Georgia:
Hello, and welcome to Watt's up with energy, a gridX podcast. I'm your host, Georgia Knapp. And today, I am here with one of my colleagues, Andrea Albergoni.
Andrea:
Hello, Georgia. Good morning. Thank you.
Georgia:
And today, we're going to be talking about how utility companies can stay competitive in such a fast changing energy market, correct?
Andrea:
Correct. Yeah, thank you.
Georgia:
Great. Then let's just dive right in. Can you actually first start by introducing yourself and what your role is here at gridX?
Andrea:
Sure. Yeah, I've been at gridX almost for three years now as a senior account executive. I'm specifically focusing on the expansion of our HEMS solutions across European markets, specifically the non-DACH speaking region, as I don't speak German myself.
Georgia:
And I guess just to dive right in, so in your opinion, what role do home energy management systems, HEMS, as we call them, play in helping utilities stay competitive in such an increasingly decentralized energy market?
Andrea:
Yeah, first of all, let's take a look at the energy sector and the energy market.
We used to live in a world with a very relatively straightforward system, and we're now moving to something much more complex, shaped by decentralization, as you just said, electrification and the rise of the prosumer.
At the same time, utilities are really facing unprecedented competition, not just from the peers that they always had, so the other utilities, but a new entrance, names like Tibber, Octopus, or 1KOMMA5 here in Germany, which are really reshaping this energy sector.
Georgia:
I think it would be helpful if you said what you mean when you're saying utility company.
Andrea:
Oh yeah, sorry, by utility company, I mean energy retailers, that we often have seen as the providers of electricity, gas, commodity services.
Georgia:
Like in Germany, E.ON?
Andrea:
E.ON will be a perfect example of...
Georgia:
Andrea:
EDP in Portugal, Enel in Italy, ScottishPower in the UK, Iberdrola in Spain.
So, with the addition of all these decentralized energy points, energy resources, the supply is no longer so easily dispatchable, and flexibility must come from the demand side. When we were used to have flexibility coming from the supply side.
These technologies, as we just mentioned, batteries, electric vehicles, heat pumps, enable the household to really shift their consumption in response to the fluctuation of the renewable energy generations.
But these can only happen if they are coordinated in an intelligent way.
And that's exactly where a home energy management system can really play a big role.
So, exactly, in this context, the home energy management system is not simply a wishful thing to have on a smart tool, but it really is a leverage for this energy transition. It allows, of course, utilities to really move away from simply being a commodity service company, so not simply providing energy, electricity to data and end user, but also create new high value services for a segment that is growing very fast, the prosumers.
So, if a consumer is just a person that is passively consuming energy, a prosumer is, on the other end, an end user that is at the same time potentially producing, storing his own energy and actively consuming it.
Georgia:
So like somebody with a solar panel who then gets to use their own energy from that solar panel.
Andrea:
That's correct. I really felt I needed to define a little better the word prosumer in this context, so that we really understand the passive role that a consumer has and actually the more active user than a prosumer have.
And then just for maybe the audience to know, or just for us to know, flexsumer is the new word coming up. So really end user that are contributing to the flexibility on the demand side.
Georgia:
And then, so then these prosumers are using a lot of the distributed energy resources. I don't think you said that term yet, which we call DERs.
Honestly, I wish we called them DERS sometimes, instead of saying DER, but like how we do HEMS, but not H-E-M-S.
But so then as more of these DERs enter the grid, what do you see the biggest challenges that utilities are facing? And then how can HEMS unlock this value stacking opportunity?
Andrea:
So as mentioned before, it's really important that these DERs are intelligently coordinated. So I will say that one of the main challenges for utilities is indeed coordination. And most of them, most of the DER, most of these devices were developed, built and designed to somehow operate isolated from the others.
And the lack of interoperability between these devices really reduces the collective value that they can bring to the end user, resulting in potential missing opportunities for both customers, utilities, but also the grid, and we'll get into that in a second.
So, as I said, without an intelligent energy management system, such as HEMS, it's really hard to turn distributed resources into steerable, aggregated resources that can, for example, support grid stability.
What we saw, for example, about 10 days ago in Spain, with the blackout, for which we don't have yet a defined cause by the TSO, we can, however, see how important congestion and system stability is becoming in this transition from an old to the new energy world.
Georgia:
So, I was in the US when the Spain-Portugal blackout happened, and the news in the US was saying that the theory is the blackout happened because the temperature shifted so rapidly from hot to cold and overloaded the system.
Is that a thing?
Andrea:
Again, this is not something that the Spanish TSO have yet confirmed. What you just said, it's probably not the root cause behind it.
And again, I don't want to spend too much time speculating on the reasons, because I'd rather have the TSO giving us some reasoning behind it.
But I think that we can all agree that this blackout underscores a major problem in our system and the urgent need to have fast responding, decentralized flexibility.
And that's exactly where a home energy management system can enable these DERs to really actually take an active part in the flexibility of our system.
Georgia:
Because in theory, if everyone had had a home energy management system, when that happened, no one would have lost power, because they all just would have switched to their own power.
Andrea:
No, that's probably not the reason.
What I wanted to convey as a message is that all these small devices, if they were aggregated together, they could be used, for example, to be discharged or charged all at once, to allow, for example, to reestablish a change in frequency, which is definitely something that has occurred the past week.
So just imagine tens of thousands, hundreds of thousand, very soon millions of devices that can be aggregated intelligently from a home energy management system and respond to potential needs of the grid and help reestablishing potentially a change in this frequency thanks to a very fast charging or discharging signal.
So, what could happen is that at TSO, it's sending a signal to, for example, balancing, responding party or local DSOs to charge and discharge a bunch of assets, and by a bunch, I mean, thousands of assets at once that have been aggregated through a home energy management system to really reestablish, for example, the frequency in the grid and avoid, for example, a blackout as we saw last week in Spain.
Georgia:
Okay. You and I both know that many utilities still rely on legacy systems.
How do you think integrating a modular HEMS, kind of like gridX's XENON, can help them transition toward digital flexible energy management without disrupting the existing infrastructure?
Andrea:
And by legacy system, we mean this older IT infrastructure that was built to offer services to this very monodirectional old school model, often very rigid and very centralized.
These systems, they lack the flexibility and the interoperability, the real time capabilities that are really needed to manage today's complexity and indeed to offer the possibility of build services upon these DERs.
And that's exactly where a modular HEMS can come into place. By modular, we mean software that allows, for example, to activate different use cases and functionality depending on market needs because of a specific regulation that has come into place. And that's exactly what we need in this new energy world.
We need intelligence systems that offer different functionality, that are fast adapting to the changing regulations that we are seeing in the European market.
Georgia:
Which is easier with a HEMS with different modules available rather than one that's static.
Like that has one module, period.
Andrea:
Exactly.
That way, utilities can really adapt to the fast changing regulations and also to the fact that they often operate in different countries. If you look at the most important or big utilities in Europe, they probably operate in multiple markets.
And even within a single market, you might have regulations and differences and upcoming regulations that continuously need to have a system that adapts to those.
For example, in Germany, and I know you have touched upon some of these topics with our colleagues, you have the 14a, the 9EEG. In one year, just in Germany, there have been multiple different regulations coming up.
And it's so important that our home energy management system, our energy management system in general, are able to adapt to these to make sure that utilities can continuously offer services that are compliant to the existing and coming regulations.
Georgia:
So, which is, is it mostly that the legacy systems are just inflexible? Like, that's kind of the biggest difference?
Andrea:
Yeah, they were just built for, you know, big power plants, how much have you produced, all the way down, quick calculations, job done. That is no much back and forward of data, that is no storage, that is no feed-in, you know. We're entering like a whole new set of logics that in the past were non-existing.
So, in short, modular HEMS platforms provide a really practical pathway for utilities to modernize themselves, really enhancing their digital readiness, improving also somehow the custom engagement, because through these systems, they can really help prosumer to educate themselves, to engage with the energy, and also to create potentially trust, which is something that utilities value very much, if they want to reduce churn, and continuously build services upon these DERs, and of course, generate revenue streams for themselves.
Once again, utilities are into these also for the business side of things.
Georgia:
And I guess moving away from like the super technical side for a second. In your view, how are strategic partnerships becoming essential in this new kind of – or evolving ecosystem? And how should utilities approach collaboration when building out scalable solutions?
Andrea:
And with complexity, it's really hard to think that a single player on his own, a single utility can really manage the entire value chain on its own.
The customer journey from installing solar panels to optimizing self-consumption and managing those assets, accessing flexibility markets involves multiple touch points.
So to truly serve these ecosystems, collaboration is not just optional. It's essential. There is really no way forward, in my opinion, for a single player, like a utility, to really offer all these touch points across the value chains.
And actually, HEMS provider, any HEMS provider can really provide a central role in this collaboration model, because somehow it touches upon all the different touch points that I mentioned just a second ago.
I think that really HEMS provide not just a technical support, as we discussed so far, but very much an integrative approach to give solutions to this energy transition. They enable the cooperation to make really decentralized energy solution work at a larger scale, while maintaining a consistent and very high quality customer experience, thanks to the platforms and all the services that are being built for them.
Georgia:
And then as regulations and market conditions change very quickly, and they change from country to country, how can utilities stay agile and compliant?
Andrea:
So yeah, as I said, one of the biggest challenges is not simply technical, but it's also regulatory. So utilities need to be very agile in terms of responding to this fast changing regulations across Europe.
So once again, as we mentioned earlier, in Germany over the past year, we saw different new regulations, such as Section 14a, 9EEG, to really create market-based flexibility mechanisms.
And it's very important that utilities fastly adapt to this change in regulation, to make sure that the end-user devices are compliant. And end-users are simply happy.
Georgia:
I mean, that is the ultimate goal.
Andrea:
Of course, this changing of regulations can unlock new value sometimes, but they also introduce complexity and potential compliance risk.
So again, going back to the idea of a modular, a flexible, modular home energy management system, architecture can really help utilities to navigate this complexity.
By acting as a digital layer between the household and the grid, it allows utilities to dynamically adjust how and when energy is used based on credit regulations, tariff, and systems needs.
Georgia:
Would you have an example? Because you said sometimes the regulations themselves can unlock new opportunities. Do you have an example of a regulation that unlocked opportunities for either utilities or end users?
Andrea:
Well, somehow section 14a is an example of that, because it can generate further value for the end user.
Of course it is a limitation, but on the other hand, if the end user is compliant to this regulation, it's then being rewarded by the TSO with a direct discount in its grid fees.
So at the end of the day, it is unlocking an opportunity of generating further value for the end user as a direct discount in grid fees.
Georgia:
And just actually another question that's a tiny bit off-topic, but typically on this podcast, we talk about the German market specifically, the Dutch a tiny bit.
But as you are Italian, Italian, but living in Spain.
Andrea:
Born and bred.
Georgia:
Do you happen to know of any, because we always talk about 14a, 9EEG, are there any big regulations in either Italy or Spain that happened in the past year that helped utilities or end users?
It's okay if you don't know, because you do work for a German company.
Andrea:
No, that's okay. I'm just going through the different regulations.
So the question was more focused on the added value that the regulations bring or general regulations that have come up more recently.
Georgia:
I guess general regulations and if they helped end users or utilities, didn't Italy do some, I thought you, something about electric vehicles.
Andrea:
It's a lot of incentives there, but I wouldn't say that regulations at the moment.
There's a lot of feed in.
Georgia:
The home...Oh my god.
Andrea:
There have been a lot of changes and addition when it comes, for example, feed in schemes.
In Italy over the past 15 years, we must have changed at least four or five times the way end user or prosumers are being rewarded for the excess energy that they feed into the grid. So years ago, it was just for each kWh, you will get X euro or cents of euros. Now it is a bit more modular.
So depending on the zone where you are, the time of the day, you're rewarded in a different way. In Spain, on the other hand, we have something called like a virtual battery.
So utilities – and actually that's a good example that I could give you.
So in Spain, utilities offer to end user the possibility of being rewarded for the energy that they feed into the grid with a direct discount in the energy component of their electricity bill in the following months.
So basically the utilities are somehow purchasing the excess energy that you're entering into the grid and then discounting the exact amount in kWh in the following months.
So we are seeing a lot of these regulations, but probably technologies we have not used yet, at least in Italy and Spain, HEMS technologies to maximize, for example, the value of the energy that is being fed into the grid.
If we had a smart energy system that is aware of the price, of the spot market price, we will be able to, for example, discharge into the grid in moments where it make economically more sense.
So HEMS is not just a nice to have technical solution, but as just said, it's a regulatory enabler and an added value enabler for the end user.
It really gives utilities a tool to respond to change, lead innovation, and generate extra value for the end users, which at the end of the day is what they want to make sure that they stay relevant, they stay attractive, and they reduce the churn of end users to other competitors.
Georgia:
And then so how do utilities factor into all of this?
Andrea:
So yeah, technical performance, regulatory adaptation, super important, but at the end, what keeps customer loyal and engaged, and satisfying, it's how intuitive, visible and beneficial these energy solutions are in their daily life.
So once again, HEMS can really close these gaps, bring intelligence, automation, really turning these passive consumers, as we described earlier, into active participants of the energy market.
That's exactly what I meant earlier by this new term, flex humor, that is actually often being replacing the prosumer.
So consumer, just possibly consuming, prosumer, somehow actively consuming, storing and now flex humor is probably the next step of an end user energy journey, and actually taking part into the flexibility of our system.
So through apps, very often home energy management system comes with end user apps, application on their mobiles, on their desktop. They can really help end user engaging with their DERs. They can see the real time usage. They can understand the savings and the value that are being generated. And with the understanding, very often comes the trust.
As a utility, well, utilities are probably going to be trusted more if an end user sees the value that the services that this utility is offering them.
So if you don't have any DERs or in the past, your relationship to a utilities was probably a once a month relationship, and that's called your electricity bill. You were receiving a bill, paying for it, and the next month, same again, and again, and again. Now the relationship is changing drastically.
Georgia:
So you get to see it on an app or something?
Andrea:
You get to see it on an app.
You get to understand why, for example, one of your assets is charging or discharging at a certain time of the day. You can be explained, you can be educated by your utility in what is happening into the house. And with education and adaption, trust can come with it.
So the confidence, what I want you to say is that this understanding and this education builds the confidence, the engagement and the trust the utilities want to rebuild to make sure that they don't lose customers.
So for utilities, this is a really huge opportunity to stay relevant.
So instead of simply relying on static prices, outdated portals, they can now move on to a very different model offering energy experiences, dynamic tariffs, a whole series of new services and values to really make the offering more attractive in the eyes of the end users.
Georgia:
Looking ahead to 2030, in your opinion, what does the competitive energy player look like? And how does a central, how central is a strong HEMS strategy to that?
Andrea:
We're going through a crazy transition, a very fast transition. And I'm sure that in 10 years from now, we will not recognize the energy world of 10 years ago.
What I can see, what I can definitely foresee, it's how the most competitive players won't be just the one offering the cheapest kWh or the cheapest devices, but will be the one offering the best customer experience, the most flexible services, and the smartest digital infrastructure.
That's who I see will stay relevant and will lead the energy market in the years to come.
Georgia:
And you and I have both been very busy with The smarter E this week, so I forgot to warn you about the rapid fire questions at the end of each podcast.
I also did not prepare any, so this is going to be a true rapid fire.
I'm just going to ask you questions off the top of my head.
Andrea:
Okay, go ahead.
Georgia:
If you could be any energy asset, which would you be and why?
Andrea:
Oh, now some time behind the solar panels, they attach a small device to basically isolate each solar panel.
It's not exactly like a microinverter like Enphase, but it's something to make sure that each and individual solar panel can be isolated, analyzed by the inverter so that you can make sure that you optimize the PV system in the best way possible.
So it's just a small little device that gets attached on the back of a PV module, just making sure that inverter is able to read each module separately and differently, and making sure that, for example, you have an anomaly in the system, and it's only one panel that is having that anomaly, you're able to isolate that, fix that, and I always thought that it's even in the early days of PV, there was something extremely cool and innovative. So I guess I've always been very much attracted by the most innovative part of the technology.
I can't remember the name, or how do we call it? It's an energy optimizer?
Yeah, it's a module optimizer.
So once again, it's a very small device that gets attached on the back of the module and allows the inverter to separately see each module and maximize, for example, the fix of an anomaly, of a problem, the analysis of the production of the PV system.
So yeah, not the inverter, not the usual DERs, but that means something a little less known, but equally innovative and really smart.
Georgia:
If a HEMS had an animal mascot, what would it be?
Andrea:
I'd say a spider. Spiders got eight legs, so many legs, interconnecting all devices.
If you have ever looked at a picture, as a sketch of a whole management system, you will always see something very central, could be the body of the spider, and then some lines connecting the other devices, and I could see the legs of the spider being these arms going and connect the different ears.
Georgia:
In your opinion, which European country do you think is most likely to meet its energy goals by 2050?
Andrea:
So I see the UK definitely as a prominent country when it comes to that, because of the amount of flexibility products and how innovative they have been over the past years, beside the huge incentives that the government are putting into place. So definitely UK will be up there.
Very likely, maybe Spain, of course, I live in Spain, so I'm pretty optimistic, despite the blackout of last week, I'm pretty optimistic that, of course, the huge utility scale systems that are being installed, the fast growth of DERs could also put Spain over the coming years in a leading position, but that's also to be seen.
Germany and the Netherlands will probably – are the two countries that I see that I see in this top list.
Georgia:
And then, what is the most energy efficient thing people can do in summer?
Andrea:
Yeah, don't go crazy with the air condition, please. That will be a very first one, and easy, easy, easy to act upon, being 18 degrees in the middle of summer in your house, just simply wrong.
I mean, if you want to connect your question also to the home management or energy management system, make sure that you really connect your devices with a home management system to maximize your self consumption, and let those smart devices help you in reducing your bills, but also maximizing the comfort in your house.
Georgia:
I think that's actually a great place to end this episode. So thanks so much for joining me today.
Andrea:
Thank you so much for inviting me. Thank you for all the listeners.
Georgia:
And yeah, have a nice trip back to Spain.
Andrea:
Thank you.
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.
You can also follow us on LinkedIn, or on Twitter and Instagram @getgridX.
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