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Podcast S03E02

Local energy systems: miniature utilities

Local energy systems: miniature utilities

As energy becomes more and more distributed, there is an array of local energy initiatives building across Europe. In this episode, Delta-EE director and host Jon Slowe talks with Charles Bradshaw-Smith, CEO of SmartKlub, Sam Wevers, Product Manager – Cornwall Local Energy Market, Centrica and Jeremy Harrison, Principal Analyst, Delta-EE , to explore which form these are taking, and the different factors driving them.

Episode transcript

  • Charles Bradshaw-Smith, CEO of SmartKlub
  • Sam Wevers, Product Manager - Cornwall Local Energy Market, Centrica
  • Jeremy Harrison, Principal Analyst, Delta-EE

 

[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.

[00:00:22.220] – Jon Slowe

Hello and welcome to the episode.

[00:00:24.830] – Jon Slowe

As we all know energy is becoming more distributed and customers are playing a more active role in the energy system. So is this going to result in more localised energy systems compared to today's mainly centralized system. In some ways the answer is inevitably yes, we will have more localised systems but the way in which this is happening, and the degree of localisation is not always clear. The markets are full of buzzwords today. Community energy, microgrids, citizens energy community’s, local energy systems, private wire networks, I could go on, but you get the point.

[00:01:04.970] – Jon Slowe

It's a confusing area. So today it will be shining a light on the localisation of energy with the aid of three guests and let's introduce them all and make some sense of this exciting dynamic but at times a little confusing topic. So, my first guest is Sam Wevers from Centrica.

[00:01:27.800] – Jon Slowe

Hello Sam.

Sam Wevers - Hi there

[00:01:31.260] – Jon Slowe

Sam thanks for joining. Can you give us an elevator pitch about your role at Centrica and the project you're working on in Cornwall in the south west of the UK.

[00:01:44.370] - Sam Wevers

Yeah, thanks Jon for having me on. So, I'm the product manager for our local energy market platform that we're delivering in Cornwall. And essentially what we're doing in Cornwall is essentially we're trying to build an energy market for the future. We're seeing the biggest structural shift in energy markets since Edison and Tesla. Anywhere technological and societal imperatives it's pretty clear that our market models have to change and we're showing that these new market models are not only possible but they're a reality now.

[00:02:13.230] - Sam Wevers

So, our platform, so in an age of stability it unlocks renewables and it places consumers at the core.

[00:02:21.000] – Jon Slowe

So how would you make that a bit more tangible for what you are doing in Cornwall unlocking renewables facing consumers at the core. But have you got an example of that or help our listeners understand what that means?

[00:02:34.860] - Sam Wevers

Yeah, so essentially what we're doing is we built a market platform where if I'm a seller and I've got some flexibility in my industrial process or in my battery in my home or potentially even in my EV, I can go onto a platform I can say what time of day I have flexibility available, I put in the amount that I can move my flexibility around, you know whether it be 50 kilowatts or two megawatts whatever it might be. I can then put a price on that, and I can then walk away from the platform. On the other side of the platform a buyer namely the DNO/WPD or National Grid the Electricity System Operator they placed bids on.

[00:03:13.980] - Sam Wevers

So, they say I need some flexibility at a particular time of day and they put their prices in, and then what we do is we take those bids and offers and we take a view of the network constraints and we run a clearing engine to create contracts for those services and then going forward, sellers will know when they have sort of turn their stuff on or off and then they end up getting paid and we'll take money from the seller from the buyers they'll pass it to us and they will disperse that back through to the seller.

[00:03:40.240] - Sam Wevers

So, it's an end to end process where somebody can you know monetise the flexibility that they have a good way for the price.

[00:03:48.720] – Jon Slowe

Great. Okay well come back to that Sam. Thank you. And my second guest is a colleague here at Delta EE, Jeremy Harrison. So, Jeremy welcome.

Jeremy Harrison - Thank you.

Jon Slowe - You've had some direct experience in local energy systems in your last role at E.ON before joining Delta EE. Can you tell us very briefly about that experience?

[00:04:15.180] - Jeremy Harrison

Yes, interestingly E.ON is both an energy supplier and distribution network operator and local energy systems present challenges and opportunities in both those areas. When we first started off looking at local energy systems it was actually from the network operator perspective, particularly looking at issues about resilience about security supply in remote areas within the E.ON network in Sweden actually. And in fact, the first project that was actually built was a microgrid, fully 100 percent renewable microgrid, in the southern part of Sweden and that was really technical demonstration to see how we could overcome those issues.

[00:04:59.240] - Jeremy Harrison

And since then it's evolved into much more of a commercial community-based approach where the supply side of the business is interested in how they can partner with communities to deliver the kind of things which I think Charles will talk about a bit more detail.

[00:05:14.440]  – Jon Slowe

Okay. So that was more network led and that was more like a mini utility that could be disconnected from the rest of the network.

[00:05:24.300] - Jeremy Harrison

Yes, I mean that's just one of the many concepts which is used is very different from what Sam was just talking about which is more of a kind of a virtual approach where you match supply and demand but across a much wider area. E.ON’s approach was a very small, in fact mini utility of about 200 homes which is actually still operational.

[00:05:45.960] – Jon Slowe

Okay and thanks Jeremy. Let's turn to my third guest Charles Bradshaw-Smith. So, Charles you're at the opposite end of the spectrum compared to Centrica in terms of size, you're CEO of SmartKlub. Can you tell us what SmartKlub does and how it's involved in that localisation of energy?

[00:06:09.130] - Charles Bradshaw-Smith

Certainly, thank you for having me on Jon. SmartKlub’s focus is around the business models, that's the market arrangements in the energy industry. So, we've got a few fundamental beliefs that have steered our focus. Firstly, we think the technology out there is great at the moment, but the business models are sadly lacking and that's in particular for individuals and small businesses people who aren't professional energy people. And we need them to get involved. We're not going to solve a climate emergency without mass movement of people lending their flexibility as Sam has described into the mix as well.

[00:06:55.120] - Charles Bradshaw-Smith

So, we're all about trying to help those people. Local energy systems in particular suffer from lack of business models. So, what we're doing, we've been busy working on two emerging products from our RND. One's all about group buying energy solutions where communities can club together and get economies of scale in doing that. And the other one is then about an easy Esco and Esco means energy service company which allows communities to then operate whatever energy system they become involved with. In particular accessing things like ancillary services which will become a growing focus and revenue streams for energy systems.

[00:07:42.280] - Charles Bradshaw-Smith

So, both of these need community activism really. So, our mission is about empowering those communities to participate. And we have a flagship project in Trent based in Nottingham where we're working with a developer the university to make renewables hassle free for both the residents and the developer. We're hoping that with the big building boom that is starting to emerge that we can get renewables embedded in that built environment as standards rather than the exception that it is at the moment.

[00:08:20.160] – Jon Slowe

Okay. And what might that look like Charles in terms of again trying to make it tangible you've got a new development maybe hundreds/thousands of homes. Would that be a local energy company? Would there be peer to peer trading between people? Can you paint a bit more of a picture of what that might look like?

[00:08:41.630] - Charles Bradshaw-Smith

Yes certainly. So how we've started this, so we have an esco called Trent Basin esco ltd which has worked with the developer to put photovoltaic panels and a large community battery on site but rather than having individual homes with individual batteries and individual homes with individual solar panels, we've actually created an energy system out of this. So, we've got a big community asset lots of solar panels strung together as well as Europe's largest community battery. And therefore that gives us the ability to act at a bigger scale than individual homes and to take the need for individual homes to do peer to peer trading for instance the esco the professional manager from SmartKlub would do that for them.

[00:09:40.220] - Charles Bradshaw-Smith

By having that scale, we've got several advantages. We can access markets in a more the ancillary service markets were talked about in a more advantageous way we have more efficient use of capital. One big battery is more useful than lots of little batteries and cheaper and so it goes on. So, the way we meant hassle free is that the community whose roofs we are using or for heat pumps their ground we're using they don't have to worry about being individual energy managers themselves. They give that to us, so we act as their trusted intermediary to use an ofgem term ofgem term being the UK regulator.

[00:10:20.090] – Jon Slowe

Okay thanks Charles. So that's three quite different projects we've got a flavour of, and already picking up some of the complex terminology and varying terminology in this area. In a minute, I’d like to go back Sam and Charles to your projects and look at them in a bit more detail. But before I do that, Jeremy can you help us to understand the ways to think about local energy systems or the key dimensions and how do we simplify what's a really confusing complex area.

[00:10:59.090] - Jeremy Harrison

I think confusing is definitely the key word here, right at the beginning you identified a number of different words and phrases that were used to describe local energy systems or things which could fall broadly into the localisation of energy.

[00:11:13.070] - Jeremy Harrison

And so one of the first things we did as part of our research service here at Delta-EE was to try and make some sense of what all these acronyms meant and what the different labels meant and so we developed a matrix which has both a technical axis and an ownership axis.

[00:11:30.200] – Jon Slowe

So, this whole coalition is to paint two axes in their mind yet and hold that.

[00:11:35.030] – Jon Slowe

Okay.

[00:11:35.420] - Jeremy Harrison

So yes, so the x axis if you like is the technical access and on the far extreme left you have things which are about systems where there is virtually no balance between supply and demand. One of the key characteristics of local energy systems in my view is there has to be some matching of supply and demand. It's about using local resources and matching those to local demands which is what Charles is talking about for example. So, things like a community, wind community owned wind farm which is referred to as a local energy system very often, is often completely balanced it's just community owned, but it has no relevance particularly to the demands locally.

[00:12:16.790] – Jon Slowe

Okay. So, the X axis and on one side very little matching of generation and demand and on the other side very high matching and that's an example of the microgrid project you mentioned earlier where it can be 100% matched and operate independently.

[00:12:31.760] - Jeremy Harrison

Exactly. And what Charles was talking about is very close to the right-hand side of that access axis with the matching of supply and demand locally.

[00:12:39.440] – Jon Slowe

So that is the X axis, let’s look at the Y axis

[00:12:40.580] - Jeremy Harrison

The Y axis is about ownership and it might seem to some people but that's not as important as physically delivering stuff but in fact ownership models as Charles has pointed out are one of the key ways that you empower local communities to manage their own supply and demand and to optimise it as well. And it opens up ways for them to invest and to increase the development of local renewables by communities engaging and becoming more involved. So on the Y axis you would have whether it's the top the bottom but one what end of it would be ownership by the local community by the local residents and at the other end the access would be centralised systems which are run by energy companies like E.ON for example.

[00:13:28.760] - Jeremy Harrison

In some cases.

[00:13:29.850] – Jon Slowe

Okay. So, we could have community owned microgrid islandable projects or we could have projects that do some matching of supply and demand where there's not community ownership but it's privately owned.

Jeremy Harrison - Yes. Yes.

Jon Slowe - Other than other combinations. Okay, and with this, in your view Jeremy will this always have to involve the physical network, the distribution network or I guess as Sam as described we have some projects that don't have the physical network at the heart of the local energy system there.

[00:14:04.560] - Jeremy Harrison

Exactly. I mean really there are two distinct types of local energy systems. There are those which are physically connected like as Charles was describing where there is a discrete network with the energy centre with its own storage. So PDP generation supplying customers within that local network and then the other side of it which Sam has described which is a virtual network where there are generation assets and loads within a much wider system which okay they're indirectly connected to each other but the network in between is not an integral part of a discrete energy system it's much more virtual approach.

[00:14:42.920] - Jon Slowe

Okay thanks Jeremy. Sam let's come back to your project in Cornwall, your local energy markets project thinking of those dimensions Jeremy set out, would you say Centrica has got a clear view as to where it wants to be on those dimensions or is this a first step or how do you see Centrica as activities today and potentially go forward.

[00:15:12.050] - Sam Wevers

Yeah, so it's a good question and as I put that and all those axis in my mind, I think we're sort of centre left on that axis namely we are, you know we're a market platform so where we're a trading house essentially where people can meet and win contracts. We're not a microgrid, we're not directly managing behind the metre’s assets because in our view that is the role of the selling actors on our platform and actually as we as we sort of refer back to what Charles was talking about and what Jeremy was talking about those microgrids themselves or those community escos we see as sellers in a local energy market system and if we're talking about you know trying to get businesses and residential customers to access revenue streams you know they need markets in which they can win contracts and they need markets that have clear pricing signals that they can chase so that they can provide innovative solutions and cut costs.

[00:16:11.570] - Sam Wevers

So, the LEM is essentially about trying to be, you know available both for aggregators for community escos, for industrial demand to sell directly for industrial demand to sell through a third party. And you know it's a broad church on purpose, it's a deliberately broad church in that sense. And the reason we're doing that is that you know it's clear that we need more flexibility on the networks if we're going to unlock increased penetration of renewables and the electrification of heat and transport. So, we need all potential sellers that we can get, and you know we need to have active consumers and communities and that's what we're trying to do.

[00:16:51.980] - Sam Wevers

But yeah we're on that centre left where we're not controlling the end assets but we are you know a clearinghouse and we do take the network into account so it's not entirely sort of without reference to the state of the network we make contracts that are grid secure.

[00:17:09.550] – Jon Slowe

Okay. Sam, your active in Cornwall with this project and I'm looking at a map of the UK on the wall in the room I’m sitting in Cornwall and I don't know what the population of Cornwall is but it's a pretty small part of the UK, less than a million people I imagine Sam do you have the numbers?

Sam Wevers - Given that I'm from New Zealand I don't actually have the demographics to hand.

[00:17:34.190] – Jon Slowe

But it is, it is a lot smaller than London. I can say that for sure in population size.

[00:17:40.670] – Jon Slowe

So how local does your concept have to be. Would you, if you roll this out. Would you have 50 or 100 of these across the UK or would you have one platform in the UK. So how inherently is what you're doing local?

[00:17:58.100] - Sam Wevers

Yes, so it's a good question. We've built the platform to be scalable so you know if we import a new grid model from a different area then we can spin up a new LEM in Nottingham or Glasgow or wherever it might be. I think our current view is probably that these markets or LEMs given that their core function is about providing flexibility to DNOs and the ESO would probably operate sort of in DNO footprints. They wouldn't necessarily sort of get down to the village level, but they're given that the key buyers of those network companies I think that defines the shape of it.

[00:18:42.830] - Sam Wevers

So yeah that's probably the best view on how we see the sizing.

[00:18:47.300] – Jon Slowe

So that's dividing the UK up into 13 or 14 different areas and potentially one local energy market in each of those areas.

[00:18:56.420] - Sam Wevers

Yep and of course you know where they, where they you know are adjacent to each other then something that happens and in in Wales in a Welsh local energy market could then move across in to Shropshire or something like that because it's obviously not just sort of looking vertically DNO and the transmission network but there's also different DNO networks that could potentially interface with each other as well which was work it's very fun.

[00:19:23.650] – Jon Slowe

Okay, and a second question around customers. So, I think I said at the beginning customers are becoming a bigger part of the energy system. We talk about active customers, customer centricity, you talked about customers offering their flexibility. But I think we have to remind ourselves from time to time that a lot of customers just don't care and aren't bothered, and they've got many more important things in their lives to do than think about what flexibility they can offer. So how in in your project, how engaged do customers have to be and how much of a challenge has that been for you to try and get them onto your platform or into your project?

[00:20:07.000] - Sam Wevers

Yes, I suppose a few key facts there I mean we have 100 homes that we've installed solar and batteries into that is making up essentially the biggest residential VPP in the UK as far as we're aware. And you know we, we put out some marketing early on in the project and had a significant level of interest and we had to whittle it down to 100 homes. So, I think you know in Cornwall we found that people are very interested in taking part in these sorts of things. Obviously, that is dependent on you know particular trends and particular areas, but I think your point around making you know customers don't have time to think about their flexibility.

[00:20:50.530] - Sam Wevers

You know I agree 100% and that's where having third party escos or aggregators is so critical, so that sellers or consumers can sign up to an app they can say what their preferences are how full they want their battery, how full they want their EV those sorts of things and all that can go into an algorithm and can be managed by a third party which is what we're doing in Cornwall with the batteries that we've installed. So, the homeowners aren't there you know 455 working out if they want to trade. That decision is made by somebody else and it's also worth noting that you know we're not just installing stuff in homes we're putting flexibility into businesses.

[00:21:34.600] - Sam Wevers

The project is part funded by the European Regional Development Fund. So, it's really about developing the Cornish economy through unlocking flexibility. So, it's that gamut it runs the gamut of residential all the way up to big factories.

[00:21:49.100] – Jon Slowe

Yeah. Okay and the buyers of that flexibility today are the network company the DNO using UK terminology, DSO more European terminology, is that the main user or beneficiary of that flexibility today?

[00:22:11.000] - Sam Wevers

So yeah, it's the DNO for sure but it's also the transmission operator. And so that's something that also very exciting about what we're doing is that we're coordinating the procurement of the DNO and the and the ESOs as it's called in the U.K. because you know we can't go into a situation where there's a whole bunch of flexibility being dispatched that is connected to the distribution network but is winning a contract with National Grid and then causing a whole bunch of problems on the local lines that have to be managed by the DNO going around with a brush afterwards to sweep everything up. And it's a clear it's a clear drive in the regulatory direction that not only we move to independent market based systems but also that it's we think about this from a whole systems perspective because when we do that ultimately we bring costs down for the consumer.

[00:22:55.910] - Sam Wevers

And so, a key part of the platform is making sure that WPD and National Grid don't do things that you know conflict with each other.

[00:23:03.820] – Jon Slowe

Yeah okay. So, managing those local and national benefits so that they work together.

[00:23:11.150] - Sam Wevers

Yeah and we do that throughout our clearing engine which has actually been developed by a Belgian company called N-Side who run the Euphemia, we have built the Euphemia algorithm that clears the European day ahead power markets. So, you know there's a thorough pedigree there in terms of taking all the various variables that you have to optimize and getting a nice clean answer out the other side.

[00:23:34.070] – Jon Slowe

Okay thanks Sam. Charles let's come back to your projects your activity. As with any start-up if I can call SmartKlub being four years old a start-up, you learn a lot on the way you pivot you change direction. What have you learned over the last years about trying to enable community individuals and particularly communities to do the sorts of things that you starting to do now?

[00:24:06.900] - Charles Bradshaw-Smith

Well firstly I would echo Sam's comments, communities and individuals really are up for this. They want to get involved, I think a lot of people are realising it can't just be left to governments, councils and the energy industry to solve the climate emergency so that that's really good news. As you would imagine there's a spectrum of knowledge and time that communities have to get involved. And that's fine, so the way we communicate with the communities and the way our customer service app works for them everybody gets an equal say.

[00:24:52.110] - Charles Bradshaw-Smith

But people can take a bigger role if they want to. And it's a bit like everybody wants attention to use the financial services industry as an analogy. Some people are just happy to have it taken out of their salary and don't look at it again until they are coming up for retirement. Other people want to day trade and get really involved. And we're learning that's the same in the energy industry. And if you've got a balanced community with a number of people wanting to take more of a role and others that are happy to follow that works really well.

[00:25:30.440] - Charles Bradshaw-Smith

They all have a say in the direction that we steer the energy system. I'm sure of that. But generally, they're happy to get involved, understand some of the complexities and as we build services onto our basic proposition they're very happy to influence those which is good news. I think from a much, I think our aspiration to activate citizens to get involved I think over the last four years we've proved that that's something that will happen people will get involved.

[00:26:08.930] – Jon Slowe

Charles can I ask you about ownership, so to what degree are in your in your Trent Valley project that you explained is the solar panels and the battery and the system owned by the community and if it is where does that capital come from?

[00:26:31.880] - Charles Bradshaw-Smith

Okay so we're taking this stage by stage at Trent Basin so one of the parameters we were given by the developer on site was that we couldn't force people to invest or join in or sign 25 year energy contracts and be locked in etc etc. The developer is a real developer wanting to sell their homes to plan etc etc. So, the normal business of being a developer and selling the homes at the right cost at the right time is what prevails and steers a lot of the projects we've started in very gentle way.

[00:27:14.150] - Charles Bradshaw-Smith

So, to begin with we financed through innovate UK funding the assets and we run them on behalf of the community using their roof space and ground space.

Jon Slowe - Yeah.

Charles Bradshaw-Smith - It'll growing where heat is the next thing that we're doing so we're still expanding the proposition. And basically, we're creating arbitrage opportunities both sides of the meter. And we have an Ofgem derogation to allow us to do that with combined billing. So they're not expected to put any money in day one but as they see the project working and us delivering a surplus and we share the surplus with the community each year they can start to buy in if they wish to.

[00:28:00.590] - Charles Bradshaw-Smith

So, our foundation investor has to be prepared to sell stakes in the energy company as the community gets more confident. They of course will get their surplus whether they buy it or not, but they would also get a dividend if they decide to buy in.

Jon Slowe - Thinking about Jeremy’s axis then you're starting maybe at the vertical axis and he's starting more towards the bottom but you're enabling your customers, you are enabling people to move upwards and take a bigger ownership in this project.

Charles Bradshaw-Smith - And that goes all the way, you know they can incrementally buy in and even locals it doesn't have to be residents who have a house that uses the local energy system it could be other local investors who don't want to invest in some wind project far out at sea they'd rather invest in their local communities.

[00:28:57.630] - Charles Bradshaw-Smith

We allow those two types of investor, but they could even take over the energy project. So, the agreement we will have with our foundation investor is that they have to be prepared to sell up to 49% of the scheme. So, they've still got control and then the community if it wishes to can launch a takeover bid and buy the other 51% and have full control. So, you know we want it to be very transparent like that. So, the community doesn't feel they're going down a one-way street. But they have the ability to run the operation.

[00:29:34.800] - Charles Bradshaw-Smith

They don't have to do that, it will work. And one of the other things we've done is the foundation investor gets a fixed return for their investment and it’s the residence even if they're not equity holders that get the variable return based on the performance of the esco. And that's based on SmartKlub’s ability to arbitrage in the different energy markets and also based on the resident’s behaviour, whether on their in-home apps that they've got on the way that they wish to participate in reducing their carbon footprint etc etc. So hopefully we've got aligned objectives to make this work.

[00:30:15.210] – Jon Slowe

So, I think what we are seeing and what we will see is a lot more innovation and learning and various different ways forward being tested around these these ownership models. And now time is always is getting the better of us, so those people that listened to the last podcast will be pleased to know that my talking new energy crystal ball is fixed because I've given up using it to try and peer into the future to see what Brexit may hold for the UK. I think it's a thankless task, so bring out the crystal ball and let's use it to look into the future for local energy systems and look out say to 2025.

[00:30:58.590] – Jon Slowe

And I'd like to ask each of you for a brief comment. So, Sam, where do you think Centrica will be with local energy markets, local energy systems in 2025?

[00:31:13.110] - Sam Wevers

So totally agree that your crystal ball can't predict Brexit, I think it'll be a very valuable crystal ball if it did. I think looking forward in the energy system it is quite clear that there's going to be fundamental change and that the systems are going to be more local and that the technology is going to be more automated and that consumers are going to have greater control. So, the question is how we get there? I think. And by 2030 as an example Centrica is looking to deliver 7 gigawatts of flexible and low carbon generation.

[00:31:45.160] - Sam Wevers

We're becoming an energy services and solution companies we're doing VPP’s, we’re doing EV management, we're doing Hive/Centrica innovations. You know the platform economy is coming to energy, it's come to transport, it's come to other places and we're trying to stay ahead of that game. Flexibility is key to driving that shift to low carbon markets and the LEM as you know at its core about unlocking flexibility to do that. So, we want to see LEMs, you know across the world with different configurations, you know flexibility and energy being traded across transmission distribution with the full range of microgrids energy communities, fleets of EVs, fleets of homes, industrial flexibility, renewable storage all trading amongst themselves and with network companies.

[00:32:31.710] – Jon Slowe

Okay. Well let's hope that you succeed in that. And Cornwell I think it's a fantastic project and a pioneering project from what we see across Europe that will help move the market in this direction.

Jon Slowe - Jeremy

Sam Wevers - No shortage of ambition.

Jon Slowe - No, great! Jeremy from your looking across Europe a very difficult question, but how in 2025/ 2030 if you want, how prevalent do you think local energy systems, local energy markets, communities will become? Will they still be something people are talking about and the odd innovation here or there?

[00:33:09.940] – Jon Slowe

Or do you think we'll see projects popping up more and more frequently in inverse markets?

[00:33:15.530] - Jeremy Harrison

I think we're already seeing quite a dramatic evolution of the local energy systems. Initially it was all about resilience and island communities where they had weak connections and they needed to have balance generation to overcome the problems with grid failures and that's already evolving from that into empowering renewables and communities. And I think that what we're seeing now at the European level particularly is a focus on the communities’ things like community self-consumption. And I think that one of the really positive things that we can start seeing happen what Charles described is this partnership between the public and private sectors.

[00:33:58.840] - Jeremy Harrison

I think there's always a danger that you can be politically dogmatic about whether it should be public or private. And in practical terms it's great if you can leverage the resources of communities. But at the same time also use the existing technical and practical resources of the private sector players and I can really, well I'd like to see you have coming together even more to optimize the value of consumers and industry as well.

[00:34:25.420] – Jon Slowe

Okay. So, you see the market really moving already and then by 2025 it will be established and flourishing in certain sectors in certain ways in certain countries.

[00:34:34.230] - Jeremy Harrison

Yes. But there are still some quite significant regulatory challenges about how you optimize this, how you charge fairly for the year, the system Sam referred to it earlier about you know how you avoid conflicts between services you're selling the transmission level but using the distribution level

Jon Slowe - So there's still quite a lot to do.

[00:34:51.890]

Jeremy Harrison - Yeah absolutely.

Jon Slowe - Yeah. Okay. And lastly Charles what will SmartKlub look like in 2025?

[00:35:00.990] - Charles Bradshaw-Smith

Well hopefully we'll be managing thousands of escos like Trent basin on behalf of communities all around the country and in Europe. I buy into absolutely what Jeremy's just described about the future. I think the regulatory aspect is key, I would like as soon as possible, the UK’s regulator to look at the idea of virtual private networks on the public wires. I think that's, I know it's very complicated. And whilst they're doing kind of round one of the fairer charging on the distribution and use of service charge, I think it's disappointing that they haven't tried to tackle the VPN question at the same time because they're inextricably interlinked.

[00:35:57.440] - Charles Bradshaw-Smith

If we're to have a smart grid and a smart system and a kind of liquid market that Sam is trying to create, we need to avoid having too many microgrids and private wires where people are either building walls around their community or duplicating copper that the DNO has already invested in, we need to open that up to enable that smarter optimization potential. We don't know the way the technology is going to go yet and if we're not careful we could be going up some blind avenues.

[00:36:41.410] - Charles Bradshaw-Smith

This is my concern so let's open up the DNO wires to virtual private networks and then I think we can be really creative in the way communities can come together and the flexibility becomes available. Without that, without the capital to rewire Britain as it's called, we're not really going to get to the stage where we can have stable local networks that can accommodate huge amounts of electric vehicles and heat pumps for instance.

[00:37:07.700] – Jon Slowe

Okay. Well as always in the energy sector there's regulation and policies and standards are an integral part of how things will develop. But and I think it's clear from listening to everyone today and from what we see that there's going to be more and more localisation.

[00:37:26.750] – Jon Slowe

Sam and Charles thanks for sharing your thoughts on your experiences on how you’re playing into that localisation theme.

[00:37:35.720] – Jon Slowe

Thanks, Jeremy, for helping to bring some sense of dimensions and virtual axes for us to think about, to make sense of this. And as always thank you to the listeners, our listeners for joining. We hope you've enjoyed the podcast and learned more about the localisation of energy and I look forward to welcoming you back to the next episode. So, thanks very much Sam.

[00:37:59.990]

Sam Wevers  - Thank you.

Jon Slowe - Thank you Charles.

Charles Bradshaw-Smith  - A pleasure

Jon Slowe - And thank you Jeremy.

Jeremy Harrison - Thank you

Jon Slowe - And goodbye to everyone and see you on the next episode. Goodbye.

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