that playing with timing is quite an important thing. You know, back to my reference earlier to the dumb system where you stuff energy down a pipe and it's just, "I need hot water, I generate hot water at the moment I need hot water," almost, in a lot of combi-boiler systems, for example.

Guy Newey [00:26:51] If I think of what we're trying to achieve in terms of where we focus our effort on innovation, it's around the demand side. Heat of buildings, whether that's domestic or non-domestic, industrial clusters, et cetera. Trying to understand how you can do that in a low-carbon way. But also, let's think about how this system is actually going to fit together. How those heating technologies might work with the wider energy system, how we might do clustering, all those questions. How the hell we're going to get the network to work in a world where we're moving from, as you say, a very dumb system to another one. Those are the big innovation questions we work with at the Catapult. There are other big ones in the landscape which work on kind of nuclear technology or renewables or things like that in an upstream context.

Mike Reynolds [00:27:42] I've always wanted to ask this question and you feel like an informed person I can I can ask this question to. So, a dangerous one, right? But, time of day shifting. It's just an obvious benefit, right? The principle being that everyone gets up in the morning and they want to have a shower between 6:00 and 8:00 in the morning. And that therefore is when the grid will take a big surge if everyone was to install a heat pump, for example. So, the idea of timing your generation, separating when you generate the heat from when you use the heat, and the same with power, potentially, if you have power storage. It sounds like a good idea.

Mike Reynolds [00:28:18] I want to know what happens when you do more and more and more of it. For example, when you do see EV penetration hitting a certain level and you see heat pump penetration hit a certain level. Is there a certain point where, actually, there isn't a rule which says that's peak time, that's peak time, and those are the ones we want to avoid? Have you run those scenarios and can you talk about what they might look like?

Guy Newey [00:28:41] This is it. At the moment, we're all getting excited about this world where I plug my EV in and it charges up overnight between 1:00 and 4:00...

Mike Reynolds [00:28:48] And I get paid to take the power.

Guy Newey [00:28:50] I get paid, all of that stuff, which is great and step one. But what we're already seeing... And we've got 1,700, 1,800 of what we call our living lab homes. So, these are real people's homes. And what we're seeing, their profiles are changing entirely if they've got EVs. Basically, they have their peak between 2:00 AM and 3:00 AM. And of course, if you have the whole system turning on like that and turning off at different points, you just create another peak somewhere else. So, the next phase of where it's exciting from an innovation point of view is how you're going to stagger all of that activity and basically that you smooth it as much as possible on a kind of local and a national basis to line up with the technology at the kind of generation end, et cetera. So, you've got all of that going.

Guy Newey [00:29:44] One thing I would say is, there's a kind of perception sometimes in the energy debate that this flexibility, this moving energy around during the time, load shifting, etc., is going to solve all the world's problems. But it is really important, and your system's not going to work on a day to day basis without it. But you still need to solve for the biggest problem in the future energy system at the moment, as we can see, which is what happens when the wind does not blow for two weeks. There's only so many batteries or storage technologies, etc., that you can have. And at the moment we solve that problem with big lumps of coal and a very big gas grid which can store energy and can be used whenever we want. That's much harder in a windy system with a much more electrified demand side.

Guy Newey [00:30:38] So, you still can't get away from the need for big sources of generation which are just going to fill those gaps. We can't get away from that. And there's quite a lot of wishful thinking in the space that we're not going to do that. And our modeling scenarios would always bump up against that challenge. Even if you're a very flexible system intraday, it's the intraseasonal stuff or the two weeks with no wind.

Mike Reynolds [00:31:12] I think I quoted this recently, it might have been on the last podcast I mentioned it, but January, 2020, I observed 41% of the power in the U.K. came from offshore wind or wind in general. And in January, 2021 it was 2%. Just as an example. So, what's the direction of travel in the U.K. to addressing that? And then, the U.K., I think, has actually quite an extreme challenge with this where we've had such success with renewables penetration and at the same time, I think we've failed to invest in baseload replacement in a way that some of the other markets around the world have. What are you seeing in terms of trending in the U.K., and where do you think the government is going on this?

Guy Newey [00:31:56] If I'm being brutally honest, I don't think we've kind of grasped this question as much as we should have. Belatedly, we seem to be pushing more effort into the replacement nuclear space after not doing anything from 30 years. But it's taking a while. And that's at the kind of large scale nuclear, you know, two to three gigawatt scale, and we're making progress there. But it's not clear that's going to be the only thing that we need. I feel like we've made big announcements in 2015 around small modular reactors, and here we are kind of seven or eight years later not having...

Mike Reynolds [00:32:42] Still making big announcements, but not doing anything.

Guy Newey [00:32:45] Still making big announcements, not enough on the ground. Although, it's a really kind of fertile area of innovation and investment. It's really interesting starting to see direct investment into there. And we're not doing enough on market reform to provide the price signals so that people providing flexibility can get really excited about what this future market might be in the U.K. context. And so, it's a work in progress, but the pace needs to up. Otherwise, as I talk about, the creaking of the system is just going to get worse and worse.

Mike Reynolds [00:33:19] And we talked a little bit today... I mean, it's amazing how quickly the conversation when we talk about energy turns into a conversation about consumers and their homes and their EVs. But that's a percentage of the mix. I'd be interested to get your views on industrial U.K. and the sort of industrial challenge. What are you seeing there at the moment?

Guy Newey [00:33:40] When you think about big innovation challenges, absolutely, how are you going to get consumers on this journey to net zero? How are you going to hold their hand through getting a low-carbon heating system installed, whether that's a heat network or a heat pump or whatever it is.

Mike Reynolds [00:33:57] And in that, by the way... So, before we get to the industrial demand, how important is choice in that for you? Like, in your research and your analysis.

Guy Newey [00:34:06] Consumers definitely want choice as a starting point. But actually, the greater motivation is confidence that whatever this new technology is, lots of which they won't be familiar with in a U.K. context, even though they've been around for a long time, is it going to get my house warm and is it going to be a reasonable cost? And they're more worried about that than they are about the choice aspect. And that is the big challenge for the heating industry, because some of these will be monopoly choices, particularly around the heat network, et cetera. So, I think choice is important, but it's more important... The barriers we see to low-carbon heating are unfamiliarity with the technology and is this going to get my house warm?

Mike Reynolds [00:34:53] I mean, I would describe myself as a relatively uninformed informed buyer. So, I kind of know what I'm talking about, but I also don't in some ways. I found myself in an argument with my plumber recently because he was basically refusing to specify a heat pump for my house. Come on man. I even got a design from another company provided. Because of the size of my property and it's an old house and it's on a cold north side of a hill, you're going to need two heat pumps. You're going to need a large buffer vessel. Interestingly, I hadn't heard the talk about Sunamp, so I'm going to go back to that, Sunamp.

Mike Reynolds [00:35:29] But I gave this to my plumber and he said, "No, I would never install that because I don't want to stand behind that work. I don't think it will work for you. I don't think it will keep your house warm. I think you'll come back and complain to me about it." And it strikes me that there just are millions and millions of tradesmen up and down the U.K., tradespeople that are doing this work, that just don't understand these new technologies.

Mike Reynolds [00:35:50] And there also doesn't seem to be any plan to say, "How does my plumber find out this does actually work? And it works in places that are colder than the U.K., and you don't have to spend £50,000 on insulation for it to work." It tends to work anyway. You can get a flow temperature of 60 degrees out of a heat pump and it'll be absolutely fine, which is also fine for heating my house, so. That was a personal rant rather than a question, to be honest with you.

Guy Newey [00:36:14] I agree with you. You know, we do 30,000 heat pump installs in the U.K., maybe more like 40,000 this year versus one and a half million boilers. It takes a lot of time to move that supply chain.

Mike Reynolds [00:36:32] You've got big moves, recently, though. I mean, I think British Gas has come out and said they're going to move into heat pumps in a big way, they're going to retrain all their employees. I think Octopus has launched a product, £3,500. They turned me down. I registered on their website and it said, "Nah, it's too complicated." They only want to do easy ones. But it does seem to be that the market's taking off and there are a lot of big people investing.

Guy Newey [00:36:57] So, we talked about consumers. What are the other big innovation areas or big innovation needs we know? One, absolutely, is the kind of less sexy part of the energy industry which is how are you going to decarbonize kind of pockets of industrial clusters? That's a big challenge in the U.K. So when you've got chemicals, plants, areas which are linked up, potentially, with a power station or something like that, or you've got ceramics as you've got in different parts of the country or any of these kind of big industrial processes, how are you going to think about what the integrated solution to the energy needs of that? And that will be a mixture of heat and electricity, et cetera.

Guy Newey [00:37:51] It's one thing which is a real systems challenge because you need to understand the different demands of all the different participants. Because what you typically get is industrial areas, because of years of different companies popping up and different relationships, you've got that slightly kind of odd mix of people in a particular site. So yeah, you could have a world where everyone does their own individual thing, but that would be an incredibly inefficient way to do it. It's much better if we think about solutions which will crucially say, "What are the steps that different areas need to take?".

Guy Newey [00:38:28] So, we see that kind of non-domestic, industrial clusters, as well as kind of commercial complex sites, as it were, whether that's a port or a prison or a NHS complex or whatever, or a university... How all of those are going to navigate to net zero is a massive challenge. That's number two, I think. And the third one is just how the hell are we going to make all these networks work together and the system join up? Those are the three big innovation challenges we see. One is the consumer, and the latter two are very much kind of "systemy," how is this all going together kind of questions. Again, it's that integration, which is as big an innovation challenge as coming up with a new technology. That's what we see is going to be the big thing over the next 10 to 15 years.

Mike Reynolds [00:39:23] And I think for some of those sectors, it's business critical. We're talking 50, 60, 70% of their operating costs to energy. And the crisis that we've had in the last two years on energy prices in the U.K. has just already brought this forward. Can we keep industry in the U.K.? This is stacked on top of how labor prices are higher in the U.K. than they would be in other markets where they can be comparing us to. So, I think this is really at the heart of a competitive Britain. What are we going to be in 50 years? What kind of country? Are we going to have industry in 50 years, 15 years.

Mike Reynolds [00:39:59] One last question to leave you with, and it's a grand question. I'm going to appoint you prime minister for the day for this podcast. Prime minister for the five minutes that we have left in our podcast. And you can do anything you want. You've got a massive majority, which means that you haven't got anyone in your own party trying to come at you from the right or the left to undermine your intensity of your commitments, which means you can go and do anything. I'm just very interested in what would be the two or three things that you would like to do in the energy space and that you would put in place.

Guy Newey [00:40:38] The things that would make the biggest difference to the two questions I worry about all the time, which is how are we going to get this net zero system to work at the pace and scale we need, and how are we going to do that in a way which is going to encourage the innovation and the innovators that we work with and we're very proud of being part of our stable to transform that future system? I'm allowed two things, if that's possible.

Guy Newey [00:41:06] One is, we have got to get the market design aligned with the physics of this new system. So that means more locational pricing, clearer incentives in terms of doing the low-carbon thing that's also the cheaper thing. All of that needs to be fixed. And there's a big lot of work and activity around that. But getting those market signals aligned, that's the most important thing for innovators. Because that's the thing that they can take to investors saying "That's a real market. I'm going after that. I don't have to lobby government for everything. I can get a real price." So, that my number one.

Guy Newey [00:41:48] My number two is, if you had a really good majority, taking on planning. Because we are, even in this very smart, flexible world, we are going to have to build a lot of pipes, wires in particular. A lot of heat networks, a lot of new nuclear, new renewables. And we're gonna have to join all of them up together. We've become very, very slow at that in the U.K. So, streaming on that process, more strategic planning and then pushing it through even in the face of local opposition.

Mike Reynolds [00:42:28] That was going to be my question. Would you do more of it at a national level? Would you take more control of the design and implementation of the energy system at a national level? Take heat networks, for example. One of things I've always been frustrated about them is they're always done very locally, which means they always end up with less resource and less focus on them than you could get if they were declared to be nationally critical infrastructure, which they should. You could decarbonize the city of Manchester if you do it well with the heat network, but it's really hard to do it if it's just a local authority doing it and they've had budget cuts for 15 years.

Guy Newey [00:42:59] I'm going to be a real systems thinker and say you both levels, right? We do not have in the U.K., and you and I have talked about this in the past, a system for local area energy planning. So, absolutely. And then you need to fit that into the national system and identify the national priorities. You kind of zoom in and out between those two as we do with transport and things like that. Transport planning, I should say. That will give us a much better chance of cutting through this. Because you've agreed to a plan at the local level which fits with the national strategic plan, and both elements should be able to say, "Right, it's in the plan. We can go ahead with that heat network. We can go ahead with that transmission upgrade. We can go ahead with digging up the roads in this area." Because, from a system point of view, it's absolutely essential. Now, you have to involve, but your planning process is how you get local consent, not once you've decided on the project, which is, we do it the wrong way around, I feel.

Mike Reynolds [00:44:04] Okay, good. I lied; I have one more question for you, which is my standing question I like to end these things with. Drop yourself forward in 20, 30 years and you're sitting with your pipe in your slippers, somewhere near Birmingham, presumably. And you're looking back on your career. What do you want your legacy to be? What do you want to reflect back on and be remembered for?

Guy Newey [00:44:26] I would love if as many as possible, but at least three or four of the companies that we work with at Energy Systems Catapult have grown to be absolutely powerhouses of the transition. And they're employing thousands of people and they are coming up with good solutions for consumers and they're helping make that transition as easy as possible. If we've helped a few of them absolutely thrive and become multinational success stories for the U.K. economy, that's the thing I get out of bed for, to help. So yeah, I've mentioned a few that could be potential. There are loads more that are in our portfolio who could be who we're really excited about. And if we were able to help them a little bit and they can say, "You know what, there's a bit of success that's thanks to the Energy Systems Catapult, I'd be delighted."

Mike Reynolds [00:45:30] We had a leg up. Yeah. Very nice. Guy, thanks very, very much indeed. Really appreciate the time today, I know how busy you are. And I look forward to seeing the Energy Systems Catapult maybe going... Do you do any work stateside?

Guy Newey [00:45:44] Yeah, we do bits. We do bits. But we're looking at more and more, so.

Mike Reynolds [00:45:49] We might see you more over there soon.

Guy Newey [00:45:50] Please get in touch. Anyone who needs any systems thinking and to learn the hard lessons as well as some exciting companies, do get in touch.

Mike Reynolds [00:45:58] Magic. Thank you, my friend. Really appreciate it. I'll let you get on with your Monday.

Guy Newey [00:46:02] Cheers, mate.

Mike Reynolds [00:46:02] Thanks, everybody.