The Future of Smart Home Energy - panel session

By Pilgrim - February 25, 2021

Veteran energy reporter Mike Scott (Financial Times, Forbes, Reuters, Bloomberg) hosts a panel session on the Future of Smart Home Energy with panellists Dr Sarah Darby (Associate Professor at Oxford University's Environmental Change Institute), Jacob Briggs (Cornwall Insight), Benjamin Kott (CEO of BP Lightsource Labs), Neil Steward (CEO of Glen Dimplex), Phil Steele (Future Technology Evangelist at Octopus Energy) and Pilgrim Beart (CEO of DevicePilot). 

The panel spent a fascinating hour discussing topics as wide-ranging as new technologies, human factors, lessons of history, connecting-up the siloes, the battle of the gateways, network effects, intermittency, agile tariffs, APIs, financing and more.

Watch the video below, or read the full transcript.

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Good morning everyone and welcome to this webinar on the future of Smart Home Energy, hosted by DevicePilot.

We will be looking - as the title suggests - at the key technologies that will make homes smarter in future: What that involves, what the key barriers are, and the key measures we can can take to roll them out. I will introduce the panellists and then we will dive straight in:

  • Pilgrim Beart, CEO and co-founder of DevicePilot, the world's leading IoT Service Management platform (I would say that because it's their webinar!) which works with companies including Pod Point - an EV charging provider - and the Dutch utility Eneco. Pilgrim has more than 30 years experience in the tech industry, including working in 3 Silicon Valley startups and then coming back to the UK and becoming a serial entrepreneur.
  • We also have Jacob Briggs, a senior consulting analyst at Cornwall Insight, where his area of expertise is the domestic retail market. And before moving to Cornwall he founded the Norwich Food Hub, which he still runs today.
  • We also have Dr Sarah Darby the associate professor and acting leader of the energy program at the Environmental Change Institute at Oxford University, where she works on the introduction of smart devices to electricity systems and the potential for demand-side response in systems integrating renewable energy into supplies and affecting patterns of demand.
  • Neil Stewart is the CEO of Glen Dimplex, a company he's worked at for more than 20 years and obviously seen a huge period of change during that time.
  • Benjamin Kott is CEO of Lightsource Labs at BP and also a member of the BBC's sustainability advisory panel, and before that he was the clean energy principal at Google, and founded Fabriq, an IoT platform for energy resource and smart building data.
  • And finally Phil Steele is Future Technologies Evangelist at Octopus Energy, a role he moved into after Octopus bought his previous company NCube, a smart home platform.
So having done those introductions, I'll dive straight in to the questions. I'll start with you Pilgrim - what do you see as the key technologies in the future of home energy?

Pilgrim: Thanks Mike - that's very broad question! In the context of the UK, homes are really important, especially during COVID. About 30% of all UK energy is used in homes - not just electricity but all energy. Something like 65% of that is gas, mainly used for heating. We know gas boilers are going to be banned in new-build from 2025. Electrification is going to make homes even more important to the UK, because we're going to see the arrival of new forms of production (PV), consumption (EV) and possibly storage in the shape of batteries and heat stores. I'm interested in technologies that are good for individuals, good for society and good for climate change - not just because all those things are nice warm fuzzy things, but because when all those forces are aligned then stuff really happens quickly.

Just thinking about technology in general, there are two types of technology really:

  • There's the the heavy lifting laws of physics technology things like insulation (which by the way we really need to do a lot more of), and batteries and heat stores and that kind of thing.
  • And then there's technology to add intelligence - that could be things like increasing efficiency, you know don't heat your home when you're not in it (if you can remember what that was like before COVID!), or increasing the "sociability", so things like demand response and so on.

Technologies have a couple of interesting properties:

  • They have learning curves so as they hit price parity then they can get adopted very quickly
  • They also have stepping stones so often it's hard to do one technology until you've done some precursor technology

So if we're talking about a five-year horizon, then heating technologies have got to be really high up on the list. And embedded intelligence within devices too, but also connected intelligence - connecting devices to the internet. And particularly in that regard Smart Meters are interesting: We're now more than 10 years into our Smart Meter rollout in the UK, we've now got about 10 million Smart Meters live, and it feels like they're about to hit their stride.

Mike: And what will that mean when when they do hit their stride? What will that enable, that we don't have at the moment?

Pilgrim: I've got some thoughts, but I'd be interested in other people's thoughts as well about that.

Mike: Does anyone else want to dive in on that? And did Pilgrim miss any any vital technologies?

Phil: I can answer from an Octopus point of view. With Smart Meters there's something like 10 million meters now on the DCC - that's the government's central system, SMETS2 as we call them, although some of the SMETS1 meters have got enrolled on DCC as well. And of course what that allows us to do is really interesting tariffs, like our Agile tariff and our Go and Go Faster tariffs, and the Tesla tariffs. And what we're seeing is that that is engaging customers in how energy is being generated, and the time of day that they're consuming it, and how green that energy is. So if you take the peak period of four till seven pm in the evening, that's typically when there's high demand on the grid, and therefore more than 50% of our electricity is coming from gas generators, whereas the rest of the day there's probably a higher level of wind (like the wind generator behind me), or from solar generation when we get back up to sunny days, and those Time of Use tariffs are starting to engage consumers in understanding that sort of thing, and that's only possible at the moment through Smart Meters and through that infrastructure.

Mike: Dr Darby, I'm going to come to you next and ask you what you see as the most significant technology in the home energy market over the next five years? What sort of penetration might we get of that technology? What are the key barriers to it? And does it then cause knock-on, second-order issues that we need to address as well?

Sarah: I suppose if I were just picking out one technology, it would still have to be the Smart Meter, because that's the precursor that helps make sense of all the others. The rollout has been quite a lot slower than was anticipated - and indeed there are plenty of people out there who will criticize aspects of it, and there is plenty that you could criticize - but I'd say it's worked as well as it has partly because there's been a good deal of attention paid to the interface between the people who use the Smart Meters and the Smart Meters themselves. So whenever I get the chance I bang on about how our Smart Meter rollout actually has three elements to it:

  1. It's putting the meter in
  2. It's the customer interface that everyone can have, who wants it - the In-Home Display - which is actually what a majority of customers really think about, when they think about the Smart Meter
  3. There's also the trained installer, because the Code of Practice requires all the installers to have basic communication skills training and to be able to give basic energy efficiency advice.

And certainly it's shown that the customers who had a good experience at installation, and have some kind of relationship with the Smart Meter, and understand how their display works - they're the people who say they're getting the most benefit from it. So it's it's not just about rolling out the technology, it's rolling out the knowledge and giving people a good experience at installation that's making the difference there.

Mike: Pilgrim said we're it feels like we're at a tipping point and the Smart Meter program has come in for a certain amount of criticism over the years, do you think that we're we're over any teething problems and the expansion of the program is not just going to be about those sheer numbers, but about what we've already learned that will give us added benefits, that will help the whole program to work better?

Sarah: That does seem to be the case, yes, and it's also been a part of the program that there's been evaluation done on it, year on year, on a scale that is very unusual, I think, worldwide. Indeed, if you just look at the the raw, basic figures for the savings made, the customer savings which were part of the original business plan in the first year or two, these were I think about 2% for electricity, 1.5% for gas, compared with legacy meter customers. And that has risen over time, so it does show that there is a whole process of learning taking place. So now the most effective rollouts that are going on, where the most care is being taken, we're looking at figures between 3% and 4% savings now. So there does seem to be this overall learning that's taking place.

Mike: OK, I'll move on to Neil now. You've been working in a sector that has traditionally not been connected at all - you sold individual devices and that was that, I guess. How's connectivity changing what what you do, and what you sell? And how will will that evolve over the next five years?

Neil: Thanks Mike. We talk about the three Ds, which is Digitization, Decarbonization and Decentralization. We've seen our industry move within the last three to four years, but it's been a journey that probably started 10 to 15 years ago, certainly from an electrical device point of view. We're looking at - as you said earlier - replacing fossil fuel boilers with electrically-driven devices such as heat pumps and energy stores and other thermal devices, and digitization has already happened, and every product that is sold today in the market has that electronic control capability, which is vitally important.

I think Sarah's point was very interesting about the impact of Smart Meters. Up until now, a lot of it the benefit from Smart Meters has been driven by consumer behaviour, where people are given information through their In-Home Displays and take a a proactive decision to switch devices on and off. My personal view is the real benefit has not yet happened, and that is when devices automatically switch on and off in response to signals from the energy system, and that is when you will get substantial improvements in the decarbonization of the grid, but also in the energy efficiency and the running cost for consumers.

Optimization of charging of electric vehicles is obvious, but actually the same logic applies to heating, particularly hot water which can be stored in a vessel, but also space heating which can be stored in a thermal storage type heating device. Or where we phase the heating through the day at appropriate times to buffer the system. So I think that my summary point would be that the Smart Meter enables an automated response, and companies like mine are investing heavily in having that on-board intelligence to make sure the appliances continue to provide the utility that the customer wants, without the customer having to really do anything other than set the temperature and time.

And these benefits that you talk about, are they here already, in terms of the the overall network effect? I mean, clearly you say the technology's there, but are the devices that are in homes already enough to make a significant difference? Or do we need that further roll out? I think the devices need to be upgraded and made Smart for sure, and that will happen progressively over time. The typical life of a heating system could be 15 or 20 years, so it's not it's unrealistic to expect people to replace a relatively new system. But I think if you take you know 27 million homes in the UK, and a 20-year life, then you're going to have to replace 1.3 to 1.5 million heating systems per year just through the normal upgrading of old systems. And we need to make sure that as many of those as possible are Smart into the future.

I think the industry is ready to do that. A missing link is probably joining up the energy market with the delivery of utility through these devices, so flexible tariffs are talked about a lot - and I'll be interested in the views from Octopus on this - but in terms of the consumer actually being able to take advantage of a Time of Use tariff, or a flexible daily tariff, there's very little evidence of that actually being deployed in the market yet. That will be a key enabler to unlock the value for the consumer.

Mile: So Phil, what's that about then? Is that to do with consumer resistance or unfamiliarity, or do we need some kind of government intervention to either make it easier for customers to do?

Phil: We've got enough government regulations in the energy industry I believe. Look at what Octopus is - we're incredibly entrepreneurial and experimenting with a lot of different technologies and things that we're doing with tariffs. I've explained about the Agile tariff, because that's what Neil was touching-on there. We haven't really released the numbers, but there's tens of thousands of customers on our Smart tariffs:  the Agile import, Agile export, Go, Go Faster, Tesla and so on. There's probably a lot more that we'll do over the next few weeks, months, years as well. If you look on Twitter and in the Facebook groups, you'll often see customers are sharing screenshots of their Agile statements showing the average pence per kilowatt hour that they're achieving, often below even 10 or 12 pence per kilowatt hour, compared to a flat rate tariff of about 15-16 pence.

Recently over the past couple of months or so, the wholesale market has been pretty high, which has had a knock-on effect on the Agile tariff and we've seen it quite often hit the 35-pence peak price that we cap at, between 4pm and 7pm. Some customers have moved, naturally, onto the Go tariff instead, but a lot of customers have stayed with it - and if they've got some EV charging, or they've got home battery storage systems, or they're using smart hot water systems, then they're still able to use the off-peak energy overnight and through mid-morning. Now this time of day actually it's a good time as well, and it's still getting their average price down below normal flat rate tariff even with that 35p peak between 4 and 7 pm.

So it is it is working and the customers are super engaged, but it's a small number of customers, and I think part of that reason perhaps is that kind of element of fear perhaps - that you see those 35p periods and wonder "Can I avoid that, and what technology do I need?". Because its a tariff that's calculated every day (published at 4pm from the wholesale market), there's this kind of "what's it going to be like tomorrow?". The general pattern is the same - there's a peak in the first thing in the morning between eight and eight and ten or so drops down goes quite low around about half past three and it will spike then at four to seven - so you can still follow the general pattern.

We've published an API, and that's been there for at least two years on the the actual tariff. There's a lot of customers and partners that have integrated to that API, to start to try and automate things, and we see lots of really interesting tech and there's products like Climote that's a hot water tank control device - we're working with them, and looking at how you can take the Agile price and say, well, "Let's warm the hot water only the amount you need, a percentage level, against the best rates", so I've got hot water when I actually need it, rather than arbitrarily programming my hot water controller from 4 pm because I want it hot by 8 pm for children's showers and baths.

The intelligence is starting to appear - we're doing it now.

Mike: OK, Moving on now to a question for Ben. Clearly the the whole energy system is becoming a lot more renewable now, and that will only increase over time - what's driving what though? Is the technology driving a shift to more renewable energy, or are the renewables driving a shift in that technology?

Ben: That's a really interesting question. I think it's changed in the last just few years. You see solar solar PV, which is what obviously what BP Lightsource our mother company does - they're driving the solar revolution as it were. Solar is the cheapest form of electricity now, so that has changed dramatically in the last few years. One of my first solar projects was probably some 10 years ago with Google, we did 20 megawatt in Germany, it was considered one of the largest plants at the time, with KFW funding. Today this is the kind of stuff that Lightsource BP does before breakfast you know - the plant size is 100 megawatt and bigger, and we have a bigger two gigawatt under management and moving towards 20 gigawatt plus, in a number of years and not decades.

So it's quite dramatic how that how that has changed, and that of course brings intermittency, flexibility into the grid, which then needs to be managed, and then off-takers can be companies like ourselves, so with with Labs we have the technology (I prepared one earlier [waves box]) that can can enable smartness and turn a home smart. And as Phil said earlier, charge batteries, charge EV's, charge hot water in the tanks. And you'll see much more grid-level battery storage and so on, which is now needed in order to take excess capacity from the grid and manage that.

I think if you look back 10 years ago it was a lot of technology looking for problems to solve - I've been there and I've had one myself, and I've been banging that drum for a long, long time without massive scale behind it, let's face it. And in the last few years - and especially post COVID, as we're coming out of this, this has changed dramatically - there's just no no way back now, on every level.

Mike: You mentioned intermittency, and also technology looking for problems to solve, and over the last two decades intermittency has been very much seen as a problem. Are we - with all of the technology that we have - now getting to a situation where it can be an opportunity as well? Maybe others want to come in on this too.

Ben: Yes, I think we definitely are, we have the technologies to make it happen today - from storage to smart sensors to devices, and so on. I think it's connecting the dots as I always say, bringing that together at scale and also funding that infrastructure to make it happen because that - in its nature - is then going to be distributed in certain sense of the off-take. Thinking of funding schemes and so on, that's also happening now because capital markets are coming around and seeing there's a big opportunity - there's funding in in orders of magnitude that weren't possible before.

Mike: It would be would be great to hear others' experiences?

Sarah: Yes, I think it's important to realize we don't have to do everything at once, and there are there are priorities here. The big users: water heating, the easiest of the lot probably, socially and technically. Electric vehicles. Space heating itself. We've got about eight times as much storage in our storage heaters in this country as we have in pumped storage for example. So there's there is a lot out there that can be addressed relatively early on, and where quite a lot of the ground work has been done already.

Pilgrim: Storage is an interesting example of one of those things which is good for the individual and good for society and good for the climate isn't it? Because it, you know, from a selfish perspective it lets you take advantage of agile tariffs and whatever, but then it also helps to stabilize the grid, so it kind of has that lovely win-win sort of quality to it.

Sarah: Yes, and I think getting a good dialogue going with network operators on these big ones seems like a priority too. I was on an advisory group about developing a standard for smart home appliances, and one thing that did seem to be missing there was a good dialogue with the network operators. It's important to get all the technical specifications right and so on, but there is the question of "How are the network operators going to be able to work with this?". Because quite often they're addressing quite localized problems. We're working on a project at the moment, at Local Energy Oxfordshire. We've identified specific areas around particular substations which are going to be facing constraint issues for various reasons in the fairly near, future and that's where we really want to get the connectivity established with things like supermarket freezers, with areas where there's a lot of storage heating, with areas where there may be a lot of electric vehicles or a lot of heat pumps soon, and get established and a way of managing all that.

Mike: And presumably homes will have a role to play in this as well, once everyone's connected you can aggregate-up that.

Sarah: Yes indeed. As has been said already, it's quite a challenge really getting the market going for that, because people need to have some kind of confidence that their flexibility is going to have value, in order to bid their assets into a market, but the market is finding it hard to get going without being able to test this out with with those assets.

Mike: So Neil is this an area where - just coming back a little bit to the whole storage thing - do you see yourself as moving from selling heating products to energy storage products?

Neil: Storage heaters in the UK context are very much an old technology which were designed in the 60s and 70s to keep large thermal plant running at night. Actually they lend themselves very readily to this new Smart world, because you can decouple supply of energy to the home from the time at which the consumer wants to have comfort. So we have upgraded our own particular range of of products, with a new brand called Quantum which is all about that smart energy storage piece.

I just wanted to give you an example. We were engaged in a project in Germany which is very exciting at the moment, where we brought together an energy service provider, a utility player, a housing provider and an investor, and with a 15-year horizon we have come up with a mechanism whereby we can completely replace the heating system, based on thermal storage heaters in someone's home, fully funded at zero capital cost to the consumer. And that is based on a 15-year payback model, generating sufficient return for the investment company. So I think it's important to recognize that these things do pay back, but you need to take a longer term view than the normal consumer five to seven year bank loan type scenario - it's a 10 to 15 year payback, but it genuinely drives this decarbonization that society needs. I think we need that bringing together of the different players in the value chain to unlock the opportunity, and it's a tremendous project that we just kicked off in Germany.

Mike: It does sound fascinating and it highlights that it's not just the the infrastructure that Ben was talking about - the physical infrastructure - but you need a certain amount of financial infrastructure in place to to bring these things about as well. I'm going to bring Jacob in now and ask: How have utilities had to change their business models as a result of of the shift to renewables? And are we seeing one single winner emerge in renewable technologies, or do we still need a a mix of technologies?

Jacob: That's definitely an interesting question! To focus on energy utilities from the supply perspective, like the domestic supplier perspective, yes there's definitely material change, and a kind of conversation between operating a business model as an incumbent energy supplier that's lean and efficient today, versus being able to focus on delivering against the opportunities that the Smart Home energy landscape presents that we're talking about around delivering a tariff delivering an electric vehicle focused product, or an all-in-home automation service. Octopus are an example, this is not a challenge that's insurmountable and can't be sold, and there's plenty of other suppliers that are examples. But I do think that being able to deliver on both of those areas can be a challenge for some of those parties, and that it's definitely there at the moment in the market in terms of whether there's one single winner emerging on that supply side. I think yes, there's kind of consolidation in the retail market, but I think we're a long way from being back to the kind of like 90% market share held by a handful of parties that we were at 10 years ago. So no, I don't think that's true.

I think part of that is that there's enough excitement, opportunity and uncertainty around what that future landscape looks like. I saw one of the questions in the chat over what the role of a consumer would be in the smart home energy world - are they expected to be actively engaged, either the archetypal innovative Octopus customer that Phil was laying out, or - to be honest - probably the bracket I would fall in, of somebody that is enthusiastic and engaged for about a week and then forgets about it, switches off and just hopes that it's kind of dealt with in the background for me. I would be very surprised if there was one universal answer to that question about how people are going to behave. I think that leaves space for a lot of different options and we're a long way from knowing even what that energy utility, just on the supply side let alone to build in the access to generation or network side looks like, in that home energy landscape.

Potentially there's a structurally very different energy supply world and therefore home energy landscape for customers in five years time compared to what we see today, which brings with it a wealth of new "pies" that people could be interacting with. I've seen a glimpse of what that looks like with something like EV Energy, who are a home energy management/EV charging optimization platform. There are lots of things, but domestic charging is an example. The other week they took domestic EV charging into the balancing mechanism, so basically rewarding customers for providing flexibility services to the grid. They're able to do that at the moment without having to actually directly interface with that household supplier, and I think that opening up of the concentrated supply model that we've got today brings with it potentially a lot of change, that means I wouldn't want to be naming and picking a single winner for that transition.

Mike: It seems that that idea of householders not having to think too much about this, but for it all to happen automatically, is the key to getting real traction?

Jacob: Yes, most people aren't that engaged, definitely, and I think for the energy market in particular where there has been a very specific and tight definition of engagement - meaning switching your supplier once a year - I think that is not really compatible with what engagement looks like in that kind of future of a Smart Home Energy world. I could argue that I've been incredibly actively engaged in picking the home automation provider that I go with once, and I've been lucky and made a successful decision there and haven't had to engage again by swapping them out each year. So I think that quite what active engagement looks is definitely something that's changing in the market.

Mike: A quick question for Dr Darby about connectivity and the grid: How does connectivity affect the grid at the moment, and how do we think that that will change?

Sarah: Sorry, how do you mean?

Mike: Well, if you've got all of these homes joined up and communicating with the network, then how does that help or hinder? Presumably it helps, but how does it change the relationship with the network, and how does that help the transmission and
distribution network operators?

Sarah: This is a bit of an indirect answer probably, but we've got to look at the connectivity taking quite a lot of different forms and rethinking that. We need to think more about the local networks particularly, and what's happening there. It's about what appliances are connected up, and also about the people and the actors that are involved in managing that relationship between people and the grid. So that will now include aggregators, it'll include the people who keep the network informed about new forms of demand and new forms of supply that's going on the grid. Sorry, I'm not answering your question.

Mile: You talked about this project in Oxfordshire - does that suggest that this primarily is a local problem rather than a network-wide issue, that you need to deal with local changes in demand - that's more important than any kind of aggregated overall effect that there might be.

Sarah: I think often the most pressing issues facing the network are the grid are not so much at transmission grid level, they're at network level, because there's such a lot more distributed supply on now, and because the patterns of demand are changing quite rapidly. So it's very important to be building up experience in that area because it's going to be increasingly important in the next decade or so.

Mike: And presumably lessons learned from projects such as the Oxfordshire one will provide real, useful information for other areas?

Sarah: Yes, I think it's hard to over-stress the importance of doing demonstration projects. They take a lot of courage, you know they're hard work, they involve lots and lots of interactions and complications and so on, but they're just so valuable, because if you look at the research literature it's just staggering the number of papers there are out there that that are based on desk work and models, compared with the findings that we actually have from testing out these technologies in real life conditions, and you learn such a lot from that.

Mikie: Thank you very much. So we're going to move on now and look at the idea of "silos". Pilgrim, can you just explain a little bit about what that means, and how that translates into the the idea of a Smart Home?

Pilgrim: Yes, I'm really enjoying this discussion, it's fascinating to have so many insights from different perspectives. The idea of silos really is this: I've been involved in innovation in a number of different markets, and you tend to notice that early-on in a market the early players to the market have to do everything themselves - because there's no one else to work with. And the net result of that is often that things end up being quite siloed, and over time that's not the best solution for everyone. Then what you want is the silos to join up into an ecosystem.

So just to "riff" on some of the things that the people have been talking about... My previous company AlertMe - where we built what became Hive from British Gas - was one of the first Smart Home platforms in the UK. We realized that there were really three steps - I think Neil already touched on this. So the first thing is, you can give people information about what's going on with the energy in their home, well that's good and that might be actionable. But then you also need to give them control so they can change that number and make it better. But if you stop there, then you've left them "in the loop" - you've left them with the management overhead which they may not have the interest or the time or the knowledge to do. So you have to take the third step which is around automation, to close the loop, and that can give individual users reliability but also - as various people have said - it gives the wider grid potentially resilience and adaptivity.

So if you think about the kind of home of an Early Adopter today - and I think that's partly what we're talking about here is moving from the Early Adopters to the Mainstream - if you look at an Early Adopter's home today: When should you charge your car? When should you heat your hot water? The answer is dependent on multiple inputs. Sure, if you've got an agile tariff that's an important one, but also "is the sun shining on your PV?" is another input. As Neil said, because heating's so laggy you probably need to predict things as well - maybe predict energy prices, predict the weather, that's another source of input.

So we've got lots of sources of input, lots of "signals" if you like that are coming on stream, and we've got an increasing number of things that we can control to take action. So I think this idea of joining-up the silos is going to be trying to put those things together - you know, if if you've got a washing machine or tumble dryer in your home - some conventional thing that we're all familiar with - when should it run? How should it know when to run? It's just quite a simple question, but you only have to walk around your house after a power cut and look at all the flashing "12:00"s to see that there are a lot of devices that have intelligence in them, but local intelligence isn't very intelligent. You have to start joining things up for the intelligence to actually be useful. As we've already touched on, that joining-up will start to happen within the home, but it's also between the home and the rest of the world: generation, forecasting and so on.

Something we used to talk about at AlertMe was the "Battle of the gateways" - there's quite an interesting kind of dynamic going on I think about "who owns the customer?". That was quite helpful for us at AlertMe when - as Ben will remember - Google came into the market with Nest, that was extremely helpful to us, because our biggest customer British Gas looked at that and saw a massive threat that Google would interpose itself as the main owner of the relationship, the main controller of energy in the home, and relegate utilities to a very minor bit part. I think the discussion that Jacob raised about the relationships with different vendors [was interesting] - we may have multiple relationships with multiple vendors around all these services, and I think there's an interesting "Battle of the gateways" shaping up again around who will be the primary relationship that sort of controls all the others in the eyes of the consumer.

Just one final thought: Sarah was talking about the various Oxford experiments, and we were involved in one in 2015 in Oxford with Moixa the battery storage people. They've got a really nice social housing estate there with a couple of hundred houses which have PV and battery storage, so quite an early experiment at a good scale. And what we were looking at with them was sharing energy locally within the housing estate. And the really interesting insight from that - which was not obvious to me until we did it - was that with a lot of energy interventions you're trying to get everyone to do the same thing: so with energy efficiency you want everyone to do the same thing, you want everyone to insulate their homes, you want everyone to use electricity off-peak or whatever. But actually what we discovered within this idea of sharing energy locally within the housing estate, is actually you want diversity. You want people that are doing things that other people aren't doing. So if you've got maybe a retired elderly couple cooking their lunch at noon, you also want to have some houses where everyone's out to work, and the sun's shining on their panels and they're producing net energy to help power that cooker. So I suppose the insight there for me was that a healthy ecosystem has a lot of diversity within it, and that's true not just at a housing-association level but the whole ecosystem of the country.

So just some thoughts there, about about how these individual silos of connected devices - the Smart Meters, the EVs and so on are going to start to to join up.

Ben: Pilgrim mentioned Google and I couldn't resist. This is interesting because - you and I Pilgrim, we first met some 15 years ago when you were a launch customer of Google Power Meter. At the time that was something where you said "That's a good idea, probably 10 years ahead of its time," and they're still not not getting it right. Nest have a few million thermostats out in the market - I have one, it's Nest or Hive now, but they're not exactly breaking the mould here and and taking over. People continue to ask me "Are you scared of Google?" I'm like: "Not really, not yet, because energy is just too complicated, there's too many gateways, there's not one standard to rule them all, we all know that." Once it's all http-based it's going to be a different story, but not for the next few years.

I just wanted to just address a couple of points that were make made - to Neil's point earlier, we've been struggling to make our business model work with Labs, with the home energy management system on a 2-3 year horizon you just about have payback, it doesn't really work at that level, still costs a few hundred bucks. But if you look at it with a ten year horizon, together with battery and solar, then it can really work, and there's a good business model in this for everybody involved, starting with the homeowner savings to the utility, to the grid operator and so on, and that's what we're pursuing now.

To Jacob's point and the question here by Phil Claridge, "Will people look at it for more than a week or three months?". The answer is no! And they never have, and that was the problem 10 years ago with Smart Meter rollout with the consumer devices, with Power Meter 15 years ago, it just doesn't work at that level - you need something that is able to connect those dots, and to do it automatically, because there's just so much information it's impossible for a single human to monitor this and to optimize this, even if they checked it every half hour, because it is now operating at minute level, at second level. You know, the is sun shining, not shining, grid events and so on. So you need a device, or a connection or a brain to do this in an automated fashion. And I think Smart Meter helps, but you need to really have that technology in the home, and I think it's really coming together and starting now. Just the five or six of us here on the panel can really can really make that work.

Mike: I want to bring in Neil, because Pilgrim talked about these various levels that this works on, so at the home level, and with your products, is this idea of silos useful to you Neil as a company, and does it help you to plot a route forward for the future?

Neil: We've been involved in numerous different demonstrator projects over the years - Sarah will be smiling at this - but we have engaged to try to deal with the silo issue with players from lots of different sectors. Our project in Germany that I mentioned earlier is probably a good example of that. I think my point is slightly different, which is that we need to remember this is all about electrification in this conversation, and at a macro scale what the UK is doing is pumping a huge investment into offshore wind generation. I think the latest number is a 40 gigawatt of wind capacity offshore, on a grid which currently consumes about that at a maximum. So the big question is "How do you use 40 gigawatts of intermittent wind generation, on a 40 gigawatt grid?" and we're talking here about small scale individual homes, and the order of magnitude of difference between the two is vast. So the only way you're going to be able to make this system work in the future is if you have a coordinated, collective approach to it. And the demand side management future model will be all about trying to cope with this new generation situation we face. BP LightSource is the same - massive assets under control in terms of solar generation as well.

So we're saying in terms of the silo debate is how you join up from massive generation capability at one end, down to the individual home at the other in a combined way - and the grid always has to balance. So my final point is that there's a market for system services in the UK, which is how basically how national grid keeps the 50 hertz frequency in balance, and that's about managing supply and demand at all times. In the past that's always done by having fossil fuel generators idling in the background and ready to switch on and switch off on demand. In future it's going to be all about aggregated demand doing the same thing, and keeping the frequency at 50 hertz and that'll be - you can't allow consumers control over that, you actually have to take that - to some extent - away from them, and the siloed approach won't work, otherwise the grid will collapse. So these are big, big issues for the country, and we as appliance manufacturers simply watch and learn, and try to make sure the technology that we're developing is going to be relevant to that future world.

Mike: So Phil, is that where a company like Octopus comes in - do you have a role to play, with the products you offer and how you tailor them, do you have - to a certain extent - you're offering them to the consumer, but do you have to have an eye on the networks as well, and is that actually something you can monetize?

Phil: Yes, I was going to come back on Pilgrim's point about diversity, but I can answer that question as well. One of our businesses is Upside, which is the flexibility market platform, and so that is working with DNOs and National Grid, where there is flexibility markets whether that's grid frequency response, and you'll see Debrin the CEO of Upside, and his team, he tweets every now and then when we balance frequency with large-scale battery deployments.

Just going on to the diversity point as well, which kind of affects that as well, with our Go tariff, it has a 5p rate between half midnight and half four in the morning, and is aimed at electric vehicle chargers. As Pilgrim was saying with that example of portfolio properties, they're all doing the same thing at the same time, you create a different issue and that's what happens is you get a whole load of EVs chargers all light-up at half past midnight. So we ran a trial over the last year with UKPN, it's called Shift, and we created a tariff called Go Faster and under that we offer customers "would you want a 8:30pm or a 9:30pm or a 10:30pm through 2am-3am start, and do you want a three, four or five hour version, with a slightly different price, half a pence below and above the old Go rate?". But the twist in the tariff was that we said "Apply for which start time you want and the duration you want, but actually you may not get it, and we may have to give you one an hour earlier, or an hour later, depending on availability". We made it kind of an "availability tariff", and we also shuffle the deck and allocate you a different tariff, and I ran the algorithm to shuffle them. From time to time, we let customers agree that they were going to change another tariff, but still 80-90% actually did agree and had no issue, they understood what we were trying to achieve with that intelligent type of tariff, that was trying to smooth out the load.

If you do a search for the UKPN Shift report (and other energy suppliers and other technologies took part in that program as well last year), there's a really interesting write-up, and the analysis as to the outcomes of that just sets the direction. You can say, well, customers are open to responding with clever tariffs and intelligence, and how devices might be connected. Because we have an API of all the tariffs, and there are lots of devices and systems that are now attached to that. There's still a long way to go, and there's some questions here about the fragmentation of the connectivity of the devices, and there's no standard APIs, but there's plenty of innovation going on there and it will it will come. I'd rather not have the government through say Smart Meters start trying to mandate that all EV charges are smart, go through the DCC Smart Meter infrastructure - there's plans and ideas to do that, but let the market, let the innovators create these - it's still really early in this space at the moment.

Mike: Jacob, can I bring you in now - what does this mean for the average customer, and how how they interact with with their power bill? At the moment you use your energy, you get a bill, you pay it. Is that going to change, are customers going to have to become a bit more proactive? Will they have that choice? Or not have to? Will it look completely different?

Jacob: In terms of "will it have to fundamentally change?", given the pace of change that we've seen historically in the energy market, I'd be reluctant to say that in a couple of years everybody's energy experience is going to be radically different. But that does definitely touch on a really interesting point around: do you have to engage and say be settled/billed on that half hourly price basis, for this transition to be like successful, or to be participating in it? I would hope not. I'd be surprised if there isn't an enduring role for translating that half hourly variability and price into a flat-rate, fixed-price tariff for people to be on if they if they want. I think there's a lot of value for that as a potential household customer, in being on a predictable tariff, but one that you're kind of used to.

Does that mean that household or that person can't be involved in some of the smart interesting flex opportunities that we've talked about? No, I don't think so. There's nothing to say that that same property that's on a flat rate tariff for its house can't also then have the energy management service provider taking the demand, or the capacity out of its electrified heating system, or it's going to be into balancing services providing a reward into that customer for doing so, but not keeping a greater share of that themselves in exchange for translating it into something that's flat and stable for them to be on. I was just looking at an answer to another question in the chat as well but potentially we're moving toward where you can see maybe supply - but certainly flexibility management - being segmented at the larger device level, so say having a separate meter for your EV charging, or for your heating demand, and being able to do something interesting with those loads separate to the rest of the household.

That's obviously important for providing customer choice, and bringing people along in that transition, but part definitely comes into the equity side as well: of what it means to be able to access the assets that do that. I think that's where some of the "zero upfront cost" products become particularly interesting, broadening out access to those to something that generally has carried a pretty high capital cost, to come and participate in it.

Mike: OK, we're coming to the end of our time, might just ask a wrap-up question to everyone? We've talked a lot about the technologies and the opportunities that they create - what are the key challenges and barriers that we need to overcome, and are there any sort of obvious solutions to that? I'll start with Pilgrim.

Pilgrim: I'll answer that with a negative answer, in terms of what we shouldn't do - I think something we learned from the Smart Meter process is that involving government in the process of rolling out technical standards makes it very, very slow. So - I'm not a sort of die-hard libertarian - but what we're starting to see is an explosion of innovation and creativity in the market, responding to all the market signals, and that's incredibly exciting. Obviously we need the emergence of technical standards and other kinds of standards, to allow everyone to join up the silos, but I think that's probably best done by multi-part, commercial entities, perhaps supervised by government, rather than government trying to come in and mandate how everything happens. I think we're now into the era of the internet, in terms of how all this stuff's joining up, and that's very exciting - and that tends to happen bottom up, not top down.

Phil: Yes, fair point, let the innovators innovate, don't dictate. There are so many really interesting businesses creating all sorts of really interesting hardware technology, everything is internet based, and APIs are not rocket science to connect to, and make interesting things happen.

Neil: Just to put the counter view on the table, I've been reading with interest what's happened with the EV charging infrastructure around the country in recent weeks, and it's a bit of a shambles. We have multiple different connections the "service station" approach to charging is very hit-or-miss. YouTube is full of videos of frustrated people unable to charge their vehicles because the plug doesn't fit in the socket. Tesla have done it really well, but you need to buy a Tesla to take advantage of that. So we're concerned that in the heating and home energy space, without some sort of standardization of approach, we could end up with a mess.

Mike: Yes, that seems like an important point, right the way up and down the system.

Ben: I would say second all that was said before, but I'll take a slightly different perspective here again. I'm an aerospace engineer, so I don't know much about finance, but I've struggled with that over the last 20 years in solving this problem, and I think it's being solved now, so I would say "bankability" in one word. 20 years ago solar PV, large scale, wasn't bankable - it was all residential back in old Germany. Then 10MW wasn't bankable, then 100 MW wasn't bankable - it all became bankable very quickly, different inverters, different suppliers. Talk about grid level storage: we were sharing offices with with Pivot Power a few years ago, at you know 10 megawatt grid level, 50 megawatt that was bankable, and now people are throwing money after that. And you'll see that at the home level as well, and I think there's going to be a lot of money coming into the market, financing the solutions that we talked about with Neil and and the rest of the panel, and that's going to really make make a change and really start scaling.

Jacob: Tying two of them together, I think the transition to smarter energy management will not have been successful if we've left half the people behind along the way. There is definitely a role for market regulation in doing that, but equally if the transition to Smart Home Energy looks like the SMETS standard for everything then we've probably also failed along the way.

Sarah: I'd go for trust-building, and keeping it real. Let's keep demonstrating these technologies, testing them out in real life conditions, getting the word out, getting a national conversation going around it, getting local conversations going on around it. People will learn to trust automation when they see that it works for their neighbors, for their friends. Let's stay focused on the most important end uses, where smart home energy is going to count the most for individuals, but also for the network and socially.

Mile: Do you think there will be a time when we can say "all homes are smart"? Or is this something that we will always be rolling towards and it would keep evolving?

Sarah: Well, you could say pretty much every every home now has a smartphone in it for example. We have this technology gradually percolating into our lives, and now we're at the stage of learning how to use it intelligently ourselves.

Mike: Well, it's a fascinating discussion, thank you all for your time, and some really interesting food for thought there. I hope everyone enjoyed it. So it just remains for me to say thank you to Sarah, Jacob, Phil, Pilgrim, Ben and Neil, and thank you all for watching.


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