Georgia: 

Hello, and welcome back to “Watt's up with energy?”, a gridX podcast. I'm your host, Georgia Knapp. Today, we are gonna be talking about dynamic electricity tariffs, its role in demand side flexibility, the regulatory hurdles it faces, and how consumers and energy players benefit from fluctuating prices.

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And joining me today to talk about this is Jan Rabe, CEO and co-founder of Rabot Energy.

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So Jan, thanks so much for joining me today.

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Jan:

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Thank you for having me.

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Georgia:

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And if you could just introduce yourself and maybe explain a little bit what Rabot Energy does.

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Jan:

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Yeah, yeah, happy to do that.

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So as you said, like co-founder and CEO of Rabot, I'm now for over 15 years in the energy space already in multiple roles.

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So starting off in the energy trading field in terms of optimization, like large scale hydro pump storage power plants. Then afterwards entered the field of portfolio management, including direct marketing of renewables. And now for the last 11 years founded three companies. And Rabot Energy is the youngest one.

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So we are doing that for around four years now.

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And what we try to do is really being a smart utility, enabling customers to benefit from dynamic tariffs with their flexible assets and enabling them to do a smart optimization.

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And by this, of course, having a good custom experience and at the same time use cheap electricity when we have a lot of renewables in the system.

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Georgia:

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Are your other two companies also energy related?

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Jan:

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Yes.

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So the first company that's also B2B company where we do optimization for rather large scale assets or large battery storages, but also power plants.

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And then the second one is a B2C model where we're doing contract optimization for B2C customers.

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So all three out of the energy segment.

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Georgia:

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Okay, nice. And I didn't realize that Rabot Energy was so young. You guys recently changed your name from Rabot Charge and now Rabot Energy. Does this reflect a change in strategic focus or a shift in the market?

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Jan:

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Yeah, very good question. So the company's name is still the same. So it's still the Rabot Charge GmbH also. But we changed the brand name, and that exactly is some sort of shift.

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So when we started off like four years ago, our core focus was on optimizing electric vehicles and therefore the charging process of these electric vehicles. But over the time, we realized that there's more to do.

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So you have a lot of heat pumps in the market, which can optimize, but also battery storages like for domestic customers.

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And so we felt that it's not just about the charging process, but about the holistic energy optimization. And that's why we shifted the brand name from Rabot Charge to Rabot Energy.

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Georgia:

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Okay, but when you said that the company name didn't change, but the brand did, you just mean like legally, it's still registered as...

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Jan:

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Exactly, yeah.

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Georgia:

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In recent years, have you seen the smart electricity tariff landscape evolve much?

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Jan:

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You see that more and more assets are coming to the market. So be it electric vehicles, heat pumps, battery storages, like assets that needs to be optimized. And I think there's a lot of push from innovative startups on helping customers doing that.

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So I would say yes.

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But of course, like I would say for the whole segment, like last year was not as successful as we might have expected it to be, like in terms of how many EVs were sold in the market and how many heat pumps were coming to the market. And I think like political insecurity and some stuff was a bit like hindering that.

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But in general terms, I'm very optimistic on how the landscape evolved. And looking at other countries, you see what is possible and what will happen also in Germany over the next year.

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So I think I'm very bullish on that segment.

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Georgia:

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And also, just to clarify, you guys are only present in the German market?

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Jan:

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Yes, right now, we are fully focused on the German market.

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Georgia:

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In the German market, then how do you see dynamic electricity prices, I guess, being accepted or utilized?

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Jan:

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Yeah. And it depends a bit, like if we look at the domestic segments of private customers, and it is still a massive niche.

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So still today, like between 98% and 99% of the customers looking for a new tariff are choosing for a fixed price tariff due to security issues and these elements. So it's a really minority who are still doing that.

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It's not true, so for the segment of people who are having flexible assets, there the share is much higher. But still even in that segment, a lot of people, due to the lack of knowledge or due to security thoughts, they are choosing for a fixed price tariff, besides that it wouldn't make much more sense to go for a dynamic one, and using, for example, negative power prices to do the optimization.

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And I think that's something which we see is shifting also in terms of media coverage. So I would say like three years ago, nearly nobody knew about dynamic tariffs.

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That has changed a lot over the last two, three years. And so I guess more and more people will get the trust also using smart dynamic tariffs in the future.

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And so I guess there we will have a good outlook. But it will take time until it's becoming like the real mass market play, let's say.

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Georgia:

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And you said that one reason people would be choosing fixed over dynamic is because of the security risk?

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Jan:

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Yeah, we're doing a lot of customer insights and research, of course. And the main issue people are having with dynamic one is, of course, the security point. So what happens if we get another energy crisis? Or what happens if prices are peaking for some reason?

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And so of course, you have a segment which is rather a risk taker and then looking for the opportunity on optimizing assets with dynamic tariffs using negative power prices in their own benefit. We hopefully, like everybody knows about the option to have with a dynamic tariff.

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So I think that's very important to get the attention there from the customer that they can use it and then they can decide themselves what they prefer as an option.

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But that they know that there's this option and how profitable that option can be.

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Georgia:

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Do you think this is something that is unique to the German market? And the reason I asked that is because I've also spoken with someone from Tibber for a previous podcast episode.

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And I think I was asking him what were some of the unique challenges going from the Scandinavian market to the German market. And he said that the German consumers are typically more risk adverse.

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Jan:

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Yeah. I would agree. Yeah. I would agree.

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But on the other hand, you have to see that in the Nordics, they have a lot of hydro. And of course, hydro is not as volatile as wind and solar in terms of the price levels.

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And so, they didn't have this like, like for example, like we had in November, like peaking prices as well. And so, the price volatility in the Nordics was never as high.

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So also, like, neutrally speaking, I would say, yes, it's true, the Germans are more risk-averse, but also like the volatility on the German market is higher due to wind and solar, which on the other side, of course, also has the higher potential in terms of optimization. So not just optimizing on the day-ahead market, but also on the intraday market.

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And so for the people who are choosing to go for a dynamic tariff, the potential is even higher than in the Nordics on optimizing assets. But of course, the barrier to do that is maybe also higher.

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And that's something like why I say people need more trust and gain trust in that model, and we need more coverage in terms of media, that there is this option even.

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Yeah. 

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Georgia:

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And so Rabot Energy focuses on making dynamic tariffs” set it and forget it” for users. Can you explain exactly how you guys achieve this? Like what is the technology behind this?

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Jan:

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So I wouldn't call that we opt for that in any case, but we give the customer the option to set and forget.

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So basically, within our sphere or in the app, customer can set their preferences like in terms of smart charging, for example, they can choose like, I want my car loaded until the next day, eight o'clock with a state of charge of 80 percent.

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And then we are optimizing in the background, we are sending the charging signals and doing all the processes.

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So he can forget about the real process. So in this sense, it's correct. And they can leave it for the whole year and then we are doing the hard work in the background, let's say. But they also can at any time change their preferences.

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So if, for example, they need their car now instantly or in one hour and they need it loaded, then they can switch out the smart charging component and charge directly. So we want to leave the customer to control what to do.

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But if he agrees on certain, let's say, boundary conditions for the optimization, like state of charge at a certain time, then he can set it and forget it.

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Because we know that many people just want to have the control, but not looking into that like on an hourly base. And then that's what we do and how we do it. As I mentioned, we were building up the technology over extended periods for Rabot.

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So we took like two and a half years to really build the technology for all that main components. And the whole process is fully automized.

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So if the customer sets the preferences, then we do our optimization on a customer level. And then aggregate, of course, volumes to execute them on the market. And this is done then via our own API to the intraday market, for example. And with this model, it's a fully automized process within our technology. And therefore, we can do that. And in the end, we also show the customer what they saved on a charging process. And they see it also in the bill, like with the cost reduction from the optimization.

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Georgia:

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And then how do you see the role of dynamic tariffs in unlocking the demand side flexibility? Like, how does it address the key motivations of the end users?

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Jan:

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We believe it's a core to a successful energy transition, because basically the energy transition, like wind, solar, is increasing volatility of the prices, because in the energy system, we need to match offer and demand in every millisecond.

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And so if the volatility on the production side with wind and solar is very volatile, we need to give incentives to customer to use the electricity also in times where you have a lot of solar, a lot of wind, and this is done, of course, by dynamic tariffs.

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And we believe that by a dynamic tariff and, of course, by flexible assets, we can enable this, to some extent, like this profits to our customers.

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And in this sense, we believe that dynamic tariffs are core for demand sign flexibility to basically enable a smart and cost-efficient energy transition.

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Georgia:

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Dynamic tariffs, smart tariffs are such a big topic now. As more players are entering this space, what makes Rabot different? And how are you staying competitive?

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Jan: 

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There's a lot of startups trying to approach customer on different ways.

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Some either through the sale of large assets, like heat pumps, PV, battery storage, like ENPAL, 1KOMMA5, and so on. And then there are other players like Tibber or Rabot, who are focusing rather on the supply of electricity and additionally using existing hardware to do optimizations.

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And we also have a direct API integration, so they basically can sign up for a power contract and then directly optimize their assets. So I think it's very important that we have that competition, and also different players tackling different fields. And so we appreciate that.

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But on the side of the utility business, we don't have much competition from traditional ones. There are few players in the smart energy segment like Tibber, like Rabot, like maybe Octopus, to some extent, or Ostrom, but not many more.

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And so I would say the competitive pressure on that side is not as high, especially also because you need a lot of technology to do that.

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And that's not so easy to entry.

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Georgia:

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Yeah. And are there any regulatory hurdles that need to be overcome to make dynamic tariffs more mainstream?

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Jan:

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And so I would say that the highest push will come from the market. And once we have the like the exponential function, which starts now with EVs, with heat pumps. So this is like massively pushing the demand for dynamic tariffs from the market side.

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On the regulatory base, of course, the main blocker so far was of course, that we were not having the smart meter rollout, and you need the smart meter to really balance on a quarter hourly base the energy volumes.

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And of course, that is very positive that from January 1st, like we have the smart meter rollout, every customer can get a smart meter. And so, I think that is massively supporting also the segment of dynamic tariffs there.

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Georgia:

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But in the European market, demand side, accessibility to demand side flexibility is so different from country to country. Do you see any of the European countries as leaders?

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Jan:

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Speaking about really the domestic customers, I would say like the Nordics, the Netherlands are also to some extent UK, but not as a leader, I would say, but really like Nordics and Netherlands, they are like the most progressive and advanced ones in that segment.

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I mentioned that in the Nordics, some stuff in terms of flexibility optimization is still not, doesn't have the highest potential as they have quite a lot of hydro. That is changing a bit right now because we have the interconnectors like connecting Central Europe also with the Nordics.

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But I would say that they are clear leaders, they have the highest chair in terms of EVs, the highest chair in terms of heat pumps, and to some extent also a bit the view into the future. What I believe also will happen in many other countries, not just Germany, but also the other countries in the European Union, or also the United States.

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Georgia:

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Which European country do you think has the most potential, like to improve how they're utilizing dynamic tariffs?

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Jan:

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Where the highest demand for dynamic tariffs should be is the countries with the highest share of fluctuating renewables like wind and solar, to really balance these two. And so, for example, Spain, Portugal are great countries to do that. But of course, also because you have the flows from country to country, so it's also France is experienced volatility coming from Germany from other countries.

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So even France has a lot of nuclear, like which is not very flexible. Well, of course, there, for example, also the topic of demand-side flexible is a topic and also progressing. But I would say like in terms of market demand, I would say like, for example, Spain and Portugal with a very high share of fluctuating renewables are one example there.

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Georgia:

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How do you see smart electricity tariffs integrating with other small-scale assets, like in a holistic way?

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Jan:

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What I mentioned before, so it's important that we get the right integrations of different providers.

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So, for example, like what you mentioned, like if you have assets like heat pumps, EVs, and so on, or a PV, and you have a home energy management system.

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So the home energy management system, of course, is focused on, first of all, like getting the outer key as high as possible, so that most of the energy which is produced by PV is really used within the household. So a clear behind the meter optimization.

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This, in the first step, of course, you can optimize further if you have a smart dynamic tariff. So still behind the meter optimization.

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Then the next step is, of course, with the new legislation in Germany, you can also optimize the battery storage based on like what is coming from the grid. And there, of course, you can use smart dynamic tariffs.

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And then the last step is really also optimizing the whole setup before the meter. So when electricity is going into the household.

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And so if we do it the right way in terms of partnerships, then we can save a lot of money in these cases, like by adding behind the meter optimization with before the meter optimization. And that is something we, of course, we are also looking for to partner with then home energy management systems, like gridX, yeah.

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Georgia:

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And then, so obviously, the money savings for the end consumer feel pretty obvious. How do you see the energy players also benefiting from this?

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Jan:

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Yeah, that's a good question. So I think, like, as the market is quite early, so most of the players are not looking right now for getting most of the money out of it. So you have some approaches who are taking a base fee for an energy trader or for an energy management system and so on. And we prefer a model where we take a profit share of what was saved.

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So what we do with our customers, we are taking a 20% profit shift.

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So we don't take a fixed fee for like using our system, like our smart optimizations or energy trader or how you call it. But we take a 20% profit share. So if we save for a customer 500 euros by doing intraday optimizations, then the customer is getting 400 and we are getting 100 euros.

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So we are doing 100% of the job, but getting 20% of the savings.

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And we like that model because basically it's giving the right incentives for both the customer and us as a company to maximize the savings for the customer.

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So that's why we like that model.

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But there are different approaches on doing that in the market.

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Georgia:

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In your opinion, do you think we are ever going to reach a point where static tariffs are a thing of the past?

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Jan:

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I would hope for the segment of people who have flexible assets. Because for people who have flexible assets, it's just a no-brainer to take a smart dynamic tariff. If you look on the overall population, like people without assets, I don't believe so.

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I believe that many also will get dynamic tariffs to change their behavior and use electricity more in times when we have a lot of renewables and the prices are low. And also for home devices, which, for example, we are integrating right now.

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But I still believe in that segment, there will be also fixed price tariffs also in five or in ten years.

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Georgia:

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And my last question before we get into the rapid fire round is just what is next on the horizon for Rabot Energy? Any exciting developments?

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Jan:

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We have a B2C component gaining direct access to B2C customers. There, we are very happy about the development, and we are very advanced in terms of our smart charging solution already. We are improving the smart heating one.

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Like, that's, I guess, for most of the players, there's still a bit of a challenge there to, because a lot of heat pumps don't have API connections like the existing ones.

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We are not focused too much on new fancy stuff, but really evolving our existing product market fit, and gaining the additional speed.

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Georgia:

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Nice. Well, that brings me right into our rapid fire round. So just seven questions. Like I said, all very lighthearted.

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So for transport, do you prefer a bicycle or an e-scooter?

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Jan:

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Good one. Bicycle. Using both, but bicycle.

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Georgia:

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For a holiday getaway, mountains or the beach?

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Jan:

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Right now, the beach. A bit more relaxed. But for a day off also, I like the mountains a lot.

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Georgia:

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What is your favorite piece of energy news from the past year?

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Jan:

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That's a tricky one. I would say, especially for us Germans, still the evolution of electric vehicles globally speeding up. Not in Germany last year, but globally speeding up.

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And maybe additionally, of course, the cost structure in terms of EVs, or generally speaking, of assets, like how fast the prices were falling.

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And that's why I'm very bullish in terms of speed of the whole energy transitioning happening. Yeah.

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Georgia:

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What is the most energy efficient thing you've done this month?

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Jan:

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Most energy efficient thing? I would say, like, I'm walking to the office every day.

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Georgia:

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I mean, that totally counts.

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Jan:

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I have the luxury of living within the city, so yeah.

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Georgia:

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If dynamic tariffs had a mascot, what would it be?

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Jan:

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A fox. Clever, clever one.

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Georgia:

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Nice. What is the most common misconception about renewable energy?

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Jan:

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That it's expensive. And I mean, that's to some extent, it's also true, or it was true. Like, of course, like, when like 10, 15 years ago, we did subventions for renewables, they were really expensive.

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And so it's true to some extent.

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I believe renewables will be our future if we do it the right way, or low energy cost for energy security.

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And so I think like that's an incredible misconception coming from maybe what was happening like 10 years ago when it was true, like renewables back then were expensive or even 15 years ago, but not today anymore.

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Georgia:

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Yeah, and then my last one, if you could instantly change one energy market rule, what would it be?

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Jan:

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I would allow that we use the quarter hourly data from modern meters, so not like what is called smart meter, but modern meters like digital meters, that you can already do like quarter hourly balancing, so that you don't need the smart meter gateway, but you could do it afterwards, like reading out the quarter hourly values.

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And that would like be much, much more cost efficient than the whole, like holistic smart meter rollout. And it would be enough for most of the households.

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Georgia:

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Well, nice. Well, thank you so much for joining me on the podcast. It's been great to get to learn more about Rabot Energy.

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Jan:

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Thank you.

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Georgia:

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Rabot Charge.

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Jan:

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Thank you. Yeah.

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Georgia:

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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.