Granular green energy with Toby Ferenczi (CEO @ Granular Energy)

On today's certificates, you don't know when the energy was produced. You might know the month of when the electricity was produced, but you don't know time of day when the electricity was produced, to be a good market signal what you want is for clean energy to be cheap when it's in oversupply and more expensive when it's in undersupply. You're taking essentially these the certificate system that runs on an annual basis, and making it more representative of the real world. Because the reality is renewable energy shouldn't cost you very much at certain times of day, and it's an oversupply.

Ensure that it's sending the right price signals for the technologies that deliver clean energy when it's most needed for the times and places when it's most needed so much better to use a real guarantee of origin for that, which is you're taking essentially, this this certificate system that runs on an annual basis, and making it more representative of the real world. Hello, everybody. Welcome back to another episode of transmission.

Today's episode is with Toby Ferrenzy, co founder and CEO of granular Energy. Toby explains the issues with the current renewable energy certification system and how granular energy is helping to provide a more transparent picture. If you're enjoying the podcast, please hit subscribe and give us a rating. It really means the world to us. And with that, let's jump in.

Hello, Toby.

Hi there. Great to be here. Thanks so much for having me. Thank you for joining us. So, really excited to have this conversation. You've been building a company for two years now. So you're still in the early stages, but you're moving really quickly.

And, I think what you guys do at granular energy is gonna be really interesting to the battery community and the energy storage community. Because if you guys manage to pull it off in the way that it looks like you're gonna do, This could be a massive new value add for the energy storage community. So that's a that's a preface. No pressure, but we're gonna cover that today.

Before we get started, Toby, what's your background? And who who's Toby for the listeners? Thanks again for having me. So, yeah, my background I've been in I've made in London, and I've been in the energy sector in startups renewables for quite a while.

I started out studying physics, did a PhD in solar energy into material science at Imperial College, that I worked went to work for General Electric, GE, for a few years in the renewables division in Germany and Munich, is ground zero for the renewables industry in Europe, but then I came back to the UK to do my first startup in energy, and that was a solar rooftop financing business. And we sold that in twenty thirteen. And then I did another startup called recharge, which is an optimization platform for electric vehicles, batteries, and this was sold to Ovo Energy, which is Big UK Energy Supply back in the beginning of twenty seventeen.

I spent quite a long time working at Ovo And whilst I was there, I was thinking a lot about an interesting question, which is that many suppliers like Evos sell renewable energy, a hundred percent renewable energy as part of an offer. But at the same time, we were trying to get customers to do demand response to optimize flexibility, optimize batteries, and there was a disconnect because they would say, well, we been sold a hundred percent renewable energy. So why are we needing to shift load from one time of day to another? So I got really interested in what does one hundred percent renewable energy mean?

And that led me down a path of research of the mechanism behind these claims, which is called energy attributes certificates, or regos, if you're from the UK, or Rex, if you're in in the United States, and to cut a long story short, it led me to set up a nonprofit called energy tag, which we can talk about. It's a nonprofit standards body for timestamp energy certificates, and this created a voluntary way of improving this certificate system from an annual system to an hourly system, which we can come back to. And then having done that for a while, the idea behind granular Energy, which is a software company, we identified a real problem, which is that many energy companies are using spreadsheets to manage their energy certificate portfolios.

And so it's very hard for them to give transparency to customers let alone on an hourly level, which is what we're pushing towards. And so we provide a software solution for energy companies around the world to better manage their energy skills and to give transparency to their customers on where their energy is coming from on an hourly basis and can talk a bit more about why that's interesting to the battery community. So let's just take it back to first principles here. So the question that you asked in that bit there, rhetorically, was what does it mean to have a hundred percent clean energy?

That is not a very complicated question. So why did you take years to figure out what that means?

No. I that is not I'm not that's not shots fired. That is just interested.

Yeah. Well, it's true. May maybe I should have known exactly what it meant six years ago, but I've actually spoken to a lot of people in the energies industry and certainly consumers when you say, well, they say, yes, I'm buying hundred percent renewable energy, but not that many people actually know what that means when you ask them the detail. Like, how do you know that it's come from one source over another? Because it's not straightforward, right? All of the energy all the power is connected to the same electricity grid.

So you can't physically tell whether the electricity that's power in your office or your home or your data center has come from a solar power plant or a gas turbine.

So what it actually means is the fact that your energy supplier has provided you with energy has bought something called energy attributes certificates on your behalf. And what an energy attributes certificate system is that something that's been around for twenty years. They're called different things in different places. They're called.

Since we said regos in the UK guarantees of origin in Europe or Rex. So they're called in the US. And the way they work, it's a really well established system, and it works very well as an accounting system. And the principle behind it is for every unit of energy that's generated and put onto the grid.

A certificate is issued and kept on a register that's normally operated by a regulator, or a grid operator, an authority, and consumers can then buy those certificates and claim them against their consumption to say there's a one to one correlation that my energy has come from that particular source. And they can do that in the comfort that there's no double counting risk that no one else has laid claim to the same unit of energy. And that's why the certificate systems are very important and the only basis by which you can say your energy has come from this source, and therefore my carbon emissions correspond to zero and carbon for that megawatt hour.

And so that that's why they use some common accounting. It's actually a misconception in the industry that if you have a PPA with a wind farm, that gives you the right to say your energy has come from that windfall. Well, actually, it doesn't because it's a commercial contract. And there's no double counting protections on a counting system.

It's only the certificate that gives you the right to say that your energies come from one source over another. So they play this really important role. Just a quick one, are these physical certificates? These pieces of paper?

What is this? They are digital certificates with an ID number kept on a registry on a database.

You can, I'm sure, download them as a PDF, but their electronic certificates corresponding to one megawatt hour and on the certificate. It says where the energy has come from, the type of power plant, when it was constructed, and several other attributes are on that certificate. And when you buy this certificate, you can, you then know quite a lot about where your energy has come from. What's interesting though is, on today's certificates, You don't know when the energy was produced.

You might know the month of when the electricity was produced, but you don't know the time of day when the electricity was produced. And so when we're talking about hundred percent renewable energy, what that means is a the fact that you've matched supply and demand on an annual basis on a twelve month in a twelve month window. So these ten megawatt hours of energy in a year, as long as you or someone on your behalf has bought ten megawatt hours of certificates and those certificates were produced in the same twelve month window then you can be a hundred percent renewable. And that's how the system has worked for the last twenty years, and it made total sense when the system was Just be pissed.

You can say you're a hundred percent renewable, which is different from actually being a hundred. There's like Right. Yes. To be agree.

But but actually legally and according to regulators like ofgem in the UK, that is a valid claim. Now that claim is being questioned.

Only a couple of months ago, the advertising standards agency in Ireland challenged that amount suppliers in Ireland are not allowed to advertise one hundred percent renewable energy offers in that way. So it is certainly being called into question Well, I think it it also depends on when you see a see a supplier's advert. You're watching Coronation Street, and the adverts come up. And it says a hundred percent renewable electricity.

And, of course, the b roll, like, the thing in the background is sheep and farms and a wind farm. And, yeah, There is there are definitely lines that sometimes get crossed. Yes. That yeah.

Totally. And I think maybe when this was a new thing, and not people just weren't aware of what renewable energy was, it was easier for people to accept. But now it's certainly being called into a question because I think there's a lot more awareness now that the wind isn't always blowing and the sun isn't always shining. Sometimes we have to actually curtail renewables when we have oversupply and other times we're bringing on gas speakers and and other fossil assets to fill the gaps.

So the annual matching doesn't make sense, essentially, that means you can take solar energy from the summer and claim to use that energy at nighttime in the winter. And from a market's perspective, and this is where it gets for the battery community, it's not sending an effective price signal.

So the way the certificates work today, their price the same regardless of time of day, but to be a good market signal, what you want is for clean energy to cheap when it's in oversupply and more expensive when it's in undersupply.

And so that's not the case with the current system. So the idea is to take the existing certificate system as it is, but just add a time stamp as one of the attributes, and then you can use it to say, okay, my energy has come from this source in this particular hour or half hour window.

And that makes it a much more reliable claim, but it also creates a pricing or that can be harnessed by batteries. So, an entirely new revenue stream. And so this is a company so this is the company that you've created, right, which is called granular Energy, which makes complete sense about why it's called that, which is you're taking essentially these this certificate system that runs on an annual basis and making it more representative of the real world, which is as close to real time as possible, and how close to real time are you getting? Well, I think this is where so I'll answer that question, and then I'll tell you a little bit more about what we're doing as a company.

Our view is that the granularity should actually line up with the same granularity as the power marker, the delivery window in the household power marker, which in depending on where you are, it's normally between one hour or five minutes around the world.

And this is a point of principle here. Like, we've got these two separate systems for matching supply and demand. One is the wholesale power market or the balancing mechanism, as we know, which is a system, to coordinate buyers and sellers to get them to match supply and demand in a thirty minute window, but it just doesn't give you any traceability. It's already a twenty four seven matching market. But there's no traceability or the power is pooled by definitions. It used to be called power pools. So you don't know what what you bought whether you've got coal or renewables.

And then you've got this other mechanism, which is completely separate, which is the certificate system, which is an annual system, but at least it gives you traceability where your images come from. And the idea is if you move to a timestamp that is the same as the on your certificate that's in the same as the delivery window in the power marker, and it's based on the same metering data. Suddenly, you can actually bring these two systems into alignment and use it for both your traceability and potentially your household market settlement. And we actually wrote a white paper on with Norfolk, the power market operator, if you go to our website, which explains essentially how we see electricity markets potentially being transformed by the advent of these certificates and bringing these two systems together because it is confusing that you can buy your power in one venue, and then you buy your certificates in another venue.

And and another system. And it's it's certainly led to a lot of confusion in the media about how the whole thing works. And it will put the link to that white paper in the in the show notes. If you're listening to this, please do check it out.

It's fantastic. What one of the things I wanted to ask you about is it used to be the case. The rule of thumb was that Regos are much cheaper than the so The pounds for megawatt hour, the the cost of producing proper renewable energy, we can argue about what is and what isn't, but is much higher than the cost of covering your energy with regos. That used to be the case.

Right? Regos were really cheap. Now if I've got this right, Rigos are actually getting quite expensive. So the arigos is about twenty quid today, I think.

And what's that doing to the the market?

Yeah. It's a, yeah, great question. The historically, the price of rigos is completely independent of the underlying costs. Right? It's just an additional source of revenue for developers, and the price of rigos or certificates is a generic term for them wherever you are is based on consumer demand. So the more companies that want to by renewable energy because they're setting net zero targets. The more energy suppliers are marketing renewable products.

The more the demand goes up, and that's what set the price. And historically, they had been very cheap as largely because with an annual matching system, you can use them at any point. And so you've flooded the market. But what's really interesting recently is that there's so many companies now setting net zero targets and committing to those zero targets and one of the best ways and most effective ways for any company to reduce their carbon footprint is to buy renewable energy or clean energy instead of buying fossil fuels reduces what's called the scope to carbon emissions, the emissions associates with the energy consumption, it's really driving the price up.

And so now, the prices have gone from, say, twenty pence a megawatt hour in the UK, a few years ago, to twenty pounds. That was the last auction that's completely unheard of. They now form a really valuable revenue stream for developers. And so that's helping with the business case for new renewable projects which should accelerate the pace of deployment.

But what we're saying is it could just be a much more effective price signal that helps incentivize more renewables, but also the all these other technologies that we know we're gonna need, like, like energy storage. And does this just thinking about from the consumer's perspective?

So in the era of lots and lots of small suppliers and challenger suppliers seems to be behind us now. Everything's been gobbled up one way or another or gone bust. But in the era of lots of cheap suppliers, There were a lot of small suppliers and large that were essentially buying rigos to cover their or or their supply.

And they were doing that very cheap piece. Yeah. Twenty p, fifty p, something like that. This and what that meant is to show blogs down the pub, when they put that when they went on to compare the market and look for their electricity supplier.

The cost of going green was hardly anything. Right? The difference of buying that wasn't green or green in inverted commas was hardly anything. You could be a green consumer and rest assured you're doing the right thing.

But now with really goes at twenty quid, does that mean that the cost of really buying renewable energy as a consumer is now gonna be much higher then if if you don't. And that's a a more direct and realistic price signal to consumers about what renewables is actually gonna cost us quite a bit of money. Yeah. Absolutely.

I think it will be more expensive and suppliers that are offering one percent renewable energy or buying regos or corporates that are signing PPAs and they want to take the certificates with them as well so they can make those green claims that are all gonna be paying a lot more for the certificates, which, yeah, in some ways, it's a it's a good thing. It's driving investment in renewables. But we're saying it can be an even more effective price signal because the reality is renewable energy shouldn't cost you very much. At certain times of day when it's an oversupply, but should be quite expensive in other times of day.

And That's just not the case. By transforming this mechanism from an annual system to an hourly system, you can ensure that it's sending the right price signals for the technologies that deliver clean energy when it's most needed for the times and places when it's most needed.

And that's a I think from a consumer's point of view, it's much easier to understand then because they shouldn't be paying a lot for intervals when there's a lot of solar and wind around, they're gonna be paying more when there's a scarcity.

And then we'll be harnessing all of this consumer demand to accelerate the energy transition.

And that's what this is this is all about really. It's like how do we capture those twenty four billion dollars were spent on certificates globally in twenty last year in twenty twenty two. There's a doubling from the previous year, and therefore, costs saying it'll be a hundred billion dollars by twenty thirty.

So that's an enormous amount of revenue, additional revenue for the technologies that can help us fill gaps. And I I think I completely understand the I understand the problem now. You've explained that really well. And I think I understand the solution.

And so how does granular energy fit in? Because this feels like it feels so structurally important to the market that Aren't governments gonna wanna make these changes? And how does granular energy fit in? Yeah.

Absolutely. And absolutely what we've been talking about is the system itself. Right? And we're just one company, and we're not going to change the system on our own.

This is a big ecosystem, and we're doing one specific, but we think important piece of the puzzle. So you're absolutely right.

Certificate systems are in general regulated by nation states or in Europe, there's a federal system that governs the or called the guarantees of origin system. It's set out in European legislation.

It's in UK legislation, and in Europe it's regionally governed, but still by by authorities by state legislation.

And the certificates themselves are normally issued by authority So the issuer in the UK is the regulator ofgem.

Sometimes it's the TSO that can only be one issuer per country.

According to your EU law.

So we're not the issuer of these certificates today, and we don't plan to be what we've been campaigning for, and that was some of the work I was doing with energy targets for all of these certificate systems around the world to be updated, just add that time stamp. It's not a big change they need to make. They just need to add one more piece of information to the certificate, which is the time of when the energy was produced. And actually, thankfully, that change is starting to happen. It's not an overnight change, but in Europe, and in the US, we're seeing more of these issuers of certificates at the time stamp, actually outside Europe as well. I reckon it's a kind of international body for certificates.

And so the this change is happening. It's even starting to appear in any legislation. An example of where it's important is something like green hydrogen because the definition of green hydrogen is very important.

Because if you've used electricity from a gas turbine that creates more carbon emissions than just doing blue hydrogen or gray hydrogen, So you've gotta make greenhouses only as green as the electricity going in to the electrolyzer. So there's a rule now in Europe and the UK that you need to match on an hourly basis your electrolyzer with clean energy. And so that's really becoming important. We what we're providing, what we noticed is that the way in which energy companies players in the energy sector manage their certificates, the old certificates is still fairly rudimentary often in spreadsheets.

And so we provide a kind of certificate portfolio management software that enables energy companies and different players in the energy sector to get a a better control over their portfolio. They can see that position. Of these certificates, both the traditional certificates helping out with the current state of play with the existing annual certificates, but then also already enabled to do this hourly matching, and that's a prerequisite for any trading of these certificates as well, because you can't trade anything until you understand your position where you have excess volumes and where you have shortfalls.

And so we're currently working with twenty five utilities around the world in nine countries. To use the software to get a better understanding of their their certificate position and to be able to allocate certificates to all of their customers, all of the people buying energy from the utilities, buying green energy can now, through our software, get a much clearer picture of where their energy is coming from, where the certificates have come from, including down to the hourly level, and the associated carbon emissions So it's a way of helping improve transparency in the green offers that we see today.

And granular Energy, you guys have been going for two years how many people are in the company? What kind of where's the software? Are you in kind of public release yet? Or you're still in testing mode?

No. So we thanks with, yeah, with twenty one people. Yeah. We're still early stages. A bit less than two years.

We we have a product that is in use by suppliers. We in in different markets, we hope to have some public announcements soon, but we have made a few public statements like we have a project with Norpool, the power market operator, where we're co developing a spot market for these timestamp certificates.

And the idea is can we generate an intraday price curve for these certificates that could then be used by a battery and we've done some projects actually with one particularly large utility that helps Can you name drop batteries?

Not with this one, but we've publicly made statements with good energy, which is a big green energy supplier in the UK, but but there are many more that we expect to develop these higher transparency offers, but with one particular utility that operates or manages a lot of batteries, we've shown that they can use those batteries that they manage to significantly reduce the carbon footprint of one of their customers which happens to be a big tech company that operates a lot of data centers. And so you can buy that they can shift load from one hour to another using the battery and then reduce the the carbon footprint.

And just to paint a picture of how that actually works because it's not that complicated. When a battery is charging in within the certificate world, it essentially looks like a consumer has to buy these certificates and claim them against its consumption from web against the charge profile to show that the battery has charged on clean energy. And then when the battery discharges, from our perspective, it looks like a generator, and it gets to reissue new clean energy certificates with record of how much the with the record of the fact that the battery originally charged on renewable energy, accounting for the round trip efficiency losses, and then as a customer, an end consumer, like this tech company, they can buy those clean energy certificates and claim them against their their own consumption.

And most consumers don't mind As long as you can demonstrate that it's clean energy, they don't mind that it's come from a wind farm and then been stored in a battery versus having come from directly from a wind farm. Because you can demonstrate the the chain that it's still clean. And for the battery, what you're then doing is you're just capturing the spread between the low price when you bought the certificate and when you discharge. And because there'll be some correlation between the price of these certificates and the price of power in the wholesale market, typically positions that you are in to an arbitrage should also the profitable positions in the certificate market.

So without having to do too much about your operations, this is just an additional revenue stream to tap into. It sounds awesome because at the moment, the, a lot of if we separate frequency response revenue, as frequency response services, which are a large proportion of how batteries make money at the moment. If you separate that out and accept that the future will be a a lot more of load shifting and trading in wholesale market and the balancing mechanism and whatnot, then price is actually a pretty good indicator of carbon because batteries in that world tend to charge when prices low, which is when power is in abundance or oversupply, which tends to be when it's windy and sunny.

And then you'd look to make a spread between that and another period where price is high and price is high tends to be when it's cold. And dark and often optically windy. And so at the moment, we're using price as a proxy for that. I think in the battery community, there's certainly a, oh, well, I'm speaking for myself here.

It makes me feel comfortable that and, moto, we have done the work on this and looking going to this we've got some research out there, which you can put in the show notes about the carbon benefit of batteries. But a lot of that, you can use price as a proxy for it. It would be so much better to use a real guarantee of origin for that. I think it's really interesting what you said about round trip efficiency because there are some new here.

It's more than just a time stamp. Right? There needs to be a a netting off of losses through a battery. And I think That's something that we need to get really right and be incredibly transparent and honest about because if we don't get that right, it will look like a fast, and we don't wanna go from one farcical system to another farcical, farcical system.

You're totally right. I'm glad you brought that up. And these standards are being developed at the moment. I mentioned at the beginning this non profit called energy tag, which is something I set up that have now handed over to a full time team in Brussels and they're creating a global voluntary standard or framework for how this works.

So if you go to energy tag dot org, you can download the standard, and there's all section on how we see batteries playing in this market, but the the there's a whole working group that is giving opinions on how this can be refined There's lots of questions around round trip efficiency. Do you use an estimate based on the technology? Do you measure it? How do you measure it?

And there are some other rules as well, like when you charge the battery, how long do you get to store those certificates for? Should it be first in first out, VIFO, or are you actually allowed to to store the certificates in the battery for until you're choosing things like that.

Exactly. Yeah. So they're it's all solvable, but we just need to come up with accounting rules that are that are fair and reasonable and accepted. Ultimately, this is an accounting system.

And so there's working groups that everyone can get involved with So please go to energy tag and, get the voltage you're interested. There's a few other bits. Right? So on the actual generator side, there is a it's a spectrum between Nothing, okay, elephant in the room, nothing is carbon free.

Right? We're all talking about clean things, but they cleaner, but nothing is carbon free. And so there's a question about for generators, what is considered renewable and on, and to what extent on which scale does that. Another thing I'm thinking about is if you're if you're gonna be intellectually honest about the role of batteries in the transmissions in the on the power grid, if you like, you're gonna generate power from wind in the north sea and store it in the battery in the southwest.

And then it's consumed by someone in Scotland. There's an awful lot of transmission losses there in the round that needs to be considered in the round trip efficiency. It's really complicated, actually. The more you think about it, it's a huge challenge.

Yeah. Absolutely. But some of those things Those questions like, you know, transmission losses apply to the current certificates, and there are standards around that. You know, we can debate whether they're the right standards, but this is a well established to system, where a lot of these terms are, it actually described in legislation.

It's been developed over a long time. So there are answers to those, not saying that those answers shouldn't evolve and improve. And we're certainly saying that this key aspect of it being an annual matching system has to change to to something that is more granular, but it's still going to be an accounting system. We're not able to track electrons, not even electrons, but it's that you can't physically tell, but what you can do is you can measure what's been generated at a meter, and you can measure what's been consumed.

And then by having this kind of robust certificate system that prevents double counting, you can make a reliable accounting claim. And if you can get the accounting system to line up closely with the physical system, you can use it as a way to send really effective price signals into the system. And you mentioned there is already a price signal in the wholesale power market, but it's not it gives the same signal to a gas turbine as it does to a battery, and there's no way for companies to really select one type of technology over another. There's no way to eliminate fossil fuels from your supply chain unless you do this hourly match it.

I have a question about how this is being interpreted and taken by industry. Because at the beginning of this conversation, we talked about how the current system of annual guarantees of origin probably isn't suitable for it isn't necessarily fit for the job at hand, but it's the best we've got. And I'd I'd think that And and so it's very easy based on the current system to start bashing everybody, right, supply side, demand side, everybody. But it it's based on the fact that the system isn't very good.

I'd imagine a lot of suppliers would actually like to be properly green and sell real green supply contracts, but can't because of the existing system. So My assumption would be, the on the supplier side, is everybody happy about moving to a more granular system? And in general, does everybody agree this is a good thing? Or I guess some folks making a lot of money from this somewhere, and there's the cynic in me thinks there's probably some there's another counter counter factual to this.

Yeah. Yeah.

So totally, I think any big change in the energy sector winners and losers. And so there there will be resistant. There's just resistance change.

So I can talk about who are the the early adopters, let's say, because if you think about it from a, and ultimately this is all dependent on there being demand, right, the consumers are probably the most important category here because unless people want to buy renewable energy, there's no market. And consumers could be a big industrial company or it could be an individual homeowner.

And for companies that have got used to being able to say that they're a hundred percent renewable, meaning on an annual basis, you could imagine that being told, well, actually, that's not quite good enough, you now need to measure where your energy is coming from down to the hourly level and you might not be matched with renewable energy each hour of the day because that's actually very hard. That is a bit of a a leap, but what you're already seeing on the consumption side, the consumer side is that there's certain kind of sustainability leaders, the big tech companies like Google and Microsoft.

They have already set themselves targets to get to what they call twenty fourseven clean energy, so matched every hour of the day by twenty thirty, and that's not because they're being told to by any, you know, standards, body, or government, it's because they've recognized the problems and the fact that they're open to being accused of brainwashing by doing the old system. So they're just leading with this. And then as long as there's demand, then I think they'll be the rest of the industry will be quite happy to create the solutions in order to meet that demand. I think where if what what we do want is for the community, the energy companies, the suppliers, to get on the front foot and start offering it, and they'll there are some leaders like good energy who are already coming out with products which give this more like hourly level granularity and we expect more to follow But again, it's that messaging.

Okay. We've been selling one hundred percent renewable energy. Now we need to sell something different. And I think what will really catalyze it are changes regulation or changes in standards.

There'll be some it will happen eventually. The question is when do when how quickly does it ramp up? And so decisions like the advertising standards agency in in Ireland banning the sale of one hundred percent renewable energy offers, and there's also the renewable energy directive updates in the EU that was published last week that specifies that these time stamps difficult or granular certificates must be made available to people who want them, is also going to be a big driver So these sorts of regulatory shifts will come and just push the market along.

But at the moment, it's relying on people to essentially recognize the challenges with the old system and want to proactively move to the new system before they're forced to. And I wonder what the market makers would say. Oh, we we need to get Vish on fish Fish from Smart Assurgery came on for a incredible conversation. He's a trader, and trades these certificates. And I'd imagine I need to ask him. I'd imagine that the market makers would be happy about this because there's more to trade, there's more opportunity and Yes. It's more things, which probably means more participation and, possibly more liquidity.

Yeah. I think, absolutely. And I think particularly companies like smartest are well positioned because they have a big power desk. They trade in the power market.

What's interesting about these certificates is that the people who trade them today brokers, you said, the middlemen. They're often not they trade certificates, but not power. So they trade things like carbon offsets, and other environmental commodities. And as we all know, the power sector is a slight slightly unique sector, right, because you've got this timing issue.

And it also means that you don't need any kind of centralized venue.

Historically, there's been very little price transparency in the certificate market because all the trading is happening bilaterally between brokers, lots of it over the phone. And so it's been very opaque and some brokers have been making very attractive margins by trading this this commodity in a in an opaque environment.

And I think when you move to this time matching, it also just means you need it won't it'll still be a lot bilateral. Just when you have a lot bilateral in power, but you'll need some centralized venues, which then create the price transparency that is lacking in the market as well. And the people who are used to trading power will be well positioned to to do well at this market. And so, Toby, now to the last two most important questions, I think, The first one is your chance to plug something.

So if you're if you've got a big announcement, now is the time to get it out there. You've already done a pretty good plug job of plugging the concept of granular certificates to battery energy storage folks I think it's pretty compelling. Really excited to see what happens there. So, yes, please do plug something now, and then we'll ask you what your contrarian viewers.

Great. Well, we, primarily today, we work with energy companies, energy suppliers, utilities, anyone in the energy supply value chain, And if you are in the business of buying and trading energy certificates today, we really wanna speak to you because we can help you manage what you're doing today, automate a lot of your existing processes, and then help you to create better value product for end customers, and if you're an end customer or if you're a battery operator, and you have contracts with those utilities or energy suppliers, then we also want to hear from you because you can help create that customer pool that we were talking about.

The more end customers that say we want to do things better and we want to see this hourly level transparency, then the faster this change will happen. It's being driven by voluntary demand, and then we expect regulations to catch up And that's just actually how pretty much all environmental markets get started. It's a group of people doing this because they they think it's the right thing to do. And it's only once it gets to a certain scale that regulators catch up and say, okay, this is being adopted, we need to put some rules in place.

And so that's exactly what we're seeing here. And that change is already starting to happen, but the more people who come forward and say, we need to do this, the vast to everything will happen, and the boss we can create revenue streams for the battery community. So there's the call to action. And now the contrarian view, what do you believe which probably most people don't.

Okay. So I think, well, I talked a little bit about our our vision, which I don't think is shared by many, which is that ultimately we see a kind of alignment between wholesale power markets and these certificate markets.

And once these certificates are available, as, and they're based on the same metering data that's used in power markets, there's lots of applications for them. I'll give you one. People are talking a lot about electricity market reform and moving to nodal pricing or even local energy markets or peer to peer energy trading. And now to make the changes necessary to do that with the balancing mechanism is very difficult because you're messing with something that is keeping the lights on. But you can do it with these granular certificates very easily. You can simply create an incentive for consumers in a region to match consumption with locally generated renewables and storage and balancing on a, on an hourly basis, just using the certificates.

Without having to change anything about how the wholesale power market works. And then you can even if you're, you know, if you're a regulator, you can give a discount for people who locally consume renewable energy or hourly match with local renewables, so say ninety percent. There's actually a way to create all of these kind of policy objectives around local energy, community energy that we've been wanting to. And we talked a little bit about this in our white paper, but We want that concept to really take off and spread out.

That that's awesome. So you could create the market structures that you wanted via certificates rather than the app actual power market, and then just net it all off at the end. I must say since getting my head stuck into the US system, what the it's it's a desperate there's lots of different systems here, but, particularly, Ercot, and how nodal pricing works here. I'm such a big fan of it.

I think it's actually fantastic. And I really hope we can get it on UK. That's probably a bit of a controversial one for me. I know there's a lot of pushback on it, but it really as a way to send locational signals.

I think it's if designed properly, it's pretty impressive. Toby, you wanna say massive thank you for coming on. That was a fantastic conversation. It's gonna be fascinating to see where we can get to with certificates in the next few years.

And we're gonna be watching you closely. So we'll put a link to granular Energy in the show notes. If you're interested about finding more, get in touch with Toby and the team, one to watch. And if you listen to this and you like it, of course, please do hit like and subscribe and let us know what you think in the comments.

It really is the lifeblood of this whole podcast. Thank you very much, and we'll see you next time. Thank you so much.