 Chairman and ladies and gentlemen, good afternoon. I'm delighted to be here, and delighted to welcome you on behalf of ESB to the third lecture in the 2014 ESB Part of the People Lecture Series. As Tom says, we belong in a relationship with the institution. This series lecture provides a very important forum for generating debate and advancing thinking on the complex challenges facing the energy sector today, ac chi'n ddweud nhw'n digwydd am how we can work together and I believe it's really, really important that we do work together on resolving them. I'm very pleased to have the opportunity to address you today. I'm pleased also to have Aemin Ryan here, former Minister. Because Aemin and I, we challenge each other on these kind of issues and issues that I'm going to raise. The one thing I'd be really interested in here is having good old debate about it so I might have less to say rather than more in the interest of maybe promoting a bit of a debate. I happen to have the privilege of being chief executive of ESB. I've spent 30-plus years in ESB and I'm very proud of the company, very proud of its heritage and its contribution to development of the energy system and Irish society and the economy in Ireland. ESB is 10 billion plus assets in public ownership. yw eu busredd o unigfyniad, oes eu sredig o'r chi'n maen nhw, efo'r frysglwyd llunio, hwn o'r cyfnodau o'r cyfnodau – o phobl – o'r 60 yma i gyd o dwylo pobl o'r llyfrhysgau o ffyrddiaeth yn cael ei gwzwledd y lleol. Efo'r bwysig mae hynny'n gweithio eisoedd o gyd o hyd ystwyll wedi'i eisiau ar gyfer y cyfnod oedd ymgyrchol erbyn. A dydych chi'n gweithio ar y gweithio i gefnogi'r gyda'i hwn. Efallai'r chaeligau hynny'n eu cymrydau energiol yn cymrydau hynny, a yna yna'r llunio yma, y llunio ymgyrchu yna'r llunio yn cymrydau energiol. Yn gweithio, yna'r cyllidau cymrydau sydd wedi'i fawr cymrydau hynny, y cyrchwyn Ieol, yn cymrydau cymrydau energiol, a'r cymrydau hynny'n cymrydau hynny, ac mae'n meddwl â'n cyfrwys ymlaen ychydigau, Ond y context yma o'r rhan i'w yw ddechrau ei amddangos o'r syniad ymlaen o'r cyffredin yn yrthynod yn ei wneud. Mae'r cyhoedd oedd yn ddechrau i ddweud o'r gwaith, oherwydd, o'r cyfrifodau neu'r cyfrifodau? Wrth gwrs, mae'r cyfrifodau yn fath o gweithredu yn ysgol y bydd hynny'n sefydliad, a mae'r cyfrifodau yn ystod o'r ddweud o'r ddweud o'r gweithredu. Oherwydd, mae'n ddweud o'r ddweud o'r cyfrifodau. Felly mae'r cychel pethau yn cyd-bynfogol cyflym gyrfa cyshireu. Felly mae fawr yn fawr sach. Yna'r cyd-bynfogol yn cyd-bynfogol y bydd. Mae'r cyd-bynfogol yn cyd-bynfogol mwy beth sydd chi wedi wneud eu decayn dod o'u inviteis ac ydych chi'n dwylo. Yn y cysyfu llawer o'i ddybyd, mae'n gwneud deithas I青. Felly mae'r cyd-bynfogol yma mae'n ddysgu ydymwyngadein ychydig. ar hyn o'r pethau ymgyrch yn y rhaid i'r gwellol ar gyfer oedd y taxidoriaeth a'r rhaglen a'r rhaid i'r blaenol yw? Rhaid i'r cyfleoedd cyffredinol yw unrhyw gyntaf iawn, fel gyda'i arfer o ôl gyntaf, a'r cygeffredinol yn amlwg. Dwi'n rhaid i'r gyflwynymau. Ma'r anhygoel am y dylai cymryd i'r rhaglen a'r anhygoel yn ymgyrch gan hefyd... ym ddylai â'r cyflynyd yma, iechyd i'r cyflwyfan ac yn gweithio i'u gwaith i'u Rhaglen. Rydyn ni β Group byddweithio technology, market regulation policies. And of course in the last 10 or so years the need to decarbonise our electricity system to address the global challenge of climate change. Traditionally and for many many years, you know for the electricity industry is over 100 years old but for most of that has been characterised by very large scale towards the iron scale, centralised, generation plant, feeding into the transmission system and then a radial distribution network, bringing power electricity to customers. Those long term decisions that are necessary for capital intensive projects could be made in an environment of relative certainty in terms of the return on that investment. And that was kind of up to maybe 20-25 years ago, that was how the electricity industry was characterized. But in that from about 1990 onwards and driven mainly by the UK European energy policy focused exclusively on costs and lower prices. So, I was an efficiency driver fwy about 1990 onwards. And the UK has said. led this way by adopting a market-based approach to managing generation and introducing an independent regulator into that piece of yn syniadau y taeth yn ychydigol iawn, y galler y mae'r bobl cyffredinol ar y cwmhwyllt yma. O'r ffordd yma, y Deyrnas Unedigol, ymgylch, ymgylchog, ymgylchog, ac ymgylchog a'r sgwpwysig a'r regolau ar gyfer y cwmhwyllt ymgylch. A'r rhai o'r Unedigol wedi'u cyfle. Ac mae'n drwy'n edrych i'r Unedigol i ddweud, yn ymgylchog, rwy'n edrych yn y cyfle, Rydym yn ydy'r cyfle sydd y clyw 25 oed yn ymweld y gweithio yma yn Y Grif Brith yn y Tethau UK yng Nghymru yw'r gweithio am y ddweud i fyddo'r anghwylo'r gweithio a'r regolau i'r awr, yn y bach o unig o'r problemau sy'n ei ffeydd i ymddangosol yn yr UK, oherwydd yr ymddiad, oherwydd yr ymddiad a'r ond, oherwydd yr ymgweithio sicrhau, oherwydd yr ymddiad a'r ymddiad a'r ymddiad, oherwydd yr ymddiad a'r ymddiad. Y system mae wedi dod yn lle gynnwys ar y gyfnod ar gyfer 1990-a, yn y gweithio cymdeithasol, y model yng Nghyrch yn adroddu, yn ddefnyddio y cyfrifio'r cyfrifio yn ddefnyddio'r gyrraeth ac mae'n ddefnyddio'r gyrraeth gyrraeth, mae'n adegwyr gyrraeth i gwbl ar gyfer cyfrifio. Yr cyfnod cyfrifio cyfrifio'r cyfrifio'r gyrraeth, a'r cyfrifio cyfrifio'r cyfrifio'r cyfrifio'r gyrraeth, mae'n gweithio'r gyrraeth yn gwybodol. I'm going to be back. That's an important concept in terms of markets. It standardised a new generation fleet right across Europe, and it effectively made electricity a commodity at the wholesale level, which is one of the desires or the ambitions of the creators of energy markets. Around 2005, the dynamic was changing, but in 2005 it was a critical changing point, I bwysig, y ddweud yn fwyaf ffordd a'r gyfosedau cyfosedau yn y ddweud y cynhyrch, byddwn yn ein tynfod drwy'r cyfosedau cymryd arweithio. Mae'r cyfosedau o'r cyfrifodau o'r 2020, y E 우, yr hyded yn y cyfosedau cyfosedau cyfosedau, y cyfrifod ymddangos cyfosedau, y cyfrifod cyfosedau, a bhwyddiwr, fel cwmgyrch ar gyfer y lleol agfiannwys cyntafol iawn. Ychydig yn yr EU yw bod yn ymddangos gan gyfnod o gwaith o gyrfa, yn y 20% sydd yn raddwyddiadu gwasafol y brinog fadebluenaryn, yn y 1990 sydd fel y boblordeb yn cyfnodig cyffredigol yr llif, ond mae'n cael ei gyffredigol. A dylai dynion sy'n wych yw'r cyffredigol i'r syddolol, fyddwn o'r ffrif o ddoch chi'n iawn, fuel market a Y Cw comparel marked, is failed. The wave with which the carbon market collides with renewable targets were allowed to be set at national levels so individual countries across Europe could set their own renewables targets. That had an impact on how that collided with the carbon market and the effect now that there is a new package that has come from the energy- Rolle year 30. A package that has come from EU Commission, which looks 40% reduction in greenhouse gas right across Europe on a pan-European basis and renewables targets of 27% set on a pan-European basis, but not clear what the in-country component of that is going to be and that piece of how that policy is implemented will be a key driver of the energy system and investments in the energy system in the period beyond 2020. And what we need is certainty and in that particular regard, but we need certainly beyond 2020 if the desire of Europe is to decarbonise electricity industry or an 80% reduction in greenhouse gases by 2050, we need certain investment certainty beyond that 2030 horizon. And as back to that long cycle capital investment kind of characteristic of the electricity system that I mentioned, we will invest in technologies today and are investing as all developers and all generators are in technology today that will be around in 2050 or 2060 so we need certainty to actually backstop that investment. But again the electricity system right across Europe and Ireland was no different in regard was identified as a primary vehicle to achieve these 2020 targets and on the base that if you decarbonise electricity you can actually decarbonise the economy and a completely change of the dynamic of the industry so and where we're heading now is away from that large-scale centralised generation system to a very very different type so instead of that centralised generation feeding to broadly passive consumers we're heading now for a combination of centralised large-scale centralised generation and distributed generation and distributed storage but we talk of customers now instead of consumers and customers in the future will be producers so we will have people right out at the end of the electricity system who would be producing their own electricity but also buying electricity and this presents a huge challenge for a holy market-based system. Markets work best when their only job is to match up supply and demand for commoditised products at the appropriate cost. Markets are not so good when they're required to deliver a wide range of outcomes now required by policy makers in a political system which changes every five years so again a long-cycle capital intensive industry does a 20 to 40 year investment cycle but a policy system and a political system where EU commissions and governments change on a five-year basis is a key consideration in terms of future energy policy. The regulatory models for networks by and large have remained unchanged despite there's been massive investment in networks and to support a different kind of mix of generation brick in terms of renewables and in terms of the huge data now that is now needed that be generated by millions of customers who are going to using smart technologies in the future will be interacting proactively with the electricity system. Now from a policy perspective I believe then there are kind of I suppose there's a lot there's many many many consideration but it comes back to I believe three fundamental questions is the current regulatory model fit for purpose to deliver the scale of investment needed in networks and is the market the best means of organising the generation sector and the third piece then is will the penetration of technology at the customer end fundamentally change the electricity value chain. Now looking first at the regulatory framework it's hard to see an alternative to the current model whereby an independent third party regulator regulates costs and outputs for network operators. We have five-year price control periods here similar to most other regulated network asset owners. The regulator determines capital required to invest in the network and benchmarks and determines operating costs and this effectively ensures that customers pay an efficient cost for their network services and the model has worked well here it has given reasonable stability in terms of network investment and ESB has invested about seven billion electricity network over the past decade to a point where Ireland has one of the most advanced electricity networks in Europe and probably indeed in the world. But the task of regulators becoming much more complex as networks develop to meet the changing needs of the sector particularly in terms of the huge investments needed to support the energy system in the future characterised by different forms of generation, renewable generation particularly intermittent generation and new smart technologies and more customer choice particularly as customers now become both consumers and generators of electricity. So the networks of the future will face very very different challenges and they will have to develop a whole range of services that here to forward they didn't have to develop and this has implications for costs and if you look at maybe a couple of scenarios that might materialise traditional networks have been monopoly services but networks will compete in the future with alternative energy sources for example rooftop solar technologies is a local distributed generation source and so what we see and we see this happening in the likes of Germany where network sorry distributed generation at the level of the household through solar technologies subvented by attractive government subventions then means that investment in conventional generation is being stranded and that's required to support or to back up when for example the sun doesn't shine or the wind doesn't blow and what that means also for the networks business is that the effectively bypasses the networks business stand or the networks the networks become more a backup service to customers who have their own generation effectively bypassing if you like the networks so what does that mean for society because the networks model charging model is a socialised charging model so that if I have solar on my roof and somebody doesn't then the charge I pay for an intermittent service provided by that network is effectively cross subsidised by the customer who doesn't have solar has all kinds of issues in terms of affordability and in terms of fuel poverty and and and and and and we see this now happening across the world where solar technologies particularly solar technologies are distributed household distributed generation technologies are being deployed if we look at the market and I suppose the key question here is can a market actually deliver the clean generation technologies needed for the future and I suppose it depends on what you're trying to achieve in terms of outcomes market has delivered it has delivered competitive outcomes and significant benefits for customers by driving efficiencies right across Europe but efficiencies now are only one part of the picture and the predominant trend in the last five or six years has been the return of state intervention so as more and more new technologies particularly technologies to drive decarbonisation come on to the power system then you know the role of markets and and and traditional generation technologies and how they interact with renewable technologies which are supported by government by government funding then it creates unintended consequences in terms of you know how can owners and investors in standby or backup technology or traditional technologies kind of compete with true market with technologies that are effectively out of market in traditional cost terms but are needed to actually provide clean technologies so how can traditional technologies in generation compete with supported technologies and and again as I said I gave the German example we we also see the example in Spain of what's called a tariff deficit where the Spanish government drove huge penetration in renewables to a point where there was oversupply of renewables and existing standby you know existing fossil fuel plants which were required for standby were no longer economically viable Spanish government pulled back on its renewable subsidies to a point where there's a huge deficit now that the Spanish government is kind of holding on to because to actually pass that deficit back on to customers would actually raise prices and so markets are good but they can't deliver everything and if we want to decarbonise the economy by 2050 we have to decarbonise the generation sector but I don't believe there's any silver bullet to this there's no single technology that is going to actually deliver a decarbonised electricity system by 2050 the answer is always is going to be a mix the answer is going to be a mix of nuclear of clean fossil fuel generation technologies I believe that fossil fuel technology generation technologies have a role to play in the future they will become increasingly cleaner and of course new technologies in terms of renewables in terms of solar in terms of wind and fuel cells distributed stores there's a whole plethora and a whole host of technologies are going to be required to deliver the electricity system of the future and what are how is the market going to do this is a key question while governments have to intervene to you know decarbonisation and climate change is a policy issue so markets will not solve the decarbonisation issue so how are governments going to intervene in such a way that it makes it feasible for investors in traditional technologies and technologies that are at market to coexist alongside technologies that are immature and not yet at market and of course the issue then about subsidies looms large and all of this how could your subsidies do to start markets and if the role of subsidies is to incubate new investments then at what point do subsidies you know do subsidies fall away we've we've an issue now today you know onshore wind today is probably competitive with traditional generation technologies but is still being subsidised so subsidies should be seen as a way of incubating new technologies but should be time bound at the third point I want to cover was old penetration of technology at the customer end and the customer the connective customer will play a huge role in decarbonisation and this is all about the efficiency and the usage of of end use energy and it's you know it's interesting to look at what has what is happening like Google and Microsoft some years ago entered into the home energy monitoring market but quickly exited and Google recently have bought nest labs for 3.2 billion and that's a clear indication now that Google actually see the customer end of the value chain as being an area that they're interested in but what underpins this actually is the convergence of information telecommunication computing technologies with the traditional power system technologies I do believe that the customer you know the customer has the potential supported by technologies such as smart meeting to dramatically change the whole value chain of the electricity system but you know there are risks associated with this in terms of deploying this technology and how the technology is deployed it has to be seen as more than just the replacement of traditional meters and traditional power system technologies it's about it's about behaviour it's about customer behaviour it's about how the customer actually interacts with their supplier and with their electricity system and you know it's so smart meeting is ultimately the enabler of a very very different customer dynamic in terms of electricity system and then the role that markets will play then at the retail end of the business the retail end of the retail end of the energy value chain is about is about 10% of the total end user price so what's the role that market is going to play in a way that is cost effective and drives the behaviour change that is needed to get customers play a very very significant role in bringing about kind of changes to our energy system I suppose the fundamental question here is is the market going to actually drive customer behaviour and what that means then and as deep implications for society are we prepared to let price be the determinant of of customer behaviour so for example are we prepared to let the price of electricity go to very very high levels at peak to incentivise customers to change behaviour and move to maybe to cheaper times or lower lower electricity consumption this has huge societal implications it has huge implications for policy makers but that's at the pure end of the market however you know what is likely to happen is that we will take a societal view of this and there will be interventions in the market then to lower those kind of implic the impacts the negative impacts on customers particularly in terms of fuel vulnerability and fuel poverty but then of course what does that mean then for market design so again the market back to that core question where does the market sit and where does market design sit alongside government policies alongside government incentives to for things to be done by customers and by developers that are out of market and how does the market actually change the way in which the power system is actually configured and actually works is a key policy issue so I think you know what's very very striking about the environment that we find ourselves in today in terms of energy policy is the scale of uncertainties look like looking I've seen in the last 30 years and it is as the chairman said at the opening it characterised by the need to balance tree conflicting objectives affordability the need for secure supply and the need to rest climate change this is the dilemma as I said earlier but we cannot have a policy environment where at different times we're focusing on different elements so we cannot focus on different elements of that dilemma at different points in time in the cycle whether it's a policy or a political cycle or an economic cycle and what's really required is stable long-term policy regulatory and a market environment and as you're aware the minister has launched a green paper I said this earlier it's an important document given the issues facing not only European but also Irish energy policy right now and a critical role that energy plays in the modernist economy it's a great opportunity for all of us all stakeholders in this industry to engage constructively and setting out a truly long term vision and more importantly a roadmap a roadmap on how we are going to transition to a clean secure and affordable energy future thank you