WEBVTT 1 00:00:08.119 --> 00:00:14.880 You're listening to Redefining Energy. Your co hosts from Berlin Gerard Reid and from 2 00:00:14.960 --> 00:00:23.079 London Laurent Segala. Today I'm redefining Energy. We're going to talk about monetizing 3 00:00:23.120 --> 00:00:27.320 and trading green electrons. Yes, jab, I'm going to tell you a 4 00:00:27.320 --> 00:00:33.119 funny story. But first a world from our partner, Redefining Energy sponsored by 5 00:00:33.159 --> 00:00:38.079 a Mundi, the leading European asset manager, your trusted partner to accelerate the 6 00:00:38.119 --> 00:00:43.840 transition to a low carbon future. Leading asset manager based on the IPE ranking. 7 00:00:44.280 --> 00:00:49.200 Investing involves risk. Consult your financial advisor. So what's the funny story. 8 00:00:49.479 --> 00:00:53.719 The fully story is the relationship between companies and reporting. I can tell 9 00:00:53.759 --> 00:00:58.520 you first they're resisted one hundred years ago the financial reporting, so why do 10 00:00:58.600 --> 00:01:03.480 we report our numbers are was perfect? And then thirty years ago when regulators 11 00:01:03.519 --> 00:01:08.799 as to report on them environmental data, they say, no problem the environment, 12 00:01:08.920 --> 00:01:14.239 We're all good. And then twenty five years ago when it was reporting 13 00:01:14.239 --> 00:01:17.680 about carbon emission, they say, we're not in accountant. It's going to 14 00:01:17.760 --> 00:01:21.400 be fine. Our engineer know the calculation very well, and on and on 15 00:01:21.439 --> 00:01:26.319 and on and on and every time, of course regulator come in and your 16 00:01:26.439 --> 00:01:33.120 forward thinking company and they start publishing voluntary protocols, which ultimately becomes low And 17 00:01:33.159 --> 00:01:37.040 we've seen that over and over again, and this is exactly what we're going 18 00:01:37.079 --> 00:01:42.359 to see with green electrons. Yeah. What I find fascinating about BRON is 19 00:01:42.519 --> 00:01:48.760 just the role of tech companies in this, because they are at the forefront 20 00:01:48.799 --> 00:01:51.400 of this by sort of going to say, we need to really change the 21 00:01:51.439 --> 00:01:55.680 way this reporting takes place and do it a different way. And they're sort 22 00:01:55.680 --> 00:01:59.000 of trailblazing, if I may say, and what they're doing, and I 23 00:01:59.040 --> 00:02:01.920 also find it interesting thing is that I could argue that they're the heavy industry 24 00:02:01.920 --> 00:02:05.120 of the twenty first century. So it sort of said, well, why 25 00:02:05.200 --> 00:02:07.360 you do that? Should you not be shutting up too, you know and 26 00:02:07.520 --> 00:02:12.280 hide in the corner, But they don't exact abswer. Yeah, what is 27 00:02:12.360 --> 00:02:15.639 very interesting in the movement is that because you've got those trade basar companies starting 28 00:02:15.680 --> 00:02:21.280 to put some protocols like we did the greenhouse Gas Protocol twenty five years ago. 29 00:02:21.439 --> 00:02:24.000 Do you add voluntary company you put the greenhouse gas product. Now it's 30 00:02:24.039 --> 00:02:30.039 the reference of the low the EU. California, they just took the standout 31 00:02:30.080 --> 00:02:34.639 and the said okay, now it's the low because pioneers could demonstrate that it 32 00:02:34.639 --> 00:02:39.080 could be done. And when it comes to green electrons, and especially twenty 33 00:02:39.080 --> 00:02:44.080 four seven green electrons, because it's kind of easy to track on an annual 34 00:02:44.120 --> 00:02:47.719 basis, but here we're talking about hourly basis. Regulators say okay, you 35 00:02:47.759 --> 00:02:51.919 can do it, then everybody's going to do it. I think it's an 36 00:02:51.919 --> 00:02:59.360 incredibly important topic because if we're going to build more renewables going forward, which 37 00:02:59.400 --> 00:03:05.560 obviously we want to do well, being able to actually really track the green 38 00:03:05.599 --> 00:03:09.080 electrons on an hourly basis, maybe even at some point fifteen minute five minute 39 00:03:09.120 --> 00:03:14.960 bass going forward is very very important because it gives the economic signal to build 40 00:03:15.319 --> 00:03:17.919 firm renewables. Now, I know that sounds very technical, but it is 41 00:03:17.960 --> 00:03:23.080 a really really critical and important thing. If we don't do it then and 42 00:03:23.280 --> 00:03:24.479 you know, I think we're just going to have well, actually, we're 43 00:03:24.479 --> 00:03:28.039 not even going to say we are going to do it, because there's no 44 00:03:28.120 --> 00:03:30.879 choice, right, we have to do it well. Not only we have 45 00:03:30.960 --> 00:03:37.520 to do it because it's good reporting, but more and more legal frameworks are 46 00:03:38.080 --> 00:03:42.759 not going to be based on this twenty four seven You can only have green 47 00:03:43.000 --> 00:03:49.360 hydrogen. If you have twenty four to seven green electricity, okay, if 48 00:03:49.400 --> 00:03:54.439 you don't produce a report of your twenty four seven green electricity, you're going 49 00:03:54.479 --> 00:04:00.840 to be taxed by carbon border adjustment mechanism and on and on. So it's 50 00:04:00.879 --> 00:04:05.719 not just a reporting thing, which is great. You're going to have subsidies 51 00:04:06.039 --> 00:04:10.520 and you're going to have taxes which are linked to the fact that you can 52 00:04:10.599 --> 00:04:15.400 demonstrate that your electricity is one hundred percent green or I mean, I don't 53 00:04:15.439 --> 00:04:18.360 know what threshold. But we're going to start talking about big money now. 54 00:04:18.879 --> 00:04:23.079 Well listen, as I said, I really enjoyed the conversation, and I 55 00:04:23.079 --> 00:04:26.480 think you know, we also got a great guest star. Expect a big 56 00:04:26.480 --> 00:04:29.720 time to get him on. Absolutely. I mean, talk a little about 57 00:04:29.879 --> 00:04:32.600 about who JP is. Yeah, JP, everybody called him JP. It's 58 00:04:32.920 --> 00:04:39.480 Ron Pablo Cerda, which I've known for six seven years. We invested together 59 00:04:40.000 --> 00:04:45.720 in a platform called Zygo, which we successfully sold to Schnader Electric two years 60 00:04:45.759 --> 00:04:48.879 ago. And last year our JP said look, I'm going to recreate a 61 00:04:48.959 --> 00:04:54.000 new digital platform, and I say, okay, I'm in. And so 62 00:04:54.040 --> 00:04:58.360 his digital platform has a great name. It's called Renewable, but without the 63 00:04:58.639 --> 00:05:03.480 ed end so bl dot com. I do have a question fair before we 64 00:05:03.480 --> 00:05:06.480 get you honest, why did you invest that in the company and the end? 65 00:05:06.480 --> 00:05:11.199 And the reason why I said is it's technical a niche. That's what 66 00:05:11.240 --> 00:05:14.279 I when I look from outside. But tell me why did you invest? 67 00:05:14.560 --> 00:05:18.040 First we listened to the interview and then I'll explain you why I invested. 68 00:05:18.319 --> 00:05:21.680 But it's going to be kind of self explaining. After the interview. Let's 69 00:05:21.839 --> 00:05:27.120 get JP on the show then, JP, I'm really happy for you to 70 00:05:27.160 --> 00:05:30.079 be on the show with thank you very much. Thank you very much Lauran 71 00:05:30.160 --> 00:05:34.319 for having me. Let's start by the big picture and twenty five years ago, 72 00:05:34.839 --> 00:05:40.399 the first carbon markets arrived, and of course they were about anything that 73 00:05:40.519 --> 00:05:44.399 emits carbon, so it can be the bower sector, it can be the 74 00:05:44.480 --> 00:05:47.279 steel sector, or the chemical, the cement and everything. And there was 75 00:05:47.319 --> 00:05:51.800 some voluntary market, there was some compliance market, mostly in Europe. But 76 00:05:51.920 --> 00:05:57.279 then after a while, I think the ronable industry thought that that blanket was 77 00:05:57.279 --> 00:06:02.279 a bit too wide and the much more gnular data. So explain a bit 78 00:06:02.480 --> 00:06:10.040 how we went from carbon to entennmental attributes of electricity. The cab market, 79 00:06:10.040 --> 00:06:15.079 as you mentioned, is a very interesting market is changing very very quickly. 80 00:06:15.879 --> 00:06:19.839 One thing that is important to note about the CAB market is the verification process 81 00:06:20.040 --> 00:06:27.920 and how, for example, carbon offsets are used to assess the projects and 82 00:06:28.000 --> 00:06:32.199 how they used to reduce or remove greenhouse gas emissions. One example is a 83 00:06:32.279 --> 00:06:41.120 forestation or methane capture initiatives. One important thing and going from the carbon side 84 00:06:41.319 --> 00:06:46.879 to the certificate market, is how these projects are verified. In contrast, 85 00:06:46.959 --> 00:06:53.959 for example, carbon projects are verified, a forestation is verified once every ten 86 00:06:54.040 --> 00:06:58.040 years, and certificates and cerifica market that we're going to talk a little bit 87 00:06:58.040 --> 00:07:02.360 more later can be very on an hourly basis. So there is a very 88 00:07:02.360 --> 00:07:09.160 interesting rule that will come into force in twenty twenty six in EU level that 89 00:07:09.360 --> 00:07:17.360 basically introducing a blanket ban on claims that a product has neutral or reduced or 90 00:07:17.560 --> 00:07:24.480 positive impact on environment if they're solely justified through the purchase of carbon oseets. 91 00:07:25.120 --> 00:07:30.600 If we roll back ten years in fact, before regulations, and I guess 92 00:07:30.680 --> 00:07:34.399 we'll talk about US regulation, which are kind of parallel to the uregulation. 93 00:07:35.000 --> 00:07:41.160 You started having companies, especially big tech, who make big commitments in relation 94 00:07:41.319 --> 00:07:46.759 to buying green energy. For instance, the R one hundred to Carbon Disclosure 95 00:07:46.839 --> 00:07:51.800 Project and so on. So that really was the origin of that movement of 96 00:07:53.040 --> 00:07:59.720 being much more cunular in tracking emissions. And of course because that was voluntary, 97 00:08:00.319 --> 00:08:05.279 they needed a system which would because the public to trace the green electrons. 98 00:08:05.839 --> 00:08:11.120 So probably explain the genesis of AIB in Europe and the equivalent in the 99 00:08:11.199 --> 00:08:16.160 US. And just to take a little step back, there was a very 100 00:08:16.240 --> 00:08:20.240 interesting evolution in the renewable energy certificates market. And just to give a little 101 00:08:20.240 --> 00:08:26.839 bit of context on what certificates like renewable ANERGI certificates are, they are a 102 00:08:26.920 --> 00:08:31.840 document that is issued to guarantee the origin of electricity generated from renewable energy sources. 103 00:08:31.960 --> 00:08:35.360 So they have different names in different countries, like for example, across 104 00:08:35.399 --> 00:08:41.440 Europe they're called GEOSO Guarantees of Origin. In the UK they're codes Regals or 105 00:08:41.480 --> 00:08:46.720 Renewable Energy Guarantees of Origin. In the US they're colled REX Renewable Energy Certificates. 106 00:08:48.519 --> 00:08:50.559 Whatever it is, the name, the concept is the same. So 107 00:08:50.919 --> 00:08:56.919 they provide transparency and assurance to consumers regarding the renewable nature of the electricity they 108 00:08:56.960 --> 00:09:03.639 consume. So basically for every make what hour of production, then the correspondent 109 00:09:03.879 --> 00:09:09.159 issuing body certifies the origin of that make what hour, and they assess and 110 00:09:09.399 --> 00:09:15.519 verify that it belongs to a specific renewable energy acid call it hydro wind solar. 111 00:09:16.399 --> 00:09:20.960 Let's be very technical. I have a wind farm, it starts producing 112 00:09:20.039 --> 00:09:26.639 power. How do I get my regal issued? Do I send a fax 113 00:09:26.840 --> 00:09:31.600 or an excel sheet PDF? Is it automated? How does it work? 114 00:09:31.200 --> 00:09:35.120 I don't think no one has faxes anymore. Probably in the old days they 115 00:09:35.159 --> 00:09:39.279 used to send facts. I'm not sure, but I live in Germany. 116 00:09:39.320 --> 00:09:43.559 They still use taxes here the German government awesome, so probably in Germany they 117 00:09:43.559 --> 00:09:50.080 still use vaccines. But typically they are issued by a regulatory authority or certifying 118 00:09:50.120 --> 00:09:56.320 body, and they are issued after verifying that the renewable energy generation source correspond 119 00:09:56.519 --> 00:10:00.639 to the energy issued. For example, here in the UK, of Gym 120 00:10:01.080 --> 00:10:05.159 of GYM is the verifying body the issues the certificate. Across Europe, you 121 00:10:05.200 --> 00:10:09.960 have different issuing bodies per country, but they are all regulated by you mentioned 122 00:10:09.000 --> 00:10:15.440 it LAN, the AIB, the Association of Issuing Bodies, which essentially the 123 00:10:15.480 --> 00:10:20.399 task of the AIB is to regulate the issuing bodies and sets rules around process 124 00:10:20.440 --> 00:10:26.960 of verification and how you can swarp cigtnificates between the AIB countries, et cetera, 125 00:10:26.000 --> 00:10:31.919 et cetera. And basically they stipulate the rules on how buyers and sellers 126 00:10:31.080 --> 00:10:35.360 can trade these certificates. And just to give a little bit of context, 127 00:10:35.440 --> 00:10:41.679 sellers are typically renewable energy generators who produce the electricity from the renewable energy sources 128 00:10:43.159 --> 00:10:48.720 and they have to apply for the certificates. And the buyers are usually energy 129 00:10:48.759 --> 00:10:54.200 suppliers or businesses who procure renewable energy electricity and they seek to opposit their common 130 00:10:54.200 --> 00:10:58.600 footprints with renewable energy certificates. So, JP, just if I look at 131 00:10:58.600 --> 00:11:03.279 the market from outside, what you see is there's a lot of criticism of 132 00:11:03.360 --> 00:11:05.639 companies are going out saying there one hundred percent renewable. Could you maybe talk 133 00:11:05.639 --> 00:11:09.720 a little bit about that controversy and the changes that are going on in the 134 00:11:09.759 --> 00:11:16.919 market to give us as customers more confidence that green washing is not taking place. 135 00:11:16.600 --> 00:11:22.360 Quite a few companies, what they're doing is buying electricity and renewal energy 136 00:11:22.440 --> 00:11:28.240 on an annual basis, and at the end of the day, that doesn't 137 00:11:28.240 --> 00:11:33.720 necessarily count as one hundred percent renewal ENERJEEP. So when you actually look deeper 138 00:11:33.919 --> 00:11:39.320 into various factors like, for example, what hours of the day you're using 139 00:11:39.480 --> 00:11:43.480 the energy and where that energy actually comes from, then you realize that that 140 00:11:43.960 --> 00:11:48.960 claim of being one hundred percent renewable is not one hundred percent truy GP. 141 00:11:50.320 --> 00:11:52.840 What you're saying, and what we've seen is that at the end of the 142 00:11:52.919 --> 00:11:58.080 year they would calculate all the a kilo, what hour okay, and then 143 00:11:58.120 --> 00:12:01.080 they would go to see walkers and they say, okay, there's a lot 144 00:12:01.080 --> 00:12:05.840 of hydro in Norway in April, there's a lot of sun in August in 145 00:12:05.919 --> 00:12:11.639 Spain. So they would buy a batch of green certificates from Norway April, 146 00:12:11.879 --> 00:12:16.639 a batch of green certificates from Spain in August, and they would match everything 147 00:12:18.200 --> 00:12:20.759 and at the end of the year what hour did match? But they only 148 00:12:20.799 --> 00:12:24.759 match on an annual basis, so in fact they were not green. They 149 00:12:24.879 --> 00:12:31.480 just accumulated some certificates once a year. And probably it's time to introduce energy 150 00:12:31.559 --> 00:12:37.159 tag because that's a movement we've been part of since the beginning, which the 151 00:12:37.240 --> 00:12:41.039 whole idea was, look, the annual matching doesn't make any sense. We 152 00:12:41.159 --> 00:12:46.080 need to go to ourly matching absolutely correct. So in terms of current net 153 00:12:46.120 --> 00:12:50.360 position. The first and the most important step to begin measuring the overall level 154 00:12:50.399 --> 00:12:58.840 of matching between consumption and clean energy generation on an hour lead basis is understanding 155 00:12:58.000 --> 00:13:03.279 the cf IS, which is the carbon free energy score, and basically you 156 00:13:03.360 --> 00:13:07.440 as a company can understand from the amount of certificates that you buy or the 157 00:13:07.559 --> 00:13:13.720 energy and the energy sources, how does that correspond on an hourly basis, 158 00:13:13.799 --> 00:13:18.519 and how does that match your consumption profile and you realize that. For example, 159 00:13:18.960 --> 00:13:22.960 something that we do at Renewable is we plug into the SMA meter and 160 00:13:22.519 --> 00:13:28.080 allow companies to visualize their energy consumption on an hourly basis, so they can 161 00:13:28.159 --> 00:13:33.759 understand, for example, if it's solar that they is the main source of 162 00:13:33.919 --> 00:13:39.120 renewbal energy that they procured, they can see exactly how that contract matches their 163 00:13:39.240 --> 00:13:43.039 energy consumption an hourly basis. Same thing with PPAs, So basically you will 164 00:13:43.080 --> 00:13:48.000 be able to understand more about how a wind farm or a solar farm and 165 00:13:48.039 --> 00:13:52.679 the production profile corresponds to your consumption profile on an hourly basis. And there's 166 00:13:52.720 --> 00:13:58.279 always going to be excess energy or excess certificates outside the consumption hours, which 167 00:13:58.399 --> 00:14:03.840 is exactly what we're trying to facilitate and make better. So what you're starting 168 00:14:03.879 --> 00:14:09.720 to introduce here would be a kind of secondary market. So the primary market 169 00:14:09.840 --> 00:14:15.720 would be you have some consumers who in fact are getting some green certificates alongside 170 00:14:15.759 --> 00:14:20.120 their power purchase agreements, which of course creates a certain shape. But of 171 00:14:20.159 --> 00:14:22.279 course, if you do that on an annual basis, the fact that you 172 00:14:22.320 --> 00:14:26.639 have too much or not enough, that's always gonna net itself. But the 173 00:14:26.720 --> 00:14:31.639 moment you are tracking on an hourly basis, that changes totally. You'll get 174 00:14:31.679 --> 00:14:35.879 some hours, will you'll have too much certificates and others, well, you 175 00:14:35.919 --> 00:14:39.879 will have a deficit. And the all premise around energy tag and the hourly 176 00:14:39.919 --> 00:14:48.679 matching becomes extremely critical because it's not just about disclosing this or that at the 177 00:14:48.799 --> 00:14:52.559 end of the year in your ESGY report. It's about regulation. It's about, 178 00:14:52.600 --> 00:14:56.639 for instance, and this is very important right now, what is green 179 00:14:56.720 --> 00:15:03.000 hydrogen. So there are regulations and subsidies and taxes which are being put together 180 00:15:03.759 --> 00:15:09.480 around that concept of twenty four to seven. Yeah, that's absolutely correct, 181 00:15:09.559 --> 00:15:13.519 and the strong focus around twenty four seven, and the focus should be really 182 00:15:13.519 --> 00:15:18.159 around transparency and bringing more technology to the mix and the traceability elements. So 183 00:15:18.639 --> 00:15:24.440 it's not just about matching one hundred percent of your volume on an annial basis. 184 00:15:24.440 --> 00:15:28.039 Two one hundred percent electricity generated by an acid is actually where that acid 185 00:15:28.360 --> 00:15:35.240 is located. What do you stand in terms of procuring energy from the closest 186 00:15:35.320 --> 00:15:41.440 acids to your operations? What the system is developing now into is a more 187 00:15:41.480 --> 00:15:48.240 transparent and traceable system where you know exactly the origin of every certificate and every 188 00:15:48.440 --> 00:15:54.159 electron that you consume and how and what actually environmental impact that has in your 189 00:15:54.240 --> 00:16:02.080 CFISCO. What you are introducing here requires a staggering amount of data because if 190 00:16:02.080 --> 00:16:06.320 you're trading on an annual basis to certificates, basically you give it to an 191 00:16:06.320 --> 00:16:08.960 intern is going to call a broker. It's going to make too transaction and 192 00:16:10.000 --> 00:16:15.879 you're done. But here you are talking about tracking eight seven hundred data points 193 00:16:15.919 --> 00:16:22.639 per year, which means that the amount of data which is processed cannot be 194 00:16:22.720 --> 00:16:26.559 processed manually. You need to put some systems. So explain a bit how 195 00:16:26.720 --> 00:16:32.399 heavy it is from a computing perspective to track all those electrons on an hourly 196 00:16:32.480 --> 00:16:38.639 basis. We do manage significant amount of data related to runeventy generation, but 197 00:16:38.720 --> 00:16:42.799 not just the generation side, but the consumption. So we deal with companies 198 00:16:42.840 --> 00:16:48.360 that have one, two, three tell our consumption pranum, and we need 199 00:16:48.399 --> 00:16:52.799 to help them understand how that looks on an hourly basis. So we're employing 200 00:16:52.799 --> 00:16:57.879 a very robust verification process to ensure that that data is very accurate, is 201 00:16:59.039 --> 00:17:04.480 traceable, remains integral to the certificate system. What we use is we back 202 00:17:04.640 --> 00:17:10.799 every single transaction that we do using an independent ledger, so that we trace 203 00:17:11.240 --> 00:17:15.400 every certificate back to a specific acid. And in terms of trading, the 204 00:17:15.480 --> 00:17:18.319 rule is that you can buy and sell certificates as many times as you want 205 00:17:18.400 --> 00:17:23.039 until someone retires it. So we want to bring that transparency in tracing that 206 00:17:23.119 --> 00:17:27.799 certificate wherever it goes until it's actually retired. JP can I just maybe it's 207 00:17:27.880 --> 00:17:33.039 related to that is if you look at sort of I want to hedge, 208 00:17:33.319 --> 00:17:36.279 what I use is some form of derivative product. If I take the case 209 00:17:36.319 --> 00:17:37.599 of power, I can win the market as it is now, and I 210 00:17:37.599 --> 00:17:41.599 can buy a yearly product and buy a quarterly product. I can even do 211 00:17:41.640 --> 00:17:47.519 the same and CO two as well. How do you see that market developing 212 00:17:47.640 --> 00:17:51.640 going forward as we move to sort of look, you might even move you 213 00:17:51.680 --> 00:17:53.440 say hourly, we might move to half hour, we might move to fifteen 214 00:17:53.440 --> 00:17:56.759 minute products. How does it work? And as Lauren has already said, 215 00:17:56.960 --> 00:18:00.119 it's going to get really complex as it is, but I can imagine then 216 00:18:00.279 --> 00:18:06.559 the derivatives' markets gets even more complex, and that's something that we are trying 217 00:18:06.599 --> 00:18:11.599 to avoid to add more complexity to the system, because that's what the whole 218 00:18:11.599 --> 00:18:15.519 industry shouldn't be about, right and adding more complexity. Our focus right now, 219 00:18:15.519 --> 00:18:19.079 as I mentioned before, is definitely a transparency, but we're also developing 220 00:18:19.240 --> 00:18:25.200 a trading system where you can actually trade hourly certificates on an our basis, 221 00:18:25.519 --> 00:18:29.839 and every hour we believe that it's going to have a specific price. So, 222 00:18:29.880 --> 00:18:33.759 for example, now the implementation of RED three to the Renewal Energy Directive 223 00:18:33.799 --> 00:18:40.279 three that actually encourages hourly matching at scope two level, we will start seeing 224 00:18:40.519 --> 00:18:45.640 more and more peak and off speak pricing, and the marketplace is eventually going 225 00:18:45.680 --> 00:18:49.960 to evolve into a more open and sophisticated marketplace where every hour of the day 226 00:18:51.119 --> 00:18:56.119 is going to have a different pricing depending on a supply and demand issue ones 227 00:18:56.160 --> 00:18:59.640 of certificates. For example, during the sunny hours of the day, that's 228 00:18:59.640 --> 00:19:03.759 going to be certificates issued, rather than the hours whether there's no sun or 229 00:19:03.799 --> 00:19:10.160 the windows blow. What you're saying here is that through marketplaces like yours, 230 00:19:10.559 --> 00:19:15.799 you're going to be able to give the price of the green attributes to electrons 231 00:19:17.160 --> 00:19:19.759 at different time of the day, which is not the case because right now 232 00:19:19.759 --> 00:19:26.400 we get one price per year and I imagine that producing solar in Italy at 233 00:19:26.440 --> 00:19:32.480 noon in July is probably going to be close to zero. But finding some 234 00:19:32.559 --> 00:19:38.519 certificates maybe through hydro balancing or batteries during peak hours in the evening, that's 235 00:19:38.519 --> 00:19:42.160 going to be much more valuable. And of course, the interesting thing is 236 00:19:42.200 --> 00:19:47.599 that that green attribute is not valued yet by the market, because the price 237 00:19:47.640 --> 00:19:52.319 of a certificate at noon and at seven pm is the same. But the 238 00:19:52.359 --> 00:19:56.680 way the system is going is that you're going to start giving a premium to 239 00:19:56.079 --> 00:20:02.240 the hours where there is less production and even more demand for the green attributes. 240 00:20:02.640 --> 00:20:06.240 Am I correct? Thinking that, yes, you're absolutely correct, and 241 00:20:06.279 --> 00:20:10.240 this is going to be enabled exactly by the BREAD three. So the Renewal 242 00:20:10.359 --> 00:20:14.799 Energy Directive three, which basically states that a guarantee of origin is going to 243 00:20:14.839 --> 00:20:18.119 be so the standard size is one megaa hour, but it can now be 244 00:20:18.279 --> 00:20:23.960 divided in fractions multiples of one what hour. So this will basically evolve the 245 00:20:23.960 --> 00:20:29.880 granularity of the certificates market and how these certificates are going to be traded, 246 00:20:30.440 --> 00:20:34.839 and this will create some opportunities. So there was a recent study from Aurora 247 00:20:36.079 --> 00:20:41.960 that was published by Montel that stipulates that this change in hourly pricing from one 248 00:20:41.000 --> 00:20:45.640 mega hour to hourly is going to increase the revenue for US owners by thirty 249 00:20:45.640 --> 00:20:51.240 three percent. And the reason for these is if we add battery storage to 250 00:20:51.279 --> 00:20:56.960 the mix, then it can help make wind and solar acids much more reactive 251 00:20:56.039 --> 00:21:02.960 and much more flexible. Another case study that will benefit the industry is battery 252 00:21:02.960 --> 00:21:07.160 storage. Battery storage, there's always an arbitrage between when the battery storage is 253 00:21:07.240 --> 00:21:12.319 charged and when the energy is deployed. So if you think about a different 254 00:21:12.359 --> 00:21:18.240 pricing system per hour, then this will allow battery storage operators to charge when 255 00:21:18.279 --> 00:21:22.200 the price is low and discharged when the price is high. In fact, 256 00:21:22.519 --> 00:21:27.039 the Association of Fissuring Bodies now have implemented and accepted a way that you can 257 00:21:27.039 --> 00:21:33.359 double stamp if you use batteries essentially, so you stamp once when the battery 258 00:21:33.400 --> 00:21:37.960 is charged, and you basically stamp again when the battery is deployed, so 259 00:21:37.160 --> 00:21:42.599 you can basically match that energy that was charged. JP. Can I just 260 00:21:42.680 --> 00:21:47.200 jump on what you've just said there and just make a point. I don't 261 00:21:47.240 --> 00:21:49.799 know if you agree with me not, But as this market changes, what's 262 00:21:49.920 --> 00:21:56.839 likely to happen is that the value of hydro and biomass, and I spec 263 00:21:56.960 --> 00:22:00.240 I call a flexible hydro in flactor biomass, it's just going to go through 264 00:22:00.279 --> 00:22:06.720 the growth. Definitely agree because of the constant production of power and the constitution 265 00:22:06.880 --> 00:22:11.960 of certificates. That's that's correct, as well as interconnectors because in fact you're 266 00:22:11.960 --> 00:22:15.000 going to put some green electrons on one side of interconnector and on the other 267 00:22:15.079 --> 00:22:22.039 side you'll be able probably to recreate the same green electrons. Let's assume you 268 00:22:22.079 --> 00:22:26.559 have Norway UK. There must be a system where we know that it's Norwegian 269 00:22:26.640 --> 00:22:30.519 hydro on one side of the cable and on the other side in the UK 270 00:22:30.880 --> 00:22:37.759 they should be able to recreate the green attributes that the Norwegian have exported. 271 00:22:37.240 --> 00:22:44.319 Correct, And that's the beauty of hourly matching because you can actually verify the 272 00:22:44.359 --> 00:22:48.880 certificates that correspond exactly when you charge on one side and then deploy on the 273 00:22:48.920 --> 00:22:52.119 other. Yes, correct, I want to follow up on what you said 274 00:22:52.160 --> 00:22:56.160 there, Laurent and JPR question there, so like just one hundred percent understanders, 275 00:22:56.400 --> 00:23:00.759 I could understand that there's a virtual match In other words, let's assume 276 00:23:00.759 --> 00:23:07.359 there's not enough transmission capacity from Norway to Europe, but they've got lots of 277 00:23:07.599 --> 00:23:11.920 renewables, so what you're doing is a virtual matching on a time basis. 278 00:23:11.960 --> 00:23:14.720 My question to you is is that what's going to happen or is it going 279 00:23:14.799 --> 00:23:18.640 to be a real production matching because there are constraints in the grids. In 280 00:23:18.680 --> 00:23:19.960 other words, is it going to be a virtual matching or is it going 281 00:23:21.000 --> 00:23:25.200 to be a physical matching? From my perspective, I think initially it's going 282 00:23:25.240 --> 00:23:30.880 to be a virtual matching and moving on to a physical matching because as you 283 00:23:30.920 --> 00:23:33.559 say, it's going to have to start being a contract for difference initially and 284 00:23:33.599 --> 00:23:38.319 then move on to kind of physical trading activity, which means back to Laurent's 285 00:23:38.319 --> 00:23:42.759 point about the grid interconnector the grid Internet director has become really valuable because what 286 00:23:42.799 --> 00:23:48.200 the gridded connectors enable you to do is move from virtual to real time delivery 287 00:23:48.279 --> 00:23:52.920 to real time delivery. Correct. Correct. So JP based on all these 288 00:23:52.920 --> 00:23:57.480 opportunities and your knowledge of developing platform like you developed Zygo in the past, 289 00:23:57.680 --> 00:24:03.680 round power purchase agreement and so your knowledge of green electrons market, you have 290 00:24:03.119 --> 00:24:08.839 started this very promising companyable. So it's renovable without the E at the end. 291 00:24:08.880 --> 00:24:12.920 So that's that's kind of smart. Yeah, So explain a bit. 292 00:24:14.079 --> 00:24:17.279 You trace green electrons. Okay, that's all fine, and I guess other 293 00:24:17.319 --> 00:24:21.559 people are doing it. But the different thing is you help the transaction of 294 00:24:21.599 --> 00:24:25.640 them. So can you explain how it works? And really it's about the 295 00:24:25.680 --> 00:24:30.359 traders. They end up with a lot of green electrons from PPAs and then 296 00:24:30.559 --> 00:24:33.319 they have too much, they don't have enough. They want to rebalance the 297 00:24:33.400 --> 00:24:37.079 portfolio. Maybe they have too much in one country not enough in another. 298 00:24:37.200 --> 00:24:44.000 So explain how your platform is helping that process. The platform is very valuable 299 00:24:44.119 --> 00:24:48.400 for two different segments. One is a corporate sector and the other one is 300 00:24:48.440 --> 00:24:52.240 as you mentioned, the traders. Our platform we do three things. The 301 00:24:52.279 --> 00:24:57.279 first one is the verification and we'll let you know as a corporate what your 302 00:24:57.480 --> 00:25:02.640 current CFE score is. So basically, we plug into the smart meter and 303 00:25:02.680 --> 00:25:07.880 we analyze exactly how you consume your energy and what is the level of greenness 304 00:25:07.920 --> 00:25:11.000 of the greed around you, and what contracts you have in place, and 305 00:25:11.000 --> 00:25:17.079 then we give you an accurate hourly cf score. The second thing is we 306 00:25:17.480 --> 00:25:22.079 highlight the gaps. So, for example, if you signed a PPA. 307 00:25:22.400 --> 00:25:27.599 Typically companies will sign PPAs either past produce or baseload, typically for around thirty 308 00:25:27.720 --> 00:25:33.000 forty percent of their annual volume, and then what happens with the remaining sixty 309 00:25:33.039 --> 00:25:37.200 seventy percent. So we can help those companies buy hourly matched certificates from our 310 00:25:37.240 --> 00:25:42.599 marketplace and then trace those certificates back to a specific acid. But our marketplace 311 00:25:42.680 --> 00:25:47.079 is really valuable as well for companies that cannot sign PPAs, because there's a 312 00:25:47.119 --> 00:25:51.680 big portion of companies that don't have the necessary volume, or they don't have 313 00:25:51.920 --> 00:25:56.319 really good credit rating, or they cannot come into attend fifteen year contract. 314 00:25:56.559 --> 00:26:02.720 So for those companies, they need to have some actual valuable solutions beyond PPA 315 00:26:02.839 --> 00:26:07.960 is where they can actually buy hourly mass certificates that correspond to their consumption profile 316 00:26:07.279 --> 00:26:11.920 and then understand exactly where those certificates come from, which win farm with solar 317 00:26:11.960 --> 00:26:17.160 farm. And the third element is the compliance site. So we provide reports 318 00:26:17.279 --> 00:26:22.519 that very five the origin of the certificates, and companies can actually create reports 319 00:26:22.519 --> 00:26:26.039 that adhere to initiatives like CDP every one hundred, as BTI, et cetera. 320 00:26:26.559 --> 00:26:30.759 So it provides a lot of value in three different areas and it helps 321 00:26:30.759 --> 00:26:36.799 companies become compliant and remain compliant by buying certificates on an hourly basis. Yeah, 322 00:26:36.799 --> 00:26:41.519 but those reports which are kind of voluntary or adherence to standards, that's 323 00:26:41.559 --> 00:26:47.480 going to change because of regulation. Regulation is coming in, so it's not 324 00:26:47.880 --> 00:26:52.119 like nice to have, it's going to be immersed have. Correct. So 325 00:26:52.359 --> 00:26:55.880 at the moment is as you say, it is a nice to have And 326 00:26:55.960 --> 00:27:00.440 what we're doing is help companies prepare themselves for when and the regulation comes into 327 00:27:00.480 --> 00:27:07.440 play and they have to become compliant to those standards. We allow companies to 328 00:27:07.440 --> 00:27:11.720 buy certificates on an annual basis, just as they normally do, and what 329 00:27:11.759 --> 00:27:18.079 we do is we reconcile those certificates on a month minus one basis, so 330 00:27:18.359 --> 00:27:21.759 they can just buy on an annual basis. As they typically do, and 331 00:27:21.799 --> 00:27:26.640 then every month that passes and we know the factual consumption, then we allocate 332 00:27:26.680 --> 00:27:30.599 those certificates to that specific consumption profile on an hourly basis and let them know 333 00:27:30.759 --> 00:27:34.880 if they need to go back to the marketplace and buy more certificates, or 334 00:27:34.920 --> 00:27:37.960 they can swarp some certificates, or they can sell certificates back to the market. 335 00:27:38.400 --> 00:27:42.839 Well, JP, this is probably still more questions than answers, but 336 00:27:44.039 --> 00:27:48.160 what you do and your team and your company are definitely one of the critical 337 00:27:48.279 --> 00:27:55.119 tools to crack the code of tracking and trading cinerect Console. Thank you very 338 00:27:55.200 --> 00:27:57.039 much for coming on the show. Thank you very much for having me guys, 339 00:27:57.240 --> 00:28:00.839 good luck with the new venture. Thank you very much. So I 340 00:28:00.839 --> 00:28:04.839 think the phrase that comes to my head is technical. It's very very very 341 00:28:04.880 --> 00:28:10.680 technical. It's also very very very important this whole area of green electrons. 342 00:28:11.160 --> 00:28:14.559 But the question I'm asked, I have to ask you is you're investing for 343 00:28:14.559 --> 00:28:18.400 the second time in this area. Why? And the reason I'm asking you 344 00:28:18.440 --> 00:28:23.680 why is is because sort of so technical, a niche. What's what's in 345 00:28:23.720 --> 00:28:26.480 my head? Actually, I'm thinking to myself, what the hell is the 346 00:28:26.519 --> 00:28:29.440 buyers for this business etcetera, etcetera. You know you have to invest in 347 00:28:29.519 --> 00:28:32.400 probably be thinking of what the lexit is. But tell me what was in 348 00:28:32.440 --> 00:28:36.720 your head when you made that investment decision. Well point number one. In 349 00:28:36.759 --> 00:28:40.400 the first investment, I made quite a lot of money, right, so 350 00:28:40.680 --> 00:28:44.240 that's always good. And the second thing is, look, we had the 351 00:28:44.599 --> 00:28:48.720 simono from Flexido about yo and a half ago on the show, and that 352 00:28:48.880 --> 00:28:55.359 shows how much that concept of twenty four to seven has advanced the momentum. 353 00:28:55.839 --> 00:29:00.519 I see this being literally as big as the bokets. But as you said, 354 00:29:00.640 --> 00:29:07.200 it's extremely digital and very very few people can honest that. It's not 355 00:29:07.359 --> 00:29:11.240 your all style broker with his phone and is a few PDF female and that's 356 00:29:11.279 --> 00:29:17.480 it, which means that the companies who can master the technology there are very 357 00:29:17.559 --> 00:29:22.359 very few, and GP runs one of them. And because he's a trader 358 00:29:22.400 --> 00:29:26.680 of my nature, it's not a digital guy you try to learn about trading. 359 00:29:26.240 --> 00:29:30.720 It's a trader who has a partner with digital guys. He speaks the 360 00:29:30.799 --> 00:29:34.960 languages of the guys who can trade those green certificates, which by the way, 361 00:29:36.079 --> 00:29:41.160 our name Shell Sanrica. We you don't need to invent clients. The 362 00:29:41.200 --> 00:29:47.119 clients are there, it's the energy market. Can I ask just maybe to 363 00:29:47.160 --> 00:29:52.640 conclude the whole discussion. Is that not sort of the natural playground of the 364 00:29:52.799 --> 00:29:56.400 energy exchanges and I particularly I think of it said the European Energy Exchanged ex 365 00:29:56.400 --> 00:30:00.839 which ultimately has Deutsch burs at the back of it. So the goal listn't 366 00:30:00.839 --> 00:30:03.920 there. They're trading everything on a real time basis. It's it not easy 367 00:30:03.920 --> 00:30:08.119 for them to do what we're talking about. Well, in Vienna, if 368 00:30:08.160 --> 00:30:12.680 you listen to us, I know the ex people very well. They can't 369 00:30:12.720 --> 00:30:18.640 develop a new product. Now. If that goes well, I'm sure they'll 370 00:30:18.640 --> 00:30:22.759 come with a very fact check in three or four years time. Okay, 371 00:30:22.039 --> 00:30:26.799 it's very clear a Zygo. We were acquired by sharl Electric because they said, 372 00:30:26.799 --> 00:30:30.960 look, your software is phenomenal and we could not develop that internally. 373 00:30:30.359 --> 00:30:34.440 Because the development of the software there's a lot of trial and error and conversation 374 00:30:34.599 --> 00:30:40.480 and you need to flip certain parameters over the weekend, and you will never 375 00:30:40.559 --> 00:30:44.559 have a big company do that. They can only invest in stabilized product, 376 00:30:44.960 --> 00:30:48.200 but they will be top dollars for that. I like what you just said 377 00:30:48.200 --> 00:30:52.519 actually, which was ultimately the opportunity could be bigger than the power markets today. 378 00:30:52.759 --> 00:30:55.839 I like it. I like it, I like it. I think 379 00:30:55.880 --> 00:31:00.559 so okay. It was a great conversation. We thank JPFO coming, We 380 00:31:00.599 --> 00:31:06.279 wish him the best and I'm helping him on a regular basis. We thank 381 00:31:06.799 --> 00:31:10.640 a Mundi for supporting the show. Thank you, guys, Thanks guys, 382 00:31:10.920 --> 00:31:18.279 and I talk to you next week looking forward with thank you for listening to 383 00:31:18.359 --> 00:31:23.960 Redefining Energy. Don't forget to rate the show and subscribe on Apple, Podcast, 384 00:31:25.400 --> 00:31:27.240 Spotify, or the platform of your choice.