 Felly ddech chi'n ddweud oherwydd, dwi'n gobeithio gan 10 yrdych, iddyn nhw'n gwneud eich gwahodd yn ddod. I wneud i'r cyfrifiad hynny, dwi'n gweithio, sydd wedi'u gweithio'r gweithio'r gweithio'r gweithio, a'r gweithio'r uniongyrch yn y Gymraegici Rhyf, i Gwyrdd E3G yn Llywodraeth, wedi gweithio'r unrhyw ymddangosill, a'r pryddysgu yw oedd yn y cyfnod, for SIF and for the European Climate Foundation, looking at where the North Sea's grid project is going. And it was actually through that work that I came to a sense that the market systems we have are not working like a lot of other people, and that with this fundamental point, our moment of change. I remember I was asked recently, we've been organised as well as that, we've organised a series of climate gathers. And one of the leading American climate policy people was there in the west of Ireland and said, what's Europe ever done? What do you do after the heat wave in 2003? And I was able to come straight back and say, we put together a radical and the most modern and most effective climate and renewables and third energy market package of measures. And I was very proud in that time to play it, to be one of the people involved of many in terms of the climate and energy package, starting with that ETS being set up in 2005. And then that very clever trick, by my mind, a trick, but political act by Dimas, the Environment Commissioner, and P-Balls, the Energy Commissioner, to get the heads of state committed at an early stage in 2007 to a radical 2020 strategy, this climate and energy package, and putting it at the heart of their whole political agenda. And seeing then their ability to bring those packages, climate package, renewables package, third package of market reforms, through the council, through the parliament and into reality in 2009. And it was, I think, a really good bit of politics at that time. And included within it, as you say, to hide the North Sea's offshore grid, which is just one element in the strategic approach that the European Council, European Commission and Parliament were taking. It's interesting, I listened to Mary Dawn in last week, she was speaking in Donato Your Force meeting, and she said, if you look back in 2009, how much has changed and how much has changed for the better? In that plan at the time, we were expecting, or there was targets being set, that for 2030 we would see photovoltaics coming down to a price of one euro a kilowatt hour. And that's already arrived in 2012, 2013. You know, if you look at how we've actually performed in that sort of time period the last 10 years, particularly in the electricity side, we have more problems in the heat and transport, but that sort of 4% and 5% year on year growth across most of the European states in development of renewable electricity, largely onshore wind as well as PV, we have really achieved a lot of the objectives that we thought we would, or that it has delivered significant investment and significant decarbonisation of the power system through that energy policy package and measures. But also I think if you're honest now, people are looking at it, it's only starting to kind of this realisation, I think it's coming into the political system in the last year, that we're starting to see some real consequences of that success, we're starting to see limits of what's possible under current policy. And the limits, for example, when you see with the scale of German renewable power generation in solar and wind on certain occasions, the spillover effect on that into labour and transmission systems and the knock-on effect in terms of market price being driven right down to zero, which affects not only the investment decisions around backup other fossil fuel power plants or other backup generation, but also investment in renewables itself. Or if you look, for example, at the damage that was done by the Spanish political system withdrawing out in a very inelegant manner from the contractual arrangements they had in support of renewables and the deep damage that was done to investment certainty in renewables through that sort of action. Or if I can maybe take the example of the North Sea's offshore grid, which as I said I've been fortunate in the last year or two to visit many European capitalists talking to people about what's actually happening. To take that as an example of how many things aren't working, how we haven't actually developed a European approach to this critical electricity power market system. And that's not to undermine what has been very good work that we've carried on by the three working groups that were set up within that North Sea offshore grid. But I think they'd all acknowledge that we still have a nationalist and still have a kind of a lack of political leadership in response to the opportunity that exists from power cooperation and developing an integrated market. It was remarkable to hear Mary Donnie speak last week of instances where two European regulators couldn't come down to the basic cooperation to allow the CABRA project to develop, which was a project that was put in the European economic stimulus response to the crisis five years ago just connecting the Danish and Dutch markets, which has now got to be dropped because the regulators couldn't actually come to cooperation in terms of the management of trading regions on it. Or again, my example, I've never listened to what one of the TSO operators in northwest Europe referring to the fact that they couldn't even get another national government, to model what the power effects would be if you allowed trading renewables across two different states. Or again, a recent example, where Tina, the TSO in that north German area, was being driven and asked by the commission to include the capability of the power grid they were building out into the North Seas to have mesh capabilities so that down the line we could add other lines onto it and start trading across Europe. And they point blank refused. And I guess their bankers and the EIB and whoever the finance repeat parties behind that were saying, well I don't want that, that's not a big additional cost, it might only be for 5% of the facility. But I don't want to do that because what certainty do I have then what the trading arrangements are for the renewables and that grid that I'm funding. And therefore I just keep it simple, I keep it radial routing from the offshore North Seas power generation site into the single market because that may be much more expensive, that may be highly inefficient compared to a new European integrated approach but at least I have a little bit of certainty around it. Or again just to cite examples of how we have a problem at this present time, the fact that Marys Mariddon has said that the European Union had also funded a huge investment in offshore wind turbines which are sitting on the dock rustling in Bremenhaven because there wasn't a possibility to get the agreement for the grid connection to actually put them into place. They're built, they're ready, they're paid for by the European citizens and they're sitting on the pier. So we have a real problem to take that one exit maybe kind of market area with that problem in that area and we have a problem in the wider sense of trading renewables based on success in many months because now we didn't expect maybe the multi gigawatt introduction of PV in wind in the system so quickly and that knock-on effect that would have on the energy market. As you're saying having that kind of target market model based on an energy market based on what the fuel price is but which didn't expect you would have such a large chunk of renewables where the fuel prices are relevant or indeed you would have other needs for flexibility where you need to intervene to support that renewable power system and therefore you're led up with a market that's not real and the actual energy, this old traditional market based on oil or gas or coal price no longer applies. So that's the context within I suppose looking back 10 years where we've come to and where we need to go now. I want to just use a couple of slides just to help some of my thinking on it. The first one is just to show I suppose the other factor at the present day which no one expected even five years ago which was the effect of shale gas in the whole political psyche on this issue. Because what clearly came out of my sense of listening to the sidelines of the energy council minister's meeting which occurred in Dublin earlier this summer was that the ministers and the heads of government are fixated on the American shale gas competitive advantage. Remember here in the Institute here in Peter Altamire the German environment minister cited the fact that they're producing the energy or electricity at two cent a kilowatt hour from shale which is just wiping the floor of anything that we can possibly produce. And I suppose that kind of figure either for industry, European average price of 11 cent kilowatt hour or household 18 cent compared to those figures for the US industry 5 cent for industry or 9 cent for domestic users is a fundamental issue with the heart of the debate at this present time. Now whether those figures are accurate or not whether those Chinese electricity prices are based on a real profitable future for Chinese utilities and a deep grid development are not we won't know for 10 or 12 years, we may know very soon if we find out they're developing credit difficulties but whether the American price is fair and accurate or not whether that carbon, whether the full externalities in terms of methane release from the shale production or whether even it's just a balance sheet play for some of those exploration companies that's a tough one to call but we do know that it's an element in the mix in terms of why I think we've lost a certain confidence in our energy policy approach in the European Union and we need to get it back together again in the next year and a half to get ready for 2015 negotiations to set our 2030 strategy in place. You can't ignore that as one of the issues that's in the back of the politicians. It's not even in the back of the politicians mind I think it's in the front of their mind, front and foremost. The North Sea's offshore grid I think is one of the examples of the projects that actually can be our response. My personal and people of different views I'm not so sure we're going to be able to dig up Europe in the same way that they can dig up upstate New York or Pennsylvania and pull the shale gas out. I'm not too sure if the climate can take it. That's my personal view and I think that the alternative in terms of what our natural resources are I think does come from renewables and I think it comes from the set of integration that we were committing to seven years ago but we haven't actually delivered. As I said we're stuck in a nationalistic approach to the whole energy market development. The E3G is doing some work on this project as I said we're just doing some scoping work at the moment we haven't completed it but just there's some scoping work in terms of the various projects that are possible and we have a lot. I mean there's a whole series of NCOE devising kind of offshore grid projects which could be developed to take it very low. I suppose we know we're looking at the possibility of addition these two authentic reactors are in the UK and indeed very attractive prospect are in France because you get that balancing you get north south flows that are possible from such development of such infrastructure. At the UK four gigawatts of connectivity at the moment are remarkable. After coming out last week saying we've got a major problem we've run out of power possibly in two or three years time no recognition within that analysis as far as I can see that actually interconnection could be one of the ways of giving them energy security. Old thinking in my mind in terms of it I can't rely on the French whatever about the Irish or the Norwegians. But I think it's an indication of where we're not thinking in an interconnected way at this present time within Europe. But across this northwest region and in my mind the solution of the approach in Europe we're not going to be able to get all 28 countries together into some new flexible kind of unified market. It is best to do this on a regional basis and then connect at a latter stage in terms of various markets solar connecting up to the northern wind and ocean resources. This project North Sea's Grave was very much also a formation about developing of the North Sea's wind and the Irish seas and Atlantic Ocean energy resources. But even as I said separate to that I think the grid infrastructure itself is critical because the grid infrastructure starts to give you some of that security and balancing capability that is increasingly difficult within the nationalists the national market approach will take the present time. For Germany to be able to manage its target for 2030 I don't think they can do it on an isolated Germany only basis. I think Helen was saying in some of the modeling that was done for the 2050 projects they were looking at least 30% of the power needs for that 2030 target coming from such interconnection from neighboring countries. And the reality is while there was two and a half billion I think approved last week within the connecting Europe facility for some of these projects projects of common interest the reality is that when we build you a fraction of the interconnection points that I believe we need and there's only in these various projects I think there's only about three or four that are in any way in any sort of advanced planning stage the vast majority of that network under current policy and current development went to a certain extent I think our 2030 generation mix will be set. So if you delay this and if you try and come back in retrofitted to the existing generation mix that you would have in this inter-period you're going to get a very strange and inefficient and uneconomic solution. This is Siemens paper and there are various other papers. It was paper I mentioned at the European Climate Foundation they did a very good paper for that 2015 analysis and they saw it by 2030 at 430 billion euro benefit to the European Union by taking this integration approach rather than a national market approach. Siemens have done some similar work and basically set out three different report publishing pages here around you could go this on a national way you could try and get a balanced system or you could go for an optimum location choice. And that optimum choice does have that investment you need an investment in that grid to make it possible 30 billion euro investment but the savings in power generation the optimisation of efficient power generation supply sources be it solar in the south wind, wave or other possible long term power supplies hydro in the north see to getting a net savings of 45 billion and we need I believe these sort of solutions to answer that scare around American share of gas and how we can be competitive. If I can then just a very general sense of where I think the politics may go from here Francois Hollande in his press conference for the second second big press conference of his presidency came out and said Europe needs to lift Europe needs to go on the offensive rather than just constantly on the defensive we set out four various areas where they might do it newton employment and other different areas but one of the four was development of a strong electricity and energy community in North West Europe and in Europe he said I think the lines we said if we don't move now Europe will be erased and I think he's serious about it and I think he's waiting for the end of the friend of the German election for whatever new government German government emerges to actually go back to that traditional driver of European policy French-German agreement around the next advance in the union I think and the institute here has been fortunate in terms of we've been very interested to visit the Potsdam Institute in Berlin we met Professor Schellenhooper and Dr Oeddenhoffer and others who are involved close to German political thinking our sense from that is that the German government will do a deal whoever is in power that there is going to be in the second half this year some sort of major step up in terms of European political engagement for stimulus for integration and for self-sufficiency I mean how do we answer that American shale gas competitive threat or how do we answer the long-term security issue we have in terms of reliance on Russian gas or other energy resources if we are not shown to be capable and serious of actually integrating and driving a policy here and I think I think there is a possibility that the UK government would also buy into such a shift because as I said as their off-gen report showed last week they have a problem and they have no cheap solutions if they go on a purely nationalistic basis and to a certain extent perhaps on a regional approach this North Sea is also really 10 countries in the north west you overcome some of the political difficulties that come by trying to follow a big European initiative this is a regional initiative which is possible and fundamentally I suppose it is a simple diagram that you are working on just in terms of they work a lot on these kind of format of measures that you can range between a centralized market to a decentralized market or from a European solution to a member state solution what we have at the moment is a lot of countries heading towards a centralized and national solution that kind of realisation in the UK government that they have a problem because the power market has changed one which was traditionally based on what the fuel price was, the marginal price of electricity determined policy, been out of date and it is the capital price which is now determined whether it is nuclear or CCS or renewables and so that intervention they are making there in their power market performance to actually very much from the centre from the treasury and then go to that interventionist, centralized and national state approach and you could look at a variety of European countries and apply the same analysis that is where we are going where I think we need to go is towards a European and also a decentralized market approach not to abandon completely the kind of benefits and advantages that you may get from full market competition and from innovation that comes if you set it up correctly so how do we do it? it is not easy stuff if people have the answer to this I was joking with Adam last night we would be selling ourselves in the beach somewhere with a big cigar and a glass of champagne on the other side because this is tough stuff and it is difficult to policy because things keep changing and it is complex market mechanisms, complex technology it seems to me that there are three possible interventions moving to a European and steel market based solution one is around targets, our investment certainty around grid infrastructure interconnection development and I think it does have to be driven by certain strategic we cannot just let the market alone to determine and design a long-term transmission grid which takes 30 or 40 years it is almost to develop it was interesting to meet one of the engineers who designed the Northpool grid he said God it was a fantastic time no one was looking over your shoulder you were just an engineer you were told to go in and design the best grid for this interconnection of the North and Scandinavian countries you were left to other engineers to work out technically how it would work the cost of capital was zero the risk of not being paid was zero the level of political planning difficulties was zero we are not going to be able to do that as easily this time but we do need a strategic intervention from a political level towards higher levels of interconnection which give us some of those balancing capabilities and which reduce the overall cost and reduces the cost of the power generation mix across the North West European region and that needs to be done with urgency that can't be just the two and a half billion connecting your facility that is not at the scale of the transition if we are really serious about decarbonising our power system that we need to do so that ramp up needs to occur very quickly and I suppose recognising always one of the caveats on why this is complex recognising what John O'Sullivan in Aerogridd says right who is doing some work for NSW in this that DC meshed grids will not be the same as the synchronised AC system and it still leaves us, you know, there are still complex engineering issues around how you manage DC which on a for example the Irish grid it's not giving you inertia we've seen already what their own East West interconnector all sorts of complex trading arrangements can arise that you don't predict when you put in such infrastructure but I think we have to if we don't build a fiscal infrastructure I'll build a market arrangement mechanism it's not going to work this key fundamental driver that we need secondly it's clear that we need some sort of new balancing flexibility arrangement to support capital investment in new power generation that is actually centered around this new low carbon future that is and that's not just an awkward or a kind of a simple capacity payment mechanism for some in a fossil fuel plant that might see it as a lovely way of keeping a lifeline to the future it has to be fundamentally designed to create the flexible conditions that makes this variable renewable power system work because it is the only one large scale power system we have available to us to counter those international competitive threats that we have last and not least in fact probably foremost we need to really set up the market mechanisms to allow demand management to take off all the mechanisms are now in place the technology is advanced I was talking to someone last night the wonders of these new Raspberry Pi devices I don't know if you've seen them but this is a new very slim almost credit card sized device that gives you huge capabilities in terms of monitoring, censoring photographing, reporting and it's so cheap 20 euros now you can do something that 5 years go to cost 200 or 2000 and taking the sort of work that Martin Curly and Intel is doing here are showing a risk building Glen Dimplex and really run with it providing them a next day trading mechanism, half hour trading mechanism for the price of electricity which allows people to plan forward allows innovators to come in and say I'll provide you that electricity I'll deliver the service I'll take some of that benefit from that market flexibility that exists, that price flexibility that's going to be key because it's not that key to actually managing the curtailment problem that's starting to develop around wind because you're pumping up demand at a time when you need it and you're cutting it back when you don't and it shouldn't be on the bounds of possibility to set up as I think the commission was looking at you're applied into day trading and flexibility mechanisms and trade on a really clever basis in Europe so that our excess wind that advantage we have in terms of this power here, power in here the time when we want it through that grid, through very sophisticated and simple at the same time yesterday trading demand management mechanisms it was interesting we were talking to Maradona as I said at this at the EUROFORCE meeting you came back with very simple straight questions straight away yes so how does a politician sell this to people how do you explain this as a project that actually wins public support because that is the biggest obstacle the biggest obstacle is politics and I said I don't have a huge sense I haven't had a huge sense in the last two years of any real leadership or confidence within the European political system that we can actually take this step to a completely decarbonised power system and actually beat your American China while we're at it and we can I think it's a safer, better, longer and better for Europe to be the world leader in efficiency and in the use of flexible renewables than digging up the confidence to try and squeeze the last molecule of methane out of the ground and burning it and losing two thirds of the power in the transmission losses that occur from there on and I think it is in some way it's around that message about European security Europe's future and designing the system going back to that last most foremost one around demand management designing this around human needs designing it so that it's easy for someone to do it, designing that energy management system so that it's integrated in such an obvious simple everyday way to people's lives that it's like the next iPhone it's something which is very easy to use which is intrinsic to everyday life which is not a huge moral or difficult dilemma it's actually selling this as the next step in what you want as an individual to be able to do, to have to share its status as well as saving your money and it's not the beyond demands of our possibility in Europe 500 million people well educated with good engineering companies and good utilities to switch the whole utility model to switch the power marked model so that it starts there by people saving power saving money and the whole system balancing itself and much further away I think that's part of where we need to go that sounds very broad and laudable and very easy to say but it is actually thinking if we don't get those messages right everything else is not going to work