TALKING NEW ENERGY

[00:00:24.900] - Jon Slowe

Welcome to Talking to Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition. Hello and welcome to the episode. Customers will be at the heart of much of the energy transition, no longer just a boundary of the energy system end at the meter. EVs, heat pumps, batteries, flexible loads, will all play a big role in providing services to customers and the energy system.

[00:00:41.730] - Jon Slowe

Now we're all customers, so we all have our own views and insights into what's important to us.

[00:00:47.790] - Jon Slowe

But if you're listening to this podcast regularly, then you're probably not a typical energy customer. So today we're going to take a broader look at customers’ needs and wants, how customers react to certain propositions and look at highlights of some of Delta-EE's research with customers over the last years to help do this. I'm joined by two colleagues. And let's say hello. First, David Trevithick, who leads customer research here at Delta-EE. Hello, David.

[00:01:19.290] - David Trevithick

Hello,

[00:01:20.910] - Jon Slowe

David. You've worked in Customer Insight for many years, not only in the energy industry but also in other industries.

[00:01:29.460] - Jon Slowe

What have you learned about how different industries think about customers?

[00:01:35.300] - David Trevithick

Yeah, so hi Jon. So, I've worked in consumer insight roles now for more years than I care to remember. Over 20 now, I think, in sort of media and technology sectors, as well as energy for companies like the BBC, Sky and Centrica. So, in terms of customer-centricity, I'm sure people won't be too surprised to hear me say that. I think the energy sector lags behind most other industries and is now effectively playing catch up. And that's really because for decades the sector has not really needed to engage with consumers for their business.

[00:02:12.460] - David Trevithick

But times have certainly changed and now it's vital for them to put the consumer right at the centre of business planning. And that's because power is shifting to the consumer greater choice and options, perhaps combined with greater service expectations from outside the energy sector. And this is true both in the commodity businesses as well as energy services. So, solutions will have to become more customer and data-driven really to survive in tomorrow's marketplace.

[00:02:39.640] - Jon Slowe

And David, in terms of how you use customer insights in Centrica when you were there, how you see the industry using customer insight.

[00:02:48.620] - Jon Slowe

Is that are there any fundamental differences in how companies like Sky and BBC, where you worked previously are using customer insight or is it broadly the same and they're just further ahead than the energy sector?

[00:03:03.410] - David Trevithick

There's a whole the toolkit of techniques, methodologies that can be used and different solutions are appropriate in different scenarios. I would say overall, other sectors are further ahead in its use, but they're always evolving and always changing. And the important thing is to get the right solution for the right purpose.

[00:03:24.540] - Jon Slowe

Yeah. OK, thanks, David. We'll come back to you shortly. My second guest is my colleague Lodovica Di Deodato, hello Lodo.

[00:03:34.130] - Lodovica Di Deodato

Hello, Jon, thank you for the invitation.

[00:03:36.800] - Jon Slowe

And thanks for joining.

[00:03:38.060] - Jon Slowe

Now, Lodo, you've been synthesizing much of our research that we've carried out over the last years.

[00:03:43.880] - Jon Slowe

Can you give our listeners a very quick feel for this research in a nutshell, what the researchers looked at and where?

[00:03:52.440] - Lodovica Di Deodato

For sure, Jon.

[00:03:53.940] - Lodovica Di Deodato

So, yes, you're right, I've been analysing the results of three years of customer research at Delta-EE and we have looked at 50 customer propositions in terms of samples. We have involved five thousand adults across five European countries, which were Italy, Germany, France, the Netherlands and the UK and we made sure also that they were all decision-makers in the house for topics like energy.

[00:04:25.860] - Lodovica Di Deodato

And we have tested and compared a number of technologies like smart thermostats, smart meters, smart TV charging, smart speakers, but also energy tariffs and services such as time of use tariff, PV optimisation services, energy data insights and also various forms of energy community schemes.

[00:04:50.730] - Jon Slowe

OK, thanks Lodo.

[00:04:52.080] - Jon Slowe

So, let's come back shortly and get some of your highlights from that.

[00:04:58.290] - Jon Slowe

David, I'd like to start with you about the strengths and limitations of customer insight briefly in the form that Lodo described.

[00:05:08.880] - Jon Slowe

So, if you're tasked with developing a customer proposition, customer insight won't give you the answers, I guess, but it will help to point you towards the best proposition. Sceptics might use the faster horse example before motor cars were invented. What do you want a faster horse? People didn't know motor cars were there, so that's a limitation. Can you give us a high level some of the strengths and limitations that you see customers insight can bring?

[00:05:39.810] - David Trevithick

Yes, sure. Jon, consumers are part of the decarbonisation equation, so we need to bring the customer on that energy transition with us. And to do that as an industry, we need to really understand them and deeply understand. So, what makes them tick, how they live their lives, their energy-related needs, motivations, their preferences. And remember, of course, this variation between us all. So, what appeals to you in your home, in your life, Jon, maybe difference in my world, which it's very different again to Lodo's so customer research.

[00:06:14.150] - David Trevithick

Is not always the answer, but it's a tool and used in the right way. It can be a very useful one, as I mentioned before, sort of dozens of different methodologies of customer research. So, we need to select the right one for the right purpose whether that's customer segmentation, exploring new concepts or message testing, market sizing, etc. So here we have we use an appropriate quantitative methodology for our customer proposition testing, and we balance the sample size and representativeness with cost efficiencies, for instance, and balancing the needs.

[00:06:48.420] - David Trevithick

Compare across the different propositions with making the questionnaire exciting and interesting for the respondents to complete and ensure we get good data quality.

[00:07:00.030] - David Trevithick

So

[00:07:01.880] - Jon Slowe

So, it's a bit of a, you mentioned earlier using the right tools for the right question. So, with that type of quantitative research where you may be asking thousands of customers, as Lodo described, how they react to a certain proposition or how what's important, what's most important to them? That won't you can't necessarily take that answer as a definitive this will work, this won't work, but it will help to point you towards what's more likely to work.

[00:07:33.170] - Jon Slowe

Is that a good summary?

[00:07:33.650] - David Trevithick

I think that's right.

[00:07:34.580] - David Trevithick

I mean, it won't shout out the answer in flashing lights and capital letters it will definitely point you in the right direction that you should be travelling. And importantly, it massively reduces business risk and the cost of developing propositions in the real world that actually no one wants. And, of course, the reputational damage that could bring as well as the cost elements.

[00:07:55.370] - Jon Slowe

So, do that early in the process rather than too far down the process, I guess,

[00:07:59.117] - David Trevithick

Exactly, yes

[00:08:01.020] - Jon Slowe

OK, now let's structure the rest of the discussion around four points spending a few minutes on each. So, the four points, first, we'll talk about some of the really appealing propositions that stood out to us. Secondly, we'll talk about the conceptual control, which I think will be more and more important as the energy system gets more and more decentralized.

[00:08:24.740] - Jon Slowe

Third, we'll talk about long term contracts. Again, important because we'll see more high-cost items on the customer side of the meter, like heat pumps or batteries as examples. And fourth, we'll look at some of the highlights of variations from country to country. Is Europe the same or other huge variations if you go from Italy to Germany as Lodo described at the beginning.

[00:08:47.900] - Jon Slowe

So, we'll run through those four points before we bring out the crystal ball. Now, Lodo, let's start with the really appealing propositions. So, you mentioned more than 50 propositions at the beginning. What stood out? What's a proposition that tested really well with customers that you're quite excited about?

[00:09:08.420] - Lodovica Di Deodato

Well, so it emerged very strongly and across all countries, really, that apps or software that allow customers to better understand their energy consumption in terms of which type of appliance is consuming the most and what is the consumption over time, the energy consumption over time. They were really successful.

[00:09:29.810] - Lodovica Di Deodato

There was one in three respondents that found that very appealing. Another type of proposition that emerged was where the ones around other switching services that would automatically switch the customer tariff from the most convenient in the market or by their energy supplier, the one offered by their energy supplier. So, these were the yeah, the proposition that emerged very strongly.

[00:10:02.960] - Jon Slowe

So, water switching has emerged in the UK it's developing in some other European markets as well. Apps around how people use energy. David, that's another aspect to your job is focusing on these kinds of apps. Is that matched by the take up of these apps across Europe?

[00:10:21.200] - Jon Slowe

Would you say?

[00:10:23.960] - David Trevithick

Certainly not quite to the extent we would like, it is, you know take-up is strong sort of 12 billion digital users per month across Europe and obviously a huge number more dip in every now and again or have downloaded apps and so successful. But there's more to go but it shows the appetite is there.

[00:10:43.100] - Jon Slowe

OK.

[00:10:45.540] - Jon Slowe

So, thanks Lodo. That's a couple of standout propositions that people might find interesting.

[00:10:52.830] - Jon Slowe

Second point control. So why is it important? Well, two reasons, I think. First, appliances can be controlled or optimized not only for customer outcomes, like a warm house, for example, or a fully charged EV on your driveway.

[00:11:10.620] - Jon Slowe

But they can also be controlled for the benefit of the energy system, demand, response, flexibility.

[00:11:17.400] - Jon Slowe

So that's one point.

[00:11:19.680] - Jon Slowe

How do you marry these two aspects of control for the customer and the energy system? And secondly, we're seeing the signs of more and more outcome-based business models such as comfort as a service which entail the service provider having control to deliver customers the outcomes they want. And that involves a third party, the service provider, having some control over an appliance, for example. So, David, in our customer research, you've seen quite a bit of resistance to this idea or some clear concerns from customers.

[00:11:54.150] - Jon Slowe

Tell us a bit about them.

[00:11:56.100] - David Trevithick

Yeah, the word control is really motivating word, but there's a danger of it being misinterpreted. So, we need to be quite careful how we talk about it. So, we would like to be in control with our lives. But there's differences between active control and delegated control to technology or third parties. So, if you consider financial investments, for instance, some people might like to actively manage their investment portfolio and taking the decisions and risks themselves. Some might like to delegate that either to a human fund managers to look after or to sort of automation through sort of tracker funds and things like that.

[00:12:34.400]

{Cross talk}

[00:12:34.540] - Jon Slowe

With both of them, they would feel they're in control.

[00:12:36.910] - Jon Slowe

Just different forms of control, or different levels of control.

[00:12:38.640] - David Trevithick

Exactly. And I think we see the same thing in some of these energy propositions. I mean, the differences between products or services is that there's a huge complexity, a huge variety of things, and people generally don't know much about them. And they're quite intangible, they don't affect the day-to-day world, even though it could affect your retirement fund quite, quite drastically. Whereas in energy, I think you find these things actually affecting you here.

[00:13:05.950] - David Trevithick

And now, you know, you're talking about that the safety, the comfort of your family in your home. So, I think those issues are quite tangible. And therefore, the risks, if you like, are seen as higher.

[00:13:17.190] - Jon Slowe

Now that to pick up on that example of comfort in your home, you could argue that a thermostat is an example of delegated control. So, the thermostat will control actually when your heating appliance switches on and off, but within the boundary that you've set. So, maybe, whereas if you posed a question, would you be comfortable with an energy supplier controlling when you're heating comes on and off? I guess that might raise a few red flags or that's what we saw in the customer research.

[00:13:49.870] - David Trevithick

Yeah, and I think that it, I think there are two things at play here. I guess if you are delegating control, who is it to? And what's the elements of either trust or distrust or the unknown. And actually, sometimes technology trumps third parties had they perhaps had a strong reputation. So, I think that that's one thing. I think the other second thing is I think over time there'll be a normalization as you say like smart metre you know smart thermostats become perhaps more normal.

[00:14:19.090] - David Trevithick

And I think it's a gradual thing there. So, I think as the customer experience improves as there aren't any bad incidents, that I think there'll be a natural movement in that direction anyway.

[00:14:30.220] - Jon Slowe

OK, and if energy companies are developing propositions around this and very careful use and framing of the proposition and very careful about the use of the word control.

[00:14:42.320] - David Trevithick

I think so, yeah.

[00:14:43.150] - David Trevithick

And I think it is really playing out and how it works for different customers. And it could be the hybrid approach is actually necessary, not just in the short term or perhaps a manual override possible, but actually just thinking about sometimes humans being humans. You know, we're not machines. We do think we do want to do things differently. And sometimes our schedules will vary. You know, you've got a sick child, for instance, you want to make sure you've got enough charge in your EV to go to the hospital now, not in the morning, for instance, and things like that.

[00:15:14.320] - David Trevithick

You need that element of flexibility, I think, as well.

[00:15:17.110] - Jon Slowe

Yeah, OK.

[00:15:18.580] - Jon Slowe

Thanks, David. Let's move on. So that's attractive propositions control. Third topic of long-term contracts.

[00:15:27.160] - Jon Slowe

So, as I said, if we're looking at high capital cost, low OpEx solutions such as batteries, heat pumps, etc, we're going to see more and more finance solutions. The service providers are going to want a long-term contract to lock in the return on that capital investment. Lodo how their customers react to the idea of a long contract for something like a heat pump or a battery?

[00:15:56.350] - Lodovica Di Deodato

Well, we have observed that there were they seem to be still a bit reluctant. So, for example, customer proposition that would propose alternative form of payment, like, for example, heat as a service for heating appliances. So, a heat pump where at the bottom of the customer proposition list in terms of appeal.

[00:16:16.870] - Jon Slowe

OK.

[00:16:17.350] - Lodovica Di Deodato

Another thing that we have noticed was that there was a drop in appeal for a similar proposition. For example, to pay back a PV plus storage system.

[00:16:27.100] - Lodovica Di Deodato

We would propose contract that offer a number of services but will last for like 10 years.

[00:16:33.070] - Lodovica Di Deodato

And so, we definitely know these like a 10 percent drop in appeal. Same, even with, you know, energy tariffs sometimes that have minimum contract period of two years or more. So, yeah, it seems like customers don't like to be bonded to long term contracts. They want to have the possibility to drop out possibly.

[00:16:56.950] - Jon Slowe

And I guess we've already seen some companies responding to this.

[00:17:01.360] - Jon Slowe

So, ones that stand out, in my mind, electric vehicle subscription models where you can subscribe on a monthly basis to an electric vehicle or an E-bike as well I've seen, and cancel at any point or even with heating, which you might think is a bit more difficult to do that with a Dutch company Econic, is offering a membership-based model where they'll install a heat pump in your home, and you can cancel at any point. And the challenge commercially then, is how you manage the risk, the exit fees and things around that.

[00:17:38.650] - Jon Slowe

David, what's your views on this? Are long term contracts just a no or as with control, does it come back to how you frame it and how you present it and the options you present the customer with?

[00:17:51.380] - David Trevithick

I think it is a bit about framing.

[00:17:52.810] - David Trevithick

I mean, yeah, there is a natural reluctance to be locked into long term contracts, but then if you're happy with a company, you can stay with them for a decade or more. So, if you've built up that trust already, then it may not be such an issue for new customers. Yes, it may well be. I think as you alluded to, it's a balance I think is needed. So, you obviously we can't control the risk on the companies offering it, it needs to be a sort of value exchange.

[00:18:18.400] - David Trevithick

So, that's a balance between the right mix of upfront costs, contract length, monthly payments. That's right for the consumer is a good one. And definitely, the get-out option, whether it's through exit fees or perhaps a change of contract ownership with a home move or whatever, solution that is there, that sort of get out option is valuable for customers.

[00:18:42.770] - Jon Slowe

OK, so another I think interesting example where this doesn't give you a yes or no answer, but it helps you understand customers concerns that will need to be addressed. And companies are already doing that quite well, I think.

[00:18:56.470] - Jon Slowe

OK, the last point, variations from country to country. So, Lodo are Europeans the same or are we really different from Italy where you're from to the UK where David and I are from?

[00:19:10.960] - Lodovica Di Deodato

Yeah, I mean, absolutely. I think that the thing that stood out was, first of all, cultural differences, really.

[00:19:19.180] - Lodovica Di Deodato

So, even in the rate of answers, we did observe different tendencies with the Dutch, for example, being the most conservative in their answers and the Italians being the most enthusiastic.

[00:19:31.030] - Lodovica Di Deodato

Then we have France, Germany and the UK that have similar rate of answer with the UK respondents being a bit more conservative than the other two.

[00:19:45.490] - Lodovica Di Deodato

 And for example, I mean, I can give you like just maybe a couple of examples or one example for each country?

[00:19:52.540] - Jon Slowe

Yeah, give us an example and let's see where we go.

[00:19:55.960] - Lodovica Di Deodato

Yeah, exactly.

[00:19:57.070] - Lodovica Di Deodato

So, because it is quite interesting. So, looking at, let's say, the most successful proposition in each country, we have EV smart charging proposition that we are really appealing above average in the Netherlands, while smart thermostats were especially appealing for Italians and German respondents, then we have smart speakers proposition that were particularly appealing in the UK.

[00:20:24.430] - Lodovica Di Deodato

And lastly, the French respondents found tariff that matches the energy market price.

[00:20:32.880] - Lodovica Di Deodato

So, they will face market price very appealing above average. So yeah. However, as I mentioned, there was the most successful proposition, the one that I mentioned in the beginning, that were really appealing in all these countries.

[00:20:47.630] - Lodovica Di Deodato

So, in each country, they're really interested in their energy consumption.

[00:20:53.260] - Jon Slowe

Yeah, OK, I'm going to get myself into trouble if I talk about national stereotypes. So, I'm not going there at all. But fascinating that there are some things that are the same across countries and some things that are quite different.

[00:21:09.240] - Jon Slowe

There are in Europe now a number of pan-European energy companies and I think we'll see things go more that direction in the future. David, do you think these companies can really develop a pan-European proposition or is that dangerous thinking? Do you need to start from scratch in each market or take a pan-European proposition and then tailor to each market? What do you think?

[00:21:37.480] - David Trevithick

I think it's for the latter. I mean, the customer research shows that there are propositions that have appeal across a broad market range. And energy insights apps are an example of one of those and also points to some of the barriers that are, again, you know, the same across territories like the barrier installation, for instance, to take up. So, we can see that at a concept that all things can work across different markets, I think we need then to tailor an approach to different markets, and it can depend on the different propositions.

[00:22:10.120] - David Trevithick

What they might be could be because of, you know, different levels of smart meter rollouts it could be homeownership levels. You know, whatever the reasons for the market variations there does need to be some adaptation to do that. But then I think you've got to look like a good place to have a business that can works across territories.

[00:22:29.200] - Jon Slowe

Yeah, OK, thanks. Now, in the interest of time, let's bring out the Talking New Energy crystal ball. So, putting an estimate on the desk still not patented, so I still can't show it to you, I'm afraid, on the video. Now, let's set the dial this week.

[00:22:46.210] - Jon Slowe

I've set it to 2030. And here's the question with a little bit of explanation to start. So, what I think one of the most amazing things about people is how about all of this is how quickly we adapt and embrace new ideas, new technology. And I remember a discussion I had a year or so ago with a futurologist fascinating discussion.

[00:23:11.020] - Jon Slowe

And I asked her, what do you think will be most surprised by today if we can look forward to 2030? So, if we had a time machine and dropped ourselves into 2030. What would we be most surprised by?

[00:23:23.770] - Jon Slowe

And her answer was fascinating. She said I think we'll be surprised by how unsurprised we are in 2030. And I really get her point that people adapt really quickly to new technology and new ways of doing things, so David and Lodo, a very open question, how do you think customer attitudes will change by 2030 or actually will they not have changed? And the change will be more about the products and services that have changed to meet similar customer needs and wants.

[00:23:55.130] - Jon Slowe

David, do you want to go first with that?

[00:23:57.200] - David Trevithick

Yes, sure.

[00:23:57.870] - David Trevithick

I think there are two things here. Firstly, I think consumers fundamental needs don't change massively in the long term. So, we prioritize on values based on a life event like a new baby, but essentially, they're pretty constant. So, if you look at Amazon, for example, in their retail business, they focused on choice, low price and speed of service, and they've done that for a lot longer than 10 years. So those things haven't changed, you know, equally in the energy sector.

[00:24:26.900] - David Trevithick

I would argue that people always want their family and loved ones to be safe and comfortable in their homes at an affordable price. That won't change it is how those needs are met and the expectations around them. That's what will change over time.

[00:24:40.580] - Jon Slowe

Yeah, OK, so focus on the underlying needs and wants they'll stay relatively constant. Lodo, how about you?

[00:24:51.800] - Lodovica Di Deodato

So, I think, I would look more at the customer attitudes rather than the way that companies would answer to the customer needs.

[00:25:03.140]

So, I do see a future where so in 2030, I do expect energy customer to be more engaged and more demanding as well. So, at that point, consider that we will have a generation of environmentally conscious people that have grown up and we represent a big share of energy customer, especially in Europe.

[00:25:24.800] - Lodovica Di Deodato

So, we're talking about Europe and on the other end there will be a bigger renewable energy penetration. And I do see residents actively participating in a distributed energy system.

[00:25:40.610] - Lodovica Di Deodato

And I see a future where there will be more the use of as a service type of contract rather than a one sale type of purchase, especially for energy appliances.

[00:25:54.140] - Lodovica Di Deodato

And I do see as well do a rebound effect in terms of privacy and control of data, in the sense that now that the awareness has been raised on the value of our data, I see regulations and customer association that will want to make sure that the data of their customers are protected and belong to them.

[00:26:16.280] - Lodovica Di Deodato

So, in the end, I think that the key for the customer proposition of the future will be transparency and simplicity because customers will want to make sure that they do understand what is offered to them and that they have the control of what they purchase.

[00:26:33.410] - Lodovica Di Deodato

Basically.

[00:26:34.580] - Jon Slowe

That's a really interesting point, Lodo. And it reminds me of a hearing, the boss of Fiat speaking at one of the big car shows a while back and a journalist asked him what is most important to customers now? A Car, what's most important to car buyer’s car purchases? Is it the environmental performance of the car? Is it speed? Is it safety? Is it the technology in it? And his answer was, it's everything.

[00:27:05.390] - Jon Slowe

Customers want the lot. So, I can see that echoed in your thoughts as well, along with that trust, simplicity, transparency.

[00:27:17.600] - Jon Slowe

So, yeah, I think a demanding journey for energy retailers or service providers over the next decade because customers will be increasingly demanding. And David, as you were saying earlier, other industries have set the bar very high, so.

[00:27:39.400] - Jon Slowe

But positively, I think there's lots of interesting innovation happening in the market showing that forward-thinking companies are up to this challenge.

[00:27:49.810] - Jon Slowe

David and Lodo, thank you very much for sharing your time and your insights. It's been a fascinating discussion. So, David, thank you.

[00:27:59.260] - David Trevithick

Thank you.

[00:28:00.160] - Jon Slowe

And Lodo, thanks very much to you.

[00:28:03.100] - Lodovica Di Deodato

Thank you very much, Jon.

[00:28:05.230] - Jon Slowe

As always, thank you to our listeners. We hope you enjoyed the podcast today. And this inspires you to think a bit more about customers in your business and succeed in developing propositions that will fly off the shelf. So, with that, thank you for listening and look forward to welcoming you back next week. Thanks, and goodbye.

[00:28:39.430] - Jon Slowe

If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcasts on your chosen podcast platform.

[00:28:55.900] - Jon Slowe

If you'd like the podcast and like sharing, then please to rate us and to listen to archived episodes, to read transcripts and to see the latest Delta-EE insights, then please visit www.delta-ee.com

[00:00:24.190] - Jon Slowe

Welcome to Talking to Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition. Hello and welcome to the episode. Europe has built up one of the best gas distribution infrastructures in the world. There's one problem, though. Today it distributes natural gas, a fuel that will hardly be able to use if we're to reach zero targets in the future.

[00:00:37.180] - Jon Slowe

So, can we use this infrastructure instead for clean hydrogen, either blended with natural gas as a steppingstone to net zero or with pure hydrogen in the future? Today, we'll be putting aside the discussion on the extent to which we should do this and focus on whether we can do this and what's involved in doing so. To explore the topic, I'm joined by two guests from gas distribution companies in Germany and the UK, together with my colleague and Delta-EE expert Rob Castek.

[00:01:07.390] - Jon Slowe

So, without further ado, let's say hello to them. First Eva Hennin, who works for Thüga, an alliance of German municipal energy companies, as well as being chair of Eurogas’s Distribution Committee.

[00:01:19.360] - Jon Slowe

Hello, Eva.

[00:01:20.960] - Eva Hennig

Hello. Thank you very much for the invitation

[00:01:23.740] - Jon Slowe

And thanks for joining us.

[00:01:26.230] - Jon Slowe

Eva, Thüga is a bit of a unique organization when it comes to gas distribution and energy distribution. Can you in a nutshell just describe what Thüga is?

[00:01:36.490] - Eva Hennig

Yes.

[00:01:37.180] - Eva Hennig

Thank you very much. Thüga is quite old. We were founded in 1867 and we are a group of 100 utility companies all around Germany. We only operate in Germany and those companies are doing gas, electricity, water and wastewater.

[00:01:51.940] - Eva Hennig

The whole group together has four million electricity customers and about two million gas customers. And they have also a lot of district heating. And the specialty is that the Thüga only has a minority share and the majority share of those utility companies is held by the cities and the regions.

[00:02:09.190] - Jon Slowe

OK, that's an impressive history and an impressive number of companies under one umbrella as part of one umbrella organization.

[00:02:17.800] - Jon Slowe

When it comes to hydrogen, how long has hydrogen been on Thüga's agenda and how quickly has it sped up the agenda in the last few years?

[00:02:28.270] - Eva Hennig

So how long is exactly thirty-one years when I was employed because I already did my thesis on power to gas in 1989

[00:02:35.380] - Jon Slowe

So, you’re the beginning?

[00:02:39.280] - Eva Hennig

I wouldn't say they employed me because I know something about hydrogen. They employed me and my husband together now, but really more in-depth. It started at the end of 2009-2010, when also the regulation was turning towards hydrogen in Germany. We already have hydrogen as part of our energy law. And then we really started thinking more and more intensively how to decarbonise the grids because we already had biomethane in our grids and 2014 we built our first {illegible} electrolyser.

[00:03:08.110] - Eva Hennig

It's coming from the UK. It was built by ITM. So, it was quite a small one.

[00:03:12.910] - Eva Hennig

We only produced sixty-five cubic metres of hydrogen, but still it was the first pilot plan was installed in Frankfurt and injected hydrogen into the grid was of Frankfurt it was a joint venture with 13 companies. And we did everything to that electrolyser you could do.

[00:03:27.730] - Eva Hennig

We ramped it up and down and we put it in the balancing market. So, it was really for us to learn and we operated it for three years. And then we said, well, now legislation and technical rules have to change. And since then, we have been very active. We have pilot projects; we are part of the big pilot project in northern Germany. It's called in Heide. It's west coast of one hundred where we will inject in the future twenty percent of hydrogen into the distribution grid.

[00:03:52.270] - Eva Hennig

But we also look into two pyrolysis projects to produce hydrogen for the pyrolysis. We've employed eight people. So, we have a big group here within Thüga, which is looking for hydrogen projects. And of course, my main job is to look at regulation and everything and being a company with a lot of gas interest. We have a lot of technical expertise, which is exactly working on the topic of hydrogen blends and pure hydrogen grids at the moment.

[00:04:21.520] - Eva Hennig

So, it's very intense in Thüga. And hydrogen is on many, many people's minds at the moment.

[00:04:27.430] - Jon Slowe

Yeah, it sounds like you've got some really interesting experience you've built up learning by doing and I'll come back to you shortly and we'll get stuck into some of what you've learnt and what the challenges are ahead. My second guest is Keith Owen from Northern Gas Networks in the UK, Keith leads Energy Strategy and Systems Development.

[00:04:46.450] - Jon Slowe

Hello, Keith.

[00:04:48.050] - Keith Owen

Yeah, good morning and thank you for inviting me to this session.

[00:04:52.700] - Jon Slowe

And thanks for coming along, Keith. Likewise. Can you give us an elevator pitch for Northern Gas Networks for those of our listeners that don't know it?

[00:05:02.180] - Keith Owen

Of course, yes. So Northern Gas Network is a gas distribution business in the north of England. So, we're stretching from Scottish borders down to just south of Leeds to give you the geographic size, two point seven million consumers connected to our grid providing heat service 24/7. So, a very typical sort of gas distribution business across the north, across the UK, rather, and obviously working really closely with partners in the other gas distribution businesses in the UK.

[00:05:37.190] - Jon Slowe

Yeah, OK, thanks.

[00:05:39.240] - Jon Slowe

And your company sparked a lot of interest in the UK, I think, back in 2016 with your H21 study around the city of Leeds. Can you tell us a bit about that H21 project?

[00:05:54.170] - Keith Owen

Yeah, of course. And as you might expect, things have moved on significantly since that initial paper.

[00:06:02.030] - Keith Owen

And back then, the H21 Leeds City Gate report as it was released at the time, was just looking at a concept. Is it possible to convert a gas network from natural gas as we know it today and run it with 100 percent hydrogen and then in doing so, decarbonise the heat story of what we have in the UK. So that was where we started with H21 that that has just grown arms and legs since that time to really explore the technical complexities of that.

[00:06:42.230] - Keith Owen

What is a fairly simple question?

[00:06:44.480] - Jon Slowe

And is there is there a fairly simple answer?

[00:06:46.520] - Jon Slowe

We’ll unpack it in a bit, but what did that initial study, how much of a simple yes no maybe was the answer.

[00:06:56.540] - Keith Owen

So, the original report concluded that it was technically feasible to do this. Since that time, we've had a number of different projects within the H21 each 21 programme. Which is really exploring those challenges and a lot more detail to establish the long-term safety case to allow us to transition across.

[00:07:19.630] - Jon Slowe

Great. OK, likewise.

[00:07:21.170] - Jon Slowe

We'll come back shortly and dig into some of those findings and follow up projects now to help us set the scene. My third guest is my colleague Delta-EE colleague Rob Castek, Rob, there's a lot of excitement and I should probably say a bit of hype around hydrogen at the moment.

[00:07:40.090] - Jon Slowe

How? If we look at the whole hydrogen space, we're focusing here on gas networks, but how would you break down the whole hydrogen space and help our listeners understand where their gas networks fit into that hydrogen value chain?

[00:07:54.730] - Rob Castek

Yes, certainly, Jon.

[00:07:55.600] - Rob Castek

So, at Delta-EE we like to think of it as a three-legged stool. So, the first leg of the stool being the sort of the production of hydrogen, the second leg being sort of the distribution and the storage of hydrogen and the third leg then being the utilization so the actual use of the hydrogen. And when it comes to the use, we typically break that down into the transport industry, heat and power segments.

[00:08:25.270] - Jon Slowe

And if we're going to distribute it widely to buildings, to homes in the future, we're going to need pipes and they're can we use existing pipes? I guess that's where blending and using existing pipes and new networks comes in for the blending.

[00:08:44.020] - Jon Slowe

What are we talking about typically that you're seeing at the moment, one percent, 10 percent, 20 percent, 50 percent?

[00:08:52.040] - Rob Castek

So, for blending the typical sort of project and trials that are being looked at today are sort of typically around 20 percent. But there are some sections of networks in Germany in particular, actually, that are also looking up to 30 percent or planning to look up to 30 plus percent as well.

[00:09:12.110] - Jon Slowe

Okay, so quite significant amounts.

[00:09:14.570] - Jon Slowe

And in terms of how much activity there is, if we're looking at new pipes, existing pipes blending or pure hydrogen, how much activity is there across Europe? Can you give our listeners a sense of whether it's just starting? It's a handful or there are tens or it's going on everywhere.

[00:09:35.320] - Rob Castek

So, the short answer is there's more going on in blending currently across Europe, but it's still quite small scale. So, usually there's sort of trial networks or sections that are separated in the networks that will then blend a little bit. And if you look across Europe, the sort of leading countries are definitely sort of the UK, Germany and Netherlands and France as well, I would say. And yes. So, there's quite a bit of blending going on the ground already.

[00:10:08.080] - Rob Castek

So, a famous UK project will be the HyDeploy where there's been sort of a 20 percent blend being already supplied to a university campus, for example. And those are moving to sort of sections of the public network as well.

[00:10:24.560] - Jon Slowe

OK, what about pure hydrogen networks? 100 percent hydrogen.

[00:10:29.020] - Rob Castek

So, those are definitely rarer still. There are a few small live projects today.

[00:10:37.180] - Rob Castek

There's a couple in the Netherlands, in Rotterdam, and there's a little bit up in Scotland, actually in Orkney. But they're definitely rarer than the actual blending that's going on. But there are some very firm plans of actually sort of purpose building new 100% networks to sort of new areas, but also to existing homes.

[00:10:58.720] - Jon Slowe

Yeah, OK.

[00:10:59.830] - Jon Slowe

That's a really helpful picture Rob because it gives us a good sense of where we're at today. So, Eva and Keith, let's come back to both of you and look first at blending and then 100 percent hydrogen. So, blending it's not the end point for Net Zero, I guess, but it might play a big role in reducing emissions from using gas in the short and medium term. And it provides a way to stimulate the market for production of hydrogen as well. So, my first question is, how easy is it to blend or how hard is it? Or do you have to think about?

[00:11:35.680] - Jon Slowe

Is it a case of just shoving up to 20 percent in the network and sit back and relax or what's involved in planning and doing that? Eva let's start with you.

[00:11:45.700] - Eva Hennig

It's quite easy.

[00:11:46.900] - Eva Hennig

You just build a blending station. And then you inject it I could say. No, it's assumed that you have somebody who is producing the hydrogen. And as soon as you have somebody who is also delivering the hydrogen when you need it. So, you need to have security supply so you can take this assumption as ideas I think it's quite straightforward. You have to look at your grid. You have to look at the components which are installed in your grid. You have to make sure that they can take whatever blend you want to inject, which for most of the DSOs, I think is easy.

[00:12:17.110] - Eva Hennig

As long as you have a polyethylene grid in Germany, we don't have any more cast iron and so we don't have to worry about that. We have mostly and polyethylene can go up to 100 hundred percent.

[00:12:27.280] - Eva Hennig

You still have to analyse what kind of components you have, if there is anything in there which might be affected with hydrogen. So, that's step number one

[00:12:34.690] - Jon Slowe

What might an example of that component be?

[00:12:38.860] - Eva Hennig

Well, if you think about the 20 percent. Would hardly be anything except maybe the discussion on the meter, but that's a special topic when you talk about the meeting, most of the other components are hydrogen, save up to 20 percent. You might have something, which is when you go from polyethylene to steel. So, when you have those joints, when you have a valve and sometimes in the valve, you have many, many tiny pieces which are made of high-end steel.

[00:13:05.390] - Eva Hennig

They might be affected when you go up to one hundred percent. And this is why we are analysing every component that exists in our grid. And we put them through the test, we talk to the manufacturers. But you really have to know what kind of components you have in your grid part one.

[00:13:20.270] - Eva Hennig

Part two.

[00:13:21.260] - Jon Slowe

Yep.

[00:13:22.950] - Eva Hennig

Customers, you have to know what the customers what kind of appliances and applications your customers have, whether you have any thresholds there.

[00:13:30.530] - Eva Hennig

We all know that the biggest threshold are the CNG stations because they only can go up to two percent because of the tanks.

[00:13:38.970] - Eva Hennig

And you might run into a problem when you have a motor CHP plants, which is very common in Germany, a bit less common in the UK and when you have very specific applications for high-end industrial glass production, steel production, aluminium production. So as soon as you go into very special gas applications, but this just means you have to learn about the customers, you have to know it and then you can go.

[00:14:02.250] - Eva Hennig

It's not that complicated.

[00:14:04.780] - Jon Slowe

Keith, how does that match with your experience?

[00:14:08.550] - Keith Owen

Yeah, it's a similar story here. I was going to touch on some of the things that Eva's mentioned. And certainly, I think one of the challenges is around. Certainly, in the UK, I suspect elsewhere is around the billing of energy, gas energy bills, volumetrically, measured, volumetrically. But you're building energy. And as soon as you introduce a different gas to the natural gas mix that influences the energy that you're using.

[00:14:42.120] - Keith Owen

So, there's a bit of work to do there, I think, in terms of how we maintain that accurate billing and there is a separate project in the UK to manage that and come up with some new methodologies to allow us to support blending in the future.

[00:15:00.280] - Jon Slowe

Anything in there that's a showstopper or challenges that you can see ways around them ways to work through?

[00:15:06.390] - Keith Owen

Yeah, I think the very much I would contextualize this is very much there's a bunch of technical challenges. Engineers like nothing better than a challenge, and therefore there are ways to facilitate blending. There are then the regulatory and market challenges which need to be addressed so that really we just need to make sure that each and every customer that is protected is provided with the right sort of service so they pay for the energy that they're receiving, that we can manage the gas quality composition in a stable way so that some of the larger users where that gas composition is really quite important to them, they know what they're going to be getting 24/7.

[00:15:57.060] - Keith Owen

So, it's all sorts of issues, really, rather than the can we can't we can certainly do this. We've got it running at Keele University up to 20 percent with Cadent Gas, who are the lead for HyDeploy. We're shortly to commence the public trial that's on our site at Winlaton in Gateshead. So, first of a kind for the UK public trial of 670 consumers. So real-world setting and all of these elements of work, this project and this research effort that's going in is really to establish a business-as-usual position as quickly as possible.

[00:16:36.030] - Keith Owen

So, we don't really see any showstoppers. This is just about working through the technical and other challenges that are out there to create this new this new market, I suppose, for blended gas.

[00:16:48.630] - Jon Slowe

Eva

[00:16:49.020] - Jon Slowe

How much would you describe it as business as usual for blending today, or how far away do you think you are from business as usual to be able to blend lots of different sources of hydrogen into your network?

[00:17:01.710] - Eva Hennig

It depends on the company whether the company has already been working on those topics. This is why in the Thüga group, we have many companies getting together. So, we have joint working groups to get people accustomed to the discussion we have together without the DSOs. We are talking to the manufacturers to make sure that they are then proving the point that how far the appliances can go. And I think in the last 15 months, the perception has changed considerably when maybe, in the beginning, people were more like, oh, we don't know, we rather take biomethane.

[00:17:37.430] - Eva Hennig

And I think now they are getting more accustomed to it. Don't forget that in Germany, our legislation, the technical legislation says you can blend up to 10 percent. This is already part of our technical rules and we also have the full balancing rules and everything that we have had that for ten years already. So, we are maybe more accustomed to the discussion on the hydrogen and what Keith has just said with the gas quality and the metering, we have pilot projects now with the tracking of the gas.

[00:18:02.910] - Eva Hennig

So, you know exactly at which point of the gas grid do you have which {illegible} index, which gas quality, which hydrogen content.

[00:18:08.820] - Eva Hennig

And when you have the security as a technician, safety is of the utmost importance. We want to operate a safe grid and also bring hydrogen safely to the customers. And this kind of knowledge is something that engineers love to have.

[00:18:22.950] - Jon Slowe

OK, so it sounds to me like, yes, you can blend. There's still a bit more to work out in terms of some of those nitty gritty issues you talked about. But what about how much you can blend? 20 percent is a number Rob you mentioned that potentially 30 percent. Where do you think you can get to where the percentage of hydrogen for the sort of approaches that you've talked about? Keith, do you want to go first and then Eva.

[00:18:51.300] - Keith Owen

Yes, of course.

[00:18:53.990] - Keith Owen

So, the UK position of 20 percent is one which was taken, I mean, as you might expect in the gas industry, we're fairly conservative in our approach.

[00:19:03.310] - Eva Hennig

{Laughing} Engineers

[00:19:08.310] - Keith Owen

Absolutely.

[00:19:09.380] - Keith Owen

And so, 20 percent was selected because that sits within the range of gases that UK appliances are tested. So, there might be a stress test, gas, the commissioning gas, if you like, calibration gases that are used in the factories to test boilers, for instance. It is a slightly higher proportion of hydrogen than 20 percent or 23 percent.

[00:19:38.470] - Eva Hennig

Yes.

[00:19:39.720] - Keith Owen

So, the 20 percent position was taken as a point at which there is no material impact on the appliance, which is a really important aspect to this.

[00:19:49.860] - Keith Owen

Now, I've seen some research out there that suggests 30 percent is equally valid. I saw that from I think it might have been Cardiff University. But for the moment at least, we are holding to that position because we think that allows us to do, you know, a reasonable amount of decarbonisation and I think that's around 6-7% carbon reduction and get things moving. Now, if there's an easy wind to shift to a slightly higher percentage in the future, I think that's fine.

[00:20:19.740] - Keith Owen

But at the moment, we just need to get to a business-as-usual position.

[00:20:23.760] - Keith Owen

I think we do get just to close out the point, we do get to a more defined decision point, which is the diminishing returns that blending might give. So, there's at some point there was a step-change which says you need to make some material changes to the connected equipment.

[00:20:44.280] - Jon Slowe

And then is it worth it or. Yeah,

[00:20:47.360]

Or should we go one hundred percent?

[00:20:49.090]

Yeah,

[00:20:50.370] - Keith Owen

Because if you're going to make that level of material change, you'd be better off going.

[00:20:54.670] - Jon Slowe

Yeah,

[00:20:55.440] - Keith Owen

Yeah.

[00:20:56.970] - Jon Slowe

Eva, you've talked about 10 percent being already in German law. What sort of percentages are you working towards or do you think you could get to in Germany?

[00:21:07.050] - Eva Hennig

So, it's also the same the 20 percent. It's one of those numbers that has been around for some time now. But now with appliances existing that have been tested, going up to 30 percent, some of the appliance industry is pushing forward into this direction. If you have a grid where this is possible, it's great. But don't forget, you still have to have hydrogen being produced and you need to have the high security of supply. So, we are depending very much on this question, how much can we blend on?

[00:21:37.170] - Eva Hennig

Where are we? Are we connected to a hydrogen backbone? When will we be connected to the hydrogen backbone? Do we have hydrogen production close by? Do we have a hydrogen production close by which is producing in the wintertime?

[00:21:48.210] - Eva Hennig

Because I don't need it in the summer. I need it in the winter, and I need it with a swing that we have. So, there are a couple of things. And as Keith said, the low hanging fruit is to blend as much as you can without having investment into the appliances and the applications. The next step is then the question, where do you jump to? I don't envisage a jump from 20 to 30, 40, 50. It's more like you go to the limit and then you have to change anyway because you cannot operate something with 50 percent of hydrogen that would be hardly possible with the existing.

[00:22:19.350] - Eva Hennig

And so, we are waiting for those famous. And this is why I love Hy4Heat, the UK program. We are waiting for the hydrogen boilers and hydrogen ready appliances because this is the big push, and we have them, and you can switch them easily and cheaply. I think this will be then the moment when you say, OK, now we can move.

[00:22:37.290] - Jon Slowe

Well, OK, let's go in on that theme to looking at 100 percent hydrogen. So, let's imagine we've got the appliances there, the boilers, the appliances the gas cookers are already what, Keith you said the simple answer to your study was, yes, you could convert leads to hydrogen.

[00:23:00.520] - Jon Slowe

Can you help our listeners understand a bit more about what would be involved in that, because is it as simple as switching off the natural gas and then putting in the hydrogen? What would be the biggest challenges that you'd need to work through to be ready to do that? Keith, do you want to go first and then, Eva?

[00:23:20.110] - Keith Owen

Yes, sure. So, yeah. So, as I mentioned earlier, the H21 work that was done back in 2016 established. It was technically feasible to convert a UK gas network. So, it wasn't necessarily specific to Leeds. We used that as a suitably technically challenging example, but it's applicable from a UK position. And in terms of what that what, we're striving for here, the prize is that we can repurpose our existing infrastructure. That's really where we need to drive to because that maintains low cost.

[00:23:57.760] - Keith Owen

The maintains what customers are used to seeing. We're not having to dig up the streets and so in order to put new asset in.

[00:24:04.420] - Keith Owen

So, it's really important aspect of H21 is that repurposing.

[00:24:09.160] - Jon Slowe

What's the biggest part of that repurposing or is it relatively small? Is it all suitable?

[00:24:17.020] - Keith Owen

So, where we are at the moment, the H21 program is just about closed out phase one. The report will be produced this quarter for the public to read through and hopefully enjoy what they see. And we're now in the phase two. And what we're trying to do here is the UK's gas infrastructure, slightly different to what Eva's described in Germany, we've still got a reasonable

[00:24:44.050] - Eva Hennig

Cast iron

[00:24:44.050] - Keith Owen

Yeah, portion of iron in there, which poses slightly different challenges to the plastics.

[00:24:50.170] - Keith Owen

So, there's been a lot of work undertaken both through the H21 program, the H100 program from Scotia colleagues through HyDeployer and so on. Looking at the material science and understanding the impacts of hydrogen might have on all of the different components that are out there from polymers to rubber to plastics, brass, steels, you name it.

[00:25:17.110] - Jon Slowe

Okay, because it's not just the pipes.

[00:25:18.220] - Jon Slowe

It's the joins, it's the {cross talk} everything.

[00:25:22.010] - Jon Slowe

And there's quite a lot.

[00:25:23.290] - Keith Owen

Yeah, it's valves, it's pre-heat systems, all those different components. So, there's been a lot of work looking at that in the lower pressure in the distribution side of things. But more recently, we've seen some really great work spinning up through National Grid, looking at the high pressure, you know, the forty bar and above type or 20 bar and above type pipelines to really start to understand the challenges there, too, because they've got sizeable compression systems and so on.

[00:25:57.460] - Keith Owen

So, there's an awful lot of work going on looking at that, what is the impact question and finding answers {illegible} that.

[00:26:06.460] - Keith Owen

But we've now we're now starting to move. From a distribution perspective, beyond the can we do this challenge, which we've gone through to the how do we do it. So, the work we're undertaking at the moment is really looking at everything that we've learned thus far. And we're creating a microgrid, at a site over in Cumbria called Spadeadam, where we can really simulate everything that the gas network does right now. And we're working with our partners right across the gas industry, so all of the national grid and all the other distribution networks, all working with us to create this infrastructure so we can test all of our policies and procedures.

[00:26:49.790] - Keith Owen

So, you can see that we're moving towards a position, which is that right? We're starting to think about the transition and how we might make that work. And this is step by step sections of our network would slowly start to be cut across and a little bit like we would do now. If we're extending the network, we start to target sectors of our infrastructure to move across the hydrogen and a phased program of work.

[00:27:17.510] - Jon Slowe

Yeah, OK.

[00:27:18.150] - Jon Slowe

So, in principle, yes, it's doable, but the devil's in the detail and there's a lot of detail to work through. But you're now getting to the stage where you're looking at practically what might this involve?

[00:27:29.960] - Keith Owen

Yes.

[00:27:31.670] - Jon Slowe

Eva from your perspective, 100 percent hydrogen. How close/far away, are you what are the big challenges? How much focus is there on that in Germany at the moment?

[00:27:45.200] - Eva Hennig

So, we have to make the distinction between existing natural gas grids and new grids, so we are looking at now is a new grid that we want to build and an extension, which is fairly easy then to do this and hydrogen because it's the same material.

[00:28:00.673] - Jon Slowe

You could design it

[00:28:03.710] - Eva Hennig

But this just means you need to have hydrogen appliances.

[00:28:06.640] - Eva Hennig

And this is what we are still waiting for. We would love to have hydrogen fuel cells also for the heating.

[00:28:11.870] - Eva Hennig

We would love to have some hydrogen gas heat pumps which are now in development. So, this is one part where we really practically are looking at if we want to build a project here in the Bavaria. The other one is the question on repurposing existing natural gas grid to one hundred percent. This is what we're doing, this dry study, looking at all the components, getting the manufacturer-approved, how far you can go. And then, of course, we need to have the appliances which are able to roll out in this big numbers and there we were still missing.

[00:28:42.890] - Eva Hennig

We have a big project with thirty-five other DSOs because as you know, we have in Germany seven hundred and forty DSOs because that's a big difference to the UK and we in this project, which we do together with our technical association, we are looking at how a DSO will do this.

[00:29:00.320] - Eva Hennig

And as Keith has said, you're going to section so you will have parts of the grid which are easily to be transferred to 100 percent because you also have a feeding of 100 percent of hydrogen. You still need to have the stuff it will not be falling from the sky.

[00:29:14.060] - Eva Hennig

So, you will look at the part of the grid, which is maybe newer, where you have steel pipes which are corrosion safe.

[00:29:20.420] - Eva Hennig

And the big difference is that we are operating usually mid-pressure. So, we are operating somewhere between 350 and 700 millibar grids.

[00:29:28.400] - Eva Hennig

We hardly have any low-pressure gas grids, and we have lots and lots of high-pressure gas grids going up to 70, 80.

[00:29:35.240] - Eva Hennig

And so, we have to look at the whole change from polyethylene going up to high-end steels. And when you talk about 100 percent, you really have to look at those loads that you have in the grids if you use them as buffer pipelines or line pack, we normally play with them throughout the week.

[00:29:54.590] - Eva Hennig

And the question is, can you do the same thing when you have them in one hundred percent of hydrogen?

[00:29:58.220] - Eva Hennig

And this is why we look to all anything that's happening in the UK with all the tests that {illegible} agency is doing in Buxton, we tried to learn from everybody, and we also try to disseminate what we are learning to everybody. So, we don't have to think two times the same stuff. But it's doable, but it takes more time because you need to have the hydrogen ready.

[00:30:22.070] - Jon Slowe

Yeah, you need hydrogen. And Keith, as you mentioned, it's rightly a conservative industry.

[00:30:27.800] - Jon Slowe

You want to be risk-averse, so you've got to go very carefully, a very methodology very thoroughly through each part of the network. I think that gives a really good picture, actually, of where you're at the moment, that both the big picture studies and then the very practical nitty-gritty things that need to be done.

[00:30:53.210] - Jon Slowe

Now, as always, time is getting the better of us.

[00:30:55.640] - Jon Slowe

So, it's time to bring up the Talking New Energy crystal ball this week. And I'll put it on the desk next to me here this week. I'm using the dual settings of 2025 and 2030.

[00:31:09.110] - Jon Slowe

So, I'd like to ask each of you in the and where you think we'll be in those years in terms of blending and converting networks to run, converting existing networks to run on one hundred percent hydrogen. So, in the interest of time, short, snappy answers, please. Eva let's start with you. So, 2025, 2030 blending hundred percent hydrogen in existing networks.

[00:31:39.410] - Eva Hennig

2025 many projects with blending. We're going to have the hydrogen ready boilers; we're going to have the gas heat pumps. We have the legislation ready, the European legislation and also the national legislation, which is a big part. And we're going to have the guarantees of origin so people will be interested in buying the hydrogen. That's something that we need. And we will have first projects where you have pure hydrogen probably, and you will in newer grids, so they can be built exactly from pure hydrogen.

[00:32:05.150] - Eva Hennig

 2030, I think we will have in Germany at least twenty percent of hydrogen in the grids. And overall, which means we will have grids which have more. We have other grids which have less. And the hydrogen backbone which will start in 2025, the hydrogen backbone will be advanced. So, we will see hydrogen backbone going at least to the middle of Germany.

[00:32:28.370] - Eva Hennig

And maybe if we're lucky, we going to get some hydrogen from the East, from the Ukraine. So, it's going to be fed from the north-west, coming from the North Sea. Europe had been converted to have. And then having some hydrogen coming in from the east.

[00:32:40.630] - Jon Slowe

So, a lot of activity in the neck, that's s an exciting picture, you've painted.

[00:32:47.480] - Jon Slowe

Keith, how about you?

[00:32:50.110] - Keith Owen

Yeah, top that, I guess, is the challenge, so, yeah, it's a similar theme, I think in the UK by 2025 we would anticipate blending to be a reasonably established and growing business as usual operation, commercial operation, rather than research projects continuing. By 2025, we would we fully expect to be a number of 100 percent gas that hydrogen gas trials happening across the UK. We’ve heard little from Rob earlier about the work that's happening in East Fife with the H100 project.

[00:33:35.230] - Keith Owen

And certainly, the other networks have similar ambitions. And by that time, we should have all of the gas industry standards converted across to or match to hydrogen. So, we've got all of our industry technical support in place, policies and procedures in place. There will be still some work to do. I think considering 100 percent in the regulatory and the market sphere, that's quite a big area over some legal changes and so forth. By 2030, we fully expect blending just as Eva's just described that to be a 20 percent normal landscape across the UK.

[00:34:19.660] - Keith Owen

You know, really significant amounts of hydrogen entering the system at that point. You're into the sort of terawatts of the product, which is amazing. But of course, by 2030, we would hope to be in a position where we're really starting the roll-out programme. So, we you know, the planning work has kicked on from 25 through to 30, a network now in a position in terms of that supply-demand balance where the production is geared up, the transition of the networks can commence.

[00:34:52.610] - Keith Owen

And as Eva described, the appliances and the supply chain for that are also in a position to provide what will be hundreds of thousands of appliances on a fairly rapid turnaround basis.

[00:35:08.200] - Jon Slowe

So, an equally exciting decade ahead in the UK then in the UK gas industry. Rob, anything you'd like to add to that in terms of a European perspective, your views, your thoughts.

[00:35:21.970] - Rob Castek

Sure. I mean, generally, I would echo everything Eva and Keith have said in terms of Germany and the UK as they being sort of leading countries in Europe. So, by 2025 and blending, I would say, yeah, many more sections of the network will be blending, will be blending gases.

[00:35:41.670] - Rob Castek

And maybe the countries that have signalled that they want to trial them today across Europe, they'll be starting to do that by 2025. I think for 100 percent networks we'll probably see a few more kind of purpose-built, one hundred percent networks and not so much of the conversion yet. But moving on to 2030 now, I definitely agree that there will be yeah, it'll be much more established.

[00:36:06.960] - Rob Castek

The blending side of things, business as usual. And on the 100 percent side, I do think there'll be a lot more efforts towards converting the existing infrastructure, especially in the leading countries.

[00:36:19.120] - Jon Slowe

Well, Rob, you had that very nice analogy of the three-legged stool production, distribution of storage and utilization, and Eva and Keith, I guess from what you both said, you will be ready by 2025 and 2030 from the distribution side, from the bits that you’re responsible for.

[00:36:38.050] - Jon Slowe

So, an exciting decade ahead for well, for decarbonisation in general and particularly for the gas sector. It's been great hearing about your experiences, your plans, the challenges how you're looking to get over them in Germany and the UK. So, thanks very much Eva for joining.

[00:36:59.090] - Eva Hennig

Thank you very much. It was great, thanks Keith it was a combination.

[00:37:05.360] - Jon Slowe

Yeah, complemented each other very nicely.

[00:37:06.710] - Jon Slowe

Thanks to Keith.

[00:37:09.590] - Jon Slowe

And thanks very much, Rob.

[00:37:11.480] - Eva Hennig

Thank you, Rob.

[00:37:13.820] - Jon Slowe

Thanks, as always to everyone for listening. Hope you enjoyed the episodes.

[00:37:19.550] - Jon Slowe

And we'll be diving into other aspects of hydrogen in the near future, I think in a couple of episodes, looking at hydrogen boilers in particular and the challenges in developing them.

[00:37:30.920] - Jon Slowe

So, thanks very much, everyone. Thanks to everyone, for listening. And look forward to welcoming you back to the next episode, soon.

[00:37:37.160] - Jon Slowe

Goodbye. If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcasts on your chosen podcast platform.

[00:38:07.160] - Jon Slowe

If you'd like the podcast and like sharing, then please to rate us and to listen to archived episodes, to read transcripts and to see the latest Delta-EE insights, then please visit www.delta-ee.com

[00:00:21.920] - Jon Slowe

Welcome to Talking to Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition.

[00:00:21.920] - Jon Slowe

Hello and welcome to the episode, demand side, flexibility across Europe is growing, it's multidimensional from residential to commercial and industrial customers, kilowatts to kilowatt-hours, from networks to electricity markets to name just a few dimensions.

[00:00:38.570] - Jon Slowe

And today we're focusing in particular on residential scale demand response. Today, we're looking in particular, at the nitty-gritty issues of standards and interoperability. Some may view these topics a little dry, maybe even boring. I don't think they are, but I can understand why some people may see it that way. But the absolutely critical issues in helping to open up and facilitate the huge opportunity that residential demand response can bring.

[00:01:06.920] - Jon Slowe

So, to bring this topic to life. I've got three great guests. Let's say hello. My first guest is Adriaan van Eck from the Flexibility Alliance Network based in the Netherlands. Hello Adrian.

[00:01:19.580] - Adriaan van Eck

Good Morning.

[00:01:21.470] - Jon Slowe

Morning, Adrian.

[00:01:23.300] - Jon Slowe

To start with, can you give me a very brief summary of the Flexible Alliance Network for FAN for short?

[00:01:29.750] - Adriaan van Eck

Yes, it's basically actually it's a flexible power lines network. So the flexible power part will speak for itself. We are a Dutch association, mainly Dutch, but we are focusing on everything we do is Europe being focused that wants to help the society unlock energy flexibility in a better way. And we focus on standards because we think that standards and cooperation between various standards is necessary to unlock flexibility in an affordable way.

[00:02:02.300] - Jon Slowe

OK, well, let's look at one of the standards, the energy flexibility interface that you've developed. In a nutshell. What is this and what problem is it trying to solve?

[00:02:13.730] - Adriaan van Eck

So, the energy flexibility interface, we started like eight years ago and we are now in European efforts to standardize it via {illegible} where it is called to S2 interface, and it really focuses on going towards controlling devices of energy flows via customer energy management in the home or in the premises towards the resource manager, which is the device itself as in heat pump, charging station or EV or maybe even a fridge.

[00:02:48.620] - Jon Slowe

So, is it enabling these products to talk to each other or to talk to the outside world or to interact with each other? How would you describe it?

[00:02:56.990] - Adriaan van Eck

Yes, so basically the whole {illegible} has been developed with it's called energy flexibility interface. So it builds for energy flexibility, not for a lot of other small things you want to do with digital. It's not about maintenance and all that stuff, really energy flexibility and it's a messaging system where we can talk to devices, to the resource manager, heat pump and stuff to ask the heat pump to go faster, to consume more energy or in a battery, to deliver energy, towards the grid or at a certain moment at a certain level, modulate.

[00:03:38.830] - Jon Slowe

OK, OK, we'll come back to that shortly. Let's introduce my other two guests first. So my second guest is Nina Klein from the UK Government Department for Business, Energy and Industrial Strategy, and a snappy name for those of you that haven't heard it before.

[00:03:54.340] - Jon Slowe

Hello, Nina.

[00:03:55.810] - Nina Klein

Hello.

[00:03:56.410] - Nina Klein

Hi. Thanks very much for having us, Jon.

[00:03:58.930] - Jon Slowe

Thanks for joining. Now Nina, the UK governments, I think, particularly keen to capture the benefits from residential scale flexibility.

[00:04:08.230] - Jon Slowe

And you're working on a standard in that area. Can you give us a summary of what the standard is and the problem that it's trying to solve or address?

[00:04:16.450] - Nina Klein

Yeah, so BEIS, as it is known, is essentially the UK Department for Energy. That's kind of one of the ways to think of it. And we're funding the UK standards body the British standards institution to develop these technical standards. And basically, it's a technical standard that means you can build and operate energy-smart appliances, so smart washing machines, smart heat pumps, smart domestic batteries and smart EV charged points. Again, it's very much focused on that energy flexibility.

[00:04:43.420] - Nina Klein

And what these standards can do is provide a standardised way for these appliances to deliver those flexibility services. So, maybe that's frequency response to help keep national grid balancing supply and demand nicely. Or maybe it's kind of flexibility to help relieve a local constraint in the distribution network.

[00:05:00.990] - Jon Slowe

OK, so could you think of it as that standard making it easier and more straightforward for people needing flexibility, like a distribution network, to access that sensibility in the home?

[00:05:14.130] - Nina Klein

Yeah, absolutely.

[00:05:15.160] - Nina Klein

So, it provides the kind of common interface to make sure that those flexibility. services can be interoperable across different devices. And first of all, as you mentioned, that benefits the grid operators to be able to call that flexibility often to a kind of aggregator or flexibility service provider. By having that standardize interface, they can reach many more devices. But also at the moment, a lot of proprietary protocols are being used. And so consumers are being locked into a service provider.

[00:05:41.970] - Nina Klein

Whereas here by standardising that and having an interoperable interface, consumers can have free choice of which service provider they'd like to offer that flexibility to the grid. So I think that's a key problem that it solves as well.

[00:05:54.040] - Jon Slowe

OK, thanks Nina we'll come back to you shortly as well after introducing my third guest, my colleague and Delta-EE expert, Lucy Murley. Hello, Lucy.

[00:06:03.920] - Lucy Murley

Hi Jon,

[00:06:05.940] - Jon Slowe

Lucy, can you help us just step back a bit and look at the opportunity for residential-scale flexibility. So, if we looked at all the demand response capacity across Europe today, roughly what proportion of that would be residential?

[00:06:22.420] - Lucy Murley

That's a very good question, Jon. So, to start with the big numbers largely across Europe for demand-side flexibility, we're looking at about 20 gigawatts of that...

[00:06:33.280] - Jon Slowe

20 gigawatts being used today by aggregators.

[00:06:36.580] - Jon Slowe

And others for flexibility

[00:06:38.410] - Lucy Murley

So, that's complete monetized assets is 20 gigawatts.

[00:06:42.650] - Jon Slowe

Yep.

[00:06:43.540] - Lucy Murley

Of that monetized assets, one point five is being monetized at a residential scale. So it is a smaller number, but the story isn't over. There's a huge untapped market for residential assets.

[00:06:58.330] - Jon Slowe

And how huge is it? 20 gigawatts like the size of the market or bigger or smaller?

[00:07:04.420] - Lucy Murley

I mean, the really big number is 200 gigawatts. So that's the installed capacity of residential assets. That's not to say these assets are interoperable or connected, but they are installed in people's homes across Europe.

[00:07:19.180] - Jon Slowe

So, that seems like electric heating, batteries, EV charges. And I guess electric heating will comprise a majority of that today if we're looking at what's in homes today.

[00:07:28.210] - Lucy Murley

So, from instore capacitate, one hundred percent, right.

[00:07:31.270] - Lucy Murley

It is primarily the heating appliances. If way to look at the amount that's being connected or has the potential to provide flexibility. The numbers are a lot smaller. It's about five gigawatts. And of that five most is EVs, electric vehicles or batteries. Approximately half of all installed batteries and EVs are connectable. So, they have Wi-Fi enabled assets and things like that. Whereas if you look at the heating appliances, it's more like one percent to give you an idea of like the asset range.

[00:08:08.930] - Jon Slowe

So huge opportunity, but a lot of what's in store today is very hard to get to because it's not connected.

[00:08:15.950] - Jon Slowe

Of course, we're going to see a lot more going in in the next year and the next decade with electrification of transport and heat and more batteries.

[00:08:24.680] - Jon Slowe

So, undoubtedly a huge prize out of the

[00:08:30.140] - Adriaan van Eck

Jon, may I add one thing?

[00:08:32.570] - Jon Slowe

Yeah sure

[00:08:32.570] - Adriaan van Eck

From the research, we did with you, for instance, for heating. Even if we see that even a lot of let's say heat pumps do have some connectivity features, but the technologies are so scattered and protocols are so they are so different that we have decided that we could not call that really ready for Flex because it's very hard to connect it.

[00:08:59.780] - Jon Slowe

Yeah, and Nina, that goes back to your point about proprietary and very difficult to switch providers. You might be locked in.

[00:09:08.600] - Jon Slowe

I think that's a really clear scene-setting as to why standards will be important in this area. A huge opportunity. A lot of things not connected and where they are proprietary protocols. So one thing I'd like to do is Nina and Adriaan, the two standards you're working on, are they the same things, are they different things?

[00:09:31.580] - Jon Slowe

How do they fit with each other? Do they fit with each other? Nina, would you like to start us off on it?

[00:09:37.880] - Nina Klein

Yeah, so that's a really good question.

[00:09:39.650] - Nina Klein

I was very excited to come on with Adriaan today to kind of pick that apart and find out and a bit more detail. Exactly, because we are trying to be very careful. There's a lot of standards in this space is a very exciting area to be working in, which has its benefits because there's lots to choose from, but also its downsides, because you got to be very careful. You aren't kind of doing a bad job of integrating, but I think you're doing a very good job of integrating here.

[00:10:01.160] - Nina Klein

And we're kind of working on two pieces of the same jigsaw puzzle that should fit together quite nicely. So I think Adrian's area, as you said, is kind of focusing on communicating that flexibility information in the home and using it to help control and operate devices in the home. And I think we have the framework for that and our standard. But we don't say exactly how that should be done because we were aware of the work Adriaan was doing and as well how it links into the international standards in that area.

[00:10:27.170] - Nina Klein

But we said, oh, we see a gap here of how that flexibility information gets communicated in an interoperable way outside the house to these flexibility service providers who can then use these assets flexibly to help support having more renewable energy in the grid or managing these constraints. And so we can define in our PAS standards that interoperable interface to communicate all that wonderful flexibility outside the house to help support that transition of the energy system.

[00:10:51.649] - Nina Klein

Does that seem fair?

[00:10:52.720] - Jon Slowe

Yeah, an insight and I'll oversimplify this I'm sure but outside to the house is what you're working on and the Adriaan, you're focusing on taking that signals and how they actually get applied inside the house.

[00:11:10.130] - Adriaan van Eck

Yes, but we basically tell the market is how you figure it out. Do you want me to consume? Do you want me to regenerate a feeling and how much? Tell me when and where and how much. And then we I will arrange it. That's basically.

[00:11:26.210] - Jon Slowe

OK, good. I think that's a really help me, I hope it's helped all our listeners understand how the two fit together.

[00:11:35.150] - Jon Slowe

Now, when you're developing these standards, what sort of things do you have to consider?

[00:11:40.880] - Jon Slowe

Nina, I know you've got four points that you're looking at in particular. So, let's start with your four areas that you're looking at.

[00:11:50.570] - Nina Klein

Yeah. So the standards that we funded with the British Standards Institution were developed with four kinds of very specific principles that we wanted them to achieve. So we believe that a good vision for domestic flexibility was for it to be interoperable, for it to have good data privacy, for it to ensure grid stability and also for it to deliver cybersecurity. I can go into a little more detail on each of those to give a bit of a picture to the listeners what we mean when we say these things if that's helpful.

[00:12:17.960] - Jon Slowe

Let's pick the interoperability one because I think that's a really interesting point about are you locked in? If I buy an EV charger from Company X, am I always locked into a particular service provider for the flexibility that I could offer?

[00:12:33.260] - Nina Klein

Exactly. And that's definitely one of the things that we kind of saw happening and saw this opportunity for standards to come in there. So, I think interoperability is about exactly as you say when you go and you buy an EV charger, making sure that you can offer that flexibility across different demand-side response service providers. And that's particularly enabled by using open communications protocols. And so in the PAS standard that BSI are developing, we define a minimum common interface and we say these are the minimum functionalities of that interface has to deliver.

[00:13:06.500] - Nina Klein

And all of the devices must be able to deliver that over the interface. So, we define very carefully only a minimum because we know there are some exciting bonus features which providers may want to offer. And then that's why you might want to sell your flexibility to them because there's some good bonus features, but a very fundamental level. They have to be able to communicate the basics of energy flexibility to help offer those services to the grid, which consumers are paid the offering, by the way, so by having that common interface with a basic functionality, all of these devices can be operated from those flexibility providers and also consumers able to switch between flexibility providers with their device.

[00:13:46.180] - Jon Slowe

OK, and you're not, are you if I interpret that right, you're focusing on what needs to be communicated, what about how it's communicated or the language?

[00:13:57.670] - Nina Klein

Yeah, so we do a bit of both. And we're at an exciting place in the level of development of the standards where I think we've got quite a clear picture of what needs to be communicated. So we want that flexibility information is and exactly how it's going to be communicated is a little bit still open. There are three protocols which we think could be spoken, as it were, across the interface. So one is the open ADR protocol, one is an EEBus protocol, which is very similar to Adriaan's, and a third one is a protocol by an organization called DLMS.

[00:14:30.220] - Nina Klein

And it's the COSEM protocol. These won't mean anything to most your listeners, but there's three ways you could speak this information. And at the moment, industry is having a think about which one they would most like to use and maybe they'll say all three. And that's fine. As long as everyone knows what we're doing, everyone can participate.

[00:14:47.740] - Jon Slowe

OK, well, let's see if we've got time to come back to cybersecurity, data privacy and grid stability the other three points Adriaan I'd like to come back to you now and particularly around these protocols or the what's communicated and the language through which it's communicated and how what you're doing. Tell us a bit about what you're doing with those protocols and how that might fit with what Nina just described.

[00:15:13.420] - Adriaan van Eck

Yes. So I'll try to skip both technical details also because that would go way too far.

[00:15:19.060] - Jon Slowe

I'll you're getting too technical. Don't worry.

[00:15:22.810] - Adriaan van Eck

So, what we're talking about is when the market decides how much energy needs to be consumed or regenerated or fed in our vision, it talks to our central energy manager, which represents basically the energy consumer. So you in the house with your EV and your it knows what you have in your home at a certain moment there is an incentive or message from, let's say, Meena systems towards the system {illegible} from 10 to 11, I want you to consume so much kilowatt-hours and then our CEM

[00:16:00.280] - Adriaan van Eck

It's a data model that can send those messages to watch the heat pumps and the EV and the dishwasher and say, OK, you stop, you pause for an hour or you consume you charge two kilowatts to the battery of the car.

[00:16:17.200] - Adriaan van Eck

And it's a data model or a message model. And the only thing we need is a communication layer. But could be KNX, for instance, or a rest API, which you use to send a message actually to the device. And what you would need is your central energy manager would need to understand as to our interface. And of course, the heat pump and the charge station would also need to understand and interpret these S2 messages.

[00:16:45.100] - Adriaan van Eck

And that's what we're working on.

[00:16:47.840] - Jon Slowe

OK, that makes sense. So.

[00:16:54.000] - Jon Slowe

There's a lot of activity and I've been looking and researching and analysing smart home activity, for example, for many, many years, and the issue of WiFi against Zigbee or there are so many competing protocols and standards.

[00:17:13.050] - Jon Slowe

So, I'm really interested from both of you and Lucy, observations from looking across Europe. How hard is it to align people around standards and protocols in the way you've described when there it's still very early, so there's a lot of competition, people with strong views as to one or the other. Yeah. What's your experience been? Nina maybe start with you and then Adriaan and then Lucy?

[00:17:41.880] - Nina Klein

Yeah, sure.

[00:17:42.600] - Nina Klein

I thought this was a really good question to ask because we've definitely seen that as part of this standard development process. And I think we're in a great position to have so many standards to choose from. But that, say, makes it quite hard to keep track, let alone kind of decide which one you want to use by understanding each of them in enough detail. And I think, as you say, it is quite early days. So there are a lot of proprietary standards at the moment.

[00:18:05.580] - Nina Klein

And I think we do need to start to see that shift to agreeing common international standards. And I think really to get that what we need is we need for industry to see the benefits of shifting to a new international standard.

[00:18:18.480] - Nina Klein

And I think the benefits that they can market their products and their services to a global market if they're using an international standard, and also that they can seamlessly integrate their goods with this global supply chain.

[00:18:30.420] - Nina Klein

So, I think although it might be a change for them away from a proprietary protocol, I think they have to see the benefits of going into this international standardized market. And I think there's a kind of a little phrase that I just keep thinking to myself, which is I don't know if you've heard the saying if you want to go fast, go alone. And if you want to go far, go together. And I think we've gone quite far.

[00:18:51.930] - Jon Slowe

Yeah, yeah.

[00:18:52.830] - Nina Klein

I think we've gone quite fast with these proprietary protocols. But I think now if we want to go quite far, we probably need to start bringing them together. That's kind of my little saying. Do you want to go fast? Go alone. If you want to go far, go together.

[00:19:06.060] - Jon Slowe

And how do you see the industry responding? Are there is there a chunk of people who want to go fast and alone or do you see a shift in going far but together as it's more slowly?

[00:19:21.450] - Nina Klein

Yeah, I think that's why I said I think we need to keep being very clear in articulating what the benefits are to people. I think people have been doing it their way for a little bit. And so I think I think we need to be clear on those benefits. And the BSI work has been really cross-sector. It's people from the energy sector, the built environment sector, the transport sector, people who are manufacturing devices. And I think in such a wide group trying to find that consensus and encourage people was tricky.

[00:19:47.940] - Nina Klein

But we were helped because the British Standards Institute has a very particular definition for consensus, which is lack of sustained objection

[00:19:57.870] - Jon Slowe

I like it

[00:19:59.430] - Nina Klein

So, as long as people don't object for long enough.

[00:20:01.950] - Nina Klein

That's kind of counts as broadly speaking, you've got everyone on board. But I think you have to do that very carefully. And I think that's about persuading people that this new common approach does still meet their needs, even if it's not exactly the way they're doing it today, it still meets their needs and so that it's incumbent upon you to make those arguments and put that evidence out really clearly for people so that they know they are safe in going forward to this new standard which can unlock the global marketplace for them.

[00:20:30.010] - Jon Slowe

Yeah, I like that definition of consensus. I think I'm going to use that from time to time.

[00:20:35.080]

Adriaan, how's consensus going with your work and try to align people together?

[00:20:44.250] - Adriaan van Eck

Yeah, well, about the protocol thing, I think it's it sometimes seems overwhelming, but I have to say that in general there is no one size fits all. So a WiFi or internet protocol can really be helpful because you can run the stuff in the cloud, whereas Zigbee and Z Wave, for instance, they are much more stronger in the house. So it's not like a choice between one of them. It's really the mix of stuff that creates the power of the system.

[00:21:13.170] - Adriaan van Eck

And what we do, of course, we try to as an association, we try to tell either governments or manufacturers like, hey, if you're trying to lock in your customer, that seems to be a good strategical approach for short term.

[00:21:31.260] - Adriaan van Eck

But what we really try to convince the market to do that, if you're not open, then people will not choose your product because it's not connected. People don't want everything for one brand, that's not always.

[00:21:43.620] - Adriaan van Eck

And we try to do some nudging or influencing in governmental bodies to see if they can be or if they would try to enforce certain standards or a set of standards where we know, like, OK, we don't enforce one standard. But here you've got a couple of approach, pick you favourite flavour but don't just create another exotic standard or approach that cannot connect to the other systems that are around.

[00:22:16.590] - Jon Slowe

Yeah. Yeah.

[00:22:17.910] - Adriaan van Eck

And

[00:22:18.420] - Nina Klein

Yeah.

[00:22:19.410] - Adriaan van Eck

To have one thing. So first, one of our approaches that we prefer not to have individual devices to be controlled from external. So no, DSO controls an individual device. It talks to our central energy manager and then the devices control. So, we don't in our view we don't send signals price signals to end devices. We send prices, we send preference to the markets. The market creates sets the price and the preference. And it just talks back to us like, hey, those phone your energy consumption or, discharge the batteries.

[00:22:58.020] - Adriaan van Eck

That's really the essence of our system.

[00:23:01.290] - Jon Slowe

So, I imagine it must be frustrating at times doing your jobs because you're trying to herd people together and get them moving in the same direction.

[00:23:13.440] - Jon Slowe

Lucy, where else in Europe do we see a lot of activity around this in this area? We've talked about the UK and Netherlands, and I know your work's bigger than the Netherlands, but what have you seen of the other hotspots?

[00:23:28.140] - Lucy Murley

I think the key one that springs to mind is Germany, and it's the EEbus that Nina mentioned a couple of minutes ago, it's as part of those discussions about openness and publicly availableness for want of a better phrase of protocols.

[00:23:41.740] - Lucy Murley

And that's what EEBus does. It sort of a standard messaging to allow one asset to communicate to another. I think that's it's gaining a lot of traction at the moment and then sort of basing on what Adriaan said a couple of minutes ago as well about heat pumps. Germany's got a smart grid-ready standard for heat pumps, which where it's not the most technologically advanced or the most intelligent standard because the commands are relatively simple, turn up-turn down. I think it is a step in the right direction in highlighting sort of the value of demand-side flexibility on a residential scale.

[00:24:18.940] - Lucy Murley

It may not be perfect yet, and there are steps to improve it and become more interoperable and access those harder to reach value streams. But it's a step in the positive direction of enabling this flexibility, which is at the end of the day, what these protocols and standards are aiming to do at the residential scale.

[00:24:38.020] - Jon Slowe

And a good example, I think, of an industry, the heat pump industry in Germany coming together around the smart grid ready standards.

[00:24:46.420] - Jon Slowe

So,

[00:24:47.380] - Nina Klein

I'd just very quickly, you mentioned hard to reach value streams.

[00:24:51.970] - Nina Klein

And I think that was something we really tried to take on board when we were working on this PAS standard because some of the demand-side response services that require very fast response times are often the ones that are the highest value. And so we tried very carefully to make sure we were constructing a technical framework that allowed one single command to be sent and that to initiate a power response. If you're doing kind of lots and lots of negotiating back and forth, you're never going to get these kind of two second response times that you need for frequency response.

[00:25:20.290] - Nina Klein

And that's a very high-value service. So the architecture we created was very cognizant of the real-world value of these things because if we don't have them rolled out, we aren't going to get to our NetZero grids. So, yeah, it's a really important point.

[00:25:33.550] - Jon Slowe

And making sure that you've got everything from Kilowatt-hour to half-hourly ahead response through to kilowatt two-second responses, Nina.

[00:25:42.500] - Nina Klein

Exactly, yeah.

[00:25:45.340] - Jon Slowe

Um. I wanted to ask you about challenges for the next years in terms of where you're at and where you want to be. Let's turn that into our corporate that in our crystal ball question as time is getting better of us. And so bring out the Talking New Energy crystal ball. I have to put it beside me on the desk I can't show on camera, I'm afraid let's put the door to 2025. And here's the question. So, if we're looking at in 2025, newly installed batteries,  EV chargers, electric heating, so that assets are being restored in 2025, what proportion will be easily accessible through, for example, your standards by different service providers for those different types of demand-side response?

[00:26:41.430] - Jon Slowe

So, what proportion of new assets will be easily accessible?

[00:26:45.360] - Jon Slowe

And Adriaan and Nina, you might want to build in a very simple why or what's the biggest challenge in getting there as well. Nina, let's start with you.

[00:26:55.890] - Nina Klein

Yeah, so I was thinking about challenges and progress and I think the standards will be published in early 2021 to put that in the context of our crystal ball. And despite them being published, then there's a lot of appetite for more standardization in kind of other areas, more in that home side, that Adriaans working in. But I'm as well as more standardization.

[00:27:16.170] - Nina Klein

I'm really excited for actually having real devices built to the standards we've already got published. And so I think this is a really pertinent question. Yes, it's great to be doing all the standards work, but when are we going to get to the real deal? So, it's a very good crystal ball.

[00:27:30.390] - Nina Klein

And I think kind of I was thinking about this and I thought, well, I hope in five years time for new assets, it is 100 percent. That's my hope given the climate change situation. And then I thought and reflected and I think actually it's also my expectation, I think that it is possible to be at a 100 percent. And I think that comes partly from seeing the standards work happening. But also, I think as I'm kind of working in government, interoperability is a key policy principle.

[00:28:00.930] - Nina Klein

And at the moment we are funding these standards because there's an intention to set that requirement in regulation soon. There are final proposals to come out. But I think government is kind of setting the standard and putting the leader like these are outcomes we want to be seeing. And so I think hopefully the market will be there to deliver them.

[00:28:19.140] - Nina Klein

So, yeah, there's a lot of analysis saying we need to be very getting to get net zero. You've got to be doing a lot of things pretty quick. And I think the government is showing a real desire for this to be brought forward.

[00:28:29.980] - Jon Slowe

And biggest single challenge to achieving the 100 percent in the next years?

[00:28:35.020] - Nina Klein

Yeah, I think the biggest single challenge is getting all these different areas to, first of all, speak the same language and then to agree that they want the same things.

[00:28:44.860] - Nina Klein

I think it would be very easy to write a standard with five different annexes for each of the five ways people are doing it now. And I think the real challenge is showing true leadership and pulling the common threads from those five ways into one common way that everyone can get behind an agree on.

[00:28:59.770] - Jon Slowe

OK, thanks, Nina.

[00:29:02.860] - Jon Slowe

Adriaan, are you going with 100 percent as well? What's your view?

[00:29:07.260] - Adriaan van Eck

I mean, I love Nina's ambition, and that's also what I read from the other documents. It's it radiates ambition and it's very good. On the other hand, of course, here he goes. I'm also a practical person. And I think I would say if we reach 80 percent, I think that's already very good. Of course, it's a glass ball. You know, there was always somebody who offers a very cheap product or that indeed offers a charging station with a Wi-Fi plug, but it's crappy or so.

[00:29:39.760] - Adriaan van Eck

So in general, if I have worked with one of the biggest European thermostats for a couple of years and, you know, technology is not it's always hard. On the other hand, I totally, totally, totally agree with Nina.

[00:29:52.540] - Adriaan van Eck

We believe and we see that in a sustainability effort and the Paris 20, you know, there's a lot of inefficiency in the system. And there was a big driver towards eheating and etransportation and a lot of other e's. So, we needed people the acceptance level of people is rising. People understand like we have a smart world and we if we can get rid of a lot of inefficiencies that we don't lose a lot of welfare or, you know, we can keep our economical level at base.

[00:30:25.510] - Adriaan van Eck

So, that's both drivers. And I think one key thing that we need to do, we as well as, Delta-EE, but also Nina and all the governmental bodies or the standard bodies and I think we're getting there slowly, or too slowly maybe, is that we tell all the manufacturers that they will need that. There is no business model in the lock-in you know, make your stuff compatible because we as a system need it. The acceptance of the general public, if you create another exception, gets lower.

[00:30:59.560] - Adriaan van Eck

People don't want it anymore and there is no business model in it. You're out of business if you're not compatible in five years. That's the message I would like to push harder towards the manufacturers or the energy as a service business people.

[00:31:14.080] - Jon Slowe

In terms of phrases, one that stuck with me that I heard is open, always wins rather than closed.

[00:31:20.380] - Jon Slowe

But it takes time sometimes for open to win.

[00:31:23.650] - Jon Slowe

So to summarize Adriaan, if it's not 100 percent, it's close to 100 percent.

[00:31:28.750] - Jon Slowe

There may be a few outliers.

[00:31:30.850] - Adriaan van Eck

Yes.

[00:31:32.080] - Jon Slowe

Lucy, how about you?

[00:31:33.730] - Jon Slowe

How optimistic are you? Are you with Nina? With Adriaan?

[00:31:37.570] - Jon Slowe

Or see it as a bigger challenge?

[00:31:39.820] - Lucy Murley

I think I'm with Nina on 100 percent. I'd like to think that come 2025 a 100 percent of the newly installed assets will have a level of connectivity of some standards. I'm not sure what standard that will be. I'm maybe slightly more sceptical on whether it will be monetized. I think there'll be a huge potential for to be monetized, but it's up to sort of the service providers, the end customers, business models as to how to entice customers to use this flexibility that they all have the option to use.

[00:32:11.770] - Lucy Murley

It's just that that next level of it's all connected, it's all interoperable.

[00:32:16.540] - Lucy Murley

But now, just because monetize it, please.

[00:32:19.450] - Jon Slowe

Yeah.

[00:32:19.760] - Jon Slowe

And that's something our listeners will have heard me talk a lot about, is customer-centricity. And these two-sided business models or providing value to the electricity system, to the energy system. On the other hand, having a compelling customer proposition that customers will bite your hands are for.

[00:32:36.400] - Jon Slowe

So I think that's a nice, optimistic note we're finishing on. Not easy, but it's been.

[00:32:43.990] - Jon Slowe

Yeah, I don't think the standards discussion is dry at all. I think it's pretty exciting.

[00:32:51.040] - Jon Slowe

Lucy, Nina and Adriaan I think you've done a brilliant job at bringing that to life. So thanks very much. Is a critical part of the equation in the energy transition. Listeners, I hope you've enjoyed the discussion and learning more about this area. So thank you, Lucy, for joining us.

[00:33:10.270] - Lucy Murley

Thanks, Jon.

[00:33:11.680] - Jon Slowe

Thanks, Nina.

[00:33:13.060] - Nina Klein

Thanks very much for having us. Really interesting.

[00:33:16.540] - Jon Slowe

And thanks very much, Adriaan.

[00:33:18.490] - Adriaan van Eck

Yeah, thank you very much for organizing this and the opportunity to share our visions and our solutions to help.

[00:33:27.460] - Jon Slowe

It's always thanks to everyone for listening. And we look forward to welcoming you back to our podcast next week. Thanks and goodbye.

[00:33:47.520] - Jon Slowe

If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcasts on your chosen podcast platform.

[00:34:03.990] - Jon Slowe

If you'd like the podcast and like sharing, then please to rate us and to listen to archived episodes, to read transcripts and to see the latest Delta-EE insights, then please visit www.delta-ee.com

[00:00:09.600] - Jon Slowe

Hello and welcome to a Christmas episode of Talking New Energy. My guests and I will be talking about what new energy presents we'd like to see under the Christmas tree, a look back at 2020 and a look forward to 2021. I'm joined by two of my colleagues, Charmaine Coutinho and Lindsay Sugden. Hi, Charmaine. Hi Lindsay.

[00:00:36.900]

So I've asked both of you to think about highlights of 2020 and I've got my own highlight as well.

[00:00:46.950]

Charmaine, let's go first with your highlight of 2020. Looking back at new energy in 2020, what would you pick out?

[00:00:55.500]

Yes. So I think mine is really around the avalanche of decarbonisation as a mainstream theme. And this is a really prompted by some work we did with Alpiq, which is a European energy company. And we were thinking around the thought leadership whitepaper and looking at the three Ds, so decarbonisation, digitalization and decentralization and through that conversation what was really clear is actually 2020 is really been around decarbonisation as a huge, huge mainstreamed theme that it's almost it's just accepted now.

[00:01:32.190]

And digitialization has been on that journey for a while. And I think decentralization has lots of other things underneath it that need to be unpicked. But decarbonisation as a big overarching theme for in that case, commercial industrial customers more generally and for everyone. So I think that that's definitely been my highlight.

[00:01:49.170] - Jon Slowe

Yeah, yeah. That was one of my candidates was Shell declaring the net zero emissions by 2050? If a company like Shell can become a net zero company and commit to being on that pathway, then as you say, I think we really don't know whether tipping point's too strong or not. But decarbonisation has been a great a great highlight of the last year.

[00:02:12.720] - Charmaine Coutinho

Yeah, I felt the same... I think one of my other companies was going to be the BP energy strategy, not because it was in a nicely formatted ten point plan type thing as well. So yeah, I would agree with that. I think if Shell and BP, then it must be at some form of point that tips over.

[00:02:31.970] - Jon Slowe

Well, let's call it a tipping point then - a net zero tipping point. Lindsay, how about you? What about your highlight - new energy highlight of 2020?

[00:02:42.050] - Lindsay Sugden

Yeah, I think my highlight for 2020 was Enecoo, os Dutch utility's comfort as a service proposition. It was actually launched in late 2019 but it was first made public and it really kind of started to to get going in 2020. And and this is really the first true comfort as a service proposition that we've seen where the supplier takes essentially all of the risk and the customer pays a fixed fee. And they do lots of cool things like heat pump and PV optimization it's possible for the buildings to be net zero because the PV supplies all of the heat pump electricity. So I thought that was a really exciting proposition.

[00:03:27.030] - Jon Slowe

And is that... How is that going, is it you mentioned it's launched by the end of twenty nineteen, started to be put together in 2020 or rolled out in 2020. Are we likely to see a wave of that in the next year or is it still early days?

[00:03:45.500] - Lindsay Sugden

Yes, so they're trailing now with about 60 houses, I think, and there's aims to to roll this out more widely.

[00:03:55.530]

But Eneco aside, there is a huge number of companies coming out with Heat as a service type propositions, most of them the companies, the suppliers are not taking on as much risk as in this case, but this heat as a service and related service based propositions for heat are really coming out in huge numbers now. And so, yeah.

[00:04:20.380] - Jon Slowe

I think that's really exciting because  risk involves managing the risk and there's more and more Internet of Things sensors, connected devices to help manage the risk. But the only way to really manage it is to learn by doing, which is exactly what Eneco is doing.

[00:04:37.700] - Lindsay Sugden

Yeah, exactly, so it's very exciting.

[00:04:38.970] - Jon Slowe

So, yeah, well, my highlight of the last year I had a few candidates, but I've gone with the investment by Origin an Australian Energy Company, in Octopus, a London based energy and energy software company which valued Octopus, a start up, at over a billion pounds.

[00:05:03.960]

So a rare thing, a unicorn valuation in new energy. So congratulations to Octopus and Octopus have got over a million customers in the UK. They're active in the German market and they're licensing their software to other energy retailers around around Europe.

[00:05:25.160]

So I thought that was particularly exciting and a good success story and hopefully attracting more investment into the into the space.

[00:05:33.660] - Lindsay Sugden

Yeah, that's what's really interesting to see, is a new supply are emerging and do you see that development kickstarting change in some of the other more incumbent suppliers?

[00:06:40.540] - Jon Slowe

I do see kick starting activity, Lindsay, I think both from companies like E.ON in the UK using Octopus's software and others like Tibe, a Nordic energy retailer and energy software company, raising money successfully. So whether we see more unicorns or not, I don't know. But I think certainly see a lot more activity like the like Octopus are demonstrating.

[00:07:11.640] - Lindsay Sugden

Yeah.

[00:07:13.050] - Charmaine Coutinho

Yeah. I think it's really important, actually, because that you can get unicorn status on something that probably a lot of people think is really simple, just building and managing your customers. But I think being on that side is so hard to do successfully.

[00:07:26.760]

So I really empathize with energy retailers when they get bad press around CRMs. And so I think it's quite amazing overlap with both. The something simple was actually very complex and it getting to a unicorn status. So, yeah, it's a good one, Jon.

[00:07:44.000] - Jon Slowe

Right. That's our highlights. Now for the next part, let's see what each of us would like as a new energy present under the Christmas tree. So I did want to get Mariah Carey music. All I want for Christmas is... and then some clever new energy thing to follow that. Unfortunately, we can't quite afford the royalty to use Mariah Carey music yet.

[00:08:10.610]

And I don't want to affect my singing. Charmaine, your singing or Lindsay's brilliant singing, all of us on our listeners. So we'll just have to imagine Mariah Carey's music in the background. All I want for Christmas is... And let's see what each of us would like under the Christmas tree for the energy transition. Charmaine, let's start with you.

[00:08:35.000] - Charmaine Coutinho

Well, it's one of my favourite songs, and now I'm thinking all I want for Christmas is a Mariah Carey branded energy retailer. But actually, I think for me this it's not related to the highlight of the year, really. But we have I think for me, it's really about seeing networks, which is a bit of the energy system that we talk about quite a lot. But I think is starting to it's a bit maybe a bit lagging behind, maybe on new energy journeys in some way and really getting them to see how they can really put the end user front and center.

[00:09:09.620] - Charmaine Coutinho

So I think a lot of conversations have kind of improved and they're thinking much more about customers. But quite often when you talk to networks, when they talk about customer, they're talking about the people who connect to their grid, not homes and businesses right at the end. And that's you know, it's not for all of them. But I'd love to see more of that happening where the customer's really front, front and center of thinking.

[00:09:33.470] - Jon Slowe

It's an interesting one Charmaine, because on... They're all about the customer, without the customer they're... They don't mean anything, but they don't have those direct relationships with the customers.

[00:09:47.330] - Charmaine Coutinho

Yeah, exactly, it's hard.

[00:09:49.070] - Jon Slowe

Yeah, I can understand why it's hard, but it would be a great present to have.

[00:09:55.440] - Charmaine Coutinho

Yeah. I mean, just even when I get through stuff through my door talking about what my local network operator is doing, I think to myself, if they're really trying and making that kind of one or two step connection. But that's what I'd like to see.

[00:10:10.370] - Jon Slowe

Well, maybe Santa will deliver that for you all nice and wrapped up on Christmas morning. Lindsay, how about you. What would you like to see under the Christmas tree?

[00:10:22.190]

Yeah, I think it's in a way, it's a bit related to what Charmaine said. It's related to having offerings where the customer is placed front and center.

[00:10:33.110] - Lindsay Sugden

So referring back to Eneco's example, which I mentioned earlier. So this comfort as a service offering, as it is at the moment, being offered new builds, social housing. And what I'd really like to see is this type of offering, this kind of comfort as a service type offering, being rolled out much more in existing buildings, which are the most challenging segment to to decarbonise. I really think this type of model or this group of service based heat models are the answer to or part of the answer, at least to decarbonizing heat in especially in existing buildings.

[00:11:11.660]

We've seen examples, but there's a lot of heat as a service with the heat pumps in in Denmark, for example, where where I'm based, which is already showing that this is possible.

[00:11:21.950]

So I would really like to see this customer as a comfort, as a service type model where the company is taking all of the risk.

[00:11:35.840] - Jon Slowe

What are the chances lindsy of waking up on Christmas morning and seeing that under the tree, so to speak? Would you be absolutely gobsmacked or do you think, oh, I'm not that surprised.

[00:11:50.000] - Lindsay Sugden

Depends if I'm thinking half the glass half full or glass half empty. But I think if I'm if I try and be realistic, I think I would be surprised if companies would go as far as comfort as a service in existing buildings now.

[00:12:02.510] - Lindsay Sugden

No, I think in new buildings the demand is more predictable. It's a bit easier for companies to take all the risk. But I think, you know, slight where offers like heat as a service, where they take a lot of risk, but perhaps not and not every single risk. I think there is there's a huge growth in these kind of offerings. So I think just a few more big companies jumping on that bandwagon. I think I could imagine that. I think that will happen.

[00:12:34.400]

In Christmas spirit, let's think glass half full rather than glass half empty.

[00:12:42.260] - Jon Slowe

So from my side, what I'd like to see under the tree is more in general, more customer centric thinking in the energy sector, still far too many engineers.

[00:12:57.170]

People get excited about the technology, myself included, and think about the energy system and flexibility in meeting peaks, but not putting the customer right at the center. And specifically, what I'd like to see is regulation built around what the customer actually needs. So comfort as you were describing lindsay or mobility or these sorts of things rather than commodity, because fundamentally we don't need a commodity. We need the outcome. We need buildings at the right temperature or to be able to get from A to B.

[00:13:33.950]

so I think that's that's my one regulation built around the customer, not the Kilowatt-hour.

[00:13:46.630] - Lindsay Sugden

No, I think that's that's a really good one because it's not technology solutions that are blocking decarbonisation. It's it's the customer journey. So the customer needs to be front and center. So I think that's absolutely right.

[00:14:03.240] - Charmaine Coutinho

Yeah, and I think the just having all those regulations being long term rather than short term, because, General, my earlier point decarbonised is, is a big, big old nut to crack. And if we're just focusing on things Short-Term, whether they're cost or whether they're particular technologies, I don't think that's really helpful for the next decade.

[00:14:29.830]

Now, we could start singing the three days of Christmas with our three presents that we've got under the tree, but I'm not going to make you do or listeners I'm not going to make you listen to that.

[00:14:40.220] - Jon Slowe

So we've had more comfort as a service for existing homes under the tree, networks that really embrace the all of their customers, not just in us looking to connect to their networks and customer centric thinking, particularly around regulation under the tree. Now, let's bring out, as we always do, the talking new energy crystal ball and into the Christmas themed keeping with the Christmas theme. Set the dial to Christmas 2021. So just one year ahead. And I want to ask you both, what would you think your highlight of 2021 will be at this time next year?

[00:15:26.080]

So  we're now coming up to Christmas. Twenty twenty one. You're looking back at twenty, twenty one and you're on the podcast again. What were your highlights of twenty, twenty one? Charmaine, let's start with you.

[00:15:39.010] - Charmaine Coutinho

So I'm going to use three words for this one. The first one is kind of well the first to phrase which combines two of them. But it's a kind of conflation of supply and generation, you know, probably around the meter, but not necessarily. And then I think the second word, which something I was discussing with a colleague, is around optimization of both of those things for the energy provider, but also the energy consumer. But I think the kind of third point is really around that being happy and happening at a local level.

[00:16:05.860] - Charmaine Coutinho

So local level optimization of energy generation and consumption really. And I think that spans the networks like I was talking about before, but maybe like local energy systems, microgrids or even within the home. So there's so much in that that really, I think is going to change next year.

[00:16:25.910] - Jon Slowe

So more and more, in a way, bottom up optimization of the energy system rather than top down.

[00:16:32.210] - Charmaine Coutinho

Yeah, it's quite a complex thing. I think, you know, as an end consumer, whether you're a business or a domestic homeowner, to really understand and kind of situate yourself within the whole whole energy system.

[00:16:42.950]

But I definitely think you can see the signs of innovation and propositions around that coming to the market. I think next year is the time for that.

[00:16:51.530] - Jon Slowe

Or maybe Charmaine. That's where I can give you my customer centric thinking present under the tree this year so that we've got a two sided business model that on one hand does all the exciting techy energy system stuff of optimizing and balancing. And on the other side wraps up in a really simple and clear proposition for the customer.

[00:17:15.470]

But am I am I getting far too excited and optimistic about what the year ahead holds?

[00:17:20.490] - Charmaine Coutinho

Oh, you know, that's not I think that's a whole plan, isn't it, to be optimistic? Glass half full.

[00:17:25.880] - Jon Slowe

Yeah. Lindsay, what's your highlight of twenty twenty one going to be when you look in the crystal ball?

[00:17:35.060] - Lindsay Sugden

OK, keeping with the glass half full theme, I think I will be looking at there, having been introduced minimum energy performance standards for existing buildings and in some markets. And so, as mentioned in the European Commission's renovation way, which was published recently as being considered in some markets like Germany, this would make a really huge impact on the decarbonisation of buildings.

[00:18:08.080]

So, yeah, going with half glass full, a glass half full, rather. That's that. I'm going to look back next year and say, yeah, that's that's happened.

[00:18:20.590] - Jon Slowe

And that's quite, if we think of carrots, a stick, would you call that a carrot or a stick. Sounds to me more of a stick.

[00:18:28.120] - Lindsay Sugden

It's more of a stick. I think this is kind of what's been missing. There's been no no lack of of carrots, you know, incentives and great big ambitions about, you know, hundreds of thousands of heat pumps being sold per year or net zero or, you know, there's no lack of ambition, but there's not so many sticks that are going to make it happen. So I think this in combination with carrots as well.

[00:18:53.830]

And my daughter suggested perhaps adding a cucumber as well when I was maybe that will help too.

[00:19:03.490] - Jon Slowe

Have a variety of things available, depending on your tastes?

[00:19:08.350] - Lindsay Sugden

Exactly.

[00:19:09.020] - Jon Slowe

Yeah. Well, it's interesting that we're already hearing discussion about that, and I think once one country shows what can be done, maybe, maybe others will follow. Yeah. So for me, twenty, twenty one highlight in a year's time, I think we'll see the battle for the selling electricity and related services to electric vehicle customers really hot up.

[00:19:41.040]

So we've already seen L.A., the Volkswagen subsidiary launch electricity, tariff and services for charging cars in Germany, Tesla launch electricity supply coupled with its batteries in the U.K. And I think we're going to get a lot more.

[00:20:03.600]

We're going to see this battle between electricity retailers, Tesla, Volkswagen and other automotive companies and other new entrants really hot up because there's going to be a huge growth in the electric vehicle market and there's a lot that these customers need. So that's my what I expect to see next year. Yeah, I mean, it's a good point, actually, Jon, because we've seen quite a bit of M&A around all the assets around EV charging this year and it's a bit of consolidation there.

[00:20:37.660]

And I think when people are thinking about where the value lies within the wonderful, exciting, sexy world of EVs and EV charging, I think it's almost like it's like going from the car back to the energy retail proposition, or at least from our perspective, obviously we're not automotive people. Yeah, that's a good one as well.

[00:20:58.460] - Jon Slowe

It's a lot of kilowatt hours there there, so even if you just stay on the commodity model, those are the customers you really, really want as a electricity retailer, I think you have to find out a reason why they should come to you.

[00:21:11.890] - Charmaine Coutinho

You know, I wonder I'm not thinking too to 2022, but whether this time next year we'll be saying the same thing about heat pumps.

[00:21:19.730] - Lindsay Sugden

That's what I was about to add with my heat hat on. I think it's natural.

[00:21:26.170]

And clearly, EVs seem to have the you know, the head start EV charging seems to be the the sexy topic at the moment.

[00:21:32.920]

But I think, you know, I may be a decarbonization of heat kind of fan, but I do think that's the next logical step and heat pump services alongside that. We're already seeing companies doing both of those things, EV charging and, you know, services around heat pumps. So I think, yeah, definitely that'll be next year.

[00:21:56.360] - Jon Slowe

Well, I had my I've got a smart meter, but unfortunately it doesn't communicate yet, so I had an old fashioned meter reader come around and then after that, my electricity retailer call me up and say, could you just double check this meeting? Because it seemed this meter reading because it seems quite high.

[00:22:13.010]

And I said, yeah, that's because I've got a heat pump and suddenly a much more valuable customer for them. But they didn't know it.

[00:22:22.510] - Charmaine Coutinho

Yeah, well, it sounds like they need to get a bit better CRM system, Jon.

[00:22:26.240] - Jon Slowe

I think they do. And they shall bring back to one of our highlights of this year.

[00:22:33.680]

Well, I hope you get that. Let's hope we will get the presents under the tree that we're we're wishing for. And time will tell whether our predictions for the next year are right. But it's been a fun little look back at last year and it will look the year ahead. Thanks a lot, Lindsay and Charmaine, for joining me today.

[00:22:57.800] - Lindsay Sugden

Thanks Jon.

[00:22:59.810] - Charmaine Coutinho

And my pleasure.

[00:23:02.150] - Jon Slowe

And I hope you get to to raise a glass, a full glass, not even a half full glass, a full glass to celebrate the holidays in whatever form we're able to celebrate this year in the not too distant future. Thanks, as always to listeners for joining us today. We hope you enjoyed this slightly different podcast format, wishing you all a great Christmas however, you're spending it in whatever form you're able to spend it with your friends and family and looking forward to talking with you all again in twenty, twenty one.

[00:23:36.230]

So happy Christmas and happy New Year to everyone and speak with you again in twenty, twenty one.

[00:23:42.450]

Goodbye.

[00:00:04.560]

Welcome to Talking New Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition.

[00:00:21.740]

Hello and welcome to the episode. The energy transition is seeing a whole host of companies having to transform themselves. One of the best examples of this is a journey that some oil companies are embarking on. Repsol and, more recently, Shell have declared bold ambitions to be net zero businesses.

[00:00:40.910]

So should we think of them as oil and gas companies or with these ambitions new energy companies? Looking at where their revenues come from today they're still oil and gas companies for sure. But that's natural given their starting point, how will they make the transition to become net zero businesses? And how are they going about this today, particularly in the hard to decarbonise area of heat?

[00:01:05.810]

So that's a question we're looking at today, together with my guests, Jo Coleman OBE who is Shell's U.K. energy transition manager and our head of Heat, here at Delta-EE, Lindsay Sugden. Let's say hello to my guests. Hello, Jo.

[00:01:21.790] - Jo Coleman

Hi, how are you?

[00:01:23.440] - Jon Slowe

Good, thanks. Thanks for joining us. Jo, I desribed Shell as an oil and gas company, at least in terms of your revenues today, but I know that's a bit of a simplification.

[00:01:34.860]

You're not starting purely from that point today, are you?

[00:01:40.050] - Jo Coleman

No, that's that's a fair comment. And I think you're right in terms of revenue. It is from oil and gas today. But I suppose in in thinking through kind of where we're going and where it's useful to look at where we've come from. And Shell started life in the early eighteen hundreds as a trading company. It was called Shell Transport and Trading, and it actually traded shells at the time.

[00:02:07.470]

It brought shells from the Far East to to to the UK. And trading has remained at the heart of what Shell does and it's at the heart of what Shell does today. So building from that base of shipping shells, we went on to import kerosene, which was used for lighting in homes in the UK, replaced whale oil and other less palatable things to be burning in people's homes. And only later on did it get into refining and producing a variety of oil products and then into oil and gas production and then more and more so I guess we've weighted the portfolio towards gas over oil, because we see that having the longer fit with the energy transition. So it all comes back to trading, being at the heart of that.

[00:02:58.590] - Jon Slowe

So I guess it depends. There's a famous business philosophy you might know it about, what business are you in? So is Shell in the business of oil and gas, or is Shell in the business of energy or selling energy to customers or is Shell in the business of being a trading company or whatever it is customers need?

[00:03:18.630] - Jo Coleman

So I would say first and foremost, we're a trading company and we sell energy products and actually a variety of non energy products to consumers, both B2B consumers, but also B2C consumers.

[00:03:33.510]

And and just to put that into context, we have more retail sites selling to customers around the world than Starbucks.

[00:03:43.520] - Jon Slowe

That's an amazing statistic.

[00:03:44.960] - Jo Coleman

It is an amazing statistic. We have 44,000 retail sites globally. Just in the U.K. We have five million customers that are at our retail forecourts,  at our petrol stations, if you like to call them that. And we have a million customers in Shell energy. So, so and not all of that is backed up by, the oil and gas part of that is not just backed up by our own production. We sell many, many, many times more products than we produce ourselves.

[00:04:15.950]

And of course, the same appliances, we think about the new products as well and coming into power.

[00:04:21.350]

So the weight of the business today is oil and gas, because that's where the market has been. That's where your business has been.

[00:04:27.680] - Jon Slowe

But you've got a whole you know, these customer interactions, the range of things you're doing, the trading activity means that hopefully you can navigate away from oil and gas and... Net zero by 2050, so Shell's ambition to be net zero by 2050, it's it's a big ambition, a great ambition. Your role in that is UK focused. So can you tell us a bit more about your role and I guess in the UK and also on that journey from where you are today to being net zero by 2050?

[00:05:03.980] - Jo Coleman

Yeah, so my role is to both drive and coordinate across all of Shell's different businesses that are in the UK to both show them the opportunities that are in the energy transition and the risks of not moving, but also to show them how to help them understand the local environment in the UK.

[00:05:28.460]

So what are the opportunities at a kind of local level, because we have in some areas very global businesses, and it's to make sure that we have an integrated strategy and for example, an integrated policy and advocacy position at a country level. We don't have one business wanting one thing and one business announcing another. We have to come together as a coherent whole in the UK.

[00:05:50.060] - Jon Slowe

And is that challenging, challenging, Jo, because you have different parts of the... I guess the parts of the business that are not in new energy, that where that net zero target is going to be quite challenging for them.

[00:06:04.250] - Jo Coleman

So yes. Yes, it is. But I think part of that is showing them it's about the opportunity and the risk. So if you can see the opportunity of where you can play in the energy transition, then I think you can grasp it and you become part of the solution. So whether it's our upstream business that's based in Aberdeen or whether it's our retail business, the petrol stations, it's about grasping that opportunity and seeing how you can contribute. So I think that is how you kind of shift corporate thinking in this area, is to make it become part of the solution by focusing on the opportunity rather than kind of trying to resist the change that's going to happen and seeing it purely as a threat.

[00:06:49.820] - Jon Slowe

And is your UK role, but do the same similar roles or equivalent roles exist in other countries within Shell or is each country doing it differently.

[00:07:00.860] - Jo Coleman

No, they, they, they do. But we are going through a major reorganization at the moment. And so I would say that the roles like mine have been here to drive the organisation, but really from sort of 2015 and 16 when we said we supported the Paris agreement and we launched our new energies business. But recognising that this is not just about a new energy business, it's about all of Shell's businesses. So these roles were put in place at that time to support the transition.

[00:07:32.000]

But the reorganisation, it really embeds the journey towards net zero and and Shell's ambition in our organisation.

[00:07:43.520] - Jon Slowe

And in the beginning, I mentioned the heat being, we've talked about it often on the podcast, I think the hardest to decarbonise sector out of the main main sectors.

[00:07:54.260]

Are you, does your work and would you say Shell are thinking holistically about all areas of emissions, or do you think Shell has a natural focus on certain areas?

[00:08:05.390] - Jo Coleman

So we're certainly thinking about all areas - we supply energy today in all areas. So whether it's whether it's power, whether it's gas for heating homes and businesses, whether it's aviation fuels, whether it's fuels for cars and trucks.

[00:08:25.280]

So we provide energy to all of these areas. So it has to include all of it.

[00:08:29.600]

But we do have a number of areas we're focused on in the UK because you can't do everything everywhere. And I think particularly when you're exploring what role you can play, you don't have to test everything everywhere you go.

[00:08:43.460] - Jon Slowe

And those focus areas of the UK, what would - do you want to highlight one or two or what...?

[00:08:48.360] - Jo Coleman

Yeah, yeah. So power is a big one, growing a power base. We see power needing to go from sort of 20 percent of end use demand today to upwards of 60, 70 percent of end use demand. So growing that power business from our very strong trading business today is a big part of that and so is low carbon mobility. So the infrastructure for charging electric vehicles at homes, workplaces, offices and on the go and they all need slightly different types of infrastructure is important.

[00:09:26.060]

And then the other with the other kind of clean energy is in carbon capture and storage and in hydrogen, both blue and green hydrogen. But hydrogen basically for use in transport and industry, potentially in homes.

[00:09:42.650]

And then the final one is about the role of oil and gas, because we can't switch oil and gas off overnight. That's not it's not actually it's not going to help anybody. So it's it's helping people to understand what is the role of oil and gas throughout the energy transition. There is still an expectation there will be oil and gas in use in 2050.

[00:10:04.330]

But it needs to happen in a way that's clean, so some of that will go into products like chemicals, you know, oil and gas goes into things from shampoo to toothbrushes to all sorts of things today that we're still going to be using in 2050, but also using it in hard to abate sectors and therefore needing the aspect of net zero that you need offsets.

[00:10:27.710] - Jon Slowe

You're using it very selectively in those areas that are really, really hard to do because...

[00:10:35.770] - Jo Coleman

Clearly it has to decline in usage. Yes, that's that's we totally get that.

[00:10:42.490] - Jon Slowe

And heat. So show, I guess your customers might not think of Shell and heating, but you're in the gas value chain, you're in the oil value chain, you're in the electricity value chain. So naturally that gives you an opportunity to play a part in the decarbonisation of it.

[00:11:00.100] - Jo Coleman

It does. And I think heat is probably the hardest nut to crack in this space. It's probably easier with business customers who who a) understand how much energy they use for heating and b) have, I think, a strong incentive to reduce their emissions. So it's probably probably easier with business customers than it is with consumers in their homes.

[00:11:27.400]

But yes, we are through Shell Energy Retail, our consumer energy business. We are, I guess, starting on a journey of trying to educate people and kind of just make them aware of how much of their emissions comes from using gas, engaging them today in things like light offsetting. So carbon neutral homes, it's clearly not the end solution, but it starts to engage them in how they use heat and then also thinking just solar panels and batteries and the kind of the whole smart system in the home and how you can adopt these different technologies.

[00:12:07.900]

And recently that has extended into heat pumps in the UK as well.

[00:12:13.650] - Jon Slowe

Well, let's come back to that work with heat pumps  in a bit. Before we do that, let's bring in my other guest, Lindsay Sugden. Lindsay, on the topic of heat, so the U.K., I think the UK has had a bit of a wasted decade with decarbonizing heat. Now, that's a bit harsh. And I know some people would disagree with me, but we're still going. We're still mainly gas. There's a lot of oil, fossil fuel off the gas grid.

[00:12:46.250]

Heat pumps have gone from 20,000 to maybe 30,000, maybe a bit more units a year.

[00:12:50.990]

And it's a big ambition with electrification, possibly hydrogen. When you look across Europe, how how divergent or how similar are the approaches to decarbonising heat?

[00:13:07.370] - Lindsay Sugden

Yeah, there's there's definitely some common themes, but the approaches and the kind of balance of which may be the preferred solutions is different. You've got the common themes of electrification, of heat and transition to low carbon gases, district heating or greening of district heating networks. And but as I said, the approach is very different. So France is probably the best example of a country which is very much going down the electrification and electric heating is even displacing gas to some extent.

[00:13:43.520]

And that's probably the only example we see in Europe of this happening. In the Netherlands, you've got really ambitious gas, natural gas, Phase-Out goals, both in existing buildings and new build. And but there's still going to be a lot of this will go to electrification, but they're still going to be a role for growing the heating. And hydrogen is a topic there. In the UK, as you mentioned. Yeah, especially at the moment. These big this new target of 600,000 heat pumps a year by 2028.

[00:14:18.830]

Electrification is a is a big story, but hydrogen is also a big story. And to date, electrification is really just being focused on on new builds. And the off gas sectors, the oil sector. In the Nordic markets is a bit a bit different, more focus on greener district heating and electrification. And where there is gas grids, these are even where they're going to become greener. They're less likely to be used for heat in future.

[00:14:49.130] - Jon Slowe

So different, the same types of ways forward, different emphases depending on the country or something like that, hydrogen or electrification or the balance between those two and.

[00:15:03.100]

You mentioned about on gas grid and off gas grid, and I think it's a really interesting way to think. The big challenges on gas grid and I don't think we've seen many countries, as you say, shift people off natural gas onto something else. But we have seen countries really shift off gas grid fossil fuels onto electricity, on to heat pumps.

[00:15:28.510]

What would be a good example of that? Where where countries really moved a big chunk of customers from oil to to heat pumps?

[00:15:37.870] - Lindsay Sugden

I mean, it is happening across Europe and oil is the kind of low hanging fruit for electrification. And but if you should look for countries that I suppose are furthest along the line first in terms of progress, with that, you probably look to the to the Nordic markets where the there's been a focus on Phase out of oil from, you know, even some cases to kind of decades this has been happening. And as a result, we're seeing quite a lot of end of the oil companies in these areas with coming out with quite innovative offerings, investing quite a lot in kind of repositioning themselves in the new energy or electrification space.

[00:16:22.060] - Jon Slowe

Yeah. Comes back to the you know, what business are you in? You're an oil company. Are you a heating company?

[00:16:28.150]

And I know you've got a couple of examples of, well, maybe not oil companies in terms of upstream producers, but oil companies in terms of suppliers of oil who have started to develop businesses. So that's sort of a I think, a great example of being in the business of heat, rather the business of supplying oil. Can you give us a quick illustration of a couple of those companies?

[00:16:50.860] - Lindsay Sugden

Yes. So a couple of good examples. Firstly, from Finland, a company called St1, one who have were traditionally an oil supplier.

[00:17:02.770]

And they've really been refocusing on their new kind of mission statement is that they should be a low carbon energy company rather than an oil company.

[00:17:16.360]

And so through this, they're kind of local energy business, which they set up. They're offering leasing and service type contracts with heat as a service type contracts with heat pumps. This is mainly for collective heating and they're investing in geothermal energy. And they're also doing time of use optimization with heat pumps so remotely controlling the operating times of heat pumps for grid balancing. And so so they're they're a good example. And then in Denmark, OK, which is traditionally an oil supplier, but they start off in coal, made this transition to oil when coal was kind of on the way down.

[00:17:58.150]

And now they're really making the transition towards electricity and they supply oil, gas, electricity. And but they're really focusing on services around electrification of heat. And they've been selling heat pumps actually for 11 years in Denmark and targeting oil companies. And they've got a whole range of offers ranging from maintenance contracts to and leasing heat pumps, heaters, the service pumps. They've got their own installation force. And so both these companies are essentially. Seeing the step from being an oil supplier to being more involved in electrification of heat services.

[00:18:42.540]

This is necessary for their kind of transition to becoming new energy companies that will survive and that kind of decarbonised energy.

[00:18:52.080] - Jon Slowe

Well, I think they're great examples and the success or not will be in the execution of that and how well they they build those businesses, no doubt.

[00:19:00.240] - Lindsay Sugden

They are quite well established already.

[00:19:06.990] - Jon Slowe

So that they're doing well. Jo, you mentioned, heat and in relation to the other sectors and heat probably not being as where you're - I don't know the right way to say it -  as active or you're engaged, but it probably at a level below power of ability just because of where you've been at. But you've got a really innovative project product called Be Snug. So just like the two examples Lindsey talked about, you've been selling oil, heating oil, but you've now got a heat pump proposition.

[00:19:37.890]

Can you tell us a bit more about it?

[00:19:40.530] - Jo Coleman

Yeah. So I guess for me that actually fits into our whole power play because it is about electrification of end use demand so so that it is part of the power play. And yes. So Be Snug is selling smart hybrid heat pumps to off gas grid consumers. As Lindsay was saying, they're the most able to pay because of what they pay today for oil or OPG consumption.

[00:20:09.880]

We're working with Passiv Systems who I'm sure you, your listeners will be aware of has been doing some really innovative stuff with heat pumps in the UK. And really we see our role is helping them to scale their solutions. So it's not our solution, but we're helping them scale. And we're doing so by working with basically we pay a very large proportion of the upfront capital. We know that capital costs are a big constraint on consumers switching to heat pumps.

[00:20:39.150]

So we pay that capital in return for the consumer assigning their RHI benefits back to us.

[00:20:49.590] - Jon Slowe

And the RHI is the UK equivalent of like a heat feed in tariff? Effectively, it's not fed in, but you're paid a bonus price for renewable heat that's generated.

[00:20:58.260] - Jo Coleman

Indeed, and it's been a bit on off in the UK and that doesn't help with consumer confidence, even for those consumers that understand what a heat pump is.

[00:21:08.490] - Jon Slowe

And the hybrid solution.

[00:21:10.900]

So that's still with an oil boiler an oil burner, but with a heat pump, electric heat pump. The did you how much did you think about whether to go with a full electric pump and no oil or what led you to that hybrid solution?

[00:21:27.420] - Jo Coleman

So I think it's about taking consumers on the journey.

[00:21:32.400]

What Lindsay didn't say in her comparison of the UK to other European countries is that we have the leakiest houses in in Europe and that makes heat pumps all the more challenging.

[00:21:46.500]

And so we think there's also an opportunity to use heat pumps in combination with other fuels. So you, the gas group, consumers, it's oil today, but it might in the future be in combination with hydrogen on gas grid consumers. But we think that gives them an opportunity to have that reassurance that even in the middle of winter, on a very cold day, that they've still going to have that back up, but it will still reduce their emissions by 70 or 80 percent if we base it on the Freedom Project that Passiv led in Wales with hybrid heat pumps.

[00:22:24.930] - Jon Slowe

And where are you on this journey with Be Snug? Is it something you've just started or is it something you're you're keeping smallish while you can learn from it and be nimble? Are you throwing everything at it? Give us a feel for whether this....

[00:22:40.320] - Jo Coleman

Yeah, so we launched it by basically about a year ago this time last year, a soft launch where we learnt and got it set up. Obviously covid then hit. And this is really not a good time for going into people's homes to do surveys or indeed going into people's homes to make any installations. So it has been a pretty rough year, I think, for for B Snug. But I guess the other thing that we've been slightly surprised by is even in off gas grid homes.

[00:23:16.980]

It's just not an awareness amongst people of what their alternatives are. So there's a real journey I think needed in education and just making people aware of the options and making them comfortable with it. And we are also trying some different business models. So Lindsay mentioned resellers. So we are working with one of our resellers who sells heating oil today, actually, so a company called [...] Who just like Lindsay said, sell heating oil today but are now starting to sell heat pumps, too.

[00:23:50.890] - Jon Slowe

That's really, really interesting that. Yeah, another example of people in the oil channel seeing a way to get the energy business. For a company like Shell Jo, well, I talk with a lot of utilities, oil companies, and one of the challenges is new energy often is starting in the niches and the numbers are small.

[00:24:15.290]

People want things that will move the needle often and have a big impact. For a company like Shell. What you're doing with B stock is it's tiny, it's brilliant. It's exactly what the market needs. But how do you how does Shell look at something like this now where you're starting small, you're learning, but ultimately you need scale?

[00:24:40.670] - Jo Coleman

Yes, indeed.

[00:24:42.620]

It is a balancing act because, you know, heat is it's not a global problem, clearly. And many countries are much better set up. The examples Lindsay gave in Europe are much better set up to adopt some of these technologies. So it is I would say it is it is a niche business in Shell at the moment, and we need to be able to scale it and prove it before we're moving it elsewhere. And it's a lot easier to think about businesses like investing in offshore wind, for example, where you get that scale really quickly or EV infrastructure where you also scale much quicker.

[00:25:23.750]

It's a lot easier in thinking in terms of these types of scaling opportunities than it is in in heat. So it is it is very much a test case for us. But as you say, it's really important in terms of the UK's energy transition.

[00:25:36.950]

Yeah, and I think the learnings, in a way, rolling up your sleeves and getting in the market and having propositions like this is a way to learn and create success.

[00:25:47.420] - Jo Coleman

And partnering with others, too, because that's a hugely important way to learn.

[00:25:51.410]

We don't have all the answers ourselves.

[00:25:54.770] - Jon Slowe

Lindsay, with hybrids in general. We've been excited about them at Delta-EE for for a long time. I'm so excited about them. I have one in my house. Not a Be Snugi, it's a gas hybrid, not an oil hybrid, but it's the market for hybrids. Hasn't really taken off anyway yet. Or are we seeing any signs of where where they are getting some really good market pull.

[00:26:19.740] - Lindsay Sugden

Yeah, you're right, I mean, when we first started looking at the hybrids market, you know, was that six, seven, eight years ago?

[00:26:27.980]

And they they they hadn't sold very many at that point. But they showed really big promise. And they really haven't lived up to their promise in terms of displacing gas boilers at scale. And but there has been some success. If you look at the evolution of the market, I think we're about across all of Europe, about 30000 hybrids a year, which obviously isn't much. But that's it's kind of it has been growing. And I think it's particularly had success where it can address pain points in the heating market.

[00:27:01.890]

And, you know, Joe kind of alluded to some of these, you know, as Joe said, there can be challenges with with leaky homes. Actually, I wouldn't say that it's only the technical challenges because, you know, there's also great advances in technology. So a house being the key in itself isn't isn't the problem, but it is a perception issue and it's a potentially an easier sell to customers, as Jo said, that you can install a heat pump alongside your existing boiler.

[00:27:34.980] - Jon Slowe

So I think with those 30000, clearly there's a market, the small market there. But I think the type of proposition innovation, Jo, that you're doing where you're contributing some of the Capex is that that experimentation, finding ways that will really appeal to customers and as a market creation job as well, because, as you say, customers aren't unaware in many countries.

[00:28:00.150] - Jon Slowe

I would love to talk about hybrid business and Shell's activities longer, but time's getting the better of us. So let's bring out the talking new energy crystal ball. And this week I'm going to set the dial to 2030. And let's have a question about hybrids. So in 2030, where will solutions like Be Snug in your case or Lindsay, hybrid heat pumps in general be? And you can answer this question Lindsay and Jo in different ways about Shell and Be Snug, about hybrids in general, about the UK or about Europe.

[00:28:38.910]

But, yeah, if you can give us our listeners a feel as to where you think hybrids will be for helping to decarbonize heat by 2030. Jo, let's start with you.

[00:28:49.680] - Jo Coleman

Yeah, so by 2030, I would like to see Shell being successful, making money back to the way we started from now than just investing money, but making money as a provider of energy solutions to homes and businesses across the UK. And that would include energy solutions, such as charging in the homes such as batteries and solar panels, but also solutions for heating and by 2030.

[00:29:22.260]

I'd like to see that including off gas grid homes, but also on gas grid homes and the government... Lindsay talked about the government's target of 600000 heat pumps by 2028. I'd like to see Shell playing a significant role in that, but for me, it won't just be about heat pumps. So we also talked a little bit about hydrogen.

[00:29:44.670]

And I think Shell has a role to play as well in supporting the both the production, but also the journey towards hydrogen being used first in industry, in transport, but of course, in our homes as part of the heating solution too.

[00:29:59.550] - Jon Slowe

OK, so a scale business around home solutions, including heating solutions of which hybrids will play a part.

[00:30:09.720] - Jo Coleman

Correct. It be the only part, but it'll be certainly be part of the solution.

[00:30:12.690] - Jon Slowe

Yeah. OK, thanks, Jo. Lindsay, how about you?

[00:30:17.690] - Lindsay Sugden

Yeah, I think if we focus on the hybrids part initially and, you know, I could imagine the growth from kind of the tens of around thirty thousand across Europe, as I said today, to perhaps low hundreds of thousands by 2030, but only if hybrids enable capturing significant value from energy system flexibility. That's just one factor which could really enable the market. Also, as Jo mentioned earlier, you know, the potential for hydrogen coming in that could extend their window of opportunity where the gas boiler part becomes renewable as well.

[00:30:55.910]

And so those could be positive signs. I mean, I wouldn't necessarily put all of my eggs in the kind of hybrid basket I could certainly see by 2030, much more pronounced shift towards Service-based proposition. So a bit like the Be Snug element, but you know, everything as a service be this with hybrids or with other technologies. And we think this heating sales through kind of service based contracts could be 10 to 15 percent of annual heating sales across Europe by 2030.

[00:31:29.840]

So hybrids may be a part of that, but there'll be other solutions as well.

[00:31:35.120] - Jon Slowe

So plenty of growth and a part of the part of the journey to decarbonizing heat.

[00:31:41.870]

Well, we'll have to leave it there for now, and I'm challenged  but excited by the journey to decarbonizing heat and other sectors as well. And Jo, I think it's fantastic to see a company like Shell set that level of ambition and get involved in the market and all the different ways of getting involved in. So good luck over the next year and let's see where we get to. So thanks a lot, Joe and Lindsay, for joining us.

[00:32:14.280]

Thanks as always to our listeners and look forward to welcoming you back to the next episode next week. Goodbye.

[00:32:23.610]

If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us on me on Twitter, LinkedIn, or subscribe to the podcast on your chosen podcast platform.

[00:32:35.610]

If you like the podcast and let sharing, then please do write us and to listen to archived episodes, to read transcripts and to see the latest data insights. Then please visit Delta hyphen e e dot com.

[00:00:04.560] - Jon Slowe

Welcome to Talking New Energy, a podcast from the new energy experts, Delta-EE. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition.

[00:00:21.890]

Hello and welcome to the episode. Energy retail - an attractive business or not? In today's episode, I'm joined by two rapidly growing energy retailers from the French and UK markets to discuss this topic, alongside my colleague Charmaine Coutinho.

[00:00:40.270] - Charmaine Coutinho

Hi Jo, how are you doing?

[00:00:42.220] - Jon Slowe

Good, thanks. Now, energy, retail, you've worked for an energy retailer and there's certainly no shortage of companies entering the energy retail business, many tens of them in some countries. Some have scaled quickly and attracted an investment. Some have been acquired. What's your view on this market? Is it attractive? Is it not? How would you feel about it?

[00:01:06.450] - Charmaine Coutinho

Oh, it's a really good question. I've got conflicted feelings and I loved working for a retailer. But the challenge was a bit of a relief, actually, to not because the scale of the challenge in the transition, the number of new entrants, finding a point of differentiation in something that is extremely commoditised, and  just the expectations from customers as the customers change. I think it's really challenging. And there has been no shortage of companies that have gone out of business, particularly in the UK, for example. So it's a challenging market, Jon.

[00:01:40.570] - Jon Slowe

Challenging and but with great potential. So let's hear about how two companies are tackling that.

[00:01:47.860]

So the companies we have both founded in 2015 and both have grown from, well, everyone started with one customer, I guess up to hundreds of thousands of customers.

[00:01:59.470] - Charmaine Coutinho

Yeah and we're going to be exploring the progress they've made, their vision, their plans for the future and really what they've learned about launching and growing their businesses. So probably good time to intro our guests.

[00:02:11.840] - Jon Slowe

Let's do that. So first up, Julien Tchernia, president of Ekwateur. Hello, Julien.

[00:02:19.030] - Julien Tcherna

Nice to be invited and thank you very much and nice to be part of that very interesting discussion.

[00:02:25.120] - Jon Slowe

Great. Thanks for joining. So can you start by giving our listeners an elevator pitch for your for your company?

[00:02:32.740] - Julien Tcherna

With pleasure. So Ekwateur we are a French based company. We started in Italy in September 2016. Oh, I've lost count how that's been four years. And we've got about two hundred forty five thousand meters now, which for our pleasure makes Ekwateur the biggest company in terms of new entrants. The French market is really focused on the historical suppliers. So EDF and Engie have still got like 90 percent of market share. And then we've got Total and Eni so that's a huge competition to reach people very aggressive and then you've got Ekwateur, so we managed to be the fifth. And as you said, there are the dozens of suppliers now. And I've heard even that there are 20 more requests for license on the desk of the French ministry for electricity and gas.

[00:03:32.260] - Jon Slowe

So lots of people in France and elsewhere are being attracted into this market. What attracted you into this market? Why did why did you set up Ekwateur? What's what's your vision, your passion about this market?

[00:03:45.010] - Julien Tcherna

It's a passion that definitely has to be a passion because it's very competitive, a very hard market. I think that there are two ways to see that. Even three at a personal level, it's me and my partner, um, we met and we work together in a previous supplier and we decided that we could do it ourselves and we wanted to do it ourselves. So we went to my maid's room. You know, in Paris we have maid's room and we started the company.

[00:04:09.940] - Julien Tcherna

That's that's the way it started. The vision was that most of the competition and even more at that time were producer. The main business of EDF, of Engie, of Total is producing energy and they consider selling as a necessary evil. And we said that indeed the selling is a nice business and it's a very nice job.

[00:04:31.600]

And and if you add the digital on the top of that, then you got a new way to do the the supplier business... indeed the right way. We used to we we usually say that we are no more an energy company than Amazon is a bookshop.

[00:04:49.870]

And so that's a concept. And then you've got the values as well. So we are obviously doing that for personal reasons, which are fighting against climate change and especially on the energy part, pushing the renewable consumption and pushing for the decentralization of energy. France is a very, very, very centralised country, so you have to have some of the citizens just doing their part.

[00:05:19.660] - Jon Slowe

OK, so a real passion for retail and for the customers and for the environment of ecological decentralised energy. That's great. We'll come back to you shortly. Charmaine, let's move to our second guest.

[00:05:36.310] - Charmaine Coutinho

Yes. So our second guest is Charlie Davies. He is the co-founder and CEO of So Energy. Hello, Charlie.

[00:05:45.600] - Charlie Davies

Thanks. Thanks for having me.

[00:05:47.670] - Charmaine Coutinho

No problem. So Julien gave us a really lovely kind of summary of the kind of challenges in the energy market from moving from the kind of generation side to customer first.

[00:05:58.620]

Could you give us your equivalent for So Energy, and why you set up the business really?

[00:06:04.110]

Yeah, sure. So we're a renewable energy company. We started out 2015 really wanting to provide a better service than the customers customers we're getting. We now supply over two hundred thousand households, so that's more like 230,240...

[00:06:23.460] - Charlie Davies

And and we're now a Which recommended supplier and we're number one Citizens Voice for customer service. We've really done this by two things: keeping it simple. So making what our customers see as easy as we can and pricing fairly, offering the best rates and being as transparent as possible.

[00:06:46.800]

We've achieved this by having built the business from the ground up, you know, leverage the latest technology, building our own in-house technology on top of that, but also allowing sort of data to help solve our customer problems. And and the energy industry is no short of them. But but sort of our secret sauce is really empowering our people. So being able to give them the tools to deliver awesome service to to help our customers, I think is, as Julien touched on this, you know, coming from a world where service was a by-product of producing upstream and and through this transition of this radiation, then this is all changing and the dynamics are fundamentally changing.

[00:07:32.040]

And we see a real opportunity there. But I guess your other question around why did we set up the business. Well, I think it's a sort of a well known fact around the UK market, the massive monolithic Big Six customers.

[00:07:53.550]

And we really felt as though we could provide energy at much cheaper, fairer prices, increasing the customer service and with one eye on the renewable electricity, because we see it's such an important part of the supply of places to help our customers solve the debt, the climate change, and be part of that energy transition.

[00:08:19.060] - Charmaine Coutinho

Yeah, that's great, I mean, I think it's a really interesting narrative and how that's going to change what has been for the last three or four years. Thank you.

[00:08:29.690]

OK, I'm I'm intrigued actually by how similar both of your visions that you described in elevator pictures are. So you both refer to well the monolithic Big Six, Charlie or Julian EDF as the incumbent in France. You're both wholly focused on retail, passionate about retail. So sometimes our podcasts have disagreement and debate. Sometimes I have violent agreements. So let's see where we go with it. Now, the first question I'd like to ask you both is around the business of being an energy retailer.

[00:09:08.800] - Jon Slowe

So you look at it from one perspective and the margins are razor thin. The competition is super high. Julien, we talked about the number of new entrants coming to the French market. Charlie, there's no shortage of them in the UK, so.

[00:09:25.320]

Convince me that you really this is really a good business to be in when you've got such high competition and such razor thin margins. Who would like to go first?

[00:09:37.980] - Julien Tcherna

OK, so it's a very fragmented, very competitive, low margin, typical retail business, very exciting. You know, French people, they've created look, we love retail, a big company, very powerful, very rich competition.

[00:09:54.680]

You've got new entrants coming from abroad in France and from the same in U.K. and they're coming with a lot of money. Everybody's got the same products. So it's the same electron and it's the same the molecules, I think, you know, all products and services is exactly the same.

[00:10:16.550]

So it's even different than in the telecommunications business because the network is the same, at least in France. That's the way it is. And the energy value is so constrained that you can play just a little on the price. Not so much, except if you're hitting a very high price. So it's just the fun of it.

[00:10:35.240]

And I think that's all this together makes it a necessity of being more than just an energy supplier. So as I said, the competition is producing energy and getting a lot of money from production. And we as a supplier, we have to consider ourself, at least we at Ekwateur we consider ourself as a shop and people are coming in first for energy, but then we are selling solar panel. We are selling demand response services and we are building that every day.

[00:11:03.650]

Obviously, we don't have as much as we would like to be as fast as we as we as we like. But I think that's the vision that we have to add on the market and that's the differentiation we think. And the customer service is the first is the first solution. Fortunately, a lot of our competition thinks it's a low barrier, low entrance market and they just first put the website and then they start to think of how I treat the customer.

[00:11:32.720]

And if they grow fast, then they just face numerous problem. And you've got most of most of the competition is is is is blocked around 50 or 100 thousand meters. And because that's where the problem arises.

[00:11:49.670] - Jon Slowe

So just coming back to what you're saying about the the challenges, you described tons of challenges Julien but effectively attract customers, look after them, really give them a great experience and work out what else they need and sell more things to them. And as you say, fundamentally not that different from from a shop from the normal retail.

[00:12:14.540]

Charlie, how would you answer that that question about how how attractive is it to be in the business of selling units of energy?

[00:12:22.580] - Charlie Davies

Well, I think it's a huge opportunity, Jonn. I think the element that our sector has really missed the point and missed the trick on is the trust element. And this is an opportunity to really build trust because, you know, it's I'm sure we'll get on to it around talking about like the new innovations and products and services. But I think trust is the thing that underpins the success of this transition towards net zero. If if we don't do all those huge amounts of responsibility actually on energy suppliers to build that, that's because if they don't have it, then customers won't take up these new products and services and therefore the road to net zero will be much harder and longer and that will ultimately fail us all.

[00:13:07.670]

So I think the energy, as Julien mentioned, that on the face of it seems a very simple, straightforward business model, low barriers to entry, relatively speaking. Hey, you know, what's the trick here? But but actually, when when you start to build the business, you understand the complexity involved and the importance of all of the suppliers. So, yes, there are razor thin...

[00:13:32.900]

You know, there are structural, especially in the UK market, sort of policies and regulation in place that are sort of enabling this sort of real race to to the bottom and pressure on margins which will have long term lasting effects with the lack of investment and innovation happening in our sector.

[00:13:56.280]

So there are some challenges there but I guess this is these challenges are there to be solved and we see ourselves sort of taking it upon that and no one ultimately doing a particularly stellar job in addressing those needs to be there for the long term.

[00:14:12.890] - Jon Slowe

Does it come back to the point Julien was making? You know, you explained it using the word trust that if you build those trusted relationships, then you have the ability to expand that relationship into more products and services. Is that a similar vision to Julien?

[00:14:30.320] - Charlie Davies

Yeah, I think that underpins that. Everyone is unique. And they will have their own unique energy requirements and being able to offer bespoke sort of supports to individual circumstance is is ultimately the goal - for some a heat pump might make sense, others solar panels...

[00:14:49.620]

But if you if you live in a one bed flat in the centre of a city, your energy needs are going to be very different. You may not own an EV, and your transportation is being disrupted in itself.

[00:15:02.040]

So, you know, as there is competitive pressure for sure. But I think there's a huge opportunity to win by doing it better.

[00:15:12.330] - Jon Slowe

Yeah, OK.

[00:15:16.200] - Charmaine Coutinho

That's really interesting, because I think the two things that just come out for me is this piece around trust, which you touched ongoing, but going back to Julien's point, this kind of pure retail opportunity, which is is very customer focused. But it is we're talking about pure retail. And I think it's something that's never really been as clearly articulated for me, how people can be enthusiastic for just just that element.

[00:15:38.550]

But one thing related to that is really about kind of when you come to retail, it's all about brand. So I think I'd quite like to ask both Julien and Charlie, maybe Charlie if we start with you this time, abut how you've really gone about building your brand because how to stand out and getting to hundreds of thousands of customers. It's a structural customer number of barriers and maybe one or two things that you've learnt in the last few years.

[00:16:08.010] - Charlie Davies

It's a really interesting question. I think, you know, we reflect a lot internally, sort of who we are, how we're positioned. Are we still addressing our customers needs? But, you know, it still comes back to the two principles I spoke on earlier around keeping things simple. Customers will want things packaged in a really simple, understandable way. And and secondly, transparency and trust. And that's driven through pricing fabric.

[00:16:38.580]

You know, there's a lot of mistrust because people have, you know, implicitly been taken advantage of because of moving on sort of deemed rates, but actually being not being proactive about it.

[00:16:52.590]

And and companies being a bit too short termist with with some of those ambitions, I think is ultimately hurting them a bit now. So, you know, what if what if we learned to get the basics right? Just a simple, clear, easy service to use is is going to win. And secondly, good service saves you money. So it makes it hassle free interaction from a customer's perspective. It means that you're not handling fallout of unhappy, disgruntled customers because you failed at doing the simple jobs.

[00:17:25.590]

I mean, clearly, we're both operating at scale, so not at the scale that we want to get to wherever, but enough that problems really face themselves if it's not on point. So I think there's a huge amount of that. And we've we've actually just sort of rebranded it on our on our own website because we've seen when we first launched in 2015 that we had was well positioned for that market. But over the space of five years, I think the market moved on.

[00:17:57.810]

And we also need to move on with that market. And being agile and dynamic enough to react to that is going to be sort of like it's going to be fundamental going forward.

[00:18:08.940] - Jon Slowe

Charlie have you had to... in terms of getting to scale... You're a start-up. You don't have a massive marketing budget, I'm sure. You've not got unlimited marketing funds. Have you grown organically?

[00:18:21.570]

Have you had to go out and market and win those customers? Have you grab by word of mouth? What would you say is the biggest growth engine to to get to hundreds of thousands?

[00:18:29.190]

Well, a combination of things and it talks about it evolved over the years. We we raised some initial seed financing in the beginning, but we have not raised any further since. I think you alluded to on the intro a few people have funded significant losses through significant investments.

[00:18:47.400] - Charlie Davies

And we haven't we haven't done it that way. So we're we're growing organically and subject to competitive pressures. So a greater opportunity means we'll grow a bit quicker. If it's not, then then we won't, because we're trying to work with both on a renewable perspective, with sustainable. But we also want to be financially sustainable. And and so, yeah, it's I think this is so we've grown at the beginning through word of mouth when we wanted slow growth.

[00:19:18.120]

But as we've sort of evolved in the market and we've we've readjusted, you know, people sign up directly through word of mouth. We have a referral scheme. We partner with price comparison websites. We have a team outbound calling customers, so we're really trying to have a diverse group, to have a diverse customer base, which I think is a great sort of great thing to have as an organization.

[00:19:45.620] - Charmaine Coutinho

So, Julien, and the same question really for you - how what can if you've learned from brand building to get to your customer numbers at the moment?

[00:19:55.640] - Julien Tcherna

So I mainly agree with Charlie. What users trust for me  is very important. And what we see in the market, as we described it beforehand, is that the only value that remains to differentiate is rending. And that branding is is today based on values: you could do branding by doing advertisements on TV with a huge budget in the 90s, that it would work. It doesn't work anymore. My competition is spending millions on TV with no values.

[00:20:35.100]

So and and the values we are aiming at now, so we are not aiming for the value we are living is, as you said, Charlie, so much probably the same transparency, proximity, proximity with the customer being very transparent and obviously being sustainable, renewable. And and this has to be more than a marketing speech. It has to be you. And it starts from, you know, explaining the importance of the customer, because that's the way, as Charlie said, you build trust.

[00:21:05.850]

That's the way to sell - you can have a one shot sell. So, like, if you've got a restaurant, a touristic restaurant, you can sell whatever you want in one shot. You can lie how much you want. Anyhow, the customer will not come back because he's a tourist. You have a long term relationship as we have. And so if you lie, once the day the customer realized that even one year after even a small lie he will be very upset with you and they will not trust you anymore, and that means you will not buy any kind of other services.

[00:21:36.040]

Even so, it's good for him because at the end it lowers expenses. You won't do that because he's lost his trust. And trust comes from value and value comes from sharing that with the team. That's very important for us. And in Ekwateur, for instance, everybody has to talk to the customer, even the marketing director, even the software developer. They have to spend at least one day every three months on the phone with the customer during.

[00:22:03.890]

And keep in mind that what matters is the customer. What they are doing is to make the customer life easier.

[00:22:12.120] - Jon Slowe

That's really interesting example, Julian, how and I've heard it from another energy retailer as well. How. You put the customer right at the center of everything that flows through the whole company, regardless of who the person is. That's fascinating.

[00:22:38.080]

And have you funded yourself? Have you raised much money, Julien, in terms of marketing or how you've grown? Have you thrown money at marketing to win customers?

[00:22:47.770] - Julien Tcherna

We've shown a lot of money we've shown several hundred thousand euros each year. So that's really nothing I respect to what the competition is is doing.

[00:23:00.580]

We've raised money obviously to start. We might again if we want to go faster. So this depends, obviously, of the situation. It's hard to see the future. And and so we started with our own money and then we had a little money because it's a really you've got cash issues when you are a supplier of things.

[00:23:30.400]

So the winter is really harsh and [...] of buying the energy, which implies a lot of financial guarantees to give to to the people whom you are buying to. And that puts you as well...

[00:23:47.200] - Jon Slowe

You need some money in your pockets. Now, let's look forward a bit, and you've both referred to selling added value products and services, selling other things to your customers.

[00:23:59.940]

If I think of old energy Retail, I think of that as being totally commodity based, selling kilowatt hours of electricity and often gas. As we move more into the energy transition, as the energy transition gathers pace, it gets more interesting.

[00:24:16.550]

And one of you mentioned demand response, for example, but more complex. So I'm interested for both of you. What opportunities do you see for energy transition retailers?

[00:24:29.840]

So maybe what's what are these other products or services you could add on or what does it mean to be an energy transition retailer rather than an old energy retailer of kilowatt hours.

[00:24:44.150] - Julien Tcherna

No, I think that's exactly that's exactly the opportunity that Charlie said. We are not producers, so we have no conflict of interest by selling any other solution. If I'm producing tomatoes and in my shop, I will sell only tomatoes. We are buying tomatoes, but we can sell as well whatever bread, water, whatever is needed recipes. And and so the demand response or a solar panel or any any solution you can imagine.

[00:25:14.960]

Peer-to-peer energy reselling is is, at least for us, not a conflict of interest. In Franceost m of our competition - big ones,  EDF, Engie, the famous name, they have these kind of services that are already on the market that they are selling already, but they are not selling a lot. And the question is...

[00:25:38.540] - Jon Slowe

They're not selling a lot, but can you sell a lot? So, yeah, they should start these things, start small. And how do you manage that when things are small, but you need to put lots of work into developing and offering. How do you get the timing right?

[00:25:53.680] - Julien Tcherna

I'm thinking of they are not selling a lot because they don't want to sell out, because it's a conflict of interest, because if your idea of if your customer is installing solar panels on its rooftop, then you have the basic problem of competition from the individual citizens.

[00:26:11.080]

And I give you an example, as far as I know, EDF, the company selling to households solar panels, they are selling more or less 5,000 per year. We started selling solar panels this year with one of our employees, a young girl with one year of experience, and she just sold to our customer one thousand six hundred solar panel in two months.

[00:26:32.890] - Jon Slowe

Wow.

[00:26:33.760] - Julien Tcherna

And I've got much less customer than EDF. So if I'm the boss of EDF and I've got somebody with that amount of customers, that is selling 5,000 per year, that maybe if I want him to sell more, I will help him or I would change the boss.

[00:26:49.720]

But definitely, as I'm not doing that, my understanding is that it's not their interests and that they're not pushing it now, they're just showing it, I guess.

[00:26:59.170] - Jon Slowe

And regardless of their interest, your experience shows that there is a market there and you can grow that hopefully relatively quickly. Charlie, how about you? What does it mean to sell energy, to be an energy transition retailer? Or as we move away from pure commodity, what would you start to layer on and add?

[00:27:21.370] - Charlie Davies

Yeah, so I guess it's very similar to Julien. And we launched our solar and our own white label battery this summer early. I think covid slightly delayed the launch of it, but up and running once we had some sort of certainty around installations.

[00:27:38.140]

But, you know, the theme and the direction of travel is offering affordable, low carbon, sustainable technologies and saving customers money. I definitely see that point. And I would describe more of a tension between this transition whereby we're trying to save our customers money and help the environment well, which means implicitly reducing the unit rates at which they buy and also buying less of them. And the traditional model is basically the more you sell, the better it is.

[00:28:09.370]

And and this is obviously where we kind of fit, where we don't. We are aligned with the customer's needs and helping advise where where possible. But the themes that we're focused on around the smart home, you know, the home generation, so the solar panels storage. But there's also transportation and and heating and opportunities in those markets, specially the U.K. market, is particularly dependent on on natural gas. And that's obviously a big challenge to try and reduce that.

[00:28:40.090]

And you mentioned earlier in the discussion focus on having to you know, you're a relatively small company compared to other retailers. You have to focus on how many of these things can you bite off at one time? You mentioned solar panels and batteries, Julian. You mentioned solar panels. Presumably there's lots you'd love to do, but you can only go at a certain pace.

[00:29:02.470] - Charlie Davies

Yeah, and timing is everything. When when you have a very limited budget and you need to be lean, and agile in how you operate. So, I mean, it's through building capabilities and competencies across the business. Some are through, offering a new product range that is new for the business and was set up to learn. So there's there's a lot of sort of like strategic thinking behind why we might launch into certain markets.

[00:29:30.370]

But, you know, timing timing is everything. And and the success of of the Road to Net Zero is driven from making this these products and services open to the early majority and the late majority. So they're very targeted on the hyper engaged, the early the early adopters, and they're loving about it and they're tweeting all the time.

[00:29:54.730]

But for this but we kind of see this this early majority being not necessarily wanting to be active participants in energy. They want it to work. They want someone to do the complicated stuff they need to keep the tariffs and the propositions super simple.

[00:30:12.790]

Otherwise, you'll get this dislocation between the people who are loving it right now and have that Raspberry Pi there, to people who are just normal people, for lack of a better word, I think, say.

[00:30:25.900] - Jon Slowe

It will stay with the innovators and stay as a really small niche.

[00:30:32.290]

Julien, from last question before we go to the crystal ball, how do you see the timing and how quickly you can widen your product range?

[00:30:43.250] - Julien Tcherna

 I'd like to be much faster, um, quick enough for digitalization. So software development, I think. Ekwateur is a software company. More than half of the employees are software developers, and and that's the main limit.

[00:31:05.400]

So we we have a lot of other small startup with a lot of products, ideas, solutions. And I think our job is to integrate them. So that's an integration limit. Digitalization obviously, because it has to be easy for the customer to understand, to buy and to support and then the logistics, because at the end, we have to enter to the household to install a solar panel or whatever. So this is what makes it less fast.

[00:31:37.610] - Jon Slowe

Yeah, well, I think most entrepreneurs always want to go faster than they can, but that's the key challenge, getting the timing right fast, but not too fast.

[00:31:50.840] - Julien Tcherna

My team think we are we are going fast and I'm not sure. The thing is I'm not a crystal ball guy. So and this is even more tiring for the team because what what I think the best solution is try everything and see which one is hooked by the market and then push on this one.

[00:32:10.520]

And every opportunity we go on it, we put it really fast and then the industrialization is just on the services that are a success.

[00:32:22.080]

And this is obviously very important and very time consuming industrialization of a solution that you're selling well is always difficult.

[00:32:32.450] - Jon Slowe

That ties back Charlie, to what you were saying, what you were saying about the customer, keep it simple for the customer. Now we need to get onto the crystal ball Charmaine.

[00:32:42.920] - Charmaine Coutinho

 I'm going to wrestle it from you. I think this is the first - it is that time of the podcast when we bring out our crystal ball and we're going to set the dial to 2025. So both of your businesses, Charlie and Julien, will be around ten years old by then? I think. So what do you think... I suppose the question to pose here is, can you give us an elevator pitch for your business in five years' time in terms of offering to your customers?

[00:33:10.250]

And then maybe if you got a bit of time and a one liner, what do you think the single biggest challenge to reaching this is? So that's say where you think you'll be, what you'll offer in five years' time? And what's the biggest challenge to reaching that? Julien, if I go to you first.

[00:33:24.940] - Julien Tcherna

Why me?

[00:33:28.658] - Charmaine Coutinho

You went second last time, that's why!

[00:33:32.680] - Julien Tcherna

Well, then you can say five years after on Linkedin if I made it right, today's idea right from the beginning just started right this morning because I will change my view every day. Now, I think that decentralisation is the key for Ekwateur in the long term. I'd like to help my customer to become a producer and to sell energy one to another, or to choose their energy. This will bring a much more resilient system than we've got in France, which is very centralised.

[00:34:03.080]

And so, for instance, Covid is affecting a lot the production of EDF because they cannot maintain their power plants. Um, Ekwateur I hope we will have reached the million meters.

[00:34:18.320] - Charmaine Coutinho

And that's a wonderful prediction. A million meters. And you would like your customers to be producers. So we'll take that for our crystal ball. And I will put a note in my diary to contact you in five years' time. Just to check! Charlie, the same question for you. Maybe in one line. In two lines. Really?

[00:34:38.150] - Charlie Davies

Yeah. So clearly flexibility and and simple propositions around that. We're already seeing demand side response and flexibility and VPP technology come through. However, still very early days and still very niche. So we'll see. But this  pace of uptake will be driven through the customer and customer centric approach. So I expected something to be around bolt on services and keeping it sort of quite modular as the flexibility, and the bespoke nature and the unique needs of the customers are adequately assessed.

[00:35:13.550]

I think, you know, one of the greatest challenges is going to be around cross industry collaboration. So great example is, is heat pumps, so great technology, not terribly affordable for most.

[00:35:30.800]

But also, you know, this is a great example where left hand's not talking to the right hand. You know, new builds are being built and the infrastructure behind them isn't the quality that you can actually install heat pumps. So you're going to have in five, ten years' time new homes that have to be retrofitted to take on new low carbon technology. So. We already seeing it today, so this is, you know, a greater sort of cross outside of the direct energy domain collaboration is to be fundamental.

[00:36:02.850] - Jon Slowe

Plenty of challenge for you as a retailer, Charlie, and plenty of challenge for governments, regulators to to get the framework right.

[00:36:10.640] - Charmaine Coutinho

That's another podcast I think, Jon.

[00:36:13.020] - Jon Slowe

That is another podcast. I mean, so let's draw this one to a close. We've run out of time. But that was a fascinating discussion and Charlie and Julien, thank you both very much for joining us.

[00:36:28.170] - Charlie Davies

Thanks Jon, thank you Charmaine.

[00:36:28.170] - Julien Tcherna

Thank you very much both of you.

[00:36:28.170]

Thanks as always to our listeners. And we hope you enjoyed it and look forward to welcoming you back next week to our next talking new energy podcast. Thanks very much and goodbye.

[00:36:39.810]

If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us on me on Twitter, LinkedIn, or subscribe to the podcast on your chosen podcast platform.

[00:36:51.840]

If you like the podcast and let sharing, then please do write us and to listen to archived episodes, to read transcripts and to see the latest Delta insights. Then please visit Delta hyphen e dot com.

[00:00:46.160] - Jon Slowe

Welcome to Talking to Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition. Hello and welcome to the episode. The topic for today is hydrogen the spotlight on hydrogen is getting ever brighter and hydrogen for sure, will play a role in the energy transition. The precise size and nature of the role is still to be determined, I think. And in many parts of the world, clean hydrogen still only exists on PowerPoint slides.

[00:01:06.950] - Jon Slowe

Today, we're focusing in on a part of the world where clean hydrogen definitely exists on the ground, as well as in plenty of PowerPoint slides, of course, and where hydrogen is likely to have a significant role in the future. And the country where we're going to be. It's the same as where Delta-EE's headquarters are, the beautiful country of Scotland. So, if you're looking for the leading edge of hydrogen activity worldwide, there's probably a few places you could go globally.

[00:01:31.860] - Jon Slowe

Scotland's, definitely one of them. And with my guests we'll be exploring what makes Scotland special today and in the future when it comes to hydrogen.

[00:01:41.720] - Jon Slowe

Let's introduce my guests. First up, Nigel Holmes, CEO of the Scottish Hydrogen and Fuel Cells Association.

[00:01:49.690] - Jon Slowe

Hello Nigel.

[00:01:52.030] - Nigel Holmes

Good morning and thank you for the opportunity to join you today.

[00:01:57.270] - Jon Slowe

Great to have you here, so Nigel, I characterise Scotland as being on the leading edge of global hydrogen activity. Why would you say Scotland merits that position? What makes it on the leading edge?

[00:02:13.950] - Nigel Holmes

I like your description about... There's lots of places where you can see what's happening on PowerPoint slides. And I think what's important about Scotland is that we do have some very good early projects that are helping us to understand not just in theory, but the practice of how we deploy hydrogen and we deploy hydrogen safely. And it's going into locations such as the city of Aberdeen, where they're deploying the hydrogen buses and Fife just across the river from Edinburgh, where they've been carrying out hydrogen demonstration education projects now for almost 10 years, and also up to the very north of Scotland off the tip.

[00:02:59.310] - Nigel Holmes

And Neil will tell us more about this in Orkney. And what we have in all of these locations are clusters where projects have been happening, where people have been getting early experience with hydrogen. And I would say, furthermore, these are clusters where we're actually very open to sharing what we've been doing and the lessons learned so far, and that's the important part we are learning as we're going. And I think Neil will probably give us a few more examples, but, you know, it's important that we if we want to make progress, that we don't try and repeat the same mistakes that we actually all move together.

[00:03:38.940] - Jon Slowe

And I guess your organisation, your role is to try and knit activity together, to disseminate those learnings, but also to secure some public sector funding, some government support. How important is that in getting these projects that you've just described going?

[00:03:58.710] - Nigel Holmes

Public sector support is absolutely essential and it can come in more than one form. Funding is obviously critical. Some of the early projects in Orkney, the Scottish Government, the local energy challenge fund, was instrumental with surf and turf projects, which then grew and became the big hit project. Support through Highlands & Islands enterprise. Neil will talk about that as well. That's been pivotal in helping the innovating projects in Orkney to actually work and to support the development. But the other thing that is critical is the policy.

[00:04:38.760] - Nigel Holmes

It's not just a {illegible} and policy support, but for what is happening in hydrogen comes in different ways. Actually, that the most important policy support I would suggest that we've had over the past year or two has been the advice from the UK Committee on Climate Change for the UK to set a target for net zero. The Scottish government, I think the day after, you know, said, yes, we take that on. Yeah, we will set a target for net zero by 2045 for Scotland,and the UK about three weeks later. Yes, the UK will commit to doing net zero by 2050. Now, you might say, well, that's nothing to do with hydrogen. But actually what we've seen since May 2019 is that the level of interest in hydrogen has just gone up exponentially. And it's not just the UK. It's a wider change.

[00:05:32.250] - Jon Slowe

But that's... Why does that matter?

[00:05:34.440] - Nigel Holmes

Because net zero essentially means that you can't just hide some of the emissions that are difficult. You've got to do something about all of the stuff: the hard to decarbonise industry heat, the hard to decarbonise the ferries. Neil will probably talk about that as well. So, you can't just say that's in the 20 percent. And that's what was happening before. And that is why hydrogen is now coming rapidly up the agenda, not just in the UK, not just in Scotland, but globally.

[00:06:01.260] - Jon Slowe

So no, no hiding places left. We've got to decarbonise everything. And and that public support, that money, obviously, {illegible} maybe that's the wrong analogy for this podcast. Thanks Nigel, we'll come back to you shortly. So, you mentioned Orkney a couple of times, well my second guest is Neil Kermode, Managing Director of the European Marine Energy Centre in Orkney off the north coast of Scotland.

[00:06:28.080] - Jon Slowe

Hello Neil.

[00:06:29.610] - Neil Kermode

Jon, good morning. How are you doing?

[00:06:31.860] - Jon Slowe

Good, thanks.

[00:06:33.360] - Jon Slowe

Now, Neil, we're talking about hydrogen today, but you're MD of the European Marine Energy Centre. So, some people might be wondering what's a marine that's been doing on a hydrogen podcast? Can you explain a bit how hydrogen fits into your activities?

[00:06:49.860] - Neil Kermode

I certainly can.

[00:06:51.480] - Neil Kermode

And I'd like to claim it was part of some great and cunning plan. But actually, it's more the conspiracy of circumstances than previous decisions, really. So we are in Orkney, so we're just north of the of mainland Scotland.

[00:07:05.010] - Neil Kermode

We're not right at the top... Shetland's beyond this. They're not always in a box in the North Sea.

[00:07:08.810] - Neil Kermode

As they appear on some maps and we are working on finding ways to harvest energy from waves and tides. The energy we're harvesting, the intention has always been to put it into the national grid and export that energy to the UK's main mainland grid.

[00:07:26.340] - Neil Kermode

However, the grid was put in originally to supply a small amount of power to the islands, not take the large quantities of renewables that are now being produced on the islands away. So the cables are getting full basically.

[00:07:39.270] - Jon Slowe

Yeah. You've got a small cable, not a big cable.

[00:07:41.940] - Neil Kermode

Yeah. So we've got enough to to to power the 20,000 people who are here, but not enough to power the 60 million people who are on the southern bit of the UK. So in effect, we found that we we could harvest the energy, but we were starting to run up against the edges where we couldn't export it all. And so we started to look for other ways in which we could use the energy that we're taking from the sea. And so principally from our tidal site, we first of all realised that we could store the energy and put it into batteries, but that only works short term.

[00:08:12.390] - Neil Kermode

But actually, were there other things we could do? It led us towards hydrogen as a long term storage energy vector. So, that led to a couple of years ago to us putting in a half megawatt electrolyser, which therefore takes the excess tidal energy and turns it into hydrogen. And so we've been doing work around that. The electrolyser is being refurbished at the moment and being upgraded is due back with this imminently.

[00:08:37.380] - Neil Kermode

But the the whole point is that we've actually produced hydrogen from tide energy. So that's the first time those two have been close coupled and it gives us another export medium rather than just purely relying on the grid.

[00:08:50.310] - Jon Slowe

And is hydrogen, an export medium, or is hydrogen something you're using that on the island and looking to utilise that as much as you can on the island as well?

[00:09:00.000] - Neil Kermode

Well, both, really Jon.

[00:09:01.650] - Neil Kermode

We see it as a potentially big export market. But you've got to have something. You've got to do things at the scale you can manage. And frankly, it's a bit chicken and egg. You know, you can't have an export market if you're not making the stuff. But similarly, if you've got a home market, it's really hard to make it and export it all, somebody suggested is a bit like deciding to open up a sausage factory and export your first sausages off the lines to Marks and Spencers.

[00:09:26.190] - Neil Kermode

You know, that's  just not going to happen. You've got to get the quality right. You've got to work at all the systems, you need a home market, you need to try it out of friends and family first, because also...

[00:09:35.760] - Jon Slowe

What sort of things are you trying it out on then?

[00:09:38.880] - Neil Kermode

Well, we would... One of the early pennies that dropped was really based around some work was done a couple of years ago by some colleagues in  a company called Aquitania, which was about an energy audit done in Orkney. And it showed principally that obviously we use energy for all the same things everybody else does, but we use as much energy for running our ships to and from the county and within the county as we do on heating and lighting all our houses.

[00:10:05.810] - Neil Kermode

So, it's a big thing here. So we thought, you know what, if we could effectively decarbonise our shipping, that gives us an energy market as big as the electricity market we've got here locally.

[00:10:17.990] - Neil Kermode

And of course, we're not the only island in the world. There are over 8,000 islands in the European Union with more than 10 people on them. You know, there's thousands of islands all around the world, most of which are running on diesel generators somewhere tucked away in a corner. So, could we do something that harvested energy from renewables and turned it into something that would displace diesel. And that was really where it led us. And so shipping was the first thing we started to do.

[00:10:44.900] - Neil Kermode

And so we've been taking the hydrogen and running it through a fuel cell onshore to power to power ferries when they tigh up alongside at night. Now, clearly, it's not efficient to actually take hydrogen and turn it back into electricity, to put it to put to a ship. But the idea was that what we wanted to do was to turn the hydrogen into electricity on the ship. But the regulations don't allow us to do that just yet. So, this is a regulatory edge that we were rubbing up against.

[00:11:16.920] - Neil Kermode

We found a way to get as far as we can and then help the regulators take the next step that will then empower us to do the bit about having hydrogen on the ships to propel the ship in due course.

[00:11:29.840] - Jon Slowe

Yeah, okay and are you looking at other uses of hydrogen - is ships sort of going to be the focus for the next years or is it wider than that?

[00:11:36.740] - Neil Kermode

Well, no, we're doing a couple of things, really. So one is we'd also there are one of the islands has also got a hydrogen boiler going in. So, we're using it for a small amount of heat, although we don't see that as a big market for us. We think heat pumps would be better there. We're also using it for range extending on some electric vehicles, so putting into fuel cells in vehicles. But once again, we think the batteries, the growth of batteries in the improvement of batteries is sort of eating a chunk of that.

[00:12:06.950] - Neil Kermode

So, the space for hydrogen propulsion in small scale vehicles is quite small. But similarly, we are we're interested in looking at some of the bigger stuff. So if any of the listeners have got a hydrogen tractor, I'd be very interested if you give me a ring afterwards, because we think there's space, because agriculture is obviously big here as well. And then the other piece we've done most recently is that there's been as work with a company called Zeroavia who now have a hydrogen propelled aircraft, and that's just done its first test flight a few days ago.

[00:12:37.940] - Neil Kermode

And that's about putting an electric drive train in an existing internal combustion engine powered plane and then swapping, producing the electricity initially from batteries. And now they've moved to producing the electricity from hydrogen. So we're looking at zero emission aviation as well.

[00:12:58.250] - Neil Kermode

So that's land, sea and air.

[00:13:01.340] - Jon Slowe

Aviation there could be quite interesting because for people that don't know, Orkney, you've got some very short flights between islands and the mainland haven't you?

[00:13:08.840] - Neil Kermode

We do and indeed we had the world's shortest scheduled airline flight, which is I think the record is 38 seconds or something between the islands of Westray and Papa Westry on down wind when nobody's looking, you know, but it's normally about a minute and a half on if it's running long.

[00:13:24.050] - Jon Slowe

Oh, that's ages Neil.

[00:13:27.530] - Neil Kermode

In-flight service is a bit of a challenge.

[00:13:29.270] - Nigel Holmes

Depends which way the wind is blowing Neil, doesn't it? If the winds blowing the wrong way, it takes a lot longer.

[00:13:33.090] - Neil Kermode

It does, it doubles the flight time.

[00:13:34.790] - Jon Slowe

Neil, we'll come back to you shortly. That's been a fascinating introduction to Orkney and your activity with hydrogen there. My last guest is my Delta-EE colleague and expert, Jeremy Harrison. Hello, Jeremy.

[00:13:50.180] -  Jeremy Harrison

Morning Jon.

[00:13:53.570] - Jon Slowe

Jeremy, we've gone from Scotland to Orkney, I know you feel very strongly that hydrogen must be thought as part of the wider energy system and not in isolation.

[00:14:05.060] - Jon Slowe

Can you just give us a couple of examples or share your thinking as to why you strongly believe hydrogen could have a really important role to play in Scotland, at the energy system level?

[00:14:17.060]

Yeah sure, I mean, it's interesting that Neil has just been talking about the applications, things like aviation and road haulage and some of these really difficult to decarbonize areas. Steelmaking is another one - there are some processes in our society which are very difficult to decarbonise, cost effectively, in fact, to do it at all. And so certainly hydrogen is going to play a key role in that. But maybe just take a step back to some of the key characteristics of hydrogen that that Nigel touched on.

[00:14:48.350]

So the one that everybody picks up on is its ability to store energy, large amounts of energy cost effectively for long periods. And so that addresses the seasonal challenge. So, for example, Neil just referred to heat pumps providing heating for homes. But of course, even if you have a constant electricity production, you need the heating in winter, not in summer. So there's going to be a demand for some kind of inter-seasonal storage and maybe hydrogen could provide that.

[00:15:16.570]

And there are quite a few applications where that is the case, but the other thing, the other characteristic which is really key to me and which comes back to the point about heating, is that today over 80 percent of our homes are heated with natural gas. And it's not just about the amount of energy, it's the speed at which you can deliver that. So every morning when people switch on their heating systems, you have an incredible ramp rate that the rate of demand for the energy, in this case gas, is extremely high.

[00:15:46.570] - Jon Slowe

Particularly with, particularly with the leaky homes that we have far too many of in the UK.

[00:15:51.640] -  Jeremy Harrison

Yeah, exactly. I mean, the storage that allow us to do that is what's called line pack. It's actually the pressure variations in the gas pipelines. And to replace that with the capacity you'd need for electric heat pumps is really challenging. So hydrogen does offer that potential to support the very high rate. And that's just one example. So you mentioned before about the competition between electricity and gas, and I don't see it that way at all. We did some work recently for the net zero coalition industry coalition, looking at some of the scenarios for decarbonisation of heat that the climate change committee put forward. And even in the extreme electrification scenario, we found that there was a significant amount of green hydrogen production, in fact it's almost paradoxical, that the more electricity you produce, the more you end up with. And therefore you could get hydrogen. Therefore, you can't have a pure direct electrification you've got...

[00:16:48.670] - Jon Slowe

And that's exactly what Neil, I guess you're seeing in Orkney, that you've got more electricity at times than when you need. You can't export it. So it's really that system approach.

[00:17:01.650]

I completely agree - it is that system, it is recognizing, it's recognising that electricity is really unusual.

[00:17:09.910] - Neil Kermode

It's one of the few things that we have very little storage in - we have storage for everything else, like beans, timber, tyres, everything else. But but barely anything in terms of electricity. And it's really quite strange. But also, we don't really try and store heat much ourselves.

[00:17:25.090]

We have storage heaters, but there are pretty smallish niche thing. There's no systematic storage unit stores.

[00:17:31.420] - Jon Slowe

There's more interest in at the moment exchange material. But it's not easy to store heat, I guess.

[00:17:36.370] - Neil Kermode

Well it is, it's ridiculously easy. That's the thing. It's sorry... Quick bit of maths. If I take a tonne of water and stick it 100 metres in the air for like a pump water storage system, that will store one megajoules of energy. If I leave that same tonne of water on the ground and heat it by 60 degrees, it has about 240 megajoules of energy in it and keeping, keeping a tonne of water, which would basically fit under your kitchen table, warm at 60 degrees, just involves polystyrene and, you know, phrenolic foams.

[00:18:09.370]

And, you know, insulation is really easy to keep 60 degrees of water hot. So I think we need to think about what is the best storage that we need, because inter-seasonality is critically important. And I think we shouldn't ignore heat.

[00:18:22.640] - Jon Slowe

So in Orkney, then, what can you bring to life, maybe some of this thinking in terms of actual projects. They've all got acronyms, one, the REFLECTS project I find interesting, but you may want to highlight others that look at hydrogen's role in this energy system challenge.

[00:18:42.890] - Neil Kermode

Yeah, so so there are a lot of projects going on and I really can't keep track of all of them myself. And I must admit, I leave it to the lexicographers to come up with the cunning names for these various things. Give me a number every time and I'd easily able to remember them.

[00:18:59.420] - Jon Slowe

But one actually that we may go onto is called Big Hit. I think that's the best acronym I've come across in the energy sector in Europe anyway.

[00:19:07.550] - Neil Kermode

And Nigel might be able to remember the probe with the provenance of that, I can't, but if we touch on the reflex project for a second, because this is an interesting one, because it was it's based around several things.

[00:19:23.390]

One of which is the fact that a lot of the participants in it have worked with each other on a variety of other projects. So we were used to working together and it allowed us to bring together a multi vector project. And effectively it's looking at both heat transport and electricity storage. And it's principally is about putting in responsive flexibility into into the grid. So I said earlier, there isn't really much storage, but part of this project is involving using storage by putting in batteries, both at a domestic level, so on the wall of your garage of various participating houses or in an industrial scale, you know, a small container full of batteries type stuff at various locations. So that's the sort of electricity storage, but also recognizing that transport is now becoming an electricity storage issue. So the batteries in cars charging those up at a time when there's a surfeit of energy from the tides or waves or particularly wind and storing the energy to allow transportation to happen in the electric car, batteries a step up.

[00:20:28.880]

And there's a further part, which is about the heating side of things. Once again, electric storage, heating and the use of hydrogen in heating and can probably combine heat and power, definitely combined heat and power projects. So it's it's it's stopping this segmentation and over siloing. It's working across the piece, taking that holistic point that Jeremy referred to earlier. That is very important. And we're really grateful to the British government for the support of this through UKRI which has enabled this project to happen.

[00:21:02.480]

So what you're doing there, to summarise, is looking at a multitude of different storage mechanisms in place to manage the system and looking at how they can work together, how they can each fit into a different part of the energy system or what customers need in Orkney. So it's not easy. There may be an element of either or. There may be some places where two different approaches are competing, but there'll be many other places where they're complementary.

[00:21:28.190] - Neil Kermode

And I forgot to say that the whole thing is underpinned by the digital side of things because suddenly knowing who needs heat, who's got energy, what's coming up, all that stuff that allows this thing to happen in the background without people hunched over control or trying to pull levers to make it all work. You know, this this should happen in the background because I think somebody mentioned the change in energy processes are going to be a behavioural change as much as this is technology, technological change.

[00:21:58.170] - Jon Slowe

Jeremy, I'd like to ask you next about scales of hydrogen. We looked at, talked about Orkney, Neil explained to us what's going on there.

[00:22:06.880]

So should we be thinking on kilowatt megawatt gigawatt or all of hydrogen, big industrial clusters or smaller scale projects like Orkney? And then Nigel I'd like to ask you about how in Scotland you see the payoff from this demonstration of funded projects through to replication building on those learnings.

[00:22:30.220]

Jeremy, let's start with you. Is the scale question is not really what's the right scale? There are different scales, but how do you how do you think about the scale of from kilowatt to megawatt to gigawatt for hydrogen? Well, I think you answered your own question, it's all of the above. I mean, the larger the scale, generally speaking, the more efficient the overall process and the more cost effective as well. But in some ways, hydrogen and fuel cells is a bit like solar in that it is very scalable.

[00:22:59.240]

In one single household, rooftop solar is comprised of a dozen modules or so and a solar farm of 20 megawatts, which is made of lots more of the same fundamental components. And the same is true of fuel cells. So the operating efficiency of a fuel cell can be just as high for an individual micro-CHP unit in a single house as it will be for the for the large scale systems that we're talking about here. And in fact, there are already initiatives across Europe with I mean, every day we seem to see announcements of somebody doing an even bigger electrolyzer than the guy next door.

[00:23:34.880]

And I think that there was the refine projects in Germany still to 10 megawatts and somebody just announced 50 megawatts, I think. How much could you do? And it depends what you're trying to do. We've looked at some very small schemes in the local Energy Systems Research Service, which looks at how local communities can make best use of locally available resources. And this is an example of where solar PV on the roofs of blocks of flats is used to produce hydrogen during the summer, which then we converted back into electricity and heat.

[00:24:10.460] - Jon Slowe

So you've combined heating power utilization during the winter. And that's on, as I said, lots of flat scale. But it's also happening at larger scales, as in the reflex project. But we can see sorry to them will end up with both with a whole range of scales of electrolysers from electrolysers working at really large levels, pumping huge amounts of hydrogen into cars, which may be down to community scale electrolysers, or do you think one or other local dominate?

[00:24:43.790]

Will we be pushed towards economies of scale? And it will be mainly the big stuff that we think.

[00:24:48.890] -  Jeremy Harrison

I think it depends what we're using it for. So, for example, already seeing companies like ITM doing electrolysers for refueling stations for road transport, and that has to happen at the scale it is needed at location. But I also think that you will get the other two extremes. So, as I say, the individual is not household, but it may be blocks of flats scale where you've got that kind of a synergy of diversified loads, which can make it sensible with the CHP scheme, but also a much larger scales where if we're talking about, for example, decarbonising the gas grid to provide gas for heating to replace what we have already, then that's going to happen at a much larger scale.

[00:25:29.120]

And that's going to be bespoke electrolysers dedicated entirely to producing vast amounts of hydrogen to feed the system rather than what I think sorry, what some of these like reflex are doing where you're using excess wind capacity and providing the flexibility that that supports.

[00:25:48.680] - Jon Slowe

OK, um. So, yeah, a range, but depending on what you're actually trying to do, what you want to achieve. Yeah, I agree. I think we'll end up with a range of just big to small, small to big.

[00:26:03.450]

Nigel - in terms of Building on the momentum that's gathering in Scotland, the energy sector is littered with demonstration projects that are interesting, but then shut down as a report is put on the shelf and then not much happens. Now, what's the pathway to Scotland to go from the sorts of projects that you've talked about to hydrogen playing a really significant role in Scotland? I think all of the projects have a part to play, have a contribution to make, but I think some will be recognized as making a much bigger contribution than others in specific applications.

[00:26:45.300]

And the one that I think will be absolutely pivotal, not just for the UK, but on a much wider scale, is the SGN H100 project. Now this project has not yet started. Maybe by the time the podcast goes out, the decision will be made by Ofgem, but it is currently in the frame, actually.

[00:27:09.240] - Jon Slowe

Nigel for our listeners who don't know the project in very quick elevator pitch for what it is we were talking about today.

[00:27:16.410] - Nigel Holmes

So I was just about to describe it. And so just north of Edinburgh, in Methil across the river, take three to four hundred typical houses. So these are houses that exist currently using natural gas and give the householder the option of changing to hydrogen. The hydrogen would be produced using local offshore wind turbines. So it's green hydrogen. And the project would be to run those for a couple of years just to test the performance and the obviously the safety of the of the systems.

[00:27:53.340]

And why does that matter? It's because if the UK is going to decarbonise heat at scale, it's not just three or four hundred houses that we need to do. It's essentially 20 million households that currently use natural gas boilers. Now, some might be able to convert to electricity or heat pumps, but there's going to be a big chunk in there that boilers could be the most cost effective option for decarbonisation for the household and also for the country as a whole.

[00:28:27.630] - Jon Slowe

I've just put in a hybrid system. So I've got a boiler I'd put in a heat pump. The heat pump can't carry my whole house, can do a chunk of it. So I'm hoping that that's a solution for me. I can get some clean, clean fuel coming down from our boiler, could be hydrogen, that will enable me to be fully decarbonise with my heat.

[00:28:46.140] - Nigel Holmes

Absolutely. Absolutely. So, so but without the evidence in place that will satisfy the regulators and safety case, it will not happen. So that's why a project like one hundred is absolutely critical. And these are the kind of projects that actually Scotland's been very good at putting together and very good at delivering. And the I'd like to think that if we did this podcast again in three or four years time, we would have the information, which is giving people the confidence that you can actually do this.

[00:29:20.280]

And the other business, the piece of the jigsaw, is that we have boiler manufacturers in the UK who actually have in their facilities, they have hydrogen boilers running. And so the idea that this is actually something that is a long term dream is absolutely not true. You know, I've got a boiler in my kitchen. It's not a hybrid, but it is a big white box. And I went down to Worcester back in March and I saw another big white box, which looked exactly the same, but it had a hydrogen boiler written on the front of it.

[00:29:52.950]

So this was under test, of course. But the other key part will be how do we turn 20 million households from natural gas into hydrogen? And again, the plans are starting to go together about having hydrogen ready boilers so that as soon as you know it's possible you start to sell them into the market, they can run on natural gas. A small change, very quick change can make them run on hydrogen. And this is about the practical aspect.

[00:30:20.850]

So this isn't just theory. This is about how you do it in practice. And we've done it before with gas to natural gas, and we can do it again.

[00:30:28.980] - Jon Slowe

What you describe there, I think we'll have listeners who think more, more electric, more hydrogen cars, different combinations. The key thing I take away from that is Scotland's been very good at getting projects going, building on those projects, using the learnings. And it will be a lot of hard work over the next year or two.

[00:30:50.130]

Each project you just described, the other project, you're you're working on other demonstration projects and bit by bit building the learning, building the evidence base so the policymakers can then make probably some big decisions with that really strong evidence behind them.

[00:31:10.300] - Neil Kermode

Jon if I can just come in there. I think it's also recognized that the UK government produced an R&D roadmap quite recently, which is pretty good, but also quite excoriating because it points out that we are quite good at starting ideas, but pretty terrible at commercialising them. And, you know, frankly, the UK needs to get its act together. So we've we've got to take these projects that do exist and actually build on them a commercial basis. And so it's so important that we recognise that quite often these these challenges are not just ones of yet does the tech work, but can we put the business model around it?

[00:31:46.290]

And that is something which is we're also finding with the reflex project that some of the challenges you have within the project have really been driven by changes to rules which have fundamentally upset the business, economics and some stuff.

[00:31:58.750]

It's got nothing to do with physics, you know, trying to change the law.

[00:32:02.670]

So I say trying to change the laws of physics and chemistry are really hard, but trying to change the laws of man just requires determination and a laser printer, you know, and that's the piece that is so galling if we if we don't make this work because we don't really try hard enough.

[00:32:16.830]

So I take that that R&D roadmap is as a wake up call, and we need to make sure that we start to turn these projects into reality.

[00:32:27.060] - Jon Slowe

Yes, I think the technology is often the easy bits, although if you're an engineer, you probably disagree with me - it's the business model and commercialization and the regulations, that's the hard part.

[00:32:37.650]

Well, we've been looking forward. So it's definitely now time to bring out the talking new energy crystal ball. This is the first podcast where we're also recording it on video. But the Talking New Energy crystal ball is still being patented at the moment. So I'm not going to share it on the screen in front of you! And we'll set the dial to 2030. Now, I'd like each of you to describe in 30 seconds.

[00:33:02.680]

So keeping it really brief please... The scale of hydrogen activity you think we'll be seeing in Scotland in 2030? You can answer in terms of megawatts, number of projects, contribution to the energy mix, whatever way you like, but in no more than 30 seconds. So how much hydrogen activity in Scotland by 2030? Neil, let's start with you.

[00:33:29.040] - Neil Kermode

Depends how much you want it. We could get gigawatts of of of hydrogen deployed if we really want to. I suspect it'll be used principally in some of these hard to use activities, such as transport. Personally, I'm not a great advocate of the hydrogen for heating side of things because I think it just uses is putting a premium fuel into a crap building - crap is a word used by the chairman of the Committee on Climate Change when describing the UK building.

[00:33:57.600]

So I personally, I would hope we have gigawatts of or at least a gigawatt online, a proper green hydrogen, none of this blue stuff.

[00:34:07.270] - Jon Slowe

OK, thanks, Neil, Nigel, your 30 seconds.

[00:34:11.730] - Nigel Holmes

I'm going to divert slightly from the. It has to be all green. I think we do want it to be all green, absolutely. But they'll be a mix. And I think that mix will be determined by demand. What do people want?

[00:34:23.900]

And. I see industry so some parts of industry as being potentially early demand. Help us to build up. I think some of the some of it may come through blue, but will be gigawatt scale and a lot of it will be green. And demand is the key. If the demand is not there, we won't get to that level.

[00:34:46.020] - Jon Slowe

Thanks, Nigel. And last but not least, Jeremy, your 30 seconds.

[00:34:50.820]

Well I'd be even more optimistic than Nigel I think that even if you just look at Green taking it from the production side and Scotland's got some targets for offshore wind, I think 24 gigawatts of offshore wind by 2030 now either we're going to need huge amounts of electrical reinforcement to get that energy where it's needed or we... Hydrogen. So given what I said earlier about I cannot conceive an electrification scenario in which there is not a significant amount of green hydrogen as a by-product, then I think that's once you start doing that, you get this runaway tipping point where it was to the extent that it becomes viable for occasions where it might not otherwise be viable. So, to take Neil's point heating could be one of the ways forward.

[00:35:39.060] - Jon Slowe

OK, well, you all stuck very well to your 30 seconds, maybe a tiny bit over, but certainly in the spirit of it. Thanks very much. And that brings us to the end of the discussion today, unfortunately. I'm sure we'll talk about hydrogen many, many more times in Talking New Energy podcasts. So thanks very much to you all. Thank you Neil for joining.

[00:36:01.980] - Neil Kermode

Thank you. Thanks.

[00:36:03.750] - Jon Slowe

Thanks, Nigel.

[00:36:05.730] - Nigel Holmes

Thank you, Jon.

[00:36:06.690] - Jon Slowe

And thank you Jeremy for your second or third podcast or forth I'm not sure.

[00:36:13.260] -  Jeremy Harrison

I can't remember either, thanks.

[00:36:16.590] - Jon Slowe

Thanks as always to everyone for listening. We hope you enjoyed that and look forward to welcoming back to another episode of Talking New Energy next week. Thanks and goodbye.

[00:36:38.700]

If you're as passionate about the energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcasts on your chosen podcast platform.

[00:36:55.140] - Jon Slowe

If you'd like the podcast and like sharing, then please to rate us and to listen to archived episodes, to read transcripts and to see the latest Delta-EE insights, then please visit www.delta-ee.com