|Bethan Sayed AM|
|David J Rowlands AM|
|Hefin David AM|
|Joyce Watson AM|
|Lee Waters AM|
|Mohammad Asghar (Oscar) AM|
|Russell George AM||Cadeirydd y Pwyllgor|
|Vikki Howells AM|
|Graeme Cooper||Cyfarwyddwr Prosiect ar gyfer Cerbydau Trydan, Y Grid Cenedlaethol|
|Project Director for Electric Vehicles, National Grid|
|Ken Skates AM||Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth|
|Cabinet Secretary for Economy and Transport|
|Nathan Barnhouse||Llywodraeth Cymru|
|Roger Hey||Rheolwr Rhwydweithiau'r Dyfodol, Western Power Distribution|
|Future Networks Manager, Western Power Distribution|
|Simon Jones||Llywodraeth Cymru|
|Abigail Phillips||Ail Glerc|
|1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau||1. Introductions, apologies, substitutions and declarations of interest|
|2. Papurau i'w nodi||2. Papers to note|
|3. Y Grid Cenedlaethol a Western Power Distribution: Sesiwn dystiolaeth ar wefru cerbydau trydan yng Nghymru||3. National Grid and Western Power Distribution: Electric vehicle charging in Wales evidence session|
|4. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd||4. Motion under Standing Order 17.42 to resolve to exclude the public|
|6. Craffu ar y Fasnachfraint Rheilffyrdd a’r Metro gydag Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth||6. Rail Franchise and Metro Scrutiny with the Cabinet Secretary for Economy and Transport|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 10:01.
The meeting began at 10:01.
Croeso, bawb i Bwyllgor yr Economi, Seilwaith a Sgiliau.
A warm welcome, everyone, to the Economy, Infrastructure and Skills Committee.
I'd like to welcome Members this morning to committee. Item 1: we do have apologies from Lee Waters. He will be joining us for the second session this morning, and a couple of other Members will be joining us shortly.
Are there any declarations of interest? No.
In that case, we move to item 2. There's one paper to note, if Members are happy to note that paper.
In that case, we move to item 3 in regards to our inquiry into electric vehicle charging in Wales. This morning, I'd like to welcome Roger Hey from Western Power Distribution and Graeme Cooper from National Grid. We are very grateful for your time with us this morning, and thank you for your papers in advance of the meeting as well, which were helpful.
Members will have a series of questions, but if I could start, can I ask you: what do you think are the barriers to electric vehicle adoption in Wales?
Well, I think the barriers in Wales are probably similar to the rest of the world's at the moment, to be honest. That probably comes down to the range and availability of the vehicles themselves. The cost can still be prohibitive. There's a much smaller range of electric vehicles compared to petrol and diesel vehicles, traditionally. So, I think the main barrier is bringing electric vehicles within the reach of most people within Wales.
So, you don't think it's to do with grid connection or capacity on the grid at all. That's not one of the main issues.
I don't think most people considering buying an electric vehicle even give a thought to their grid capacity, in the same way as you go home and you turn your lights on and you expect them to come on. So, no, I don't think that's the initial concern of people—
Or, I suppose, the number of charging points, which is a different point.
Okay. Well, I'm sure we'll come on to the availability of charge points. What we find is that most people who are currently getting electric cars tend to have off-street parking, and that may well tell you something about the demographic of people who are adopting electric vehicles first. But, by and large, what we find is that most people with off-street parking will prefer to charge at home whenever possible.
So, for declaration purposes, I have a plug-in hybrid and electric vehicle, so I'm actually living this on a daily basis, which I guess shows you the challenges, and I do travel across the country. The unique thing about having an electric car is the charging at home, if you have off-street parking, so you start every journey full, which is great, and it's fundamentally different to having a petrol car. The challenge you've got, and it's actually demonstrated in my journey here today, is that, when you do an out-of-pattern journey, there is no trust that you will be able to get a service that allows for your journey not to be interrupted.
So, I fully grant that the choice of vehicles is a problem today. The price of vehicles is a challenge. But then the next order of merit is the trust that you can charge universally. And it's generally—we are generally creatures of habit. I think the first car in most families does about 37 miles a day, statistically. And, if you're lucky enough to have a second car, it only does about 11. So, most 150-mile- to 200-mile-range cars will do generally what you need them to do. The challenge that you really have, though, is people don't buy a car for average; they actually buy it for the biggest and longest journey they'll ever do, and it's that out-of-pattern stuff where you need confidence that there is appropriate charging on your journey so that it doesn't interrupt your journey. So, I would say that the short-term issue is a supply issue, the second merit issue is the cost of the vehicles, but then, the second one is around charging, and you can't just assume that people will use cars like they use a petrol car. My experience over a year of driving electric cars is that it's more like a mobile phone; if you're somewhere and there's a socket, you plug it in as opposed to waiting for the fuel light to tell you you need to refuel.
Unfortunately, I wasn't able to, because I didn't have the confidence, so I've driven from Reading and—
Okay. You didn't have confidence that there would be somewhere to charge up en route.
Yes. So, actually, it's one of those things, the first thing you—. People talk about range anxiety and I think it's actually the perception of range anxiety, because people's perception becomes real. So, it becomes a lot about journey planning, so when you look at the map of where chargers are, there are two functions: one, where are they, is that helpful to me, are they on my route? And then the second one is: is it fast enough so that it doesn't interrupt my journey?
Yes. Interestingly, we had some evidence last week that suggests that there are grid issues, but I notice in your 'Future Energy Scenarios' report, you say that there is enough capacity to support the whole of the UK's transition to EVs. But we've had evidence to say that there are grid issues, particularly in rural parts of Wales. Do you recognise that?
Let me try and help. National Grid has two functions. We own the transmission system in England and Wales and then, National Grid, as a system operator, operates the system for the whole of England, Wales and Scotland. So, I actually represent National Grid, the transmission owner, so, the wires. And it's the National Grid as system operator that writes the future energy scenarios. But what they've said publicly is that, under all of the scenarios, the grid can cope. But when they look at that modelling, it looks at a number of scenarios for what we use power for and then, how is that met. So, there are two functions in that: one, where is the power made and, secondary, how does it get to where it's needed? So, I would say that the transmission level, as we've said publicly, or as system operator colleagues have said publicly, should not be a problem. So, I don't think that there is a tremendous concern. I think what we have seen anecdotally in streets is if you end up with clusters of cars, you can have challenges in streets, but that ends up being very location specific.
Yes, thank you very much, Chair. Just a question to you straight away: are there any plans in place so that newly built homes in Wales must have charging points installed in the property?
The one thing I'd say, as the transmission owner, is that our customers are the distribution operators—my colleague here—and also, large generators and large consumers. So, from that perspective, that last-mile service is absolutely a distribution one.
But my question is on the newly built homes. The homes that are going to be built must have a charging point.
Okay. Shall I pick up on that, then?
I tell you what, we've got questions on that a bit later on, so if it's all right—. Is it all right to hold fire on that?
Well, I know another Member is asking questions around that as well, but if you want to come back after that, is that all right, Oscar?
Thank you, Chair. If the Welsh Government is going to develop a national strategy for EV charging infrastructure, what do you think the main features of that strategy should be, both of you?
Good question. Mr Hey?
First of all, it's probably worth just building on that distinction between transmission networks and distribution networks. The transmission network is akin to the motorways in England and Wales, whereas the distribution networks are the A roads, the trunk roads, the B roads, the C roads, and we're the people who serve the 1 million homes in south Wales. That's what we do in Western Power Distribution.
In terms of electric vehicle charging infrastructure and a strategy, what we'd like to see is a forward-looking plan so that we can develop the network strategically. It's always much more efficient to be able to develop a network top-down, strategically, than it is incrementally, bottom-up. The way that a lot of the network charging methodologies work is that, as you come along and you want to put in charging equipment, particularly larger charging stations, you will approach the network operator. Western Power Distribution, in the case of south Wales, will conduct an assessment as to what works are needed, we'll do a technical design, we'll cost up that design, and then we will present the person wanting to connect with the bill and an estimated timescale for delivering the work. We will use up the spare capacity that is inherently in the system first. So, the first few people who come along will, relatively, get a cheaper connection than people who come along later. At some point, you are that straw that breaks the camel's back, and you end up with quite a large grid connection cost, or, sometimes, something that has to wait a number of years. So, I think, for me, in terms of an EV strategy, we're really trying to understand what outcomes we're trying to achieve in Wales, so that we can develop our network strategy and investment plan ahead of need, and not be always working reactively.
I'd like to add to that. It's a very commonsense approach. What we've seen from the Government's 'The Road to Zero' strategy is they've already articulated that the infrastructure that sits behind charging will be a challenge. We've also seen, from the national infrastructure assessment, which is published by the National Infrastructure Commission, that we should be investing in infrastructure now, in the right place, to make sure that we're ready for 100 per cent of new car sales to be electric by 2030. And we've even see the Business, Energy and Industrial Strategy Committee hearing recommend to Government that the infrastructure needs to be delivered now. I think the challenge in all of these things is Welsh Assembly Government have a really unique opportunity to do it right, do it once, and have a strategic plan. Because the charging infrastructure will end up being almost like a utility, and you wouldn't let a new water utility just see how it goes, you'd want a level of strategic planning, but you do also need to let markets develop. So, I think a high-level plan that fixes, or at least articulates the art of the possible will give a really strong and shining light to the opportunity to get this right at first principles, rather than leaving it organically.
And going back to the question that I think the Chair asked earlier about constraints on the network—just to clarify and reiterate: you don't perceive that there are any areas where the Welsh Government needs to have a picture of constraints, like rural areas, for instance?
At a transmission level, we have a really interesting—. Wales is a strong generator of energy. So, when you hear the discussion around transmission constraints, it's actually getting power out of Wales. What's interesting, as we move to decarbonsiation of transport, and you have more local demand, actually, you take pressure off the system, because the power is not having to be shipped out of Wales—it can be consumed in Wales. So, I would say that at a transmission level, actually, decarbonising transport is a really useful thing to help take pressure off the system. Now, I can only speak at the transmission level, and I'll let Roger dive in from a distribution level.
At a distribution level—and Graeme is absolutely right—there's a real opportunity here of marrying up this new demand against all the generation that we've already got in the system. When people talk about grid congestion, and the grid being full, it really is on the generation side, rather than the demand side. So, bringing all these electric vehicles on, if we can charge the cars at the same time as the renewables are producing, there's a real opportunity there. However, it would be unrealistic to expect that the current grid, as it stands, could cope with 100 per cent penetration of electric vehicles. An average car does, what, 10,000, 12,000 miles per year, on average. That would use about 4,000 kWh per year, which is about the same as an average three-bedroomed semi-detached house. Now, we wouldn't consider we could double the housing stock in Wales without some investment in the infrastruture. So, we just need to be realistic about this journey to the electrification of transport as well—there will need to be targeted reinforcement, as well as those things like smart charging, and time-of-use tariffs, and stuff, as well.
That's really useful, thank you. Because I've been privy to so many conversations about the grid being full, and this being an issue, but you've clarified that for me very well now. And the local constraints, Graeme, that you were talking about, on a street-by-street basis, that we might be coming across now, then those issues—if we had the forward planning, we wouldn't see issues like that, local issues?
Well, on a street-by-street basis, it's a distribution system—so that's Roger's specialism.
Yes. So, what our strategy is for electric vehicles—first of all, we need to understand what's happening with electric vehicles, who's buying them, where they're being charged. Some of that is through notification—people notifying us when charge points are installed. Some of it is through access to smart metering data as we start getting data through. That way, we can be on top of where we're getting clusters of electric vehicles, and we may well start to have a requirement to do some sort of management of the charging. We would hope that most of the smart charging, management of charging, would be done through your energy suppliers. They would produce tariffs and structures and service offerings, free evenings and weekends, peak time free miles—those sorts of offers that would be 'grid friendly', so that people would be incentivised to do their charging when the grid has got the capacity.
At some point, we'll continue to track the uptake of electric vehicles. So, we're probably north of a 40 per cent penetration now, on the whole, and, at that point, there may well be a need to consider some sort of mandated smart charging, just to make sure that the system isn't dangerously overloaded. At that point, that's the point where we need to consider doing the conventional reinforcement, looking at bigger transformers, extra transformers, larger cables, and so on, but we're talking about 60 per cent penetration of electric cars, which is, what, 120,000 cars in Wales?
Okay. One final question from me, and that's regarding the paper from the National Grid. Now, that places a strong emphasis on the development of ultrafast chargers at motorway service areas, but to my mind that seems to be a paper that's far more suited to England than Wales, when we have only one motorway in Wales that basically stretches from the Severn bridge to Swansea. What about the rest of our road network? Surely, that's not a feasible option for our nation.
I guess, in shorthand we've described it as the motorway network. What we set out to do with that study was to—. The biggest barrier is the cost of cars, and National Grid can't help with the cost of cars. However, the perception of range anxiety is a very real one, and it's that out-of-pattern journey, and people don't buy a car for average; they buy it for the biggest journey they'll ever do, and if that's a summer holiday in Wales, they will need to be comfortable that they can charge en route. So, what we took was the strategic road network—so that's motorways and principal A roads. We mapped the country, and we mapped the country on the basis that, for you to have confidence that you can have an electric car as your first car—. If you had confidence that you could drive in any direction from anywhere in England and Wales and meet somewhere where there was enough capacity to do very fast charging—this is not available today, but will be coming—so that's charging in five to 12 minutes, so not dissimilar to refueling a petrol or diesel car today, then you'd have a level of confidence. So, we mapped the country, and 54 strategic sites across England and Wales would mean that 99.6 per cent of the strategic road network is covered for 50 driven miles in any direction. What we then did is we then overlaid grid networks, and we realised there's a 60 per cent synergy between the transmission system and the strategic road network. So, when we look at that, there is an opportunity there for both the National Grid and the DNOs to serve those 54 strategic sites at a high level, and that will mean that anybody with an electric car would have the confidence that if they jumped in the car for an out-of-pattern journey they would know they would meet somewhere they could charge that fast that wouldn't interrupt their journey, 50 miles in any driven direction.
That certainly sounds a lot more reassuring for our urban areas, but what about the rural areas of Wales? How would we account for electric vehicle usage there?
So, that falls back to being a distribution question. If you look at it from a transmission level, you have a very strong network running across the south of Wales and a very strong running across north Wales. That doesn't mean that's the only network. So, it is one of those things that everything feeds off that transmission system. So, the real rural stuff is absolutely a DNO challenge.
It depends on the size of the charger, really, as well. The bigger the charging station—. And the sorts of things Graeme was talking about are more like filling stations, with lots of pumps. Some of the charging stations, for example the ones where we've been working with Tesla to install their charging points, they're 120 kW per vehicle. There are typically somewhere between four and 10 charging points. We've installed about 10 of those, working with Tesla, across our patch. There are three in Wales. There's only one that is operational today, which is at Sarn Park, which again is the motorway service area one, but there are two more going in. One is just south of Aberystwyth, and the other one is at Crossgates in mid Wales. And there will be the opportunity to put smaller charge points in. Again, at the motorway service areas, some city centres, you may have seen the Ecotricity charge points. They're 50 kW charge points, so they're about half the size of those Tesla ones. They would recharge a vehicle within around about an hour, an hour and a half, from flat. So, again, it depends on the size of the charge point what can be installed and where.
Os yw Vikki wedi gorffen. Rwyf jest eisiau gofyn i Graeme Cooper ynglŷn â'r hyn yr oeddech chi'n ei ddweud ynglŷn â'r cyfyngiadau o ran cael ynni mas o Gymru, yn hytrach na bod yna gyfyngiadau yng Nghymru. A allech chi esbonio tipyn bach beth yr ydych chi'n ei feddwl gan hynny, ac a ydy hynny'n golygu, er enghraifft, y byddai Cymru yn gallu rhoi ryw fath o bris ar werthu beth sydd yn rhywbeth sydd yn adnodd naturiol i Gymru i Loegr, fel ein bod ni'n gallu elwa fel Cymru o'r hyn sydd yn digwydd yn y maes yma? Dyna beth yr oeddwn i'n ei glywed gennych chi o ran bod Cymru yn gyfoethog yn hynny o beth, a roeddwn i eisiau clywed mwy am hynny.
If Vikki's finished, yes. I just wanted to ask Graeme Cooper about what you said about the problems in terms of getting energy out of Wales, rather than there being problems in Wales. Can you just expand on that, and does that mean, for example, that Wales could put some sort of premium on selling something that's a natural resource for Wales to England, so that we could benefit as the people of Wales from what is happening in this area? Because that's what I thought I heard from you, in that Wales is energy-rich in that regard. Could you tell us more about that?
Yes. I think that's a really good question. So—. Sorry, I can hear myself back through the headset, so I'll speak without the headset on. So, we have a very active energy market in the UK. The market is traded by those who make it to those who consume it. It's done ahead of time, and what I wouldn't want to see is interfering with an energy market. It works very, very well; we've a very reliable system. I guess you have strange dynamics with the transmission system, and it's changing. So, we've seen in the very the south-west of England—so, in Cornwall—solar has now turned up. So, before, on a sunny day, without solar, the power flows were generally flowing south-west. But, with the disruption of solar panels being put in fields and on buildings, actually, there are times of the day on sunny days when actually power is being pushed into England. In the same way, with high penetrations of wind in Scotland—on really, really windy days, we see power flows flowing directly south; on non-windy days, we see power flowing north. The challenge we have is, if we look at trying to island markets, you end up with—. I would suspect that you would end up with unintended consequences. One of the things that you have particularly in Wales is you have some very, very windy areas, and, in the south, some great opportunity for more solar. So, I think, within market, there are tremendous opportunities. Trying to extract value on the power flows, I would be very nervous that—. Actually, as an islanded system, it works very, very efficiently—
What happens on the continent, then, in Europe? You know, we've seen that Sweden are doing quite well on this. Surely, as an independent nation, they wouldn't be sharing it with islands around them, they would be accruing that for themselves. Even though we're on an island of islands—. It still would mean that they would have that natural resource as a nation. That's what I'm trying to understand.
Okay. So, what we see, if you look at—. I can use a very real example. So, what we see at the moment is some strong need for interconnectors between markets. I was in the control room—the National Grid's control room—earlier this week, and it was a very still day, high pressure, so there wasn't a lot of wind on the system, and it was an overcast day, so there wasn't a lot of solar running, and it was actually cheaper to buy energy from France and bring it across the wire into the market than to maybe start a coal-fired power station. So, I think it's one of those things, that, if you ended up with trying to do the same in interconnecting Wales with England, (1) the way the networks are built makes that a little challenging, but also we get value by the whole system working efficiently on moving that power around. I think it's one of those things. I'd really be interested to get into the detail; maybe we don't have time to do that. We've got some great thinkers within our organisation, and it might be a thread worth picking up and taking further, about that market movement.
Good morning. I want to look at constraints—[Inaudible.]—looking at distribution. And, within the current regulatory regime, what are the key ways of unlocking any potential grid constraints? And, again, because I cover rural mid and west Wales, I'm really talking about the opportunities that could be given and any blockages in the system that need to be taken care of. So, you talked about, just now, specific street constraints, potentially. And you talked about identifying it through any clusters that suddenly appear, but we all know, don't we, that if the Government starts to suddenly direct people towards electric vehicles, which they're trying to do, you could suddenly find that you haven't got an even, slow transition toward a type of vehicle but suddenly everybody buying electric vehicles? How would you cope with that sort of constraint?
Okay. One of the things we're doing in Western Power Distribution, we're leading a project called electric nation. It's actually the worlds largest consumer trial of electric vehicle consumer behaviours, to understand how people who've got electric cars today actually charge and what the impact is on the grid. What we're finding from that is that the evidence points to there being the potential generally—and this is generally; it's going to exclude those clusters of being able to support up to about 15 per cent penetration of electric vehicles. So, that's about 300,000 vehicles in Wales, and where we stand today is about 2,200 electric vehicles in Wales. So, we are some way off. So, even with a very rapid uptake of electric vehicles, there is grid capacity on the whole to be able to support those sorts of numbers. So, this isn't a problem that keeps me awake at night that I'm going to worry about.
There will be, and there are, instances where things cluster unusually, but we can reactively or proactively go along and reinforce. This is particularly in rural areas, where perhaps people are fed from a pole-mounted transformer rather than a ground-mounted substation. Ballpark cost for upgrading one of those—you'd perhaps be about £10,000. So, we're not talking millions. We're talking about a proportion of the cost of a car, so those can be handled reactively.
The other important tool to have is to ensure that the grid remains safe, so that's one of the primary concerns. And networks are protected against fault, so, should something wear out or get broken, or become damaged—somebody may be doing some other excavation work that damages the cable—the fuse will blow. A fuse is not a good device for protecting a network against overload. It really won't blow until it's very, very overloaded. So, having access to be able to do smart charging, and making sure that chargers have the ability to be controlled, is also really important. We're delighted that the new legislation for charge points that has just come through the UK Parliament mandates the installation of smart chargers from this point on. Do I think we need to access these immediately? No, but, again, it's a really good foundation stage to make sure that the grid remains safe and we can just make this transition to electric vehicles as simple and seamless as possible for drivers and consumers.
Okay, so vehicle-to-grid is basically the same as smart charging but has double the potential. So, an average domestic vehicle charger is 7 kW. If vehicle can do a vehicle-to-grid, it can export up to 7 kW. So, if something's importing at 7 kW and can very rapidly switch to exporting at 7 kW, that's 14 kW of difference. So, basically, vehicle-to-grid gives you twice as much potential as smart charging. It will also help with the ability to share power around the locality. So, if you've got a lot of people who are at home during the day, with an electric car, and maybe they've got solar panels as well, they're charging the car during the day. Some of their neighbours come home at tea time and want to charge their car, and what those other cars can do at that point is share some of their power with their neighbours before then resorting to off-peak electricity overnight to charge back up again. So, it will come. Again, there's a limitation of the numbers of vehicles that support vehicle-to-grid at the moment, and in availability of the charging equipment. The stuff that exists today is rather large. It's about the size of a wardrobe, which most of us wouldn't want in our driveways.
So, you've started talking about the co-location of different energy, renewable energy and also electric vehicles. Some of it's already happening on a low scale, because there are big problems with either accessing the grid, if you put solar panels on your house, particularly in a rural area, and the cost is prohibitive; and the other challenge, of course, is the storage, the type of storage that exists in properties at the moment. So, what views do you have in that being perhaps where you might foresee problems in grid capacity, in solving those? Because if we're going to build lots of new houses, this is a planning issue, a forward thinking issue. To avoid blockage in the planning system, because you said you'd need more transformers and lines, et cetera—I picked that up very quickly when you talked about that, because you're going to have objections to those things. So, part of the planning has to be foreseeing the problems. So if we're going to build new buildings and we're expecting people to drive new types of vehicles, should we not be linking these things together right at the beginning?
You're absolutely right. The whole point—. We call this move from centralised, predominantly fossil fuel power stations to all these localised renewables, it's generically called distributed generation, and the key to distributed generation is actually distributed energy. It's about making the energy locally and then using it locally as well. So, the more locally we can use it, the more of a relationship we can get between communities and where their energy comes from, and that in turn will drive the sustainability agenda, which in turn will drive efficiencies and minimise costs as well.
We've got a number of projects that we're working on. Some are new build, so they're looking at designing new housing estates, housing estates of the future with electric vehicles, and smart grids, fibre to the home, heat pumps, home energy storage batteries. We're working with Sero Homes and Pobl on a development of 250 homes at Tonyrefail. That's a new-build project. We've then got a retrofit project that we are doing at Blaenymaes, just outside Swansea. That's a retrofit, and what we're installing there is solar panels, energy storage, and a district heating system and heat pumps as well. What we're trying to do on both of those projects is to try and work out how we can be as self-sufficient in those communities as possible. So it's not about trying to build a really big grid infrastructure. It's about trying to build an appropriately sized grid infrastructure that's smart and local as well.
Okay. And what about those charging points that you don't know about? Are there any charging points that you don't know about? The unregistered.
If you could just be a bit more brief on the answers. I appreciate your full answers, but we've got quite a bit to get through.
We currently have 939 EV charge points notified and registered with us, and we believe, according to Regen, who do our local energy scenario, about 2.2 million cars. So that's showing that we've only been notified about 50 per cent of them, although a number of the cars could be being charged on a standard three-pin socket, which we don't endorse, and don't believe to be a safe way of charging a vehicle.
Some of the responses, perhaps reflecting something Bethan Sayed said, seem to be reflective of the old-fashioned England-and-Wales view of this, and it's not surprising because we know how much is reserved to the UK Government. But with that in mind, how are you building a relationship with the Welsh Government, particularly with regard to customer-centric charging infrastructure?
Firstly, we're here and happy to contribute.
Well, this isn't the Welsh Government. You said earlier 'the Welsh Assembly Government'. Well, this is the Welsh Assembly. It's not the Welsh Government. I'm keen that we make that distinction.
Yes, absolutely. Apologies. One of the things that we have done is look at the country as a whole. We've made representations to Westminster on the strategic 54 sites to fix range anxiety. The extension of that is then who delivers that and how they deliver that. We've actually met before. We came in today to work out how we jointly turn up as networks to solve the transport problem. So, this is an opportunity for us to take this and move forward to work constructively and collaboratively. Because the transport sector doesn't really care who owns the wires. They just want to make sure they turn up in the right place and there's the right capacity. So the one thing—we met prior to this—was that there is actually a great opportunity for networks to try and help fix the transport problem, working with them.
So, can you give examples of engagement you've had with Welsh Government Ministers, the civil service?
I have some appointments booked later today.
I haven't personally, no.
As Western Power Distribution, as you'd expect with us serving south Wales—south Wales is one of our four operational areas—and being a relatively large employer in the region as well, we have longstanding relationships with the likes of Ron Loveland and Jane Forshaw at Local Partnerships, which is a particularly helpful channel into those local authorities as well. If anything, because I cover all four of the licence areas—so, south-west, and the east and west midlands as well—the real opportunity that Wales has got is that it's much easier to engage, I find, in Wales than it is in England, where you have to go to lots of local energy partnerships and lots of different local authorities. There's a real opportunity in Wales.
Okay. And let's turn that on its head: how well do you think the Welsh Government is engaging with the UK Government to produce a joined-up picture?
I guess it's probably more of a National Grid question. I guess the challenge with all these things is that we're in uncharted territory. The disruption of decarbonising transport is a bit of a brave new world, so it's only really in the last six months that we've had 'The Road to Zero' strategy, the National Infrastructure Commission report, and the Business, Energy and Industrial Strategy Select Committee hearing. So it occurs to me that when we hear the output of the BEIS select committee hearing, it's a really good platform, because that should be advice to the Government of the day as to the next steps.
It's then taking that and working out what that means in each of the regions, because I'd even say within England, no two regions are the same, and I guess in Wales, no two particular areas are the same. You've got different challenges, both geography, population and grid capacity. So it occurs to me that, actually, when we have those three documents together—'The Road to Zero', the national infrastructure assessment and the BEIS advice—that's actually a really good opportunity to open up all three documents and say, 'How does this translate?' and then, 'What are the regional nuances that actually help?'
No, I mean regions within Wales. If you look across the transmission system, the transmission system in Wales is broadly a strong line across the bottom and a strong line across the top. But even the nature of the demographics in each of those is fundamentally different, so I think it's a case of, even within regions, there are sensitivities around what people think they need and what they want.
But to come back to the question: do you have any perception that the Welsh Government has engaged with the UK Government on infrastructure?
I would like to think that those discussions have taken place, but because it's at ministerial level, I don't have direct sight of that.
Okay. So, let's go hyperlocal and local authorities in Wales. Have there been examples of charging infrastructure being developed within local authority areas in Wales?
Charging points have been installed across Wales. The localities that we've worked in: obviously, we cover the south Wales region, so there's an established relationship with Cardiff city council; we've done quite a few innovation projects with Bridgend; we've got a good relationship with Carmarthenshire; and Monmouthshire, we've recently been doing a fair amount of work with. So, yes, we do engage at that sort of local level as well.
Yes. So, we've got a longstanding relationship particularly around Ebbw Vale and the redevelopment opportunities there as well. So, yes.
Thank you very much indeed, and thank you, Graham, for telling us about the solar energy from the south-west of England and windfarms from Scotland. So, why not some hydroelectric from Wales? Because we've got a lot of canals and a lagoon, which is, basically, a lot of energy we can produce with tidal wave. It's one of the biggest in the world, and with that we can cater for the M4 right from Bristol to Swansea, and still sell to the grid. Don't you think? Have you done any feasibility on that site?
When people want to—. National Grid doesn't have the ability to central plan what generation happens. We obviously own the transmission system, which is the route to the market for the power. So, when somebody wants to develop a generation project, be that a windfarm, large solar plant, even the Swansea bay tidal project, they would approach us and ask for a grid connection. So, we can only look at the impact on the grid connection when we know the size of the project—they make an application and we can make an assessment of what that means to the grid.
There's a recognition that the energy transition is moving. Historically, making electricity was the dirtiest thing we did as a country. What's interesting is with the development of windfarms and solar, actually, transport is now the dirtiest thing we do as far as carbon intensity goes. So, it shows that in a very short period of time, the energy market is changing dynamically. We're just trying to make sure that we are ready so that we are not the barrier to the transition. We want to make sure that we are the enabler, hence engaging at the transport decarbonisation level and coming up with propositions to try and help.
Thank you very much. The thing is, Norway is the only country in the world that is virtually an electric vehicle nation—in the world it's at the top of the tree, the best in the world. Rather than them making electricity from hydropower—
They are, yes.
And they're only going to distribute to every car, I think, in the next few years.
Fifty per cent of new car sales are fully electric. The one thing that makes me a little nervous if you say, 'That's what Norway can do, let's cut, copy, paste and do exactly the same', is that they're obviously a country that has lots and lots of deep valleys, so I think a high 90 per cent—
I was going to say, most of their electricity is generated by hydro, which is great, but also what is different, really, and why, at a network level, it's a very, very different play, is that, in Norway, when they started building houses, they heat them electrically. So, most of the houses already have a large connection to them and the energy is generated via hydro. So, by adding electric vehicle charging to a house in Norway, it doesn't really move the dial. So, the network was built to do heat, and the heat demand is greater than transport. In our island, as a whole, we've generally heated our houses with gas, or if you're rural, via oil. So, the challenge you've got is the network was built, really, to serve ovens and lighting; it wasn't designed to have a high load on it. This is really the transition we're going on. It's great what they can do, but you can't just copy and paste.
I was just coming to my question now, because I just went off the track, learning what we can learn from Norway.
Yes, it's great. But the thing is, my question is regarding how to assess funding levels and mechanisms for electric vehicle infrastructure, including Welsh Government and UK Government funding. Actually, that's what—. Two million pounds of funding from Welsh Government has been allocated. Is it sufficient to achieve its ambition to create a publicly accessible national network of rapid charging points by 2020?
Crikey. Well, I'm not sure I'm totally qualified to answer that, to be perfectly honest. I mean, what I would urge is that, as local authorities, if it's going to be local authorities mainly leading the installation of the chargers, if they engage with us early. We have local depots and offices all the way across south Wales; we operate a regional business, so our planner for the area, our low-voltage planner will sit in that local office. I would encourage people considering building that infrastructure to go and visit, get to know our planners, because it really can make a massive difference just where you site the chargers. It can be as significant as which side of the road it's on, or whether it's on the main road, or the side road. So, come and talk to us early. There's lots of information and plans available online, but there's nothing like a bit of human contact between two sets of people who are serving the same community.
How should private investment be secured on this? Private investment.
So, perhaps the question is: there's Government money going in, but what about levering private investment as well, along with that Government investment, or what the balance should be?
What's really interesting right now is, to try and get established investment, you need certainty in a number of things when you present that to investors. The two things that are happening right now are that you have connection costs to the grid that are generally reasonably pricey by the nature of the safety and the nature of the grid. And if you were a large power station, you would amortise that cost over a number of years. If it were a nuclear power station, that's 40 or 50 years, if it's a windfarm, it's 25 or 30 years.
What we're starting to see in the market is that charge-point providers are looking for 10 or 15-year leases, so that's a shortened time to amortise that connection cost. The other side of the equation is that you have utilisation risk. So, at the moment, with only 2 per cent of the cars on the country's roads being plug-in, what does the uptake look like? The business model is really struggling right now, and this is where there's a mode of market failure. And it only gets worse when you go to more expensive and faster chargers, because the grid connection is more expensive and so is the charger. So, at the moment, that mode of market failure is that there's an opportunity for Governments as a whole to consider strategic investment, which is what's articulated in 'The Road to Zero' strategy and the national infrastructure assessment, where commercial markets might not make it yet. And the faster you go on charging, the more that becomes a challenge, which was why the 54 strategic sites were presented to the Westminster Government and we shared the content here. So, that's really the problem of getting that investment. At the slightly slower chargers and where there are other commercial drivers, so it's not just about the supply of energy,it's anchoring people where they do something else, then there's an element of socialisation of that cost for whatever it is that people are going for. So, at the moment, those business models are still emerging and it's very, very difficult to get private finance at scale, where it's very difficult to see how the returns are made.
Okay, I understand. Finally now, where should the Welsh Government be focusing its £2 million funding in order to achieve maximum impact and how should this be co-ordinated with the UK Government and private sector investment? You've answered part of it, anyway, but where should they be focusing that money, the £2 million?
One of the things that I think often gets missed is that there are two functions to chargers: location and the speed of the charger. So, the thing that makes me a little nervous is if you wanted to get as many charge points for as little an amount of money, you would put lots of slow chargers in. The challenge that you have is that that means leaving a car somewhere and people are stuck whilst they're waiting for their car to charge—they need something to do. So, what I would say is that before anybody spends any money, both think about the location, and then the location will dictate how fast the charging should be. A real practical example: if you don't have off-street parking and you probably do your weekly shop at a local supermarket, it would make sense to have a charger at the local supermarket. The challenge is—I don't know about you, but you're never there for more than 45 minutes, so what you want is a charger fast enough to charge you up in 45 minutes. In the same way, if you didn't have off-street parking and you go to the cinema once a week, you're in the cinema for two hours, so you'd want the charger to deliver enough charge in that two hours. So, the one thing I'd say is that before any money is spent, don't think about dots on a map—it's the combination of both location and appropriate speed. At home, a slow charger's fine, because the car's sat there for eight or nine hours. It doesn't work at a motorway service area.
Rwyf jest eisiau gofyn ynglŷn â beth y gellir ei ddysgu o'r system band eang a mobile, os unrhyw beth. Rydym ni wedi trafod yn barod y bore yma ynglŷn â'i drin e fel public utility, ond rwyf i wedi bod yn gofyn cwestiynau i Julie James, y Gweinidog, ynglŷn â thrin band eang fel adnodd cyhoeddus, ac, yn amlwg, mae hynny'n rhywbeth mae Llywodraeth San Steffan yn mynd i orfod gwneud penderfyniad drosto. Mae yna rwydweithiau band eang fan hyn, ond rydym ni'n gwybod eu bod yn ad hoc a'n gymysg. Felly, a yw band eang yn rhywbeth y dylem ni ddysgu ohono, neu a oes yna rywbeth arall y gallwn ni ddysgu'n well ohono?
I just want to ask about what can be learnt from the mobile phone and broadband roll-out, if anything. We have already discussed this morning about treating it as a public utility, but I've been asking Julie James, the Minister, a few questions about treating broadband as a public resource, and, obviously, that's something that the Westminster Government will have to make a decision on. There are broadband networks here, but we know that they're ad hoc and they're mixed. So, is broadband something that we should learn from, or is there something else that we could learn better from?
Do you want to go first?
Yes, I can do. There are probably two parallels with the broadband roll-out, particularly. One of the things we did with the first generation of broadband is we all used something called an asymmetric digital subscriber line—I think quite a lot of people still use ADSL, rather than fibre—and the feature you get with ADSL is when everyone wants to use it at once, it slows down quite rapidly. And there are real parallels there with smart charging, particularly if you push the smart charging too far—everyone would come home and the grid would slow down just at the point when everyone wanted it to be faster. This is a societal question, really—it's a customer service issue. We need to work out what our customers want in the future. We need this to be customer-led, not network-led. So, we need to learn that from the broadband roll-out.
The other point I'd make quickly—I mentioned the retrofit project. One of the things we're doing there—because what we're going to try and do is retrofit and fit bigger cables; superfast electricity into this estate using fancy robotics and directional drilling, and all sorts of fancy things—is actually install some fibres at the same time as well. So, actually, if there is an element of rewiring to be done, ultimately, for electric vehicles, could this be an opportunity at the same time to put the superfast fibre in?
I'd also say there are similarities between the roll-out of mobile phone networks. So, wherever you've seen a disrupted technology, if you leave it purely to market what generally happens is that towns and cities get done, and everybody else becomes a second-class citizen. So, this is really where there is an opportunity for the Westminster Government, Scottish Government and Welsh Government to actually say, 'What is it we want our populations to have?' So, I think if we just assume that markets will fix everything, I think they will eventually, but if you look at the transition journey we're on, this needs to be speeded up. So, I think there is an opportunity for modest strategic direction from Government so that the populations get the best answer, rather than it end up being focused purely around markets, and that gets anchored around just towns and cities.
Ond ai nawr yw'r amser i wneud hynny, achos rydym yn gweld gyda'r rhwydwaith mobile fod yna fonopoli? Mae gan Arqiva fonopoli yn y system. Os nad yw Llywodraeth Cymru yn mynd i fod yn gweithredu nawr—rydych yn dweud mai dim ond chwech mis maen nhw rili wedi bod yn edrych ar hyn—mae yna gwmnïau sy'n mynd i fod yn edrych ar hyn ac yn dweud, 'Fe allaf i greu monopoli yn y farchnad yma', ac wedyn mae Llywodraeth Cymru yn mynd i gael llai o fewnbwn i mewn i beth sy'n gallu cael ei wneud ar gyfer y bobl hynny rydych yn sôn amdanyn nhw, sydd ddim yn flaenoriaeth.
But is now the time to do that, because we see with the mobile network that there is a monopoly? Arqiva has a monopoly in the system. If the Welsh Government isn't going to be acting now—you're saying that they've only really been looking at this for six months—there are companies that will be looking at this and saying, 'I can create a monopoly in this market', and then the Welsh Government is going to have less input into what can be done for the people you're talking about, who aren't a priority.
So, just thinking—. I guess the challenge that we have is there's a very superheated market right now in people offering the charge-point provision—the bit between the grid and the car. I wouldn't want to interfere with that because, actually, that's a very live and dynamic market-led market. The challenge is the grid capacity to be able to serve that. So, the strategic opportunity is not around dictating who the charge-point provider is and what they deliver; it's about bringing the capacity to enable those local markets to be served. So, the challenge you've got is the comment I think you made earlier, Roger—the first person turns up, if there's a bit of spare capacity, they get that very cheaply, but if you then want to scale, then the next person is bearing the upgrade costs.
So, I think there is an opportunity, really, just to make sure that networks, both transmission and distribution, work with Governments to look at least-regrets strategic investment. It falls more towards the distribution system once you come off the transmission system, the in-street and the rural communities. But I think it occurs to me that there is a real sweet spot.
I'd also say timing—you made a comment about timing. What's really interesting for me is that I regularly commute from my home in rural Berkshire to Warwick, which is where my office is. Midway on that journey is a 16-bay charger, and when they put the 16-bay charger in everybody thought that this was a bit of a white elephant, and would not be used. Three weeks ago, all of them were full and three cars were waiting. So, when people say the challenge of charging is something we can take time to consider and we'll worry about it—it's a future problem—in certain areas, and this will be very region-specific and, actually, location-specific, the challenge is already there now.
So, what I'd say is that this is a real window of opportunity for some decisive direction, both in devolved Government and central Government, to make those least-regrets approaches now, where the infrastructure could actually unlock the market for all.
Nid oes lot o amser gyda fi, ond efallai y gallaf i rolio'r ddau gwestiwn arall i mewn i'w gilydd o ran on-the-go charging a sut mae hynny'n creu sialensiau, a hefyd rydym yn gwybod bod yr Alban yn gryf yn y maes yma—a oes yna bethau rydym ni'n gallu eu dysgu o'r Alban? Rydym yn cael budd o'u gwynt nhw, rydym newydd sylweddoli gennych chi heddiw, ond a oes yna strategaeth yn y maes yma y gallwn ni gael budd ohoni hefyd?
I don't have much time, but perhaps I can roll the other two questions into each other about on-the-go charging and how that poses challenges, and we know that Scotland is strong in this area—are there things that we can learn from Scotland? We benefit from their wind, we realise from you today, so is there a strategy in this area that we could also benefit from?
So, by 'on-the-go charging', do you mean literally charging as you go, like wireless charging as you go?
Yes, that what I—. I'm not an expert, but that's what I thought I meant by it. [Laughter.]
Such a technology is still at the research and development phase. But everything has to start somewhere. We actually installed the UK's first wireless bus charging infrastructure. We did this with Milton Keynes Council. We started in about 2013, and we converted a whole bus route to wireless charging. So, there's basically three wireless charging points in Milton Keynes, one at the terminus at either end and one in the middle. And what we're able to do with that is determine where the grid has capacity to where the bus charges and when it charges. So, it just gives extra flexibility. You've obviously got no trailing wires and leads and stuff as well. And that's been incredibly reliable. It's quite efficient. It's not as efficient as a cable. The bigger the gap that the electric has to go through wirelessly the more you lose, but it's actually quite efficient and it's been in since 2013. We're now in 2018 and it's still in and it's still operational. So, for first-generation technology, that's not bad. We're now working with the local authority and the UK Government to identify whether there's potential to potentially change all the bus routes in Milton Keynes to pure electric and pure wireless charging.
And in Wales are you looking at that, because, obviously, bus regulation has just been devolved? So, are you looking to do that in Wales?
So, the conversation we've had around Wales—there was the charging point outside the Welsh Assembly Government building. I don't know if you saw that one. It was there for a period of time. Unfortunately, it was running from a generator, which didn't look quite right, but it was a start. So, yes, we have had a conversation with both Cardiff city council and the Welsh Assembly Government about the potential for electrification of larger transport. Electric isn't the only thing for larger transport. We've also got aspects of looking at hydrogen, green hydrogen from electrolysis, for larger fleet as well. Hydrogen tends to get forgotten—electric vehicles are definitely here, they're definitely coming, but, certainly, we're not ruling out a potential role for hydrogen there as well.
Can I just add one point? In the modelling we did with the 54 strategic sites, we included the capacity for making hydrogen electrolysis, because the national grid is not in the business of picking winners—we're technology-neutral—so in the 54 strategic sties, we actually built in the modelling in our capacity to make hydrogen. So, I just wanted to add that in there as hydrogen came up.
We've touched on it earlier, but just to talk about residential infrastructure with regard to charging as such. How much of a priority should home residential charging be for the Welsh Government? Should they be involved in this? I would have thought that, with regard to regulation on new homes, they would have to have a focus there, wouldn't they?
Yes, I mean, there's certainly an opportunity around new homes to ensure that homes that are being built today have got the infrastructure that's suitable for them in the future. We produced a paper a few weeks ago with the Renewable Energy Association. We introduced this concept of superfast electricity, which is sort of akin to superfast broadband. But, basically, what it entails is taking what's called 'three-phase connections' into each home. At the moment, there will be a three-phase cable in the street, and we will take one of those phases into each property. So, every fourth home, every third home, will have a different phase. And what we're proposing is taking all three phases into each home. The way to ensure that that happens is in the same way as, through planning, you can mandate the installation of a 7 kW charger, but you can also mandate a minimum amount of energy, or a minimum amount of power. The reason why you're doing it through the planning system, rather than just us unilaterally deciding to do it, is that, actually, the connections market for new build is a competitive part, so it's not part of our monopoly business.
So, we are talking with the other network operators. We are talking with what are called 'independent distribution network operators'—IDNOs—to identify whether there is the willingness or, indeed, the ability to be able to increase that minimum standard. We all have licensed conditions at the moment to develop networks to minimum cost. So, we need to work out a way of just lifting that bar.
How did you make the choice on that retrofitting site? How did that come about? Was the Welsh Government involved in that?
Sorry, on the ones that we're working on, the one in Blaen-y-Maes? So, that was part of an Innovate UK bid for funding that we did alongside local authority and the Welsh Government, yes.
One of the issues—you actually, I think, passed on this; actually, Graeme, you just mentioned it—is the fact that some of the manufacturers and retailers are providing what is really inaccurate advice with regard to charging things at home, saying that three-point plugs are suitable for recharging. And, obviously, that's not really the case, is it? We've heard about the possibility of trailing cables all over the place. What do you think the Welsh Government ought to do with regard to that?
Well, it's really a matter of ensuring that the equipment installers—these are electricians, accredited electricians—are following the regulations that are already in place. So, the Institution of Engineering and Technology governs the wiring regulations in the UK. They have developed a code of practice for the installation of electric vehicle charge points. Electric vehicle installers have to carry out what's called a load assessment to make sure that the house is suitable for that charger; they'll look at what other equipment you've got. And, if they believe that that is going to go above a 60 amp limit, they need to notify the distribution network operator before they install.
Well, they're already there—it is part of the wiring regulations. So, in terms of new build, it would come under planning and building control.
But you mentioned earlier on that only 50 per cent of those who are installing these actually let you know about that. Should that be backed up by regulation, that if—?
So, the existing regulations are where people are installing a dedicated charging point. Some people do go and plug them into a standard three-pin plug—that's not appropriate. We have dedicated wiring for our cookers, don't we, and that's generally a smaller load than the car. So, really, it's about making sure that the whole electrical industry is giving consumers the right advice. As I say, the controls are there; it's a question of making sure that they're enforced.
Yes. Obviously, smart charging is going to be quite an important factor in this, as the roll-out goes on. Do you have any ideas as to how we can change behaviour with regard to customers to accept smart charging as part of owning one of these electric vehicles?
Okay. So, through the Electric Nation project that I mentioned earlier, we've about 700 drivers of vehicles taking part in that trial. And what we found from that project is that people going into the trial—around about three quarters of the people going into the trial said they had no issue with smart charging. Coming out of the back of the trial, we're actually finding that nearly 80 per cent of people are happy with smart charging. So, we are actually finding that lots of people, so long as they feel in control of it—they have an app or button on their charge point, so, if they need a priority charge, they can get one, but we're actually finding that a very high proportion of people will accept smart charging. Most people don't even notice. A lot of the trials we were doing were actually to do what we call charging events and to push things to the point, to see whether people would actually notice us doing it or not.
Okay. Why do you think there's the other 20 per cent who were not accepting it? Is it ignorance or—?
Some people, if you look at the data—. So, some people are outliers. If you look at an average fill of an electric vehicle at home—if you take a purely electric car, which will typically have a 60, 70, 80, 90 kW an hour-type battery, they will fill their electric car with about 35 kW—that's an average fill. So, we've got a good feel for that. But there are outliers either side of that. So, if you're at the upper end of that—so, you've got a long commute—you're going to be less tolerant to smart charging than somebody who's got a small commute. There'll also be those people, who, given the option of a button that says, 'I want to charge now', and while there's no extra cost to that, will always press the button.
Can I just ask a question to National Grid? Earlier, we talked about Wales being an exporter of energy. What I'm trying to grapple with is—without asking too much of a technical question—when you're relaying that power out from projects in Wales to a point across the border in England, is the technology enabling just power to go in one direction? Because what we're interested in is, of course, power coming into Wales. Do you understand my question?
Yes. Unfortunately, I'm not an engineer and I'm not able to answer your question, but it's a great question and can we take that offline and we'll get some better engineering brains than I have to try and answer that?
Right. Okay, thank you; I appreciate that. And, finally, our piece of work is to ultimately make recommendations to Welsh Government about how they can support better electric-charging infrastructure across Wales. Do you have any other thoughts about what we could be recommending to Government or anything else that you would like to add that hasn't been drawn out in questions today?
Do you want to go first?
I think, with a danger of reiterating myself, it would be to work with us. There's a unique opportunity, particularly with the distribution network operators—we are a monopoly service provider, but we serve all the homes and businesses in south Wales; if that isn't a unique opportunity to engage with Government to work on something strategically—
Well, continue the conversation, share things like scenario planning—what are the outcomes we're trying to achieve, what are the barriers to the installation of charge points. You talk about—. If the Government can talk about the outcomes they want to achieve, we can look at the best engineering solutions.
Okay. Is the Government doing that at the moment or is there room for improvement?
I think it's still—
It's an ongoing conversation. It's still early days. There are still relatively low numbers today, but now is the right time to actually get ahead of the curve and get on with it.
I'd agree—engaging is really important. I'd also say, I think, that there's a real opportunity here and that a lot of work has happened on 'The Road to Zero' assessment, on the national infrastructure assessment and on the BEIS select committee hearing and the report that fell out from that. I think for me, there's a real opportunity to look at those three documents as a suite, because a lot of work went into those. And then let's work out what that actually looks like on the ground, in all the areas of Wales, to make sure that you get the right answer and that translates. But I would absolutely agree: there's a top-down and a bottom-up and, actually, we need to do both. Because the challenge here is: home charging doesn't just fix it, on-route charging doesn't just fix it; what you need is more of everything, and, actually, the time to act is sooner rather than later to make sure that we're not behind the curve so that the infrastructure is not the reason for not making the energy transition.
We're really grateful for your paper and for your time this morning—we appreciate that. I hope, Mr Cooper, that next time you come to the National Assembly for Wales, you'll be able to drive here in your electric vehicle—
Let's hope so.
—without taking other modes of transport. Thank you very much for your time this morning.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitem 5, ac o'r cyfarfod wythnos nesaf, yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from item 5, and from the meeting next week, in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
We move to item 4. Under Standing Order 17.42, I resolve to exclude the members of the public from item 5 and from our meeting for next week. Are Members content with that? Thank you.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 11:08.
The public part of the meeting ended at 11:08.
Nid oes recordiad ar gael o’r cyfarfod rhwng 11:30:22 a 11:30:35.
No recording is available of the meeting between 11:30:22 and 11:30:35.
Hi, I'm Simon Jones, director of economic infrastructure.
And I'm Nathan Barnhouse, deputy director of transport planning and programming.
Thanks a lot for attending this morning. Our first set of questions is from Hefin David.
Cabinet Secretary, it's not been a very good autumn. You said in response in the Chamber that the dreadful quality of the rolling stock you inherited from Arriva Trains Wales was a key factor. Are you one of the few people surprised by that?
Taking over the trains was was a bit like purchasing a second-hand car; you knew that it had an MOT, but you didn't know the standard to which had been fully maintained, or what the advisories were on the MOT either. We were surprised by the impact that conditions had on the wheels, but we had no control, as you're aware, over these standards that were built into the contract that had been agreed back in 2003. The standard of the trains at the point of handover we can trace back directly to the contract that was awarded back in 2003, and that contract, as I've said on numerous occasions, was simply unfit for purpose.
It's this bit of surprise that I'm struggling with here, because, as a committee, we've gone into depth on this, and also our predecessor committee did. We've been to the repair depot, we've seen the wheel lathe they've got there, and we weren't remotely surprised by these things. So, I'm just struggling to understand why you would be surprised. You've had warnings from our predecessor committee and from this committee about the state of the rolling stock. Why are you surprised?
It's not necessarily surprised by the state of the rolling stock; it's surprised by the scale of what happened, and we are still learning more about factors that may have contributed to such a volume of trains being taken out of service. I think I've already stated on the record that there was an issue back in 2016, when Network Rail stopped sanding all of the tracks. That, along with the fact that the Welsh fleet is one of the only fleets, I believe, in the UK not to have wheel-slide protectors, suggests that that increase in the number of wheel flats that began in 2016 can be attributed to that dual factor. And so this only became apparent this autumn. Normally, autumn is a very difficult period anyway, but this became apparent this autumn. But the actual maintenance of the vehicles, it's quite clear, was carried out to a very minimal standard, based on the contract. Simon.
Yes. We were managing a contract on behalf of the UK Government that we inherited in 2006-07 for a number of years that just wasn't fit for purpose. The contractor was complying with that contract. We can't argue that they weren't complying with that contract, but the requirements were so low that they weren't giving us anything that would give a lasting benefit for us.
In a statement, Arriva Trains Wales have said that they've gone above and beyond their contractual obligations. Do you dispute that?
Well, let's just take a look at what they've said in that statement. They've boasted that they'd invested £30 million over 15 years, and yet their profits during many of those years were in excess of £20 million. Now, contrast the £30 million of investment with the £800 million that we'll be investing through Transport for Wales in the rolling stock, and the £200 million that's going to be invested in stations. There's quite a degree of contrast. If they say, and if it is true, that they went above and beyond what was contained within the contract, then that, once again, I'm afraid, demonstrates just how dire that contract was.
Okay, that's fair enough. You've been very, very robust in your criticism.
How much was required—? How much were Arriva required to invest, according to the contract?
Well, the contract was based on the assumption of zero growth, and there was very little within the contract that would enable us to compel Arriva to bring into action new rolling stock. It was also an issue that the UK Government were responsible for. We were managing it from 2007 on the basis of an agency agreement, but, ultimately, it was UK Government.
Yes, but what I'm getting at is that Arriva are saying in their statement that they've invested £30 million. What were they required to put into that contract or into the—
I don't think there was a requirement for them to invest anything. So, I think it probably is fair to say that they went above and beyond, but I think, as the Cabinet Secretary said, you put that into the context of what other levels of investment that we're seeing now, when you compare that with the levels of profit that they were making, it doesn't paint a pretty picture. There was no compulsion on them to invest in rolling stock, despite the fact that passenger numbers doubled over the life of the franchise.
It demonstrates the shortcomings of the form of privatisation that was taken forward and the contract that was agreed back in 2003. As I think has been well recognised now, the deal that we've got going forward through the next 15 years will see an unprecedented amount of investment with a huge number of new services introduced and greater—
I appreciate that, and the future of the franchise is, I think, in safe hands in that sense. But what we're trying to understand is the overlap between Arriva and the Transport for Wales introduction.
Yes, and the preparedness. It's got to be said, in 2013, the Enterprise and Business Committee said that the Welsh Government needed to develop and publish
'a rolling stock strategy as a matter of urgency...to enhance future capacity and quality of trains for the long-term.'
But that was only accepted by your predecessor in principle, which we know means absolutely nothing.
But with all due respect, I think the committee also recognised that, back in 2013, we were operating under an agency agreement and, therefore, rolling stock was a matter for UK Government. We kept saying to UK Government that rolling stock was an issue. They didn't do anything about it, and, so, actually, us developing a rolling stock strategy at that point would have been pretty pointless, because we didn't have an ability to actually deploy that strategy and to implement it. Simon.
And going then beyond 2013, as we got closer to the start of the new franchise, it became clear to us, and actually from recommendations from organisations like this committee, that we needed to focus much more on the outcomes that we wanted to achieve, rather than specifying a whole load of inputs. If we'd developed a rolling stock strategy that said we should have had x number of this type of train and y number of that type of train, we would have really been tying hands for the quality of innovation that we've seen through the procurement process. So, that was why we were, in one sense, a bit reluctant to fully embrace the detail of a rolling stock strategy, because we wanted the full scope for innovation in the procurement process.
It's very doubtful that we would have reached the point that we're at where we've agreed the £800 million of new rolling stock.
That's appreciated, and I genuinely appreciate the work that's gone into this franchise and the plans for the future. I'm just thinking about—at the handover point, you must have had a rolling stock survey, plan and assessment, and you must have had an inkling that this autumn was going to be bad. I know, from having met with Tom Joyner at Arriva, they're very honest with you about the detail of the problems. You must have been prepared for this and been aware of it.
We followed the established process for the handover, and it's always difficult to have a very clear understanding of the condition of the rolling stock until that handover has taken place. But we followed the DfT proces. Transport for Wales undertook a full audit, investigated the fleet as part of the handover and localisation process but, as I say, it's always difficult within that process to be able to really ascertain precisely what sort of condition the rolling stock is in. I go back to the MOT analogy: it's like buying a car, having the keys handed over to you, you knowing that there is an MOT that shows that the car has been maintained to a minimum standard, but what you don't know until there's a handover is that list of advisories and the issues that are attached to it. Frankly, towards the end of the franchise, I think, looking back now, it's quite clear that the trains were maintained to an absolute minimum standard.
It's going to be the same staff maintaining the trains now, as they've been transferred across under the Transfer of Undertakings (Protection of Employment) Regulations 1981, so what changes will be made to the maintenance process?
So, I think there's a root and branch look at the way that things are going on. I know you had some evidence from James Price and Alexia Course last week from TfW.
And he said that 'some of the working practices' they were 'surprised about'.
Yes, so, I think there are customs and practices that evolved over those 15 years. We've got a new senior management team in there now that is bringing in best practice from across the UK to change the way that we look at it. But we've also got to remember that some of that rolling stock is 40-odd years old, and—
Yes, and I don't think we want to criticise individuals for the work that they've been doing. If you think about the snow that we had last winter, they did a fantastic job of—
A thousand overtime hours by staff. It has been a monumental effort, and, as of today, I think now 100 trains are in operation.
Around 100 trains.
And this is what I was going to say, actually, following Simon, I think one of the big changes that's taken place in the last few weeks is that TfW have ordered those wheel-slide protection kits, which will be installed on all of the trains for next autumn.
I was also going to say that there is some additional rolling stock that's on order that's due to arrive in the spring of next year. I think we were talking about that in the last session that we had here. So, there will be additional rolling stock on top of what's already in service at the moment. So, that will give additional capacity. The wheel-slip protection stuff will be in place as well.
And we also—. TfW moved quickly to identify facilities where wheels could be turned—lathed in order to bring them back into use more quickly, So, for example, they looked at other facilities across the border in England that we could utilise.
So, it's not been the most auspicious start for the Transport for Wales brand, but you are confident that that brand can be rescued and won't end up with the same reputation as Arriva.
Absolutely. I'm in no doubt about that and, actually, if we just recognise that what happened was they had a handover that was at the worst time of the year, with a fleet of trains that had been maintained to a minimum, that were archaic, and, as a consequence of various conditions and factors, the number of trains in use fell to 86 and that was very suddenly. And in the space of a couple of weeks, they have reintroduced 14 of those and will be back to normal within a matter of days now. So, I think, actually, it's been a Herculean effort to get those trains back into use and to address really quickly, in a short space of time, historic poor maintenance of the fleet.
Sorry, just to emphasise a point that was made earlier on, the fleet is extremely old. We did make representations during the time that we were managing it on behalf of the Department for Transport to ask them to invest in new rolling stock. They were not interested in doing that. We made representations, particularly in the run-up to the end of 2019, because we've got to change the fleet, or we're going to make amendments for the persons of restricted mobility regulations. Again, the UK Government were not interested in dealing with that problem, they wanted that to be dealt with as part of the new franchise. So, these problems have been stored up by design by the previous owners of that contract and it's for us to try and unpick that over the 15 months we've got between now and the end of 2019.
Can I just pick up on points in regard to the 2013 committee report by the previous committee in regard to publishing a rolling stock strategy as a matter of urgency? Because, as I understand it, you invested in rolling stock before 2017, and then in 2017 you also started the process for procuring additional rolling stock. So, what I'm trying to understand is why, knowing the state of the rolling stock, you didn't act earlier than 2017, if you like.
Sorry, just to go back and re-emphasise the point, we were very keen to create, particularly on the core Valley lines, a vertically integrated railway solution for reasons that the committee has recommended to us in the past and the National Audit Office in particular has recommended. We didn't want to repeat the mistakes that have happened in places like the Great Western electrification where the department ordered the trains, somebody else was responsible for the electrification, and bringing together those two programmes resulted in the problems that we've seen with Great Western electrification. We wanted a single organisation to be responsible for the track and the trains and the delivery of a kind of holistic solution. If we'd have gone in and ordered a load of trains and then said to the bidders, 'Here you are, this is what you've got to do', we would have really been constraining their options. We would have been making a choice about what was the best technology to be using in those specific circumstances. So, we were particularly reluctant to do that.
That's fine, I'll come back to that in a moment. But can I just ask, for clarity—I've got a couple of other Members who want to come in as well on this issue. But can I also ask, in regard to the autumn disruption—Hefin David started with some earlier questions—are you blaming the contract or are you blaming the previous operator, Arriva Trains Wales? That's what I want to just be clear on.
The contract, primarily. The contract, clearly, was not fit for purpose, and Arriva Trains Wales met the conditions of the contract, but the standards were so low that the trains only needed to be maintained to the very minimum.
Actually, it's also worth Members knowing that, during the mobilisation process, we had to submit papers to DfT regarding what we saw as a breach in ATW, the way that they were behaving, particularly with regard to IT mobilisations. As a consequence of us being able to evidence that, Arriva were able to then resolve the issue, but it does demonstrate that the handover is not a straightforward process and a quick process, and it was actually fraught with some difficulty.
And coming back to the questions on the securing of rolling stock, I'm still not quite clear on why that couldn't have been done earlier because you're obtaining rolling stock now on a short-term basis, not for the metro. So, why couldn't that have been done earlier?
So, partly, it's because it was the DfT's contract, and, ultimately, they were responsible for it and they chose not to do anything with it under the previous contract—
In 2017, that was still the position then as well, but you were still procuring rolling stock in 2017 even though that was the same position again.
So, the stock that we ordered in 2017, the stuff that's been delayed now, the so-called 769s, were ordered as a very short-term measure to deal with this acute problem that we've identified that, come the end of next of year, we need to be able to get over this persons of restricted mobility challenge that we face. So, there was a very short-term solution using some second-hand rolling stock, but that really didn't tie the hands of the bidders for any length of time. That was a very short-term fix, and those trains will come into service and then go out of service.
The other thing that's worth just reminding the committee about, and we've talked about it in here before, is that a lot of the challenges that we faced were as a direct result of the cancellation of the electrification programmes across the UK. So, there was a sense back in around 2010 that there would be no need in the UK to develop any new diesel rolling stock because all of the diesel rolling stock that was operating on lines that were due to be electrified would be freed up and made available to those places where electrification hadn't taken place. Subsequently, with the massive cost overruns of the electrification programme, the UK Government decided that they were going to turn down the ambition for electrification, and then that led into a problem with availability of diesel rolling stock because all of these lines that were going to be running under electric still needed to run under diesel. So, there hasn't been any diesel trains manufactured for quite some time, and the UK, as a whole, in a time of passenger growth, is really suffering from that absence of diesel rolling stock. And we were at a really difficult moment in time where we needed to go and get new rolling stock.
I think it goes without saying as well that the strategy that had been developed in 2013 would have been developed on the assumption of electrification being rolled out, and you do have to question where on earth we'd be now. Sorry, Nathan, do you have something—
Okay. Is it all right—? I've got a couple or three other Members waiting, but that's fine, thank you, Nathan.
I was just going to add to what Simon was saying, which is that when you're ordering rolling stock, in order to have an efficient contract, you try and extend that rolling stock contract for as long as possible. So, having a number of rolling stock contracts that you have for a very short period of time is very costly. So, we're in an industry where there's a limit to the amount of rolling stock available, and it's a seller's market, and we might be getting in there and asking for a large number of short-term vehicles at the seller's price. So, you weigh that against having your fleet in the best position possible until the order for your new rolling stock comes online. So, there is a, sort of, balance to be had between investing heavily to get you over the short term or putting the orders in and trying to get that strategy structured properly so that you have a more cost-effective franchise in the long term.
I've got three Members waiting on disruption issues: Bethan, Vikki and Joyce. Is yours specific on this—
—line of questioning now? Okay, Joyce, and then I'll come to Bethan.
You talked about the cancellation of electrification causing some backlog, and we've been caught up in that. Have you got any wider figures to compare how badly we've been affected, and, therefore, deliver,y with other areas and how they've been affected? Just, really, to try and get people to understand that this isn't uniquely our problem, but a wider problem.
So, there are two issues there. One is how we've been affected by the delivery, and, therefore, the backlog, and also, then, how we've been affected in terms of the service disruption that's been caused. Simon.
I think a good parallel is the Northern franchise, which has had well-documented problems over the last few years. Northern was also a franchise—well, actually, within the franchise area, they were relying on new structures of electrification. That electrification was terminated, so they've had to spread their legacy diesel rolling stock across a whole range of areas, as they wait for new trains to be rolled out. They are seeing new trains arriving in the Northern franchise now, and that's beginning to lift some of the problems, but that's been a UK-wide story for a significant amount of time, and they were affected as a result of this cancellation of electrification.
I think what's concerning for me is—I appreciate that Transport for Wales has apologised, but I think the overly defensive tone that's coming from Government, as opposed to just saying, 'Yes, you know what? We've made some mistakes and we need to rectify that.' You said to the climate change committee:
'the performance of the franchise…has been better than it was this time last year.'
But then, with regard to the media analysis, this suggests that delays, which have gone up from 30.7 per cent to 41.5 per cent, are attributed to defective trains and lack of train staff. If you knew that autumn was going to be a really difficult time in relation to the weather, the leaves, why did you not extend Arriva Trains Wales's contract to cover that very difficult time so that then you could have a clearer run to when you would have the stock, when you would have everything in operation, so that we wouldn't face these challenges now? It was you who said it was the leaves, not us. Therefore, you must have known that autumn was going to cause those problems for you, unless you can tell me now that winter, or January, would've caused you more disruption. Because I think that's what really aggravating the everyday passenger, to the extent that some people are saying, 'Well, I'm not actually going to take the train anymore, I'm going to drive my car', because of the level of disruption they are facing day in, day out at the moment.
So, the question back would be, 'Would you have preferred to have maintained the contract arrangements that were in place with ATW rather than move to what are far better contract arrangements?'
No, I didn't say that. I said: why didn't you extend in the autumn?
But that's what would have happened.
Because you were saying that autumn is the worst time, so why not extend through the autumn until the point at which you were able to cover this efficiently?
But if there'd been an extension, that extension would have been based on the same conditions that had already caused problems. And, actually, it has to be recognised as well that there were huge problems in past years with autumn conditions—take the Wrexham to Bidston line, for example—and, actually, the conditions that affect train services are not just dealt with by the operator; they were also a responsibility and had to be dealt with by Network Rail. For example, the autumn conditions that present such a challenge for the operator are often exacerbated by lack of removal of vegetation alongside railway lines that leads to leaves falling directly onto the lines. So, actually, it's the responsibility of Network Rail, not just the operator. But those conditions—
But you attributed lots of the issues to the autumn situation by having this new contract at this time.
But I go back once again and say: would you have preferred us to be in a position today where we would have had the same problem with the wheel flats but with the conditions of the contract that Arriva were operating to? Or would you prefer to be in a position that we're in today, with TfW having ordered all of the siders for next year, address the issue with 1,000 hours of overtime, and ensured that they are fully accountable to Welsh Government? I would prefer—
I would prefer, and I'm glad that we took the opportunity to move onto the new franchise—
Okay, well, stop using that as an excuse every time, then. If it was the same issue last time, stop using it as an excuse.
There is no doubt in my mind that that was the right thing to do.
But if I can just come on to a point that you make about—
Cabinet Secretary—I'll come back to Bethan Sayed. Cabinet Secretary.
There's no evidence, as far as I can see, that staff shortages were the cause of this.
A lack of train staff—issues with regard to a lack of trained staff have gone up from 30.7 per cent to 41.5 per cent since last year. That's quite a significant increase.
As far as I am aware, that did not contribute to the wheel flats issue. The wheel flats issue—
The disruption was caused by the actual vehicles not operating; it wasn't about the staff. And I think it's important to recognise that if we had maintained the contract that was in place with ATW, I simply do not believe that we would be in a position today of having 100 or so trains back in use through having 1,000 hours of overtime, and I do not believe that we'd be in a position where those wheel slide protectors would've been ordered.
Thank you. Anyone who knows anything about the rail industry knows that autumn is always a very, very challenging time of the year. I know that several rail franchise operators around the UK respond to that annually by having reduced timetables. That, then, allows for, if you have rolling stock that's taken out through wheel flats—you've got a little bit of room for manoeuvre. Now, obviously, looking forward to 2019, we're still going to be in a position where we won't have the ideal rolling stock that Transport for Wales wants, moving forward, so would you consider, for next autumn, maybe running those reduced timetables—I understand there's evidence to show that rail users prefer to know in advance that there will be those reductions in services, rather than having last-minute cancellations?
It's interesting because we did that on exactly the line that I identified earlier—the Wrexham-Bidston line—in the past. Simon?
It's a challenge for us and one we've wrestled with quite a bit in the past. The difficulty is the way the timetables are set up. That window becomes a really long window, where you're running a timetable where people are getting far fewer services. Essentially, it could allow the operator to be running far fewer trains even when the difficult conditions don't exist. So, it's a balance for us between being able to maximise the opportunity for people to be able to travel against the disruption that comes from cancelled services. But I think we're trying to deal with that by making more fleet available, so that, when we do have these cancelled trains, it's got less of an impact on services. But it is a real balance for us: do we have significantly fewer services at all times or do we have this kind of pain that we've got? And we want to get over that pain by having more trains available.
And would you be confident that, by autumn 2019, you will have that enhanced fleet that will give you that room for manoeuvre, so that you don't need to look at reduced timetabling?
Yes, as I've said, we've got more fleet that's going to become available to us. Transport for Wales, as we've already described, are working hard to make sure that fleet availability is significantly more than it was in the past. So, I think there are good reasons for optimism for next autumn, yes.
I think also it's fair to say that Network Rail are working far more closely with Transport for Wales in identifying where investment needs to be focused in order to remove as much as possible the factors that contribute to poor autumn conditions, i.e. vegetation overgrowth, which leads to leaves on the line. In terms of where we'll be this time next year—well, all of the trains will have been fitted with wheel slide protection as well.
Can I just deal with your question of why we chose this time of year to start the new franchise, just to box that one off, if I may? The contract expired on 14 October. If we'd decided to extend it for a further six months, that would've reduced the amount of time that would've been available for us to be able to order new trains and to be able to get over this deadline of 31 January 2019, when we've got to be able to sort the fleet out. That 15-month window that we've got to be able to order in new trains in order to be able to deal with the PRM—persons with reduced mobility—deadline was already extremely tight. The Department for Transport didn't want to step in under their franchise to help us sort it out; we really needed all of that time to be able to get orders in for the trains to be able to close it. So, we knew it was going to be challenging starting this service in the autumn, but the alternative would've been that, if we'd have extended it a bit longer, we would've been potentially in danger of missing the PRM deadline for the end of next year.
On wheel slide protection, do you accept that Government has to step in with investment when a privatised rail franchise is coming to its end? Because, clearly, that operator isn't going to invest when they can't see a return on their investment.
I think if it were our franchise, then that would've been a reasonable thing to do, but it was the Department for Transport's franchise, and they refused to make those investments.
I think it would've helped had they made those investments. Clearly, fewer trains would've been taken out of service, but it was for them to stump up the cash and that didn't happen.
Okay. Are there any other questions on rail disruption before we move on to other areas? No. Oscar.
Thank you very much, Chair, and thank you, Cabinet Secretary. Listening to you, I've got a couple of questions and one is: I understand from the last time you were here that Arriva Trains were running the service after finishing the contract for some period of time—for maybe a couple of years, they ran when the contract had expired. Am I right? That is basically—. And then the contract was given very hastily to somebody. My question, which I'm coming to in a minute, is that you've spent £5 billion of investment in the franchise. Isn’t the Welsh Government expenditure in reality £3.8 billion, whereas £900 million is an abstract number reflecting the transfer of the core Valleys lines asset? I think when it left the business, that is scrap metal, rather than—. Was a prudent valuation done on the rolling stock and all the assets—£900 million that you put on the balance sheet?
I think that there was a couple of £900 million figures floating around, I think, in the committee the last time we talked about the £900 million balance sheet treatment. That isn't part of the £5 billion that we've talked about.
The £900 million is attributed to the metro infrastructure and maintenance, I believe.
Yes. So, there's £3 billion of revenue support money that's going to be paid over the course of the 15 years, so there's £900 million, as the Cabinet Secretary says, that will transfer to us for operation, maintenance and renewals of the Valleys lines. So, that's the money that Network Rail would have spent on that part of the network over the course of the 15 years. And then there's the capital expenditure on the core Valleys lines, the £750 million, plus some other announcements that we've made, like Taff's Well and various other things, and that adds up to about £4.7 billion, which is just under the £5 billion.
How does the new contract deliver the Welsh Government’s commitment in its programme for government to develop a new, not-for-profit, rail franchise, and comments in your October 2016 Western Mail article that the contract will operate similar to a concession?
Well, that's true, that's correct, and I think I've rehearsed this argument many, many times about Transport for Wales as a not-for-profit organisation is as close as we could have gone to essentially nationalising the Wales and borders franchise area. So, it's operated on a not-for-profit basis. It's the company that's managing the contract. It's a wholly owned subsidiary of Welsh Government. As I say, it's the closest we could possibly have got.
Can I just deal with the concession part of your question? Again, this was something that we wrestled with during the procurement process. If we'd have gone for a straight concession arrangement, it would have been quite difficult to motivate the contractor, particularly during the early years, where there's going to be an awful lot of disruption on the network. So, we needed to have the contractors suitably motivated to be feeling both the pain and, potentially, some of the gain to get us through the difficult early years of the contract. Now, that's not to say that at some future stage, if we're still [correction: not still] prevented from being able to operate the franchise directly, a concession model might not be a suitable future model.
Okay. Professor Mark Barry has suggested there is a need to finesse the bid solution and not be unnecessarily constrained by the initial bid solution. How flexible is the contract, and does the Cabinet Secretary believe any changes to the original proposals are desirable?
Well, the contract does contain change provisions within it. Detailed design is taking place at the moment. It was always intended that the metro would be a programme of enhanced infrastructure that had extendability at its very heart, so I think it goes without saying that building on our initial vision for the metro is a highly desirable piece of work that's taken forward, and should be taken forward by future Governments, because this is a long-term programme of enhancements and improving rail infrastructure across Wales.
I personally think that your Government did not have its eye on the ball on the Arriva franchise, but are you keeping your eyes on this new franchise?
Yes. It wasn't about not keeping our eyes on the ball; we were keeping our eyes on the ball, but the problem was the ball was not fit to be played with. That contract was dire. It was dire.
You mentioned earlier about the issuing of the previous contract, so I'm assuming in the performance management regime for the new contract that these issues will be addressed sufficiently. In Plenary on 24 October, you were talking about punctuality of services, changing percentage of stops missed—you needed to track that—the service quality regime. Can you give us a bit more information about how you'll be managing that, and how you will be scrutinising it?
The performance matrix are far better in this contract agreement than they were with Arriva Trains Wales under the previous contract agreement. The rail industry is some way behind other areas of transport delivery, in terms of, for example, the lack of real-time tracking software that is utilised for services. And, at the moment, we're going to be, through Transport for Wales, investing in real-time tracking technology so that we can assess the performance of rail services not just on the basis of when they reach their destination, but at every point along the way. At every stop there'll be an assessment on the basis of passenger time lost, which is an established way of measuring the success or failure and performance of rail operators. We're going to be assessing the proportion of services that are operating on the basis of short formations—reduced number of carriages—and, also, crucially, I think, the percentage of stations missed, because there are examples where, if you want to make sure that the train gets to the destination on time, you just cancel a stop. Well, we're going to be monitoring how many train services fail to get to every stop along the route.
In terms of monitoring—
If you're monitoring that—. Sorry to interrupt, but if you're monitoring that, how are you going to ensure that that doesn't happen so often, because something I get a lot of complaints about is vulnerable people being left on the train, not being able to get home of an evening. So, how are you going to change that scenario in this particular regime?
So, perhaps it's just worth describing how the current franchise works, and, actually, most of the franchises in the UK still use this metric called PPM. I'm not sure what the PPM stands for—there's a lot of jargon in the rail industry that I haven't quite got my head around. But, PPM essentially means that they're measuring the reliability of the train at one end and at the other end of the journey. So, as long as it leaves the originating station at the right time and it arrives at the destination station at the right time, it gets a kind of tick in a box, and it doesn't matter how many passengers are using it and it doesn't matter how many stops are skipped in the interim.
By way of example of that, the Cardiff Bay line, under the previous franchise, was incredibly reliable, because that was able to prop up quite a lot of the figures for the franchise because it's just one stop end to end. Now, that's not a sensible metric for measuring a franchise. So, as the Cabinet Secretary said, what we're going to be doing is measuring the time when the train arrives at every station in the interim, but also, then, factoring in the numbers of passengers that are using those trains at those interim stations. So, we get a much better view of the impact that service disruption has on the number of passengers. In order to try and prevent the supplier from gaming that system, so that they pull services that aren't very well used, we've also got a whole layer of other mechanisms in place so that we can monitor this skip-stopping stuff and we can monitor the short formations, so that when they run shorter trains—
Will there be penalties, or will there be comeback for them when they do these things on a regular basis?
So, all of that lot is tied into the reward mechanism that we give to the supplier. So, their payment is predicated on how they're performing. So, if they perform well, they can get a certain amount of money. If they perform poorly, then the amount of money that they get will significantly reduce potentially.
And how will we be able to scrutinise that? Will you be producing that analysis?
So, I don't see a problem with producing some high-level key performance indicators for the franchise as a whole. That's how we're going to be monitoring them, and I think James Price, when he was in here last week, talked about wanting to be as open and as transparent as possible with the franchise, and wanting to be able to produce as much of this documentation as possible. So, I don't really see any problem with that information being shareable. In fact, one of the things that we built into the franchise is a requirement for the supplier to provide open data to anybody who wants to be able to see it. So, in a future world, when we've got the new rolling stock, people will be able to see what's going on with the service in real time, if they want.
Chair, I could probably talk for hours on this subject, as probably Simon could as well. Would you like a detailed note on this?
That would be helpful because I know we've got quite a few subject areas to cover in the next 20 minutes. So, yes, thank you.
The other question was with regard to partnership. You've said that it's a partnership, but I'm just concerned as to how you define that, because, in practice, obviously, Transport for Wales's role is in managing the operational development plan. So, obviously, there's a nuance in how that relationship will actually work in practice.
I don't know whether Simon's got anything to say to this, but it's probably worth just looking at other examples around the UK where this sort of partnership already operates very successfully. We've been to London, we've been to Manchester—okay, models are bespoke to those particular areas, but they still have at the heart of it a partnership approach that we've adopted for Transport for Wales and the ODP. So, I'm confident that it will work effectively. And, actually, it's there to drive behavioural change as well within the sector, and make sure that the service provider is as responsive as possible to the passenger but also fully accountable to the Government.
Can I just add a bit to that? So, there's a contract between Transport for Wales and KeolisAmey, who are the operator at the moment, but they're not the only people who are really important to this; there are Network Rail and the rolling stock providers. So, we've got to work differently with them. But Transport for Wales is just at the start of what it's trying to do now. If we don't have that partnership arrangement embedded for the railways, it's going to be really difficult for us to do it when we move into buses and other forms of transport as well. So, we've got to get this right at the outset with our rail partner, from day one, in order to be able to create that culture that is going to be important for us for the other services that we want Transport for Wales to deliver in future.
And in holding them to account, that's the information you're going to be providing to us? Because I think that's really quite important in relation to how you will then—. So, you're not coming back in a year's time and saying, 'Well, that didn't work out', and then they don't feel that they have to be accountable for changing that operation.
We'll capture that in the note. But, in brief, there will be daily, weekly, periodic reviews of any issues that arise, action plans being put together to drive continuous improvement. There's an alliance in place between Network Rail and TfW, and we can enter into any remedy situations if performance is not meeting expectation. So, there are a huge number of facilities that are at our disposal to ensure that the operator and development partner are delivering to our expectations. We'll capture it all in the note.
Okay, thank you. We appreciate that, Cabinet Secretary. Vikki Howells.
Thank you, Chair. With regard to new stations, could you give us an update on the stage 2 assessment of those across Wales outside the metro area?
Yes. Stage 2 of the work has now been completed. Transport for Wales was commissioned to develop the criteria to assess which stations should be taken forward as a priority to stage 3. And they also undertook assessments of each of the stations. That work is being completed. Stage 3 will involve development and assessment of the highest priorities, including, of course, a WelTAG appraisal. But it's worth, I think, just stating again that investment in stations is a matter for UK Government. What our role is is to ensure that we are at the front of the queue—that our stations are prioritised first when money becomes available, and so that's why we're taking forward this work at maximum speed.
That was going to be my next question actually—it's about the funding models that will be used. Because, obviously, it's a matter for UK Government, but all but the larger stations at least are managed by franchise operators, and I know there's no block grant allocation for that purpose, but you've been looking at other models.
So, the franchise—sorry, the contract that we signed with KeolisAmey does include for investment of nearly £200 million in station improvements across Wales. That's over and above what the UK Government should be spending on its own assets. So, yes, we are looking to bring that in. But we're also, elsewhere in Wales, where there's a commercial case that can be made, looking to work with commercial partners to develop stations as well. Now, that's not going to be suitable for all parts of Wales, but there will be locations—and we are looking at a particular site where that might be viable—where a commercial partner can help to carry some of that burden as well.
Yes. So, the Cabinet Secretary just mentioned a piece of work that we're looking at in terms of land value capture. This is work that's been—. In the UK, Transport for London have done a lot on this, particularly for funding extensions to underground lines, and Crossrail, I think, is using some of that funding. And we're looking at that as a model for how we might pay for future enhancements to the railway. So, essentially, that means that, if you build a new piece of public transport infrastructure, there will be beneficiaries of that—so there will be businesses and others who will benefit from that by either building new homes there or new commercial premises. And we're looking at the different mechanisms by which we might be able to capture some of that value. So, that might be using something called tax increment financing, whereby an amount of future business rates, which are created as a result of businesses benefiting from that transport infrastructure, an amount of that business rate money is captured over time to be able to pay for the capital infrastructure.
Chair, I think Hong Kong's MTR system is a really interesting one to look at in this regard. Of course, it's very different, given that their stations largely have huge high-rise blocks on them, but it's a similar principle that's operated there.
Yes. Perhaps Nathan will be able to pick that one up.
So, the assessment's been completed as part of stage 2 and, along with the assessment that Transport for Wales have done for us on stage 2, it will be submitted for advice for the Cabinet Secretary shortly.
Okay. And with regard to the roll-out of the metro, particularly the core Valleys lines that are going to see the use of electric tram trains without toilets, the station upgrades there, will they include toilets, to deliver the pledge of toilets every 15 minutes I think it is?
Okay. I also wanted to ask you in particular about the plans for Hirwaun in my constituency. You may be familiar with the fact that there have been many promises over the years to look at reopening Hirwaun station. It's on the metro map, but there's still nothing concrete about whether that is a bus or rail link, and the community are really hungry for some news on that.