May 11, 2022

Ep85: John Pettigrew 'Matching Net-Zero Supply and Demand'

John joined National Grid in 1991 and during his time at the company has held a variety of senior management roles, including UK Director of Engineering in 2003, Chief Operating Officer and Executive Vice President for the US Electricity Distribution & Generation business in 2007, Chief Operating Officer for UK Gas Distribution in 2010, and UK Chief Operating Officer from 2012 to 2014.

He joined the Board in 2014, as Executive Director UK, responsible for the UK’s Electricity Transmission, Gas Transmission and Gas Distribution businesses.

In September 2017, John came together with the government and thirteen other CEOs to create an Inclusive Economy Partnership, which has been established to identify and develop solutions to some of today’s most significant societal challenges, including financial inclusion and capability, mental health and transition to work.

In January 2018, John was appointed to the Rentokil Initial plc Board as a Non-Executive Director and became Senior Independent Director in May 2019.

He was appointed a member of the Edison Electric Institute Executive Committee in June 2019 and joined the Board of the Electric Power Research Institute in April 2021. John is a member of CBI’s Presidents Committee, and a Fellow of the Energy Institute and of the Institution of Energy and Technology. He holds a BSC in Economics and an MSc in International Economics and Banking, and completed the Advanced Management Programme at Harvard Business School in 2010.


Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up it really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich, and this is Cleaning Up. My guest today is John Pettigrew, CEO of National Grid. In the UK and the US, National Grid owns the infrastructure which moves energy, electricity and gas from where it is generated to where it is used. Please join me in welcoming John Pettigrew to Cleaning Up. So, John, thank you very much for joining us here today. Welcome.


John Pettigrew: Well, thank you, Michael. It's nice to see you.


ML: Now, where are you today? I always start with that question. Because during these times of pandemic, and Zoom, and goodness knows what else, you never know, somebody might be somewhere very, very interesting.


JP: Well, today, I'm actually in central London. So, we've got a headquarters here. So I'm actually overlooking Trafalgar Square. But it's very rare that I'm here actually, I'm usually in other locations. Next week, I'm in New York and the week after that in Washington. It's quite nice to spend a couple of days in London actually.



ML: So, Trafalgar Square. Now as you look out the window, you don't see Extinction Rebellion protesters glued to the roads.


JP: Not today. But it is something that we have seen and the campsite on Trafalgar Square as well. So I actually live in Westminster. So walking through in the evenings is one of the things you have to sort of fight through occasionally as well.


ML: That's right I actually visited one of those protests in Trafalgar Square, and fascinating to see all the community activities going on that don't get into the headlines, some of them very, very valuable. But let's start by talking about I mean, obviously, National Grid. Now, my audience, some of them are real, real experts on all the way down to the minutiae of electricity market regulation, but some of them are not. And I'm hoping that my audience has just increased because one of the last episodes the end of season five was with Alex Honnold, the free solo climber who has a solar foundation. So hopefully, that will have brought in some new audience who may not know what National Grid does. So, can you give us a thumbnail?


JP: I mean, highest levels, National Grid is one of the largest investor-owned utilities, our focus is UK and US. And very simply, what we do is we run the electricity and gas networks, transmission and distribution. So, we basically transport power from where it's produced, to where it's needed. That's primarily what we do. We have other assets like renewable generation in the US, but our focus is on delivering low carbon energy from where it's produced, to where it's consumed.


ML: And it's primarily the backbone of the system. So, you don't do distribution into people's homes, or do you have a bit of that as well?


JP: No, we do actually. So, in the UK, we just acquired actually the largest distribution company in the UK, which is called WPD. We acquired it from PPL, and we're just going through the process of integrating it. So, in the UK, we do the large infrastructure. So, imagine it's like the motorways transporting the energy. And distribution is like the small sort of A roads and B roads and the local roads. And we just acquired the electricity distribution in the UK. In the US, we are transmission and distribution. So, we serve millions of customers in the Northeast of the US every single day. Right to their homes, we're delivering electricity to the home.


ML: Okay, and that's very interesting because I sort of think of National Grid as being the backbone kind of keeping the whole system balanced and up and running. But you've also got those distribution businesses. How does it work in terms of keeping those separate because the regulators you know, we've been through this decades long process of separating the generation, the transmission, distribution, retail sales? Presumably, you talk to all of those regulators?


JP: Yeah, we do. So, in the UK, we have a single regulator called Ofgem, in the UK, we're not allowed to own generation. So National Grid doesn't own generation, we just own those networks. And we keep those businesses separate. So, in the UK, I've got a gas transmission business, an electricity distribution business, an electricity transmission business. And we actually have some businesses that connect the UK to Europe as well. All are National Grid Ventures businesses. They're all separate businesses, they all have their own operating boards. They're kept separate from a regulatory perspective, in the US, slightly different. So, in the US, there are multiple regulators both at the national level called FERC, but also at a state level. But each of our businesses, again, are operated as individual business. So, we've got a Massachusetts business, a Rhode Island business, a New York Business, and each of them are separate. In the US, we are allowed to own generation, so a different regulatory regime, which means we have different opportunities in the UK and in the US.


ML: And now on previous episodes of Cleaning Up we've had Kristian Ruby, of EurElectric, we've had Francesco Starace, a very popular episode, obviously, the CEO of the big, Italian utility, Enel, and we've had Greg Jackson, the CEO of Octopus. So, we've sort of done, we've looked at the electricity system from a number of the different systems, a number of different directions. But we haven't really done the same with the gas system. So, give us a thumbnail of your activities in gas, which are all in North America, if I'm right.


JP: Well, actually, in the UK, we're just selling our gas transmission, because we've just announced it actually Michael. So, we're selling a 60% stake in it to Macquarie. So, we're still be a 40%, owner of our gas transmission business in the UK, but most of our gas businesses is in the US and in the US, we are the largest gas distribution company in the Northeast, so serving about eight million customers. And for us, the challenge is really how do we actually continue to deliver for our customers every single day, about 40% of all the emissions in the Northeast come from heating people's homes. So we've got a challenge, and how do we serve them every day whilst actually working through the energy transition. And actually, we've been doing a lot of work on that looking at how you decarbonize gas, as we call it, to find alternative ways of delivering heat in an affordable way to customers, but actually reducing the amount of methane emissions that you see. So, we do a huge amount of investment on reducing leaks on our pipelines. And in the next couple of weeks, we'll be talking about how we can actually get to a fossil free gas solution using renewable natural gas, and actually hydrogen as a potential long-term solution.


ML: So, I was waiting for the hydrogen word because, you know, in so many of the meetings that I have, it's almost like you have to run a sort of sweepstakes, and the first person who uses the word hydrogen has to buy the drinks. And you lost that because you mentioned the word hydrogen. But it's really what I like, though, is that you actually talked about renewable natural gas first, you got there first. So maybe that's the kind of one all draw. And I think, let's come back, though, to the question of decarbonizing gas, particularly, the reason why I laugh about hydrogen is because it just dominates discussions. It's the topic of the moment, and then you end up spending all the time talking about hydrogen. But I wonder, so we'll come back to that. But maybe you could sketch out what is the, how do we decarbonize? I mean, what does the net-zero transition look like? And can you just give us a kind of a thumbnail of that without diving just into heating, but you know, what does it… let's try and peel the onion from the top down.


JP: That's a great question actually, Michael. I mean, so the way I think about it, we at National Grid have been have been thinking about it sort of in three tranches, and the timescales of delivery actually is slightly later in each tranche. The first tranche is decarbonization of electricity generation. And actually, the actual shape of that is pretty well clear to everybody. I think, you know, we're going to see an offshore wind, onshore wind, solar storage, with some nuclear potentially conventional generation, whether it's with carbon capture and storage, or even hydrogen being used for production of electricity. But you can sort of see that pathway and this week, we saw the UK government's announcement that they've ratcheted up their target for 2030 to 50 gigawatts of offshore wind. The second tranche we think about is the electrification of transport, and of course, slightly different timescales. But we're now starting to see that ratchet up and that has big impacts for networks. Transport is the largest emitter of CO2, both in the UK and in the Northeast of the US. So that electrification of transport is the sort of second tranche we think about and as prices come down for electric vehicles relative to internal combustion engines, we're going to see utilisation going up and with that significant decarbonisation of transport. The third tranche is decarbonisation of heat. And it is by far the hardest, I think, in terms of being clear what that roadmap looks like. We have done a huge amount of work on it thinking through, potentially how does it play its role over the next several decades. But actually, what's the opportunity to reduce the cost of decarbonisation for customers, there are billions of dollars being invested in these networks, these gas networks over many, many years. And if you can repurpose them to actually support the net-zero journey, then actually, that will be a lower cost for customers. And what we've seen in the Northeast of the US, and we're going to be announcing this the next couple of weeks, is actually if you take the renewable natural gas opportunity, there are 1000s of opportunities to just capture that renewable natural gas, blend it with hydrogen, of which there's a potential surplus of renewable electricity going to be available, which you could actually use to through electrolysis to produce hydrogen. You put those two things together, adding on top of that energy efficiency, and actually, there will be electrification of heat as well. And actually, you get a solution, which is lower cost and supports net-zero. So when I talked about decarbonisation of heat, I talk about a myriad of solutions, which is energy efficiency, electrification of heat, ground source heat pumps, and air source heat pumps, potentially supplemented by some additional boiler heat, and then potentially a fossil free gas, which is made up of renewable natural gas and hydrogen. So, we're quite excited about the prospects, because actually, it is probably more deliverable than actually electrifying everything, because the scale of the electrification will be massive. So, four times as much energy goes through our gas networks in the Northeast of the US, as through our electric networks, and the peak in the winter is huge, it’s a real challenge. So that's how we've been thinking about it, those three tranches, and fossil free gas is part of that solution in our mind.


ML: That's great. And now let's take each of those three tranches in turn if we could. And starting with the power, I agree, if, in fact, you know, about 10 years ago, I started to say, look, we kind of know how to do the power system, it's kind of becoming clearer, it's like it was emerging out of the fog of, of war, or the fog of whatever, you know, we were starting to see what that system would look like. And it was clearly going to take decades and decades to build. But we're tracking along a path, which is lots of renewables, as you say, some nuclear where it can be done, you know, lots of demand response, batteries and storage, where that can be done. But now, I want to challenge though, on the one area that I don't think we've got great visibility, which is every so often, whether it's in Northern Europe, because there's a wind lull, or if it's in the Sun Belt, where there might be, there might be a monsoon, or there might be a period even in California, every so often just kind of rains for a few weeks, or it's or it's cloudy. What do you do to get through those difficult periods, which could be a few weeks, but they could also come at the end of a few months of low resource where whatever storage you've got is depleted. How do you get through?


JP: Those are great questions. I mean, one of the things we've seen in the analysis we've done if you take the UK, for example, then the weather fronts are right about 1000 miles wide. And you could see yourself in a position where for several days or even a couple of weeks, there is very little wind resource. And actually, people underestimate the amount of decarbonisation that's gone on already. So last year, 50% of all UK, electricity came from zero carbon sources, and a lot of that was wind. But actually, the volatility we see is quite wide. So, there are days where we get about 2% of the wind capacity, there are other days, we get 98% of it. Very different to your traditional nuclear or CCGT, which are sort of in the 80% plus mark. So for us, when we think about those periods when wind is going to be low, or the sun's not going to shine, there are a couple of areas that need development. And there are a couple of opportunities. So, the opportunity is in interconnection. So, the more that you can interconnect these networks, the more you can diversify that risk. So those weather fronts are limited in size. So National Grid, for example, will have by 2024 7.8 gigawatts of interconnection between mainland Europe and the UK.


ML: Let me just interrupt for just one sec on that, because my audience doesn't necessarily know that many gigawatts mean. What percentage of the UK is sort of peak demand could that meet if we just let's give them just a thumbnail


JP: So that the coldest, wettest, darkest half hour in the winter in the UK is around about 50 to 55 gigawatts. So, 7.8 gigawatts on Full Tilt from Europe, potentially is providing over 10% of that energy need at that peak. It's significant.


ML: 15% out. Okay, good. Sorry. I didn't mean to interrupt your flow. But we need to keep the audience with us here.


JP: Absolutely. Thank you for reminding me. So. Yeah, so interconnection, I think, is an opportunity to diversify that risk. Because obviously you can get wind from other places solar from other places, clean, zero carbon generation from other places. So <inaudible> is a great example. You know, we've just commissioned an interconnector there, 1.4 gigawatts of that 7.8. All of that is hydro coming into the UK. So that helps to diversify that risk. The second area, and probably the biggest challenge, to be honest, Michael, which is not yet solved is long term storage. I was at the Global Investment Summit back in November that the UK hosted and Bill Gates was on the platform. And he talked about some of the key challenges that have to move from the sort of the lab in terms of R&D to production scale, if we're going to achieve net-zero by 2050. And large-scale storage is one of those things. Now hydrogen, ironically, could be the solution to that problem. It might not be, it could be batteries getting more efficient and longer in duration. Obviously, there are other sources like hydro, but for me the interconnection and long-term storage of the things that we have to focus on over the next decade, if we're really going to get to that truly sort of diverse diversified risk of net-zero networks.


ML: Yes. And long-term storage is actually one of the things when I was talking to Francesco Starace, where we had a very, we have very, very few differences of opinion, but Francesco and Enel, Francesco seemed very bullish about mechanical gravitational storage or lifting concrete blocks and then lowering them. And I've done a back of envelope calculation, and a kilo of hydrogen contains enough energy to lift a concrete block 13,000 kilometers, in other words, to put it into orbit, and I just can't see how, I mean, to be honest, I can't see how chemicals storage, how chemical batteries could scale to cover those sorts of potentially two-week, three-week, one-week whatever lulls between those fronts. That mechanical seems entirely implausible. And that leaves us with relatively few options.


JP: Well, it does, based on my understanding where the technologies are, it does bring you back to hydrogen because it is, you know, a storable gas. And potentially there are going to be periods in most countries, I think, where there will be a surplus renewable generation, look at the capacity that we're building to meet the need. Because of that intermittency means there will be periods where actually there'll be more generation available than demand is actually taking. One way of solving that problem, is converting through electrolysis to hydrogen, store it and then use it when you need it for those risky periods. The economics don't work today.


ML: I worry about the economics of this, you know, I've actually fought a kind of a long campaign against this idea that excess renewables can be turned into hydrogen via electrolysis, because of the economics because, by definition, that would suggest you're using only electricity that would otherwise be curtailed, which means your electrolyzer is only working, you know, at the moment, 2% of the time or whatever, you'll know better than me the number, but maybe 10%, maybe 20% of the time, how can you possibly then make a competitive hydrogen versus hydrogen from dedicated resources or even potentially, or whether they're renewable or even potentially nuclear.


JP: Well, you can do it from dedicated so the analysis we're doing and we're publishing a couple of weeks’ time in the Northeast says, actually, for our zero fossil fuel vision for the gas network, you need about 15 gigawatts extra generation to support the hydrogen need, because it's a blend with renewable natural gas. But actually, as an overall solution. It's about 80 to 100 gigawatts less than if you electrify everything. So actually, that's why the cost to consumers is lower. So, you will need dedicated generation for hydrogen, if that's the world that we move into, both for heat and to protect against that risk that you talked about. But you know, that's where we have to explore R&D in terms of what are the options, I sort of agree with you on batteries? They look great for four hours, they're fast acting, which is brilliant if your operating system, but actually will they be there for multiple days at the moment, technology suggests not, so that's going to be a challenge for us.


ML: I have to admit that I'll bring up the next two things, I'll bring up ones that I have very small angel investments in. One is geothermal closed loop sort of third generation geothermal, where the UK actually has a potentially viable resource, at a very big scale. And, and the second one is Xlinks, which is the renewables in North Africa, 10 gigawatts of renewables and a three and a half gigawatt cable around the coast of Europe not landing until it could just feed straight into your grid. Are either of those interesting, or have I just blown, what small amount of money I've put into those?


JP: No, no. I'm a geothermal actually, when I talked about zero fossil solution. And actually, geothermal is part of that. So, we do think there, there are places where actually within communities, geothermal would be a sensible solution. We've actually got some funding by our regulator in the US to actually pilot some geothermal to households. So, we're actually developing it as you as we speak. So, I do think it will be part of the solution. None of these things are the total solution. And of course, there are lots of people that go to extremes, which is why I think we'll have a mosaic of solutions. Xlinks, I'm very familiar with. In fact, Dave Lewis is on the board there. I had breakfast with him not so long ago. So, the question will be whether the economics of it work, from a technology perspective, it is it is eminently achievable. So, you know, we've just commissioned the largest deep-sea cable in the world to Norway, which is about 720 kilometers. I think the one to Morocco would be several thousand kilometers.


ML: That's right, 4,000.


JP: It comes up as a as a direct current, which means you mitigate losses on it quite significantly. So, it will come down to the economics of it and what support it needs, whether it's a capacity contract or a, a CFD. So, you know, a lot of these interconnectors I think are part of the solution, as I said, to mitigating some of the risks around intermittency.


ML: Right, let's go to that second layer, which was the transportation. And it does seem to be now the consensus that it's going electric for light vehicles. But there's still a lot of discussion around heavier vehicles and round freight and even around things like trains to me, to me, anything, you know, trains ought to be electrified. We already know how to do that. But how do you see it? Because the alternative, of course, is hydrogen, without leading the witness, although you probably know what I think about the solution set, what's your sense?


JP: Yeah. Well, I mean, I absolutely agree with you when looking at light vehicles? Absolutely. It seems to be a done deal, isn't it? It's just a matter of how quickly it gets used, it gets rolled out. I mean, for large vehicles. Again, I think we'll end up with a hybrid solution. Certainly, for trains, this seems very sensible, that it's electric. It's probably the easiest form of transport to electrify, to be honest. So why wouldn't you actually get into heavy vehicles, I know there's challenges. But gradually, as battery prices come down, we are seeing more and more larger vehicles being produced. I mean, obviously, the buses that we're seeing in lots of city centres is a great example, National Grid supporting some of the schools in Massachusetts actually, with electric buses, that we are starting to see electric as a solution. I think it depends on the nature, what they're being used for. You know, whether it's last mile logistics or whether it's longer term, but does get you to the speed and the efficiency of charging as well and the infrastructure around that. So National Grid has been advocating in the UK, for example, that we should create an ultra-fast charging network across the whole motorway system. We've got some funding from that, through the government, which was put in place a couple of years ago, but we need to move on it. The vision was that wherever you are in the UK, you're never more than 50 miles away from an ultra-fast charger that would allow you to charge your car in a period you know less than it takes to get a cup of coffee. So that 20 minutes or so. I think that's going to be increasingly important to give people confidence to buy EVs, whether it's you know, light vehicle, or heavy vehicle, or heavy duty.


ML: Now, there's some elements out there, not pointing a finger at Net-Zero Watch, or the Global Warming Policy Foundation, as was but who say this is all absolute nonsense, because we would have to add 15 new nuclear power stations to power this electrified transportation system. And you at National Grid have actually done quite a good job of kind of bringing that discussion back to reality, have you not?


JP: Yeah, it always makes me smile, Michael, it’s usually one of the top <inaudible> that say, you know, the lights are going to go out because of electric vehicles. So, the reality is that the network is built to meet, as I said, one half hour a year, the rest of the time, there's loads of spare capacity on the network. And in fact, if you look in the UK, the through energy efficiency, the peak demand in the UK has gone down by I think around about 14%, since 2006, has gone down quite significantly. So, there's plenty of capacity on the network. And therefore, it really is about provision of energy. And yes, the amount of energy going through the networks will increase, it's likely to double. But actually, it's going to double over a period of time. And therefore, we can plan for that. So, it always makes me smile when people say that, you know, the network's not going to be able to cope or the lights are going to go out. That's not true. And with smart charging, you know, people aren't going to care when they get home and they put their plug their car in whether it charges at 5:30 on a winter's night, or whether as long as it's charged by the following morning, when they use it, then actually, they're going to feel very comfortable. So, we can use all that spare capacity, including the spare capacity on the generation side, you know, so the generation, you know, a lot of the time is either part loaded or is spare, because there isn't a demand to meet it. So actually, you will not need that much more increased capacity.


ML: Right. And of course, the key to this though, is digitisation because you can't do any of that without digitising really everything all the way from generation through to the car that's on a driveway. So where are you with digitising all of your assets?


JP: The transmission system actually is pretty digital and it has been for a long time. Distribution is slightly different. So, transmission is the big stuff distribution, the local stuff, transmission has pretty much been an automated system with data collection for many, many years. The distribution system has always been a passive system and therefore is less automated and certainly less data is collected on it. That's the challenge. It starts with smart meters to be honest; you know very little can be achieved unless you've got a smart meter that provides you the data back into the networks about what you're using, but also allows you to then do clever things like real time tariffs, and potentially, you know, export energy back onto the grid, which you could get paid for from your car. So, the starting point is making sure you've got the whole of the infrastructure on smart meters. In the UK, it's been rolled out, it's taken a while, to be honest, you know, I think the original plan was it was going to be complete by 2020. We're at 2025. Now is the latest new, isn't it? But that is a massively important sort of foundation building block to then digitise the rest of the network to be able to meet these sorts of challenges ahead.


ML: Right. But when you say the starting point of smart meters, it's kind of at that may be the biggest hole at the moment, but you also need the data moving right the way through the system. So, it's not just a smart meter. But in a sense, it's the generators, because they need to know that they need to get the price signal from the smart meters, but the smart meters need to know what's happening on the generator. So, it's also the transfer of data throughout the system, is it not?


JP: Yes, sorry, when I talk about smart meters, I mean, all the infrastructure that goes with that. So, with the smart meter comes a massive investment in the sort of telecommunications to provide that data to a central repository that can then be provided to the industry. So, they've got that information. So, the rollout of smart metering, both in US and the UK includes all that infrastructure that gives us that data. So, it's not just the meter in your home. Actually, it's the connection back to the central repository with all the information. So that is being built out. So that is massively important. Yeah, the network's perspective is actually just real time monitoring of the network. So, the network historically has been very passive. So, generation, transmission distribution to a home, you can optimise the network much more effectively now that we've got better access to data in real time. And, you know, National Grid is doing that. We've just invested in a company in California called Smart Wires, which we're deploying in the UK and in the US, which is avoiding us having to invest in wires, because actually, we're basically optimising the system much more effectively and being able to get more power donate existing routes than we were able to historically.


ML:  Right, I know Smart Wires very well. I wanted to help them if I could, but I think they're on a great roll without me. But also, there's another one Reactive Power I think you're working with, and they're correcting the voltage fluctuations or monitoring them. And there's a lot to be done on that digitization front to improve the usage and the capacity utilisation of your assets or anybody's assets.


JP: Yeah, it's one of things I did when I became CEO, actually, we set up a company called National Grid Partners, which is basically an investment fund. It's based out of California. And the objective was to make sure that we were looking over the hill at new technologies that were coming on would help us manage the network in the future. And we co-invested in these companies that generally are quite small and startup. And things like Smart Wires and a number of others have come through that process for us. And actually, we allow them to then invest in our network and use our network, which is quite helpful to them as a sort of sibling company. But it's been fantastic for us as well to get insight into new technologies, how we can optimise the system burden.


ML: On this digitisation, there's one question one challenge, though, which is security, you know, particularly in the background of this conversation, we've got the conflict in Ukraine. And I can only assume that there are bad actors out there, who shall remain nameless, who are trying to penetrate and trying to cause trouble on Europe and on even the UK or even the US grids. Are you worried about cybersecurity?


JP: So, usually, the question I get asked most is what keeps you awake at night? I usually answer by saying, well, I can't imagine any CEO that runs utilities and networks wouldn't say cyber. So, it's not something that keeps me awake at night. But it is something that's absolutely in my top three priorities. Just to be clear, we're not actually seeing anything as a result of the Ukraine Russia <inaudible> at the moment, but we are monitoring it. But we are ever vigilant. The challenge for you know, for CEO running utility with regards to cyber is the risk is constantly changing. So, there are bad actors who were looking to exploit vulnerabilities in our systems. So National Grid has invested hundreds of millions of pounds over the last five years and will continue to do so in making sure that we've got the right protection the right defences, you know, in the same way as I've got a control room that keeps the lights on and the gas flow, and I've got a control room that is constantly monitoring our systems against cyber-attacks. And we separate out those real science systems, those things that actually do keep the lights on and the gas flowing from our business systems. And then, you know, increasingly one of the challenges with cyber is technology out in the field. So, you know, your local substation 20 years ago, it was mechanical, there wasn't any chips in it. Today, a lot of the, the equipment we have is digital, and therefore it's vulnerable to cyber-attacks. So we have to protect that. So, we think about it in layers, sort of core real time systems, the business systems, and then actually what we call operational technology, which is out in the field. And, you know, we have hundreds of people who are dedicated now with the National Grid focusing on that. And, of course, given our role, we also have very good links with the UK Government, in terms of the National Cybersecurity Centre, and in the US, as well with the, with the appropriate bodies there to get the information on what's happening externally.


ML: And I suppose it would be, I wonder if I can come back on you and ask you how confident you are in other players, because of course, your systems are connected intimately, connected with other people's systems. And you know, the great example, and one of the recent cyber-attacks in a retail, I think it was the Target cyber-attack where the vulnerability was in the SCADA system of the air conditioning system that then managed to get in and get the credit card numbers. I mean, you know, your systems could be fine. But somebody else could have a vulnerability, and how do you protect yourself against that?


JP: Yeah, without getting too technical, it is about making these things to separate. So, we are very conscious that through our supply chain, or through just the normal supply, and so, you know, we firewall all our systems to make sure that there is no access from their system to ours without going through doors and gateways. My CAO describes it as think of it as a house. And you know, first of all, you need a key to get through the door. And then every room has got its own door with its own lock. So, everything is airtight. So even if someone gets in the outer into the outer ring, they can't get into the inner circle. So, we think about it all the time. But it is a vulnerability. And we remind our staff as well, you know, mostly you that the biggest vulnerability is us as human beings, you know, doing something on the website or going on a website or clicking on something that's emailed to you, those are the highest risk. So, we spend a lot of time with our staff, educating them reminding them of those vulnerabilities.


ML: You mean, that list of my passwords that's pinned to my computer screen is not a good thing? I wrote something recently, for Bloomberg NEF on resilience, I entitled ‘What could possibly go wrong?’ And one of the things that as I was researching that, that I actually started to get cold sweats about was solar storms, the famous Carrington event of I think, is 1859, which took out, there were no electrical utilities at the time, but it took out the telegraph system, and the pylons were sparking and giving the operators electric shocks. If that happened today, I'm assuming that I think I suspect your answer is going to be well, we're ready. We are absolutely fine. But other people will be in trouble, but maybe not. What's your what? How are our protections against major solar disruptions?


JP: So again, I'm not an expert on this, but are two different types of solar flares is what my technical team tells me. And actually, we simulate those things happening. Three major events have happened since that, I think, one in Canada in the 1980s.


ML: 1989, Quebec. It took out the power system for a few weeks.


JP: You are right, the answer is that we simulate it and actually the way that we configure our system protects against that we know where there would be vulnerabilities to our transformers, for example. And therefore, we double up on what we need in those sorts of areas. So, we are protected against those things. Again, never be complacent, because you do the analysis you do. You put the mitigations in place, but sometimes things turn out to be different, but we are comfortable that we can mitigate against those things. I think the bigger issue for us on resilience is you know; we are very focused on the energy transition and mitigating climate change. But we do have to think about, you know, adaptation as well. So, we spend a lot of time in terms of thinking about the resilience of the networks, so things like flood risk. So, we're investing in all of our substations to make sure that they're protected against a one-in-thousand-year risk now, because, you know, as we see climate change, we have to protect the system. Whilst we're already working hard to try and mitigate it, we have to recognise that the climate is changing. And as a result of that the way we invest in our networks and the way we design them is changing.


ML: Absolutely. My house in Notting Hill got hit by the Notting Hill floods last July. And it's just a few streets away from a substation and, you know, Notting Hill. It's not a flood risk area at all. But that's what happened.


JP: Exactly. So, we have mobile solutions, and we actually have permanent solutions on depending on the rest. We do a huge amount of analysis. Infact, we’ve got a website, you can go on and see how climate change is impacting on the UK and the US, and where we're investing in to mitigate against that.


ML: Now we need to get to that third layer and this is where it could go horribly wrong. We've had a lovely conversation so far. But we may not see eye to eye entirely on the heating solutions and the use of that fabulously expensive gas network that you've got. So, talk about that third layer, you've already mentioned, renewable natural gas. So, let's start there. Because in Denmark, renewable natural gas meets one third of the country's gas need, but it's nowhere near that in the UK or the US where you operate.


JP: No, it’s not but the potential is there. So, we did quite an extensive study on the Northeast of the US because that's where our gas businesses, and we looked at what's the potential capacity of renewable natural gas that could be made available with the right investment. And actually, what we found is there is sufficient renewable gas available to support that solution that I articulated. Now, that will require you to transport that renewable natural gas from where it's been produced, to where it's going to be consumed. Where actually, in the Northeast, which is where we're operating, we would just need to have our proportion of what's available within the US that reflects the demand that we see in the Northeast. So, you know, it is you know, it is through waste, solid waste, farm waste, all those things. So relatively small in terms of individual contributions. When you add it up, when you look at population growth, and what's actually happening to waste, there is sufficient renewable gas available. And from a technology perspective, it's pretty simple. We've been flowing renewable natural gas into a US network since the 1980s. We've just commissioned a really big renewable natural gas plant in New York, which is taking waste from New York City, and providing it, injecting that renewable natural gas directly into the network to support our <inaudible> network. So, we know the technology is there, it's about making sure that you've got the right regulatory sort of framework in place to encourage that. So, we're talking to our regulators, we'll be talking to our regulators. So, in the same way as in the past, we were encouraged to buy renewable electricity, as a utility, being encouraged to buy renewable natural gas will help to stimulate the supply of it in the market. So, we do see it as you know, an important part of the solution. And hydrogen, you know.


ML: Before we go to the hydrogen piece, the blending piece, which we need to get to, there's one nice sort of twist to the renewable natural gas, which is that it also produces CO2 on the production side, which can then be either sequestered. So, which would be carbon negative, or can be used to make things like airline fuels. But it does need to be moved around from those locations, those distributed locations, are you going to get into the CO2 movement business? Or are you already in it?


JP: We're already in it, actually. So, in the UK, predominantly at the moment, we’re one of the partners looking at the zero-carbon cluster up in the Northeast in Humber with BP and other partners.


ML: Is it H2H? So, I also have to declare I'm an I'm an advisor to Equinor. So, I know that project well.


JP:  They are one of our partners. So National Grid is involved in that particular solution. So, we've been working on that for several years now. And obviously, the UK government's come out in support of it. So, we're currently doing what I described as the pre-engineering for that. So, we are looking at that as part of the solution. But you're right, you know, renewable natural gas, naturally, it's methane going up in the atmosphere, that's much worse than CO2. If you can capture the CO2 as well, after you've burnt it, then actually, it has a massively positive effect relative to some other solutions. So, that's why we think it's worth exploring. It's not going to happen on its own, it's going to require political and regulatory support. And it's going to require some support from an investment perspective to create that supply side. But from a demand side, if you can get that source moving, then potentially it could be a lower-cost solution than actually electrify everything.


ML: Right. Now, when you talk about the hydrogen blending, what sort of percentage blends would you be looking at?


JP: Well, we know from the work we've done so far that you can get about 20% hydrogen blend without having to change either the pipeline or actually appliances. We've actually got a project running up in the northwest of the UK at the moment just we've built basically a new transmission and distribution system offline with houses. And we're actually injecting hydrogen into the network and seeing how far you can take it before you need to invest. And then what investment would you need to repurpose it? So, we know 20% is doable.


ML: If I can come in there, I don't want to sort of, I don't want to hector the witness, but that's 20% by volume, correct?


JP: Yes.


ML: Which is only going to give you 7% of emissions reduction, assuming none of it leaks because hydrogen is also a greenhouse gas itself, but then you know, as is the methane in the pipe, so it's kind of that may not be a big factor, but definitely, because hydrogen is so diffuse 20% by volume is only 7% emissions, and it slightly increases your pumping loads as well. So, it may only be six percent. So, is it really worth it for that 6%?


JP: Well, the key is, what would you need to do to raise it above that? So, you know, raising the pressures? What would you need to do the pipelines in terms of compression? What would you need to do potentially, to line the joints. So, one of the issues is the molecules are smaller. So would you need to do something different, you may be aware in the water industry and in the distribution, you know, we've lined pipes in the past with plastic with a molten plastic that sits inside it, which helps to reduce the leakage. So, we're exploring what the investment that will allow you to repurpose it, ultimately, to get to a position where you can do 100%. And there are going to be industries where electrification is going to be really difficult and actually creating a hydrogen hub with 100% delivery of hydrogen is the right solution. So, we're exploring all of that.


ML: So, I'm completely on board with hydrogen hubs and for industry, but there was a little sort of bait and switch there, you know, where it's kind of goes from heating homes, and we can line pipes, because what we've been doing is digging up water by endless, endless roadworks digging up water pipes to reline them. And then, you know, so it can be done. Yes. And I guess the question that I can't get over myself is you have heat pumps, which are, which are effectively energy multipliers, and then you have hydrogen, which is an energy divider. And it's also very disruptive to do. So, it just it feels, I'll be honest, it feels wildly, uneconomic to go that route.


JP: To go back to the sort of the, the, the efficiency of sort of ground source and heat source pumps. So, in the Northeast, the US with the winters that they have, you may well need to supplement the heat in the winter, to get to a comfortable level, given the sort of the installation and the efficiencies they have with the housing stock. So, part of our solution, as I said, as a mosaic where you might have people who've got a ground source heat pump, but will need a supplement. And that supplement could potentially be that fossil free gas. So, I'm not advocating that everything will be fossil free gas, I'm saying it's a mosaic of solutions. But that could be part of the solution for zero carbon, and net-zero carbon and a more economic solution, then potentially asking customers to pay, I think, was it $10,000 to $30,000, to electrify in its entirety. So that's why we're looking at this and exploring it is we think there's an economic solution that does repurpose that could use hydrogen, renewable natural gas. Sometimes to supplement ground source heat pumps, or air source heat pumps, sometimes 100% hydrogen for industry. And sometimes it will make sense just to electrify but you know, new housing stock is likely to be electric heating. Because you can do it from you know from a start with good installation and efficiencies.


ML: I mean, I’ve got to be honest, no, I was very gentle on you. Blending I think is I've called it the stupidest idea from Stupid-ville. But it's not because actually using I think the stupidest idea from Stupid-ville is actually the hydrogen scooter. But now, I tell you why I say that. Because the reason you would do it the reason, you'd go to the expense of turning something into hydrogen and then taking it back out of hydrogen into electricity. There's such, it's so lossy that you need to add enormous value in order to bother doing that. And the value of just maintaining an asset, versus getting the kind of right solution for the next 50 or the next 100 years doesn't seem to me to be sufficient. The value of the hydrogen that I see where it's worth doing all of that go into that brain ache is either because it enables, you know, airline traffic or ships or something that's really difficult to do, or because it shifts in time. So, it provides storage, which can be very valuable, that resilience. We are completely undervaluing resilience. And if hydrogen can solve the resilience, we won't care whether three quarters or two thirds of it is wasted. But the idea of just doing it just because well, we've got a pipe we want to use it. That doesn't seem like enough of a justification.


JP: I absolutely agree. I think there's just not been enough debate around resilience. So, I think people have been so focused on trying to move the dial on renewables, that they've forgotten about the importance of resilience. And I think that increasingly will be a focal point for people, particularly with intermittency. And you know, what do you do in those situations? My only counter to the gas, we spent a lot of time on it is, is a sort of practicality thing, which is you can't electrify everything in the timescales. So, thing that's not popular to say, but you can't build enough offshore wind and enough network to just electrify the whole of the system.


ML: But hydrogen and heating require more offshore wind. I mean, it requires six times as much on the generating side.


JP: If you blend it if you mix it with true energy efficiency and with RNG, end up with less.


ML: But you've got to do the true energy efficiency anyway. Right? It doesn't, you can't, you can't just ascribe that to the hydrogen column, if you're going to do energy efficiency, it's available for whatever supply technology you're going to use.


JP: I guess that is true. That is true. That is true.


ML: On my hydrogen ladder, which you may have seen, I don't have heating at the bottom bottom, it's like one up from the bottom, because I could imagine, there are some properties, you know, a grade one listed building, which you just can't, you're not allowed to put a heat pump anywhere near it. Okay, when I can kind of, although frankly, that's a stupid rule. I mean, we've got some also stupid building regs about, you know, not being able to change windows for, you know, whatever. But I'm just, every use case that involves heat, and even, you know, high temperature heating, well, actually electric does high temperature heating much better than gas, medium temperature, low temperature, commercial heating, you know, food industry, why wouldn't all that go to heat pumps, it's just a much, it's a six times more efficient solution. I can't see why...


JP: I’m going to send you a thought paper which shows some analysis, that might slightly influence you, that the team did for me.


ML: I often say that I'm that I'm, I'm right about 70 or 80% of the time, and I'm very happy to be proven wrong, you know, so I do change my mind. And I do acknowledge why I change it as well, that's happened very often, I'm not ideological, I try not to be.


JP: Ditto, ditto. I'll send that over to you. And maybe it will change your mind, it might shift a wee bit.


ML: As always, when you start to talk about hydrogen, it's kind of the 90%, we agree on gets overwhelmed by the kind of the concerns about the 10%, where there might be a little bit of of fuzziness, and obviously, I can understand because your incentive is you've got investors, you've got a huge investment in gas networks, and it's your fiduciary responsibility to try to get value out of them, I guess I see that I see the renewable natural gas probably as the route to do that, rather than the hydrogen.


JP: I do have a fiduciary duty. But there's also a, you know, affordability issue, which we have to consider. So, you know, the number of people who can actually afford to replace the heating systems before they need to be replaced, in order to achieve net-zero, you're not using existing equipment is going to be a massive challenge for us. And therefore, we think quite carefully, but how can you do it affordably?


ML: Right, but you can flip that on its head and say, those people also deserve the cheapest, all-in cost long term solution. Now, there may be some financing challenges, they may have to spend more upfront, or somebody may have to invest more upfront, for them to have then a cheap solution for the long term. Because you know, that the I think there's going to be a very big delta between the cost of natural gas, pre-Ukraine or today, and that hydrogen in the future. And so, I think it's complicated,


JP: We're very mindful, you know, in our jurisdictions in the US, 50% of people are low income, so they don't have any money to invest in capital. So whatever support you're going to put in, it's going to be a challenge. So, trying to find solutions that naturally allow them to replace when they're going to replace rather than artificially, it's quite important we think.


ML: John, I promised I would get you off and done and dusted at half past the hour as we record this. So, we're actually out of time. I'm sorry, I've gone ever so slightly over. But it has been utterly, utterly fascinating. And I'd like to thank you for your time.


JP: Well, I've really enjoyed it. It's been a pleasure. So hopefully catch up soon. I think we're on a conference together very soon.


ML: Absolutely. And I look forward to moving off the computer screen and doing this face to face in person and all the best for the rest of the day.


JP: All right. Thanks, Michael.


ML: Thanks for joining us. So that was John Pettigrew, CEO of National Grid. My guest next week is Farhana Yamin. She's a climate lawyer who advised some of the small and vulnerable nations in the Paris climate negotiations. She's also an early member and acted as the strategy and policy coordinator for Extinction Rebellion. Please join me this time next week for a conversation with Farhana Yamin. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation