06 - How energy management is changing with Stephan Marty (CEO @ Wattstor)

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We might as well crack on.

Yeah.

So Stephan, how are you doing?

Well, thanks. Good to see you again. And happy new year. Pretty good. I can't complain.

It's been a very busy 2021. And, well, 2022 started to pretty exciting as well, I have to say. So we're all ready for it.

I'm absolutely chuffed to be here. Firstly, thanks for hosting us down in London. We are somewhere in the city of London in--

Very welcome.

--in your head office, which is awesome. And, today, we're going to talk about your--

you've been at Wattstor now a year and a bit now?

A bit over a year, yeah.

A bit over a year. So everything about what's Wattstor, behind-the-meter batteries, and what the challenges are for building behind the meter versus front of the meter and how the market is evolving.

So, I mean, firstly, I know who you are, but, for the folks who are watching at home or at home or wherever they're watching, so who's Stephan? And what brought you here?

Well, I'm an energy guy, basically, as you know. So I've been in energy and shouldn't even say, but for more than 20 years now since really energy was not sexy. And, remember, I started out in coal power stations, but, even then, trying to like upgrade them, and then moved through a couple of stages to General Electric, big company background, did smart grids 12 years ago now when it was just new, and switched over to Kiwi Power, big company to small company move. I never looked back. It was really a great move, I have to say. I know we had a similar experience.

That's where we met, right? So you joined Kiwi back in--

so you were at Kiwi for a long time. You were there from when it was a tiny company to when it got acquired and everything in between. So what was that like?

It was great.

Apart from putting up with me for a little while.

It was a great ride really, I have to say. I mean, I joined just at the beginning of 2015 if I remember correctly. And my task was actually not even battery storage. It was about growing our business from a UK-based aggregator to like a global virtual power plant operator, so to say.

So we took the technology, the expertise, packaged it together. And I think, by the time that I left six years after, we were in 12, 13 countries, including the UK, so really had a big expansion into Europe, North America as well, and, at the end, also over to Japan.

And then, more on the side, I was actually getting into battery storage because Kiwi was involved in the Leighton Buzzard project very early on. Well, it was like the first big project really.

Six megawatts, right?

Six megawatts. Six megawatt hours if I remember correctly.

And it was one of the DNOs, wasn't it? It was--

UKPN.

UKPN, yeah, back when they could own and operate.

Yeah, exactly.

And it was like a battery on stilts, wasn't it? Because it was on a flood plain if I remember correctly. So you had to walk up some steps to get into it. And it was so--

I won't say over-engineered. You just wouldn't build a site like that now, right?

I don't remember on the flood plain, but, yes, it was indoor with a big construction around on a green field. And, if you look at the price then to where we are now, well, we're probably less than 30%.

But that was one of the first, right? So it was always a bit more expensive.

And it was about the learning. And, obviously, the learning has worked very nicely for the whole industry because if you look at where we are right now in front of the meter and behind the meter.

But we hadn't build up this whole energy storage thing. And it was part of the up and downs and back and forth of everything from EFR to FFR to balancing mechanism wholesale, as I'm very focused on right now [INAUDIBLE]..

But, if I remember correctly, you were involved with Kiwi put a bid in for an EFR contact and, in fact, actually built an EFR battery, right?

STEPHAN MARTY: We did.

Like separate to the EFR auction.

STEPHAN MARTY: Slightly. I'm still not allowed to talk about it.

Yeah, and then built out a few assets, developing and building them. And then you got more on the technology side, didn't you? So what was that about?

Yeah, exactly. Because we were--

well, initially, we had to develop better approaches because nobody else wanted to do it or did it or knew how to do it. So that's how we got into that.

But, over time, because we were at Kiwi more a software company and we had a virtual power plant, it made sense to focus on that aspect where really, ultimately, the core value is in a software, how we operate these assets and how we make money from these assets. So that's what we focused on, then built up the team and got into that.

Yeah, and that's where we are at the end of Kiwi Power. And now it's more the whole behind the meter space with Wattstor really.

That's enough Kiwi Power. Let's talk about Wattstor.

If we could talk about--

maybe we'll do a Kiwi Power discussion in the pub instead. So--

Happy to do that.

So what is Wattstor? Who works at Wattstor?

What's the company?

How long has it been going? What's the company vision? Tell us everything we need to know about Wattstor. And what's the market opportunity?

Yeah, so Wattstor is all about reducing energy costs and CO2 emissions for businesses and energy communities. So our end users are small and medium enterprises, energy communities, so to say. And our vision is really to empower these businesses to participate in the green energy transition and also financially benefit from it because, I mean, if it's not financially attractive, then it just won't happen, right?

Yeah.

So we're all around making net zero affordable and accessible to these SMEs and energy communities. And we can talk a little bit more about it, but it's very interesting in a market. So SMEs are a big segment, but very neglected in my understanding and the market understanding by a lot of players.

You have a lot of people that focus on the residential segment. And there's been a lot in the press lately. And then there is a lot of attention on the large players, which is more like what Kiwi Power, what aggregators would do.

But this whole segment in the middle is kind of left behind, right? They're too small really to be interesting for an aggregator, and they're not kind of like all the same like all the residential customers would be. So they really need to be brought along. So that's what our vision is. We bring them along.

What kind of customers are they? Are these manufacturers? Or are these offices? Or are they--

like what kind of businesses are these that are your customers?

Yeah, I mean there are different ones, right? And that's a bit the difference from the uniform residential segment. But, at the moment, we're doing a lot of, let's say, council flats, aquatic centers, leisure centers, fire station we just did, hospitals, but then also lots of like retail stores, more in the farming space, petrol stations, that kind of stuff, small industrials like wood processing plants as well to give you an idea. Those are typical end users of our technology.

So big enough to need to change, but too small to be into like multi-megawatt aggregator kind of getting store contracts or whatever else.

STEPHAN MARTY: Yeah, exactly.

I mean, that's the key point because, if you go to these guys, energy is not their key business, right? If you go to these guys with a complicated offering, like an aggregator did--

and, hey, I've done it for six years so I know what I'm talking about--

that's just not what they need, right?

They need a simple solution, an automated solution. They don't care about doing nominations, bidding, store contracts, paperwork, metering, all that complexity. With our solution, we all cut that out. And we don't do that.

So Wattstor is going to help these businesses decarbonize and hopefully save some money or make some money on the way. How does Wattstor store do that?

So, basically, what we provide is like an energy management system. And we can talk a bit more about what that means in detail, but it's all about the behind-the-meter optimization of assets on a site, right? So really focused on behind the meter. We don't do front of the meter, so behind the meter.

So we look at a site. Typically, think about a supermarket. The supermarket has put solar on their roof because that makes good business sense right now. They now need to put EV chargers in because customers and employees want to charge their cars when they come along, right?

Now, they realize, OK, putting a battery in kind of makes sense. They heard about that over the years, but they don't really know how to do it. They may have some grid constraints. They may have some heating and cooling loads.

So that is all there.

And now--

and this is really the big difference is you see this big price volatility in the market. I mean, I think everybody--

even my mom sends me messages around that. So you can see, everybody is on top of that. So there is a lot of opportunity on one hand to look at these fluctuating prices, to take advantage, but also, of course, to help out the grid if you do that because, if the price is high or low, that means the grid needs help, right?

So what we do with our energy management system is really to tie this all together, so not just do the classic behind-the-meter aggregation, say, solar on consumption, DUoS avoidance, smart car charging, and that kind of stuff, but also looking at what is the price, the electricity price going forward, wrap it all together, crunch the number, and figure out what's the best way to operate your site for the next day or two and then schedule all of that.

So that's what we do. And we also supply energy storage systems, which is we can use any system, but we have a pretty competitive offer. So, typically, right now, the projects we do have both, so an energy management system and a fully integrated battery on top of it as well.

So you're primarily a software solution. And then you also supply battery energy storage systems. Is that right?

Yeah, it's both really, right?

OK.

So I think the long-term value is going to be in the software, right? I mean, it's the same as we've seen front of the meter that we both lived through. But, at the moment, because the market is kind of neglected--

and I think that's going to be like that for the next few years--

there is a lot of value if you have the right kind of like CNI storage system.

And ours is scalable on the kilowatt side, on the kilowatt hour side. We have DC-coupled solar solutions. So it's still a big advantage because our customers are typically--

and those are not like the end users. We work with solar installers, for example, project developers. They don't really know how to use a battery on the CNI side yet, right? So there's a lot of expertise we need to provide there.

The primary control, I guess, is sitting on the battery. So most of the brainpower of your system is probably controlling the battery.

Is it? Or are you also doing the--

STEPHAN MARTY: Actually not.

Right, OK. That's an assumption of mine.

STEPHAN MARTY: So our ECD on-site controller, if you want, is actually a full battery BMS as well. It's also a full EV charge control device.

But, typically, it depends how many assets you control. So we do projects where we have 20, 30 EV chargers, maybe one battery, two separate solar panels or solar panel arrays.

Then it just depends how many you connect. And that determines a bit the processing power. But we do a lot in the cloud as well. So it's a dual system where we operate locally, but the hard crunching, like the smart and machine learning aspects, the forward planning happens in the cloud. And then a schedule is sent to the local device to execute it.

OK, so let's say I run the MODO charging station--

no, not charging station, gas station or a fuel station.

What's the value prop to me? How do you--

what's the sell? And how do I take advantage of that?

So it's two things I said at the beginning. So you can reduce your electricity costs and your CO2 emissions. And we can talk separately about CO2 emissions, but this is becoming increasingly a big thing for many companies, corporate social responsibility. And then there is the whole public sector where we see a lot of projects that actually have to do it, So they don't have a choice. They really have to do it.

But, in general, how we provide more value is to really bring you an additional revenue stream. And it has to do with wholesale pricing. So, as I mentioned before, we don't believe that bringing an aggregator solution with ancillary services, store frequency, balancing mechanism to like an SME is the right solution.

The right solution is to tap those sites into a smart slash dynamic supply contract on the electricity side because, by that, you cut the complexity out. And you can literally use those fluctuations in the market and then schedule the site accordingly. And that creates this extra revenue stream. So you get more money as a site, and you also get it at lower cost because the way we do it is fully automated.

We're not an aggregator. So we don't have an aggregator in there that takes a piece of the cake. So that's basically the key part behind it.

And I guess, thinking about it, if I'm a small, medium-sized company, like a fuel station, fuel filling station, I'm getting crushed right now because I'm small. So I'm not negotiating like really competitive rates with my energy supplier. I'm not under the cap regime. So I'm not capped like residential supplies. And I'm getting absolutely killed. I might be fully exposed.

You should some of the quotes I see going out to these sites now. I mean, it's crazy. And it fluctuates every day, but they're crushed by the costs.

And I probably--

until now, I probably didn't care that much about energy, right? I probably cared about normal running a business. Energy was just a cost. And now it's a huge cost.

And then, suddenly, maybe the people at the business don't fully understand the energy market. Why would they need to until now? So you've got to communicate all this complicated stuff to them at the same time, which must be hard.

Well, that's the point, right? So we're trying not to make a complicated. And the reason--

and this is the reason why we're not doing ancillary services to large. We can, right? If we have to, we can.

But we really believe, if you have a smart supply contract--

it can be a dynamic, or we have hybrid dynamic solutions where we actually are not exposed to any of the peaks, but it can still take advantage of it. It's a bit more technical work on our side, but you can actually have your cake and eat it in that space.

So, if you do it through that, that really allows you to communicate that in a way that an SME understands, right? You can tell them, look, instead of paying, well, right now, 20, 30p a kilowatt hour, you're going to pay 5p less or 10p less. That's what they understand.

They don't understand if you come and say, you can do dynamic containment. And you're going to do x, y, z. And you're going to sign here and all that. That's for the large guys, the large guys who have energy manager specialists and all that, but not for the SMEs.

So that's very crucial. Yes, they're very aware of it now, and we're getting a lot of requests also from the private sector. But you need to make it automated, simple, and talk to them in a way that they understand.

And the one thing they understand is their energy supply contract because every business does that on a regular basis. So, as long as you tie it to that, done, right?

Pence per kilowatt hour is a language they understand.

You've got to turn everything into that language.

And you don't need--

and you don't need to do any upgrades because they already have a fiscal meter in place, which is also neat. They don't need any specific crazy metering infrastructure on site.

And so are you seeing--

is there a step change in how--

has the energy crisis of this winter changed the way that businesses are thinking about this? Have you seen a step change in responses?

What's the impact on you and Wattstor and actually on the whole sector? You know, what's changing?

Well, I mean, yes is the short answer, right? So we see a lot more interest.

Interestingly enough, if we look at our partners, like the solar installers, they are getting flooded with requests because, typically, the easy thing to do is to install some solar. Solar already had before a good return on investment.

I think what we are doing is we're taking a bit of a wider aspect.

We say like, hey, if you look at your site, you make and only install that much solar unless you take into account a battery, your load, your EV charging. And we manage that with our EMS, right? So you can overbuild the solar, even if you have a grid constraint, and, by that, then take advantage of the much lower generation costs. So that comes into play, and we see a lot more of that coming, yes, definitely.

You said something there that triggered me--

grid constraints, grid connections.

What's going on with grid connections for SMEs? Are they allowed to put solar and batteries in on these sites? Or do they have to still do a G--

whatever it is, G59, G99? Or do they have to go through some other--

No, it's still the normal process, the G99 now that they have to look at and G100 if necessary. But some sites have export constraints. I think, if you're in sunny areas, that's the biggest issue.

And then, if you want to like overbuild your solar, you cannot.

Otherwise, you would feed it into the grid, and you cannot do that. Even if you can, you probably get a pretty bad PPA from it. It's much better to store it and play around with your load, which, again is what our EMS does is to take advantage of that.

Probably worth clarifying, we've just spoken a lot of jargon here. So G number number or G number number number number, so G99, G100, that is a process where you go through if you've already got a connection, and you want to build some generation on the site, so solar or a wind turbine or a battery.

Battery doesn't really fit in nicely, but, anyway, it never will. You have to apply to your distribution--

Remember these days.

Yeah, you have to apply to your DNO. You have to fill out some forms, put a little drawing in. And then you have to wait how long? Like ages.

Three months typically.

So they should come back to you in three months.

And then they come back to you, and they say, yes, you can connect, or, no, you can't connect or something in between probably. And so, for all of your customers, you have to do this process with them, I guess.

So no.

QUENTIN SCRIMSHIRE: Good.

We don't do this. So we are a technology supplier as a company. I may haven't mentioned that at the beginning. So, while our end users are these sites that we discussed, our customers are typically like solar installers, project developers, EV charge installers, these kind of guys.

So we have a B2B2B approach if you want. So we provide the best EMS and the lowest cost battery into our channel partner. We train up the channel partner. We advise on sizing. So we look at what's the business case, what's the best size from the battery to the solar, and give them that advice.

But we are not and we are not staffed for that to do like--

as much as I like it with my engineering background, we're not there to do that integrated create project development or even the installation. Those are our partners that do this. And we give them the technology to enable that.

OK, and these are companies that are used to installing solar panels. And they speak the--

they speak the language of the customer and your language. And they're sort of a go-between.

Absolutely. So those are like--

well, you would know them, so your typical solar installer that you hear in the news. And they know everything about solar, about cabling, about G99s, not for the battery side, but for the solar side.

And then they often come to us when they say, hey, look, I have a site now. And these are the cool sites that we're doing.

I have solar.

I've been told I need to install a battery, but I don't really know batteries. Right now, I have these EV chargers there, and there is this load that they want to do as well. Can you help us?

And that's when they come to us because that's what our EMS does. And then we introduce them to, well, actually, we have a pretty cost-effective battery as well. And do you know like that space where you can have this extra revenue to make your project better by tapping into the wholesale electricity prices? So that's typically how the conversation goes with these guys.

OK, it makes sense.

What I want to get into now is I want to define behind the meter.

What is behind the meter? And then I want to talk--

I want to ask you, because you've been at the coalface of this, what's changed over the last five years or so in behind the meter? And then what's coming, coming in the next decade?

Are things getting easier or better or worse for behind the meter? But, firstly, what is this behind the meter thing? What does that mean?

At the coalface is an interesting one. Definitely not anymore.

Oh yeah, no, I shouldn't say coalface. What's the modern version of the word coalface?

So behind the meter for us is basically everything that happens behind a specific fiscal meter. I mean, it can be two or three. But, on a site, on a specific site, that is behind a fiscal meter, simply said.

So that can be like a small commercial unit. It can be a larger residential area, something like. It can be energy communities because we believe a lot--

and we may come to it--

in energy communities taking over more and more going forward. And that's just a bit of a bigger behind-the-meter project if you want. But everything that happens behind a fiscal meter on a specific site.

When you say fiscal meter, you mean an electricity meter that determines how much electricity you pay for, like kilowatt hour.

STEPHAN MARTY: Yeah.

OK, cool. So this is on a customer site behind that. And then what's changed?

Hell, thinking back, well, a lot of the regulation has changed around DUoS and the Triads and all that--

you know that--

and will keep changing. So that part of the business model hasn't improved. I think--

Although, you've got an extra year of Triads, right? Didn't you get an extra--

or an extra two years or something?

I think it's until 2023 now. So it was this one and then the next one. I haven't even looked at Triads this year yet. That will be an interesting one because it's such a weird weather pattern.

To me, there is like two key trends if you see happening. And we can talk wider. One is really this trend--

and this is not since now--

but this decentralization trend. I really believe that, look forward 10, 15 years, and what you're going to see is more energy islands that pop up, like energy communities if you want, that generate, store, and consume their energy by themselves within--

behind their fiscal meter.

That can be quite wider. And there is EU legislation, actually, that allows these energy communities to buy the local grid from the DNO, as an example. So this is something that we see more coming. And it makes sense at these kind of energy prices. And they use the grid to balance out whatever the surplus is.

For example, is this like a group of offices? Or is this people in their homes? Or is this--

an example of one of these energy communities, what would that be?

It could be like a neighborhood, right? It could be a residential one, but maybe like a commercial neighborhood where you have a few shops around there. You may have some residential ones as well.

And now the trick is, instead of each single business and each single residential inhabitant of that area buy a battery, put in a system, they do it together. They put a little bit of a bigger battery in. They put one big heat pump in because that's going to come as well.

They put together a solar farm, maybe even a small wind turbine as well, and manage, to a large extent, their energy generation, consumption, and storage on site. And, for us, this is the natural next segment. So we really believe that there is a big trend to there.

Look at the energy prices right now. As we discussed before, it makes total sense to do this, right? So that's clearly one of the key trends that we're working on. And, obviously, for us, an energy community is basically the same as a behind-the-meter site, just a few more assets, right? Complexity is about the same.

And the other one is price volatility. So that's a very interesting one.

So you think it's here to stay?

Yeah, I mean, it has to, right? I mean, if you want to go--

if you want to go to a much more renewable system, then you will need to have that more volatility, right?

You're going to see days--

probably, they're quite common that electricity prices are basically zero, right? I mean, we know they go negative. That happens quite often.

But, in the future, for quite a lot of time over the year, prices will be more or less zero. And, in other times, they will be very high because that's inherent if you want to build a lot of wind, which, well, we've all committed to and the government has committed to as well. And it's not that far away. It's 2030.

So you need to live with these volatile prices, right? And it's a shift really in--

basically, when we were starting, it was the generation of electricity, the power stations, followed the demand. So, if I go home, turn on the kettle, then the power station turn up and down.

Now, this needs to turn upside down, right? So we need to consume when the wind is blowing, when the sun is shining and all that. And, again, what is the signal to do this? Obviously, the price is the key signal to tell everybody.

That's why, again, we're so keen, and we have built in our EMS that you can follow these signals. And that will only increase, right? Solar is just going to get cheaper. Batteries are going to get cheaper.

You see more price volatility. It will be the new norm. So that's the other big trend. And it fits very neatly with the decentralization trend, actually, where you just do it on site, instead of getting expensive electricity.

So you used to forecast--

basically, National Grid had to forecast demand. Was Coronation Street on, blah, blah, blah? Run the power stations.

And now what we're going to do is forecast generation, which is like the other way around, I guess, is what you're saying.

So you need to forecast, is the wind going to blow? Is there going to be cloud coverage? Pretty hard to do actually.

What else can you--

it's a forecasting game. So how--

STEPHAN MARTY: It is. And, I mean, that's what the energy markets are doing. So we're tapping into--

we're tapping into the day-ahead markets, for example. And you can see--

I haven't looked for today, but the last time I checked was, I think, Friday. It was not even a very special day, but the peak price was 900 pounds a megawatt hour.

Oh, same today.

And the lowest was like 130 or so, right?

I'm pretty sure, this afternoon, was the same.

You can see these fluctuations. It's pretty massive. And, often, it goes negative, as you know as well. Yeah, it's just here to stay.

And this is the market forecasting, to a large extent, what's the renewable generation going to be. Yesterday, it was pretty--

well, it was sunny at least down here, but it wasn't very windy. So I assume prices must have been pretty high, anticipating that.

Right, just thinking, another third trend--

I'm going to add to your two trends--

is electrification of these businesses. Everything is electrifying. So even we might be moving into electrified heating systems.

The way that they like these businesses is changing. I'm not saying they were burning gas before, but these businesses are moving to much smarter technology. And, hopefully, that process means they're more controllable.

So what about you for Wattstor? How do you control--

you've got to interface--

there's an interfacing question for you, right? You've got to control a battery system and solar and measure at the meter and stuff. How do you get around that from a technology perspective?

Well, we have like--

that's kind of like the old game, the same as an aggregator would. So we have an in-house team that can do all the connections, but we use standard protocols. So SunSpec Alliance is one on the solar inverters, for example, which most of the big inverter manufacturers use.

And, because we deliver our own battery, we're obviously fully integrated, but we can use any kind of battery. So we've integrated with most batteries as well. And then there are the usual protocols that we're using to integrate with other assets, EV chargers as well, OCCP 1.6 now. That's some stuff that we have standard available.

So it's more--

there's a bit of standardization on their side, which makes our life easier--

That's good to hear.

--to connect with them.

You mentioned EMS earlier. And this feels like a good opportunity to talk about EMSes. So what is an EMS for anybody who's listening? And how does yours work?

That is a bit of a loaded term, right?

Yeah, it's a difficult question to answer.

Well, yeah, because a lot of energy management system is very broad, right? And we are really focusing on the behind-the-meter space. But, basically, it's a system that manages energy assets to some form of an optimization question and an optimization algorithm that you set.

And ours really is, as I mentioned before, the core of what we do is so we basically--

we look at all the energy assets on site that we can control--

EV chargers, solar PV, wind, batteries, loads. We look at the grid connection. And we get the forecasting of the electricity price.

So, for that, we work with suppliers. And we just signed up our first supplier in the UK to roll this out across their customer base.

Awesome, congrats.

But we then really--

sorry?

Congrats. Sounds like a--

yeah, awesome.

Yeah, watch out for it. You'll see much more about it.

Sounds like a complicated deal, right?

It is, yeah. But then what we really do is we forecast on that site with our algorithms. What's generation?

What's the load?

What's the state of charge of the battery as well? What are some of the--

and we know from the system what are some of the constraints we have there.

We take in the price forecast. We throw it all into our machine-learning-based algorithm. And, basically, then it spits out a schedule. And that schedule then tells each asset the next day or two days, if it's a weekend, what you have to do at what specific time to really make sure you have the lowest electricity costs.

So you move solar from here to here. That's kind of like the obvious one. But it gets quite complex once you start to add all these different factors. So that's really what our EMS does, really focusing on that.

We're not looking at, let's say, building loads like lighting or so. We can. But we do this through an existing BMS and just give them a signal.

And where--

so this sounds quite computationally heavy. Where does that sit?

That's in the cloud, right? So that computation is in the cloud. It doesn't take that much, but, yeah, it takes a bit of time. So we do this in the cloud, and then we send it down onto, well, that baby over there, right?

For those who can't see, there's not a real baby. Stephan is pointing at--

That one over here.

--the Wattstor--

what do you call it?

Well, the ECD basically.

Is this it? The box for it?

That's the box, yeah.

Oh.

STEPHAN MARTY: So, basically, that goes onto this baby or the edge control device, to use the real name, that connects to the assets. And then it stores the schedule. So it knows what to do.

So even if you lose the connection--

and that's often a bit of the worry about the businesses--

that will still--

the device still knows what to do for the next few days because we always plan this ahead. And the really neat thing is, on the EMS side, as we talked before, on the electricity prices, you know today in the day-ahead market what the price is going to be tomorrow, right?

We can talk about intraday or shorter term prices as well, and we'll do that. But you know today that, for example, tomorrow, the price in half hour x is 900, and, in half hour y, it's 130.

So you can plan about that. And that's really what our EMS does is schedules everything on site to reduce that cost of energy or CO2 emissions.

So I just thought a second. What about the--

if a supplier has planned--

so if a supplier has to buy--

say I'm British Gas business or other suppliers who are available. I've got to buy a lot of power in advance for a lot of companies like you--

not you, but a lot of businesses like your SME based on a profile.

So, if you're going to now play with that profile to improve--

to reduce costs or even make money for that business, then how does that affect me? If I'm a supplier, if I'm British Gas business or something, do I like that? Am I OK with that?

Is that a problem for me? Do I have to--

is this something else that I have to think about?

It's actually your best business opportunity to survive as a utility if you ask me because, if you don't innovate as a utility in that regard, what the hell are you going to do? Because just supply electricity is really not an interesting one.

But, shortly, yes, absolutely, right? It's very crucial.

And now we're going a bit into the more detailed thing. So there is--

if we're talking about dynamic contracts, there are basically two different types, high level, that we talk about. One is a fully dynamic contract, kind of like an Octopus Agile on the residential side.

QUENTIN SCRIMSHIRE: So it's an electricity supply contract

Yes, exactly. So that one tells you, a day ahead, this is your exact price every half an hour. So we take that in. We crunch the numbers, as we discussed. That's one thing.

What we are actually launching first is what we call a hybrid dynamic contract where you can actually have your cake and eat it. And that allows you to still fix your electricity rate. So you can still have whatever 14 or now more 20, 25p per kilowatt hour rate. And you can still take advantage--

--of the swings. And, in that case, it's a bit more complicated for us. But what we do is we take the forecast from the day-ahead electricity price, take that into account, crunch it in our numbers. We also do a baseline by the way.

So we always bid our baseline and then say how we move the stuff around and send that back to the utility partner ahead of the day-ahead trade so they can aggregate it and take it into account.

QUENTIN SCRIMSHIRE: Ah, OK.

That's the way you can basically have your cake and eat it because, as a site, you can fix it. You're not exposed to any spikes. But you still can play and take advantage of these price fluctuations.

This is cool because this is one of the things I've always felt was a problem. Because, the suppliers, they've got so many--

they've got so many meters to look at, to worry about, so many businesses that they supply. And they don't understand what's on that site.

Say we're talking about, again, a petrol station. They don't know what can be turned off or moved or shifted or whatever. So the supplier is not the best person to decide what it's going to be. It needs to be told by the site what's best for the site.

And I guess what you're saying is, Wattstor comes in and says, hey, I represent the site. And I will tell the supplier what I can do as a site. And no one knows this better than me because, guess what? I'm actually here, right?

Yeah, we're here, and we're forecasting. It's site specific, right? All our forecasting algorithms are site specific, not like the suppliers would use like a bigger one. They look at what's the temperature, what's the wind and all that, and I don't know what, lots of factors, and do that for a certain area and a certain customer segment. But we look at each site. So yeah, exactly, that's what we're doing.

And we always generate a baseline as well. We say like this would have happened without our intervention. This is the difference. So you can very easily calculate what the benefits are from that.

And how much money is on the table here? So, for businesses, I don't know how we size this. How do we compare apples with apples? But I'm just going to shout the words how much money is on the table again, and, hopefully, you'll answer it.

I thought that's your business [INAUDIBLE]..

So yeah, what's the opportunity here? We'll talk about the carbon one in a second. I really want to talk about carbon. But money, cash money, how much money is there to either be saved or earned or whatever? And I know this is a trick question because you've got to see the future though.

Well, yeah, I mean, of course, right? And I was like, I'll turn it around. You tell me how much is in the market right now. But, I mean, you know the values of like pounds per megawatt per year that everyone is floating around. So, I mean, you can cite numbers, but 60, 70 pounds, 1,000 pounds a megawatt a year easily in the markets that we see right now.

50 of that's from Triad this winter if you can predict it.

That excludes Triad.

That excludes Triad.

That would just be the wholesale part. And then you have the whole DUoS part. You have the Triads part and all that. So it's quite attractive.

Especially in London, I guess. That's in London with double red DUoS If they--

do they still do double red DUoS in London?

Last time I checked, yes. Well, it's not yet April. So it will change from April. But I think it stays like that, yes.

Yeah, so that's very crucial. I mean, the way I'm looking at it is--

we can talk numbers, but it is a bit difficult. I more look in terms of payback for a typical investment. So, if you are even a smaller kind or medium-sized site and you put a battery there and you put a solar panel on top--

for example, you have a bit of load and all that--

you probably look at the payback maybe five years. If you're a bit bigger, four, maybe a bit more if you're a bit smaller, but that kind of level.

That's great.

So that's still not--

That's great.

It's pretty good. Yes, I would say so as well. And this is still not--

this is still not like two, three years where it's just a no-brainer, right? Yeah, I throw the money after it. But it is now much better than maybe the 10 years it was before.

And it is something that now a lot of companies say, yeah, this is good enough for me. I want to do that.

It's the money is good. I'm going to be green. And, also, the CO2, of course, as you said before, is increasingly important for our customers.

So there's a sizable monetary incentive. Let's talk about carbon for a second, CO2, carbon, green, whatever the benefits are. How do we quantify that?

Well, actually, our calculations always look at that as well. And a lot has to do--

like, for example, you can consume more solar on site right if you have a battery, but--

--it also means, if you look at the energy prices, typically, they're expensive when the wind is not blowing, sun is not shining. So you know, when you're actually shifting your load to times of low prices, there is a strong correlation with the CO2 emissions at that point that your kilowatt hour consumed generates to be produced.

So that comes in as well. And we see a lot. As I said before, like public sector, for example, we have a lot of public sector projects. They have to do it, right? It's mandatory for them, not just because the government says, but also their constituents are asking for it.

And then the whole private sector now looks at that as well. They want to go as green as possible. And, historically, there was always the chance to just sign up to a green PPA. Are they green or not is a different question that we probably don't want to go into it.

But that's not good enough anymore, right? You really need to do it on site and manage the whole thing. So yeah, we see a big trend. And I mean, again, if you look at macro trends, that only can increase in the future.

So last thing I want to talk about today is the future energy system. So what's the vision?

What does Stephan Marty think the future energy system looks like in 20 or 30 years? You talked about decentralization. What else plays a big role there? How do you imagine the future?

That's a big question, but we talked a few points already. So yes, clearly, electrification is a key one. So demand will go up. That's clear.

It's clear that--

By the way, that hasn't clicked for a lot of people still now. The demand is always going to go up.

I think they're getting around to it, right? But that doesn't need to be bad as well because, at the same time, there will be a shift to renewables. That's clear--

in demand. I mean, look at the EV stats that are now coming through. It's really taking off. It's great to see that.

QUENTIN SCRIMSHIRE: Sorry, I jumped in. Electrification of everything.

Yeah, electrification, and you have heat as well--

heat pumps are going to be here sooner than we think because it has to--

decentralization, and then this price volatility. And the big question will be, how are we going to provide like baseload in 15 years? Let's say something like that.

The UK wants to do a couple of very expensive nuclear power stations. Is there going to be like a backup fleet of gas potentially? Or is there going to be so much energy storage that we don't even need that stuff? Is there going to be hydrogen?

That's the one thing that, to me, is still open. I think short-term energy storage, over-day energy storage, that ship has sailed. It's going to be batteries. There is a lot of that around. We all know that.

How you do more seasonal, longer term energy storage outside of gas--

because, at some point, we need to move from that--

that's still the big question, I think, that is relatively open.

Nuclear can play a role.

We're building nuclear stations now. So it's a fact. That will provide some baseload.

But still that's not going to be enough by a long shot. So we're going to see a very renewables-driven system, a system that has a lot more price volatility where really the demand side needs to react to, as you said before, when the wind is blowing, when the sun is shining, so completely shift the way it used to be done.

And then the big question will be, are we going to get to something economic in terms of a longer term energy storage, hydrogen, large batteries, something we don't know yet?

Or will it still be gas? And there's going to be a few gas backup lines, right? That one, I'm--

The government is going to step in.

I'm not sure what you think [INAUDIBLE]..

I mean, I think we're going to hear a lot about it in the next couple of years. The government is going to have to step in to stimulate in a market that doesn't really reward long-duration storage.

STEPHAN MARTY: No, at the moment, that's not the case.

And we need it. So the government is going to have to step in. And it'll be really interesting how the government--

I don't want to be too cynical, but how they set these kind of incentives in a rush.

Because they've also got to set the hydrogen. Oh, BEIS are so busy, right?

They're doing competitions. And they're almost picking winners of the competitions when they're doing it. And they can't do anything--

they've got to go so fast, I don't blame them, but it's a tricky one. There's going to be a bunfight. But I can't wait to watch. And it's going to be awesome.

Yeah, I think, as I said, that's the one question that's still open. To me and it seems like to you as well, there's different solutions there. Otherwise, it's pretty clear. I think decentralized, volatile, renewables driven, and demand led--

or supply led and then demand reacts, that's pretty obvious. And much more electrified, and we need more electricity.

Awesome, so a view into Stephan Marty's crystal ball.

That was a great conversation. Thanks for coming on, Stephan. For anybody who's watching or listening, please do let us know what you think in the comments. Do remember to subscribe. Plenty more conversations like this coming.

And, once again, I just want to say, thank you, Stephan, for coming on, really, really enjoyed it. And it's great to be back in a room together after many years of hiding behind our laptops, fighting this pandemic.

Couldn't agree more. Well, thanks for inviting me to your podcast here. And great to see you again.

Awesome. Thanks. Cheers.

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