38 - What’s the deal with Demand Flexibility Service with Kieron Stopforth (Origination Manager @ Octopus Energy)

[MUSIC PLAYING]

Hello, and welcome to another episode of the MODO Podcast. Today I'm joined by Kieron from Octopus who is going to talk to us all about DFS. Kieran, over to you.

Hi, I'm Kieran Stopforth, Origination Manager at Octopus, and it's a pleasure to be here.

Great to have you on. Right, so I promise you some quick-fire questions to get started.

So I'm going to do four of these and then we're going to get into all things DFS. Just to get the seat warm, so who is going to win the World Cup?

England, of course.

ED PORTER: England? Great answer. Great answer.

Although my wife my wife is from Brazil.

ED PORTER: Oh, OK.

So I have quite a good backup option if England doesn't go to plan.

That's an exceptional hedge, yeah. Well done, good choice. So Elon Musk, superhero or villain?

Different, in different spheres, I'd say.

ED PORTER: OK. OK, all right. To the UK Network, would you add 10 gigawatts of interconnection, or would you add 10 gigawatts of storage?

I would add 10 gigawatts of storage. I'm not sure if that's the right answer for stability. But it would probably make my life more interesting.

OK, I love it. And would you like EVs to go 10% further? Or would you like them to be 10% cheaper?

I think 10% cheaper.

10% cheaper, I think that's the right answer as well. OK, great. Let's get into it. So DFS, what is DFS?

DFS is, it's short for the Demand Flexibility Service. It's a new balancing service created by National Grid to help manage stress on the system this winter.

The way they're going to do this is if you're a home or a small business, they'll ask you to turn down a day in advance. And by adjusting your energy consumption, for the first time ever, you can get paid a sort of similar level of balancing if you're a home energy consumer.

It's the first time anywhere, really, that a whole country's smart meter population can participate in grid balancing and get paid for it.

OK.

how does that work, right?

You said that the day before, you would get told. So how does how does that happen?

Yeah, so National Grid will prepare a series of forecasts closer and closer to delivery.

At day before, if they think that the system is going to be short on the following day, then they'll send out an alert and say, we think we need x100 megawatts from the demand flexibility service. Providers then bid into the service.

Grid will dispatch according to which ones are cheapest. And then those providers, they'll then instruct those providers and say tomorrow, from 5:00 till 6:00 PM you have to deliver this amount of capacity that you bid in.

OK. That's really interesting. Just from a consumer perspective then, before we dive into that whole process of how that works, if I'm at home and this process is happening behind the scenes, what happens?

Do I get a notification on my phone? Do I get a letter coming through? Is it done by fax? Don't tell me it's done by fax.

Yeah, I think we've probably retired fax machines in the Octopus offices.

ED PORTER: [LAUGHS]

OK.

But other providers may differ. Yeah, basically, all providers in the UK can sign up. You know, I think Eon, I think Centrica is in the process of signing up.

OK.

KIERON STOPFORTH: All of the usual suspects are kind of looking at this service.

So if you're a customer of one of those, they each have their different ways that they do it. If you're with Octopus, we sent out an email to 1.4 million smart meter customers.

We said anybody with a working smart meter, please participate. We got about 400,000 customers signing up to it. What those customers will see is, when we know that we're definitely going to get dispatched, we'll send everybody an email.

If they have the Octopus app, then we'll send them an app notification. We'll say there's an event tomorrow, from 6:00 till 7:00 PM. This is how much you're going to get paid. Would you like to participate?

They then opt into the event.

Then, shortly before the actual time of the event, we'll send them a reminder. Hopefully they'll go round and switch off high-energy-consuming devices in their home. Yeah, and then afterwards we take a look and see how everybody did.

That is a great system.

There's an email. You then say yes or no, you want to be part of it. Then they get a second message that says, yeah, this is definitely happening.

Would you, within that, would you say how much a house might save? Would octopus kind of say, you might save 1 pound, 10 pounds, 100 pounds? How much were you thinking an average home might save?

Yeah, exactly. We think an average house, it depends how many times the service is called. And it depends how many times, it depends how much, customers turn down.

We're expecting anywhere in the kind of 30 to 100-pound ballpark. I guess to compare, we had an event last week already. The average customer got paid 1 pound for turning down in the window.

But if you look at the top 5%, they got on average 4 pounds or above. So for people who are really able to drive energy reductions, this is going to be quite a welcome benefit to them this winter.

Plenty of numbers in there. You were saying maybe sort of up towards 100 pounds, for perhaps the people who are most able to turn down, over the course of winter. But in a single event, maybe something like a 50 p to say, 3 or 4 pounds? Is that fair numbers?

I think that's, more or less, the range. But the average customer got just over a pound.

Just over a pound. In terms of how often this might happen, is there a rule that says how many times this can happen over the course of winter? Or could it be happening every day?

Yes, there are 12 guaranteed events. National Grid are running these test events, where there's a fixed price.

Generally, anybody who bids in at that price will get dispatched. That's about 3,000 pounds per megawatt hour, or 3 pounds per kilowatt hour.

As to the rest of them, it depends how bad the system gets over winter. If you have a scenario where France and Germany, and Mainland Europe is using a lot of power, and the interconnectors aren't importing to the UK, and at the same time, you have a wind lull, then that's the perfect storm of extreme grid stress.

If that happened fairly frequently, then we could get a lot more events. 12 is the guaranteed minimum. We're expecting somewhere in the ballpark of 20 to 30, based on what we can see for the winter.

OK. 20 to 30, at an average of a pound a go--

that's maths I can do--

gets you to 30 pounds. But you might see people getting over 100 pounds?

KIERON STOPFORTH: Yeah. I think partly, it's the test events have a guaranteed pricing level, which is 3 pounds per kilowatt hour. During those extreme stress events, we've heard that the prices could go as high as 6 pounds.

Yes.

KIERON STOPFORTH: I mean, if you remember in summer, the balancing price went to something like 9,500 pounds. Hopefully this will be a cheaper form of balancing to the grid. But if we start to get more of those events that are up towards 6 pounds, it's going to shift that average higher, and start pushing what customers can make closer to that sort of 100-pound average number.

OK, great. In terms of how people would get that turned down, I was on Twitter, when your trial was going on. And I was seeing people sort of turning off lights, and perhaps making the kids more homework and not have their dinner until 8 o'clock.

What are the kind of things you're expecting to see? And would you be expecting people to use their electric vehicles in this?

Yeah.

I think well, firstly, Twitter is great.

I think one of the really great things about the program is that this is coming at a time when customers' homes and their bills are under so much pressure.

We've definitely, as a company, been thinking a lot about how we can support and help our customers through. For many people this will be an extremely difficult period.

Which is why we've invested and really helped to push forward the DFS concept, and it's why we're going so big on it. Because any way that we can help customers out this winter, we want to be doing. At the same time, we have a lot of really engaged customers, who the combination of what we're able to do through our customer communications and getting the right messages across and connecting with customers, a lot of people, from what we saw on Twitter, a lot of people enjoyed participating.

It was a chance for customers to think about energy and climate. We had almost 300,000 people participate in the first event. When customers join in, they're joining part of this big collective action to do this thing that's good for the grid, and good, and will have an impact on climate as well.

300,000 is an incredible number of people to get excited about, the energy market, and bringing down that peak demand.

KIERON STOPFORTH: That's right.

Do you think there's extra benefits to it? There's not only the pound or 50 p to 4 pounds, let's say, that they get back. There are also wider benefits for the grid?

Yeah, that's right. By customers doing this, if our customers can provide balancing at a lower cost, then that helps bring balancing costs down across the grid for everybody. Not just people who participated. Or not just the Octopus customer, but for any energy consumer, in general.

Yeah.

I think to the extent that when the grid gets really stressed, that's when you start looking at running gas peakers or bringing coal power stations online, so the Grid's using the Demand Flexibility Service as a balancing tool for the winter. The other thing they're doing is they're paying five coal power plants up to 420 million pounds just to stick around.

Just on the off chance that you might need them for a couple of hours over the whole of winter. One of the broader benefits is that if you can shift consumption from a peak time of stress on the grid into the later hours of the evening, or if you can get rid of that demand altogether, then that's going to have a meaningful climate benefit as well.

You wouldn't then need to turn on these coal-fired power stations that are sat in reserve, just in case we get to that level of demand, where they have to turn on.

KIERON STOPFORTH: That's definitely true, at scale.

Great. Great. OK, to ask another question about how this then matures.

We've had one demo, and we had hundreds of thousands of people getting involved, and we will have other suppliers joining the market and also taking part. So how do we think this will mature over the course of winter?

Do we see a story where it becomes very popular and we see more people taking part in these events? Or do you think that people will, there's a first event, and people love the fact that it's a new service and they can take part? Do you think people will sort of gradually stop doing it? What's your feeling?

Yeah. So we started to see some of these behaviors in a program that we ran with National Grid in February and March.

We did a smaller version of the DFS, in February and March. Because we went to National Grid and said, look, we think our customers can help by turning down. Let's just ask a bunch of them and see what they turn down.

We did eight events over February and March, some in the evenings, some overnight, and some in the morning.

I think some of what you're describing, in terms of are people just interested in the first event, will this start to snowball? Or will this be a continued thing? I think the answer definitively, right now, is that we're not sure yet.

What we start to see, in February and March, was that there were definitely some people who enjoyed the first event and then after that, they participated a bit less. But we also started to see a kind of stabilizing of interest and a stabilizing of demand levels. Where we only did two or three events in each time slot. But there were early signs that there was starting to become some pattern-forming behavior.

I think we're thinking very deeply about how we can keep customers involved. I would say the other difference to that trial that we ran, in February and March was that, on average, the benefits that people can get are anywhere from 5 to 10 times higher. So there is a more meaningful value that can accumulate over the winter.

OK. Can I ask a question about how it works from day to day? If I am National Grid, and let's say on one day, a customer decides to, instead of using their kettle at 7 o'clock, they wait until 9 o'clock to use their kettle, which is one of the more energy-intensive items you might have in your home.

If they decide to make that change, how does National Grid know that they've turned down from the day before? For people familiar with this space, it's around baselining. How does National Grid know what, on average, that home should be using?

Yeah.

You're right, that there's a baseline.

The metering part of this, everything goes through the site meter. I guess the MODO listener is probably very familiar with boundary versus asset-level metering.

Oh, God.

We don't need to go down that particular rabbit hole. But essentially, for metering, as the utility, we receive all of the smart meter data. That is the main unit of reporting.

To tell whether there was a turndown or not, we compare the usage during the event to the previous 10 similar days.

We take an average of if the event happens on a weekday, we look at the last 10 weekdays of average consumption, as long as there wasn't an event.

Then we say if the average was a kilowatt hour of consumption and the actual was 0.4 kilowatt hours, then there's a reduction there. That's the amount that the customers get paid on.

If I was to say, if you were away on holiday last week, then it wouldn't be too much of a problem. Because there'd be 9 weeks prior that you'd be able to use the data for. But if you've been on holiday for 10 weeks, then you've had too much of a good time?

It's the last 10 consecutive days so if you were on holiday the whole of the last week. Or if you were on holiday for the last 2 weeks.

ED PORTER: It might be quite hard?

Then it might be quite hard. But at the minute, we're two weeks in, and we've seen two events so far. So you quickly reset the baseline, as it were.

That's great.

Then, just to move on from DFS a little bit, in terms of comparing DFS and time-of-use tariffs.

I think a lot of people would be familiar with Economy 7. This idea that you get cheaper energy for 7 hours overnight.

Do you think that this, that DFS, is a new tariff? People will go for a more normal tariff with DFS on top? Or do you think this isn't an evolution of time-of-use tariffs?

That's a great question.

For DFS, we're describing it as a customer offer. So anybody with a smart meter, regardless of whatever tariff they're on, can participate. As long as they're an Octopus customer and the smart meter works.

It's just a way of layering on this credit on top of the existing tariff arrangement. No one has to change. They don't have to re-evaluate and move onto a tariff that might be more or less expensive, depending. It's just there for anybody who wants to participate in.

You mentioned time-of-use tariffs.

I think, really, this is part of an evolution of how customer flexibility is going in general, where Octopus, Economy 7 tariffs have been around forever.

Octopus started experimenting with time-of-use tariffs in 2017, 2018. So we've got Go, which is a 4 hours of cheap energy use overnight. Or Agile, which is the price changes every half hour, depending on the day-ahead energy price.

You have that bucket, where if you're really early adopter, or say you've kitted out your home with all of the different smart meter technology, you have a home battery and some solar, and there's a way to benefit through using those time-of-use tariffs. I think where this is all going in the future is a much more integrated system, where actually, the customer doesn't have to worry about how the energy price is changing every half hour.

We have a tariff called Intelligent Octopus, where we're directly integrating with people's EVs, and their electric vehicle charging equipment. We can automatically optimize around the lowest cost times of charging. All they do is tell us when they need their car ready by, and how much charge they need the next day.

We'll calculate how much charging they need, and make sure that we find the lowest-cost hours to charge in. Then we return them a low-cost tariff. Now, I think the really interesting thing about where the DFS sits, is it kind of sits in the middle, of you don't have to be the world's most sophisticated energy user.

You just have to shift around a bit of your energy consumption. What that does is, before we have this super-advanced automated control, and without needing a person to be a very sophisticated energy geek user at home, this is something that if you have a kettle or electric cooking or electric heating or electric hot water, or something, anybody with a smart meter can participate.

That opens it up, right now, to a much bigger addressable market of customers.

For us, that's 1.4 million. There are 14 million electric smart meter customers around the UK.

What we're doing with the Demand Flexibility Service, in conjunction with National Grid, is really accelerating that customer-led flexibility by several years, ahead of where we're going to get to anyway with electric vehicles and heat pumps.

To round that off, there's 26-plus million homes as well.

KIERON STOPFORTH: That's right.

So we could be we could be doubling that number again, in terms of how many smart meters there are.

KIERON STOPFORTH: That's right.

My next question is around 2050. When you started to think about DFS and how it fits in with the other tariffs, is this something you think will still be the delivery process for this, in 2050? Or do you think there'll be something sort of much more automated by the time we get to that net-zero world and perhaps things are a lot more automated and connected?

Yeah.

My personal view is that we're definitely moving in a more automated direction.

I think 2050 is very far in the future. But I was looking at some numbers for 2035, if that's not too--

That's not too far.

KIERON STOPFORTH: --disappointing for the crystal-ball gazing that we're trying to do here. If you look at of what National Grid is projecting, consumer-transformation scenario, energy demand in the home is going to increase by 60% by 2035. At that point, you will have about 12 or 13 million electric vehicles on the road.

Sorry, actually, it's actually higher than 20 million electric vehicles on the road by 2035. In heat pumps, you'll have almost 11 million heat pumps in the home. What this means, those two things together are going to form over half of residential energy consumption.

That's two devices in the home that are controllable and innately flexible, because you can shift around a little bit the times when you're going to use them. They don't require an Internet of Things controller to come in and switch off your fridge during times.

We're already making great strides on automating controls for both EVs and heat pumps, is the next thing that we're looking at. But if you can automate and make flexible half of customer home demand, that's just going to bring such big grid benefits. It's not simple, but in a way that doesn't mean that you have to go install an Internet of Things device and control everything in the home, and have this massive benefit for the grid.

When it comes to the 2035 point, I think you're saying that we'll get to a point where perhaps things are much more automated. So perhaps the need for a DFS-like service--

DFS is brilliant for where it is today and what it's showing that we can do. But as we get to 2035, you think that might be more built into the business as usual, because you'll have flexible assets like EVs and heat pumps?

KIERON STOPFORTH: Yeah.

Also, just we talk about heat pumps, I think let's talk very briefly about them. One of the things that happens, in terms of meeting customer demand right now, is that when things get cold, as they are today, this is probably our first cold spell in November, which is late. But our first cold spell.

When people need to heat their home, they turn to gas boilers.

Obviously, to do net zero, that's not going to be how we move going forward. So we're going to bring in a lot of heat pumps. It looks like that's going to be a really important part of the heating mix.

That is going to bring a lot of demand, but also a lot of seasonal demand, to the grid. So the challenge we've got at the moment is meeting customer demand. But it's going to grow, because we were going to have all these EVs and these heat pumps coming in. Do you think that makes things like DFS even more important as a service?

Yeah, absolutely. Absolutely. I think this ties together the previous question as well, in that the way I see DFS, ultimately, is a kind of accelerant to that kind of customer-led flexible future.

That's not to exclude batteries or grid scale sources of flexibility. Those will be critically important too. As everybody loves to say, there is no silver bullet.

I think DFS is an accelerant of that consumer technology. At least for the next three to five years, managing that transition towards electric heating and transport, DFS or whatever the evolution of DFS becomes, that's going to play a critical role in helping to speed up this transition and get value for customers.

Yeah, I think that's a really important part right. One thing that stands out to me, about DFS, is just perhaps the speed that it's come into market. Within the energy sector, innovation has been something that we sometimes do very well and sometimes we do quite slowly.

The UK, actually I think, has a very good record for innovation. Was there any lessons that you learned from bringing things like DFS to market, that you think would be good to share as good tips for other people looking to innovate in this space?

Yeah, totally. That's a great question.

We, I guess just thinking about the choreography. We ran the trial with National Grid, as I mentioned in February and March, 100,000 customers.

About 200 megawatt hours of turndown. That really provided a strong reference case for what the DFS turned into. We've been supporting and help push DFS along the path.

But that, DFS as a service, has been strongly led by National Grid. It's definitely not an Octopus thing.

Any energy company can participate in it if they want to. But just to make that link clear, that we did a lot of work providing that reference case.

We also supported and consulted on the design. But is a National Grid service, and they very much drove and led that.

I think DFS, though, and the trial that we did is a really interesting reference case for innovation. As you mentioned, there are lots of good innovation projects in the UK. The UK is one of the more innovative energy markets anywhere in the world.

ED PORTER: Definitely.

But the way that innovation is procured and funded sometimes is not a very good match to the pace of change in the energy market. As you well know, things are changing so rapidly, almost on a week-by-week or month-by-month basis. There's a new kind ancillary service, or battery owners are jumping on new strategies, that someone's figured out something and everybody goes after it.

Yeah.

With traditional innovation projects through the kind of Ofgem funding rules, it's something where you have to spend three to six months writing a proposal, or possibly more. You do a lot of planning and think exactly how everything is going to be spent. You create this sort of Gantt chart.

That's for two to three years, potentially. Once that's approved, you're not really allowed to deviate from that.

There's lots of reporting requirements and all of that. You're kind of set down this path for the next two, three years.

The trial that we did, in February and March, was such an interesting reference case. Because really, we got that spun up with National Grid's help in eight weeks or so. We had a meaningful amount of customers that were engaged.

We worked with National Grid, to build a model version of something that could be scaled up very quickly. Then we also had champions and stakeholders across National Grid, from the control room, and a broader cast of characters that really believed in the potential, were really motivated by that. Also, we paid for it ourselves.

That always helped.

KIERON STOPFORTH: We did do some reporting. We put a lot of information out there, but it didn't mean that we had to do weekly check-ins and weekly progress. All of that created the system where we were able to move really quickly, demonstrate something that could work at-grid scale, and that's been shown by the pace at which it's been adopted.

I think it's changed the way that we think about innovation. You know, like the pace of change is so quick.

What steps can we do? Even is it paying ourselves or finding other routes to fund stuff?

As a model, doing a small scale of something that can work, getting buy-in from National Grid, having stakeholders that back it all the way through, but agile development and iteration. If it doesn't work, then stop doing it. Don't do the 1 and 1/2 years left of the project.

Minimum. Get the minimum viable product down.

KIERON STOPFORTH: Minimum viable products, yeah.

Yeah, then you can pivot onto something else if it doesn't quite work.

Yeah, yeah.

That's crucial to getting things out fast, it's a really important skill. I think the thing I really liked in that description was how you kept on coming back to the trial and the data. That seems to be the really critical part.

Everything is based off that original trial. That's the data. That's the proof of concept. Then you build from there.

It feels like a really critical part of the project. In a rare thing for these podcasts, we have somewhat of a live event.

I can see of the corner of my eye, my phone. I've got a text from Capacity Market Notices. Which means one thing, that the system is very tight this evening. So I'm sure Grid will be calling people for provision of energy.

Just taking today, do we think that, let's say, Grid are needing some support for this evening? Would there be a notice, do you think, coming out to Octopus customers?

Yeah. That's definitely a sort of impressive credential, when you have the live grid alerts coming directly to your phone. That's when you know that you're a recovering energy professional.

No, not recovering. Not recovering. Sadly, like fully-fledged energy geek.

KIERON STOPFORTH: Yes, yeah.

Yeah, it's bad isn't it?

KIERON STOPFORTH: Exactly.

But to go back, would that link up?

Would it be one of the trials? Would that get called today?

Yeah. Yes, I think we're obviously recording this midafternoon. There is an event today.

ED PORTER: Yes.

It was triggered yesterday. Notice was sent at 2:30. We were confirmed at 4:30 yesterday.

National Grid, do the trial events to try and align with the time to when the grid is shortest.

Yeah, there's an event coming tonight.

Don't know how people are going to do. We've got quite a healthy number of customers signed up already for this event. So we're hoping to put on some big numbers tonight. We'll see.

OK, really interesting. Do you think you'll get more?

How do you think the numbers will do in comparison to your first trial? Because there was a lot of good publicity that came out from the first piece. Do you think your numbers will go up for the next trial?

I would love that to be the case. Yeah, maybe I should just put a stake in the ground. With all confidence, there are a few signs that the numbers may be at a similar or higher level.

I don't know if we covered it, but in that first event, I think I said we had almost 300,000 customers participating. But the amount of demand reduction we actually got from that event was 108 megawatt hours in a single-hour period. So if you're comparing this to grid, to put it in grid terms, that's bigger than the output, or that's bigger than the power of the largest battery that's currently grid-connected in the UK. If you put it in slightly more-human terms, it's about the same amount as the city of Sunderland would use across that period in the evening.

It's an incredibly powerful tool, particularly if you can get if you can drive up the engagement. If you can get many more homes taking part, and as we talked about, if you can enable the flexibility of heat pumps and EV to take part as well, it could be one of the critical tools to balancing networks in 2035-2050. It really does feel so important that we get that right.

Yeah, absolutely.

The key point that I would make is it's not like we want the demand flexibility service to exist and evolve and continue and be a part of flexibility in this country. I think the key thing though, is like, there is a role for consumer flexibility to play. And whatever the tools National Grid has at its disposal, consumer flexibility should remain part.

Regardless of how it's procured or what the service is. Or do you start doing things like turn up to absorb renewables over production? Or there's a bunch of stuff that could be done. But the point is consumer flexibility is here now and it should be here to stay.

Great. I have two more questions. One is on DFS. just in terms of how if we could do one thing to improve it, what would we do?

That's a really good question. I mean, want to recognize and commend National Grid for the speed with which they've moved and the vision that they've shown, which has been extraordinary. I think it might be slightly strange to say this, as Octopus and representing a utility.

But I think the more utilities that get involved, and the more customers across the UK that can get involved, the better.

We're starting to see different utilities take some steps in. I think some people are going in bigger than others. But I think the more that this is available to your average energy customer, the stronger a case will be made for the future. Anything that can be done to encourage broader adoption, I think that's critical.

Yeah I wholeheartedly agree.

Demand flexibility, in whatever form it comes in, it becomes one of the key levers that National Grid pulls, in terms of balancing the system at the tightest times. It's all the more power to it, if that lever is more impactful. Yeah, totally agree. But my last question is, is going off DFS, and going to you, personally.

It's a question around if you were working in the energy industry, but you weren't working for Octopus, and you weren't working on DFS.

What part of the market you would you work in? Let's say you're starting out fresh faced, coming to market and saying yeah, this is where I'm going to work. This is the nut that I'm going to crack. Where would you choose to work?

There are a long and short answer to this question. I'm most interested in stuff, in new technology, that is finding a market or just on the cusp of finding market and has the potential to really scale.

There's loads of people in that space.

I have asked this question a bit, but I think a lot of people do always say it's that thing that's not quite there. Because of the challenge, because of the difficulty in working it out. It just feels like there's something there where you could really give it a nudge. That's where you're going?

Yeah, exactly.

We were chatting just before this, about long duration storage.

I was a physics graduate once upon a time and retain a very nerdy interest in that. There's a lot of potential there.

Broader thoughts, I was lucky enough to get to spend some time in the US.

There were going to be a lot. The Inflation Reduction Act is going to funnel a lot of money into renewables. Electric vehicles, climate tech startups.

The UK's a tremendously-exciting place to be. I think the US is going to start to see some really step-change growth. So I think that geographically, that is an interesting area.

I think it's a really good answer. I think it's also a really good place as well to wrap up the podcast. Because there's a huge amount of opportunity and growth that's coming in. And I think lots of people probably share the same view as you, in terms of where to go and where to look while the US is, particularly with the Inflation Reduction Act, is going to be critical.

Yeah.

I think maybe one lesson. I've been in companies that succeeded and companies that have failed, failed painfully. I think one of my lessons is looking at your addressable market size and how are you going to get customers?

Because I think one of the things about the UK market is it is quite a small market. If you're doing DNO Technology, you have six customers, and they move slowly. If you're doing utility technology, there are maybe 10 to 20 big ones, but a lot of them are building their own technologies in-house.

The energy sector is one where, unless you have a really good sort of route to accessing thousands of customers, it's hard.

A lot of businesses struggle because they ultimately don't have that market size.

You know, if I was chatting to a younger fresh-faced graduate, as you said, I would say, think about how big is your market size really? And do you have a way of capturing those customers?

Because that's something that a lot of companies in energy don't ultimately have, and can't get because of the structure of the market. Something to really be aware of.

What I wouldn't want is to bring that back into--

it sounds like tech that's just about coming to market, but also hits millions of customers. Totally agree with that. It does violate one of the rules though. It sounds like you're advocating for DFS.

If I was to say if it was a similar technology that's coming to market at scale, would you say things like heat pumps might fall into that, in terms of a really large scalable market?

That could be an interesting place to work. But you've also said long-duration storage. Which again, I wholeheartedly agree with. That's a very interesting place to work.

Totally. Totally.

There are a lot of tailwinds behind heat pumps accelerating. It's something that we believe in a lot, a lot as a business. I think that could be a really interesting growth area.

I think for heat pumps, the question is how can you differentiate your technology? Are you doing anything on a technology level that's fundamentally different?

Then if you are, then good. But if you're not, in any case, you still have to think about your cost-reduction curve.

Because heat pumps, right now, right now, I think depending on what metric you look at, competitive with gas. But they're still going to have to keep coming down that cost curve. Yeah, that's if you were going to launch into the world of new heat pump business, those are the questions that I would be thinking.

I think it's a fascinating space.

It's going to grow so quickly. It needs thousands, if not millions, of engineers and new grads with exciting ideas to go into. So I wholeheartedly agree. Well, brilliant. Thank you very much for coming on the MODO Podcast. You've been a fabulous guest. And yeah, join us next time for our next podcast.

Thanks a lot.

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