How Battery Route to Market Structures Impact Investment with Victoria Upton (bp)

Hello, and welcome to transmission. Today, we're joined by Victoria Upton, a European power originator at BP's trading organization, who has been working in the battery space since twenty sixteen, where she helped bring EDF's West Burton battery project to market. The conversation explores various route to market structures for battery projects, including tolling arrangements, floor contracts, virtual battery swaps, VBS, and the complexities of colocating batteries with solar. I think listeners will really enjoy her contrarian view on floor contracts, how small differences in profit sharing percentages can become meaningless if the overall profitability drops as it did in twenty twenty four, with the potential of wiping out years of expected returns for optimizers. So as battery revenues mature, are these complex financial structures going to win an increasing market share? Let's jump in.

Hello, Victoria. Welcome to transmission.

Hi, Ed. Thanks so much for having me.

So as ever, let's get started off with who are you and why are you important in the context of batteries in GB?

So I'm Victor Epton, and I currently work as a power originator, BP's trading organization.

So I started my career in energy in twenty fourteen. I, did a two year graduate program at EDF Energy, which I think actually is a little bit of a school, really, for people in the energy industry. I worked across four different teams as part of that graduate program, which gave me super broad insight into the UK energy market, really. And then coming through that, I took a role in EDF Energy's renewables business, where I mostly worked on onshore wind and battery storage in the UK.

So I was actually involved in twenty sixteen in, at the time, I think the biggest asset in the UK, which was a battery we developed at Westburton B. And that asset was forty nine point nine megawatts and half hour duration. So that was entered into National Grid's enhanced frequency response tender, which I think really was quite a turning point for battery storage development in the UK. So that was, yeah, kind of interesting to look back that I was involved in that so long ago.

And since then, I moved to BP and coming up to been there about seven years, in power origination.

There's kind of two really fun things in there. So one is that anyone working in the battery space, if you've been working in it since sort of twenty fifteen, twenty sixteen, you've kind of seen the whole lifetime of it. And so actually some of the people who know the most about batteries tend to be or can be quite young in context to like the people who know the most about say gas CCTTs have seen them since, you know, nineteen eighties, nineteen nineties and have been in that space for a very long time. So it's quite it's quite funny that the battery space is is relatively young in comparison to other parts of the power world. And I also think the grad schemes, lots of other really good ways of getting into the energy market, but such a good place to start because you can see four different parts of the energy industry without kind of, it being issue when you move on to the next thing. You just learn so much on on those grad schemes if you can get a spot.

Yeah. Yeah. Definitely. Would would recommend anyone wanting to be in the industry for sure.

Excellent. Okay. So let's let's get started with tolling. So this this episode is gonna be about route to market structures and how do people how should people prepare for coming to an off taker? And let's start off with tolls. So why are tolls interesting to you?

Yeah. So tolls are interesting to us. I think as a large trade organization, tolling, you know, it's not something that's new necessarily. So it might be new in the battery space, but it's not new.

As you say, you know, tolls have existed in other commodities, so existed CCGTs and in the gas market for for many, many years. So tolling for for a large trading organization like BP is is interesting because we have existing power portfolio. We've got power purchase agreements in there. We've maybe taken long term positions in certain markets with other products.

And tolling on batteries brings a different profile into that wider power mix of every risk and positions that we're managing. And it's a different product into the portfolio to help manage that risk. And ultimately, it's something that because we've seen it in gas and other commodities in times gone by, it's it's a product that we're sort of familiar with with how that risk reward works.

Okay. And maybe just let's let's break down what a toll actually is. So very simply, what is a toll?

So a toll is where, say, as the optimizer, you agree to fixed fee, so a fixed annual fee per megawatt per year to the asset owner. And in return for that, so you optimize the asset and ideally maximize the returns that asset receives. But you as the toller would receive well, essentially take the risk of what the asset actually earns. So if the asset earns more than the level of the toll, then that is for the optimizer's benefit. But obviously, if the asset earns less than you the level you have told, then that's also a risk you take as the optimizer that has paid to toll the asset.

Okay. So you're giving that certainty to the original owner of the the the site, and then you're taking the risk that it kind of overperforms or underperforms in the toll?

Yeah. Exactly. So from the from the from the asset owner or the investor's perspective, it provides a different risk profile as well to, say, other products in the market because you would you know, you'll receive a higher pound per megawatt tolling fee, if if you wanna call it that. But you, let's say, will rely less on then merchant exposure, but but ultimately merchant risk.

Okay. So less variability, more structured, which means means it's it's more more stable rather. And that means that effectively it's easier to finance that asset. So that's how it's sort of good news for developers.

Yeah. Yeah. Okay. And then how how does a big organization think about tolls? So why are they sort of attractive to you?

So they are attractive to us because as we said, there's something that we have seen before in other commodities, so we understand them. And I think ultimately they provide, you know, different risk profile than, let's say, other products in the battery space at the moment. So floor products are not something that we have sort of ever particularly been that interested in. They're sort of very competitive.

I think during certain periods of, you know, attractive revenues in the market in sort of twenty twenty one, twenty twenty two, the level that floors were set at versus the revenue share was kind of dislocating a bit. Sort of expectation of the level of a floor was going up, size of assets was going up, but the revenue share percentage that developers were looking to sort of give away for that product was kind of only decreasing. So it kind of created quite a challenging sort of risk return profile from our perspective. And, ultimately, that product doesn't give the same sort of portfolio benefit that that we're looking to achieve in in our business.

Okay. And maybe just to help people kind of follow that through. So with tolls, there's very much a fixed payment that comes from the optimizer to the owner with a floor. The floor implies there's a there's a a certain amount that is fixed, and so you might fix say thirty thousand, forty thousand, or fifty thousand pounds.

And then there would be an element of profit sharing that happens above that. So with a toll if if you're an owner, when you toll something, you'll get a very fixed return. Whereas if you're signing up to a floor, you'll get a portion of your revenue that will be and then you'll get a portion that will be variable that is above the floor. And so just just to kind of as a as a quick recap, for those that sort of, spend less time on it.

So have have we seen I'm really interested in the kind of you were talking about how in twenty twenty one, twenty twenty two, there was a kind of growth of flaws in the space. Have we seen something similar? Is there momentum behind more tolls coming into the market? How how does that work?

Yeah. It's definite definitely been a change in momentum, I think. So, you know, obviously, twenty twenty four was was a challenging year for revenues in the battery market. And I'd say that really sort of evolved, let's say, the interest in in tolls and ultimately, investors and and people who are looking to lend money in the space.

You know, they've also had to come along a bit of a learning journey of what are the different product options. But we I'd say during twenty twenty four when, yeah, when revenues were were, let's say, challenged, we saw a huge, huge increase in interest in in tolls. And I think, ultimately, that that makes sense, and that's the nature of of these markets because there's been so much change and variation in in what revenues people have seen. And, you know, a toll will provide that that more certain, you know, return and level of guaranteed revenue and it removes some of that merchant exposure, which some investors, that is what they're looking for.

So I think where people maybe have run scenarios looking at sort of the lows of revenues sort of down to forty ks a megawatt a year that we saw in twenty twenty four, you know, that's that's quite a low sort of revenue scenario, which which isn't probably particularly attractive to people. So that then has increased that interest in, well, okay, how do I actually fix a higher revenue certainty? And I also think, sorry, that, you know, with assets getting larger, I think that's maybe changed some of the way that different products that people are looking at. People are maybe splitting larger assets into multiple BMUs.

And so then wondering, maybe I could do a floor on one BMU, maybe a toll on different another BMU, and then sort of looking at a basket of of revenues that overall give them the revenue certainty they need for financing, but then maybe an element of of merchant exposure as well. So it's kind of how people are sometimes reviewing a large asset in into multiple chunks.

Why would a client split into multiple BMUs?

So we we've seen this more and more, I'd say, again, over the last year or so, think, where an asset maybe is above even above about one hundred megawatts, so there can be multiple benefits of splitting into more than one b m u. So I think, firstly, you know, I can't really speak from, let's say, the development side and what it means in terms of, registration and sort of asset actual development and obviously considerations at a particular site because there will always be those elements to consider. But from a contracting perspective and then even an optimization perspective, So let's say you have a three hundred megawatt site.

If you split that into three BMUs, you essentially have three one hundred megawatt assets. And each of those assets can in theory be optimized independently, which means you could have three different optimizers across and they each optimize one different BMU. And they could have very different strategies in terms of how the three BMUs are managed. But also it's another thing that we've looked at, which is interesting, is there is some restrictions on both in terms of ramp rates to do with the grid connection and the technology that's deployed.

But also there are some limitations currently on the size of BMU that you can enter into certain ancillary services. So for some services the maximum you can enter is one hundred megawatts. So again we're kind of having more conversations with people who are looking at these much bigger assets that they see a benefit based on how ancillary services and revenue structures available today and limitations that exist there, know, how splitting the asset is definitely seen as a benefit over kind of keeping it as one asset. And we're also seeing a lot of interest in people sort of distributing a large asset amongst multiple optimizers.

Okay. And I've done a dreadful job as host here because I didn't explain what a balancing mechanism unit was. A a BMU, there is a balancing mechanism unit. And that is a a site, a generator, a battery that is effectively providing services directly to the control room to turn up, to turn down, to meet the needs of of the control room. And maybe just to say, like just you you were kind of implying it that more people were considering this. Would you say that this kind of it's commonplace to see assets being divided up into multiple BMUs, or is it is it quite rare?

I'd say it's definitely becoming more commonplace, but that's partly because we're seeing assets just get bigger and bigger.

So Okay.

Interesting. Okay. So we've talked a little bit about why a toll is really useful for an asset owner and why they might really like working with you. But from your side, who is an ideal person to be providing that toll to?

Yeah. Great question. I think that's there's a few different options of who's who's interesting to work with in this space. I think, you know, we often draw parallels to tolling arrangements, which typically people may be looking for sort of seven to ten years if they're looking to finance an asset off the back of signing this type of arrangement.

So for that type of length contract, you know, we see lots of parallels with power purchase agreements in power markets. And the reason for that is there's a similar type protections and clauses in there that you would see in a power purchase arrangement. So someone that, let's say, has experience in that market, I think, will maybe already be more readily sort of aware and understands and ready to negotiate some of the sort of maybe trickier type terms, things like sort of termination, delay damages, those types of things are important in these contracts. And because of the level of risk being taken and the length of duration of the contracts, Someone with experience in PPAs is helpful.

I think the other thing is someone looking for revenue certainty. So that that is what you achieve out of a tolling arrangement, so that's ideal. And someone also who is perhaps looking to refinance an asset, so often people are looking for a toll to finance a new build asset. And in that case, ideally, the asset would maybe be eighteen to twenty four months away from its commercial operation date.

Sort of much longer term than that is ultimately a bit more challenging just due to the ever changing UK market and some of the risks that exist with such a faraway COD. But I would say that the other party that would be interested interesting to work with on this type of product is maybe someone who's looking for a shorter term toll on an existing asset. Because this type of, as we've said, tolling arrangements are sort of becoming more and more commonplace and more understood and maybe more of a precedent in the market. So perhaps someone who has an existing asset that is on a different type of structure, but maybe they want to refinance and use those funds to invest in new projects.

That's the type of investor or developer that that could also be interesting to work with on maybe a shorter term toll.

Okay. And you mentioned COD, so the commercial operational dates of when the asset goes live. I suppose you've also got the the flip side of this. So if they are twenty four months or eighteen months ahead of that time, plenty of time to have that negotiation. If somebody comes in and says, oh, I go live next month. What do you think?

There's probably not enough time from from your side to to run that negotiation, and and that would be, like, far too close to to delivery to to kind of work out a toll.

Yeah. I think that's fair. So I think if someone was lucky was was one month away from commercial operation date and and wanted a tolling arrangement in place for commercial operation date, I I'd say that's probably challenging. You know, realistically, and I think perhaps Louise mentioned this on on her podcast a couple of months ago, you're probably talking anywhere between maybe six to twelve months is realistic and how long these arrangements take.

And again, that's very similar to what we see on the power purchase agreement side of our business. But you know, we typically see that people are looking to put tolls in place, as I said, if they want to use them to secure financing and debt, then they're typically putting them in place prior to taking financial investment decision. So if someone has already taken that and then is approaching commercial operation date, I think possibly you have a bit more flexibility and timing. And if someone's been able to take financial investment decision and then later down the road decides they want to put a toll in place, then that's also super interesting because you probably actually remove some of the risks from the contract because you're so near to commercial operation.

So if people are listening to this and they're thinking, okay. I now know what a toll is. I now have a good idea what a floor is. How should they be thinking about the difference between tolls and floors, and which one should they be moving towards as a good idea?

So ultimately, tolls are more complex contracts than a merchant contract or a floor contract, which are at the moment the the main other options in the UK market. You know, the consideration on sort of the advice needed, the time to negotiate such contract are pretty key. But I think the other thing that's really worth sort of assessing and analyzing from sort of a business case perspective for a developer and for someone investing in the space is, you know, floor contract can is simpler and people can look at sort of the merchant element that remains and have their own view of the worth of that and their own projections of, the UK market.

But one thing that we've done quite a bit of analysis on is a floor contract really is very dependent on the actual performance of your optimizer. So having a floor contract, but not a good optimization strategy or out turn of revenue. The question is, is that the best option for the asset and for the actual returns for the investor compared with on the toll side, kind of having that fixed revenue where you're perhaps less exposed to the actual performance of the optimizer. So, you know, I think that's something that does need to be analyzed as, you know, we see a huge, really a huge variance in performance of optimizers.

So I think that element sometimes is maybe not taken into account as much as much as people realize. You know, I recently saw something online from another company in the industry talking about how, you know, people can sort of maybe on a floor contract quarrel over like zero point five percent merchant revenue share. But really that becomes insignificant if the performance of the two people that you're maybe deciding between one offering not point five percent more than the other, if if their performance is very different, then in reality, that different in revenue share becomes a little bit insignificant and and irrelevant.

When it's when you're selecting that that profit share or the the floor percentage, don't be don't be just focused on the lowest possible percentage of what that profit share might look like because actually you will have different levels of performance across different optimizers. And even though someone is giving you a kind of the lowest profit share, there might be better performance overall with a higher profit share.

Yeah. Absolutely. And I think comparing a toll to a floor, you know, yes, you're going to, you know, have merchant exposure on the floor. But the question is, have you run, let's say, lots of scenarios to see whether that that merchant exposure does that work for your business case in, you know, low, medium, and high revenue scenarios? Because twenty twenty one UK average earnings versus twenty twenty four UK average earnings were very, very different. So you could be in a scenario either from the market itself or from optimizer performance where a floor contract, you know, maybe at forty, fifty k, if that is the level you're receiving and there's not much upside from that, is that a better outcome than locking in, you know, a a tolling arrangement?

And maybe the maybe the interesting thing about that sort of forty k level is that I think for most battery sites, when they're thinking about sort of a breakeven of how much money do they have to sort of make in a year to meet sort of financing repayments, for example. Often above some of the floor levels you hear talking talked about. And so I think that kind of does ask a question like how much security is a is a floor giving you and is it giving you enough security to have a sort of sustainable business case? Because as you say, if there are a few downward years or like your optimized performance isn't good enough, then it's gonna be really hard to essentially keep on hitting what you're what you require from the finance side. So we've talked a lot about the toll structure and the floor structure. Maybe one sort of final question on on tolls. Are they all fully fixed?

So typically, the toll price would be would be fixed for the term of the the contract. But one thing that we talk a lot to investors and developers about is the concept that the whole capacity of the asset doesn't all have to be under a toll. So again, if someone's looking at the revenue options, so merchant floor toll, then with one contract, you could essentially have, let's say, eighty percent of the asset tolled. So that eighty percent would be receiving a fixed pound per megawatt per year. And then keep, you know, the other twenty percent fully merchant. So in that sense, you're still creating, you know, a mix of of revenue and investors can have that choice of what portion of of merchant exposure are they interested in, works for them. So we're seeing that as an interesting way to, I guess, find a middle ground between how much merchant exposure and how much fixed revenue people people take.

Okay. Interesting. I I think people are getting a real feeling for how much of, how much flexibility there is between the sort of fully merchant then with a floor, then with a toll, and then the then in fact, not only that, but you can also select portions of your asset to go into one of those and portions of your asset to go into another part. So lots of lots of variability within there.

And of course, what you're mentioning as well, which was when you get to the end of that tolling arrangement, then your lot your asset might still have another thirty years to go. So, how you contract your asset is a a rolling conversation and a huge amount of complexity. So I think people will really find that useful to get an overview of how that space works. I have heard one other term in the market recently, so a VBS.

Would you like to describe what a VBS is?

Sure. So there there's actually two well, I use two different names for for a VBS interchangeably, which which perhaps doesn't help, but it also maybe helps if people are hearing hearing them both. So for me, a VBS can stand for either a virtual battery storage, but it also could stand for a virtual battery swap. So the s can stand for two different things. But ultimately, people are talking about the same product.

And what is that product?

So it's a virtual agreement that is not actually asset backed.

So what we mean by that is that the it's a trading arrangement. So in the UK, for example, typically just traded under a standard GTMA contract. So it's basically a UK trade, the volume that the contract allows for, let's say at three AM, and then you're going to sell one hour of volume at five pm.

And you as the buyer would then, and let's say this this product is settled, it's a physical product, you would then nominate a day ahead and you would then physically receive those volumes and that is what you have paid the fixed price premium or fixed fee for, which is obviously set at the beginning of the contract.

Okay. So rather than physically controlling the asset as you would with a profit share or with a floor agreement or with a toll, you're essentially saying, I want to buy from you some of the power that you're gonna consume and you're gonna generate, and I'll pay you an amount of money for that. And so let's just say we're talking about one day, I would pay you say thirty pounds and you would give me ten megawatt hours in the morning and then sort of ten megawatt hours of length in the at the end of the day, and that that's kind of how it would work. And those sort of blocks of energy would be worth thirty pounds ish.

Well, ideally more.

Ideally more.

If you're the buyer. Yeah. Yeah. Exactly. So the product can be can be tailored, obviously, between the two the two parties to take into account of sort of the volume, how long you want to fix that price for, you know, how many cycles are allowed, and obviously, also for duration. So although then the product can be, let's say tailored to what works, it's still not actually asset backed in a physical sense like you said. So it still sits separately to any physical actual optimization that if in theory there is a real asset there for one of the parties, then then that's kind of managed separately.

Okay. And so if I am a physical asset, I'm a I'm a battery, we've agreed to VBS, you're paying me some money, and I'm giving you kind of from my position, which has lots of different trades within it, but I'm just giving you, say, a charge in the morning and a discharge in the evening. What can I do with the rest of the battery? Do do I have to kind of sit and wait, or can I just can I carry on trading that as usual?

The product could, in theory, also include inch day values, but what we just spoke through is is just talking about nominating day ahead. So we see at the moment these contracts are being used to hedge just the day ahead portion. And also because they're not actually asset backed, in theory, from the from the battery's perspective, the battery could be doing anything it wanted to maximize its revenue. So obviously, day ahead versus intraday is going to change its view on on what the most optimal thing to do is, and it should still function and be optimized to maximize the revenue that it earns. And that should be done irrespective of the VBS.

However, obviously, the the volumes that have been nominated do still need to be delivered. So in terms of who's optimizing or who's physically trading those volumes with with the VBS holder, obviously, needs to be considered. But the asset, you know, the battery itself can still be operating completely normally across all markets.

Okay. And is this product maturing? Like, it seems like it's started to come out as a product. So we're starting to see more of it in the market?

I think it's definitely something that's being spoken about more and more. So people are talking about it when when they consider the different products available. When developers, you know, launch tenders, more and more people are kind of asking about this type of product. So definitely seeing an increase in interest. So typically, we've seen a VBS contracted just to basically hedge day ahead only. And there's work going into, well, how how could we then also include maybe the intraday value because that that changes the product somewhat, but it would also change, you the portion that's being risk managed in terms of day ahead and intraday value. I think the other thing worth noting is this product can be transacted both physically and financially.

So if the product is physical, then the buyer is nominating it day ahead and, you know, they don't have, we call it perfect foresight of where the day ahead auction is going to clear and what the value of the hours that they nominate, you know, what what is going to be the value and the price of of those hours.

So if the product is traded financially then firstly there is no actual physical delivery of the volumes, the product is settled sort of after the fact so we would then say that that is perfect foresight And the VBS has essentially created a formula which, let's say, says the payoff for each day would be, you know, the highest versus the lowest one or two hours after the fact. And then that is calculated as your financial payoff.

Okay. So this is kind of we're starting to go out out of the the sphere of profit shares, flaws, tolls. We're now starting to get sort of standalone smaller contracts that can let you package up the risk of, say, a battery's operation in another way, and that can allow asset owners to derisk their position, but it also allows traders to do sort of innovative things that they can offer that potentially gives them an edge in terms of providing a route to market contract.

Yeah. I think what's really interesting about this product is that there's lots of different players in the market that that are interested in this, and they're interested for different reasons. So we've spoken to other optimizers, for example. So other optimizers might have contracts in place with real assets, perhaps they're floor contracts, perhaps they're tolls, doesn't matter, but they have agreed a long term contract at a certain price and they might be interested to sell this product to hedge the day ahead portion of the contract that they have with a natural asset.

A developer with an existing asset who may have either a merchant contract or other type of route to market could also be interested as it's a way of guaranteeing revenue certainty.

And maybe they have a view of value over the next one or two years and so interested in a shorter term product that will bring them revenue certainty and and help them.

And it's it's it's interesting. It's about the the repackaging of some of the risk is happening. So as the market matures, there are different ways of dealing with the risks that come out of these optimization contracts. Maybe to move on from standalone batteries, I'd like to just cover off colocation before I move to the final two questions. So colocation, how have you seen this change over the last few years?

We've seen quite a lot of change, really. I mean, I think two or three years ago, it was probably one of the biggest buzzwords in in the GB market. You know, you couldn't go to a conference without there being multiple panels on colocation, and and everyone was interested. And, you know, it was a super sort of hot topic.

I think the interest in colocation has reduced a little bit, at least in the last year or so. And I think there's many reasons for that. So, you know, we've got uncertainty on grid reform. We've got uncertainty on Rima.

We've got uncertainty and currently unknown timings on the next CFD round. I think one of the biggest changes perhaps that's happened in the last three years that we've seen on colocation is that you had all these people really interested, lots of people develop projects, get planning permission for projects.

And on top of all the all the other challenges I just mentioned, people have just realized that colocation is really hard. It's complicated both from a project delivery and engineering perspective, but also commercially. So although there's a benefit, a natural benefit in sharing a grid connection and optimizing costs from that side, the sort of precedent and really obvious benefit commercially is is still quite challenged, and a precedent hasn't really been set on exactly what that looks like. And commercially, people have been trying to, like, really unlock what what the optimal business case is for colocation.

And with all the other challenges I've already mentioned, on top of that, you have revenues for batteries seeing a decrease in twenty twenty four, and that's fed into both what products sort of an optimizer and an off taker might offer and also maybe revenue expectations versus the complexity. The the holy grail hasn't really hasn't really come come to light. So we've seen various projects be developed and come to market, but I think the the general interest and the surge of projects has not quite come to fruition in in the way I think a lot of people at one point expected.

Okay. And I think maybe this is kind of a really interesting part of the evolution. So we look a lot at kind of like solar cannibalization across Europe. So Germany and Spain, super interesting markets for us.

We we've been releasing analysis about both markets. I think on that point around capture rate and cannibalization, we've definitely been seeing some solar sites getting knots like hundred percent of say the baseload price, but they've been getting down to something like fifty percent of the baseload price over the course of the year. It's just such a strong performance from solar. It's interesting that the market kinda considers those assets to be very stable and very secure, but we are seeing the revenue starting to shift.

And I think that's a real opportunity for batteries to come into those markets. But you're you're seeing maybe there's been sort of a cooling of colocation in the market recently.

I think I think in the UK, as I said, there's there was huge interest.

I think at one point, nearly every solar project that went through planning added battery because it was kind of a free option to do so, which gives the option to to have both those assets on a site, whether it be in the initial development of the project or in the future, which is great to see. And we are optimistic about the future of colocation and the fact that grid connection is scarce, and it it should make sense for the synergy of battery and solar to be together and share a good connection.

However, as you say, I think Spain is perhaps a market with even more need for colocation and is a super interesting market and perhaps has a bit of a different opportunity than the UK just given its yeah. The challenges it's currently seeing in the in the solar space.

So in the UK right now, what would an ideal colocation site look like for you?

Maybe some of the the more interesting sites, would be so so AC coupled, which is to do with how the battery and the solar are connected. There's still some complexities to work through on DC coupled collocated sites. So AC connected and I think where the maybe the battery has a longer duration than maybe the the UK average. So people perhaps looking at three or four hour duration batteries alongside the solar. I think that's interesting because it creates a bit of a different asset mix at that grid connection. And also where there's an appropriately sized grid connection where ideally the import and export capacity is symmetrical.

Yeah. And and maybe at some point in the future, if everything becomes so cheap, maybe it's possible to co locate where you've just got an export connection. But right now, you need you need you need both sort of import and export to match the size of say the battery that you're putting on. Yeah. Okay. I'm gonna move us on to our final two questions. So is there something you'd like to plug?

There's a couple of things. So firstly, I it would be a miss to not to not plug BP's recent optimization performance. So year to date, twenty twenty five, from an operator's perspective on on Motor Energy's own leaderboards, we are second highest performance only only behind Tesla. And actually, for the months of April and May, we we are top operator. So, you know, that's performance that we're we're really proud of. And, you know, there's a lot of hard work behind the scenes, sort of constantly improving our optimization, working with we have a dedicated team of data scientists working alongside with our traders. So we're really pleased with that with that performance this year.

Okay. And you mentioned you had two things?

Yeah. So the other thing is that we're really interested in batteries in Spain and Germany. So for us, they are kind of our most interesting markets outside of GB. So if anyone's looking at projects there and wants to understand revenue structures and what we can offer in those markets, then please get in touch.

Yeah. It's fascinating markets. Think both Spain and well, mean, Germany is very hot at the moment. Lots of interest in it.

Potentially too much interest. I think perhaps Spain has greater need, but much less sort of, interest in it, but maybe the combination of both is a is a sort of home run. Let me, move some to our final question. So is there a contrarian view that you hold that, not a lot of the market believes?

So I think probably one unpopular view that I have is is around floor products. So we maybe touched on it a a little bit, but I think it's just really interesting to really look at the sort of risk risk reward from an optimizer's perspective for a floor type product. So if we use some some numbers as an example, if you take a hundred megawatt asset on a ten year floor contract, let's say the floor level is at fifty k and you agree to that the optimizer earns ten percent revenue share above the floor. And let's say from the optimizer perspective, you assume on average over that ten years that the asset could earn sixty five ks.

So in theory, you're the GBP fifteen ks above the GBP fifty ks of the floor, earning ten percent revenue share, then you might be expecting to earn over that ten years, all rounded numbers, sort of GBP one point five million.

For example, in twenty twenty four, as we all saw, you know, percent of all assets in GB in twenty twenty four earned less than GBP forty thousand. Let's say your asset earned that GBP forty thousand, the ten ks difference between the fifty ks floor and the forty ks the asset earned on one hundred MW, that's a million pounds. So from a risk reward perspective, that one year in ten years could wipe out a huge portion of your potential earnings. And I think from our perspective, those numbers themselves speak to what what can be quite a difficult risk reward profile.

Super interesting. I know a lot of people are very pro floors, so, this will be contrarian. They are. But I think it I think it gives a lot of, detail to how optimizers and originators who kind of connect the developers and asset owners with the credit teams, within some of these big, off takers and traders, some of the number wrangling they have to do to make these these these these projects and these deals float. So I think super interesting insight into that. Victoria, thank you for your time and expertise. You've been a great guest and yeah, looking forward to having you on again soon.

Thank you.