TALKING NEW ENERGY

[00:00:04.000] - Jon

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

[00:00:21.140] - Jennifer

Hello. And welcome today's special episode of Talking New Energy, which is dedicated day to the topic of women in New Energy. The avid listeners among you will have noticed that I am not Jon Slowe. I'm Jennifer Arran. I'm head of products here at Delta-EE, and I'm absolutely delighted to have this opportunity to host an episode with such incredible female guests and leaders in the energy transition. Today, we want to focus on women in the energy industry and recognise both the challenges they face, but also highlight why and how greater gender equality can support the and transition and its overall success.

So to do this, I'm joined by Laetitia Ouillet, Chairperson of De Windvogel, a Dutch energy cooperative, an energy consultant. Hello, Laetitia. And Dhara Vyas, Head of Future Energy Services at Citizens Advice. Hi, Dhara.

[00:01:19.720]  Dhara

Hi.

[00:01:21.000] - Jennifer

Thanks both for joining us today. By way of introduction and to kick off the discussion, it would be great if each of you could kind of say hello and maybe give a brief intro of your current role and your experiences so far in the sector achieving these positions?

[00:01:37.800] - Laetitia

Yeah. I've pretty much been working all my life in the energy sector, not even pretty much, actually. I've worked all my life in the energy sector. I started taking a keen interest in electricity around my 15th birthday after reading some articles about the electricity pool in the UK. I come from France. So for us it was big, huge news. We had to wait another ten years to get there. And so I've been doing different stuff in the electricity sector right now, combining being a consultant by day and working for an industry cooperative by night. Pretty much working at the moment on hydrogen and heat networks.

[00:02:18.900] - Jennifer

Okay. So very busy day job and night job. It sounds like.

[00:02:24.500] - Laetitia

Yeah. Although the whole working at home thing just I think it works out quite well. To be really honest, it's a good combination of getting to work and seeing your children as well. So I'm getting used to it.

[00:02:37.380] - Jennifer

Yeah. And I'm sure working from home will come up up a little bit in this conversation as well. Certainly it's changed how I work. Dhara, from your perspective, it would be good to hear your experiences, your role at the moment at Citizens Advice.

[00:02:52.180] - Dhara

Yeah. Absolutely. So I lead a team in Citizens Advice that focuses on three main aspects of the energy market. One is the smart energy kind of smart home product services. And within that we talk about energy data, how it's used and EVs, and all the different kinds of changes that are coming down the track when it comes to the technology that will help with demand side reduction. I also cover energy efficiency and fuel poverty, which I don’t think I need to expand on for your audience. But, you know, the kind of fabric first and improving leaky homes and also low carbon heat.

So decarbonising heat and part of that is about heat networks. And part of that is about the different low carbon heat technologies we might have in our homes. Heat pumps, potential for hydrogen and also a little bit on the kind of microgeneration very much from the consumer side of things. Citizens Advice is the statutory advocate for energy consumers across Great Britain and we have, like an official role in giving both advice and also advocating on behalf of energy consumers. I joined the energy advocate twelve years ago, and before that, my work was very social policy, very focused on local government and local government and the voluntary sector things like overview, scrutiny, governance, but also community building, devolving funds to local decision makers, thing like that.

So moving into energy was a bit of a baptism of fire. I joined when we were as a consumer body for consumers in Great Britain, we were dealing with the aftermath of the retail market review. And you know what that would mean for people in the changing energy market. And in the time that I have worked on energy, it's gone from a market with around, I don’t know like seven or eight, of the big six plus two or three to at its peak, I think 60 odd suppliers?

And in this week where there's been a huge movement in the energy market, you know, we're very quickly seeing energy suppliers going out of business. So I think we're heading into another kind of big period of change, and reform in the market in this country and for the Citizens Advice offer because it's very much on how people experience it, what it means for bills, the impact on affordability. And I guess what sits above that for me is that all of my work focuses on net zero. And it's about how you take people with you on the journey to net zero.

[00:05:45.720] - Jennifer

Yeah. Yeah. And you were attracted to the energy sector, as, was it just something that kind of you came across from the social policy background? I started in the policy background as well. So I kind of know it's interesting. I made that transition across a similar sort of time, and Laetitia it sounds like you were into energy from a very young age instead. Is it something that you're aware of when you were younger, growing up, or was it just you came across through policy work?

[00:06:18.720] - Dhara

So for me, I absolutely wasn't. And to be totally truthful, I applied for a job at what was a newly created consumer body with cross market work. And it was a generic job description. And I went through the interview process and was kind of offered a job in the energy team. And I thought this is interesting. Why do energy consumers need representing? But I started looking into it. And I realised that I hadn't really done anything that was about how people interacted with a regulated market. And I didn't know how long I would stay working on energy, but it's absolutely fundamental.

It underpins pretty much everything we all do. We all rely on it. It's fascinating. And it's a market where there are so many different routes that you could take your career in. There so many different aspects of it, particularly thinking about the future energy market, particularly thinking about net zero and the transition of the energy market and the impact it's going to have on every single home in every life in this country.

[00:07:32.780] - Jennifer

Yeah. And I guess that brings me on to the first topic to discuss today which is around, you know, are things improving? You know, are we getting to a more gender balanced energy sector? I know, even in the space of ten years that I've been in the sector, 15 years actually, but I've seen a big transformation in the events I go to at least you just looking around the room at the different types of people that are attending the events. Laetitia, I don't know if you've got any experiences around, do you agree that we are heading in the right direction? Are we getting more gender balance?

[00:08:06.280] - Laetitia

I'm going a bit back and forth. So I mean, I agree with you if you go to a conference. I remember going to Sparks and Flames in 2002 in Amsterdam and looking around me and texting my husband at the time that I was the only woman in the room. And so that was how the sector was pretty much 20 years. That has changed. You see much more women. You see more young girls studying something that will lead them to a career in energy. I've been working for a University for five years and you saw how many girls were actually going to technical studies.

I think there's definitely if you look at the bottom of the age pyramids, there there's a lot of gender balance. I think I have no idea how old Dhara is, but I'm 43 and in my age category, I see no gender balance at all. So that hasn't improved. And I actually don't, I don't expect it to improve because all the people that joined the same, you know, the energy sector when I was 20, all those guys, they're still around. So it's not like they've left and done something else.

So I don't see that much balance in, you know, executive functions. And so that depresses me a bit. But I think for young people, it's definitely looking up.

[00:09:29.640] - Jennifer

Yeah. I’ve had a similar sort of experience.

[00:09:32.020] - Dhara

What I would say, though, is having worked across the retail market and now working very much in that net zero space. There's a few things that strike me. And one is that working on smart metering and anything to do with that technical side of the metering interaction in the home, very what we would describe as ‘male pale and stale’. Right? And I say that because I'm not white and I have been around far too many boardroom tables where I'm one of two or three women. And I am the only non white person.

And I am more often than not, I'm the only consumer rep, understandable, because that's our official role. And it's actually very hard for other charities or consumer groups to be able to dedicate the time to get into the depth of the technicality of different things we work in. And that, to me, is less of an issue. But it is an issue to me that the people round the table from the companies are likely to be men, and the handful of other women are likely to be the civil servants.

Right. And you notice that. But that to me, was so stark when I worked on smart metering. But when I was doing work on things like the customer service, a lot of the senior people in companies. Yeah, senior, like the managers and the customer service heads - often women who've worked their way up to through their kind of contact centre model. Not always often, but not kind of when it came to going to London and sitting around that boardroom table, you know what I mean, and there's a real difference there.

But now moving into the net zero space, which I've been doing since 2015, I've been leading a future energy services team working on a much broader range of issues, but it's not with the traditional energy suppliers always, there are, there's more of a diversity of actors, I think in this space different types of companies, new emerging and where I'd say I find that similar again, is EVs. Its very blokey.

[00:11:58.660] - Jennifer

Actually, it's a good point. I mean, we got an EV team, and I think, not deliberately, but it is all men that's working on it at the moment. And I never really thought about it because they're great guys. They know their content, they're incredible at what they do. But yeah, it's quite blokey!

[00:12:16.640] - Dhara

No comment on how well they're equipped to do their job. But, you know, women make decisions about purchasing cars too. Women drive cars too. I drive an EV, you know, it is a very weird little bit. And then on the other side, if I'm talking about energy efficiency or fuel poverty or low carbon heat, there's much more of a diversity. So there’s thes pockets isn't there across the market because the market is so diverse now as well. Yeah. Maybe people are attracted to different aspects of it.

[00:12:59.060] - Laetitia

I don't know if you guys have got that as well because there might be a cultural difference. I mean, I work in the Netherlands and you guys are in the UK. You girls are in the UK, but right now, I'm really trying to get into those boards of those advisory boards because I think you come to an age that you think, well, I think that I've done enough in the sector that I could maybe contribute on the advisory type of work. And then you get all those courses on the internet that are being offered to women.

And I stumbled across one a couple of weeks ago and it was offered by a big consulting firm, and it was telling women, if you are going to make it into an advisory board, come follow a course with us to make sure that you actually add value. And there is even some positions now, and there is some proposition that have been developed. I even applied for one at some point, and that was come and follow a course with us for a year and we’ll place you somewhere in an advisory board and then everything you get in terms of salary you need to pay to us for the first year because obviously you're not adding value because you don't know what you're doing.

Well, I mean, I'm not a feminist, but I'm sure there's never been, you know, those type of courses offered to men. They get in the position because they've done the work they've done, and you actually expect that they add value because they are the person they are with the CV they have. So I'm actually quite shocked by that development. That's something we've really seen the Netherlands at the moment.

[00:14:38.060] - Dhara

You can argue that the men get there because of who they know or where they went to school, right? It is not always by their merit, but I agree with you that there are loads of those sorts of courses, and it feels patronising, particularly when you are skilled and you know what you're doing. But there is a gap. There are not enough women who are energy professionals. There are not enough women who are energy decision makers, but there are plenty of women who energy consumers. So it is, if not that route, then how? Obviously not right if they're trying to take anything you earn. But, you know, there are some good examples of really simple things I think you can do to help elevate both yourself and your colleagues. And they are really simple things, like for a long time now, my team at work has had a no man rules policy. We get asked to speak at loads of conferences, and any man on the team will turn it down. If it's just a panel full of all men, they will just say no, so we won't appear on them.

I am at a point where if I am on a panel with three or four men, I'll say I'm the only woman and asking the charity person, the consumer advocate person to provide that diversity for you. I'll do it if you find another woman, ask one of them to talk to one of their colleagues. Don't tell me you don't have a colleague who is female who could do this because you do. You just don't think to offer it to her. If you're doing an event or if you're at an event, ask a woman first when they've got their hand up to ask a question, because nine time out of ten, you know, the woman is not what women don't get called on to ask questions at conferences and don't put their hands up as well.

This is really basic things that we can do to kind of support and elevate one another and to suggest to one another and to promote one another because I think that's such a big part of how we can improve that sort of, how we can improve that sort of representation.

[00:16:58.180] - Laetitia

I agree. I mean, I've been called to conference to come and talk about topics like I remember once being asked to talk about digitalisation of the energy sector, which is something I know absolutely nothing about. And I refused. And when they asked me why I refused and I said, well, you know, I don't know anything about it. The answer I got was, yeah, but you're a woman and we need one on the conference. And I think we should also turn these invitations down. I only go to conference when I think that I know something about it, the topic I’m going to be talking about.

I'm going back and forth as well on those quotas. And I think that what Dhara is saying is actually a really good one saying if you if we have someone at the company that is a woman and could be talking about the topic, then you'd be better to send that person to just try and make sure that there is a gender balance that is being forced upon the events until it feels like I have it and something that they're not afraid of anymore.

[00:18:00.480] - Jennifer

I think it's great you highlighting that it's not just a, it's not just women that have to try and create a quality. There's a role for the men to stand up for it and call it out when they see it as well. And I think that's really important for the men in your team to say, you know what actually don't think that's appropriate. That panel is too, because we know that. But that's a great step for them to have that awareness, to try and make sure that there's some sort of kind of balance in the panels we’re are speaking at.

[00:20:00.480] - Dhara

Within Citizens Advice we have a big focus on EDI and it's something the team started to do organically. So we decided to put a bit of a framework around it. What is it? How do you do it? And I kind of mentioned it to my husband and he was like, oh, yeah. I've been doing that for years. Why on Earth would you ever go and agree to go on a panel where there’s no gender balance? And it's like, well, I mean, I'm so used to this very male energy world. It's right.

[00:19:01.520] - Jennifer

Yeah. And it sounds like just to kind of summarise, it sounds like we're doing good things in terms of getting young women engaged. So young women are starting to become more engaged. We are starting to see them come through, but it still feels like it's maybe in pockets. So there's certain areas I don't want to call them the last bastions of the energy sector, but there’s certain areas where it seems like they're still very male dominated. I know. I certainly felt that when I've been in network conversations, you know, there's certain areas where it's harder. So is there an argument there for extra support to help in those areas?

[00:19:37.800] - Laetitia

Support would have to be in the form, and it's obviously not going to be something you'd want subsidised. So it would have to be in the form of quotas or obligations. I'm never very happy with those. I think you could for a conference, for example, say that you want to have some balance in some form. But I used to work at a University, for example, who said that for every job you had to have the first six months I was only open for women to reply. I've got problems with that because I know like, Dhara says, there are not that many women that are experts in energy yet, and you shouldn't promote someone to a job because it's a woman. I don't think that works. The only thing you want to see is that I had a course at some point that was given to me about all those bias that you have without knowing you have them. That was a shocker. I thought, you think of yourself as being non racist, open to everything and then you get a bias course and you find yourself being biased on some points that you never, ever would have thought of yourself. So I think those courses should definitely be mandatory that you realise that you're putting a bias on things. If I take, for example, the example of energy cooperatives, it's all voluntary work, and definitely if you're talking about bastion, well, that definitely is one. They're all 75, they’re all men they’ve all been working for Shell and in their old days decided to do something with renewable energy and then they are mourning the fact they can't get women around.

But then, you know, at some point I wrote a quick note of how do I get more women working for my energy cooperative? They always organise meetings on Wednesday afternoons and Wednesday evenings. No idea how it is in the UK, in The Netherlands it is just very regular that woman, if she was working part time, Wednesday will definitely be the day she will not be going to the office because school stops at 12:00. If you're making Wednesday your priority day, you're not going to get women around.

People are meeting at, for example, when I had to apply, I had to go to people's house. I mean, I'm not happy going to somebody's house that I've never met before. And meet with three guys I've never met before. So I was like, why don't you just, you know, have meetings at town halls or at cafes or a place where somebody will feel safe and happy enough going to? They had never thought about it. And they were like, I but, I mean, we're not rapists. And I'm like, that has nothing to do with that, it just has to do with the fact that I'm not comfortable going to somebody's home talking to a guy on a one on one basis that I've never met before.

I don't know what the house looks like. I don't know if there's a dangerous dog inside. You know, I've been through that as well. So I just, like, just make it, you know, easy for people to walk in and just adapt yourself. And if you like, we always met on Wednesday for the last 40 years. Adapt be flexible. Just choose another day. And those are very easy things that they had never thought of. And I'm not even going into the use of words because there are so many red herrings, right things that you don't want to hear.

[00:23:18.020] - Jennifer

Yeah, I know you've picked up some really good points, so I think it's kind of moving on to the kind of what advice would you give to men and women working in the space. And when I was thinking about what I would advise, you've already picked up on the bias point. You know, as I know that I have biases when I do recruitment, I'm really aware of them and try to be really aware of them. But the first station in that is just acknowledging that you might have some because of your upbringing and your background and your privilege.

And then the other thing is around actively listening and adapting. I think again, Laetitia picked up on that. But I actually listening to what makes women feel comfortable and able to collaborate or cooperate or be part of that conversation, not just paying lip service to it, but actually adapting your what you said your meeting regime to make that work would be one step.

[00:24:19.000] - Laetitia

I’m not being judgmental there, that because it's nothing for you, that it should be nothing for someone else. I think that's the most important. If somebody thinks feels very strongly about something, then it's just a fact of life and the fact that you don't feel strongly about it or you don't have any fears or you're very happy to go in the middle of the night, visit other people. It's your fact of life.

[00:24:42.380] - Jennifer

So do you have anything on advice for people or steps people could take?

[00:24:48.960] - Dhara

Well, I mean, I am a feminist, and I do think that in the workplace, people should be treated equally. And I feel like one of the big things that divides people, and, you know, the point we made, Laetitia made about age as well. You know, the minute people have children, you could be in the most, you could be in the most equal relationship with your partner. If your partner is male and you have children and things change because you're the one who physically carries the children. In the UK, you have, the more time off and as a result of that, your career suffers.

Right. So there's a huge impact, I think, on women's careers at a certain point and how you handle that and how you treat colleagues and people you like manage through those career changes while helping people to develop and think about the direction of their career, what they'd like to do, and how it's a huge, huge topic, isn't it? It's massive and it's well researched. Theres far more people who could do the topic justice than I can because it's absolutely not my own specialism, but as a manager, as a team leader, as a member of a senior leadership team, I think there's some really basic things that you can do, which is, you know, talk to and encourage, pre-pandemic, talk to and encourage anyone who's a parent, male or female to consider whether they want flexible hours and things like that, but also thinking about that across the team.

So one thing I've realised is that we have got a young team and a lot of them want a lot more flexibility, not for children. Now they want to say, can I do a nine day fortnight, can I compress my hours because there's other things they like to pursue in the other parts of their life, but bringing flexibility to work for me, it's not just parents, and it's not just women who want that. Thinking about those sorts of workplace issues are quite important. And I agree about the kind of STEM, the STEM things as well.

I think, you know, science, technology, engineering, mathematics. The more women get into these issues, the more hopefully we'll see them entering the energy market too, yeah.

[00:27:19.180] - Laetitia

If you asked us for advice for women as well and getting into the field of energy. And I have quite a lot of especially when I was working at the University. I have quite a lot of students coming around and saying, what should I be doing first when I'm finished with my degree? And I've always said to people to specialise, that has been my trick all those years. I just find this little spot, this area of expertise that you're going to be the best in, that they always need you around.

And by being a specialist at the table, it means you don't have to raise your voice. It means you don't have to have a fist on the table because they are going to need you and they're going to need your expertise and they will ask you a question at some point. I mean, I remember being 22/23 and joining even negotiations around merger and acquisition and being at tables where I shouldn't have been at. But the only reason was I just had that very specialist knowledge of the market that they needed at that moment.

So I think it gives you visibility. It gives you credibility. And it gives you the possibility to not have to spend so much energy in trying to be visible and recognise because you are visible because, you know what? You know, that's always my big trick tip.

[00:28:44.460] - Jennifer

That's great advice. Great advice. I'd like to bring it back a little bit to a bit of the why, we kind of skipped over and we have covered it in through the conversation. But, you know, we're talking about this because we all believe I think that gender balance is important and it will bring benefits to the energy transition. So, yeah, its just going back there. Dhara, I don't know if you want to link it back to our consumer work around, you know, what are the benefits of having women more involved in the energy space?

[00:29:14.480] - Dhara

So I think there's a really simple thing about, you know, you can't be what you can't see. Right. And it's this, it's really hard for people to aspire to being active in a market or on an issue. If they can't see other people who look like them here, who they can model themselves on and what that might mean. And so I think that's really important. I think we touched a little bit about kind of women in leadership positions. I think that's really crucial to bring a diversity of women energy professionals and women as decision makers, because, I mean, I'm loath to say that women will bring soft skills or anything like that because actually, we shouldn't, we should do what we're there to do because we're professionals.

I just don't think that being a woman should exclude you from these bases. If you're the right professional person to be there. So quite similar to what Laetitia was saying, you know, that they're having a having gender equity in energy policy means elevating women, because right now, there just aren't enough women who are active in the senior parts of these markets across the country.

[00:30:48.240] - Jennifer

And if we're able to do that, I mean, that means there's, you know, a bigger range of voices around the table. So the innovation, the ideas generation, the know the business models are coming up with that appeal to consumers will actually have people with experience.

[00:31:06.460] - Dhara

Exactly, you know, Caroline Criado Perez, do you know which book I’m talking about? Everyday Sexism?  You can't design the market. Men can't design a market that 50% of the users are women. Right? Men can't design that market alone without considering women, because women are 50% of the consumer base. So why wouldn't you want women around the table at all points?

[00:31:38.340] - Jennifer

Laetitia, you had an example?

[00:31:40.990] - Laetitia

Yeah. Because, I mean, Dhara is obviously she's been told she's talking to customers and half of the customers are women. So that is a direct why, you could ask yourself why in strategy departments or merger and acquisition or regulatory affairs. Why should you have women in deal rooms? But I've seen, for example, I don't know how you are, but I am a huge writer. So I write everything down all the time. I've got my old attic is full of notebooks of notes that I've taken in meetings. And I don't know if you've noticed, but men never take notes.

They take, like very little notes. I always wonder when or how you even you remember what has been said today. And it's been always of such use because people would just think where we last time and let's just be able to say, let's cut the crap. We were there, there, there and there you said that and that. And now this is how you know, we're going to proceed. So it always has had value to have, I think it adds value to have people that are just behaving differently in meetings as well.

So I would be like taking notes and not worrying myself that people will think I'm a secretary. There is nothing wrong with taking notes just is very useful. You can look back at them afterwards. You can be very productive. Another thing would be I always look around at body language. I remember going to a deal conversation in France, and I happen to be French. So my Dutch colleagues were entirely sure we had the deal. We were trying to buy a portfolio of solar and wind parks, and I just looked around then, no, we don't have anything at all.

These people hate us. And then I met with the guy from the company we were trying to buy from. I met him in the lift on the way out and I said, we don't have it do we. And he said, no, no, absolutely not. My two Dutch colleagues went to celebrate that evening because they were so entirely sure that we were going to get the deal because at no point in the conversation did they actually look up and feel the atmosphere of that room? And you can tell so much from body language.

And that's just something that women look at. So I think we bring different skills I mean, we all know we have the same level of knowledge. So that's not where the difference is, but we bring different skills. We are more thinking about risks very often. So when there is a tunnel vision going on of everybody but everybody wanting to make a deal, very often we'd be the ones going, let's think of this and that and not sure I'll look that one up. So I think that's just you should have as many different voices at the table, like she said, because it brings it makes it a better conversation.

[00:34:42.800] - Jennifer

Yeah, absolutely. And in terms of how we might make that happen, how do we facilitate that as an industry, what's the kind of biggest things that still need to be overcome to enable these open conversations where everyone sitting at the table.

[00:34:59.160] - Laetitia

I think Dhara said it well, you need women in leadership positions to make sure that you attract more women, it doesn't only start at the bottom. So it also starts at the top. And what we see in the Netherlands at the moment is that a lot of young people are leaving those big energy companies because they don't feel they don't feel that they are seeing the values in the board that they want to be seeing. So they're all about renewable, sustainable net zero. And then they look at the leadership team, and the leadership team is all about protecting our interests, fossil energy, fossil backgrounds.

So you need to make some breakthroughs in the leadership team because it will definitely reflect on the whole organisation. I strongly believe that.

[00:35:55.860] - Dhara

I think yes, absolutely. It's about leadership teams. But I also think one more thing and that is that there is some value in cross industry in cross industry initiatives. I think that cross industry initiatives can really help to kind of embed thinking about things to do with equality, diversity and inclusivity, whether that's gender, whether that's race, whether that's disability and access or neurodiversity, really trying to make things more inclusive is the way forward. And I think I know we've not mentioned COVID directly. I know Laetitia has sort of mentioned the impact it has on work life balance for her.

I think that COVID has been described as a real leveller of for so many people because of the change to commute and the ability to work from home and the impact it has on women. My worry is that as the world opens up and conferences and things start to happen the again, you know, networking, all of that business, what's going to happen? Is it always going to be the woman that's on the screen? Will it only be men who decide that they're going to go to because I've been to two conferences now and there have been far more men than women there. I’m slightly worried about this, you know.

[00:37:24.300] - Jennifer

Yeah. I mean, I hadn't thought of it in that context of the return to work because obviously, I mean, it's a difficult conversation to have because obviously, at some point we need to start returning to, you know, normal, but you'd hope the new normal would prevail. But you're right. If there's when everyone's working at home, it's very equal and everyone is working off a screen. But when some of the people can attend, you start to see that division again. Where, you know, some people can be very active in those meetings.

I think your point there are about inclusivity is a big thing. So it shouldn't really just be about gender equality is to about complete inclusivity. And if you're mindful of that, then absolutely the gender balance would follow.

[00:38:07.120] - Dhara

Yeah. I mean, I'm mindful of the intersectionality that I've experienced in the over a decade that I've been involved in the energy market. I'm very mindful of the fact that, you know, more often than not usually I am the only non white face around a table in the energy market in this country. And there was a time where often the youngest is that's not the case any more, but certainly kind of not being white and not being a man. That combination of factors, it has an impact on how you feel.

It has an impact on your confidence, and it's the people around you. It's your leaders. It's the women around you who elevate and support and give you the confidence, reminding you that you can do your role and then how you pay that forward. You know, the older I get, the more I'm aware that I want to pay that forward.

[00:39:07.660] - Laetitia

It's funny you said that thing about age because you said, I used to be, you know, the youngest one around. And I have that feeling as well for a very long time. I mean, I started very early as well, but it feels like women stay younger, longer. I mean, how often have I not heard that I was too young for a role? And I'm like, how long do you stay too young?

Mean, I don't know how it is in the UK, but at 43, I'm still waiting for that moment that people are going to say, oh, she is, you know, she has the experience she's been around for long. I'm like 43 years old. It's ancient, not too young. But it also comes from the fact that nobody in the energy industry seems to retire ever. People just go from executive position to advisory boards to sorts of civil servants, working groups. And I don't know about how it is in the UK, but in the Netherlands, if you're 70 or 75 or 80, you’ll still be on advisory boards at the energy industry.

So if I have to wait for all these people to retire, I’ll probably never get there.

[00:40:26.940] - Dhara

I can give a good example of that because I was on the board of Smart Energy GB, which is a slightly unusual, kind of set up by government funded by an industry to promote smart meter roll out through country, and I was on the board because Citizens Advice has a seat on the board because of the way it was set up. The board is made up of industry representatives and you want to have a balance, and hear that consumer voice. But for various reasons that make up changed and our status changed on the board. So I was leaving the board and I was involved in the recruitment for what would be consumer reps.

And it's exactly as you say, like people who have retired, understand consumer issues and can speak for and on behalf of consumers and at the board level. And you get a real range of different people who apply for these roles. Most of them are men and you see across energy in the UK and for example, network panels can be consumer engagement groups on energy networks. You know, there's a lot of retired men doing the rounds. Where are the retired women?

[00:41:34.900] - Jennifer

True. Yeah, I think that's a really good question. You know, where are the retired women? But it's going to have to be a question that waits for another time as we are running short of time today. So Jon has kindly lent me his talking new energy crystal ball for one week only. So to finish, if I set the dial to 2030, what do you hope the sector will have achieved by then? And what do you expect the role of women to be? And if we could keep the answers reasonably brief because we are running out of time. That would be great. Laetitia, do you want to take it first?

[00:42:10.060] - Laetitia

I am very optimistic for 2030 in the sense that I don't think that I think we have all the technology around that we need to reach the goals of 2030. So if you take 2030 as a sort of mid term goal, then I’m definitely not pessimistic. The only thing is that's standing in the way, is the way we do things, it's all regulations and little rules and frustrations we all have and the fact that we're all a bit unwilling to change. So that on the one hand, I'm like, okay, we do have the cure.

But on the other hand, we are standing in the way of implementing the cure. So I hope that at some point people realise that they should definitely dare to make those changes, to leadership teams, to governments, to ministries, to really make sure that those people that are willing to take on that change that are not afraid of doing it are not hindered by any sort of background or deal history or whatever. I hope that those changes are going to happen very soon because otherwise, we won't be able to implement the technology that we have in house.

If you look at gas prices today and we have a whole discussion in the Netherlands coming up about energy poverty because of gas prices the way they are today. I'm like, you know, we've been warned for this for 15 years, maybe even 20 years, and we have been resisting change. We have been resisting heat pumps, we've been resisting heat networks. And now we’re all surprised that, you know, people are going to be fearing for not being able to pay their energy by this winter. This is all our fault collectively. So I really hope that we're going to embrace the change.

[00:44:01.260] - Jennifer

Yeah, it's an opportunity is opportunity, a challenge, a huge challenge, but a huge opportunity to get on the right path and to have a wider conversation. Dhara do you have anything to add?

[00:44:17.120] - Dhara

Yeah. I think I would say that by 2030, what I'd like to see is the women who are the middle managers of today taking more leadership and senior roles. It's only nine years. It's not that far in the future. If you project to 2050, what I want to see is effort today to encourage women in STEM having resulted in more women in energy leadership positions by 2050.

[00:44:42.800] - Jennifer

Fantastic. Okay, so to summarise, how do we summarise the conversation like today, such a big big topic? I think what's become clear is that there are still huge challenges facing the sector in terms of inclusion, not just a women, but inclusion generally, and that it's going to be important over the next few years to dare to speak up and to dare to make those changes and ultimately, the solution to the energy crisis is better engagement and that's engagement across all groups. And it's great to see that there's also lots of ambition and hope for the future.

And like the guests here today, I think I really believe that by 2030 we will making some headway into this space. And with that, we'll leave it there. Thank you very much, Laetitia, Dhara for joining me today. It's been great to have you on.

[00:45:29.300] – 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 podcast on your chosen podcast platform. If you like the podcast and like sharing, then please do rate us, and to listen to archived episodes to read transcripts and see the latest Delta-EE insights, then please visit www.delta-ee.com.

[00:00:04.000] - Jon

Welcome to Talking New Energy, a podcast from Delta-EE, the new energy experts. We'll 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. Today is the second part in our series on utility venture capital. And today I'm talking with Petr Mikovec from Inven Capital, which is the venture capital business of CEZ, the Czech utility. Hello, Petr.

[00:00:40.520] - Petr

Hello. Thank you for having me.

[00:00:43.460] - Jon

Thanks for joining Petr. I'm really interested to hear a bit more about Inven Capital. Why CEZ set it up, how you circle back and work with CEZ and what you've learned over the last years. So some of our listeners, many maybe won't be familiar with Inven. Let's start off with some quick fire questions then short facts about Inven. So when did you start?

[00:01:09.720] - Petr

We started in 2014.

[00:01:13.160] - Jon

Okay. And how big are you or how would you describe how big you are? Numbers, pounds, Euros….

[00:01:18.210] - Petr

Sure. €240m of committed capital from CEZ, the utility, which set us up in the first place and €50m from European investment bank. Altogether €240m Euro.

[00:01:34.860] - Jon

Okay. How many investments have you made over the years since 2014.

[00:01:41.900] - Petr

We have done 14 investments. We will announce a couple of weeks from now the 15^th, and by the way two exits and one unicorn.

[00:01:53.360] - Jon

So, I know, but for our listeners benefit, who is the unicorn?

[00:02:00.400] - Petr

It’s Forto – Berlin based freight forwarder. We had a $50 million round last year, and then Softbank bought Forto.

[00:02:13.680] - Jon

Well, congratulations to them to you. And to Softbank for getting a great company.

And stage of financing, for those not familiar to the venture capital world, you get everything from seed to late stage. So do you invest in brand new start ups or, where along that startup maturity curve do you typically invest?

[00:02:36.740] - Petr

Think of Inven as a rather later stage investors? So B or C would be where we would be investing, but we have done A as well if we see really great fit with our investment strategy and great growth opportunity.

[00:02:55.700] - Jon

Okay. And you're from the Czech Republic. But what's your geographic footprint?

[00:03:02.780] - Petr

We are based in Prague. However, we invest in the whole of Europe and Israel.

[00:03:09.400] - Jon

Okay, great. Well, that gives us a really good quick portrait of Inven. Now let's start by how the energy transition space has changed. So you started in 2014. I don't even know if the word energy transition was used in 2014.

[00:03:39.240] - Petr

I think it was. But it's some time ago in Germany it was called Energiewende, I think at the time already, it it was pretty well known.

[00:03:51.440] - Jon

So from setting up there and looking for startups to invest in, looking for opportunities, to where we are today, how do you see that change when you look back and remember what it was like when you set up Inven Capital?

[00:04:07.320] - Petr

I think things have really changed the way, at that time when we set up Inven with €240m we were actually one of the largest cleantech funds out there in Europe and not that many utilities or corporates had their venture capital arms. Which has changed dramatically. If I'm not mistaken, the body of investments in cleantech in seven years, more or less became five times bigger than the investments in the VC in general, as the cleantech became actually very, very popular, I would say. And that's just the beginning.

[00:04:55.720] - Jon

And does that for you mean more competition for the quality start ups out there that are looking for funding, or is there still plenty to go around?

[00:05:07.220] - Petr

I think competition is good, but lots of players set up their corporate venture arms and it doesn't really work. So there is a competition, but not everybody is able to provide the right value proposition and be able to target really the future winners.

[00:05:32.040] - Jon

Okay, well, come on to it a bit about what your proposition is. But again, thinking back to 2014, last question about this. What about the opportunities to invest? So when you look now at the opportunities out there and you think back to 2014, how has that changed, or what was it like back in 2014?

[00:05:56.320] - Petr

I think it's a huge difference. I think today I would say we can see more than 15 different types of technologies out there in cleantech who are just about to get commercialised and go into scale. You know, six, seven years ago it was more about innovation and finding the right value proposition at that time, storage system attached to the solar system in the family house didn't make much of economic sense. Still, now cleantech became a mainstream. So we have products, we have value propositions that actually makes economic sense. And that's great news for scale up rates.

[00:06:46.740] - Jon

So back in 2014 there were a lot of technologies looking for applications. They didn't have a compelling proposition. Now the markets moved on and I guess companies can generate revenues more quickly. They can start to scale more quickly than they could back then?

[00:07:06.860] - Petr

Exactly. I mean, it's not only the innovation which has evolved, but even the market attitude, and customer behaviour change. Right. And regulation has even a kind of strength and supporting the energy transition even more. So we have a lot of tailwinds from coming from regulation, and we have a customer behaviour change which is supporting it as well. And we have here beautiful products out there with nice value proposition which needs to scale. And that's where we are today.

[00:07:48.040] - Jon

And you've explained that you've got investment from CEZ, the Czech utility, from the European Investment Bank. How has, you've made some nice returns for CEZ, with a unicorn exit. Fantastic. What about the strategic rationale? So did CEZ see Inven Capital as a financial investment or strategic? I guess the answer is a bit of both. What about the balance of that. And can you tell me a bit about how they hope to get that strategic return?

[00:08:40.420] - Petr

They see us as a financial investor with a very clear strategic focus, which makes sense to them. And this prioritisation has important consequences. So as Inven Capital are out there in the market as actually an almost independent fund with the fund structure, which is looking for clean exits, not strategic acquisition. And that helps us to really target the best opportunities out there. And that’s a very good business model. Now, if you think about it and look at us what we are doing and look at the portfolio we have created, there's lots of interactions going on on the business level between CEZ and portfolio companies. So you see opportune companies doing business with CEZ on an arms length basis. So the strategic benefit is that we are kind of filtering the best products and business models out there and enabling CEZ to enter into the business with someone they wouldn’t actually see. And that's why they have us.

[00:10:01.400] - Jon

OK. So you're in a way, CEZ’s window onto the world of cleantech?

[00:10:09.760] - Petr

Exactly. And we had a couple of great deals with CEZ, actually, because at the beginning, we need to agree that we will actually invest in someone who is attacking the status quo of the of the centralised energy business models CEZ represents. It was a pretty tough decision but the logic was if we don't do it, someone else going to do it anyway, so there will be at least appetite. So we decided with CEZ, it's kind of like, be part of it rather than just look at it and be disappointed.

[00:10:45.600] - Jon

Could you argue that some of that interaction between your portfolio companies and CEZ would have happened anyway, or is it just so much easier given the connections that you can make between the companies and between CEZ?

[00:11:01.780] - Petr

It's so much easier, we see 500 startups a year in the cleantech space, right, in Europe and Israel, and we see them only, and they speak to us only, because they know we can invest and have clean exits for them. So that's not what corporations do. They have complicated structures. There isn’t motivation, really right. And there is no big reason why the winners of the new energy should speak to them in the first place. That's why I'm saying we are the guys, and the window for them. But the business model, it's very important because, you know, you need to have motivation on both sides. So the interaction starts and so you can actually, you know, I introduce someone.

[00:11:58.680] - Jon

So how much of your time or your team's time is spent with CEZ? Because I can imagine the majority is Inven Capital looking at investment opportunities working with your portfolio companies. But how much of your time then is talking with CEZ, nurturing those relationships, understanding their interests, making those connections.

[00:12:24.320] - Petr

It’s limited but very intense. So we know, understand the strategy of CEZ. I've been working with CEZ for some time. So there is a very strong bondage and we know what they are up to and what they are interested in. We know their questions. So we have a pretty broad investment focus, which is the carbonization of whatever activity of human beings on this planet, check it out. And so we are bringing back, first of all, things which make by themselves, economic sense and then open the door. And if there is a will and opportunity to do business, they do it. If there's not, they don't do it.

[00:13:12.230] - Jon

Yeah. Okay. So some of your portfolio companies, they may end up having nothing to do with CEZ at all, for example.

[00:13:18.790] - Petr

Exactly. This can happen. It can easily happen. And that's perfectly, that's perfectly fine. But the majority actually do co-operate, such as Israeli-based Driivz. That's a software company which is managing the charging infrastructure of any kind out there is used by CEZ. And it's how they pilot, its a full commercial scale up because they are the best in the market. And that's why they want the deal with CEZ.

[00:13:54.020] - Jon

So I’d like to ask you when you look at all the portfolio companies you've worked with, some of them you've exited, Sonnen is a great example that many listeners will know about. What have you learned from working with them about how they scale? Because I see no shortage of innovators, start ups, good ideas in the energy transition. What I see a shortage of is that ability to scale.

[00:14:29.200] - Petr

Technology has matured and it's all about in this moment, if you look at Forto for instance, they grew from 250 people to 650 people in a year, twelve months now. And what I have witnessed that you guys were able to inspire their experienced managers, coming from big tech companies, from Silicon Valley, moving from Silicon Valley to Berlin, and starting doing business with them. So my key answer to your question is the ability to hire the best talent on all levels is actually very, very important. And it has to do with not only what the great vision of these companies have and the culture they represent and the values they share right as well with some practical things like whether the city your HQ is based has kindergarten for the kids of those managers.

[00:15:35.500] - Jon

Yeah. It's that comment across your most successful portfolio companies, that ability to hire, would you say?

[00:15:43.460] - Petr

That's key. Exactly those where we haven't seen, you know, addition on the chairmanship of the board or getting very strong chief financial officer who is complementing the founder with the experience from big investment banks and IPO. If you don't see this happening, there's something missing. And truly the difference is, the winners are those who might just be great. Good average. That's the differentiating factor.

[00:16:24.420] - Jon

Yeah. And so the founders are people that are driving the startups, I guess their ability to sell their story to potential employees is as important as their ability to sell their story to you as an investor and to their customers.

[00:16:41.620] - Petr

Exactly. Exactly. And if you think of Christoph Ostermann for example, from Sonnen right. I think he's the guy who, first of all, had a great vision and he stuck to it. He wanted to really become the utility of the future, the decentralised utility of the future, managing other people's assets. Right. As a business model with clear mission to democratise energy. Right. And he was able to really communicate it, articulate it, to all stakeholders. And we raised together with him $180m since 2015 until the exit. So you better have a good story. You better build your story and you better able to sell your story.

But it's not enough. It's all about the trust you talked about an alignment you need to have between investors, the board members and the key customers and partners actually being able to partner is important as well.

[00:17:45.240] - Jon

And I know another one of your companies tado, for example, they are they're one of the best I’ve seeing in creating partnerships. So whichever country I look at, you see tado talking with an energy retailer, for example, or an appliance manufacturer or a service company. So do you see that again across your portfolio companies, that need for partnership, or is that just relevant for some and not relevant for others?

[00:18:16.920] - Petr

It’s important. It's important because what we see, we see convergence of different sub industries. We see financial industry fintech converging with cleantech with the data and mobility. We see lots of things coming together and to offer one clean and simple value proposition for customers. So you need different types of expertise and knowledge. So you have to decide what you're going to own and what you're gonna be your key assets and what you're going to outsource or use from, using your partner. So the …. businesses beautiful piece of hardware or just a piece of software, that's not enough. You need to be able to combine a lot of things to succeed in the market.

[00:19:10.980] - Jon

And I see companies finding that partnership quite hard often, because, well, in the energy world, there's been a mentality of build it yourself or buy it in. But that partnering, even partnering with competitors, maybe.

[00:19:30.320] - Petr

Yeah. And those who are gonna walk away from the business. Unfortunately, that will be the future. Look at tado. Coming back to the people, right.  Christian Deilmann and Johannes Schwarz at some point in time, decided to pick the new CEO, someone who comes from the different industry, actually to bring in this type of thinking, right. How to build and scale companies. And that's again, the reason as well. Why these guys have all they need. They have nailed the whole business model sourcing from China selling, partnering different distribution channels.

[00:20:15.010] - Petr

You have to bring in talent. You have to bring in people with experience, help to scale companies, if you as a founder really want to succeed and you want to have an impact.

[00:20:30.880] - Jon

Anything else you'd like to highlight our listeners Petr in terms of key ingredients, common success factors or failures, because let's face it, when we're innovating there’s never guaranteed success. So any other lessons you’ve learned over the years?

[00:20:53.200] - Petr

There are a couple of things which really matters and become more important as we have learned our lessons. And one of the things I really would like to stress is the what we call constellation for success, which needs to be built in the company. And what it means is the alignment the founders are really able to create between themselves and the managers they hire and the people, the are employees, investors, customers, suppliers, the board. And that's actually very important. So one key lesson learned is that that the start up founder should really think twice before they pick concrete ambassador and let them join their ride because it's going to influence the future.

[00:21:48.440] - Petr

So it's not only that we do due diligence as investors on the founders, but founders should do due diligence on the investor. That will be key lesson, build very strong pyramid. They build foundations with people who think alike, share the same values, what are critical and able to give you feedback.

[00:22:11.680] - Jon

So how do you differentiate yourself as an investor? We spoke at the beginning about the space becoming more crowded, which is great because there's more capital flowing into startups, but there will be competition for the best startups. So what's your sales pitch.

[00:22:33.140] - Petr

Our sales pitch is very different than the pictures you see from other VCs and corporate VCs. We usually get on the stage as a team because we embrace the team spirit. So instead of talking about team spirit, we perform team spirit. So we build pyramids with ourselves. We sing and dance haka because by the way the haka is the best pitch ever. You don't really understand what haka guys are telling you when they do haka, right there is no situation there. So we live what we want to see within the start up team and we show it and take a risk to lose face on the stage.

[00:23:23.930] - Petr

So that's one thing. We lead by example and we are not afraid to lose face there, that’s the number one. For number two, we are invested. So a little bit of hard stuff as well. So in addition to equity, usually you're Euopean Investment Bank, banks your depth team, look at the portfolio and provide venture that nondilutive money along directly which is actually very helpful as well. So we can open the doors there where they took their decision. And last on the list we are really those guys. When we invest, we invest in the consortium. We try to see out to the bigger pie, we try to share. When we do due diligence, we create value. It's all. The cheque is creating value exercise. Sometimes we use equity digital themes to help us figure out some some opportunities on the market which is then provided to the startup. So we help start ups, thats our mantra and we live it every day.

[00:24:32.300] - Jon

It's really interesting, Petr, because you shared some summary material about Inven with me before the podcast and hearing you talk about the haka and that team, that pyramid that working together as a team, actually, that shone through in some of the material you shared with me and that video clips. I can see that if you really live that and believe it, then it makes a very authentic, very authentic for start ups you're talking to its not just a promise. They can actually see it in you and your team.

[00:25:07.680] - Petr

Exactly, and what's happening to us, at first its a magnet. We are getting those guys, start ups who see similarly who speak their heart, who try to make a meaning rather than focus on profits. I follow usually great meaning, guys really want to create not only unique products but products which actually creates value for someone. Guys who do enough and deliver decent unit economics. So it makes all sense. Guys who create trust, which goes far beyond the startup, not only within the small team. And that's very, very important.

[00:25:45.840] - Jon

Well, one of my favourite bits of management advice is you probably know it. Start with why. Start with why you exist, why you're together, what you’re trying to achieve. Yeah, I'm a huge believer. If you start with why then, as you say, everything else won't automatically flow but tends to flow much more easily if you start with your mission and your real purpose. Petr times getting the better of us. So let's bring out the talking new energy crystal ball. And I've got a question we haven't really talked about it so much.

[00:26:31.260] - Jon

Touched on a little bit. If we set the crystal ball the week 2030, what types of companies will be dominating the clean energy sector or the distributed clean energy sector that we’ve been talking about? And you talked earlier a bit about working with CEZ. They may have seen some of these companies as competition, but you're making those connections. So by 2030, to what extent will it still be the big incumbent utilities? To what extent will it be Sonnen or Shell who has now bought Sonnen, what's your view, what the sector will look like in 2030?

[00:27:11.000] - Petr

Yeah, it's really a tough one, right, if I knew, but in general I would say that only those firms who are able to serve the needs of the customers will survive, right. So watch those who are already today able to identify the real needs, are solving the real problem, which can get only bigger in the business model, which is which is viable. That’s the mantra. Those guys who can do that, they will probably be around right. Now, I am a fan of actually cooperation rather than competition, sharing rather than playing poker.

[00:28:00.000] - Petr

So I believe that it could be actually a joint co-existence of a bigger, big corporates who work together with the smaller, innovative startups, changing the world together. Something which we and CEZ are trying to do. We are trying to combine the best from both worlds, strong balance sheet of CEZ with small engineers from the energy sector with this innovative approach towards supporting, supporting these innovative startups in cleantech and all this co-existence and cooperation could actually make a big difference.

[00:28:36.390] - Petr

It shouldn't be about big is bad, small is good. It's all about how can we work together to change the world for a better place, so I think we'll see those who can cooperate and then compete and those who actually focus on the customers, they're gonna be around us.

[00:28:58.480] - Jon

And I guess for those traditional utilities, they can't move at the pace of a startup, but they need to evolve and move fast enough to work with the startups in the way you described you work with them.

[00:29:14.040] - Petr

Exactly. Work with them, use them and cooperate.

[00:29:19.120] - Jon

Well, I think what we all want is a world in 2030 where the energy world is much cleaner, much more focused on customers. It sounds Petr like your work at Inven, you’re one of the first funds, you've been very successful and I wish you continued success in finding the startups, working with them, helping them to scale.

[00:29:45.160] - Petr

We will continue to do so. Just a couple of numbers I think according to McKinsey, we need €5.7 trillion to deliver on 2030 goals, from which I think €1 trillion will be provided by Europe. So we need the remaining part coming from the private funds like Inven, and asset backed financing would play a key role to scale up all those products and technology which are ready for scale already today.

[00:30:30.840] - Petr

So that's going to be the main driver of the success. Fintech us entering clean tech, and where big institution investors will be able to invest in smaller, decentralised, small, decentralised energy systems and the bridge needs to be built. And we've got to see lots of innovation here to bridge that and we will be investing in this area as well.

[00:31:00.120] - Jon

I completely agree in old energy and to a degree new energy for offshore wind farms and big assets. Everyone knows how to finance those, but the new energy system will be capitalised a lot on the customer side of the meter and with distributed assets, and that needs finance.

[00:31:26.740] - Petr

That needs financed, and the business model needs to be found, and that's where we were.

[00:31:31.940] - Jon

Wishing you as much success in the next nine years to 2030 as you’ve had in the last seven years Petr, thanks very much for joining. Thanks as always to the listeners of our podcast and I look forward to welcoming you back next week week. Thanks and 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 podcast on your chosen podcast platform. If you like the podcast and like sharing then please do rate us, and to listen to archive episodes, to read transcripts and see the latest Delta-EE Insights, please visit www.delta-ee.com.

[00:00:04.000] - Jon

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

Hello, welcome to the podcast. The topic for today is distribution networks, which I think will be increasingly in the spotlight as the energy transition gathers pace and energy becomes more localised, decentralised and electrified. No longer will distribution networks or DSOs be the slow moving and slightly dull parts of the energy system. The jobs they're having to do are changing and becoming harder and harder, for example, connecting renewables, accommodating and facilitating electrification and integrating with other parts of the energy system, all while coping with more climate extremes. Luckily, while they've got more and more jobs to do and more challenges, they've got new tools to do these jobs enabled by the rise of software, the Internet of things, tidal waves of data, artificial intelligence and more. Really exciting times to be working for a DSO or working with a DSO. And if today you're not working with network companies, maybe you're an energy retailer or in the flexibility sector, then I think you'll be interacting more and more with distribution networks in the future. Which makes me delighted to welcome three guests to today's podcast. And today we've got guests from ENEL in Italy, Alliander from the Netherlands and UK Power Networks, whose name gives their location away.

So let's say Hello to my guests. First of all, Viviana Vito from ENEL. Hello, Viviana.

[00:02:07.060] - Viviana

Hi, happy to stay here with you today.

[00:02:13.540] - Jon

You're very welcome. Viviana, can you just tell our guests briefly what your role is at ENEL?

[00:02:18.320] - Viviana

Yes, my name is Viviana Vito, and I've been in the energy sector since a long while, actually more than 22 years. And currently I have the role and possibility to be the head of market strategy and regulatory analysis within the global infrastructure and network. It is the vision that in ENEL take care of, let's say all the distribution companies over the world.

[00:02:43.480] - Jon

Okay, and that's a lot more than just Italy, isn't it? Your distribution companies. How many countries altogether?

[00:02:51.320] - Viviana

As distributors we have eight countries. We are in Italy, Spain, Romania and Europe and abroad in Latin America. In all the main megacities, megalopolis in Latin America.

[00:03:05.120] - Jon

Great. Okay. We'll come back to you shortly. My second guest is Suliman Ali from UK Power Networks. Hello.

[00:03:11.550] - Sul

Hi.

[00:03:14.740] - Jon

Now, unfortunately, Sul we can't see you, but the video connection is not working, but we can hear you fine. Likewise, can you just tell us a bit about your role at UK Power Networks?

[00:03:26.100] - Sul

Sure, hi, good afternoon. I'm the Directory of Strategy and Customer Service at UK Power Networks. So I look after all of our customer facing operations business strategy, and I also look after regulation, technology and innovation.

[00:03:42.800] - Jon

Great. Thanks very much. Sul, look forward to hearing from you shortly. Our third guest is hopefully sorting out his technical challenges and joining the Webinar. It's Daan Schutt who's CTO at Alliander in the Netherlands. So we'll here from Daan shortly. What I've asked my guests to do is to talk about their top three opportunities or challenges from a DSO perspective, as the energy transition gathers pace.  Opportunities or challenges? Well, because one person's opportunity is it another person’s challenge, and one person’s challenge another person's opportunity. And maybe it depends a bit whether you are as we say in English, a glass half empty person or a glass half full person.

So I'll ask each of my guests to go through their top three opportunities or challenges in reverse order. So third biggest, second biggest and then the biggest. And then we'll have a discussion around some of the themes, the differences in what my guests think. So Viviana, let's go with you to begin with. Do you want to go through your three two one in terms of your opportunity and challenges?

[00:05:01.020] - Viviana

As you were mentioning the idea, so now the DSO changing the role is more and more crucial and essential in the energy transition. So the challenge is an opportunity, a different angle of the same points that you need to tackle as operator. But if I need to put the priority, I think that the first one that I mentioned that is the third one and actually in my opinion what’s more essential is to be innovative and resilient. Meaning resilience that is not just being resilient to climate change conditions to market disruptor conditions, that's the situation by which the DSO will find themselves in managing different consumers and all the new actors, which creates new dynamics to manage the network, and this means putting together all the tools in terms of innovation from the automation in different layers. So we consider a smart meter essential but any other capability of the DSO to have remote control, so society going towards artificial intelligence use in order to better profile the use of the network. Meaning this challenge was also opportunity. The second one is to be participatory. So we need to do a platform and create a way that all the other players can play together with a network.

And this means design a role of a flexible operator or system operator that can allow all the counterparts to participate in an open way in arriving to the customer. And third one that's in my opinion is the first one in terms of importance is to do all of that being sustainable, so to participate to the gain, to arrive to the carbonisation, an objective for less CO2 and other emissions meaning not just adding the capacity for the renewables or electric mobility possibly coming from green energy that we have on our network, but being also in the asset itself as you work so, so having a capability to design products and services in all that everything is optimised to do the best for creating an environment that is much participative to the objective of reducing emissions.

[00:07:48.040] - Jon

Okay, Viviana, I'm fascinated by your answers if I just summarised them so the third one was being innovative and resilient, the second one being participatory. So this new role DSO role as an orchestrator and number one being sustainable, which isn't just about your own operations, but sustainable in your approach involving the entire energy ecosystem. And the reason I think these are really interesting ways to frame them are, it's as much about your mindset in a way as technically, what you're doing. Is that how you're thinking about how your mindset is in approaching networks?

[00:08:36.720] - Viviana

Yes, its a mindset, but with an engineering approach that should remain. This means that when you have to design, for example, something in your network, you need to think to the very beginning to think to the value that is design in terms of specific appliance of these processes, should bring those in terms of KPI for the ambition of emission and all the other ambitions in terms of sustainability. So I give an example that is very practical one but is not the only one that we have in our company. That is about smart meters.

We tend to design smart meters since the very beginning in order they can absorb meaning the asset itself needs to be, for example, done in a circular economy with the plastic use from other meters from other plastic utilisation and also the entire design of the processes to do the smart meters should be from the very starting points in that direction. So all the value chain, all the supply chain, all the logistics. So this can really create value because the opportunity we have us distributor, they see a very, distributor local, that's a very incredible volume of things that he produce, we use for our network. And this means a good capability to escalate. So a small innovation design for value for an asset for a process is, if it's replicated, can bring value in all the network and also for our peers because we have not a competition. So we can bring the same typology of processes past where we don't need to stick in our area because we have only for ourselves this deployment and innovation. It’s not only for us, we can share.

[00:10:20.380] - Jon

Yeah. Okay, great example. Thanks for bringing that to life. We'll come back and discuss some of these points once we’ve heard from Sul and Daan. Sul, over to you now. So your top three in reverse order. So third, second then first. Nice that we can see you now as well, that always makes things easier.

[00:10:45.230] - Sul

I managed to get the firewall adjusted, which is nice when you own technology. OK in reverse order. I would say number one electric vehicles, so in the UK transport accounts for about a third of greenhouse gas emissions, and the big challenge that we see here is, how do we scale up the provision of EV public charging to tackle EV in equality and avoid some of the issues we've seen with things like broadband where rural communities, we have sort of charging deserts that appear where it's not viable for market based approaches to deliver the infrastructure needed at the charge points, particularly so the question which comes up is what role should DNOs play working with market participants, national level government to ensure that everybody can benefit from the decarbonisation of transport and that we don't have, we don't exacerbate today inequality into sides. The second one is around energy efficiency. So in order to decarbonise heat, you need to have an energy efficiency rating in the UK, a minimum of energy efficiency rate C. We have lots of properties that are nowhere close to that and therefore if we’re going to carbonised heat, how are we going to commercialise energy efficiency to tackle the issues that we have in our legacy housing stock? And what role should a DSO or DNO play in that? Because effective energy efficiency one could see like a flexibility service in that it reduces demand and on demand. So how should DSOs/DNOs be producing products and services that effectively help commercialise energy efficiency at scale? And then the third one probably most important is what I call whole systems and the enabling incentives. There was a recent report that was done by Imperial College under and the Carbon Trust and those guys and girls identified something like £17 billion per annum by 2050 from having a smarter, more flexible energy networks.

And when you look at that business case, what it is basically is a cost avoidance. It's about saying, well, if you have much smarter flexible energy networks and consumers that are effectively choosing to consume and it's cheaper and greener to do so you can avoid building new generation plants, new nuclear plants, new renewables that you don't need because actually you're consuming a more efficient way. So the question is OK, how do you remunerate network companies, DSOs and others participants that are pivotal to unlock that system value because the cost avoidance, so how do you create the right incentives and framework to make sure that we all benefit from that £17 billion of savings per annum. That is a big strategic issue.

[00:13:36.000] - Jon

Thanks Sul. So summarising in third place was the EV public charging provision, particularly where the market won't deliver that public charging infrastructure. What role can a DSO play in that? Second was energy efficiency linked to decarbonising heat. How can DSOs help to support incentivize or facilitate energy efficiency and number one whole system incentives. So getting a more flexible energy system. What role in a network company play? How you should you be remunerated? So what I think is interesting or my take away from this is all three of those areas go outwith what traditionally a DNO or DSO would think about its networks and its assets. So all of those stray onto the other side of the meter, as its often called. Do you see that as a pivotal change or new role in your job is a DSO that you've traditionally focused on your assets, your transformers, your cables. In the future, you're going to be much more involved with customers assets.

[00:14:50.680] - Sul

So yeah, 100%. But I don't think that will be, certainly not in the UK directly involved, with end consumers as an example, we’ll probably work through intermediaries like aggregators or energy suppliers to effectively have the end relationship with a customer but effectively from a customer's point of view. If they are, if they are presented with compelling propositions, that effectively say we can lower your energy bill. If you can consume super and greener to do so, the network companies should be able to reduce their reinforcement needs, reinforcement investment to pass on some of that value, to customers. Companies should be incentivized to do that. So yes, definitely. We need to be thinking about collaboration and propositions for end consumers and customers and what our role will be to make those products. So that this is new proposition is viable.

[00:15:44.300] - Jon

Thanks. We'll come back and discuss some of that in a bit more detail shortly. Now we're still waiting for Daan Schutt. Unfortunately I understand that Alliander’s firewall is proving very effective and meaning he’s got a challenge in joining the gotomeeting software that we're using, Sul like you discovered with your camera and getting around your firewall. They’re certainly quite secure in their networks at the moment in certain ways. Luckily I've got Daan’s top three challenges which I can share with you. Hopefully he'll be able to join us for the discussion.

So his third place challenge was digital transformation of the energy system, so embracing digitalisation and better utilisation. His second challenge was scaling operational output, so realising more grid reinforcements more quickly. And his first challenge was truly utilising flexibility or influencing behaviours for an effective and efficient energy system. So some similar themes there, digitalization, scaling operational output which is I think a slightly different Sul from yours and Viviana’s opinions. Then truly utilising flexibility, I think echoed in Sul, both of your points. And interestingly talking with Alliander, I know they've got a lot of grid congestion like both of you probably have in connecting renewables to their networks. And it's interesting to hear the culture that when they can't connect a new PV farm, for example, or an application for a PV farm, for their employees - it really hurts them because their employees really want to connect renewables. They want to be part of the energy transition, they want to be enabling it. And I think that was an interesting observation for me on that culture that they're desperate to facilitate the energy transition and it hurts them when they when they act as though, well when they can't do that.

So Viviani and Sul, I’m interested in your observations on each other's priorities? Was there anything that surprised you on each other's points or anything that was different to how you think about things? Or would you say you agree completely with each other's points? They’re just expressed in a different way.

[00:18:17.500] - Viviana

I think that the points are all very similar. And it's just a question of expressing it with different angles in the end. But this is why the opportunity gain between the player of this part of the value chain, DSO/DON whatever is peculiar, the capability that we can have in confronting ourselves on the technical points can arrive really in a very a good level in terms of transparencies so we can really share how to do that and this is independent from the organisational type, or choice that the company can have.

But when you put two people on a technical side to understand how to facilitate, the connection in the end is really a fruitful conversation. And I have experimented sometimes a roundtable of discussion, facilitating people from different countries and different players, it was very useful. And this is again the idea how a DSO can open the participation with others. First of all, with other peers. I could mention that we launch before the summer, this Flexibility Lab initiative that is exactly esentially we are doing to creating a place where we can exchange technical tools and technical instruments to plan how the network should participate with the system, on the flexibility markets and open to players that can bring services for this market in future, but also peers they can experiment the trial on these labs.

So I think this is a way to do it, to open technology, to open innovation and to have a place where we can share with so open to everyone to have our Flexibility Labs initiative, that are in Italy and Spain but also can bring experience from other countries.

[00:20:34.840] - Jon

I guess the physics is the same from network to network. The regulation may differ, the precise market structure may differ, but the engineering and the physics are common. So what about yourself in terms of what you've heard from Viviano and the priorities that I outlined from Daan at Alliander?

[00:20:55.060] - Sul

They resonate with me. I think we've just taken slightly different perspectives on the same sort of challenges that I've come at from, so as a country we need to hit net zero by 2050. It’s heat, transport and we do cheaply. How do we go about doing that, what our role is. But in order for us to do to achieve those things, the things that Viviana pointed out are really key. So the first one around innovation and how we need to look at the problems and solutions in a different way.

So that needs to purvey every aspect of our business because we're not going to achieve net zero if we just kind of think about the solutions in the way that we've always thought about them. So an example would be where we see a huge connection volumes coming in. I don’t think its acceptable for network companies to say we don’t have the capacity, you can't connect, that would be a failure. Our job is to make sure that people can connect. And therefore we, for example, thought about things like timed connections, flexible connections. Where an example would be in London, you know bus operators that on a really tight timescales, never had to work with the electricity sector at scale. They don’t know what the lead times are. They've said we need to get some bus garages online asap, now we can't say to them, “oh, sorry, you're going to have to wait 24 months for reinforcement”. We've got a timed connection. We looked at the demand profile, allowed them to connect, 75% cheaper. And actually it's twelve months off time frame. And now what we need to be able to do is to think about those types of solutions in everything that we do.

And I think the other point that Viviana raised was around sort of participatory approach. And I think that really resonates with me because we have to now work with sectors that quite frankly, I've not had to give a damn, its interesting. It's just been a given -  so fleet operators, they don't really know anything about electricity as it pertains to EV charging, but we don't know much about them. And therefore coming up with new products and services requires us to change the way in which we operate.

But I think there's lots we can learn from the competitive market. In terms of how competitive businesses, they have to fight for their revenue, go about understanding customer segment needs and how they go about development propositions for those needs.

[00:23:14.760] - Jon

What do you both think about the, I guess, a change of mindset needed for that. You know Viviana you framed your three challenges very much around mindset driving the right engineering approach. So what you've described is different from where a network company was ten years ago, for example. So given how urgent, well, how quickly the change is coming to the energy sector now and how urgent the challenge is, how hard is it to drive that mindset that you're talking about Sul, and Viviano that you outlined in your response to the top three opportunities.

[00:23:56.560] - Viviana

It's clear that you need to have a driver and I think that’s probably a little bit since ten years, we have on the objective of supply when you need to be sustainable, and as a company, as a group, you have a sustainable bond, then you need to bring that so not only on the renewable side but on the component responsibility because it won’t be sustainable and wider, let's say, scope. And this is coming from the top,  so from the bottom up approach. This is why you need to enter into stimulating any type of product or service in that direction.

And the way we are trying to do that is through transformational process into platform, lets say modality. This is to combine the different model resolution using of data in order to be very pervasive, not just to have a zealous approach, but have more holistic, that's not just in real. For example, the challenges of data. I think it's an incredible opportunity because you need to imagine an incredible amount of data that you can reach thousands of billions per day of data from some thousands of sensors…And then you need to take from this opportunity. You can really valorise these inputs into giving to solution for your business, for your objective and to be more resilient to respond much better in terms of the features you need to have and the standards you compromise for your concessional licence to be reliable because in the very end it's about that we need to be reliable and use electricity it's so increasing in terms of also other sectors – e-mobility. We have experimented during this pandemic, how for telecom operator it's more essential electricity and they know they knew, let's say but they realise how much of it probably and also all the other sectors because to stay in the data flow you need electricity and otherwise you cannot do anything everything.

So this is so crucial and so present in all the systems at sector, business sector level that you need to use this challenge as an opportunity also to incorporate for example trading infrastructures with or operate or things that we already do but need to be much better sharing data without a sector in order to have this bunch of data that could be for the central is possible with all the regulation GPR, but you can use data for vegetation to provide your network better use for maintenance, but our vegetation also for the administration of our city.

This is the platform is not just a interconnection in between two of technical, but also capability to having these share it.

[00:27:13.130] - Jon

Viviana I've seen from Enel, you know, you've been very successful with EnelX, for example your services business, not the networks part of Enel but other parts of Enel, and talking with people in EnelX and other parts of Enel it's really stemmed from leadership from the top. You can see and feel how that leadership flows down through EnelX and different parts of Enel. Is that the same in the network part of your business?

Are you having to push this down from above or is it bubbling up from below or is it a bit of both?

[00:27:51.130] - Viviana

It’s a bit of both but I think that really we change the sense of urgency in a very different manner. For years the distribution business has been considered even in a company like an Enel, sort of latest parts of, everywhere actually that's sort of a supply, different business and a diversification. And we have this poor guy working on a network that technically what engineer forget about that they need just to connection on the renewable, that now really this is changing.

You will hear more and more our group COO speaking about network and also the responsible or our division is one coming from the green electricity very enthusiastic approach and very different drivers and a little revolution in terms of managerial approach. But I think this has been changing and I can tell it because I'm a person that’s been in the company since really too many years, probably. But all the value chain of the companies or renewable generation, EnelX. I've been here there. I think that now the way we do is really a new way.

[00:29:15.660] - Jon

Yes. Changing. Sul, how about UK Power Networks and changing the mindset and that innovative approach and being open to new approaches?

[00:29:25.760] - Sul

I think it's not about throwing the baby out with the bathwater. There are mindsets and ways of doing things that are still valid. We are traditionally a risk averse culture. We like to measure things. We like to know the impacts of change before we go and make the change because obviously keeping the lights on is our number one priority. So I think those are strong engineering domain expertise and mindsets will remain. But I think what we need to supplement them with more entrepreneurship, a curiosity around data, technology skills that we haven't really needed in the past, but we will be in the future, around machine learning AI.

And I think it's about then combining both of those two things together to solve specific problems. I'm actually taking a more consumer led approach. In the past where network companies have not had the end relationship with customers -  I remember 20 years ago talking to utility executives and they would say we don't have customers. We have meter points in the UK.

[00:30:38.460] - Jon

Or they have one customer and that's a regulator?

[00:30:41.180] - Sul

Yeah, that's right. And you look now and you think well how retrograde a perspective was that? Now you look in the UK and all of the DNOs/DSOs are fighting to be number one in customer service. They're measuring everything daily. They're delivering as an industry over nine out of ten customer service scores and the culture change is massive. And I think what we need to do is then now kind of look at the yard stick and say we need, we can't compare ourselves to other regulated businesses. We need to compare ourselves to businesses operating  in a competitive market.

And what would they do in terms of understanding future customer needs? How do they get their product and services, ready, for that future market? So I think it's not about replacing the mindset and skills. It's about supplementing them with these new things that we need given the changing energy system.

[00:31:30.480] - Jon

And I guess there's no one magic button to press to get that going. That again starts with leadership that lower the top. It's culture. It's the change in mindset that takes time to develop.

[00:31:43.600] - Sul

I think it starts with purpose, more than anything. What is the purpose of your company? And I think if that's not clear, then you see that in organisations that just keep running around from one crisis to another thing. You've gotta be clear as a company, what is your purpose? How you measure that purpose? What ambitions are you setting on that purpose? And then I think it gives clarity to everyone in the organisation about what is their role in achieving those objectives? Are their measures aligned with the organisational measures? If you want to call it that, I think that's what helps. If you don't have that, how does anyone know whats important, and what their role is in delivering what’s important.

[00:32:43.600] - Jon

It’s a lesson for everyone in terms of purpose, whatever organisation you work in and is that purpose changed, Sul, you know, I'm thinking of how someone in a DSO might have answered that question ten years ago, the purpose might have been to minimise the cost of maintaining assets or to focus on reliability. So how do you articulate that purpose in your company and Viviana, I’m interested in how you articulate that in the networks part of your company?

[00:33:00.900] - Sul

So when we were formed in 2010, as UK Power Networks, we had three core objectives that we set at organisational level, which is to be an employer of choice, a respected corporate citizen and to be sustainably cost efficient. And what we did as an organisation, we basically set very clear KPIs. Not a list of 100. We actually managed our business at that level and about less than a dozen KPIs. So we looked at, for example, lost time injury. We look at employee engagement. We looked at things like our reliability performance, our customer service schools, our stakeholder engagement schools. And then we looked at how we are performing against the regulatory contract that has been set by Ofgem as it pertains to cost because in a commercial business, if you earn £100 and your budget is £50, you don't go and say oh  well, that's fine. I'll just keep spending £50, in a commercial enterprise, you will seek to spend £40 because you get more profit. So how do we get that same commercial attention in our business as it pertains to contracts, ie drive more and more efficiency. So we set those objectives and they've done us well for the last ten years, eleven years. We’re top on just about every measure that we've set, whether safety, reliability, service.

[00:33:24.440] - Jon

Have you changed them?

[00:34:24.440] - Sul

They’ve evolved. They have evolved. We haven't changed the measures that were there. We've evolved. So for example, ten years ago we never had anything on diversity/inclusiveness. But we have, we've now said that we're going to benchmark ourselves to be amongst the best in the UK. We never had any measures on effectively how we're driving and facilitating competition. We never had any measures on gender, and some of those other things. So we have we've evolved and adapted and added new measures as the society and the environment around us has changed.

Most recently we're adding a fourth pillar to our vision, which is how are we going to facilitate net zero for our communities? And we're adding explicitly at the top level equivalent to being an employer of choice, the respected corporate citizen and to saving costs efficiently, and underneath that pillar we're going to add to specific measures. How are we supporting our employees to carbonise their lifestyles? How are we supporting the regions to carbonise in the areas that we cover? How are we supporting and driving competition and great flexibility to deliver net zero at the lowest cost.

So we're changing that point of our vision and we're adding in kind of a fourth pillar with clear objectives and targets. And we're actually establishing a DSO, independent and separable DSO from the DNO with specific targets and objectives to drive competition in every part of the business which will be under the same ownership group but very distinct and separate in terms of, it will have its own advisory board, its own metrics and measures of success which we’ll report separately to the regulator and stakeholders.

[00:36:15.200] - Jon

Okay, that's fascinating to hear how you articulate that sense of purpose and how that's evolved. Viviana, from Enel’s perspective, sense of purpose, what shone through to me in the way you answered those questions was talking about things like the UN Sustainable Development goals as part of your purpose. How widespread is that through your networks businesses in eight different countries. Are you trying to develop the sort of common sense of purpose across all your countries?

[00:36:49.480] - Viviana

Yeah, I think that this was…. also you mentioned the point when you create a purpose that can be shareable also for the people that participate in contribute in terms of employees, this can for sure give you the capability to not only drive the change but to make it happen because otherwise you drive the change from the top and then you find people feel not comfortable for the purpose. So in giving to the business the stainability goals and trying in all the countries to align it, as we mentioning before in processes and services, this creates two opportunities. The first one is to probably also having these economics so that you were referring before in good shape, because you create a standard of quality, standard of services and create synergy in the business and in all the value chains of your business and the presence in each country, you can imagine that you standardised products and services can facilitate this type of economics of scale within the different activity data too. And the other side you create also KPI to give your purpose and to track exactly mission and to accompany each decision in terms of investment.

Also with this type of evaluation and track it and measure it. And we’re also accountable for that. I think this is creates value for the entire company because in the end being accountable on that also, it's a major interest from investors. Then I can look to the sector not just with ….., because we have the a certain level of ….. a certain level of regulated profit, but you are more in line with the objective of sustainability and also investors connect. So I think it's really of value. I think really that's creating value on this type of purpose is creating economic value, its automatic.

[00:39:05.940] - Jon

It's not an either or  - they support each other.

[00:39:10.440] – Viviana

Yes. Then you have the the regulator that you need to have a board on that because they need to track this type of value also in your revenue stream.

[00:39:24.800] - Jon

That's my last question I want to come to now for both of you, which is speed and pace. I said at the beginning of the discussion, the energy transition is gathering pace. And I think if you think of a hockey stick shape curve, I think we're we're still on the shallow part of the curve. I think some people think a lot has changed, but I think the speed and pace of change in the energy sector is going to accelerate and accelerate. So, 2030 carbon targets are really challenging. Yet this is, the energy sector is a conservative sector, the network sector’s probably the more conservative part of the sector. Rightly risk averse, very focused on keeping the lights on, and it's very regulated. And regulators move at a certain pace, sometimes fast, but often not as fast as we might want. So, how do we reconcile the urgency, the heavy regulation in the sector and the naturally risk averse mindset of many people in the sector? Are they contradictory? How do each of you feel about reconciling those and moving at a fast enough pace?

Sul maybe starting with you and then Vivana.

[00:40:49.960] - Sul

I would say, look, there’s always trade offs between all of these things. So yes, we need to deliver at pace. And do we think that we're going fast enough? Probably not, I would say. But if you look at the track record, so if you take for example, in the UK market, just look at how the decarbonised power over the last ten years and that is exceeded a lot of expectations, particularly look at for example solar distributed generation. And if you look at the recipe of how that was successful to get very clear government policy targets back to subsidies.

Yeah, the network companies that were looking at what their customer needs were and you had basically a lot of competition. So it wasn’t just that network companies didn’t have capacity you had a buoyant independent connections provider a market, etc. So there was a plethora of wealth of talent that could that you could rely on touch by those connections. I think we need to recreate that same recipe for success as it pertains to transport and heat if we're going to achieve the next ten years, 20 years worth of targets.

So I'm not worried about that. I just think that it's more about just being focused on setting targets that are achievable within a shorter time frames, so part of the problem that we find is that if you talk about 2050, it's kind of, well, actually, who's going to be here? A lot of the people that are making decisions today, are not going to be around in 2050. So I think what we need to do is change our mindset. Take like a covid emergency mindset that says we must do something.

Ok. What do we need to do in the next five years in terms of carbon reduction? Try. How do we go about policy, incentives and competition and network to drive the outcomes we want? That's what we need to do. So I'm not I'm worried about it. I think we should be confident, but what we achieve today we just now need to amp it up a little bit.

[00:42:48.500] - Jon

Just have the right focus, the right sense of urgency.

[00:42:52.640] - Sul

That's it. Yeah, exactly. It's going to be harder, no question, because decarbonisation of the next decade into the next years it's going to require behaviour change and action at consumer level, which the last ten years quite frankly has been invisible to those consumers. So I think that's the dynamic that’s changing that we need to be on top of and decide how we're going to tackle that because it impacts all of us as citizens as well as people are working in the utility sector.

[00:43:20.360] - Jon

Thanks Sul. Viviana, to finish. How do you see the urgency?

[00:43:25.760] - Viviana

The urgency is there also I think that the capability of this sector is huge. So in the end normally the way that because we have been a longer trial of experience. I'm not speaking like Enel but in general DSOs are very consistent in terms of capability to react to urgency to disruption because they are in the very end the ultimate point of contact where a problem is there in terms of this. So I really believe that the capability of the sector is huge and the potential of escalating in terms of solution is incredible.

So the only point is to have regulator on board in being most possible transparent and let them understanding how it works. I believe lots on sandbox or regulator experiment and can bring value in large scale demonstration to demonstrate the potential for having a distributor directly in contact with the service provider in terms of flexibility and now this can capture the value of flexibility in total, not partially because we are so near the end point so that you can capture this value, in a broader way more than other players in the market is why we need the market local combined with, not the local market, but local to capture all these potentiality of flexible mechanism.

And so I think the sector is ready in some parts of the continent. Not everywhere that could be peers that you need to bring on board with the experience and sharing experience and this is possible to be done. So this opportunity should not be lost, and then also for continents where there could be a leap frog. I believe I've been engaged for a long time in big power plants, and that leap frog is not working anymore. It's more justified a very local market with a local producer and good distribution grids more than a transnational network.

Sorry, but it's like that the reality and the time arrives to decide on investment should be short. Not so long.

[00:45:54.720] - Jon

Well, I'm pleased to hear how you both answer that question because I think there's the speed of change will increase. But if you look at what distribution networks have achieved over the last decade, as you said Sul in one of your comments, things have changed a lot. And if society as a whole and your employees are passionate about what they're doing, wanting to connect more, more renewables, wanting to enable electrification, then I think the ingenuity the mindset of engineers has shown that they can rise to challenges like this.

So I think it's a hugely exciting area. I think distribution networks will be more and more in the spotlight. I think it's going to be a really exciting area to be working in. And importantly, I think the sharing of best practice. Viviana, you alluded to the fact that different countries are maybe moving at slightly different paces, but there’s so much learning from one country to another country and even within a country, that I think the answers are there or will be created. And then one of the challenges of the sector is to work together to share those, support each other in playing their bit in the next years.

So. Time got the better of us. I think we'll leave the discussion there. Lots more we could talk about. But Viviana, and Sul thank you so much for your time and for thinking about your top 4 challenges for the discussion today. I'm sure everyone listening to the webinar will have found that fascinating and everyone who listens to the podcast will really enjoy the discussion as well. Thanks for the honour.

[00:47:36.480] - Viviana

Thank you for the opportunity.

[00:47:38.280] - Jon

Thank Sul. So apologies to the audience we couldn't hear Daan, but we’ll find a way to maybe capture his views and share them as well. Thanks a lot both. Thanks everyone for listening and speak to you soon.

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 podcast on your chosen podcast platform. If you like the podcast and like sharing, then please do rate us and to listen to archive episodes to read transcripts and see the latest Delta-EE insights. Then please visit www.delta-ee.com.

[00:00:04.000] - Jon

Welcome to Talking New Energy, a podcast from Delta-EE, the new energy experts. We'll 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. Today we're looking at how local energy solutions can be used for new housing and wider new build and regeneration projects. Can clever software optimise demand, storage and generation to make these developments more energy independent. If possible, then these developments will still have a grid connection but will be less reliant on the overall grid and could even operate independently from the grid should the grid go down. How are these types of developments growing across Europe? What are the business models and commercial arrangements for these projects? Well, this is what we're going to explore today. So I'm delighted to welcome two guests who are at the leading edge of these developments and our Delta-EE expert on the topic. Let's say hello. First, Philip Gladek, founder and CEO at Spectral, based in the Netherlands. Hello, Philip.

[00:01:12.760] - Philip

Hello and thanks for hosting.

[00:01:15.470] - Jon

Thanks for coming on the podcast. Philip, can you give us a very quick elevator pitch for a Spectral to help our guests understand who you are and what you do?

[00:01:25.100] - Philip

Sure. So Spectral is a system integration company specialised in energy management and control systems, and we have a few key application areas that we focus on - being smart buildings and real estate, great infrastructure, meaning integrated electrical and thermal networks and also large scale renewable production systems and storage. So wind, solar and large scale batteries are core areas.

[00:01:54.080] - Jon

Okay. So your core strength is software and optimization of energy. Is that right?

[00:02:00.760] - Philip

Exactly.

[00:02:03.560] - Jon

Can you give us an example of a project along the lines of my introduction where you're optimising demand in a new development or demand generation and storage?

[00:02:13.040] - Philip

Sure. So I think one project that particularly well connects to the theme of today's podcast is a development in the north of Amsterdam which is currently under construction called Republica and Spectral is responsible for development of the integrated electrical and thermal energy systems within this site, which features a private microgrid with just one connection to the public grid network. And it consists of about 20,000 square metres of new build across six buildings, several apartment buildings, office spaces, restaurants, leisure. So a sort of mini city on a plot. And underneath it all a large parking structure which will have about 50 electric vehicle charging points, a big community battery of 1.2MWh as well as a large heat pumps with thermal storage which will supply hot and cold to all the buildings in the plot.

[00:03:14.460] - Jon

Sounds like some development and your role then is optimising the electrical demand and electrical flows behind that single point of connection.

[00:03:23.660] - Philip

Exactly. So optimising the control of all the different assets to be able to deliver local energy services and manage also peak demand as well as to help balance the national and European grid network utilising the flexibility of those assets all the while, of course, ensuring that the efficiency of the operation is also maximised.

[00:03:47.400] - Jon

Great. Well, we’ll come back to that shortly Philip. Let's say Hello to our second guest, Dan Nicholls, whose managing director at SNRG - S N R G -  based in the UK. Hello, Dan.

[00:03:59.860] - Dan

Hi. Thanks for having me.

[00:04:01.380] - Jon

Thanks for joining. Likewise, Dan, can you give us an elevator pitch for SNRG -  who you are and what you do?

[00:04:07.500] - Dan

Yes, of course. So SNRG is Centrica backed Smart Energy Solutions business. And our focus, similar to Philip, is really about decarbonising new buildings with a real focus on new homes through technologies like smart microgrids, which are really based on trying to reduce complexity, reduce cost around a decarbonisation journey for new homes. And we call our product a SNRG smart grid. And as Philip described, is really based on the idea of having a single point of connection to the network, connecting all the demand and generation loads together behind that network connection point and using clever optimization technologies and things like battery storage to really minimise the demand and the cost on the network and also the cost and complexity for consumers.

[00:05:08.020] - Jon

Okay, so quite a similar thing to what Philip described, a real life example or example of what you're developing?

[00:05:15.110] - Dan

Yes, we have a project which is being occupied, as we speak in place called Corby, and that's a scheme of 16 apartments all connected behind a single boundary meter. And that project has a single communal battery, has a single communal PV system. And as I describe, we have our software platform that thinks through the deployment of the PV of the battery, the management of the loads such that consumers get the cheapest deal ultimately, and don't have to worry about the complexity of doing that themselves.

[00:05:54.620] - Jon

Okay, thanks a lot Dan. Likewise, we'll come back and learn a bit more about that project shortly. Third and final guest is my Delta-EE colleague Jeremy Harrison. Hello, Jeremy. Jeremy, let's frame the topic a little bit more. So if we look at a new development, it could be a new housing development, the type that Philip described. The developer will typically have to get a connection with the local distribution network company. Now, the precise way that's paid for changes from country to country according to the regulations. But there will be like a one-time cost associated with that connection. And that cost sometimes is paid by the developer, sometimes might be socialised, but there's still a cost for that connection. Why is that becoming a bigger and bigger issue at the moment across Europe, or why do you see this becoming more and more important area?

[00:06:55.480] - Jeremy

Well, it's always been quite an issue in terms of getting connections for developers, because you need to synchronise the build out of distribution network with the planning and development of the housing development itself. So in some areas where the grid is constrained it can be quite challenging to get a timely connection. But in the past those connections were sized, based on the assumption that the homes typically would have gas central heating. So the only electrical demand, things like cooking and lighting and so on, and the DNO would normally assume a demand around peak diversified demand around 2KW. Now, as you mentioned right at the beginning, we're seeing electrification of heat with heat pumps and mobility, with electric vehicle charging, and those are significantly bigger loads. And the problem is that we have a lot of experience with gas heated homes and that kind of normal everyday electrical consumption. But there's an order of magnitude greater demand from these new loads. And there's no experience of having both the heat pump and electric vehicle charging and all the normal electrical loads on a scale that will give the DNO the kind of confidence to size the network accordingly. So, avoiding risk, they will tend to oversize the connection to make sure it doesn't fall over. And that's, of course increases costs.

[00:08:13.790] - Jon

Yeah, and that might be difficult if the grids are getting more and more congested as we get more and more electrification, they could turn around and say, well, we don't have capacity for this development or we're going to have to build a bigger grid in this area, and you going to need to wait for that, or someone will need to pay for that in some way.

[00:08:33.920] - Philip

Indeed. And maybe just to interject the capacity problem in the Netherlands is becoming quite significant. In fact, many projects are simply unable to get a grid connection in certain areas, and that has to do both with projects that need to import energy as well as renewable plans that need to export. So the grid operators are looking at all kinds of solutions to resolve this problem because placing the traditional solution of upgrading the cables and the infrastructure is simply not cutting it and can't move fast enough to cope with the magnitude of the problem.

[00:09:13.200] - Jon

Was that the driver behind the project Republica you described just north of Amsterdam Philip?

[00:09:16.280] - Philip

Initially, it wasn't per se, the biggest driver - the biggest driver, at least from the developer, our client's perspective was to create a highly sustainable and innovative site. It's really a showcase for them as well, and to help push the boundaries of new regulatory and industry structures and demonstrate that smart grid technology in practice. However, during the course of the development, actually, the area in which the project is in Amsterdam North has now experienced congestion and in fact, the project is not able to obtain the full amount of capacity that's needed, if it was just available. So we are actually working also with the grid operator on new creative solutions to couple our smart grid systems with their substation automation systems or other kind of, let's say, more contract implicit flexibility mechanisms to ensure that we can actually realise the project and go into full operation while at the same time taking into consideration the actual peak load and the congestion within the local grid network.

[00:10:34.560] - Jon

It's really interesting because I think a demonstration project is great and we need demonstration projects to push the boundaries and move us forward in the energy transition. But they are one-off things by their nature. What you described there is a real hard commercial driver that could see more and more need for the types of approaches that you you're talking about.

[00:10:57.270] - Philip

Certainly, and maybe just to add, I mean, we were, of course, going to anyway implicitly limit our peak demand on the grid because the grid operators demand charges are already based on, for example, how much capacity you've contracted but also the measured peak demand. So it was part of the business case for us to do that anyway, but now it becomes a much more critical aspect of the project where the grid operator is actually going to rely on us to take action and help reduce load so that the infrastructure in the area is able to actually provide energy to the rest of all the residents and businesses that are there.

[00:11:36.080] - Jon

Dan, how about yourself, how would you characterise your project? Is ahead of its time, or are there really strong drivers in terms of getting sufficient grid connection or sufficient grid connection capacity for new housing developments?

[00:11:52.640] - Dan

What I think Philip’s describing really resonates with us, and whilst I’ll talk to some specific examples, we've set up to deliver a solution that that runs out across the industry as a standard alternative way of connecting and servicing new homes. We don't see this as a necessarily in R&D exercise. We were really keen to get out there and solve some of these problems and really just to add some colour to Jeremy's point around how this issue has arisen. Obviously, seeing the numbers around kVA per home is the kind of key numbers we're talking around and with a dual fuel a kind of standard of day home. It's about, we're talking about 2kVA. But as we move into a more decarbonised scenario, which based on in particular, UK legislation is highly likely to be predominantly all electric. That means we're electrifying our heating and importantly, we are electrifying transport. So we'd like you to see that 2kVA increase significantly. If you stack all those loads without a diversification, then you could be looking at something like 15kVA. So very big jump, of course, across housing developments, you can you can factor in the fact that people aren’t doing everything at the same time, which allows you to reduce that peak. But still it's an order of magnitude, its still a significant increase in terms of the demand, the pressure that's put on the network and then obviously the network operators need to plan for that. But I think that's where this kind of key additional cost is arising.

[00:13:35.860] - Jon

OK. So a real key driver to limit that maximum demand from new developments. I want to ask first about technically how hard it is to do what you're both doing and then look at a bit more on the commercial model and what this looks like from the customer's point of view. So let's spend a few minutes looking at the technical side. How difficult is it? Or, what's involved, or can you give listeners a feel for these optimisation systems that you've developed? Who would like to go first?

[00:14:15.480] - Dan

Yeah. So jumping in, happy to kind of pick up the thread and then pass the Philip for some, perhaps to continue where I was with the kind of explanation or to give an example and then and then go into the how. We're working with a developer on a project in Gloucester, and that project has been quoted upwards of £12 million to upgrade the network over and above a threshold of about three NVA, which is to try and characterise those figures, they would normally expect to have to go above that level to service a scheme of this size. But the additional cost at that point, is a significant barrier for them. And so we've come up with a solution based on our smart microgrid that we think can deliver the whole scheme under that threshold. So in terms of the previous question, there's a potential significant material advantage to delivering these solutions for new housing. You avoid that cost, which goes to the land value. And of course, you avoid any other costs which might get socialised across the system. So how we do it in this scenario is that the key thing here is being able to place a single boundary meter on the system and then coordinate all of the assets, the load, the generation storage behind that meter and that coordination, you see, you're proactively then taking steps to ensure that that peak load is diversified down to the lowest level. And you can do that with our concept. We do that with a single large battery storage system that is charging from any generation connected to the microgrid, ensuring that generation, typically on a housing development we’re talking about solar PV, is ensuring that that PV is all used on the system rather than exported back to the grid.

[00:16:14.720] - Jon

Listeners will get the battery and the PV part. But are you also then optimising, the timing of the electric heating operation, the timing of electric vehicle charging? So how many different points are you optimising in addition to the battery? Because the battery is fairly easy to imagine how you do that. How wide do you go?

[00:16:35.580] - Dan

Yeah, exactly. I guess the battery is the simplest use case in this scenario, but what the ecosystem does, it kind of gives us opportunity to, as you say, manage those other loads, in particular, those which can be sacrificed and that includes EV charging, and that includes hot water heating and under some circumstances that can include heating as well. So as a minimum, those are the loads that we're looking to coordinate. And what's kind of really key here is we can do that in a way which works with the consumer. We can operate as a service provider. So let me give you the EV example. You need, and again, very simply, you need to use your car at 7 o’clock in the morning to go to work. You might also want to make sure your car has always got enough capacity for your emergency trips. But beyond that, once you’ve plugged it in at home, you're not too worried about how you get to that point. So what SNRG can do with this optimization capability is ensure you get that service. But in the background, make sure we're not stacking all the EV charging together. Make sure that if there's a peak loading issue on the smart grid that we perhaps turn down or turn off the charging for short periods of time during that duration. So really its about allowing us to coordinate those assets, but importantly, do so in a way which doesn't penalise the consumer. And I think that's a really important part in this debate is, how do we manage these issues? Do we do it with the consumer, or do we do it from a purely system only perspective?

[00:18:09.830] - Jon

Yeah. Well, let's come to the model in a minute. Philip, I just want to hear your views on the complexity. Can you help our listeners understand where your software sits, is this like a local control system? How long has it taken you to develop? What are the bits you're really proud of, from a technical point of view?

[00:18:34.100] - Philip

Certainly I can elaborate. So from a technical perspective, certainly what we do is extremely complex, but also that's where we excel. So actually, the technical part is the fun part, which comes easily to our team. Indeed, some of the challenges lie in regulatory or financial aspects, but I'll elaborate on that later, but zooming in on the technical parts. So the system locally consists of some edge devices that are actually integrated with the status systems of specific assets, like the large community battery or the heat pumps. Those are connected to a central microgrid controller, which is kind of the brains of the local operation orchestrating and making decisions on which assets to turn on or off or ramp down or up for managing of that local peak demand and making sure that we keep the local network in balance. Then on the cloud side, so we also have intelligence running with forecasts, and also that's where also users log in to see their data and have the interfacing for the system. All the financial administration functions are running there. So it's actually a sort of three layered system. And also what we do is actually combine a number of different functions into a stacked energy service approach. So first and foremost, the highest priority is we need to make sure that the peak demand in the area is managed and that the congestion in the grid is relieved. So that's priority number one, then things like making sure that locally we also optimise self-consumption. So indeed, as Dan said, limit the export of PV and keep it consumed locally within the grid. And there's also a small financial upside. And managing the state of charge of the battery is also quite essential to make sure it stays within the correct bandwidth. On top of all of that, we also provide balancing services to the national network to the transmission system operator. So using the battery, for example, we're able to provide frequency containment reserves to help keep the frequency of the network at 50 Hz. And additionally, we can stack secondary commercial trading functions, for example, perform energy arbitrage selling energy on the day ahead or intra-day markets, or if there's an interesting price deviation, that can be another way, which the business case is improved. So all of these actual functions are running simultaneously and the prioritisation there is maintained. And for example, when we know that there is going to be peak demand in the evening hours when everyone's coming home plugging in their cars, turning on the heating for those hours, we also don't bid some of the flexibility, for example, from the battery into the market to make it.

[00:21:43.340] - Jon

You need to you need to save that reserve. So you're balancing lots of different things against each other with a hierarchy. Jeremy, how technically, when you look across Europe, is this a technical challenge, would you say or, while it may be very hard and there's lots of clever work going on, fundamentally, the technology is doable and we don't need real technology breakthroughs to do this.

[00:22:11.320] - Jeremy

I think the last point absolutely. We don't need technology breakthroughs, the technologies all exist. I was talking to a microgrid company just yesterday and they were saying that actually building microgrids is not that technically complicated. But what is complicated is scaling it to this level where really your two companies are providing almost like an intermediary service. So the network operator is not used to this level of sophistication at low voltage levels. It's basically everything below the 11 kv transformers is done. And similarly to the developer, housing developers have no experience or understanding of these kind of very complex optimization systems. I mean, they're struggling to even install PV systems with batteries and EV charging. So it's not a real technical problem in absolute terms, but for the participants, it is. For the DNO, it's not common at this level and for the developer. So for a company like Dan’s to come along, say we’ll do a package for you, we’ll provide you with the technology, the heat pump, everything and integrate and optimise it - that is a really valuable service in facilitating this transition.

[00:23:17.420] - Jon

Okay, so let's look at it now from the household or the building owner perspective. Philip, what would someone moving into this new development in Amsterdam? Would they be aware of what you're doing? Would they be paying you for what you're doing, or would they just have their normal arrangement with an energy retailer? And somehow in the background you're optimising when they’re charging their electric car, for example.

[00:23:46.700] - Philip

Good question. So in this particular project I was describing the Republica, we need to engage the residents, the business owners in the area, because they also while the grid, the physical infrastructure, they don't really have a choice to opt out because, well, there's this one grid there and they need to be connected. So for that part, regardless of who moves in, they’re a member of the cooperative for their grid connectivity. But for energy supply, especially on the electricity side, they do have freedom of choice, which is also mandated by the European law. Now there's quite some benefits if they join the Republica cooperative, which is the entity that's been set up to actually exploit the smart grid and energy systems because they can then charge their cars at a fraction of the cost. You know what they would if they were just charging with the public grid and they get access, of course, to the technology where they actually log in. We always build the 3D digital twin model of all of our smart grid projects so they can actually see in real time what's happening in the grid, with the battery system, with the EVs, all of that is integrated and made transparent towards the end user.

[00:25:09.640] - Jon

They don't have to do that. There's no obligation for them to look in that detail. They could just say Republica is giving me a cheaper deal than I could get elsewhere, sign up to that, know that their electric vehicle charging is going to be optimised.

[00:25:25.040] - Philip

Certainly, although to get everyone to join the cooperative, there's a degree of communication and education to explain to people what are the benefits? So during that process they learn about what's actually happening, but certainly not everyone is logging in and checking right the energy flows and that maybe percentage of technical people who are interested or maybe show it off once in a while, to their friends in a bar. But that's the extent to which the consumer is really involved in the operation of the systems.

[00:26:00.600] - Jon

Dan, how about you if someone moves into one of the houses in the Stroud or Gloucester developments, what do they experience? How do they buy energy? Do they I have a contract with you. How does it work?

[00:26:13.960] - Dan

It's really similar to the way Philip described it, really. And I suppose one of the benefits it's really simple for residents, notwithstanding the initial kind of welcome and on boarding that this is a slightly different model to normal. You can be a very passive participant as a household on a microgrid like this. And I think that's potentially a real upside, real opportunity because as we kind of electrify decarbonize, increase the intelligence of the systems in our homes, what we're doing is making life more complicated for the consumer. You've got, you might have a battery, you might have a smart hot water tank, you might have a smart heating system, you've got a supplier, you might have an aggregator, you've got a DNO, maybe an IDNO to use all the acronyms in the book. But ultimately, what I'm saying is in a smart home, you might have four or five different points of contact you need to make and different contracts that you need to sign. And of course, the holy grail is to combine all that and make it really easy for residents. And that's what these microgrids offer. You come in on day one. You know that the SNRG is working behind the scenes to make sure you're not paying anything more than you need to pay for any of your energy services. And you don't need to worry about if anything goes wrong. There's one point of contact, one phone number and so on. So, of course, what I didn't say at the outset is that is that the system is fully funded. So as a consumer the real aim here is to make life simple. Of course, as with Philip’s scheme, if you wish to take your supply from someone else, you can. But the real benefit here is in taking the supply from the microgrid so you can access all of those.

[00:27:54.980] - Jon

So, Jeremy, all we effectively seeing mini vertically integrated utilities then, that are owning the network, the microgrid, they’re operating it, and the acting as the competitive energy retailer.

[00:28:10.400] - Jeremy

You know, it's an interesting take, isn't it? That when we liberalised the energy market, it was separation, horizontal separation. But actually, when you want to optimise systems, having this vertical integration really does make sense because you can optimise the whole, every component of every asset within it. And I think one of the things that has just been touched on about the cost is not just that it is cost effective from day one. It's the fact that you have more stability. We've already seen very recently the dramatic increase in wholesale cost of electricity due to gas shortages. And when you have a self contained microgrid, the largest extent you can produce your own electricity means you have that long term stability. You're not buying it from the market. You're buying it from yourselves. So there are a lot of opportunities there for energy communities to invest in their future. Your low carbon electricity supply is also going to get them long term price stability.

[00:29:13.360] - Jon

Yes, it's a fascinating point. And I think there's a lot more to unpack on the business models around this. The financial investment, how you get the return on that financial investment that we haven't talked about today. But time flies on these podcasts. So let's now bring out the talking new energy crystal ball, and I'm going to set the time frame this week to 2030. And my question to each of you, how widespread will these kind of developments be by 2030? And you can express your answers in any way you want - percentage number, whatever metric you want to use. I imagine Philip and Dan, you’ll want to do it for your own country. Jeremy, choose how you want to answer the question. So how widespread will they be? And very, very quickly in about 20 seconds, the biggest challenge in reaching that. So short and sharp, please. But let's start with Philip, how widespread by 2030 and biggest challenge to get there?

[00:30:23.360] - Philip

Certainly. I think if you talk about smart grids in the more general sense, an integrated thermal electrical systems, certainly more than 50%, I would say, private grids in the Netherlands is actually something that probably won't be happening more broadly because the Dutch government actually has decided they don't want to allow a private grids in the residential context to keep it in the regulated domain. But certainly smart grids will be scaling up and they need to because otherwise we will not be able to support the amount of renewables and the higher penetration. And the biggest barriers there to scaling, I think, are in fact, on the regulatory side, but also on the governance and organisational side, getting everyone on the same page, also financing the projects that have some inherent risk, due to let's say fluctuation of market prices. So those are really the biggest barriers in my view.

[00:31:19.840] - Jon

Okay. Thanks, Phillip. Dan, how about you?

[00:31:23.020] - Dan

So I'm going to plump for anything between 25% and 45% for smart grids in the UK and the reason why I pulled those numbers out, they're not pulled out of the air exactly, but they really represent where the sort of sweet spot is in the construction sector or in the house building sector in the UK for these types of systems, ultimately on site over sort of 10ish homes. And if that say, for the next ten years that's roughly a million homes that get built on those sort of sites. I think that's potentially thousands of pounds worth of or millions of pounds worth of grid reinforcement cost and obviously higher bills for consumers and ultimately, from my perspective, notwithstanding the challenges and the regulations and so on, why would we build that number of homes through a model that incurs additional costs, ultimately.  And a big challenge. I think Jeremy touched on it earlier. For me, it's really about the fact that what we're trying to do here is working the interface of transport transition of energy transition and, of course, construction transition. And I think trying to solve a problem for all three sectors is really where the challenges lie, but also where opportunity lies, and it's something I think we need to see more and more joining up around all three of those sectors being seen as a single policy.

[00:32:51.460] - Jon

I guess that echos the coordination point that Philip made, its a lot of parties to coordinate together a lot of factors to coordinate together. Jeremy - last but not least.

[00:33:02.450] - Jeremy

Well, yeah, we can turn Dan's challenges into an opportunity because I think that it is absolutely right that it is an innovation to have to provide this service. But I think because of that is a huge opportunity. And as we see electrification of heat mobility, somebody's going to come up with a solution to it, and it's unlikely to be the housing developers. It's not their core business. So I think that companies like these two will be really instrumental in making that transition. And if the developer can outsource this challenge to somebody else, then they are likely to go for that. And in terms of the numbers, I think I would agree that there are people who say yes, 50% by 2050. It's just a matter of how much of a challenge this does represent when we get a higher levels of electrification in the new build housing market, which is going to happen the next few years.

[00:34:00.920] - Jon

Well, as you said, Jeremy, one person's challenge is another person's opportunity. Philip and Dan, it looks like you're doing some fantastic work at the leading edge and wishing you the best of luck in the projects you mentioned. But ultimately in scaling these as quick as you can over the next years.

[00:34:21.820] - Philip

Thank you, John, and Jeremy and Dan. And that was a pleasure talking to you today.

[00:34:27.400] - Jon

Well, thanks, Philip. Thanks, Dan. Thanks for joining us.

[00:34:30.700] - Dan

Likewise. Likewise.

[00:34:33.100] - Jon

And thanks, Jeremy. Thanks for your expert appearance again on our podcasts.

[00:34:37.010] – Jeremy

Thanks.

[00:34:38.780] - Speaker 1

Thanks to everyone for listening. When you hope that you found that an interesting episode, particularly if you're in Corby, Gloucester or North Amsterdam, the three locations we talked about and look forward to welcoming you back to our next episode next week. Thanks, everyone and goodbye.

If you're as passionate about the new energy transition as we are, then please keep in touch. You can follow us and me on Twitter, LinkedIn or subscribe to the podcast on your chosen podcast platform. If you like the podcast and like sharing, then please do rate us and to listen to archive episodes to read transcripts and see the latest Delta-EE insights, then please visit www.delta-ee.com.

 [00:00:04.000] - Jon

Welcome to Talking New Energy, a podcast from Delta-EE, the new energy experts. We'll 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. Today we're looking at where we're at in the energy transition and what next in the next five years for the energy transition. And to unpick these two rather large questions, I'm joined by my colleagues, Jennifer Arran. Hello Jennifer.

[00:00:42.070] - Jennifer

Hi, Jon.

[00:00:44.070] - Jon

And Andy Bradley. Hello, Andy.

[00:00:44.800] - Andy

Hey, Jon.

[00:00:46.760] - Jon

So these are quite big questions. Where are we at in the energy transition and what next for the energy transition? But we're going to pick them off in three chunks and pick up particular examples that we think bring up some of the key themes. The first chunk will be what's happened, looking at where we are, particularly in the light of the COVID pandemic. Secondly, we'll be looking at the companies. So the types of companies, who is doing what, where, how and where the companies are at in the energy transition. And thirdly, looking ahead to the next five years. So without further ado, let's get stuck into these three questions. So first of all, looking back at what's happened in the last year or two. So, Jennifer, you've got some nice stats and numbers that painted a bit of a picture for the customer end of the energy transition.

[00:01:40.600] - Jennifer

Yeah. As luck would have it, this is quite a hot topic in our research services and the new energy business models research has looked across all of the different areas, products and services in new energy and calculated the customer spend over 2019, 2020 and into the future. What we found is that 2020 has been a growth year compared to 2019 on customer spend. And there's been a kind of double digit growth, so 50% growth in terms of customer spending on new energy technologies.

[00:02:15.820] - Jon

Jennifer, when you talk about customers spend on new technology is what sort of spend on technologies are you talking about?

[00:02:21.720] - Jennifer

Yeah. So technology wise, really, the growth has been around kind of three main areas. So e-mobility is not surprising, a huge part of the growth story across Europe in a number of different markets, new heating is definitely emerging stronger in some markets than others. And behind the meter generation and storage is really important as well.

[00:02:45.580] - Jon

Okay. So new heating, heat pumps and the like behind the meter generation and storage, PV and batteries effectively.

[00:02:51.260] - Jennifer

Yeah. Yeah, absolutely.

[00:02:53.050] - Jon

And any surprises to you in what's not in there? So connected home, for example, I guess we're seeing growth in smart controls in homes, but the value of each device is relatively low. So when you add it up in money terms, it looks quite small.

[00:03:10.360] - Jennifer

Yeah. Exactly that, so in terms of customer spend numbers, it's a part of all of the markets that we look at. We look across all the kind of major European markets. But it has a lower impact on that overall value story across the market. And the value story across the market is different depending on when you're looking. In Germany, for example, it’s very much split between the three main technologies that we just talked about. In France, there’s more of a new heating story emerging there. And in the UK, it's pretty much all about EVs at the moment, and e-mobility is really driving those numbers.

[00:03:47.100] - Jon

Okay. So even in three European countries that are relatively similar in some ways, very different patterns in where that investment on the customer side of the meter is going. Yeah.

[00:04:00.520] - Jennifer

Absolutely.

[00:04:02.260] - Jon

Andy, any surprises to you in what we've seen in the last year in those growth areas or the different patterns?

[00:04:10.260] - Andy

Yeah. So just to pick up on a couple of things that Jennifer said there, particularly around the heat market. Anecdotally I've heard that the market is really flying in Europe, actually, in the major European countries, the year on year growth from 2020 to 2019 is really strong from last year, but the then into 2021, the growth is continued to accelerate. And I think there are some strong subsidies in place in one or two countries, particularly Germany, for example. But the heat market in particular, seems to have really taken a strong recovery from the initial impact of COVID and then it's really gone from strength to strength in 2021.

[00:04:47.210] - Jon

And that's not only, Andy, the old technologies, the boilers that dominated the European market, but that's very much the new technologies the heat pumps.

[00:04:57.780] - Andy

I think it’s a mix, there are still a significant number of non condensing boilers across Europe. So I think that a lot of those non condensing boilers are being swapped out for condensing boilers, which is still on fossil based. Clearly, there is an efficiency game, of course, but it's condensing boilers swapping out non condensing, but also, of course, you know, continuing growth we see in the electrification of heat.

[00:05:22.360] - Jon

So when I think of these markets, I often think of inflection points, the curves are not normally nice, smooth curves that increase year on year at a steady rate. With many of the markets we're looking at, you get these inflection points where you suddenly get this jump in the market. Andy, I'm not sure of the inflection point for heat yet, but for electric vehicles, arguably, we are at that inflection point. Jennifer, in terms of the EV market, what sort of market shares are we seeing, and do you think we will see in the next years as EV markets really take off?

[00:06:00.080] - Jennifer

Yeah. I mean, the EV story is one that we started talking about with a lot more certainty. So it seems to be a kind of when not if that inflection point can happen. And an agreement that inflection point will be soon. I mean, from as early as kind of early 2020s, so 2022, 23 next year, we're going to see kind of around a 10% share of annual car registrations being EV, according to our forecasts, and then that ramps up really rapidly actually towards 2025 and 2026 where you might start to do that crossover inflection point that you're talking about.

[00:06:36.830] - Jon

So more than 50% being electric?

[00:06:40.830] - Jennifer

Yes

[00:06:43.830] - Jon

Andy, we're not going to see that in the heat market quite yet are we?

[00:06:46.830] - Andy

I don't think so. Not yet. I think those inflection points come, Jon, when the proposition for customers is one that customers want, there might be a price premium there still. And I think for some of these solutions, there will always be perhaps premium solutions. But when customers want them, I think that's when the market pulls demand, whereas in the early stages, it's the industry supply, if you like pushing into the market and trying to earn a right to get the customer's attention. So with EVs, I think as we know, the price of vehicles is dropping all the time and you might get closer to normal ICE vehicles in the next two, three years or so, and that will help their adoption. But I think as more drivers experience an EV and realise that actually it's just a better car, customers will start to want one and as long as the infrastructure is there and there aren’t nightmare stories about recharging, etc. I think the market will really start to pull the demand.

[00:07:45.540] - Jon

So in terms of the value pools, I guess a huge interface between electric vehicles, because of how they charge and the energy system. So there's a huge value pool that will certainly developed there. Heat is coming, but not quite there yet. And the other big bucket we talked about with EV and storage, arguably there in Germany, growing in a number of other countries. But in parts of Europe where there are poor incentives or electricity prices very low, that market's not there. So those are the three big growth areas we've seen in the last year, and I think we'll keep seeing those being the major capital spend items for distributed energy. Let's move on now to the second question, a bit around who is doing what in the energy transition and the different ways we can think about the energy transition, the large utility scale projects, the behind the meter, the distributed energy markets – Andy, what patterns do you see in terms of what role different companies are playing to date?

[00:08:56.000] - Andy

When you look back probably around a decade. I mean, the thinking about the European space, European utilities - a lot of the European utilities saw huge value destruction in the early part of the last decade and had some tough times through that. But a number of them are very successfully capitalised on the utility scale renewable boom and some of the valuations of some of these companies now have increased massively compared to, say, ten years ago. The oil majors, I think, missed that boat completely. But more recently, the oil majors have clearly come to the energy transition party, if you can describe it as that and they're all taking the energy transition very seriously. And the European majors, Total, Shell, BP, in particular, have all put money on the table and made big announcements about their future engagement. But they're still relatively early days in terms of their engagement. So I think when you look back on where we've got to, utility scale renewables is the big story for many of the big utility players and perhaps some of the new oil majors that are coming to the space. But I think when you look forward, the landscape is going to be very different because it's much more about distributed energy markets in the future. You know, a key aspect of the energy transition is how national grids, national energy systems are going to be increasingly fragmented. Assets are going to be distributed through the system.

[00:10:29.260] - Jon

Those behind the meter assets we were talking about earlier, for example.

[00:10:32.330] – Andy

Absolutely. So behind the meter will become really important. It's not going to become all of the system in the future, but it was really an irrelevant part of the system in the past. But in the future, it's going to be a very important part of how the system works. So those distributed energy markets and understanding those, the technologies required, the propositions required, the business models. I think that's going to be the big playing ground for a lot of the players in the space, which is attracting a huge number of startups, technology companies, software companies, the digital giants, controls companies, the car companies, all types of OEM really. So I see this sort of massive convergence of industry verticals, actually around the energy transition.

[00:11:19.260] - Jon

Can I use your boat analogy? So the boat’s sailing already for utility scale renewables, it's left the harbour, it's powering away. It's got further on its journey to go. There's a lot more build out of utility scale renewable to go. But that's on the journey. The boat for distributed energy markets is behind the meter markets is leaving the harbour. Is that the right way to think of it, left the harbour? Is it building up speed or is it still in the harbour?

[00:11:45.820] - Andy

I think it's still in the harbour, but it's building up speed.

[00:11:47.820] - Jennifer

Are there Russian players trying to get on?

[00:11:54.820] - Andy

There is because I think I you go back five years, Jon, to thinking about the work we're doing at Delta-EE together then, and the narrative’s moved on massively. It's no longer a strategic debate about do we need a transition strategy? That ship has sailed. And now, it’s OK, what do we do? How do we respond? How do we protect our legacy business? But how do we create the business for the future, the business for the transition. So those are the questions now that companies are focusing on.

[00:12:28.340] - Jon

Yeah. And I see some companies if I take a company like SSE, one of the big energy companies in Ireland, UK and Ireland, for example, they've made a deliberate decision to exit the residential retail business. But they're very good at utility scale renewables, so they've decided they won't play in one part of the market, but they will play in another. But I don't think I've seen many of those sort of very proactive decisions yet. I think my impression is that most companies are still trying to see if they can play in these distributed energy markets, trying to work out what the right business models are, the right customer groups to focus on how quickly they can get traction. It’s very wide open still.

[00:13:14.570] - Andy

Yeah, I agree with that. But I think most companies are trying to keep their options open, quite sensibly. I think there are other examples – E.ON, for example, split itself into two parts going back a while now, RWE or Innogy has made them move out of the downstream part to a large extent. Orsted, perhaps moved first of all around a decade ago. So there are examples of companies who are looking at their strategic position, their capabilities, their strengths and weaknesses, and positioning themselves in what they think is the right part of the supply chain for their business. But I think many companies are still perhaps trying to work that out, but also because of the nature of the transition where the customer is just going to get more and more important, you know, the value is shifting downstream towards the customer to become more distributed, more local, more behind the meter. That fundamentally means that if you give up your customers, are you giving up your future business opportunity? And I think that's the strategic conundrum for many of the companies.

[00:14:20.340] - Jon

Yeah. It's the future battleground, I think for the next five years. And it will be fascinating to see whether the likes of Volkswagen with their energy retail or energy service company they set up, Elli, or Tesla, who have been - will they move into the heating market? Will they become an energy retailer? They're already doing that in some markets, or would it be the incumbent utilities that have got the big customer bases that can exploit them?

[00:14:54.800] - Andy

Absolutely. And some of the oil companies have a fantastic opportunity because of their brand strength. You know, they have some of the most recognisable brands globally. BP and Shell, can they use those brands in a positive way with customers to fundamentally reposition themselves? And that's an opportunity or challenge for them, depending on your perspective?

[00:15:18.080] - Jon

Well, my view is that the winners here will be the ones that are truly customer centric, that really put the customer at the heart of their businesses. And I still think most of the types of companies we talked about still have to learn that. I don’t know whether I'm being too cynical or not. But it's really a mindset change that, you hear that mindset when you talk to company like Procter & Gamble on one of my recent podcasts, the R&D team will spend a third of their time in customer homes. And that's just so different from the energy sector at the moment. OK, let's move on to the next topic, which is what next - looking forward to the next five years. So I’m going to, as a talking point here, use a poll that we carried out for our research network. We gave them a number of options to choose as to, which would be the most important topic. We didn't put e-mobility in there because it was so obvious as Jennifer you talked about earlier, we have passed the inflection point there, arguably. But the topics we gave them were flexibility, heat, the rise of DSOs, so distribution system operators or distribution network companies, customers and communities and hydrogen. So a bit of an eclectic mix and not a like for like, what we found was that when we asked them the top three, there were flexibility, heat and DSOs - distribution system operators, and customers and community weren’t far behind, hydrogen was quite far behind. So Jennifer and Andy, any surprises there from your side or comments on that order?

[00:17:25.020] - Jennifer

I mean, I wasn't surprised to see flexibility up there. It seems to be one of the almost, I think, the key to holding everything together in this new entity future we might have, at some level, you know, how we use flexibility to manage demand on the network is going to be absolutely critical.

[00:17:46.080] - Jon

And it cuts across virtually, well most, if you segment the world by technologies, it cuts across most of the technologies.

[00:17:54.160] - Jennifer

Yeah, and eventually it will. So in the near term electrication of heat, for example, we're still talking about air to air heat pump, hydrolic heat pumps, electric hot water heaters. There's big replacement markets there post 2025. How you then use those loads when those technologies are in homes becomes really important. And that's going to require some sort of flexibility to really maximise that and use that and that's a big opportunity there. So it will be important, I think flexibility.

[00:18:15.610] - Jon

So you would put that at the top as well or toward it?

[00:18:25.610] - Jennifer

I think I would, because I think, like you said, it scans across everything and it's the way that everything is going to be linked together. And it's the way to get the best value out of all these different parts that we're seeing emerge. So it's almost that linking piece.

[00:18:37.580] - Jon

Ok. Andy, what about you?

[00:18:41.160] - Andy

I mean, the three make sense to me, actually. I mean, heat in particular. It's been the elephant in the room that no one's talked about for a decade. Really. We know how to decarbonise generation of electricity. We know how to decarbonise transport now, or at least cars. Heat, well, there's been lots of talk, but not much action, really outside the new build sector for quite some years. So it's fantastic to see heat coming into focus in terms of policy making and regulators. And I see that in discussions with the companies that I'm dealing with, that there's big opportunities and challenges in the heat market. So I think flexibility and heat made a lot of sense to me. And the DSOs are intimately related to both of those. I mean, they both an active demand side, and much higher rates of electricity use for heating or comfort in the home will lead to huge pressures on distribution networks.

[00:19:40.190] - Jon

And they become the key enablers, in my view, as you electrify more and more, you need to optimise, you get more challenges, more congestion on the network at lower and lower voltage levels, and the need to optimise and glue all of these together. Jennifer, the same way you talked about flexibility becomes critical.

[00:20:00.400] - Andy

Absolutely. The network industry, when you look back over the last decade, probably has been cost driven for the whole time. But actually, now I think if I was advising a young graduate looking to come into the energy sector, I would advise them to really look at that part of the energy sector because it's going to be the key part of the energy supply chain in the energy transition. And actually it's going to be fascinating and interesting part of the industry to be in I think, over the next decade.

[00:20:28.500] - Andy

So I think those 3 topics, sorry Jon, I think I agree with, but there are a couple of other things that I feel quite strongly about, and they are I suppose related to those some way, but just two things that perhaps surprised we haven't talked about. One is the kind of ‘as a service’ concept, e-mobility cars are expensive. Heat pumps, the product is expensive. There's really really big commercial challenges for customers to engage with and take those propositions ‘as a service’ business model concept can be a way of squaring that circle from a customer perspective that may make it affordable.

[00:21:10.240] - Jon

That's a fourth topic of customers and communities, which in a way, it's not an either flex or flexibility or customers and communities. But it's an and because as you said, unless you package it in a way that makes it doable for customers and attractive for customers, it's going to be technology push and industry push without any customer pull. And the second one Andy, you said two things?  

[00:21:42.380] - Andy

The other one was, I see many, many companies focusing on net zero, our own company thinking about our net zero strategy. Big questions. How do we achieve that? What actually do we need to do? What investments do we need to make? What do we need to change in our business? What technologies do we need to adopt to achieve, to get ourselves on the pathway to net zero? Mainly, a question for commercial or industrial companies. But I see that as a really big topic at the moment. Actually, in the market, loads of companies have made really bold statements about that. But perhaps many of those companies don't quite how they're going to achieve it. So I think for me that's a big flashing red light and an opportunity for many companies, I think.

[00:22:27.790] - Jon

Yes. So translating a bold vision into a road map or a plan or a strategy?

[00:22:33.360] - Andy

Yes.

[00:22:36.220] - Jon

Keeping on time, let's bring out now the Talking New Energy crystal ball, and I'm going to set the dial five years forward. It fits the time frame we've been talking about. And the question this week for all three of us is what if we look forward to a fantastically successful five years in the energy transition, so we're well on the pathway we want to be on to reach our decarbonisation targets. What are the three lessons we’ll have taken from COVID or the COVID crisis that would have helped us to reach that point of by this time.

So what can we learn from COVID? What can we embrace? What can we use? What will we have used in 2026?

[00:23:34.200] - Andy

Could I start with that one Jon? The first one for me is money. We do have a magic money tree. Just seems to me that if the emergency is big enough and the urgency is strong enough, then actually we can find the resources and the focus to deal with problems. And it really made me think that through the pandemic that actually there is the capability for us to move faster and do more and have the resources to do that.

[00:24:04.800] - Jon

The three of us think it's urgent enough, Andy, compared to COVID, do you think society at large, political will, governments see it that way yet or is a bit more to go?

[00:24:16.120] - Andy

I think there's still a bit more to go quite clearly. But the news over the last weeks, the events and things, the pressure is building. COP26 is coming up rapidly. The geopolitics of it always clearly very challenging.

[00:24:25.120] - Jon

Moving in the right direction.

[00:24:30.120] - Andy

But for me if we look five years down the track, I really hope that actually we've taken the lessons from the pandemic and the way we've met this challenge and we're willing to be really ambitious in the way that we can meet the climate challenge.

[00:24:51.920] - Jon

Jennifer, how about you? What will we have taken from the COVID crisis that enables us to succeed in 2026, and be on the right track.

[00:24:59.770] - Jennifer

I mean, over last ten years at Delta-EE, I've always spent a lot of time focusing on what that means to the customer and the customer view on all of this. And I think what COVID has told us again is if there's that shared, you know, urgency, we are seeing communities pull together in a more local way. You know, people cooperating with their neighbours within their communities to make things happen. And if you engage people in the right way, then there is that community spirit there that perhaps we'd forgotten in countries like the UK that there really was, the country really did pull together and achieve a great deal over that time. And if we could put that shared effort into decarbonisation, for example, then that would be incredible. I also think there’s a lesson there around, you know, connecting impact. So those everyday impacts in terms of the overall bigger picture. So maybe that's a disconnect at the moment that people don't see that I insulate my house if I can have a big impact.

[00:25:57.980] - Jon

So people got in COVID - if I stay at home, if I do what I'm told, I will be helping to fight the pandemic..

[00:26:10.420] - Jennifer

Yes, it was for helping everybody, wasn’t it. It wasn’t just to help yourself. It was to help everybody.

[00:26:12.820] - Jon

Whereas people don't get that connection with climate change yet, or not to the degree they could.

[00:26:16.790] - Jennifer

Yeah, we still see that customers are really mainly motivated by their own personal circumstances or financial benefit on the whole. And that's not surprising.

[00:26:26.780] - Jon

But we can tap into that wider societal benefit?

[00:26:31.760] - Jennifer

And EVs is a big opportunity because actually once everyone’s got an EV, then you might find that everyone suddenly starts thinking about how they use their energy in a slightly different way. So that's a good opportunity to start engaging with customers through that.

[00:26:45.760] - Jon

Yeah, a critical part. If we can't do that, we probably won’t get to where you want to get to. The third point I'd make is that I think we can learn massively from local supply chains and the way in the COVID pandemic there was a benefit to having local supply chains to being more resilient, to be maybe slightly less reliant on global trade flows and on imports from other countries. So I think that will help us to better match local generation with local demand and balance the system at a more local level and then tap all the local energy resources that are that are there that can be used now.

[00:27:29.750] - Andy

Yeah, I agree. And I think it also supports Jennifer's point about engagement with end users, with customers, having local organisations or having them participate in local community energy or local energy systems is a great way of helping them understand the contribution they're making, perhaps to the system decarbonisation. As so often with the energy transition, everything is connected. And I think that's part of the challenge, isn't it? But the industry tends to start with the technology rather than the customer. If we can always really keep focusing on the customer and work backwards, I think that will be a fantastic achievement for the industry. And if in five years time that is business as normal in the way the industry works, that would be fantastic.

[00:28:15.130] - Jon

With the wheels oiled - that's not the right word, Andy - but the wheels oiled by the magic money tree. Okay, well, that's been a really interesting discussion on where we're at and where we're going. Andy and Jennifer, thanks very much for your time. Listeners, I hope that’s given you some useful ideas, perspectives, things that you can maybe take to your own activities, your own work in the energy transition and I look forward to welcoming you back to next week’s episode. Thanks and 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 podcast on your chosen Podcast platform. If you like the podcasts and like sharing, then please do rate us and to listen to archived episodes. To read transcripts and see the latest Delta-EE insights, then please visit www.delta-ee.com.

[00:00:04.000] - Jon

Welcome to Talking New Energy, a podcast for new energy expert. We'll be talking about how the energy transition is developing across Europe with guests who are working at the leading edge of this transition.

[00:00:21.840] - Jon

Hello and welcome to the episode. Traditional utilities are evolving fast to navigate and help drive the energy transition. As part of this evolution, a number have established venture capital teams investing in innovative companies which are much needed for a successful energy transition. Today I'm talking with two people from two utility venture capital funds exploring their aims, their investments and their experiences. So let's say Hello to my guests. The first Terhi Vapola head and founder of Helen Ventures in Finland. Hello Terhi.

[00:00:58.520] - Terhi

Happy to be here. Thank you for inviting me.

[00:01:01.860] - Jon

Thanks for joining Terhi. Our listeners might not know the Finnish energy company Helen, so can you give us a very quick snapshot of Helen and then tell us in a nutshell about Helen Ventures?

[00:01:17.420] - Terhi

Sure. So Helen is originally from Helsinki Energy. So one of the largest energy companies here in the Nordics and being very advanced in terms of technology and development over the years. So being this kind of progressive player, establishing a venture capital arm was kind of a natural next step when realising that there is a change in the transition and also the additional needs needed. So what we do is focusing €50m into European startups, focusing on transforming the energy sector.

[00:01:54.040] - Jon

Ok. And can you give me an example of one of your, well, favourite investments? That's maybe a bit of a loaded question, but exciting investments that you've made in the last year.

[00:02:04.000] - Terhi

I’m thinking that all of my investments are of course my favourite, you can say, but maybe I'll just point out the first one, Virta, which is fastest growing mobility platform company in Europe, which actually we are all co-investors together with Jan.

[00:02:25.780] - Jon

Thanks Terhi. Our second guest is Jan Lozek, founding and managing partner at Future Energy Ventures, part of the E.ON Group in Germany. Hello Jan.

[00:02:38.800] - Jan

Hi, Jon. How are you?

[00:02:40.120] - Jon

Good, thanks. Thanks for joining. Jan, my guess is that more of our listeners will know about E.ON so probably no need to give a snapshot for E.ON, but can you give us a snapshot of Future Energy Ventures?

[00:02:52.980] - Jan

Sure. I would like to do it. Future Energy Ventures is a venture capital firm which is globally seeking for the most exciting young teams and technologies with regard to energy transition. We would like with this initiative to accelerate the energy transition, in fact, and we invest into digital solutions from A to B, which is what we call the future of energy technology, which also includes future city technologies and mobility. We have had invested so far €250,000,000 globally, mostly in Europe and North America. The team is really seasoned, coming from with the background from E.ON, energy from the venture capital scene, from startups and so on. So far, 15 people in Palo Alto, Tel Aviv and Germany, Berlin and Essen to change the world in energy and to solve a huge problem which may secure our planet for the future.

[00:03:53.680] - Jon

Thanks, Jan. So you've been, you mentioned the joining together of E.ON and Innogy’s teams. How many people all together in your team? Of course, quite a few locations you mentioned.

[00:04:06.360] - Jan

Yeah, we combined the best of both. We are now 15 people from both units – E.ON and Innogy. And this was quite a challenge. Two years of Covid and I'm not sure if you're aware of we launched Future Energy Ventures at the end of last year. So Covid was already running and most of the people or some of the people did not meet until today because Covid still ongoing. So it was really a challenge for us to create a team, to create team spirit, to create a high performing team in order to fulfil our task, our mission, our passion, and with regards to mission and passion I think we are all aligned and looking into the same direction. And also, as with regards to our past experience, both teams invested into energy transition technologies with slightly different focus, but in general, the same passion in the same direction. I think the challenge is really to build a team in that time. And that challenge is still here and we are looking forward to become closer and lock our industry.

[00:05:16.220] - Jon

Thanks Jan. Same question as I asked Terhi - one of your, and I won’t use the word favourite this time, one of your exciting investments you'd like to highlight for our listeners.

[00:05:25.200] - Jan

Yeah, it's really difficult. I fully agree with Terhi. I'm just taking the last two new announcements. One was we exited Waycare, which was a company which invested into the space of managing transportation and cities, having municipalities to manage their transportation more efficiently, especially in crowded and tense times in the transportation systems. And we got a great team or is a great team. And we exited this company to Rekor Systems and Nasdaq listed company just two weeks ago using the amazing technology, and we are also happy that this company can further grow now and further accelerate their technology because that's really helpful and great. And another company we just closed was bidgely another round of bidgely with our co-investors, a company from the US which is investing into energy management solution and also growing their business model into the mobility space.

[00:06:34.680] - Jon

Okay, thanks very much. So three quite, well, two related to transport from both of you and one around data and energy management. Okay, let's move on now. My first question is around the core aim of your fund, because the way I see it you're wearing two hats to a degree, you're wearing a financial venture capital hat, but you're also wearing an innovation hat for your energy companies. I'm interested in the balance between those two drivers, or maybe balance is the wrong way to think about it. Maybe they're complementing, I don't know. But how would you answer that question? Are you energy innovators? Are you investors? What are you measured on? What drives your decision making? Or is it that neat combination of both? Terhi, let's start with you. How would you answer that question?

[00:07:33.060] - Terhi

First of all, I think that you should think of them in the continuum. So I think they are not opposites of each other. So for us, it's super important to have both at the same time. So maybe my own background - I come from the VC industry, so I could not think of making investments which would not be economically sound. And I also think that if you want to do a strategic impact, which is of course natural and expected of us, you can't do it unless the companies you are invested in are becoming successful and actually making a difference. So you see the strategy from, in our case the investment strategy and investment thesis. So looking at the themes which are really needed in the industry to drive it forward and actually make the energy transition happen. And in our case, especially focusing on the digital elements of it, which our tradition is something where utilities are not as strong and at the same time are typically the stronghold of startups, fast moving start ups. So bringing that element into the thesis enables us to actually make a strategic impact, but without any compromises on the economic front.

[00:08:50.640] - Jon

Would you say the financial decision making about the return would be the same as a pure play venture capital firm?

[00:08:59.030] - Terhi

Yes. Our focus is quite narrow. So we just look at that area. But in terms of finding and investing in companies there you cannot make compromises.

[00:09:10.180] - Jon

And what about your team? Do you need both sets of skills in your team? You said you come from the venture capital background. Are you all venture capital seasoned professional or a mixture of that and people from Helen, the energy company?

[00:09:23.720] - Terhi

We do have a mixture. So we have people with a strong energy background. We have people with a strong venture capital background and the combination of the two, and also the understanding of not just the energy field, but also the digitsl business. It's bringing these elements together and then kind of thinking as we see with benefits, having the access to the business and being able to have the experts to both evaluate the cases but also support maybe an indoor opening and helping the companies to actually grow.

[00:09:59.680] - Jon

Jan, do you see that the same way at Future Energy Ventures, or any differences in how you approach it?

[00:10:07.760] - Jan

I absolutely agree with Terhi. Well, you have answered most of the topics. Similarly, just another perspective on it. If you look at the problem we wanted to solve. Utilities used to set up huge systems, invested €3-€10 billion into grid systems, into generation, power generation systems like large nuclear power plants, coal plants and so on and so forth. And then they operated those assets for 40, 50, 60 years. But it's now happening with the immense growth of decentralised energy resources, there are a lot of small energy systems which are coming into the broader energy system with different ownerships, with different capacities, with different characteristics, and we need to manage and change that absolutely. And coming from that from that background and having the target to accelerate the change of our industry, we believe the venture capital is the best tool to innovate our industry. And if we believe that's the best tool, we need to operate as a venture capitalist in the industry to change our world and that where we are coming from. And I think that's absolutely different than venture capital firm thinks when they enter the market. However, we are coming with this strategic mindset into the venture capital market,

but the acting, the rules of the game, how we behave and rounds what we do when we access an investment is absolutely similar to any venture capital firm in the market. But if you are then in, you may have more time to exit. You may have a long, more longer term focused than a venture capital firm and so on and so forth. But again, the financial rules we apply, the techniques we use to assess a company are absolutely the same as any other company in the market.

[00:12:09.920] - Jon

So I can see very easily how you measure the financial return and the venture capital model - invest for three to five years, say, exit, you get your financial return on that investment. How do you measure the innovation return? Or can you put the question maybe a different way? Can you imagine a situation where you didn't get that financial return? But you really did get a great innovation return so a bit around how you measure that? And might there be a trade off between an okay financial return, but a great innovation return?

[00:12:49.200] - Jan

Happy to start this time with the question. I believe it's impossible to invest in a start up without having a clear financial return perspective. I mean, later everything can happen. But in general, I believe that's not possible because we are entering very small companies and here's A and B with a smaller team, this little revenue and so on and so forth and then. But we are doing mainly we are using the market and our capabilities to scale that company, and the company is only ready for great innovation return when it’s scaled, let's say to a stage and it has 100 employees and it have €20, €30, €40 million of revenues and you need the market capabilities to do so. So if you would focus too early or strategic return, you would always you always run into the risk that the business, the company, the team is dying over time. So hence we have an incentive not to do so and always focusing on final financial returns, which are the language of the market of good or bad innovation, so to say. So, hence, we are always focusing on financial returns. And then if the company grows, then it may become strategic relevant and exit candidates.

[00:14:13.080] - Jon

Yeah. Okay. So there's almost no hierarchy there. Focus on the financial return, and in some cases it might be a financial return and only that, in other cases you might get that and the strategic return as well.

[00:14:24.430] - Jan

And there's a little other argument into it. We, for example, Future Energy Ventures, we invested into 50 companies. Obviously 50 companies is far too much for E.ON to integrate to take over whatever. So the most of the companies will exit into the market to any other company and so on and so forth. So in order, if you wanted to do our business right, we need really to use the market techniques in order to have a profitable overall business investing into many companies.

[00:14:55.880] - Jon

Yeah. Okay. Terhi how about yourself at Helen Venture?

[00:15:01.020] - Terhi

If you think about the financial returns, as I said, that's easy finding the good measures for innovation. We actually haven't come up with it, they are very fluffy. So that's why we basically focus on the investment thesis and looking at the areas which are crucial and thinking of whether what the startup is doing is something which is really needed in the industry, and can it make a difference? And through that, then go in and then be part of the investment team of that company to help it grow. That's how I sit in terms of how to how to balance the two or measure.

[00:15:46.440] - Jon

So if you get the investment thesis right, then that really drives the chances of that strategic innovation return.

[00:15:54.660] - Terhi

Exactly. And also in terms of the individual cases. So here the investment thesis is the broad umbrella. But then also every single investment decision to thinking of that part of the company. So if it meets the financial hurdles, what is the impact of that particular company and what it could be in the market?

[00:16:15.620] - Jon

Yeah. Okay. So considering that in the investment case, you tick the financial return box. Was there much debate in Helen in setting up Helen Ventures -  you’ve been going for a few years, I think? Was there pros and cons discussed, was it a big decision, was it an obvious decision?

[00:16:38.320] - Terhi

I would say that it was very progressive as Helen is the company, which is looking at transforming the industry and being a fast moving player, being a medium size. So being able to actually take decisions to be more mature. And what was very clear out of the strategy process before Helen Ventures were started was that this future what we are building on is changing more rapidly than we anticipated and is requiring different kinds of skill sets, which are the core competencies. So in order to really get into where Helen wants to be at in terms of its strategy, it fundamentally needs tools. And of course, there are other tools as well to basically bridge that gap. But it was very clear from the strategy that the venture capitalist tool, to really address that, crossing the chasm, as you could say.

[00:17:39.980] - Jon

So you could do all of that from within the utility in the traditional way. That was quite clear. You felt you had to do that through having stakes in more - if I use the word more dynamic - but younger dynamic innovative companies.

[00:17:59.310] - Terhi

And also the kind of,  what they bring in into the market. So thinking of the digital capabilities and thinking of the kind of a way of developing but also the subject of subject matter. So thinking of AI or satellites or different kinds of technologies which are taking very rapid advances at the moment. So it's kind of realising that you need partners, and you can have different kinds of partners, also other types outside of the startup ecosystem. But the start up ecosystem is actually having a good chance of making a difference at this kind of phase we are at in the energy transition.

[00:18:34.640] - Jon

Yeah. So it's one of the tools to help companies like Helen really make the transformation you need to make. How do you bring that innovation back into the energy company? It’s topic I've discussed over the years with utilities, of innovation and venture capital. I think it's a fascinating topic, and I'm still not clear on -  there probably is an answer or the way. But on one hand, there's a driver not to interfere too much with the companies you are investing in, to let them run and grow their own way. On the other hand, you're investing in them because you want that access to that innovation. I'm really curious to hear your thoughts on how you work with the bigger energy company and how you get innovation from the start ups back into the energy company. Jan, do you want to go first on that?

[00:19:36.610] - Jan

So what we do is we work closely with E.ON as such, there's a huge innovation Department aspect or even bigger than Future Energy Ventures which is understanding, seeing and understanding and interacting with the core business to select the most burning topics. Technology topics, future topics, the people in the business scene. And this in mind, we source work together with our startup portfolio and invest into certain technologies as Terhi laid out given our investment strategy and so on and so forth. And if we have a startup, then we worked closely with the colleagues from E.ON to test and to check where to apply the technology, where to test the innovation and so on and so forth. So we are starting with small projects between customer services and the startup or our network business and the startup and so on and so forth. It's not working in all the cases, but in most cases we start just to test, to test the technology, get to know each other and so on and so forth. And so sometimes magic happens. And I would say 20% of startups there are magic happens, then it gets into commercial relationships and commercial relationships, meeting selling technologies for €1 million, €2 million, €500,000 and then so on, so forth.

[00:21:11.060] - Jon

When it works and when it doesn't work. Is that just a case of magic happening? Or can you look back and are there certain things that you can see really help to make that work? And any examples or any examples where yeah, looking back on that, that didn't work because… or is it just a case of as you describe magic happening?

[00:21:34.040] - Jan

Transformation  - good transformations are always more successful than bad transformation, so there is something we can influence here. Yeah. This the success rate of transformation or change process is 30%. It's not 70% or 60%. Referring to that, I would say, yes, you can do a lot of things. Understanding the people side, making sure that the people talk the right language, they understand each other, making the right introduction, starting smaller and then getting bigger, right? We work with champions in the business, which are eager and keen and exploring new solutions instead of trying to convince people which in the first moment are not interested in the technology and so and so forth. So we are using these typical transformation capabilities you should use. We wanted to change something in an organisation. Change management here is key and already be more successful and improve your success rate.

[00:22:38.220] - Jon

And I guess it's the relationships that you mentioned. The relationships and the people side that can be so critical. Terhi, what have you learned since you've been going about bringing that innovation back into the business or making those connections?

[00:22:53.400] - Terhi

I truly believe what you just said. It's a people business. So knowing the people and being close enough to the organisation is so very important for us. Of course, Helen is not a huge organisation. It is actually relatively easy to know who are the right people and who can be the champions of taking the innovation forward. We've also institutionalised a little bit so we had this kind of business. So we divide the roles in such a way that we have investment, which is our focus and then we have business decisions, which are the business’ focus. So we don't mix that too. But at the same time, we have taken in into our team to work with us. We call this like BD, business development persons who are from the business who part time work with us so that we bring bridge the gaps between the business unit and ourselves. And these are the champions or catchers of the innovation so that they can take it in their own respective organisations and try them forward. So that's one way we've done it.

[00:24:03.400] - Jon

 And has that worked? Any lessons, or are you still learning how to make that work really well?

[00:24:09.920] - Terhi

We’re still learning, as you know, this is one of the one of the hardest things and the CBC business to actually bridge the gap and make it in a way where it adds value for both sides. What we've seen is that, again, going into what is the innovation or solution, what the startup is bringing and how well it fits into the what the business needs. So you want to make sure that you are innovating in the areas where external innovation makes sense and is needed. And for example, in our portfolio, we have a company called Gradient, which is working on bringing the digital twin into districting networks, being able to lower the temperatures, so therefore have the cost benefits and also the CO2 benefits and also being able to address the thing that soon these networks are going to be so complex, so being able to manage them, you need the more advanced tools. So kind of bringing that kind of solution in which is fundamentally needed on the business side is obviously where you have most fruitful possibilities to actually add value.

[00:25:28.320] - Jon

That's fascinating. So a lot of alignment, a lot on the people side and some structure around that as well.

Looking back at your time in this area, is there any if someone in another utility with starting up a court prevention capital fund, is there any one bit of advice you to give about making the connections and bringing that innovation back into the business?

[00:25:55.660] - Jan

A very good question. Makes me a little bit reflective right now, but we don't have the time to be mindful now. I think generally, what Helen was in making sure that on both sides it's a people business you don't get access to interesting technologies if you don't understand that it’s a people business and the same happens on the internal side, and then you need to have quite good stakeholder management in your organisation from the top to the bottom. There isn't any level you shouldn't be aware of because the board is as important as the people in the business, which then buy the technology to test them out.

[00:26:39.800] - Jon

Yeah, it's really interesting for both of you. I think we're getting to the time now where we need to bring out the talking new energy crystal ball and look to the future. We've reflected back a little bit. Let's look forward now and set the dial to five years time - 2026. And I want each of you to imagine that in 2026 you're looking back at the last five years, and what one thing do you think you'd be most proud of in your current roles in that situation? Terhi let's start with you and then Jan.

[00:27:24.900] - Terhi

So I think two things which I'd like to see happening. So one, obviously we are in the industry where climate change, we can actually make a difference by finding out technologies which can help us to address it. So I'd be super happy if we've been instrumental in making those technologies available and into the market. So played our role in enabling that to happen. And the other thing which I do believe we should be doing is bring the digital tools into the industry, which has happened in the other industries earlier. So I think bringing those capabilities and tools into the energy market in the next few years is fundamental to actually enable us to do things we want to do.

[00:28:20.440] - Jon

If you had to pick one biggest challenge, one thing that might keep you awake at night about achieving those two things. What would that be?

[00:28:30.920] - Terhi

Probably if you think about the kind of grand scale of climate change so we don't have the luxury of waiting anymore finding or solutions. And how do we accelerate, so that we bring the future quicker into the market so that actually we can make a difference.

[00:28:56.120] - Jon

Yes, so that’s speed. Thanks Terhi. Jan, what are you most proud of looking back over the last five years if you're in 2026?

[00:29:02.720] - Jan

Hopefully a climate report with an outlook that we may be closer to the 1.5 or 2.0 degree and which we wanted to achieve, the planet is not getting warmer, and that would make me really happy because that's our passion. We wanted to contribute to secure our planet. It looks not very good looking into the latest reports, and we wanted to be instrumental in changing here and using our skills and applying technologies. As Terhi already said I wanted to  repeat this again. But I think the topic, the topic we are fighting for is securing our planet and having something in our hands which fights back against climate change and making the world is a bit better for the next generation.

[00:29:56.660] - Jon

And the biggest challenge for the difference you can make on that, and the disadvantage of going second is you're not allowed to use the same challenge as Terhi has talked about.

[00:30:06.440] - Jan

Yeah. No, I think the challenges we need to shift a little bit our communication also in this in this round here we are talking about energy giants and what they are not doing on what's the right thing for venture capitalist. But the problem we are solving is climate change, and we need to keep all the attention of everyone to the point that this is the task and the mission we have. And I think that's the challenge. I'm also in our discussions in the company in E.ON and the board, wherever we are, we need to focus on that problem. It's not about optimising, getting more efficiency of a large corporation, it's not about sustaining the life for four, five years, it’s solving the most burning problem on Earth. And I think that's the huge challenge. If I'm looking into our conversation and conversations in our board, with my colleagues in E.ON and in the press, everyone is still on the mode ‘Yes, I'm doing my job and then everything is getting better’. But we are not there yet. We need to focus more. We need to challenge ourselves more.

[00:31:08.360] - Jon

It's really to be mission driven. Well, nothing hard changes overnight. I guess meaningful things always come with challenges and never easy to do. And I can see there's such a huge wave of innovators out there that can help to drive the energy transition that the investment and capital that companies like yourself can bring to that and then help to transform traditional utilities is a critical part of what we need to do. As you said Jan, keep to 1.5 degrees, hopefully, warming for the future. So thanks both very much.

Thanks Jan, thanks Terhi. That's been a fascinating discussion and a great window for our listeners into the world of utility or corporate venture capital. And thank you to listeners for joining this episode. We hope you found it interesting and look forward to welcoming back next week. Thanks and goodbye.

[00:32:13.220] - Jon

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