Why Energy Trading Must Evolve for the Renewable Era with Rasmus Rode Mosbæk (Hybrid Greentech)

Hello and welcome to Transmission.

Today, Q is joined by Rasmus Road, who is the CEO of Hybrid Green Tech, provider of virtual power plant solutions optimizing energy storage and flexibility assets. In this conversation, they discuss how hybrid green tech is the missing link for a hundred percent renewable energy, the complexities of multi market optimization and the regulatory hurdles slowing down progress across Europe. As always, if you're enjoying transmission, please hit subscribe. And if you want more content like this, sign up to Modo Energy's newsletter, the weekly dispatch for the latest in global energy transition. Let's jump in.

Hello, Rasmus. Good to see you again, and welcome to the Transmission Podcast.

Thank you. Nice to be here.

So let's kick off then, Rasmus.

Tell me about the business. So Hybrid Green Tech, you guys have been around for a few years, and, I'm sure a lot of our listeners would have seen some of the content that you put out there. So tell us all about the business.

So Hybrid Green Tech, we believe our we are the missing link for hundred percent renewable energy.

We are developing a leading fully automated virtual power plant for energy storage and flexibility for providing next level, revenue and asset optimization.

We are a full, balanced responsible party and retailer, with a fully vertical integrated virtual power plant.

We have trading system, the multi market optimizer, asset interfaces, analytical platform, and financial system in, one single platform, which is the core part of our business. And then we have supporting feeder businesses, where we support our customers in getting battery energy storage as as it's faster to market.

And so could you just give us some of the stats about the company? When did you start? Who was involved? Do you have a cofounder?

And, how many people are in the business? Which regions do you operate in? How many assets do you control? Let's have it all in in one.

Yes. So, Ivy Green Tech was founded by me in two thousand and eighteen. The big challenge I I saw at that time, that was that I worked for many years, within both energy storage and hydrogen. I have a a PhD within electrochemistry and design based system for four years, in a battery management system, provider, where I was responsible for developing full based systems. But the challenge I saw at that time that was it was extremely hard to convince customers that there was a business case for batteries.

But I could see from, among us, the Bloomberg new energy finance, forecast, that from eighteen to twenty forty, best systems and best deployment will increase by a factor eleven hundred. So I thought at one time, at one point, where prices go down, there will be very good business case for battery systems.

And already, I think, at least in Denmark, then in twenty twenty three, we was down and having payback times around one, one and a half years. So the business cases, finally came. I was, founded it in two thousand and eighteen. I was, one main army, for the first one and a half years until I raised a capital to to hire the first employees.

Today, we are, thirty employees in Hyper Green Tech. We are market active in Denmark, controlling portfolios in both DK one and DK two. It's a bit weird. Such a small country have two different synchronization areas. That's, very unusual.

And that is for virtual power plant for our our business analytics, we have, we are doing a business case analysis all over Europe.

And so what kind of assets do you control in the virtual power plant? Of course, batteries, but, what else?

Battery energy storage systems is our core. Then we are aggregating, more than one hundred thousand EV charge points through, charge point operators and charge point management systems.

Then we have, aggregating heat pumps, domestic heat pumps. That is also through heat pump service providers. And then we are aggregating a number of, load banks as well.

So that that is the typical asset asset types we have.

We have developed an optimizer, an energy management system integrated in it. So we can both optimize BIS, standalone.

We can also optimize BIS colocated, with PV. And then we are also optimizers based systems behind the meter for CNI customers, where we both have production forecasting, but also load forecasting and managing the integrity there is behind the meter.

This is where I think base optimizations is becoming real complicated.

And so let me ask you some questions about the Danish grid then while I've got you on, which is, of course, your home market. You mentioned a moment ago that there's a couple of synchronized grid in Denmark. Can you talk a little bit about that? That's a fascinating fact.

Yes. We have, DK one and DK two. We are actually planning on getting DK three as well. But, at the moment, we have DK one and DK two. And DK one is, Jotland and, Funen.

The decay one and decay two is isolated at the grade belt.

So that is, the area between Zealand and Funen. And Funen and Jotland is the Kronos with the German grids.

This means that, it's the German, central European requirements and ancillary service markets available in in d k one.

And, d k two is connected to the Nordics and Kronos areas. So that is, that frequency is synchronized with the Sweden, Norway, and Finland. And this, therefore, is the ancillary service markets available is quite different, compared to, to d k one. And the reason for that is that you need a lot more ancillary service markets in the Nordics because you have significantly fewer consumers that you have in the rest of Europe. Therefore, you need more ancillary services in order to stabilize the frequency.

So you instead of one primary reserve in decay one, which is FCR, you have fast frequency response in decay two, you have FCR d, the frequency containment reserve disturbance, both up and down, and then you have, frequency containment reserve, normal reserve, FCIN.

Now there's four different primary reserve, and then you have, two secondary reserve, but then you both have in decay one and decay two. And they were AFRR was made asymmetrical in October last year. So you have AFRR, automatic frequency restoration reserve, both up and down.

That we made in Denmark in October last year. And that's quite interesting and bit quite profitable, base revenue, for more than half a year now.

And a fun fact there is that there are you get a capacity payment in AFR, but you also get a energy activation payment.

But it's only d k two, Zealand, and Ireland that are getting energy activation payment in the Nordics, which means that the revenue in d k two for AFR is significantly more profitable than it that it is at Sweden.

Interesting.

And what's the what's the Danish market shaking out like then? So for batteries, for some markets, it becomes clear that there's gonna be an optimizer optimizer play that will dominate.

Yeah.

In other markets around the world, you see utilities taking a more active approach or you get kind of vertically integrated IPPs to do the whole thing. So what's Denmark looking like? What's the direction of travel? Do asset owners generally wanna use an optimizer?

And, what does the optimization market look like? Of course, you're right in the middle of it.

So how how do you think about that?

Yeah. There is, there are the what you call the large BRPs, energy trailers, that are providing the some of the services.

And then there are a few optimizers like us, like, Hybrid GreenTek.

And then we see some vertical integrated energy companies that, some of them are developing their own platform.

But I don't know how, But for many of them, that has been challenging, to to develop.

So, someone some of them is also coming and knocking on our door to get support.

And when you think about controlling battery assets, do you do you put hardware on the site, or do you do it all via API?

It's actually, quite interesting questions because we wanted from the beginning of Hyper Vintech. We want to be technology agnostic.

We want to be able to integrate with any business system available on the market, and we want to have limited hardware aside as possible. So this means that we only have an industrial graded router to give us in Internet access, and that's it. And that enables, it could be Modbus communication or IEC one zero four communication from from the BIS, to our cloud.

And that actually the only hardware we have on-site. But what it enables us is, together with our software and our cloud platform, we are actually enabling from we measure a grid disturbance, a grid frequency disturbance till we get the data in our cloud to our, customers' assets, response is with within one hundred and thirty five milliseconds, which means that we are more than five times faster than the the fastest market we have in dk two, which is called FFR, Fast Frequency Response, which requires seven hundred milliseconds response time.

So even though we have very limited hardware on-site, we still enable very fast responses.

Furthermore, we want to have our energy management and control based in the cloud. We have done that with great success. But we also enable, if customer want us, we also enable to do dedicated control. We are part of the control heavens as such.

That's an interesting approach. So ten years ago or so, when I first got involved in in building battery assets, and they were much smaller back then, of course, it was quite often for sites to have a problem where, you know, you you build the battery and then somewhere towards the commissioning you know, your commissioning is approaching, and then someone says, right. We need an Internet connection. And you can wait months and months for Internet connections.

But now I wonder whether and then and then, you know, four g came along, and then five g came along, and you you could have some backup or some some dual interconnect Internet connections. But I wonder whether anyone's using Starlink. Are you use are you looking at using Starlink on sites? Actually, if you're listening to this and you're, you're listening to this podcast and you're you've got a battery asset that's using Starlink, we'd love to hear from you. And, I wonder how that's gonna change the market when you have this super low latency Internet everywhere approach with, like, incredible uptime.

And I wonder whether you can start moving EMSes to the cloud like you're talking about, exactly as you're saying.

Yeah. Yeah. We have moved the EMS to the cloud. We are not using Starlink, but it can be a possibility.

The router we are using, designed in, in, built in Europe, That is, that is enable us to do fiber, four g and five g five g in one ride router. So there is always Internet fallback if the fiber connection is lost or the five gs is lost, then it roll down to the next one. So there's three different connection in in in one router, which enabled us to to if if we lose one of the connections, then we still have a fallback connection.

And what kind of battery assets are folks building and developing in Denmark? Just do they tend to be one hour system, two hour systems? Are they longer duration?

What kind of scale is this market starting to get to?

In the beginning, it was primarily one hour system.

And that was stand alone based systems designed only to capture primarily to capture revenue in and civil service markets.

But as we have seen that, the secondary reserves is getting more profitable and also that, spreads are getting bigger, then, actually, two hour and four hour system is becoming increasingly interesting. And and these are the two types of systems that we see most customers, designed today.

Typical asset sizes have for the few last few years been two five megawatt hours, or two, five megawatts and one to two hour systems. But, actually, now we see thirty megawatt hour, twenty megawatt hour, eighty, and even several hundred megawatt hour systems were claimed for the deployment.

So let's switch lanes a second and talk about degradation because I know that you and the team spend a lot of time thinking about degradation, and it's one of the things you mentioned as part of your sales pitch. So take a step back. Battery degradation is, of course, a a core challenge for, battery assets and then energy storage in general. So how do you at Hybrid Green Tech think about degradation? And, can you just talk about how you build that into your models? Because I know it's something that you spend a lot of time working on.

Yeah. So as a total, so from my background that I have I have a PhD in battery, and, PhD in dictation and performance of electrochemical cells, both hydrogen cells and and, battery cells. And I work with battery management systems for for four years doing a business science. So hybrid green tech is founded on very deep domain knowledge on base degradation and performance.

And, therefore, as a part of our services, and our operational services with our virtual power plant, we also deliver asset integrity management service for, for our customers, and for the assets we have under management.

This means that we can do automated, remote state of health, monitoring and testing. And we are able to limit cycle degradation when we are planning and trading and operating, the best systems.

And that is becoming increasingly challenging because you need to know how are you affecting your deputations in the trades you are doing compared to what are the effects on longer term degradation. Like you typically have, depending on on the supplier, you usually have eight to ten thousand full cycles in a BIS system. But it there is a big difference if it's microcycles, degradation, or it's a longer, deeper cycles. So, yeah, you need to be aware how you affect the the battery. And the best way because the challenge is that you do a lot of microcycles when you do ancillary services, and you do a lot of deep cycles when you're doing avatars.

So the best way as you see it to monitor and degradation is to do periodical state of health test to monitor what have been the capacity loss over time.

So we do an initial test when we start operating the best assets, and then we do periodical test afterwards to, continuously monitor the state of health of the assets we have under management.

Can we talk about market access for a moment? So as an optimizer in Denmark, do you have direct market access, and what does that look like? And how then how do you think about your business? Because I I know you're expanding beyond Denmark. Right? So how do you think about all of the complications of building an optimization business and then having to get market access in all these different markets, which are all quite different?

There's obviously some some coverage in, you know, European power exchanges and and things, but it's a bit of a challenge. And I'm interested to know how you're gonna go about that challenge.

Yes. Yes. Very, very interesting.

We have we are as I said earlier, we are, fully vertically integrated, optimized on BRP.

We have, direct market access to ancillary service markets.

We are trading Day Ahead and Interpay.

That is done through European Power Exchange.

It is the same access, more or less, all over Europe.

It also the same as d k one requirements. It's more or less the same as Central Europe. It's the same ancillary surface markets and the requirements for the markets are the same. And as well as, for d k two, there is the same markets we have in DK two as we have in Norway, Sweden, and Finland.

So by having designed our market access and our platform to DK1 and to DK2, we are able to scale to other European countries without with only fewer changes to the platform. We have made the platform modular so we can have, you can say, a country module, for every country.

The biggest challenge I see for providing our own market taxes in every European country, that is integrating the retailer service.

So how you are getting meter data because that is quite different from country to country. In Denmark, we have a central data hub managed by the TSO that are getting all meter data from all energy meters in Denmark. But in other countries, that is specifically to every single DSO. So every single DSO has its own, integration and own day data access.

And in some countries, that is also manual. So there, it become increasingly challenging to do settlement of, these, customers if you are also trading energy for them and trading energy for the assets. If you're only doing ancillary services, then it's much easier. But this is not where you can, in the long term, get the highest revenue.

So where are you going next then, Basmas? What what what's on the roadmap?

We are preapproved for some of the Nordic countries, but we're also looking south of Denmark to to, to countries in both east and Western part of Europe. We see a huge move towards energy stores in the Eastern part of Europe and also Bellicom and getting several customer requests there.

Having Belicom disconnected from Russia, with only a few great connections to Central Europe, there is a huge demand for balancing in in Belicom as we see it.

So then from your vantage point, your your customers span lots of markets.

What do you see across the different markets? So what are you learning about how the different markets operate? And, ultimately, from an optimization perspective, who's who's getting it right?

Jainesis, I think there will not be one optimizer that takes it over.

The ones who getting it right is that at least what I believe is that you have, huge benefit on being vertically integrated optimizer.

Your chain of commands, if you re need really fast response time, but also need a stable trading platform and operations platform.

It is not stronger than your than your weakest link. And you need to have your asset state of charge in control at one hand, and you have the you have the market signals in the other hand. And if you introduce multiple API layers from multiple legal entities, So market, access for with different market actors.

Then you introduce operational risk and inefficiencies.

Also, higher causes of breakdown of of that chain.

Through our life ex operation experience, we have sometimes seen that the actual weakest link is the connection to the TSO, sometimes.

So we are we need to implement data safety and data procedures for the data streams to avoid. If sometimes the a API suddenly stops or periodically drops out, we need to handle that with minimal impact on the assets we have under management.

Okay. So thinking really big picture here on on the macro about integrating energy storage into grids in general. We'll just focus on Europe now. What do you think about the about about getting that done? So there's interconnection queue issues. We've got telemetry queue telemetry challenges.

There's obviously the the whole all the capital that needs to move in. But when you think about connecting energy storage to grids, how do you think about that problem?

Solving the green transition is super complicated.

And with our platform, you need multimarket optimization.

You have fifteen gate closures spread over forty eight hours before delivery hour while you need to do live state of charge manage management with live market signals, and you need to have your platform, operating with a response time of around hundred milliseconds.

That is super complicated.

But still, the key challenge for integrating energy storage is paperwork and the waiting time between the paperwork.

That is site lease agreement.

You need grid connection agreements with sometimes waiting times of three one to three years waiting time. You need building permits, usually six months, but sometimes two years waiting time to get a building permit. You need land zone permit, usually six months waiting time there. Then you need fire approval permit, approximately, three months waiting time. But you need to educate every single local fire department on battery safety as well.

Then you need grid connection approval for technical requirements. And depending on the DSO, you need to educate the DSO on the technical requirements. And usually, that also take approximately one to six months waiting time depending on their experience.

And then you need market prequalification for every single and serial service. And that could take all the way the fastest we have seen is one day, sometimes it's several months waiting time on that. And that is, as I see it, make both the green transition costly, but also slowest time. So even though we have a virtual power plant company and that is a core part of our business. Then we have been in a need to develop commercial EPC management services for supporting our customers in bringing down waiting times for an on approvals and permits in order to get more base volume faster on our platform.

Furthermore, we see that grid connection fees are a strong barrier for getting more base into the markets. Therefore, we have seen since October last year an increasing demand for collocated PV and BIS systems, but also an increasing demand for C and I BIS systems, where both of these segments, you are both saving on grid connection fees, compared to straightener loan assets, which means that, therefore, you will have, better business cases, compared to straightener business, go very much.

So lots of paperwork in the way.

Yeah. And I'm I really hope that we can enable in Europe to to bring that down. And even though Denmark is one of the most digital countries, at least what I know, in Europe, I'm afraid that in some parts of Europe, that will go even slower.

Yeah. I and I I believe that, several have the same experience as well. You see support teams for entities or sub basis, but still you have the barriers and paperwork and requirements and how public entities are evaluating these requirements.

Because you also have, like, the technical requirements for grid connection approval. That comes from EU from the RFG. It's called requirement for generators.

But every country and every TSO might evaluate these general requirements for generator rules differently.

So that's also becoming, a challenge.

Okay. So, Rasmus, now on to the last two questions. So the first one, this is your opportunity to plug something. So anything you wanna get out there to the listeners of the Transmission Podcast, now's your chance.

So we are in very early beginning, as I see it, in developing flexible energy markets. And I don't really know what will happen in the future. Some will say that in service service markets and flexibility markets, are salary will be saturated.

But every time, we expect or see markets that saturates, we see new markets pop up.

Where we saw from twenty three to twenty four, we saw a lower price in, FCRD markets.

Then we saw other markets, for example, AFR in twenty twenty four becoming, going from symmetrical to to asymmetrical.

Now we see further changes, also in MFRR.

So we even though that some of the markets are saturated, then we on and on again see other markets, either changes or new markets pops up, which creates new revenue streams and new revenue potentials. Therefore, it's very important to have an optimizer that are able to adapt fast to new market changes, both on energy markets, but also on consumer service markets.

Yeah. We've seen that in a few places. So, in Texas, for example, or actually, in in Great Britain is a great example when, there's been a couple of times where new services have come out, and you can see some of the optimizers already on day one at the first gate closure, if you like. They're bidding into those markets, and it makes such a big difference. And, it's plain for everybody to see.

The the the companies who can really move fast and get ahead of these changes, It looks extremely good for them and also for their customers.

So now let me ask you, what is your contrarian view then, Rasmus? What do you believe that not a lot of other people believe?

At least from what we hear in the market, who are the best optimizer?

We do not believe that it will be one optimizer that takes it all.

Every optimizer, as I believe, have their own strengths and uniqueness.

And I believe that base owners need a vertically integrated optimizer, and BRP in order to be able to capture the greatest value of their assets no matter if it's standalone, collocated, or CNI base, behind the meter.

Furthermore, optimization of assets is becoming more and more complicated.

So you need to have an optimizer that are able to both capture, multi market revenues.

There we have been able to be active in several markets in the same hour, still be compliant.

But we you also need to this, as I told before, have this live state of charge optimizations of the assets.

This is some of the parts I think is is is, crucial, because the more if you both have market optimizers and market access, and then you have additional API systems in the loop, all of these needs to get some part of the revenue.

So in order to get the highest revenue for the asset owner, you need to have as few optimisers, market actors in the dupe as possible.

So is your contrarian view that the optimisation space is not gonna be winner takes all.

Exactly. Exactly. I believe that there will be space for several, several both optimizers, but also, access that provide market access. But what I think is important that is that even though sometimes we are challenging, challenged by it, but, that, base owners are competing optimizers of against each other. This is also what makes us sharp, as optimizer and makes us more competitive.

So I I I think it's very good that as as as its owners that have a larger portfolio, they get the optimizers to compete against each other.

We also think it's, it's a good competition, and it keep us us in on on the edge of both development and and innovation on keeping our our optimizer and trading algorithms at the edge.

Okay. Alright. Well, Rasmus, we've come to the end. I wanna say a massive thank you for joining us on the podcast. If you're listening to this and you wanna find out more about hybrid green tech or the work that Rasmus and the team are doing, then, we will put links in the show notes so you can go and do that. And Rasmus, it's always fun to chat with you, and thanks for taking the time.

Thank you for letting me be here.

Alright. See you later.