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Thank you Mr Chairman and thank you to APM for the opportunity to speak here. Good morning ladies and gentlemen. The theme of this year’s conference is Delivering the Vision and I am going to talk today about some of the Vision behind the NorthConnect power cable project between Scotland and Norway, and from that, also highlight some project and programme delivery lessons about being able to realise any Vision through project delivery – large or small. SLIDE
In doing so I will outline three particular Visions, or it could be said that these are actually different slants on the same Vision. They are the project, the European and the Scottish perspectives. SLIDE
Firstly, NorthConnect’s Vision. SLIDE
Our vision is to build the first HVDC interconnector power cable between the UK and Scandinavia. The drivers behind that Vision are: CLICK Security of supply – in renewable energy terms, its that question, “What happens when the wind doesn’t blow? Or does blow but there’s no demand at the time?”. But security of supply can just as easily refer to a couple of nuclear or gas plants being out of operation at the same time, or a cold snap in the winter. CLICK Sustainability – connecting the very powerful combination of wind power and hydro, particularly pumped storage hydro, two green and renewable sources of power, in order to create, in simple terms, a big 1.4GW battery pack for Scotland. CLICK Market integration – connecting the UK / Ireland markets to Nord Pool, which is currently the largest integrated power market in the world, so that it can operate as a single market. And finally…… CLICK Reduced price fluctuations – now I will keep coming back to this one – this shows the current diurnal variations between UK and Nord Pool power prices. This is where the interconnector itself generates revenue from – by taking as a fee, a small percentage of the differential market price between the Generator and the Consumer on each contract. But more than that, our modelling shows the socio-economic benefits far exceed those transmission fees, by the fact that consumers can access the cheapest source of power at any one time. Now the modelling is done from current demand projections and production scenarios based on investment plans. It is actually very difficult to make decisions in relation to the more outlying demand side scenarios, so we capture these as risks: i.e. what happens if carbon pricing comes in across Europe; or what happens if the switch to electric cars comes (and it probably will within the lifetime of this cable, and when it comes it will probably come rapidly over a matter of a few years). Those sort of things will turn peoples’ and companies’ behaviours, and hence power demand patterns, completely upside down. But what we can say for definite, is that there will still be large variations between countries, even if we cannot quantify them. SLIDE
So, how do we propose to achieve our Vision…… The technology for this cable is HVDC, High Voltage Direct Current technology. DC has much lower power losses than our normal alternating current (AC) in buried cables, and it is therefore the only way of making long distance underground power transmission economical. We have an AC/DC converter station and a separate grid connection substation at either end of the link. It can operate in either direction up to a capacity of 1400 MW, carrying up to 12 TWH a year, that’s enough to power over half a million homes or a city the size of Glasgow. CLICK The subsea cables are 650 km in length and there are 2 cables – one powered up to +500kV and the other to -500kV by the transmitting end of the link. The voltage difference then provides the energy to power the conversion equipment at the receiving end, to turn it back into AC current. DC has been around for as long as power transmission. In the 1880’s, these two fellas: CLICK Thomas Edison and George Westinghouse fought what became known as the War of the Currents in the US. Edison’s company General Electric patented and sold DC transmission technology and Westinghouse adopted the European pioneered AC technology. They competed for municipal and industrial clients to develop the first power transmission networks. They too had visions – unfortunately their methods of achieving those Visions were mutually exclusive to one another’s chosen approach. To cut a long story short, AC and Westinghouse ultimately won – it wasn’t necessarily the better technology at the time, but they got the marketing right - a bit like Betamax and VHS for video recorders – if you remember them? Anyway, there is a lesson here for Delivering a Vision – and that is that people are easily led, people are easily misled. So you need to clearly articulate your Vision and get the marketing right or, to put it in project speak, get your “Communications Planning” right. Finally, GEC-Marconi are still going strong today, so they didn’t do too badly after all, and Edison is arguably much more famous than Westinghouse. SLIDE
Let us now widen out to the European perspective. SLIDE
Europe also have a Vision…… now believe it or not, despite the European Community being around for 56 years and the European Union and Common Economic Area for some 20 years, there is still no common market for power transmission. There are two reasons for this: The infrastructure has evolved “in country” over 50 to 60 years, creating systems which are “islanded” and stop at the borders – even across land borders, there is still surprisingly little interconnection. Secondly, the trading mechanisms are all different. These range from the UK and Scandinavia, which have particularly open market commercial frameworks, to some of the Eastern Europe accession countries for which transmission systems and trading mechanisms are wholly state run. The EU have not yet agreed, let alone set up the process and systems to run, a common trading mechanism. CLICK So our old friend price differences between markets comes in. We cannot currently access the cheapest sources of power outside of our borders. Neither can any other country. It is not a free market. CLICK As I have said, Nord Pool is example of how it could be. Set up in 2002 between Norway, Denmark, Sweden, Finland, Estonia and Lithuania, the infrastructure is highly interconnected, with HVDC cables across the Baltic and more being developed, and there is an open market trading mechanism which governments, regulators and commercial organisations all subscribe to and jointly administer. CLICK Europe’s vision is to emulate this - a fully interconnected free-market trading block for power and gas, right the way across the 27 countries. And just imagine what this could do: CLICK In this renewables revolution where we move away from dirty, base load sources of power in each country, imagine being able to connect UK, Irish, Danish and German wind; to Norwegian and Balkan hydro; to Swedish and Baltic biomass; to Spanish, Saharan, Italian and Turkish solar; to French and Finnish nuclear; to Icelandic geothermal; to Portugese wave; and finally to tidal power in Orkney among other places. And to make all of this available instantly, to every single power consumer across the continent. The difficulty with these power sources compared to fossil fuels, is that they each have a different natural geographical bias. And if countries remain “islanded” in terms of power transmission, the technologies will never be developed, as they will never have a route to market. CLICK So, our old friend the price differences will be all over the place, even more erratic than they are today. But if you put the infrastructure in place, then you not only change the energy map of Europe, you probably shake up the geo-political map also. That brings me to my final point here about delivering visions. Do not underestimate the political, regulatory and commercial difficulties in getting there – that is why the EU isn’t there yet after 56 years in the power sector. We have current political difficulties in Norway with NorthConnect – the current government oppose greater interconnection whereas the opposition support it. Depending on the results of a general election in Norway in September, it could potentially kill the Scottish project. And you can think about any project in terms of “political risk”, whether with a large P like general elections, or a small p regarding project team politics, organisational politics and local stakeholder politics. Delivering the Vision is about taking your ideas and carrying all these people, and their often conflicting views and priorities, along with you. A good PM does not just manage the minutiae of cost control and schedules and contract administration, they also keep a weather eye on the whole political landscape from micro to macro issues. An old boss once told me it’s the job of the PM to hold an umbrella up over the project team. SLIDE
Okay, finally let us home in again on Scotland’s Vision…… SLIDE
Map of Scotland Scotland also has a Vision……… The UK climate change targets are for a 20% reduction in greenhouse gas emissions and a 20% increase in renewable energy generation by 2020. Scotland has much more ambitious targets for 2020, including 100% of domestic consumption to be generated from renewable sources (that’s 175 TWH or 20 GW of continuous generation). A 1400 MW link with Norway and a similar one with Iceland for geothermal energy could make a significant contribution. Further to those targets, the SNP has a vision for Scotland to have no new nuclear. Hunterston B has a capacity of 1320 MW and Torness 1364 MW. So, creating links to Norway and to Iceland could match that existing generation capacity. CLICK Now in Scotland, this is all being driven by a vision that this fella has. And it brings me to my final point about Leadership. You know, say what you want about this fellas policies, you cannot deny that he has a Vision, one which includes a future for Scotland as a leader in renewable energy. The First Minister sponsors his Vision through everything he does, says, promotes and stands for – and it is here that I draw the link with PM’s and Project Sponsors. Once you have defined your Vision and strategy for your project, it requires leadership / sponsorship / promotion / buy-in, call it what you want, but it requires that support at all levels if you want to deliver your Vision. Getting your project team to head in the right direction. Getting your whole organisation to promote the aims and the means. Making sure the stakeholders are happy, or if not happy, at least not in kill mode. Chunking up the vision into achievable goals. Communicating the steps, the end result and the benefits to anyone who will listen. Look in the textbooks and you will get all sorts of definitions of leadership and its traits. There is only one definition for me and that is that people will happily, willingly, enthusiastically follow a Leader. Results and achievements will inevitably follow a Leader. So, if you want to know whether someone is a Leader or not, just have quick peek behind them. Finally, what is slightly alluring about Salmond’s vision and Europe’s vision for renewables, is that it has the very real potential to be our route out of recession. CLICK It is estimated that the switch to renewable energy for the UK could represent over £250billion of investment over the next 10 years. That’s 250 billion pounds-worth of construction work, research and development, technology manufacture and all the jobs that go with those things. And that is not including second tier employment opportunities and the intellectual and skills capital that we could acquire as a nation. Compare that to the total amount we have paid since 2008 to prop up the banks in the UK……….. CLICK £955billion. Now what would you prefer that the government spent your money on? SLIDE
Finally, let us draw some conclusions from all this. SLIDE
The first thing about delivering a vision through project and programme management, is that you have first got to have a vision and articulate it. Think big, write it down and draw pictures of it. It sounds a rather glib thing to say that, but we all work in projects and how many of us write out our project objectives in very dry, technical terms, which will communicate the objectives to our team and the engineers and the Project Director, but when you think about it, they are probably not the people who need convincing. It is the senior management, the customers, the stakeholders, the planners, the regulators and the politicians who we really need to get at. CLICK Secondly, get your marketing right, or in project-speak, your Communications Planning, to be able to communicate your vision effectively. You might have the best project in the world, the best technology in the world (like Edison thought he did with DC networks), but you have to persuade everyone around you of that fact, and especially your customers. CLICK Don’t simply be aware of political risks (and you can add Economic, Social and Technological to that also), but actively manage and lobby to mitigate those risks. If you don’t, they could creep up behind you and blow you out of the water. Or your competitors will manage the risks more effectively than you and gain advantage. CLICK Leadership – big ideas and the will to carry through and achieve them requires leadership – and the impact of that leadership can be good……… CLICK … ..it can be bad…… CLICK … ...or it can be like Marmite……….. CLICK ……… you either love it or you hate it. But for better or for worse, what those characters all had in common, was that Delivering their Vision undoubtably changed the world forever. And the very last thing, delivering any vision takes hard work and dogged persistence. I will leave you with this quote: CLICK “ I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.” And who said that? CLICK Thomas A. Edison. SLIDE
Ladies and Gentlemen, Chair, Conference, I thank you for your time and your attention.
Delivering the Vision• ““I have not failed 10,000 times. I have not failedI have not failed 10,000 times. I have not failedonce. I have succeeded in proving that thoseonce. I have succeeded in proving that those10,000 ways will not work. When I have10,000 ways will not work. When I haveeliminated the ways that will not work, I will findeliminated the ways that will not work, I will findthe way that will work.”the way that will work.”Thomas A. EdisonThomas A. EdisonCreateCreate CommunicateCommunicate RisksRisks LeadershipLeadershipDeterminationDetermination
1212Glen Coe Hardangerfjørden“From Wind to Hydro and back”