People in power

Going Mainstream – an interview with Eddie O’Connor

1 November 2009

The first in a series of interviews with the most influential people in the power business as reckoned by the force of their ideas, the size of their office or the spending power they can command. Here Leonard Sanford talks to Dr Eddie O’Connor, founder of Airtricity and Mainstream and creator of the Supergrid concept, a continent-embracing transmission system designed to connect all renewable power sources located at sea.

About Supergrid

MPS The Supergrid [see map, page 11] is a tremendously ambitious project. The person who achieved it would go down in history. But given the figures about projected European power demand at present rates of growth (at 2%, it will double by 2050, at 3%, demand will treble) and achieving an 80% cut in GHG, is it feasible? Are governments getting behind it? Is there any chance at all it can be achieved?

O’Connor Oh, absolutely it can, although it’s not the sort of thing where you can casually sit down and say ‘this is a jolly nice idea so let’s have a go at doing it’. But oil and gas availability controls the fuel market and therefore the availability of power, and we have already passed the peak of oil production. All the majors have reduced their production in the last five years, those that were achieving over 1 million barrels a day reached their peak in 2006, and now only Petrobras and Petrochina are still expanding. The big five all peaked between 2002 and 2005, and are now having trouble maintaining the present flow, much less expanding it. The rate of discovery is falling behind too - in a 9 month period last year we used 31 billion barrels and discovered 10 billion.

According to the CEO of Royal Dutch Shell, ‘easy’ oil and gas will peak during the next ten years. China is adding a ‘new Germany’ to energy demand every year, and India effectively doing the same. Oil production can’t now be got above 85.5 million barrels a day. So - do we have to find a new way of doing things? Yes, absolutely. Our economies are now under threat, this is a clear and present danger. The present recession, caused by the banks, can’t be ignored: but we cannot just sit still and let mega-inflation, caused by vast increases in the prices of oil and gas, lead us into an endless series of bumps and slumps until we have made the transition to sustainability.

MPS Do you think this can happen in a planned kind of way as set out in the ten, twenty and forty year plans that now exist, or will it follow the past pattern and we’ll do something frantic and barely effectual at the last possible minute?

O’Connor I’m not so sure that is the pattern of the past really, if you think about some of the grand schemes that have been accomplished, for example the setting up of the EU, which was Jean Monnet’s vision of the immediate post-World War II period and which was the most politically significant event of the 20th century. When Kennedy said we would get to the moon in ten years, you would call that a grand scheme too, I think.

MPS The crucial difference now perhaps is that one country cannot achieve it alone, and so one man cannot.

O’Connor Perhaps, but look at the example of the EU. After much kicking and screaming we have achieved a kind of unity on this, and I cannot see anything stopping the march forward. I note the Lisbon Treaty, the first treaty since Euratom where energy imperatives are at the centre, is there to allow the co-ordination of 27 different nations.

MPS It does seem that the political backdrop has changed, and the EU energy commissioner is much listened to and much quoted, so there is some hope. Do you have any ideas about the mechanism by which the Supergrid and the concomitant expansion in wind and other renewables generation might be brought about?

O’Connor It’s intimately bound up with our ability to create suitable transmission. Grids built hitherto were all built with one purpose, to take electric power from the existing points of production to the load centres, but now much of the power is going to be produced at a whole new set of places so we need to have a completely new system.

MPS You mentioned [in a company videotape] the figure of 40 GW of new wind power per year that would be needed.

O’Connor That’s right. The key issue is that at 2% growth to meet targets we need 1.2 million MW of wind energy by 2050, and at 3% we need 1.8 million MW, so we’d have to build somewhere between 1.0 and 1.6 million MW offshore. We can’t put it onshore, mainly because of the pressure of population and space considerations, and a lack of wind, while there is much more wind energy available out in the Celtic Sea and the North Sea. Germany, which did much of the early work of exploitation of wind, is running out of land and is now going offshore.

The main point that I would make is that we don’t really have many choices. We have to do it, and we have to do it rather quickly. We in Europe don’t have the [bulk fuel] purchasing power that the Americans [and China and India] have for instance. They can always build a new aircraft carrier to get their way, but we don’t do things that way any more in?Europe. We’ve had enough of war, while certain other countries haven’t. We don’t any more go to war for trivial reasons, In Europe we try to trade or design or technologise our way out of trouble – we invented the new technology and designed and built it in Denmark, Germany and Spain. But if you try to be competitive with oil and gas you end up competing at the margin, with he result that any new technology loses out, so a lot of sophisticated thinking has gone on in Europe into how we might achieve it. Makes one proud to be European. Britain has taken a world leading role in this. The UK government’s Round Three [offshore licensing] is an amazing programme and is working very well. We would be delighted to do our part and help Britain become energy independent - in fact become more than independent, become a big exporter of energy.

MPS If we accept that the idea is politically acceptable, and inevitable from an energy supply point of view, it still has to have a mechanism to bring it about.

O’Connor Correct, and that’s why I have chosen 2020 as a nominal start date. But we will already have a lot done by 2020. We will have thought out who owns the Supergrid, who will run it, how we will build successive sections, and who will pay for it. I anticipate that all if those questions have been addressed, then – like every other question the world has faced – it will have to be clarified and dealt with to everybody’s satisfaction to allow us to proceed in a rational manner. One might think it’s a generous timetable but of course there is an enormous amount to be done. We will need, I estimate, twelve new specialised sea-going vessels, we need the willing co-operation of every nation in Europe, we see a lot of things having to fall into place – and when I think ‘maybe it’s too long a timetable’ I reflect that we will have to work though the grind of politics ... I’ve been working on Supergrid now for 8 years and it’s only now that it’s coming to fruition for me ...

MPS Well, it is a solid achievement that it has now been accepted philosophically, one can mention it in polite company ... and you’ve already mentioned several aspects that would have to have been dealt with, also the manufacturing capacity would have to be built up, the market incentives or the government management, one or the other, would have to be in place ... and most of those things would have to be brought about by huge industrial concerns that have full confidence that the system will actually be built.

O’Connor Well, this is not theory I’m talking about here, its heavy practice, we have some of the biggest companies in Europe supporting the Supergrid – Siemens, Hochtief, Beluga Group, Prysmian, which is the biggest cable maker in the world, Parsons Brinkerhoff: we’re talking about a massive degree of support for this concept, it is also being backed by Andris Piebalgs, so it wouldn’t be right to think of it as something that might happen, it is definitely going to happen and have a big impact on all our lives.

MPS I have seen that Mr Piebalgs publically supports it, and that Siemens and ABB do, but they make the equipment and so stand to benefit from enormous contracts, and at this stage their support is costless. But one can imagine a stage where enormous investment has to go into this without an prospect of immediate return ...

O’Connor Yes, we will have to get everything properly lined up, we have to get the risks properly described, we want to get Europe engaged in how we actually reduce those risks on behalf of the companies that are participating in this, in what is in effect a rescue job – I mean by that that we are in such a bad energy situation right now, with almost nobody with a vision of how a rescue can be accomplished, that it’s actually become one of the more frightening prospects in life, as to what we can do if we don’t get this energy. Our capitalist free enterprise system was built on the ready availability of huge amounts of cheap energy, and that’s gone away.

MPS Do you think the commercial concerns see ruin staring them in the face if they don’t themselves do something about it?

O’Connor I’m not so sure that most people see it in those lurid terms, because they have no real desire to live in the future. There are some of us who do, I’m one of them, it’s an affliction I suppose, but when the guys who see into the future are in complete alignment with the guys who look out of their windows and see the here and now, then you know that something serious is happening that we can no longer afford to ignore.

MPS You have said that 2010 to 2020 is the learning phase. What are the most important things that we have to learn?

O’Connor We aren’t quite there with the technology yet. We are almost there – I would argue that in preparing the technology we almost there with the DC breaker and that’s the big sine qua non for the development of our sector. There are very good technical reasons why we didn’t build the electrical world on the basis of DC – AC is much more controllable, and we were able to transport power around satisfactorily, given the smaller scale of systems of the time, but we’re not able to now, so we have to do some R&D on that score. There are other questions - who is going to govern the Supergrid, who is going to participate in the ownership of it, who is going to gain and lose from it ...

MPS There would be ramifications, I imagine, for onshore installations – the existing T&D networks don’t lend themselves to direct connection to an offshore grid - there would be a large number of connections to be made ...

O’Connor Yes, a lot of that has to happen, that would be part of the learning process – together with, who owns the grid, who pays for the grid, these are very important questions ... and there is no mechanism right now to pay for it, there is no agreement across Europe about that.

MPS It seems pretty much inevitable that consumers will pay for it

O’Connor Well, those who derive the benefit should pay for it. But we have to sort out all those questions. How do we go about levying income? Where do we build the first leg of the Supergrid? I also include these in the learning process.

MPS We’d also have to teach the 500 million population of Europe that they are going to get a benefit from it, because they are not going to be very willing otherwise. A couple of dozen heads of giant corporations might be easier to convince perhaps, at least on the philosophy of it, than the population at large.

O’Connor The population at large is not in a position to make such decisions, and as you know the world doesn’t actually work like that ... a much more reasonable process is that someone comes up with a plan, and business interests pick up the plan and come up with the ideas to implement it – somebody has the vision first, and there is nothing more powerful than a vision of something whose time has arrived – it has the power literally to move nations – and I think our ideas are now moving nations. I know that Britain is seizing the opportunity – having railed and ranted against it for a long time, concerned persons are now saying this looks like it should be done and are now thinking more practically – well, how DO you connect up 3000 MW of offshore wind to a grid?

MPS Do you see Supergrid being made in piecemeal fashion or as a gigantic single project, thought out as a complete plan from the start?

O’Connor In the minds of a few people, this would be an ever-present meaningful vision. Those people are the kind that come along every so often and are able to achieve great things – like the conception of a Europe without boundaries that would save us from ourselves by trading, and whose timing in history was profound – so it isn’t necessary I suppose that everybody arrives at the same conclusion together. It is necessary that those who have the big important ideas, that they’re empowered and see themselves to be empowered, and get an echo from decision makers. This is a public affairs job to beat all public affairs jobs and those of us that can see the necessity for this plan will work extremely hard to bring it about

MPS But the initial thrust will continue to be political, you think?

O’Connor Well, that’s the way everything is. Look at energy. The developing world subsidises energy to the tune of about 310 billion dollars every year and the rest of us subsidise energy to the tune of 300 billion every year. For instance, we have to pay for the aircraft carriers that are policing the Gulf.

MPS Even for the energy business alone the amount of public money that goes into it to keep up the appearance of a free market must be huge, it’s such a heavily managed system ...

O’Connor Actually there is close to 600 billion dollars going into it every year from the world at large - in Venezuela they virtually pay people to take the oil, the situation is ridiculous ...

MPS OK, but is it so surprising? You wouldn’t be surprised if you were told that we spent a large proportion of our GDP on food and energy.

O’Connor Absolutely, we know that’s the way it is. Somebody once said to me that the price of energy is the price that the government wants the people to pay. Unfortunately that’s true. Personally I would prefer to see free enterprise win out ...

MPS We can’t expect the world to head for the precipice at full speed – no doubt if we had the Supergrid already we’d love it, but will we lift a finger to bring it about?And does it yet have sufficient political backing? I’m reminded of the case of CHP, which has been pushed for decades by enthusiasts, to very little effect in most countries, endlessly ignored or blocked by politicians, but suddenly it’s the green thing to do and the self-same politicians are all for it. Are we at that point yet?

O’Connor Oh, absolutely. The cause was helped enormously by Mr Putin’s turning off the gas supply.

MPS Yes, that was useful. We couldn’t have improved on it if we’d contrived it ourselves.

O’Connor This kind of thing is done for larger political ends, in this case “hands off Ukraine, and forget any idea of its joining the EU” and Britain got that message very quickly because it’s at the end of every pipeline. In the end, people are rational, although there is huge pressure to be irrational, but in the end unreason always loses out. It was always possible to argue when energy was very cheap that CHP didn’t make economic sense, and it was true, but this is why we need governments. For all their failings they are able to act in the long term. They don’t always choose to do it, but they can, if the pressure is great enough.

MPS No doubt they have the capacity but not necessarily the will, when they are naturally inclined to look at the voting patterns.

O’Connor True, but there are exceptions. I think it was John F Kennedy who said ‘Even when I am gone, my idea lives on’ – and my idea is more important than anything else I do.

MPS Every now and then someone exists who is held in such regard that everyone takes notice of his or her ideas - it says more about the person than about his or her vision.

O’Connor I’ve had some recognition for what I’ve achieved so far but I’m not in it for the recognition, although its great when it comes. But this is a serious idea, very serious, and it comes at a time when we are in real trouble over energy.

About Mainstream

MPS Perhaps you could tell me a little about Mainstream’s strategy and how wind and other renewables industries in Europe bear on it.

O’Connor Mainstream is a renewables energy company, pretty much a continuation of what happened with Airtricity which I started in 1997 and we built it up until it was actually quite successful, finally selling it to Scottish & Southern in 2008. We immediately, within a week, set up Mainstream Renewable Power. My feeling at the time was – my job is only half done, that job being transforming the world into a sustainable place. We had assembled so much talent, within Airtricity, to do that, and a lot of those guys came to work with me. We decided that sustainable energy was the field we wanted – every country in the world is going to have to make the transition to sustainable energy – we didn’t think Ireland had the necessary support scheme but we decided after some study that Chile and South Africa presented suitable opportunities.

But our central decision was to go offshore, which seemed the logical answer to achieving sustainability, particularly in Europe. They’ve stopped working onshore in Germany, and in Denmark, soon they will stop in Spain. So we have assembled what I think is the best development team offshore and we are going to be the leaders, if we aren’t already. And the offshore team has worked out very well, we competed for an offshore zone in Scotland and won against stiff opposition from the utilities, and against the enmity of one or two of them (we get on very well with utilities in general by the way, we don’t have any kind of a view against utilities, in fact we see the utilities as our best customers, and we see ourselves working very well with them in the immediate future) anyway we competed with them offshore and we won, and we always will because we are an entrepreneurial company, we are quicker and more nimble, we can do what others cannot do, we have been conditioned by experience to make things happen, we are specialists and we don’t mind the seemingly big risks of offshore. You know my line has always been ‘this is going to be done by somebody – I’m not sure who that somebody is going to be, but I’m going to give it a very good rattle’.

MPS Do you think the current acceleration offshore is sustainable?

O’Connor I do, absolutely, and what’s more it has to be increased, there has to be more of an emphasis on quickly moving to a new scenario. We are using up oil and gas at a rate absolutely unprecedented in the history of the planet.

MPS The oil majors have a strong vested interest in getting into other areas of production, of course, and they have the money to do it. If they time it correctly they could be very influential ...

O’Connor But they aren’t very entrepreneurial, are they?

MPS Maybe they are too big to be entrepreneurial?

O’Connor Yes, size does matter in these areas.

MPS I believe Mainstream bought a technology development company last year ...

O’Connor As well as some assets in Chile, in Illinois, in Alberta, in South Africa, we invested in 2B, a small turbine manufacturing company based in Belgium.

MPS Do you see any significant changes in the technological approach, or do you think we have already got pretty much what we need to do this job?

O’Connor On the contrary, we don’t remotely have what we need for offshore wind. After all it’s a new area, and one can’t simple translate what exists on land ... we know that three bladed and two bladed turbines work, we are aware that on land you can produce ‘perfect’ power from a wind-fired power station, but we don’t need perfect power, because we have to turn it into DC anyway to get it to land, and we are aware that existing turbines offshore are quite limited, and need some redesign to go to sea. They have to be much bigger, and the supply of them has to be organised so they produce much cheaper power. My firm believes it should aim at the commercial advantage of having the cheapest offshore turbine, and it will have, and we’ll have the investors necessary to doing it.

MPS Do you plan to carry on with the engineering and technical development of the components themselves, as well as developing windfarms?

O’Connor To some extent. It’s not our core business to invest in technical development but I find that we have to get into it, because other people are missing the boat ...

MPS These companies that you have bought around the world, how do they contribute to the vision of the company’s future? Are they manufacturers?

O’Connor Each one has been selected for its ability to give us a start, a beach-head if you like, into the country where it is situated in developing wind projects, so at heart we are still developers...

The future energy mix

MPS What do you feel is the place of coal and nuclear in the energy mix? Do you have strong feelings on the subject?

O’Connor Yes indeed. I think that coal burning is a disaster for the planet. The idea that we can replace oil with coal – to give the context, by far the highest proportion of carbon locked up in fossil fuels in the USA is in coal – and it would be a disastrous step for the planet if we were to go down that route – it’s horrifying for me to think about all that coal being burnt ...

MPS So you don’t believe in the concept of clean coal?

O’Connor Absolutely not. A complete piece of science fiction. CCS? Stuff and nonsense. Read any serious commentator on the subject of clean coal – it’s an invention – probably just to get a subsidy going ...

MPS I do see the humour in it when somebody announces the building of a 1 GW coal fired station and pronounces it as a carbon dioxide saving device when what they are going to do still is pump vast amounts of CO2 into the air. But the advantage is in burning the coal more efficiently ..

O’Connor Only slightly more efficiently, only very slightly. In fact we can’t go on producing these quantities of CO2, there are not enough sensible places to bury it, it costs a fortune to do so, and to think otherwise is actually to fool ourselves on a gigantic scale. Do you know that if you burn anthracite, a variety of coal that is virtually pure carbon, in air you produce several times the amount of CO2 than existed in the coal originally?

MPS Do you mean several times the quantity of CO2 than the amount of carbon in the coal?

O’Connor Yes, with the addition of the oxygen component. And everyone seems to ignore the nitrogen you also burn and make NOx, there is far more nitrogen than oxygen – what are we going to do with it all, are we going to bury nitrogen as well? Obviously not. I have never seen an area more redolent with science fiction than the area of energy just now.

Do you remember cold fusion? When I left college in 1970 as a chemical engineer we were supposed to be 20 years away from nuclear fusion – and it’s a moving twenty years, it’s always twenty years away. My son came out of university quite recently. When he’s my age it will be well past 2030, and he’s going to be asking – well, where is it`? It’s gone away again. The idea of trying to contain all that H2 conversion energy in a bottle ... then of course we have the great white hope of fuel cells.

MPS Well, they give you a different energy route, a way of making the CO2 that is going to be produced under controlled conditions, they aren’t claimed to be more than batteries, although the hype does rather suggest something miraculous.

O’Connor True. And have you heard of the hydrogen grid? Why would we build one when we have an electricity grid already, something we have done for centuries and know all about? This is clutching at straws, anything to avoid viable solutions such as wind energy or even marine – there are a lot of people who want to continue doing what they do now and not change, that is really the problem, a resistance to change.

I recognise how difficult change is, I’ve been an agent of change myself all my life, but I can assure you that these guys just don’t want to move outside their comfort zone – they think ‘if I was to do it any other way I might not win’. And to my mind CCS is the worst of all, that is one that really should be knocked on the head right now, because it’s being used as an excuse to allow China to continue to build what it’s building now, huge amounts of coal firing, it shouldn’t be allowed and we have to find a way of helping China. Would I be in favour of giving grants to China to move away from coal? Yes, I absolutely would be. We have to face it that there is going to be nothing easy about this transition to sustainability, but it has to be done right away.

MPS So I’m guessing that you aren’t all that keen on conventional nuclear power production.

O’Connor Well, give me a choice between coal and nuclear and I’ll choose nuclear. I really believe that what has informed all my endeavours since 1989 when I was running the dirtiest company in Ireland, Bord Na Móna, when I became convinced that global warming was a fact and I began to think – here I am running the dirtiest company in Ireland, I don’t like this, I found myself realising that I hadn’t considered CO2 deleterious to the environment up to then, but now I’m convinced, and one just has to go with one’s conscience on this issue, and that’s a huge driving force in my life. But I am absolutely convinced that out of control CO2 emission is a real and present danger to the whole future of our species.

MPS My own belief is that however good the answers we come up with what we’ll actually do is what we’ve always done, muddle along until we are faced with a crisis so immediate we can’t ignore it, then we’ll cope with the disasters that inevitably follow, somehow. In an altered world, no doubt, but it just seems much more likely, given our record.

O’Connor It’s difficult to dispute that view. But it’s not my own view – my belief is that we can get out of this, and that people and governments can be made to take action in time.

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