What Happens When The State Take Risks Private Capital Won't? - GB Energy

**Ed Porter** (0:00)
I'm your host, Ed Porter. Welcome back to Transmission.
A solar array next to a hospital near Hull saves it about a million pounds a year, enough to fund more than 50 nurses. That saving sat there for years, unbuilt, until today. GB Energy calls itself an activist investor, chasing down the frontiers. Private capital moves too slowly on. Deep water wind, long duration storage, solar on hospitals and schools. So what happens when a state backed company starts making the bets that private money won't make first? Our guest today is Dan McGrail, CEO of GB Energy. He's the one setting the strategy on how consumers see the biggest benefit from this newly formed entity. If you have any questions about the build out of batteries, solar or wind in GB or Europe, that's what Ko is for. Head to modoenergy.com to try now for free. Let's jump in.
Hello, Dan. Welcome to Transmission.

**Dan McGrail** (1:12)
Thank you for having me, Ed. It's lovely to be in an air-conditioned studio on a day of this impossible heat.

**Ed Porter** (1:18)
Yeah, we're in a second heat wave of the British summer, and the power prices in this one aren't quite so exotic as what we had in the first one. Thankfully.
Okay, let's get straight into it. So what is one thing that everyone gets wrong about GB Energy?

**Dan McGrail** (1:33)
I don't think it's something that everyone gets wrong, but it's one of the common themes is that GB Energy is an energy company, and our aspiration is to build an energy company in the model of other European state-owned energy companies.

**Ed Porter** (1:48)
So like an EDF or...

**Dan McGrail** (1:49)
Yeah, or Rostead or Vat and Fowl, or so on and so forth. You know, and so those are our long-term aspirations. And sometimes people approach us in the thought of, you know, can we, that we're a government department. And, you know, yes, we're owned by the government, we're owned by, and Desnz is our shareholder. So we're very closely engaged with the whole world of energy policy.
But we are a company and it's independently managed and operated in the interests of our shareholder, who is ultimately the British public. So, you know, I kind of want to make sure that people understand in the long run that we, you know, the business we're building is in the mould, in the vision of having a British energy champion in the way that the Danes, the Norwegians, the Swedes, the French have equivalent organisations.

**Ed Porter** (2:42)
And so perhaps reading between the lines of that, is that more saying that as a company, there's that commercial focus on the projects that you would engage in rather than how, say, Desnz might look at a market, Desnz might look at a market and say, we need to sponsor this very early stage project because it needs development money and it needs sort of a high risk attitude. But you would say, and in the same way that an EDF or a Vattenfall might say, they'd say, well, look, does it make sense for our investment committee to do this?

**Dan McGrail** (3:11)
Yeah, and so we operate in exactly that way. We have an investment committee, but I do think the one thing that a publicly owned energy company has differently is a duty and a responsibility to identify the frontiers where you're trying to move the energy market towards. And the way I tend to encapsulate this is, where do we have high levels of national ambition, whether that's in the deployment of energy projects or whether it's in the technologies that underpin them.
But the private capital isn't moving as freely or as quickly as we'd like it to. And that takes you down certain avenues. And the way we developed our strategy and the way we thought about it, it was very much along the lines of, okay, yes, being additional to the energy market matters. But in the long run, we hope that that additionality in certain fields of technology will lead you into a space of leadership. So if you take Allstead as an example, they started, yes, they were an oil and gas company, they did a huge corporate transformation to offshore wind. And in doing so, built really deep competence and know-how, and became a leader in offshore wind to the extent that, yes, they are publicly owned, but they're publicly owned and a market leader. And that's my hypothesis is that you have to choose areas where you can build competence and ultimately differentiation in the long run in that aspiration of building an energy champion.

**Ed Porter** (4:44)
So it's not just that you're sort of naturally drawn to the frontiers, but there is this, if you commercially want to try and get ahead, you need to think, not just to do the same thing that all the other companies are already doing, you're trying to find the niche and the edge where you think that there's not quite so much activity today and you can build up that expertise. And then in the long run, that would allow you to then hold a much bigger position.