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The Battery Boom: Why Grid Storage Is the Backbone of Clean Power! | The Fully Charged Show Podcast
00:48:01
Battery storage is booming — but how does it really work, and why does it matter? In this episode of the Fully Charged Show Podcast, Imogen sits down with Ed Porter from @modoenergy one of the UK's leading experts on battery energy storage...
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- [00:09]
Imogen
Hello and welcome to another episode of the Fully Charged show podcast, where today we're catching up with Ed Porter, director of Insights for Europe of Modo Energy. Now, Modo Energy are the experts when it comes to understanding battery storage systems on the grid. So in this conversation we're going to talk about things like decoupling the cost of electricity from the price of gas, the role of batteries for storing energy when it's abundant and releasing it when it's less abundant, frequency regulation, the future of the grid, and loads of other tasty things as well. Of course, this is a very, very complicated topic. So there are so many things that we didn't get a chance to get into in any real detail and I think it's only sensible to have a follow up conversation with Ed in the very near future. But please do let us know what you think, let us know which questions we didn't answer and any thoughts that you may have as well. Now, before we get into our conversation with Ed, a very, very quick advert break.
- [01:02]
Andy
We've teamed up with Duracell Energy to celebrate their brilliant ecosystem of home energy products and their platinum home owner offer by giving away a Duracell bunny to win. Simply watch to the end and answer a question about Fully Charged.
- [01:17]
Imogen
Ed, thank you so much for joining us on the podcast today and your really wonderful setup there, which I know you use for your own podcast, the Transmission podcast, it's looking pretty fabulous.
- [01:27]
Ed Porter
Yeah. Well, Imogen, thank you for having me. Honoured to be here.
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Imogen
Now, I'm going to ask you to kick us off by explaining exactly who you are, what Modo Energy is, and can you give me your dinner party response for the people who have no idea about electricity or anything like that?
- [01:45]
Ed Porter
Okay, so at Modo Energy, essentially we track battery storage. So how does it operate today? We also forecast how it operates in the future and then we write research around that. So if you were to own or to operate or to finance battery storage, how could you get slightly more out of that? How could you kind of de risk investing in that space? That's probably the slightly more professional answer. I think the answer for me is how does it work? And maybe the dinner party answer is a bit of a tricky one. I think if you say that you work in grid scale battery storage, you don't often get invited to dinner parties. That's a bit of a. That's a bit of a challenge. But essentially, how does the grid work today? How does the good work in the future? Is the super simple answer.
- [02:31]
Imogen
And I suppose if you were to get into this conversation at dinner party. It normally ends up with a few people kind of sheepishly admitting, like, what actually is the grid and how does it work? And it seems phenomenal that this enormous piece of infrastructure of which we are all so dependent often seems quite abstract. And I find it interesting that the more we have electric vehicles, the more we have batteries, perhaps in our own home, or perhaps grid scale, actually, that electricity takes on a slightly more tangible, less abstract quality. So, yeah, I'm sure you're getting increasing number of questions and interest from those dinner party guests over time.
- [03:06]
Ed Porter
I think it's absolutely changing. So we're starting to see much more sort of decentralized batteries or solar panels. You can now go and get solar panels on your home. Maybe 100 pound, 150 per solar panel, someone will come along, get it installed in a day. You could have a battery attached to your home as well as having a battery in an ev. The energy transition has become much, much more tangible and much, much more affordable. If you go back 10, 15 years, you had to have a huge subsidy to kind of get those panels. Now, if you want to buy the panels in some markets, you can just go along to a supermarket and just pick them up and hang them over your balcony in Germany and do something called balcony solar. This whole transition has become so much more feasible for many consumers.
- [03:52]
Imogen
Yeah, I met with the lady yesterday, and she's getting solar because she's already paid for the scaffolding. She was having some work done on her roof. And actually the scaffolding is the most expensive thing at this point. Okay, I want to ask about. Okay, there's gonna be so many themes in this, and we can go in so many different directions. We touched on decentralization there. That is something that I want to return to. But before we do, let's just get everybody on the same page. What are grid scale batteries actually doing on the grid and why do we need them?
- [04:24]
Ed Porter
Okay, so we do get this question a lot. And the answer is, I think, quite simple as well as being very complicated. And so the simple answer is that batteries help to balance the system. So effectively, when we have too much generation, batteries can charge, and then we have not enough generation, batteries can discharge. And that's called a couple of things. But the biggest one is probably wholesale trading. So essentially, you're buying at low prices and selling at high prices. And I think everyone kind of has an innate understanding of that. The other big thing that batteries do is they help to manage the grid. And so that's something called frequency response, which is what it sounds like. So it's responding to frequency. And effectively on big battery sites you'll have a frequency meter which is tracking grid frequency. And if grid frequency goes outside of a certain range and the first response I think is outside of like 0.015 Hz, so it's like a really tight band. As soon as grid frequency moves outside of that range, essentially batteries start responding. And some of those responses are sort of pre fault. So before anything goes wrong and they kick in in under one second. And so if I kind of wrap up those two things. So you've got wholesale trading, which is sort of shifting energy around to help balance the system. And then you've got things like frequency response, which is acting sub second 20 deviations in grid frequency to keep the system healthy.
- [05:53]
Imogen
That's so interesting. So, so just to recap, you've got kind of two really, really key functions. You've got the Wolf of Wall street buy low, sell high kind of mentality, but also that gently kind of nudging the system so that it's always operating in that, that right frequency. Okay, but then now this is an interesting thing. So I know that we're going to come on to talking about the Iberian blackouts. For the avoidance of doubt, we're having this conversation on the 21st of May. So the Iberian blackouts were reasonably recently and there hasn't been a totally coherent conclusion as to what happened. However, the term frequency sort of was in everyone's minds when they were sort of analyzing what went on. And I'd say that that baseload frequency is something that not many people totally understand and partly because I think people have this vision that electrons are traveling down a wire or a cable in a single direction. So I'm going to ask you to explain what frequency in the system actually means.
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Ed Porter
Yeah, so frequency in the system is effectively talking about us having like three phase current. So a 50 Hz system, that means that every second there's kind of 50 oscillations effectively of the electricity grid. And if you have too much generation, that frequency goes up and so it increases. And if you have not enough generation, that frequency goes down and decreases. And so really that's not a problem if it's a small deviation, if it's a big deviation, that can have really big implications because some systems are synchronous to that frequency. And so a really fun example of that is that in your oven timer that is synchronous to grid frequency. So if you, for example, start running your house off a diesel generator for a short period of time. Diesel generators aren't great at keeping frequency, so you'll find the oven timer goes do lally, which is a fun fact.
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Imogen
No way.
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Ed Porter
Yeah.
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Imogen
Oh, my God, that's such a good fact. Thank you.
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Ed Porter
Yeah, yeah. So I had the pleasure of that experience last year because my house managed to disconnect itself from the grid, which was fun, but outside of that, you essentially have this 50 hertz, which we need to keep. And that if you have a really large thing that's synchronized to the grid, what you really don't want to happen is that for the grid frequency to go too high or too low, because you can damage that equipment. And so nearly all electrical equipment is sitting behind a relay, which is similar to the fuse box you would have in your house. And effectively, if that grid frequency goes too high or goes too low, then that relay will effectively shut off the circuit so that the, the electrical equipment that's on site doesn't get damaged by grid frequency moving too fast. And so not talking about how we got to the position of the Iberian blackout, or any other blackout for that matter, effectively the reason why things cut off is to protect equipment that's on the sort of consumer side of the grid.
- [09:03]
Imogen
That's really interesting. Okay, so here in the uk, I was really surprised to learn that we're actually one of the leading markets when it comes to deployment of battery energy storage systems. Bess, for those in the know, do we have enough to make a meaningful difference to that frequency regulation? Where are we on our battery deployment journey?
- [09:25]
Ed Porter
Yeah, so this, this is really interesting. So, and actually this is probably one of the things that people don't know, but should know in that if you go back, say six to 10 years, nearly all of our frequency response was coming from gas units, like really large gas units. And gas units are very much like a car. They kind of like to run at a certain level. There's certain levels that they're stable at. If you put a car in fifth gear and try and start it, it's going to clunk out. So essentially, when you try and get frequency response from a gas unit, you're trying to ask it to, to sort of ramp up or ramp down really quickly. And in order to do that, it kind of already needs to be running. So effectively you need to turn on your gas unit, get it up and running, and then sort of part load it, and then have the ability to kind of bring it up or down quite quickly. That's actually quite expensive to do because gas units don't really like running at part load. And so that's how the grid used to work. Then along comes a new technology, battery storage. Battery storage is able to ramp up and ramp down within milliseconds and loves doing that work. And effectively, what has been happening since around 2016 is that batteries have been coming into the market and kicking gas out of that service. So we'd call it something called dynamic frequency response, which is essentially a bucket of frequency response services. And in 2022, what we had was we all of a sudden had enough batteries to replace all of the frequency response being provided by gas in that surface. So the number was around about 1.5 gigawatts of frequency respons. And once we got to that point, essentially we stopped paying money to get it from gas and we started getting it from battery storage. And that meant that the price pretty much came down by about 80% over the course of around about six months. So as consumers, instead of having to pay loads of money to part load these gas units, we were able to get it just directly from batteries at an 80% reduction in price, which I think is really cool.
- [11:30]
Imogen
I mean, the numbers here are absolutely staggering. That there was enough so that all that dynamic frequency response could be met by batteries. That 1.5 gigawatts at an 80% cost reduction. And how was that not shouted from the rooftops is absolutely astonishing. It probably was in key circles, but definitely not in the Daily Mail, I would say. But I guess the sort of analogy that people would really recognize is that I suppose it's the difference between an idling car and driving an electric car in traffic. For any EV driver out there, they'll know that one is much more efficient than the other.
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Ed Porter
Yeah, exactly. And know on this podcast we should definitely try and draw analogies to cars that will. That will definitely land well, I hope.
- [12:17]
Imogen
And so something that we're seeing a lot in the news is around Clean Power 2030ambitions. In your view, are the plans for battery energy storage, Are they sufficient to meet those goals?
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Ed Porter
Okay, so this is quite exciting. So your enthusiasm for one and a half gigawatts of batteries is shared. My enthusiasm is the same, but we've carried on building batteries. And it's because batteries don't just do frequency response. That's kind of the entry level. Four batteries into grids. So nearly all grids worldwide, batteries will come in and start displacing thermal plant from doing frequency response. And we see this in Loads of other grids as well. The next thing that batteries go into is the wholesale trading that I mentioned earlier. So the kind of the Wolf of Wall Street. I don't think that's a very good analogy because I would say the batteries actually do some good work, whereas Wolf of Wall street, maybe. I actually can't remember the plot. So. But I'm gonna, I'm gonna assume it wasn't. I'm assuming he wasn't consumer focused in his outcomes. So essentially, as batteries go out of frequency response, they go into kind of wholesale trading. And now in GB we have 5.3 gigawatts of batteries. That's live and the average duration is about one and a half hours. And to put that into like gas terms, a really big power station would be like 2 gigawatts. And if you've ever been to those big gas stations, they're like cathedrals, effectively. And so we've got say three cathedrals worth of batteries, if that's a term. So we're at five gigs today. Five and a bit gigs. Sorry. And in clean power, 2030, we're trying to get to somewhere between 22 and 27 gigawatts. So somewhere between a 4 and a 5x increase on what we have today. Is that doable and is it a good thing? Kind of. Probably. Two different questions on the Is it doable? I would say our number for 2030 is a little bit lower than that. So we think that there are some very real challenges like getting grid connections, making sure that there are enough engineering and construction companies that are actually able to deliver that rate of change. We've probably delivered at max, something like one and a half gigs or two gigs per year. So to go from that to delivering three to four gigs per year is a really big step up. So we don't necessarily see that we'll get to that level, but if we even get close, so even get to like early 20 gigs or sort of late teens, that will totally transform how our system works for frequency response, but also how it will work for within day balancing. And so I'm really, really excited about, about that as an outcome. I think that we, through having 20 gigs of batteries, we'll be able to take a vast amount of our gas off the system for things like dealing with a peak within a day. And let's say like on excess of wind generation, we can make much more use of that with 20 gigs of batteries than we have ever been able to before.
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Imogen
Oh my goodness. I mean, it is an extraordinary challenge. And I suppose if you were doing a careers talk within a school, you might be saying, look people, you are going to be extremely employable. Should you have these sets of skills to help deploy batteries and connect things to the grid? Please.
- [15:47]
Ed Porter
I mean, we both sort of have come from the same background and anything engineering related I think is always a plug. I would always plug engineering, but that's just, that's just me.
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Imogen
Yeah, so you mentioned there a number that I think some people will be like, oh gosh, this is maybe surprising. And that was that those batches have a duration of 1.5 hours. So does that mean that if they were full and they were being used continuously, they would be empty in one and a half hours? And yeah, if you could explain that a little bit more, that'd be great.
- [16:24]
Ed Porter
Yeah. So the early batteries that came on the grid, they were doing, as I said, frequency response. Now frequency response needs very short bursts of power. So something like a half hour system could, could handle frequency response. As we've moved from frequency response to wholesale trading, essentially you want to have more energy and so your duration of your system becomes longer. And we're now looking at, I would say people often look at two, four or six hour batteries in gb. Everything that's being built today is probably between two and four hours. I think if you're a bit of a visionary, something like a six hour system could be quite interesting. The reason why we don't tend to go too far beyond that is because when you buy a battery, you want to cycle it, you want to run it as much as possible. And if you just think about a day for, for humans and everything's built in response to kind of how humans behave. So we wake up around, you know, six and seven and we put kettles on in the morning and that gives us our morning peak, which is kind of like seven to 11 o' clock in the morning. So that's a four hour discharge. Then as we get to like 11 o' clock through to say three or four, we're starting to get solar really kicking in. So really big solar generation again, it's like a four to five hour chunk. And then as people get home at the end of the day, either that's kind of. You might see some slightly increased load from heat pumps or EVs as they come home and plug in. But also people putting on kettles, making their dinner again, it's another kind of three to four hour chunk of the day. And then you have overnights, which is obviously longer. And if you have A four hour system, you can kind of make the most of each of those, those, those sort of buckets of human behavior. If you have a 10 hour system, that 10th hour of battery storage, you don't get to cycle it very much. And so that's why people tend to build things that are three or four hours. But there's also kind of an interesting part in this which is that batteries really, their role in the system is to help manage the shape of demand within a day. And when I say shape, I mean sort of the rise of demand and then the fall and essentially what it would look like on a graph. And so batteries help to manage that. I think often people say, oh well, this is kind of the gotcha moment. It's like, oh well, batteries don't do a full winter's worth of discharge. And yeah, they don't. That's definitely true. They're not designed to do that. Imagine an EV that you were, instead of having a range of 500 miles, it had a range of 5,000 miles. Nobody's doing a 5,000 mile journey, so it would be a totally uneconomic thing to build.
- [19:03]
Imogen
You have segued perfectly to my next question because I was going to say there will be people out there who'll be thinking, well, actually I think a lot of people assume that when it comes to ensuring that there's enough renewable energy in the winter, that actually you're storing up the solar in the summer, waiting till winter and then discharging it then. But that absolutely isn't the case. So how do we mitigate for things like Dunkle Flats, those periods of time where there's the wind isn't blowing and the sun perhaps isn't shining.
- [19:32]
Ed Porter
Yes. So, yeah, the dreaded word Dunkel Flauta. I kind of like it and hate it and whenever you say it then have to describe what it is and then I think actually is that a very useful thing because you, you've then had to explain it. So Duncleflower, the concept is that essentially there's low wind across the uk, but also across Germany, which is the origin of the word. It's also in winter, so there's not much solar. And because we are essentially northern Hemisph and GP in particular has kind of low quality housing stock, from a heating perspective, we can see quite high heating loads across winter. And so for a power market designer, this period is essentially one of the, kind of the worst periods to get through. Summer is quite straightforward. We have lots of solar, we have plenty of wind, demand is low we can really handle summer quite easily. There are some nuanced things in summer, like too much generation and kind of creating negative prices, but that's much less of a problem problem than when we get into winter periods. And so just as a side note, I think if you're in Texas or if you're in Spain, the whole moving to a net zero grid, I think is just easier. But I wouldn't trade living in gp. So we're going to plow on with dealing with a winter period with net zero. And I think that the real challenge comes from you need some generation to turn up. And so that today comes a lot from gas. In the future, it could still come from gas. So we could have abated gas where effectively gas has something like carbon capture applied to it and that would allow us to run gas for. And if we could fully capture that carbon, then essentially we could kind of run that gas as much as we like. You could also have what we call unabated gas. So that could be gas that doesn't have carbon capture on it. Now, that sounds like bad news, but at the moment we run gas a huge amount on our, on our grid load factors for gas somewhere around like 40, 50%. In Clean Power 2030, we're trying to get those load factors for gas down to 5%. And so instead of gas kind of setting the price on our grid something like 95% of the time, the idea is that within Clean Power 2030, gas would set the price on our system something like 15 to 16% of the time. And so even if we still have to run some gas from time to time, the fact that we can use it much less frequently will still be a huge win for consumers in the transition. I would just add one more thing to that. So there will be other sources of generation that will get us through winter. So it's not all about gas. We will have nuclear on the system. Those questions around biomass will obviously still be very much interconnected. But the biggest thing on getting through winters is wind. Wind generation is lower in summer, it is higher in winter. And if we're going to do a net zero system, we absolutely have to double down on wind. And we've seen news recently around some groups pulling out of wind, some wind projects in gb. And I think if I was sat in government, I think how to get the wind industry back on track would be one of my biggest questions.
- [22:53]
Imogen
Well, we touch wood, because who knows what could happen in the next few weeks. But we should be having someone pretty senior from Desnes on the podcast in the coming weeks. So, for those outside of the uk, DES NES is our department for Energy, Security and Net Zero. If you could whisper a little something in their ears, what would you say?
- [23:15]
Ed Porter
I'd say exactly that. On wind, I think there's also quite an interesting thing within DES nes. I'm sure they had an internal memo as well which said they weren't allowed to call themselves DES nes. They need to kind of full name themselves. So maybe keep an eye on that for the episode. Maybe I've just totally stitched them up. So my apologies to them. And I think from a storage perspective, it's been quite odd. So storage, because it's very successful, has never really had very much government intervention. In fact, a lot of the things that government has been working on within storage has been to undo some things that are already unfair to storage. So, for example, storage was having to pay final consumption levies when it first came to market, which meant that it was both paying for the levies that a consumer would pay, even though the storage was then exporting that energy back out, it was kind of having to essentially double pay on consumption levies. Storage is not subsidized. So your wind, your solar all goes through cfd. Your gas gets, sorry, contract for difference, which is essentially when there is a price that wind and solar get paid, they get paid that in all conditions, unless prices go negative. And then that depends on which version of the CFD they've got. The more recent ones essentially don't pay out negative prices, the older ones do. Then there's gas, which gets a capacity market payment. So that is effectively a payment from government to make sure that gas is still there. Now, batteries do get paid a capacity market payment, but the difference is that gas receives something like 95% of their capacity market payment, whereas batteries only receive something like 15% of their capacity market payment. And it's not really that relevant to the battery business case. So batteries, for me, they're quite unsubsidized, They've been very successful, but government doesn't necessarily, like, prioritize them that much. And so if I was to whisper something to Desnaz, I would say, by the way, you have this amazingly transformative technology that's coming into your grid and you're spending a lot of time worrying about CCUS or hydrogen to power in 2040. And actually don't, don't do that. You should be worrying about how do you make the best of the tools that you have at your disposal today? And so how can you Ramp battery storage really quickly, because the thing that that will do is it will essentially not get us to net zero, but it might get us to a 70 or 80% decarbonized grid, but also at low cost. And that's the critical part. I think people really don't want to see billions going on potential projects that might not work.
- [26:00]
Imogen
Now, one of the things that you mentioned there that I really want to pick up on is this marginal pricing point. So should we reach the goal set out In Clean Power 2030, it would mean that the price of our electricity is determined by gas 15 to 16% of the time, which is a substantial reduction from where it is now. That's obviously a huge benefit for consumers because the electricity would be cheaper. It's obviously a huge motivating factor to put more renewables on the system to diminish that even further. But I know that there are lots of people in this audience and lots of listeners who would say, well, actually we'd prefer if you just decoupled the electricity market from gas altogether. What's your view on the right direction?
- [26:39]
Ed Porter
Yeah, so decoupling the electricity price from gas has been considered as an option. The GB energy industry has been going through something called rima, which is the review of the electricity market arrangements for a couple of years now, and lots of options are being considered. And perhaps the last one standing is a debate around a national price. So every region in GB gets the same price, more or less. There's some nuance in that. Or we get a price which is a zonal price, which is effectively that if there is a constraint so you can no longer flow energy from, say, Scotland to England, then Scotland and England would see different prices, not necessarily a higher price price always in England, it depends how you kind of reallocate the kind of cash you get given by balancing the system in a more effective way. But. But that is something that has now been considered. So rather than decoupling gas from how the system prices today, I would say we're much more likely to see reform on things like national versus national versus Zonal. I think just to kind of add a little bit more on the point around gas setting the price less often, I do think that will mean that consumers will all of a sudden start to see prices that are perhaps more set by renewables or battery storage. And that can be. That can be really good for consumers. It doesn't mean that the price will go to zero, though. So even if the wholesale price is zero, and we think this will happen a lot in the future, consumers still have to pay the sort of top up to the cfd. So if a wind site or a solar site is being paid 7 pence per kilowatt hour and it's contract for difference CFD, then if the wholesale price comes through at zero, then consumers still have to pay to kind of top up that, that, that wind or solar site. Now that won't feel like a huge reduction in bills, but it is a huge change from having gas setting the price in certain periods. And if for example we go back to 20, 20, 22, we going 10 or 15x the price and energy was effectively getting so expensive that had to very much step in and stop the market from working in a certain way. And so having that type of system where we have renewables or storage setting the price more often I think does really protect us from those gas price shocks and gives us a better system longer term.
- [29:12]
Imogen
I suppose the other thing that's happening at the same time, oh my gosh. I mean I know that this podcast could be about four hours long because there are things I want to ask you about. Zonal pricing, negative pricing events, distributed energy systems. And I'm going to have to be selective. We're just going to have to do a second installment if we don't cover it all. But you know, all of these reforms are being considered and the way that the grid has managed to supply all of the households out there and as well of course businesses as well. But at the same time we're seeing more and more distributed systems, either local community energy systems or people actually having self generation and storage within their own homes. And especially as vehicle to grid becomes more and more prevalent thing then actually there's more and more storage out on the roads as well. Are these things being mapped out at the same time? Because sometimes it feels like we're looking at the grid almost in a like, for like replacement, looking at replacing gas with renewable energy or looking at battery storage instead of gas when actually the system is so much more complicated than that. How do we. Do you think it's being thought about in the right multifaceted, holistic sort of way?
- [30:26]
Ed Porter
Yeah, so this is really interesting and I think if you go back a few years there would be people say, oh, you can't run a grid on, you know, more than 15% renewables. That's just, that's just not going to work. And yet here we are knowing full well that we can run systems on very renewables intensive grids and moving to a more renewable dominated system or One that has much more self generation or relies more on EVs, that type of system, or very distributed generation as well, does, does create some challenges. And so for example, inertia is a very common one. So with large thermal plants it spins and this creates inertia on the system. So effectively they spin at 50 hertz and so that helps to keep the system running at 50 Hz. If for example, there's a sudden shock. So let's say a nuclear plant trips off, all of a sudden we lose 2 gigawatts of power. Those other power stations, because they're spinning at 50 hertz, essentially keep the system going at 50 hertz. Now that's very much the way that the old system worked. And I'm really sort of simplifying this because there's a whole host of other things around voltage, reactive power, short circuit level that a proper electrical engineer would be jumping up and down about and they would be right to be doing so. So I will accept those comments when they come through. But just to really simplify it, I think the, what the grid has learned is that instead of having to bundle up all of those particular parameters and characteristics into it's just a gas unit, let's turn it on and that'll be okay. We're starting to now create individual markets for those things. Frequency response is a great example. So instead of getting it from gas, we're now running an open market where essentially any technology provided it can hit the right parameters, can essentially come into that market and can provide it. And when that market has been opened up, it turns out the batteries have been the best way of providing it. And when we look at things like stability on the network, so the provision of inertia or the provision of like voltage control or provision of short circuit level, which is much more locational, both voltage control and short circuit level are much more locational. When you start to open up these markets, instead of just relying on, oh God, we kind of need that thing, so let's just turn on a big gas unit, that'll be okay. We're now going to the point where actually we're having specific markets for these things. And we can go to the point where inverters are progressing. So most inverters out there are grid following inverters, which means they essentially track what the grid is doing. But you can also have a type of inverter called a grid forming inverter. And that means that it can do things like control its voltage or it can control its contribution to things like reactive Power, which is starting to sound a bit more geeky and nerdy. But where I really want to get to with this is that the grid of the future will be much more based around the grid. Operators know what they want to get for all of these niche things that keep a system healthy and they can go into a market and they can procure that individually from lots and lots of small individual assets. And so instead of kind of relying on 12 gigawatt gas unit that's kind of constantly running, you could have something where effectively you have a thousand, ten thousand individual units, be them batteries or they could be inverters on other types of technology that are able to provide these types of responses. And I think that we will leave the grid in a significantly better state than when we found it. In that, essentially, we're not just. We don't just have like one tool in our toolbox, which is, let's press go on a gas station. And that's being a little bit unkind, but we will have this plethora of options where we can pick up the things that our grid actually needs. Needs to be really stable.
- [34:19]
Imogen
God, that is. Do you know? So last week, I promise you, this statement is relevant. Last week, I was moderating at the Financial Times Future of the Car event and there was a huge amount of discussion around residual values of electric vehicles and how actually, it's a bit of a problem for leasing companies and fleet operators. Great for consumers, though, because these secondhand electric cars are cheaper. And whilst it's sort of almost certainly a bit of a temporary blip as we transition to a fundamentally different technology, actually the arguments are being made of, well, it's a different technology that's used differently, and therefore we need a sales mechanism that reflects this new technology and that we're not trying to shoehorn an old marketplace onto a new technology. And it feels like what you've described there is that the grid and how it operates in those individual marketplaces are matching the new technology that's arising.
- [35:12]
Ed Porter
Yeah, absolutely. I fully believe that we will get to a point with the grid where we are running a far more resilient grid at far lower cost. The transition will be bumpy. And so we talked a little bit about Iberia right at the start. That's a kind of classic case of where something has gone wrong. And of all of the conversations about Iberia of, like, how it happened, was it oscillations, was it frequency, was it voltage control, like, what caused these relays to trip? All interesting conversations. I think the Most interesting thing about Iberia is that when the grid operator finally says, oh, you know what the problem was? X of all of the things that have been discussed, they're all doable. They're all really doable. So if the answer is we need more frequency response, great, we can get you 2 gigawatts of batteries really quickly. In California, a market that we are active in and track. There's a site called Edwards and Sanborn. It's a battery site. It's 1 gigawatt, 3 gigawatt hours. That's just mind blowing scale. I remember when we did sort of, maybe we kind of made a mistake here, we called them sort of big batteries when we deployed them in 2020, 20, 2014, 2015. And they were sort of, excuse me, like 2 megawatts, 5 megawatt hours. And yet here we are building stuff that's almost a thousand times the size 10 years later. And so if in Iberia all of a sudden we say, right, actually we really need a gigawatt of response, it's just totally doable. We have absolutely the blueprint to roll that out and to get that active on the Iberian system very quickly.
- [36:58]
Imogen
I mean this is just so exciting, honestly. And like, I mean we're also, I recognize that we're both very lucky in that you have an audience who are totally engaged in these topics. So do we at fully charged show. And I know that people are going to be listening to this being like, there's hope.
- [37:12]
Andy
This is exciting.
- [37:13]
Imogen
Batteries are the future. Okay, I know we're coming towards the end, so I'm going to try and be selective. But you mentioned there that we're looking at just before we start to talk about Iberia, that all of these different market mechanisms exist to take, take advantage of slightly more centralized sources of energy and storage versus the slightly more distributed ones. And lots of people I'm sure will have read around Octopus Energy's zero bills homes initiative in which they are guaranteeing customers no bills for 10 years or so and they're putting in heat pumps, solar batteries, etc. Amazing initiative. Super, super innovative. But is the real mechanism that's going on is that actually they can be doing some fabulous stuff and kind of making money off your own energy and the fact that you have storage there. How do Octopus stand to benefit from that situation?
- [38:08]
Ed Porter
Oh, Octopus, yeah, interesting. Octopus, a real success story. And they have shaken up markets in a, in a really admirable way. And as, as a business I like, I'm fully supportive of solar storage and heat Pumps. So like there's so much to love about that business case. If I was to kind of to flag one thing that might be a way that those houses of the future might change. And this is to say that I'm 99.9% absolutely pro. Well, I'm not even 99.9%. I'm just totally in favor of solar and storage. I have it on my own home. I love heat pumps. I think that that is absolutely the technology of the future. I think that how we charge for energy to domestic homes in the future might change. So in that solar and battery storage is a really good solution. Most of the charges in today's market get recovered from the unit rate. So like a pence per kilo hour rate. And if we get to the stage where lots of consumers are no longer consuming unit rates because they're effectively self consuming, then you need to pay for the grid somehow. And so really it goes from paying for a unit rate, so a kilowatt hour imported, to starting to pay for the right to have your grid connection and the right to have the security of that grid connection to turn up for the 10 days of the year that you just cannot meet from your solar and battery storage on your home. And I think that might change the capacity charge. So that sort of standing charge you'll see on your bill. So I am not working in domestic pricing and haven't worked in domestic pricing for what is now 15 years. But I would say that those concepts we may start to see some of the ways that people charge those homes differ so that they can pay or help to contribute towards that grid which they are only relying on for five or 10 days of the year. But I think we might see it coming more through a standing charge. That's the only thing that I could say that would further that conversation because otherwise I would just totally be in support of solar battery and heat pump. And yeah, I think it's a very admirable thing that is being done.
- [40:38]
Imogen
We're definitely going to be looking at this in more detail on the fully charged show and everything. Electric show. And I can't wait because I have so many questions and I just want to be like, look, could you write it down on a bit of paper, like show me how it's working, who benefits where, how are you actually making money? But anyway, okay, I also want to ask you about negative pricing events because you've written in various articles and on LinkedIn, et cetera that we we're going to see way more negative pricing events. In which there's more, there's more generation on the system than we can possibly hope to store or use in adequate measure. How does that change things for the operators of those battery energy storage systems and how do they really, really stand to benefit?
- [41:21]
Ed Porter
So negative prices, just to make sure that it's kind of, it lands with people, effectively, that it's a concept that when you're generating a kilowatt hour of energy, instead of being paid for that kilowatt hour of energy, you essentially have to pay to export it to the system, which is kind of really what that means. So if you're a wind site, a solar site, a gas site, negative prices are bad news. And that can be challenging for those business cases. And they are watching it very closely to give some numbers. I think last year, so 2024, we had something like 176 hours of negative pricing in our day ahead market. We had slightly more in our intraday market. But that's just nuance. And so that is a number that has been rising year on year. You didn't take Covid out of those numbers to get a kind of really fair reflection. And we think that number might get towards so between say 500 and 1000 periods of negative pricing as we get close to 2030 and what does that do? So essentially negative prices are calling to the system. They're saying, please, can we find something, Please can we find some demand or some way to flex generation down to help balance the system more effectively. It's really like a cry from the power system. Say we need flexibility. And batteries love negative pricing. So batteries are able to charge when prices go negative and then they wait until, let's say the very sunny period or the very windy period is over and then they can discharge into the market. Essentially batteries are making money on the spread. So the difference in the lowest price in the day and say the highest price in the day and so a negative price is no problem. There have also been, our team in Australia have kind of flagged up a couple of also fun examples of this. Where you can have days, I think in South Australia, where you have a day where it's been pure negative pricing, but batteries have made money moving between a really negative price and a slightly less negative price, which kind of cooks my noodle a little bit, but it's pretty interesting.
- [43:25]
Imogen
Now, Modo Energy, you work with across Europe, that's your role. Australia and North America, when you're chatting with your colleagues, are there any things that you're looking in those other markets thinking oh, God, I wish we had that here in Europe and the uk.
- [43:40]
Ed Porter
So Texas is a really interesting example. Texas is getting towards something like, I think it's eight, eight and a half gigawatts, so of a similar duration to GB. So they're around 13 gigawatt hours. And Texas really got started, in all honesty, in sort of like 2020. That's when they really started ramping up. And in Texas, it takes something like 210 to 220 days between sort of starting construction and the thing going live. And they have just so much more of a much more aggressive attitude to being able to bring things onto the system and to get them running and to get them essentially lowering bills. For consumers. In gb, it takes significantly longer to get assets ready. For example, you could have something like a battery system that is absolutely ready to go, but is hasn't had the ability to have someone come along to site and test it. And you could have something like that battery waiting for 180 days before it's actually ready to go. So. So I'm, I'm super jealous around the ability of places like Texas and their grid, which is called ercot, to move really fast and get stuff done. I think if we had a little bit more of that attitude within gb, we'd be seeing lower bills for consumers already.
- [45:05]
Imogen
Sort out planning, get those connections to the grid, I think is the message there.
- [45:10]
Ed Porter
And people. And people. Right. So getting electrically qualified people to be able to commission projects, commission new connections to the network, there is a massive drive to get people into the space. And so in that this is a fantastic platform for it. If you've ever been interested in batteries or NET zero, then please do take a look at some of the careers in the. In that space. It's just amazing how quickly it's moving and you will make a massive difference.
- [45:39]
Imogen
Well, I think that is absolutely the perfect note to end on, honestly. Ed, thank you so much for joining us on this podcast. We absolutely need to have this conversation again because I think we have covered maybe 10% of my questions and I know that we will have generated so many more questions as well, so we'll have to save that for another time.
- [45:58]
Ed Porter
Imogen, my pleasure.
- [46:00]
Imogen
Thank you so much to Ed for joining us on this particular episode. I don't know about you, but he is so unbelievably eloquent at explaining these deeply complicated topics. So I'm very grateful that he's given me a lot of homework to do. I will say many things that I need to go away and research in a little bit more detail, but that is all that we have time for. Thank you to Andy from our team who will be editing this particular episode. If you could do us the honour of liking, subscribing, commenting, sharing with a friend, or all of the above, we will be eternally grateful. It honestly does make sure that we can keep on telling the important and cool stories in this clean energy transition, but that's it. If you have been thank you for listening and watching.
- [46:43]
Andy
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- [47:20]
Imogen
And the best installers in your area.
- [47:22]
Andy
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- [47:49]
Imogen
Good.