Speaker 1: With Laurent's segle end from London and Gerard read from Berlin.
Speaker 1: This is redefining energy.
Speaker 2: Today on Reef Energy JOT for our first real episode
Speaker 2: of the year after the crazy episode last week on Predictions.
Speaker 2: We're going to talk about distribution networks and how to
Speaker 2: make them more intelligent.
Speaker 1: More intelligent, more efficient, and we do that true creating
Speaker 1: a market in that area of for flexibility.
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Speaker 3: Make your life easier, make your business more flexible.
Speaker 2: Back to the show, Yes Jah, because everybody talks about
Speaker 2: transmission networks and there is about according to judgipts or
Speaker 2: you know, take all those statistic with a grain of salt,
Speaker 2: seven million kilometers of transmission network which are supposed to
Speaker 2: triple by two of fifty, but distribution networks, which is
Speaker 2: described as about fifty killer volts that's medium voltage and
Speaker 2: ten kilovolts that's low voltage. That's one hundred and ten
Speaker 2: million kilometers, which also going to expand not by as much,
Speaker 2: but will expand by another thirty percent by two or fifty.
Speaker 2: And of course they are facing aging infrastructure, climate stress,
Speaker 2: and they are the growth of demand response, so gigantic
Speaker 2: subject that nobody talks about.
Speaker 1: Yeah, people don't like talking about grids because they're complex,
Speaker 1: that's be really really clear. But without them, they don't
Speaker 1: have power. If we don't have power, well, madam well
Speaker 1: just ceased to exist.
Speaker 2: As you said, innovations are happening, and we are fortunate
Speaker 2: to have one of those innovators on the show, and
Speaker 2: it's Jojo About.
Speaker 1: I've known her many years and she really is at
Speaker 1: the forefront of a color optimization and around the last
Speaker 1: mile that distribution grade. So it's great to have her
Speaker 1: command show.
Speaker 2: Our company has the greatest name of all. It's called
Speaker 2: simply Electron, and it's a flexibility operating system for distribution networks,
Speaker 2: which means aggregating a lot of demand response program it's
Speaker 2: going to be about Evy Charging. She's a very successful startup,
Speaker 2: probably six rounds of financing. She has a team of
Speaker 2: fifty person who aile doing software grades market designs. So
Speaker 2: this is a great way to start the year.
Speaker 1: So let's bring on the show.
Speaker 2: Yojo, welcome to the show, and happy new Year.
Speaker 4: Well, thank you for having me.
Speaker 3: Happy New Year by Joyo.
Speaker 1: It's great to have you. So maybe let me just
Speaker 1: kick off. If I look at the sort of the
Speaker 1: future of our power system, the concern I have is
Speaker 1: in the distribution grid, because for me, it's all about
Speaker 1: optimizing energy flows through that system. Listen, I know you're
Speaker 1: in the midst of all of this area, but I
Speaker 1: just love to hear a big picture what you see
Speaker 1: going on there and just talk a little bit about that.
Speaker 1: That'll be great.
Speaker 4: Well, the distribution grid is often quite forgotten and all
Speaker 4: this kind of government rhetoric of transition, you know, so
Speaker 4: this phrase you always here, there's no transition without transmission,
Speaker 4: And I'm just like and distribution. Most of the spending
Speaker 4: on this transition is on distribution. In the US's wild
Speaker 4: it's something like fifty percent. This is like twenty percent
Speaker 4: on transmission, twenty five percent of generation. So there's an
Speaker 4: and we're in a position like a place of having
Speaker 4: to expand the grid really fast for new connections, mostly
Speaker 4: at distribution level, while we've got this really aging infrastructure
Speaker 4: it's around forty years old, and we've got this kind
Speaker 4: of looming affordability crisis. So a lot is happening on
Speaker 4: the distribution grid, but not as much as people want
Speaker 4: to happen on the flexibility space. UK, I guess is
Speaker 4: a leader in the distribution flexibility market space. There was
Speaker 4: a very clear incentive in place about six years ago
Speaker 4: by government for utilities who could use flexibility instead of
Speaker 4: network upgrades to essentially share the savings. Customers get fifty
Speaker 4: percent back, utilities get fifty percent back, and that kicked
Speaker 4: off quite a big, very fast growing distribution level market
Speaker 4: in the UK. I think last year about three hundred
Speaker 4: million pounds was saved that nine gigawats were traded. That
Speaker 4: is one thing it needs to get bigger. Though only
Speaker 4: use case they're trading against is network upgrade deferrals, and
Speaker 4: as you know, we need to build everything right now.
Speaker 4: We want faster connections and things like that to be
Speaker 4: included in. In Europe there's been kind of clarity across
Speaker 4: here from twenty nineteen around flexibility is the right answer
Speaker 4: in the medium to long term started, but this hasn't
Speaker 4: been translated into really clear incentives on a country by
Speaker 4: country basis, and you're seeing a lot of kind of
Speaker 4: intervention now to try and make that happen a little
Speaker 4: faster country by country, and in America, it's all just
Speaker 4: starting to take off.
Speaker 2: I love some of the quote you've made, and you said,
Speaker 2: we are building the operating system that turns a distribution
Speaker 2: grid from a dumb pipe into the world largest virtual
Speaker 2: power plan. So that's what your company, Electron. I mean,
Speaker 2: great name, Electron, well done. So can you elaborate a
Speaker 2: bit on that operating system.
Speaker 4: I guess there's a bunch of different people building pieces
Speaker 4: of it as well. So where we sit in it,
Speaker 4: electrons job is to help the utility on one side
Speaker 4: optimize on a kind of value basis what they're doing
Speaker 4: in the network, whether it's bills or flax. So it's
Speaker 4: getting the data of netility that they need to make
Speaker 4: that decision, and the data from the people who own
Speaker 4: and operate the distributed energy resources on the other side.
Speaker 4: So we're not octopose, we're not dispatching and optimizing consumers assets.
Speaker 4: They're traders on our platform. In the UK, we're not alters,
Speaker 4: we're not aggregating C and I customers. They could all
Speaker 4: be traders on the platform. But with wizard of trying
Speaker 4: to surface the information from those guys as to what
Speaker 4: they've got and what they could do, surface the information
Speaker 4: from the utility on the other side as to where
Speaker 4: they've got constraints, what the value is, and make the
Speaker 4: magic happen, and try and create more and more opportunity
Speaker 4: to capture these efficiencies with distributed energy resources kind of
Speaker 4: marketplace model. But we can't do the Nasdaq model yet
Speaker 4: because people don't know what they're buying or what they're
Speaker 4: selling or how to price it. There's a lot of
Speaker 4: incremental data reveals.
Speaker 2: So by acting as an interconnect between the DSO or
Speaker 2: the d and O, maybe their system are relatively antiquated
Speaker 2: and the various pockets who start doing some dr VPP
Speaker 2: batteries whatever, aggregatails. Somehow you bring clarity to a distribution network.
Speaker 2: Is it a good way to put it together?
Speaker 4: It's exactly that. If the network operator wants flexibility in
Speaker 4: one location and they know the provider, They don't need us.
Speaker 4: They can go straight there and they can buy that flexibility.
Speaker 4: But if you want to scale that market, you need
Speaker 4: to understand value better. We get in that. You need
Speaker 4: to find more volume. We bring all the different providers together,
Speaker 4: and you need to reduce friction, and we just make
Speaker 4: it very easy for everyone to see all the price
Speaker 4: signals in one place and to enact rates. So yes,
Speaker 4: exactly that we're about scaling that use of energy resources
Speaker 4: beyond that kind of bilateral relationship, which is where it
Speaker 4: all started.
Speaker 2: So Jojo, you just said that local flexibility is cheaper
Speaker 2: than greed reinforcement, and so you know you can avoid gapex,
Speaker 2: which is unfortunately for very long time description network. They
Speaker 2: work on a cost plus. The more I spend, the
Speaker 2: more I make, But of course that starts to become
Speaker 2: very expensive in everybody's invoices. So can you laborate to
Speaker 2: bit on flexibility is cheaper than grid reinforcement? And where
Speaker 2: do you see the limits of that?
Speaker 4: Firstly, where it's available, it's cheaper than grid reinforcement. It's
Speaker 4: not always available. So so job one is should you
Speaker 4: use flexibility? Is there enough flexibility? In this location when
Speaker 4: there is, it's essentially necessarily cheaper than grid reinforcement, because
Speaker 4: I don't think people understand how little distribution grids are
Speaker 4: used in terms of kind of capacity, maybe like five
Speaker 4: percent in Germany, seven percent in Spain. Even in like
Speaker 4: populous areas like even around like London in the UK,
Speaker 4: it's probably only around twenty five percent. And distribution grids
Speaker 4: obviously for the last mile it's how power actually gets
Speaker 4: to people. But in like extreme weather events going on
Speaker 4: and increasingly when there's a lot of renewable they are
Speaker 4: getting too or close to capacity. So instead of rebuilding
Speaker 4: a grid for an extra like twenty hours a year,
Speaker 4: if you can use the people who are on that
Speaker 4: grid and pay them to shift, it's essentially necessarily cheaper
Speaker 4: and more efficient than building the grid. So distribution grid
Speaker 4: to ferral is different to transmission grid to ferral. You
Speaker 4: probably want to build as much transmision and as people
Speaker 4: can use power because power creates society and economic value.
Speaker 4: But it is always economically rational to use distribution grids
Speaker 4: more effectively, And the numbers that the utilities are paying
Speaker 4: for flexibility wildly vary by location, but typically for every
Speaker 4: dollar you span on flexibility, they'll save like three to
Speaker 4: ten in reinforcement costs. Again, we'd be very careful because
Speaker 4: when flexibility first came about, it was all about deferring upgrades. Now,
Speaker 4: in a world where everyone wants to build, build, it's
Speaker 4: really about using flexibility to discover where you should build next,
Speaker 4: where you'll get the highest value from building. And when
Speaker 4: you run a flexibility market, you discover relative value in
Speaker 4: different locations of grid deferral. So it helps the utility
Speaker 4: make better decisions about what to build next and where
Speaker 4: they're going to create the most economic value. So it's
Speaker 4: a partner to your grid expansion and not instead of
Speaker 4: these days when you.
Speaker 2: Are dealing with utilities, we've seen that with a lot
Speaker 2: of great innovation, you have the value of death, which
Speaker 2: are pilots. You know, they just do pilots, pilots by nothing.
Speaker 2: So how have you been able to transform pilots which
Speaker 2: are very nice but you're just building everybody's money. Two? Okay,
Speaker 2: now it's for real and you can rely on this
Speaker 2: new innovation. So explain a bit of the journey.
Speaker 4: We spend a lot of time in pilot land because
Speaker 4: elections almost ten years old, the hardest thing about innovating
Speaker 4: in this space is there's a gap between the value
Speaker 4: that you can create for the system and the value
Speaker 4: you can capture under current regulatory regime. So the trick
Speaker 4: is to find a way where you can create loads
Speaker 4: of economic value that isn't unlocked yet, but also some
Speaker 4: current economic value that is unlock where you can survive
Speaker 4: long enough for those rules to change around it. And
Speaker 4: that was really our path. But when we first started,
Speaker 4: I was coming from the renewable investment side battery investment,
Speaker 4: and the answer is so obvious to me. It was
Speaker 4: time and location based price signals, and we were getting
Speaker 4: curtailed generation to pay local demands to turn up or
Speaker 4: down and get free energy, and that was exciting because
Speaker 4: it was really economically rational. The challenges we couldn't scale
Speaker 4: it because as soon as you start trying to change
Speaker 4: flows in a big way through grids, got to feed
Speaker 4: this into the distribution netwik operator to check that you
Speaker 4: weren't going to turn the lights off, and there wasn't
Speaker 4: even an operational process for us to feed that data in.
Speaker 4: So we had to then go and win the right
Speaker 4: to run today's market, which is the procurement of longer
Speaker 4: term moving to near a real time capacity on the network.
Speaker 4: When we went about that, there was someone else at
Speaker 4: one hundred percent market share in that space, and we
Speaker 4: really really had to kind of redesign our product to
Speaker 4: take that market and have the right to essentially like
Speaker 4: provide these long term tender constructs so that we could
Speaker 4: then reintroduce the near real time markets, the more dynamic
Speaker 4: trading things like operational dispatch, which is where we started.
Speaker 4: So we were lucky to survive through that value and
Speaker 4: I think, yeah, learnings for others thinking about during the
Speaker 4: same as starts for something everyone's already doing. And so
Speaker 4: it's all about cost benefit analysis. I do you want
Speaker 4: to change the way someone's pay this, you have to
Speaker 4: show real data that they can get more balue that way.
Speaker 4: So you do have to do the pilot, Like you
Speaker 4: can't skip the pilot. You just have to do the
Speaker 4: pilot while you were allowed to be paid for something
Speaker 4: that's currently economically rational.
Speaker 1: Jojo, can I just ask about one thing that was
Speaker 1: from last year, which was there was talk in the
Speaker 1: UK about changing the power markets right and moving to
Speaker 1: nodal pricing. I'd love to hear your thoughts in and
Speaker 1: around that and what we need to do going forward
Speaker 1: to sort of incentivize more and more flexibility. And I'm
Speaker 1: not just talking about the UK, just you're doing this
Speaker 1: in different market. What would your lessons be that if
Speaker 1: you were speaking to a regulator tomorrow, what would you
Speaker 1: say to them?
Speaker 4: To do locational pricing definitely benefits a system, makes the
Speaker 4: system cheap. That should you part it onto consumers as
Speaker 4: a regulatory discussion that can kind of happen. Apart from that,
Speaker 4: if you decide that you need to have some form
Speaker 4: of locational pricing to drop the cost of the whole system,
Speaker 4: which I think is really very important. And today when
Speaker 4: the system costs is rising so quickly and we're having
Speaker 4: to expand the grid so fast, deside you had to do.
Speaker 4: You have two choices. You can do explicit where your
Speaker 4: flexibility markets like ours, where you're kind of pinging crime
Speaker 4: and location based pricing now, and then you do implicit,
Speaker 4: which is where there's a kind of moving zonal lodal
Speaker 4: regional price. We sort of said nod all too difficult,
Speaker 4: so we're going to do zonal. But zone not only
Speaker 4: helps with transmission constraints because their areas are so big, essentially,
Speaker 4: and so much of the challenge is more localized. So
Speaker 4: I think we haven't said it's no locational pricing. We've
Speaker 4: said that we're going to do locational pricing explicitly for
Speaker 4: a while instead of updating every system. And there's some
Speaker 4: sense in that in the US, where we're also working
Speaker 4: with a number of different utilities, there already is LMP
Speaker 4: in a lot of these regions, and you're still needing
Speaker 4: to layer on these explicit locational pricing because you're still
Speaker 4: getting these really constrained areas of kind of aging infrastructure
Speaker 4: and a lot of new connections coming through. So locational
Speaker 4: pricing is inevitable, especially when network prices are getting this high,
Speaker 4: and the implicit explicit debate is peak terror and how
Speaker 4: that has passed on to consumers.
Speaker 1: Can I just maybe just following on that, can ask
Speaker 1: if I look at it, what I can imagine what
Speaker 1: we see in the markets is we see a lot
Speaker 1: of volatility and wholesale power prices. Obviously you can go
Speaker 1: to flexible tariffs and stuff like this, but I can
Speaker 1: imagine if you flexibilize the grid tariffs as well, then
Speaker 1: you really do have an incentive in place for customers
Speaker 1: to make change is one thing that I was quite
Speaker 1: taken back by. I suppose the end of last year
Speaker 1: was just the Australian government's decision to sort of go, okay,
Speaker 1: we're going to give away electricity for three hours a
Speaker 1: day to our customers. I mean that's quite a radical move.
Speaker 1: But it sort of goes back to there sort of
Speaker 1: saying well, you know, if it's electricity for free, let's
Speaker 1: do something like that. You know, so how do you
Speaker 1: think about all of that?
Speaker 4: It massively depends right by Regina. Australia has huge, huge
Speaker 4: amounts of sola and one so of panel can create
Speaker 4: about four times as much power as it can in Australia.
Speaker 4: And as a kind of know, then you're the promise
Speaker 4: of the transition was like free is there a much
Speaker 4: no cost power some of the time in brackets and
Speaker 4: it's really exciting to be able to pass it on
Speaker 4: to consumers. Hey, some of the time I wish governments
Speaker 4: would start being more honest on this transition piece and like,
Speaker 4: you know, we're not dropping the energy costs necessarily, we're
Speaker 4: dropping the energy costs really severely some of the time.
Speaker 4: If you know, we then need to invest in the
Speaker 4: flexibility that actually makes that capturable and valuable to consumers.
Speaker 2: Okay, I understand those debates. You have academics who are
Speaker 2: running complex where we used to have a Excel sheet,
Speaker 2: but now it's even better. We get AI models. So
Speaker 2: they're going to come with a six hundred page report
Speaker 2: demonstrating that this should be done or that should be done.
Speaker 2: But then the governments, you see, no way, they say,
Speaker 2: you know what flat prices. So in fact, government, because
Speaker 2: the subject has become politics, they start intervening. And every
Speaker 2: time a government interven's journey is done on more ideological
Speaker 2: than economic basis. They want the flush headlines and a
Speaker 2: lot of positive signal which could get from the market
Speaker 2: that they are brushed aside because you change the system,
Speaker 2: you have what they call the wiener and loser. The
Speaker 2: wianer this is very nice, but the loser they'll make
Speaker 2: so much noise that it will negate any economic value
Speaker 2: because of a political cost. So the question is what
Speaker 2: can be done under the radar, so we don't start
Speaker 2: having public debate of yeah, six hundred newly minted would
Speaker 2: be expert.
Speaker 4: I like cost reflective pricing because that actually does incentivize
Speaker 4: to driving down costs of whole system. And that is
Speaker 4: really important because if we do not transition in a
Speaker 4: cost effective way, we may well lose the mandate to transition.
Speaker 4: As to whether that gets passed on to the consumer
Speaker 4: or not is another matter, and that's where I wish
Speaker 4: the government intervention would happen. You can say, hey, supplier
Speaker 4: is you take that risk and you guarantee your consumer's
Speaker 4: a flat price, and you work out what you can
Speaker 4: guarantee them based on how you can trade that for example,
Speaker 4: so what consumers see and like how we price for
Speaker 4: a cost to reflect a system should be divorced. And
Speaker 4: that's why I was actually very pro the nodal system
Speaker 4: debate because NODO would have given us so explicit pricing.
Speaker 4: Explicit pricing is can like a free market because any
Speaker 4: new supply I can kind of start up without even joining.
Speaker 4: Each local flexibility market knows how to move their consumers.
Speaker 4: So I personally was a massive proponent of that basic
Speaker 4: even though it would probably be less good for a
Speaker 4: business like Electron. That is all about getting explicit pricing
Speaker 4: to consumer because there's still a ton to be done
Speaker 4: below the nodal level. And you see that in countries
Speaker 4: like the US where they already have zone on pricing.
Speaker 4: So yes, for the very reason you just said, Laura,
Speaker 4: it's very difficult to work out roots to market and
Speaker 4: value in the energy space because you are navigating this
Speaker 4: regulatory and kind of fundamental value shift that just don't
Speaker 4: quite match yet. And for us, it's about finding a
Speaker 4: way in and then showing enough data kind of incrementally
Speaker 4: to show why something else should move around it, and
Speaker 4: we really have to kind of partner with utilities to
Speaker 4: do that. There's a lot of people who think that
Speaker 4: utilities aren't buying flexibilit because utilities are useless, but like
Speaker 4: a lot of it's not true in most places because
Speaker 4: they're not incentivized to do so, because they haven't been
Speaker 4: able to make their regulator understand the cost benefit analysis
Speaker 4: for example, of them being incentivized to do something this
Speaker 4: way is gross that way.
Speaker 1: Jojo, can we just maybe ship direction a little bit
Speaker 1: and just talk about some of the technologies and the
Speaker 1: flexibility is because what I would say is there's just
Speaker 1: a massive amount of flexibility being built, particularly behind the meter,
Speaker 1: particularly I'm thinking about batteries. You could also argue, well,
Speaker 1: we've got these movable batteries which are called evs, and
Speaker 1: there's even more flexibility in them. So how do you
Speaker 1: see that? And related to that, then talk a little
Speaker 1: bit about new business models that come from that, because
Speaker 1: a lot of what we've been talking today is about
Speaker 1: grid operators and utilities, but actually you could eye you
Speaker 1: what's going to be on mobile manufacturers that can control
Speaker 1: this flexibility, or new companies and new businesses. So how
Speaker 1: do you see that?
Speaker 4: So basically a lot of the aim monoles and kind
Speaker 4: of removing friction and increasing volume in these markets is
Speaker 4: about enabling anyone to participate in this marketing. The reason
Speaker 4: that these electric vehicles, for example, are such an exciting
Speaker 4: prospect for flexibility is just there's going to be so
Speaker 4: many of them. Yeah, let's say you get two kilo
Speaker 4: hours of flex from an EV half a million ev
Speaker 4: us is like a nuclear power plant. It's going to
Speaker 4: be you know, many, many, many multiples of that. And also,
Speaker 4: if the flexibility is coming from the bottom of the grid,
Speaker 4: it can solve problems at the bottom of the grid,
Speaker 4: in the middle of the grid, the top of the grid.
Speaker 4: So it just get some more kind of opportunities to
Speaker 4: play and create value and it can also help balance
Speaker 4: supply and demand. A lot of the flexibility people don't
Speaker 4: think about though today is not just in batteries, but
Speaker 4: in commercial industrial processes. That almost doesn't really exist today
Speaker 4: because power prices have been quite high or quite flat.
Speaker 4: If you actually get to a really spiky cost reflective
Speaker 4: market where you get really cheap power some of the
Speaker 4: times and really like a lot of money for flexibility
Speaker 4: other times, you're going to get to transform the unit
Speaker 4: economics of some energy intensive, flexible industry and get a
Speaker 4: lot more flexibility. The battery story is absolutely fascinating. There's
Speaker 4: all sorts of new business models of people who can
Speaker 4: use power flexibly. On the actual consumption side. There's something
Speaker 4: that we're working on at the moment. It's essentially a
Speaker 4: imbalanced hedging product with a PPA platform, a bit like
Speaker 4: a capacity market contract that they can pay twenty five
Speaker 4: percent of the value the battery needs to make per
Speaker 4: year to secure against thirty eight hundred hours a year
Speaker 4: where they're inn imbalance, and that battery can then pay
Speaker 4: a lot of the cost to even build the battery.
Speaker 2: To pursue on Chile's question, So you have EV's heat
Speaker 2: pump on batteries flexible to almost start commercial load. Which
Speaker 2: of those category do you think give up the most
Speaker 2: flexibility in the next ten years, and which one do
Speaker 2: you think is overlooked.
Speaker 4: People are still really over excited about heat pumps and
Speaker 4: electric heating, and that's coming through much slower than everyone wants,
Speaker 4: and unless policy changes, that's going to continue. So evs,
Speaker 4: for their scale, gets a lot very very quickly. But
Speaker 4: batteries obviously the kind of ultimate flexibility enabler because they
Speaker 4: can guarantee that someone gets something and you can build
Speaker 4: new business models behind it. So it's more than new
Speaker 4: business models behind the technologies that really excites me. That
Speaker 4: will move the adoption of things like batteries. I will
Speaker 4: cap your energy price here and put my battery behind
Speaker 4: your endpan and give you some kind of resilience a saving,
Speaker 4: but then make all of the money in the kind
Speaker 4: of trading that battery. I think that's a really exciting
Speaker 4: proposition that haven't seen in the market before. And it
Speaker 4: really gets possible when you can securitize that asset.
Speaker 2: It's what base power is trying to do in Texas.
Speaker 4: Yeah, and the Texas market's wild, right because you make
Speaker 4: all your money from ten thirty hours a year, but again,
Speaker 4: you don't want to expose consumers to that necessarily, like
Speaker 4: during storm ury Jojia.
Speaker 1: The other thing that I'd like to talk about generations
Speaker 1: when the way I look at it is the more
Speaker 1: flexibility or we put into the system, the less baseload
Speaker 1: generation we need. And I'm just curious, have you done
Speaker 1: any modeling or do you have any thinking around what
Speaker 1: that future system could look like. And I'm saying this
Speaker 1: because you're looking at countries like Germany that are sort
Speaker 1: of saying, oh, yeah, we're going to put in, you know,
Speaker 1: a whole pile of firm CCTT capacity, and I'm sort
Speaker 1: of wondering is that really the right thing for them
Speaker 1: to be doing.
Speaker 4: You absolutely need diversity, whether you need baseload or not,
Speaker 4: you definitely need diversity, and baseload is a very diverse
Speaker 4: profile against renewables. The only reason you need diversities is
Speaker 4: because if everyone's correlated, then you're really, really really exposed
Speaker 4: to the swikey events. That means, in my mind, based
Speaker 4: out could easily be kind of ten to fifteen percent.
Speaker 4: But I don't think the more flexibility you need, the
Speaker 4: less base load you need, because flexibility is absolutely diversity.
Speaker 4: There was a report out five years ago that I
Speaker 4: was looking at a world where you could over build
Speaker 4: renew book pacity by like five x, then you have
Speaker 4: enough renewables ninety percent of the time, and if you
Speaker 4: overbuild it by like eight x, you have enough renewables
Speaker 4: ninety piercent the time. I think it was around that
Speaker 4: and everyone kind of poo pooed it because everyone was
Speaker 4: that it was like about only solar. But I don't
Speaker 4: think people understand the extent to which you get more
Speaker 4: flexible industry and flexible types of kind of consumption if
Speaker 4: you put really cheap power out there a lot of
Speaker 4: the time and really really spiky flex signals. I don't
Speaker 4: think people have kind of understood that that new industry
Speaker 4: that could use power differently and it needs a huge,
Speaker 4: huge amount of electricity almost doesn't exist yet because we
Speaker 4: don't have those kinds of electricity prices or flexibility prices
Speaker 4: and Georgia.
Speaker 1: That's why I asked the question because I agree with
Speaker 1: Jane it's back to that Australian example of giving solo
Speaker 1: away for three hours a day. We have to see
Speaker 1: what impact that has. But if that does have a
Speaker 1: very big impact. Then actually it does give you a
Speaker 1: path forward to what what you're just talking about.
Speaker 4: We need diversity, flexibility is and diversity, but we don't
Speaker 4: have diversity yet because we don't have that thing. So yeah,
Speaker 4: so we're building CDT and we're building like longer form
Speaker 4: nuclear and things like that, And now how do you
Speaker 4: get to a world where you can rely on the
Speaker 4: diversity of flexibilities? So yeah, we'll be looking to Australia
Speaker 4: for good examples that. There's also some really interesting changes
Speaker 4: in the way. For example, like some of the new
Speaker 4: big consumers like data centers, are looking at powering themselves
Speaker 4: to be flexible. I saw this kind of five categorization
Speaker 4: of data centers that the US was adopting on from
Speaker 4: kind of like completely inflexible to dispatchable like a power plant.
Speaker 4: And they're getting connection agreements based on Okay, you can
Speaker 4: connect now if you're a five, but by next year
Speaker 4: you've got to be a three, and in five years
Speaker 4: you've got to be a one. Those kinds of connection
Speaker 4: agreements as well as the power prices. If you can
Speaker 4: connect faster for being flexible, you will get a lot
Speaker 4: more flexible load and a lot more diversified load. Diversity
Speaker 4: is really the thing that governments and networks need to
Speaker 4: start paying for because that gives you the stability geojo.
Speaker 2: You're orchestrating, you integrate device, you integrate aggregator constraints, market settlement,
Speaker 2: and now you are active in half of fu kid,
Speaker 2: you know, and you start working in America and part
Speaker 2: of all this orchestration, how much can you just replicate
Speaker 2: and how much as to be tail or made to
Speaker 2: the local circumstances.
Speaker 4: US circumstances albs different to the UK. And so we're
Speaker 4: working with five utilities in the US already and some
Speaker 4: of that's through acquisition. We acquired a US grid analytics
Speaker 4: company called Rhythmos on the US market entry journey because
Speaker 4: we found that we had to start almost like a
Speaker 4: little earlier in the journey. In the UK, we could go, Okay,
Speaker 4: you want to buy that product, you had that incentive
Speaker 4: and you're going to pay this. Let's go and find
Speaker 4: the people who can sell it. In the US, we
Speaker 4: had to get involved earlier in the game. We'd to say, okay,
Speaker 4: you want to know whether you should buy flexibility or not,
Speaker 4: and if there are enough assets out there to make
Speaker 4: this valuable. And this company was doing kind of EV
Speaker 4: detection DR detection telling them where the assets were on
Speaker 4: their network and where the constraints were, and that sort
Speaker 4: of helped us get involved a bit earlier and help
Speaker 4: create the business case for new flexibility markets. But then
Speaker 4: when you get there and when you say, okay, there's
Speaker 4: value in these locations, there are enough assets in these locations,
Speaker 4: then we can move on to the kind of electron
Speaker 4: connect activation type. I would say in the US, the
Speaker 4: difference is in UK and Europe, flexibility is the answer.
Speaker 4: The kind of medium and long term for renewables, The
Speaker 4: answer is obviously flexibility. Just go and create those markets
Speaker 4: because we'll need them. In the US, there's a real
Speaker 4: like the kind of affordability crisis now as well. You
Speaker 4: need to show that like flexibility creates value right now,
Speaker 4: there's a kind of shorter time frame or tolerance to that.
Speaker 4: So it's really about having a lot more grid data
Speaker 4: uncertainty to create that CBA for doing something new and
Speaker 4: different when the incentives aren't is clear to just go
Speaker 4: and spawn these markets and this type of diversity.
Speaker 1: Jojo, we started this conversation talking about distribution grids I'd
Speaker 1: really love to hear how you see them going forward
Speaker 1: and what you're thinking is in around what your business's
Speaker 1: role is going to be in that future.
Speaker 4: So there's two things that I see kind of being retransformative,
Speaker 4: one for the industry and one for kind of Electron
Speaker 4: or our route through it. For the industry, we really
Speaker 4: need clearer incentive structures for network operators to use grid
Speaker 4: enhancing technologies to get more value from the network. They
Speaker 4: are still disincentivized from spending op X versus CAPEX, and
Speaker 4: typically it's your operating expenditure that buses good enhancing technologies.
Speaker 4: That has to change, and it will change as the
Speaker 4: weight of overwhelming data kind of crushes it, but it
Speaker 4: can take a bit of time. That is the transformative
Speaker 4: piece for the industry. For Electron, we've been absolutely in
Speaker 4: the trenches with the utilities right now working out cbas
Speaker 4: business cases and trying to sort of grow their markets
Speaker 4: in five years time. We're sort of looking to make
Speaker 4: Electron more of a kind of data platform or destination
Speaker 4: that people can come to find information about what is needed,
Speaker 4: what the relative value of putting their assets in XYZ
Speaker 4: place to the network, maybe even securitize the assets to
Speaker 4: make them easier to kind of finance and build out
Speaker 4: against those kind of future revenues and against that kind
Speaker 4: of real historical data to these kind of assets this
Speaker 4: much in this location, and be much more of a
Speaker 4: platform play and allow other people to sell services in
Speaker 4: tepre data and I won't have you on then, and
Speaker 4: stop doing that kind of utility tender thing and start
Speaker 4: having something to offer people when they arrived from scratch.
Speaker 2: Well, Yojo, you're passionate, geeky, and you're very patient. That's
Speaker 2: what it takes to be successful dealing with utility and
Speaker 2: trying to provide flexibility or lubrication in a system that
Speaker 2: tends to naturally ossify itself. So thank you so much
Speaker 2: for coming on the show. But it's great to see
Speaker 2: that beyond the flash headline is hard. We're being done
Speaker 2: at distribution level because we really need that. Thank you
Speaker 2: very much.
Speaker 4: Thank you, it's a pleasure.
Speaker 1: Thank you very much. Yeah, I wish you all the
Speaker 1: best job.
Speaker 2: This is one of the most critical parts of our
Speaker 2: energy system and nobody's talking about it, and I'm very
Speaker 2: glad we brought Jojo on our show.
Speaker 1: Yeah, totally wish I mean, this is what I take
Speaker 1: out of it is just like we've got this distribution
Speaker 1: grid that we don't use all the time. Right, the
Speaker 1: capacity and utilization factors are just so low, and you
Speaker 1: sort of go, this is mad. I mean, we need
Speaker 1: to use it more and how to do it and
Speaker 1: all that, And if we be really clear, the way
Speaker 1: we manage the grid has not changed in one hundred years,
Speaker 1: and it needs to change. It needs to change for
Speaker 1: lots of reasons. We need to be more cost effective,
Speaker 1: we need to be more secure from energy security point
Speaker 1: of view. It can go on and on and on
Speaker 1: in terms of what needs to happen, and for me,
Speaker 1: it's not about building more cables, but it's really using
Speaker 1: the ones you have and the infrastructure you have much
Speaker 1: more effectively.
Speaker 2: Right, Yes, And the big change is if you look
Speaker 2: fifteen years ago, only ten percent of the generation was
Speaker 2: connected on to the distribution networks, and now in the
Speaker 2: EU it's a third, Okay, a bit less in the US,
Speaker 2: less in China. But every time you put batteries, every
Speaker 2: time you put solar, every time you put any flexibility,
Speaker 2: it goes directly in the distribution network. So it used
Speaker 2: to be a bit of an enough plumbing system and
Speaker 2: now you need to put a brain, and it's it's
Speaker 2: very difficult for the distribution operator to find a brain.
Speaker 2: And it's great that you have companies like Electron and
Speaker 2: also a few years ago we had Dana from Voters
Speaker 2: and of course all the work that Autopus is doing,
Speaker 2: so it's bringing local brains to supplement the big brain
Speaker 2: of the transmission network. Yeah.
Speaker 1: Well, I just want to thank Jojo again for coming
Speaker 1: on the show. It was great, very insightful, and I
Speaker 1: wish her all the best in the coming years with
Speaker 1: the business.
Speaker 2: Absolutely good as ever.
Speaker 1: Talking to you, my friend, looking forward to speaking to
Speaker 1: you next week. Thank you for listening to Redefining Energy.
Speaker 1: Don't forget to rate the show and subscribe on Apple Podcast, Spotify,
Speaker 1: or the platform of your choice.