Hill+Knowlton Strategies

Overhead High Voltage (HV) cabling has long been the subject of debate and argument. It was at one such debate that I met Mike, business development director at Costain, and we talked about the rationale behind undergrounding HV cables in tunnels. Mike very kindly offered to show me the current undergrounding operations that Costain and partners are building under the streets of our Capital for National Grid and so it was that I spent a very interesting afternoon in North London.

Willesden Junction is not a place I knew in London and after emerging from the Bakerloo line it became immediately clear why. It is a curious mix of light industrial, train and transport depots and some residential streets, but that made it the perfect starting off point for the 7.2km 3m diameter tunnel that would end up somewhere near St John’s Wood and meet a 13km 4m diameter tunnel that had begun in Hackney.

Map of tunnels at Visitor Centre

The excellent visitor centre, which was about to be raided by the second school visit of the day, contained some fantastic visualisations of the tunnelling work including this real time drilling chart and full size mock up of the tunnel.

Tunnel Mock-up at Visitor Centre

But where the school tour ended was where our tour began and after donning the correct personal protective equipment and having our safety and orientation training, we went on site to witness the production line efficiency of a tunnel boring team, only days from reaching the target ‘breaking through’ point.

Accompanying us was Richard, who made sure we were safe during our visit and after first looking at the impressive muck conveyor belt, which carries tonnes of London clay vertically up the massive main shaft, we then descended the 50 metres or so to the floor of the shaft.

Main shaft to access tunnel

There we caught our train, one of several that continuously run between the tunnel boring machine (TBM) and the main shaft to ferry the precast concrete rings that make up the walls of the tunnel and the tonnes of clay back in the other direction and of course the people that work on this project. These trains take about 20 minutes to travel to the face and run like clockwork to ensure that they pass each other at the correct spot to ensure the TBM is constantly supplied.

Tunnel Boring Machine

The TBM has a crew of about ten, who work with production line-like efficiency. The process of fitting a 1.2m ring of concrete would take longer to describe than it would take to do, so here’s a two minute video showing some of the process (note: the camera shake when the blocks go in place gives you an idea of how big they are!).

TBM in action

It is an impressive thing to watch, and I genuinely felt privileged to have been able to join Mike and the team to watch this tunnel being built in order to futureproof London’s electricity supply. It is an ambitious project and indicative of the sort of large infrastructure investment the UK needs to make as part of the upgrade to our electricity grid, but also to support growth and investment in our construction and engineering industries. It will certainly bring some reality to my next conversation about undergrounding HV cables.

Last week we were reminded of the rare, but sometimes terrible consequences of working in remote places to secure energy supplies. In monitoring the situation unfolding in Algeria I was struck not only by the terrifying nature of the raid on the In Amenas facility, but also at the challenge of getting good information, by Governments, the firms involved and the media. Of course this is a very remote site, in the sands of the Sahara no less, so you would expect difficulties in getting reliable information. That said in these hyper-connected days the vacuum created by rolling news and live blogs on newspaper websites and Twitter was for an observer challenging. For those more closely involved it must have been intolerable.

In the weeks and months that follow BP, Statoil and Sonatrach together with their respective Governments and the wider industry will try to come up with a solution. There will no doubt be many suggestions though there was one thing that might help that occurred to me during a particular bulletin and that was the use of unmanned aerial vehicles.

Perhaps this has already been done by companies, but I suspect it hasn’t yet. I saw reports that the American military had used an unarmed UAV to monitor the situation at In Amenas. Of course the monitoring capabilities of these machines is vast with their specialist cameras. Their range is also extensive, their cost falling and the risks of using them very low. Will it really be that long before energy firms with remote assets start to deploy these machines?

It first struck me that it won’t be long before the media begin to use them. Watching rolling news over the last few days, there has been scant imagery showing events unfold. Only a few smartphone pictures ultimately made it to our screens. For families affected this must have been something of a blessing, but for bulletin editors used to having footage almost immediately of an event like this, it must have been a challenge. I really wouldn’t be surprised to see the first media drones (UAVs) circling above an unfolding story within a few years time.

So if the media look likely to invest to stay ahead of a developing story, I would also not be surprised to see companies investing in this technology in the coming years.

Of course the situation remains unclear still for some families and we hope and pray that there may still be some miraculous good news to come to those families who have had their lives thrown into turmoil.

It was the most famous cardigan in world energy policy. On a bright winter’s day in February 1977, less than two weeks after his inauguration as US President, Jimmy Carter settled into an armchair (casually dressed) for his first ‘fireside chat’ with the nation. In the address, Carter revealed that his ‘strategic priority’ as president would be to implement the US’s first long-term energy strategy. The address was well received. Only a few years before, in 1973, the Arab oil embargo had sent oil prices soaring. Americans and Europeans remembered long queues at petrol stations and soaring gas prices fuelling high inflation and economic malaise all round. Back in 1973 Richard Nixon had become the first American president to call for the US to become energy independent – the first in a unbroken chain of presidents and presidential candidates who have called for the same since, Mitt Romney becoming the latest last week.

 Several months after his first report in 1977, Carter returned to the airwaves for an “unpleasant talk” with the American people on the “the energy crisis”. His national energy strategy would require “considerable sacrifices” from them he said. It would be the “moral equivalent of war” (or MEOW, as its critics labelled it). It was a disaster. 

 Carter’s plan was underscored by a genuine belief that the world was rapidly running out of oil and gas. In 1977 oil and gas prices had dropped significantly from their 1973 peak – but Carter was convinced by evidence of “peak oil” that suggested that oil supply would be unlikely to peak much beyond its then current level of around 60mbd (it’s now at around 90mbd) and gradually drop off in the early 1980s. Carter’s plan was threefold: re-energise the American coal industry, launch a massive push on energy conservation, and plough investment into renewables, with a headline target for the US to be 20% solar-powered by 2000.

 To a large extent the Carter presidency launched the renewables industry in the US and the world. Huge sums of money were invested in solar, ‘synfuels’ and other technologies, the Department for Energy was created and Carter even had a solar water heater installed on the White House roof to much media fanfare. But the American people didn’t buy it. For many Americans the message on energy conservation and scarcity was just too gloomy and the complex subsidy regime set up to support renewables ended up being inefficient and costly.

 In 1980 – after the Iranian revolution had wreaked further havoc on world energy markets – Ronald Reagan defeated Carter on a ticket to deregulate the market and end federal support for renewables. The infant renewables industry practically collapsed in the US while a huge market based drive for domestic fossil fuel production began.

 35 years later and energy policy is back as a strategic, government directed, priority for presidents, prime ministers and chancellors.

 As the US Presidential election itself approaches, the candidates’ energy narratives closely mirror those of Decision 1980 with a Republican challenger accusing a sitting Democrat of reigning in domestic production through (among other things) burdensome environmental regulation and costly renewables subsidies. How it will all play out is, of course, difficult to say.

 However, it would appear that the current (unnamed) White House adviser quoted by Daniel Yergin in his magisterial new book The Quest might be right: “these walls are still haunted by Jimmy Carter’s sweater”.  

 Now watch the sweater in action

http://www.youtube.com/watch?v=MmlcLNA8Zhc

Later this month I will be cycling the length of the UK, a distance of nearly 1,000 miles from Lands End in Cornwall to John O Groats in Scotland. En route I’m looking forward to seeing parts of the country that I have never visited before and to re-discovering places that I have travelled through before, but at a slower pace . . . a much slower pace!

As I considered what to blog about this week it struck me that the route will also take me past some of the great sources of power – hydro in Scotland, some of the larger wind farms in the South West, Wales, Scotland and the Midlands, the nuclear power station at Hinkley and some of the large coal and gas plants. I haven’t mapped this out against my route, but I’m sure there will be many energy vistas to enjoy along the way.

Now of course I’m an energy geek and I find this stuff interesting, or even beautiful, to look at, but it made me wonder how many people actually participate in energy tourism and what, if anything you can visit. I suppose the ultimate energy tourists map is this one put together by Deloitte. For those looking for something a bit more organised though, I thought I would save you the time and provide some links to the top energy tourist destinations in the UK!!

1. Whitelee Wind Farm - Just outside Glasgow this wind farm has it’s own visitor centre and visitors can tour around one of the largest onshore wind farms in Europe. There are also nature tours, cycling and the various visiting attractions as well as the opportunity for younger visitors to make their own turbines in craft workshops.

2. Electric Mountain - Not a new ride at Thorpe Park, but a visitor centre for a hydro electric power station in Snowdonia, Wales. More specifically the Dinorwig Power Station, which incorporates a guided tour of the massive turbine hall for any visitor that pays the entrance fee, is of appropriate age and wearing the right head gear and foot wear.

3. Eon Visitors Site - Eon have not one, but seven sites that people – mostly students by the look of it – can visit. Sites including the Ironbridge Coal Power Station in Telford and the Scroby Sands Wind Farm Visitor Centre in Great Yarmouth.

OK I admit this will not be everyone’s cup of tea, but hopefully there are a few young visitors that will be inspired by these vital installations, and I will try to take some pictures during my journey to capture some of them along the way.

By the way if you are interested in sponsoring the journey – we are raising money for the Royal National Institute of Blind People and the fund raising page is at http://www.justgiving.com/ChrisPratt-LEJOG

Following the Queen’s Speech, today the Government publishes its landmark piece of legislation to reform the electricity generation market in the UK. The draft Energy Bill contains the long-awaited Electricity Market Reforms, which are intended to provide the support necessary to balance future electricity generation over a mix of energy sources in order to reduce dependence on any one source and to meet carbon reduction targets. Against a challenging economic backdrop and with a fifth of existing generating capacity due to be retired from the grid in the next decade, these reforms are critical to ensuring the lights stay on while meeting our commitments to cut carbon emissions.

Overview

The key part of the Electricity Market Reform (EMR) are ‘market mechanisms’ designed to transform our generating capacity. The first of these is the introduction of Feed-in-Tariffs with Contracts for Difference (CfDs), long-term instruments designed to provide stable and predictable incentives for companies to invest in low-carbon generation. This will replace the system of Renewables Obligations (RO), which is due to end in 2017.  DECC has also committed to working with industry on Final Investment Decisions (FID) Enabling to enable some investment to begin in advance of the CfD regime coming into force. The second is an Emissions Performance Standard (EPS) that will limit carbon dioxide emissions from fossil fuel power stations by setting emissions standards for all new fossil fuel powered generation. This will prevent the construction of new coal plants which emit more than 450g/kWh.

Further support for the market mechanisms is the introduction of a Carbon Price Floor. This was announced by the Chancellor in the 2011 Budget and was introduced in the Finance Bill. This provides a clear economic signal to move away from high carbon technologies by increasing the price paid for emitting carbon dioxide. It places an initial value on the price of carbon of around £16/tCO2 (2009 prices) in 2013, which will rise to £30/tCO2 (2009 prices) by 2020. This will be complemented by a Capacity Market that will, if required, provide security of electricity supply by ensuring sufficient reliable capacity is available.

The measures are set to increase consumer bills, although the Government argues the rises will be less than if the UK carries on without reforms. The Department of Energy and Climate Change estimates the average bill will increase by GBP160 by 2030 instead of the GBP200 rise predicted if the market is left as it is. The costs of this investment will preoccupy media interest today and in the coming weeks, especially as consumer bills continue to rise and incomes tend to fall. One aspect of energy policy that will be critical to ensure that the cost increases stay within Government targets is the drive to improve the energy efficiency of the UK’s housing stock, and therefore reduce energy usage. The Green Deal is not part of the Energy Bill, but will be very important to achieving the Government’s affordability ambitions.

In addition to EMR, the Energy Bill also aims to ensure that Government and regulator Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS). The Bill also establishes a new nuclear regulator, the Office for Nuclear Regulation, to regulate the building of new nuclear power stations. Finally, the Bill contains provisions that will enable the sale of the Government Pipeline and Storage System (GPSS). The Parliamentary Under Secretary of State for Defence Equipment, Support and Technology, at the Ministry of Defence provided a separate Written Ministerial Statement about this.

Gas

The Government have said that gas will continue to play an important role in the transition to a low-carbon economy, to provide flexibility and help maintain security of supply. A separate strategy on the role of gas will be published in autumn 2012. This is the subject of a public consultation and the deadline for submissions is 28^th June 2012. Also the Government announced earlier this year that the Emission Performance Standard for gas fired power stations in the UK that will allow them to continue to operate until 2045. Gas may well play a critical role in filling any gaps in supply created by a delayed roll out of the EMR.

Nuclear

The introduction of CfD for nuclear, together with other forms of low-carbon generation, is an important part of the Government’s plans to support the construction of new nuclear capacity. Some commentators have suggested that the EMR has been designed firstly to accommodate the nuclear consortia that are bidding to build new nuclear reactors, to the detriment of other energy sources. This is primarily because the Government have stuck to their no subsidy line for nuclear. This appears to provide very positive reading for nuclear and DECC appear very ready to engage with project developers in the short term before CfD comes into force. This will be welcomed by EDF Energy, who today suggested that they may apply to extend the life of their existing nuclear power stations.

Renewables

The CfD is seen by many commentators as favouring developers of larger renewables projects, but as an industry the EMR will be welcomed as a first step to providing the investment certainty required to build new capacity, especially the third round of offshore wind. For developers though the devil will be in the details and there remain some questions about issues like the tenure of CfDs, the details about contracting parties on CfDs, but perhaps most importantly around the proposed timeline for implementing EMR. The industry suggests these timelines look ambitious. The CfD must be in place to support investment decisions before the end of the RO, which currently expires in 2017.

Today energy major Total plugged the well at its Elgin platform the North Sea that has been leaking gas since March 25th this year. This is a great result and now will make the process of plugging the well more straight forward. The plans to drill a relief well, which have been run simultaneouslywith the Top Kill attempt, were well progressed, but estimates suggested this would take six months to complete. No doubt customers, officials at DECC and operators of nearby platforms will be relieved, a estimate suggested that up to 6% of the UK’s summer gas needs would be affected by the leak. Now that the leak has been stopped, hopefully production can be brought back online safely in the coming weeks. 

I expect too that those concerned about the environmental impact of the Elgin spill will also be relieved that the leak has been stopped. There will of course have been consequences for the local ecosystem as a result of the leak, but these have proven to be far less apparent than the impact of oil spills. It is this aspect of the spill that I wanted to focus on with this post.

Of course I am not overlooking the impact of this spill, but as this case has shown gas is not as visibly noxious as oil and the results of a spill are not as easy to convey visually, which impacts media interest. I remember Greenpeace had attempted to convey the impact with some high impact infra red images of the leak, but even these images didn’t get much traction. Had the leak caught fire then in terms of reputation this leak would have been far more catastrophic.

I think this chart neatly shows this in action (the horizontal axis is time and the vertical axis is number of posts). It’s small, but you can clearly see how interest has tailed off since the initial news of the leak and early speculation about the impact of the spill. The red line shows how this played out in mainstream media and the grey line shows Twitter posts. It is interesting that in contrast to the Macondo spill in the Gulf of Mexico, media interest has been far more muted and less persistent. Of course there are other differences including BP’s record in the US, the company statements that exacerbated media interest, the apparently different perspectives between BP and the White House etc, but one difference is telling and that is the visual impact of oiled birds and beaches versus the more intangible evidence of a gas leak at Elgin. 

It lead me to wonder a question to which I don’t know the answer, but would be fascinated to know and that is whether the risk profile and therefore cost of offshore gas developments factors in this lower reputational risk. I expect the differences in terms of risk are probably imperceptible, but from a reputational perspective this leak appears to have been far easier to manage for Total than Macondo was for BP.

I think I should start this post by telling you what’s special about the photo above. At first glance it may look like a really dry and boring snap of a Commons select committee hearing. However, if you look closely you can see me! Isn’t that exciting? I may need a haircut, but I’m still pretty pleased to have been caught on camera, given how exciting a trip to Parliament always is.

In any case, this shot was taken at the Energy and Climate Change Committee hearing this morning. The Committee was continuing its inquiry into new-build nuclear programmes in the UK following the withdrawal of RWE npower and EON from the Horizon project. Today, the chiefs of these companies – Volker Beckers and Dr Tony Cocker, respectively – gave evidence. This was followed by evidence from DECC Minister Charles Hendry and Hergen Haye, DECC’s Head of New Nuclear & Strategy.

The hearing was interesting for a couple of reasons. Firstly, it was fascinating to hear first-hand the precise reasons for RWE and EON’s withdrawal from their plans. It was interesting to hear both companies state that there is no way that they’ll be reversing their decision to withdraw. However, they said that they feel the UK has one of the best investment frameworks around. They praised both the current government and the previous Labour government for their efforts to encourage investment in the sector, and singled out Contracts for Difference (CFD) as a particularly promising aspect of the Electricity Market Reform. Dr Cocker even went so far in his praise for the notion of the CFD as to say that EON felt so confident that the CFD would resolve the issue of uncertainty around electricity prices that it didn’t feature in the decision to withdraw.

It was also interesting to hear that both EON and RWE, and the Government feel confident that they will find a buyer for Horizon. The Committee expressed concerns that have been shared in the media recently about the possibility of foreign (read Russian or Chinese) ownership of a piece of the UK’s energy infrastructure. However, neither company, nor the Government shared these worries. Rather, they said nationality is of secondary concern in such dealings, with the primary factors being a candidate’s prior nuclear experience, safety and security practices, and financial viability.

We’ll certainly be following this issue very closely. If you’d like to watch today’s proceedings for yourself, you can do so here.

Last week the energy team in London hosted many international colleagues, contacts and clients to our Demystifying Digital or D2 Energy event. We are happy to report that the event was a resounding success, with more than 80 delegates from across the energy spectrum and some great speakers. Some of the presentations will shortly be available online, but here I thought it worth sharing some of the key learnings that the day yielded.

Panellists debate 'The Age of Storytelling'

 1) Twitter is news

In a great anecdote from our keynote speaker, Carla Buzasi, we heard that at launch the editorial must have at the Huffington Post UK offices was two screens, one with a Twitter feed. This is not wholly surprising to anyone that has used Twitter, but rather neatly shows how important this platform has become in shaping the news both in terms of gathering content and in terms of quickly determining what stories have impact and interest.

 2) Use your “crazy geniuses”

During our panel one of our panellists explained that his company use their crazy geniuses to demonstrate their thought-leadership and engage expert audiences. This was something that Nikki Whiteman from Which? Had also eluded to earlier by saying “we thought it easier to teach our experts how to use digital tools than to teach our digital team to become experts”. Of course balancing this with the other calls on their time is not easy, but when that balance is right and the training, policies and strategy are in place, organisations often discover a wealth of compelling content exists within their own organisation to populate digital channels. Also when the person behind that content is more visible then the message is more compelling for an audience. As we were reminded throughout the day social media is just individuals interacting with one another. The more human that interaction can be the better. 

3) Listen first

This is something that we would always advocate to clients, but it was reinforced by a number of the presentations that we saw last week. Firms need to listen to the conversations about them and the markets that they operate in before deciding whether to or how to contribute to those conversations. Too often a presence is built on a platform before an organisation has listened and problems have arisen as a result. Audits, like H+K’s Pathfinder® are the best starting point, followed by monitoring that covers both a keyword analysis, but also a human review of conversations so as not to miss some of the nuances that automated monitoring can’t always capture.

 4) Be your own media

Our panel discussion with representatives from GE and Statoil was fascinating and this video from GE really captured the audience’s imagination and showed how rich and engaging content can convey complex ideas and messages directly rather than via traditional media. I think more generally it shows that organisations shouldn’t be afraid to think a little differently and try new things.

5) Good digital service can be a source of competitive advantage

Nikki Whiteman from Which? also talked about their approach to helping companies to serve their customers better and to bring to their attention customer dissatisfaction that is aired on social media platforms. There were several examples of organisations who simply by being responsive and ‘human’ in their digital interactions had clearly turned customer interactions into positive engagement and though that’s where the case study ended we can assume that a more positive and perhaps loyal relationship may have been the ultimate result if those customer interactions continued to be handled well through other channels.

Thank you to everyone that joined us at the event and for contributing to the breakout discussions. We hope you can join us again at our next event. If you have any questions or would like any H+K speakers to come and review some of the presentations with your team then do get in touch.

Hello world. This is my first post on the H+K Energy + Industrials blog, and since I’m still learning about the sector I’m basically going to write about myself. Think of it as an introduction.

As a new grad, I’m being rotated through sectors at H+K and Energy + Industrials is my first stop. What’s really struck me about the sector is that it’s incredibly challenging, but in a really rewarding way. I’ve been really pleased with the breadth of issues I’ve had the chance to get my head around in the first few weeks. I’m really enjoying getting into the issues which drive global businesses and feel safe in the knowledge that I’ll never be bored here. I’ve even become a bit of a supply chain logistics geek. I never saw that coming!

I’ve also been delighted by my team, all of whom have been really supportive. I was amazed at the lack of a ‘bedding in’ period. I felt right at home straight away and ready to get my teeth into some real work. Best of all was the urban golf night they held to welcome myself and new Team Coordinator, Susie into team. Whilst my lack of a swing made the night a bit of a ritual humiliation, it didn’t feel like deliberate hazing.

All this is well and good, but what’s most important of all to my general happiness is the quality of treat on offer, and this is perhaps the area where E+I excel the most. Our treats aren’t just any treats…they’re Foyle’s Fancies.

Which? The consumer affairs group today launches the Big Switch campaign, designed to get the more than six in ten households who have never switched their energy supplier to consider doing so. Featured today in The Mirror and The Sun the campaign is encouraging consumers to submit their (non-binding) interest in order to collectively negotiate a better deal from the large energy suppliers.

The timing couldn’t be better and the Which? team deserve credit for launching in the middle of a cold snap when interest in energy prices is set to peak again. It is also just days into the term of new Secretary for Energy & Climate Change, Ed Davey, who began his Cabinet career by suggesting his focus would be on enabling consumers to get a better deal from their energy supplier. 

Which? Has long been a trusted consumer brand and I remember blogging last year about CBI research around the Green Deal that showed Which? to be the most trusted brand by consumers looking for advice. This campaign is in my mind overdue and I hope that it will be successful. I’ve signed up this morning and it was dead simple. Congratulations to Which? for kicking it off.

They will though face an uphill struggle in encouraging consumers to make the switch if the latest research from Ofgem is to be believed. In a report available on the regulator’s website they review attitudes to switching and new devices aimed at simplifying bills. It’s clear from the opening of the report though that the vast majority of energy users fall within a ‘disengaged’ category of people who don’t understand their bill, don’t appear to want to understand their bill and/or don’t feel there is much value in better understanding their bill because ultimately they do not trust that their time and interest will save them money. As I mentioned the Which? campaign faces and uphill struggle, but they have made the right start. I also just noticed the first tweets about this from @whichaction and @whichconvo. This is encouraging because a campaign like this is made for social networks. A shame though that Facebook hasn’t also been engaged by Which? I did look for their page to show an example of what they are doing, but perhaps they are waiting for the new Facebook timeline to launch on 29^th February.

Either way don’t delay, expressions of interest need to be logged on the campaign site by 31^st March.