Rethinking REGOs with Tom Parsons (Director of Sales and Origination @ Good Energy)

Because fundamentally, we disagree with the current rego certification approach. In the world of renewable power, you can take that renewable certificate that maybe was generated from solar in the middle of summer you can take that certificate. Hold on to it till the middle of winter when it's not even sunny outside, and then you can allocate it to a piece of power that was generated from coal or gas. You can claim that that's renewable.

The renewable system we have at the moment, that is within the parameters of what you're allowed to do. A good energy, we say, well, you might be allowed to do still not the right thing to do, and it's not incentivizing the right level of new build renewables to to to create renewables at those difficult times at five o'clock on a winter's evening when it's dark and not windy. So we need to change the system and change change when those certificates and power flows are linked up and then when they're given to customers. Hello, everybody, and welcome back for another installment of transmission.

In today's episode, guest host, Ed Porter, is joined by Good Energy's director of sales and origination Tom Parsons. Over the conversation, they discuss how customers can use tone match certifications to better take control of their carbon emissions. As always, if you are enjoying the podcast, please consider giving it a like and subscribe. It really helps us to reach a wider audience.

And with that, let's jump in.

Hello, and welcome to transmission. I'm guest host Ed Porter. And today, we joined by Tom Parsons from Good Energy. Welcome Tom.

Thank you, Ed. Good to see you. It was great to have you on. And your role title, right, your director of sales and origination, I would love to start off by asking because I've been asked this a thousand times. What does origination mean?

It's a it's a great first question. And when I interviewed for this role, that was the first thing I had to look up. What exactly was an originator. And, what was I supposed to be doing in the job?

But quite simply, it's the sourcing of renewable power across the UK. So There's literally tens of thousands of independent renewable generators across the UK all the way, all the way from offshore wind farms down to a farmer with some solar panels on their roof. And you need people that can go out, understand the the mechanisms for selling that power, putting it onto the grid and getting it to homes. And that's that's what originators do.

Okay. So a whole lot of a whole lot of hustle going on, making sure you're getting out, seeing people getting this contract signed, and people are getting good value for what they're generating. Right?

Yeah. And actually a load of those are farmers. So the farming community's been great for renewable generation in the UK, everything from solar panels to putting wind turbines on their land and then building bio generation as well. Using the manure to create to create AD. It's, absolutely fantastic.

And, like, we're we're t minus thirty seconds into into a podcast, and I can sense like a rabbit hole coming because I'd love I would love to ask the question around, like, putting solar panels on less less good quality farmland and kind of where you where where your views are on that, but maybe we can come back to that. Let's let's kind of just stay at a high level though to begin with. So just in terms of who good energy are and what the mission is, I would love to hear I would love to hear your take Sure. So, I mean, our mission hasn't changed in twenty four years.

It's actually our twenty fifth birthday next year. So what counts for the celebrations on that? But twenty four years ago, we were set up with a really straightforward mission, which was to help combat catastrophic climate change, and it hasn't changed, since then. How we get to that right now, our mission is, or or, yeah, the way we reach that mission is to help a million homes and businesses in the UK decarbonize, and that's everything from sourcing when you will power for them.

Helping them with sort of energy services and the installation of assets that help them decarbonize, help them get off gas and and and utilize that renewable power.

Okay. And there's and there's, like, within that right. So there's a real there's a real kind of physical. This is a real thing you can install on your site, and you're gonna get value out of it to kind of almost financial certificate based thing, which is you're gonna connect to the grid, and the certificate's gonna do some of the heavy lifting for you. And I think we're gonna come on to that in a little bit more detail. So I'm excited to I'm excited to get into that, but maybe just going back a step. So what what is it that you do within good energy?

Yeah. So my my teams are responsible for sourcing all of that great renewable power. So we've got about two and a half thousand independent generators across across the UK.

And and that really is the foundation of Good Energy's businesses, those those renewable generators. And when I talk about the two and a half thousand, that's businesses that are selling their power to us. As I said, lots farmers earlier. There's some community energy schemes in there as well and things like that. But actually on top of that, we've got around a hundred and seventy five thousand feet in tariff customers And they're so they're they're small generators, they're households like like this one with solar panels on the roof that are then exporting that power to the grid. So we've actually got a huge amount of customers with Feeding tariff with their second largest provider fee and tariff services in the UK. So we've really got that scale.

So that's the first part of my job sourcing all that great renewable power. And then the second part, is then, you know, finding the customers that want to buy that power that really care about the provenance of that power. And you mentioned earlier that that question around certification and the actual power flows themselves. And the difference about good energy from pretty much every other supplier in the UK is that we keep the power and the certificates together, which means if a customer supply customer wants to take the power from us. They know that the the certificate, the renewable energy guarantee of origin, the rigo has traveled with that power all the way along and they can go back and find the provenance of the of the site that that generated whether it's whether it's a farmer or whether it's a little hydro site at the at the base of snowden.

So that that so that's the other side of what what I do is finding those those input customers, and that could be domestic. So we've got fifty five thousand of those on supply with this at the moment. It could be business. And we've got five and a half thousand business customers on supply with us at the moment.

So you've got that natural balance, good energy of great renewable power coming on one side, and then customers that that want that provenance and want to be able to evidence their renewal power on the other side. But then what we found recently over the course of the last two, three years is those customers that are buying their renewal power from us, got great, great great relationship with them, great brand trust. I think we're at four point seven on trustpilot now as a as a pretty solid indicator. But they're saying, right, well, we love the power, but what more can you do for us?

You know, that that step one on our decarbonization journey or step two, three, however they position it, what else can you do for us? So then we moved into energy services to say, right, we're gonna help you decarbonize further with actual with with the actual installation of assets, whether that's solar panels or the roof, whether it's heat pumps in in the houses to to get them off gas. And so we're creating them quite the ecosystem to help those customers decarbonize both the business side of things and the domestic side of things.

Okay. And you mentioned two things in there that I think we should probably have a refresher on a feeding tariff and a rego. Would you mind just kind of giving us the high level view of of what both of those two things are? And maybe do you get a rego with a feeding tariff?

That's that's that's a brilliant question. Actually, you're you're you're you're guessing about our product development process there, which is quite exciting. So the the Feeding tariff is a scheme that was set up as a good energy helped set it up because we recognize that small generators weren't able to sell their renewable power on the grid. There was no incentive for them to be able to do it.

There was no way they could get paid for putting it onto the grid. So very few people were building. So so we work with the various industry body to create a a pre test, the fit scheme, the feed and tariff scheme, that works. And what it effectively means is customers get paid a generation payment So every kilo hour they generate, they get paid a a a fixed payment for the duration of the scheme.

And then for every unit they export as well, they get paid a separate payment for that.

And and and and those at the time were were reasonably generous. They were good incentive. And what that meant is the Feed and tariff scheme meant a lot of small scale generators cropped up, and they're able to build solar on their roofs and and and export back to the grid.

Okay. So that's the that's the feed in tariff. That scheme is now closed. That's been replaced by the smart export guarantee, and we can we can touch on that a little bit more more later on.

But in terms of those renewable energy guarantees of origins, that's effectively just a receipt that comes with every every megawatt hour of renewable power that's generated in the UK. So if a, yeah, if a hydro site on snowden generates a megawatt hour of power, there's a rego a certificate that is attributed to that. That's all managed centrally, and that effectively guarantees that that power is renewable. It's the audit trail that goes through the process.

And you can separate the power in the regos and sell them separately from each other. Good energy doesn't think that's the right thing to do, and that's that's what I was touching on earlier. I'm keeping the two together to evidence that provenance and and and keep the process whole. Yeah.

Okay. That that makes sense. And your your so that piece of ground feeding tariff, so I love the idea of connecting supply, generation, and demand. If you're generating with a feeding tariff, like, do you get a rego, or is that just is that more for sort of the bigger projects?

So interestingly, you are entitled to claim a rigo on any feed in tariff generation. It's a small amount. So so a typical household would generate maybe one, one and a half regos per year, but there is a value on those regos certificates. But at the moment, there is no market mechanism for the household to claim that rego, so effectively to generate the ID for it, and there's no process in the industry to support and facilitate that. So at good energy, we're actually looking at ways at the moment that we can do because that's an extra ten, fifteen, twenty pounds that would go back into the into the householders and into that into the renewable generators.

That's been something of a ride. Right? So so Rico's have have kind of if you go back five years, will my worth worth maybe? I'm gonna say twenty to forty p, but arrigo nowadays is a very different ballpark. Right?

Yeah. The market's shifted massively. And that and that comes with with with some significant benefits. So at twenty pence, arrigo, the problem is that's not it's not a lot of money for any general So it doesn't necessarily incentivize new generation, and it doesn't help finance new projects.

Once you start getting above the ten pounder ego mark, the feedback from our customers then does incentivize new projects that that helps you when you when you do the, do the maths on whether you should invest in in building new generation, that ten pounds per man got our additional top up from the ego. We're at fourteen now and actually some have traded at sort of twenty twenty four over the course of the last couple of weeks. That really does help incentivize new build generation. So we're seeing some quite exciting things in the marketplace at the moment, which, I think is broadly good news for renewables in the UK.

Yeah. And and on that sort of some trading at twenty, some trading at twenty four, does that there's sort of different quality of rego. Can you get one that's like a grade a, a grade b? Like, what what why are they different value?

So historically, we have seen, quite a separation between different types of rigos, and that that depends on the the source of the power, ultimately. So, We see various terms in the industry, things like Deep Green, which applies to you, you hydro your solar and your wind, and then something like biomass would come out as not Deepgram, still Green still renewable certificated, but but not the same Deep level. And we would have seen a lower premium, a lower ego price paid for that to flow biomass. But they're in such short supply at the moment.

So demand is increasing and supply has actually decreased that we're seeing those prices actually levelize out now. Almost everybody's desperate to get their hands on something. So the prices tend to tend to stabilize across the piece. Yeah.

Okay. And this and and you've kind of not only got sort of the origin being different Virego. But then you've also got the other part of this, which is when does your where when's your generation and when is your demand and making sure that they match and the kind of traditionally, the industry has very much been trying to match within year. But but you're sort of trying to push the boundary of that.

Right? And we this is building on a great podcast we did with with with granular, probably about three weeks ago now, that's kind of talking about perhaps matching regos on a more like half hour by half hour basis.

That's right. So we've launched a product with with Grandula called hourly matching, and that means that all of our business customers in the UK can see on an hour by hour basis where they're their renewable power is coming from. And we launched that because fundamentally we disagree with the current rego stification approach. And I like the the tomato analogy with organic tomatoes.

So let let me take you that. Let's see if it lands. So imagine imagine you go to the the shops, you get to waitrose and you and you buy organic tomatoes and you pay it at five pounds for those organic tomatoes. There's premium because they're organic there from waitrose.

You take your receipt, you take your tomatoes home, and then you eat those tomatoes, but you hold on to the receipt. Imagine six months later you go to Tesco's and buy the cheapest tomato they've got not organic, and you take them home. And then you sell those tomatoes with the waitrose receipt to your neighbor as organic.

Now, your neighborhood quite quickly say these aren't organic. They've got a Tesco label on it. It doesn't match up with waitrose. This is absolute nonsense.

And it wouldn't be appropriate, he would he would send you back with them. But in the world of renewable power, you can take that renewable certificate that maybe was generated from solar in the middle of summer you can take that certificate. Hold on to it till the middle of winter when it's not even sunny outside, and then you can allocate it to a Visa power that was generated from coal or gas, and you can claim that that's renewable. So in the tomato analogy, unacceptable, but the renewable system we have at the moment, that is within the parameters of what you're allowed to do.

Good energy, we say, well, you might be allowed to do it, but it's still not the right thing to do. And it's not incentivizing the right level of newbuild renewables to to to create renewables at those difficult times at five o'clock on a winter's evening when it's dark and not windy. So we need to change the system and change change when those certificates and power flows are linked up and then and when they're given to customers.

Yeah. Yeah. No. It it it makes sense to the tomato analogy. I think the thing that I would challenge on here is that actually, like, how affordable is it for everyone to have a waitrose organic tomato.

You know, I, you know, every time I go, you know, go and buy a bag of nutrients, tomatoes, I have to re mortgage my house to to to to pick them up. So if you're if you're someone who who wants to do the right thing, you want to have time matched regos, that sounds like a really good solution to making sure your regos really have that, that provenance. But how do I do that and make sure that my business is viable?

I think there's there's two elements on this one. Now number one is what we fundamentally need to do with the energy market in the UK is separate gas prices from renewable prices because at the moment we prices by renewable prices up that they had a trader on the same wholesale market. They jump as well. So, actually, your your your problem there around, you know, premium renewable power and and let's let's call it dirty.

Bad gas power. They're they're the same price, so there is no premium on that. So we need to separate one from the other. And there's various there is various mechanisms and schemes community power schemes that enable that that sort of break of the linkage to happen and, you know, off chairman various bodies are looking at other ways of of separating out the two.

So don't think you necessarily have a premium there on it. And then when we look at the good energy product, so the the cost for the first year for all of our customers is is nothing. So we're a hundred percent subsidizing it because what I wanna do is give everyone the opportunity to see and feel what it looks like and then to get the data and be able to make decisions off the back of So have that true transparent picture, and then they can focus their investment decisions on all the true decarbonization activities they need to do rather than just ones that that that are born out of bad information.

But then for the second year and beyond, yes, there is a price, but you're talking tens of pence per megawatt hour. So negligible prices for corporations to be able to give them real direction in terms of where to focus their investment.

Okay. And the way I look at it is they're actually saving there's a opportunity cost that that they're saving here because at the moment they're spending lots of money on decarbonization activities that may not be pointing in the right direction.

What hourly matching enables them to do is then refocus that expenditure on things that will actually make a material difference both to the corporation and to UK PLC as a whole and and and our our broader carbon footprint.

Okay. Okay. So there are two really interesting parts of that. So one is kind of the the sec the section where you're sort of talking about actually let them get on and do the decarbonization activities they really want to do.

And for me, that's kind of crying out to, like, the physical what can you install on your site type thing? And let's and let's come to that because I think that's super interesting. But the other part, I just wanted to flag out very quickly, is is just around the economics of this thing. So you mentioned sort of ten pence per megawatt hour.

And for people kind of who don't deal in, like, pounds per megawatt hour for whole wholesale power prices, a standard wholesale power price might be, say, a hundred pounds per megawatt hour. And so Tom's saying, okay, it's look, we're talking like, this is easy maths for me. It's like naught point one to naught point two percent of the wholesale price might be going on making sure you've got a match a match rigor. Have I got that right?

Absolutely. And of course, a customs bill isn't just a wholesale price. So when you actually look at the cost on a bill, you're talking, yeah, less than that, not point one percent bill increase. Okay.

So then then the kind of carry on question, right, which is if the benefit or if the cost of the consumer is any kind of naught point one pence, not for sorry, zero point one pound per megawatt hour or ten pence per megawatt hour, then that that is effectively something that you are taking from the customer to give to the generator. And you're saying to the generator, Hey, I think that what you're doing is super valuable not just generating at the same time as all the solar sites, and you're not just generating the same time as all the wind sites, but you're generating on a cold still winter's evening when everyone's turning on their power.

And the the rigo analogy is great, right, because you you kind of you you buy rigos at twenty pounds, and it gives people the confidence to go invest in things that are really useful. And as you said, once you get to ten pounds a rigo, people go, oh, you know what? This this works for me. I can take this decision.

At ten pence per megawatt hour, it feels like that's almost too low to kind of incentivize, like, say, a battery to kind of make an investment decision. So do you think that sort of do you think that ten pence will go up in the future and sort of incentivize more build, or is there like some sort of cumulative effect that will go go on here and kind of make a better business case for something like storage that might shift between half out to half out.

For me, it's a rebalancing of the overall cost. So, actually, that that that that the end of the pence per megawatt hour we're talking about there is actually the the administration cost really, it's the cost of the platform and and doing the allocation and the balancing.

But the what that balancing allows us to do is to say, alright, well, perhaps solar egos, and we're gonna see more and more solar coming onto the UK grids, you know, over the next decade. Maybe they're worth, nine pounds. Maybe they're worth ten pounds. You know, the average at home let's say fourteen, and and and solarigos are worth less because they're only they're only covering that peak period.

But perhaps a, an a bio generation, so anaerobic digestion rego is worth twenty five pounds because it's baseload and it it consistently performs throughout the day and throughout the night based on the, you know, the manure or or or always crops that go into it. So, actually, it's about rebalancing where that where those rego payments get made. And when you move down into the more granular certification, so you can actually say hour by hour, Instead of saying solar's worth x and anaerobic digestion is worth y, you say, well, if it was generated in the middle of the day and summer, it's worth really not a huge amount, but that's fine because there's the investment case for solar is actually still pretty strong even without these rigos.

But if it's a rego that's generated five o'clock on a on a dark winter's evening, That rigor could be worth five hundred pounds, seven hundred and fifty pounds.

So it's that reallocation of value within the existing system that happens. So there shouldn't actually be an additional cost on customers. They can just focus their focus their finances in the right areas. Okay.

Okay. That make that makes sense to me. And I the kind of reason where the the reason why that question comes up is because I know a lot of people listening to this will be people who are investing in battery fleets or have battery fleets. And so, you know, they're looking at, okay, where where can I get additional revenue from and this sounds like something that could be really valuable for their site?

So as that scheme takes off and you start to see volume coming through it, I'm sure you'll get lots of battery operators and owners who'd be very interested to find out more. Can can I just ask one more about about kind of the the the matching of of Regos So what does what does the volume look like today? How many people do this? Is it kind of when we're talking about zero point zero one percent of the market?

Or is this something that's actually growing really quickly?

So when you say how many people do you mean what which suppliers are out there doing this in the marketplace?

So, actually, let's go for let's go for consumers. Let's go for generators. How many people have signed up to the scheme?

So from a consumer side, I think, it's it's it's all of our business So we're putting them on the platform for free. So you're talking about about quarter of a tower there that that that goes on to it. And of course, then that's matched off by another quarter of a tower terawatt of power of of generators. But actually on top of that, we're also doing it at a good energy level.

So, you know, we're about a half a terawatt hour business on the on the import in the export side of things. So although we don't have the half hourly data for our all of our SME customers or our domestic customers, because it doesn't doesn't exist at the moment for all of You can do the total shape, which we do. We put into the platform, and then we do the total shape of our renewable generation. And collectively, we say, right, these portfolios were at ninety three percent matched on an hour by hour basis.

Still a hundred percent matched over the year, but ninety three percent matched on the hour by hour. Our basis, which is, you know, right at the top of capability of any supplier in the UK, if that's higher than any any other supplier as far as I can tell in the UK. So, yeah, we've got about half a terabyte of Power on our books that are that are participating in this in this at the moment that can see their score. And then when we look worldwide, there's there's the usual sort of tech players that are already doing it on a individual company level.

So Google, Google pushing hard for it, Microsoft pushing hard for it, and a number of others as well. But one of the really important things for me around this, and the reason we're doing it for every single one of our customers is we don't just want a cherry pick because what we what what you could find doing, and actually what I think we'll probably see from some of our competitors going forward is they'll say, okay, there is value in this product. Consumers in the marketplace are one a premium for it. They, you know, they want to see this level of data.

So maybe they'll sell a contract to Microsoft to give them that hourly matching. But the other seventy percent of their customers they don't give it to, and actually those seventy percent then suddenly get worse power because all the good stuff's being reserved for Microsoft on an hour by hour basis. So you don't actually help the system or all your contributions as a company to it. You just cherry pick, move things around and create a premium product that you can sell to somebody who's who's trying to invest in it.

Yeah. It's a and it and it's kind of it is testament to people like Microsoft and Google that they have kind of innovated in this and pushed for it and suppliers like yourself that are kind of the the the the pushing forward, it does move the does move the needle. But I totally see what you're saying around, actually, if you take all of your sort of balance power and then check it all over to one side of your portfolio, then you're just kind of fudging the other numbers it seems. So the whole portfolio, the whole portfolio sort of approach seems like the only way to go Now to to people outside of kind of the energy space, you sort of said, you said shape and demand shape and generation shape.

And it would just be great to get, like, just a couple of lines on on what a shape is and why, like, when you say you're matching shape, what what does that mean?

This is just simply. It means a a curve. So how much how much electricity does an organization or an individual home need on an hour based and you'll typically see a sort of a bell shaped curve throughout the day for most organizations and for most households. And that's because at night a business is turned off, so we've got very little electricity consumption.

And likewise, a household at nighttime, everything's turned off. And everybody wakes up in the morning. Microwave goes on, kettle goes on. Maybe the television goes on on the weekend, and you start consumption increase.

So it's just making sure that for each of those periods, there is an equivalent amount of generation. So the generator shape is doing exactly the same as the household or or business.

Okay. Alright. No. That that's that's clear. And I think we've talked a lot about kind of the the matching of certificates and making sure that businesses can kind of buy something that really kind of allows them to say to the to themselves or to their board or to whoever. Actually, we are genuinely renewable because we've matched our we've matched our shape when we bought certificates that that work on a half hour, half hour basis.

If we then talk about the physical side of this, so alongside there being solar farmers fields, and there being AD plants all over the country.

We also have this kind of new sort of option that's available for businesses, which might be bringing generation onto their own site and starting to really manage their own their own energy needs. Like, what does the trend look like here? And, what, what, what a customer's asking for? Absolutely. I mean, when we look at the the options customers have in terms of decarbonizing their portfolios. The first one is, of course, consume less and and and lots of them are doing that and consume, you know, more wisely.

The second one is either to build your own renewable assets or to take renewable supply or actually probably a mix of both of those. So we are seeing an increase in customers, quite a big increase, especially among the commercial sector that's saying, right, I want to put generation on to renewal generation onto my assets. And solar works quite well for a lot of commercial organizations because their employees are arriving at eight AM in the morning. They're going home at six PM in the evening, which happens to be you know, on on a on a on a on a certain time of the year is when the sun rises and the sunsets, you know, not quite right now when we're in windsurf, but those two shapes I was talking about earlier actually match quite nicely.

So so, yeah, significant demand there. I've seen a little bit of a lag really. So wholesale prices peaked in October last year. So that's when prices were getting really expensive.

We spoke about a hundred pounder megawatt hour earlier. We saw prices up to eight hundred pounds a megawatt hour during October last year. And a lot of businesses were, you know, they had to sign electricity contracts because they needed power coming in. So they've been suffering from some pretty horrible bills, you know, caused by the invasion of Russia and Ukraine and a number of other factors, but they've they've suffered through those bills and had to pay them.

And what that's meant is as they go through their budget cycles now and as they go through their sign off processes, they're saying, right, we need more resilience against getting hit by these bills going forwards. So now we're seeing as they get into end of the current financial year or we can do the next one, they're saying, right. Now we have signed off this budget for half a million pounds to invest in solar on our warehouse roof. Now we just need to go out and find a provider that can give us that.

And then an x and and then an any power we're exporting, we wanna know what the fixed rate is gonna look like for that. So we, you know, helps with the business case. And then gives us that that power cost resilience for the next ten, twenty, twenty five years.

And now, like, from from from my view, I see that the the business case of putting solar onto those sites is is generally a reasonably strong business case. But from you from from your point of view as a as a supplier, Can you tell me a little bit about, like, how the demand shape is perhaps evolving? We're back to shape again. And, like, why that might be a difficult thing for you?

We we have to do a lot more balancing now. So as as more and more solar is put onto the grid, that means we end up with lots of renewable power in the middle of the day. So we have to make sure that aligns to our to our import customers as well. And then where we have to trade that export power, which can potentially be worth less because there's so much on the grid at those times.

So it does mean we have to be smart as an organization, but we're we're sat on both sides of coin here. So we're, yeah, we're buying renewable power on one side. We're selling it on the other. And in the middle in the middle, we do all these balancing services.

So we've got that great capability to work out how much power is worth at different times of the day and put that into our pricing models so that we make sure we're paying a fair price to generators and consumers are getting, you know, a a a well balanced price off the back of it. And when we talk about, you know, generators and consumers, as you say, that could be the same, the same organization that can be a warehouse with server on the roof, at six in the morning, they're a consumer, and at, eleven AM in the morning, they're a generator. And it's just balancing the two for them and making sure that that, yeah, overall, their costs are as good as possible.

Okay. And do you see many people so a lot of people I think are looking at solar on on rooftops. Right? It seems like a bit of a bit of a slam dunk, but do do you see many people kind of going the step further?

So it's kind of I wanna put solar on my rooftop, but I also realize that in winter, the sun goes down at four o'clock. And I've gotta, you know, and and the factory runs on until six. And so I know I've got this two hours of additional, demand that I need to meet and I would love to meet more of it with kind of my own generation on-site. Do do you see people starting to look at, okay, I've got the solar.

I wanna stick on a battery as well. And I wanna make sure that I can meet that four to six from my sort of battery on-site, or do you think that maybe they should look at, actually, just get just get a matched rego and get it from grid. That's a much easier way of solving the problem.

Yeah. We've got two two parts of this thing. So on a commercial side of things, yes, they're asking those questions and saying, right, what what what can I do about batteries for those those those shoulder when it's not sunny and we're still consuming?

But at the moment, batteries for a warehouse, you know, tend to be high where they are higher consuming customers, a battery won't cover you for two hours. Unless you stick lots and lots of them in, and then you're getting up into the hundreds of thousands of pounds in the payback period, the return on your investment suddenly starts to go from three or four years just for your solar up to, you know, ten, twelve years when you when you stick enough batteries on to cover it. So you're right that actually the better solution there is to say, right, well, is there a is a grid level solution here, which there is, and, you know, that's what good energy does.

It says you do the cost effective renewal generation for yourselves when you can, which at the moment is solar, payback period is great. And when you can't do that, we will find you renewable power from across the UK that, yeah, that that that means across across your twenty four hour operating cycle you're getting renewable power for for as much of that's possible.

But on the flip side, flip side, other other other customer base domestic customers, we're seeing eighty to ninety percent of them taking back trees at the same time as as solar. So even though, again, the payback period for domestic customer does increase with the battery, they see more value in it because it actually gives them, resilient as well. So, yes, it helps them, helps them get renewable power in the in the in the in the shoulder hours. But actually, when we saw the storms rolled through last week and and and caused quite a lot of devastation on the south coast of England, it tens of thousands of homes without power.

Anyone had a Tesla powerwall battery installed was still able to run all their all their electrical assets in the house and we had, you know, we've installed, I think, three, four hundred of those so far. And and and it's quite an active community, and many of them are quite quick to come back to us and say, My house is the only one on the street that still got power because the the broader power is down. And, yeah, there is devastation going around, but they're feeling quite smug that they made a choice that gave them that resilience. And I think we'll we'll carry on seeing that trend going forward.

Yeah. I think that for me, it's a really fascinating part of the energy sector. Right? So someone might say, oh, look.

It doesn't really make sense. For people to go and deploy batteries on walls in people's homes. It's so difficult to get the contracts in place, put it in place recoup the money from doing it, you have to roll out so much volume. It's so hard.

But on the flip side of this, whilst it might be quite difficult for a big corporate to put lots of money into it, you like, it's almost like the bank of mom and dad. Right? You've you've kind of got this this big pot of money and grid connections in terms of EV charging points and your Tesla that sits outside. Maybe your maybe your battery that you've got at home as well.

And actually, there's a big pot of grid connections and money and willing people to try and sort of make a change on a on a personal level. Right? And so we kind of maybe sit back and we think about all the corporates doing this. But actually, there might be a bit of a revolution going on within within homes in in the UK.

So I'm kind of fascinated to hear that you're also working so much on that side of things. And I know we also wanted to kinda cover the solar saving side of things. So So if you are someone who's taken the plunge and Bank of mom and dad is kind of, you know, you've decided this is where I'm gonna stick my money. I've got some solar panels.

But you can't use it all. Like, how does that work? I'm just thinking back to your bank and mom and dad. I'm trying to work at how I can get my parents to pay for, like, for, you know, additional assets in in in the house.

I'd I'd be happy to, take another battery. I've got got the EV on the drive at the moment.

Yeah, so we we launched our solar savings product only only a matter of months ago now. And and the purpose of that product is, again, it's it's innovation within quite a technical complex area of the industry and quite a stagnant area. So the feed in tariff scheme we spoke with earlier is closed There's not much innovation going on it. Customers are getting paid a set amount, for their generation and then a set amount for their export. The export rate is sort of six to seven pence.

And we looked at wholesale prices, and we said, well, six to seven pence doesn't seem very fair as an export rate anymore. Actually, it should be fifteen to twenty pence. So we wanted to create a mechanism where those feed and tariff customers could actually get access to much higher wholesale prices without creating any risks to their existing feed and tariff contract because those are quite valuable and, you know, they go on for over twenty, twenty five years.

So there's two two things we've done. So first of all, is putting all of our feed in tariff customers onto smart export. So the feed in tariff scheme when it was set up, they just there was an estimation within the industry that said we're just gonna pay fifty we're gonna assume fifty percent of your generation is exported. So half of what generates will come out to the market, and we will pay you seven pence for that fifty percent.

And then so we did some analysis of good energy, and we realized actually people exported on average about sixty percent. So they're getting shortchanged for, for effectively, what they're getting paid. So we've flipped all of those customers with smart meters because you need that data. Onto onto smart export, and that means they're getting a twenty percent increase in in their payments.

Now for a customer, an individual customer, that's about twenty pound a year, but There's literally nothing they need to do to to enable that. We've done it so far. We've done it for about fifty thou fifty, fifty four thousand customers now have been moved over onto that So you're talking quite a lot of extra value and you think sort of get that twenty pounds across fifty four thousand customers.

But then we move into the really exciting things moving beyond just that smart and that the sort of, technical change onto onto our solar savings product. And we designed this product to cover both those feed in tariff customers but also actually customers that miss the feed in tariff because it's closed and and technically fall under the smart export guarantee scheme at the moment. So for feed in tariff customers, we move them off of that six, seven pence rate, depends it varies a bit depending on when they signed up and and and what inflation is. And we put them onto a fifteen pence a kilowatt hour export rate. That means they're getting paid over double for for what they were previously. And that stacks up to about a hundred pound per customer across the year. So now we're to get into numbers that are actually reasonably material for a customer.

And then those those customers that installed their solar, and it predominantly is always solar. So they've installed their solar the fit scheme closed, what once the solar installation is done, you're not getting paid anything. There's no guaranteed mechanism for you to get paid for that. You have to go to a supplier and agree a smart bought guarantee rate or an or an equivalent rate.

And the average in the UK is about five five pence a kilowatt hour, so even lower than that that fit payment was talking about earlier. But again, we flip them on to a fifteen pence kilowatt hour, anyone that signs up with us, anyone that actually installs through good energy, so has the solar panels installed through through our team and then it in as well, we pay out twenty pence a kilowatt hour. So that adds up to about a hundred pound increase per year per customer for for that product as well. When you start to stack that up across tens of thousands of customers across the industry, then you're you're literally creating sort of millions of pounds of additional value and incentive for customers to go out and and install install renewables on their on their households.

And there's an interesting nuance in our marketplace of particularly around the Feeding tariff scheme. So a lot of the rooftops were actually leased out. So you'd almost have a rent a roof scheme where as a household like me, company would say we want to we want to put panels on your roof. You consume from the panels in the day, and anything that's exported, we as the company owned.

And it was quite attractive for for for individuals to do that. And and a lot and so you've got lots of portfolios of households, ten, fifteen thousand sites all stacked up under the same Gemini investment group. Whether that's a pension company or a fund manager, etcetera. And so when you start to say, well, one of these funds has got fifteen thousand rooftop sites, You can see that by moving over onto a solar savings type product, they're actually getting an about a million pounds extra per year by doing very little, just enabling good energy to move move things around in the background for them and put them on the most attractive rate.

And when you're an investor with a portfolio and everything's about how much money you're making, suddenly that that that creates a huge amount more value for those investors.

Let's just say it's the this space is is is kind of incredible to me. Right? We we go from the sort of early feed and tariff rates and and the sort of interesting business models that you have, like renting a rooftop type thing and then bundling that altogether for sort of large investment investment funds through to, okay, we're now starting to get much more soda online, and we and we now have businesses like Microsoft and Google, that want to have half hour by half hour balance regos to make sure that they're getting sort of a full green supply. And we've also at the same time, we've got all these businesses that are going, hey, with the invasion of Ukraine by Russia the last year, I don't wanna be paying seven hundred pounds per megawatt hour.

I wanna take some of this back and I just wanna just have solar resilience and maybe battery resilience on my home. The space seems to be changing so fast. And it's it's a sort of very exciting place to be, but I am sure that if we kind of go forward ten years and look back on where we are now, things are gonna be things are gonna be very different again. So a huge amount of change.

With within within the within the podcast, we we use we like to wrap up with with two key questions.

And so the two key questions would be the first one would be, is there anything that you'd like to plug? The the big one for me is is is good energy really is that generator's best friend. We've been doing it for very close to twenty five years now. We we enabled the mechanism for generators get paid.

We've got so many great customers, and and and we do a series on YouTube called to meet the generator, and that gives it some some of our some of our generators that we're happy to talk about good energy and and what we do with just got so many great, great generators, so so many great brand ambassadors across domestic and and business that I think it's it's it's something that I've encouraged anyone that is generating to take a look at good energy see if we align to the ideals because as you say, they've often built the assets for a financial return, which we can do. But that actually for a, you know, does this help the planet return and good energy is right at the forefront of that?

So, yeah, we find a lot of customers aligned to those brands and and wanna be a part of our our story going forwards. Okay. I love it. And the the second part of of the ending would be around your contrarian view.

So is there something that you believe that a lot of the industry doesn't.

It's it certainly was a contrarian view. I think, actually, the industry is catching up. So I I spent fifteen, sixteen years now trying trying to trying to decarbonize both personally and and and businesses and consumers around me.

And one of the things that sort of riled me during that time is is carbon offsets. So my view is that in the majority of cases, carbon offsets do not add material value. So they don't help help us decarbonize.

They're miss sold to organizations, and they they're just a another form of greenwashing which is which has become pretty insidious in in in the industry as a whole of it. And, you know, it it it really derails the ambition to get to to get to net zero. And the reason I say that is, you know, when you make decarbonization decisions, there is a stack of choices you should make first. And we spoke earlier around, you know, using less then using renewable power, then then transitioning to smarter ways of doing things, new fuels, and all sorts of good things.

Carbon offsets really should be an absolute last resort then there should only be a temporary resort as well. And full disclosure of good energy, we have to use some carbon offsets for our gas. So our gas is ten percent green gas and the other ninety percent has to be we we have to use carbon offsets. And that's so there isn't enough green gas in the UK at the moment to to be a hundred percent green gas supplier of our size.

But the carbon offsets we use, we make sure that they they align to the UN sustainable development goals that they're sort of gold standard, and we know exactly what projects they're being used for. And every pound we invest in a carbon offset goes towards helping to create more green gas so we can see the projects that that we do helps put more green gas on the grid. So there's a very clear link there. Okay.

But actually also with carbon offsets, you have to say, well, how do we get off them? This isn't a long term solution. So what is the long term solution? And at good energy, that's why we're spending millions of pounds on heat pumps, because we're saying, right, if we can't decarbonize our gas fully, we have to get people off gas completely.

You have to switch heating over to electricity, which we can decarbonize So that moves us off those those carbon offsets in in the medium term as well. So it's a short term thing for a small part of our portfolio that's that otherwise couldn't couldn't be decarbonized.

A lot of organizations jumped to that as the first step. So easyJet, for example, they just bought carbon offsets for all of their their fuel emissions, and those carbon offsets, they bought the cheapest ones they possibly could. And which, you know, on reflection probably probably had very little to zero, impact on actual carbon sequestration and and and helping against climate change, which is probably one of the reasons why they then moved away from moved away from that approach. Yeah.

I I yeah. Interesting. And I I would love to get can you can you just put a little bit of context when you say carbon offset, right? So, like, like, what what is that?

So a carbon offset is effectively finding a a project somewhere else that can store the carbon that you're unable to offset. So if you are a aviate if you're in the aviation industry and you want to offset one tonne of carbon from your from your emissions of your airplane, you could find a forest in, somewhere in Central and you can set up with this forest to store a ton of carbon. And then what you'd effectively get is a carbon certificate that said one ton was sequestered over here, and therefore I can use to offset my emissions over here in the UK or wherever that aeroplane is flying. Mhmm. And for and for Good energy, you say you do invest in some carbon offsets, anywhere you have to, what are those carbon offsets that you are sort of hitching a wagon to and saying, these carbon offsets, yep, these are these these are good enough.

So the important thing is due diligence, first of all, and making sure you're paying a price that feels sensible. So if you're paying, you know, pennies for a ton of carbon offset, it feels like that's not practically able to to work so it it doesn't pass the it doesn't pass the sniff test. But so the pro am I paying a reasonable amount for the these as part of the due diligence process, also being able to see what they're doing. So an example of one of the projects we're working on, and we only we only do three or four projects bigger projects where you can actually see the the output.

You can see photos of an evidence of what's happening. So one of the projects is in India, where typically villagers will cook on open fires. They will they'll chop down trees and they'll cook on firewood, which isn't great having firewood inside your house anyway. It's, you know, burning wood, bad, bad for lungs, dropping down trees, which isn't great either.

And of course, you're then releasing that carbon dioxide into the air. So generally, that sort of cooking style is isn't great all around. And so what we've done is our carbon offsets go towards investing in creating, Bio methane cooking stoves. So these local villages, they will have cattle, cattle will be creating, manure, manure then creates biogas, which goes into these cooking stoves.

So you're creating that green gas from the money that we invest. So you can you can see the end to end process the investment, green gas going on the grid, and then all the other great benefits as well around around the household, you know, lifestyles within those communities. Yeah. Now I think it's a really good example of kind of actually being to see the carbon impact end to end, you can say, yep, this is this is genuinely reducing the carbon emissions, and that kind of ticks the box.

There we go. One carbon emission agreed. Okay. Well, brilliant. So, Tom, thank you for coming on today.

You've been a fantastic guest. You've talked us through everything to do with the riggo, space, as well as, kind of, how supply and behind the meter generation starting to decarbonize our supply. Everyone who's listened to this and thought this great episode. We'd love to hear more.

Do hit like and subscribe on these so other people can find us as well as stay in tune for the next episode. Tom, you've been a fantastic guest. Thank you for coming on. Thank you for having me.

It's been an absolute pleasure.