Eon CEO Michael Lewis believes the UK has largely cracked decarbonisation of power generation and must concentrate on heat and transport, which is where he said the energy company will concentrate its efforts.
Speaking at Aurora’s Spring Forum, Lewis, who took the reins from Tony Cocker a year ago, applauded the policy stability of successive previous governments in delivering renewables.
“[Renewable generation] has been a huge success, but in many ways, that is already done,” said Lewis. While there are “some issues around intermittency” to solve, “we have [achieved] renewable, low and zero carbon generation at a lower price than conventional generation. Now we need to turn to transport and heating – and that is where Eon wants to play a key role.”
He said heat and transport are at a similar juncture to renewables “ten or eleven years ago” and pointed out that while the UK has succeeded in delivering almost 40GW of renewable generation, “success was far from a forgone conclusion back then”.
Lewis said in 2008, Eon had two offshore projects under construction, “both hugely over budget and late”. The firm had another two in operation, both beset by technical difficulties. Meanwhile, the London Array project “came that close to not going ahead, and would not have gone ahead unless government had moved to two Rocs”.
Giving offshore wind developers additional subsidy at that point, he suggested, was now bearing fruit in enabling the economies of scale that are leading to cost reductions.
“We were about to make an £800m investment decision and needed to know that the government stood behind us, which they did, and created a world class industry.”
That foresight should now be applied to decarbonising heat and transport, said Lewis, which is where Eon will focus more fully.
“We believe our capabilities are better deployed where there is still a problem to be solved,” he said, suggesting the starting point should be “making the existing system more efficient.”
Under the proposed Eon-RWE deal, it has been announced that Eon will focus primarily on retail and networks, with RWE taking on generation.
Speaking at the same conference, SSE boss Alistair Phillips-Davies said he “saw the SSE-Npower merger going forward and being unaffected by the RWE-Eon deal”.