Transcript

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Georgia:

Hello, and welcome back to Watt’s Up with Energy, a gridX podcast. I'm your host, Georgia Knapp. This season, I'm going to be talking about the bread and butter of the energy management space, interoperability, which, on a very basic level, is the ability of devices to communicate with one another.

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Before I dive into that, though, I want to introduce my special guest for the next few episodes. I am super excited to welcome gridX's own Chief Growth Officer and Co-managing Director, Tim Steinmetz.

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Welcome to Watt’s Up with Energy, the podcast.

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Tim:

Thanks, Georgia. Yeah, thanks a lot also for inviting me. As I said, I'm also very excited to join today and yeah, happy to start.

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Georgia:

Great. And so before we start talking about interoperability and the energy space, can we talk a little bit about what brought you into the world of energy in general and to gridX?

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Tim:

Yeah, sure. Good question. So, I think I started my professional career within the energy industry roughly around 15 years ago during my studies. So, when I had to select a specification for my studies in Berlin, I was studying industrial engineering and economics, I filtered or I checked the different areas which were possible to choose and found out for me personally that basically the energy area was the most attractive to me because I felt that there's a big change coming. Let's explain it like this.

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And yeah, in the end, since then, I'm part of the energy industry and started next to my studies as an independent consultant for analysis of the CO2 trading market back then, the emission trading scheme, and also worked in parallel for a company called Engie, I think that's the right pronunciation, a French headquartered big utility. And yeah, I basically learned there the basics of the energy industry.

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So, how the different market players interact with each other, how markets work, how energy production is working, how that plays together with the consumers, how you bring that together, how you can hedge basically energy volumes from the market or from your power portfolio.

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And yeah, I was working very intensively in the portfolio management and trading department there for roughly four to five years. And the deeper I digged into the topic, I was super excited about how can you actually avoid risks in power portfolios.

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Sounds a bit nerdy, maybe. But yeah, with increasing amounts of renewable energy in the system, it was clear that risks are really also increasing in power portfolios for utilities because you need to basically provide all the time the electricity to your consumers when they want to have it.

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But if you don't know when the power is generated by renewables, then it's sometimes tricky. So, I started to dig deeper and found out that there are only a few instruments in the market, also with assets, how you can avoid these risks or counterbalance that.

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And that was basically the birth of the idea to use physical assets, energy assets, basically decentralized assets as a hedge, as a flexibility option, so to speak. And that's where I also recognized that providing such very new and innovative solutions to the market, that's easier to do that, or probably it's easier to do that in small and agile companies, small teams who are very innovative and agile.

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So, that was the point in time where I joined the Entelios company in Munich and Berlin, where we fully focused on demand response services. So, pooling industrial customers, very large industrial customers who consume the biggest amounts of electricity in Germany back then into a virtual power plant, aggregate that, and apply optimization logic to it and bring it to different energy markets to use really the flexibility we have already in the system instead of building completely new and expensive power plants for that.

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And then I think in 2018, I started to dig into more scalable approaches. So, we had roughly 200 target locations within Europe, so the biggest industrial customers back then, and I wanted to scale that to SME customers, C&I customers, residential customers, but the technology basically was not built for that from Entelios.

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So I looked into the market and looked for good teams and good technology and found Critics basically, met the two founders, had a couple of conversations, and then it was clear that I needed to join this team.

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And yeah, that's where I'm now at gridX and trying every day to scale energy solutions to the market.

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Georgia:

Nice. I know I hear a lot about how the energy industry is very slow to progress, and it sounds like that's a big reason that you came to gridX – and you came to your other companies – to be a little bit more innovative. And what do you think is holding the energy industry back right now from progressing more rapidly?

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Tim:

Yeah, good question. So, I think the energy industry is not in total slow in progress. Of course, you have frontrunners who really push and try to facilitate progress in the energy transition. But on the one hand, the energy industry has also very traditional players, right? And so larger utilities, which are existing for a long time, DSOs, so grid operators, etc., were in the market basically for decades.

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And it's also a very regulated environment. So, traditionally, I would say there's a majority of market players coming from the older energy world, which are rather slow to innovate and digitize.

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Not, of course, all of them, but I said the majority maybe. And I think if you look at more the frontrunners and innovative companies, they're pushing, but sometimes even these companies are slow because they're not only regulation topics, which are maybe hurdles or barriers to progress faster, but also technical topics, right?

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So, even companies like gridX could be faster if you solve certain technical barriers like providing communication standards between energy assets, which makes it much easier to scale and provide energy solutions to certain customer areas.

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Georgia:

It's really interesting because when I think about combating climate change, and I've mentioned in a previous episode that I'm kind of an energy newbie to all of this, all I think about is decarbonization. So, it's less cars, less plastic, stop eating meat, things like that, but it sounds like maybe decentralization is on the top of the renewable energy pyramid. That would be the most important?

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How does that help the renewable energy, green transition cause?

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Tim:

Yeah. I think in the end, we need different puzzle pieces, right? So, also energy efficiency measures are super important. So, really use less energy in your daily life. That's for sure what you were pointing at, which is also very important. But in terms of decentralization, I think it's very beneficial if you produce electricity locally, if possible, where you also consume it, right? To just avoid infrastructure, to transport electricity over very, very long distances. And in the end, the good benefit for everybody is that usually for users, this should also lower the costs, right, electricity costs, and also the carbon footprint.

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But on the other side, it's generally much more challenging for the overall system. So, the electricity system, the power grid operators, the grid itself, because when we shift towards decentralization and renewables, the power supply is kind of more inflexible. So, it's really dependent on the weather in comparison to where we're coming from, from a centralized fossil-fueled power generation.

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So, that basically means we need also flexible demand to balance it out. And to make demand flexible as a next step, we need to connect these assets, right, that produce electricity and that consume and store electricity, as mentioned before.

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Georgia:

And then is this also where the ability to become a prosumer instead of a consumer comes in?

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Yeah, definitely. So, that's totally correct. The prosumer basically turns the traditional passive approach to just consume electricity into a more active role, which is also enabled by technology, which can really play this active role. It can also provide electricity, if necessary, to other groups of users or to the grid or to the market.

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So, basically, a user can play more around with his production, consumption, and storage to provide these services so that everybody can benefit from it.

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Georgia:

And just in case for anybody listening who doesn't know, because again, I did not know this until I started at gridX, a prosumer, it's from the words producer and consumer, and so exactly what Tim said, it's somebody or it's a household that can start to become self-sufficient by producing and consuming their own energy.

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A second ago, though, my idea of a prosumer was always just this one household making their own energy, maybe giving it back to the grid. But it sounded like a second ago, it's like one household as a prosumer could give it to the house next door?

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Tim:

Yeah, indeed. So, I mean, then we're talking about more energy communities. So, in certain countries in Europe, that's starting to be an interesting use case. But it needs to be enabled by the right regulation. But I mean, with the prosumers in the market, you will have always situations where you produce more energy as you can consume.

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And in that situation, the big question is, where do you put it the most intelligent way, right? And if it's the neighbor next door, also there, you avoid bigger unnecessary infrastructure in comparison to you send it over to, I don't know, another country, for example.

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Georgia:

OK, are some energy companies resistant to this kind of change?

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Tim:

I would say, yes. I mean, in the end, it's a big, big change, big shift in the industry. So, some are more the frontrunners, some are more the followers, and some are resistant.

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And yeah, I think, for example, if you take the topic of open interfaces that assets can communicate to each other, there are definitely examples where companies or players in the market are more focused on, let's call it, closed shop systems, so that their assets only talk to each other.

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So, if they, for example, provide an inverter in a wall box that they don't have open interfaces for independent service providers like gridX, for example, but only talk to their own product portfolio, which is, yeah, I think a strategic decision to do that.

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And for some companies, in fact, they invested a lot of money and time into such solutions in their closed shop systems, which work perfectly in their environment, right? And if you invest that kind of resources into such solutions, sometimes it's, of course, very hard to make the strategic decision, the shift, and open up to others, right, to the ecosystem.

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But yeah, I'm very convinced personally that if you do that, if you open up, at least in the European area, I think that's very beneficial for your business as well, because then you start to unlock the full potential of smart energy solutions if you talk to other manufacturers, other service providers, et cetera, and collaborate basically in an ecosystem.

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Georgia:

On the flip side, are there any companies that you can think of that are embracing this change?

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Tim:

Yes, sure. I mean, the most easiest thing is if you look into the customer portfolio of gridX, very easily speaking, because there are many great examples. These companies, they basically took their decisions, be a front runner, provide energy solutions to the market, and do that via using the different puzzle pieces in the ecosystem.

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So, by nature, they're embracing basically this transformation, like you call it. And yeah, these companies are basically more, for example, providing solutions in the immobility space, for example, for high power charging locations or in the home energy management space, which we just discussed, right, with rooftop solar wall boxes, heating rods, and heat pumps combined with a state of the art energy management system.

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And in the end, you need to combine that to have a holistic solution for the end user. So, it's not only about energy management systems, and it's not only about the energy assets, it's also about combining that with tariffs, for example, dynamic tariffs, which enable the end user to use the energy or to consume the energy when it's cheapest on the market.

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So, during times where you don't have or you have lots of surplus energy from renewable energy. And yeah, the combination of these different puzzle pieces, which are interoperable, make the best solution in the market then.

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Georgia:

Could you dive a bit deeper into how gridX’s technology specifically aids in the integration and the management?

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Tim:

Sure. So, maybe first of all, our platform, which consists of an IoT gateway and a cloud backend, is designed to act as a digital bridge, so to speak, between the different energy assets to make them talk to each other. And it's of course built for scale, right?

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We really want to have impact and not only do POCs or small projects, so it's really for a million assets in the market.

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And I think you can explain it in different layers. So, the first layer is that we integrate on a continuous level new manufacturers, new products, new firmwares via our integration teams to be able to connect these assets to the platform. The second layer is that we provide also optimization logic, so you need to tell these assets when to do what, so when to produce, when to store, when to feed into the grid, et cetera, so that the end user in the end saves money and also has the best carbon footprint as possible. And the third layer then is an aggregation layer, which connects thousands or in the future millions of different locations to offer that as a bundle, as a pool, so to speak, as a virtual power plant to different flexibility markets.

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Georgia:

With that level of control and optimization, what are some of the key barriers that you would see in a wider adoption of such systems?

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Tim:

There are a couple of barriers, but if I would pick one, I think one of the biggest barriers is actually the regulation. So, if you look at energy markets and the infrastructure, originally, this was designed for centralized and not renewable systems, right, so fossil fuel power plants.

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And the regulation nowadays often struggles between enabling, facilitating the whole change, the energy transition towards decentralization and renewables, and on the other side preserve the existing setups for some time.

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So, you also need to have backup capacity for times where you don't have renewable energy in the grid. And there, I think it's very hard for the regulation to find right balance. But in the end, bottom line, I think the change, the transition could be driven much, much faster with better regulation, which brings in the right incentives. And with that, I don't mean more subsidies, right? I think such systems, such solutions are very, very often already nowadays a good business case. It's more about the right incentives, right?

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So, allow assets to do what they can and don't avoid, for example, during times where the grid needs electricity that prosumers are not allowed to feed it into the grid, right, which is technically possible, which economically would be very useful, but from a regulation point of view is not allowed.

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Georgia:

It sounds like that is actually going to lead us into what our next episode will be about, which is more of the current state of interoperability in Europe.

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So, actually to round off this episode, I always like to ask a fun question: If you could grant every household one superpower that would let them manage their energy smarter, what would it be?

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Tim:

Yeah, one superpower. I think if every household could have the superpower to be a very, very strong language teacher or translator, that would be extremely helpful.

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So, if they would buy energy assets like PV, inverter, an EV, heat pump, et cetera, and they can tell the assets or teach the assets to speak immediately the same language, I think if you do that with one snap, you could solve lots of problems and you could actually accelerate the whole energy transition a lot. 

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Georgia:

That's the kind of superpower I would like to have living in Germany. I'd like to be able to snap my finger and I'm fluent in German.

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Tim:

Yeah, that's useful in different areas. I agree.

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Georgia:

All right. Well, thank you so much for coming over today to talk about interoperability and decentralization. And to all of our listeners, I hope you'll join us again for our next episode where we will continue talking about this subject and specifically the current state of interoperability in Europe.

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Thanks so much, Tim.

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Tim:

Thanks, Georgia, for having me. It was a pleasure and see you soon.

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Georgia:

If you'd like to learn more about the world of renewable energy or energy management systems, be sure to check out our website, gridx.ai, where we produce regular blogs and glossaries about the subject.

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You can also follow us on LinkedIn, or on Twitter and Instagram @getgridX.

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