WEBVTT 1 00:00:04.120 --> 00:00:07.679 With Laurent's segle end from London and Gerard read from Berlin. 2 00:00:08.160 --> 00:00:10.359 This is redefining energy. 3 00:00:10.640 --> 00:00:14.160 Today on Reef Energy JOT for our first real episode 4 00:00:14.160 --> 00:00:17.559 of the year after the crazy episode last week on Predictions. 5 00:00:18.000 --> 00:00:20.760 We're going to talk about distribution networks and how to 6 00:00:20.839 --> 00:00:22.480 make them more intelligent. 7 00:00:22.440 --> 00:00:26.239 More intelligent, more efficient, and we do that true creating 8 00:00:26.280 --> 00:00:28.239 a market in that area of for flexibility. 9 00:00:28.359 --> 00:00:31.359 But first the world from our partner, A Bloco Energy 10 00:00:31.440 --> 00:00:35.320 is Europe's premier leaser of ten foot container mobile batteries 11 00:00:35.640 --> 00:00:39.880 built in Europe with COTL best LFP cells. A Bloco 12 00:00:40.079 --> 00:00:45.399 Energy serves fourteen European countries, including France, Germany and the UK. 13 00:00:46.200 --> 00:00:49.119 A Bloco's batteries can be leased for any duration between 14 00:00:49.159 --> 00:00:52.079 six weeks and six years and they are monitored by 15 00:00:52.079 --> 00:00:56.079 the Dutch award winning platform school a block O Energy. 16 00:00:56.359 --> 00:00:59.159 Make your life easier, make your business more flexible. 17 00:00:59.399 --> 00:01:02.600 Back to the show, Yes Jah, because everybody talks about 18 00:01:02.640 --> 00:01:07.000 transmission networks and there is about according to judgipts or 19 00:01:07.400 --> 00:01:10.239 you know, take all those statistic with a grain of salt, 20 00:01:10.640 --> 00:01:15.239 seven million kilometers of transmission network which are supposed to 21 00:01:15.480 --> 00:01:21.319 triple by two of fifty, but distribution networks, which is 22 00:01:21.840 --> 00:01:27.040 described as about fifty killer volts that's medium voltage and 23 00:01:27.079 --> 00:01:31.159 ten kilovolts that's low voltage. That's one hundred and ten 24 00:01:31.239 --> 00:01:35.799 million kilometers, which also going to expand not by as much, 25 00:01:36.560 --> 00:01:40.359 but will expand by another thirty percent by two or fifty. 26 00:01:41.200 --> 00:01:45.359 And of course they are facing aging infrastructure, climate stress, 27 00:01:46.040 --> 00:01:50.079 and they are the growth of demand response, so gigantic 28 00:01:50.280 --> 00:01:52.079 subject that nobody talks about. 29 00:01:52.719 --> 00:01:55.400 Yeah, people don't like talking about grids because they're complex, 30 00:01:55.920 --> 00:01:59.159 that's be really really clear. But without them, they don't 31 00:01:59.200 --> 00:02:02.439 have power. If we don't have power, well, madam well 32 00:02:02.680 --> 00:02:03.760 just ceased to exist. 33 00:02:04.480 --> 00:02:09.680 As you said, innovations are happening, and we are fortunate 34 00:02:09.759 --> 00:02:12.840 to have one of those innovators on the show, and 35 00:02:12.879 --> 00:02:14.080 it's Jojo About. 36 00:02:14.560 --> 00:02:16.960 I've known her many years and she really is at 37 00:02:16.960 --> 00:02:20.840 the forefront of a color optimization and around the last 38 00:02:20.919 --> 00:02:23.199 mile that distribution grade. So it's great to have her 39 00:02:23.199 --> 00:02:23.879 command show. 40 00:02:24.479 --> 00:02:27.879 Our company has the greatest name of all. It's called 41 00:02:27.960 --> 00:02:35.319 simply Electron, and it's a flexibility operating system for distribution networks, 42 00:02:35.719 --> 00:02:40.719 which means aggregating a lot of demand response program it's 43 00:02:40.759 --> 00:02:45.520 going to be about Evy Charging. She's a very successful startup, 44 00:02:45.560 --> 00:02:48.840 probably six rounds of financing. She has a team of 45 00:02:48.919 --> 00:02:53.639 fifty person who aile doing software grades market designs. So 46 00:02:53.719 --> 00:02:55.479 this is a great way to start the year. 47 00:02:55.680 --> 00:02:56.719 So let's bring on the show. 48 00:02:57.000 --> 00:02:59.560 Yojo, welcome to the show, and happy new Year. 49 00:03:00.120 --> 00:03:01.080 Well, thank you for having me. 50 00:03:01.199 --> 00:03:02.680 Happy New Year by Joyo. 51 00:03:02.680 --> 00:03:05.000 It's great to have you. So maybe let me just 52 00:03:05.159 --> 00:03:06.919 kick off. If I look at the sort of the 53 00:03:06.960 --> 00:03:10.199 future of our power system, the concern I have is 54 00:03:10.280 --> 00:03:13.680 in the distribution grid, because for me, it's all about 55 00:03:13.800 --> 00:03:17.840 optimizing energy flows through that system. Listen, I know you're 56 00:03:17.879 --> 00:03:19.199 in the midst of all of this area, but I 57 00:03:19.319 --> 00:03:22.560 just love to hear a big picture what you see 58 00:03:22.599 --> 00:03:25.599 going on there and just talk a little bit about that. 59 00:03:25.599 --> 00:03:26.280 That'll be great. 60 00:03:27.400 --> 00:03:30.000 Well, the distribution grid is often quite forgotten and all 61 00:03:30.039 --> 00:03:33.199 this kind of government rhetoric of transition, you know, so 62 00:03:33.759 --> 00:03:36.280 this phrase you always here, there's no transition without transmission, 63 00:03:36.280 --> 00:03:39.400 And I'm just like and distribution. Most of the spending 64 00:03:39.719 --> 00:03:43.199 on this transition is on distribution. In the US's wild 65 00:03:43.240 --> 00:03:46.319 it's something like fifty percent. This is like twenty percent 66 00:03:46.360 --> 00:03:49.400 on transmission, twenty five percent of generation. So there's an 67 00:03:49.639 --> 00:03:51.840 and we're in a position like a place of having 68 00:03:51.919 --> 00:03:55.000 to expand the grid really fast for new connections, mostly 69 00:03:55.039 --> 00:03:58.680 at distribution level, while we've got this really aging infrastructure 70 00:03:58.800 --> 00:04:00.759 it's around forty years old, and we've got this kind 71 00:04:00.759 --> 00:04:03.919 of looming affordability crisis. So a lot is happening on 72 00:04:03.960 --> 00:04:06.560 the distribution grid, but not as much as people want 73 00:04:06.599 --> 00:04:10.520 to happen on the flexibility space. UK, I guess is 74 00:04:10.719 --> 00:04:14.560 a leader in the distribution flexibility market space. There was 75 00:04:14.560 --> 00:04:18.480 a very clear incentive in place about six years ago 76 00:04:18.560 --> 00:04:22.480 by government for utilities who could use flexibility instead of 77 00:04:22.680 --> 00:04:28.000 network upgrades to essentially share the savings. Customers get fifty 78 00:04:28.040 --> 00:04:30.959 percent back, utilities get fifty percent back, and that kicked 79 00:04:31.000 --> 00:04:35.600 off quite a big, very fast growing distribution level market 80 00:04:35.759 --> 00:04:38.519 in the UK. I think last year about three hundred 81 00:04:38.600 --> 00:04:41.959 million pounds was saved that nine gigawats were traded. That 82 00:04:42.079 --> 00:04:43.879 is one thing it needs to get bigger. Though only 83 00:04:43.959 --> 00:04:46.399 use case they're trading against is network upgrade deferrals, and 84 00:04:46.399 --> 00:04:48.000 as you know, we need to build everything right now. 85 00:04:48.160 --> 00:04:50.040 We want faster connections and things like that to be 86 00:04:50.079 --> 00:04:55.600 included in. In Europe there's been kind of clarity across 87 00:04:55.600 --> 00:04:58.920 here from twenty nineteen around flexibility is the right answer 88 00:04:58.959 --> 00:05:01.560 in the medium to long term started, but this hasn't 89 00:05:01.600 --> 00:05:05.120 been translated into really clear incentives on a country by 90 00:05:05.160 --> 00:05:08.040 country basis, and you're seeing a lot of kind of 91 00:05:08.079 --> 00:05:10.160 intervention now to try and make that happen a little 92 00:05:10.199 --> 00:05:13.639 faster country by country, and in America, it's all just 93 00:05:13.920 --> 00:05:14.920 starting to take off. 94 00:05:15.800 --> 00:05:19.639 I love some of the quote you've made, and you said, 95 00:05:20.040 --> 00:05:25.360 we are building the operating system that turns a distribution 96 00:05:25.560 --> 00:05:30.240 grid from a dumb pipe into the world largest virtual 97 00:05:30.360 --> 00:05:33.279 power plan. So that's what your company, Electron. I mean, 98 00:05:33.360 --> 00:05:37.240 great name, Electron, well done. So can you elaborate a 99 00:05:37.240 --> 00:05:39.480 bit on that operating system. 100 00:05:40.079 --> 00:05:41.959 I guess there's a bunch of different people building pieces 101 00:05:41.959 --> 00:05:43.639 of it as well. So where we sit in it, 102 00:05:44.040 --> 00:05:48.560 electrons job is to help the utility on one side 103 00:05:49.040 --> 00:05:52.360 optimize on a kind of value basis what they're doing 104 00:05:52.360 --> 00:05:55.519 in the network, whether it's bills or flax. So it's 105 00:05:55.600 --> 00:05:58.199 getting the data of netility that they need to make 106 00:05:58.199 --> 00:06:01.199 that decision, and the data from the people who own 107 00:06:01.240 --> 00:06:03.680 and operate the distributed energy resources on the other side. 108 00:06:04.040 --> 00:06:07.600 So we're not octopose, we're not dispatching and optimizing consumers assets. 109 00:06:07.600 --> 00:06:10.680 They're traders on our platform. In the UK, we're not alters, 110 00:06:10.680 --> 00:06:13.959 we're not aggregating C and I customers. They could all 111 00:06:14.000 --> 00:06:15.920 be traders on the platform. But with wizard of trying 112 00:06:15.920 --> 00:06:19.519 to surface the information from those guys as to what 113 00:06:19.600 --> 00:06:22.040 they've got and what they could do, surface the information 114 00:06:22.120 --> 00:06:24.680 from the utility on the other side as to where 115 00:06:24.680 --> 00:06:27.040 they've got constraints, what the value is, and make the 116 00:06:27.079 --> 00:06:29.319 magic happen, and try and create more and more opportunity 117 00:06:29.360 --> 00:06:33.360 to capture these efficiencies with distributed energy resources kind of 118 00:06:33.560 --> 00:06:36.360 marketplace model. But we can't do the Nasdaq model yet 119 00:06:36.360 --> 00:06:37.800 because people don't know what they're buying or what they're 120 00:06:37.800 --> 00:06:39.480 selling or how to price it. There's a lot of 121 00:06:39.600 --> 00:06:41.240 incremental data reveals. 122 00:06:41.759 --> 00:06:46.319 So by acting as an interconnect between the DSO or 123 00:06:46.519 --> 00:06:50.519 the d and O, maybe their system are relatively antiquated 124 00:06:51.000 --> 00:06:55.439 and the various pockets who start doing some dr VPP 125 00:06:56.759 --> 00:07:04.680 batteries whatever, aggregatails. Somehow you bring clarity to a distribution network. 126 00:07:04.800 --> 00:07:07.079 Is it a good way to put it together? 127 00:07:07.759 --> 00:07:11.480 It's exactly that. If the network operator wants flexibility in 128 00:07:11.519 --> 00:07:13.680 one location and they know the provider, They don't need us. 129 00:07:13.680 --> 00:07:16.199 They can go straight there and they can buy that flexibility. 130 00:07:16.399 --> 00:07:18.439 But if you want to scale that market, you need 131 00:07:18.519 --> 00:07:20.480 to understand value better. We get in that. You need 132 00:07:20.519 --> 00:07:23.360 to find more volume. We bring all the different providers together, 133 00:07:23.639 --> 00:07:25.160 and you need to reduce friction, and we just make 134 00:07:25.199 --> 00:07:26.800 it very easy for everyone to see all the price 135 00:07:26.839 --> 00:07:30.319 signals in one place and to enact rates. So yes, 136 00:07:30.399 --> 00:07:35.399 exactly that we're about scaling that use of energy resources 137 00:07:35.560 --> 00:07:37.639 beyond that kind of bilateral relationship, which is where it 138 00:07:37.680 --> 00:07:38.160 all started. 139 00:07:38.600 --> 00:07:42.839 So Jojo, you just said that local flexibility is cheaper 140 00:07:42.879 --> 00:07:47.720 than greed reinforcement, and so you know you can avoid gapex, 141 00:07:47.759 --> 00:07:52.399 which is unfortunately for very long time description network. They 142 00:07:52.439 --> 00:07:54.439 work on a cost plus. The more I spend, the 143 00:07:54.439 --> 00:07:56.800 more I make, But of course that starts to become 144 00:07:56.879 --> 00:08:00.600 very expensive in everybody's invoices. So can you laborate to 145 00:08:00.680 --> 00:08:04.720 bit on flexibility is cheaper than grid reinforcement? And where 146 00:08:04.720 --> 00:08:06.480 do you see the limits of that? 147 00:08:07.160 --> 00:08:10.240 Firstly, where it's available, it's cheaper than grid reinforcement. It's 148 00:08:10.240 --> 00:08:12.560 not always available. So so job one is should you 149 00:08:12.639 --> 00:08:16.279 use flexibility? Is there enough flexibility? In this location when 150 00:08:16.319 --> 00:08:19.600 there is, it's essentially necessarily cheaper than grid reinforcement, because 151 00:08:19.639 --> 00:08:23.800 I don't think people understand how little distribution grids are 152 00:08:23.920 --> 00:08:26.360 used in terms of kind of capacity, maybe like five 153 00:08:26.399 --> 00:08:28.800 percent in Germany, seven percent in Spain. Even in like 154 00:08:28.839 --> 00:08:31.160 populous areas like even around like London in the UK, 155 00:08:31.199 --> 00:08:33.799 it's probably only around twenty five percent. And distribution grids 156 00:08:33.799 --> 00:08:36.240 obviously for the last mile it's how power actually gets 157 00:08:36.320 --> 00:08:39.679 to people. But in like extreme weather events going on 158 00:08:39.759 --> 00:08:42.120 and increasingly when there's a lot of renewable they are 159 00:08:42.159 --> 00:08:45.080 getting too or close to capacity. So instead of rebuilding 160 00:08:45.080 --> 00:08:47.879 a grid for an extra like twenty hours a year, 161 00:08:48.320 --> 00:08:50.200 if you can use the people who are on that 162 00:08:50.240 --> 00:08:53.480 grid and pay them to shift, it's essentially necessarily cheaper 163 00:08:53.519 --> 00:08:56.399 and more efficient than building the grid. So distribution grid 164 00:08:56.440 --> 00:08:58.480 to ferral is different to transmission grid to ferral. You 165 00:08:58.519 --> 00:09:00.440 probably want to build as much transmision and as people 166 00:09:00.440 --> 00:09:03.360 can use power because power creates society and economic value. 167 00:09:03.720 --> 00:09:07.600 But it is always economically rational to use distribution grids 168 00:09:07.600 --> 00:09:11.240 more effectively, And the numbers that the utilities are paying 169 00:09:11.360 --> 00:09:15.440 for flexibility wildly vary by location, but typically for every 170 00:09:15.720 --> 00:09:18.559 dollar you span on flexibility, they'll save like three to 171 00:09:18.639 --> 00:09:21.879 ten in reinforcement costs. Again, we'd be very careful because 172 00:09:21.879 --> 00:09:26.759 when flexibility first came about, it was all about deferring upgrades. Now, 173 00:09:26.799 --> 00:09:29.200 in a world where everyone wants to build, build, it's 174 00:09:29.240 --> 00:09:32.559 really about using flexibility to discover where you should build next, 175 00:09:32.840 --> 00:09:35.399 where you'll get the highest value from building. And when 176 00:09:35.440 --> 00:09:37.919 you run a flexibility market, you discover relative value in 177 00:09:37.919 --> 00:09:40.600 different locations of grid deferral. So it helps the utility 178 00:09:40.600 --> 00:09:43.080 make better decisions about what to build next and where 179 00:09:43.080 --> 00:09:45.440 they're going to create the most economic value. So it's 180 00:09:45.480 --> 00:09:47.759 a partner to your grid expansion and not instead of 181 00:09:47.919 --> 00:09:49.519 these days when you. 182 00:09:49.480 --> 00:09:53.240 Are dealing with utilities, we've seen that with a lot 183 00:09:53.279 --> 00:09:57.279 of great innovation, you have the value of death, which 184 00:09:57.279 --> 00:10:01.200 are pilots. You know, they just do pilots, pilots by nothing. 185 00:10:01.279 --> 00:10:05.879 So how have you been able to transform pilots which 186 00:10:05.879 --> 00:10:09.639 are very nice but you're just building everybody's money. Two? Okay, 187 00:10:10.200 --> 00:10:12.960 now it's for real and you can rely on this 188 00:10:13.159 --> 00:10:15.559 new innovation. So explain a bit of the journey. 189 00:10:16.240 --> 00:10:18.399 We spend a lot of time in pilot land because 190 00:10:18.600 --> 00:10:22.080 elections almost ten years old, the hardest thing about innovating 191 00:10:22.080 --> 00:10:25.600 in this space is there's a gap between the value 192 00:10:25.600 --> 00:10:28.039 that you can create for the system and the value 193 00:10:28.080 --> 00:10:32.200 you can capture under current regulatory regime. So the trick 194 00:10:32.960 --> 00:10:36.360 is to find a way where you can create loads 195 00:10:36.399 --> 00:10:39.320 of economic value that isn't unlocked yet, but also some 196 00:10:39.440 --> 00:10:41.759 current economic value that is unlock where you can survive 197 00:10:41.840 --> 00:10:44.120 long enough for those rules to change around it. And 198 00:10:44.399 --> 00:10:46.919 that was really our path. But when we first started, 199 00:10:46.960 --> 00:10:50.799 I was coming from the renewable investment side battery investment, 200 00:10:50.960 --> 00:10:52.639 and the answer is so obvious to me. It was 201 00:10:52.679 --> 00:10:55.600 time and location based price signals, and we were getting 202 00:10:55.720 --> 00:10:58.840 curtailed generation to pay local demands to turn up or 203 00:10:58.919 --> 00:11:02.399 down and get free energy, and that was exciting because 204 00:11:02.399 --> 00:11:05.480 it was really economically rational. The challenges we couldn't scale 205 00:11:05.559 --> 00:11:08.480 it because as soon as you start trying to change 206 00:11:08.799 --> 00:11:11.879 flows in a big way through grids, got to feed 207 00:11:11.919 --> 00:11:13.759 this into the distribution netwik operator to check that you 208 00:11:13.799 --> 00:11:15.639 weren't going to turn the lights off, and there wasn't 209 00:11:15.639 --> 00:11:18.159 even an operational process for us to feed that data in. 210 00:11:18.840 --> 00:11:22.120 So we had to then go and win the right 211 00:11:22.200 --> 00:11:25.360 to run today's market, which is the procurement of longer 212 00:11:25.480 --> 00:11:28.399 term moving to near a real time capacity on the network. 213 00:11:28.840 --> 00:11:30.879 When we went about that, there was someone else at 214 00:11:30.879 --> 00:11:33.279 one hundred percent market share in that space, and we 215 00:11:33.320 --> 00:11:35.840 really really had to kind of redesign our product to 216 00:11:35.879 --> 00:11:39.320 take that market and have the right to essentially like 217 00:11:39.440 --> 00:11:42.559 provide these long term tender constructs so that we could 218 00:11:42.600 --> 00:11:45.279 then reintroduce the near real time markets, the more dynamic 219 00:11:45.320 --> 00:11:48.559 trading things like operational dispatch, which is where we started. 220 00:11:48.600 --> 00:11:51.639 So we were lucky to survive through that value and 221 00:11:51.720 --> 00:11:54.240 I think, yeah, learnings for others thinking about during the 222 00:11:54.279 --> 00:11:57.720 same as starts for something everyone's already doing. And so 223 00:11:58.039 --> 00:11:59.919 it's all about cost benefit analysis. I do you want 224 00:11:59.919 --> 00:12:02.519 to change the way someone's pay this, you have to 225 00:12:02.639 --> 00:12:05.480 show real data that they can get more balue that way. 226 00:12:05.519 --> 00:12:07.399 So you do have to do the pilot, Like you 227 00:12:07.440 --> 00:12:09.159 can't skip the pilot. You just have to do the 228 00:12:09.159 --> 00:12:11.039 pilot while you were allowed to be paid for something 229 00:12:11.279 --> 00:12:12.879 that's currently economically rational. 230 00:12:13.559 --> 00:12:15.879 Jojo, can I just ask about one thing that was 231 00:12:15.919 --> 00:12:18.440 from last year, which was there was talk in the 232 00:12:18.480 --> 00:12:21.559 UK about changing the power markets right and moving to 233 00:12:21.639 --> 00:12:25.000 nodal pricing. I'd love to hear your thoughts in and 234 00:12:25.000 --> 00:12:27.559 around that and what we need to do going forward 235 00:12:27.600 --> 00:12:31.039 to sort of incentivize more and more flexibility. And I'm 236 00:12:31.039 --> 00:12:33.000 not just talking about the UK, just you're doing this 237 00:12:33.039 --> 00:12:35.960 in different market. What would your lessons be that if 238 00:12:36.000 --> 00:12:38.000 you were speaking to a regulator tomorrow, what would you 239 00:12:38.039 --> 00:12:38.600 say to them? 240 00:12:38.639 --> 00:12:42.440 To do locational pricing definitely benefits a system, makes the 241 00:12:42.480 --> 00:12:45.639 system cheap. That should you part it onto consumers as 242 00:12:45.639 --> 00:12:48.279 a regulatory discussion that can kind of happen. Apart from that, 243 00:12:48.679 --> 00:12:50.840 if you decide that you need to have some form 244 00:12:50.879 --> 00:12:53.879 of locational pricing to drop the cost of the whole system, 245 00:12:53.879 --> 00:12:56.240 which I think is really very important. And today when 246 00:12:56.240 --> 00:12:58.080 the system costs is rising so quickly and we're having 247 00:12:58.120 --> 00:13:00.600 to expand the grid so fast, deside you had to do. 248 00:13:00.600 --> 00:13:03.639 You have two choices. You can do explicit where your 249 00:13:03.840 --> 00:13:06.159 flexibility markets like ours, where you're kind of pinging crime 250 00:13:06.159 --> 00:13:08.440 and location based pricing now, and then you do implicit, 251 00:13:08.799 --> 00:13:12.639 which is where there's a kind of moving zonal lodal 252 00:13:12.919 --> 00:13:15.600 regional price. We sort of said nod all too difficult, 253 00:13:15.600 --> 00:13:17.679 so we're going to do zonal. But zone not only 254 00:13:18.039 --> 00:13:21.600 helps with transmission constraints because their areas are so big, essentially, 255 00:13:21.600 --> 00:13:24.039 and so much of the challenge is more localized. So 256 00:13:24.080 --> 00:13:27.360 I think we haven't said it's no locational pricing. We've 257 00:13:27.360 --> 00:13:31.759 said that we're going to do locational pricing explicitly for 258 00:13:31.799 --> 00:13:36.279 a while instead of updating every system. And there's some 259 00:13:36.320 --> 00:13:39.360 sense in that in the US, where we're also working 260 00:13:39.360 --> 00:13:42.240 with a number of different utilities, there already is LMP 261 00:13:42.360 --> 00:13:44.320 in a lot of these regions, and you're still needing 262 00:13:44.320 --> 00:13:47.159 to layer on these explicit locational pricing because you're still 263 00:13:47.159 --> 00:13:50.200 getting these really constrained areas of kind of aging infrastructure 264 00:13:50.240 --> 00:13:53.399 and a lot of new connections coming through. So locational 265 00:13:53.440 --> 00:13:57.240 pricing is inevitable, especially when network prices are getting this high, 266 00:13:57.279 --> 00:14:00.559 and the implicit explicit debate is peak terror and how 267 00:14:00.559 --> 00:14:02.120 that has passed on to consumers. 268 00:14:02.519 --> 00:14:04.519 Can I just maybe just following on that, can ask 269 00:14:04.679 --> 00:14:07.159 if I look at it, what I can imagine what 270 00:14:07.159 --> 00:14:08.840 we see in the markets is we see a lot 271 00:14:08.840 --> 00:14:11.639 of volatility and wholesale power prices. Obviously you can go 272 00:14:11.679 --> 00:14:14.399 to flexible tariffs and stuff like this, but I can 273 00:14:14.440 --> 00:14:19.039 imagine if you flexibilize the grid tariffs as well, then 274 00:14:19.080 --> 00:14:22.000 you really do have an incentive in place for customers 275 00:14:22.039 --> 00:14:24.639 to make change is one thing that I was quite 276 00:14:24.720 --> 00:14:27.039 taken back by. I suppose the end of last year 277 00:14:27.080 --> 00:14:30.519 was just the Australian government's decision to sort of go, okay, 278 00:14:30.600 --> 00:14:33.000 we're going to give away electricity for three hours a 279 00:14:33.039 --> 00:14:36.200 day to our customers. I mean that's quite a radical move. 280 00:14:36.799 --> 00:14:38.519 But it sort of goes back to there sort of 281 00:14:38.519 --> 00:14:41.759 saying well, you know, if it's electricity for free, let's 282 00:14:41.840 --> 00:14:43.639 do something like that. You know, so how do you 283 00:14:43.639 --> 00:14:44.519 think about all of that? 284 00:14:45.399 --> 00:14:48.720 It massively depends right by Regina. Australia has huge, huge 285 00:14:48.720 --> 00:14:52.519 amounts of sola and one so of panel can create 286 00:14:52.559 --> 00:14:55.519 about four times as much power as it can in Australia. 287 00:14:55.519 --> 00:14:57.679 And as a kind of know, then you're the promise 288 00:14:57.720 --> 00:15:00.000 of the transition was like free is there a much 289 00:15:00.120 --> 00:15:03.320 no cost power some of the time in brackets and 290 00:15:03.600 --> 00:15:06.200 it's really exciting to be able to pass it on 291 00:15:06.240 --> 00:15:09.080 to consumers. Hey, some of the time I wish governments 292 00:15:09.080 --> 00:15:12.279 would start being more honest on this transition piece and like, 293 00:15:12.320 --> 00:15:14.440 you know, we're not dropping the energy costs necessarily, we're 294 00:15:14.480 --> 00:15:16.559 dropping the energy costs really severely some of the time. 295 00:15:17.200 --> 00:15:18.919 If you know, we then need to invest in the 296 00:15:18.919 --> 00:15:23.679 flexibility that actually makes that capturable and valuable to consumers. 297 00:15:24.200 --> 00:15:28.039 Okay, I understand those debates. You have academics who are 298 00:15:28.120 --> 00:15:31.519 running complex where we used to have a Excel sheet, 299 00:15:31.519 --> 00:15:33.399 but now it's even better. We get AI models. So 300 00:15:33.440 --> 00:15:35.480 they're going to come with a six hundred page report 301 00:15:35.840 --> 00:15:38.840 demonstrating that this should be done or that should be done. 302 00:15:39.399 --> 00:15:41.559 But then the governments, you see, no way, they say, 303 00:15:41.600 --> 00:15:45.320 you know what flat prices. So in fact, government, because 304 00:15:45.320 --> 00:15:49.879 the subject has become politics, they start intervening. And every 305 00:15:49.919 --> 00:15:53.879 time a government interven's journey is done on more ideological 306 00:15:54.000 --> 00:15:57.919 than economic basis. They want the flush headlines and a 307 00:15:57.960 --> 00:16:01.080 lot of positive signal which could get from the market 308 00:16:01.120 --> 00:16:04.679 that they are brushed aside because you change the system, 309 00:16:05.320 --> 00:16:07.840 you have what they call the wiener and loser. The 310 00:16:07.879 --> 00:16:11.720 wianer this is very nice, but the loser they'll make 311 00:16:11.840 --> 00:16:15.879 so much noise that it will negate any economic value 312 00:16:16.200 --> 00:16:20.080 because of a political cost. So the question is what 313 00:16:20.320 --> 00:16:24.759 can be done under the radar, so we don't start 314 00:16:24.799 --> 00:16:30.720 having public debate of yeah, six hundred newly minted would 315 00:16:30.799 --> 00:16:31.879 be expert. 316 00:16:32.600 --> 00:16:38.840 I like cost reflective pricing because that actually does incentivize 317 00:16:39.039 --> 00:16:41.720 to driving down costs of whole system. And that is 318 00:16:41.759 --> 00:16:45.279 really important because if we do not transition in a 319 00:16:45.320 --> 00:16:47.919 cost effective way, we may well lose the mandate to transition. 320 00:16:48.840 --> 00:16:51.360 As to whether that gets passed on to the consumer 321 00:16:52.080 --> 00:16:55.360 or not is another matter, and that's where I wish 322 00:16:55.399 --> 00:16:58.919 the government intervention would happen. You can say, hey, supplier 323 00:16:58.919 --> 00:17:03.000 is you take that risk and you guarantee your consumer's 324 00:17:03.000 --> 00:17:05.119 a flat price, and you work out what you can 325 00:17:05.160 --> 00:17:07.519 guarantee them based on how you can trade that for example, 326 00:17:07.680 --> 00:17:10.599 so what consumers see and like how we price for 327 00:17:10.599 --> 00:17:13.400 a cost to reflect a system should be divorced. And 328 00:17:13.440 --> 00:17:16.880 that's why I was actually very pro the nodal system 329 00:17:17.000 --> 00:17:20.599 debate because NODO would have given us so explicit pricing. 330 00:17:20.599 --> 00:17:22.640 Explicit pricing is can like a free market because any 331 00:17:22.640 --> 00:17:25.920 new supply I can kind of start up without even joining. 332 00:17:26.640 --> 00:17:30.279 Each local flexibility market knows how to move their consumers. 333 00:17:30.319 --> 00:17:33.519 So I personally was a massive proponent of that basic 334 00:17:33.599 --> 00:17:36.119 even though it would probably be less good for a 335 00:17:36.160 --> 00:17:38.759 business like Electron. That is all about getting explicit pricing 336 00:17:39.039 --> 00:17:41.079 to consumer because there's still a ton to be done 337 00:17:41.160 --> 00:17:43.200 below the nodal level. And you see that in countries 338 00:17:43.240 --> 00:17:45.079 like the US where they already have zone on pricing. 339 00:17:45.200 --> 00:17:47.599 So yes, for the very reason you just said, Laura, 340 00:17:47.680 --> 00:17:50.440 it's very difficult to work out roots to market and 341 00:17:50.519 --> 00:17:53.440 value in the energy space because you are navigating this 342 00:17:53.640 --> 00:17:57.559 regulatory and kind of fundamental value shift that just don't 343 00:17:57.640 --> 00:18:00.920 quite match yet. And for us, it's about finding a 344 00:18:00.960 --> 00:18:04.319 way in and then showing enough data kind of incrementally 345 00:18:04.359 --> 00:18:06.759 to show why something else should move around it, and 346 00:18:06.799 --> 00:18:08.599 we really have to kind of partner with utilities to 347 00:18:08.640 --> 00:18:10.480 do that. There's a lot of people who think that 348 00:18:10.839 --> 00:18:13.279 utilities aren't buying flexibilit because utilities are useless, but like 349 00:18:13.720 --> 00:18:15.920 a lot of it's not true in most places because 350 00:18:15.920 --> 00:18:19.200 they're not incentivized to do so, because they haven't been 351 00:18:19.240 --> 00:18:22.279 able to make their regulator understand the cost benefit analysis 352 00:18:22.279 --> 00:18:24.240 for example, of them being incentivized to do something this 353 00:18:24.279 --> 00:18:25.319 way is gross that way. 354 00:18:26.039 --> 00:18:29.039 Jojo, can we just maybe ship direction a little bit 355 00:18:29.079 --> 00:18:31.000 and just talk about some of the technologies and the 356 00:18:31.000 --> 00:18:34.160 flexibility is because what I would say is there's just 357 00:18:34.200 --> 00:18:38.079 a massive amount of flexibility being built, particularly behind the meter, 358 00:18:38.519 --> 00:18:41.799 particularly I'm thinking about batteries. You could also argue, well, 359 00:18:41.799 --> 00:18:45.400 we've got these movable batteries which are called evs, and 360 00:18:45.440 --> 00:18:48.200 there's even more flexibility in them. So how do you 361 00:18:48.200 --> 00:18:51.359 see that? And related to that, then talk a little 362 00:18:51.400 --> 00:18:53.960 bit about new business models that come from that, because 363 00:18:54.759 --> 00:18:56.400 a lot of what we've been talking today is about 364 00:18:56.440 --> 00:19:00.119 grid operators and utilities, but actually you could eye you 365 00:19:00.319 --> 00:19:03.200 what's going to be on mobile manufacturers that can control 366 00:19:03.240 --> 00:19:07.079 this flexibility, or new companies and new businesses. So how 367 00:19:07.119 --> 00:19:07.680 do you see that? 368 00:19:08.599 --> 00:19:10.880 So basically a lot of the aim monoles and kind 369 00:19:10.920 --> 00:19:13.680 of removing friction and increasing volume in these markets is 370 00:19:13.720 --> 00:19:18.119 about enabling anyone to participate in this marketing. The reason 371 00:19:18.160 --> 00:19:20.839 that these electric vehicles, for example, are such an exciting 372 00:19:20.839 --> 00:19:23.160 prospect for flexibility is just there's going to be so 373 00:19:23.200 --> 00:19:26.119 many of them. Yeah, let's say you get two kilo 374 00:19:26.279 --> 00:19:30.240 hours of flex from an EV half a million ev 375 00:19:30.319 --> 00:19:32.960 us is like a nuclear power plant. It's going to 376 00:19:32.960 --> 00:19:36.200 be you know, many, many, many multiples of that. And also, 377 00:19:36.240 --> 00:19:38.119 if the flexibility is coming from the bottom of the grid, 378 00:19:38.480 --> 00:19:40.039 it can solve problems at the bottom of the grid, 379 00:19:40.279 --> 00:19:42.000 in the middle of the grid, the top of the grid. 380 00:19:42.000 --> 00:19:43.680 So it just get some more kind of opportunities to 381 00:19:43.880 --> 00:19:46.200 play and create value and it can also help balance 382 00:19:46.200 --> 00:19:48.880 supply and demand. A lot of the flexibility people don't 383 00:19:48.920 --> 00:19:51.559 think about though today is not just in batteries, but 384 00:19:51.640 --> 00:19:55.079 in commercial industrial processes. That almost doesn't really exist today 385 00:19:55.079 --> 00:19:57.519 because power prices have been quite high or quite flat. 386 00:19:57.880 --> 00:20:01.279 If you actually get to a really spiky cost reflective 387 00:20:01.319 --> 00:20:03.200 market where you get really cheap power some of the 388 00:20:03.240 --> 00:20:05.359 times and really like a lot of money for flexibility 389 00:20:05.400 --> 00:20:08.079 other times, you're going to get to transform the unit 390 00:20:08.160 --> 00:20:11.839 economics of some energy intensive, flexible industry and get a 391 00:20:11.880 --> 00:20:15.960 lot more flexibility. The battery story is absolutely fascinating. There's 392 00:20:16.000 --> 00:20:17.839 all sorts of new business models of people who can 393 00:20:17.920 --> 00:20:21.559 use power flexibly. On the actual consumption side. There's something 394 00:20:21.640 --> 00:20:23.799 that we're working on at the moment. It's essentially a 395 00:20:24.359 --> 00:20:29.440 imbalanced hedging product with a PPA platform, a bit like 396 00:20:29.480 --> 00:20:32.640 a capacity market contract that they can pay twenty five 397 00:20:32.680 --> 00:20:35.640 percent of the value the battery needs to make per 398 00:20:35.720 --> 00:20:39.039 year to secure against thirty eight hundred hours a year 399 00:20:39.039 --> 00:20:41.839 where they're inn imbalance, and that battery can then pay 400 00:20:41.880 --> 00:20:43.480 a lot of the cost to even build the battery. 401 00:20:44.400 --> 00:20:49.079