Bringing decentralized energy together with Caroline Bragg (Interim CEO @ the ADE)

- The energy bill covers huge amounts in terms of from hydrogen licensing for example, carbon capture and usage and storage, heat decarbonisation, all the way to the governance that we're going to be talking about and some of the other areas. The way that I see it I guess is, for a kind of battery storage and flexibility side of things, it's almost like the great ordering.

You imagine, for example, if we were used to be in kind of RPGs, like cyberpunk Dungeons-and-Dragons-type world, where we've got open world, like not a lot of--

some rules but mostly just get on and do some stuff. I think what you can see the Energy Act in some ways is doing is going, right, no, we're going to move now to more board game-based play whether a fixed rules, slightly more prescription around things and a slightly more centralizing way and framework of creating those rules.

- Hello, everybody. Welcome back for another installment of Transmission. Today's conversation is with Caroline Bragg, interim CEO at the ADE or the Association for Decentralized Energy. Over the conversation, Quentin and Caroline look at the Energy Act 2023 and what the future holds for decentralized assets. If there's a topic you'd like to hear discussed on Transmission, please let us in the comments. We'd love to hear from you and hit subscribe so you never miss an episode. Let's jump in.

[MUSIC PLAYING]

- Hello, Caroline. Welcome to the podcast.

- Hi. Thanks very much.

- The first thing to say is I first met you back in 2015 or '16, something to do with the house of Parliament, I think. And you wouldn't have noticed me. I was just I was working at Centrica at the time. I was sitting at the back of the room, and you were presenting something about the targeted charge review when that was just an idea.

And they were going to take Triads away, and it was a disaster. And there was thinking about residual costs and values and--

- Glint and Frances Warburton's eye.

- Exactly. Yeah. So that's the first time we met, but I don't think you' remember me. But it really is delightful to have you on the podcast. Thanks for joining us.

- No. Thanks so much for the invite. Yeah I think that was my first month at the ADE, so several years ago now.

- I mean, a lot has happened since then. They've actually got the targeted charter review done. Triads have almost gone away.

- Yeah, I mean, we've still got Mods, haven't we? So it's still going a little bit, little bit.

- I remember there was an argument about whether--

there was lots of comparisons to postage stamps at the time, like charges should be like postage stamps. You know how postage stamps work? Like a totally archaic way of thinking, but anyway. Caroline, do you want to explain for our listeners who you are and what you've been doing in the last 10 years or so?

- Well, thanks so much for having me. Yeah, it's great to be on this. So yeah, so I'm Caroline Bragg. I lead an organization called the Association for Decentralized Energy. And, basically, what we're doing is a whole load of flexibility, which goes across everything. So we look at demand side response but also how we just make the system more energy efficient and smarter, whether that's looking at heat, decarbonisation, energy efficiency or industrial energy.

- And the ADE, what bucket is this in is? It like a lobbying group, industry group, quango? Do we still have quangos anymore? They're kind of out of vogue, were they? They haven't killed some of those. Where does it sit in the types of bodies and groups?

- Yeah. Sure, sure. Yeah. So we're a trade association, so we work with government, basically, on behalf of a whole load of companies working in the energy sector, so names that you might well know, so people like Flexitricity, obviously, Octopus, big suppliers like E.ON, Centrica, also members, and a whole load of others. I'm working basically with those guys try to get a bit of progress with Ofgem, DESNEZ, ESO where we can.

- And we've got a lot to talk about today about all of those.

DESNEZ, is that the correct pronunciation now? DESNEZ. We've been arguing internally about what it is. DESNEZ seems to seems to have won.

- Yeah. I mean I think we've slightly past the it shall not be acronymed period. And I think they have been acronymed upon them, so yeah, DESNEZ.

- "daz-noo-za" was a favorite idea that we had our side, but it didn't take off. And yeah, so what's the ADE here--

What's the mission? What's the vision? And how many people are involved? And where are you guys--

Well, you're sat right now in London, I imagine.

- Yeah, yeah.

- All of those things.

- Yeah. I know. So I mean we're quite a little organization. We've got about 20 people, but I love it.

I think small organizations are a nice place to be. And we're so close. We're just on Westminster. So before the Energy Department moved, we actually--

if you imagine, there's little futurama tubes to move about in. We could basically have done that from us to the sixth floor of DESNEZ. Now, I have to walk a little bit, which is annoying.

But I guess, yeah. No the, big thing that ADE is really trying to do, I think, we all know that we're in an energy system that is painfully inefficient and really back in the 20th century still for many parts of what we do. And so, all of the people who are part of the ADE, A, believe that we could do things in a more efficient way. And that's both in terms of primary energy as well as final demand. And we know that we could do things in a much, much smarter way.

So those are the two things that we're really trying to drive at. What that means in practice really is we look at demand-side response in particular, you know, whether that's your kind of solar and domestic scale storage right at the small end, whether that's, for example, the move towards battery UPS' in industrial applications, how you use industrial use for flexibility more generally and then all the way across as well.

So I think one of the things that's most fascinating in my job at the minute is that we work in lots of different sectors, but all of them are now starting to think we have an energy system that is moving towards electrification and flexibility and how do I get--

how do I become part of that? How do I contribute to it?

For example, heat network members who perhaps, previously at the sector, has all been about large structures based on, say for example, gas boilers who are now thinking, right, I'm going to use a whole load of unused heat from data centers, for example, that are using a lot of energy. Then I'm going to flex that, and I'm going to contribute to how we make an electricity system more resilient. Which I think is fascinating. It's really cool. So that's what we're all about anyway.

- And how long have you been at the ADE?

- So I think six or seven years now. I think something like that.

- OK. So part of the furniture.

- Yeah. Yeah. [CHUCKLES]

I would say I loved part of the furniture, but I hope, but yeah.

- No, no, no, no. I mean mid-century furniture is back in vogue now, so you'd be there for 50, 60 years. It'll be cool.

- Well, we shall see. And so, the Association of Decentralized Energy how does it--

we're battery geeks, right? Moto energy is all about battery stuff. And so, a lot of the things I'm going to ask you about today will be through the lens of battery things. So what's going on within the ADE and battery energy storage systems?

How has the ADE changed since this new technology came along? And what are you guys working on or thinking about with how batteries can play a role in the new energy system?

- Yeah.

I mean compared to perhaps many of the conversations you have on Modo, we have quite a specific perspective I guess I would say.

So we're really focused on demand-side response and flexibility that's quite kind of local to users so less maybe grid scale merchant, merchant batteries. But I think it's been really interesting over the course that I've worked at the ADE how demand-side response is changing. And I think it speaks to a lot of the things that you're saying.

So when we first started, because of the background that the ADE has and how we kind of developed the work that we do on flexibility, it was a lot around the flexibility whether that was kind of on-site generation like, for example, CHP and more general--

- So in industrial and commercial.

- Industrial and commercial, yeah.

- We always try and stop the--

prevent acronyms as best we can on the podcast.

- No, I know.

- So Yeah. So--

- We do too.

- --industrial--

- We do too. We have something at the ADE called the NA jar, which is the no acronym rule jar. Where there is significant beer penalties, and I am always falling foul of it. But that's OK.

- You're always are bound for that one.

- Exactly. I contribute beer to the general fund.

- So industrial and commercial batteries. we're talking about smaller stuff. It still can be big but not grid-scale batteries, behind the meter batteries and more focused on how they support energy users and communities--

- Exactly.

- --rather than how do they make as much money in the merchant markets. Is that right?

- Exactly. Yeah, exactly, exactly. And particularly, where they're being kind of combined, for example, or with solar, for example, or other kind of low-carbon technologies. And then also increasingly, obviously, we're doing loads of work on EV chargers.

- Lots to talk about with EV chargers, but we'll come to that in a minute. The big thing we want to talk to you about is the Energy Act 2023. This is a big deal, and I want to ask--

start quite basic about what this thing is and why it's significant, and then drill into some of the bits of detail if that's OK. So could you just give a quick overview about what is the Energy Act 2023?

- Yeah, sure. So it is a big deal. I think it's the first major piece of energy legislation that we've had for probably about 10 years now since some of the legislation that brought in, for example, the contracts for difference. I guess, the way that I see it, I mean the energy bill covers huge amounts in terms of from hydrogen licensing, for example, carbon capture and usage and storage, heat decarbonisation, all the way to the governance that we're going to be talking about and some of the other areas. The way that I see it, I guess, is, for a kind of battery storage and flexibility side of things, it's almost the kind of great ordering that we are now coming to.

So, if I could take maybe an analogy, I know it's--

well, I guess I think all your audience are probably quite big nerds, so I thought, right, I'll use a nerdy example. But if you imagine, for example, if we were used to be in kind of RPGs, like cyberpunk Dungeons and Dragons-type world, right, where we've got open world like not a lot of, some rules but mostly just get on and do some stuff, I think what you can see the Energy Act in some ways is doing is going, right, no, we're going to move now to more boardgame-based play, whether a kind of fixed rules, slightly more prescription around things, and a slightly more centralizing way and framework of creating those rules.

- How boring?

- I know, right? [LAUGHS]

- No, no, no. that's the first D&D reference on this podcast in almost 100 episodes. And--

- I'm glad.

- --the first of many, I hope. can you just explain why legislation is significant firstly? surely, we're passing laws all the time about energy, no?

- Not really. So this is primary legislation. So the real significance about this is that it gives the Secretary of State powers to then enact the much more detailed stuff that is being worked up at the minute, that will come through something called secondary legislation, which is also called statutory instruments. That's really important because some of the stuff that we are talking about here we don't have the powers to do at the minute. So that includes, for example, the role that the future system operator will play, the changes to code governance that I'm sure we might get into.

- OK. I once had it explained to me by a government bod, that it's like Christmas trees. And primary legislation is the middle of the Christmas tree. Hanging a Christmas tree once a year or--

it's a long time between Christmas trees.

- But Once a decade, yeah.

- Once a decade. But once you got the legislation, you can hang all the ball balls it. That's how it's explained to me. so this is really, really significant because this is the grounding for lots of other decisions and changes that can come in the next however many years, decade or so.

- Yeah, exactly.

- Energy Act 2023. And so 2023 makes it sound like it's in the past. Is that Right it's been passed?

- It has been passed, yes. There was quite a lot of to-ing and fro-ing just at the very end, but they have managed to get it passed, which it took about a year.

So in the general course of things not, too shabby.

But now, all of the fun starts because, obviously, when government writes primary legislation, it has a relatively good idea about what the detail that they want to do is going to be that flows from that primary legislation. But there's still huge amounts of work in order to properly fill that out.

So the primary legislation itself is extremely high level. It's simply is giving the Secretary of State powers to then go do something. And, as I said, all of the secondary legislation is where the fun is really at.

- And what does it mean for decentralized energy or flexibility or batteries or DSR? What the big--

I don't want to say headlines because it sounds clickbaity, but what are the big news stories that are going to come along now?

- So the first thing, so a little bit as I was saying about in terms of moving to a slightly more board game world. Some of the big areas that the energy bill has is around governance. So we have the future system operator, ah, I feel slightly boringly named, the NESO now. I think, in a sector that is such a beautiful creative source of acronyms.

They could have chosen something slightly better, but OK, fine. So we've got the electricity [INAUDIBLE]

system operator.

- Also, now, we're in the realm of acronyms without vowels between acronyms, which is quite--

it's like gymnastics for your--

[LAUGHS]

- I know.

- --your whole face, basically.

- I know I know. I want to go back, you see--

do you remember when we had the [? AGEX? ?]

I don't know whether you know this.

- Yeah.

- It's like that's an acronym within an acronym. This is the kind of heights that we should be aspiring to--

- The glory days,

- Exactly.

Sorry.

so basically, we've got a whole load of governance, right? So we've got the future system operator, the NESO, as is now called.

Now, obviously, there's the kind of immediate stuff that will happen there, which is bringing the gas system operator into the electricity system operator, et cetera. That's all fine. But the stuff I think that's more important to us is that that will be a strategic role sat at the center of the energy system, that will probably have quite a lot more influence. So I think that's one really to watch. Obviously, we all know that.

I think the second one is it will massively change code governance.

I have to personally say, I think, for the better. I think in taking a slightly more strategic view of what we're all trying to do here particularly because we know how much change there is and how long MODS have taken to really get through. But, obviously, there's so much to work out in terms of exactly how is that going to work. Is Ofgem going to be able to provide a more strategic view?

- This is things like grid code modifications. What do you see? Like GC number, number, number, or other code MODS, that you have to do a consultation and then more consultation and then, yeah, [INAUDIBLE]

- But even before you get to the consultation, it's just like days in working groups, isn't it? To even get to that point.

- Working groups. Lots of biscuits get eaten, thankfully. That's the only upside. But it takes years and years and years to get this stuff through. And so, does that mean we've got a faster path to get modifications now?

- Well, that's certainly the idea. So there will be a more strategic role for Ofgem, basically, to say, guys, this is the direction we want MODS to go. And then, the way that, for example, Elexon works right now is in a more sort of--

it facilitates discussion, but it's much more about industry bringing in then pushing forward the changes it wants. That's going to change so that the code managers have a more directive role that's responding to what Ofgem needs but working with industry and, I guess, in more consultative way than we're sort of just providing you the platform to argue.

So we shall see. I mean the process right now is slow.

and, certainly, I think our view would be that, whilst it's really useful, industry being able to push forward what it really needs.

I think, in the past certainly we feel it has tended to favor incumbents just because of the amount of resource that it needs to get to all of these meetings, to put the time in, but we'll see. I don't know. I think we have to try it out, see how it goes, and go from there on that one.

And then, obviously, the big one is we've got regulation coming for the DSR sector including, for example, domestic level batteries and EV chargers.

- So regulation coming Forward, So this is demand-side response. This is behind the meter stuff. This is the industrial and commercial folks who are saving energy or making money by accessing power markets and all that stuff. So let's kind of delve into that a little bit. What does that mean for an industrial and commercial customer? Say, I've got a factory that makes Dungeons and Dragons costumes.

And we're a couple of megawatts. We make a lot of costumes. And we run 24/7 in a Renaissance in D&D in the UK.

So, in that world, what are the big changes that's going to happen to me if I'm considering demand-side response or installing a battery or some electric vehicle chargers for my employees?

- So, I guess, some of the main things that you will see is basically the way in which the partners you may well be working with are operating in order to do that. So people who are looking to provide DSR going forward will be under more regulation than they are today through Ofgem. And that will cover a number of things. So, on the more sort of non-domestic side, it might be particularly around, for example, the way that we think about cybersecurity and system security more generally. So there might be things, for example, around the way in which you look at your IT systems.

And particularly then, if you have very large amounts of load under your control, you might be subject to more regulations than you have been previously because people will start to say, well, actually, if you've got say more than 300 megawatts under your control, that's starting to be quite significant to the broader system. When we look at some of the--

- That's aggregators that we're thinking about there.

- Yeah, exactly. You mentioned Flexitricity earlier, big demand side response portfolios. They're structurally significant now to the electricity system, and therefore, there's some regulation coming to make sure that--

Are they happy about that?

- Oh, Yeah. I think they're probably.

- They're OK with it?

- Yeah, yeah.

well, the devil is in the detail. I think if the idea of regulation industry of supportive of is just really about how we get it right.

we've got kind of standards at the minute, for example. So, if you look at something called PAS 1878, they're just like MODS. PAS 1878, 1879 was sort of a first go at particularly looking at, for example, these are provision on a more local domestic scale. And then things like, for example, EV chargers. So we've had that for a little bit. But the process sometimes with that has been quite difficult in terms of getting the detail right, making sure it actually fits with what's going on in the real world and making sure that it's linking with the other pieces of work that are going on at the minute in policy on this.

- So regulation is coming to watch this space. I'm going to ask you a bit of a difficult question now, which is, so when the ADE first started, when I was first getting involved in flexibility in 2013, '14 it became, in my world--

I know it's been going on since the noughties, but in my world it became a big thing.

And in the twenty-teens, you had lots of aggregators. And it was a booming market, but it still felt on the fringes. And so, a lot of the positioning and discussion between aggregators and with National Grid and with government, it was kind of fighting to get us in the door. Take us seriously. We may be only a few megawatts here and a few megawatts there, but trust us this is going to be a big thing.

There's something quite nice about being the underdog.

The question is, now, demand side response and flexibility is such a big thing. You look at businesses like Piccolo and some of the competitions they have, this is serious hundreds of megawatts of competitions now.

It's a bit of a long-winded question coming. But the setup is important.

has how has this all changed now smaller decentralized assets or players are becoming bigger players? Are you seeing competing interests? And how is the ADE managing that? Because there must be some, right?

- No, no, no. we're a very happy family.

No, I mean, I guess one of the things I think that is really, really interesting at the minute, I wouldn't say that there's--

it's not like there's disagreements, but there's almost like we're sort of--

we've talked about this stuff for so long, and now we're getting to the proper meaty bit of figuring this stuff out. So, if you look, for example, I find P415 that's just been finalized and approved by Ofgem, which is around wider access to the wholesale market, really interesting, so I'm sure loads of people who are listening to this know this.

But, obviously, we did wider access to the balancing mechanism quite a few years ago, that established a role called the Virtual Lead Party which is effectively a way of specialist flexibility provision working in that market without needing to become a supplier provide bulk electricity and do all of the things that being a supplier means.

Because there are two quite different roles. Now, P415 has established effectively a similar route into the wholesale market, but I think that's fine. Everyone kind of is supportive of that, and that's kind of the high level of that. But

The detail is what's really interesting with P415, which is how you start to think much more clearly about the different roles between an aggregator and a supplier with lots of different assets especially as those aggregator roles and their position in the market gets bigger and bigger and bigger. So we took a view in P415 that was put forward to Ofgem, whereby, effectively, there'll be some form of socialization to make sure that kind of people are made whole between the two.

But I think that it prompts a very fundamental question, which is what is the right relationship in terms of settlement, in terms of where the money actually goes in this relationship between aggregators and suppliers as we move forward and flexibility becomes much more important.

- Yeah.

well, firstly, shout out to getting that through. It's an incredible improvement for the market, I think personally. I'm a big fan of it. We had Alastair from Felxitricity on a load of episodes back, and we had a discussion about how, for aggregators to have supply--

to have a supply license is a serious bit of responsibility to the world, to the market, to your shareholders. And so your board meetings as a supplier could end up--

you can spend 3/4 of your board meetings as an aggregator if you have a supply license, talking about hedging risk, right?

And that's kind of not what an aggregator should be doing. An aggregator should be thinking about technology and innovation and all the other stuff.

I'm not going to say should. "Should" is a strong word. But aggregators have got a lot of potential in that world. And if your board meetings are spent managing risk to do with your supply license, that's the wrong way around. So the devil is in the detail.

- I mean, because, obviously, you have suppliers who are very innovative as well. I think we have to recognize that as well. I think it's just they are two very different roles. I think is the really important thing, and what you want is people who are real specialists in flexibility to have a route into the market to do just that because it will make things more efficient. It will deepen kind of the markets, greater competition. But how we sort tease that out so that the suppliers are agnostic to having flex providers in their area. Flex providers can do their thing in a way that is fair creates a level playing field.

I think we've talked about this at a kind of principle level for a long, long time. But P415 and some of the other things that we might come and see from it, including say adjustments to how we do wider access to the balancing mechanism are they're getting to the real meat of what that actually means.

- Controversial topic that seems to be--

everyone's talking about this at the moment. So we all know about REMA and all the things that may or may not be. Locational pricing, what's the ADE's stance on locational pricing?

- So, I guess, this one is a really tricky one. I think, where we are at is, in principle, we see loads and loads of benefits from locational marginal pricing with respect to the spiky signals that we need, a move towards markets that are truly valuing flexibility. However, I think we also, in a sort of more practical sense, we see a lot of risks with it. So in particular, for example, how you would resolve how it would work politically in terms of which consumers pay more, pay less, how that works in terms of, obviously, Scottish consumers.

Also, I think part of the nervousness that we have had is it feels an enormous step up in terms of IT infrastructure and the ESO's role than we have been to date.

I think I mean the ESO does a great job. It's under a huge amounts of pressure, but we all know and they would know their IT legacy systems are a real pain for the industry. And they haven't been able to move quick enough, I don't think, in that. So putting huge amounts of dependence upon an FSO that can truly deliver a very kind of sophisticated set of IT architectures to deliver this has always felt a bit nerve-wracking for us.

I guess with that, I think, the other thing to say I think is we certainly think that there will be some way in which we need stronger locational signals. It's just how we get to a kind of pragmatic way of doing that. And finally, that's the only thing we would say and that is there's been so much--

REMA, in some respects, Has felt like it has been are you LMP or national, you know.

- Yeah. Yeah, yeah, yeah.

- Which is fine. It is the kind of core--

- [INAUDIBLE]

out that way.

- It's the core of REMA. I get that. I get that. And we've been part of that debate. I think the other thing that we've been trying to do is also think, OK, we know that there's also huge amounts that we want to improve in terms of operations and how the system actually works. So when we look at, for example, the balancing mechanism, there's so many ways in which we could make that friendlier to small-scale assets and thinking more clearly about that as well. I think we've been trying to add to the debate.

- That's interesting. It's good to get your thoughts on that. I guess, if you're representing so many--

you're representing so many different players in industry ranging from top three, Centrica one of the biggest suppliers in the country with a generation portfolio, a fully diversified portfolio ranging from generation supply even oil and gas down to smaller players, and it's a tricky one.

I say it's a lot. I'm just such a big fan of location market pricing.

It feels like the argument you have, which is can we build this thing?

it's a massively ambitious IT project to get this thing over the line. Can we do this? Do we have a history of doing that? I just think it's such a shame if that's what gets in the way. But then, I would say that because I work in software. I work in a software business, and I think everything is possible with software.

All right. On to the last two questions. First one, Caroline, what do you want to plug?

- [CHUCKLES]

I guess, I would say--

so we were talking about REMA, so let's talk about it. I think what we really, really need out of REMA is a way in which we are not heading for a system that is just pure CapEx, you know, blank sheet. Let's just build more CapEx, more CapEx, more CapEx. I think it's really, really important that, wherever, we get to on LMP, wherever we get to on broader flexibility markets, we come out of REMA with this quite bold set of frameworks that will deliver huge amounts of flexibility.

We know that flexibility is not keeping pace at the minute with where, for example, renewable generation is right now or wants to be.

So, I think that's really important to us to start with. I think the second thing to say is that we've seen loads and loads of work on EV charging and where we get to on that to try to, I guess, reduce some of the uncertainty we've got at the minute in terms of how the legislation all fits together. So I guess, if people are interested in that, like it is all hands to the pump at the minute to try to get some progress on that one.

- OK. You heard it here first. And, now, everybody's favorite question. What's your contrarian view? What do you believe that maybe not everybody else believes and we need to hear about it?

- OK. So I chose one from the energy bill because that's what we're--

Energy Act, sorry. That's what we're chatting about. So it's a bit niche. It sounds a bit niche, but bear with me.

so there is a tiny little provision in the Energy Act called cross-sectoral revenue flows, which sounds super niche and quite dull, right? Yes. But wait for it. So, now, the very practical, very short term impact of that is basically to set the FSO up, the Future System Operator, so that they can levy both electricity and network charges to do their business.

Right?

- OK. I've got to break this down so just to get the words right because I'm already lost. cross-sectoral revenue flow, so revenue flows across different sectors.

- Exactly, right?

- OK.

- It sounds super neat and boring, but I'm telling you why it's not.

- No, no. I'm not saying it's boring. I'm just trying to get my head around it. And then it's to do with the National Grid, ESO becoming the future system operator.

- Exactly. So that's the immediate impact it will have. So, at the minute, what we have is we have--

well, before the Energy Act--

we had an Electricity Act that says, right, you can only use the money that we get from electricity networks for electricity customers. and then we had a Gas Act that said, you can only use the money that we get from gas networks for gas customers.

- Ah, here we go.

- [INAUDIBLE]

OK. Now, if you're the future system operator, that makes no sense because [INAUDIBLE]

you're having a conversation over here versus here. what are you going to put it towards? So there's a very [INAUDIBLE]--

- Because the future system operator is going to look after both electricty--

- They're going to look after both.

- --and gas. Whereas, before, they've been split.

- Exactly. So that's like the immediate thing which, in some ways, is very boring, blah, blah, blah, don't care.

- It reminds me a bit of when Gordon Brown, they used to get national insurance. income tax went to the tax thing, and national insurance went to the NHS. And then Gordon Brown said, no, we'll just put it all in one pot. It reminds me a bit like that.

- Exactly. Right? But I think the fascinating thing about this, that I think there are some people kind of looking at this a little bit more, but the potential for this idea of actually you can now move money around the system in a way that you never could before is actually huge. So, if you think about it in terms of, for example, we have never had the ability where, if going to electrify a new town is a much more efficient way of doing things than having the gas network there, for example, how do you know? how do you figure all of that out?

- If. [LAUGHS]

- If, yeah, quite. Whereas, now, these provisions, I feel like it's like the first meaningful step towards actually we should be having a proper chat about how all of that works. And if the electricity system is the better way to go, then actually money should flow to the electricity networks in a way that has been physically illegal until the Energy Act. So I think I really feel like, if we can if we can build on that as an idea, there's something really nice about how we could make a much more efficient electricity system out the back of it.

- Wow. That is absolutely fascinating. So now, it's all going to go in the same pot. All the money's going to smush around together. Well, we have the power for it all to smush about.

- It has the power. And then, hopefully, we can move all of that bigger lump of capital into the most efficient way to get the right outcomes.

- Yeah, yeah.

- Very interesting. So what happens next on that? that's in the Energy Act, right, 2023?

- It's in the Energy Act. At the minute, it's only being used for the FSO, and then there's a few people trying to figure out how it can be used. For example, in terms of--

I'll get super nichey. But there's things around the way in which different networks can start to compare the costs of their own approaches. So they've started a bit of work. It's called like the whole system CBA, cost benefit analysis, for example, and some of the other work around that.

So that would be the next bit to start.

But then you start thinking, right, OK. If we can do it for those lot, what about heat networks as well? Or how do we think about it?

- Oh, yeah.

- Like much more general kind of thing.

- The genie's out the bottle now. You can apply it on all sorts of things. Great.

All right. Well, that's going to be running around my brain all day. What else can we do with all this smushing all the money around?

So, Caroline, I want to say a massive thank you for this. It really was a pleasure. We covered lots of interesting stuff there.

We're going to put some links to the show notes so you can read up more about the stuff and the ADEs. So, if you're listening to Caroline, you want to learn more about the ADE or get involved, then we'll put links and share an email address. Yeah. Thanks for coming on, real pleasure, and see you next time.

- Thank you so much.

[MUSIC PLAYING]

PLAYING]