TALKING NEW ENERGY

A Delta-ee podcast

We're a group of new energy experts, talking about the energy transition in Europe and how it will affect the customer.

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Delta-ee Director Jon Slowe hosts a selection of guests from across the new energy industry.

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Episode 16: What does the future hold for distribution network companies?

In the ‘old energy’ world, distribution networks managed the downwards flow of electricity and gas from the transmission system to customers. As the transition from ‘old’ to ‘new’ energy gathers pace, the role of distribution networks is changing. In this episode, we are joined by Pallas Agterberg, Director at Alliander and Dave Openshaw, Director at Millhouse Power, to discuss how they are changing, and where they are headed.

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Episode 16: What does the future hold for distribution network companies?

Jon Slowe, Director, Delta-ee

Pallas Agterberg. Director. Alliander

Dave Openshaw. Director, Millhouse Power

[00:00:04.560] – Jon Slowe

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

[00:00:22.850] – Jon Slowe

Hello and welcome to this episode.

[00:00:25.340] – Jon Slowe

Companies that have relationships with and provide services directly to customers.

[00:00:38.360] – Jon Slowe

But today we're focusing on the less glamorous but equally critical role in the electricity sector of distribution. And we might even stray into other energy factors as well. In the old energy world distribution networks manage that downwards flow of electricity and gas from the transmission system down to customers. Load growth was quite easy to plan, it tended to correlate well with economic growth and customers load profiles the way they were using electricity gas didn't really change that much from year to year. But as the transition from ‘old’ to ‘new’ energy gathers pace the challenges facing distribution companies is changing and indeed the nature of their role is changing.

[00:01:22.610] – Jon Slowe

These challenges an evolution of the role of distribution networks is what we're exploring today, and I'm delighted to welcome two guests to today's discussion. First Pallas Agterberg, Director of Strategy at Alliander,

Hello Pallas,

Pallas Agterberg

Hello

[00:01:47.250] – Jon Slowe

Pallas for our listeners unfamiliar with Alliander, network company based in the Netherlands, can you give us a few facts and figures about Alliander and how you've set up your role there?

[00:01:56.790] - Pallas Agterberg

Yeah sure. Alliander is a quick operator in the Netherlands

[00:02:01.090] - Pallas Agterberg

Which means that for about 40 percent of the Netherlands we have more than almost 6000 employees.

[00:02:10.270] - Pallas Agterberg

One point nine-billion-euro turnover mainly situated in the Netherlands with a small part in Germany too. And mainly because our innovative activities that we share it with other quick operators, so we exchange information we co-invest also Germany.

[00:02:44.620] – Jon Slowe

In the balance of electricity distribution against gas distribution and heat distribution. How does that, what does that look like?

[00:02:47.860] - Pallas Agterberg

We practically don't do in heat distribution so is like 40 percent gas 60 percent electricity.

[00:02:55.380] – Jon Slowe

Okay. And the focus of your role palace, how would you how would you sum that up?

[00:02:59.740] - Pallas Agterberg

Yes, strategy and innovation, corporate strategy means, well, how is this market changing? How do we need to dissipate on that? Innovation as well, also organizing the processes that needs to deliver the innovations are new businesses that tend to create to meet new challenges.

[00:03:25.180] – Jon Slowe

So, I guess you're looking forward a lot of the time but balancing that with the reality of practicalities of today's business as well.

[00:03:34.360] - Pallas Agterberg

Yeah, it is how I want to have it.

[00:03:36.800] – Jon Slowe

Yeah., OK, my second guest is Dave Openshaw. Hello Dave

Dave Openshaw:

Hello

[00:03:58.110] – Jon Slowe

Dave you're an associate here at Delta Energy Environment and spent your career in the UK's electricity distribution industry. You didn't move from the distribution network to working with us at Delta that long ago. So, can you give us a flavour of your most recent roles and what your what your focus was in that distribution industry.

[00:04:14.580] - Dave Openshaw

Sure, yes Jon, thank you. Well I'm now an independent consultant, having formed my own company Millhouse Power Ltd in 2015. And I'm delighted to be an associate of Delta Energy Environment and I've worked with them on several projects. But as Jon says prior to that I was with an electricity distribution company UK Power Networks which serves the east and southeast of England and the majority of London and I held a number of senior management roles at UK Power Networks including head of asset management, Head of Engineering and regulatory strategy and Head of Future Networks the focus of this latter role was really to prepare UK Power Networks for the future, which is really what we're discussing today and this involved a wide range R D&D projects exploring new technologies and commercial models.

[00:05:07.470] - Dave Openshaw

In terms of what I'm doing nowadays in addition to my day job as a consultant I also serve on the Institute of Energy Technologies policy panel which gives out of advice to government on energy related matters and policy. I'm also currently involved with the UK Energy Systems catapult in supporting the UK electric vehicle taskforce which is charged with understanding the challenges and opportunities surrounding mass up-take electric vehicles and its impact on the electricity system.

[00:05:39.410] – Jon Slowe

So, Dave retirement is still a bit of a way away for you then.

[00:05:44.090] - Dave Openshaw

Yes, indeed Jon was supposed to be a transition path to retirement, but it continues to occupy my brain and keeps me mentally active which is not a bad thing.

[00:05:56.690] – Jon Slowe

Dave, can I start by looking back a little bit to your time at UK Power Networks and maybe less the innovation future looking role there but the asset management role for example. If you're looking back 5/ 10 years ago, how would you sum up the core elements of UKPN’s activity, the core elements of the business roll, business model and then the core activities?

[00:06:28.630] - Dave Openshaw

Yes, I mean it is fundamentally an asset management function because that's what distribution companies traditionally do, they manage physical assets and it was really about ensuring UK Power Networks met its licence obligation first and foremost. In particular, ensuring the developments with efficient coordinated and economic distribution system and that means ensuring the safety of employees and the general public protecting the environment maximising regulatory incentives performance for example things like quality supply, no interruptions and so on. But what it really meant is having a really good handle on asset condition and risk of failure to use the technical term failure mode effect and criticality analysis and being able to predict low growth as you said Jon and putting in place appropriate asset replacement maintenance network reinforcement plans.

[00:07:16.460] - Dave Openshaw

But even then, UK Power Networks was exploring active network management alternatives to conventional network reinforcement, so the transition was just about beginning around five years ago.

[00:07:26.650] – Jon Slowe

Okay. So very much having the right assets in place, those assets in cables, transformers etc and making sure those assets were working well, managing the health of them.

[00:07:38.570] - Dave Openshaw

Absolutely and not replacing them to early or too late.

[00:07:47.150] – Jon Slowe

Pallas, looking at Alliander today, how would you relate that role of asset management that Dave described to, is that still the core or the essence of Alliander today? Or how have things changed in the last 5-10 years?

[00:08:10.430] - Pallas Agterberg

Yeah, investing in the assets in the right time, not to early not too late is of course one of the most important parts and an issue is, what we have been doing in the last 10 years or so is implementing and doing a lot of measuring tools, to actually know what's happening in the networks on a deeper level than we've ever known before. In order to be able to have this much better planning of asset investments then we had before because we saw already five years ago, ten years ago it started.

[00:08:54.500] - Pallas Agterberg

These energy transition means, that we will get a lot of new need for new capacity and where the special thing about it is, well you mentioned in the introduction, that we have come from a world where it's very predictable in terms of a million customers and they all have the same type of users trusting networks so it's pretty much predictable. Apart from the last five minutes in a year, we know exactly what's going to happen. And this is completely changing because of energy transition, this decentralization of technology means that for instance, solar on the roof in a single street means a doubling or tripling the capacity on a certain moment of the year but you need to know on what used solar.

[00:09:47.120] - Pallas Agterberg

So, the same for electrical car charging in the streets, with maybe public charging where the charging point will come, where the solar will come, when the heat pumps will come, makes a lot of difference. And now its five years later or ten years later, we're in the middle of it and it's just very difficult to understand exactly what kind of dynamics we needed to know, while the dynamics we know now is that the problems we are facing right now is the sudden demand for capacity, for data centres and for solar fields. And these solar fields are more or less subsidy triggered, but in the fields just way out of the build environment and the industrial areas, just fields where nobody ever comes. That’s the best place to put a solar field for a financial perspective.

[00:10:42.040] – Jon Slowe

But not necessarily a for the grid itself.

[00:10:50.960] - Pallas Agterberg

Not at all, so, it's very difficult to know which field will be picked out and you cannot prepare for that.

[00:10:58.880] – Jon Slowe

You’ve got the react then, I wanted to ask you next about time horizons because on one hand you're putting assets in the ground that will have a lifetime of many tens of years. So, your time horizon then is looking quite far forward but it sounds like you need to be very reactive as in this example of the solar farm on a weak part of your network you've got to cope with things very quickly. So how do you think about timeframes and time horizons?

[00:11:32.380] - Pallas Agterberg

Of course, for these data centres, time horizons they come up fairly fast with new demands and not realizing that their demand is so huge, data centres like in a medium city, a big data centre.

You cannot put the power capacity for a medium city in two or three years

[00:11:56.840] - Pallas Agterberg

You need 10 years so it's impossible to do that. And so, we need to learn from that in terms of from spatial planning that you need point out where the data centres for instance will come for instance for these solar fields. What kind of policies do you need from a governmental perspective to put them on the roof or where do you want to have these solar fields and where not?

[00:12:34.310] - Pallas Agterberg

It's a very new perspective of this capacity triggering. So, it's yes, it's about speed but it's also about planning.

[00:12:39.060] – Jon Slowe

Dave what's your view on time horizons or what have you observed and experienced in the UK? How fast or reactive do people have to be?

[00:12:48.480] - Dave Openshaw

Well I can echo everything that has just been said really, I mean the UK power networks covers the very rural areas of Norfolk, Suffolk and so on.

[00:12:57.930] - Dave Openshaw

But at the same time central London and I can certainly empathize with the data centre issue. It is literally like a small town appearing on the footprint of what used to be just a sort of an ordinary commercial building. It could be 10/12 megawatts of power that you were having to cope with and it is important therefore that you don't react, well you have to react, but at the same time you don't want to react on an ad hoc basis. Again, going back to the coordinated and economically efficient development of the network.

[00:13:27.110] - Dave Openshaw

So, having forward visibility of where those demand centres are going to be and then designing the network accordingly in advance is really important. And of course, in the Central Business District areas they tend to be some of peaking loads anyway. And so, adding data centres with their air-cooling load onto it just exacerbates a potential problem. But it also provides an opportunity for demand side response. We've shown the UK power networks was exploring seriously in order to deal with them plan network outages if you could. You know turn the demand down for an hour or two that could alleviate a potential problem. But going out into the rural areas yet again wind farms on solar PB farms on very weak parts of the network we're also a major challenge and very, very difficult to predict because developers would put in speculative requests for quotations and only a handful of those would ever go ahead.

[00:14:26.720] - Dave Openshaw

So, you're always trying to predict what was going to happen and what wasn't. And again we've looked to commercial models for exploiting the fact that the load factors are generally low and therefore with a little bit of curtailment risk if the developers are prepared to accept that it means they can secure faster cheaper connections in exchange for that very small risk of curtailment if there's a network outage at the time when they're exporting at maximum potential. So, these are really important areas to try and manage the connection queue for renewables.

[00:15:00.560] – Jon Slowe

So, if we look to Germany for example, I think the whole German sector got caught out by the huge rate of growth of the photovoltaics. And that created a lot of challenges for their distribution network. Data centres very hard to predict, rural solar farms and weak parts of the network are hard to predict.

[00:15:21.560] – Jon Slowe

Looking forward, Pallas how predictable, how have network companies got much better at predicting the future and understanding the new loads sources of generation connection requirements for the grid? Or do you think it's inherently very, very difficult to get that right?

[00:15:45.090] - Pallas Agterberg

Yes, I think it's not a technical issue of course you need to have the technological part right, you need to know exactly what a different type of flows to your network.

[00:15:54.080] - Pallas Agterberg

We have all kinds of simulation programs, in real time measurements but it's not enough.

[00:15:58.970] - Pallas Agterberg

It's not for just demand maintenance but these type of new efficient we were just discussing this quite a different thing. And also, you need to look out to choose to put in covering the ground because it's not just the access to the energy system that you want to fight. You'll also want to have an affordable network. And so, it is this that I just made is the difference between these data centres that will be there for tens of years. Or at least these areas will be developed for those types period but these beefy farms in remote areas they can be gone in five to 10 years.

[00:16:49.150] - Pallas Agterberg

So, you have put in an effort that will not be used anymore.

[00:16:52.510] - Pallas Agterberg

So, this is about new ways of collaborating with local governments. And, yes, it is about being smarter and having technology right, but it's also about collaboration and policy.

[00:17:11.170] – Jon Slowe

How would you relate that to say electric vehicles? I think that's there is general consensus that transport will be electrified and homeowners where they can, can charge their vehicles at home, everyone knows that's coming.

[00:17:25.090] – Jon Slowe

No one's quite sure exactly how quickly that will roll out. Can you invest and prepare for that ahead of need or do you try and have to invest as the need is developing. Because I guess what you don't want to do is be caught investing behind the need and see problems on the network as people charge their electric vehicles.

[00:17:48.510] - Pallas Agterberg

Yeah. But in a way it is like there's public charging and charging at home, the public charging we can be sure are making this mission nationwide planning already and it helps a lot but for at home well there's a difference between that rural areas and the villages compared to the cities in the dense cities.

[00:18:14.490] - Pallas Agterberg

But it's still about public charging, and so we can we can influence that quite a lot. But at home it’s about how you cannot just start creating all these networks is low how this network just because you think there might be some extra cars. So, on the other hand there's these cars. This is for instance why we need vehicle to grid type of innovations these cars with these batteries can also be part of the solution, instead of just charging, they can also be storage. The smart part is about opening up for flexibility.

[00:19:03.700] - Pallas Agterberg

It's not just the volumes that you pay for it's a time of use, that's coming more and more important. So, we need to change this energy market from just the volume base as it was with these standard low profiles, to flexible real time balanced markets.

[00:19:22.420] – Jon Slowe

So that would help you deal with a challenge, and I guess minimize the investment needed in a copper in the low voltage network. Dave, can I ask you about your view on investing ahead of need? So, the regulator wants you to be prepared, but the regulator also doesn't want money to be spent way in advance of when it needs to be spent on that to try to reach customers bills. How do you see that balance between preparing but not preparing to far in advance?

[00:19:56.220] - Dave Openshaw

Classic, classic dilemma that one Jon, and I was interested to hear Pallas’s comments on national planning because that's one of the key recommendations that’s coming out of the electric vehicle energy task force because it's an awful lot of public charge points going in with no real visibility of UK wide coverage. So, you could envisage maybe you know the more coastal areas rural areas you know being under provided in terms of infrastructure and maybe over provisional along the motorways and trump road. So, we really do need a better handle on where those charge points are going to appear.

In terms of the charging at home, that will impact the low voltage networks first and foremost, and the key there is to try and understand where that charging time is most likely to occur. And the obvious thing is if you've got homes with off street parking, they're obviously the most susceptible to home charging.

Jon Slow: Yeah.

[00:20:42.640] - Dave Openshaw

And for that reason, range of smarts or active management solutions have been prepared including you know active voltage management, load shifting between networks or indeed between phases of networks.

What that does is to give you some optionality, pending there may come into you when you still do need to reinforce, but at least it gives you time to analyse what's happening and therefore hopefully put the government in place so in good time.

[00:21:15.490] – Jon Slowe

I'd like to talk a bit more about that now, we've talked about how you can try and plan for the future, to have a joined up approach to the future, predict for example where challenges will come from electric vehicle charging by looking at homes and driveways.

[00:21:45.000] – Jon Slowe

But you've both mentioned different tools and techniques or smart solutions for example vehicle to grid, or a wind farm switching off when the networks really stressed for those few hours a year. That's a different type of activity from the one Dave you described at the beginning, which was I'm exaggerating a bit here but from the traditional asset management activity.

[00:22:11.710] – Jon Slowe

So, you're looking forward what will the role of the DFL/DSO, so a network company be?

[00:22:21.270] – Jon Slowe

If in the past it was very much building assets and maintaining the health assets, looking four to 5-10 years. Pallas, maybe start with you, given you're always looking forward! How do you see or how would you describe the nature of the distribution business in 5 or 10 years?

[00:22:50.570] - Pallas Agterberg

Well if I describe the DSO role, or DNO role as is used in the UK, there are two elements. It's asset management and it's market facilitation. We do the grids, we don't sell energy, we don't do any energy surface related activities. So, we create the data and the options for access to that market. So, this is the market who is switching the clearing analysis etc. But if these services change then you need to change your market facilitation too. And this dilemma we were just talking about the change of the energy business from the volumes in terms of, this is the volume we would kilowatt hours you would buy in a year or two.

[00:23:34.600] - Pallas Agterberg

It's not just the kilowatt hours, it's also the moment that you use your produce. It's rather, it's a change of any services, which means a change in facilitation.

[00:23:44.900] - Pallas Agterberg

So, if this capacity issue like for instance switching off a solar field in terms of an imbalance where there's capacity issue you could also say there's is a different way of looking at things two different ways. One is that the decrease operator just switches off if it thinks it is necessary. And the other one well, we’ve sold the capacity to our customers and if there's a lack of enough capacity, let's give our customers the option to exchange this capacity that I've been buying. So by doing that you create a flexibility market for time use not only in energy production but also in capacity for the network. This is a completely different way of looking at things.

[00:24:17.100] – Jon Slowe

It is different on how that's new. How challenging is that for a company like Alliander do you think to have that as part of the core activity because traditionally they'll be more asset management, this market facilitation and that example used is quite different. That's quite a shift isn't it?

[00:24:59.980] - Pallas Agterberg

Well it isn't. I think it's not that quite of a shift, because it's like the cables underground and people sometimes forget that there's a lot of investment to put these cables in there. These computers that do the data switching and the measurements etc. They're also in physical, but it's there and it's one of the largest computer capacities in the country for the energy I mean. So, it has been there, but nobody knew. And if we just change it in a way that's; congestion markets, flexibility markets are opening up. Well it's

a little bit new but I think not for us but for our environment.

[00:25:43.420] – Jon Slowe

Ok, so some of that core competencies are already there within the company and then you're just using that in a different way.

[00:25:47.680] - Pallas Agterberg

Yeah, I do agree that it's difficult to have these types of things, but we're working on it.

[00:25:54.820] – Jon Slowe

Dave, how do you see that that shift, or do you see the same shift the palace described and how challenging is that for network companies?

[00:26:05.000] - Dave Openshaw

Yeah, I see a broadly similar shift Jon. I also see it as a two-stage approach, and I think where the UK distribution companies are well on the road to the first stage which is becoming active network managers and I alluded to a few commercial and technological approaches to active network management.

[00:26:13.090] - Dave Openshaw

It does require more granular data. You know we're looking at network loading asset condition diagnostics with those sorts of things but I think the next stage which is the one that's more challenging but which is being explored now is how you use flexibility not only for local network congestion management but also for the wider power system and in U.K. particularly or Great Britain in particular we're seeing a very rapid displacement of synchronous generation from coal and gas fired stations to wind solar PV and a little bit of nuclear as well of course.

[00:27:10.490] - Dave Openshaw

But what that means is that the overall stability of the system is becoming lower because of lower inertia on the system. So that requires additional services like frequency response short term operating reserve because of the relative uncertainty prediction of output from renewables and therefore there's a huge market for flexibility as Pallas said, not just for network congestion management but also for upstream network services and system services as well. And I think the key role for a VSO transitioning from the VNO going forward is to make sure that flexibility is accessed to maximize the revenue streams for the service provider by making sure you can use all of that flexibility for the wider power system as well as the local network.

[00:27:57.590] - Dave Openshaw

That's very much at the heart of the NA’s open networks project which is which is happening as we speak in the UK.

[00:28:09.170] – Jon Slowe

Yeah. When I look across Europe, I see a number of demonstrations, trials, experiments and early developments with local flexibility markets, how you can give us flexibility in multiple ways with the different parts of the value chain in a coordinated approach. I can see this very much is going to be a big topic in the next years and something that's new, relatively new not just a DSO’s but to a lot of players in the value chain.

[00:28:42.010] – Jon Slowe

We're getting to the point now where we need to start rapping up and those of you who listen to the podcast will know at this time, we normally bring out the talking new energy crystal ball. So, I'd like to ask you each two questions which can summarize the discussion. First question, if we look at a distribution company a few years ago and if we look forward to 2030, what's the biggest difference we'll see in a distribution company? And then secondly what is the biggest challenge to make that change or to see that difference palace would you like to go first on that?

[00:29:24.440] - Pallas Agterberg

Well, crystal balls, it's always difficult to predict especially regarding the future, and at the same time in terms of 2030 for a grid operator actions like to borrow because if we rebuild things for 30 to 50 years and so I really hope we can just elaborate on what's happening right now.

[00:29:52.240] - Pallas Agterberg

It means that the way I just described from this asset management and market facilitation that it's getting more and more clear is that,

the decentralization of technology that comes with this energy transition makes it possible to do as much and much more at a local level at home or in a neighbourhood or in an industrial area which means that this microgrid thinking will be coming up a lot and optimizing on a very local level and leaving the networks the backbone and the distribution grids and more or less as a safety system.

[00:30:09.410] - Pallas Agterberg

And I don't know where it will be but it's to say a safety system in 2030 with this is a path we can look at. And then these microgrids need to be managed to, so maybe they will have a combination of active system management not just on our own networks, but on local networks, that are in possession of others and making sure that this will work through electricity, gas or kind of new type of gas and heat.

[00:30:48.900] – Jon Slowe

And the biggest challenge in a nutshell together if you had to isolate on thing in a sentence?

[00:31:06.780] - Pallas Agterberg

The biggest challenge would be to really look at it from this system perspective, system management perspective and organizing millions of access on that system.

[00:31:23.540] – Jon Slowe

Okay. Thanks Pallas, so Dave, the biggest difference from now to 2030 and biggest challenge?

[00:31:42.370] - Dave Openshaw

Well again I agree with pretty much everything Pallas says there, and I think it's

[00:31:51.240] – Jon Slowe

I was looking for a bit of disagreements and arguments today

[00:32:24.960] - Dave Openshaw

But just to build on that, I think the opportunity for the DNO’s as they transition to the DSO’s is to also look at the opportunities they might have for additional revenue streams not least for consultancy services because you know microgrids, energy communities begin to develop but they're not generally very well served in terms of technical expertise they've got some very good business sense, around there propositions, but they can certainly take a great deal of value from experience network operators. I think in terms of how you manage that sort of market with what we saw. You know whether it's connected to the distribution system or not. I think there's a role or greater scope for private network asset management as well.

[00:32:40.200] - Dave Openshaw

I think the biggest challenge is really one of the culture change, really for the DNO’s is to think of themselves not just as regulated companies with you know more or less guaranteed low risk revenue streams but also looking at opportunities for using that core expertise you know to find new business opportunities. And I'm sure the opportunities are there is if they're prepared to invest in the, you know the capability to do that.

[00:33:11.940] – Jon Slowe

I guess a lot of network companies have unregulated businesses today, but the core part of their activity is running as a regulated business, so I can see the difference in mindset required.

[00:33:18.130] – Jon Slowe

Time has got the better of us. So, we'll wrap it up there. It's been a fascinating discussion and I feel we've just scratched the surface in some ways but there's lots more to talk about in future episodes. Dave thank you very much for joining us.

Dave Openshaw: Pleasure Jon.

Jon Slowe: Pallas, thank you to you as well.

Pallas Agterberg: Yeah, I was happy to debate and be part of it.

[00:33:40.470] – Jon Slowe

And of course, thank you to our listeners for downloading the episode. And we hope you enjoyed it and found it stimulating. This is the last episode of serious 2 so we'll be back in September with series 3 and we hope you can join us then!

Thank you very much and goodbye.

Episode 15: Responding to disruption: how energy companies can avoid the fate of Kodak

In this episode we explore how energy sector incumbents are responding to the transition – and associated disruption – from old to new energy. Host and Delta-ee Director Jon Slowe is joined by consultant Eric Morel, who has been working with energy companies across Europe to help them manage how they are responding to the energy transition.

Jon and Eric discuss and exchange views on the challenges energy companies face and the different ways they’re responding.

View Transcript

Episode 15: Responding to disruption: how energy companies can avoid the fate of Kodak

Jon Slowe, Director, Delta-ee

Eric Morel, Consultant

[00:00:04.560] - Jon Slowe

[00:00:23.000] - Jon Slowe

Hello and welcome to the episode. Today we’re looking at how energy sector incumbents, are responding to the transition from ‘old’ to ‘new,’ energy.

[00:00:32.670] - Jon Slowe

In the 2000s you would regularly meet people in the energy sector who doubted that change was really coming. Distributed generation was viewed for example as an annoying fly that could be swatted away by some people. In the 2010s there has been gradual acceptance that the transition is underway and in some markets the impacts have already been significant, asset valuations and share prices have been battered for traditional incumbent utilities. Today most people see that the future energy business will be quite different to how it has been.

[00:01:07.150] - Jon Slowe

But recognition and response are two different things. The Kodak moment is one of the most famous examples of a company failing to respond to disruption, as the film giant failed to respond to the disruption that digital cameras brought and that Harvard Business View has a great article about that downfall and I think that two key takeaways from the article. First recognizing something and doing something about it are quite different things, and secondly doing something and doing the right thing are also different things. So, today we're going to be looking at how we can relate, recognizing something, doing something and doing the right thing can be applied to companies in the midst of the energy transition.

[00:01:45.020] - Jon Slowe

To help me explore this, I'm delighted to welcome Eric Morales to today's podcast.

Jon Slowe: Hello Eric,

Eric Morel: Hi Jon.

[00:02:02.160] - Jon Slowe

Eric thanks for joining us and I've invited you to this discussion as like me and my colleagues here at Delta, you have spent over 10 years working with energy companies, helping them to respond to the transition. Do you want to tell us a little bit more about the focus of your experiences over the last 10 years and your background?

Eric Morel: So, first of all thanks for inviting me Jon.

Jon Slowe: No problem

[00:02:28.730] - Eric Morel

I've been consulting for energy firms, utilities for 10 years. I have created in 2010 my own consulting firm, specializing in energy transition and digitization. Before that I have been serving the industry for 25 years, especially at Schneider Electric where I led the corporate business strategy and the first EU dedicated to smart grids in energy efficiency. So, I've been active for almost 30 years in the new energy world.

[00:03:10.280] - Jon Slowe

Great, thanks Eric. So, I think we'll have a really interesting discussion about how our experiences and how the companies are responding and the challenges they're facing, but of course keeping confidential details confidential.

[00:03:24.350] - Jon Slowe

Eric, I described the lessons from the Kodak moment, those three things of recognizing something, doing something and doing the right thing. Do you think we can use this model to, look at how energy companies are responding to the energy transition?

[00:03:37.330] - Jon Slowe

Do you think we can use this model to, look at how energy companies are responding to the energy transition?

[00:03:46.130] - Eric Morel

I think it applies quite well, maybe I will describe it a little bit differently.

[00:03:52.190] - Eric Morel

The first stage, because facing so many disruptions and changes in the energy world, it's always difficult to know from scratch if we are doing the right thing.

[00:04:08.300] - Eric Morel

So, I would prefer saying acting consistently and consciously. What makes the difference between the stage two and stage three is to know what we do, to know why we do it and to know why we act with a certain manner. So, in other words with the finalized strategy.

[00:04:35.930] - Jon Slowe

So, recognizing something, you can do something but doing the right thing; clearly there are many ingredients to that and as you say having the right strategy consistent and conscious approach to doing the right thing.

[00:05:24.630] - Eric Morel

I am amazed every day and by the number of companies that have some difficulties to recognize things. They often deny changes or maybe the depth of changes. So maybe to be a little bit provocative I would say that, 80 percent roughly of the companies; energy companies, utilities recognize what is happening, but the significant percentage don't.

[00:06:00.300] - Jon Slowe

And is that, where in the companies do you see that Eric? Is that in your experience in the leadership positions? In the middle management? Or is it irrespective of where people are in the companies?

[00:06:19.170] - Eric Morel

I would say both, meaning that in the same company you have you can have executives that that recognize the changes and are conscious about what has to be done and some middle managers that are scared and fear they can lose in these situations. So, where we may have a gap but we have also companies where the middle management is aware of the situation and is struggling against the executives to be able to move forward, by having a management team more conscious about this situation. So, it's difficult because the situation within a company can be that [illegible].

[00:07:00.690] - Jon Slowe

From my experience, I see sometimes a lack of a long enough term focus, so if people very focused on the next six months, the next twelve months, maybe the next budget period, but a lack of sometimes while people may recognize the challenge and change but not looking forward enough and really addressing that.

[00:07:25.610] - Eric Morel

You're right, you're right.

[00:07:28.710] - Eric Morel

I think once more we are facing so many changes that, to realize the consequences we have to think beyond the six next months, because if you think in these timeframe you have always the good reasons to think that you have time to react and you're going to act so to become conscious about the depth of the changes you have to extend your period of consideration. Yeah, you're right.

[00:08:03.420] - Jon Slowe

And then if we look at the next bucket of doing, so we've had recognizing, the second bucket is doing something and the third one doing the right thing. How many would, what percentage would you put in the doing something but not necessarily doing the right thing?

[00:08:17.550] - Eric Morel

Among the 80 companies or 80% of companies I mentioned recognizing this situation, a significant percentage is scared, scared to move forward, scared to do the wrong thing and so they have some difficulties to act.

[00:08:40.910] - Eric Morel

So, I would say that maybe something like 50% are really acting and what I observe also, I don't know if you observed the same? But among these 50% maybe half of them are just acting to act, to be able to communicate.

Jon Slowe: Yeah

Eric Morel: Not really focused on deep changes and a real adaptation of the of the company to do the changes.

[00:09:13.700] - Jon Slowe

I completely agree Eric; I'd probably separate that into two groups. One who just want to do something so they can communicate it, publicly, and another lot that probably don't know what to do so they think ‘OK well we'll run some trials, some pilots,’ but without any clear strategy or view of what they will do beyond that first trial or pilot so, they feel good because they're doing something, but it's not really necessarily a proper strategy or approach.

[00:09:47.770] - Eric Morel

That's right. What I have seen in in several customer service is that the first tragedy consisting in acting with no real goal except communicating, begin to be sanctioned by the customers and we have more and more feedbacks in these customers service, of customers who are more and more conscious about this situation, who want their utility to move forward and they are ready to have a difficult relationship to change their supplier into one if there is to recall the incumbent supplier is not responding correctly to the changes.

[00:10:43.650] - Jon Slowe

Okay. And then in this last bucket of doing the right thing and you expanded on that earlier, what percentage would you put that are acting consistently and consciously with a clever approach?

Eric Morel: To be once more provocative I would say 5%

Jon Slow: 5%

[00:10:51.310] - Eric Morel

5 % of companies having defined a real approach. Based on the vision which is shared in the company because it's not sufficient to have executives nurturing a vision without sharing it with the with the whole company and especially with the middle management. So maybe it's a little bit more but not more. And I want maybe to point out with this very low percentage the fact that many executives think they have a strategy, think they have worked and share what to do and in reality when we see that with distance and from outside this is not the case.

[00:11:54.780] – Jon Slowe

Yeah okay. So, the percent if you've measured it by executives who claim they have a strategy would be a lot higher, but if it fits your consistent conscious strategy that's not just executives but across the company then that falls a lot more.

[00:12:12.910] – Jon Slowe

Why do you think is Eric? What's, because if that's right you know that's not great. We've been in many, many years now knowing this energy transition is happening. These companies are using consultants, research companies like me, you many others. What's stopping them?

[00:12:35.990] – Jon Slowe

Why is it only 5%?

[00:12:40.890] – Eric Morel

I think based on my experience that it's very difficult for many executive teams to draft a strategy with so many uncertainties, because they have to review all the strategy process methods, tools and so one. The usual methods and tools don't apply in such a situation with so many changes, so many distractions and so on, and I see many people scared to move forward, scared to investigate an unknown world, unknown processes and unknown ways of working. I don't know if you if you see the same. But I am surprised to see, so many people are afraid, scared and frozen by this fear.

[00:13:44.160] – Jon Slowe

So, like a rabbit being frozen by a car’s headlights approaching. Yeah. I see the same Eric, often, and I think for me, part of it is the way that utilities have used to be making decisions. And typically, it's a small number of large investment decisions, with those decisions de-risked to quite a strong degree. And making decisions where there isn't perfect information or evidence about the likely success or failure, I think is really a culture change for many utilities.

So, what would the take up of the certain offering be?

[00:14:38.080] – Jon Slowe

We don't know.

Well what evidence can we have?

Well, we can trial we can test, we can do customer research, but we still won't know until we try.

And that's I think quite a, for me I see that one of the big barriers is that cultural way of making decisions and dealing with uncertainties and possibilities of failure.

[00:14:59.140] – Eric Morel

I observe a sort of paradox because we know the utilities world. They have a huge stake which is to preserve the continuity of service for the whole economy. And so, it cannot take so many risks because they have to sustain the same quality of service. And in some cases, to improve their quality of service and so by a certain extent what has to be done to face the energy transition is also taking the risks that may damage in their mind, this continuity of service and the level of performance they have to respect because it will be very costly to have some shut downs or blackouts and so on.

[00:15:56.980] – Eric Morel

It’s not bearable. But they cannot hide themselves, behind this reason and you are right to mention this trial stage, that can be achieved by each utilities because my trailing, they can minimize the impact of any changes and they can test the potential link between their actions and their performance to be able to respect this level of performance and to keep their continuity of service.

[00:16:35.440] – Jon Slowe

Jon Slow: Yeah, So trailing can certainly help learn and reduce the uncertainty, that there's many vendors as the service providers that are looking to do deals with utilities or energy retailers who I think are quite scarred by trial, trial, trials, that they've learnt through some hard experience that a trial may be well and good to learn. But if you get to the end of the trial and then there's no clear commitment or strategy then as the vendor, they’re no further forward. So, I'm interested Eric, how you see or your experience in how effective trials are?

[00:17:19.680] – Jon Slowe

Do you see this risk that you just trial, trial, trial without anything happening beyond it? Or do you see lots of examples of where people are approaching trials in the right way?

[00:17:31.920] – Eric Morel

Right Jon, I observe the same. You have trial and trial in some cases, the trial is a stage of an implementation process. So, within your project organization you include a new stage which is this trial stage allowing you to be more flexible, to test on the limited territory and once you have proven, adjusted your solution you extend it. And you have also trials, which are not aiming at refining a solution but just reinforcing the convictions or the fears of some managers and in those cases, yes, you're right!

Trials are some ways to delay or just bury some projects or some solutions.

[00:18:21.330] – Jon Slowe

Or to show that, as you said earlier, you're doing something, for the public relations, communication - Look we're doing something.

[00:18:37.400] – Eric Morel

Eric Morel: Yeah, yeah, yeah. That's right. And sometimes during the trials the teams face difficulties because, the new energy confronts them with new technology and new skills. Decompartmentalization of the energy systems and so on, and they're not used to that. And sometimes the trials reveal some difficulties they have not anticipated and so on and just because we are involved in a trial we don't look at solving these difficulties, of finding solutions and so on that we just discontinue the trial just by saying that we have too many difficulties to move forward and to succeed.

[00:19:25.050] – Jon Slowe

Eric, we've talked about some of the challenges. Let's look at some companies now that we think are responding in good ways to the challenges. So, whether they're in that 5% you mentioned of the ones with clear and conscious approaches and strategies, I'm not sure. Who would you pick from looking across Europe as an interesting example of someone who's in that 5% or close to that 5%?

[00:20:04.100] – Eric Morel

Now we have several companies that paved the way to do the new energy world.

[00:20:13.780] – Eric Morel

I think each of these companies we can mention, are showing the interest or the value of one action, one component of the changes to be implemented in a utility.

[00:20:29.560] – Eric Morel

We can list first some trigger maybe close to energy which are companies that have developed a vision, begin to share this vision even if in some cases it has still to be completed.

Jon Slowe: Yeah

[00:20:49.950] – Eric Morel

And now they are at the execution time and having a vision helps them to get some acquisitions or launch some innovative initiatives and so on. And we see these two companies are pretty much aggressive, consistent in their communication, consistent in their actions. You certainly know Centrica well because it's in your neighbourhood.

[00:21:22.510] – Jon Slowe

And we've had people on the podcast from Centrica and from Engie, Centrica from their aggregation business that they bought a couple of years ago and Engie from their heating business developing, heat as a service.

[00:21:38.520] – Jon Slowe

So, I think they are good examples of companies that have set out a vision and they've acted on that either through internally reorganizing and innovating or acquisitions. What from looking at their merit, would you highlight any one or two challenges in that execution phase, you talked about?

[00:22:02.150] – Eric Morel

I think all the utilities are first facing the challenge to adapt their organization because more and more initiatives are cross-functional, cross-department and so on and they have been organized by CEOs for years. Everyone knows that and in utilities you had people dealing with electricity, other with gas, other with heat and so on and all these businesses have to be connected today including the emerging services activity. So, this is the first point.

[00:22:42.740] – Jon Slowe

Yeah and I have seen that, you take a new area like, I’ll pick electric vehicles for example. It's not obvious in which silo it should sit and maybe it shouldn't sit in any silo because it's connected to the customer business. The smart charging is connected to the energy trading business. It's an asset business if you're installing infrastructure.

Yeah, yesterday’s silo that are probably not the right way to organize for the future but reorganizing a big business with several thousand employees is tough.

[00:23:25.170] – Eric Morel

Reducing the impact of silos is one dimension, for the EV story reveals all the other needs. The first one is to grow marketing skills within utilities because utilities have not been used to develop these marketing skills and first to segment their customers and what is very difficult for utilities is that their segmentation is not the same for all the offerings. You don't segment the customers the same for EV charging needs, or for electricity sales, or for energy efficiency services and so on. It's a real difficulty and it's a real complexity.

[00:24:15.290] – Jon Slowe

Maybe one other company we can each pick out, one that I see, that I'd like to mention, is Eneco, the Dutch utility and that the thing I'd like to highlight there is a number of small, relatively small or acquisitions or stakes they have taken in companies and what I can see there is that putting a lot of bits of the jigsaw together in terms of the skills, capabilities and competencies they'll need in the future.

[00:24:47.720] – Jon Slowe

So for example from taking a stake in a data science firm, to a stake in a heating business in Germany, bringing their smart home partner in-house through acquiring that, it's building a lot of the right competencies that I think a company will need to succeed in a new energy future.

Eric, anyone else you'd like to highlight or mention that you think have got some good ways of responding maybe in or close to that 5 % that you mentioned?

[00:25:24.570] – Eric Morel

You're right, mentioning Eneco is important and we may come back on that example later. I think there is another example which is interesting which is Enel and its maybe linked to the Eneco case because what is at stake when we face so many disruptions and the need to readapt a company is the struggle between the teams that innovates and the teams that have to sustain the performance and the profitability of the existing businesses.

[00:25:58.480] – Eric Morel

And in many companies, the leaders of the existing activities are imposing constraints to the innovators because they don't want their business to be disturbed by innovations to be cannibalized and so on. And certainly, the reason why Enel decided to create any energetics to bear all the innovative activities without having to refer to the existing businesses. And so, to avoid these constraints.

[00:26:33.340] – Jon Slowe

Yeah and I guess you get the advantage of avoiding those constraints. Challenges you maybe it's harder to capture some of the synergies between for example an aggregation business and a supply business. If you've separated them yet but there's no one perfect approach.

[00:27:11.470] – Eric Morel

Yeah. That's right. And the choice made by Eneco is to acquire the competencies and to try to build internally based on these competencies. This is certainly less disturbing for the organization, less disturbing for all the employees.

[00:27:26.790] – Eric Morel

Certainly, if they succeed more powerful because the competencies embedded internally and including in the organization will train the orders, will pull the orders and so on.

So, this is certainly the best way, which is difficult, is to combine in the same company different business models, different decision processes, because each of these activities require different ways to be managed and this is a certain difficulty, to be flexible enough at the executive level to manage this diversity of activities.

[00:27:52.030] – Jon Slowe

And I think from the discussion Eric it's clear there's no one right approach. There are many different approaches and the right approach for a particular company would depend on many, many factors. It is appetite for risk, it’s capital, it’s size, it’s culture and so on.

[00:28:09.790] – Eric Morel

It's a reason why at the beginning I said acting consistently and consciously instead of doing the right thing because the right thing is always different from a company to another one because you have not the same environment. And because the right thing is linked also to your strategy into your choices. So, you may make all the choices than new competitors and both are doing the right thing because they the act consistently you understand what I mean?

[00:28:43.770] – Jon Slowe

Yep, yeah. So yeah, no single right thing, but make a choice as to what you think the right thing is for your company and be clear and consistent. Eric as always time is getting the better of us in these discussions. So, two final questions for us to discuss.

One, we talked about the kodak moment at the beginning so is the transition to new energy really a Kodak moment for the energy sector? What do you think?

Eric Morel: I would say yes and no.

Jon Slowe: You're hedging your bets Eric

[00:29:17.420] – Eric Morel

Yes, because all companies are facing a significant shift as Kodak did a few years ago because many may die if they don't adapt. So, for that reason say would say yes, but I would say no because all energy companies can be aware of the threats, they are known, they are discussed, they are recommended. And, because regulation will assure that all economic players, especially the industry will not lose continuity of service so they will pay attention that the changes will not damage the performance of the energy systems.

[00:30:16.140] – Eric Morel

It will be certainly more secure for the energy players than the environment experienced by Kodak.

[00:30:25.980] – Jon Slowe

Yes, I would say it's not definitely not a Kodak moment, if you're a network company because as you say the regulator won't allow the network company to, or will demand that continuity of service if you're a pure retailer or a retailer with the wrong type of generation asset, then I think maybe it could be a Kodak moment because you're probably more exposed to a fast moving change. Second question and this I guess I'd like to answer as well as from our experiences, I was going to say the top three pieces of advice that would give to a traditional energy company, but let's pick the top piece of advice.

[00:31:10.590] – Jon Slowe

So, if there was one bit of advice Eric you could give to a company that is not in that 5% that maybe in that middle ground of doing something but not the right thing. What bit of advice would you give them?

[00:31:26.460] – Jon Slowe

What bit of advice would you give them?

[00:31:30.270] – Eric Morel

Eric Morel: I think the first one will be except for some of the biggest energy companies, focus yourself on some activities on some customers on some knowhow and so on, because energy companies have been used for years to address everything by themselves and this is not feasible anymore I think.

[00:31:43.840] – Jon Slowe

And by that do you mean either partnerships or don't think that you can be good at absolutely everything, work out where your core competence and skill with lie?

[00:31:55.410] – Eric Morel

If you want to focus on some knowhow you can rely on partners for the skills you don't want to develop in internally. But you can question also your focus on some activities or some customers and so on and it will push the companies to question the relationship they have between business strategy, business dates, business targets and the political stakes which happens quite often as many energy companies have public shareholders.

[00:32:17.350] – Eric Morel

But this is to be questioned, because I think that today all the energy companies cannot achieve everything by themselves.

[00:32:57.040] – Jon Slowe

Sure. And I think my advice Eric would be similar which would be build a clear vision of where you want to play and what you want to do, and build consensus either throughout the company or in the Enel X example a part of the company, so that you have alignment up and down the business, on where you want to play and what skills and competencies you need to develop and do that.

[00:33:23.140] – Jon Slowe

Okay, we've covered a lot of ground in half an hour, but we have reached out half an hour. So, Eric thanks very much for joining.

[00:33:40.300] – Eric Morel

Thank you, Jon. It was a pleasure.

[00:33:42.970] – Jon Slowe

Thank you as always to our listeners for downloading and listening to the podcast. We'll be back next week and look forward to welcoming you then. Goodbye.

Episode 14: Energy Insights - A Utility Perspective

Usual host Jon Slowe is on holiday, so we are joined this week by Delta-ee's Head of Consulting, Charmaine Coutinho, and Digital Research expert, David Trevithick. They are speaking to Paul Mordant, CEO of Edelia and François Gonczi, Chief Digital Officer at EDF, about energy insights related to consumption.

View Transcript

Episode 14: Energy Insights - A Utility Perspective

Charmaine Coutinho, Head of Consulting, Delta-ee

David Trevithick, Digital Research Expert, Delta-ee

Paul Mordant, CEO, Edelia

François Gonczi, Chief Digital Officer, EDF

[00:00:04.560] - Jon Slowe

[00:00:23.060] - Charmaine Coutinho

Welcome to this week's episode of Talking New Energy.

[00:00:26.180] - Charmaine Coutinho

Regular listeners will note a change in host and recognize me Charmaine Coutinho, as a Delta-ee guest from other podcasts

[00:00:31.280] - Charmaine Coutinho

Jon is on holiday so I'm very pleased to be hosting the podcast today.

[00:00:34.330] - Charmaine Coutinho

Full service with Jon will resume in a few weeks’ time and maybe he will even tell you a little bit about his holiday.

In this episode we're looking at energy insights around consumption. The emergence of new technologies such as Smart Meters etc, is generating a huge amount of data around customers’ energy consumption in the home. In many markets a new part of the energy industry is emerging for residential customers.

Companies with the capability to capture, analyse and create insight and then, hopefully, value from this. There’s a variety types of customers who are doing this from standalone specialists such as Bidgely to others coming at it from a connected controlled angle like Quby in the Netherlands. Others like Centrica and EDF are developing skills themselves.

[00:01:23.660] - Charmaine Coutinho

I am delighted to be joined by two people at the forefront of this change: François Gonczi, Chief Digital Officer, at EDF and Paul Mordant, CEO of Edelia, a subsidiary of EDF which was established to set the pace of its digital journey.

[00:01:27.430] - Charmaine Coutinho

Hello Paul, Hello François

[00:01:39.050] - Paul Mordant and François Gonczi

Hi, Hi

[00:01:54.310] - Charmaine Coutinho

Regular listeners will note a slight change in our guest format having two representatives from the same/ similar organisations. But enough of that for a moment we'll come onto that. Paul, thanks very much for joining. Please tell the listeners a little bit more about Edelia and what it offers.

[00:02:05.200] - Paul Mordant

Hi Charmaine, François a pleasure to discuss with you this topic. As you said Edelia is a subsidiary of EDF providing one of the most comprehensive digital customer engagement solution for energy retailer, dedicated to a residential market.

It has been designed and developed for EDF customers, first in France and designed in Belgium and Italy with great success. Now we have more than twelve million users on the platform and we are now happy to offer the service to other retailers outside of their group. So, I'm happy to discuss this with you today.

[00:02:41.810] - Charmaine Coutinho

Wonderful.

We will get on to the, the offering to other companies because I think that's really exciting. François I'll turn to you now for a moment. One of the big challenges in this space is, there's no shortage of analysis and charts and insights that can be gained from analysing consumption data. But one of the key questions is where is the value? And what the use cases are for the customer. And also, obviously for the energy retailer and how it fits into their broader strategy around digital. I'm sure listeners are very familiar with EDF, who EDF are, but François please tell us a little bit more about your role and EDF’s take on some of these questions.

[00:03:13.010] - François Gonczi

Hello Charmaine, it’s a pleasure to join the chat today. I know you're used to having these kinds of chats every month, every week.

[00:03:34.640] - Charmaine Coutinho

Yes, that's right.

[00:03:38.360] - François Gonczi

Just as you proposed, just an introduction to EDF, EDF is not exactly a small company as you know. Very briefly, EDF is of course an industrial company and also a commercial company so I am myself the Chief Digital Officer of customer activities in France. So, France represents more or less half of the face of EDF the rest being in the U.K, in Belgium and in Italy.

[00:04:19.100] - François Gonczi

With of course electricity we are well known before that and also gas and services for all type of clients.

[00:04:26.360] - François Gonczi

As I usually say we sell electricity gas and services from my mother to big steel companies for example.

So I'm the basically and roughly that digital guy for all these activities what means digital for any customer? That's a customer branch or for utilities that's quite usual. There are usually three things; being good on how you engage your customer or prospects and use digital to be roughly let's say an emergent. Secondly, they will up new services you perfectly know probably on your side of the channel that selling electricity and gas only is less and less profitable if profitable.

[00:05:27.780] - François Gonczi

So, you have to find new way of developing a new source of incomes, and digital has it but it's not the only way. It has its part to develop new services and increase the proposals to your customers. And last, what is less known use digital i.e. algorithms, automates and so on to do efficiently what is not seen by our customers and roughly being more efficient in our internal processes. So, which is what means digital for the customer activities. Myself I lead inside with customers activities a team, a digital team that specialize in some part because we are doing digital for years or for of course.

[00:06:29.240] - François Gonczi

I am focused on three things…

[00:06:32.220] - François Gonczi

First thing that I have that science for everything so that I can practice for EDF customers activities in my team.

[00:06:43.680] - François Gonczi

Second as I said we are let's say a retail business of electricity and gas, is more and more competitive with a very intense competition. That means that we are condemned to innovate and to propose new things to our clients every year.

[00:07:10.620] - François Gonczi

So, I also led a team specialized in bringing some new innovation advocate, select some ideas, test some and bringing them at scale, a few of them not all of them at the end of the agenda process. And that's just to mention that we also have also some big transformation projects on transformation of the skews each our transformation on transformation or for our I.T. system as we are a young company that is 70 years old so, we have very old I.T. so we are always transforming it and developing new activities beat inside the company or through spin offs and new companies.

[00:08:05.580] - François Gonczi

So very briefly speaking this is an overview of EDF first and the role of a digital officer inside EDF.

[00:08:15.300] - Charmaine Coutinho

That is really interesting actually and thank you for that, it sounds like there's kind of three key things around how EDF interacts with customers which digital plays a huge role.

[00:08:27.630] - Charmaine Coutinho

New services and just sum up new technologies that happened behind the scenes, really interesting that you said two things there.

[00:08:34.920] - Charmaine Coutinho

One is being condemned to innovate, which we can come back to later and two about the transformation in terms of digital skills because I think that we don't often talk about and really important when we talk about energy digitalisation. Okay so I'm going to go. I'm also joined by David Trevithick our in-house digital energy expert Delta-ee. David let's focus on a couple of key points to Energy Insights really set the background. Firstly, could you give us a bit of context around the status the energy insight markets across Europe, where is the industry really at?

[00:09:04.300] - David Trevithick

Hi Charmaine and thanks.

[00:09:08.140] - David Trevithick

Yes of course. Firstly, this sector of the market is no longer niche and it's no longer just the major suppliers like EDF offering such services. We've now got tens of millions of European consumers with access to personalised energy consumption insights digitally, so they can access it via apps and portals or email for instance. This will only increase as more energy retailers develop their customer engagement strategies. As a smart meter rollout program continues across Europe and with the increasing need for society to focus on energy reduction, its time shifting energy consumption and increasing self-generation.

[00:09:51.560] - David Trevithick

However currently I'd say the market is still some way from maturity.

[00:09:57.320] - Charmaine Coutinho

Okay, so that’s really interesting, so a growing market, more progressive, not niche and increasing but not mature yet. Okay so let's go into my second question. How far forward our energy retailers and I'm talking about you know the people that you expect to buy electricity from? How are they really engaging with the customer? And then secondly how are they actually starting to create value from these insight tools?

[00:10:20.560] - David Trevithick

Okay well historically it's been very much led by technology. You got technology, you've got data and being pushed out onto customers, the worries and recently seeing and starting to see really, this market move from promoting the technical data offer to actually using that data and technology to address real customer needs. Some of those customer needs might be around things, like bill transparency and reducing that bill shock. We can be around things like saving money and being more efficient in their energy consumption. It can be around home automation and optimizing, both from the perspective of the smart connected home and in terms of self-generation.

[00:11:11.800] - David Trevithick

And, the rest of added value lifestyle services such as home and occupant protection the energy insights can help as well. But that said I think where we are now to the past that's the tipping point of early adoption. We're into the early mainstream, I mentioned the tens of millions of consumers already in Europe, so it's starting to offer a significant opportunity. For the major suppliers, to me that means having the ability to compete or needing really to compete to stay relevant in this dynamic sector. But for challenger brands it's also relevant it provides an opportunity for them to compete on price.

[00:11:53.050] - David Trevithick

So, we're starting to see some innovative apps use cases so progressively from providing information to customers to actually empowering them. So, we're on the journey but you know some way still from reaching any destination.

[00:12:07.960] - Charmaine Coutinho

Okay.

[00:12:08.440] - Charmaine Coutinho

Well yes, I think that's right, and it's been a bit of a process for the industry and I'm going to go back to Paul now for a little bit. Paul, based on what David said can you tell us a bit more about Edelia's experience of market change since you set up, I think back in 2005 is that right?

[00:12:23.320] - Paul Mordant

Yes, precisely at first Edelia was founded to design and to experiment lots of small experimentation with a limited number of clients. So, we have developed a IoT device. We have developed a solution for the mainstay management for an energy management solution but only on a limited scale.

So, we have always been at the heart of the transformation of the energy retailer.

[00:13:19.540] - Paul Mordant

But the main decision has been made six years ago when my predecessor decided to focus on developing a solution able to address the large number of users based only on data coming from the electricity and gas meter, without any specific device and so our key assets is all the data which enable

us to provide more and more personalized features for the user, but also value for the retail directly.

And during the six years we have developed a solution with more and more features and so more and more value with quite good success internally.

Right. Yes. And we have.

[00:14:13.520] - Paul Mordant

They can benefit from the deployment of the smart meters which has been a first step to get more data and to be more personalised, to gain in terms of satisfaction and engagement for the clients.

And now we are facing the second wave with the coming IoT device, the smart home, and the possibility of a large number of partners to get more data and to provide new services that came to our smart home devices.

[00:14:36.890] - Charmaine Coutinho

So that is very interesting your emphasis on focusing on a particular area six years ago seems to have really paid off in terms of the progress you've been able to make.

[00:14:47.180] - Paul Mordant

Yeah, so with this large and increasing number of data and month of data, we have progressively developed new features, first on the data digitization proposal. But more and more in order to engage the client with emails, with SMS, with specific interaction. What we estimate is that a client in the energy sector spends only 10 minutes within a year on the interaction, digital interaction with the retailer. So, we need to be really personalized and empowering to be able to address the specific needs. And it's key for the satisfaction of the clients and therefore their loyalty and therefore the business of our client.

[00:15:43.610] - Charmaine Coutinho

Thank you, Paul, that's really interesting that 10-minute statistic is a great one and it does really show that you everything needs to be very, very personalized and specific.

[00:15:44.090] - Charmaine Coutinho

And actually, I think in the past it was easy for energy companies and energy retailers to have been quite complacent with their customers, they're also that digitalisation will just happen. Francois can you tell us a bit more about and we touched on this before but EDF wider digital strategy and how you have experienced promoting these kind of energy insights to your customers?

[00:16:34.220] - François Gonczi

Yeah actually I think finally about a goal of the strategy mainly David and Paul finally as Tom mentioned the key points.

[00:16:42.590] - François Gonczi

Just to recall the two main things we have a strategy on customer engagement on what we sell within our core business and also strategy on developing new services. [illegible]

[00:17:00.830] - François Gonczi

That means that for first or customer engagement what are the goals. Mainly two things getting more engaged with the client.

[00:17:11.420] - François Gonczi

Typically once a month that is a good idea because when you are more engaged with a client we are better in tune, with let's say proposing new and more efficient things to the client and also better against your competitors because you have a chat and there occasions to two to bring to your clients.

[00:17:40.610] - François Gonczi

What is needed for them and today, beyond only price, the main thing that is asked by our clients, the second thing after the price and after basics let's say get my beers and so on, the second things that is to get energy efficiency advice is absolutely personalized and so on.

[00:18:10.940] - François Gonczi

Paul mentioned that this is true for B2C, this is true for her team is also, of course it's more complex.

When you speak about more bigger consumer like big industries or big tertiary buildings. When you go to these types of customers you are less the problem of those let's take the target of digital engagement, but you more speak about digital includes in services. And usually first energy efficiency services and if you can find a well with some customer you go beyond that.

[00:18:52.400] - François Gonczi

So just to mention for services EDF starts with energy efficiency services usually and more and more develops new kind of services for B2C customers, for example we developed a platform company that that is called Easy by EDF selling interventions at home.

[00:19:02.200] - François Gonczi

I don't know your primary or you hold her when you need to renovate totally your apartment and so on. So we are trying for services first to offer the basics. That means services related to energy and more and more they will put to develop our business and not service is purely related to energy but linked to a little bit with energy renovations, let’s say urgent intervention for at home or for big clients and so on.

[00:20:01.880] - François Gonczi

So, this is how we include digital in developing our business.

[00:20:15.570] - Charmaine Coutinho

Yeah. So, the role it plays in the wider piece you can see as being an quite critical. Okay. And then Francois again I was wondering around and the decision to look at digital capabilities 20:29 and develop that in-house as opposed to buying in?

[00:20:37.320] - François Gonczi

That’s a good question, there is to be honest Charmaine, there is no simple answer to this question, so I do not have any strict doctrine.

[00:20:38.250] - François Gonczi

We consider that each time we do something, I will give you some of the parameters that we consider because usually when you do that you have two types of questions.

[00:20:48.240] ] - François Gonczi

The first type of question is do you do the technology itself at home, inside, or do you buy it?

[00:20:56.520] - François Gonczi

And the second type of question is do you do the activities, the economic activities, beyond technology inside your main company? Or do you take shares in another company or start up and so on? Or do you build a spinoff like Edelia is to do those economical activities?

[00:21:08.870] - François Gonczi

Well I would say for each for part we actually do all types of things depending on the project.

[00:21:15.690] - Charmaine Coutinho

Yeah, I think it’s definitely something we see in other places and in other kinds of different types of energy transitions that are going on in the market. But sorry I interrupted you, you were going to say…

[00:21:20.790] - François Gonczi

No, you are perfectly right. Actually, the first thing we would consider is where are the risks? We want to let's say to let to a company. Or are there risk we want to insure ourselves for example around privacy, personal information GDPR and so on.

[00:21:39.720] - François Gonczi

Usually we are absolutely not keen to send the personal data of our clients to a third party. We have a number of rules, cyber security rules and privacy rules that means we usually we keep the data at home, inside the company.

[00:21:49.290] - François Gonczi

So, this is how we consider selecting technical partners. That's first thing.

[00:21:54.170] - François Gonczi

The second thing we consider also is, do we want to do the business or are just of our inside or through a spin off. Well the main thing is that where when do you do you. Many. Not only that many financial issues that means do you want to locate into one vehicle which is an independent company.

All of the founders and order is to develop a business, or don't you want.

[00:22:01.710] - François Gonczi

So, it is mainly financial and governance issues and not strategic issues.

So that is the second point and the last point, well I don't know if it's your question Charmaine, but I'm usually asked this question, why don't you work a bit more with start-ups? Is it your question or not at all?

[00:22:13.730] - Charmaine Coutinho

Well I think it's very interesting actually, because my next question is going to be…

[00:22:25.110] - François Gonczi

So I will try to answer, when we are working with a very big technological company or a very big partner or a specialist on the energy and you're speaking about start-ups.

[00:22:34.480] - François Gonczi

We wanted to insure ourselves for example around privacy personal information GDP and so on.

[00:22:44.680] - François Gonczi

So, we have worked with start-ups in many ways. Just to mention as with most big company we have venture capital funds.

[00:23:08.120] - François Gonczi

We worked to start off with our R and D and so on and I have to admit. So EDF does that since I think it has into a four to eight years program I think more or less all are very organized but I have to admit that when you want to develop a business at scale it's quite rare that a partnership with the start-up is finally a success. Mainly the main reason. So usually when we say at scale it's at least to one million clients. So, we are not a small company less than 1 million clients, it is not at scale.

[00:23:17.260] - François Gonczi

And to develop something with a start-up for one million clients very quickly, usually is a main issue is that we are very, very, very careful on cybersecurity things and we and it's quite rare then that the start-ups meet our requirements. So, if I can mention just that that means that finally when we develop something at scale, with a start-up, to be honest we accept very few examples and usually we buy it.

[00:23:54.310] - Charmaine Coutinho

Yeah, I mean it's a really good point actually and Paul I'd be interested in that kind of conversation of scale particularly as you mentioned that you are now Edelia’s vendor of solutions to customers beyond EDF.

[00:23:58.180] - Charmaine Coutinho

Can you tell us a little bit how that's come about? And how that plays into the scaling challenge?

[00:24:07.460] - Paul Mordant

So, the first scaling challenge has been made internally in the group because at first, we started with only thousands of clients and with the commercial development internally, so we sold the solution to our subsidiary in France.

[00:24:33.080] - Paul Mordant

Like so we yes in fact more in foreign island and also now in Belgium and Italy.

So, with this company we have been able to scale up and to deploy the solution with specific needs.

[00:24:42.540] - Paul Mordant

Taking into account the specificity of each of these markets so the first step has been made a good thing. And the second step has been made or so internally with the possibility the opportunity to switch from thousands of clients to now 12 million clients by importing increasing and more and more client.

[00:24:58.320] - Paul Mordant

Usually it's quite and so we worked with start-up within many ways you. Just to mention as most big company we have venture capital funds.

[00:25:12.570] - Paul Mordant

For these three concretes and a possibility to engage with this client with a specific feature so we are now I would say able to address millions of clients in every country in Europe. So the strategic decision to move further on has been made a few weeks ago and I would say the key element of the decision is that it is a necessity to go further.

[00:25:53.160] - Paul Mordant

I mean to be more and more competitive with the new feature addressing the needs of the changing world of the retailer, energy retailer and also the necessity to add more clients to reduce the cost. So a platform strategy to reduce the cost per client in every country both for our clients now and for the future clients. In a digital world you have to address more and more clients to be competitive.

[00:26:07.450] - Charmaine Coutinho

Yeah, I think we find that very interesting.

[00:26:48.220] - François Gonczi

Yeah. Sorry Charmaine, just to say very briefly that finally come on process in say that because when you asked what how we approach the application process so you have an innovation where you trade between an external partner or inside partner as Edelia with our own inside you know how employees and so on. So first you try to see is there is a business, is technological it works, and so on. Secondly you ask yourself Okay, do you want to, do I want to put this if it works, do I want to put this outside the company.

[00:26:50.650] - François Gonczi

I mean I buy the solution. Do I want to disrupt the business or develop the business as a standalone company which is the case for Edelia or do I want to keep that inside my company as I know from the main brand and the main company which is EDF. And naturally so in Edelia we withdrew, we have chosen the second solution.

[00:27:01.450] - François Gonczi

More recently we have also chosen the second solution with another company called Argos you know that aggregates for flexibility and decentralised energy.

And so it's on the energy market, towards an energy market, because sometimes we choose at the end just to let's say to develop a service for example inside the main branch and the main company and sometimes we just choose to do a partnership with an external company so the three processes are possible but we tried first once let's say two to come to your advocate issue Africa program we tried first to answer a program that is already at scale in-house it means that from the beginning we start more small but the perfectly knowing at the end it worked big.

[00:27:22.630] - François Gonczi

That's why there is so many cybersecurity issues. That's why we usually consider all the possibilities like how we are going to the market and so on.

[00:28:12.600] - Charmaine Coutinho

So, I think that's actually interesting and I'd love to talk about that more, because there's so many things that you've unpacked in that conversation around scaling. And Paul you mentioned developing new platforms and platforms is a topic that we've seen come up in the sector repeatedly. But more and more in the last 12 months. But that is probably another podcast from a running at a time which is a shame, but I will do our last thing which we always do on our podcast which is to look forwards and bring out our talking new energy crystal ball well it’s Jon's crystal ball but I'll borrow it for this podcast and I have one question really.

[00:29:14.790] - Charmaine Coutinho

What do you think are the key challenges for the Energy Insights sector and I think Paul and Francois you've touched on some of them, but if I pose that question around things that we haven't discussed so far? What else do you think really is the key challenge for the energy insight sector? Paul If you want to go first.

[00:29:31.370] - Paul Mordant

I think the key is that the energy transition is making the possibility, the relation with every client with the energy sector more and more complex because it has more and more choice, the number of competitors, the type of offer of self-consumption PD, EV, demand side management and so on, these are probably a few.

[00:29:34.490] - Paul Mordant

This is very complex for every client and only few are really able to understand it rarely. So our mission I would say is really to be able to simplify all this and to be able to address in very simple features to be able to allow in to use all these possibilities or this new possibility because it's really a great opportunity for him. But we have to make it as simple as possible. And if we don't manage it, it will be a difficulty for energy transition. So, our mission really for energy transition is it to make it simple for every residential customer.

[00:30:22.370] - Charmaine Coutinho

Okay. Thanks Paul. Well I think making something really complex, simple, is key! Francois, would you agree?

[00:31:08.540] - François Gonczi

Yeah, I perfectly agree I would say if I can give more insight I would say, if I could put some of our challenges on a timeline today are as electricity, mainly electricity gas retailer. The challenge is it's the case in France, it the case in the UK, it's the case in most countries in Europe is that we have a very, very, very competitive market. So, seventy competitors in France. I think more than one hundred in the UK.

[00:32:05.630] - François Gonczi

So it’s an almost added effort. We have a big market share in France and also in the UK.

[00:32:24.080] - François Gonczi

But the market is very, very competitive. So this is a challenge today. This is what was mentioned by David just at the beginning of the podcast. The challenge not for today but let’s say tomorrow morning is that we have to sell more and more services.

[00:32:44.230] - François Gonczi

That means that the historical difference bid for a B2C or for B2B between the company that sells energy and the companies that sell the services linked to energy or services using energy will be less and less so this difference will be less and less obvious.

[00:33:11.430] - François Gonczi

So this is for tomorrow morning and last but not least for tomorrow afternoon, it is exactly what Paul mentioned it is still not well developed today but increasing very fast that means mainly for B2C customers finally, they will equip new types of equipment at home dealing with energy from photovoltaics from electrical vehicles, some batteries at home, some domestics equipment and so on and today all of us all of those things are not really speaking with one another and with it a new complexity

[00:33:15.230] - François Gonczi

That meant that when you tolerate energy storage at home, production at home, big new use of energy like electrical vehicle at the end dealing alone they take.

[00:33:22.810] - François Gonczi

If you're my mother, sorry Charmaine mean dealing with all of this stuff alone and be sure that at the end it is used efficiently. You have to find somebody that makes it very simple really very simple.

[00:33:55.510] - François Gonczi

So, this is exactly what Paul mentioned. We see that on what we work today which is not this is for tomorrow afternoon. That means that in very few let’s say months or a year that with that is a very big business case.

[00:34:46.750] - Charmaine Coutinho

Yeah, I think that's right. I think it's really interesting to see you positioning all of the innovations and services that need to be developed for companies to stay relevant around this Energy Insights piece.

[00:34:54.340] - Charmaine Coutinho

So yeah, I think I would agree with that. David let's finish up with you and bring it back to engine insights if you like what you think is the key challenge for the industry?

[00:36:08.440] - David Trevithick

Thanks. Well I agree with everything that has been said and we’ve certainly covered a lot of ground already actually.

[00:36:37.960] - David Trevithick

I think just to add to that perhaps is really demonstrating commercial value from Energy Insights to reflect the level investment that's gone into developing these customer propositions over the years. It’s not to say it doesn't exist, but we are generally seeing higher customer satisfaction amongst customers with access and using energy insights, but things like the retention benefits, the up sell benefits we mentioned you know those sorts of things are not yet established at scale.

[00:37:41.650] - David Trevithick

I think that's the area perhaps again for tomorrow rather than today but one to focus on.

[00:38:16.870] - Charmaine Coutinho

Thank you, David.

[00:38:31.620] - Charmaine Coutinho

Well that's been really interesting actually and I think we have covered a lot of ground from the role of engine sites and how the market's evolving.

[00:38:41.250] - Charmaine Coutinho

The challenge for suppliers as to how they innovate around digital energy which is I think a key question people have been asking themselves and will continue to and they probably need to do it tomorrow afternoon and then the afternoon after that.

[00:38:45.340] - Charmaine Coutinho

So, it has been a really fascinating session.

[00:39:19.280] - Charmaine Coutinho

I'd like to say thanks to my guests Paul from Edelia and Francois from EDF and David of course.

[00:39:37.420] - Charmaine Coutinho

But finally, thanks to the listeners.

[00:39:55.120] - Charmaine Coutinho

Jon will be back next time I'll be back at some point for sure. And thank you very much.

Episode 13: In conversation with Greg Jackson, Octopus Energy

In this week's episode, Jon Slowe is joined by Greg Jackson, Octopus Energy, to discuss the energy market, disruption in energy and transport, and the ways in which the energy, heating and transport sectors are converging.

There will be no podcast w/c 15th July as we're on holiday! Join us again later in the month for the end of series 2.

View Transcript

Episode 13: In conversation with Greg Jackson, Octopus Energy

Jon Slowe, Director, Delta-ee

Greg Jackson, Founder and CEO, Octopus Energy

Jon Slowe

Hello and welcome to the episode. Today I’m in conversation with Greg Jackson, founder and CEO at Octopus Energy, one of a new breed of energy retailers that’s popping up across Europe. Octopus are based in the UK and have been quickly growing customer numbers and grabbing some attention in the market so I’m delighted to have Greg on the podcast today and to talk a bit about Octopus and Greg’s views on the market. Hello Greg.

Greg Jackson

Hello, how you doing Jon?

Jon Slowe

Good thanks. Greg, thanks for joining me and looking forward to talking with you about the growth of Octopus and your perspectives on the market today. Now, you’ve not got an energy sector background, you come from more of a tech industry, or a tech background. I’m very interested to know what about the energy market captured your attention, because from one point of view it’s a crowded market, there are many suppliers, energy’s a bit of political hot potato at the moment, retail margins are pretty thin, its very regulated market. Given all of that, why did you find it interesting?

Greg Jackson

Well I think the first thing is that customer experiences have generally been not great in energy. So my own experience as a customer and the people we read about in the press all the time suggests there's a big opportunity to improve customer experience but I think the founding team came from a technology background, we've built a lot of transactional platforms in our previous business and our observation was that there were a couple of sectors, energy and retail financial services that were colossal globally, which had really not yet been disrupted by technology. And if we looked at energy, not only did we have the bad customer experiences, we also have high cost to serve, a lot of mistakes and really excitingly the opportunity to do something about climate change. If we put all that together, energy is a two and a half trillion dollar undisrupted sector globally with all the opportunity of fintech and then both the business and moral imperative to sort out climate change.

Jon Slowe

Okay. And how long ago was it when you started thinking and acting on this?

Greg Jackson

We first started thinking about it in 2012/2013 when we'd sold a business that built transactional platforms. But I think it became apparent if we wanted to make a really significant impact. We needed to be well backed and it wasn't until 2015 that I happened to meet the founder of the Octopus Capital Group and, you know, they are one of the leading venture capital outfits in the UK, they've also got more solar farms than anyone else in the UK. And I pitched him on the idea, that was late 2015 and we launched the public in May of 2016.

Jon Slowe

And to give listeners a feel from launching in 2016 to today, how big are you? How much momentum have you gathered?

Greg Jackson

So we're about three quarters of a million households customers so about 1.3 million energy accounts and that's growing around 50 to 80 thousand households a month.

Jon Slowe

Okay. So that's quite a rate of growth and quite a customer base you've established. Greg if you think back to when you got excited and enthusiastic about energy and the last few years of experience of growing a business to that that level, do you, have you got more excited, less excited or has the nature of your excitement changed at all?

Greg Jackson

I think we get more excited all the time. The opportunity, I guess everything we do that works or gets traction creates more permission for the next level of disruption. So I don't think at any point now could we sit back and think we've been successful but we have delivered a lot of the things that we promised we would or that we believed we could. And I think that then enables us to kind of accelerate the investment and the rate of change that we're trying to bring to bear on the market.

Jon Slowe

Okay. And looking at the things that you've learned that've gone well and how would that translate for a customer? So if, I'm afraid I'm not an Octopus Energy customer but if I was what would that translate to in terms of customer experience, in terms of what's, what you're really proud of in the last few years? And how does that compare to your, I guess your mission of the not so good customer changing and the not so good customer experience that is more prevalent in the industry today?

Greg Jackson

I think the first and probably greatest or hardest thing is that energy, certainly in the UK and in many other countries, has fallen into the trap of companies luring customers in on unsustainably low prices and then hiking them, typically a year later, once the customers DD is established and its inertia kicks in. And I think the very heart of bad experience is the distrust that that causes. Customers finally get around to switching energy company, they think they've got a great deal and then just a year later they discover that they haven't switched to a better company, they've just switched to one that's the same as all the others. And I think from the very beginning we were determined not to do that. And really our question was; is it possible to build an energy company with prices that start as good value, not necessarily the cheapest, sustainably good value and carry on being good value year in, year out. And I think the first thing I'm really proud of is that our customers will be experiencing that with their pricing.

Jon Slowe

And do they know that Greg? Do they, do you make that visible to them or how does a customer see and understand that?

Greg Jackson

Yeah. So a great example would be energy companies typically have, what, a three page bill? If you're an online customer you'll get an email every month from an energy company every quarter saying log in to see your bill and you literally have to log into a website with a username and password you'll never remember because they've got specific rules that you don't use elsewhere, to download a three page PDR with hundreds of numbers, buried among which are the prices you've paid for two products. Meanwhile, you know, Tesco have got a two inch till receipt, they can have a dozen products on it and it's easier to follow. So what we did was rather than blame regulation and say look here's that impossible to decipher bill we created a really clear, transparent, readable statement that customers get every month with key numbers, in plain text, in the preview pane of the email. So every month they're aware of what they're spending and what energy costs. So I think we try and make people aware of it from the very beginning.

Jon Slowe

And that, you talked a bit about coming from a tech background but part of that would involve tech but part of that just involves thinking, putting the customer first in your thinking I imagine.

Greg Jackson

Yeah I think far too often companies in incumbent industries like energy think of tech as being a way to cut costs but actually it's a way of reinventing the entire customer experience. So, you know, tech can bring transparency. We often remark, you know, Uber shows you where the car is, Deliveroo lets you know that the guy is about to knock on your door. That transparency in the operation applies just as much in energy. So our question is; now that it's basically costless to give information to customers, how do we give them as much information as possible to enable them to easily understand what's going on with energy. And then our article of state is that if we're transparent and open with them they'll choose to stay with us even when a company with a different strategy might offer them a short term better deal.

Jon Slowe

So how would you benchmark yourself then against a Deliveroo, an Uber, an Amazon. If we think of the, you know, those companies at the top end of customer experience, user interface are you, have you got a lot more to do or what do you look at them and think yep we're in that category as well?

Greg Jackson

Well actually, interestingly, the best of the energy companies, and we're one of them, but the best of the energy companies are probably now among the best rated companies for service in any sector. You know our trust buyer rating is 9.6 out of 10. That's a lot higher than Deliveroo's, it's a lot higher than, well most of the companies you've just mentioned. Now by the way, I'm not criticizing Deliveroo there, they are incredible, they're an amazing company. But I think it's really important for people to realise that traditional, the incumbent energy companies typically have very low ratings. The kind of cheap and cheerful unsustainably priced new start companies to become very poor ones as well but the best of the new breed have got bonkers high levels of service.

Jon Slowe

Yeah. Okay. And service, we'll come back to service in a minute. I want to ask you about first of all the commodity business and then tech and then service. So the energy retailer business model has and still is a centralised commodity business model today. And that's what Octopus, I imagine most of your business is based on so far, but in the future and we're starting to see this already it's going to be a very different business model based around optimising distributed assets. A lot of them the customer side of the meter, your electric vehicle, electric heating and so on. So while you’re probably mainly a commodity tradition or centralised commodity company today, how do you see yourself in three to five years? Do you think that will still be the dominant part of your business or do you think you'll be optimising EV charging, electric heating, working with batteries behind the meter and so on.

Greg Jackson

Yeah. All of the above. I think the, there's a great video from Jeff Bezos, the founder of Amazon, in 1998 when Amazon had just start opening its own, building its own warehouses and the interviewer said I thought you were an internet company and here you are building real estate and Bezos said internet, schminternet. It's all about the customer. He says we will do whatever it takes to bring our customers better products and services and better value. And so if that means building a warehouse so we can reduce the delivery time, we will do that and I think it's the same here. It's all about the customer, customers require energy, they're not bothered whether it's coming down a wire or from a thousand miles or whether it's coming from next door. What they want is their energy needs met. And our job is to understand the very, very best way of meeting those energy needs and bring them the products and services that will do that with the best value that suits their lifestyle in a way that makes them happy.

Jon Slowe

So if I turn that question around a bit then, to achieve that aim, how quickly do you think your business will shift from being almost purely based on centralised commodity to optimising for example, electric heating or electric vehicle charging or vehicle to grid even?

Greg Jackson

I don't think it's sort of an either or, or a shift. I think it's just an increasing number of ways in which we will meet that customer need. So for example, today I think we've decommoditised electrons to a high degree. We've got plenty of customers now who have tariffs that give them super cheap electricity to charge electric vehicle at certain times a night. The ones who've got tariffs that mirror the half hourly wholesale price and that charge kind of peak pricing when their network's busy and super off peak pricing when it's not. So already one electron is very different than another.

And I think the more we move to a world in which a green electron traveling a short distance down an empty wire is a cheap electron, the better. Now that could mean solar panels or batteries, it could mean that we put a facility at the end of your road, it could mean we're supplying you from next door. But I think, you know, that creativity in the way that we meet the customer need is already beginning to happen.

Jon Slowe

Okay. Tech was next on my list. So I'm interested in your view on tech from two angles, and they're interwoven, one angle is the technology that will be needed to, for example, optimise electric vehicle charging a particular time, so offer the right tariff to the right customer so that the tech platform underlying all of that. And secondly tech from a, both a customer service and delighting customers as you've talked about and a cost to serve point of view as well, so enabling you to provide customers with what they want, when they want but a really good price. So you've described Octopus as a tech company and you've got a tech background but how do you think about tech? Do you think of yourself as building a tech stack and then starting with that or customer led and then building the technology around that? I'm interested in how you approach the whole question of the technology needed now and in the future.

Greg Jackson

Yeah. I guess the first thing is that we as a team, before we started Octopus Energy, really did look at do we create a new breed of digital bank or a new breed of digital energy company. So the choice to build a scalable globally applicable tech backed to disrupt an industry was a decision we'd made even before deciding that it was going to be energy.

Jon Slowe

Right.

Greg Jackson

I think in terms of the question you ask about, kind of, the tech required to, for example, optimise EV charging or versus the tech required for low cost to serve, essentially, it's the same tech. What you need is to have truly scalable, big data solutions where you've got a highly agile platform that doesn't find a job of billing and reconciling and providing CRM particularly difficult. And instead can then put all of its effort, sorry, a lot of its effort on what is the future of energy. And that's kind of what we've built. So I'll give you a couple examples actually. So we're what three years old, we got a single tech stack that supports our business. It's called Kraken by the way, just so I can refer to it in future. Kraken has on it 35 million rows of data, live, today. Every phone call, every email, every time a customer switched to us or switched way, every interaction and every half hourly meter read and an estimated read for every half hour where we don't have a smart meter and so on. And all of that data sits in one place which means you really can start to, kind of, join together what would traditionally be seen as sort of industry data you know forecasts, which we divide at a half hourly level using machine learning, settlement and you know the costs that with consumer behaviour, which is why you start then to be able to say you know if we've got a customer on a dynamic tariff and it's had a spike in price and they phone in, are they likely to be leaving us to be switching to a static price or actually they're going to be phoning up to say what can I do in future to reduce the pay.

Now not only do you have all that joined up data in an agile environment that just keeps growing, you're also able to start thinking about things like you know you talked about automated EV charging. The same system knows what tariff you're on, what your price regime is and therefore exposes via APIs, that kind of information to any equipment or services that the customer has authorised or connected. So then you can automatically start plugging into that kind of hive mind of the future energy system and we give you that today

Jon Slowe

Okay. And that presumably was, that's a big investment, investment may not be quite the right word, but you've developed this over a number of years with a very strong tech team. Do you consider that as an investment is that, or are you able to give us a sort of indication of how much investment that is?

Greg Jackson

I think the interesting thing is when come from a tech background, you learn how to do these things in a way which is, you know, robust and scalable and maintainable but doesn't involve employing 500 subcontractors. So you know our tech team is probably a small two digit number, 20 or 30 people, and throughout our history it's been growing. So actually the core platform was developed by fewer people than that.

So I think the idea here is that you have small numbers of exceptionally talented people who truly understand the domain and are therefore able to be 10 or 100 times more productive than the kind of developers a lot of people are used to who are essentially doing, kind of, colouring by numbers. One of the things, I think this really brings it home is; most people will be used to a weekly or monthly or even quarterly release cycle. So all of the upgrades to your platform happen on that, you know, monthly or whatever cycle. We run genuine continuous integration and continuous deployment which means we typically releasing maybe 30 times a day. So you've got this super turbo charged speed of tech development and the magic of that is it means that the next stage of development which has to wait till this one's out of the way, is only waiting hours rather than waiting weeks or months.

Jon Slowe

And presumably Greg this is experience you have; you and your colleagues have got from your own backgrounds outside of energy. When you look at other energy companies, you talk with your peers within energy a number of companies are moving in this direction but a number are still stuck on big old legacy I.T. systems. How quickly do you think the sector as a whole is able to work in the way you've described? Or do you think for many it will just be really, really hard to change a legacy system and adopt this, a new way of working like you described?

Greg Jackson

It's certainly hard adopt these ways of describing until you've got tech savvy leadership. I was at a dinner and someone said to me come on Greg, you know, all the big six need to do is employ some smart CTOs who can do what you guys have done. But the reality is you need the tech people right at the top of the company because I think when you have tech people on top of the company they're able to understand, ordinarily, senior management say to the tech people this is what we want you to deliver. But in a tech company, actually what happens is senior management are saying, we know that tech can deliver this. And so what you do is instead of trying to force your tech to fit your business model you actually create business models that are built around the tech that you know you can build.

Jon Slowe

So rather than an energy company with technology you're a tech company in energy is that a fair way to describe it?

Greg Jackson

It really is and I don't want to be hubristic about this because you know [...] enormously and I'm sure we can't hold a candle to them. But if you think about the companies that have disrupted other sectors, Uber wasn't started by cab drivers or the cab companies that hired tech people. And Amazon wasn't started by retailers that hired tech people. The same applies to any of the sectors that have been disrupted. They're disrupted by tech people who think they can use tech to change the way a sector operates and it's changing by the way for the better, to dramatically drive down cost of operations, to improve transparency, bring back customer service. That's kind of the opportunity in energy.

Jon Slowe

And how, the gap that you have from that direction is the energy sector experience and some of the energy sector will say this is all very well and good but unless you understand how to manage your position in the wholesale market, wholesale market risk, balancing responsible positions and unless you're effectively coming from the energy sector and have that ability to trade and manage risks in the wholesale market you'll come unstuck. What would, how would you respond to that?

Greg Jackson

I'd love to share with them the technology which enables us to do probably a better job of modelling in risk management than traditional energy companies. And I think, you know, I'm being hubristic but a risking hubristic. But the reality is, you know, if we're sitting on 30 odd billion rows of data and the machine can crunch that really, really effectively and churn out you know in our case I think we run 3, 000 Monte Carlo simulations a week to test our hedging position against incredible variety of stress scenarios. So what we're doing is we're using technology to tackle questions like that as well as, you know, customer service, flexible pricing and APIs. So, you know, I think the magic there by the way is that we're replacing the fragility of spreadsheets with the ability and audit ability of software.

Jon Slowe

Okay. And I guess not quite taking the human out of it, the energy trader out of it but using that software and that intelligence from the data to help an energy trader to optimise positions.

Greg Jackson

Yeah. And I think increasing what we do is first of all the people we have running our trading procurement and risk management are from an energy background but we hired people who had the mathematical and software skills to be able to not only do the job but code the job. So instead of repeating same analysis each time they run a, you know, kind of look at a position, what they'll do is write software that will do that analysis. We'll build that into the platform and that means the next time running that analysis it's just happening automatically. The machine's just doing it and the people are moving to the next level challenge which is how we just kind of keep reducing risk at every stage.

Jon Slowe

Okay. Greg something you talked a lot about earlier was customers and meeting the needs of customers in the best possible way, tech can help with that but it can only do part of that. You talked about tech leadership, to what degree or how do you manage within a growing business, a growing tech business, to keep customers at the centre of what you're doing and not let the tech people get carried away with all the different things that tech could do.

Greg Jackson

Yeah. So one of the great things we do is every couple of weeks the members of the tech function in our business actually sit down with the operations people, the ones looking after customers and they sit side by side and they're looking after customers together. And that enables the tech people to truly understand what the kind of problems we're solving are and also where our tech makes it easier and harder. So the customer operations people have kind of got this mainline injection into improving technology. Every week we get the whole company together, we join up at three locations by video and the tech people reveal the latest things they've done to make life easier for operations people, the operations people give them a big round of applause and it's a really positive way of enforcing that's what tech if for.

Jon Slowe

And scaling that when you're five times bigger, 10 times bigger in the future, can you maintain that or is it just a way of evolving your organisation as you grow?

Greg Jackson

Yeah. It's funny, when we had like 20, 000 customers people said will it scale and when it's 200 thousand it's will it scale, you know, we're way past that now. The reality is, it's all designed to scale. So for example the way we look after customers is every customer is looked after by a semi-autonomous operations team. That team will look after 55 to 60 thousand customers. There'll be about 10 people in the team they'll look after every aspect that customer's life with us. So because we've got a tech platform that lets the customer operations people be a true universal agent and you've got teams where every member of the team is able to do everything. As we grow all we need to do is create more teams. We don't need to recruit more, you know, billing specialists or metering specialists or second line support, instead we've got this wonderful, smart, multitalented workforce who go through the same training, into the teams and it just keeps growing.

Jon Slowe

So from talking with you today Greg there's three things that I can see are, or pull out from what you've said. One is being tech led as you've said a couple of times. Second, making sure your customer led and dovetailing the technology and the customer experience. And thirdly, scalability, making sure everything you do can be scaled for the future. I guess these aren't, this isn't rocket science or anything that you couldn't find in other sectors as you've described but the challenge is the actual application of this. So as we get to the end of the podcast I'd like to ask you about your role as leading the company in how to keep the different parts of the business balanced and your biggest challenge as you look forward to what Octopus could achieve in the next few years?

Greg Jackson

Great. So I think look, the first thing for me is maintaining a culture in which we don't need to tell people what to do. We need to create the environment and give them the resources to do what they need to do to do a brilliant job because as an article of faith most people want to do a brilliant job. And by the way energy is one of most exciting sectors people work. Simultaneously tackling kind of all the problems of the past to do with how customers were treated or high pricing and lack of transparency and they're at the frontline in the fight against climate change. So we've got a motivated for workforce and I just have to make sure the process and, you know, kind of rules don't get in the way of their ability to really drive forward what they want. I think the second thing I have to do is kind of relentlessly advocate for a better energy system, one that's genuinely built around customers. So, you know, the very phrases in energy like energy supplier, you know, where else can we get a supplier, drugs, drugs supplier. It is the grubby business of taking money off someone in return for a commodity on a street corner but instead we should be energy retailers, energy companies. Our job is to truly understand and look after customers and then champion them all the way down the supply chain so that if we spot the opportunity to reduce the cost of energy, anywhere in the supply chain, from generation to transmission to distribution, we should be championing that. And I think as we look at the future of energy and the opportunity to deploy storage, time of use, APIs, automation, you know, there’s never been greater need for it than there is right now. So I guess in with the culture and outwardly I drive the change we need to enable an affordable greener energy system.

Jon Slowe

And a vison for where Octopus will be in three to five years? Is it in such an evolving, dynamic sector that’s being disrupted in the ways that you’ve talked about, how clear are you in where you could be or might be or want to be in three to five years’ time?

Greg Jackson

Yeah. So look, we’ll have to have millions of customers here in the UK and we’ll have to be building a significant market share in multiple other countries and in order to deliver the potential of the platform and the business we’ve built to date, anything short of that’s probably letting ourselves down.

Jon Slowe

Okay. And if you had to give one from your experience, not only with Octopus but in previous companies, one thing that’s stuck with you as an entrepreneur to pass onto others, be they in start-ups, in companies like yourself or an entrepreneur embedded within a big corporate somewhere, what would one key piece of advice from all your years of experience in developing new businesses?

Greg Jackson

Remember that every single person who works in your company manages to run a life outside of work. And in fact the less they get paid, the harder that is and yet when they get to work so often companies treat them as though they have to be told how to do the most medial tasks. Instead, understand if they can do what they do in their private life, they can really do whatever is needed within your company.

Jon Slowe

Okay. Well your focus on your people, your trust in them and the culture that you’re developing around letting people get on with their jobs shines through very bright and strong Greg. As does your focus on tech and your passion to disrupt the energy sector. Greg thanks so much for sharing your thoughts with us today and congratulations on everything you’ve achieved with Octopus so far and look forward to talking with you and your colleagues over the next years as you go hopefully from strength to strength.

Greg Jackson.

And thank you Jon, it’s been an absolute pleasure.

Jon Slowe

Thanks very much. So that brings us to the end of todays episode, we’ll be on holiday next week, taking a break from the podcast and then back the week after that. Thanks again to Greg, thank you to all of you for listening and good bye.

Episode 12: Transforming homes with super-insulation and high-efficiency heating

Host Jon Slowe is joined by Delta-ee heat expert Lindsay Sugden, Joris Jonker, Founder/CEO of The FCTR E and Kristofer Fichtner, Co-Founder of Ecoworks. This week they discuss transforming homes with super-insulation and high-efficiency heating.

View Transcript

Episode 12: Transforming homes with super-insulation and high-efficiency heating

Jon Slowe, Director, Delta-ee

Lindsay Sugden, Principal Analyst, Delta-ee

Joris Jonker, Founder/CEO, The FCTR E

Kristofer Fichtner, Co-Founder, Ecoworks

[00:00:04.560] - Jon Slowe

[00:00:22.130]

In this episode we're looking at how to slash carbon emissions in houses through electrification and doing this in a way that doesn't require a big upfront investment from households. Sounds intriguing? Then listen on. The pathways for decarbonising heating in homes are really tough. And I think in comparison to decarbonising electricity generation and transport, decarbonising heat is really hard. Looking at the pathways, there's variety of pathways for decarbonising heat, hydrogen or low or zero carbon gases is one. District heating fed by low carbon heat sources another. And of course electrification of heat.

[00:01:02.540]

It's electrification that we're focusing on today, coupled with […] and in one case super insulation that slashes the demand for heat. My guests have founded companies that could revolutionise energy demands of households in Netherlands, Germany and beyond. So let's introduce my first guest, Joris Jonker, founder and CEO at FCTR E in the Netherlands. Hello Joris.

[00:01:29.680] - Joris Jonker

Good morning Jon. Thank you for having me.

[00:01:32.410] - Jon Slowe

Thanks for joining. Tell us a bit about the name FCTR E, so F C T R and then E. What does it mean? Where does it come from? It's a bit unusual.

[00:01:44.500] - Joris Jonker

Well the idea for the name is it's the FCTR E because we upgrade your home, we upgrade homes to fossil free heat and energy and in a way if you look at all the technology which enters your home when you put in the heat bump and hot water tank and solar panels, batteries, it kind of looks like a factory, but not a normal factory a FCTR E. So an energy factory and it goes also, and having a home like that we call an E home and having an E home gives you the E factor. So a little bit complicated, but that's how we came up with the name the FCTR E.

[00:02:28.920] - Jon Slowe

Okay.

[00:02:29.350] - Joris Jonker

So we upgrade your home to a fossil free, heat and energy home.

[00:02:36.390] - Jon Slowe

The E then for energy or the E for electricity or could it be either?

[00:02:41.550] - Joris Jonker

Both, yes either.

[00:02:54.370] - Jon Slowe

Okay. And how long ago did you set up the company and tell us in a nutshell what your, a bit more about your mission, you've given us a little window into that but tell us a bit more.

[00:02:56.900] - Joris Jonker

Well the initial idea started a few years ago, company was launched or set up two years ago but we launched our services the beginning of 2018 so we are little over a year old now. And our mission is to make all the hundred plus hundred million plus home owners homes fossil free. So we target the large gas countries in Europe and then we target home owners and within the home owner group we target larger homes 150 square meters and up or 15 hundred feet, square feet and up.

[00:03:40.960] - Jon Slowe

Okay. Great, well I'm looking forward to hearing more about FCTR E but let's now introduce our second guest Kristofer Fichtner, co-founder at Ecoworks based in Berlin. Hello Kristofer.

[00:03:56.020] - Kristofer Fichtner

Hello, good morning Jon.

[00:00:00.000] - Jon Slowe

Kristofer, likewise, could you give us an introduction to Ecoworks. What's your mission? What problem are you trying to solve with Ecoworks?

[00:04:08.220] - Kristofer Fichtner

We are on a very similar mission that Joris is targeting and very complementary to it. We are targeting the multi-family homes, those residential buildings that you will find all over Europe and have been mostly built after the Second World War. Mostly in Germany right now, we have a lot of buildings in the 50s to 70s. They make two, three, four stories high, similar structure and they have very poor insulation and very high heat demand, they use fossil fuel based heating devices and we want to get them off the fossil fuels.

[00:04:43.190] - Jon Slowe

Okay. And in the German market in particular there's I think a higher proportion of multi-family homes. Have these been neglected in the past would you say or maybe neglected is a bit strong. Are you seeing this is an empty space where there's not been maybe the focus there should be to try and insulate and decarbonise these homes.

[00:05:04.140] - Kristofer Fichtner

Well it is, to some extent, a tough space because usually they're rented out, you don't have aligned interest between the building owner and the tenant. Because if the building owner investment in property, the one who benefits from the energy saving is the tenant and the tenant itself cannot invest in the infrastructure of the building and also technically these buildings with the bad insulation that they have these days have very high peak heat demands and they use high temperatures on the radiators to give this heat in the building. And this is very bad for heat pumps. If you have to have a high temperature that you need to generate from the heat pumps it takes a lot of energy, it has low efficiency. So it's tough for those buildings to go off the fossil fuels if you don't insulate them very well.

[00:05:53.310] - Jon Slowe

Yeah. And I guess those buildings are going to be around for a lot longer so they're going to have to be tackled in some way.

[00:05:59.510] - Kristofer Fichtner

Absolutely.

[00:05:59.510] - Jon Slowe

Okay. Thanks Kristofer. And introducing my final guest today, Lindsay Sugden, Principal Analyst here at Delta-ee, joining us from Denmark. Hello Lindsay.

[00:06:11.170] - Lindsay Sugden

Hi Jon.

[00:06:12.490] - Jon Slowe

So Lindsay you lead our heat research here at Delta. Can you tell us a bit about why slashing emissions and households is such a tough nut to crack? Kristofer gave us a very specific example of that but in general why is this so hard?

[00:06:31.270] - Lindsay Sugden

The biggest challenge is decarbonising heat in existing buildings as we've heard. These are responsible for the lion's share of emissions, so not new build, and in existing buildings than before decarbonising heat, you first need to reduce heat demand and there's a lot of progress being made there. But this can be challenging and really expensive and you need to deal with many households in order to really make inroads into reducing heat demand. And if we're going down the electrification route, so heat pumps for example, then that typically requires a lot of upfront cost. And that's not just the cost of upgrading to a heat pump but potentially upgrading the building fabric insulation and the heat distribution system as Kristofer mentioned there and of course if you are electrifying heat you also need investment in low carbon electricity if heat is really going to be decarbonised.

[00:07:30.520] - Jon Slowe

So yeah, that's a lot to do and I think I particularly like your point about the existing housing stock. It's easy to focus on new build and building passive homes or very low energy new homes but we won't hit our carbon targets if we don't tackle existing building stock. And how much progress are we making in Europe, if you had to generalise with existing homes, with the existing housing stock?

[00:08:01.720] - Lindsay Sugden

Yeah, it's tough, in many markets there is some progress through insulation. And in a few markets there has been success with heat pumps, with biomass for example, so heat pumps in Switzerland have largely pushed out oil heating. If you look at Sweden, heat pumps have long been the number one solution outside of the strategic areas. Here in Denmark, heat pumps are becoming a much more mainstream option for customers moving beyond oil. In Austria we've seen success with pellet boilers. But there are really not many examples yet of natural gas being displaced. So more on oil less on gas so this is really a challenge.

[00:08:44.700] - Jon Slowe

Yeah okay and gas is the dominant heating fuel across Europe so at some point that's going to need to be tackled. And there's one company, Energiesprong, who are pioneering, and have been for a few years, deep retrofit of homes. Lindsay, in a nutshell, what do Energiesprong do and what scale have they reached?

[00:09:09.030] - Lindsay Sugden

So Energiesprong brings together the building industry and social landlords that carry out whole house retrofits to achieve net carbon, net zero carbon energy. It's focused for now on the social housing sector only, they aggregate demand, so retrofitting many homes at once and the concept then is they mass produce usually external insulation to slash the demand so that houses are in net zero carbon. In terms of how well they're doing, so they've got 5000 houses in the Netherlands have been retrofitted. And the concept is now active in at least four other European countries including the UK , Canada and further afield.

[00:10:00.260] - Jon Slowe

Great. Okay. So there's, in terms of impact on the overall sector, 5, 000 is good progress but very small compared to the size of the challenge. So, Lindsay thanks for that scene setting, let's come back to Joris and Kristofer now and see if, dig a bit more into your businesses and the potential for you to address this huge challenge of decarbonising the existing housing stock across Europe. Joris, let's start with FCTR E. You said a bit earlier you're targeting owner occupiers and the larger houses; how significant a market is that? Can you give us a feel, are you targeting the top few percent of the market or the top third of the market and why are you starting there?

[00:10:56.860] - Joris Jonker

Well we target the larger homes and that's in, I would say it's about 25 percent of the home market. And why, we target these homes is because they have a higher energy bill, both gas and electricity. So there's more money to play with because what we say to these people is give us your bill, so the money you now pay to your energy company and we'll use that money to upgrade your home put in heat pump and put solar panels on the roof and your monthly cost will be same or lower than before. And this only works at the moment for larger homes with a higher energy bill.

[00:11:36.940] - Jon Slowe

Okay.

[00:11:37.430] - Joris Jonker

So it's smart for customers with a home larger than 150 square meters to do the upgrades. If you have a smaller home then the cost, there's no payback time.

[00:11:51.690] - Jon Slowe

Okay. So purely the economic driver pushes you to the larger homes. Tell us a bit more about the proposition, is, how would you characterise it? Is it a green proposition, a money saving proposition, a enhancing the value of your home proposition?

[00:12:12.410] - Joris Jonker

It mainly, our focus is on enhancing the value of your home.

[00:12:18.140] - Jon Slowe

Okay.

[00:12:18.140] - Joris Jonker

Providing more comfort to the home, with a heat pump you have a more comfortable heat, it's constant comfortable heat. And it's also very worry free to know that when there are any price increases, which we've had a lot in the Netherlands recently, that you are not affected because you pay a monthly fixed fee for the service, so if gas prices go up or electricity prices go up you don't have to worry about that. So it's more comfort and worry free.

[00:12:47.740] - Jon Slowe

And what have you learnt so far as you develop new propositions you always learn from how customers react and the questions they ask and what they're most interested in. In the time you've been going. What have you learnt about what's really going to get customers biting off your hand or really get them enthusiastic about your proposition.

[00:13:09.590] - Joris Jonker

Of course it's always money, that's most important. If it's not smart, as we call it, we call it smart, you have to be in the money so you have to, you don't have to have a payback time but your monthly cost to go down and when the value of your home goes up then that's a good start but what we also found is that the, especially in the countries with gas, that heat pumps are unknown and they're seen as new technology, which they aren't. They're older than the condensing boiler, the technology. So there's a lot of hesitation towards the heat pump as a technology. So we have to do a lot of explaining.

[00:13:52.850] - Jon Slowe

How much do you talk about the technology? So I could see on one hand you could almost not talk about the technology and say to the customers we're installing some products in your house, in your home. Don't worry about what it is but it works and it's, will reduce your costs, or do you very deliberately talk about the heat pump or do you find customers really want to know what the heat pump is and how it works.

[00:14:24.420] - Joris Jonker

Well we try not to talk about the technology because we are the energy factory, we provide the technology to your home, you pay us a monthly fee, there's no long term contract. So if you don't like it then you can cancel the contract on an annual basis. So you should not worry about the used technology and the brands we use. But of course people want to know. So we try to be as little technical as possible and just explain that a heat pump is existing from more than 40 years. It's used in countries within the North of Europe, Scandinavia where it's a lot colder than in Germany or the Netherlands for example. And that's in most cases enough. And also the brand we use is one of the largest in the world. It's a company which has been in business for, I don't know exactly, but more than 50 years, so it's very reliable. So they're more looking for a confirmation of the fact that the technology we use is not something completely new.

[00:15:35.370] - Jon Slowe

Yeah. I'm intrigued by what you said about the contract that customers can cancel whenever they want, they're not locked into a 30 year contract for example or 10 year contract. How would that actually work? Would you then remove the equipment yourself, would the customer have to pay a cancellation fee? How would that work?

[00:15:57.440] - Joris Jonker

Well the reason why we proposed in such a way is that we, what we want to do as The FCTR E we want to take away any hurdle for home owners to transition towards a carbon free home. And at first it was the technology, then it was the price so we started with a monthly subscription and then the last hurdle was why do I have to sign for 15 years? Because we use a 15 year term to, for the equipment for our calculations. And then we found that if we say it's 15 years then people are still not very happy to sign a contract with us.

[00:16:40.160]

So we decided to change the model slightly. We stay owner of the equipment so it's a lease. And if people after a few years they don't like the product then we, yes we take it away, you pay a small removal fee. But we have, so far we haven't seen anyone wanting to take it away so I don't expect it to happen a lot. And for us as a company it's not a big risk. Heat pumps and solar panels are very reliable systems so it's for us it's not a problem to remove it at one customer's premises and install it in the next one.

[00:17:20.530] - Joris Jonker

Yeah. Okay. So you're trusting in the, in your proposition, you're trusting in the service the customer gets and why would they cancel if they're getting a good service and a good deal?

[00:17:31.870] - Joris Jonker

Yeah. Even if they cancel then it's all reliable equipment so we will just put it in another home.

[00:17:40.130] - Jon Slowe

Yeah. Okay. Thanks Joris. Kristofer let's now have a look a bit closer at Ecoworks. So you're going for a slightly different approach, rather than owner occupiers you explained that you're approaching housing companies that own multiple houses. Is what you're doing similar to Energiesprong, that in the way Lindsay described, or are there any key differences.

[00:18:11.090] - Kristofer Fichtner

Yeah. There are a lot of differences and if you look at Energiesprong, it's a non for profit foundation and it's designed and funded by a very motivated and skilled people who've thought about the problem of how do we get all these buildings insulated and off the carbon emitting heating devices. And they have started in a way that they collect the demand and then make sure that we can sign for big tickets as in installing or construction company. So they are not an actual service company themselves. They're just mitigating the market and they are opening up the market, which is a very important role. But they will always rely, to some extent, on the demand side which is in Germany mostly the residential building owner industry of companies owning thousands, ten thousands, sometimes hundred thousands of flats. And on the other side they will need architects, installation companies, construction companies, to actually roll out the project. So they won't be selling anything, they will just be opening up the market which, as I said, is very important but it's not the solution in itself. So it needs companies like Ecoworks, who actually go out there and say okay we're going to do all the planning for you and then we're going to take responsibility, do the construction work and then also make sure that we keep a net zero energy balance for at least 15 years meaning that we take these buildings to a level where they produce the amount of kilowatt hours of electricity that they will need through the year for the tenants and their electricity and also for the heat pumps themselves on a neutral energy balance to the year.

[00:19:53.530] - Jon Slowe

In terms of getting customers on board, how have you found that, you're relatively early on in your journey, but what have you learnt from talking with the housing companies and their appetite for the sorts of things you're offering them.

[00:20:08.480] - Kristofer Fichtner

Yeah. This story is also a bit linked to Energiesprong. One of my co-founders, Emanuel, he has been writing about the Energiesprong foundation and the project that happened in Netherlands and has been asking in Germany, why don't we do it? And this was after then some money from the federal government to go to the Dena, German Energy Agency, to start an Energiesprong project in Germany as well. And what we found is that there is a lot of demand from the residential industry to find a better solution for their retrofits and for their refurbishment projects. But there wasn't much supply out there. So right now the usual refurbishment process in Germany goes through a planning company, like an architect or engineering office and they will then plan for replacing a roof, replacing windows, replacing a heating system and installing insulation on the walls. But they will usually be in separate little projects and will not be managed in one big chunk and there will also be of interest.

[00:21:12.240] - Jon Slowe

So the key thing you're doing then is bringing together, it's helping to create demand but critically bringing together the solution under one, you know, under Ecoworks. So one company can provide this solution.

[00:21:25.440] - Kristofer Fichtner

We found a lot of demand in the market but not many players were able to get to it. That's why we started to found the company, incorporated in September last year.

[00:21:35.430] - Jon Slowe

And in terms of delivering that solution, there's many different aspects as a financing, there's that's contracts with the customers, there's an insulation aspect, the vortex on the roof, that's a heat pump, the technical side. Where would, are you able to single out one biggest challenge. They're all hard, I would have thought. What, is a fact, matter of bringing them all together or would you highlight one of them as the really hard part in delivering this.

[00:22:07.810] - Kristofer Fichtner

Yeah I don't think there's one single part, I guess the overall challenge is finding the scalable approach and combining all of these. So for example in the insulation, the normal process here in Germany would be to go and manually glue EPS panels on the walls with a lot of craftsmen. It's just not scalable. We don't have the skilled workers available and it also is not very efficient to do so. So what we do is we take a 3D scan of the building, have a digital model of the building and then we can design a new outer building shell that is then being manufactured in a construction area and we ship pre-built building shells to the construction site that we just have to attach. So this slides us down the amount of working hours we need onsite, the amount of workers to do so and it also it increases quality and installation values. And then with everything we do we are always trying to find out okay how can we solve this in not doing it at project base but product space, so thousands of times a year. With all these details that need to go into there we usually find one problem where we say okay the way we do it right now here is not only scalable it needs to be changed.

[00:23:22.140] - Jon Slowe

And I think you're on your first project at the moment. How quickly, how long will the learning phase, if that's the right way to say it, how long will it take you to think before you've got that confidence to say okay we have productised this we've industrialised it we're ready to scale?

[00:23:43.010] - Kristofer Fichtner

So the goal is to install three projects this year and get them going and running so we can take measurements through the winter and see if there's stuff that we need to learn and need to change. And then the next year, maybe something between 10 and 20 to use our learnings and see what's going on there. And then I hope that we have had enough learnings to really start scaling it up.

[00:24:06.790] - Jon Slowe

Yep, yep. Joris, coming back to you. Can you tell us a bit about the, your scale, how, you've been going just over a year? How quickly have you been able to get projects in the ground and start ramping up?

[00:24:24.680] - Joris Jonker

Well initially our idea was to only target existing homes because it's a much larger market than new built. But now we do both. And last year, the initial year, 2018 we had, we did hundreds of homes and deliberately not more because we want to learn. This year the target is thousands and it looks right now we're going to go over that thousand homes this year and next year we're also going to move to other countries so I don't know what next year exactly will bring but somewhere between probably three and ten thousand homes.

[00:25:03.790] - Jon Slowe

Okay. Question for both of you. You've both founded other, what I've called new energy companies, so Joris, one of the founders of Quby in the Netherlands. Kristofer with Thermondo in Germany. I'd like to ask each of you what's, if you had to pick one key lesson you learnt from your last company that you can use and apply in what you're doing now, what would it be? Kristofer do you want to go first?

[00:25:36.110] - Kristofer Fichtner

Yeah there's quite a bunch I guess, the most important is the question I'm thinking about how you can scale a business, how you can do things not only 10, 15 hundred times a year but thousands of times. What does it mean for the company, for the processes, for the products you use, how does it impact the scarcity of trained craftsmen and installers you have. But also as the other company, Thermondo was based in the heating industry, we also have a lot of contacts and expertise there now that helps a lot in addition. Also the venture building experience like how you set up a company, how you get it financed, you build a governance.

[00:26:15.260] - Jon Slowe

Okay. So a laser focus on scaling and scalability. Joris how about you?

[00:26:20.210] - Joris Jonker

Well what I found with my previous company is that the people in the company are the most important to focus on the people, focus on the fact that everyone knows the strategy of the company, where it's going, what everyone's role is and responsibilities and then the real challenge is that these change every three months. Because every three months you make a step and that means that you, people's roles change and responsibilities change. So what I learned most is that it's best to plan ahead your organisation for six months. So say I am, I want to achieve these goals in six months. Prepare your organisation today and you have less hurdles when growing. So that's my biggest lesson, constantly look at the team and everyone's roles and responsibilities and make sure that everyone's actually already in a role which they should have six months from now.

[00:27:22.200] - Jon Slowe

Okay. Very interesting, I think as you've both alluded to, there's no single lesson but lessons from your experiences, I'm sure, will help you to succeed in your new businesses. It's now that time in the podcast to bring out the Talking New Energy crystal ball. Joris and Kristofer, you've both talked a bit about where you'd like to get to. But if I can ask you to say in three to five years, what scale, just summarise the impact you'd hope to be having, the sort of scale you'd like to be reaching in three to five years and pick out the single biggest challenge you think that you'll face in getting there. Kristofer, do you want to go first.

[00:28:07.970] - Kristofer Fichtner

Yeah. This is the question I have to answer a lot when suppliers are like how many devices of A, B, C do you want to buy from us in the next years. And the usual reply I give is that I don't know for very sure yet but I do know that we have like eight years left to get carbon neutral buildings if we want to be reaching the one point five degree maximum global warming goal, right. So looking at the market we can address with technology right now. There's like three million flats that we have to go through in eight years. I tell everybody very honestly that we have this one big year now and the next year will be only doing little numbers but then we really need to scale, it needs to be, go on the ten thousands a year, quickly. We're not going to be alone, we're hopefully going to be together with Energiesprong opening up the market for more players but I guess we're going to be one of the driving force behind it.

[00:29:02.170] - Jon Slowe

So that's a scale of your ambition and the single biggest challenge if you had to pick one critical challenge or one of the critical challenges?

[00:29:12.120] - Kristofer Fichtner

Regulation certainly is one that is very, very hard to mitigate because we don't know what's coming up and for right now it looks like everything is going towards a more eco-friendly industry. But you never know with all these right wing parties, these nationalist parties going for power, it's very dangerous that we decide to not go for a race against climate change and just give up

[00:29:41.640] - Jon Slowe

Okay. So getting the support of regulatory framework. Joris, how about you, three to five years’ time, level of ambition and biggest challenge?

[00:29:52.910] - Joris Jonker

Yeah. I can give you numbers of ambition but that's a very financial, so our ambition is to have more than 50, 000 homes upgraded to a fossil free home. But more importantly it's to have any home owner realise that it's a smart thing to do with their home because that's the main reason why we do this. Similar to what Tesla has done in the car industry. So make the change, or make it happen and have people understand and especially home owners, that it's a smart thing to do, to upgrade your home. And for us the challenge is, unfortunately it's the same answer as Kristofer, it's a constantly changing government regulations and that's a challenge and that's a poor country is also different than with the current political landscape. It's very black and white, so it can go both ways so that's a challenge for us.

[00:30:53.940] - Jon Slowe

Okay. Lindsay, coming back to you, from your perspective and your experience, the research carried out and listening to the discussion, if you had to pick out a challenge what would you say in terms of the challenge of decarbonising homes across Europe. There are many, many challenges but what one would you focus on.

[00:31:16.090] - Lindsay Sugden

I would say that the biggest challenge is really reaching the customer, especially in the owner occupier sector where requirements can be quite different. And this means getting the technical solutions right for them, usually meaning minimising disruptions at the householders. And then secondly getting the customer proposition right. So perhaps thinking beyond just selling a product to sell ongoing services. I think if we can get these two elements right then we'll be making progress with decarbonising heat. And I guess that chimes very much with Joris, your point about convincing customers that this is a smart thing to do and experimenting with a proposition that allows them to or makes it easy for them to sign up to your type of offering.

[00:32:05.510] - Joris Jonker

Yes that's correct.

[00:32:08.240] - Jon Slowe

Okay. Well time has got the better of us. So thank you very much Joris for joining.

[00:32:18.320] - Joris Jonker

Okay.

[00:32:18.320] - Jon Slowe

Thank you Kristofer from Berlin, joining us from Berlin.

[00:32:22.270] - Kristofer Fichtner

Thanks Jon. Looking forward to seeing you at the summit.

[00:32:24.490] - Jon Slowe

Yeah. And thank you to Lindsay, joining us from Denmark.

[00:32:30.950] - Lindsay Sugden

Thanks Jon.

[00:32:33.770] - Jon Slowe

So thank you to our listeners. We hope you've enjoyed this episode. Kristofer mentioned our heat summit which we're holding in London in September. You can have a look at our website, Delta-ee.com if you're interested and we hope to welcome you back to our next episode next week. Thank you everyone and goodbye.

Episode 11: Everybody needs a platform: a building block for new energy

Platforms are a hot topic across the European energy sector. In a highly distributed world, they can bring together thousands, even millions of assets, capturing value from data or running a virtual power plant. In this episode, we hear from two of Europe's leading residential energy platforms. Talking New Energy host and Delta-ee Director Jon Slowe speaks to Charmaine Coutinho, Head of Consulting at Delta-ee, Sandra Trittin, Co-Founder and Head of Business Development and Marketing at tiko, and Conor Maher-McWilliams, Head of Flexibility at Kaluza.

View Transcript

Episode 11: Everybody needs a platform: a building block for new energy

Jon Slowe, Director, Delta-ee

Charmaine Coutinho, Head of Consulting, Delta-ee

Sandra Trittin, Co-Founder and Head of Business Development and Marketing, tiko

Conor Maher-McWilliams, Head of Flexibility, Kaluza.

[00:00:04.470] - Jon Slowe

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 work at the leading edge of this transition.

[00:00:23.600]

In this episode we're looking at platforms, one of the hot topics in the new energy sector in Europe today. Platforms can mean different things to different people. On one hand businesses like Airbnb and Uber are platform businesses, connecting buyers and sellers. And in previous podcasts we've looked at these sorts of platform businesses in the energy sector. For example for installing heating appliances or for auto switching. But today we're looking at a different type of platform, one that connects large numbers of assets together, assets such as hot water tanks, electric vehicles and batteries. Today I'm joined by leaders from two platform businesses, Sandra Trittin from tiko, based in Switzerland and Conor Maher-McWilliams, head of flexibility at Kaluza from the UK.

[00:01:15.110]

Hello Sandra. Thanks very much for joining.

[00:01:20.220] - Sandra Trittin

Hello. Thank you as well.

[00:01:22.080] - Jon Slowe

And Conor nice to have you on the podcast as well.

[00:01:25.900] - Conor Maher-McWilliams

Hi Jon. Thanks for the invite.

[00:01:28.690] - Jon Slowe

Sandra and Conor before coming back to each of you I'd like to welcome my last guest. Regular listeners to the podcast will know her well, so my colleague here at Delta, Charmaine Coutinho. Hello Charmaine.

[00:01:40.090] - Charmaine Coutinho

Hi Jon.

[00:01:41.560] - Jon Slowe

So Charmaine, why, from your point of view, why are platforms such a hot topic in the market today?

[00:01:51.040] - Charmaine Coutinho

Well it's very interesting, and it kind of goes back to one of the key elements that we assume about the energy transition at the moment. So, the energy system is decentralizing, that's a line that we all kind of believe in and what we see is the market. But this actually means that there's a lot more assets in the market. So millions and millions of assets rather than you know tens or hundreds of large power stations and all of those assets are either already in homes and businesses or they'll come and some of them might be very simple things like smart thermostats all the way down to electric vehicles and what will come in the future.

[00:02:26.650]

And I think interestingly more and more of them are connected it's almost like a default these days. And when you hear people talk about the internet of things relative to assets I think what's really clear is that connectivity between them all is almost the default now. So how those assets are connected has to go through a centralized place and that is where the conclusion comes to a platform in order for us to maximize value but also to make sure that the electricity, or the energy system, benefit from it as a whole.

[00:03:00.310] - Jon Slowe

So Charmaine, there are lots of assets that can be and are being connected to platforms from batteries to electric vehicles to hot water tanks. They're a hot topic. Does everyone have a platform today or does every energy company want a platform, is everyone building one or buying one or developing one?

[00:03:21.100] - Charmaine Coutinho

I think the key thing is that most people realise that they do need one. So maybe the last five, 10 years people have been busy deploying assets and now building into that some sort of connectivity. I think people are realising is well what do they connect to? Is a gateway, is it a hub, is it something else? And who owns or runs that platform. So it's really emerging at the moment because of the systems and the assets have been put into place so far but also where future value may come from.

[00:03:53.020] - Jon Slowe

Okay. Now let's come back to Sandra and Conor. Sandra let's start with tiko. Can you give us an elevator pitch for tiko? For those listeners that don't know tiko, what is tiko, what do you do?

[00:04:09.720] - Sandra Trittin

So tiko has been founded in 2012 and exactly for the reasoning that Charmaine was mentioning, we were seeing the decentralization of the energy industry and we realised that the residential sector is playing one of the most important parts in that change and also for all our energy transition. And we saw a need that there would be a platform to connect all these devices as Charmaine was mentioning before. But we also saw that it's not only about connectivity but what you do afterwards when you have all of these devices connected and that there is a need for valuable business models where are sustainable also for the future.

[00:04:51.540] - Jon Slowe

Yeah. What are those Sandra, because on one hand you can connect everything to a platform but then what do you do with that? What's the value, what's the business case?

[00:05:03.620] - Sandra Trittin

Yeah. So what makes us unique is that on one side we create a virtual power plant where we use the flexibility of the connected assets in different markets like portfolio optimisation, balancing group up to frequency regulation and on the other side we provide in-home energy management system to the device owner. We use for that, to combine both, we use machine learning algorithm and to do that without any impact for the owner of the device.

[00:05:31.420] - Jon Slowe

Okay. And how did tiko start? You mentioned you started in 2012. So you've been going seven years or so, start up, venture capital, spin off? Tell us a bit about where tiko came from.

[00:05:44.950] - Sandra Trittin

Yeah. So our origin comes from Swisscom, a Swiss telco operator. We have been founded and spin off out of Swisscom in 2012 and we started to connect all existing assets at the time which were mainly water tanks, heat pumps, night storage direct heaters. In 2016 we moved out of our focus of Switzerland and now we are running business in Germany, Switzerland, France, and in Austria.

[00:06:14.260] - Jon Slowe

Okay. And could you give us an example of maybe a couple of the different things you're doing maybe what you're doing in Switzerland and what you're doing and one of the other markets.

[00:06:26.390] - Sandra Trittin

Yes for sure. In Switzerland we are running the virtual powerplant ourselves with mainly heating customers. So we have acquired, installed and supporting our customers directly because we had to see if the technology and the business case would work. We put the flexibility there on the past frequency market. In the meantime, outside of Switzerland, we are providing our solution as a white label solution to utilities for example to EWE in Germany and to Sonnen in Germany to put the batteries on the frequency market or to Engie in France.

[00:06:59.840] - Jon Slowe

Okay. So you've got a hybrid model in Switzerland, you're doing the whole value chain and going direct to market and in other countries you're working with partners.

[00:07:08.390] - Sandra Trittin

Exactly.

[00:07:09.080] - Jon Slowe

Okay. Conor let's move to Kaluza and maybe first of all the name, it's quite a distinctive name, what is it or where does the name come from?

[00:07:22.460] - Conor Maher-McWilliams

Kaluza the name comes from Theodor Kaluza who was a Polish born, German mathematician who introduced a new dimension to space and time when trying to unify the theories of general relativity and electromagnetism. And we see platforms such as ours literally introducing the new dimension of time to the consumption of electricity.

[00:07:40.480] - Jon Slowe

Okay. So yeah, a new dimension to the electricity sector and as Sandra did, can you tell us in a nutshell what Kaluza does what it is and how you're working?

[00:07:54.260] - Conor Maher-McWilliams

Yes, sure. So Kaluza is the energy technology division of OVO group and has formed around a range of core capabilities designed to offer end to end solutions for the energy transition, primarily focused in the domestic sector. So we provide smart hardware in electric vehicles, electric heating and home energy storage systems and a platform to optimise these devices, alongside smart metering services.

[00:08:16.650] - Jon Slowe

Okay. So the platform to collect the data, to analyse it, to create business cases from that data but also the hardware as well?

[00:08:27.380] - Conor Maher-McWilliams

Yeah, that's right. So we've, over the past number of years we've invested in some hardware businesses, so we're building our own electric vehicles smart chargers and V2G charge points as well as providing hardware that through our partners as well and electric heating.

[00:08:45.380] - Jon Slowe

Okay. And the relationship with OVO group, so for those of you that don't know, OVO's an energy supplier in the UK and I think active in other countries as well. What's your relationship with OVO, are you integrated into the supply business or a separate standalone part of the group?

[00:09:04.370] - Conor Maher-McWilliams

Yeah. So we are an OVO group business but we're entirely separate from OVO Energy and the other retail businesses and so earlier this year, Kaluza was launched as a separate business and to be able to offer end to end solutions to both OVO and other suppliers through working with OEMs and grid site operators.

[00:09:24.200] - Jon Slowe

Okay. Now the next thing I want to explore is the key functions and elements of a platform to some it may seem slightly intangible. The platform is in the cloud or a data centre, you're collecting data, you're doing things with the data, so how could you boil this down into a few key functions or elements? Sandra, start with tiko and how would you break the platform down into something that people can understand or something tangible.

[00:10:04.470] - Sandra Trittin

I would even take in addition the boundaries of the platform. So for us it always starts with the possibility to integrate different kind of devices on that platform through hardware or API and it must be possible to include every kind of device supplier independent. Because you want to include everyone to be able to participate on your platform. Then as a second piece, we see the communication and the data handling as being a central point, it has to be cost efficient because you will be handling millions of data points and it needs to be reliable for different kind of energy and grid services for the virtual powerplant and then overall it has to be secure, especially when we talk about the growing capacity that these platforms are building up.

[00:10:53.490]

And last but not least it's also the value proposition that you need to build up. What Conor was mentioning, it's about shifting energy in time. You need to do that in an intelligent way with the help of smart algorithms, of artificial intelligence to do it in a way that the end customer is not impacted, but instead it creates additional value for the owner of that asset.

[00:11:16.120] - Jon Slowe

Conor, anything you'd add from your perspective or do you segment that differently from how to Sandra described it?

[00:11:22.080] - Conor Maher-McWilliams

I think there's a lot of common elements but maybe if I just walk through how our platform is sort of segmented from the point of view of a smart EV charge point. So whenever we install smart EV charge point in a residential home, we need to be able to have a connection to that asset, so that's one, one key part of the platform. We also need a connection to the customer so we can understand the customer's needs for their assets, with the example of an EV, when they need to be ready, and also surface them some insights about what we're doing with the platform.

[00:11:51.260]

We then need algorithms to understand that end, that's the physical parameters of the connected electric vehicle, it's charging behaviour and some of the, sort of, chemical profiles of the battery that we're charging. And then as Sandra mentioned, intelligent orchestration of these devices is key, and there's kind of two key parts to that. One of them is understanding the flexibility that's available and then two is deciding on how you dispatch that flexibility the most valuable way and in which markets. And then yeah, in order to create value from that those, you need your platform to be connected to as many markets and networks as possible.

[00:12:29.430] - Jon Slowe

Okay. And Conor do you think that Kaluza, you'll always operate the complete value chain yourselves or do you think you'll be flexible in terms of working with partners and the partners might take care of certain parts of that value chain and you others?

[00:12:45.940] - Conor Maher-McWilliams

Yes I think for our partners, particularly supply partners, we can offer most value whenever we can package up the whole value chain and deliver that to them. And based on our sort of technical capabilities we see ourselves well positioned to do everything from connecting to understanding how best to extract value from flexibility available. And having said that, in certain cases we'll encounter a partnership with someone who's already got connection to their devices and has built that infrastructure. So in that case they may hold that part of the value chain and then we plug in the energy Intelligence to their system.

[00:13:21.700] - Jon Slowe

Okay. Sandra what's your views on that, do you, because you're working with different partners in different countries. How flexible are you, or do you think you need to be, or will you be in terms of what you will do and what others will do?

[00:13:36.360] - Sandra Trittin

Yeah. So what we saw due to the different countries, or being active in these countries, is that we need to be flexible. Up to now we also know that we can be most efficient if we do the full end to end chain from connectivity to the value proposition as virtual powerplant or as home energy management system. But we get increasingly more requests where people tell us; I already have a piece of a platform or I already have the connectivity or I just want to connect through API, our devices to a platform, and then we are really open to that. It just might impact in terms of regulatory requirements, the capability of the platform for monetisation on different kind of energy markets.

[00:14:20.570] - Jon Slowe

Okay. So I think what I hear from both of you is that there's, you both would ideally like to do more of the value chain or most of the value chain but in cases you will need to be flexible working with different partners. That brings me to my next question which is around scale. So, there's obviously a lot of cost in developing the platform, in maintaining it, installing the data, developing the algorithms and so on. And that cost would need to be spread across a certain size of customer base. So two questions for each of you.

[00:14:57.920]

First of all how many assets, well three questions, how many assets do you have on your platform at the moment, roughly? How many assets could your platform cope with? And what scale do you think you need to reach in order to, are we talking thousands of assets, hundreds of thousands of assets, what sort of scale do you need to reach for this to be a successful profitable business? Sandra let's start with you and then turn to Conor.

[00:15:29.600] - Sandra Trittin

Okay. So for your first question on how many assets we are connected, and we have more than 20, 000 assets connected today and we control each of them per second. The platform has been built up for the purpose to connect up to one million assets. We are happy to explore everything beyond, like we thought okay let's get to that point, it mainly has an impact on the IT architecture. Then for the point what is the amount that we would need to be at scale, let's say, the more the better. I think we would have to wait probably one or two more years to reach the necessary amount.

[00:16:12.760] - Jon Slowe

Okay. Conor, your take on those three questions.

[00:16:18.960] - Conor Maher-McWilliams

Yeah, sure. So I think on the asset questions, we're aggregating, you know, kilowatt scale assets and we're in the megawatts billion, the tens of megawatts range with that and growing apace. And I think in terms of the scalability of the platform, I think the way we've sort of approached this game problem is not to build a platform capable of managing millions of devices from the outset but building it in a modular and scalable way for you know micro services, architecture, and cloud native approach. So that enables us to call on sort of the highly scalable and the high scalability of cloud giants such as Google and AWS and also it helps us when we work particularly the residential scale, working in a market that's constantly evolving and changing, we don't know quite how it's going to unfold, so taking that approach allows us to quickly adapt to any changes that do occur.

[00:17:10.070] - Jon Slowe

But it sounds to me like you're both looking for scale in terms of the partnerships that you're putting in place and you want to get to. So on the partnerships, Charmaine talked at the beginning about how everyone is interested in this. What are you finding when you're talking to partners? Are you pushing at open doors? Would you agree that everyone is interested but it's, can take a bit of time to convert that interest into commercial partnerships? So I'm interested in how you're finding that at the moment when you're talking to companies interested in this platform area. Sandra, you've got a few partnerships or a number of partnerships already across a few markets. How will that move forward do you think, slowly, quickly, easily, with a lot of challenge?

[00:18:05.340] - Sandra Trittin

Yeah it can never be fast enough right. So I think what we figured out is you need to be at the right point in time at the right place. You can talk to some of the companies for one, two, three years you have good relationships and you think okay it will go nowhere and then all of a sudden you're at the right time talking to the right person and then they have a need because the key issue and key success factor is what we see, you need to find the need on one side for aggregating that flexibility and then on the other side also on the end customer side because otherwise in the residential sector it's quite difficult to convince the customer to join that platform.

[00:18:54.620] - Jon Slowe

And how would you characterise that Sandra? Is the need to, when you talk with potential partners is everyone understanding the need but not confident enough to step forward yet or are people trying to discover what their need is?

[00:19:13.880] - Sandra Trittin

I think it's a mixture. It's a mixture, so on one side many of the utilities are still in the discovery phase to really see what the customer need is. And then in the second step it's also on how much risk they want to take to go into that service offering going away from just offering a tariff to I offer you a service and additional value is for many of them quite new. So it just takes a bit of time to go through that transition and also be sure if you bring out a new product on the market that it resonates with the customer base.

[00:19:58.230] - Jon Slowe

Conor, how, are you finding similar things to what Sandra described or anything different?

[00:20:04.560] - Conor Maher-McWilliams

Yes I think there are definitely some similarities and again we're talking to lots of people across electric vehicles and electric heat and home energy storage and there's definitely a wide variety of sort of maturity in people's thinking about getting on board with the energy transition. So one of our earliest partnerships with Dimplex, the world's largest electric heat manufacturer, they've been thinking about their heaters as flexible assets for quite a long time so they were ready to make that jump. And we've helped them unlock what they've known was possible for quite a few years. Then with other potential partners they know that there is something there but it's kind of we have to, as Sandra said, you have to kind of go on a journey with them and wait until the time is right for them to make that leap. But I think one of the things we've definitely noticed over the last, even the last two years, is that the conversations that we have with partners, people are getting more and more clued up as to how the energy system is changing and how they can play a part with whatever their device types may be.

[00:21:07.340] - Jon Slowe

Okay.

[00:21:07.580] - Sandra Trittin

Yeah. And probably to add to what Conor was saying, I think what is really important in what she was mentioning is it's a journey that you go with the customer. It's not that we have like easy product that you take out of the shelf as a platform and you say you can take it and you use it tomorrow. I think for both of us it's maybe a journey that you take together with the customer to get up also the business model behind.

[00:21:32.280] - Jon Slowe

Yes and that takes time. So Charmaine when you look across Europe how many other companies similar to tiko and Kaluza are you seeing active in this area or similar types of areas?

[00:21:45.910] - Charmaine Coutinho

Well I think it's still fairly new but there are a lot of different companies and you got to remember it's quite a different role to the role that traditional players in the energy sector played in the past, so this kind of intermediary role. And people are doing that from a utility perspective, so building things in-house, to start ups, to product manufacturers who are looking at opportunities just adjacent or beyond the kind of traditional sphere. So it's really quite a range of companies and there's quite a few of them. And I think each of, both Conor and Sandra touched on that kind of different but fairly consistent elements of the value chain. So some people doing the total end to end some people doing bits of it and some of them are software only, some of them are embedded in hardware. But how they kind of evolve their offering, how they make it work with as many devices as possible, how they might, you know, start to look at different protocols and things like that. I think is one of the questions that many of them are going through at the moment.

[00:22:47.680] - Jon Slowe

Okay. So it's, we said at the beginning it's a hot topic. There's more and more interest, more and more realisation that you will need to knit together all of these assets like electric vehicles, batteries, hot water tanks, heat pumps and many people on that discovery path at the moment to looking at how they can, where the opportunities might be and how they can move forward. So on that theme I think it's now that time in the podcast to bring out our Talking New Energy crystal ball. So for all of my three guests, particularly for Conor and Sandra, Charmaine more looking at the sector overall, where do you think you'll be in the next three to five years and if you had to pick one challenge in getting there, what would you pick out? Conor let's start with you.

[00:23:43.780] - Conor Maher-McWilliams

This is, I think we're in a really exciting period where we're starting to see the investment we've put in over the last few years in building automated scalable processes start to really pay off. So we're installing devices in high volume every week in our sort of load under management is constantly taking up without needing much management, it's just happening in the background. So I think in three to five years we can expect to have a large portfolio of highly distributed connected residential devices and see residential platforms like ours have moved from sort of the fringes of the sector into really sort of the centre, have centrepiece or to the centrepiece of the energy system.

[00:24:22.870] - Jon Slowe

Okay. And your biggest challenge in getting to that point?

[00:24:26.070] - Conor Maher-McWilliams

So I think a lot of the challenges we face are related to policy and regulation not being able to keep up with the pace of innovation and technological advancement. So that can go from super detailed things like some of the you know the processes we have to do to onboard like a new V2G to the grid for example to really sort of high level policy decisions that are being made about how network charging is applied and what impact that has on flexibility the edges of the network and having the right incentives in place to make sure that people who want to play a part in energy transition and can realise the full value of their contribution.

[00:25:02.980] - Jon Slowe

Okay. So policy regulation, unlocking the value and the opportunity. Sandra how about you? Where will you be in three to five years and your biggest challenge?

[00:25:13.930] - Sandra Trittin

So in three to five years we hope to be in more countries than we are now, having also much more assets connected than we have today. And being a real competition to the existing conventional power plants in this system. For the biggest challenge I agree with Conor, on one side it's the regulation on the other side I would also add it's a bit the decision making time frame and timeline of our potential partners which gives us sometimes a challenge.

[00:25:45.960] - Jon Slowe

Yeah. Building their, them having the confidence to take a step forward, to invest, to do something new.

[00:25:54.450] - Sandra Trittin

Exactly.

[00:25:54.450] - Jon Slowe

And Charmaine from your perspective looking across the sector, where do you think we'll be, how quickly will this move forward and or what would the biggest challenge be?

[00:26:04.560] - Charmaine Coutinho

Well I think it is happening and it needs to happen because just because of the kind of growth in devices. I think the question that I'm thinking about from, if I step back for a minute is; is it going to be a question of one platform, one winner takes it all or will actually be a much more disparate kind of ecosystem of lots of different types of platforms you know performing best at lots of different types of actions within the energy system. So for some of the listeners who may be old enough to remember will it be video vs. Betamax, I'm not sure. So that's the kind of thing that I'm thinking about at the moment and well I'm hoping that in three years’ time we'll have a better view on that but probably not.

[00:26:47.730] - Jon Slowe

Conor, Sandra, any views on whether one platform or a few platforms would dominate before we finish or whether we'll have a complex ecosystem of different types of platforms for different types of assets?

[00:26:59.130] - Conor Maher-McWilliams

I think at the moment we're really starting to see platforms plug into platforms and in different parts of that value chain I expect that'll continue because we're still in sort of the market infancy and people are not going to be discouraged from ploughing ahead with their plans with their platform for a while. But I think in the medium to longer term they'll definitely, I mean, consolidation makes sense. Some people will become experts and in delivery of the whole value chain or parts of it and some of the smaller players will start to drop off.

[00:27:29.580] - Jon Slowe

And Sandra, your view?

[00:27:32.280] - Sandra Trittin

I think as well there will be some consolidation coming but also there will be still different kind of players with different kind of focus on their platforms in the market because it's different if you use a platform to build up a virtual powerplant or if you build up a platform to just focus on an energy management system or if you want to combine both for example and there will be different players for sure in the future.

[00:27:59.160] - Jon Slowe

So my overall take on this is it's I think it's a certainty that this new aspect of the energy sector will grow. There's a lot of discovery at the moment, a lot of taking existing companies on a journey, as you've talked about, and a lot more in the next years to shake down in terms of exactly who does what in what part of the value chain where. But certainly a fascinating sector, one that I think will grow quickly in the next years and one that is bound to be a very significant part of the electricity system going forward. So thanks to my guests, Charmaine thanks as always for your views and comments.

[00:28:42.770] - Charmaine Coutinho

No problem.

[00:28:44.880] - Jon Slowe

Sandra thanks for joining us, I think from Berlin is where you are at the moment.

[00:28:49.860] - Sandra Trittin

Exactly. You're welcome, it was a pleasure.

[00:28:52.620] - Jon Slowe

And Conor thanks from London if I get that right.

[00:28:57.150] - Conor Maher-McWilliams

Yeah that's right, yeah, thanks for having me.

[00:29:00.480] - Jon Slowe

Thank you to the listeners and we look forward to welcoming you back for next week's podcast. Goodbye.

Episode 10: Selling heating systems online

Buying a new heating system has traditionally meant getting quotes from installers. Now, new entrants and incumbents alike are using web-based platforms to provide customers with a slicker way to buy a heating system. In this episode, we speak with Philip Pausder, CEO of Thermondo, who is pioneering this approach. Roxanne Pieterse, heat analyst at Delta-ee, also joins Jon Slowe, Delta-ee Director and Talking New Energy host.

View Transcript

Episode 10: Selling heating systems online

Jon Slowe, Director, Delta-ee

Roxanne Pieterse, Heat Insight Service Manager, Delta-ee

Philip Pausder, CEO, Thermondo

[00:00:04.470] - 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. In this episode we're looking at new ways to sell heating systems. Will the online tidal wave come to heating systems in the same way it has come to virtually every other product category. Buying a new heating appliance today typically involves finding an installer, maybe taking time off work for them to come round, getting a quote that I've no idea whether it's competitive or not and then dealing with a local installer. Why not just buy online? With the Internet giving customers more and more power and information, is this trend coming to that very traditional sector, the heating industry? Today I'm joined by two guests, one from one of the leading companies in this space, from Germany, together with our in-house expert here at Delta-ee. So my guests Philip Pallister, founder and CEO of Thermondo in Germany and my colleague here at Delta, Roxanne Pieterse. So Rox let's start with you. Hello and welcome to the podcast.

[00:01:26.370] - Roxanne

Hi Jon, thanks for having me.

[00:01:28.980] - Jon

Rox, you've been delving into this topic recently. Now it sounds simple in one way, buying a boiler or heating system online, but there are different ways that online can help a customer in the whole process of buying and installing a heating system. Can you tell us a bit about those, those different ways or break that down a bit for us?

[00:01:52.470] - Roxanne

Sure, so for a customer needing a new heating appliance. Normally the first step as you said is finding an installer and then having them around to your property to determine what's wrong with the system and what it should be replaced with. And depending how urgent the situation is it might be a few days before the installer can come around and do the survey and then if the customer accepts the quote that the installer provides for replacing the appliance it might be another few days or even weeks until they can come back with all the necessary equipment and tools to do the actual installation. So platforms like Thermondo look to speed up and simplify this process for customers by doing the site survey remotely either by asking the customer a few simple questions online or over the phone or having them upload some photos of their heating system or we're doing a video call. So the first benefit here is that customers don't have to wait very long at all in order to get a quotation and they don't need to be at home waiting for an installer to come around and do it.

[00:03:00.050] - Jon

Okay. So if I've got a problem I just go online and I can put in some information, some photos maybe even a video about my heating system and get a response?

[00:03:11.700] - Roxanne

Yeah absolutely and because it's so easy to do this, customers will often get several quotes rather than just one which they would possibly do when they have to have an install around and it's more of a hassle. And then also once customers have accepted the quote then these platforms usually allow them to book a time online to have the installer around to do the replacement and that's often at quite short notice, so some are for next day installation. And then once the job is done the customer can also pay online rather than having to pay the installer. And then a lot of the platforms also offer finance which your average soul trader installer might not do which can also be very valuable for customers. And then you also see reviews on these sites that customers can have a look at and know that they're going to get a quality installation based on what other customers have said.

[00:04:02.390] - Jon

Okay. So that's one end of the spectrum that's I guess a, the complete value chain or the complete supply chain done online. But there were a few, couple of other variants as well if you could to give us a quick feel for how else online, how else online can help customers in this journey.

[00:04:21.630] - Roxanne

So there's a sort of spectrum I would say. At the one end you've got your independent installers who the customers would contact directly if they need a replacement and that will be, you know, you'll call them up or you'll find their number on their website but the entire relationship there is between the customer and the installer. One step beyond that is your online directories and lead generation sites where a customer can go online, put in their postcard and get the contact details of installers nearby. But beyond that the platform doesn't do anything to handle the relationship between the customer and the installer. Then there are home services sites where as a customer you can say I need somebody who can install boilers, there might then allow you to book a time that that person comes around and does a site survey. But the payment components of it might then still be handled by the installer. And then at the far end of the spectrum is your full end to end sites where all the customer facing is done by the platform and the only thing the installer does is the actual installation.

[00:05:33.840] - Jon

Okay. Great, thanks for setting that out for us. Let's turn to my second guest. So hello Phillip, thanks for joining us.

[00:05:43.480] - Phillip

Hi Jon, thanks for having me.

[00:05:45.310] - Jon

You're speaking to us from Berlin at the moment is that right?

[00:05:50.060] - Phillip

That's correct.

[00:05:52.100] - Jon

So can you tell us a bit about Thermondo then. So if I'm a homeowner in Hanover needing a new heating appliance what can Thermondo do for me, what does your company offer?

[00:06:01.310] - Phillip

Well we offer an end to end solution and that of course starts with, you know, the consultative meeting whether that's on the phone actually like Rox described or in our case very often also in the home or at the people's home. We did start off as a pure telesales based company. And also you know making our offers available on the internet and a couple of years ago we actually did change to predominantly outside sales to the company so we actually do go to people's premise to really then do obviously also the technical planning of the system. So that's the first step obviously then you know that can come in at different choices, different kind of solutions, different alternatives and then it will obviously what the customer then chooses us then we do perform the installation always with our own installers. So at the moment Thermondo is 100 percent vertically integrated so they're all on our payroll and then ultimately we do want the relationship forever, right, and that is embedded very often in having like 85/90 percent of cases a contract, a long term contract. So we're very successful with our leasing product, so heat or hardware as a lease, that is typically coming in a 10 year contract or alternatively people choose a maintenance plan, we have three different levels. So we basically have real long term or we create long term relationships to our customers. We expect like no shorter than 10 years with like 90 percent of our customers at the moment.

[00:07:48.380] - Jon

Okay. So thanks for that pen portrait of the Thermondo Phillip. I'd like to pick out three things that you talked about there and discuss them a bit with you and Rox. Firstly the, I guess the entry point from, you mentioned you started off purely telesales and online but now you've evolved that. So that's one point is how do customers want to buy, purely online or face to face? Secondly the comment you made about installers that you employ all of your own installers and I think we see some different models across Europe from contracting with installers to employing installers. And then thirdly the point you made about service and I guess the enduring relationship with customers, again we see different models from a transaction with a customer, selling an appliance through to that ongoing relationship. So let's pick the first one; online. Rox, can I ask you about some of the research you've been doing and do you see companies sticking to that purely online model at the moment or are people moving in the direction Phillip talked about in this sort of hybrid model of online telesales or in-person?

[00:09:10.260] - Roxanne

So from what I've seen in the UK is that usually these companies want to do as much of the process online as possible and they're doing this quite successfully because the photos being uploaded by customers and the video calls being done, these are analysed by heating engineers who know what they would be looking for if they were to do a site visit in person. And so usually it's only in exceptional cases where they can see that there's something maybe different about the system where they would suggest that they need to go and do a site visit in person. But there are also platforms that don't do any sort of online component, they basically just immediately say "we're going to arrange to have an engineer around, what time suits you?"

[00:10:06.020] - Jon

Okay. So some companies do purely online. Philip can you tell us a bit about the journey you've been on from starting as you said more telesales and online and then moving to a more hybrid system and why you've done that?

[00:10:22.330] - Phillip

So we started off with the, let's say simple idea of say this is a very large market, it's very fragmented, it is mission critical for the energy transition because in regards to CO2 emission reduction potential it's just massive and it is driven by really poor customer experiences. So things and the elements of customer journeys we're used to in other areas of life like being able to choose between brands, transparency in pricing, fixed prices, all services included. All these things we're missing when we started and that led then to the fact to really look at every single step of the journey, how that could be simplified and obviously be supported or driven by technology software. And until today we don't really need the home visits so we're perfectly fine selling based on photos and on the phone very much in the way that Rox described it. It's a trust question and I think their markets just different. If you look at the average ticket in countries like the UK, the Netherlands or Spain it's probably like two to three thousand euros and as a proxy of the complexity of the job to be performed it's just so much lower than in Germany for instance where people just tend to spend much more money on their heating system and also just go for much more complex systems. So the decision I guess thus is a much larger one and people are willing obviously to invest a bit more time into the decision and our average ticket to give a comparison is ten thousand euros at the moment. So it's probably, from a complex point, it might be three times as complex as what you have as an average job in some other people.

[00:12:10.010] - Jon

Yeah and I can see from the customer's perspective 10, 000 euros is a lot to spend online without having met someone or without that trust. So whereas in the UK and the Netherlands for example we see a lot more of a straight swap of a wall mounted combi boiler, very straightforward job, and as you say much lower cost.

[00:12:33.370] - Phillip

Correct.

[00:12:34.500] - Jon

Okay. Let's move to the second question about installers and the different models. Rox, let's start with you again and from the research that you've been doing, to what degree do companies with more of an online presence, to what degree do they, are they using their own installers or to what degree are they contracting installers?

[00:13:00.610] - Roxanne

So it really depends on the company and the country, there's one example I can think of in the UK where they employ their installers directly and I think it's similar in France with some of the energy suppliers there. But a lot of the new entrants in this space, at least in the UK, they work by subcontracting their installers. They won't have installers employed full time they'll only use them when they have jobs coming in from customers. And I'd say that's probably the more common route for the newer players in the UK.

[00:13:33.220] - Jon

So that's a real Uber type model then connecting, to connect installers to jobs. And what do installers think of that? Do we have installers that are purely working for these types of companies in an Uber model or are they mixing and matching their own sales and then working for these platform companies?

[00:13:56.420] - Roxanne

So we did some research with installers recently and asked whether or not they're subcontracting and how much work they are getting this way. And it was really interesting because we found that, I think it's about 50 percent of installers, said that they are only getting a quarter of their work through these subcontracting channels but a lot of them think that will increase. So what happens, I think, is that installers usually sign up to these platforms, get one or two jobs this way then they sort of realise that it's quite easy, they don't have the hassle of doing all the quotations and payments and then they start to take on more and more once they're sort of more comfortable with it.

[00:14:37.080] - Jon

Okay. So a move towards more of an Uber type model from what you've seen. Philip you've gone down a different route, can you tell us about your experiences of how you started and where you're at now and why you've gone that way?

[00:14:55.280] - Phillip

Yeah. So at the very beginning we also went for that kind of model where we actually wanted to be even less than Uber, we wanted to be just a broker, then we went to an Uber model if you wanted and then ultimately like six to nine months after the launch we went for the full integration. And that was definitely the right one for the first three years, I mean keep in mind we were one of the fastest growing companies in Europe actually as per financial times during those years 13 to 16. So it was no limit to our growth interestingly although, you know, the capital market actually told us and a lot of sceptics were out there saying this will limit your growth. And I think whether that is the right way to do or not also very much depends on the labour market. Obviously if we had launched in a country like Spain, you know, in those years with an unemployment rate of beyond 20 percent that's much more relaxed labour market. Now in Germany there's literally no unemployment, certainly not for skilled labour. So just from that perspective it did make sense to do what we did. It also made sense because we had direct access to obviously the, we could train our people, we could invest into our people, we could create something like a way of installation and obviously train our processes. And I guess with a more complex actual technical job that is more important than with a less complex one because you can literally make more mistakes.

[00:16:25.320] - Jon

Yeah. That's something I wanted to ask you about. Sorry, carry on Phillip.

[00:16:27.020] - Phillip

So, I guess, now we do feel that it does limit our growth. We could be growing much faster if we had more obviously flexible resources so we are still very much 100 percent integrated. I do think that we will be heading towards something like let's say 60:40. So we would definitely add flexible resources but in the end it comes down to two things; cost and quality. And those companies I talk to that do work with partners, what they pay them on a per diem level, so let's say the mandate, the cost of a mandate, and also the quality they are receiving, you need to be comparing that to your in-house costs. And pleased with what I see here in Germany, both cost and quality that we have is beating that our force partner models. But you do, it does cost you growth, right. So there's a trade-off, and obviously as a growth company, which is venture capital finance, growth is an important currency.

[00:17:38.420] - Jon

So I think there's an interesting angle around the complexity of the installation. So when we look at these platforms in many markets all they're selling is a boiler whereas the more complex a job if you're starting to sell heat pumps or other technologies then that skill issue probably becomes more important to have in-house. Are you finding that, how far are you moving beyond selling straightforward boilers and are you finding those skills requirements are more challenging?

[00:18:18.700] - Phillip

Again, it always comes down to complexity. So at the moment we're selling six or seven brands, right, so you need to keep your training up on six or seven brands that cost time and money. But let's say the complexity of the average construction or the complexity of our construction is just very different and I think that's very different to other markets. Combi boilers make up only 10 percent in Germany. Last Friday I was visiting a construction in North of Munich which was, had a value of thirty five thousand euros, so included solar thermal, included a freshwater station, so that customer literally went for everything that was available. So, that same day in the morning in Munich I was in a small house and that was literally gas to gas, you know, it wasn't a combi boiler but it could have been a combi boiler. So I'd say as so often Germany is probably a bit more heat [...]. We do still have for instance a 44 percent oil share in that area, in the UK you hardly get any oil, rightfully so. You have condensing boilers, you almost have a hundred percent share, in Germany we only have 35 percent condensing boilers so far. So the markets just differ very greatly. We, and that for instance, Germany is quite advanced in regards of fume cells. We didn't store fume cells in the past, we left that segment, now we're entering that segment again because it's reached a size that it matters. And that's of course again a construction with a rather high complexity.

[00:19:57.940] - Jon

Okay. So I think really interesting points there around the differences between a relatively simple boiler for boiler swap or more complex installations. The third point I'd like to talk about is services. Phillip you mentioned at the beginning you often have an enduring relationship with a customer. So I think I see two different approaches between transaction type approaches and service type approaches. Rox, let's start with you again in terms of the UK. What do you see in that balance between companies moving in this online approach between transactions and services and who is focused more on which model?

[00:20:41.930] - Roxanne

So, it's quite a mix and it depends on the background of the company. So there are a handful of companies that started off offering maintenance and insurance first and then brought in the boiler installation platform. So for them they've always been offering both. And then there are the platforms that started firstly with just boiler installation so a one off interaction who are now looking to add maintenance, servicing into their package so that they can have an enduring relationship with the customer rather than a one off. So it's quite a mix.

[00:21:19.380] - Jon

Okay. And they're quite different business models. Philip I'm interested in your views from the transaction based business model which I guess is a margin business, margin and boiling business. And then the service based business model where your, you've got a 10 year relationship with a customer. Do you, how have you moved from one to the other and how do you see those two different business models?

[00:21:45.300] - Phillip

Well first of all from day one on we always felt that we wanted to be the caretaker and the partner of homeowners in the energy transition. I mean keep in mind there was very little change in people's homes until recently. If you took an x ray of a home let's say today even and you will take an x ray of a home in 10 years you would just see so much more technology being deployed and installed in people's homes. But that is obviously PV, battery or home charging. We consciously went for the largest existing category which is heat to really enter into that relationship but we always looked at it as an anchor of that relationship that we sought. So the first years we were clearly a transaction based company, very strong, very transaction minded in regards of number of leads, number of orders, conversions, very cleanly and clearly and really building up that engine if you want. But as of summer 2016 we moved more and more to a subscription based company. Like I said in the very beginning 85 to 90 percent of our companies have a multi-year contract with us. Out of those 30 percentage points go for 10 year leasing's. So that's our key strategy, to be that partner and that will also of course evolve to add more and more products and revenue streams onto that partnership. And that is also that link to us wanting to give you an end to end branded experience. You might know that we launched our first Thermondo boiler two and a half weeks ago, the t1. And so now if you go for a t1., everything and anything you see is Thermondo branded, right. So the person working to your home, Thermondo branded, the installation team, Thermondo branded, the product in your basement, Thermondo branded, your contract's Thermondo branded and obviously then every year, annually, we show up at your doorstep to perform the maintenance and we want to be that trusted partner.

[00:23:36.980] - Jon

Okay. So I guess there are different models here, there's probably not a right or a wrong. There are pros and cons of different models and companies like yourself will maybe start with one model and evolve to a different model. We're coming towards the end of the podcast now, I'd like to, my last question will be about customers and customer attitudes. Do customers want this new type of experience or are they happy finding a local installer and dealing with a local installer. Rox, can you tell us a bit about what we've been gleaning here at Delta from our research with customers.

[00:24:18.780] - Roxanne

Sure, so, from our research that we've done I'd say that there are maybe three different groups that customers fall into, at least in the UK. The first is the customers who know local installer who they've been going to for years and they'll call that installer up if they have a problem and get it sorted before even considering looking online for alternatives. And the last research we did with UK homeowners in 2017 showed that about 50 percent of people fell into this category which I thought was a pretty high percentage but that's among UK homeowners. The second group I'd say are more, sort of opposite end of the spectrum, so they're more convenience and price driven. They're comfortable buying online and they'll arrange heating appliance replacement through a website without any hesitation. The simplicity of doing this actually appeals to customers of all ages, not just younger customers, and it's also proving popular amongst landlords because of how convenient it is for them. And then the third group I'd say are those who might use websites like this to get quotes for comparison but they have their reservations about following through because they feel that they need to have an installer around to the property to assess the situation and also to meet the installer to decide if this is someone they feel they can trust to have in their home and who will do a good job at a fair price.

[00:25:43.720] - Jon

Okay. And Philip I guess it's those last two segments that are opportunity for Thermondo. So can I ask you a last question about your view on those customer segments Rox outlined and looking into the Talking New Energy crystal ball how will you see growth for your company over the next years and your biggest challenge to achieving that growth.

[00:26:13.520] - Phillip

Yeah. So first on the customers, quick quotes became a commodity. So when we launched in 2013 that was new and it was special and kind of the industry reacted to it. So also the manufacturers created their software to help the local installer to be faster and more precise on the quotes. So I do not think you can really differentiate yourself on being fast on, I mean to some degree still, but it becomes more and more commodity. So it is all about either you have the best experience or the best, which includes the best quality, you know, the most reliable partner, connectivity comes in ear, remote maintenance comes in ear and then of course there will always be price driven people that just if you want a quote from you very quickly to, like Rox said, you know, to use that to probably put some pressure on to the local guy. And of course our segment, if you want, the digital or the online driven segment is still tiny compared to the entire market.

[00:27:16.560] - Jon

But it's going to grow.

[00:27:19.590] - Phillip

It's going to grow and at the same time we became the largest company across all market segments in Germany. So of course you can grow much faster in the segment than in the conventional segment. In regards of the crystal ball...

[00:27:28.560] - Jon

And then looking forward to your, yeah, your growth challenges.

[00:27:31.860] - Phillip

Exactly. So growth challenge, it's about managing complexity. If you go all in like we do you are at risk to add, continuously add complexity to your organisation, to your model and you have to be willing to cut it down also and to reduce complexity. I mean like you said, I guess at one point, we are building a nationwide organisation, we're building a fully vertically integrated company and that is very complex, we need to be good at so many things. So removing complexity is key for us.

[00:28:09.330] - Jon

Yeah. Okay. So I think we can confidently say that this sector will grow or this new model for buying heating appliances, whether it's a purely online model, a hybrid model or one of the varieties Rox talked about will grow in the future and it will grow in different ways in different markets. Personally I think that the, for many customers the experience will drive the growth in this market. So if I need a new heating system and I can simplify the process of buying a new heating system, go online, get someone to come round very soon, book a slot online, upload pictures and videos, then I think that drives a much better customer experience in many customers eyes. So Phillip thanks very much for sharing your thoughts and telling us about the journey you've been on and good luck for the next years as you grow your business. Rox, thanks for sharing your views on the research we've been doing. Thank you to our listeners for joining and look forward to seeing, to talking with you in the next week's podcast. Goodbye.

Episode 9: Highlights from our New Energy Summit

In this episode we’re bringing you some highlights from the Delta-ee ‘New Energy Summit’ held in Amsterdam at the end of May. At the Summit we had 80 practitioners from the new energy coalface – from across Europe, and from five other continents. Jon Slowe and Charmaine Coutinho from Delta-ee talk with three of the speakers from our Summit - Bastian Gerhard, MD of Oyster Lab by Alpiq; Vincent de Dobbeleer, founder and CEO of June Energy; and Vittorio Guarini, CEO and founder at Fazland. Find out more about our Summit on our website here.

View Transcript

Episode 9: Highlights from our New Energy Summit

Jon Slowe, Director, Delta-ee

Charmaine Coutinho, Head of Consulting, Delta-ee

Bastian Garhard, Managing Director, Oyster Lab by Alpiq

Vincent de Dobbeleer, Founder and CEO, June Energy

Vittorio Guariani, CEO and Founder, Fazland

[00:00:04.470] - Jon Slowe

[00:00:24.110]

Welcome to the first episode of the second series of our podcast. It's been great to see more and more people downloading and listening to the podcast. If you've got suggestions, comments or feedback we'd love to hear them. You can let us know at our podcast web page. W w w dot Delta hyphen e e dot com. In this episode we're bringing you some highlights from our New Energy Summit held in Amsterdam over a couple of days at the end of May. At the summit we had 80 practitioners from the new energy coalface.

[00:00:54.770]

Well I'm not sure those words go together coalface and new energy but there you go. So 80 practitioners from across Europe and from five other continents so a truly international event and today we'll be talking with three of the speakers from our summit that particularly stood out to us. I'm here today with my colleague Charmaine Coutinho to discuss some of the topics from the summit.

[00:01:16.640]

Hello Charmaine.

[00:01:17.210] - Charmaine Coutinho

Hi Jon.

[00:01:19.190] - Jon Slowe

So Charmaine let's start by picking out each picking out one of the standout sessions from the summit. I'm going to start with our digital customer engagement session. And the reason I've picked that is because I think the energy sector has got so much to do in this area. Digital customer engagement the bar is set really high in terms of other sectors. Love them or hate them, customers are now used to experiences that they get from Uber, from Deliveroo, from Amazon and the energy sector has got some way to go to say the least to catch up with these types of companies.

[00:02:03.140]

We did see some some great examples of how some energy companies are starting to catch up but it's an area with a lot of challenge but also a lot of opportunity for the energy sector to do better.

[00:02:18.570] - Charmaine Coutinho

Yeah it is really interesting actually because retail is often held up as the shining example. So from my perspective in energy retail it's it's a very kind of long running historic industry. So in theory it should be right up there more quickly. So it's great. I mean it's great to see that people are kind of finally getting there because it's a challenging and very emotive topic I think for many of our residential customers.

[00:02:43.460] - Jon Slowe

So, Charmaine, that was my favourite session. What stood out for you?

[00:02:49.050] - Charmaine Coutinho

So I think my standout session was around flexibility and demand response so I think what was really apparent most how many different types of companies are now paying attention to the way flexibility and flexibility within the energy system will impact their business in the future. So not just energy suppliers not just traders but going right down to product manufacturers and just broader interested parties. So we talk about some very very complex and specific use cases around flexibility and it's just great to see the engagement and kind of the I suppose the scale of the challenge ahead really.

[00:03:26.280] - Jon Slowe

Flexibility is a very energy systems centric topic. Charmaine, how good a job do you think the sector is doing of making this easy for customers so making it simple meaningful and clear for customers and developing good propositions.

[00:03:43.890]

A long way to go or some really good examples?

[00:03:47.070] - Charmaine Coutinho

I think bit better than we were I think is a classic energy systems way of thinking where we're not great at customer centric language and definitions are not ever really defined until kind of very well into use cases and propositions.

[00:04:06.690]

I think we're much better than we're going to be because no one really...

[00:04:10.200] - Jon Slowe

Charmaine that sounds like a polite way of saying a long way to go.

[00:04:14.460] - Charmaine Coutinho

Well yeah I think it's I think it's a it's a long way to go but I think it's it's actually much better because people see the scale of the challenge from the demands of the from the future with decarbonisation and electrification. So I think they're paying much more attention to the role of the customer. So I think it's really positive. But it's complex you know the easiest way to understand it is if you're a trader and we're not all energy traders are we.

[00:04:37.560] - Jon Slowe

No we're not. I've never worked as an energy trader although I think it might have been quite a fun part of my career if it had gone in a different direction. Now a common theme throughout the summit was what we call the battle for the customer. There are lots of companies fighting this battle from car manufacturers to incumbent utilities oil majors to product manufacturers new entrant energy suppliers to tech companies.

[00:05:01.770]

These two are sometimes one and the same. We heard from all of these companies and one of the things that stood out for me was the passion that some of them have for their customers and for these companies customer centricity is a lot more than lip service. It really is part of their DNA and you can see how their customers permeate all of their thinkings and actions.

[00:05:26.720] - Charmaine Coutinho

It is a wonderful actually. I remember I'm going to I was slightly off topic here. We were working in an organisation where they asked everyone within the organisation to stand with a picture of a customer, stand where they thought their job was in relation to the customer.

[00:05:41.310]

And I'm not going to talk about what the results were but it was a really interesting exercise because people's perceptions of how close they need to be the customer vary so much and actually one of the examples that we saw at the summit was from Oyster lab which is a startup organisation from Alpiq. So Alpiq are a very established switch Swiss electricity company and they established the kind of innovation lab to really grow businesses purely based around customers but what came out totally from listening to that was this very very customer focused a very agile a very lean startup approach to developing propositions and many of those employees in that company came from outside of the energy sector and you can really hear that in the way they speak.

[00:06:28.830] - Jon Slowe

I like that presentation too, Charmaine. I caught up with Bastian Gerhard managing director of oyster lab at our summit.

[00:06:38.940]

So I'm with Bastian from Oyster lab here at Delta's summit. Would you share with us a bit about Juicar and what it is.

[00:06:47.550] - Bastian Gerhard

Okay so Juicar is basically what I call Netflix for electric automobility. It's a subscription based service where we enable you or our customers to drive their own electric car without having to buy it. So it includes the car obviously including repairs maintenance tyres delivery to your home but also the charging solution. So we have our own charging station for your home and also an app that provides you access to public charging points all across Europe and the electricity on top. So it's going to be one. One complete bundle that allows you to enter the world of electric mobility.

[00:07:32.560] - Jon Slowe

That sounds nice and simple for me as a prospective customer to get everything from from one company in one place but what is Juicar who's behind it. Why do you why do you develop this?

[00:07:43.120] - Bastian Gerhard

Okay. Well the idea was developed within Oyster lab which is the company build off Alpiq because the large energy utility based in Switzerland. But we are also operating in many European countries and yeah the Oyster lab was established to actually develop new consumer business opportunities for Alpiq and the well in the beginning the goal was actually quite different because we wanted to have access to the digital home the connected home of consumers. Initially we wanted to find a way to sell more PV more affordable [...]. And we realised that the electric car is actually a good gateway drug because if you are these these customers that we that we are focusing on families owning a house and you have the electric car then photovoltaic would be the next logical step. And also if you're a family with PV the electric car would be the next logical step. So that's why we realised look we have to get into that space and find a way to sell more electric cars.

[00:08:50.440] - Jon Slowe

Okay. And what stood out for me actually in your presentation to the summit here was your background you're an entrepreneur you are not from the energy sector and the way you've gone about developing this proposition is probably quite different from how traditional energy companies would develop the proposition. So tell us a bit about how you started, you had an idea? What did you do next. Or did you have an idea or or how did you how did you end up where you're at with this Netflix for electric vehicles type proposition.

[00:09:24.740] - Bastian Gerhard

Yes actually having having the idea. Let me start over. I think in the beginning it's not so important to have an idea. The question is more what is your. It's a strategic objective. And most importantly who is your customer. Who is going to be the target segment that you want to cater to and offer a service to and for was as I said the goal was to have access to the digital home. So we actually went to these people and we were trying to find a problem. So the problem is it's much more difficult to discover than to have a groundbreaking idea let's say.

[00:10:01.340]

And we realised hey there's this problem there's a mobility need and it kind of fits with our strategic objective to get access to the house.

[00:10:10.940] - Jon Slowe

Okay. And then the other thing that stood out to me was the speed at which that you went from the concept to actually getting a prototype out. So yeah. Tell us about how how long that took and how you managed to do that service so quickly.

[00:10:29.360] - Bastian Gerhard

Yes it was quite fast. So we we developed well we discovered the problem. Then we developed the first quick idea or a couple of ideas along with hypotheses that we needed to validate in order to to to find out whether the idea would fly or not. And the first prototype took us only three weeks to develop which was just a quick and dirty Yeah quick and dirty prototype where we just connected existing off the shelf solutions we didn't build anything. The only thing that we built was the customer experience the so-called customer journey so we wanted to control how the customer would perceive the product and how the customer would interact with it.

[00:11:13.940]

So thereby we we kind of benefited from the from the degree of freedom that we received from the parent organisation because we were able to cannibalise our own products that we had at the time just to give you one example Alpiq has its own charging app to charge electric vehicles but the service quality is not that great. So we decided to just lose to just use a competing product because it develops deliver us a better customer value.

[00:11:42.510] - Jon Slowe

Okay. So you could pick pick hardware pick products off the shelf. And then it's the user journey that user experience that you could develop pretty quickly because that's basically software there's no hardware.

[00:11:55.430] - Bastian Gerhard

Yes exactly. You develop the customer experience first the customer journey first use existing technology and then see which technology you would like to reintegrate later and develop in-house to to deepen your vertical integration basically.

[00:12:13.270] - Jon Slowe

Okay. So now you've got your proposition out in the market that's all in one. Everything bundled to electric mobility as you described. What's next where where do you take it from here?

[00:12:24.950] - Bastian Gerhard

Yeah. The sky's the limit. So I mean I have I have this entrepreneurial background so I would like to scale it like a like a unicorn basically world domination. But yeah I mean we just concluded the what we call product market fit in three markets. So we we know what the product has to be we have a price point we have existing customers and we want to scale. So we want to scale it in the markets where we at. Switzerland, Lichtenstein and Germany but also expand and turned this into a pan-European company.

[00:12:55.790]

Not alone however. But with strategic partners. So we are currently in the process of creating an investment strategy. And then we will pitch that to our strategic partners and to other external financial investors to to scale and grow.

[00:13:12.470] - Jon Slowe

Well I love the speed that you have you're moving at and the simplicity of your your proposition and how you've built this through putting customers at the heart of the or finding the problems that you're trying to sell for customers. So best of luck in the next years.

[00:13:26.570] - Bastian Gerhard

Thank you very much.

[00:13:30.650] - Jon Slowe

Another example that stood out to me was June energy from Belgium. We first got to know June from the auto-switching activity where they automatically switch customers to the cheapest or best tariff. Hearing from the founder and CEO Vincent de Dobbeleer their customer first mindset again stood out to me.

[00:13:51.740]

Vincent. So you shared with us how you're collecting a lot of data from a lot of homes. Tell us a bit about what you're doing with that data. It's not data for data sake but data and then what. What is June energy doing with this dat

[00:14:07.050] - Vincent de Dobbeleer

So actually what we're doing with that data is trying to create relevant and useful insights to help end users to optimise their energy bill. So as you say in the data as such it's not worth much. The worst is in creating the insights out of that data.

[00:14:26.340] - Jon Slowe

And can you make a business from creating insights because there is a lot of companies doing demand disaggregation saying I can break down the bill in this way and that way. Are you. Are you driven by what you can do with the data. Or how do you work out what insights to focus on and what customers want?

[00:14:43.560]

So so we are actually driven by by what customers want and we try to connect that with how can we create what they want. We did data the insights that we have. So one example of that is are auto-switching service which is then personalised for that particular consumer based on their data their behaviour and of course the terms in the energy market and we optimise the bill on the tariff in that in that case.

[00:15:11.610] - Jon Slowe

And I guess that consumer need is to save money or to get their energy at the lowest cost. How how do you keep customer centric. So it's very easy to get carried away about what you can do. Do you talk to customers you've put things out there and see what how customers react. How do you keep the customer at the center of what you are trying to do.

[00:15:32.960] - Vincent de Dobbeleer

Well we do a combination of things actually. We make sure that everybody in our company has continuously daily contact directly with customers to feel what they like or they don't like what they would like to see changed. And then secondly of course we do the more let's say traditional customer research. And thirdly we we follow and and collect everything they do on our platform. So why do they look at when are they there. Do they come frequently or not. And depending on that we try to create services that are relevant and we put them to the market as well which we see our customer base a bit as a as a real life story to start services.

[00:16:20.400] - Jon Slowe

Okay. So one customer need is buying energy at the lowest cost. So you have the auto-switching. Have you got an example of another customer need that your your meeting or your you are trying to meet.

[00:16:31.530] - Vincent de Dobbeleer

Another one is is customers that really want detailed insights in their energy usage and try to optimise it themselves as well. By and by adapting their behaviour. Others is the objective advice on what energy related installations would be relevant to optimise the energy mark... Energy management.

[00:16:55.830] - Jon Slowe

Okay. And you can use the insights from the data that you're collecting to identify what those options might be for the customer.

[00:17:03.180] - Vincent de Dobbeleer

Yeah exactly. We combine the data of the customer the energy consumption with external data. We we load up also subsidy related data in order to see what the best choice is for that particular customer again.

[00:17:19.410] - Jon Slowe

Okay. And lastly June energy were that you have some B2C business through auto-switching but you also have some business with partners. Where do you see your your future do you see it more as building a brand a cost consumer brand in the Belgium market or more is using your insights to work with partners who will then work with customers or both.

[00:17:42.770] - Vincent de Dobbeleer

Yeah we see it as both actually. Our focus is trying to get to the customer what he really wants. And depending on the situation maybe he wants to to buy a service. Heating is a service from an installer and he does want his history of optimised but not with another company which would be June and so it depends some customers we approach directly others. In other cases we we license our engines to two partners that then use them in their home services.

[00:18:15.150] - Jon Slowe

Okay. And the core of what you can offer then is is it the collection of the data or the analysis of the data or or would you say both of that.

[00:18:23.670] - Vincent de Dobbeleer

It's it's more of the analysis we of of course collect a lot of data some out of our own hardware we have an open system so we also collect data from other hardware solutions. It's creating the insights out of the data and combining all these data streams energy data consumer data weather data and so on and so on and trying to simplify that in order to get the relevant correct advice.

[00:18:56.170] - Jon Slowe

Okay. And then being flexible flexible about whether that's B to C or B to B to C depending on what's the best way to meet our customer need.

[00:19:03.420] - Vincent de Dobbeleer

Exactly. Exactly.

[00:19:04.960] - Jon Slowe

Vincent thank you very much.

[00:19:06.730] - Vincent de Dobbeleer

You're welcome.

[00:19:09.070] - Charmaine Coutinho

So Jon, the last example is a little bit different isn't it. I loved their presentation actually. So I think it's a great example.

[00:19:18.370] - Jon Slowe

Yes it is. Now we're heading to an example from Italy. My last conversation at our summit was with Vittorio Guarini CEO and founder at Fazland.

[00:19:28.740] - Charmaine Coutinho

So what really stood out for you about them.

[00:19:32.290] - Jon Slowe

Well they're coming at this not so much from the energy sector but from the home services sector. Their company's on a journey from being a lead generation site for home services to becoming an end to end platform for home services. Think of them a bit as a Uber of home services providing a platform for customers to buy a home service from their network of installers.

[00:19:54.520]

So I'm with Vittorio Guarini, from Sicuro, an Italian company.

[00:20:01.640]

Vittorio would you tell us in a nutshell how your company is helping customers in Italy with their home and energy needs.

[00:20:11.640] - Vittorio Guarini

Thank you Jon. And thank you for the question. Yes we studied since the beginning. Is a customer needs. So we want to make your life easier and simplify life. And Sicuro by the way an Italian is a pretty nice word because the way you put it. Closed door installer service provider that means safe installer, safe service provider, trustable service provider. And if you put it close to price, it means clear price. Transparent price. So in my opinion and in our opinion enough working with the customer this is the way to make their life easier.

[00:20:48.660] - Jon Slowe

So if I need a new new boiler or a solar panel I want a solar panel on my roof... Just describe to me as a customer what I would do and how how Sicuro would help me.

[00:21:00.540] - Vittorio Guarini

Yeah would find that e-commerce that is not only product oriented but is a product plus service [..]. We see a transparent price. We find a clear price and it will do the end to end the floor together with medium and we'd buy a platform. So at the end the customer wants automation integration. One single point of contact and fast delivery for a boiler or a tech system. The topic is over the same.

[00:21:30.220] - Jon Slowe

OK that sounds like a nice customer experience. You have been doing or you've been in this area a while with a lead generation business to start with before moving into this end to end service.

[00:21:42.880] - Vittorio Guarini

Yes.

[00:21:43.180] - Jon Slowe

What did you learn from the so far from the lead generation business and how are you taking those learnings into a more end to end business.

[00:21:53.470] - Vittorio Guarini

Yes. Thank you for the question. Yes. This was a good starting point for us because [...]The lesson learned is if we were to one that each customer has got a different story a different profilation that could be done and a different personalisation that tailor made approach needed. And then the then customer wants. And that's what we mean with the Sicuro the final instant gratification. After searching for a quarter or searching for a specific service so you can give them some gratification with the clear price in front of them and with the peer service level agreement specify either the [...] they can do the kick to be very easy and they can do the tick delivery by the way but he is.

[00:22:42.620] - Jon Slowe

So what do you think the most important thing is for customers. Is it saving time and the convenience of your service. Is it transparency on the price? What would you say is if you had to pick one or two things that are critical for customers. What would you pick out.

[00:22:59.570] - Vittorio Guarini

Well in my opinion transparency is a priority one because of course the outcome of our most of them may still use a digital channel or they are priced for the best. But we don't put in priority one. The convenience are sometimes not what we discover from our lead generation analysis first and our end to end analysis now that the customer wants a final decision on the price very high or price very low By somebody they don't doesn't want to see metric points and not to understand and to be disoriented. If they are very well issued about the transparency over the price and the conditions maybe they can spend even more and they are there now. You have a willingness to pay.

[00:23:42.350] - Jon Slowe

So taking away that confusion from the customer if they have two very different quotas what do they do. And how wide a set of products and services are you offering customers.

[00:23:53.720] - Jon Slowe

We I mentioned boilers or solar panels as an example but give us some idea of the range of services that you're looking to provide to customers.

[00:24:04.850] - Vittorio Guarini

Yeah probably home services as we try to look for the new generation product and services needed by the customer so keeping in conditioning for a solar system. For those like system for sure lots of viewing intercom alarms as much innovation alarms and even more because we are doing something about the water purification about here monitoring in here fortification so everything that it may be will be there. Mark hallmark. 2.0 3.0 now.

[00:24:40.620] - Jon Slowe

So the anything that I want to do from my home in Italy. I could go to Sicuro. Well maybe not anything but many things. And you've got a whole range of products and installers lined up to help me.

[00:24:53.940] - Vittorio Guarini

Exactly, exactly.

[00:24:55.350] - Jon Slowe

And last question around the well your model I guess depends on providing a great customer experience but you need a great installer experience as well because you need both sides of the business.

[00:25:11.850]

We've heard at our summit that the word Uber ization or that Uber ization of installers is bandied about. What's your view on installers are they... How many of them or enough of them happy and interested to go down this uber type model. Or is that a challenge for you to get sufficient number coverage of installers on your platform.

[00:25:36.680] - Vittorio Guarini

Yeah. Thanks for the question because this was our discussion with my team every single day in the last month and in my opinion is that our vision is that this will be the next challenge for sure but next my son. Absolutely. It's a must for us because our expedition in addition came also from selecting the good installers in Italy and we will be the first to utilise the installer network. providing these up worker but will Uberise as you said before as you mentioned before they solar max or the two. Maybe they are students and they will. Be featured. They are they we get the training or recruitment and it means the recruitment day will be. Native digital installers are so because they want they need to be full with quality or you to be one but also ready to delivery ready ready to be outstanding with their customer and with very good use of digital gadgets that must in my opinion.

[00:26:38.710] - Jon Slowe

Good. Okay. So very much a partner for the installer as well. And Vittorio. We've enjoyed your presentation of summit. Hope you've enjoyed the event and nice talking just to you now. Thanks for your time.

[00:26:55.260] - Vittorio Guarini

Thank you so much Jon and thank you for all the organisation. It was a great pleasure for me.

[00:27:01.850] - Jon Slowe

So we hope you've enjoyed hearing some highlights from our New Energy Summit. Our next summit, we hold around two a year, is in September. On the topic of heat and we'll bring you some highlights from this to me. Give us a sneak preview into some of the hot topics in that sector.

[00:27:18.220] - Charmaine Coutinho

Oh yeah for sure. I'll try not to do any kind of puns on the word heating up on the phrase heating up anyway. So one thing that is popular at the summit last this week but also is very relevant is the really disruption to business models around heat. So something I'm really passionate about. But moving from hours to comfort, from shifting boxes to selling services, is a real kind of key topic that has been emerging over the last year or so and we'll continue to do that. That's a big one.

[00:27:50.090] - Jon Slowe

And what else will we hear about?

[00:27:51.860] - Charmaine Coutinho

Well one thing which I think we're all really passionate about. I think in the sector is around how low carbon heating can really reach scale. And that's really looking at how retrofitting might work in the future. And so that's really what's really important. And I think it will be an issue on many policymakers over the next few years.

[00:28:11.810] - Jon Slowe

That retrofit challenge certainly is a big one.

[00:28:14.410]

And the last topic?

[00:28:16.100] - Charmaine Coutinho

Well there's two actually I'm going to sneak in two. One is sector coupling. It's a classic energy sector phrase for how the electricity system and the electric heating system are going to be working together in the future. And, related to this this was related in general is the emergence of hydrogen. So we've had a lot of questions from from the market on this and specifically how does hydrogen web pages.

[00:28:40.150] - Jon Slowe

Thanks Charmaine the heating sector certainly is hotting up. You see I'm not not scared of a pun myself. So that's it from this episode. We hope you've enjoyed it. A reminder to give us feedback if you'd like at a w w w dot Delta hyphen e e dot com. We'll be back next week talking about the heating sector effect. We hope you can join us then. Until then goodbye.