Mr. Paul Blount:

To add to that, that is actually a mistake. We need an auction framework that asks for the best solutions to be provided. On the Great Britain side, my understanding is that part of the reason was because there was a feeling that investment is happening today in lithium-ion batteries in the market in Great Britain because it can just about scrape together a business case with two-hour batteries arbitraging in the energy market and participating in system service markets. It can just about build an investment case for that. There may have been a view that it does not need the support, but support is probably the wrong word to use. The best solutions are needed.

Even though we are not developing lithium-ion technologies - we believe other technologies might provide better solutions - it is right they should compete. There certainly is not a business case today to build six-hour or eight-hour lithium-ion batteries. If there are projects like that which want to turn up in an auction to compete, they should be fairly assessed. Whoever can bring down emissions at the least cost should be awarded contracts. The more it can be made technology-agnostic the better, even if there are supply chain issues or challenges on the project side. While there probably will be environmental, social and governance points to be considered at a certain point, the developers should be allowed to work through their challenges to bring the projects to the system and then the system will procure the best solutions. That is the right way to go forward.

Mr. Kennedy covered the international examples well. When looking at the likes of the Italian auction, it will get the cheapest storage of the duration it specified, which may or may not be a good solution for the system. The Australian market is probably a lot more in line with what we are proposing. The way in which I characterise this is that the simplest possible procurement is to specify the duration and procure that. If it is not duration-specific procurement but rather value-based procurement, there will be different levels of sophistication. The Spanish auction has value-based elements to it but they are quite crude, which means the risk of not getting brilliant solutions exists. The more sophistication is brought into the design of the auction, better and better signals will be sent to the market to develop the very best solutions for the system. If it is simplified too much, the wrong behaviours will be seen. People will solve for the crude design rather than trying to give the very best fundamental solutions to the system. That is why it is really worthwhile investing, even if it costs several million euro, to build this auction clearing mechanism. The reward will be ten times or one hundred times that by incentivising the right technologies. It is worth taking the time to have a sophisticated design.

As for Mr. Kennedy's point about looking at what has been done internationally, looking at the best of them and then seeking to build on that to take it another step forward from what they have done, I point to Australia as probably being the closest to getting it right. It may not be quite right yet on the specifics on its model but it is probably the closest to getting it right at the moment internationally.