For E.ON's British boss, there are big changes blowing in the wind

Paul Gollby, head of E.ON UK, talks to our correspondent about how to achieve the balance between meeting energy needs and safeguarding the planet
 
 
THEY say you shouldn’t take your work home with you, but Paul Golby, head of E.ON UK, the power company, is busy arranging to have a wind turbine strapped to his house near Statford-upon-Avon.

It may smack of tokenism, and the generator will only supply about a third of his family’s energy needs, but Mr Golby says that it shows his commitment to taking seriously the planet-threatening issue of climate change.

His seems an anomalous position for the chief of an energy company, who readily admits that his industry is incentivised to sell more and more electricity and gas, at least at present.

“I genuinely believe that climate change represents a grave threat,” he says. “We shouldn’t believe that we can afford to do nothing.”

In tabloid language, Mr Golby explains, the parameters of the energy debate are nuclear versus windmills and draught excluders. But as he is keen to tell people it should not be an “either or” debate.

“We have to do lots of these things in parallel if we are going to reduce the impact on the environment, preserve supplies and at least slow down the rate of increase in price,” he says. That means energy efficiency, distributed energy, gas, clean coal, nuclear and a whole range of emerging technologies, such as marine and solar power.

The pace of change has been reflected in a traffic jam of reviews, white papers and frameworks. Another White Paper, less than four years since the last, is expected next spring — this will be critically important to the future of the industry.

“We need to take the right decisions. I don’t want to be in a situation where my grandchildren are saying to me why on earth didn’t you get it right,” he says.

But this White Paper will go to the heart of democracy in the changes to planning laws it proposes, as evidence mounts that local concerns are impeding national requirements.

E.ON is developing a major offshore wind farm, called London Array, with partners include Shell WindEnergy and Core Ltd — a Danish utility company with the largest offshore windfarm in Europe. However, the project, in the outer Thames estuary, was almost stopped in its tracks because a local authority in Kent has blocked planning permission for where the cable comes on shore to a sub-station.

“We can’t have major national infrastructure frustrated by local authorities, frankly on the basis of nimbyism,” Mr Golby says. Potentially much more controversial than wind farms, however, will be nuclear power. E.ON has told the Government that under certain conditions it would be an investor.

Discussions are at a fairly early stage, but E.ON could build nuclear reactors on its own and has years of experience running them in Germany and Sweden. However, it is demanding certain conditions from ministers.

The first is an energy framework that puts a value on carbon — in other words there is a need to expand the current EU emissions trading scheme beyond 2012. Second, the UK has to streamline its planning rules and licensing system, so that developers can use one licensed reactor model, rather than seeking separate licensing for each reactor they build.

“We can’t repeat the mistakes of the past and go for a uniquely British solution or a process that takes so long. The historic approach we have taken to nuclear is like saying to Airbus or Boeing we like your aircraft but we would like a different tail fin or set of wings on it to suit the UK. Everyone can see that is barmy in the case of aeroplanes, well we think it is equally barmy in the case of nuclear power stations,” Mr Golby says.

The third condition E.ON wants met is a strategy to deal with the disposal of nuclear waste. “I fully accept that if I am going to invest in nuclear I’ve got to pay for the storage of waste. But I need a clear framework agreed with the Government so that I know what I need to do,” Mr Golby says.

New power stations — nuclear, clean coal and gas — are important but E.ON UK is also exploring other avenues. “What if we could invest £1 or £2 billion in people’s homes to reduce their energy consumption? As long as I can make a return on that investment that to me is equally valid investment as building new nuclear power plants,” Mr Golby says.

An unexpected choice to lead E.ON UK, Mr Golby has survived two takeovers and prospered. Now he is one of the Secretary of State’s key advisers on energy issues through his role as co-chairman of the Energy Research Partnership, alongside Dr David King.

The man who moved to East Midlands Electricity in 1998 from a career as a corporate turnaround specialist seems to have found his niche at last. He arrived at East Midlands Electricity in 1998 but its US owners were already signing the bill of sale to Powergen while he was unpacking in his new Nottingham house. Four years later E.ON, the Germany energy giant bought Powergen for £9.6 billion and Golby found himself soon after, leading Britain’s biggest power generator and second biggest-electricity supplier.

“It’s a pivotal moment in the energy sector. When I started in this job I had two to three pages of press cuttings, yesterday I had 82. Every day energy is on the front page of at least one UK newspaper. People are genuinely engaged in the issues,” he says.

Meanwhile, the parent company’s appetite for consolidation across Europe remains undimmed. Last year it made an approach for ScottishPower When that was rejected it set its sights on gaining Endesa in Spain.

Increasingly this sector of the economy is the place for large players and E.ON wants to leverage its economies of scale across several countries. In arguing its case in Spain, it has used the example of Powergen in the UK to comfort the Spanish.

“They have said to the Spanish politicians and regulators to look at our track record in the UK. It’s a British company run by Brits.”

Since E.ON bought Powergen it has invested several billion pounds in the UK business. It bought TXU in 2002 and Midlands Electricity in 2003 and it has investment plans worth almost £4 billion for the next three years, covering investment in new power stations, distribution networks, gas storage and wind farms. “We couldn’t have done that without being part of this large international group,” Mr Golby says.

Being part of an international giant also brings UK customers benefits. In the example of gas, where the UK is moving to become a net importer rather than net exporter, only companies with the scale of E.ON can negotiate successfully with the Russians, Mr Golby says.

“On the basis of our gas contracts we will be supplying about one sixth of Europe’s gas — these are all ways of making sure that we can get gas into the UK. As an individual stand-alone company, Powergen just never would have been able to do those things,” he says.

Mr Golby may not be an industry lifer but his broad business background has probably helped him to survive. Being a fresh face in 1998 in an industry that had a hangover from privatisation also helped. “As the new boy you can ask dumb questions. Then slowly it dawns on people that it wasn’t such a dumb question after all, it’s just that was the way they always did things because of the history of the company or the industry,” he says.

Energy companies are easy targets for criticism, he knows. “No one lies awake dreaming of the energy they get from me, not like their next budget holiday to Czechoslovakia,” he says.

That’s true, but most people are afraid of the dark and keeping the lights on in the face of global demand for resources requires some tough decisions. Mr Golby doesn’t shirk them.

The leader in ten questions

Q Who is, or was, your mentor?

A Elizabeth, my wife. She has great perception and is a very good judge of character

Q Which businessman or woman do you most admire?

A Bill Gates, as an innovator and for building Microsoft but also for how he is using his wealth to the benefit of others

Q Do you read books on management? If so, which has influenced you the most?

A Great to Good by Jim Collins – it captures the essence of creating the right culture for true success

Q Which is more important: what you know or who you know?

A Both are important. What you know, so that you can ask the right questions. And who you know, so that you can find the right answers

Q What does leadership mean to you?

A Creating the vision and environment where people want to go that extra mile to win

Q If you could change one thing about the business, financial and commercial environment, what would it be?

A Get a clear UK/European energy policy. Since the late 1990s, there have been three UK energy reviews

Q Does money motivate you?

A Yes, but only to the degree of providing an acceptable standard of living and security for my family

Q What is the most important business event, good or bad, to occur in your working life?

A Buying TXU Energy. A £1.6 billion deal done in just seven days. It was exhausting but exhilarating

Q What gadget/piece of technology can you not do without?

A My i-mate. I travel a lot and couldn’t be on top of my job without it

Q How do you relax?

A Riding horses, the only time I switch off

Power CV

Age: 55

Home: Stratford-upon-Avon

Education: Hinckley Grammar, Leicestershire; Aston University (BSc in mechanical engineering, PhD in mechanical engineering)

Married with three children

Career:

1972-1986 BTR/Dunlop

1986-1990 Early’s of Witney

1990-1992 Grovewood of Securities

1992-1998 Clayhithe

1998-2001 managing director, Networks, East Midlands Electricity, then managing director

2001-2002 director, UK Operations, Powergen

2002 chief executive, E.ON UK

Other roles: co-chairman Energy Research Partnership non-executive directorships: AEA Technology

Hobbies: restoring an old vineyard in France, riding, keeping horses