Cynulliad Cenedlaethol Cymru

Diolch, Llyr. We at the IWA have been working on renewable energy for a number of years now with our Re-energising Wales project. Last year, we did a two-year follow-on, 'Renewing the Focus: Re-energising Wales Two Years On'. We still believe that Wales should focus on its unique selling points, so homes as power stations—so, that's putting solar energy and other [Inaudible.] homes—bioenergy and marine energy. So, making use of what we have in Wales. Because obviously, with renewable energy, it's not like nuclear where you might have a choice of a few different reactors, it's a vast, vast, vast sector and I think we should focus very much on our USPs. Particularly also, making sure that community ownership is a large part of that. We believe that up to a third of all new renewable energy generation projects should be owned by local communities. 

Okay, thank you, and we will be pursuing a number of those themes in greater detail later on. Rob and Rhys, do you want to add anything?

Yes, I'm happy to add something. I think the things within Welsh Government's power are areas around licensing, so speeding up the process for the licensing of new renewable energy projects, so that might need an increase in resources to Natural Resources Wales potentially. I think the grid is probably the biggest barrier to Wales becoming zero carbon, and I know that's not necessarily within the powers of Welsh Government, but I think it's an area that needs real focus. I think looking at the public estate and what could be done on the public estate, and prioritising that work and speeding that work up is a massive issue. And then, energy efficiency as well as the other area, trying to reduce the energy demand. And, of course, supporting community energy as well, and ownership, but I guess we'll come on to that later.

Yes, it goes without saying, I'm sure. Okay. Thanks, Rob. Rhys. 

Thank you very much for the invitation to speak to the committee today. So, I think, from my point of view, in terms of powers, the discussion has probably evolved a little bit, I think. It's been customary in recent years to talk about powers that Wales may need to acquire that it doesn't currently have. But I think it's more now around about facilitating, or having an environment that facilitates the development of renewable energy, which may or may not require additional powers. And, within that, Rob's already alluded to grid as being extremely important, and I don't necessarily think Wales needs to acquire more powers over grid for grid to actually happen. I think that's more related to certainty around a pipeline of projects coming forward. 

I think another big-ticket item that is being discussed at the moment in terms of powers is the future of the Crown Estate, which is, of course, attractive in some ways because of the huge value of the asset, if you want to call it that, as demonstrated by recent auctions. And I think, if that is a policy that Welsh Government is keen on pursuing, then the right thing to do is to have a very detailed look as to how that stacks up economically for Wales, as well as its merits politically or otherwise. 

I've mentioned a couple of other things. Marine licensing is something within Welsh Government powers, and I did welcome, within the deep-dive context, a commitment to have an end-to-end review of that environment at the moment. And, also, the extent to which Natural Resources Wales can fulfil its remit considering that there's likely to be a big uptick in renewable energy projects coming down the track, and, obviously, that's something we can control. 

And, then, the final point in terms of powers I would probably allude to, and we may come on to later, is around finance-raising powers. I think there is a need for a more detailed discussion about how Wales can gain a return on investment from renewables projects with varying degrees of risk and reward. I think that probably needs to be part of the conversation around the remit of any future energy development company in Wales. Thank you.

Okay. Diolch, Rhys. Huw.

Thank you, Chair. It's only a brief supplementary because I know we'll be going into a lot of detail further into this session. But one of the things we don't talk as much about nowadays is the issue of energy security, curiously, and the role that renewables can play within that—renewables in its broader sense, including storage and so on. In light of the tragic events that we're seeing unfold now, there's a deep human tragedy going on, but it has also raised those issues of energy security. There are two possible solutions being put forward here: one is that energy security now needs to be going deeper into fossil fuels and opening up the debates around fracking and so on; the other one is that we have to turbocharge our efforts around renewables and green energy. I'm just wondering if you have any thoughts on that before we get into the real detail that we get into in the committee.

Yes, if you wouldn't mind. You probably expect me to be in the latter camp. The issue that we have with gas and getting more into being more dependent on domestic gas, as well as imported gas, if you like, is that, ultimately, it's the swing fuel for power markets. Just producing more gas domestically doesn't mean that it will be used domestically, because the resource goes where it can fetch the highest price. So, it doesn't necessarily follow, just because we pursue more reliance on fossil fuels such as gas to fulfil domestic demand that that would actually happen, because it's to do with price. So, my argument would be that we need to double down on investment in renewables and that is the actual course that we need to pursue. 

Thanks.

I think Rob wanted to come in as well. 

Yes, I'd agree with that, and I think the reason our energy bills are going up is not because of renewable energy as some would like to have us believe; it is because of the price of gas. So, the more renewable energy we have, the more stable our electricity prices will be. I think there's another point as well, because, obviously, what we're seeing is a huge increase in energy costs for households and, obviously, all energy generators are making a lot of money at the moment because of the price of energy—it doesn't matter who that is. What it shows is that the more energy that we actually own in Wales, the more we are able to retain that value within Wales. So, community energy schemes at the moment are making a lot more money than they have done because of the price of energy, but, obviously, community energy schemes only own a tiny proportion of the amount of energy out there—most of it is owned by multinationals, so most of that profit is not staying within Wales. So, I think, yes, the more we can have it owned in Wales, the more we can benefit from those—keep the benefits within Wales from those higher prices.

Okay. And finally on this, Will.

Thank you. I think, in terms of energy security, obviously, we're in a deep crisis at the moment, and the fastest thing we can do is insulate people's homes and fast-forward homes as power stations. Obviously, the transition away from big energy generation projects is going to take time. By insulating people's homes, we can halve the amount of gas that they're burning in their boilers, and that's the quickest way of actually reducing the amount of gas that we're either importing from Russia or using of our own productions. Obviously, it will increase in price due to the global situation. But I think that should be the focus right now.

Okay. Thank you, all. Before we come on to specifics, or some of the specifics that have already been mentioned, I'm just wondering whether you believe that the Welsh Government has a sufficient understanding of Wales's renewable energy potential compared maybe to its energy consumption. In other words: is the Government clear about how much renewable energy we need to generate in order to meet our net-zero commitments for 2050? Anyone? Will.

I'm happy to come in first. So, we do have some concerns that it does need further development, but we recognise that a lot of the energy system is catching up, in both respects. And I guess the issue is we don't have a firm handle of what the future energy consumption will be, and therefore what we want to aim for. I think what is unhelpful is that there's quite a strong debate going on at the moment around whether we should aim to be self-sufficient or whether we should aim to be an exporter of renewable energy in the future. I don't think that's a very useful debate to have. I think, at the moment, it's a case of building as much renewable generation as possible whilst reducing consumption as much as possible, having that community ownership element. And if we get to a point where we're able to be a net exporter of renewable energy, great, but I think that the actual trying to match consumption with the production of renewable energy, at the moment, is probably not particularly helpful.

Okay, fine. Right, we will move on. I don't expect you all to answer every question—obviously, there'll be some that are more relevant to others—but, clearly, if you wish to come in, then I'm more than happy to allow you to do that. But we'll move on now to Delyth.

Diolch, Gadeirydd. Good morning, everyone. Could you tell us, please, how ambitious do you think the plans for renewable energy are as they're set out in the Net Zero Wales plan?

Rob.

I think the plans are ambitious, certainly, in terms of the overall strategy and aims of Welsh Government. I guess there's probably still quite a lot of work to do in order to create the environment that would enable that to be delivered. And obviously, a lot of those elements of work come under some of the recommendations in the deep dive, but a lot of those recommendations are actually working on or trying to create that environment. So, I guess it will depend on how effectively those working groups that spun out of the deep dive are able to work and how quickly those changes that are needed are able to be made within Welsh Government.

Thank you for that, Rob. Before anyone else—. Or did anyone else want to come in on this? I don't see—

Rhys.

Forgive me for just going back to the last question, because it is relevant in terms of this. I think understanding what we need to generate to meet demand in Wales is useful, but I also think that we need to be careful about going into a rabbit warren where we only focus on this balance between potential and need. I think it's useful in a limited way, but society is being electrified. Over the last half century, final energy demand for electricity went from 10 per cent to 20 per cent, but over the next half century, it's going to increase dramatically. There's no—and I'm quoting here from Bloomberg Associates—net-zero economy scenario in which electrification accounts for less than 60 per cent of final energy demand. I think, in some ways, overcapacity within the energy system that we're going to need to have, which is going to need to be flexible, is a feature of that energy system and not necessarily an issue with the energy system. So, I think when we talk about ambition, we need to have that kind of understanding in mind, because electrification is going to require at least—this is according to the UK Climate Change Committee—a doubling of generation capacity by 2050. So, the direction of travel is absolutely crystal clear and that should inform the decisions that we make.

Thanks, Rhys. The word 'ambitious' can mean two very different things, can't it? It's all in the tone of how it's put across, because if you say that something is ambitious, then that could be a really positive thing, or it's like, 'Oh, it's ambitious'—it can imply that actually maybe there's a lot more that needs to be thought through. So, actually, I think that this concept is really key in that. Keeping in mind everything we were talking about with what Huw had asked you in terms of the current geopolitical crisis that we've got in terms of the climate emergency declaration, the net-zero target, and looking at the renewable energy targets that we've got, do you think that they are—it's that word again—ambitious enough in both of the senses of the word? Do you think that those targets should be increased, keeping in mind the desperately fraught situation that we're in?

I think the ambition that is broadly understood is that we should decarbonise the power sector by 2035, because that keeps us in line with the trajectory to achieve net zero by 2050. When I participated in the deep-dive inquiry, I actually queried whether or not it was necessary or relevant particularly to change the targets that we have. So, at the moment, as everyone knows, it's 70 per cent by 2030. I'm not going to go on Twitter every day and say it should be 100 per cent, because I don't think that's particularly relevant. I think the point is that if we create the right environment in which projects can come forward in a way that returns value to Wales, then the targets take care of themselves, because we've already got the net-zero target of 2050, we've already got the well-understood target to decarbonise power by the middle of the next decade. So, I really do question what added effect it would have to, say, move from 70 per cent to 100 per cent of renewables by 2030. Personally, I don't think it's particularly relevant.

Thanks, Rhys. Rob or Will, did you want to add anything or are you happy? Will.

Diolch, Delyth. I agree. I think 2035 is the right date that we've settled at. I think it's achievable as well, which is helpful. From our position, I think that we need to focus much more on delivery rather than shifting the targets further. We've got that net-zero target by 2050, as Rhys said, and that's what we're aiming for. I don't want to get distracted away from that end goal.

Okay. Rob wanted to come in as well, I think.

I think the ambition is good. I guess there's a bit of a predicament as to whether the ambition is realistic, given the current systems we have in place. I think the grid is what concerns me the most. I heard anecdotally of a developer trying to connect a 3 MW solar farm to the grid in south Wales. They got an offer from WPD, but then National Grid said that they weren't able to connect without some huge amount of work going on on the national transmission network. That's 3 MW; we're talking about gigawatts that we're looking to connect. So, things like that really concern me, about is our grid actually fit for purpose. And other things that concern me are that we haven't decided how we want to go about this decarbonisation. There's a lot of talk about green gas, blue gas, grey gas or whatever—all the different colours of gas—and we've also got things like air source heat pumps, demand response and battery storage—you know, all these sorts of things—homes as power stations, energy efficiency. It doesn't seem like we've got an actual clear plan. I hope some of that will come from the heat strategy that's being developed as part of this process, but it seems like there's still a lot up in the air about how we're going to get there and whether our infrastructure is even going to be able to cope with that. I think that, for me, is a massive concern, and worries me a lot.

Diolch. Thank you very much.

Thank you, Delyth. We'll move on to Janet now, then. 

Reflecting on your organisation's involvement in the deep-dive project, does there exist actual omissions in either the scope of or recommendations produced by the deep dive that undermine its effectiveness? The reason I ask that is that there is a suggestion that the deep dive's recommendations don't go far enough in terms of resolving the Welsh grid infrastructure issues. So, if you could just come back on that.

Who wants to go first on this one? Rob, your paper was pretty happy, seemingly, with the deep dive and the work that will come from that.

Yes. I think the process was good. It was the most dynamic process I've been involved in with the Welsh Government—no offence to other work done by the Welsh Government. So, that felt positive, and the speed and the urgency of it felt in line with things like the climate emergency and that side of things. There are areas where the Welsh Government doesn't have powers—things like the grid, Ofgem, those sorts of things—and those are the areas where I guess the deep dive, because Welsh Government don't have powers in those areas, was weakest, because it didn't actually have the authority to change those situations. So, I think that's where I feel it's weakest, but that's also the area that concerns me most in terms of whether we will be able to deliver the target. I think that is something for Welsh Government to consider and decide whether Ofgem and the National Grid et cetera are able to enable Welsh Government to meet its commitments.

Yes, okay. And Will wants to come in.

Diolch. We were obviously involved in the deep dive. We again found the process really dynamic, and it was a really important inquiry to be undertaken by Welsh Government. I think if anything was missing it was a look at the trade-offs between the impact of renewable energy generation and other things like land use. I know that there's obviously a lot going on at the moment around the potential buying up of land for forestation and removing potential agricultural land. I don't think there's any threat to that from renewable energy projects, but obviously some projects do take up more land than others. I think it's just having that consideration of where are the best technologies used where, to make sure that we have (a) the most generation, but also (b) the least impact on other pieces of land use in Wales—not that we, I think, have a lack of land per se, but just making sure that we are making the right decisions.

Yes, okay. Thanks, Will. And Rhys.

I was on the steering group, so it's difficult to participate in something and then afterwards say, 'Well, it wasn't that good', because in that case, why didn't you shape it whilst you were participating in it? In that regard, I think there were some things that were to be welcomed emerging from it. To be fair to the Deputy Minister, he was very clear that he needed specific recommendations, but I think the scope was so broad it was like having a deep dive into health or into education. It's difficult to put your arms all the way around it. But in terms of what was good, it reaffirmed Wales's desire to be a net exporter of clean power in a way that maximises value to Wales. We definitely supported the point around the creation of an energy systems architect, with some caveats. We welcomed the end-to-end review of marine licensing, we welcomed the commitment to look at NRW resourcing. So, there was lots of good stuff coming out of it, but I think ultimately, participants in the process, they all come to things like that with their own agenda, and they're things that you want to see movement on, and RenewableUK is no different in that regard. But I think you have to pursue those things separately and then participate in something like this in a slightly semi-detached way that looks at value to Wales as a whole, and not necessarily just from the perspective that an organisation like the one that I represent is coming from. So, there were lots of good things to come out of it, and I think there are things to work on. Also, there are subgroups that are now being convened to follow up on the deep-dive process, and I'm actually joining a call straight after this meeting to look at financing renewable energy in Wales as part of the deep dive follow-up work. So, that's all I'd add. Thank you.

Thanks for those responses. There is a significant amount of focus on the energy potential of offshore windfarms, particularly so here in north Wales, with the two big sites, and in the Celtic sea. Does the Welsh Government's deep dive and net-zero plan focus too much on this huge, grand offshore potential, to the detriment of a wider energy mix, such as onshore wind potential, solar power, or hydroelectric power, for example?

One-word answers are fine, but I'm sure you'll want to add.

I don't think it focuses too much on marine energy. I think it incorporates a wide variety of energy sources, including offshore projects as well. So, yes, I don't think that's probably true.

But does it sufficiently—

You don't feel that there should be a greater mix of other types of renewables. Certainly here in the north, it's felt by many stakeholders, actually, and indeed constituents, that there seems to be a huge concentration just on these huge big schemes, but we don't have too many of the other energy mix in all the schemes coming forward.

I think I agree there should be a mix, but I don't think that this deep dive precludes the onshore projects as opposed to marine. So, I don't think it's one or the other. I don't think the report is suggesting one over the other. It's both, and I think—

Okay. And then—

Hang on, Janet. Will wants to come in as well, and Rhys briefly, and then we'll come back to you again.

Thank you. I think the point that we'd like to make is that there's a big shift here in that we need to make sure that people in Wales realise that renewable energy is going to have to be ubiquitous, and  that every community can benefit from some kind of appropriate renewable technology, whether that's solar panels in the home or an offshore windfarm that they can see from their house, and that's going to be very different to our current energy system where most people don't live near a power station. And obviously, that energy mix that we're going to have to end up with to reach the aims that we want to by 2035 is going to create that change, and I think what we need to focus on is that mindset change, I think—on it being a much broader mix.

Thank you. And then—. Oh, sorry, Rhys. 

Yes, Rhys wants to come in. I was just going to say that the broader it is, the more resilient it is as well. 

I said that the scope was very broad, and we probably could have had more detailed conversations about specific technologies. I might single out commercial-scale solar as one example. I would say that there is a certain amount of antipathy, probably, towards commercial-scale solar at the moment, which is possibly unhelpful, so I'd probably mention solar in terms of technologies that I think could have been discussed in a little bit more depth. But I don't think that was the actual core purpose. I mean, we were looking at barriers, really. For example, one thing that emerged in the deep dive is that we're going to review Natural Resources Wales's resourcing requirements to be able to deal with an uptick in renewables and renewable energy projects. That's welcome, because that needs to happen. Also, one of the other things that came out was how do we enable communities to participate more effectively in ownership. What are the financial pathways to helping communities achieve that? So, these are the things that actually contribute to an uptick in renewable energy projects, no matter what type of technology they happen to be. So, I think that was the purpose: rather than having a technology-specific focus, it was about the enabling actions around that, things like consenting and finance, and how do we make those speedier and make them simpler to enable those projects to get away in a way that maybe they don't at the moment.

Yes. Okay. Thank you, Rhys. Sorry, Janet. Back to you.

Thank you. And then, while our foremost focus must be on creating greener renewable energy to meet out net-zero targets, both EDF and RWE have identified that the deep dive does lack ambition in relation to Wales becoming a net green energy exporter. So, what action does need to be taken for Wales to become a reliable exporter of renewable power, and what economic potential does such an export bring?

Okay. Any takers?

I'll go.

Rhys.

I think this probably relates back to grid, probably, predominantly, and I see these things as very much—. I spoke at the start about trying to figure out what we need against what we need to generate, but I think we need to frame all of these discussions around what do we need to do to (a) make Wales an investable proposition for renewables, and (b) how do we do it in a way that maximises the value and the return on investment into Wales. Those are the things that we need to think about. This is an economic transformation as well as an energy transformation, and we need to be in the vanguard of that. We need to plan effectively to get ahead of the game, rather than constantly be thinking about, 'Oh, what do we need to meet this particular parcel of demand?' That's useful, but it's more about the economic opportunity that exists here. And, of course, grid is a huge part of that. I could quote you several sources from the Welsh Affairs Select Committee last year that fed back on grid. I would characterise all of those responses as saying that there is virtually no capacity to connect any renewables in Wales at the moment. So, it's difficult in terms of grid, but I do emphasise that this is about having first and foremost in mind what is the economic and social value opportunity that can accrue to Wales as a result of the energy transformation that is happening in front of our eyes and that is very, very competitive, not only on a UK basis, but on a global basis as well.

Yes. Okay. Excellent. Thank you, all. We'll move on now, then, to Joyce.

First of all, apologies for being late; I've missed a lot of what you've said. There are intentions by the Welsh Government to reach a national energy plan, and that's from the ground up as well, by scaling up local energy plans, which will feed into that national energy plan. I've heard you mention some of the risks—we all know the national grid is probably one of the biggest risks—but I would like to hear from you, in terms of that scaling up and achieving that national energy plan, what you think are the biggest risks, beyond the grid, to achieving that, at both a national and a local level?

Thank you, Joyce. Okay. Who wants to pick up on this one? Rob, yes.

I think the grid is probably the biggest issue, and that's not just in terms of renewable energy generation, that's also in terms of if we're looking at electrifying our heating or electrifying our transport and those sorts of things. There are parts of Wales that are effectively precluded from being involved with that, such as the Llŷn peninsula, for instance, because the grid is just not capable of enabling that in those areas. Rhys was talking about, I guess, would we—. We've invested a lot in the past in, say, road infrastructure, to try and open up opportunities for economic development in Wales, and I guess the grid is similar, but we don't take the same approach to the grid as we do to the road network; we wait for enough developers to come together to make it worthwhile to upgrade that bit of grid, rather than being preemptive and saying, 'We're opening up that grid because there are opportunities here.' So, I think that that is probably the main barrier.

The other risk, I suppose, which I think was definitely discussed, is that, basically, the benefits of this transition are not kept and retained in Wales, and I guess that's the other sort of risk that we have, that we open up Wales and we make a lot of multinationals very rich and don't benefit the people of Wales. So, I guess—. You know, I was really pleased with Welsh Government's commitment to local ownership, to shared ownership, to community energy and those sorts of things. And I think we definitely need to look at the Crown Estate in terms of making sure that the Crown Estate in Wales is delivering on the Well-being of Future Generations (Wales) Act 2015, because, at the moment, it's focused on UK Government priorities, which are, basically, 'make as much money as you can out of it', pretty much, and that's not necessarily benefiting Wales going forward.

No. That's an important point and it's one we'll be putting to the Crown Estate later on, I'm sure. Will.

Thank you. So, in terms of a national energy plan, what we see this as is a scaling up of the local energy plans that are already under way, and it needs to knit all of those together, rather than trying to reinvent the wheel, and it needs to replicate that local consultation and bring communities along with it as well. Because, as I mentioned earlier, renewable energy is going to need to be ubiquitous. This isn't going to be a case of strategically placing really large-scale energy production in a certain few parts of Wales; it's going to be a case of spreading across the whole of Wales. So, it needs to replicate that community ownership and understanding and consent, really, over how we're going to progress towards meeting our energy needs.

Can I come in, Chair, with just one quick question? I agree with everything, obviously, that you've said, but in terms of—. It's not just about producing energy; it's about saving the energy you've got. So, how joined up are you with the other policy initiatives coming out of local government, and housing is obviously one of the big drivers there?

Yes. So, I think—. Oh, sorry, did you want me to come in?

Yes, please do. Please do.

Sorry. In terms of the deep dive, obviously, that was just looking at renewable energy production. Obviously, we want to see Homes as Power Stations as a big part of that—as many homes as possible generating all of the energy, if not more than the energy, that they use. But, as I said earlier, I think the actual immediate concern should be increasing the energy efficiency of homes and business premises, because, in terms of, particularly, gas usage, that's the biggest difference we can make in the short term, in terms of short-term gains. And I think that that's what we want to see things like the Net Zero Wales plan, and future carbon budgets as well, really, really tie those together. Because, obviously, the energy efficiency of homes and business premises is going to have a huge impact on our actual demand for energy and therefore how much we need to generate as well.

Yes, okay. Rhys wanted to come in as well on this point.

Yes. Just very quickly on that, obviously, the ambition is that, by 2050, total energy demand reduces significantly. But, obviously, as part of that, the contribution of electrification kind of goes the other way, so electrification is a very, very significantly increasing tranche of an overall picture of reduced demand and I think that's an important point to make.

In terms of the national energy plan, it's due to be delivered by the end of 2024, I think, according to the deep dive. I think it needs to be delivered a lot sooner than that and I think, on the understanding that the Energy Systems Catapult is now undertaking about a year and a half's worth of work looking at future grid requirements, then there may be a requirement to marry those two things together. But, of course, the point I keep coming back to is that it's clear what trajectory we are on and what we need to do, so, you know, a plan is all very well and good for the short term, but everyone's got a plan until they get punched in the face. And I think the long-term trajectory is so clear that we mustn't get completely bogged down in this sort of incremental, 'Plan. React. Plan. React' quagmire. I think we just need to be a lot more heads up than that, really.

Okay, thank you very much. So, we'll move on now, then, to Jenny.

First of all, can I just declare that I'm an investor in Awel Aman Tawe, who are giving evidence later on? We've already established, I think, in the conversation so far that the grid infrastructure is not fit for purpose and is quite a major challenge, but we don't control it. I just wanted to explore how the inadequacy of the grid infrastructure is a Welsh problem or whether it's a UK-wide problem. Is it particular to Wales that these guys just haven't caught up with the new reality?

No. Sorry, can I—?

Yes, yes, sure. Sure. Yes.

No. No, it's definitely not just a Wales problem; it's a UK-wide problem. And, indeed, the OTNR—offshore transmission network review—which you can go and have a look at, is designed specifically to deal with the challenge of connecting huge amounts of offshore projects, initially, in the east of England, off the east coast, because it's such a difficult challenge. So, it's not just a Wales thing; it's definitely a UK thing, but, in Wales, we have the dual issue, I suppose, that we're going to have this issue of increased offshore connectivity with things like the Celtic sea and floating wind—the Crown Estate's talking about 4 GW now of floating wind potential in the fairly near term—alongside the fact that we have no transmission infrastructure in mid Wales either. So, there's probably a twin track problem in Wales, but by no means think that this is just a Wales issue.

The other thing I would probably add into all of this is the issue of transmission charges—it's the price that generators pay to access the network. This is a huge issue, but probably far more so in the north of Scotland. If you look at the price that they pay there to access the transmission network on a pounds-per-megawatt basis, it's about £7.64, compared to about 49p in England and Wales. Now, that's significant, because it makes projects in Wales comparatively more attractive, actually. But transmission charges are a very, very significant influencer of the investment decisions that developers make. So, I'd just add that point as well.

That's really useful. I just want to try and explore, then, given that we have these constraints, how much does this stimulate other ways of getting around these problems. So, local storage, local energy generation for local energy use. Will.

Thank you. Yes, playing a bit of a devil's advocate, I think that there have been some benefits from the constraints. I think if we'd had really good grid connectivity in Wales 10 years ago that we'd probably be playing host to quite a lot of the Midlands power production with wind power, and all of that would be owned by large corporations. We probably wouldn't have a huge amount of community ownership of that. So, actually, in some ways, the delay has given us the opportunity to get our ducks in a row to enable that community ownership.

I think, in terms of more local power production and storage and things like that, there are still potentially issues, even at the local level, with the network operators and substations, and whether or not, if we do proceed with lots of homes as power stations, there's the ability for them to return power to the grid in a meaningful way. Then, obviously, there are issues around feed-in tariffs and things like that. So, I think, even the national grid infrastructure aside, there are still issues more locally that need to be dealt with in terms of local generation of energy. And storage, as you say, would solve a lot of those problems, but, even then, it would need to be probably quite local to get round some of the issues, unless we obviously solve the problems with local connections as well.

Okay. Rob, in your paper, you mentioned the frustrations you were having with procurement issues—you know, with local government in Wales being really slow to come forward, and that this large-scale solar farm you're planning, you envisage ending up selling the stuff to local authorities in England instead. So, clearly, if we can't organise ourselves to stimulate the investment and then use it where it's needed, we're not getting the maximum out of it.

I think procurement was highlighted as one of the major issues from the deep dive in a number of areas, but, certainly, because the public sector uses a huge amount of energy, we could be using local energy to provide our power, either through direct wire, potentially, solar panels on roofs or whatever, like what Egni has been doing. Egni Co-op have been putting solar panels on the roofs of public buildings, providing cheap power for the public sector and creating an opportunity for local people to invest in community share offers and things like that.

So, we could be doing much more of that, but, unfortunately, procurement—. I don't know if it's a real barrier or just an excuse. I'm not quite sure. I think it's probably a combination of both, but I feel that we need to be much braver in perhaps pushing forward on challenging perceived procurement issues, and, certainly, if local authorities in England can get their act together to buy power from a Welsh community energy project, then I don't see why the public sector in Wales shouldn't be able to do that, because, obviously, they have similar procurement issues as Welsh Government do.

I'd just like to also come back to just build on what Will was saying, as well, in terms of—. So, we've done quite a lot of work on local energy projects. We've been involved in the Energy Local work, trying to provide power to the local community from community energy schemes. Again, Ofgem is one of the biggest barriers to this, and they do a lot of work around innovation, so you can apply for innovation funding and the ability to have derogations on the licensing terms from Ofgem, but, actually, that is still seen as innovation, rather than general practice or good practice.

I think there's a massive opportunity, again, to look at how we can benefit communities in Wales by providing, for instance, cheap power in the middle of the night when the wind is blowing and no-one's using the energy, enabling them to access that power to charge their car, to heat their water up or whatever it may be, or even maybe store it in batteries in their homes that they could then use at the more expensive times during the day. So, then we can actually benefit the people of Wales from those flexibility services, because I think there's a risk that those flexibility services will be delivered, again, by big companies who have big barns full of batteries or whatever it may be, rather than actually benefiting the people of Wales from, potentially, the cheap power that we're able to produce ourselves. So, I think there's a big opportunity there with that. But, yes, Ofgem are probably a bit of a barrier to that.

I want to understand how—

Jenny, sorry, I think Rhys wants to come in as well.

I beg your pardon, Rhys. Go ahead.

No, not at all. Diolch, Gadeirydd. It was just another couple of additional points on grid; if you don't want me to make those, then I'll be quiet.

No, no, I think—. Please go ahead.

Yes, this is why you're here. Go on. [Laughter.]

Okay. It was just two things quickly in relation to grid. So, one thing we haven't mentioned, and Rob just reminded me, is around Ofgem and the role of anticipatory investment, and I welcome the fact that Welsh Government is engaging with Ofgem to discuss these matters. That's absolutely the right thing to do. The regulator will consider anticipatory investment in projects that it sees as presenting good value for the taxpayer and where they perceive there to be a reasonable chance that these projects will come to light, and I think that encapsulates the chicken-and-egg situation that we find ourselves in.

Ultimately, grid will only emerge where there is a pipeline of projects. I'm not talking on a piecemeal basis, I'm talking here on a strategic planning basis. If you look at the network options assessment document that National Grid's recently published, this is the document where they give their view on which reinforcement projects throughout the UK should receive investment as a priority, then this year, in south Wales, there is no option whatsoever in that document to recommend investment, and all the connection enforcement in north Wales continue to be on hold. So, that gives you an indication as to what the transmission owner is viewing currently of the pipeline in Wales. It sees value in taking investment forward in other parts of the country. So, I just wanted to make that point, because it's an important point around the significance that a clear view of consented projects in the pipeline gives the signal to the infrastructure to emerge to support it. There's nothing to say that you can't consent the grid that you need and then, maybe, it doesn't even get built—that could actually happen—but just at the moment, there are no current plans to spend money reinforcing the grid in Wales according to the network options assessment published by the transmission owner.

I think Huw wants to pick up on this specifically, sorry, Jenny, with your permission, and then we'll come back to you.

Huw.

Sorry, Chair, it's not specifically to do with the grid point, but it's a point that Rob mentioned. I'm happy to delay it and come back in a moment if you want to.

Okay, hold that thought, then. We'll come back to Jenny first.

Okay. So, there are very clear constraints, and, by talking to Ofgem, hopefully the Welsh Government will be able to smooth some of them out. But how clearly do you think the Welsh Government fully understands these constraints on the grid? And what is the extent of (a) its ambition and (b) its strategy for overcoming them, regardless of what other people they don't control get up to?

Well, from my point of view, I can only take Ministers on their word on what they say, and I'm fairly convinced, therefore, judging by what Welsh Government has said, that it completely understands the constraints on the grid.

I think I made the point earlier that I'm not entirely convinced that we understand or that we've disentangled ambition for generation as opposed to need for generation. But what I am certain of is that constraints on the grid, ultimately, will harm Wales's prosperity. So, it's difficult if a lack of affordable or securitisable grid optionality harms an investment in a particular project. But, ultimately, we've got to frame this on the extent to which underinvestment in transmission harms Wales's economic prosperity and the return it can earn from the energy transition, and not frame it piecemeal in terms of whether or not a particular project is viable or not. I think that's the key point we need to understand.

Will wanted to come in on this as well I think.

Thank you. Rhys has covered most of the points I was going to make, but I think, just to back his point around not really understanding exactly what we want generation to look like and where it would be, although I don't blame Welsh Government for not having a full understanding of the constraints on the grid—. I don't think the energy companies or the network operators or Ofgem do either, because we don't still have a clear and shared sense of what our use of our unique selling points, like marine and homes as power stations et cetera—what they're going look like in terms of being deployed and, therefore, what the grid should look like to be able to facilitate that, because, obviously, the grid would look very different if it were to be very large-scale renewables in a few places compared to a very ubiquitous, a very distributed and a dispersed grid system. So, yes, I think we need to get that real clear understanding of what we want that to look like first.

Okay. The Welsh Government has talked a lot about the importance of community-owned renewable energy, but there hasn't actually been an awful lot of progress, so I just wondered—. And some of the other things that Rob was talking about, about enabling people to use energy during the night—storing it up themselves when the wind's blowing and people are asleep. So, what are the specific strategies that need to happen to really start to get the movement that we urgently need to see, given the Russian invasion of Ukraine and everything that goes with it on gas supply?

I think I'll answer that, if that's okay. So, I think, in the past, Welsh Government approach was, 'We'll give support to help specific projects, but we won't look at the wider picture as to why those projects are difficult to develop and maybe aren't happening as quickly as we'd like.' So, there is resource there to help develop projects, but I guess, from our perspective, what we need is to identify those opportunities, so find sites and land where those opportunities can happen. Public land is an obvious place where Welsh Government actually does have influence over. We could be looking at public land, and I guess that's one of the things that we'll be looking at in the procurement working group—how do we enable communities to have access to publicly owned land, NRW and local authority land, and roof space and things like that as well?

The other thing is, at the moment, it's a difficult market. The price of energy is up and down like a yo-yo, there's a lot of uncertainty, communities are basically competing—. It's not a level playing field, because communities don't have the same resources as the commercial sector, or the same rules and pricing et cetera as the commercial sector. So, what could Welsh Government do to help create a more stable sector for the community energy sector? One of the ways they could do that is by looking to buy the power, or at least offering a price for community-owned power that the public sector is willing to buy. Then you're effectively creating an export tariff for Wales for the community energy sector, giving them security on price. That then helps enable community energy projects to look for investment, because investors know what return, or at least what minimum return, they're going to get from their energy. It can also help the public sector to stabilise its energy costs, because at the moment, the costs are sky high. Maybe in the future they'll be lower, but, again, it's potentially unlikely. But it helps the public sector secure its energy price over a long period of time as well, so you can actually then budget. You know what price your energy's going to be for the next 15 years, so there are benefits to that as well for the public sector, as well as for the community energy sector. And then you can put additional resource into the community energy sector because you've created the environment that enables them to succeed.

Shared ownership is another key one. We're looking forward to hearing the recommendations on shared ownership, because at the moment there's a bit of uncertainty about what that actually means for developers as well as the community sector. So, hopefully some strong wording on what that actually looks like. And then I guess the other area that we didn't really touch on in the deep dive is a lot of communities are looking at how they can get more involved with energy efficiency projects, with heat projects, with transport and things like that, and I guess the support that's been there has been there for renewable energy, to be expanded, and looking at how communities can get involved with those other types of project, because a lot of communities are really keen to be involved in the net-zero transition as a whole—it's not just about renewable energy. There's a huge amount of willingness out there; it's looking at how we can enable that to materialise.

Thank you, Rob.

Rhys wants to come in. Is that—?

I'm just conscious of time now, because we do have some other areas we wish to cover, so very briefly.

Okay. Can I just simply throw in to Rhys: how do you think the Wales energy system architect is going to resolve some of the issues we've just been hearing about?

Okay, we'll come to Rhys and then we'll come back to Huw, and then we'll move on.

Okay. I wanted to make a couple of points around community ownership, but I'll come back to that if you want, Chair.

Thank you, yes.

The architect point—yes, we supported it. I think it can potentially help. It could be established in a kind of task and finish format, I guess, utilising and involving a national energy plan to make recommendations and be a focal point or interlocutor between the industry, Government and the regulator, but I do think, given the vast remit that this architect role is going to have—. So, it's going to be talking about demand-side flexibility, mapping of fuel and transport-poor households against district network operators, smart solutions for transition, supporting the business case for whole-system planning, et cetera, et cetera, et cetera. There are a lot of things in there, so I do think that that architect position is going to need to be a group of posts, or done through a kind of committee format rather than just a person doing the job.

Okay. And the other points you wanted to make briefly, and then we'll come to Huw.

Very briefly, then, on ownership, I'm in agreement with a lot of what Rob said. The problem is ultimately that development's very, very expensive. It's about £1.5 million per megawatt for development expenditure, so it's obviously hard for communities to attract that sort of funding, which is why we, as a commercial sector, are interested in speaking to Welsh Government about how we can facilitate that. So, for example, on the public estate, Welsh Government could, if it wanted to, insist on a certain percentage of a project being given to a local community free of charge as part of its terms of tender. It could insist that a percentage of a project would be invested in at cost by communities, once it was built, i.e. without any of the development risk. So, there are lots of ways that community involvement can be enhanced, and I know there are some good examples at the moment. I know that Caerphilly, for example, has entered into a memorandum of understanding with RWE for a windfarm at Pen March. So, there is a lot of stuff there that could improve the picture. Thank you.

Okay. Huw. Thank you, Rhys. 

Thank you, Chair. Chair, if you'll excuse me, I have a couple of points on this, because I think it's a really important issue. I'll declare that, in the 20 years that I've been an MP, my constituency in Ogmore has been one of the—well, it depends which way you'd argue this—biggest recipients of, or you could argue the greatest beneficiaries of, or certainly contributors to, renewable energy. We haven't got a hill that doesn't have a turbine on and there are more planned as well, and I am personally a big supporter of renewable energy. But this, for me, is a very pertinent discussion, because, in all of those 20 years, I don't have a community-owned regeneration scheme in the whole of my constituency, yet every hill has got wind turbines on it. So, one of my questions, Rob and others, is to what extent we should be retrofitting some of these schemes at points in it. And I'm not talking about necessarily at 20 or 25-year points, when they've got to the end of their first lease, but actually during the period of it. If it's seen that they're more profitable than expected, if it's seen that they're doing better than expected, we should look at them.

And related to that, the reason I'm raising this is because Rob raised an interesting point there about the potential of overnight cheap energy, enabled by storage, that could benefit local communities. I know that's an emerging thing, but perhaps we should be looking at some retrofitting of these schemes, the existing ones, across the whole of the south Wales Valleys. I say this as a big supporter of wind energy. I noted my colleague's point about north Wales offshore windfarms. We've actually been hosting massive-scale renewables for a long, long time. Beyond the donations to local groups and so on, it would be great to have a more significant part of it. 

And my final point is this: Rob, your point about local authorities getting involved in it is a really interesting one. They often feel fearful because, if they chose to step up and look as if they're interested in being an investor, a part of one, it seems as if they're prejudicing the views of local people and planning, quite frankly. That's why they don't step forward. Sorry, I've raised a range of issues there, Llyr, but it comes down to: should we be looking at retrofitting some of these now to get greater community ownership, community payback, including cheaper energy through things like overnight storage, and how do you seriously incentivise a local authority in an area that it's planned for to get involved with it, when it looks as though they're taking a side?

Okay. Rob, you go first. 

I'll tackle the last point first, if that's okay. I think that is a fear that local authorities have, but, as I said, with the project I'm involved with in north Wales, part of the project is actually in Cheshire. So, we're having to do two applications—one in Wales and one in Cheshire. And Cheshire West and Chester Council are one of the parties that are interested in buying power from us, and they're also the planning authority. So, they seem to have found ways to get through this, and I guess it's creating some sort of firewall between those two parts of the authority to make sure that they're making good, non-biased decisions. They seem to be able to get around this, but in Wales we don't seem to be able to. And it's similar with Egni: Newport City Council are great, Pembrokeshire County Council are great, other local authorities in Wales are not great. So, there's a very inconsistent picture. Why is there an inconsistent picture? Why can some do it and others can't? And I guess that's the point on that. 

In terms of existing assets that are already there, certainly there is potential for communities to look into whether they can buy existing assets, but I guess that because they're owned by someone who's invested in them, they would want—. I don't see any other way you could make that happen other than offering to buy it. But, if there was enough local interest in that and they could raise funds through a community share offer and they could put pressure on whoever owns those assets to buy them, then that's certainly a possibility, and it has happened. Sometimes, you have developers who are more interested in developing the assets and not so interested in owning them in the long term, so some are happy to sell them on. So, that's definitely an option.

And then, I think, you probably are going to have to look at the end of life—what happens after that and making sure with the next iteration of that, if it's a new turbine on that site and it has to go to planning, that we make sure that we do create the environment that enables communities to more directly be involved in that or benefit from that through shared ownership. So, I'd love to go and get communities chaining themselves to turbines and taking them over, but I'm not sure that's going to happen, from private developers.

Okay. Will wants to come in briefly on this, and then we will have to move on, I'm afraid.

Diolch, Llyr. I've got nothing to add on the short term, but I think, in the long term, we do need to be thinking about this as another industrial revolution that we can either choose to control and benefit from or we just let happen to us. If you've ever been to the Shetland islands, you'll see that they've got gleaming public transport, subsidised leisure centres, all sorts of amazing things, and a lot of that's down to the fact that, in the 1970s, there was legislation that allowed them to essentially skim off a lot of the income that was being made by oil producers that were landing oil on the islands from offshore platforms and shipping it on. We would support this committee to have a serious look at the ability for Wales to create some kind of wealth fund to generate income from, particularly, a lot of the marine opportunities, opportunities out of our ports as well, and our ports are very well sited for the Celtic seas. We'd also need to make sure that we weren't stifling development, but I think it's something that we should be seriously looking at in terms of benefiting future generations in the long term from what's hopefully going to be quite a significant industry.

Yes. Okay, thank you, Will. Very, very briefly, Rhys, I'm afraid.

Yes, just a very quick one. Huw's points are excellent, and I think, in terms of repowering wind farms, which is a kind of natural pause where you re-examine these things, there's an opportunity there to look at how the terms of ownership might alter as part of that process.

Okay, thank you so much. Okay, we'll come on to Joyce now. We've got about eight minutes left, and I think we could probably take the whole session discussing this next area, but there we are. Joyce.

We could. But, in order for any scheme to go forward there are two hurdles. One is planning, one is consenting. I do know a little bit about this; I cover mid Wales. So, what needs to change—there's a question for you—in both those areas so that we can actually move forward, taking everybody with us but recognising the urgency?

Now, that's a starter for 10, if ever I heard one. It is a huge issue. I know we're up against time, but primarily what you think in terms of consenting and planning. Will.

Really quickly, our main points are around the resourcing of Natural Resources Wales and local government alongside the Welsh Government energy service—particularly planning departments in local authorities; massively cut since 2010, some of the hardest hit parts of local government, and that has a real impact on the ability to process and provide advice and everything else to get these projects off the ground. That's, I think, our main point.

Yes, thanks, Will. Rhys.

Yes, completely agree with Will's point around NRW, and it's been looked at as part of the deep dive. Two other points very quickly. One would be in relation to the transfer from PINs Planning Inspectorate Wales, into the new Planning and Environment Decisions Wales body. There are some concerns around how that has gone, and it's resulting in delays to applications being registered and perceived reduced transparency in the regime. There's less publicly available information on the PEDW website, for example. So, that's a concern. The other thing in the offshore environments is the need for marine permitting, which again goes through NRW, to be brought into line with the DCO framework in England, where environmental and marine permits are combined. I think there's a danger that Welsh projects are being disadvantaged by having that dislocation at the moment. And the marine review, as recommended by the deep dive, needs to take that as a matter of urgency. 

Okay. Thank you, Rhys. Rob, do you have anything to add to those?

No, I think they've probably covered it. 

Okay. Thank you. And thank you, Joyce. We'll come on to Huw then. I think this will probably be the last few questions that we have. 

That's great, Chair, and I think I can help because a couple of the areas have already been touched on there. But, just to say, I'd really welcome any further written correspondence to the committee, Chair, on the issues of how we can look at not simply the obvious things around community ownership, community engagement, but actually those areas where, and at what point, communities can step back into the breach again and engage with some of the larger scale developers and so on—those issues. 

And the other thing is first dabs to local ownership. One of the things that we have learnt surely now is that, as we bring forward schemes, of the right size, we should certainly be looking at some way that we say to Welsh Government, 'Well, maybe you should be empowering local communities, municipal authorities, whatever, to be in there right at the very beginning, rather than...'. Anyway. 

What I want to ask you is—and the two are related, which might help there—how effective you think the Welsh Government energy service has been in supporting renewable energy projects to date, and whether there's any suggestions that you might have about improvements, and also the interplay of this and the proposals around Ynni Cymru, including its parameters and its operation as well. So, open to you. 

There we are. Rob, first of all. 

I think, as I highlighted earlier, the Welsh Government energy service has been hampered by the environment for renewable energy, and how, even though they're providing support, it's still difficult for community energy projects to happen. So, we need to change the environment. 

In terms of Ynni Cymru, I personally think it's a good move. It's about putting resources to actually develop publicly and potentially community-owned projects as well at the development stage, which is often the hardest stage to get finance to develop a project. So, it means that there's potential for looking at developing projects on the public estate through that body. I guess my concerns would be how much the community energy sector is involved with that and how much it supports and benefits the community energy sector. At the moment, we're very much engaged with the process and are part of it, so that's good. Hopefully, that will remain, going forward, but it is about putting those resources into the development stages to make projects happen and take them forward. 

Thank you, Rob. Rhys, did you want to add anything to that?

Nothing to add specifically with regard to the Welsh Government energy service. In relation to Ynni Cymru, our members are absolutely committed to working with Welsh Government to help them achieve their ambition, and I think, Ynni Cymru, in terms of its role and remit, is still being worked through.

I think it's well understood that the commercial sector does certain things better than the public sector can, and vice versa, and so it's logical for Ynni Cymru to complement the operation of a competitive and motivated commercial sector in order to deliver social value. But, overall, I think the principle underpinning Ynni Cymru is sound. I just think there needs to be additional clarity in relation to what the relationship is between Ynni Cymru and the commercial sector, so that there is an opportunity for Welsh Government to invest in large projects, for example on the woodland estate, if it chooses to do so. RenewableUK Cymru has had some engagement with Welsh Government in that regard already, and we hope to continue that. 

Yes, excellent. Thank you. And the last word, then, to Will.

I think the Welsh energy service is doing a good job. Again, it comes back to the resourcing of it, alongside the other agencies that are involved in giving advice to developers of renewable energy projects. In terms of Ynni Cymru, I think it's early days to see how that's going to progress, and we'd very much like to be involved with Welsh Government in critiquing its development. 

Excellent. Well, the clock has beaten us, so apologies for that. But, I'm really grateful to you, the three of you, for the evidence you've given us this morning—it's an excellent start to our deliberations on this area. As Huw suggested earlier, I think there are areas where we might want to write to you and ask some questions, some further questions, but also areas that maybe we didn't cover—financing options and the like. So, with your permission, hopefully we'll be able to extract even more information out of you, and more evidence as well. You'll be sent a copy of the draft transcript, just to check for accuracy, as we tell everyone who appears before the committee. But, with that, can I thank you for your attendance? Diolch yn fawr iawn. The committee will now break for 10 minutes. We will reconvene at 10:40 for our next evidence session. Diolch yn fawr.

Diolch.

I think, from a network perspective, obviously we're committed to working with Welsh Government on achieving its priorities for net zero. That's why, over the period from 2023 to 2028, we intend to invest over £650 million in the electrical infrastructure for Wales, subject to our business plans being approved by Ofgem. 

However, in terms of priorities, we think network planning is probably one of the key priorities, and not just planning for the electricity network, but taking that whole-system approach to planning so that we can consider all vectors and ensure that we get the right solution that benefits customers in the short, medium and long term, right the way out to 2050.

We think that also looking at innovation in Wales is a big priority. Wales has a number of opportunities that we're currently exploring in terms of innovation and we want to make sure, as a company, that we're putting Wales at the very forefront of innovation when it comes to decarbonisation, particularly in the heat and transport space, but also in network resilience and automation and operation.

Another priority is working collaboratively with both Welsh Government and local authorities on prioritisation, particularly for demand connections, where that connection may be able to facilitate the creation of jobs, particularly serving areas where well-paid jobs perhaps are few and far between and hard to come by. So, a collaborative approach to prioritisation and planning would be something we would very much welcome. 

We have already carried out over 500 optioneering and feasibility studies, largely with the Welsh Government but also with other parties, including local authorities, to try and understand where prioritisation could take place in order to get maximum benefit for all parties, but particularly for the customers and inhabitants of that local area. So, for me, those would be key priorities.

Yes, okay. There's quite a few there. Graham or Peter, would you want to add any others? Yes, Graham, first of all, then.

Yes. I certainly think that—. I share the view from SP that it is about working together. Certainly, one of our key priorities is working with the local authorities to build up their local energy plans, and we see that local plans and community energy are going to be key to delivering the ambitions of the Welsh Government, and we certainly are fully supportive of that. We have within our business plan for Electricity Distribution 2 dedicated engineers to work specifically with the authorities within south Wales to identify those opportunities and to ensure that our network is going to be ready to meet those requirements. I think innovation is going to be key, but I also think that data and digitalisation is going to be a key part of this as well, and certainly we are taking great strides now to make our data publicly available so that it's not only ourselves as WPD that have access and use of that data, but that data is widely available for use by either local authorities or the Welsh Government itself, or other partners. I think the whole system is definitely going to be a key part of that, and so working across the whole of Wales is going to be key, so we are within our business plan working closely now with SP and National Grid transmission to ensure that we have a co-ordinated approach, to ensure that we get the best outcome and the most economic outcome for Wales.

Yes, thank you, Graham, and I appreciate, Peter, your relationship or your role in this context, is slightly different, of course, but I suppose it's maintaining those dynamic relations with Welsh Government and having that dialogue as we move forward.

Yes, absolutely. Our role is to enable these net-zero plans that the networks are putting forward. For me, from the Welsh Government, it's really important that there's a vision for the future of renewable energy in Wales that's clearly articulated, that explores the art of the possible. There are lots of pathways to achieving net zero. There are lots of options available. It's making sure that there's a clear plan that everybody can get behind, that we can get behind, in terms of supporting the networks, so we can drive it forward. So, yes, let's have a clear vision that we can all articulate and get behind.

Sure. Thank you for that. Having that clear vision has to be based on a clear understanding of how much renewable energy we need to meet our net-zero targets for 2050 and anything else, if we want to be a net exporter or just self sufficient. I know that's something that's been touched upon. Maybe I could ask Liam and Graham initially: do you believe that the Welsh Government has a sufficient clarity around that?

From my own perspective, I think they do have clarity. One of the indications that that is the case is the alignment between the results of the renewable energies deep dive and our own distribution future energy scenarios document. There's very good alignment in terms of the outcomes and findings between those two documents, which suggests that Welsh Government and our own thinking are very close in terms of what is required. Obviously, as Peter outlined there, there are lots of paths to get there, but we at least know what the destination is and are working collaboratively to achieve that.

And Graham.

Yes. So, I think the Welsh Government have been very clear on their ambitions and we're very supportive of those. I think, to echo what's been said, our future energy scenarios that we published seem to very much align with that pathway. To echo what Peter said, there are many different pathways to achieve this, and, clearly, I think, whatever happens, the plan needs to be flexible. As time goes on, things will change. The way people use energy is clearly changing now and will continue to change. Investment in heat and insulation within homes will change, again, the way that energy is used. So, I think the key is that there are many different pathways, but what we need to be is very flexible about how we approach that and ensure that, whatever pathway is eventually taken, whatever the end goal is, we as WPD, working with Ofgem, the regulator, have the ability to invest and be flexible in our investment in the network to ensure that we can meet those goals.

There's been reference to the deep dive, clearly, and that's quite a central plank of the work that we're doing as a committee in terms of what we're looking at. I'm just interested to know whether you feel that there might be some omissions in the scope or in the recommendations of the deep dive. Is there anything you feel that has been omitted from that process? Peter.

I've had lots of interactions with Welsh Government on their plans. To your earlier question in terms of is there a clear understanding of the challenge, I guess, the need for renewable energy, I think the Welsh Government have got a good grasp of that from my interaction. Some of the questions I had you outlined at the beginning: the question of does Wales want to be self-sufficient, or a net exporter of renewable energy, does it want to harness the renewable potential onshore, or offshore. There are all sorts of different options and different pathways, as we said earlier, that they can take.

There are a couple of areas that I didn't see. First of all, I guess, having lots of renewables is great to meet your needs, but it's intermittent, so the question for me is how do you fill the gaps when it's not sunny, when it's not windy and when it's cold. Flexibility absolutely is a key part  f that future energy system to help fill that gap, so I think there's something missing. That might be dispatchable generation, large-scale storage; I'm not entirely sure what the plan is in that respect.

The other area that I've asked about many times is to try and understand what are the perceived blockers in terms of the current market arrangement, the current regulatory framework, the current statutory framework that is inhibiting progress towards net zero. I'm keen to understand what those are, so I can take those back and see if there's a way to address them.

Yes, okay. Thank you, Peter. Liam, Graham, do you have any reflections on the deep dive generally, before we come on to some specifics?

I think in general, it's fairly comprehensive in terms of the conclusions and outputs. As I've mentioned before, it closely aligns with our own studies into this particular area.

Okay. There was a suggestion it might have been too comprehensive, actually, trying to be too broad, in the earlier session that we had. I don't know whether that's something that you share. Graham.

I think we're fully supportive of that document and the ambitions within it. We feel that it's a very comprehensive document, one that's a very good start, and I think what we're able to do from now on is to build on that by working closely together and in collaboration.

Yes, okay. Thank you so much. We'll get on to some of the specifics now. We'll move on to Delyth.

Diolch, Gadeirydd. Bore da, bawb. Could you please talk us through your views on what the Welsh Government is doing in terms of scaling up local energy plans and creating a national energy plan? I don't know if you saw some of our earlier sessions, because this came up then. Are there any potential risks that you'd like us to kind of keep at the front of our mind, as well as the good things that could come about because of this? And just to save time, because I know that we're going to be short on time, could you also at the same time, please, talk us through what your role is likely to be in the development of both the national and local energy plans?

I'll go first, if that's all right. From a local area perspective, firstly, we absolutely fully support local area energy plans, and it's very important that at a community level, people understand the opportunities, challenges and what actions can be taken to maximise the energy potential for local communities. That said, it's also equally important that as a country, we in Wales have a plan that we're working to that sits over the top of all those and gives us that overarching control co-ordination and also sets out clarity in terms of responsibility so that we don't have the situation where people are off working on their own agendas, which may be well be at odds with what we're trying to do at a national policy level.

I think from our business perspective, we're working across all of those spaces. We're actively involved in local area energy plans and we were facilitating the current Conwy council trial. We're working very closely with Conwy on their local area energy plan, and all the other local authorities in the areas that we serve. In terms of our role, I see that as a facilitation role, understanding what local and national ambitions are in terms of energy and then playing our part in facilitating those ambitions. But also, we need to make sure that whatever those ambitions might be, they are firmly rooted in the communities that we serve. As a business, SP Energy Networks is rooted in the communities that it serves. We employ from those communities and the solutions that we put in place are for the benefit of those communities. That's something that cannot be lost, regardless of whether that's at local or national level.

Thank you, Liam.

Graham, did you want to pick up on anything?

Yes, if I can. Thank you. I think the part that Western Power and particularly our independent distribution system operator business plays in the local energy area plans is key. It's certainly something that we are very supportive of, working with all the local authorities to support them in delivering their local energy plans. They feed then into, clearly, the national plan for Wales, but key for us is they feed into our future energy scenarios and our planning for going forward. With that, that's a loop that constantly goes around. We then take that information from those, feed it into our plans and then republish those plans. All of our future energy scenario plans are published down to a local authority level, so it's very clear to see how the local authorities fed into our plans and how those plans have been changed based on the information that's come from those.

Clearly, also, then, for the south Wales licence area that we cover, we have a plan for the whole of our licence area, and then individual plans for each of those individual authorities. And certainly, going forward under ED2, we've got funding in place to have dedicated people that are there embedded within our organisation to work with local authorities across our business to support and help with those local area energy plans, but also, as I've also mentioned already, dedicated people, separate to that, embedded within our business to support community energy groups as well within those, because we see that that is going to be a key part of ensuring that those plans work for the whole community and that nobody is left behind.

I would add that as a national regulator, our job is to make sure that Liam and Graham actually do what they've just described. And, indeed, we have received these plans. We set a requirement on the networks to take account of the local energy plans in setting up their plans for the future. We're currently churning through the plans that they've submitted to make sure that they meet those requirements, and we'll be setting their price controls for the next five years during the course of this year. 

Some of challenges around these local energy plans are making sure that they're consistent and, I guess, making sure local authorities have got the resources in place to be able to develop c2onsistent plans. We set out methodologies for all of the local authorities to follow, so that we have some consistency. It's really important that these link together, that they join up with the national plan. All too often, in the past, local plans have been inconsistent, and you add them all together, and the sum of them doesn't meet the whole. So, it is important that the local and national plans are an integrated suite, again, that we can all get behind.

Thank you very much for that. Peter, you've anticipated this; I was going to ask you how you thought that Ofgem's ways of working and your role might have to change or adapt to support this more decentralised system. Is there anything other than what you've already said that you'd like to add on that?

Yes. There's a whole load of initiatives going on in Ofgem to facilitate the path to net zero. We've talked about the price controls—that's just part of it. We've got five strategic change programmes ongoing in Ofgem to support this work. One of them is around low-carbon infrastructure, making sure that networks such as the distribution networks here are building the infrastructure of the future. But that extends further; that extends to the gas grid, it extends to the national transmission system. There's a whole programme around what we call full chain flexibility. Flexibility is going to be key to the future energy system, especially with the intermittence of renewables, and enabling that is key. We've got a whole work stream around governance and governance reforms around how the industry operates, a big programme around data and digitisation—you know, that is key, that's going to be kind of the nerve centre, if you like, of this high-tech energy system of the future. And reforming the retail market models to accommodate new business models that are going to come forward and have already started coming forward from the more innovative suppliers out there.

So, yes, there are lots of things that we're doing to support this. And absolutely, I think the final point is around distribution system operators that Liam and Graham have outlined. This is a new capability within the distribution networks to plan and operate a much more active network on a local basis. We're moving away from a world where electricity flowed from the national grid and down through the distribution networks to demand; we're going to have a lot more demand-side resources and it's important that the networks are planning for those and can dispatch them, if you like, in a much more active system.

Thank you.

Diolch yn fawr iawn. Thank you, Delyth. Janet Finch-Saunders.

We've talked, haven't we, today about reports of power lines being close to full capacity leaving potential energy schemes and developers facing prohibitive upfront costs to upgrade local networks before they can even start generating. Could you outline the main areas of grid constraint in north, mid and south Wales, but do it on a separate basis? I know, certainly in mid Wales, of the strong objections in rural Wales to pylons; could we have some clarity on how much more it's going to cost to do what's needed so that we can have that grid capacity increase by putting the infrastructure needed underground?

There are two things there—the scale and pace generally, but also, then, undergrounding. I don't know who wants to take that first.

I can start if you like. I think where we are at this moment in time for us within the south Wales area and the mid Wales area is we have connected 2.1 GW of generation on our network already, and we have a pipeline of 2.7 GW, with a demand in the area that we cover of only 2.5 GW, so we've actually facilitated a huge amount of generation connection already, and doubling that in the pipeline that we have. Those are offers that have been sent out and generators have already accepted those offers. So, there is a considerable amount of work that's already been done. Clearly, the current price control that we work under and the funding mechanism for these schemes does mean that those that want the connection do have to either pay or pay towards the cost of that connection or the reinforcement associated with it. We're fully supportive of the work that Ofgem have been doing around the significant code review that would have the potential from 2023 onwards to socialise some of those reinforcement costs, so those that wish to connect wouldn't see the same significant upfront costs for those connections that they want. 

I think, to cover the second point, clearly, Western Power cover mid and south Wales and I can only talk about those two, but the south Wales area has historically been an industrial area and there's a significant amount of electrical infrastructure, both at distribution and transmission level, around the south Wales area. But certainly, the mid Wales area, which is an area that we can all see has great potential for renewable energy, has historically been a very rural area, and the infrastructure in those areas has been designed for the demand that is there. That doesn't mean that we haven't connected. The windfarm up at Brechfa forest—a significant sized windfarm—of 50 MW has been connected onto our network without significant reinforcement being required.

But we do accept that, where infrastructure is required, overhead networks do come up against opposition from the people in the area and from environmentalists, and quite understandably so. So, certainly, underground networks can be delivered, but they are significantly more expensive. They can be 10 times more expensive than a traditional overhead network, and, of course, under the current charging regime, then the connecting party would have to either pay or pay a considerable amount towards that. The proposals under the significant code review potentially could socialise some of those costs, but it's still, at the end of the day, all of us as energy users and bill payers for energy that would pay for that, so I think it is definitely a debate that needs to happen, and a discussion needs to take place about the right way of providing the capacity in those more rural areas and whether that is underground network or overhead network, or a combination of the two to try and balance the availability of network capacity in those areas to meet the renewable generation ambitions against the environmental impact that that network has.

Okay. Before I bring Liam in, maybe, Huw, do you want to add a supplementary?

Yes, thank you, Chair, and it is directly related to this point. You touched on the fact that, over the years, one of the major constraints on enhancing, strengthening the grid capacity through mid Wales, and mid Wales to west Wales, has been local opposition, and it's been very strident. Now, meanwhile, in south Wales, we've gone ahead, we've developed—we've realised the potential of renewables. We probably can do more, but we're probably significant in our contribution here in Wales, particularly in terms of onshore wind. I just want to ask you: what's your assessment of the planning approach now in terms of developing this grid infrastructure, because everything you've touched on are familiar constraints in terms of opposition to developing the grid infrastructure we've seen for years, and I'm just worried, from what you're saying, that we haven't found a way through this yet that can say, 'Well, we can realise the potential in mid Wales as well'? The future generations Wales 2040 has clearly identified mid Wales and other parts of Wales and their potential for contributing. It's not going to happen unless we sort the grid out.

I totally agree, and that's why, within our business plan for ED2, working in collaboration with Scottish Power and National Grid transmission, we are pulling together a plan that's a co-ordinated plan about what is the right solution, whether it's a transmission solution or a distribution solution, or, almost certainly, a combination of the two. We've built into our plan £2 million to have dedicated engineering resource to work through all of the possible options so that we can be ready then to start to go out to consultation and to start addressing those planning issues, because all of those things, we recognise, do take time. So, for us, the important thing now is to work with the Welsh Government, with our other partners, being Scottish Power and National Grid transmission, to optioneer the possible solutions so that we can share those with the people of Wales, so that we can engage in consultation and so that we can then start that planning process to deliver the correct grid connections in that mid Wales area.

Okay. I will bring Liam in, and then I'll bring Joyce in, if that's okay, Joyce.

Thank you, Chair. I'll try and be succinct, because Graham has outlined very well the issues in mid Wales, but one thing that I would add to that discussion is that there is no one company that has the answer to unlock the true potential of energy generation in mid Wales. It is very much that collaborative approach with a tailored solution that takes into cognisance both the maximisation of the opportunity for energy, but the considerations from an environmental and a local economic standpoint, and delivers a solution that not only fixes the problem in the short term, but also creates even further opportunities as and when, down the line, they come along. So, it really does need to be that collaborative approach to answer the issue in mid Wales.

From a north Wales perspective, I think the solution is actually a little bit closer in terms of where we are in north Wales. Because it has traditionally more inhabitants, there's more infrastructure there naturally, anyway, to provide supply to the people who live there. But, one of the key things in north Wales is the level of innovation that's going on there right now, and I think of projects like Angle-DC, which is literally a world-leading distribution energy project designed to increase the capacity for renewable generation on Anglesey, and many other projects, which Peter has touched upon, in terms of active network management and the creation of constraint management zones, which can actually increase the potential for generators to connect.

So, the reality is, from a north Wales perspective, there's a lot going on right now. There will be a hell of lot more going on in ED2, subject to our plans being approved. And, for mid Wales, we do need that collaborative, multiparty solution to resolve the problem and unlock that potential, which, I think, everybody agrees is clearly there.

Thank you, Liam. I'm conscious that Janet has been very patient in being able to come back, so, Joyce, very briefly.

It is brief. I cover mid Wales—the only one here that does. The real problem with mid Wales, from great experience, is the fact that you can generate your green energy through wind, but then you've got a distribution issue. That's the crux of it in reality, and, of course, that makes people nervous, because of all the things that have already been said, and they feel like it's being done to them with no advantage for them. So, my question to you is: how do you take people with you on a journey to realise the potential for those people who will have to put up with some inconvenience to them, and that they see the benefit? I would like to know if any of you have been involved in any of that work.

I have, certainly, and I think the key to that is twofold. One is community engagement, for that very purpose that you outlined there, in terms of understanding the issues but also being able to convey the benefits and understanding what those benefits might look like at a very close community level, and being able to make sure, in whatever we do in that local area, that those benefits aren't sacrificed or lost—they're actually maximised. I think that the second part of that is to make sure that the community's voice is always heard, and that there are clear lines of communication for communities to come and discuss and actually have what I would say is a direct influence on the solution that's put in place in their area to avoid that feeling that you articulated there about communities feeling that things are being done to them. So, there's a lot about engagement but also about the maximisation for local benefits for those communities.

Okay, thank you for that. Back to Janet, then. Thanks, Janet.

Thank you, Chair. The WPD submission highlights a need for a detailed analysis to be undertaken of potential whole-system solutions to the challenges faced by the Welsh energy system. Do you think that the UK and Welsh Governments are doing enough to understand the constraints on the grid in Wales, and that rather than further analysis of grid capacity, we should all be actually better working, moving more forward now towards implementing actual solutions? One thing that's been raised with me by some people in the renewable energy industry is microgrids, and I'd just like your opinion on those.   

So, I think, from our perspective, yes, absolutely, we need to come to a solution and be able to put that solution in place. But the challenges in mid Wales, I think, as we all can see, are significant because of the rural nature of those areas and the impact that any network will have upon the environmental concerns in those areas. So, I think the time now is to explore all of the options, do the optioneering, and to make that publicly available, start that consultation process and, I think, going back to the last question, to bring people along with us so that the solution is actually one that can be achieved with the support of the local communities. I think, to do that, we have to be very open and transparent about what all the options are, and their positive and negative impacts upon the amount of renewable generation that can connect and its impact upon the environment and its impact, ultimately, upon the bill as well. So, I think now is the time for us to invest that time and effort, working with the local communities and the Welsh Government to really explore all the possible options and to share that and to have that consultation process.

Okay. Peter wants to come in. I can see Huw wants to add a quick supplementary, and then we'll go from there. Peter.

I'd just like to say that the obligations on the network companies—. So, developers come along with their project to build renewable energy, and the obligation sits with the networks to offer connections and build out their network to accommodate that, and our obligation as a regulator is to make sure that they're funded for those projects. This is a little bit incremental. It's not necessarily joined up; it's a little bit bitty. To Graham's point, what we really need is to get to a joined-up, strategic plan that sets out what network we need to get us to our 2050 ambition. So, the parties here on this call are committed to coming up with that sort of future blueprint, however it looks, and taking account of some of these environmental concerns that people have got. But, fundamentally, the process is there. If developers feel there's an opportunity, they'll come in and seek connection, and the networks will build the infrastructure needed to accommodate those connections. The funding pathway is there to ensure that they can get on with that work.

Okay. Huw.

Thank you, Chair. Look, my apologies if I'm being absolutely dense here, and that's not beyond the realms of possibility, but I've heard all this stuff before. We've been through this before—better engagement, better community engagement, lining up all the ducks in a row. Can I just ask you what, in all that you're saying, is materially different now, or will look different in 12 months, 24 months, that means that we can develop the potential of renewables in all parts of Wales, including those that are currently facing the constraints of grid? I'm not hearing the hard, practical stuff from you. I'm hearing some really good and encouraging sounds, but they're not new sounds, and this is where it went into the sand before. So, please tell me I've missed something, that I'm being dense.

Certainly I wouldn't say you're being dense at all. It's a very fair challenge. I do go back to my point that we've already connected 2.1 GW and we have 2.7 GW in our pipeline. So, those are already accepted schemes and already built solutions to achieve those schemes. That is, actually, a net-zero pathway—that amount of energy connecting to the network will meet the net-zero pathway to 2050. I think the challenge is that developers come to us and want to connect, and we give them the quotation for their connection. We always do that, but, of course, that doesn't always then meet with their funding, and that may make that project unviable. I think what we're talking about here is not the incremental growth of the network through developers coming to us and asking for applications, as they have. There's 2.7 GW of generation in that pipeline, and that pipeline hasn't stopped—we've actually offered 14 GW of offers over the last 12 months in south Wales for connections. So, I think what I'm talking about is not the incremental growth, but a real plan for going all the way out to 2050, about how we continue that pipeline of connections, how we continue that net-zero pathway to achieve the ambitions of Wales and to achieve that through a co-ordinated approach.

Okay. Peter, in response as well.

Yes, just echoing what Graham said, their plans include lots of building of new infrastructure to accommodate the developments that they see. And through our price controls, we would look to approve that if it's economic, efficient and well justified.

I also just want to reflect on the SCR that Graham mentioned. Effectively, this is a change of rules. At the moment, developers effectively have to pay for reinforcements to the grid to get connected. What we're considering now—the decision is pending—is effectively socialising those costs, so the developer will no longer have to fund that reinforcement cost. So, in effect, the networks don't now have to wait until the cheque comes through the door before they can get on and build the infrastructure that they think is needed. And I think that will open some of these barriers up. 

Okay. Thank you. We've got 20 minutes left, and there are a large number of areas that we still need to cover, so we have to move on, I'm afraid. So, we'll have to come to Jenny next. 

Thanks very much. So, this joined-up strategic plan, is that what you're going to get out of the evolving the network grids for Net Zero Wales project?

I think all network operators working alongside Welsh Government to develop that plan and that pathway out to 2050 is the right way forward in terms of making sure that we have that collaborative approach to energy planning, which we believe is probably the key to delivering a joined-up solution across Government, local authorities, network companies, the system operator and Ofgem—all working together to deliver a plan that meets that net-zero requirement. 

Okay. So, how far have you got to date?

Well, we've made good progress on all of the things that we set out to do in our ED1 pricing period. We're building infrastructure, as has been mentioned previously, that facilitates connections. I guess the key thing is being able to deal with the scaling up, which our ED2 business plan very much is set out to do. But, the pace of change and scale that's going to come with the electrification of heat and transport all coming at us relatively quickly—we're starting to see a real upturn in electric vehicle uptake, for example, now—we need to make sure that we're not just keeping pace with that but that we get ahead of that pace, and our plan sets us on a strong platform to do that.

Electric vehicle charging systems, that's one of the obvious things that could be done by local community generation. Is that something that you're supporting?

We're supporting various community energy projects. There are some that look at using locally generated electricity for electric vehicle charging or heating, and we're involved in several projects that look at those aspects. But, again, the key thing is understanding what the local community is able and wants to do, but also what their requirement will be for those types of technologies, and making sure that our plans meet those requirements. And, as we mentioned before, the future energy scenarios documents that we have absolutely do that. 

Okay. Well, moving on—thank you for that. Obviously, we could talk a lot more about that, but moving on, starting with Ofgem, the Welsh Government's hoping that Ofgem will create a Wales energy systems architect. Is this something that you're going to be able to lead on?

So, proposals around energy systems architectures are not new, but it doesn't generally align with central Government thinking. I'd also say that it's not in our gift to create such a thing. Our powers are limited to regulating the networks and market participants under the current institutional framework. So, creating a system architect will be a matter for Government, rather than for Ofgem.

Okay, so how are we going to get around this problem? If the UK Government has still not grasped the extent of the crisis we face, how else can we approach this? Because our earlier witnesses in the earlier panel this morning said that National Grid was still talking about having to assess development projects and turning them down because they don't think there's sufficient evidence of anticipatory demand for future investment, when we know we can sell absolutely everything we generate. Anything that we can't use in the UK, Germany will buy it, absolutely without question. So, I'm wondering why we're still having these sorts of conversations, as opposed to—

So, the networks working together are effectively an architect. To the extent National Grid is saying, 'We can't build', well, I'd challenge that. They're duty bound, like the distribution operators here. If developers want to connect to the national transmission system or if they have large connections to the distribution network that require transmission build, they've got an obligation to bring those plans forward. So, if they're not doing so, I'd be interested to understand why. It may be that they don't have confidence in the projects. But if projects have come forward, they have planning consent, they have an agreement through, say, the contracts for difference scheme for funding support—you know, they've got financial backing—and there's clear evidence that those projects are going to go ahead, the grid needs to build infrastructure to accommodate them.

So, they're wrong in thinking that Ofgem still turns down things because there isn't sufficient evidence of who the buyers of the energy are going to be.

Some examples, actually, are in Scotland. So, Shetland, for example, we recently approved a 600 MW link to Scotland to accommodate renewable development in Scotland, and that's because we can see clear evidence that that's going ahead. We've got a similar arrangement with Orkney. That's not yet been approved. That's conditional on enough generation coming along. But again, once they've met that criteria, we will give them the green light to build a link to Orkney. And the same can happen here. There are lots of renewable developments, whether it's onshore or offshore, and if there's a clear signal that that's going to go ahead then the network can come to us and seek funding to build the infrastructure, like they've done in Scotland.

So, you're saying that they're wrong in thinking that you still turn projects down because there's not sufficient evidence of demand. I understand they have to get planning permission and sort out—

Our job is to protect the interests of consumers. These are very, very expensive projects that ultimately consumers end up paying for. What we don't want to see is white elephants, big projects that—

My question's in the context of gas prices going through the roof and a climate emergency. That's what I'm struggling to understand.

Can I just maybe come in here? Because you mentioned earlier, the whole architect issue aside, that it wasn't in line with central Government thinking, and I think there is a broader question here about Ofgem being beholden to the UK Government and maybe—and I'm sure you'll respond to this accordingly—not being sufficiently in tune or reflective of the different and increasingly diverging policy environment here in Wales in terms of what Welsh Government, the Welsh public sector and wider Welsh society wants to achieve in this space. What would you say to that?

We are evolving the institutional arrangements. We talked earlier on about the sort of DSO context and, effectively, distribution networks' strategic planning. We're consulting on strategic network planning on a national scale, including Wales, for the transmission grids. We and Government are consulting on creating an independent system operator, again with a strategic planning role, to look across sectors, across regions, between distribution and transmission, to come up with much more strategic plans. One of the things that the electricity system operator is doing at the moment is, where we have a plan to build 40 GW of offshore wind, coming up with a holistic network plan, a strategic plan, that will need to be built to accommodate that. And these sorts of initiatives fit just as well for Wales as they do for England and for Scotland. I think what you're looking for is scope to deviate from those arrangements, because there are particular local issues. 

Well, yes, the Well-being of Future Generations (Wales) Act 2015 is recasting the policy environment here in Wales, and the way that we do politics, do business, do everything really. And I'm just wondering how, as part of wider UK processes, are you sufficiently reflecting that in your deliberations around our situation here in Wales.

So, what we're asking for, we're asking the companies as part of the plans they're putting forward to take account of local energy needs.

So, the onus is on the companies to do that.

Yes. 

Okay. 

Yes, and that's part of the obligation and the guidance that we've given them in order to put forward well-justified plans.

Okay, thank you. Back to you briefly, Jenny, and then we'll have to move on.

Okay. Mr Halladay, in your submission, you talk about a change of policy as of September 2020. The restrictions that were previously on new thermal plants and battery storage have been lifted, and since then we've had over 200 MW of potential battery storage capacity. So, how much more can we envisage being able to increase that storage capacity, given this realignment of the rules?

So, there was a restriction on dispatchable generation—thermal generation, not reneawable generation—in the south Wales area due to a constraint on the national grid transmission network. But because of larger coal fired-type power stations that have closed down in south Wales that capacity has then subsequently been released, and that's what removed that restriction in 2020 to enable dispatchable thermal generation to start connecting again. There was never any restriction upon renewable generation connecting throughout that time, and there still isn't now. 

So, as I said, the pipeline that we currently have is 2.7 GW in our licence area. So, we have offers sent out and accepted from developers to build 2.7 GW of generation: 2.1 GW of that is actually renewable generation, and some of that will be storage, and some of it will be wind, and some will be solar. And, as I said, we've actually sent out 14 GW of offers, and I'm sure some of those will be accepted.

So, every year, we are sending out offers, we get acceptances. So, throughout the remaining period of this price control, up to March 2023, and beyond in the next price control period from 2023 to 2028, we've got a significant amount of investment in our plans to continue to invest in the network to ensure that we can continue to facilitate connections, both demand and generation. And I think that links in then to that wider piece of work, which is about where we go beyond the next price control to have a more co-ordinated approach to ensuring that the grid continues to meet the net-zero pathways and the ambitions of Wales.

Okay. So, on your map, you talk about fossil gas sites. How much is gas replacing the coal as opposed to renewables?

I'm afraid I don't have that number with me; I apologise. 

Okay. That's particularly important. If you can write to us with it, that would be great. 

Yes, I'm sure there are a few areas that we may wish to cover in written form after this session, particularly given that we've only got about seven minutes left, and I know Huw and Joyce wish to pursue some themes as well. So, Huw first, and then Joyce.

Thanks, Chair. I'll try and do this really quickly and skip over the areas we've done already there. Can I just ask you for your view on the contribution of what we now know as constraint management zones? They're a feature of every electricity provider in terms of the UK, but are these a serious element of contributing both to grid issues, but also to local demand management and so on? And, if so, how do we decide where they are in Wales? What's the priorities? What's the criteria?

Liam first on this. 

Yes, okay. Active network management schemes, which constraint management zones are very much a factor of, are absolutely a serious part of the solution. They're not the entire solution to the problem; they're another tool in the box that we can use to manage issues with capacity. 

I think the critical factors and the criteria that you mentioned are around the demand for connections, and also the network make-up in that particular area. But the constraint management zones are typically employed at the point where the transmission system interfaces with the distribution system. Technology is employed at those grid supply points, which allows us to then use flexible—customers who signed up to us flexibly to peak their demand, which then facilitates our ability to connect more generation. So, an innovative solution and very much part of the future.

They're not fully worked up yet within Wales, are they? We're still scoping out where they'll be, how they're developed?

Well, certainly, in our area, we've had a successful trial up in Scotland, in the Dumfries area, which we're looking to replicate along the coast, from mid Wales up to north Wales—so from Aberystwyth up to sort of the Bangor area. There are four grid supply points that we intend to start work this year, actually, installing the equipment, so that that trial for Wales is complete by the end of this price review period in 2023.

Okay. Well, I think we'd love to hear more about that, but perhaps in writing, with some detail of what that means for Wales.

No problem at all.

Chair, do you want me to ask about local authority capacity?

I think we need to move on, Huw, I'm afraid.

That's fine, no problem.

Peter briefly wanted to come in on this, I think. Peter, do you want to add anything very briefly on this?

Yes, I just wanted to say that the constraint management zones and active network management are a tool to connecting a lot more generation onto the network than the network is physically capable of managing at the time. But my view and our view as a regulator is that, ultimately, if renewable generation grows, you need to start the reinforcement job and remove those constraints. The example I mentioned of Orkney earlier on—. So, there's a big active network management scheme on Orkney, but it's getting to the stage where it's bursting at the seams, and hence the application from Scottish and Southern to build a new connection to the mainland to accommodate that. So, where there's a need, we're more than open to funding building new infrastructure to remove network constraints.

Okay. There we are. Thank you for that. Joyce, then. [Interruption.] Oh, there we are.

[Inaudible.]—the operators. Anyway, just a question to Peter about regulatory derogation and your response to it. The Welsh Government has called for the development of that, to enable energy business model innovation, in support of the recommendation of the deep dive that currently has taken place. Do you agree with the proposed objectives of that derogation?

I agree with what it's trying to achieve—absolutely. I spoke earlier on about our future retail strategy, which is all about enabling new business models in the retail sector. Our powers are limited in terms of issuing derogations; generally, derogations are for specific areas where the technical compliance of standards, for example, or codes, cannot be achieved. The concept of a national derogation is not within our powers. I think the question here really is that you're looking for changes to the rules to allow new things to happen. And back to my initial point—tell me what rules are blocking the sorts of things you want to achieve, and I will take those back and we will consider them as a regulator, and consider what—. It's not about derogations, it's about changing the rules. And Graham talked about the new rules around connections and not paying for upstreaming enforcement—that's a change to facilitate net zero. So, where there's a blocker, let us know what it is, and we can consider how we might address those blockers, because we're all trying to achieve the same objectives here.

Okay. I'm afraid we're out of time. I'm sure we'll take you up on that, Peter, in our report—keep an eye out for some of the recommendations. But, thank you, the three of you, for your evidence. We will send you a copy of the draft transcript, just for you to check for accuracy. And we're very grateful to you for the evidence, both in written form and orally that we've received from you today—it's really valuable and a big contribution to our work. Thank you very much. Diolch yn fawr.

The committee will now take a break, and we will reconvene in time for restarting our session at 11.55 a.m. Thank you very much. Diolch yn fawr.

I'll go first, just from what is, I suppose, our narrow sectoral perspective. So, from the nature and conservation sector, which is myself and Karema, I think the main barrier we see with the big scaling up of offshore renewables is the balance between the commitment to net zero, which is obviously very important, and the target to halt biodiversity decline, so the rolling out of big infrastructure in the marine environment where we are actively protecting species and habitats for various reasons. So, it's that balance in terms of the impact that a physical infrastructure has, both in the construction and the operation, in terms of biodiversity. 

So, would you say that existing structures are sufficient in that respect or what is it within that that isn't sufficiently addressed at all?

I think it's the sheer scale. So, what we are seeing with the targets to accelerate to net zero is the fact that we need much, much more infrastructure out in the marine environment—much more than we had anticipated even a few years ago. So, when we're putting big physical structures out, which can interact with wildlife, so the obvious things are things like bird strikes on wind turbines—so it's that kind of thing. So, proximity to protected sites, proximity to foraging grounds. And on the sea bed, we have had an active programme over the last decade of putting in place marine protected areas. So, it's ensuring that infrastructure goes in in a compatible manner.

Okay. Huub, is there anything in particular from the Crown Estate perspective?

Yes, and let me start by acknowledging the points that John made. As the Crown Estate, we're the entity that is entrusted to looking after the sea bed for the nation, and we are committed to driving solutions for both the climate emergency, but also for the nature emergency. So, biodiversity concerns, as John outlined, are a very significant one. And one of the main barriers that we have seen over the years, working on, for example, fixed-bottom wind, is that often the evidence base on these ecological systems is good, but not good enough to make the complex decisions that are required. 

So, we set up, in fact, last year, and John was one of the founding members of the original group, what we call the offshore wind evidence and change programme, which works with over 20 statutory bodies and environmental non-governmental organisations—and it includes Welsh Government—to really say what is the evidence base that is needed to make sure that those trade-offs, which inevitably will need to be made, can be made in the right way. And even—and this is very much our aspiration for the work that we're currently doing in the Celtic sea on floating offshore wind—how can we take an integral perspective where we really integrate environmental considerations as much as societal considerations into the design of these leasing rounds. And therefore—. Yes, there are these trade-offs. The two that I will add to that one is we have to ensure that the delivery and the growth of offshore renewables is really done in a way that is respectful of existing economic sectors like the fishing industry. We have to make them become part of our success story as well. And the second one is that we have to be very mindful of the economic opportunities that this enormous energy transition offers. And therefore driving societal value for Wales, for the south-west region, and indeed for the country, is part and parcel of how we are designing our activities in the Celtic seas.

Okay, thanks for that, Huub. I think, Huw, you want to pick up on some of that, I'm sure.

Yes, please. Huub, if you don't mind, I'll come back to you in a moment, because I want to pick up on some of the issues you raised, but if I can go to our colleague from the JNCC first of all, and ask you—. Before I turn to the work that Huub talked about that's been set up last year, which is good to hear about, what's your take on where we are with marine science generally? Has the marine science strategy 2010-25 delivered on its aims of tackling those cross-cutting barriers to actually sharing marine science so we can map the marine environment properly? What's your take from a JNCC perspective on where we are with the marine science and the various strategies we've had over the years?

I'll start with the first go. Yes, there is a lot. Casting my mind back to that marine strategy, I think there always has been very good collaboration in the marine environment. There is always more that can be done. So, I think, in terms of maximising the opportunities we have to collaborate and gather evidence in the marine environment to tackle those cross-cutting themes, I think the UK is doing fairly well at that. I think the barriers we persistently come across are: it's just very expensive to work in the marine environment, so it's very difficult to actually plug all of the gaps that we might wish to plug. But in terms of a strategy I think it's still quite relevant. It's just that it takes time to plug these gaps in a dynamic and hostile environment.

Just tell me, then, John, before I come to Huub with the same question, do you think we've dealt with one of the main cross-cutting barriers, which is the willingness of operators in the marine environment, from the Crown Estate to developers, to fisheries, to whatever, to actually share information, particularly when, understandably, they have issues such as commercial confidentiality they want to protect? Are we now at a point where we can genuinely say that all the good science that we have in terms of mapping the marine environment and the changes in the marine environment is somehow or another being shared? It has a relevance to today's discussion, clearly. Are we at that point where we've broken that barrier?

I'm not sure if we've actually broken the barrier. I think things are better than they used to be. I think there will always be those issues of commercial confidentiality, but it is, once we get past that point, ensuring that we have the right data feeds into the right system and the interoperability of systems and a willingness to share data. So, there certainly is a focus on that, but I don't think we've entirely broken through that barrier yet.

Okay. Well, maybe, Huub, if I can put that same question to you: where do you think we are with the science? Obviously, in the very establishment of this new initiative from last year including Welsh Government, that shows that we've got more to do. What's your take on where we are, and are we inevitably in a situation where we put the science together piece by piece, project by project now, or are there still barriers, frankly, from your perspective as Crown Estate, where you engage with a lot of operators out there? Are there still things that we can just do better, to use the existing science?

It is a really good question, and it is one that has been exercising us, and it has been one of the main drivers behind this offshore wind evidence and change programme, which is funded by the Crown Estate. The initial funding was £25 million, and in fact we awarded the first three projects in January, which are totalling £12 million. So, we are investing in getting better science, but there is a lot more that we're doing. So, we have, in all our commercial agreements with developers—and it doesn't matter whether it's offshore wind or whether it's other businesses that access the seabed—data clauses that say, any surveys that you carry out, we respect your commercial confidentiality, but you have to supply us with those data, and after a period of a few years, which we agree with you, you will then make those data available to the public free of charge. And in fact, if I would have planted a question, it couldn't have been any other than this question, because, just today, we've announced that we've relaunched our what we call marine data exchange, which is a freely accessible database that includes over 2,300 environmental surveys, science surveys, but including wind data, including sea bed data, freely accessible, can be downloaded by anyone—marinedataexchange.co.uk—and all of this is essential because the only way that we're going to deal with such a highly complex and dynamic environment like the ecological system—. Ecosystems vary over time, but the physical environment also varies over time, so having the best possible data to the largest possible audience allows us to take an informed position on those trade-offs and on those optimisation questions that say, 'How do we now integrate environmental impacts, fishing impacts? How do we integrate them in the thinking that we do on something like floating wind in the Celtic sea?' I can say more on that, but maybe I should pause here with this particular question.

Well, I think one thing we'd welcome as a committee—both in terms of this inquiry, but our wider focus on the marine environment—is more of the detail you've just been talking about, and the sharing of that science. That's really fascinating, and, in some ways, encouraging as well. But let me turn directly to the issue of marine energy for a moment—[Inaudible.]—

Sorry, Huw. Huw, sorry.

Sorry, Llyr.

Joyce wants to come in. Is it specifically on something that we're speaking about now, Joyce? Yes, it is. Okay, let's have Joyce first, and then we'll come back.

Just priorities. We were talking about priorities: the need to have energy, so we're not dependent on fossil fuels, and the need to balance, as Huw's just explored. So, my question is an easy one, a quick one: where will that priority lie? Are we in danger of one negating the other? The rush to get more green energy, with the cost being the environment. How do we know where that balance lies?

So, if I maybe start answering that question, I think that's the hardest question in the book, because we don't know, and what I can tell you is that the demand on sea bed space has never been greater—and I've worked in offshore renewable energy for 25 years now—it has never been greater than it is now. And making sure that we have the best possible data, and really that we have the broad dialogue with environmental organisations, but also with fishing organisations, on the tourism side, we have to make sure that we develop a shared vision of how these infrastructure projects that John was talking about, that they can be designed and developed in a way that really works for all those three different dimensions—economically, environmentally and socially—but it's the hardest question in the  book.

It is indeed. Karema, did you want to add anything to that?

Not really. I agree with what Huub has just said. I think from JNCC's point of view, our role, really, is to sort of make sure that the environmental designations are considered in that process, and are adequately considered in that process. So, I think Huub's right; we have to bring everybody together, but the ENGOs and the statutory nature conservation bodies have a role to play in making sure that those decisions are made with the marine environment in check.

Okay. Thank you so much. Back to Huw.

Thanks, Chair. And Huub, I wonder if I could just ask you: in terms of marine energy, how do you see the Crown Estate playing a role in enabling us this to go ahead, and let me just ask this: I love seeing the Crown Estate, because you're a bit like MI5—and I say this in a nice way—when we see somebody in person, but we always think of you as lurking around there out there somewhere interplaying with us, but we're not quite sure who you are. So, I guess I'd ask you: is there anyway in which the Crown Estate, partly because of that slight distance, maybe, but there might be other factors, is there anyway that it constrains development in its relationship with Welsh Government, with developers and so on?

I would say that we have a really good, open, constructive, sometimes critical relationship with Welsh Government—a real partnership. Just maybe as a scene set, as Crown Estate, we are entrusted with looking after the sea bed and the shorelines in England, Wales and Northern Ireland, and that is a trust that we don't carry lightly. So, we are committed to creating shared and lasting prosperity, and we really do that by convening, by not thinking things up in an MI5 think tank, if I can just borrow that analogy for a second, but, really, running workshops. We have met with the fishing sector on several occasions already, and, in fact, we are running a joint programme that is led by the National Federation of Fisherman's Organisations to really look at how can we integrate fishing needs with new floating wind turbines. We carry out these joint projects. So, our style of operations is very much open, it is collaborative, but I do agree with you that we're not always as visible. And that's partly because you would be surprised how small an organisation we are. So, we don't have hundreds of field agents running about. I really would, therefore, welcome also the opportunity to talk to the Senedd on this particular subject, because we care about the work that we do. I've got a very passionate team that sits around us, and we really hope to deliver this shared vision in partnership.

Thank you, Huub. My final question, Chair, just to go back a little bit: is there anything you want to add, or John or Karema, on the issue of evidence gaps in terms of the offshore environment, and that would include offshore floating wind as well? What are we missing there in terms of the evidence to allow projects to go forward in a timely but also a sustainable way?

So, shall I answer for JNCC? So, it's more around the amount of information we have. So, JNCC has been leading on the development of the offshore wind environmental evidence register, which is actually hosted by the Crown Estate, and this is the first ever UK-wide register of offshore wind evidence gaps. So, this has identified gaps of evidence under the themes of ornithology, marine mammals, fisheries and benthic ecology. There are planned updates for that register in June and December of this year, and Natural Resources Wales have also contributed to that register. Within the register, the gaps are prioritised in terms of their consenting risk, so that gives us, as a community, some idea about where the greatest risks are and what gaps we need to fill and what projects we need to do to fill those gaps. 

So, there are a number of research projects being undertaken in Welsh waters to fill some of those evidence gaps, and these are under the themes of benthic ecology, ornithology, marine mammals and fisheries, as well as some UK-wide projects that cover a number of themes, including cumulative impacts.

Thank you. 

Okay. Thank you very much for that. Yes, Huub.

Just maybe to add, one thing is that we're also planning a survey campaign in the Celtic sea to look at, if you like, the science that needs to underpin the design of these floating windfarms that will work with the leasing process. So, leasing for us is much more than just granting rights to sea beds. We take the basis of that design, i.e. the proper science data, very seriously and we will be investing in that and hopefully have vessels in the water later this year.

Excellent. Thank you.

John.

Yes, I could just maybe add a little bit more to what Karema was saying. So, JNCC also hosts something called the offshore wind strategic monitoring and research forum, which is basically a forum of statutory bodies, statutory conservation bodies, regulators and the industry themselves, and that's about deciding what are the key difficulties they have in terms of consenting offshore windfarms—so, what are the key evidence gaps, be that around species or habitat gaps. So, they've been prioritising those things to feed into research initiatives. So, one of the things, a year or two back, was that they prioritised kittiwake mortality, because that was one of the species that was closest to the windfarms. And of interest, now we might be looking at different species being prioritised for research in that forum.

There's one—. I suppose also bringing this other bit alive, there's one sort of fairly novel research project that JNCC has distilled as a collaborative venture. We've been looking at—bringing it down to a very detailed level—the energetics of the red-throated diver as it inhabits the North sea, and this is about where it migrates from Finland and Iceland and other parts of the UK and overwinters in the North sea, and it's been looking at the energetic needs and whether displacement is going to be a problem for them. So, that's with a view to some of the big North sea windfarms. It's all to do with the environmental assessment process—how big an impact is it if they displace that kind of thing and how it relates to their energetics of foraging, so it's been quite an interesting study that we've been doing with a number of partners.

Very good.

Okay, thank you so much for that. Joyce. There we are.

I've got to remember to keep my hand off that button.

This is just for the Crown Estate. You did start mentioning the Celtic sea and my question is on the discussions that you've had with the Welsh Government and also energy developers in Wales on the timing, the scale and the speed of future leasing rounds for the Celtic sea FLOW?

Yes, I'm sorry, I didn't quite get the question, but we have had a number of discussions with those parties. Would you want me to elaborate on that, maybe?

Yes. It was about—. Yes, well, if you want to expand on what those discussions mean, because, obviously, there's timing, scale and speed of future leasing agreements that have to be reached. So, you know, yes, you've had discussions—that's great, I'm glad to hear it, but I'd like to know a little bit more.

Absolutely. So, the Celtic sea we see as a tremendous energy opportunity for Wales, for the south-west region, for the country. So, it is also one that sits in an environment that is already being used by other users of the sea. It's got high environmental value, it's got high tourism value, so, therefore, the design of a leasing round in the Celtic sea is something that has our attention, and we have held numerous workshops with the market; we've had two rounds of market consultation with developers, we have held workshops with statutory bodies, so with statutory nature conservation bodies and with environmental organisations, and what those have resulted in is that we are going to use a novel approach to leasing in the Celtic sea compared to what we've been doing in the past. And that novel approach will be that we will be identifying the areas first before we offer them to the private sector.

Now, we speak to a lot of developers who say, 'Don't bother, just give us the keys to the sea bed and we will sort everything out.' And we believe that if were to do that we could create the kind of problem that one of your colleagues asked about, which is: how do we deal with the cumulative impact of all these environmental impacts? How can we make sure that, if we take this piecemeal, project-by-project approach—? How can we deal with the totality, with the sum total? And what we are doing is we are doing an approach that is, if you like, led by the Crown Estate in a consultative mode. So, this is not us on our own; it's us working with the market, with the complete range of stakeholders, I would say, and really looking to answer three questions. One question is: how and where is the best way to provide access to the private sector? So, at what point in time do we run our lease, and what areas of seabed? The second question is: what ancillary investments—infrastructure investments—are required to make sure that we can also offer the best possible opportunity for Welsh businesses and other businesses in the area, and in the country, to be competitively successful? Because we want this leasing round to drive social value. And the third one is: how can we do that in a way that really works for the environment and that really integrates those environmental sectors?

So, as a result, there is a much longer lead period for the Crown Estate than the market has traditionally seen. So, we will be the ones who will be carrying out those site surveys offshore in the period ahead, which will inform, together with the views of the market, on the areas of seabed to be offered. And only once that, shall we say, centralised part of work has been done, and that we collectively can agree, 'This is the right pace and the right scale', so that we have answered the question on that balance between environment and infrastructure, only then will we open the gates for the private sector.

Llyr, shall I go on to 7 now? It sort of makes sense.

If you wish, if you wish.

So, with all that done, to what extent is Wales's offshore wind potential constrained by supply-chain port infrastructure and electric grid infrastructure?

Yes. It is constrained, and just to put maybe a picture of floating wind in the Celtic sea—what should be before our mind's eye when we talk about 4 GW of floating wind in the Celtic sea, because those in the sector throw these numbers around every day—just to put it into numbers, 4 GW of floating wind in the Celtic sea, which is the ambition that we have formulated together, is an investment in the order of, let's say, £12 billion. It will supply probably in the order of 4 million homes with electricity. It is a project that would see around 250—keep in mind floating wind—floating foundations. On the top of each foundation would sit a wind turbine the size of the Eiffel Tower, although more slender—much more slender. But, in terms of the height of those structures themselves—those floating structures—are the size of seagoing vessels that will be permanently anchored to the seabed. That's simply because that's the scale of floating turbines. The anchor chains or the tension cables that are fixed to the seabed will all need to be there, will all need to be manufactured, will all need to be installed, will all need to be maintained. So, it is a big project in its own right, and what we want to ensure is that other ports in the area can offer the services—to install those turbines, to do the mounting work, to lay the cables, to connect it all up for the service crews to travel out there. So, there is a lot of infrastructure required, and I'm not even speaking of the fabrication itself of these turbines and these vessels. So, it is a massive civil engineering undertaking, and we want to make sure that we are doing a lot of work with others on understanding where the opportunities are for Wales in terms of early investments that will make Wales an attractive and competitive place for the supply chain to really benefit from this level of investment. So, it is the big question, and I'm also sitting here with my hat on as a non-executive director of Offshore Renewable Energy Catapult, who are the leading technology organisation in the UK, who have recently opened the floating wind centre of excellence, and who are really working with the Celtic Sea Cluster of companies to identify and shape the opportunities for the supply chain in Wales. So, that's to the supply-chain point.

On the grid point, equally important, we need to ensure that the power that these windfarms generate can be transmitted to consumers and to industry who need to use it, and, therefore, anticipating where the grid points are going to be that the power from these offshore windfarms can connect into. Ensuring that the onshore transmission infrastructure—transmission grid—is there on time is another key area of infrastructure development that we are engaged with. And, in fact, we are working together with National Grid to ensure that this 4 GW of capacity is included in the strategic planning that National Grid do of their future transmission system.

Thank you very much. That's pretty comprehensive, in fairness. That's excellent. Janet Finch-Saunders.

Unlike on land, the Welsh national marine plan is not on a spatial basis. Do you have any thoughts on the impact the creation of a marine development plan that sets out a spatial and strategic context to development proposals in the marine environment would have on the workings of you as the Crown Estate?

What has become clear over the years is that the spatial dimension of the sea bed has become, arguably, the largest factor that we need to take into consideration. As Crown Estate, we are entrusted with looking after the sea bed, and it is a duty that we fulfil in collaboration with many, many, many others. And, fundamentally, having the right data, the right evidence that informs the policy decisions and that helps shape market access, we believe, is critical in ensuring that communities, that Wales, that the country are really getting the best value out of the sea bed. So, we see the Welsh marine plan as an integral component of that collaborative approach to really driving the sustainable development of the sea bed

Thank you. I'm aware that there is pressure on the Crown Estate to work proactively with developers to ensure adequate leasing rounds continue to be offered regularly, but can you outline the steps you do take to consider the potential environmental impact of any leasing on marine diversity before opening a round? And I know that there have been lots of concerns raised that these leases and things are—. How do the biodiversity marine conservation aims fit into that as a primary? 

Again, it is one of the hardest questions to answer. As Crown Estate, we are committed to the net-zero agenda as much as committed to healthy and environmentally rich marine environments. So, we recognise the primacy of the nature and climate emergencies. Now, integrating environmental factors into the design of our leasing rounds is, therefore, absolutely critical. Maybe old-school planning would be, 'Here's a developer that has a plan,' they submit it for planning consent, and then objections are barriers that need to be dealt with. That is old school. That won't work anymore. What we really aim to do is work with the widest practicably possible range of environmental bodies, to say, 'How can we integrate their views and their perspectives into the areas of sea bed that we offer, the surveys that need to be carried out before we offer those surveys, and the monitoring programmes, so that the access rights to the sea bed that we offer is done in the most responsible way possible?' I think that's the first limb of my answer.

There's a second limb to my answer, which is that we are not the statutory body that has the ultimate decision. Now, there are bodies, like Natural Resources Wales and like the Marine Management Organisation and the planning inspectorate, that have the statutory duty to adjudicate on the designs that developers bring forward. We work with those bodies obviously, and all the work we do is there to help the private sector ultimately be successful in securing those planning consents. But we will never sit on the chair of the planning authorities because that's not our statutory remit. I just wanted to clarify that point.

Thank you very much. An interesting situation has arisen here whereby, obviously, we've got these big schemes coming off the north Wales coast and the impact on our fishermen, and some are actually thinking now—. Apparently, during the Gwynt y Môr scheme, lots of fish disappeared and some have never returned, and what they're saying is that they would like to be able to work with you and, say, the energy companies. They've thought of things like using the actual poles of the wind turbines and harvesting—a bit like rope harvesting—seafood, and actually using the bases of the wind turbines to be able to encourage biodiversity. They see themselves as a very small organisation and they're really struggling to have those conversations with the energy companies. Is there anything that the Crown Estate—? Because, for me, I think that's a no brainer—if there's a way that supports our fishing industry. They're accepting that these things are coming, but what they're saying is, rather than let nature, over many years, produce this build up of molluscs, or whatever it is that builds up, there is a way you can plant them on at the start of the project. I feel quite frustrated that my fishermen cannot open into those avenues of conversation.

I would welcome your fishermen to reach out to us. From my personal experience, just before Christmas, having been in a workshop with fisherman from various areas in the south-west, sitting at a meal afterwards just talking through their concerns and their ambitions, it's one thing for the energy companies to say, 'We are committed to a sustainable future'; the fishing community wants to see a sustainable future. And we want to work with the fishing community to make sure that we can integrate their perspectives into the work that we do. Now, whether the specific solution that you talked to is a good one or not, I don't think it's for me to say, but what I will say is that, as the Crown Estate, we have an open door to those concerns. We are also, in case there is, for example, a need for some experimentation to be carried to look at what we can do to make that happen to inform better answers—. The big net-zero energy revolution can only be successful if it's experienced as a success by everyone who needs access to that marine space, and I do not want fishermen to feel taken for granted or feel excluded. They are part and parcel of the solution of a better, more sustainable use of our marine space.

Thank you very much.

Thank you. Jenny.

Thanks very much. I just wanted to explore your co-operative relationship with NRW, which you mention in your written paper. Particularly, for example, you mentioned earlier that you have data-sharing arrangements with commercial companies, and obviously you have to keep that safe from competitors for a determined period. But what are the implications of that for data sharing with NRW, for example?

Any obligations that developers have under their planning consents, of course, always take precedence. So, if NRW would grant a licence, and that licence would include monitoring obligations, of course those data would need to be provided by the operator to NRW. We have no role in that. What we do is we say over and above anything that is going on on a project-by-project basis, we require the provision of these data in the way that you just described, which is the operator provides them to us, we run quality assurance processes, and we subsequently make them available on our marine data exchange after a period of a number of years. From this period onwards, they are fully accessible to Natural Resources Wales and to anyone. If you're a Master's student at Cardiff uni or you're one of the fishermen that we just spoke about, you can access those data—you can just download them from the internet. 

Okay. So, it's not a particularly close relationship at the moment. Clearly, you're talking to them, I understand that. But given the complexities of data gathering in the seas—much more difficult than on land—there isn't that sort of data-sharing relationship with yourselves and NRW, who are both caretakers of our seas. 

Yes. I have to admit I'm slightly missing the presence of my colleague who was due to join us as well, because she has the day-to-day contact with NRW. But I do have a crib sheet in front of me here that I'm going to just check the answer on. We have regular meetings with NRW on these issues. We have a forum where we talk. They are part of various expert working groups that we have. They are part of the steering group of this offshore wind evidence and change programme, which I mentioned earlier—this £25 million programme for data and evidence that we have funded. And we also regularly meet with them on the development of floating wind in the Celtic sea. We work with them on the Welsh marine affairs advisory group. I have a few other names here as well, but maybe you get the picture. We have a healthy and frequent operational relationship with Natural Resources Wales. 

Okay. Obviously, I'm trying to explore what difference would it make if the Crown Estate was devolved to Wales in the same way as it is in Scotland, because then there might be statutory bodies sharing information for regulatory purposes.

The other aspect I just wanted to quickly explore is that we've recently become the first nation to install cameras on all commercial fishing boats, and that is going to give us quite a lot of information that, once again, is extremely difficult and very expensive to gather otherwise. Will you have access to any of that information in terms of the migration of fish or the absence of fish in particular areas?

We would not have automatic access to that data, because that is the property of fishermen, and they would have to choose to share the data with us. But there is a precedent. We ran a system a few years back that we called the UK FIM—fishing information management, I believe it was called—which had fishermen sharing their fishing tracks with us, which went in an anonymised database and it allowed us to design windfarms away from main fishing grounds, for example. I can say that we have active discussions with the fishing sector now to make sure that the design of the windfarms in the Celtic sea, in those windfarm areas, is going to be one where the fishing sector has had a full chance to provide its input and where we have had the opportunity to listen to that input. 

Okay, but do you think there would be further benefits if the Crown Estate was devolved? You'd then become an agent of Government in same the way that NRW is, and therefore that information could actively be worked on to work out the most sustainable and least damaging way of developing the energy.  

What I can say is that we work with such a wide group of commercial businesses, and we find them invariably all very aware of the fact that there is this great need for collaboration and transparency on data, and it has been the main driver behind us setting up this marine data exchange. I believe that the balance that we can take between very legitimate commercial interests on the one hand—keep in mind we want to be an attractive environment for the private sector to invest—and on the other hand the very legitimate need for, shall we say, the state, the public sector, to protect the interests of the public—. I believe that where we currently are as a Crown Estate, on that intersection between the two, allows us to operate effectively. That is the mindset that we take to all the work that we do. I hope that's an answer to your question. 

Okay. 

Thank you very much. Thank you, Jenny, and thank you, Huub, for that. Huw. 

Thanks very much, Chair. A really interesting discussion. Let me turn to where the advisory powers currently rest and the need to make timely decisions, expertly led, on the best evidence in order to enable good projects to proceed and not to delay them as well, but to do it with the best knowledge in front of you. On the Welsh Government's proposal to delegate offshore advisory powers from the JNCC to NRW—and this might seem like a really unfair question to put to JNCC—what are your thoughts about that?

I'll have a go at that. It's quite interesting, actually. Once, I sat on a cross-Government programme board—it was called the offshore wind programme board—that was all about the earlier phase of the growth of renewable energy and offshore wind, and the journey of that board was about cost reduction, which has been spectacularly achieved, and the UK content supply chain and all of this type of thing. I think we used to think as statutory bodies, from our view of the world, that we were a major constraint, and then when you saw their risk register, you realised that, actually, we were just one of the little lines in there and there was a whole heap of other stuff that was actually constraining offshore wind development. So, coming to the question about the ease or otherwise and the streamlining of the advisory process, I don't think it's really been our experience that that has actually been a major constraint.

From about a decade ago, we were working jointly with Natural England on big North sea projects and, a little bit later we were working with NatureScot—they were Scottish Natural Heritage at the time—on big projects in the Moray firth and the Firth of Forth, and working actually very well together and producing joint packages of advice because we had different statutory geographic remits; one is territorial and ours is the offshore, the 12 miles out to the economic exclusion zone limits. Through those processes, what we have progressively done is we have actually delegated that function to the country body, and that's really been primarily on the basis of streamlined customer interface. It's probably a bit simpler for the customer to actually interact with one body on some of these complex licensing and advisory processes than it is with two.

Having said that, when we've done our own internal reviews of that, we've found it's a fairly finely balanced judgment, but on balance it probably is a little bit easier. So, I think it probably helps a little bit from the customer interface. I wouldn't have said it was actually a constraint the way things are. I think it just makes things a little bit simpler for the customer, as I say. I don't think it actually makes things any cheaper—you just tend to find that the cost shifts from one body to another. So, it has some benefits, some merits, but it's not perhaps the panacea that many people think it is. 

Okay. So, it's a finely balanced decision from your point of view. Can I ask whether it carries any risks with it, from your perception? I'm sorry, I'm not asking you to do this—it sounds like asking you to dob in your concerns on another body, which I know JNCC wouldn't want to do. But from a scientific point of view in terms of the advisory role we're talking about, would you have any concerns about a sister body like NRW—which is a slightly different-shaped body from the JNCC, with a slightly different remit—either in terms of the expertise that they currently have available or may have available to them in doing this, or, alternatively, in a slightly different agenda within NRW serving a slightly different wider remit? Are there any risks there to the advisory role that they have to take on? 

I can't say I've thought about it that deeply, but I think in general we would have confidence in our NRW colleagues that we work with on a daily basis, anyway. I'm aware that Natural Resources Wales have a broader function and they have to separate their licensing a bit from their advisory bit, so it's primarily the advisory bit we'd be talking about. So, I think they would be more than capable. I know they do struggle with resources, just as, in fact, we have struggled with resources in the past. Funnily enough, I mentioned this cross-programme board a while ago, and one of the things in their risk register, which has been perpetual for the last decade, is resourcing to statutory bodies to fulfil those advisory functions; so, making sure those gaps are filled. I think in terms of overall competence, I'm sure they're more than competent to do it. I think it's just that they need to be assured—as, indeed, would we—that the resources are there to back it up in terms of the financial resources. 

Okay. Thanks. 

Thank you very much. And a final few questions from Delyth Jewell. 

Diolch, Gadeirydd. Could you please let us know how things are working with National Grid and distribution network operators in terms of developing the right grid infrastructure to realise all of these plans? 

I can't give you a lot of detail, but I will say that it is absolutely critical. So, grid usually sits on the critical path for any major energy project, meaning that if there is a delay in the grid connection then the entire project gets delayed. It is also sensitive because grid is—. The transmission cables, they need to be there offshore, but also they need to make landfall somewhere. They then need to connect to a substation, and then that particular substation needs to connect to a high-voltage grid somewhere, which may mean on land that there are buried cables or that there are pylons. These are all projects that have an impact on communities. If the roads get dug up or someone is planning a big substation in an area, communities have an opinion and rightly so. The planning process needs to be there too have enough time to work with the developers to choose the best possible locations.

At an electric system level, it is relatively straightforward. In fact, as Crown Estate, we have a statement of intent with National Grid in place that gives guidance to our co-operation and it helps us to have dialogues that we have to make sure that we work, for example, on these 4 GW for floating wind in the Celtic sea—that we integrate it early enough in their strategic thinking so it is part of what is called HND, holistic network design. It is a term that's used in the sector and it's a big piece of design work that National Grid are carrying out to make sure that they can meet the growing demands of a changing electricity system across the country. So, holistic network design. 

I hope my electrical engineering colleagues don't criticise me for saying that it's relatively straightforward, because experience is that the social dimension, where these cables go, where the transmission system sits, where the transformers are—that is the bit that's much harder. And that is something that really has to start in earnest. As Crown Estate, we see this as something that we really want to enable National Grid, and developers in the end, to get on with. But, certainly, National Grid, in terms of planning, the overall backbone of the infrastructure that these wind farms connect into, they play a huge role. We are, I would say, on track with them in terms of the four key goals in the Celtic seas.

Thank you for that. Does anyone else wanted to add anything to that? Yes.

I was going to say, can I come in on the JNCC's role in that? So, JNCC are playing an active role in the offshore transmission network review, which is looking at how the network is designed and delivered in UK waters. So, we're an active member of the environmental steering group, which is currently looking at grid connection options on how you connect offshore wind to the onshore network. We're providing advice on the possible implications for those marine protected areas, along with other environmental non-governmental organisations and statutory nature conservation bodies, and we'll also be a statutory consultee for any of the plan-level habitats regulations assessment that goes with those consenting requirements.

Thank you very much for that. John, if you did want to come in—please, I don't want to stop you speaking. No, you're fine. The final question I had is for Huub. Am I pronouncing your name correctly? Is it Huub?

Yes.

Yes. I wanted to check. I just panicked. Okay, great, thank you. What are your views, please—? I'm aware of the time, I think we've only got four minutes left, but what are your views, please, on the Welsh Government's level of ambition on wave and tidal energy—anything further to what's already come up—and if you've had any discussions with the Government on these technologies? Again, I'm aware that this will touch on some of the things that have already come up.

Yes. So, yes, we have productive discussions with Welsh Government on those technologies. They are in a much lesser advanced stage than offshore wind is. So, there is a much greater need for, for example, demonstration projects, extra demonstration projects. The technology has potential. There is sizeable resource in Wales. So, the natural energy, for example, in the flows of tidal streams is well known. We have six agreements in place with developers of tidal stream projects around the coast in Wales. So, we are working—in fact, we are making a contribution to a programme called the joint industry project for wave and tidal projects. I think, honestly, these projects need a journey in terms of their maturation, technological maturation, and they have significant opportunity, and they require, therefore, to be able to move to a demonstration stage. We were very pleased to see the allocation of a budget in the contracts for difference round from the Department for Business, Energy and Industrial Strategy that is specific to these wave and tidal projects, because only by doing can we actually learn. There is only that much that you can learn in the lab tank or on the laptop. You want to be in the water with these technologies at an appropriate scale, and as the Crown Estate we are working with developers to enable that.

Thank you very much, you finished with a minute to spare. 

That's excellent. Can I thank you? There's so much there in terms of evidence that we can take away as a committee. We're really, really grateful to you for your participation this morning—or this afternoon, now. You will be sent a copy of the draft transcript just to check for accuracy, in case we've misrepresented anything that you might have said. But with that, can I thank the three of you for your attendance and for the evidence that you've given us today, and in written form previously as well? Thank you very much. 

Thank you, and prynhawn da, everybody; good afternoon. So, I think there are lots of things you can do to accelerate renewables. Our request as an industry will always be more and more and more. But I think you're probably going to start with the thing I say to everybody in every country, which is grid, grid and grid. So, I think that's the—. The main point is it's not just about renewables but about electrification generally. So, you need a grid. The electricity grid is like the broadband digital age's requirement for the electrification age. So, that's the kind of one we always say right at the beginning. 

The other one, particularly for us, as we now look at floating offshore wind, and the opportunity thereof, would be investing in port infrastructure, and really leveraging Wales's ability to take a key role in the development of that floating offshore wind. And then we get into, from our perspective, we get into the kind of resourcing of bodies in order that we can deliver. So, in particular Natural Resources Wales, whether it's more resources or more focused resources into the 'able to give us advice' on the consenting process. And then also, just finally, making sure the marine licensing process is timely and fit for purpose. 

Okay. Diolch yn fawr, Tom. Jon.

Thank you. I'd like to support those comments, please. So, at the risk of being boring, I think we couldn't agree more with the fact that it's grid, grid and grid. I think everybody knows EDF—we're the largest producer of low-carbon electricity in the UK, and I think we have, potentially, up to 2 GW of renewable energy projects that we would love to invest in Wales, but the biggest single challenge is connecting those projects to grid. So, yes, we really support that. 

Diolch yn fawr. Dan.

I disagree. [Laughter.] I think I'd say it's people, people, people, in contrast to what Jon said, if we want to decarbonise our society. The technical stuff is important, but people can derail technology, as has been seen by windfarms, which can face opposition. So, we've got to focus on people, and we've got to focus on engagement in energy. One of the best tools I've seen for that is a portal called Energy Sparks, which works in schools and conveys real data for gas, electric and solar into schools, and a whole lot of teaching materials that then enable children to then reduce their carbon impact within schools and their builds. So, it's that kind of thing that we also need to be considering along with technology. 

Thank you, Dan. And Sarah.

Yes, so I think I'm a hybrid of the two. So, Ripple enables individual households and businesses to own their own source of clean power. So, we obviously want as much as renewables in Wales to be developed as possible, but really, really importantly, we want consumers, households and businesses to be able to own part of those sources of clean power, and then we can see—. In owning those sources of clean, stable-priced electricity, they can then protect themselves from volatile energy prices like those that we're seeing at the moment. So, it's a combination of the two. We want projects, and it's fantastic that the Welsh Government has such a clear focus on ensuring that as much of the value of projects can be retained in Wales. We think that it should be the benefits as well—so it's not just about value, it's about the benefits, and part of the benefits of renewables is that they can generate electricity at a really stable cost, for the long term. And we think that Welsh consumers should be able to benefit by owning their own source of clean power, and benefiting from that stable-price green electricity that renewables can deliver.

Yes, and that was really interesting in the paper that you supplied as well, and I'm sure we'll pursue some of that further in a moment. Okay. Thank you for those initial responses. We'll go on now to Janet.

Surely, the first stage of determining an effective energy mix and in deciding where best to place finite resources is to actually conduct a survey in the first place on the potential for energy production. As such, what assessments do you feel have been undertaken by the Welsh Government, or indeed other organisations, to ascertain the true renewable energy for all of Wales, for all types of renewable energy, and, obviously, not just focusing on offshore wind, as appears to be the case here in north Wales?

Dan?

Everyone's gone quiet. [Laughter.]

Okay. Sorry, I saw Dan had been unmuted—I wasn't sure whether you did it yourself or whether it was done for you. But who wishes to respond to this one? Yes, go on, Tom.

It's a really interesting question—thank you, Janet—and it's a complicated one to answer, because I think the first question you need to answer is: what is the problem you're trying to solve? So, are you trying to solve renewable energy for Wales, or are you trying to solve Wales's potential to maximise economic value and local value from renewable energy? So, how much could you become a green electricity exporter as well, which I think is a very good opportunity for the people of Wales to use that natural resource that you have. And that's what we see, for example, in Scotland. Scotland sets a much wider ambition about how it wants to be a green electricity and hydrogen provider for the world.

So, I think, first of all, you've got to start with a solution—what's the question you're trying to answer? I think we would appreciate guidance from the Welsh Government, because it's not unequivocal—are you trying to do green for Wales, or Welsh green power for the world? And I think that's the first part. I think then you can look at—and you mentioned offshore wind, and, as you know, we're the largest offshore wind operator and developer in Wales. And I think it is important, as much as we talk about local solutions, and they're absolutely important, but we need local solutions and national and international solutions—this is such a large problem. And, of course, the Crown Estate have done a really good job in terms of identifying those areas of the sea that are best placed for wind resource.

Thank you. And then, as we see the growing use of electrical vehicles and the continued reliance of our society on electricity, what detailed assessments have been made to ascertain the expected energy demand over the coming years, to ensure that Wales has renewable energy production to meet that demand in electricity, and to make sure, for instance, that we have the relevant and required number of electric charging points for cars, in particular, being as we are pushing now electric vehicles so much?

Okay. I think we may have lost Tom, actually; I think he's having some problems with his line. But would any of the others want to come in? Jon initially, then.

Thank you. Hi, Janet.

Hello.

Hello again. I wanted to maybe just confirm that EDF—. I think we have at least two significant battery projects that we have in the pipeline. I think each is around 50 MW, wind, and potentially looking at combining with EV charging. So, we're very much aware of the increasing demand from Welsh consumers for electric vehicles et cetera. So, we very much welcome working with you to grow that part of the pipeline and increase those projects in Wales.

I think the other point I was going to make was we're also well aware of the work you're doing with NRW , around the forest. So, that's another really good initiative that I think can again identify where there is space for all of those different technologies—onshore wind, offshore wind, batteries and solar—where are the right places and the right scales. So, I think maybe if there was one point, another key point, from EDF today it would be around getting that balance, so it's not a one-size-fits-all approach, but we have those really good local, small-scale community developments and yet we also have a place for the large-scale developments in the right places, which will make a dent in the climate emergency and in those net-zero aspirations. So, it's trying to find that balance.

Thanks, Jon.

Okay, thank you, Jon. Dan.

Yes, thanks, Janet. Just to say, really, that the wind energy in north Wales, that's such a great opportunity for north Wales—and south Wales—and we just need to make the most of it. We've got that resource here and it's really good. Tom's off the call, but there is a shared ownership project that is developing in Alwen up in north Wales between Community Energy Wales and RWE, which is just a way of retaining, as Sarah has said, more value from these sorts of projects within Wales. And there has been, obviously, a big level of assessment that's been done to identify that location. We're also—Awel Aman Tawe—involved in another project in south Wales near Port Talbot, working with the two councils for voluntary services on 100 MW windfarm—again shared ownership to retain value. So, these projects—the shared ownership, community owned—can be really large scale as well, not just smaller scale.

But, in terms of the EV point you were making, the smaller-scale side of it is also really important. So, with Egni, we've developed a lot of rooftop solar and, again, that's ideal for factories or community centres, because it's supplying renewables on-site, so it enables those organisations then to look at EV charging because they've got clean-energy capacity on their own site, which is best to use there, rather than going on to the grid, because that creates more of a problem in terms of the size of the grid. So, yes. So, there are real—. When you go on holiday to Germany or places like that, you just see the amount of rooftop solar that they've got everywhere, and you travel around Wales, and there's so much capacity and we just need to find ways of doing more on that.

On that point, I've always wondered, and I've even been asked by some headteachers, why are schools in Wales—? We've got this twenty-first century project and new schools will be built and they don't have things like solar panels on them and I've even got people with established schools who've said, 'We'd love a scheme to have some solar panels on our roof.'

Yes. Yes, okay. Yes, I'm sure we'd all agree with that. We've Tom back with us.