The evolution of BESS revenue models with Louise Dalton (Partner @ CMS Law)

Hello and welcome to another episode of Transmission. Today, we are joined by Louise Dalton who is a partner from CMS. Many of you will know Louise from battery transactions that you have worked on, but also from industry initiatives like Wines.

The conversation focuses on contracting and managing key risks in energy storage projects. From the conversation, I really enjoyed the section on tolls. How these are structured? How they deal with changes in the marketplace?

And how do you deal with some of that uncertainty.

I think many of you listening will find this really useful and let's jump in.

Hello, Louise. Welcome to Transmission.

Thank you so much for having me.

So we are going to get started off with your experience in the space. How did you get into storage?

So I'm a partner at CMS, which is an international law firm. I'm a partner in our energy and infrastructure team.

I've been advising on batteries since twenty fifteen, so ten year anniversary this year. So, the first batteries I was advising on were ten megawatt thirty minute systems, and it feels like the sector's gone a long way now that we're acting on multi hour gigawatt plus systems in lots of different jurisdictions.

I mean, that ten year period has actually been totally crazy. So I was looking at some early Fez stuff from the mid teens, and the twenty sixteen one said, by the way, we've got two thirty megawatts of batteries in GB. And I look back at that, and I think, oh, wow. That kind of like, we really have moved quite fast from there.

Yep. So so how did you how did you kinda get into batteries? Because batteries kind of only really became a thing around sort of fifteen, sixteen from a grid perspective up until that point. Now what was your kind of bread and butter prior to then?

I advise on commercial and regulatory arrangements for clean energy technologies across offshore wind, onshore wind, solar, and with a particular focus on the kind of regulatory arrangements. So to be honest, what first got me into it was how does storage actually treat it under the electricity act, which feels like a very geeky question now. And we've kind of come up with some solutions or answers. You know, do you need a generation license or a supply license?

How is it treated from user system charges perspective? No one knew the answers to those questions in twenty fifteen. So that's how I first got into it, and then I've never looked back. It's always changing.

There's always something new to look at and advise on, and so it's become a a real passion of mine.

Absolutely. And we've probably got now somewhere between five and six gigs depending on when this, podcast goes out, and I'm pretty sure we won't be late enough to go past six gigs. So some of between five and six. Of that portion of batteries that have been added to the system, CMS and your team, how many do you think you've seen and and worked on?

That's very quick math. That that yeah.

Quick math, I was gonna say. It's really difficult to say because, obviously, there's lots of projects potentially you work on that maybe don't necessarily come to fruition, etcetera, etcetera. You might be working on an equity transaction, or we do a we've got a full service practice. So I tend to focus on revenue and regulatory arrangements on the stand alone basis, so advising on optimization agreements, but also supporting equity and debt transactions.

We've got an amazing construction team who do the full service on the construction, real estate consenting, etcetera. So it really does span the whole thing, and so we might have one team that look at things. Or what we really love doing is kind of providing the whole suite, like helping an equity deal get away, bringing the financing, doing the construction suite, doing the revenue piece, and seeing the project actually being delivered. And there's, you know, a number of gigawatts which we've been which we've been working on, which is in just in GB, which has been fantastic.

Yeah. Yeah. And and then anything kind of done in GB, right, is a great buildup for other, storage markets. Yeah.

Kinda think about those big storage markets, Texas, California, GB, Australia, potentially, like, German domestic had kind of put in there. But those are like those feel like the big ones. Yeah. As CMS from the storage perspective, do you see a kind of other areas coming through as, like, particularly hot topics?

Absolutely. We are actually Europe's largest law firm. I mean, we're a global law firm, but we have a very, very strong presence in Europe. And the in level of interest we're seeing from kind of UK based developers and investors, but global developers and investors in terms of Germany, Poland, Italy, increasingly Spain, but also other markets like the Netherlands.

We are doing quite a lot in the Middle East at the moment, Saudi Arabia in particular, and, you know, increasingly seeing kind of potential projects in in Africa and Latin where we have strong presence as well. So it's been really interesting to work with our kind of energy colleagues in all those different jurisdictions about kind of lessons learned from kind of UK market, what's been painful. And also there's lots of international players on this, aren't there? There's, you know, all the contractors are quite similar.

Quite a lot of the traders are similar. Obviously, you're having to deal with the nuances of the local planning regime, connection regime, exactly the electricity market structure, etcetera. But there's a lot of common themes as well, you know, in terms of planning pain, how connection charges work, connection queues seem to be very universal pinch points across, you know, the global network and the global set of projects that we're currently working on.

Yeah. I mean, that's definitely true. So we see this kind of we go from big thermal assets that had quite high load factors, so they they utilize their grid connection quite a lot. We go to wind and solar and storage.

None of those really use their grid connection that much. So even if you want to maintain the same amount of demand, you have to have so much more connection to be able to manage it. So it really is one of those things that as everyone makes that transition, we've just got the same problems biting in all of these regions. So yeah.

No. It's really it's really interesting. Those lessons learned. Let's let's start there. So if we go if we kind of consider the last, say, five years for battery storage within GB, what are those kind of critical lessons learned from the revenue side?

Lessons learned, I suppose, you've obviously seen market saturation in different markets. We saw it happen with FFR. Then we've had seen it happen with dSTAR services. I think everyone's realized that how flexible the battery storage model is always going to be.

And as a result, you're never gonna put your eggs in kind of one basket. We've obviously seen huge amount of, like, innovation in terms of revenue structures, floors coming in. And, you know, I would say now floors are a very, very well understood product with a number of kind of bankable entities providing them. But we're continue continuing to see a lot of innovation in this space in terms of tolls coming through.

So we're currently working on some bankable long term tolling agreements, which will be very interesting, and I can't wait to see the MoDo analysis when, they become public. You know, that's having quite interesting impact on the on the debt market as well in terms of level of interest from lenders. But we're also seeing people looking at other things, you know, potentially bringing trading in house, virtual floors, third party floors, insurance products, forward products. So I don't think it's just gonna stay the same.

And that's one of the things that we really enjoy about the space is the fact that there's always something new coming down the line in terms of a new potential ancillary service from Nissan, dealing with BM skip rates, you know. And now in a world where because we're weaning everyone off the focus on ancillary services, you know, and towards a kind of more wholesale market product, I think we're gonna see any more innovation there. You know? What role does twenty four seven carbon free electricity have in in terms of providing revenue stream for storage?

And we're just starting to work on some mandates which will genuinely provide a new revenue stream to storage, which is gonna be super interesting.

That is super interesting. Let hold that thought because we're definitely gonna come back to it. I'm aware that we've just covered we've just covered about five years worth of content in in about in about in about sort of a minute. Yep.

So let let's let's go back. So let's just start off with, so going from frequency response. So we had firm frequency response FFR, which has now gone, and it's been replaced by the d star, which is dynamic containment, dynamic moderation, dynamic regulation. Those are all frequency response services.

And when you said that that kind of that market is kind of saturated, how how do you kind of talk about that for people who are trying to understand that concept who are maybe coming from outside GB?

I suppose, ultimately, you need frequency to keep the system stable.

You know, technical for people can explain it better than I can, but but, ultimately, there's a finite need that NISO is coming out coming out for. And as we saw in, say, dynamic containment, when we didn't have the battery storage capacity on on the system, compared to what they were currently procuring, it was sustaining quite high prices. Whereas as we saw battery deployment continue, it meant that there was increased competition, which obviously reduced prices. One of the things we tend to find when people are looking at storage as an asset class when compared to, say, wind or solar is just kind of understanding how many different revenue streams there are and stacking them on top of each other.

And even people who say coming from the gas world, you know, they might have been able to do these services, but in reality, they were all being driven by a kind of other kind of market economics. Whereas, obviously, here, you're potentially looking at stacking a number of ancillary services, capacity market, plus BM and wholesale trading all on top of each other to create a kind of investable revenue stack, which is quite a different mindset shift from people who are either coming from kind of the renewables world where maybe they would have had the CFD or a kind of certificate which provided them with a lot of revenue certainty or on the thermal world, which is much more focused, like, not focused on on things like, you know, individual ancillary services.

Just to kind of complete that. So going from a market where in the beginning for battery storage, it was all very much around frequency response. So keeping good frequency at fifty hertz.

As we add more batteries to that system than we needed to need to have in order to meet all of that frequency response. We then saw the price decline, and then batteries decided, well, actually, am I gonna stay in this response market, or am I gonna go to a better market? And that better market is kind of wholesale trading, so the kind of the buy low, sell high, and and things like, flexibility services to the control room with the bouncing mechanism. And so we've kind of seen this this gradual move towards more sort of wholesale structures, which is then maybe an interesting part to where you mentioned a flaw and a toll. So what are those things, and why why does that matter for a for an offtaker?

For an offtaker or developer?

Oh, let's say for the asset owner, why does it matter?

Kind of as we just described, the the revenue picture for batteries can be pretty complicated and flexible, and that's fantastic because you've got optionality.

But a lot of, equity investors and and obviously lenders need a level of revenue certainty.

So a floor is providing a a level of revenue certainty at the downside. Right? So I'm picking numbers out thinner here. This is probably a little bit out of date, but forty thousand pounds a megawatt as a floor.

And then that means that your offtaker will guarantee that in the ten years of the agreement, you always make forty thousand pounds a megawatt for that asset.

And then above that, level, there's a revenue sharing because clearly people are not investing in these assets thinking that that's the kind of level of return they're getting, but there's alignment of interest above the floor. So you have a level of contracted certainty which enables you to get better debt terms, potentially attract a wider pool of of equity investors whilst also seeing upside sharing on on that side of things. Whereas on a toll, it's like we've seen in in lots of other electricity markets, for example, in gas, is effectively full revenue certainty. So you get a a a fixed price per megawatt or kind of per kind of you know, it it comes out in different in different ways, but ultimately, a fixed price with no revenue sharing, which obviously creates different kind of risk incentives and structures that need to be thought about in terms of the negotiation of those documents.

Just to be clear, on both that floor level and that toll level, there are obviously adjustments to reflect that if the battery is not available, degradation and kind of round trip efficiency, that clearly that the those levels can be adjusted. Now how you define all of those is is like a in a a podcast in in and of itself, I think.

But that that's the wider principle is that there's on a toll, there's full revenue certainty, which obviously enables you to kind of attract maybe even more conservative equity or bring in higher debt finance, leverage.

Okay. So so if you're on one side, you've got this kind of profit sharing relationship where where sort of you have the asset owner and the offtaker, and you agree a a split between you. That's and and that's very variable, so that can kind of up and down any any year. The most fixed end, you've got the toll, and the toll is both parties agree a number, whatever, x per megawatt per year for, say, ten years.

And that helps the asset owner know exactly what they're going to make, and so they can then go on and kind of do other things with that and can maybe come back to that in a second. But the the process of putting that toll in place so I've seen the profit share side, and I I know I know that doesn't take very long to do because everyone's kind of aligned in the right direction. So everyone wants to make more money, and that means that okay. Great.

So we just we just if if if we can make more money, that's always a good thing. On the toll side, not necessarily aligned in exactly the same direction. So does it take longer to get that toll put together?

Yes. In a in a in a word, I think also they're very new to the market. You know, in reality, they've been talked about for the last eighteen months, only really being executed in, say, the last eight months. And, actually, really, we're only just now doing banking the first tolls.

So no one has quite thought through all of the positions or, you know, it's everyone's doing it in the middle of the negotiation.

No one has a standard form document yet, though, you know, we've we've got some some precedents now. But, ultimately, there isn't a kind of industry form in the way that you see now have got on floors, etcetera.

And, yes, I agree. There are a number of things where where which don't even come up in floor negotiations.

So for example, what services should the asset be able to do in the future, and who gets that revenue?

Likewise, on the charges charging side, how are industry charges shared? Because, you know, from an asset owner's perspective, if you're taking a fixed income and then your chart the the charges are changing behind the scenes, that can have a massive impact in terms of your overall returns. So you have quite a lot much more focus, to be honest, around adjustments and making sure that the testing and the kind of remediation processes are appropriate and that the risk levels are appropriate as between the parties, recognizing that all the CapEx will have gone in upfront from the asset owner's perspective and what mitigation are there available outside of the tolling agreement for them to kind of take on additional risk during the course of the the long term toll.

So on the tolling side, we've just talked about how you can essentially get a more fixed revenue with that toll. But it's perhaps not as fixed as it seems in the sense that if a new revenue stream comes in and that adds, say, five percent to the revenue for that particular battery asset, you don't have to think about who gets that return. Yeah. Who does get that return?

I mean, it's a subject of negotiation. I think, you know, ultimately, stuff that you would expect the asset to be due on day one where there's no additional CapEx, there's no additional operational kind of downside in terms of degradation, etcetera, typically, we're seeing that sit with the total. Because in reality, what you're saying is you are taking market risk, both upside and downside. And then from the asset owner perspective, they're taking kind of asset risk.

They're making sure that they're delivering a good asset that does what it says on the tin, and that they've backed up those obligations with their underlying, supply chain. Where it gets more complicated is obviously where there would be CapEx or where there would be additional degradation. Because ultimately, everyone's modeling additional asset life after the end of these tolls. So a key driver from the asset owner's perspective is that there are checks and balances in place to ensure that Tola doesn't overcycle the battery and make as much money as possible during the during the term of the, agreement, which means that there's a bat battery at the end, which is fully degraded with no warranty, and and there's no revenue earning potential left in it at at the end of the toll.

I'm with you. So so and let's just kinda make sure we've got a few of those people right. So the toller, that is the person who is the kind of route to market or the operator, the person who's kind of paying the money to the asset owner. And you're saying if kind of a magical ten pounds appears and there's no kind of cost of of working to get that ten pounds, then it's probably the total who gets it. But if that magical ten pounds appears and it's gonna cause five pounds worth of damage to the asset, then the total gets five of the well, that gets the ten pounds but has to pay five pounds over to the asset owner.

Yeah. I mean, maybe it's not necessarily fully worked out in that way, but that's kind of the principle. Okay. And it's these kind of issues that people have a there isn't necessarily a kind of set agreed position on that yet or kind of, like, lots of market experience on on on it yet. So that's been one of the really interesting things about working on some of the best ones to come to market is actually kind of working out what is what is the right risk allocation between the parties. You've obviously got more different people offering these tolling products as well, which has been quite interesting. So it hasn't necessarily been people that we've seen doing the flaws.

So that's kind of partly because they've got slightly different drivers. So we are seeing people coming into the market who have large supply portfolios, for example, large other renewable generation portfolios, which they're potentially looking at at storage flexibility within that wider trading portfolio.

That's been quite interesting as well. I mean, one thing I would say just to be absolutely clear, to everybody listening is obviously anyone who's offering a toll or a floor has to be bankable in and of themselves, I. E. Hold a credit weight rating or kind of have very substantial assets or be backed by credit support by a parent who is also, as we describe, bankable, because ultimately, that's what you're taking to equity and debt. You're saying, I've got this credit worthy stat counterparty who is going to pay me x every month, and that you can definitely know that that's gonna be there for the next, say, ten years.

So the bankability of the toller and the fact that they will pay that money, why is that useful to the asset owner? Why do they why do they need to know that that group is really credible?

Because you're entering into a long term agreement on the basis of which you are asking your shareholders to put in CapEx and your lenders to lend you debt. And you need to be sure that you are able to actually repay that debt and also return, you know, the CapEx to to the to the shareholders with the expected IRR. And you will just not get final investment decision over the line with those counterparties unless you can tell them that there there's there's an element of certainty there.

You can make sure that the debt is the the debt knows that the counterparty is credible, and therefore, they're happy to put the debt into the project.

Okay. In terms of the kind of you've got the fully merchant on one side, which might be, say, the profit share. And then on the other side, you've got a toll, and let's say imagine it's a toll with the most credible counterparty we could imagine. And, like, what does the what does that do to debt in a project? What like, are there different ranges? So would would you see very different numbers of of different gearing levels of debt in these in these projects?

I mean, we've done plenty of merchant, debt financing, so single assets and portfolios.

Typically and, you know, using rough numbers here, you'd be looking at, like, forty to fifty percent leverage on, merchant debt financing to reflect the level of risk there, you know, potentially is in terms of certainty of getting that back, but also just revenue certainty generally. You've got no downside protection when you have, like, a winter twenty three, right, in those kind of situations.

Whereas, obviously, on on on the tolling side, they can kind of model all of those revenue streams. So you're looking at much higher leverage.

Actually, there hasn't been a publicly announced debt financing of a toll product yet, so I don't think I wanna necessarily say a a level. But, you know, you'd be looking at seventy percent plus leverage on the basis of that contracted revenue.

And that can be really useful for the asset owner because it means they get their equity back, and they can go and do their next project. Right? So okay. I think that's hopefully closed off a little bit of the loop.

I just one last question on the toll side. It's actually two questions, so I I just completely lied there. So the the first one first one is, and hopefully a little bit easier, how long does it take to to get a toll? So from from the from the day that someone thinks, oh, this is interesting.

I wanna do a toll to toll closed. Are we talking, like, two weeks? Are we talking a year?

We're talking months. Not yet a year. As I say, it's a more nascent in industry. The terms are not yet kind of quite as well known. You've got new counterparties coming in with different levels of approval and kind of understanding all kind of approach to the market. You also got more pricing risk. Because you're asking the toller to kind of commit to a price, unlike on floors where you wouldn't necessarily see the floor fluctuate a lot during the negotiation, we have seen potential kind of wider market issues result in pricing chips, which obviously has an impact in kind of negotiation deliverability.

I would say we're typically seeing it take kind of five, six month kind of Yeah. You know, and the on the kind of ones that we've currently got on. So it's it's a big endeavor, and I think that's when when one of the things we're seeing when people are trying to make the decision, do I go floor, do I go toll, you are spending more internal resource. You are spending more on legal costs and technical advisers and others to get these tolls over the line.

You probably have more, you know, execution uncertainty on doing a toll at the moment than you do with a floor. Yeah. And that goes into the decision about strategically what you want to be doing. Or, as I say, doing merchant, you know, we've definitely got a section in the market mark market that says, why are you paying a higher revenue percentage to a floor when the when the floor levels aren't what I'm expecting to get anyway?

Why am I not just taking the volatility? That's why I'm doing batteries in the first place. So Yeah. There's a range of views in terms of, the stakeholders in holders in the market as you know.

Yeah. Yeah. Agreed. Agreed. So so just on that that kind of process in terms of time of toll, so you're saying so so six to twelve months, let's say, not only for you, but also for the offtaker as well because they have to be on the other side of this negotiation.

Absolutely. Does that mean that we also get a natural size? So if I said, oh, by the way, it's gonna be like a one I've got a one megawatt asset. Would you would you like to toll it? You know, we're not gonna sit around the table for six months to talk about a one megawatt asset. So there's kind of like a natural size where this starts to become material?

I think that's absolutely right. We've have seen some portfolios where people are looking at doing, say, a few hundred megawatt assets and they're tolling some and and, you know, doing other things with others. But I would say, yeah, not we haven't really seen much interest in doing anyone doing a toll on assets smaller than a hundred megawatts, two hundred megawatt hours, then it goes up from there, obviously, in terms of the kind of the size of projects.

Yeah. And and last question on tolls. I I'm not sure I can really promise that because we might have more. So I feel like last question on tolls.

Because they they feel like they're fixed. They feel like they're they're a certain amount. But but within a toll, you would still have things like liquidated damages. So if something goes wrong on the site so let's say you're you're saying a hundred megawatts, two hundred megawatt hours, so pretty standard size for battery.

Let's say that something goes wrong and actually ten megawatts of that twenty megawatt hours is not available for some reason. How how does that get resolved? Because obviously the person the toller, the person who's paying for this asset is not gonna get the the physical thing they wanted.

It all comes down to the definition of avail availability, but the broad broad idea is, you know, if the asset is not available because of something the asset owner has done wrong, there is a reduction and whatever that what that looks like, whether that's actually a reduction or it's an LD payment to the toller to reflect the fact that that's that ten megawatts in your example is not available.

Now how that becomes bankable from an asset owner perspective is, hopefully, in the majority of circumstances, that's then able to be backed off with their supply chain, so their battery OEM or their bot contractor or other kind of their supply chain, they will also have ALD's mechanisms subject to a cap in their underlying agreement. So they should hopefully flow through. Obviously, that's not gonna work through in all situations.

Where you get into more interesting discussions about is when is when is the asset you know, when does is that does the availability mechanism not kick in? How are constraints and curtailment dealt with?

Okay.

How is FM dealt with? Sorry.

A force majeure for Yes.

Yeah. Well, let's let's come back to constraints in a second, but let's just make sure we do so LDs liquidated damages. So that's, like, the amount that gets paid. Yep.

We've then got the OEMs, so the original equipment manufacturer, so the person who made the thing that goes on-site. So let's say it's a it's a Tesla system, that would be Tesla. And then you've got the BOP contractor, which is the balance of plant contractor, so the person who put that whole project together, many of those out there, but essentially the the the group of engineers that are on-site getting it done. And then you're mentioning, so what if the problem doesn't come from a physical thing that happens on-site, but comes from a, a problem that is outside of the control of the asset owner?

So let's say it is the network operator that says you were gonna have a hundred megawatts of grid connection. Now you've only got fifty. What happens?

This is the million dollar question, Ed, and this is what's keeping me very, very busy at the moment. It's working through these different scenarios about, you know, is it something that's genuinely outside of both parties' control? How should those kind of risks be shared between the parties? Because it's clearly not right that it sits wholly on one side.

But from an asset owner's perspective, you need to be able to present, particularly to lenders, as much revenue certainty as possible. So it's thinking through the various scenarios, working out what the risk is, working out if there are other mitigations, and also who's best placed to kind of manage that risk. If it's a NISO issue in relation to, I don't know, ancillary services markets, there's obviously gonna be other revenue opportunities. I don't think that necessary that's not it's not actually might mean you're making less money, but it doesn't mean there's no revenue opportunities at all.

So it's thinking through all those situations and then kind of coming up with the right risk allocation.

And I think the thing that we we did there in a classic energy market thing was we implied something and we didn't talk it through. So so it was the the the BOP and OEM, that is a party that you can look to and then they can pay you money to make you whole. With the grid connection, the big difference here is that if you have a grid connection, you only have, say, fifty megawatts and you're expecting a hundred, the grid connection will not pay you money to make you whole. So so it kind of there is a sort of, yeah, there's a big risk there for for for for tolling assets.

Yeah. And I suppose, you know, just to be clear, you obviously need to distinguish between situations where there's a physical issue where you're not getting paid by NESO and a an issue whereby you are getting paid via the balancing mechanism. Because, again, if revenue is flowing, you might not be able to operate the asset, but you are getting compensated for that by way of the balancing mechanism, then clearly, it's inappropriate for you to kind of that to then re re result in a reduction in the availability of the underlying asset.

So I think I wanted to do a podcast that was based around sort of tolls and legal structures.

And I think what I'm doing or what we're doing is an advert for becoming a lawyer. This is I'm slightly concerned about this, but it's okay.

So you mentioned a a while ago just around portfolio risk. So some of the tollers might be groups that have an interest in tolling battery assets, but they might also have wind and solar assets. So so why do they care? Why why why are they interested in doing this?

We I tend to act asset owner side, so I'm I'm kind of speculating here. I mean, it obviously provides some diversification in terms of that portfolio and a natural hedge within the portfolio for them to be able to kind of more options from a trading perspective in terms of being able to kind of monetize assets and, shift load around.

Okay. Interesting. And I think the other thing that we promised that we'd come back to is on twenty four seven supply of green energy. So so what does what does that mean?

As you may know, a number of big global corporates have achieved their hundred percent renewables. What do we mean by that? What they're actually saying is a hundred percent of their annual global consumption has been backed off by PPAs or direct power purchase agreements with underlying renewables assets, which are new renewable assets. So there's additionality. They've created new generating capacity in the various jurisdictions.

Now that's on a global and annual basis. And in reality, to kind of truly decarbonize, you need to be moving more to genuine hourly matching of demand and supply. Twenty four seven is obviously the goal.

But, you know, there's a huge way to get to actually get there because, you know, I don't know. Take solar curves, for example. You know, getting that to match to, say, a big tech provider's demand profile would take a huge amount of storage. But we're just starting to see traders and other people look at products where they are bringing in storage to enable them to kind of shift the load around in order to provide maybe not a kind of twenty four seven yet, but kind of moving towards higher percentages of carbon free electricity in the relevant jurisdictions. So it's looking at more on a jurisdictional basis and a more kind of hourly like, moving towards an hourly basis as opposed to an annual basis.

Okay. So making sure that the renewable generation is in the place where your consumption is, but also making sure that that renewable generation happens close to the time that your consumption happens.

The I think the kind of the the example that really sticks with me on this is the you could have all of your consumption could get a certificate that says it is effectively green, and yet you would still run a thermal site and you'd still have emissions that come out during the course of the year because you might generate, say, more than the total amount of consumption because you have some curtailment that happens on green generation green, renewable generation. So, yeah, you can kind of you can have everything kind of backed off in an annual certificate approach, but still have emissions on the system. And so at that point, you kinda go, okay. There's something that's not quite working here. And and just to kinda talk that through, so let's say we've got a really sunny period, lots of renewable generation. That gives us just maybe some some lots of certificates.

What's the kind of concept here that you could kind of take a certificate, which is a a virtual thing? You could put that into a battery. So a battery not only charges energy but also charges kind of certificates and then export that at a time when there's not, say, solar generating. So at night, and then that that kind of that does the twenty four seven matching?

Yeah. I mean, at the moment, you don't have kind of hourly match certificate, like, guarantees of origin, which is that the certificates you're referring to necessarily, and that's one of the one of the innovations that we're expecting to see. We've there are some tech providers that are kind of providing that kind of tracking service. There's quite an interesting kind of data and tech or quite a very big data and tech piece around this.

But that that concept is right. Exactly what that looks like in terms of how you actually monetize that, how that becomes a kind of a a proper revenue stream for underlying storage provider who's taking the risk. Because in reality, that's, you know, certainly if you're a single own a single solar farm, that's not necessarily a risk you can take. Is all very much being developed at the moment.

So there isn't a kind of Okay. A a final position, but we're just starting to see people explore that kind those kind of areas. So I think that's definitely gonna be a trend over the next coming years.

This is I think this is really underrated, and I think it's not talked about nearly often enough. So that's definitely on the radar. If if I was to say that Bashi made a hundred pounds a year, the half hourly regos, do you think that they will be sort of a fifty p, one pound, five pounds, ten like, are they gonna be really material to business business cases, or is it gonna be like, we just don't know, we just kinda wanna think about it?

I mean, who knows? I mean, I don't think anyone would have predicted that, say, Regos in the UK market were gonna be trading at twenty pounds, which they were, you know, a while ago, and now it's two. So, you know, there's a huge fluctuation there. I think what's interesting is that because you've got the kind of stackable business case for storage, additional revenues are always gonna be helpful in terms of achieving kind of IRR, getting more investable projects. I I I wouldn't have a figure to be able to put onto it, but I think having another alternative on the table that can kind of enable more projects to get away is is very interesting.

Okay. And from a legal perspective, it's more about thinking about the concept of how this might flow, how this might happen than it is about physical or actual numbers on the on the deal. Yeah.

Exactly.

Okay. So let's move on from the world of of revenues because otherwise, I think we might we might run on for quite a time. And let's let's move into larger sites. So one of the big things that's been happening in GB is we've seen larger battery projects coming through.

For a very long time, we saw batteries hitting a planning wall at kind of fifty megs and fifty megawatts, and things didn't seem to get too much bigger than that for a long time. And now we see many bigger projects coming through. So we have so maybe brought live by Killick, so a two hundred megawatt, four hundred megawatt hour asset. We have the Colburn asset from CIP, Copenhagen infrastructure partners, which is a five hundred megawatt system, one gigawatt hour.

So so we have these sites that are very large coming through. Is that easier to deal with in terms of from the legal side, or or, like, does it come with its own level of complexity?

Is it easier to deal with? Yes and no. So, obviously, you've if you've got a four hundred megawatt battery, if you've got a single site, maybe not a maybe a single landowner, but a couple of landowners all in one place.

You know, whereas you might achieve four hundred megawatts across ten sites all across the UK. That's ten different landowners, potentially ten different planning authorities, ten different grid connections.

So there is there are challenges on that kind of thing in terms of just you know, there's a lot of work. Buying that asset and financing that asset. The costs from in terms of internal time cost, but, you know, the external costs of legal advisers, technical providers, everything else, it isn't necessarily linear as saying it's a tenth of the price to do a forty megawatt project as it is to do a four hundred megawatt project. So there's definitely efficiencies from that perspective.

That being said, there are also challenges of doing these kind of larger projects. You're pushing boundaries. Right? No one's taken that maybe that level of concentration risk before in terms of, say, on the offtaker side.

They're kind of working out how they they deal with that internally. Similarly, from a supply chain, that's a big amount of maybe their book in the UK. Likewise, on the investor side of things, for example, and lender side of things, are you taking a punt on one very large asset in in a particular location with, say, no pricing coming down the road, whereas or would you prefer to have your risk more diversified across the UK? So I think there's lots of opportunities, and, you know, I don't think we're capping out of five hundred megawatts.

Right? I definitely think we're seeing more more big batteries coming batteries coming coming down the road. But, yeah, there are some also some challenges even just down to getting these things online and making sure that you've got a similar degradation profile. You know, you can't build these size that things out in a single phase because, you know, by the time you commission the last con last string and last container, the container of that was the first container that you put on-site would be have a very different kind of degradation level if he's been left to sit there for the for the last year.

So we it's one of the things that, you know, we we really love doing is doing kind of the new cutting edge stuff. And so, you know, coming up with solutions and working with our clients to come up with solutions to deal with some of those.

Yeah. It feels like the the the the analogy for painting the Golden Gate Bridge by the time you've got to one of it and you finish painting it, you have to go back to the start and start again. Yeah. Okay.

Okay. Good. So larger sites, yes and no. I think that's I think that's a fair answer.

Another thing that we definitely see changing in terms of business models, colocation. What is colocation?

So collocation is typically it doesn't have to be, but typically collocating solar and storage on the same site. There are two different ways to collocate. So you can do AC coupled or DC coupled. What we're typically seeing certainly in GB is AC coupling.

So in that situation, you're not actually charging the battery from the solar. You are effectively just sharing the grid connection infrastructure, and then you've got two projects which are not actually interconnected behind behind the meter. And I would say the vast majority of solar projects that we now see are collocated in some way. And why is that?

Well, you're sharing costs. Whilst there might be some clipping on the solar volume that you get, actually, you are then utilizing the grid connection infrastructure in all of the hours of darkness when you potentially are much more likely certainly currently to be cycling the battery.

So it can have a, you know, a positive impact on IRR. There's obviously complexities because it's quite a new frontier. There's lots of things to think about about how that actually works during practice in terms of metering, interactions between the CFD and the other revenue streams that you might be getting on the solar. So that's been super interesting. But, you know, we're seeing equity and debt coming into the colocation space both across portfolios, but also very large single assets. That's definitely been a really interesting trend over the last two to three years.

And from the from the legal side, what is hard about and let's just stick in kind of the AC coupling side. What is hard about doing the legal side for co located projects?

For example, on the contracting side, typically, in solo, you would do a kind of EPC what we call an EPC rep. So a single contract with a single contracting party. You don't necessarily always take that approach on the battery side. You don't always have the same supply chain that you'd necessarily be looking to contract with on the solar side and battery side. You then then potentially got interface risk between different counterparties.

Similarly, on the offtake side, you might be looking to get a CFD on your sailor, or you might be looking to get a corporate PPA or a utility PPA. Whereas on the battery side of things, you might be looking at different counterparties who understand the battery market to provide you with either merchant floor agreements. We haven't seen tolls yet on colocation.

So it's marrying up the kind of two different approaches and making them work together in a single project. And, you know, I think we're everyone's learning a lot of lessons, and the first ones are actually being deployed in the UK.

Because from a standalone perspective, each of them are fine. Yep. And it really kind of where the nuance comes in is is that kind of it's where that shared infrastructure happens. So it's where the two potentially want to do the same thing at the same time or when there's a problem in that area. So let's say the grid connection drops, like, by fifty percent. Like, like, how how do the two projects kind of share that and allocate sort of revenue between the two?

Absolutely. And, you know, effectively, even though they'll be typically within the same SPB, so the same legal company, different of the projects will or kind of different projects will have different obligations. So you whilst it's technically possible for you to get a capacity market contract for a solar project, people tend not to. So you typically, the battery element will have the capacity market obligation.

So you could be in a situation where you have an obligation to export from the battery site to meet your derated capacity capacity obligation in a certain time period.

Whereas, you know, your offtaker on the solar might say, but I'd modelled that you were gonna be providing from the solar then. So it's about kind of making sure that you're kind of backing off those risks and making sure that each element of the project is able to comply with its legal obligations. But, also, overall, you're able to kind of achieve the best revenue outcome depending on what's happening in in the market at the relevant time.

So so so it's a lot of kind of putting that hat on for scenario modeling, working out what might happen, what might change. If we go down that road, if we go down this road, like, how do we then share this? How do things get allocated? Getting a kind of fair resolution.

And I'm sure we're definitely gonna have missed things. And in the next five or ten years, there's gonna be a few of these that we're gonna have to go back and take a look at again. I mean, just so maybe just to talk about that very briefly. So when that does happen, do do you the is portion of the work that you do to kinda look back on these old agreements and kinda go, we really didn't think about that or whoever wrote this.

Whoever wrote this, didn't think about this. How do we untangle this?

Is that Yeah.

I mean, it's typically in in any commercial contract, there'll be an ability for the commercial the parties to come to a commercial agreement and vary the contract to to to deal with it. There'll also be dispute mechanisms if you massively fall out and completely don't agree in in the actual solution. You also have mechanisms to deal with kind of known changes, if that makes sense. So, for example, you probably know in the ten year agreement that the law is going to change in some way, And there's typically what we call a change in law provision in all of these agreements, which will say, if something makes this illegal or impossible to perform, there'll be then the parties will meet and agree. And if you can't agree, then it'll go to some kind of expert to determine how, the contract should be amended to make it, possible to perform.

Again, interestingly, in kind of particularly the tolling scenario, interestingly about how some of those aspects work through. So, you know, as you can imagine, top topics at the moment, p four six two, is that known enough at the moment for people to hold their pricing or should when when p four six two, which is a BSC code mod, which is going to impact, kind of volatility in the market for everybody's benefit to stop you having to do it. When that comes in in probably twenty twenty six, twenty twenty seven, should that enable people to reopen the pricing?

Or is it something that everybody knows about now and as a result should be potentially excluded from that kind of ability to to look at pricing? Or should there be any ability to reopen, reopen tolling pricing due to change in law? All of these questions are kind of what we're debating on a daily basis at the moment.

I'm not I'm not gonna pick you up on p four six two. We did say when, and I think maybe when or if. Like, let's let's not yeah. Yeah. Yeah.

No. We can debate that.

Let's leave that on the table.

But but actually, in case it takes really nicely onto kind of the next part of of this, which is on regulatory change. And the first question I have is, like, how on earth are we supposed to keep up?

You tell me. Yeah. I mean, honestly, it's ridiculous. I mean, so if you think about this week alone, we've had the new kind of planning and connections legislation kind of potentially laid before parliament. We've also had the LDES technical document, and that's just this week.

And and those two things do what?

On the planning side, it's very hard to keep up because that's actually not my area. But since Christmas, there must have been, like, eight different planning suggestions in terms of, like, reforms about what might change on the on the planning side, frankly, to speed up the the system, deal with what we kind of know is is not a workable system at the moment in terms of how long it's taking projects, not just energy projects, to to to come through the system, providing more kind of clarity about, say, onshore wind and and also where projects where government would like projects to be located as well.

On the LDAS side, so that's long duration energy storage, Ofgem and Desnaz are proposing that we have a cap and floor to support of twenty five years to support eight hour plus long duration energy storage projects. They released a technical decision document earlier this week, which is providing more detail on on what that cap and floor would look like, what that where the floor level may be, etcetera. They're borrowing heavily from the interconnector, cap and floor regime, which has kind of run through three successful rounds. But the really interesting thing on Elders is no no one's built any LDAS projects in in the UK for what? Forty years. Forty years.

So there's huge supply chain issues. Government would ideally like some of these projects online by twenty thirty. So, effectively, they are gonna be running effectively running the cap and floor process while the policy is being developed. During the course of twenty twenty five, it's gonna be super interesting in terms of that process is gonna be running alongside everyone doing their procurement, their equity, and their financing to kind of rush to actually try and attempt to get towards a kind of twenty thirty delivery of these absolutely massive infrastructure projects.

Yes. I think it's a really good example. And then we've also got, like, the delivery date in twenty thirty. You've also got two years grace as well.

So just just in case you missed it, just in case you happen to be missing the twenty thirty target, you've got two years of grace to get that that And there's a twenty thirty three window as well.

Right? So so, you know, there are possibilities. And it's not obviously you know, there's a lot of pump storage looking at it, but there are different technology classes.

But that's just, like, almost one small area. Right?

It's it's one one small section of of regulation that got released in a single week. Yeah. And that Alders document came with a sixty page technical decision document, and then NISO did their own release, which was another sort of sixty page document.

Then separately, the probably the two hottest topics at the moment are RIMA, which is the review of electricity market arrangements, which has been spoken about for the last three years. But it looks like we're hurtling towards an actual actual decision in terms of whether or not we have zonal pricing in in GB. So as everyone may know, we currently have national pricing in GB. There's a big discussion about whether we need to have the electricity market provide stronger locational signals. One way to do that would be to move to zonal pricing.

I would potentially say that there's probably other signals like connections reform, some of the planning reforms I was working, which are already providing some of those locational signals, but we await with interest. There's no decision on that.

When when do we hear?

We're supposed to hear in q two, but I don't know how you know, exactly when in q two. But in terms of what that actually means for projects, if you move to a zone or price, I mean, you know, there's lots of other markets that have this. It's not like this has never been done before. But if you're in a situate if you're in a a zone whereby there's a high demand, a small amount of generation as a generator or a battery project, you're gonna kind of see higher wholesale market prices. If you're, I know, in the north of Scotland, you've got tons of offshore wind and not very much demand, potentially you're looking at very different pricing signal. And that's obviously not what anyone has currently modeled. So there's a huge concern from the developer investor community in terms of what that means for the delivery of the project, certainly, the the the near to medium term pipeline, given the the uncertainty about whether or not that's going to come.

Yeah. Well, let me add just a little bit of context on that. So I think the the national price that we have had for the last ten years is almost in a world where there aren't a huge number of constraints. And so that that is kind of the the status quo.

We've kind of got two options ahead of us. As you've kind of very rightly said, there's this zonal option, which brings kind of constraints into the wholesale market, and and that's designed to give better operational signal signals. You've also got this concept of reform national, which on the face of it doesn't sound like too much for change, but but actually is quite a big change. Like, we we see assets getting sort of signals to do a certain thing within their head market that then will get a different signal in the balancing mechanism when constraints get overlaid.

And so there's kind of options. You can either go for, like, a zonal thing or you could go for a national thing. And that national thing needs to get some constraints, like, bolted onto the side of it. And so if I'm an investor, I have that uncertainty whichever road I'm going down.

And maybe that's not super helpful because it means there's kind of uncertainty of both options. Yeah. But but it it is kind of and just to go back to, like, the whole basics of this, the the reason why this whole thing is kind of rearing its head is because the constraints that we're starting to get are starting to become too large, and we need to do something about it. And so that's kind of like, that's that's almost like the the the starting point for all of this, and then the other options kind of spawn out of that.

No. Absolutely. I mean, no one ever envisaged that you were gonna have balancing costs of billions and billions of pounds as just what is currently being modeled. So I don't think anyone's disputing the underlying kind of issue and that something needs to be done about it. It's just what's the right way to do it and balancing kind of how investable UK PLC is considered to be in the wider kind of global competitive market that we're in and also hitting our clean power twenty thirty goals because there's a huge amount of investment that we need now to enable us to to meet that, and this is just another level of uncertainty, which is not helping necessarily with with with some of those decisions.

And I think we're gonna come back to this investments this investment level, towards towards the end. So I think we've we've covered all those, Rima. We've covered a little bit about planning.

Should we talk just a second about connections reform? Yeah. So what is what is kind of connect in this whole sort of range of millions of things changing all over regulation all at the time, connections reform, what is that?

As many of you listening will know, we've got a very, very large queue in the UK, over seven hundred gigawatts of potential projects sitting in a connection queue. It is untenable.

Even after queue management was implemented last year, that still has not cut the queue. And so we are now moving from a situation whereby effectively often people go and get their grid connection on a speculative basis first with very little kind of downside at a DNA level kind of upfront a small upfront payment, potentially at transmission level, not in a even in any securities without needing to show really very much at all in terms of how viable a project you were going to. Now to get a real grid connection, a grid connection point, and a grid connection date, what do we call a gate to offer, you will need to demonstrate that you actually have proper land rights, and there's a number of these, but effectively that's an option to purchase or a long lease or holding the freehold of that land in order to achieve that that gates two offer.

So that being consulted on all the way through twenty twenty four, and that's what we call the kind of first ready element of this connection reform.

Once the Labour government came in and wanted to do Clean Power twenty thirty as well, that has then added an additional layer towards the end of last year on top of on top of being ready. And, obviously, being ready is very much in the developer's control to you know, they need to go off and have the negotiations with the underlying landowners, and there's a lot happening on that side of things. But, you know, you you kind of we're very clear about what you needed to do. Whereas strategic alignment is giving pots both the distribution and transmission level across GB for up to twenty thirty and up to twenty thirty five.

You can say, I want to do a storage project in the north of Scotland, and you now know how much capacity is available up to twenty thirty and how much capacity is available between twenty thirty one and twenty thirty five. And particularly on the story side, and there's me some fatter. I'm taking my motor modeling on this. You know, the connections queue vastly outweighs the kind of pots that have been put put out in terms of strategic alignment.

There's a a lot of uncertainty about kind of where the projects are kind of gonna be coming through.

NUSO and the government have recognized that there needs to be and Ofgem have recognized there needs to be a level of investor certainty here. So there are some protections available. For example, if you have a connection date in twenty twenty six, you've achieved planning and you've effectively taken financial investment decision. You can be kind of fully protected, and there's some other protections, for example, available. They don't necessarily give you as enhanced protection if you've got a capacity market or achieve planning by the time that go live happens.

So that in and of itself has been hugely difficult to keep track of. We're still waiting for the confirmation of exact the exact go live date. Then there'll be a some a self declaration process where each project needs to go and say, I'm ready. Here's my land rights.

Here's my red line boundary, and this is why I benefit from the relevant protections. Mhmm. Then Nissan is gonna need to kind of consider all of that and then effectively reorder all of the queue in light of I mean, it's a huge, huge task. So effectively, it's gonna take the rest of twenty twenty five for all of that to happen in terms of the key key to be ordered and key to kind of be cut down.

And then once connection performance is fully implemented, we're gonna move to these six monthly application windows. So before, you could just apply for a good connection whenever you wanted to, whereas now we're gonna move to, like, six monthly windows to enable you to to do that.

So so I hope that's given people a bit of a flavor. We've covered connections reform, long duration energy storage, things like REMA, Zonal, Reform National. I think all of those things we've kind of we have we've kind of touched on previously in in and it seems really good to get an update. I think the the thing that's kind of unique to you is you see these projects coming through from a legal basis. Like, the amount of change that we're doing, is it actually workable to keep this whole machine running with this amount of change going on? Or is it like are we kind of like a straw a straw away from this camel kind of dying of exhaustion?

I mean, well, we haven't even discussed whether there's gonna be any legal challenges to any of these reforms, which is a whole another kettle of fish.

I mean, I think it's very difficult well, there's a more practical question about whether whether all the right the best policy decisions are being made. Because if, you know, the people at the developers who are on the ground trying to deliver these projects aren't able to keep track of everything and kind of respond to consultations, are all the right points being considered and really thought about when we're making the right decisions?

Are all the interactions between all the interactions between all the different policy decisions being thought about? It's fantastic that Ofgem issued the end to end connections review, which is basically the counterpart to connections reform. So it's effectively looking at different, incentives, shall we say, on the networks to actually deliver their side of the bargain in terms of connection dates, and costs, etcetera, etcetera.

You know, it's fant you know, it's interesting to see, you know, look at the overall role of Ofgem.

But you need to also think about who how will these things interact with each other in order to make sure that that's, like, the best policy outcome for kind of the UK. And we've all seen it happen. You know? No one anticipated the capacity market was gonna deliver a load of small scale diesel jets. Right? So we wanna make sure that the right people are thinking through these policies.

But by the same token, we don't have ages to sit around and wait. You know, if we wanna hit clean power twenty thirty, we want to decarbonize. We need to make sure that the system is fit for purpose in the kind of kind of generation world that we're going to have. I mean, implementing some of these things I mean, my understanding, implementing zonal pricing from a legal perspective, there'll be primary and secondary legislation, code modifications, license changes.

But just from a practical perspective, I mean, the IT upgrades alone, you know, must be very, very substantial. So the timelines of how quickly these are gonna actually some of these reforms are actually gonna come in. And then the age old legal concept of grandfathering also comes up. So for everyone's benefit, that is the concept of effectively protecting projects that can't kind of mitigate this risk.

And I think particularly on zonal pricing, one of the big kind of interest areas that people are coming up with is, like, what level of grandfathering is going to be available. Government has been cleared. CFD projects will be effectively be fully grandfathered because they'll move the reference price under the CFD projects to a zone reference price rather than national reference price. So they'll be fully protected.

But as we all know, there's a huge amount of generation online in GP at the moment, which is not backed by the CFD. So there's, at the moment, no kind of clear indication what that looks like for all those other merchant projects backed by corporate PPAs, battery storage projects, etcetera, etcetera. Yeah. And not just the stuff that's online right now, but people are currently need needing to make decisions, and a lot of money needs to be invested in over the next one to two years in order for us to meet Claim Power twenty thirty, balancing how much of this uncertainty you want to be want to be providing to the market.

But also and, you know, there's been lots of economic analysis about the various benefits or potential downsides to Zonal pricing. But, you know, in order to realize some of those potential benefits, if you protect absolutely everything in the queue now Yes.

Then, you know, you know, you're presumably pushing out, I don't know how far, but pushing out the consumer benefits that would arise from the kind of the pure economic And and and maybe kinda taking this back to just like a really high level.

So so government's role is more or less to make sure there's a good balance between consumers getting protected and getting a really good deal and seeing the benefits of net zero to the other side of generators making sure that they are getting adequately rewarded for the risk that they take to develop these projects, to construct them, to to own and operate them. And so that is the kind of balance that you're trying to strike. And so with within all of this, it's it's not a kind of but in development asset owners, it's not it's not risk free. It it should never be kind of gold plated.

And so there always should be, like, a nice balance to this. And I think we could carry on talking about this for at least another two episodes. And so I will I will kind of put a put a pin in the regulatory change there, but I think we've kind of really covered some of the main bits, and I hope that's given people just some concepts of just how much change there is. I will ask one final question on how big is the CMS team in energy, and is it big enough?

We're pretty big. I mean, it's been at the heart of what we do for, like, over thirty years now. We've had a kind of a specialist kind of electricity team for that long. And for us since, we've we rate some of the industry code, so sorry, including the cask.

So sorry if you're ever looking at that thousand page document. Not me personally. Unfortunately, I'm still a little bit too young. But, I mean, honestly, the amount of regulation and the amount of regulatory work that we are doing is only increasing.

And we have seen the general trend, you know, more people looking at challenges and looking at judicial reviews and appealing to the CMA, the Competition and Market Authority, and looking at going to Ofgem and challenging things that are happening. So when I first started in the sector kind of, you know, almost fifteen years ago, that wasn't really something that anyone did. Everyone just said, oh, it's regulated. It's fine.

Now people are a lot happier to kind of potentially look at potential challenge option and kind of enforcing their rights and utilizing the wider, regulatory framework. And I don't see that changing, particularly when now we're moving to situations where you've got entities like me. So, you know, having a much more directional approach rather than a developer led approach. So, for example, you are obviously gonna have a number of people who are gonna effectively lose connection their connection points and connection dates as part of connections reform.

Yeah. You know, that's very much a much more kind of, I suppose, centrally dictated system than, you know, certainly, we say we grew up in when we first started in the sector. You know?

And and development's always had risk. Right? So those development projects, they they did they had kind of historically, they haven't got a hundred percent success rate of those projects. Absolutely not.

They've always they've always had risk. I think the impact assessment on connections reform talks about one to three between one and three billion pounds of of impact in terms of the connections reform, which is kind of a a huge number. And just just on that kind of judicial review and challenge side, so that that is when, say, let's say, Elders says that long duration storage is absolutely concretely eight hours or more. It turns out that the the maths behind that was wrong, and definitely long duration storage should have been forty hours or more.

Then should the evidence come to light, then someone might go ahead and kind of It's slightly different than that.

And, you know, I'm not a dispute specialist, and I've got some fantastic energy dispute specialists in in my team. But, effectively, judicial review in particular, all these things, or some of these other appeal options are actually things around appealing the decision at the relevant time that the decision is made. And there's a whole legal framework about it, about making those challenges quickly. So part of the art is working out when a decision is actually made.

Is it actually when Ofgem releases a response to a consultation? Is that decision? Even though it might not actually say decision on the tin. And that, you know, you actually only have a three month window, to actually challenge a decision, and there's very strong judicial kind of guidance that you need to do it as soon as reasonably possible.

So there are a number of, there's a number of strategies which I'm sure my colleagues could talk to you about about, you know, the best way to kind of achieve the best outcome. Yeah. Because, you know, a lot of people, you know, don't want to go down the disputes route. They just wanna end end up with the right policy outcome and ensure that it's not having a significant impact on their business, not because they're just self serving.

They just wanna make sure that it's it's actually the right risk allocation between between the relevant stakeholders.

So that's a lot of what we do is potentially working with policy teams of keeping challenge options in the background while potentially working on achieving the best policy outcome through other means as well.

Yeah. Okay. I think that's that's really useful for context for people just in terms of understanding kind of how that process works. I will have to move us on to our two final questions, which are, first and foremost, is there anything you'd like to is there anything you'd like to plug?

So two things. First of all, hopefully, it's come across, but we're really, really passionate about the battery storage, energy storage sector, and we love doing first of a kind things. We've got colleagues all across the UK, but across Europe and the wider world. So do come and reach out.

We'd love to help you do new and interesting energy storage projects. And then the second thing is we've set up a women in energy storage network or, the acronym is WIND to effectively provide a space for better networking between women in this in the in the sector, but also to share knowledge, share connections. You know, it's such a fast moving space. And sadly, like quite a lot of the energy industry, it's still relatively male dominated.

I'd love you know, we've got LinkedIn page. We have regular free events currently mainly it's only in the UK, mainly in London. It only got set up less than a year ago. We've got over seven hundred members already who knew there were this many people, or there's so many women who, were working in the storage sector. And that's across developers, investors, traders, a huge range of of of kind of viewpoints, I suppose. So if any women out there who are interested in kind of getting involved in wines, please do follow the LinkedIn page, come to our events, and get involved.

It's superb plug and absolutely one that we would endorse. And the the last question, so is there do you hold a contrarian view to something that you believe that the majority of others in the space don't?

Whilst I think everyone can see the wider market fundamentals changing and that ultimately investment in energy storage should make sense from a kind of a structural perspective.

I have serious concerns about the amount of particularly large institutional capital that is willing to invest in storage in the time scales we need to to hit, for example, our twenty thirty targets. So just and this is not just in the in GB, but, you know, let's use GB as an example. We've just talked about all the regulatory change we talked been talking about, and the other headwinds that you've kind of got in terms of revenue uncertainty, supply chain, etcetera, etcetera. If you take CP twenty thirty targets, we need conservatively another seventeen gigawatts of just batteries on online.

If you say say half of that's debt financed, roughly use a billion pounds a gigawatt. So we need another eight point five billion pounds worth of equity investment in UK batteries or GB battery storage, what, in the next two years, in order to meet twenty thirty. And whilst we do a lot of equity transactions and we've supported a number of equity transactions, and I I personally fully believe in the in the underlying space, I'm just not seeing and I have doubts whether we're gonna convince enough equity to put that much money into into batteries. And bear in mind that that's just one country, and we've got, you know, the whole of Europe, EUA, the US, you know, all looking to kind of accelerate this transition and and and deploy out gigawatts and gigawatts of storage in a in a at a pace that we've never seen before. So I I'd love to be proved on, but that that's my, that's my view.

I think that genuinely is contrarian. Like, I there there's always this feeling that provided projects get above a hurdle rate that the kind of finance will emerge. And you're saying that even if that's the case.

I I I think it's probably it's it's the complexity. Right? You know, people have you know, all these investors, they have lots of options to look at. They can invest in data centers. They can invest in real estate. You know, they can invest in offshore wind, which, yes, obviously, has its own technical challenges. But, you know, you potentially got a CFD and a government backed kind of revenue stream.

Why why would people look at the complexity of batteries where you've got degradation risk and have to understand cycling and you have to understand all of these different kind of elements in the market? As I say, you know, I personally think the the sector's amazing. It's got such a crucial role to play. And I think the investment will come. It's just will it come quickly enough for what we need to enable the transition that we are currently targeting?

I love it. Louise, thank you very much for coming on. You've been a fantastic guest. I'm I'm slightly concerned we could have gone on for double that time. But I think we are gonna have to stop it there. And, yeah, you've been a fantastic guest, and I'm sure we'll have to get you on again soon.

Thank you so much for having me.