What P415 means for flexibility with Paul Troughton (Senior Director of Regulatory Affairs @ Enel X)

- The economic and business case for doing demand response is blindingly obvious. It's a much lower cost way of providing sometimes a higher-quality service than a generator could. P415 is a modification that I proposed because somebody had to, and it was to fill in a gap in the access of independent aggregators to the different markets in GB. Every customer has a relationship with an energy supplier, where they buy their energy from them. They're billed for everything.

In principle, that supplier should have every incentive to be really intelligent about using all possible flexibility that customer might have. In practice, that doesn't really happen. The business of being a supplier is quite different to the business of specializing in flexibility. You get lots of activity in terms of flexibility when you allow someone other than the supplier to do it.

NARRATOR: The introduction of balancing settlement code modification P415 will open up the wholesale markets to demand sports participants, allowing flexible consumers to gain value from their actions via third party if their licensed supplier doesn't provide the service.

In today's episode, Paul Troughton, Senior Director of Regulatory Affairs at Enel X joins Ed Porter to discuss the code change that he put forward that would allow increased consumer participation. If you're enjoying the podcast, please hit Subscribe so you never miss an episode and give us a rating wherever you listen. Let's jump in.

- Hello, and welcome to another episode of transmission. Today, I'm joined by Paul from Enel X. Welcome, Paul.

- Thank you for having me.

- And as ever, we'd like to start off with just a little bit of your background. So who are you? What do you do for Enel X and perhaps what have you done in the energy space in the past?

- I'm an engineer by background. I've been doing things to do with demand response since 2007.

I started in a demand response aggregator startup in Melbourne, in Australia, possibly one of the first and they're building the minimum viable virtual power plant. So very hands on in a very small company. And that company was eventually acquired by [INAUDIBLE], which was a large American demand response aggregator, and then that was acquired by the Enel group to make part of Enel X.

So now the world's largest demand response aggregator with a little bit over--

a little bit under 10 gigawatts of dispatchable demand response from commercial industrial customers in 16 countries around the world, I think. So that's what the business does. It's part of the Italian Enel group, which is a multinational utility. It's got 65 gigawatts of renewable generation.

It's got distribution businesses and so on.

But Enel X is the customer focused part. So it's got the demand response and various other customer-focused things, not classic utility things. In the UK, we're mostly an aggregator of commercial industrial demand response. My job--

I have two hats, one of which is in UK and Ireland doing regulatory affairs. So that's looking at market design issues and rule changes and trying to make things work better or stop things being made worse. My other hat is heading our global flexibility policy center, which is a very grand name for two people, but essentially we're supporting our colleagues in 19 countries who have relationships with policy makers and system operators. But maybe aren't fully across all of the issues around flexibility.

We're trying to take lessons learned in one country and apply them in others, which is really interesting, if somewhat confusing. Well--

- Yeah. OK, no, super interesting. And I think a lot of people listening to this always like to hone in on why something started and the kind of story behind where did it first--

where did it kind of first take place. And so I like that piece around early--

early in the 2000 you were in Melbourne looking at this. Why do you think that the kind of Australian market was ahead of others looking at this and why do you think Melbourne was that hotspot?

- So it had been a liberalized market for quite a few years. Then the national electricity market in Australia was set up in, I think, 1997. It's being a very transparent real-time market, means that it's very easy to understand. Well, easy is probably overstating it, but you can figure out what's going on and you can figure out the value of flexibility.

The other thing is just the fundamental characteristics of that power system.

Even before they added lots of renewables, it was a very peaky power system driven by hot weather spikes, basically. So there were some periods in which there was huge amounts of value from being able to move demand around, either system value or market value. The company started with an emergency program from the system operator for a particularly hot summer. And then we tried to figure out, well, we've done that. What other things can we do, which are more sustainable? And that's how we got into the capacity market in Western Australia and providing fast-frequency response, first of all in New Zealand, then in Australia.

And in all those cases, the economic and business case for doing demand response is blindingly obvious, that it's a much lower cost way of providing sometimes a higher-quality service than a generator could. But the challenge is that the market's been set up around a few centralized power stations, not around these aggregations of small resources. So there's a lot of work need to do to convince people to make the changes that are needed so that you can get access to the money that would otherwise be going to generators.

- And there's so much actually in there around a blueprint for bringing in more flexibility. And I think the things that I really like. So I really like that point around transparency of pricing. So once you have that availability, you can get entrepreneurial spirits kind of coming in and looking at it and saying, do you want to do this?

You also mentioned kind of there being system stress events and actually system stress events almost make people think, OK, well, how can we do this differently? And we kind of saw it in the UK in COVID times where we wanted to turn down demand in certain occasions because we had excess solar coming online. And you see grids thinking about how to do things in a more entrepreneurial or lower cost way. So really like that example of Australia. But we're not here to talk about Australia, even though we probably could and it would be fun.

We're here to talk about P415. So what is P415?

- So P415 is a proposal to change the balancing and settlement code. They are sequentially numbered. So it's the 415th one that's happened since it was set up. No significance to the numbers, really. The balancing of settlement code is the set of rules by which all of the participants in the electricity market play basically.

So it decides who's responsible for the volumes measured by each meter. And that's how you get paid for generation. You pay for the energy you're consuming. It's how the system operator can tell you to do things to help improve the balance. It's how you get punished for being out of balance. It gives you the incentives to do your wholesale market trades. That's the heart of the system, really.

P415 is a modification that I proposed because somebody had to and it was to fill in a gap in the access of independent aggregators to the different markets in GB. I should probably talk about independent aggregators. So every customer has a relationship with an energy supplier, where they buy their energy from them. They're billed for everything.

In principle, that supplier should have every incentive to be really intelligent about using all possible flexibility that customer might have in order to supply them at lower cost and more efficiently to help them in with their sort of cutthroat competition between suppliers. In practice, that doesn't really happen.

The competition perhaps is not quite that cutthroat. Or another way of thinking about it is that the business of being a supplier is quite different to the business of specializing in flexibility. And there's not many examples of businesses that do both well.

But the result of this is that it's--

yes, looking at history, you get lots of activity in terms of flexibility when you allow someone other than the supplier to do it. So the customer can stick with their existing supplier and get someone else to manage their flexibility.

Now, GB's been really good for that in terms of having the capacity market and various ancillary services markets, where you could work with whoever you wanted to get some value for your flexibility.

The missing piece was wholesale market access. So before P415, if you wanted to get some value for your flexibility, some wholesale market value, then your only options were to work with your supplier if they were sufficiently enlightened to do that or to say to your supplier, I just want to buy everything at wholesale prices, charge me the day-ahead price for everything, and then I'll manage things myself. That would work. But it requires the customer to be quite risk tolerant.

And the fundamental thing about demand side flexibility is that customers are not in business to do demand side flexibility. They want an easy life doing something which potentially exposes them to lots of risks. And certainly, lots of complexity is not something that many people are going to volunteer for.

So what P415 does is it allows independent aggregators, which are called virtual trading parties in that particular role to work with customers to get value for their flexibility from the wholesale market without any interaction with their normal relationship with their supplier.

- So if I'm consumer and I have flexibility on my site, I might both be able to have a relationship with my existing supplier who might go about their business of being a very good supplier, and I might also have a relationship with some form of aggregator who would then be making the most of the flexibility that I have on my site. And maybe lots of terms there for people who may not be so in the detail of this.

So perhaps could we make it--

could we make it real? Could we say, well, what is an example customer look like for you? What type of--

when we talk about flexibility, what do we mean?

- There are many possibilities. So we focus on larger commercial and industrial customers. So we don't often go below a megawatt, but there's no--

that's not the only viable business. There are certainly things you can do with domestic EV chargers, heat pumps behind the meter batteries, but behind the meter guess is a key phrase. This is not about a front of meter asset, something that's built specifically for energy market purposes.

Battery would be a typical one. This is about finding things that the customer has that they're using to consume energy, that they can do something slightly different with, which may have a cost, but there's more value to be had to justify that cost.

To give an example, yesterday I was at a site of a customer of ours in Ireland. They have an air separation unit that makes lots of liquid nitrogen, oxygen, argon, various other things, and they provide flexibility for us in a couple of different ways there, one of which is by--

in Ireland's capacity market, which is essentially an energy market. They're tied together there. They will shut down for a couple of hours if we ask them to. That's a fairly manual process.

They do a sort of gentle shutdown, takes a few minutes to do. They also provide frequency response, which is we will shut off, I think, 5 megawatts of compressor load within a couple of seconds and keep that up for 20 minutes.

So that's an industrial process that exists. When we interrupt them, they incur some costs in doing that, but they're willing to do so if we're paying them enough. And if you look at it from the economics of the country, it's worthwhile doing that because there is more value from using the power that's available for other things than for their particular use at that particular time.

- Yeah, yeah. It makes--

it makes total sense. So if you can flex some of that demand, then you don't have to build that kind of final, perhaps battery or perhaps transmission line at quite large costs that you don't necessarily use all year round. You can just use a little bit of flexibility from the demand side to be able to reduce the overall system cost.

And I think just worth coming back to in front of the meter and behind the meter piece because I think that does confuse a lot of people--

when someone says something in front of a meter, that doesn't mean that it hasn't got a meter. It means that there's one meter for the particular asset. And so there's almost like a one-to-one relationship. But it--

it is still behind a meter. But when people talk about behind the meter, they mean there is a meter and then there's a series of things that sit behind that meter and some of those might be sub metered, but everything sits behind a meter. It's just how the industry talks about in front of the meter and behind the meter.

- That's exactly right. There tend to be lots of meters everywhere. The key point about behind the meter is that you're behind some suppliers meter. So there's someone else who's responsible for the normal supply to that site, which is not the case when you just build a grid-scale battery. And that's what makes things a little bit challenging in terms of getting a settlement. You have to make sure that the supplier isn't getting adversely affected by what you're doing.

A kind of naive way of approaching it is saying, well, maybe you should negotiate with that supplier. So you can square things up. But in practice, there's competitive tension between suppliers and aggregators. So that basically never works. And in fact, the European rules say you cannot require an agreement between these parties, which was not the initial approach, but they've added there because that is the approach that works.

- OK. And let's come back to how does the metering side work and how does the relationship with suppliers work. Let's just make sure that we've got each of the key players identified in this. So we have the supplier, they have the meter, and they have been the historic provider of--

and in the future they will also be the provider of energy to that site. We have the consumer themselves with the flexibility that they have. And then this other party.

And you mentioned kind of a virtual trading party, but we also hear sort of a virtual lead party or a VLP. What's the difference between those two things?

- So both of those are independent aggregators. It's just the balancing and settlement code loves to have unique terminology. So the virtual lead party is a concept that was brought in at the beginning of the wider access to the balancing mechanism process, and that is someone who is also responsible for what happens in a particular--

going through a particular meter aside from the supplier.

So in balancing settlement code terms, you--

a particular meter can be a member of a primary balancing mechanism unit that's a suppliers unit and also a secondary balancing mechanism unit. And that is the one which the virtual lead party controls. So this is about separating normal supply from flexibility.

ED PORTER: Yes.

- And essentially you--

most of the time, it's all down to the supplier and the primary balancing mechanism unit. Just thinking of the balancing mechanism, when you have a dispatch from the system operator in the balancing mechanism at that point for that period, the virtual lead party becomes responsible. So the secondary BMU becomes responsible for how the consumption on that site deviates from what they otherwise would have done.

- Yes, OK.

- And I can see you going to your next question.

- Yeah. So let's just pause there for a second because I know that when we put out these videos, and particularly when we come into something that's a little bit of--

has a lot of new phrases and terminology like P1, P4 and P5 that I think sometimes it can be really difficult to actually really work out who the people are.

So let's just turn a few of those names into your example for the manufacturing facility with, say, the gas compressors. And so you have your supplier who is typically providing energy to that site, and that is the primary. And then you have the ability to flex up and down that particular compressor, and that would be managed by the virtual lead party. And really when that happens is when there's a need from the system for that to do something effectively, that's when the virtual lead party can make a decision. And then because that individual asset gets metered, how that moves up or down goes into their pot of energy up or energy down. And so they can then get paid for it and then they can pass that on to the end consumer.

- That's right. There are a couple of more details, though. So you wouldn't necessarily have to put a separate meter on the compressor. You could just look at what the supplier's boundary meter is saying and say that we'll compare what actually happens with a counterfactual of what they would have consumed if we hadn't done anything.

And for that particular site, it's really easy. They always consume--

I think it's like six megawatts unless they stop something.

So it's quite easy to draw a line across 6 megawatts and say, well, we deviated from that. So that's what's called a baseline. The challenge is coming up with a baseline, which is--

you can be sure that it's sufficiently accurate and that no one's playing any games with it.

ED PORTER: Yes.

- In their history of demand response, there have been a few classic examples of sports stadiums, putting their lights on during the day and things like that in order to get to game their baseline.

- So effectively with baselining, you're saying the person who's paying for the service really wants to make sure they're getting something valuable for it. And so in order to do that, they have to know what would you have done if I didn't pay you to do this. And so you're saying, well, some meters you can look at and they always do the same thing. So it's pretty damn obvious. But there are some other cases where there's a bit more flexibility.

And so actually defining what that baseline is a bit more complicated. And so that's really what we're saying here. So the person paying for the service is saying, hey prove it, prove that you're doing the right thing at the right time.

- Yes. And if you've got that number that this is what would otherwise have happened, then you can also use that for settlement so that then from the supplier's perspective, you want them to not be adversely affected but also not have a windfall gain from this action. So if you leave it so that it is as if the consumer had carried on consuming it, the baseline, the supplier should be perfectly happy, have no cause for complaint. So that's something that the--

the wider access reforms did a part of in terms of they--

they corrected the balancing position of the supplier to remove the effect of the activation.

And P415 builds on that by adding that same--

that same correction for wholesale market activations. But it also adds one extra element, which is financial compensation for the supplier. So the issue is that although the supplier doesn't end up out of balance under the previous regime, they do have a legitimate complaint that they, let's say, they are expecting that customer to consume 7 megawatt hours in that hour.

But because of this action, they only consumed 2 and they went and bought 7 megawatt hours.

They only get to bill the customer for the two that the meter shows. The 5 megawatt hour difference, which is the demand response, gets taken away in a perimeter correction.

So they're not left exposed to imbalance, but they do end up having bought something that they expected to sell and they never got to sell and they got taken away. So it tries to fix that by saying, and we'll also pay you for that.

- Yes. So someone--

to just talk through that. They're expecting to see 7 megawatt hours on the meter. They only see two. An external party comes in and chews up their meter, not with a screwdriver.

That doesn't happen. But it's done--

done virtually. But in that circumstance, they still have--

they're still expecting to provide 7 megawatt hours because they've bought that in the wholesale market. So they provide two, but they've got 5 left over.

What do they do with that 5?

- That 5 gets effectively taken away by [INAUDIBLE]

in the balancing and settlement process as what's called a perimeter correction. So that has to happen because otherwise the supplier would find themselves out of balance. They'd be long by 5 megawatt hours and that would expose them to a financial risk.

In this case, there's no risk, but there's just the fact that they bought this stuff and it was taken away that needs to be compensated for.

- And they've bought it, say, at 60 pounds or 70 pounds per megawatt hour, what do they get paid for?

- Well, they probably--

they wouldn't have bought it recently because they were--

they know they have this customer to supply who has a reasonably predictable load. They might have bought it a year ago, depending on their hedging strategy. So there's--

what you're really after is a kind of a long-term average sourcing cost and that's what you'd like to compensate them at.

It's quite hard to get that number. Different markets have used different ways of doing this. So if you look at the equivalent mechanism in Australia, they use a long-term average wholesale price, I think over about a year or something. France uses a blend of futures costs and wholesale costs. Again, a long-term average.

What we've settled on in P415 was trying to avoid building something new. There was a--

we just need a number for what a supplier probably pay to source things. And the Ofgem price cap mechanism was a convenient source of such a number. So the number that's used is based on that.

- OK. So the supplier through the process ends up where they get an exposure is they have that 5 megawatt hours that gets kind of taken off their books, but they have to be compensated for it. So there might be some difference between what they paid for it and then what they got--

what they got compensated for. But effectively--

- It should be a second order.

- It should be a small piece. Then the consumer themselves, that's quite a straightforward piece because they've agreed with you--

a virtual lead party--

to get paid for doing a thing. And so it cost them 10 pounds to turn it down. They get paid 20 pounds for it. So they're happy.

And then from the aggregator side or the virtual party side, you are providing a service to THAT--

You're providing service to the wider system and you're getting paid 40 pounds for it and you're passing on whatever 20 pounds to just in a theoretical example.

- Whatever the commercial deal is, yes. But so we are selling that energy on the wholesale market. So presumably, we have done some kind of a wholesale tread to do that.

It doesn't really matter what the details are. If we've got the volumes wrong--

so we did a trade of one size and we asked the customers actually delivered more or less than that, then we're exposed to imbalance just like any other resource.

- And this feels to me like it all works. So each party kind of--

it makes sense, which is good news. But where doesn't it work? What am I missing?

- I mean, it's quite complicated.

- Yes.

- Probably a downside, but there's one implementation issue that may cause a problem here in GB, which is around the supplier compensation. So the way that I originally proposed it was that the compensation going to the supplier would be paid by the virtual lead party, by the aggregator or by the virtual trading party, if we use the correct terminology for the--

- For the sticklers--

the [INAUDIBLE]

sticklers.

- And there are some.

- Yeah, yeah.

- That has some quite nice properties in--

you can say that you're giving the correct economic incentives to all the parties. But one way of looking at it that is a cost for the aggregator and hence for the customer providing flexibility. So that does make customers less likely to participate or provide less volumes or at different prices than they would without that compensation payment.

So what Ofgem decided was that they would have instead of requiring the virtual lead party or the customer to pay the compensation, it would be socialized. So it's basically collected in--

from a levy across all customers, which--

yeah, it should definitely mean that you get more enthusiastic demand production.

My worry is that it gives a cause for complaint. People can say, look, there's this subsidy cost here--

could be viewed as a subsidy. So that's one problem. It breaks symmetry in--

in a way which I think will--

well, is already leading to two concerns. So we talked about doing demand reduction. So going from 7 megawatts to 5 megawatts--

7 megawatts to 2 megawatts. Let's say they could actually go from 7 megawatts to 8 megawatts. So a demand increase.

- And so--

- That plant can't. But let's say it could.

- Let's--

let's say it could. And we're in a world where maybe we've got too much generation and we are thinking about having to do some really expensive things to use up that generation. So maybe there's a cheaper way of turning up demand somewhere else.

- Exactly. So from the economics perspective, you're saying, well, energy is really cheap right now.

The wholesale price is 1 pound.

So it makes sense if the customer can get more than 1 pound worth of value out of that for them to consume more. And the idea is you should expose them to that somehow, despite the fact, they're on a normal retail tariff with their supplier, where they might be paying 20 pounds. The problem is that the way things have currently been arranged--

If you increase--

if they increase their demand by 1 megawatt hour, the aggregator can buy that energy for a pound.

That's great. But the customer still has to pay their supplier 20 pounds for it. They will be billed for it as normal.

- Why is there not--

in the same way. So in the inverse, you had that border adjustment. I think you described it as. In this way, why does it--

why does the border adjustment not happen?

- So it does happen, but it doesn't flow all the way around. So from the supplier perspective, they expected to sell 7. They actually sold 8. They would have bought 7 at their normal procurement cost. Because there's a perimeter correction. If you didn't have a perimeter correction, they would end up short by 1 megawatt hour because the customer consumed 8 rather than 7 they bought.

So the perimeter correction does happen. So they get gifted 1 megawatt hour of power. So they end up back in balance. And it's recognized that they get a windfall from this because they gifted this energy and they get to sell it for 20--

20 pounds. So they have to pay this reverse compensation of 20 pounds.

But that doesn't actually reach the customer or the virtual party because of the socialization mechanism. It gets sort put into the slush fund of--

so it reduces the total cost of compensation for demand reduction or nets off against that.

But it doesn't reach the party whose decision you're trying to influence the customer. If you had the non-socialized approach, then it would reach them and everything would work out quite neatly. So that is a worry that it means that we'll have more demand reduction, which is the most obvious thing to look at.

- But the demand increase in the world where we have too much generation and are oversupplied, we don't necessarily incentivize that as effectively.

- Exactly. The price has to be negative for it to actually make sense for the customer to do that. There's a further twist on this. So one concern that many suppliers have is what they call the rebound effect.

So the example I gave of shutting down this air separation, you're actually stopping--

you're reducing their total annual production. They never catch up and consume more some other time. But quite a lot of the demand response is not like that. It's actually time shifting.

If you think say, an EV charger, then if you stop the customer from charging, at some point they're going to continue to charge at some other point. Ideally, you should be optimizing where they charge it as well as when--

when they don't charge it. The really neat way of doing that would be to treat both of those--

both sides of that shift as separate dispatch events.

So the--

the aggregator says don't charge now and that's settled either in the balancing mechanism or whatever service it is they're doing. They might be doing frequency response. And then as a consequence of that, you then need to do some more judging some other time. So you--

you say, well, we have another event here where the consume more than their baseline.

That would work really neatly. But if you set up--

if the flows don't work for demand increase, then it will almost never work that you'll be able to do both of those profitably.

- One half, the demand reduction is kind of accounted for well. And then the second half of it, which is OK. I'm not charging my car at 7 o'clock. I'm charging you at 8 o'clock. That's not really flowing through as well.

- Correct.

- OK. I think I've got--

I think and I hope listeners will have a kind of good understanding of how P415 works and how the processes work, perhaps turning this into practice. So are we just talking about a single factory somewhere that has some flexibility? Are we talking about one megawatt, 10 megawatts, one gigawatt? How big is the impact of this on the market?

- It's very hard to say. I mean, in terms--

it's not just factory. It's this should work for all scales of flexibility. You want to aggregate it to make it up to a useful volume, where you're trading charges are going to wipe everything out. But it is a missing piece.

So kind of aesthetically, we want--

we want this part here so that all markets are accessible.

The question is, looking at all of the value that could be had from flexibility, what proportion of it can only be had through the wholesale market. And I don't have a good answer for that. There's lots of consultancies that have done analysis, which tends to show that there--

certainly, the wholesale market is biggest. How much of it you can access from flexibility is actually very much like a battery optimization issue.

As with a--

even with a front of [INAUDIBLE]

battery, you can be in the providing frequency response services, you can do reserve, you can do capacity markets, you can do balancing mechanism and you can do wholesale. And I think it's fair to say the trend is towards wholesale price arbitrage being the larger slice of the pie. And the expectation is it will go further that way.

So for demand response, it's been a problem that part of the pie hasn't been accessible unless you're willing to be spot price exposed or have a really good supplier. We're trying to fix that, and it's probably important now and it should definitely be very important in future.

- And I suppose part of that is as soon as you allow people to actually do this properly and you allow prices to pass through, you can really get a sense of actually what the level of response is, because until you've got a price, everything is a consultancy report on paper and it's not real until you kind of actually say, OK, this is the price. This is the mechanism that's now in place. Now we can go to market and see what turns up because--

let's say we talk about just a particular section of the market and let's say it is we just look at factories. Will they choose to respond or will they say, actually for the amount of money that's on the table here, I'm kind of--

I'm actually not going to go ahead and do it?

So is it going to be 100 megawatts? Is it going to be 2 to 3 gigawatts? We'll be really interesting to see. And now we have the mechanism in place. We should start to see that data coming through, if I follow your logic. OK.

OK. I'm quite excited about how quickly that will come through. So now P415 is approved.

When does it go live? When does it all happen?

- It actually went live last week on the 7th of November. But going live means you can start the process of registering to become a virtual trading party. So in terms of actually having a customer impact of real megawatts doing things, that's going to be next year.

- OK. So something to keep a lookout for. And on that kind of pathway of let's see the data coming through and then let's make decisions around how much volume is out there. We should start to see volumes coming through as of next year.

OK. And maybe to make this real for a consumer, like let's say, I have an EV or I have a home storage system, like a rule of thumb, or is there an amount of money that someone might be able to get from this. Or that--

is that kind of is all very dependent on market conditions?

- I think it's very dependent. And there are some unknowns. I mean, it's quite easy to take a mechanism that looks like it should work and make it not work. One thing that could not work here is operational metering. So if we were required to spend a lot of money per site in order to provide national Grid with high resolution, low-latency latency data, then that sort of puts the minimum site size at which that becomes cost effective quite high. Hopefully, that won't happen. But we're waiting for a review on that.

- And so this is saying for non-fans of meters, you're saying that some services require really high-quality metering and really high-quality accuracy of what's going on the site and that comes through these operational meters. And so they can be quite expensive.

- In general, metering is not that expensive. It can be built-in functionality in an EV charger or an inverter or whatever, but what is sort of inescapably expensive is providing low-latency data to the national system operator

- OK. And so I think Paul, just to my last two questions. And the same questions for everyone. So the first question is there anything that you'd like to plug?

- So something that's quite surprising about GB, given the amount of noise that's made about how advanced we are with flexibility and so on compared to other markets is that it's actually not mature here. There are some mature flexibility markets where looking at commercial industrial customers, everyone we talk to already knows about it or has tried it, but that's actually not the case here.

So I think there are still a lot of commercial industrial customers out there who are not providing flexibility. Maybe they look at it and thought there was no value in it or they just haven't heard about it or are only doing it in a fairly minimal way. They're not stacking together multiple services to optimize. So I guess the simple commercial plug is come and talk to Enel X. We can probably help.

- OK. Very good. And do you have a contrarian view so something that you believe that the majority of the market doesn't?

- It's possible that some of the markets caught up with me on this. But I guess the--

there's been this key phrase in policy-making circles of technology neutrality. The idea is you should always divide--

design products and markets to be technology neutral. You should just think about what do you need in the system. Don't think about any particular technology when you're doing it. Write the rules and then that way people will compete and you'll find the optimal mix of technologies to deliver it.

And I agree entirely with that principle.

But I think it's time to say that in practice it hasn't been working. It's been subverted too many times. It's very easy when doing that to actually be thinking about gas generators or about front of meter batteries or about coal plants. Those are examples from GB, Italy and Germany and write your rules so that, yes, you can argue that at no point does it say you can't do this with demand side flexibility or you can't do this with a battery or whatever. But in practice, the tiny details mean that only the technology you are thinking of can do it.

So what--

what I hope is that there will be a shift towards sort of technology inclusiveness, this idea that you think about what the system needs and then you go through all of the possible technologies and figure out how do I accommodate that to the extent it can help solve the problem. That hasn't really happened much yet, and I--

I hope it will.

- That's a lovely place to leave it. Thanks, Paul.

- Thank you.

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