[Music] hi guys Quentin here from Moto we're here with Charlotte Johnson from quack and flex who we've been wanting to get on for a while and today we're going to talk about technology and energy storage world and how it's really changing uh how assets are operated so um Charlotte thank you very much for coming on and speaking to us before we get started I guess um it'll be good to have for the guys at home watching or wherever they're watching this um who is Charlotte Johnson and how do we end up here well thanks firstly for inviting me but I'm Charlotte Johnson a senior Analyst at crack and flex I've been with the company for nearly four years now or just under four years and there's two main areas that I focus on one is the commercial side so basically Market modeling and Market insights and the other is strategy so looking at the business strategy for crack and flex in alignment with the wider octopus Energy Group great and so um on your background before this how did you end up uh in the world of energy did he always plan for a life in energy I don't think anyone um so at University I studied geography um physical geography and then I did a master's in climate modeling and really looking at the Melt rate of the Greenland ice sheet and I think from that obviously carbon emissions is a massive thing and a huge driver and I think I looked at the energy industry they're responsible for a huge proportion of carbon emissions so it felt like kind of the next step to do something practical in the space awesome okay and um so crack and flex okay let's get this up out of the way so cracking flex and octopus group who's Quack and flicks and how do you fit with octopus and what do you do yeah so Kraken Flex was originally upside energy yes yeah so originally upside for probably the past five six years I think since 2014 2015 um we were acquired late last year by octopus energy or the octopus Energy Group and within the art of synergy group you've got multiple companies so there's crack and Tech and crack and flex that are kind of related together and they sit sit in one side and then you've got octopus Energy Services octopus electric vehicles octopus Renewables and then there's a number of other other areas of the business too okay and so you're you're a bit crack and flex so you're based in Manchester right um what do you how many people are there in a company um what's the the teams is it software developers or is it commercial people how does it split and then who's the customer yeah so we are based in Manchester the northern quarter although we do have an office in London as well um the split is mainly or the largest proportion of the the company is software developers and so you've got a huge number of tech teams and then we've got a small commercial side okay and um Kraken flat so it's cracking Flex the Quaker versus the company right yeah and then what's the product called and who who's the customer yeah so the product has um it's a modular platform so we've got four separate modules and they're basically control and dispatch and that's where we connect to assets and dispatch them you've got optimization where we basically pull in market price signals and optimize the assets and decide when you should dispatch them you then have alerts and notifications and then you've got reporting and analytics which is all around sort of operational performance and financial performance of the assets okay so if I've got this right you guys do um but the technology of the controls yeah and the market access as well so I'm getting by the getting folks into frequency do you do the optimization a bit like a habitat would or an EDF or do you do something different yeah so it would vary between customers in terms of ancillary Services if we start there we basically do access to ancillary services for customers that are potentially don't have a megawatt to enter and enter the market so we would be it's too small yeah because they're too small so we would aggregate them and we would basically bid them into the market for them so we do that for a number of customers at the moment usually retail customers that have got smaller portfolios in terms of is this like uh Joe blogs with his electric vehicle or is this like what slightly larger than that to be honest I don't I don't think there's many electric vehicles in the ancillary service Market at the moment um but it's usually cni or small businesses so for example some have got 200 kilowatt batteries 100 kilowatt batteries that kind of range okay cool and so in that case uh so I'm just going to take this back set so you provide the technology and some tools for folks who are doing the optimization right so the is that screens for trading teams or is that algorithms is it price forecasting um how does that all fit together the idea is is that customers upload their own price forecast or they perhaps um their own sort of Market forecast they also will look at if they've got a VPP or a virtual power plant with a renewable generation in as well they'll pull in their own generation forecast our optimize will look at Optimizer sorry I would look at the market prices look at the assets that are in the portfolio and decide when to basically dispatch them so you can do it that way or you can send us a dispatch schedule via an API so there's like two different ways and it all depends on the customer and what their capabilities are like really okay so um could you who are your biggest customers right now you know you're able to say who they are and what you do for them yeah so we have four key customer groups and the first one starting with would be asset owners so they're sort of large fund owners that have invested in in Grid scale battery projects or renewable projects so you've got kind of the likes of eel power and would be one of them you then have off takers so these would be companies like EDF energy habitat energy shell and they're people that would use users to connect to a large number of distributed assets you then have retailers so that would be like the sort of bright energy Haven power and octopus energy who have a growing portfolio of either domestic flexibility or cni flexibility and then the final group is system operators and that would be the likes of sort of transmission system operators or distribution system operators and that's the kind of work that we're doing with Elia groups so they're there to sign a deal or something was just agreed agreed congrats to uh for doing that big moves abroad right yeah so yeah one of our first International deals actually so Elia are the transmission system operator for Belgium and also 50 hertz in Germany so Germany's got four are a few different transmission assistive operators octopus of course acquired uh upside which became cracker flex and now you have which is incredible you know you've got now some some more obviously more money to spend to grow the team deliver on a vision deliver on the technology so my question is um what does that look like now you have the the backing to deliver on what the vision of the company was what does that look like in 2013 where does Kraken Flex fit into that what's the technology going to do to to your customers that's going to make their world better yeah and I think if you look across the four customer segment groups you can see that we're trying to Branch out and diversify from Just One customer type and the idea of that is to really help us be at the heart of the technology that then enables the energy transition so to do that internationalization is a huge one for us so crack and flex and octopus have a very strong presence in the GB market and now it's really looking at how we can enter new geography strategically to sort of um access that Vision okay and then of course Europe's first and then uh octopuses in the States now isn't it yes yeah they're in the states so Texas um is the state they're in they're in Japan with Tokyo gas origin in Australia and then yeah Europe okay so um and the last question about Kraken Flex so um what's the business model how do you guys make money do you charge per license do you charge per seat there's some you know it's a box that you sell how what what's a business model look like yeah so there's two different sides to it there's um we're a software as a service company so we have a subscription fee and customers basically pay a pound per kilowatt per year fee for the volume that they put on the platform um and so you'll see that that varies between customers because it depends on how many modules you take and also how big your asset is or how big your portfolio is on the other side on the question on that yeah because of course um having 100 100 kilowatt assets the math is going to be wrong in my head now but put a zero on version but um a lot of small assets is not the same as one big asset right because the amount of effort to get those small assets into the market and all the metering and registration and stuff it doesn't really scale like one so um I guess it can't cost the same for that as beginning that's one of the big problems that our industry needs to solve right yeah so at a smaller level it tends to be a pound per asset fee instead um all right so now about the wider industry see um you've been around for a while you've been doing lots of writing and we've been following uh Charlotte and I saw a lot of folks watching have been following the stuff you've been writing and putting on LinkedIn and I just want to say it's absolutely terrific so thank you on behalf of us for for putting the time in and releasing that work so in your view of the industry as a technology provider um where does where does Kraken Flex sit um from people who build assets and own them all the way up to the end user how does Kraken Flex sit within that and what are the changes that crack and flex is making to to the industry yeah so if you're looking at it from a customer point of view it would be sitting between the asset owner and the optimizer or the off taker if you're looking at it from where we physically sit in the sort of integration stack you would have the site controller which is something that does or someone that does all the lower level functionality on the site so things like sort of HVAC systems fire suppression and detection all the kind of monitoring controlling of switchgear and they're usually done by in our industry they're called scada systems but you often hear the term sort of PPC so a PowerPoint controller an EMS an energy management system or a BMS a battery management system so they're sort of the collective terms for Escada technology we interface with that technology and we do so by putting a piece of a piece of Hardware sorry on site which we call a Gateway and that gateway then allows us to communicate with the asset and also back to our cloud and that's obviously what our customers then use to dispatch the asset through the cloud so it's that kind of bridge between the physical asset and the cloud okay and do you provide them as well so the the comms for registering and metering and all the stuff for being a bmu and do you do that so we don't own any of the meters on site um so we don't take any kind of liability there that's all done by the EPC that usually organizes or configures the site okay but we would obviously advise on when you're looking at going into different markets with your asset you really need to think about what metering you need so the accuracy and also the resolution of it so we can advise on that but we wouldn't go out and procure it and install it on the site okay well let's talk about that for a second because um you you guys um I don't want to put you on a spot and say how many assets do you control now but quite a few and they're in a lot of different services and so you have to pre-qualify for a lot of different services and they're using your technology to do that so um if if it's okay can you just talk a little bit about pre-qualifying frontal services so for example the last year we've had Dynamic containment one of the interesting things about Dynamic containment which is the new frequency response service is it's new it's fast and the the regime for testing to get into pre-qualify to get into that service um it's a it's quite a bit more complicated than it used to be for ffr for older services and so the technology requirements to to pass those tests are um pretty stringent so um what's your journey been like at Kraken Flex I keep on trying to call you upsiders but um cracking facts what's your journey been like and um what have you learned what can we what can you share with folks who are listening on on how they can make sure they don't fall down any traps yeah there's been some really great developments with Dynamic containment because if you think about it's the first sort of ancillary service that grid has brought out that actually allows you or gives you specific rules on how you manage your state of charge or state of energy which is really important for energy limited assets um so so that's great when you think of though the metering it requires one Hertz operational metering and 20 Hertz performance metering all right so one so one type of so operational what does that mean operational metering so operational metering is the metering that goes in real time to National Grids control room and it's secondly so one Hertz and then the performance metering is 20 Hertz which would be delivered an hour after the event um to National Grid okay so the so the National Grid once a second can see generally what you're doing yeah and then if there's a big frequency um event like low frequency something falls off the system Wind Farm trips something like that then they can look back through the data at 20 Hertz or 25 seconds and see did you do what you're supposed to do yeah so the 21 Hertz is all there to basically validate your response and to prove that you did it um in the past with dfr the way grid validated it was through audits or spot checks and they would ask for it in secondly readings for a four-hour Block in Excel sheets send us an Excel sheet from last month really um as well it's still open on Excel sheets so okay so we don't use Excel sheets anymore no that's good that's great and so um passing the test so hypothetically because when we're just talking about energy storage on this podcast although we do tend to talk about all sorts of stuff hypothetically we've got the Moto uh awesome energy storage limited and we have got 20 fantastic containers uh on a great site that are ready to go and get into Dynamic containment and we have used Kraken Flex for our technology provider and so we want to get these 20 megawatt site or whatever it is um into the market what's the process of us pre-qualifying what do you have to do at cracking place yeah so we need to look at the metering requirements to make sure that you've got the right meters on site and the site is configured in the right way then you would go speak to an independent technical expert so there's someone that essentially um or an ite that was set up by National Grid a few years ago to try and speed up that process from when you've done your dfr testing or your DC testing instead of sending it to National Grid you can send it to an itu who would sign off it and then you'd be able to send it to National Grid so it's supposed to make it much quicker like so you do tests so we'll talk about tests a second before you do the tests and then you get an expert in who is some sort of engineering Bard someone from I know what a big engineering consultancies I'd imagine come in look through your data and then they sign it off and then National Grid says an IT independent technical expert is happy with this so therefore National Grid is happy with it yeah with the it though there's something to sort of Bear in mind that the earlier you bring them in or the earlier you engage them often is better because all ites are very different in how they work there's not a consistent approach some of them will look at test results on an Excel spreadsheet and just sign it off and be happy others will actually want to go to go on a site visit and look at how the site is configured and look at the metering and start to to probe more into about how you've generated the results so the earlier you can kind of engage them the better you can sort of de-risk the projects and so if I um I'll start with them wrong here but so the so you do the test you get load of results which are which is data in the Excel sheet or something else right and then the ite's job is to say did that battery do what the data said it did and and is and are we measuring it in the right way yeah okay yeah okay and then what about the actual tests so um well what what would I need to prove to National Grid to make sure I can get into DC really that you have a stable internet connection so when you think in the sense of when you're looking at the operational metering that's the secondary data that goes to National Grid you need to be able to um not all Sites will be configured in a way that they can deliver stable readings to National Grid every second so there's a bit of leniency with some dropouts but it's there's a there's a threshold on how much you can kind of have so you need to be able to prove that you've got a stable connection just I've probably a bug bear of mine I haven't been involved in quite a few projects over the years for anyone who's developing projects or building projects make sure you get your open reach connection pretty early in the build out don't get to you know you want to come to switch it on and think okay where's this BT box I need to connect to because it can take ages for such a small thing um and so these are mostly wired connections for Kraken is it or do you do 4G cards how does it work so there's a bit of both so our preference pref ER story is usually to have a direct line in reality it's not possible on all Sites so a 4G connection is is often used as well and what we tend to do on those sites is to add an additional 4G sim with a different network provider so that you've got some sort of redundancy if one of them goes down great okay so um coming back to assets for a second what are the differences between the assets that you connect to so a battery does not equal the same but all these battery assets are different we should do a calendar of these batteries one day but um they're all slightly different they all respond very differently you've got containerized systems out there you've got in 40 foot containers 20 foot containers separate inverters Integrated Systems loads of different ways that these assets can be configured and so if I was building an asset today and I knew that I wanted to use crack and flexor services in the future what what should I think about when I'm specifying this asset to make sure it's going to be a good asset for you to connect to so we need a fixed line a broadband connection um or a strong 4G connection yeah um what else do we need I think you've already kind of alluded to it thinking about the markets you want the asset to participate in so if it's Dynamic containment or if it's the balancing mechanism can you do that one Hertz operational metering and so for that you'll need the right meter likewise with Dynamic containment you'll need a 20 Hertz performance meter so have you got a frequency meter that can monitor frequency at 20 Hertz then also an active power meter that can actually report on your readings at 20 Hertz so 20 readings a second um there's a lot of data to be constantly sending out yeah yeah a huge volume of data compared to previous sort of markets and then the final thing is then looking at what else is on the site so do you need any sub metering so a lot of battery sites tend to put or later down the line line want to put electric vehicle charging or other assets behind the meter so thinking about do you have the right submetering and how is the site configured so that you can still deliver your DC response whilst also having other assets on the site that don't invalidate that response cracker Flex connects to all sorts of different types of assets right so you've got big uh big sexy big batteries that we love uh I I hear that the smaller ones are also very interesting so can you talk to us a little bit about behind the meter small assets highly different from the big ones and what's what's different on the technology in the technology realm yeah so in principle when we connect them it's the same in the sense that they all have the same level of safety security and reliability built into the site the difference though is that on a large site so take a 70 megawatt battery Farm or 100 10 megawatts of wind you would have more redundancy built in or resiliency built in so we would do additional frequency meters we would do additional industrial PCS just just so that if anything goes down you've got a backup when it comes to domestic sites or smaller sites so a few hundred kilowatts you might have a cloud to Cloud integration with the manufacturer and that just makes it more cost effective for the cus for the customer and also less less disruptive because you don't need to so cloud cloud does that mean that crack and flex is talking to say it's a we always don't want to use Tesla again let's use a different one um so you've got a byd battery in your house yeah and you so cracking Plex of having an API to byd's Cloud Server which would control the battery so you wouldn't be speaking directly to the battery you'd be going through the oems cloud service yeah which is which is great for kind of cutting the cost down and making it more scalable the only drawback that you might have is latency between the two card systems which means you might not be able to do a service like Dynamic containment okay and so these smaller so you talk to the um see there's more redundancy in bigger sites and um sometimes you won't put your own Hardware on the site I assume so you just control it all via an API how about these how about a performance are smaller assets do they perform worse than bigger assets because they're um I'm going to say something cheek here but cheaper of course there's a scaling cost but um how are they more difficult to get into answer these services are they more of a headache or are they easier um quite a loaded question yeah it is another question there's a few things so if you're a small site you'd need to be aggregated to get into an ancillary service Market which then means you need to be tested individually and also at a portfolio level and every time you then add in a new asset or drop it into that portfolio you have to retest the whole portfolio again so making sure that you've got a Time window blocked out to perform those tests with I mean if you think about electric vehicles you're talking about hundreds of electric vehicles that you would need to get to get to a megawatt to then be able to test so orchestrating that test is is difficult you also have the challenge that some of the inverters are not necessarily the same um they're not they haven't been set up to do Dynamic containment whereas if you're buying a large sort of 50 megawatt 70 megawatt site the containers you're buying have been made and spec'd out to be able to enter these markets so there's this different size to it yeah makes sense and um now we're going to get to the bit that we really want to talk about so um everybody knows Charlotte Johnson from um from some of the stuff you've been writing uh recently we are massive fans of the work that you've put out on LinkedIn and on your blogs um not only the work itself and the analysis which is awesome but the titles of some of these pieces um and one of them that we particularly liked recently was uh an imperfect storm with in in Brackets um about this winter and some of the stuff that you you talked about in that piece has really come to the front of everybody's attention since it's been written right so you you you talked about this winter being tough um for for that for our industry in lots of different ways and I wonder whether you could just talk through what that you know what that research involved and what your view is of the market now and that's just that's just let's just chat you through yeah so I originally wrote that I think it was end of September beginning of October time when there was so much going on in the media about the the crazy sort of volatile market prices that we were experiencing and I really wanted to sort of disaggregate or separate the difference between the extreme pricing that we saw in the first few weeks of September versus the kind of consistently sustained high prices of gas and electricity due to Rising commodity costs that we'd see in the whole year and I think that was kind of mixed I don't think the message was really delivered clearly and particularly not in the media with all the sort of noise that there was about what was going on what was the purpose of the piece yeah so the first few weeks of September the market prices on the day ahead market and the balancing mechanism were significantly higher than what they'd be in the rest of the year so I think the day ahead price reached a new record of over 2 500 pounds per megawatt hour and the balancing mechanism bids and offers were accepted over sort of four thousand pounds per megawatt hour which is insane right because it feels normal to us now in December recording this but I mean to everybody who's been everybody in the industry this is crazy right yeah and particularly when you think about like an average day ahead price which could be anywhere between sort of 40 to 50 pounds per megawatt hour four thousand pounds per megawatt hour in the BM or two thousand three thousand pounds per megawatt hour in the day ahead Market is a massive difference especially day ahead right because day ahead there's you know uh their head is of course day ahead uh no no uh no flies on me there but you um this there's so much longer after 24 hours ahead to usually 24 hours ahead you can take so many actions to bring the cost of that electricity down there's so many things you can do but because markets are so tight we were seeing just insane prices and what does this mean for everybody yeah well I think September was unique though in the sense that it wasn't we weren't into the winter months yet and we were still sort of coming out of summer so you had so many plants offline like the nuclear outages for summer maintenance and the same with sort of thermal generators as well so you had a huge volume of capacity that was missing off the system and our Market or our grid is so heavily reliant on gas so when no one else is around it's the gas generators that will have to set the price and we'll have to kind of step in and I think that's why we saw the kind of extreme pricing and it didn't help that wind was obviously unseasonably low during that three-week period um and very low I think it was like below two gigawatts and there's about over 20 gigawatts of wind installed so 10 of what is installed was obviously generating so we've got um so we've got unavailability of it is the perfect storm right so we've got the unavailability of plant we've got crazy high gas prices that um we don't yet even December recording this we can't see an end to that um and then power prices are mostly set by when the BM in many cases in the electricity Market power prices are set by the most expensive generator in many cases and in many and uh when there's when it's not very windy the power power price is set by gas generators anyway but especially when it's not very windy um it's set by gas in some cases coal which we saw some really high prices there there's Quack and flex control DSR because I've been thinking this is for this is perfect for DSR no and even some of these backup diesel generators that got capacity Market contracts and whatnot surely they should be running now and making an absolute killing I don't know whether that's actually happening in practice um but it's quite complex to do DSR too yeah so we do have a growing portfolio of DSR customers that are all sort of on the cni side um so that kind of encompasses industrial heat pumps sort of factory lines that you can turn down um Refrigeration HVAC systems and then some backup generation I guess if you're if you're a plant that produces stuff in the UK and that that requires a lot of energy you are basically doing DSR whether you like it or not because every day you're looking at your electricity bill and you're going holy smokes what can we turn off to save electricity which is basically DSR without an aggregator anyway we digress so what um the imperfect storm this winter craziness across the board what does this mean for flexible assets and what's the opportunity out there it's a huge opportunity for providers that have got dispatchable Technologies or flexible assets like you said because if you have a battery you can obviously discharge into those kind of peak prices whether it's day ahead or you can um opt to enter into the VM and the same with sort of gas generation as well a lot of gas generators were holding back capacity on the day ahead Market in the hope that they would be successful in develop in the balancing mechanism yeah I mean gas I mean speakers right now after so many years so many peakers got built they were developed and got built in sort of the 2017-18 1920 and then everyone said oh we don't want peakers anymore we only want batteries which is uh of course we're battery Enthusiast so that's great um but now have your own pikas um despite you know Peak evaluations this year went really low and nobody wanted to touch speakers because they were dirty gas and then of course peakers are now running are making an absolute killing um so uh just very very interesting we do need some sort of peaking generation out there and there is a big opportunity for it and then how did it so the input come back to imperfect storm I'm just wandering around this conversation of knocking on doors and um just going crazy so imperfect storm how did you finish because you did if I remember correctly there was scenario analysis um does that was that your own forecast or was that the Kraken Flex forecast or you know how did the scenario analysis work and what was the outcome yeah so I think it was a combination of some of the historic things we saw in the market so we looked at how much generators were making um I think for September it was sort of double what they'd made in previous months and likewise for Batteries what what a battery could have made or what their opportunity would have been during those sort of weeks but really it was looking forward to um looking at National Goods winter Outlook which looked at the d-rated margins and trying to see what's the probability or what's the chance that we're going to see those extreme prices that we saw in September again in the winter months and so I don't know if you saw National Grid's winter Outlook but they basically said that the derated margin was going to be between three to four gigawatts and the G-rated margin is just basically used to illustrate any excess capacity above the underlying demand so pick the man they're saying when everybody does it when Corey's on everyone's make using it using a kettle no uh Peak demand um on a weekday uh tried period usually um there's gonna be X gigawatts of Demand on the system and we at National Grid we think we've got three or four gigawatts on top spare capacity is that what they're saying that's quite frightening and so um what's the what's what's the normal number for the racing Market well it's still higher than what we saw in September September was below sort of two gigawatts so it's not too far off what we usually see in Winter I think the lowest that we've had in winter in the past five years has been slightly below three gigawatts um but the fact that it's three to four is is above the is above the lowest so not the highest but not the lowest okay still though um my basic mind that still I mean a big nuclear plant is uh not far off that you know uh if we say we had a trip um so um quite quite worrying of course there's other things they can do there's other things that I suppose we had a capacity Market event a classic Market this week uh or last week which was rather exciting um do you think we're gonna have a capacity Market event soon we're all very excited to finally have a capacity Market event is it going to happen probably likely that it's going to happen it's just whether or not it actually turns into a capacity Market event it is another thing because the market tends to be quite good at responding and we saw that last year I think there was was a six electricity margin notices and a few kind of capacity Market notices but nothing really resulted in a capacity Market event um it's quite rare that we sort of get to that point because we've got a market that's very responsive although sensitive it's very responsive to events that are happening yeah I mean um not that we it just it would be interesting to see how much actually cut you know in the actual capacity Market event yeah how much capacity could actually switch on for it um I don't know what are you working on at the moment is there a new piece coming out should we um yes there is a new one okay yeah so I'll do so I don't know if you saw the one I did last year sort of a year in review of 2020. I think it was called The Good The Bad and The covet um I'll do a repeat this year not not the same title I need a new I need a new title like Spotify on wrap but um okay cool but yeah looking at the highs and lows of that have happened this year for 2021 and so for anyone who's listening or watching so you can find inshallah how do people follow you and your work how what should I do follow you on LinkedIn are you uh just how do we do that yeah so I have a medium account um which I put all my blogs on and then also LinkedIn okay awesome and do do that because um you'll learn a lot so um I just want to say Charlotte thanks so much for coming on um it's been awesome and um we really look forward to hopefully having you back in the motor offices sometime soon and everybody is watching listening do follow Charlotte um can I ask you can they send you a DM and ask any questions yeah of course yeah um yeah and see you next time thanks very much thank you [Music]
2023-04-05