Scottish Energy Networks Strategic Leadership Group minutes: December 2020

Attendees and apologies

Attending (full attendance):

• Paul Wheelhouse - Minister for Energy, Connectivity and the Islands (co-chair)
• Professor Keith Bell, Strathclyde University (co-chair)
• Angus McIntosh, Director of Energy Futures, Scottish Gas Networks
• Frances Warburton, Director of Energy System Transition, Ofgem
• Phil Sheppard, Director, National Grid Gas Transmission
• Julian Leslie, Head of Network Capability Electricity, National Grid Electricity System Operator 
• Rob McDonald, Managing Director of SSEN Transmission
• Scott Mathieson, Director, Scottish Power Energy Networks
• Trisha McAuley, independent energy consumer expert

Scottish Government (SG) officials:

• Neal Rafferty
• Simon Gill
• Anastasia Charalampidou
• Stephen Mckellar
• Michael Reilly

Items and actions

Actions: 

• SG officials to finalise the draft principles, taking account of feedback from discussion, and share a final version with this Group - SG - due by December 2020
• SG officials to propose options for publishing the principles in a way which demonstrates the agreement of all SLG members and underlines the collaborative production. (Frances will double check Ofgem’s position on this and report back any issues) - SG/Frances Warburton - due by December 2020
• SG to ensure that the next meeting considers how the principles are used, and how they should be applied in each of the network sectors - SG - February 2021
• Matrix on skills developed for the oil and gas industry to be shared with the Group - SG - December 2020
• SG to consider the evidence needed on skills, training and employment to inform energy policy, and discuss with the Members what is needed and what it can be provided. SG to consider how to forge a co-ordinated approach to skills across all SLGs - SG/Keith Bell - January 2020
• SG to commence procurement process on Scottish Energy Scenarios - SG - December 2020
• Organise next meeting for February 2021 - SG/Michael Reilly - December 2020

Decisions / Agreement: 

• members accepted the minutes/actions of previous meeting (September 2020)
• members agreed on the principles subject to including the concept of ‘pace’, and to review how they can be applied in each of the network sectors on the next meeting (early February 2021)
• members agreed to work collaboratively in order to identify information and resources available in order to move the whole system scenarios project forward
• the next meeting should be scheduled for early February 2020

Agenda

Ministerial introduction 

The Minister welcomed the good progress in developing a set of principles describing how members can work together to help facilitate Scotland’s distinct energy policy and accelerated net zero timelines.

He also reiterated the importance of skills in the energy transition, both in terms of the short-term for our economic recovery, and the long-term for our ability to deliver net zero. 

He noted that the whole system Scottish Energy Scenarios is an important piece of work, and welcomed the Member’s commitment to support its development. 

He then introduced the key areas for discussion at this meeting, as recorded in the following sections.

SLG Principles  

The Members were invited to discuss and contribute to the following key questions around the suggested SLG principles:

• do you have any comments or queries on the 8 principles presented in Annex A? Is there anything missing?
• how should these principles be presented and communicated? Do you have views on when and how we should communicate the principles to the wider industry, the public and other stakeholders?
• how should the principles by applied? We are keen to ensure that this is more than a theoretical exercise. For the principles to have value they need to be built into processes and thinking for all parties. For example, engagement between SG and network companies could be captured through the D-FES process (for electricity distribution) and similar processes for electricity transmission and gas

Trisha McAuley:

• the principles make a well-made argument about pace, agility and responsiveness and the need to identify policy levers to accelerate action on decarbonisation
• welcomed the constructive conversation this Group had, as well as the need to focus on future consumer needs and the potential trade-offs for Scottish citizens and consumers
• urged the Group to consider how these principles can be effectively communicated to a wider set of stakeholders

Rob McDonald (SSEN):

• happy with the principles, and suggested the concept of ‘pace’ to be included in order to highlight the urgency and agility needed to achieve decarbonisation targets

Scott Mathieson (SPEN):

• agreed with the suggested principles and with SSEN’s proposal about incorporating ‘pace’.  
• noted that the principles give an overarching framework and would be interested to see how they can be reflected into Ofgem’s price control decision-making and regulatory planning framework

Frances Warburton (Ofgem):

• stated that the suggested SLG principles reflect the discussions that took place both in the last SLG meeting and also working group
• recognises the points made from DNOs around ‘pace’ being incorporated into the principles. Ofgem appreciates the need for urgency and agility, and looks forward to working together with all parties to deliver this
• highlighted that collaboration between ESO and DNOs is a key success factor when it comes to D-FES feeding into the national scenarios and vice versa
• stated that RIIO2 is more dynamic than past price controls, and that as we move into RIIO2 we need dynamic mechanisms to reflect changes

Phil Sheppard (NGG):

• content with the principles and highlighted the importance of D-FES and national scenarios feeding each other to create a comprehensive national picture
• noted that regional impacts are driven by regional and local policies and that D-FES are highly important to bring the granular aspect into ESO scenarios

Angus McIntosh (SGN):

• agreed with principles and noted that the SGN Charter, which was presented later in the meeting, can be an example of how we manage pace of change in the short, medium and long term

Julian Leslie (NGESO):

• agreed with principles and need to keep the document concise, highlighting the ambition to move fast on decarbonisation, and into the delivery phase
• welcomed encouraging early signs on collaboration around the price controls, with cap on strategic investment now being removed in recognition of the level of investment required to meet the decarbonisation targets
• noted that it is a positive step forward that NGG can now test and demonstrate the existing gas transmission network
• asked for more clarity on final determinations for RIIOT2 about the stakeholders’ feedback that Ofgem is taking into consideration

Professor Keith Bell:

• Prof Bell welcomed the principles and collaborative work to deliver them, while noting that housing/buildings and transport are also key drivers for change in the energy system
• achieving the decarbonisation targets needs preparations to begin quickly, since timings may be uncertain but not the general direction to achieve net zero

Paul Wheelhouse:

• welcomed positive engagement between SG, Ofgem and the network companies on building the principles
• highlighted internal reorganisation to bring together heat energy and housing teams, which will help achieve a whole systems approach
• reiterated SG’s significant commitment to develop the appropriate framework for deploying heat pumps and the need to do things faster than the rest of the UK

Skills papers

Neal Rafferty (SG) briefly presented the key points of the Skills paper circulated to the Members prior to the meeting and invited the Members to provide thoughts and feedback.  

Rob McDonald (SSE):

• uncertainty is the main challenge when it comes to recruitment and training
• the more certainty the sector is experiencing, the easier will be for DNOs and TNOs to invest in skills and attract as well as grow the domestic supply chain
• SSE understands the concerns around anticipatory investment and stranded assets, however, noted that skills are linked with the scenarios and that more central planning might be required in order to achieve our targets

Scott Mathieson (SPEN):

• around net zero, due to the fact that certainty can have a multiplier effect on the supply chain, the regulatory framework is highly important to secure the necessary technical skills and supply chain for future needs
• SSEN also highlighted that there is steep competition in the global market to attract resources. The renewables revolution that takes place in Scotland can create local jobs and attract supply chain
• the study published by Professor Karen Turner, University of Strathclyde Centre for Energy Policy, demonstrated that positive interrelation between skills/jobs helps, GDP growth, and, achieving wider economic targets

Julian Leslie (NGESO):

• noted that the supply chain needs certainty on revenue before recruitment that uncertainty mechanisms might not help to deliver
• important to ensure that we are getting the right people with being attractive to candidate being linked to providing attractive features on net zero (i.e. STEM)

Angus McIntosh (SGN):

• highlighted the importance of improving the engagement with the key Scottish universities and colleges for the areas of known growth and scale of opportunities over the next 5-10 years
• agreed with NGG point around STEM. SGN are planning a lot of work with local schools in Fife for H100, and believe that these initiatives could be more co-ordinated

SGN Charter  

SGN provided a presentation of the Charter on whole system definition and approach, and how we can more effectively work together in order to support and deliver net zero. 

Trisha McAuley stated that this is a helpful initiative to navigate challenges on delivering at pace and working collaboratively. She is supportive of the Charter and looking forward to seeing it being involved further. 

SPEN noted that the Charter is a positive step forward and that they are very supportive of the effort on this area. The institutional element of information sharing and communication between all parties needs to be integrated to a greater extend.   

Overall, the Group welcomed the presentation and SGN will share the charter once agreed.  

Energy scenarios  

Simon Gill provided a short summary on putting together a broad approach to produce a coherent set of 2-3 scenarios to go beyond networks and existing electricity and gas sector scenario work, and bring as much information forward. 

Information produced by SG and available via the Members will be combined to tell a story on how the wider energy system can be developed. 

Important step towards identifying, in a coherent way across energy systems, the levels of energy infrastructure needed in each scenario, and use these scenarios to clarify needs for skills/jobs as well as the overall impact on the economy. 

Priority to be given in the scenarios work to breadth of coverage rather than depth in any one area.

SPEN noted that Scotland has the opportunity to localise energy scenarios, and that there is now the need more than ever for a coordinated approach. 

SSEN highlighted that we would have to build on what we have, and suggested a half a day workshop of to identify what information and resources are available as well as the gaps in order to take the project forward.  

ESO have been positive about detailed engagement over the Scottish specific information through the FES.  

AOB

Ofgem noted that discussions that take place within this Group will play in the rest of UK, and thanked the group for the collaboration. 

In his closing remarks, Mr Wheelhouse thanked the Members for an interesting and constructive discussion welcoming the tangible outcomes produced by the Group. 

Members agreed that we should meet again in early February 2021.