Interview: Why EDF's Vincent De Rivaz backs Scotland

De Rivaz at the Morrison Street offices of EDF Energy Renewables in Edinburgh

The chief executive of EDF Energy was in the Scottish capital to join First Minister Nicola Sturgeon last Tuesday as she opened a centre in Edinburgh for EDF Energy Renewables – the 50:50 joint venture between EDF Energy and EDF Energies Nouvelles, the renewables arm of the French-based group.

Scotland has recently seen its share of green electricity comfortably overtake that of its UK counterparts, with a record proportion of energy supplied in 2015 coming from wind, hydro, solar and other renewable sources.

In her address, the First Minister referred to Scottish Renewables’ recent statistics revealing that 60 per cent of the nation’s energy needs were being met by such sources in that year compared with 50 per cent in 2014.

Sturgeon acknowledged that EDF Energy Renewables has “built strong relationships with Scottish industry – making a commitment to use towers manufactured in Scotland by CS Wind UK, using local supply chain companies wherever possible, and developing renewables in areas like the Western Isles”.

French-born De Rivaz reaffirms that commitment, claiming that the new centre, which will create 35 jobs, represents “an act of faith in our renewable activity, an act of faith in Scotland, and it is going to be the hub of our renewable activities for the UK.

“Having transferred the centre of gravity from London to Edinburgh is a strong signal that I send to Scotland.”

He adds that while the business and the Scottish Government don’t agree on every point, they share a desire to fight climate change and achieve both affordability and security of supply. “We want to make sure that the lights stay on,” he says.

By setting up in Edinburgh, the centre sits alongside other trailblazers in the renewables sector, such as Atlantis Resources, whose chief executive Tim Cornelius has laid claim to “the world’s most high-profile tidal stream project” with its pioneering MayGen venture, which started generating power in November. Atlantis last week welcomed the Energy Technology Institute’s findings that tidal-stream generation will soon compete with other low-carbon energy sources on cost.

EDF Energy is the largest generator of low-carbon electricity in both the UK and Scotland, and is looking to boost customer numbers north of the border, having won a key deal with the Scottish Government in 2012. This sees it provide power to more than 27,000 sites, including schools, hospitals and even Edinburgh Castle, using 100 per cent renewable energy and accounting for about 10 per cent of Scotland’s annual electricity consumption.

But it is the Scottish residential market that De Rivaz now has in his sights, determined to grow the company’s customer base “significantly”, having seen a 30.5 per cent year-on-year increase over the past year to about 221,000 customers.

His ambition is to net every home north of the border. “There are other suppliers, but I think we are in a very strong position to convince because we have the cheapest fixed tariff offered to customers in Scotland.”

But while renewables is a clear priority for the company, is it an important consideration for customers, or are they more focused on price?

De Rivaz admits that consumers “want [energy] to be less expensive”, but he believes innovation and customer service are key points.

A Which? survey published last week covering customer satisfaction in the sector found that the Big Six – comprising EDF Energy, ScottishPower, SSE, British Gas, E.ON UK and Npower – continued to languish in the bottom half on key measures such as value for money and customer service.

EDF Energy’s score came in at 55 per cent while Ovo came in top with a score of 78 per cent, for example.

Which? Magazine editor Richard Headland said: “Larger suppliers need to urgently up their game in line with smaller providers. Energy companies should now be doing much more to genuinely engage their customers who are stuck on these poor-value deals.”

Disappointed customers are increasingly voting with their feet. Earlier this month Energy UK, the trade association for the UK energy industry, said 2016 had been a record year for consumers switching, boosted by the introduction of the Energy Switch Guarantee, and up by nearly a million people from 2015 to almost five million.

There have also been concerns about competition among the Big Six, but De Rivaz is keen to point out that the lengthy Competition and Markets Authority investigation into the issue gave “companies like ours a clean bill of health” and also highlighted a “lack of engagement” by some consumer sections to choose better tariffs.

At the other end of the scale, there have been concerns about losses among the Big Six. Vysyble, which provides trend and information analysis, said in a recent report on the UK energy market, using revenue minus all taxes and charges as a yardstick, that the half-dozen firms collectively racked up £129.9 billion in economic losses between 2007/8 and 2015/6.

However, EDF Energy stresses that those figures do not tally with its own accounts. De Rivaz states that while the business is not making huge margins due to very challenging market conditions, with tough competition and having to cut prices for customers, “we are financially sound”. The company also needs to invest, and “there are some efforts to be made… costs to be cut, but that’s normal, responsible business”.

It comes as parent company EDF Group, where De Rivaz is part of the executive committee, prepares to post its full-year results on 14 February. In November it said that for the first nine months of 2016, sales saw a year-on-year drop of 3.1 per cent, in an “adverse market environment”, to €52bn (£45bn). The UK slice of this fell by £884 million.

A landmark for the firm came towards the end of the period, with the UK government’s approval of the EDF Energy project Hinkley Point C in Somerset, the UK’s first new nuclear power plant in decades.

While the decision was not universally welcomed, De Rivaz at the time described it as “good news for British consumers” and “a huge boost to British industry”.

The Frenchman joined EDF in 1977 in its external engineering centre as a hydroelectric engineer, describing this field as the original renewable energy source which tied in with his passion for nature.

He went on to senior roles at EDF’s international division, for example covering the Far East, and he became managing director of the group’s hydro power department. He joined the EDF finance division in 1999 as deputy chief financial officer, and in 2000 became director of financial strategy and operations.

This was followed by taking the reins as chief executive of London Electricity Group (LEG) in 2002, and he led the merger of LEG, Seeboard and the Eastern Network to form EDF Energy in 2003, as well as taking charge of the incorporation of the UK nuclear operator, the former British Energy, into EDF Energy from January 2009.

That year he was made Chevalier de la Légion d’Honneur; in 2012 he was awarded the CBE; and in September 2015 he was elected a fellow of the Royal Academy of Engineering.

His visit to Edinburgh last week also saw him sign the Scottish Business Pledge to adopt fair and progressive business practices, and revealed EDF Energy’s sponsorship of the Edinburgh International Science Festival. And De Rivaz is committed to improving the gender balance in the industry. “Our industry is not diverse enough,” he says.

On the same morning as the Edinburgh launch, Provost Tom Kerr of West Lothian Council opened EDF Energy Renewables’ latest six-turbine 19.2 megawatt wind farm at Pearie Law, and De Rivaz cites wind farms when discussing cutbacks made to renewables.

Regarding a large project on Lewis to build a wind farm, with power exported to the Continent, De Rivaz explains that it does not qualify for subsidies, which provide investors with benefits, including certainty over revenues “to justify massive investment of that sort”.

Subsidies are “something we need to permanently argue for”, he says, but adds that the business is “not begging” for such support, and is working hard to make such wind farms more economical and efficient.

However, concerns remain over the renewables sector’s outlook. Scottish Renewables has warned that future progress is “hugely uncertain, with  large-scale onshore wind, solar and hydro power all locked out of government schemes to support investment in new electricity generation capacity”.

But De Rivaz sees calmer rather than choppier waters ahead, flagging up the firm’s aim to “play a bigger role in Scotland” and increase its renewable output more than three-fold in the coming years. “I just want us to be a responsible company, to help Scotland have low-carbon, secure and affordable electricity.”

He also stresses that EDF Energy’s nuclear power stations, Torness in Dunbar and Hunterston B in Ayrshire, produce 40 per cent of the electricity consumed in Scotland.

And despite EDF Energy’s French ownership, De Rivaz is keen to stress that it “became a Scottish company in 2009” with the acquisition of these sites when it bought British Energy.

He says: “If people attach importance to the fact that in Scotland they prefer to deal with a Scottish company, I am a Scottish company, producing 40 per cent of the electricity of this country. It is difficult to have better credentials.

“We have 1,300 people [here], we are opening a new office here,” he continues, with no limit on how many people the centre can employ. “It’s a starting point.”