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Podcast S13E07

Getting into the decarbonisation of heat: an energy retailer perspective

In this episode Jon talks with Alex Thwaites and Michael Harper from energy retailer OVO Energy about their activity and ambitions to help households decarbonise heat. Roxanne Pieterse, Senior Analyst, from Delta-EE adds her expert views.

Episode transcript

[00:00:05.930] - Jon

Hello and welcome to the episode. Today, we're looking at the future of heat pumps, particularly in the UK market. And it's very timely to be doing that. We're in the middle of a terrible energy crisis in Europe. We're reliant on a lot of gas coming from Russia, and we need to reduce our carbon emissions. Heat pumps aren't the only way to do that. Hydrogen might be a way to do part of that, but heat pumps will be a big way to do a big part of that in the next years. And that's very much so. The case for the UK. UK has got Europe's biggest gas boiler market. Gas reaches about 90% of homes. Most of those homes have a gas boiler. Heat pumps have only reached tens of thousands of sales a year, compared to 1.5 - 1.6 million or so gas boilers a year. So we need a huge transition in the UK, a lot of growth in heat pumps. And today I'm lucky enough to be talking with one of the UK's biggest energy retailers about their plans and activity with heat pumps together, as always, with a Delta-EE expert. So let's say hello to our guests.

First up, Alex Thwaites from OVO. Hello, Alex.

 

[00:01:25.170] - Alex

Hi, Jon. How are you?

 

[00:01:26.830] - Jon

Good, thanks, Alex. Thanks for joining us. Can you give our listeners an elevator pitch for what you do at OVO? And then a few facts and figures about OVO for people that might not know who OVO  is?

 

[00:01:40.710] - Alex

Yeah, of course. So, Alex Thwaites, I'm head of Zero Carbon Living for OVO Energy in the UK. And what that sort of role compasses is EV business. Anything e- mobility tariff, EV chargers, public charging. It also includes our decarb of heat strategy. So low-carbon heating, air source, heat pump, zero emission boilers, and then also innovation across both heat and transport. So anything that helps our members reduce their carbon emissions via home or transport sort of sits in my world, which is great. And then from an OVO energy perspective, we're a company that founded in 2009 with a really simple purpose, and that was to make energy greener, cheaper and simpler. And to give a bit of an idea around sort of size and scale of the business. We're sort of five retail brands. So we've got the OVO Energy retail business. We've got Kaluza intelligent platform, along with a couple of other businesses. We've got around four and a half million customers. We've got eleven offices across the world, UK, Australia, France and Spain. We've got about 9000 connected devices across those businesses, about five proprietary platforms, planted nearly 2 million trees as part of our OVO foundation. So fairly sizable business.

 

[00:03:12.490] - Jon

Okay. And you've got a big job then, because you've got four and a half million customers in the UK that you need to take on a low carbon journey with heat or electric vehicles.

 

[00:03:23.010] - Alex

We do. And it's really exciting. And that's exactly how we view it, as. It's an opportunity to help our members transition to low carbon heat, electric vehicles and help reduce their energy consumption and ultimately their carbon footprint.

 

[00:03:38.010] - Jon

Great. Thanks, Alex. Come back to you shortly. The second guest is Michael Harper, also from OVO. Hello, Michael.

 

[00:03:45.270] - Michael

Hi, Jon.

 

[00:03:46.950] - Jon

Michael, likewise. Can you give a listen a feel for what you do at OVO?

 

[00:03:53.320] - Michael

Yes. So I'm a data scientist working at OVO Energy, and the areas I mostly focus on are smart, thermostats, smart meters and how we can use that data to help inform this journey we're trying to take customers on, from gas boilers towards heat pumps. So a lot of my work is looking around the heat pump space and understanding how people are heating their homes. And my vision, I guess, with this is how we can use data to help people make this massive transition.

 

[00:04:25.370] - Jon

Great. And I guess you've got more and more data to play with, if that's the right phrase or maybe not. Smart meter data. Smart thermostat data that's throwing off huge amounts of data.

 

[00:04:38.670] - Michael

Very much so. It's often the case. It feels like you have too much data. So actually turning all that information into useful insights is, I guess, where my job comes in.

 

[00:04:50.260] - Jon

Yeah. Great. Well, let's come back to you shortly and find out more about that job. Last but not least, at least, my colleague and Delta-EE expert Rox Pieterse. Hello, Rox.

 

[00:05:01.250] - Rox

Hi, Jon.

 

[00:05:02.440] - Jon

Welcome back to the podcast. Rox, I mentioned in my introduction the UK has got a long, long way to go with heat pumps. We're talking with OVO Energy, one of the big retailers in the UK today. But can you give us a feel for whether energy suppliers, energy retailers have been really engaging with heat pumps much in the past in the UK? Or do you see that starting to change?

 

[00:05:31.710] - Rox

Yeah. So a couple of years ago, when there was still quite a lot of uncertainty in the market around what the future would be for heat pumps in the UK, there were a couple of energy suppliers who were hedging their bets and establishing their installation capabilities to be the early movers. And then there were a couple who were quite dismissive and said, no, we're just going to focus on installing boilers because that's what we see the future of the market being in the UK. But now that there's a lot more certainty about heat pumps playing a significant role in decarbonising the UK, I would say all of the major UK energy suppliers and also a lot of the smaller ones are really keen to establish their capabilities here.

 

[00:06:00.460] - Jon

So they can see which way the wind is blowing and it's blowing towards heat pumps?

 

[00:06:15.710] - Rox

There’s no uncertainty anymore.

 

[00:06:21.460] - Jon

Yeah. Well, the UK Government has been working on decarbonisation of heat since 2011, I think. So it's had a long time to be driving the market. I don't know, Rox, if you think I'm too harsh in saying it largely hasn't driven the market between then and now.

 

[00:06:40.890] - Rox

I think that would be fair to say. Yeah.

 

[00:06:43.590] - Jon

Okay.

 

[00:06:44.180] - Rox

But there's still quite a bit of uncertainty because we're yet to make a decision on what role hydrogen will play. So even though we know we want to get moving on heat pumps now, it's still not clear whether it's going to be 100% heat pumps eventually or a mix of heat pumps and hydrogen.

 

[00:07:04.690] - Jon

Alex, how does that play into OVO's approach with heat? Do you see it as a one way bet? Do you see the winds have really changed direction, or what's it like for you in a commercial role? You want to get more heat pumps into homes, but you've got a commercial business to run as well.

 

[00:07:25.190] - Alex

And it's a challenging one. So to touch on hydrogen, I think the way we are viewing is we don't rule hydrogen out. But what we're really trying to do at OVO is look at deployable technologies that are available now and heat pumps are available and installable in multiple homes now. So I wouldn't say we're putting all our chips in on one particular product. We're looking at a breadth of low carbon technologies. I think I touched earlier around heat pumps, zero emission boilers, not convinced that hydrogen will be deployable at scale in residential homes, but think it's got a place to play in the wider industrial industries. So, yeah, we're really looking at what can we do to help our customers and non members, you don't necessarily have to be an over energy member to buy a low carbon product from us. It's what's available now and what can make a difference now. So that's pretty much where we're playing in the heat pump space.

 

[00:08:29.670] - Jon

And where are you at today with well, with heat pumps and heat in general, is it all a future business? What's your existing business and heat like in terms of activity and volumes?

 

[00:08:44.690] - Alex

Yeah. So we've got a couple of different angles on this. So I touched I think in the introduction around, we've got a couple of different businesses within our other group. One of those is CORGI HomeHeat, so they offer gas boiler installations and home servicing as part of gas boiler maintenance and servicing packages. So we're in that pre existing gas space, but then we're also future thinking, looking forward to low carbon technologies, and we're also in the heat pump space. So the strategy we've taken is trying to gain knowledge and expertise in the area through innovation projects so that we can test and learn for longer and make sure we understand what the right processes is, how to get an efficient operational business. And one of the big learnings we've taken from that is around the design of heat pumps, making sure that the design is correct, because when they're designed and installed to a good standard a heat pump can be incredibly powerful in terms of carbon emission reductions. But when they're not designed correctly, they can also have a negative impact. So it's making sure we've not jumped in with both feet and created an operational business where we've got less experience than we have in the gas boiler world.

 

It's around making sure we understand what we need to do to get it right.

 

[00:10:17.210] - Jon

How long is that test and learn period? Are you still in it and when did you start it and when do you think you'll come out of it and how many installations are you learning from?

 

[00:10:26.210] - Alex

Yes, great question. So we've been in the space since about 2018 through funded innovation projects with partners such as BEIS, Innovate UK and different local authorities. So we're still in that test and learn space. Right now. We've got three live innovation projects and we've got two in the pipeline that should hopefully go live either in Q2 this year or potentially Q3. So we'll probably use 2022 as further learning, make sure we understand the practicalities of installs, let the market grow. I think would be fair as well. Wait for the demand to increase. So hopefully by scale some of those cost efficiencies can come in and reduce the overall cost of the customer.

 

[00:11:19.170] - Jon

Some people listening from the heat pump sector might say - four years. Heat pumps is a mature technology. Do you need four years of testing and learning? What would you say to that? There is a lot to get right, but I guess what have you learnt over those four years and did you think it would be four years when you went into it in 2018?

 

[00:11:46.130] - Alex

I would say in the middle of that we've had a pandemic.

 

[00:11:53.510] - Jon

Okay, fair point.

 

[00:11:55.610] - Alex

A couple of our innovation projects, one in particular that we're going to talk about today, was sort of install phase was delayed by 18 months. So I'd say although it took four years you could probably shorten that down to two. But we've got some great learnings from those projects. We've installed hundreds of air source heat pumps. We've installed ground source heat pumps. We've installed heat batteries. Some of these technologies, specifically around the heat batteries, is newer technology than heat pumps, configuring those to work together with all of the different schematics and electrical requirements and also plumbing and heating expertise that's required to get those systems to work efficiently. I think it's been the right decision to use innovation projects to smaller scale, get it right so that we've designed a great customer proposition that we can then launch mass market.

 

[00:12:55.190] - Jon

Yeah.

 

[00:12:58.830] - Michael

I'd add to that as well. Having gone through the journey of getting a heat pump installed in my own home, I can mirror the challenges I think, which we face every time we go into a house to put a heat pump in. And it's not the nicest customer experience. I must say, putting a heat pump in at the moment, there's a lot of detail, a lot of opportunities for things to go wrong. And I think Alex you said at the start about kind of trying to bring people along on this energy transition with OVO is probably one of the core principles of the business. And making that a painless experience is to me, probably the one of the biggest hurdles we still have at the moment with heat pumps.

 

[00:13:35.550] - Jon

I think we've seen in other countries. There's been I know in France in the last decade, there was a big incentive for heat pumps. The market exploded, but the quality wasn't quite always what it could have been. So then there was a bit of a crash after that. And I've seen that in a number of other markets. So, yeah, I can really see the rationale for learning, getting it ready to scale, because I imagine you want to do this at scale to make a difference.

 

[00:14:08.250] - Alex

We absolutely do. Again, one of the challenges around at scale is installers and having the right - one volume and two quality of installers out in the market. So I think the Heat Pump Association figures are around from last year, about 2300 installers in the UK. And by, to hit the government target of 600,000 by 2028, we need about 26 and a half thousand. So you can see there's a huge skills shortage or skills gap there that we need to help to plug. And there are certain things in there that we need government incentives to help stimulate the market. So incentivizing those installers to take the plunge and upskill from their existing gas qualifications up to heat pumps. There's an education and awareness piece around the transition from your tried and tested combi boiler on your wall, all that you know, and I was going to say probably don't love your gas boiler, but you know it and you're comfortable with it and you know how to turn it off and adjust the temperature, et cetera. So there's an educational piece there as well, I think. And then some other policy changes, shifting the green levys from the electricity side of the bill to the gas side of the bill, trying to encourage customers to move away from gas onto electric heating.

 

[00:15:40.510] - Alex

But all of the green levies sit on the electricity side of the majority of the green levy. So there's some policy changes. There some skill shortage and incentivising in installers to take that leap, being there. And also around the skill shortage, the demand as well. You need the demand.

 

 

[00:15:59.810] - Alex

It's almost that chicken and egg scenario. You need the demand there to encourage the installers to upskill because they can see long term visibility of a pipeline of installs coming. But you need the install to be able to deliver those installers to be able to deliver those. So it's challenging.

 

[00:16:17.740] - Jon

What strikes me about that, what you've just said there, Alex, it’s a lot to get right at the same time, you've got to get the number of installers right. You've got to get your experience. So it's seamless for the customer or as seamless as possible for the customer. Right. You've got to get the demand has got to be there and the policy incentives have got to be there. It's a lot of different parts of the jigsaw that need to come together.

 

[00:16:41.050] - Alex

There is. And the longer awaited heat and building strategy was sort of published last year, and that went some way to mitigating some of the challenges that this industry face. I think the boiler upgrade grant when it comes in April will be a bit of a catalyst, I hope, because it's removing some of that upfront cost barrier, which is one of the really big challenges. But then we could some other financing mechanisms to help customers reduce the upfront sort of cost, spreading payments over a period of time more akin to how you would do the boiler. Not many people would buy a boiler outright upfront. They'd spread it over three years. And that type of financing mechanism to also help stimulate the market.

 

[00:17:27.430] - Jon

Yeah. Let's have a look at the trial, learnings from one of the trials that you've been involved in now and then, Rox, after that, I'd like to ask you a bit about the proposition side and what you see maybe looking outside of the UK about energy retailers getting involved in driving the heat transition. So I know one trial you want to talk about is the zero carbon homes trial. Michael Or, Alex, would you like to tell us a bit about that?

 

[00:18:00.430] - Michael

Yeah, I'd love to. So as you mentioned, we've got a few trials ongoing, so the zero carbon homes project was funded from the government’s low heating technology fund, and OVO was awarded this funding back in 2018. The project is being led by OVO  but we’ve worked closely with our partners at Kaluza who do the smart energy management platform. Mitsubishi’s heat pumps and Sunamp have been providing the thermal batteries. These technologies, including the Sunamp thermal batteries, as Alex inferred earlier, are all fairly new products. And there’s not loads of experience building these complex systems which work together, and that’s a lot where this project fits in. But the big challenge they introduce is you get really big peak demands, so morning and evening you might result in too much demand for the grid, so the idea of these heat batteries is looking at whether we can move when you’re using electricity to off peak times. Not only does that bring really major benefits to distribution networks but it also allows you to use cheaper electricity and ideally lower carbon electricity if you’re avoiding hitting those peak hours.

 

[00:19:08.330] - Jon

Because I guess gas, you can squish in the gas pipes and store it in the gas pipes. For those few hours in the morning when the gas boilers are all firing electricity, you can't do the same thing.

 

[00:19:17.920] - Michael

Exactly. Yeah. There's no real time of use incentive for a gas system. You can store it and use it whenever.

 

[00:19:25.630] - Jon

So what's that been like? Heat batteries? These are phase change material batteries.

 

[00:19:31.190] - Michael

Yes. They're Sunamp phase change batteries.

 

[00:19:35.590] - Jon

Yeah. So what have you learned through that process? As you say, relatively new technology. Tell us a bit about what that's been like.

 

[00:19:43.630] - Michael

So we've managed to put in 12 of these systems, and there’s been 2 types of system we’ve put in. One where we’ve paired the thermal battery with a heat pump and the other one is just putting a thermal battery in and charging the system via a typical immersion heater. There’s been loads I think we’ve learned from this project especially around the installation side, and on my side as well, the data science, we’re definitely getting some interesting insights coming out of these systems. But I think the big one I would really take away from this project has been that installation and the need for space to fit the storage. I think just to give an example for some of the properties, in one bedroom flats, asking them to have space for a battery which is the size of a washing machine is actually quite a challenge and that has actually ruled out a lot of properties in our search for trial houses.

 

[00:20:42.690] - Jon

So what sort of places was it going? Was it going in kitchens or utility rooms or on the balcony of a flat even?

 

[00:20:50.190] - Alex

Yeah, it's really interesting one with the thermal battery only. So the demand that they could meet were more akin to a one or two bed flat. And we have lots of interest from homeowners in one and two bed flats. But when we went to do the technical surveys, the available free space in those one or two bed flats was really limited. So the majority of them had a combi boiler on the wall. These units are floor standing, so as you can imagine, and it was normally a couple of units required, so you'd stack one on top of the other. There's not that many one or two bed flats with available space to put two washing machine size units in. So the interest was there and we generated lots of interest. But, yeah, trying to actually find the properties that had viable space for that where space is a premium. In smaller flats, that was a challenge. One of the big learnings and then also around the high install costs. So these systems don't come that cheap. And obviously with newer technology, the hardware is normally more expensive, so we would expect that to come down as we start to scale, which is, again, another really positive point of being able to use innovation projects to trial these different technologies.

 

And the customers or homeowners were getting £15,000 worth of technology installed into their home. So that's a real positive.

 

[00:22:30.510] - Jon

I can see how the cost will come down, but in terms of space and target properties, do you think the conclusion there is probably not one and two bed flats for now, but focusing on larger homes or can you see ways to get around the space challenge.

 

[00:22:50.890] - Michael

You go for it Alex?

 

[00:22:52.520] - Alex

I was just waiting to see if you're going to do a bit - I think it's probably a little bit too early for us to identify whether we rule properties out or not, and also especially the heat batteries being slightly newer technologies, is there an opportunity to reduce the size so that they'd be more applicable to smaller properties? So I think there's lots of innovation that can happen in this space, because what we definitely don't want to do is leave anybody behind. Right. We don't want to believe in demographics or property types. And that's why we're trying to look at a breadth of low carbon technologies so that we absolutely know heat pumps will be suitable for lots and lots of properties in the UK, but they'll also not be suitable for lots of properties in the UK for a number of reasons, space requirements, noise restrictions. So we've got to look at other low carbon technologies so that we've got propositions and products that can support everybody and every household in the UK, and not just specific ones where a product fits. So I think this is another real bonus of innovation projects because we can do them funded at cost.

 

Customers don't have to have a big outlay to trial these products, and it gives us really good opportunity to test and learn and iterate and look at different products and not leave anybody behind.

 

[00:24:23.030] Jon

Yeah.

 

[00:24:23.820] - Michael

If you don't mind me adding as well, I think a really interesting part around these systems is not only the technology you're trying to put in, but also when you're doing it, or is it a house which is fully fitted, has a working gas boiler, or do they have a chance to think about a deeper retrofit? And this is actually something I did in my own home. We didn't have a space for a hot water tank in the old layout of the house, but we did a retrofit of the old utility room, put a cabinet in, and suddenly putting a heat pump in was no longer a big challenge. But had I not been in a position to do that change, it would have been quite a lot of upheaval, I'd say, trying to find somewhere else for that hot water tank. So with the challenge for these kind of innovation projects, you're walking into fully furnished houses who've already got their kitchen done out quite nicely, you're going to struggle to find sometimes that extra space. I'm optimistic about systems like these fitting in more homes, but the question is about the education piece, making sure people are aware of the options available well ahead of time and using data to help that. Sorry, I have to talk about data sometimes!

 

[00:25:28.130] - Jon

Well, I was going to ask you about that, Michael, in terms of the data you talked about mentioned earlier on Smart meter data. Smart thermostat data. I guess you don't get any magic data feeds that tell you the space in a customer's home. But can you give our listeners a bit of a vision for a view of how you might bring together smart meter data. Smart thermostat data, other forms of customer engagement to help take customers on a journey.

 

[00:25:55.430] - Michael

Cool. Yeah. Okay. This is definitely a passion project of mine in terms of..

 

[00:26:03.410] - Jon

I can hear in your voice you're excited about it!

 

[00:26:04.800] - Michael

Yeah. So you mentioned there was data in lots of places. And one of the first things you actually said about you don't have floor area about buildings. In fact, in the UK, we actually have quite a good data set, the energy performance certificates. Anytime someone sells or rents a home, there's a fairly simple survey done on the home which does give you enough attributes to start understanding the building and the size. So you have got that and it gives you a level of confidence on what might work. Smart meter data is really interesting. OVO actually have a product we developed called Greenlight, and it starts trying to give you insights based on your energy patterns. So can we spot if you're charging your electric heaters at night, can we compare your home to similar homes? So there's some really exciting things you can do with smart meter data. I think what we need to start doing as an industry is using all these data sets we have scattered around and pulling them together into easy to understand propositions so that if you take, for example, a home which is fairly inefficient, you'll be able to notice their gas bills are a lot higher than a similar sized home, which is efficient.

 

[00:27:21.090] - Michael

And that's a really important thing when it comes to putting heat pumps in. That's just one example of the kind of end to end data journey I believe we should get to one day. So the pre install. What happens when you're getting your heat pump, how you design that sizing, and there's some really good methods out there at the moment of sizing heat pump systems. But again, they're quite survey heavy and they're at risk of sometimes being inaccurate. And then finally installation. And once your heat pump is in, how does the end user actually know their system is performing efficiently? I think one of the big things I've taken away from people I've spoken to of heat pumps is that constant fear of bill shock. How do you get past that concern? And again, data is something which can really bridge all those gaps in my mind. But there's a lot to do.

 

[00:28:09.290] - Jon

There's a lot to do. How far away from that journey that I can see is in your mind that you'd love to get to? Is it several years? Is it a year? Are we on that journey at the moment or are you on that journey at the moment?

 

[00:28:24.310] - Michael

I think this is what OVO is trying to tackle the kind of parts of that journey and sort of pick out. So in my mind, if we can work on that scoping journey first by helping people just understand if their home is something where a heat pump would work. To me, that's a really good starting point. The whole end to end journey, I'd say it's going to be iterative and probably over a few years and something we can always learn from. That's the other thing there, the more heat pumps we get put in. One of the things I reflect is my heat pump is in a house on a street that's about 60 similar houses on this street. That information that learning is actually something which other houses essentially could replicate and we can sort it, so as we get more heat pumps fit in, we're going to be able to ramp up this learning.

 

[00:29:11.550] - Jon

Yeah. Okay. Thanks, Rox. Listening to the conversation so far, how similar or different do you see that is from other energy retailers in other countries, or do you see a lot of people going on the same sort of journey that you've heard so far today?

 

[00:29:31.750] - Rox

I think it's quite similar for other energy suppliers. I mean, we've had Eneco on the podcast before talking about the trial that they're doing with heat pumps and using them to offer comfort as a service. They're doing that in new build so that they know ahead of time roughly what the demands are going to be for the heat pumps and then trying innovative things where it's a fixed monthly fee for the customer so that you get over that bill shock challenge. And then in the background, you've got Eneco optimizing the operation of the heat pump in line with when they've got wind generating electricity. So there's all sorts of interesting things like that that energy suppliers are trying to do with data and different ways that you can manage your risks as you're learning and come up with a proposition that's easier for the customer to get their head around.

 

[00:30:23.350] - Jon

Okay. That's encouraging in that there's that activity. Is it stepping back and thinking of the industry as the whole Rox? Do you think it's happening fast enough? I mean, maybe this is as fast as it can happen, but for the sort of targets and ambitions we have, do you have any thoughts on the speed or compared to where we need to get to?

 

[00:30:52.990] - Rox

It could certainly go faster. I think there is a kind of risk of analysis paralysis and that you want to get tons and tons and tons of data before you're ready to launch a proposition and make a move. To some extent, it's just going to have to be some learning as we go along. It kind of goes both ways. It needs to happen faster and maybe a bit less in some cases.

 

[00:31:16.270] - Alex

I think there was a really important point in Rox's example around new build versus pre existing homes. And I think there's a clear route to market on new build properties. You understand the building fabric, you understand the insulation levels, you understand the heating demand, and you can size that heat point to that new build property and you can deploy it to scale. I think what we're learning is retrofitting existing homes is a much bigger beast to Michael's example, 60 houses on his street. But what you could find is that they've all got varying degrees of glazing, insulation levels, leakiness. So it could have a really efficient gas boiler in one home, but it's leaking it through the windows and the walls on the roof. So I think that's the really key thing we're trying to tackle is the educational piece upfront around actually, let's go from a fabric first approach and let's make sure that your home is really well insulated first, and you've got double glazing and you're not losing the valuable heat that you use in your home. And then that transition to a low carbon technology and specifically the heat pump. But also it's not super easy to retrofit a heat pump where a gas boiler has been installed.

 

[00:32:48.390] - Jon

If you look at the big heat pump markets in Europe, they're either in new build largely, or they're displacing oil. They're not displacing natural gas, they're displacing oil or other things. So I think to a degree, this is a bit of a generalization a lot of Europe is on a learning journey with moving heating from gas boilers to heat pumps. So coming back to the point I made at the beginning, we need to do it fast, but if you rush it and you have bad customer experiences, that's only going to slow us down in the long run.

 

[00:33:27.510] - Alex

It is, and the industry, especially in the UK, can't afford that. So we need heat pumps to be working and running efficiently. And the last thing we want to do, especially as an energy supplier, but I would imagine nobody wants this is to install the heat pump and the running costs push people into fuel poverty as an example or bills that they just can't afford. That's a really important part for us around getting it right at the front end. So we would rather use that test and learn for a little bit longer and make sure we've got the proposition where we want to launch. We know it's right and we know it's going to be the right thing for our members as opposed to rushing it and getting it wrong and pushing people towards fuel poverty.

 

[00:34:15.990] - Jon

Well, we've got to that time in the podcast now where we look forward to bringing up the talking new energy crystal ball. I'm going to set the dial this week to 2030, which feels like a long way away, but it's only eight years away. So I'd like to ask each of you and very briefly just in a sentence to give our listeners a vision for, Alex and Michael, where you think OVO might be with heat pumps in 2030 and Rox, where you think we'll see energy supplier activity with heat pumps in general by 2030. Alex, do you want to go first and then Michael and then Rox, a very brief vision for 2030.

 

[00:35:01.010] - Alex

Oh, 2030. I can tell you what I'd love - OVO to be a decarbonisation company that offers zero carbon living to our customers and non customers, whereby we've got insulation fitted in customers homes that's being heated by air source heat pump that's being powered by solar PV and battery storage that's got an EV on the driveway that's being used flexibly either through vehicle to grid or vehicle to home that's being powered by our Kaluza intelligent platform in the background and doing everything so the customer doesn't have to worry.

 

[00:35:43.370] - Jon

Okay. And I guess doing that in a significant chunk of your four and a half million customers homes?

[00:35:45.010] - Alex

And beyond, and beyond.

 

[00:35:50.010] - Jon

Okay. Thanks, Michael. How about you?

 

[00:35:56.670] - Michael

I'm not one who summarizes things in sentences that well, I tend to rant for longer. So summarizing, I would say that I see connectivity will be the main part we are bringing together as Alex infers, your heat pump to work with your home and your EV so that you can charge. You can use your heat pump. If the grid constraints are bad at the time, you'd be able to charge directly off your car, the heat pump. So I can see this kind of connected. I feel like we're building a lot of the separate experiences at the moment, but this truly connected smart grid of the future, I really hope by 2030 we'll be in a really strong position to offer that and reap all the benefits it brings.

 

[00:36:41.730] - Jon

Great vision. So I hope that as well. And Rox, how about you?

 

[00:36:48.450] - Rox

Well, I can't speak on behalf of OVO, but I would say for the market as a whole and the role that energy suppliers will play in it, I suspect that energy suppliers will probably account for a greater proportion of heat pump installs than they do for gas boiler installs today. I think there's definitely an opportunity for energy suppliers to come in and have that customer facing role to provide customers that confidence. I think by 2030, you'll have a couple of really good market leaders who started moving now or earlier than now, and they are the market leaders in installing heat pumps. I think there'll be a few that maybe try and fail. They'll have had the wrong strategies or they won’t have been committed enough. And then I think you'll also have your kind of laggards who in 2030 are late to the party and only just then starting to partner up with heat pump installers and try and get their business off the ground. But, yeah, hopefully falls in the first category.

 

[00:37:50.640] - Jon

Well, you said commitment. And I think what we've heard, Michael and Alex, from both of you today is that commitment over a number of years and hopefully a lot more years to come to help customers decarbonize their homes through efficient heating systems. So thanks, Michael, for joining. Thank you very much.

 

[00:38:12.970] - Michael

Thank you.

 

[00:38:14.030] - Jon

Thanks, Alex.

 

[00:38:18.030] - Alex

It was a pleasure.

[00:38:19.030] - Jon

And thanks again Rox, for joining the podcast. It's been great having you share about OVO and Rox’s wider market experience today and really interesting to get under the skin of what it's like for an energy retailer to be building a low carbon heating business. So thanks very much for your time and thank you as always to everyone listening. We hope you enjoyed the podcast and gained some new and interesting perspectives to take back to your activity in the transition and look forward to welcoming you or back to the episode next week. Thanks and goodbye.

 

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