#14 Anne Johnstone: Why Heat Is the Invisible Giant of Net Zero

In this episode, Philippa talks to Anne Johnstone about why heat has been overlooked for decades, what it actually takes to move buildings off gas, and why energy security is as much about storage and infrastructure as it is about generation.

Anne Johnstone is ESG Director at Vital Energi, a company delivering low-carbon heat at scale through heat networks, large heat pumps and long-term energy infrastructure. She has spent more than two decades working across sustainability, the built environment and energy. Anne grew up in a former coal mining community in North Lanarkshire, and that experience shapes her conviction that the move to net zero must also be a just transition: one that creates opportunity rather than resentment.

In this conversation, you'll hear about:

• Why heat accounts for almost half of the UK's carbon emissions, and why a 50-year-old habit of burning gas through 85 percent of buildings has made it almost invisible until energy bills tripled.
• What decarbonising heat actually looks like on the ground: individual heat pumps, district heat networks pulling warmth from rivers, sewers, data centres and waste heat, and why hydrogen has no realistic role in domestic heating.
• Why heat networks have stalled in the UK despite being mature, proven technology, from regulatory blockers and the missing utility status only granted this year, to the four-to-one price gap between electricity and gas that the wholesale market still ties together.
• The Queens Quay project in Scotland, where two river source heat pumps draw enough warmth from the Clyde even at three degrees in winter to heat an entire connected community.
• Why "the pipes don't care where the heat comes from": once district heat infrastructure is in the ground, the heat source can be swapped and upgraded over a 60-year lifespan, which is why the priority is getting pipes in now.
• Why energy security is not the same as drilling more North Sea oil and gas: the basin is in decline, gas is sold on a global market regardless of where it is extracted, our offshore storage at Rough has been run down, and the UK is already a net importer.
• The 1.5 billion pounds paid last year in curtailment payments to wind farms told to switch off because the grid cannot move their electricity, and how thermal stores can absorb that wasted renewable energy as heat for days or weeks.
• Why a just transition matters: growing up watching the miners' strikes hollow out her village taught Anne that promises of "new jobs will replace these" are not enough, and that skilled pathways and apprenticeships are the only honest answer.
• What Vital Energi is doing about the skills gap, with 30 apprentices in its largest intake yet and 15 percent of the workforce on a learn-and-earn pathway, plus the Powering Futures schools programme now in 125 Scottish schools.
• The one thing Anne wants every business leader setting net zero targets to understand: you cannot reach them without thinking about heat, and the closer you get to your target year, the more expensive it becomes to leave it in the too-difficult box.

Key takeaway

Anne's argument is that the UK has spent years debating generation while ignoring the half of emissions that come from heating buildings. The technology to decarbonise heat already exists, is proven across Denmark and the Netherlands, and is delivering 70 to 80 percent emissions reductions in working UK projects. The blockers are regulatory, financial and behavioural, not technical. The risk now is not that we fail to decarbonise heat, but that we rush it, scale it badly, and create a new wave of fuel poverty in the process. The practical action for every listener is small but real: find out whether you are in a heat network zone, and start asking the questions that make local projects viable.

This podcast is intended to be of a general nature, will not be suitable for everyone, and should not be treated as a specific recommendation. We recommend taking professional advice before entering into any obligation or transaction.

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Transcript

SPEAKER_01 0:02

I'm Philip Mahan, CEO of Harrodland Norton, and this is Life Matters More where we explore ESG, sustainability, and the future of business. Hello and welcome to another episode of Life Matters More. Today I am joined by Anne Johnston, ESG Director at Vital Energy. Vital Energy is a company at the sharp end of delivering low-carbon heat at scale through heat networks, large heat pumps, and long-term energy infrastructure. Anne has spent more than two decades working across sustainability, the built environment, and energy. But what makes her perspective distinctive is that she doesn't just talk about targets. She talks about the more concrete side of sustainability, pipes in the ground, supply chain, skills, governance, and people. She grew up in a former coal mining community, and that experience has shaped her belief that transition to net zero must also be a just transition, one that creates opportunity and not resentment. In this conversation, we're going to talk about why decarbonising heat is so hard, what energy security really means in practice, and how equality, diversity, and inclusion show up or fail to in the UK's energy transition. Anne, welcome.

SPEAKER_02 1:31

Thank you, Philippa. Delighted to be here.

SPEAKER_01 1:34

Okay, let's dive in with our first question. I mean, really looking forward to chatting to you because you are just the most interesting person about heat. But when most people think about net zero, they think about electricity or they think about transport. Why does heat matter so much and why has it been so easy to ignore?

SPEAKER_02 1:58

It matters because it's the invisible giant of the energy system. Um and heat accounts for almost half of the UK's carbon emissions. Um so we can't get to net zero without decarbonising heat. Um but it's been easy to ignore because of the massive success of the gas network. So um around 85% of buildings in the UK are connected to the Maine's gas network. And for decades, you know, that has the the supply of gas through those pipes just been heating our homes and buildings um without anybody really having to think too much about it. And that was the case really right up until the Russian invasion of Ukraine, when suddenly people did become aware of it because their energy bills tripled almost overnight. Um but the that was the first time really, probably that a lot of people did stop to think about heat, other than um, you know, the the really unfortunate occasions when your boiler maybe broke down in the middle of January, and then suddenly you were aware of you know where your heat didn't come from. Um but we you know we we've just got so used to burning gas to to heat our homes. And in actual fact, a lot of homes in the UK are massively energy efficient. So we burn lots of gas to heat our entire houses and like a lot of the kind of external atmosphere as well, because around a quarter to a third of the heat that the gas that we burn to heat our homes that of that heat sort of just goes out through the leaky doors and windows and things. So, you know, when it's plentiful and you don't have to think about that, then then we don't, and that's the way that we've lived essentially since the the kind of like the 70s and the 80s. Um but now we're in a we're in a different world. Um, and we have both the climate crisis and the fact that we have to deal with those emissions, but also the the energy insecurity and the and the price of gas um affecting people's lives in a very real way.

SPEAKER_01 4:18

Yeah, where there's where there's no problem, there's no thinking, I think is is the right way of looking at it. So when you talk about decarbonising heat, what what are we actually talking about in practice? What what are the actual changes on the ground compared to the gas-based system, which is so prevalent?

SPEAKER_02 4:38

Yeah. Uh in practice, what we're talking about is moving from burning fossil fuels to an electrified system and electric that electricity coming from renewables. That's what we mean by decarbonising heat. Um, and there's really sort of three main pathways to doing that. So the first one is buildings having individual heat pumps. So that's where you instead of having a gas boiler, you have a heat pump, and that heat pump takes um heat from either out air from the like outdoors environment or potentially from um underground. So whether it's an air source or a ground source heat pump, um, and it acts a bit like a reverse fridge. So it takes a small amount of heat from a big reservoir, compresses it, and then uses that to heat hot water, which then gets circulated around your house and provides you with heating and hot water. Um, or you connect to a heat network, which is essentially a big version of that. So instead of each building having its own individual heat pump, you have an energy centre which has large industrial-sized heat pumps in it, and that's where you create the the heat, and then it's distributed through a pipe network, so lots of buildings that are connected. And the third way um is to use hydrogen, which um in my view is not is not really feasible. So, although there's still a lot of noise around that, but I personally don't think that hydrogen has any role really in domestic heating. Um so the the kind of change for consumers is actually very little. Um, in reality, when you you know, I either you have a heat pump outside rather than a boiler inside, or if you're connected to a heat network, you have something called a heat interface unit, which is smaller than a domestic condensing boiler, and it just sort of like sits there in a cupboard, and and that is what controls the the hot water going around your house. Um, but the more visible changes, the change in infrastructure. So gas is at the moment obviously distributed through underground pipes, and for heat networks, instead of that, we would have pipes that are distributing water. So that means digging up roads and lots of kind of civils work in infrastructure. Um, so to completely, you know, as I sort of said before, to move from having 85% of the country on a gas network to, you know, even 20 to 30% of it on district heat networks is going to involve a lot of a lot of that um kind of civil's work and and and disrupt and disruption. But once the pipes are in the ground, they're in the ground and the impact on consumers is actually very little.

SPEAKER_01 7:27

And isn't that isn't that where there's been uh you know relatively small amount of take up? What's what's getting in the way? I mean it it feels to me like having a heat network where you know the there is a a uh a waste um waste heat or waste energy, and that is then used to to keep humans warm or keep theatres warm or council houses warm. That just seems like a really obvious solution. So why why isn't it happening?

SPEAKER_02 7:57

There's a number of different reasons, but the main one is really blockers that come from our regulatory and market framework. So we've built a market around buildings having individual gas boilers, um, and all of our pricing rules and consumer protections and planning um legislation is all kind of like built around that, and none of it is really designed for shared heat infrastructure. So heat ends up kind of sitting in the middle of the, you know, the reason I called it an invit the invisible giant is that it ends up sitting in this kind of like space between buildings and electricity generation, and those two things get lots of focus, particularly in the UK at the moment. And and heat's actually, it gets it seems to get overlooked, but it is actually the bridge between the two things. Um so we we kind of by by thinking about the entire system, including heat, we we unlock lots of other things, which you know we'll probably come on to in a bit. But there are, you know, there are practical issues as well. So I mentioned obviously you have to dig up streets, and until essentially this year, heat networks have not been classified as a utility. So gas and electricity and fibre, although those are all classed as utilities, which means that you get certain rights as a utility undertaker to dig up roads and pavements and put, you know, do repairs or or put new infrastructure in. But heat networks, like district heat pipe, is it hasn't been classed as a utility. So every time you do work, you have to apply for permits and you have to apply for a different permit for every bit of your network, and that makes it quite slow and expensive. And that has been addressed by legislation, but it's only just coming into force now. So that'll kind of remove that drag. But that's something that has made it more expensive than it really needed to be to put in this kind of infrastructure. Um, and the you know, that whole aspect of the financing of heat networks is tricky because the you know, the there was a lot of government subsidy for the initial rollout of the gas network. Um and although there is some grant funding available, that level of subsidy doesn't exist for transitioning as off gas and onto and onto um onto district heating. Um and we also, so without you know, without having certainty around things like tariffs and anchor loads customers, so an anchor load is a big heat user, something like a hospital or you know, a university campus, or you know, some user that's going to use a lot of heat and therefore make it economical to invest in it. It's very difficult to kind of attract private investment in without some kind of, you know, without that subsidy element or without some kind of um some other sort of you know market mechanism. Um and that and and the final thing is the price of electricity in the UK. So electricity prices in the UK are about four times the price of gas, and that makes it quite difficult compared to countries like Denmark or the Netherlands, where they've got a longer history of having heat networks for us to start deploying them at scale here.

SPEAKER_01 11:20

Okay, I'm gonna, we're all beginners who are listening to you, so I'm gonna roll you back a little bit. So we've talked about heat, we've talked about electricity. Why is electricity affecting the cost of the cost of gas? Where does where does the heat district get its heat from? Why aren't we pumping electricity? What um you're gonna have to go back a little bit for it.

SPEAKER_02 11:46

Um right, I know there's a lot to unpack. So it can seem counter-intuitive, but actually, um at the moment, so we have there there's without getting into too much detail, essentially, as I said, you for for every one pence in a per kilowatt hour that you pay for gas in the UK, you pay four pence for, and it's it's not actually one or four pence, but just a highlight like illustrate, you pay four pence for the same amount, same unit of electricity that you would for that same amount of energy and gas. Um, and the reason for that is that even though we've we're building out lots of renewables, offshore wind farms, solar farms, all these kinds of things, and they generate electricity real cheaply, the cost of the subsidies that have gone for building those things goes on to electricity and not onto gas. But more importantly, we we pay something called the the what we the price that we pay for electricity is determined by the fuel of last resort, which is essentially if you have, you know, if your wind turbines aren't turning or your solar farms aren't generating, and you have to switch on a gas-powered fire station, the cost of that burning that gas to generate electricity is what determines what sets the cost of every unit of electricity of gas. So we still pay the the price of electricity is is inextricably linked to the price of gas. And until we break that link, then it is it makes it expensive to electrify heat. Um now what's unfortunate about that is that when you've got a district heat network and you've got the pipes in the ground, the heat can come from anywhere. So where is it? It could come from the air, it could come from uh underground, it could come from rivers, it could come from sewers, it could come from a tube, it can come from waste heat from industry. So we already do this in some places in the UK where we burn uh waste, energy from waste to generate electricity, and there is heat that can come from that process, which can be fed into district heat networks, it can come from data centres, it can come from all sorts of places. So you know, heat networks are what's described as agnostic. Once the pipes are there, the heat can come from anywhere. So you could build a heat network today that actually has um, and this is something that vital does. You know, we've we've built heat networks in the past that are actually gas networks, so the the the the heat is produced by what's called a CHP, a combined heat and power engine. Um, and then we've gone back in subsequently and replaced that CHP with heat pumps. Um, and then you know, in 15, 20 years' time you might go back and replace it with a more efficient heat pump, or there might be another heat source that becomes available that allows you to extend your network. So it it's all cumulative, but the important thing is actually try to get the pipes in the ground in the first place.

SPEAKER_01 14:55

And the pipes are delivering hot water water. And then what happens to the hot water?

SPEAKER_02 15:02

So the pipes get the the the heat comes from, as I said, the you know, if we take an example, we've got a big we one of our kind of um like we've got a quite a high profile site in Scotland which is called Queen's Key, where we have two river source heat pumps. So those heat pumps are taking heat out of the river Clyde, and people might think, how can that possibly be? Like, how can it be how can it be warm enough?

SPEAKER_01 15:30

And the spell me.

SPEAKER_02 15:33

So there's something going to be. But the temperature of the river, gener the temperature range in the river is generally around sort of like three degrees in winter to about up to about 15 degrees in summer. But even in in winter, that is enough heat within that body of because it's massive, it's a massive body of water, there is more than enough heat in there for the for the energy centre that we've built and multiple other energy centres along the river. So what happens is we pump the water out, it goes through the the heat pumps, which are large industrial scale heat pumps, and as I said, it's a bit like if you, you know, if you ever like you pull your fridge out to clean behind it, and you can feel the heat like from your compressor extracting the heat from your fridge. Essentially, it's the reverse process. So the heat the the um the heat pumps are compressing the heat that that comes from that river water and then using it to heat water that gets circulated around highly um efficient insulated pipes, which then carry it to the buildings that are connected, where they have something called a plate heat exchanger and a heat interface unit, and that connects it that hot water to the building's central heating system, so the radiators and provides hot water for the for taps and shovers, and that's very basically how it works. Um, and that's you know, so that like don't ask me any more questions on that side because that's me reaching my limit of engineering knowledge.

SPEAKER_01 17:10

Do we all have to have our houses the same temperature, or can we adjust it?

SPEAKER_02 17:14

Well, see, this is one of the other things about the energy transition. Um you it requires a bit of behavioural change from people as well. So this is what I mean about being because we're also used to gas, like what people do is they think I'm a little bit cold, I'm going to turn the thermostat up, and then your your boiler kicks in and you're burning all this gas to heat your, you know, or it's like and your radiators get really hot, but the it takes ages to heat the rest of your house. If you're on a heat network, then essentially the temperature in your house is pretty much constant all the time. But also the system can act, and heat pumps can act as they can act as because they are essentially built on refrigeration technology, they can help cool as well, so they can extract heat as well as deliver it, so they can act as heating and cooling systems. But yes, people do have to get more used to just like having an ambient temperature, but that ambient temperature is comfortable, like you know, if you've ever like if you ever go into a house that's that's on a heat network, it it should just feel like you know, a nice, a nice warm temperature, but you just don't really need it all the time.

SPEAKER_01 18:22

Yeah, I love I'm looking forward to that future. I I don't like the cold, so my house being warm all the time would just be brilliant. All right, so the vital energy, what what does good look like other than everyone having lovely warm houses all the time or cold houses all the time? Um, you know, what what does it look like when it works really well from both a technical and a social perspective?

SPEAKER_02 18:50

Um well, not very much is really the answer. You know, if it's what so good to us would look like people just really not really, like as you said, they're just not really being aware that you know, you're on a heat network, you are just you're you're you've got a nice warm house, you can have a hot shower whenever you want one, you're just you're comfortable, your bills are um you know affordable and predictable, um, and it's just not really something that you have to think about. That's you know, that is for us what you know what good looks like. So technically, that's efficient low carbon generation with a well-insulated network, um, smart controls and kind of like real resilience in the system from the very first day. Um, but socially, I think good is about people trusting um and and being able to see the value of it at a local level. Um, and that comes from things like you know, transparent billing, it being affordable, local jobs being created, and having sort of like genuine community involvement. Because you know, heat networks are different to other types of um, you know, people might be aware of things like community benefit funds that are related to wind farms. Um, but quite often, you know, that, or even if you think about gas power stations, you know, the generation is tends to be at some distance from the community that's either affected by it or you know, local to it, um, or or provided by it, you know, provided by it. But heat networks are inherently within a community. So the energy centre will be somewhere local, you know, that the it will be people will feel that it is connected to them. Like our our heat network, one of the biggest heat networks that we um operate on behalf of Leeds City Council, um in Leeds hasn't, it's called Leeds Pipe. So it's got its own name, it was given that name by school children, it has its own website, you can go on and look, and you know, and and I think in people that fit feeling of belonging is actually really important. You know, we want people to because it like you know, heat networks, once the infrastructure's there, they're there for generations, so it's not a case of when we're doing that kind of community engagement. Obviously, you know, we might only be there in terms of what people can see during the construction phase, but afterwards, you know, you it's it's an asset that belongs in in various different ways to that community.

SPEAKER_01 21:22

Yeah, I love that. We're so disconnected, aren't we, from where our food comes from and where our energy comes from. So being able to say, oh, my house is heated by that data center over there is feels really nice actually. So before we dig into kind of the public perception and social costs, etc. Um so we we invested a lot of um money into our gas network. We really believed that the gas network was the future. Um how are we how are we ensuring that we're not designing systems, digging up the roads, laying all the pipes that that locks us in? To the wrong solution in the future.

SPEAKER_02 22:03

Yeah. I mean, I think, you know, as I said before, the the pipes don't care where the heat comes from. So once they're in the ground, you know, that this is one of the other things about heat networks. You can lay pipes now where you that are relying on one type of technology, but you're not going to be locked into that. So, you know, when we build an energy centre and we put the you know the the pipes themselves will have a lifespan of 50, 60 plus years, but heat pumps have got a lifespan at the moment of around 15 to 20 years. So we're not, you know, we're building the so the main thing is we obviously want to get things like where your energy centre is, you want that to be right, um, you know, the size of it to be right. But the actual technology will we already know that it will change and it will develop and it will improve. Um, and actually, heat networks allow you that flexibility, it's much more flexible because you know you've got these energy centres dotted all over the place rather than a big network that's connected to a huge power station. So there's inherent flexibility there that you don't get with the gas network, so there's less risk of being locked into something that we, you know, that that we're kind of saying, oh well, we don't know whether. And the other thing is that we do know that it works. It's not none of this is new technology. Um, you know, like Denmark's had heat networks for a hundred years, like we've had heat networks for there are existing like heat, you know, there are there are actually probably way more heat networks in the UK than people are even aware of, but you know, we've had we've had them for for set, you know, in some places for generations already. So we're not talking about something that's unproven and or we're experimenting on people. We know that this works, we know how to do it, and it's just that we haven't really yet done it at scale. Um, but the um the so that it's not really about the technology, the risk isn't on that technology side, it is on the kind of the economic and the social side, and that's the bit that we that we have to get right. You know, we so we can't be building systems that that are going to put people into fuel poverty, you know. It it has to be um affordable to people because otherwise they're you know they're just not going to connect and then and then you will have failed. So that's the bit that we need to get right. And there are there has been um there's legislation uh that's actually literally just come into force about consumer protection around heat networks. Um and that, you know, that wasn't there before. And there are some, you know, there are some horror stories out there. There was an article in The Guardian last week giving some examples of people that have been on on heat networks where that have been locked into to kind of very high tariffs, but those those are well the again they were conflating two things like district heating, which is what I'm I'm really describing, where you've got pipes that are going across an entire town or city, is different to what gets referred to as communal heating, which is where you have an energy centre, but it's maybe serving one building or a few buildings that are clustered together. So you tend to find them in high density places like London. So the example that was given in the article was Greenwich. Um, and those tend to be the the source of heat for those is actually gas. They are heat networks, but they're burning gas, and that's why they're they're really expensive. So, you know, look, but there are now much stronger consumer protections, and that will be much, you know, so that there's a lot more onus now on heat network operators to protect the end consumer. So you know, I know a lot of people worry about monopolies and you know being locked into a single provisor, but there is much stronger protection than there ever has been before around that now.

SPEAKER_01 25:57

Okay, so let's move on to energy security. You you I know have spoken about energy security out in the public before, something you're really fat passionate about. Um the you've argued that it isn't just about producing more energy, um, but it's how you use and store heat. Can you unpack your thinking around that for us a little bit?

SPEAKER_02 26:26

Yeah, so I I wrote a LinkedIn article about this last, it was actually last Easter, because it I am that I specifically remember because my daughter was she was um doing her hires and she had like quite a stressful couple of weeks of doing her like higher art portfolio. And I thought, well, I'm going to sit down and invest some time in something in solidarity. So that's when I like like worked on and wrote this article. Um and it was really around because I think there was a kind of a lot of noise at the time about um, well, we should be, you know, we should we should be drilling more in the North Sea, and energy security is if effectively saying that energy security is equivalent to extracting more of our own oil and gas from the North Sea. And I actually um, you know, I studied geology at university. Um so this isn't it's not like you know, I and I'm I've not uh you know I'm not gonna like I've never I've not been a practicing geologist, but I understand, you know, like how it actually works, how the North Sea basin came about and how it works. Um and so I thought, well, I I just I feel feel that there's some some perspectives here that really need to be challenged. Um so the first one is that the North Sea as a as a basin, like as a you know, a source of oil and gas is in decline. Um so even and that is that is just its geology, it is a mature basin. So although there's still oil and gas there, um the fields are becoming hard, it's becoming harder to find and much more expensive. So um we the it's going to cost much more money to get out whatever, to extract whatever is kind of like left in the basin. And even with new drilling, we are already a net importer of fossil fuels of and a net importer of gas, and we would remain a net importer of gas even if we drilled more in the North Sea. Now, so that's the first thing. That that is also on the assumption that anything that you extract from the North Sea would be used in the UK, and that is also a fallacy because it's a global market. So when you extract gas from the North Sea, it gets traded on a global market. So it doesn't actually matter whether it is North Sea gas or it's you know Texas shale gas or it's from the Middle East, they all get traded at the same price, and it doesn't, you know, we don't get to domestically use our gas. Um so it won't reduce anyone's bills. That and that's the important point to make there. And also, you know, even if it did if it's getting more expensive to extract, it's definitely not going to reduce anyone's bills. And the third thing, and this is a bit that I think does get overlooked a lot, is that it's not just about immediate, you know, like gas coming out of wells and then immediately getting used. We do need to have energy storage as well. And for many years, the our gas storage was in a a big offshore facility off the coast of Yorkshire called Ruth, which is owned by British Gas. And we used to store enough gas in the in Ruth to that could cover roughly half of our winter um needs, like gas needs. But the it has been kind of like run down and closed over the years, and now it's it's nowhere, it's nowhere near that. So we don't have that buffer. Again, that whole thing about resilience, there's very little resilience in the system. So if something did happen to interrupt the supply, you know, either coming from Norway or whatever, then we probably could quite easily find ourselves in a situation where it, you know, it was an emergency and we didn't have enough gas to supply everybody's heat and needs. And if it was a you know, if that happened at peak demand in winter. So, um, and at the same time as all of that, we are currently wasting a lot of our renewables because we can't move that electricity from where it's generated to where it's actually needed. So I think most of our electricity generation is off the coast of Scotland or the north of England, and the most of the demand is in the south of England. And at the moment the grid is constrained, which is why we then have that still of this situation of having to fire up gas-powered stations to provide that supply. Um and we pay those wind farm owners what's called curtailment payments. So if they have to turn off just because we can't use the electricity, they get compensated for that. And last year, the those curtailment payments were around one and a half billion pounds. And you know, we could be and we should be using that electricity. So I think large heat pumps are one way of using that curtailed wind. You know, we could, you know, and if we can't connect them through the grid because we don't have the capacity, then we can you can use things like called private wire, which is literally that you connect your wind farm to the heat pump, um, which obviously means you would you're initially sort of using it locally, but you can, you know, heat can be an off taker for that for that electricity. Um, but also when you're creating heat networks, you have what are called thermal stores. And a thermal store is basically, at its most basic, a big tank of water, and you can heat that water up and then you store it that energy as heat in the water for days or weeks. Whereas if you're storing electricity in a battery, at the moment we can only really do that for hours. So storing energy as heat is much more efficient than storing it as electricity.

SPEAKER_01 32:21

Wow. I mean, I it's just so interesting, isn't it? It's so it's so out far outside of anything that I've ever been taught about. So thank you for unpacking that. And is that why, uh, in your opinion, um heat networks and that sort of thermal storage just reduces um the UK's exposure to the to the global volatility of energy prices? Yeah.

SPEAKER_02 32:47

It just it provides you with flexibility, um, you know, the storage, it's much smarter, it's more kind of decentralized, and um, and it, you know, it's it's just it does introduce that or bring, you know, it brings that resilience back into our system, which at the moment just isn't there.

SPEAKER_01 33:06

Yeah, and gives us that that energy security that we would love to have. Yeah. Okay, so if you have the opportunity and you are called into government to go and advise them, because this all sounds jolly sensible to me. Uh say you had a clean sheet. Um, what would you what would you prioritize around strengthening our energy energy security?

SPEAKER_02 33:33

Um, so I would decouple the electricity cost from gas. And uh, you know, and it's not it's not, and obviously, if it was that simple, people would have done it already. But you know, there are there is a lot of like we have a that there's a um Nisso, the National Energy System operator, which came into existence 18 months ago. I mean, that that's their remit, and they are looking at at grid reform and electricity market reform. So that like you know, there is work going on, but essentially heat still isn't really a high enough priority within that. Um, and the reason for that is that that what the you know the government's clean power plan 2030 plan is very heavily focused on generation um and and and upgrading the grid. And although those things are important, you know, I I think that you know heat needs to be much more front and centre in in the conversations. Um and that, you know, that's what we that's those conversations need to be, need to kind of have more. So if I was in those rooms, I would just be constantly banging on about heat. That's what I would be doing.

SPEAKER_01 34:49

And so uh you're not in those rooms, sadly. Um but what uh so what does keep you awake at night when you know, particularly when we're thinking about doing this responsibly, you know, what what what worries you about scaling that low carbon heat um solution in in a responsible way?

SPEAKER_02 35:12

Um so I think the first thing that I like really worry about is that we is that we scale it badly, that we sort of, you know, do it wrong in terms of trying to scale um this, and that in doing so we do kind of create another generation of fuel poverty. Um so if we're rushing systems or they're poorly designed and or they're not built with proper community engagement, then they'll be expensive to run and they'll be unreliable. And there is a you know that like this is one of the areas where although although it's obviously good to have targets, if everybody is rushing to meet a 2030 target and we try and do everything at once when we should be doing things sequentially, there is a real risk of that. Um and the second thing that worries me is skills and the skills gap. Um, so we just don't have the workforce to do this transition at scale. And and that's it's not just about bringing new people in and training them, it's about losing experience at the other end. So um, you know, one in five of the kind of construction, not just not just in the energy sector, but in the construction sector generally, one in five workers are are already over the age of 55 and likely to retire in the next 10 years. So there's a you know, it's not just about bringing young people in, it's like who are they going to learn from if you lose all that skill and all that knowledge at the at the other end. Um and that that is a you know that's that's a real risk. Um and you know, but companies are only going to invest in training and skills and apprenticeships and things if there is a a strong pipeline of work for them. And at the moment it's still too up and down, and particularly for small companies, so um, you know, like like actually across most sectors in the UK, but but it's you know in the same in construction, that the vast majority of companies are actually SMEs or micro businesses, and so for all of them, you know, like like Vital has it, we've got our own apprenticeship scheme. We've um you know, we we had our largest ever intake of apprentices, 30 apprentices this year, and we're now at 15% of our workforce being age 25 or under, and on a learn and earn pathway, and that's great, but you know, really what we need is for the like two and a half thousand companies that are in our supply chain to be able to take on one or two apprentices, and that's where you're kind of like really going to make that difference. Um, and you know, it's it's just really that's really, really hard right now, and and we're you know, we um we're just not going to have that talent pipeline without the project certainty and the economic certainty for people that are running those businesses. So, you know, I what I worry about is that we kind of get to 2030 and um you know we've got ambitious targets and we've got investors that have got money that they want to invest, and but we don't have enough people on the ground and we don't have enough projects that stack up from a kind of like tech technical and economic point of view to allow that capital to be deployed and we miss the opportunity.

SPEAKER_01 38:29

Yeah, wow, it's so it's always so much more complex. Although it did put me in mind of you know, the whole conversation around well, AI is gonna take our jobs. Well, you know, actually AI is gonna generate some data centers, those data centers are gonna generate some heat, and actually, we could be building a whole new, you know, uh um sector around that. That's um that's yeah, just super interesting. Okay, so you spoke there about social impacts, and I know you grew up in a an ex-coal mining community. How has that shaped the way you think about um energy transition today?

SPEAKER_02 39:07

Yeah. And actually, I I don't know, probably a lot more than for a long time I realised even myself. Um, but yeah, so I grew up in a village called Croy, which is in North Lanarkshire, which is a sort of area of Scotland, just sort of to the north of Glasgow, so in the central belt, like you know, part of like the Midland, the the the um the Midland Coal Valley. And um I so I was a small child in the early 80s when the minor strikes were going on, and my own dad wasn't a miner, so we weren't kind of directly affected, but essentially it decimated the entire village. So he was one of very, very few people in the village that wasn't employed in the pits, and I was, you know, kind of like going to school with I mean, I've got I've got this um, I remember one Christmas specifically, I suspect it was probably Christmas 1984 or five, um, probably 85, I think probably like into this into this kind of like first full year of the strikes. And my mum had said to me, So I've I've got a really big family and I've got lots of older cousins, and we'd had I'd been like handed down loads of um Cindy stuff. So I had a big Cindy house and various other things, and I had two Cindy horses, and my mum said to me, You need to give one of them away. And I was like, I was just like, No, I'm not doing it. And she was like, Yeah, into this bag. But those those that but that was because that those things were going to kids that were in like my class at school, like the you know, they were literally the we were I was at in school with families that had had no income for a year or more. Um and it's the village has never recovered. It has never recovered, and the area now we it's actually as well as being a mining village, it's on our the main railway line between Glasgow and Edinburgh, and it's only so it's like 10 minutes on the train from Glasgow and half an hour on the train from Edinburgh, so it's really well connected. And nowadays, lots and lots of houses have been built in the area, and people have started to move in here, and it's actually quite affluent, but the the village itself is still in the bottom 5% or on the Scottish multiple and um the Scottish multiple indices of deprivation map. So you can see even when there's been you know house building and and if you know, on the face of it, money coming in, that particular community has remained impoverished because of the effect of that industry being removed more than 40 years ago now. Um and that is why it the whole idea of the just transition really matters to me. We cannot do that again. You know, though those people were told that there would be new jobs, something would come in and replace coal, there would be other opportunities, and there weren't. For most of them, there weren't, and not just for them, but for their children, and in some cases now their grandchildren. Um, so we you know, it's it's just untenable to me that we have that we would go into this, you know, another energy transition and create that. But the answer is not because that and this was another thing that I got into a bit of a argy barjee about on LinkedIn. The answer isn't to reopen coal mines like the Cumbria solution. You know, I don't my grandfathers didn't want their grandchildren going down the pit. You know, that's the the answer is um, you know, skilled jobs, recognizing those jobs as being skilled and being, you know, being paid and having career pathways within the new industries and and that are being opened up by these opportunities.

SPEAKER_01 42:58

So can you give us some examples then of um where uh there's been improved outcomes in in energy or infrastructure projects? And I'm thinking not only those those communities that have been left behind, but you know, equality, diversity, and inclusion um elements as well.

SPEAKER_02 43:21

Um so specific project examples, you mean of things where we've we've actually done a good involvement. Yeah. Um so I think one example that I'm personally involved in at the moment is um so I there's a um an organisation uh uh of Scottish five Scottish universities that have come together to work on the problem of how we decarbonise high density urban areas specifically. So UKRI, which is one of the UK's funding bodies, uh they had put out a A call to universities all across the country to apply for funding to investigate this issue because it's a obviously it's a huge part of how we get to net zero as a country. And it's a particular issue in Scotland because of the density of tenement buildings in Glasgow and Edinburgh and Aberdeen and more Scottish cities, but you know, they we have lots of tenements that are like really you know old and very difficult to decarbonise. So the um so Edinburgh University, Glasgow, Strathclyde, Napier, and the University of West of Scotland, they won the funding and they created an organisation called the Centre for Net Zero High Density Buildings. And it has six different working groups that are focusing on different elements of this. And I co-chair one of the working groups, which is focused on EDI training and skills. And one of our projects is working with an organisation called Powering Futures, and Powering Futures run um uh a qualification for Scottish students who are in their fifth and sixth year at school. So that's like the equivalent of upper and lower sixth. Um, and this qualification is the they if they pass it, they get the equivalent of a Scottish higher, and so it counts towards their UCAST points and all this kind of stuff. But what they do is they are they work on a real-world challenge that is set by a business, and um there's five challenges that they get to choose from, and we set one around decarbonisation. Uh so those students are working, have been working on that project this year, and they will be um presenting in a couple of weeks' time um to various places across the country to groups of business people who have volunteered to watch them and listen to their presentations. But through that, you know, so that is a lot of the kids that end up doing that are probably you know ones that are maybe not quite as academic. Um they you know that it gives them an opportunity to do a qualification that doesn't rely on passing an exam. It allows them to work on you know on these like like real-world challenges and to find out about businesses and jobs and careers that they would not otherwise have got to find out about. So I through IMETor a school, um, which is actually the school that my children go to, and my daughter's actually doing the the qualification, but we you know I go into the school and I sit with them and like you know go through like they you know give them some support. Recently I've been helping them with their um their presentation skills, uh, and they'll they'll be they'll be doing their mock presentation to me in a couple of weeks before they do it for real. Um, and so they that that that program it's it's it's now in 125 schools across Scotland with around two and a half thousand students participating in it. And our hope, the reason that we've that we've kind of invested in this is vital, is that what we're hoping is that that will generate um a pipeline of of young people that want to come forward and apply for our apprenticeship scheme, or if they do choose to go to university, that they you know, they they do STEM subjects and then they come out looking for engineering degrees. So that is a really great example of you know where like business and academia where we've come together and we've like really focused on a practical solution.

SPEAKER_01 47:29

I love that, and you know, the fact that you've got kids learning about this stuff from the ages of what 70, 16, 17, and 17.

SPEAKER_02 47:38

16, 17.

SPEAKER_01 47:39

Fantastic, absolutely brilliant. All right, so coming out uh uh a little bit further as we sort of come to the end of our conversation, for leaders who are listening to this podcast who don't work in energy, I don't work in energy, this is all I'm learning so much from you. But but we do as leaders want to set ourselves net zero targets or ESG strategies. What's the one thing that you wish those leaders understood better about heat?

SPEAKER_02 48:15

Um I think that it's understanding that you can't reach, if you've set yourself net zero targets, you can't reach them without thinking about heat. Um, and it is quite difficult for business leaders because again, because I worked in kind of commercial in the commercial property side, you know, that it's you you you might be you, you know, you might own a building, but it's on a full repairing lease, and therefore everything's up to your tenant, or conversely, you might be the tenant and your land, it's up to your landlord, and there's very little that you can do. But I think those, you know, we we need to find ways around that for those kind of like landlord-tenant relationships to work together on these things because it's you know, you you can't be thinking, well, we'll just do that's too hard, and I think that's the thing because of that. It's like, well, we don't really need to think about it, that's really difficult. But what we can do is we can get you know a green ta electricity on a green tariff, or we can make a commitment to changing our our company car fleet to electric vehicles. No, that's great, those things are great, but ultimately what's going to happen is the closer you get to your net zero year, if you've not tackled heat, um it's still going to be there, you're still going to have to do it, and it's just going to get more and more expensive. So, what I would say is that you know, instead of just putting it in the too difficult box, start to think about it now and just understand what your heat demand is, you know, under like do you know, understand what you know, get some think, get find out information about your building, you know, what can you control and what can't you? Um, and and look kind of like beyond your own walls, you know. So are you in an area that has been most local authorities in in the whole country now will have done some kind of study to determine which parts of their regions are heat network zones? And so are you in a heat network zone? Is a heat network going to be coming at some point in the future? And you know, can you plan for that? Can you look ahead to when you might be able to connect? Um, and and also to link heat to your social and your your ESG goals, so thinking about you know that that like about the local jobs and apprentices, apprenticeships and things like that. Um and just yeah, just being realistic in terms of you know, obviously within the confines of what everybody can do. And I know a lot of people will be thinking, I can't do anything, but you, you know, if you've if you've questioned it and then you started to ask questions about it and you've done that work and you're trying to find out, you know, get that information, then you might actually be able to make things happen. Because one, you know, one of the biggest issues that we have is um if you're trying to kind of demonstrate that a heat network is economically viable, you need off-teakers, you need customers, and if no one's aware and no one's you know like thinking about it, then if they're asked do you want to connect to a heat network, they might be like, Well, no, probably not, just that just sounds like a hassle. But if you've already, you know, if you have educated yourself and you have got that awareness, then you know, if you're actually approaching your local authority or or you know, whoever is going to be leading a heat network in your area and saying, Well, actually, you know, we would be interested, then that in itself can make a difference. So we're in a joint venture at the moment and with a another um company called Hemical and to develop the UK's first advanced heat network area zone, and it's in London, so it's called Swan, South Westminster Area Network. Um so you know that there's that's one live example, and there will be others that will be coming forward in you know in in the next few months because there's lots of old authorities that are looking at this.

SPEAKER_01 51:58

And you wouldn't necessarily know that you're in a heat district.

SPEAKER_02 52:01

No, no, you wouldn't know unless you went to find that information for yourself. No one is going to come and tell you, not right now, unless you know somebody comes knocking on your door, like Hemico or one of our other partners, Enervate, you know, like where we are active in some cities, we might have, you know, that there might be partners that are actually going out and speaking to certain, you know, identifying people that they think um would be you know large heat users and saying, would you consider it, you know, would you you know sign a letter of understanding, a memorandum of understanding about connecting, you know, or a letter of intent about um connecting to a heat network. But generally, it's not something that will be, you know, said to the a lot, all the local authorities have done these studies and on their websites there will be a report that says, well, we've looked at where potential heat sources are, we've looked at density of population, and we've actually put lines around areas that we think are likely to be future heat network zones, and and anybody can go and try and find that information and see whether they're in one of those zones or not. But you know, no one's going to come and tell you that information.

SPEAKER_01 53:11

Yeah, so there's an action we can all take and find out whether we're in a heat network area. I'm I I will be going to go and do that. You know, it's funny, every time I have one of these conversations with somebody who's heavily involved in sustainability and responsible business, one of the things that comes out really, really strongly is sometimes the most effective thing you can actually do, it's cheap and it's you know, when it's free, um, is to ask better questions, just asking better questions. And hopefully that this podcast is doing is giving people those questions to ask. So, on that note, let me ask you my next question. Um, around um if you had the power to change one assumption that dominates the UK's approach to decarbonisation, what would it be?

SPEAKER_02 53:59

Um it would be this the assumption that um that generation is the primary lever of change. So, you know, what I mean is that it's everything's focused on more generation, like more wind farms and more solar, and um and that you know, because basically the current model is assuming that we have to build sufficient generation to meet peak demand. Um, and and obviously that is important, but um shifting towards that holistic energy system approach where heat plays a proper role introduces the resilience that I talked about earlier on, and actually means that you know, if you're integrating power and heating and cooling, um, instead of treating them all as separate silos, then you you can move away from a fossil fuel network without having to have you know that that before you've got to that kind of like peak demand situation and potentially make the overall cost of the transition less. So that would be the one thing that I would do.

SPEAKER_01 55:04

Brilliant. All right, and let's let's look towards the future and a bit of hope. What genuinely gives you hope that we could do this transition well?

SPEAKER_02 55:14

Um, so I think the first thing is that we already have the technology, so you know we're not we're not relying, um, you know, it's it's not like carbon capture, we're not saying there'll be some silver bullet that'll come in the future. We this works, we know it works, it's been done lots of times. So we can we know we can do it. Um so that's the first thing. Um, and you know, and that we've we've seen it working in practice. Um, I mean, we've got you know, we've we know examples of where um you know people's bills have been have have reduced massively and carbon emissions have dropped off by 70 to 80 percent. So we've we've already got those case studies, we know that it works. And the second thing is that you know, it's around young people. So all the young people that I engage with, whether it's people, whether it's ones that are still in school through Power and Futures or our apprentices and our graduates, they get it. Um, you know, they understand why this matters, and they're not really interested in you know, the ones that I have have met anyway, there's a lot of them, in kind of arguing about or being cynical about climate, they just want to be part of the solution and to get on to to crack on with it. Um and then the third thing, and I think although this might sound counterintuitive, um, it's what gives me hope is actually the failures because we've you know we've we have tried some things that have not worked, and that you if from every one of those you learn, and we know, you know, so we we have we we can see what not to do, and and that that should mean that we're where we go from this point is much better informed and and will work better for for ordinary people and not you know not just for a small few that are kind of at you know at the top of the chain. Um so yeah, those would be my my three because I'm quite an optimistic person, Philippa. So I'm not you know, like those are that's I I do I do genuinely believe that it will, you know, that it it it that it will work and and that is those those three things are fundamental to that.

SPEAKER_01 57:18

All right, we're just gonna finish off with a slightly lighter-hearted quick fire round. All right, what's your favourite way to switch off after an ESG heavy day?

SPEAKER_02 57:30

Um, I love a good crime drama. So um, and and like crime novels as well, but uh but yeah, so be watching a few things recently. Um so I watched a series called Black Shore, which is very good, um, about an Irish detective, and then another Irish one, which is um called How to Get to Heaven from Belfast, which is by Lisa McGee, who did Derry Girls. So this is her follow-up to that. And that was yeah, very funny. I'd recommend both of them.

SPEAKER_01 57:59

Excellent. And I am a massive bibliophile. Uh, what's your uh the best book you've read in the last year?

SPEAKER_02 58:07

Um what's actually a book that I reread. So I first read it in 2018, um around like a around Brexit time. I can't remember. But it's called Travellers in the Third Reich, um by a woman called Julia Boyd. Um and and she she lived, she was a um her her husband was a diplomat, I think they and was posted in Germany, and she lived in Germany. And the book is about people, real people, stories from real people who traveled in Germany in the 20s and 30s, and essentially it kind of gives a picture of the rise of the Nazis through the stories that these people tell. And that there are, you know, it's a really interesting book, and there's a lot, you know, the like the the the stories come from like a huge range of people, um, but it does give you something, you know, that you can you can root it in the in the current day in terms of thinking about well how you know how did this happen? How did uh how did that an entire country and I think you know one of the things is it it makes it really clear that there was nothing there was nothing exceptional but about Germany, you know, what happened there could happen anywhere, um, but also just some of the individual stories. So one that really kind of like stuck with me, and actually was the part of the reason that I reread the book was because I was thinking about it, I thought I'm gonna go back and read that again. It was about two old English ladies who were sisters and they loved opera and they would travel to Germany to see the opera and they would go with bit like hardly any, you know, the very little luggage and like bare minimum, and then they would um they would come back a different way, but when they came back, they would be wearing furs and loads of jewellery and things like that, and they were basically smuggling out the belongings of Jewish people who weren't able to get their own like valuables and things out of Germany. But it was the little details of things like one of them didn't have pierced ears, so she had to wear clip-on earrings, make sure she only ever had clip-on earrings because if she had you know like pierced jewellery, that then they would realise that they weren't hers. And it's just you know the fact that people that people did things like that and had to do things like that. So, um yeah, so I would recommend that. It's a very it's it's you know, it t it tells a really important story, I think, but is not a heavy read.

SPEAKER_01 1:00:26

Yeah, I'm definitely gonna add that to my list. Uh one word that people use to describe you. Um Scottish.

SPEAKER_02 1:00:37

But also um well, pragmatic. I think people, you know, I think I do get, you know, if if people the one thing that would say to my face anyway, is that that I'm a doer, so I can't get muck mucking.

SPEAKER_01 1:00:51

There are definitely worse things. Yeah. Uh and the what do you think is the most misunderstood phrase in sustainability?

SPEAKER_02 1:01:01

Oh, I think it's net zero, and I think it's deliberate well, misunderstood and misaligned and misappropriated. Um, but I mean, all it really means is you are taking, you know, whatever you're adding, you're taking the same out. And it doesn't mean absolute zero. And I think that that gets kind of you know, it means that you're essentially we've kind of like if you're if you're going to get really technical advice out, we've got the Paris, we you know, at the Paris Agreement, it said this is this is the levels we need to be at 2050. So whatever is still in the system at that time, we have to be able to take stuff out and and balance that, and it's about balance. Um, and I think you know, the net bit does do a whole lot of heavy lifting. So, on the one hand, I think a lot of companies, particularly around 2019, you know, that like have like set when there were kind of various declarations of climate emergencies and things, a lot of people set net zero targets without understanding how they were going to get to them. And then once they started doing the work of how they were going to get to them, thinking, oh, well, um, that's actually going to be really expensive, or it might even be impossible. And then they start quietly abandoning the targets. And I don't, you know, instead, like there's instead of doing that, I think it's better to own it and say, Yeah, actually, we said this. And there's been examples of companies that have done this really well, but saying, actually, do you know we said that, but we didn't really understand it, but now we've done all this work and now we do understand it, and these are the things that we're doing that are going to make a difference. But do you know what that original number that we gave, we're not going to be able to do that. Um, so that's like you know, kind of like one side, not allowing it to like you just push things, like you know, kick that can down the road, really. Um and then on the other side, you know, the fact that it the the kind of scaremongering of trying to say that it's basically saying that we have to go back to like you know, living in caves and like having doing everything cut by candlelight, that's obviously not true either. Um, and the whole point of the net is that you you know you can continue with some emissions as long as you're offsetting them. So as long as we're honest about the those trade-offs that we have to make. Um, and I think a lot of that nuance just gets completely lost because it just gets thrown out as a phrase all the time, and people have, you know, they just say it and they don't really think about it anymore.

SPEAKER_01 1:03:22

Thank you. And I have honestly, I have learnt so much, and you know, secretly and selfishly, I do these podcasts so I can learn from amazing people like you. I mean, I I I had no idea that heat was such a a huge part of that sustainability, the the environmental approach that we're taking across the UK, uh, as you described it, that sort of invisible giant. I didn't know, I still don't know currently whether we are on a um a heat network, but I am definitely going to go and find out. Um, and as always, you've brought to the fore, let's go and ask some really good questions. Let's dig into the detail of what it is we think we know and and just double check whether or not that is that is the absolute truth. And you've really shone a light for us on the the role of heat and how much more work that we have to do around it. And and actually you've made me feel really very optimistic about the possibility that uh that we can. So thank you, Anne. I really appreciate your time. And if you, my listeners, have enjoyed this conversation, please tell your friends about it, tune in for our next podcast, and as always, keep asking good questions. Thank you so much.

SPEAKER_00 1:04:40

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