CfDs and GB’s Clean Power Revolution: Neil McDermott, CEO LCCC & ESC

Hello everybody, this is Stuart Baudi from the EIC and welcome to another EIC-clearly podcast. Did you know that the UK is the world's second largest offshore wind producer after China, and the UK was the first G20 nation to harvest emissions from a 1990 threshold. How do we do this? Many stakeholders have played a part of course, but perhaps the leading role played by an arms-length public institution in the UK that you may not have heard of. The L-Triple C, the low carbon contracts company. In this podcast I am delighted to meet with Neil Madermott, CEO of L-Triple C, as well as the Electricity Settlements company. Neil has been CEO for more than 10 years, and today you will learn about their vital role and innovative work. How their role is changing, growing and increasingly influencing policy. After relating out of the Climate Change Act in 2008, L-Triple C was finally established in 2014, as industry and government worked on a new concept of a contracts for difference or CFD to allow cost of capital to come down, with auctions to drive competition to win the CFD and stimulate renewable energy growth of Britain's electricity system, and it worked. L-Triple C now manages more than 350 CFDs, manages 10 gigawatts of operational projects generating domestic renewable electricity, and has another 25 gigawatts coming online by 2030. L-Triple C today employs 270 people, and approximately 75 billion pounds have been invested in Great Britain due to CFD, of which 60 billion pounds is in offshore wind. The scope of L-Triple C has now massively expanded beyond its original fixed-bed offshore wind scope, to other renewable technologies like floating offshore wind, carbon capture, hydrogen, battery storage and even manages nuclear regulated asset-based settlements. But always, the guiding principle is to get the best out of the CFDs and settlement payments, by boosting investor confidence and lowering cost to consumers. So how does the CFD work? The contracts for difference model is the British government's primary mechanism for supporting low carbon electricity generation. It involves a 15 year private-law contract between a renewable energy generator and the L-Triple C, which is government owned. And this 15 years is increasing to 20 years for some technologies from allocation round 7. The model incentivises investment in renewable energy projects, by offering revenue stability to generators while protecting consumers, from high costs when electricity prices are high. Key components of the CFD model are. A strike price, which is a pre-agreed price for electricity per megawatt hour, specific to different technologies. A reference price, which is the average market price for electricity in the Great Britain market. The two-way payment mechanism. Whereby, if the reference price is below the strike price, the L-Triple C pays the generator the difference. But if the reference price is above, the strike price, the generator pays the difference back to the L-Triple C. And finally, allocation rounds or auctions, which are often abbreviated as AR. Developers compete in auctions to secure contracts with the lowest cost projects prioritised. This model is important as it provides generators with revenue stability. The scheme is funded by a levy on UK electricity suppliers passed on to consumer bills. Key entities you need to know about. On Triple C, the low carbon contracts company, so L-Triple C manages contracts and payments. They report to the Department for Energy Security and Net Zero known as "Desnes", who will of course, set policy. You've also got NISO, which is the National Energy System operator. They actually run the auctions. And off-gem, they handle appeals. So that sets the scene. Let's meet Neil McDermott, CEO of L-Triple C, who I met in his London headquarters. And note, this was recorded just before the AR-7 announcement. Enjoy. Hi, everybody. It's Stuart Brody here with another fascinating EIC clearly podcast. And I'm here with Neil McDermott, who is CEO of LCC, which is low carbon contract company. He's also CEO with the Electricity Settlements Company, ESC. That's a long job title, Neil. Help me out. It is. Hi, so great to meet you. So we've got two companies here, a low carbon contracts company and electricity settlements company. However, all of the employees and all of the work is done within LCC. And ESC is effectively a shell company. And it's responsible for administering settlements for the capacity market. And we'll go into a little bit more about what that is. LCC is really the place, the company that employs all the people and does all the work across the schemes we run. You, like me, have been in our respective jobs for about 10 years. You're just knocking on 11 years now, aren't you? So, but where did it all start for you? And how did you get this? What, I think, is a very cool job that you have? Yeah, it's a really interesting job. And frankly, it's got better over the years. But I was working with EDF Energy. I'd spent 12 years there. The role came up to be CEO of UltraBallC and ESC. And look, it was an opportunity to take my first CEO role. And also, I'd been on the board of EDF renewables, developing onshore wind and offshore wind over the previous few years. So I was transitioning into more renewable energy, low carbon energy. And so this opportunity came up and I decided to take it. I was employee number five. So it was quite a change for me because I was coming out of a big corporate. And I'd always worked for big companies, in-run before EDF, EY before that. And so to come into what was effectively a start-up, we had a service office in just off-fleet street. We had some laptops. There was a chair, some art in Reed. You know, between us, we designed the organization. There was a small setup team working there from government. And we built everything from there to the point where it is today. It's been a fascinating journey and I'm sure we'll talk more about it. So the general description of L-TripleC is to accelerate the delivery of net zero and implement schemes which enable low carbon investment at the least cost to consumers. Sounds so easy to say, but I'm sure as we talk we're going to find out it's not an easy thing to deliver. But let's go back to the beginning. So when you join as employee number five, brand new organization was being set up. What was the background to why the organization was being set up? Who set it up? And what was that original mission? Government back in, I think, 2012, 2013 had what was called electricity market reform as one of their policies. And you had the Climate Change Act of 2008. And so enacting the growth of renewables and low carbon generation on the Great Britain electricity system. And as part of that, the industry had been working with government to develop the concept of the CFD. The contract for difference. If there's a 15 year fixed price for electricity produced by renewable or low carbon generators, that concept was attractive to offshore wind on, shall wind on other technologies who would struggle to compete in the market on their own, get finance, get constructed. So the CFD was a concept whereby we'd develop the project, they would construct it, they would take the risk on the operation of the project. But they would get a fixed price for everything produced over a 15 year term. And the benefit of that was that that fixed price would allow the cost of capital to come down. Through the development from 2015 onwards, I think it was the concept of auctions for these projects to win a CFD, drove competition and best value for consumers through that process. And what we've seen is a huge growth in the amount of renewable electricity generation on the system. The CFD and I think Elchipal CF had quite a big role to play in that. So it's been a really interesting journey. And these auctions, I guess, are allocation rounds today. We'll definitely go into all of this. To right back to the beginning then, Elchipal C is where it's managed and basically a part of the government to hands arms length organization. How did you describe that? So we're an arms length body where the shareholder is the sector of state for energy security in that zero. But we're set up as an independently operating company. We have our own board of directors and the chair. Then chair now is Tony Bickestoff. So we operate in an independent way. And the governance between us and the shareholder is set out and offering what document. And that's a document that's on our website, so anyone can see it. The independence in the way that we operate ensures that commercial decisions over those contracts are made in an independent manner by an independent company from government. You could view us as a cog in the middle between government and the private sector. We work with both. Because we're not for profit organization, then our main motive is to ensure that we get the best outcome. Our guiding principles, I think you made reference to it in the statement or in the question, is to maintain investor confidence in the schemes that we operate and to minimise cost to consumers. And really that drives a lot of our decision making. We look at it through those lenses. Investor confidence is a long time built and a short time lost. And the way that we behave as a company, it's really important for investor confidence. We work hard on that. And likewise on cost to consumers, we're always thinking about those two things in tandem. Which really drives a lot of our behaviour. At the end of the day, we're the single count. party to the whole market. Most major energy companies are our counter parties in these contracts and indeed a lot of small companies. If you look at the solar sector for instance, it's full of a lot of large and small energy companies. Approximately how many contracts are you managing under the CFD scope? And are there other levels of contracts that you're managing under this low carbon scope? More than 350 CFDs that we've accrued over the last 10 or 11 years behind those CFDs are clearly a lot of infrastructure projects. We just actually went over a milestone in the last month or so where 10 gigawatts of that capacity is now operational operating and generating electricity. There's another 25 gigawatts of the electricity generation capacity that has a contract that is working through the milestones in terms of construction into operation. So that generation will come online over the next three or four years and yeah there'll be 35 gigawatts in total. And of course that's set to grow. We're in the middle of allocation round seven now and so it'll be interesting to see how that will develop. As we've gone through the auction rounds over the last 10 years, the auction rounds were quite small in terms of numbers of projects or contracts. So we might take on 15 contracts in one of the early auction rounds. Allocation round six, we took on 130 and I imagine we'll take on maybe more than that in allocation round seven. We'll have to see. And often the experience suggests that the numbers of contracts are quite often dominated by solar projects these days. However, offshore wind, for instance, dominates in terms of capacity. And when I talk about 35 gigawatts, just to put that in perspective, peak demand on the Great Britain electricity system now somewhere between 50 and 60 gigawatts, you can see that the capacity linked to the CFD is pretty major in terms of electricity generation on the system. And your role within the CFD is what exactly? So we're a counterparty to these private law contracts. Where do you step in? Because obviously the auction round or the allocation round is not set by you, but you then execute elements of it. So the government sets the timing of the auction, the budget for the auction and the types of technologies. Niso run the auction. When the results come out, we receive a, what's called a direction from the Secretary of State to sign a number of contracts with a group of counterparties. As I said, in allocation round six, there was 130 or so of those contracts to sign. And we have to issue those within, I think, 10 working days. So there are regulatory time scales from which we need to get those done. And of course, you can see as the number of contracts and the options increases, that get in the mountain that time is ever more of a challenge. But we can talk about how we manage to do that a little bit later. So we take those contracts and we sign them. They're like any contract. There are two counterparties to a contract. Us and the generator. We then start working with each of the generators to manage that contract. There are certain milestones in it. So within a certain period of time, the projects have to pass the, what's called the milestone requirement, which is where they need to have achieved a certain amount of development and progress towards construction of the project or development of the project. And then they have a targeted commissioning window within which they should attempt to commission their plant and start operating. So there are those milestones in it and we work with projects with the generators to hopefully get those projects through and built. So your teams are actually on site during construction or you have other departments that are doing the on site supervision of the generators and the construction teams. We have a contract management team who will be managing each account. We're very keen on having well developed and often in person relationships with generators. Because if you develop those relationships early on, then when these projects perhaps have problems, then I think we've got our best chance to solve those if there are strong relationships and interactions between us and the generator. We're not on site all the time. We are based in Canary Wharf, but we also have an office in Birmingham and also one in Leeds. We expand our footprint and become a regional company from one just based in London. So much of our business is based in the north of England and Scotland, it absolutely makes sense for us to grow outside of London. The Oscar is full UK, not just England or Wales. Full Great Britain. What makes a good generator then in your view? The CFD is a fairly heavy weight contract. We will work really hard to welcome all of our generators. Some of the big energy companies have a number of CFDs with us and they've been working with us for maybe up to the 10 or 11 years, would be in existence. So they've been through the process many times with us. That can make it an easier process. I wouldn't say they're a bad generator or necessarily what makes a good one. We'll work with all of our generators to ensure that they understand the process, they understand what's important in the contract and can anticipate that process. Nevertheless, good documentation, record keeping, all of that stuff is pretty important. At the end of the day, these projects aren't not our projects. We have a contract with a generator and there are certain publications on the counterparty and on us in that contract. So we need to work through each of those to try and help them meet their milestones or work out if they can't meet those milestones. How can they? How can they do it? Do they need more time? That sort of thing. At the end of the day, EMR, electricity market reform, which I mentioned earlier, was put in place and actually we were put in place to try to see the advent and development of renewable and low carbon generation on the Great Britain electricity system. We are very keen to see these projects get built. But we have to do that within the guardrails of the contract and our guiding principles of investor confidence and minimizing cost to consumers. Generators that have been working through this CFD system for a number of years, they should be a better generator partner for you and the government going for because they understand how it's succeed. They know what you're looking for and that makes sense, I guess. So new players coming in can be a bit more challenging for them, I'd assume. I wouldn't say one's better than the other. You're going to have some generators who have done it before. May have the systems and the documentation and the processes to make sure that that's already. Part of the concept of the CFD is that it's great for emerging technologies to get a foothold for the early projects to get built. If we think about the offshore wind sector, it's been on that journey over the last 11 years where those big early projects 2013 with the early CFD contracts got built and the prices associated with what was called the investment contracts were much much higher than you would see in the auctions, so in AR6 and AR4 allocation around 4. And why is that? That is because those early projects enable the supply chain to learn how to build these big projects to innovate in terms of the economies of scale, build bigger turbines effectively, make them more efficient, be able to construct them in deeper water, that sort of thing. And as a result of that, the cost of those projects came down. Therefore, the CFD can help those emerging technologies gain a foothold. We'll work with all generators, the government will work, think about new technologies coming forward, title and others, for instance, geothermal is another one. We'll work with all of them because ultimately the CFD has a role of facilitating those projects, getting the early projects built and then starting that same journey of scaling future projects, achieving economies of scale and seeing costs come down over time and look, we're delighted to work with new generators and we work hard to brief them on how the contract works. If those relationships are working well then I hope that we'll end up with some very experienced generators out there. If you're enjoying this podcast and think you have an inspiring story to tell, contact me, you'll do it broadly, directly, as I would love to do a sea level podcast with you too. EIC is proud to be the UK's largest membership energy trade association and the fifth largest in the world. We are unique around the world for three reasons. We are truly energy agnostic, believing all energy technologies are vital to delivering energy security, affordability and adjust transition. We are the only energy trade association anywhere in the world that offers a truly in-house one-stop shop for market intelligence, networks and events to help our members export diversifying grow and we are proud to be the voice of the energy supply chain, advocating for the five golden rules of a healthy energy supply chain. More details on EIC membership, the five golden rules, details about doing a future podcast with me and how to contact us about anything else or in the description for this podcast. Do you have a role with the supply chain as well or is that the generators that manage all aspects of the supply chain to get the construction done? We don't tend to have a huge interaction with supply chain companies. At the end of the day the generators are building these projects and they will have their supply chain contracts. Of course we're happy to interact with them. Desnares is very focused on supply chain growth. Part of this is about not only bringing forward low carbon renewable technologies but it's about energy security, having a diverse generation mix on the system and also about economic growth and jobs. And all of that will come through development of supply chains. We've seen the emergence of the clean industry bonus and your policy from government to encourage generators to contract with British companies. And of course, you know, these projects like offshore wind and onshore wind and others are often cited near communities that have the opportunity to get regeneration to developing jobs in renewables and low carbon generation. So there are definitely benefits associated with the CFD and what we've done to help facilitate growth of these sectors that then benefits the development of supply chain jobs and economic growth in Great Britain. Let's just rewind a bit though to your team. How big is the team that I can imagine it's a growing team with a growing number of CFD in contracts you have to manage? We employ about 270 people spread across the three locations. So that's grown over the years. I think the main growth has come post 2019 when the government legislated more amended the 2008 Climate Change Act to enact the 100% net zero by 2050. And that was I think a quite an important point for the company. We recognised the time that there was likely to be growth in not only our core schemes and of course we talked about the CFD but also with a settlement body for the capacity market. But we also developed a strategy working with the shareholder. The CFD having been quite successful in renewable electricity could well be applicable to attracting investment into other sectors of the economy to decarbonise other areas. So that strategy has seen us work with government and investors to structure CFD type contracts that would attract private sector investment into carbon capture usage and storage, hydrogen production, other areas we're working at the moment with the Department of Transport on sustainable aviation fuels. So the concept of the CFD actually has been recognised as something that isn't just for renewables and low carbon electricity. It's a concept that can attract private sector investment into infrastructure projects in a number of areas of the economy. Give us an example of a key project right now that you're working on perhaps using the CFD as the basis of that. Back in 2022, which has come out of the pandemic seems a long time ago now. And looking at the emerging new schemes that we had and one of the things that we did was as we were working on things like hydrogen, carbon capture and storage, we were going to be signing CFDs in these areas, then of course we would need systems to be able to settle those contracts. We also would need to grow efficiently, not just multiplying up the number of people that we employed as we took on ever more renewable CFDs but also expanded into these new areas. So we centralised all of our operational activity into a Gordon and operations hub, a single team and as the company had grown we had developed operational activity in a number of areas. We consolidated that into one area to really drive efficiency in the way that we operated. What would ultimately be not just two core schemes but a number of them, five maybe ten. But we also brought in house all the development of systems. And that has really led to us, for example now, we're just about going live with our hydrogen settlement systems and we're expecting to see the first money flows on hydrogen in Great Britain in Q1, 2026, fairly complex to be able to settle these contracts. We've also digitised a lot of the interaction between us and our generators. So in the early days I would sign all of the contracts on the board table so I'd have 20 or 30 contracts to sign. Also the way that we have what's called our zero system which in generators can log into it's a portal for uploading information rather than attaching documents to emails then it's all uploaded automatically and that's another area that we've been working on. Another example is what's called a head end system that we're, it is a big project. So our largest capital investment project that we have underway at the moment. This is a system that will import data directly for meters. So if you took the hydrogen sector for example, there is no BSC balancing a settlement code that exists in electricity for metering. So we have to import all of the data from meters directly into our systems and that head end system is something that's capable of bringing all that information in and then feeding into our settlement systems. But it's also very flexible in terms of being able to assure the types of hydrogen near where hydrogen's come from. It's also assuring things like biomass fuel or accreditation etc. So what's interesting for me is that decisions taken since 2022 are really influencing now the systems that we've got and the kind of schemes that we can take on and the value that we can bring to those from a strategic perspective you know, we're now three to four years on from that and was now seeing the fruits of that investment and that decision taken back in 2022. Things like the CFD main workhorse that I guess the team here was involved in is becoming something that is less critical to your core outcomes going forward which is more about efficiency optimization, transparency you know behind the meter and in front of the meter services, the digital aspects of the way to make sense of you know, whereas the molecule coming from, whereas the electron coming from. Is it only electricity markets that you're involved in? It's not is it? So you're now moving of course into gas and hydrogen markets as well. But it originally I think it sounds like it was electricity predominantly. It's true. I mean I come from an electricity background. A lot of the people we would have employed in the first six or seven years of this company would have come from that sector because the schemes that we're working on. But actually since then we've been recruiting a far more diverse employee set from carbon capture and storage or hydrogen or other other areas and what it's led to is quite a diverse mix of people working here. Which is great. It creates quite a quite dynamic culture. Do you feel that you're increasingly driven towards reducing cost of energy, particularly the cost to consumers of energy? And do you feel you have direct levers to deliver that? So one of the things I mentioned just then was we're growing dramatically in terms of the number of contracts and managing on the renewables side and then also managing CFDs across all of these other sectors and our ability to develop systems to digitize processes while maintaining human relationships with counterparties and generators or customers of ours. Those systems enable us to drive efficiency and productivity in the business because I don't have to employ more and more people. I can take the number of contracts per contract manager, maybe from 10 to 15 to 20 contracts. And that enables us to drive a more efficient outcome. And in that way, make sure that we are hopefully driving best value for consumers because ultimately we're a publicly funded company. Are you involved in what seems to be one of the great mysteries of energy markets around the world? Which is explaining why some countries have high energy costs in some countries don't. I was in Germany recently. And they like the UK and other countries have these very high energy costs and they're kind of really worried about it. And I think they have the same energy cost in basic terms as the UK does. But I find it very hard to break it down in terms of what were the original historical decisions that led to that and what are the wholesale market drivers of that today and what are the steps we can take today to reduce it in the future. There's a lot of swirling talk around what it could be and policy talk and media talk. It's very hard to actually have a dashboard and a transparent sort of these are the five things that will deliver it. Are you involved in that or is that more of a knee service responsibility? Where does that sit? We're not involved in supplying electricity to consumers, nor necessarily the policy decisions around what's included in the bill. It's true to say that from our perspective running these schemes, the CFDs are the funding the amount we pay out to generators under these contracts is funded through a levy on electricity suppliers and ultimately will end up in the in the tariffs that are charged to consumers. We operate within that space and we're very aware of the pressure on consumers and it's a critical topic. What we can do is to try and make sure that we are driving efficiency and productivity within our business and that from a credibility perspective, the CFD scheme for instance is structured with auctions that drive competition to get the best prices from generators to win a CFD. We then try and run this business on a very efficient basis. But ultimately those the costs do end up in what you might call the under the umbrella of policy costs in the bill. China is being talked about a lot now, should we have Chinese made wind turbines coming into the system? That's not of course a decision of yours, but that would lead to lower costs supposedly in the auction process which would then lead to a lower subsidy or even a zero subsidy through that process. Do you see that as a direction of travel that is one of the ways to drive down costs or is it really in the end and this is a bankability question? Is it more capital markets or is it the cost of capital? uncertainty in markets that's driving that. So the cost of the projects that are being built, inevitably the supply chain is a critical part of that cost base and that will be the cost of turbines and other aspects of the build. And the other critical area is, as you rightly say, is the cost of capital. And the CFD can, you know, the fact that it's a 15 year contract with a counterparty in L.T.C. with a, what you might call a good credit rating, means that the cost of capital will be lower as a result than if it wasn't there. And so ultimately that feeds through to the prices that are quoted in a competitive auction. So inevitably they are two big buckets of cost capital intensive, large infrastructure project. And you know, from working with the generators, I know that they work hard to structure their global procurement activities. And you know, I think ultimately are also very keen to ensure that there is local procurement and local supply chain as we're possible. It is their decision. The CFD was structured in a way that where CFDs would be auctioned when generators were close or almost ready to go to financial close. And of course, I think having their supply chain lined up is always a good thing when you're agreeing the fixed price for your revenues over the next 15 years. Coming out of the pandemic, we saw in allocation around six and we all know the pressure on supply chains and the cost of goods post pandemic. We saw, we have seen, you know, the, the strike prices in an auction is like allocation around six. They were higher than they had been previously in AR3 and 4. That's a global phenomenon as societies and economies emerged from the pandemic. One of the things that's a factor of energy security, and you're definitely kind of part of the energy security mix is let's say the different stream energy security and energy sovereignty, where sovereignty would be we have to do everything we can within our borders. And security can very much involve trade and import and connectors and other balancing mechanisms. What are you seeing as a driver for your role in terms of the difference between security, which is all about relationships regionally and sovereignty, which is increasingly about building a GB only solution. And I asked this because of course, there are other nations in the world that are taking a sovereignty approach right now. And I guess right now in the UK, we're not. And it's hard to know which is right or wrong because of because then it's about predicting the future and where to invest right now based upon some future. How does your role fit into that? Just from my background in the energy sector over many years, I'm fairly personal philosophy that having a diverse energy mix in the country is probably a good thing. Not having too much dependence on a single technology has got to be good. So having a mix of nuclear renewables and other technologies, it ultimately should insulate you from any shocks associated with one technology or fuel type. So the CFD, we have quite a number of technologies that we're working with from solar through onshore wind, offshore wind, tidal, etc. We also have a CFD with nuclear with Hinkley Point C. And we're the settlement body for the size well C nuclear project that's starting to be built now. And you run the RAB model, do you as well, for size well C? So that's what I was referring to, the RAB model. We will be operating the levee, collecting the funds and pain into the project under instruction that the regulated asset base model. From my perspective, we are helping that diverse mix by working facilitating investment in those diverse technologies. And that's critical. I think renewables like offshore wind or onshore wind solar, they also have the benefit of, you know, the sun and the wind is not owned by anybody. So again, that you might argue that that is sovereign to the country. And just gives another angle in terms of, you know, the benefits of having that diverse mix of energy sources in Great Britain. It's an increasing view, certainly of mine, which is energy security and energy transition are overused terminologies right now. Energy sovereignty is not used much, but you still end up in a secure, transitioned world if you focus on sovereignty. Because energy say, you focus on what are the natural resources that I have in almost every country can say that I have renewable resources that they can access. Is it about focusing on sovereignty or are we tend to think more about energy diversity? Nevertheless, certain technologies will be strategically independent for the country. Is your role linked directly to interconnectors or trade in that sense or is it your only managing those projects that are domestically built in the GB and the CFD relationships and other capacity issues around that? We are based in Great Britain. Nevertheless, we're starting to work now, as I mentioned a little bit earlier on a CFD scheme for Northern Ireland. And using our 10 years worth of experience to work with an Northern Ireland government on how they develop their CFD scheme, it's also true that the CFD and our role needs to develop over time. So although we're not involved with interconnectors right now, I think that it's just one area where I wouldn't say that the CFD offshore interconnection isn't something that we won't do in the future or have a role in in the future. The CFD has been incredibly successful. It needs to continue to develop over time and we're very focused on that so that it remains relevant to the kind of technologies and projects that investors want to bring forward and that it remains relevant to the kinds of policies that the government want to bring forward because it has to be fundamentally, it has to remain in demand. You can't stand still, you've got to develop this. One example is how we've been working with the solar sector on co-location of solar with storage so that the production from the CFD linked solar project can be meted separately from a storage unit but can store the electricity and release it at time. So rather than being necessarily intermittent in the way that it produces electricity onto the system, if that electricity can be stored it could be released at peak times, which ultimately is good for investors and should be good for consumers as well because more electricity coming onto the system at peak times. So it's how can we and previously that wouldn't have been possible under the CFD originally. So working on those concepts is a way that we can make sure that the CFD remains relevant because technologies are changing all the time. Yeah, it's an energy diversity I think drives all of this. I think it's a very good way of describing it. And it's worth I think just for those listening around the world, the UK has achieved a lot in the CFD space particularly in offshore wind. So we are still I believe the number two operational producer of offshore wind in the world after China. We were number one until I think five years ago and then China rushed ahead. So that's a lot to be proud of. We're also the first E20 nation to harbor emissions from the 1990 starting point. So there's a lot to be proud of but of course that's a kind of looking back situation. Yeah. So in this sort of looking around opportunities and challenges going forward then it sounds like very much of your role now is thinking about the right model for the future. That's right. Just dwelling on where we've got to for a second, we estimate that more than 75 billion has been invested in the sector while the CFD has been in place. Around 60 billion of that is in offshore wind. So that dominates in terms of the scale. And one of the nice things and one of the interesting things about this company is that so much of what we do is done for the first time and is then replicated elsewhere. So building a CFD for hydrogen. How do you do that? Or one for carbon capture and storage. And that's carbon capture and storage for gas fired electricity generation. So capturing the carbon emissions from gas fired generation and storing them under the sea bed. But also decarbonizing industrial emissions, which is another aspect of that. And of course creating a CFD that again capture of carbon, it's carbon capture and storage, but for industrial emissions such as cement production in the UK is one of the highest emitters of carbon. So we've signed up our first Hydealberg materials cement production plant. This pad is wood isn't it? Yeah, it pays wood. Yeah. And also the protest plant. So another technology in the high net cluster, new Liverpool. And so what's so interesting is that we're working on things which haven't been done before. And I regularly present to foreign party, foreign governments or others around ultra-pull-sea, the CFD, the things we're doing. But it also influences the kinds of people that are attracted to come and work here. I meet with all of our new employees and often ask them, why did you come and work for a low carbon contracts company? Because we're not, most well-known company in the world. And it generally is around. They're interested to be part of the journey and they come and work for us because of what we do. And it's a trump card for us in terms of our ability to recruit people and leads to that sort of diverse employee mix. But anyway, you're asking about future challenges. The challenge is often around what are the decisions you're making now that are going to strategically useful to us in three years' time. I mentioned the decisions we made in 2022 and how they're facilitating our ability to take on new schemes and help government deliver and investors deliver on the priorities today. So what are those decisions that we need to take now that will enable us to do that? That's about working with all parties. Hopefully because we're not for profit and we have an independent role. We're working, we advise government. And government will get lobbied every day. But we talk to investors, we talk to other delivery bodies like NISO and National Wealth Fund and Off-Germand, they'll see transition authority and Crown Estate as that set of publicly owned institutions in Great Britain. And as I said before, our ambition is to make this work. And it's about how do you make it work the best as government works towards clean power 2030? What can we do to really try and. How can you add the most value? Yeah, how can we add the most value? Are you an energy business looking to revisit your strategy? Did you know EIC's consult team helped 50 businesses last year? How? We helped them with their strategic investment decisions using EIC's award-winning market intelligence and data to provide them with tailored, pragmatic BD strategies, presentations and reports. It works. Our data and insights have helped customers to confirm their decisions to export, diversify and grow. Contact us now to learn more about EIC consult and begin your own journey to smarter decisions. Details in the description below. So you're actually having to be very innovative, body. You're not there to just execute based upon models that somebody else delivered or created. You have to do that yourself. We are doing that and we're influencing government policy. We're influencing an understanding what investors think. A small aspect to this is that we co-locate in leads now our office space with the National Wealth Fund. And that alone drives relationships and understanding. So we've got to know National Wealth Fund better as a result of interactions there. And we see that National Wealth Fund is investing in the peak cluster recently, which is around cement production and decarbonisation. So or maybe investing in ports who are important to the ability to build offshore wind. So we're two institutions of publicly owned companies or bodies operating in slightly different parts of the value chain. But our ability to understand what each other is thinking and each other is doing is really important. So we work hard at trying to make sure that we're working with a crown of state who may be working on leasing of seabed in the STA who are regulating seabed for, let's say, offshore hydrogen production or carbon capture and storage and so on. And also in terms of their work on managing the system. So one of those challenges is really trying to make sure that we are connected. With a lot of players, we have a lot of stakeholders to manage. And actually, this talks to my role, which has changed over the years, as the company's got bigger. You have to run the company differently. From when you were a 50 person company to a 270 person company, then you have to run that company differently. And part of my role has changed to be more externally focused. In the secretary of state for energy, what would he say he wants you to deliver in the next three years? So one of the things we recognize is that over the last few years, we've expanded into a number of new areas. It's critical that we continue to do a great job on our core schemes. And we've talked about CFD. You haven't talked very much about capacity market. I should talk about that a bit. Because they're doing a great job there and getting some fantastic stakeholder feedback in those areas is part of your credibility and license to do new things. And I'm pleased that the company seems to have a reputation for being good at delivery. But that reputation is a long time built and a short time lost. So we need to make sure that everything we're doing is geared towards fantastic delivery. Because investors have confidence in the counterparty to these contracts in terms of their ability to deliver, to make sure we're paying people on time, the right amount, those brilliant basics, and the government has confidence in us. And that confidence means that they want our opinions, they want our views and our experience. And then we end up being asked to do new things. Sounds increasingly like it's being asked to do new things to help in this ever-changing world and to help drive down costs and to help innovate. How can we encourage private sector investment into the sustainable aviation fuels? How do you create a contract that would enable that to happen? That attracts some very bright people to come and work here. It's fascinating to see. What people can do and the kinds of things that we've managed to create. And yeah, I look at the company now and I see the people working here. Is this what you're most proud of perhaps? Is the team you've built and giving them the chance to really make a difference? It's great. And delighted to see people independently deciding to pursue their careers in UltraBal Sea. And meeting the diverse backgrounds that they come from. We've got a graduate scheme now. We've had our second intake of graduates and hopefully have our third intake back into 2026. And that gives a lot of energy to the business and misunderstanding what people of that age and level of experience can deliver if you give them the space to do it. Are you talking about then the skills that people coming into the workforce today or digital would be part of that? I guess my link to that is data centers are now all the talk. And I guess that's also a role that you're being drawn into. Is it which is meeting the power requirements and building the contract models that again and meet the power requirements of data centers? Is that something on your work this yet? It's certainly a very topical aspect of the sector. That's an example of a physical power offtake that one of our generators can develop quite often the generators have got land. So you could house data centers on that land or nearby. The CFD is ultimately a financial contract. The physical energy still has to be sold. Data centers are a good example of a power offtake that one of our generators may be selling into. Does the government want to have a policy which drives UK as a global center for AI? I guess. And then they would be looking for auctions to get more and more power available at the lowest possible cost. This comes back again, I think, to high energy costs. There's a difficult thing for investors to come in and do for data centers too. So I can imagine anyway, this is a role that you will increasingly have. And you'll see that in the media. And the talk around data centers and AI, that diverse energy mix I was talking about earlier, ultimately I think is a good thing for attracting which will need secure energy sources. I want to go on to capacity, Max. We'll link to that first with the grid and the huge investments that double of the grid in the next 10 years. And a double again 10 years later, supposedly, is what most countries are having to deal with, including the UK. What's your direct role in expanding the grid? We don't have a direct role in expanding the grid. The generators that we're working with, both on the CFD side and indeed, who may win capacity market agreements, need to connect into the grid. And that itself is what is spurring the need to invest in grid. And of course, that's a massive program that I know. You know, NISO and National Grid and others will be focused on. We don't have any direct involvement. Nevertheless, as I said, all of their wind farms and other forms of generation will need that connectivity. I think we will look back in maybe in the 2030s and be very happy that we did invest as a country to invest in a modern grid and a diverse generation base. That, you know, for me, I'm passionate about that being low carbon and that energy transition. That all builds a picture of a lot of private sector investment coming in to Great Britain and the UK. And having a modern grid with a diverse, modern set of electricity generation is absolutely critical to economic growth for this country. So the work you're doing capacity markets, let's unwrap that a bit. So watch your focus. Where does it start? Where does it stop? So the capacity market was set up similar timing to the CFD. And with the growth of intermittent generation, then the sun doesn't always shine and the wind doesn't always blow. So the original plan for the capacity market was that you would have to pay other forms of generation such as gas generation to be available to generate when the wind isn't blowing on the sun isn't shining. And therefore they need a different income stream than one just purely based on selling electricity. The original vision was that they would be paid for availability. You enter an auction, it's an amount of money per kilowatt of capacity for a power station to sit in. It's a payment each month for availability rather than actual generation. So that market has been in existence all the time the CFD has been around. That itself is changing. We're seeing aggregators aggregating a lot of, what do you call smaller components in that market at a domestic level. Solar panels and your battery storage is all coming to the fore in the capacity market and being paid for availability. And it works on both sides. So you've got the idea of generating more onto the system when it's needed. And likewise demanding less. So you've got demand side response, which is about turning off at a point where there may be a what's called under the capacity market a stress event where there isn't enough supply to meet demand or expected to, which has never happened by the way. And you can look at this as an insurance type policy. It's making sure that there is either enough generation ready to come on or enough demand ready to come off the system to make sure that Nesco can manage the system. And we do a lot of the operations around that market and we settle all of the agreements. and the containment aspect of capacity markets. Are you also involved in that? So if you're talking about Catailment of wind farms, that's not necessarily linked to the capacity market, but it's an operational, it's something that Niso will do in order to manage flows of energy on the system. It's not something that we're involved in. Okay, so that's Niso that does that. What do you see as for you, the future of so you've been here 10 years, and it sounds like you've achieved so much already, you've been sort of party to this amazing success of particularly official wind in the UK, but now we're at this sort of definitely changing point in time, aren't we, where energy diversity is required, high energy costs are driving a slowdown in bankability all around the world. And we're in an increasingly uncertain world as well, where perhaps more domestic and sovereign requirements around strategy are going to come through policy in the end in different countries of the world as well. So what do you see as your role personally as a leader here in L-Tribalcy and the role of L-Tribalcy as a business overall? Having worked in the energy sector for the last many years, it never fails to be an exciting place to work in one thing you can guarantee from the energy sector is it will change all the time. Got new technologies coming along, new government policies, you've got lenders and infrastructure developers and supply chains and policies and regulators and importantly customers. Which of those is the most challenging for you to respond to? Because those are all stakeholders and drivers of change, but which one do you find can have the biggest impact on the ability of L-Tribalcy to do its work? Clearly, government will have a big influence on what we do. I mean, the end of the day, there are shareholder, they're developing the policies, they're, you know, structuring the auctions for CFDs and capacity market. They're determining the schemes and the size of the schemes and the speed with which they develop around hydrogen, carbon capture and storage, etc. So our work with government is absolutely critical. That's where a lot of the new business comes from for this company, working with the Northern Ireland government, delivering what they want to do. But, you know, as I was saying, I would say to anybody out there looking to develop a career, then the energy sector is a brilliant place to be. It's got commodities, big infrastructure, it's got customers and regulators and all these sorts of things creates an opportunity to do a lot of really interesting different things. I look back on my career and I've done LEDDF energies trading and run power stations and now I've done this job and other things. So it's a great place to be and I love leading this company and working with people across the sector, trade bodies, generators, other delivery bodies, government, investors and banks. In order to try and facilitate the right outcome for GB or UK PLC, I look, I'm really happy to continue working in these areas. But there's so much to get on with that will add value to the country. Long may it continue, frankly. I'm really enjoying it. Thank you so much for the wide ranging. I think very open discussion. What's the one thing you would love to happen? Whether it's sort of domestically or internationally or whether it's policy wise or whether it's financed wise. There's one thing that would make the work of L-Triple C have more impact and I think you're a leader that's trying to make an impact. What would it be? Generally I think that one of the brilliant things about the schemes we've run is that they've been stable. We've had a stable government policy around CFDs and it's changed over time, capacity market also. But it's been something that has had 10 or 11 years of relative pretty good stability and investors like stability. So it's that continued commitment to delivering this concept of a CFD or capacity market or the work of L-Triple C. Maybe it's something around that stability that's attracting private sector investment into this area and driving economic growth and energy security etc. So I think we've hit on a model that works really well and can be applied increasingly to other technologies and can be applied in other areas of the economy. Clearly we have to focus and look at value for money also making sure that it is value for money and that's a lot of the work that we do is to try and make sure that what we do with value for money. But I think we've got a concept here which works really well. It needs to develop and change over time but you know it's enabled the industry to work closely with government and deliver a huge amount over the last 10 years and it's how can we continue to work together to deliver ambitions around clean power 2030 and an ultimately decarbonisation of the economy driving economic growth energy security for future generations. I think that's a great place to end it Neil. Thank you so much for your time fascinating discussion. I hope everybody enjoyed that. Thank you very much. Thank you. As I close out this podcast I just wanted to give you an update on the UK government's contracts for difference AR7 results which were announced on the 14th of January 2026 very soon after we recorded this podcast and it's secured a record breaking 8.4 gigawatts of new offshore wind capacity enough to power 12 million homes. Following a budget increase to 1.8 billion pounds eight projects were successful including six fixed bottom and two floating wind farms. Marking a major milestone for the UK's 2030 clean power goal. The clear winner was RWE securing 6.9 gigawatts of this total capacity and the impact is hoped to be unlocking 22 billion pounds in private investment and supporting 7,000 jobs.