€100 Million Bet on Ukraine: Inside Octopus-DTEK Energy Partnership

Speaker A: Today we're going to bring you a deal that shows you the hope that can come out of the tragedy of war.

Speaker B: We invest up to 100 million euro into this platform, making Ukraine much more resilient, especially now.

Speaker C: So there's all sorts of things happening in the energy industry that require some sort of involvement in tariff, services, innovation, R and D.

Speaker D: We are back. Wolf Power Club has teamed up once again with the Spectator for the Energy Summit on Monday 30th November. Come and join me Michael Gove Oliver, the CEO of the National Wealth Fund, Claire Catino and many more to announce. And last year we had the likes of Greg Jackson, Harry Metcalf book your tickets on the Spectator magazine's events page. And if you use code WPC50, you get a 50 discount for being a

Speaker A: Wolf Power Club listener. Guys, it's been a cracking climate week in London. The Wolf Power Club has been to tens of events. It's been unbelievably busy. But today we're going to bring you a deal that shows you the hope that can come out of the tragedy of war. And it also shows you that great commercial relationships being built between Ukraine and the uk. So what are we discussing today? We're going to be discussing Rise, the new hundred million euro project between DTEC and between Octopus Energy. And we're going to go into detail at a second. We're very privileged to be amongst a m small group of people that are invited to the signing at the Octopus's Energies massive event at Batters Park. And then we've got a second part of this podcast and we'll come on to that where we hear where the future is going with the solutions from Octopus Energy and we get to speak to none other than Philip Steele, the future Technologies Evangelist. There's a lot from Climate Week so we're going to m have another one next week about the great American voices and what they had to say to London last week in terms of how we move the dynamic on. Um, you'll also be hearing in the Rise Talk a one to one interview with Maxim Simchenko, obviously a friend of the podcast. We've had Maximum before, CEO of dtech, obviously the largest, uh, privately owned power company in the Ukraine. If you guys remember back in February, it was when we do a join by Cordy o' Hara of National Grid. So what was the deal? The deal was the following and it got public announcing Cadance, but I was very, very privileged to be invited into the signing room between Maxime and Greg Jackson. So this is what it's about basically there has been an agreement between DTEX retail arm um. Yes, no. And there's also been Octopuses one time technology Kraken company to look at how you can power through secure rooftop solar and battery storage businesses in the Ukraine. And there's a fantastic line when the guys signed the contract between Greg Jackson at Octopus and dtech of Ukraine. You can't turn the sun off and we know how important that is in energy security. But basically what is going to do is it should basically demonstrate to customers that installations with integrated of solar Octopus Energies Kraken battery management system that are going to be lower bills but also is going to cut peak hour consumption and sell surplus back to the grid when it's required. It's also that the ownership of the contract um, basically of this joint venture uh, um. The customer can take ownership of the equipment after, after 10 years. So basically it's a way of seeing the following and this is what really impressed me about the deal. When you talk to dtec they've never ever wanted to us to feel sor for them because Ukraine's been such a war. They want to have concern about the actions of what happens but also they're great business leaders. What Maxine goes on to talk to me about is actually when you are up against war in the most difficult situations you find unique ways to solve problems such as the power supply to your nation. Secondly, and this is something that I hadn't really thought about until in the last year being involved with number of these characters is that one of the things that when you're in a terrible situation is it rips all the plastic off bureaucracy and you can get stuff done. Octopus were quite clear with me that this is a way to roll out solar and storage in a way that potentially the ways of detail bureaucracy, planning permissions so on in peacetime European countries can make these rollouts very difficult. Ukraine is saying now that we can learn about energy defense in the country, we can test new technologies and we can make sure that the power that's so near to the country as we covered on our previous info break actually happens. Enjoy my interview Maxime and then after this you'll hear from Philip Steele. Philip Steele is a unique role. I haven't seen many in in other companies like this called the Future Technologies Evangelist and basically Octopus he is basically given free reign to look at what are going to be the greatest technologies that move on energy transitions. And my final thoughts before you enjoy these two very different parts of the episode is that it was amazing to see octopus bring nearly 4,000 people. A mixture everyone from John Carey to Boris Johnson to Tim P. To their customers, to their colleagues to celebrate International Climate Week and discuss the detail of where we're going with Net zero. Enjoy these episodes and you'll find out about the hundred million euro deal of joining DTECH and OCTOPUS in making, uh, solar and battery storage in the Ukraine. Enjoy.

Speaker D: Great to have you back on the podcast and say you're with us for International Energy Week. Um, but you've just signed a deal with Greg Jackson at Octopus Energy today. What's the deal and what will it allow DTECH and OCTOPUS to do together?

Speaker B: Uh, it's a great pleasure for me to be here for the second time. And if you remember, one year ago we announced the new initiative of uh, investments in Ukrainian small and medium enterprises by making the platform and vehicle to install solar panels, battery storage equipment and Kraken Flex as a, as a, as a software to manage it all so that our clients will start savings from day one. So we invest up to 100 million euro into this platform to uh, roll out this solution for our clients in Ukraine, making Ukraine much more resil, especially now.

Speaker D: Now, um, today we've had in the green room just now John Kerry, the former, uh, leading American politician. We've got Boris Johnson here, um, at International Energy, we had a clear message for energy leaders and politicians that the need for resources. You were in the middle of a terrible winter, obviously now in summer and we're doing commercial deals. What would you like to see from the international community? You're in London this week. What would you like from the London community this week?

Speaker B: I think that everybody should remember that energy resilience and energy transition is going together now. And Ukraine, uh, is an example, building more distributed generation, investing more in wind, solar and battery storage, building more decentralized, uh, power generation and grid. This is what makes us much more, more resilient, much more strong against Russian attacks. And this is basically, uh, part of green transition agenda, not only in terms of climate change, but in terms of energy security. And this is our message, that we should keep investing in new technologies, decarbonized technologies and distributed generation so that we make stronger our energy system.

Speaker D: Now, final question. I was in Washington 10 days ago

Speaker A: at the Atlantic Council.

Speaker D: A lot of American CEOs, investors, big funds, and they're saying that although there's a very tough story in Ukraine, from an energy perspective, that means a speed of rolling out stuff is quicker than anywhere else in the world because you

Speaker A: guys are looking to do solutions.

Speaker D: I was talking to your team about some of the stuff you've rolled out in two years that would probably take 10 years in a G7 country. Could you tell our listeners about actually in Ukraine right now, why it is a good ground to roll out stuff probably F than anywhere else in the Western world.

Speaker B: I respect Greg and Octopus Energy. Then from the very beginning of full scale invasion, he saw not only the risk but opportunities in Ukraine and the fact that we built the largest wind farm in Eastern Europe during full scale invasion, one of the largest battery storage system, 200 megawatt building within six months. It is impossible in any other part of the world. So our message don't learn from us, but learn with us. Come to Ukraine and we can teach you how to uh, build such a project in such a short period of time. And then with all this experience, you do investments in Ukraine, you come back to your countries and probably share Ukrainian

Speaker D: story Maxine, we love the story that you're doing. The respect for DTECH has always been at the utmost and we wish you a productive week both in London and Poland this week. Thank you for your time very much.

Speaker B: Thank you.

Speaker D: Wolf Power Club listeners, Spectator Energy Summit listeners. It's Climate Week and I'm in Battersea Park. What an amazing venue to start today. And we have got Phil still, who is the Technology evangelist. I know I've never heard that title before either. So Phil, can I welcome you to the Wolf Power Club and just tell us what you do at Octopus Energy.

Speaker C: Yeah, so actually the full title is Future Technologies Evangelist. Anyway, what do I do? All sorts of different bits of R and D. So whether it's uh, getting involved in some of our new tariffs, uh, I was involved in some of the first heat pump rollouts, uh, involved in solar battery systems, things like microgrids, tenant power, um, all sorts of things around services and tariffs, new technology. So coming across interesting products that have got, uh, something different they do in the energy industry. So the example is a company called Heater, that's a data centre on the side of a hot water tank. Data centers waste heat, why not use it? You know, this is all sorts of things happening in the energy industry that require some sort of involvement in tariff, services, innovation, R and D, that kind of aspect. So that's my role is a mixture of all sorts of things across the whole stack.

Speaker D: Now in my world, uh, I get a lot of CEOs, uh, I get a lot of politicians and with CEOs, I kind of know what their target is. Long sustainable profits. They've got a vision that will help their share price. What does good look like in a year of an evangelist that's looking at the future technologies?

Speaker C: Well, good is hoping at least one of the projects actually comes back to fruition. Because in R D failure is common, right? If you're not failing, you're not actually making progress in R and D. So we can't just focus on those that are going to be successful. There will be some things which will just not come about along the way.

Speaker D: Now, one of the things I've loved about Octopus is that you guys try and bring the consumer on the journey. And it's fair to say I've never been at an energy event like this where you've taken over an arena in Battersea. You've got thousands of people here today. Do you think that's the fundamental problem with future tech technologies isn't about whether they're green and clean or whether cheap or so on. Just people don't have enough of this information to go on the journey.

Speaker C: Uh, what we'll see here with this 4,000 people here and what you see actually you saw it last year, is the people walk in here and they go and sit at the front row, which doesn't happen any other kind of energy conference or anything. So there's real engagement in what we're doing. Um, I think it's because it's a combination of yes, we're doing the right thing for the environment with the tariffs and so on, but actually the tariffs are really competitive. You know, you look at the intelligent octopus go to really great rates or the go to. You look at Agile. Agile is probably the most engaging tariff for those that are perhaps more, uh, tech enthusiasts like myself that really can actually say, right, uh, I can see that the Agile rate is low overnight. It goes negative when we've got a really strong wind and all the rest of it and what can I do to use that energy? And actually one of the things we've done is there's always been, since the beginning actually 2018, an API application programming interface of the Kraken platform. And that allows any third party developer to create an app or product or service that's integrated to the tariff. So it can read the half hour rate of the Azure tariff and say, well, now's a good time to charge a battery or charge a car or discharge a battery or whatever. Right. And that level of openness means we've got probably hundreds, I can't even count them, of third party apps and services. And devices that are connected to us that are kind of amplifying everything that we're doing and how the energy system is changing and how us all as consumers get involved in it.

Speaker D: Now. Now Phil, we had a little chat beforehand. You said one of the big projects you're working on is micro grid. Now you and I in a lot of meetings, but for the 120 countries that listen to our podcast, could you describe to them what micro grid is and specifically what Octopus is trying to do and push the boundaries on it?

Speaker C: So we've got one Microgrid Life, gsa Thornwood. Um, now that micro grid is a new build site. It's mostly domestic, but 130 properties. Uh, there's a few businesses on that side as well. Because it's a new build, then we could look at how the grid is deployed. Um, so Eclipse Power is one of our um, businesses that we're invested in, have put that local grid connection in. So we've got a single boundary connection to the main grid and that's the point at which we meter, uh, import and export. We've actually mixed up several of our propositions. So we've got micro grid technology in there. We've got a battery that we're trading and we've got zero bills as well. So a zero bills property is where we've got significant amount of solar on the property that exceeds the amount of input consumption. So that difference between input and export means we can actually set the rate at zero as the guaranteed rate, uh, either five or ten years depending on the property and the circumstances. So we've got this kind of mixture of everything that's going on that side. But what we then do is measure all the energy flows, import, export from the properties, trade the battery. So we'll store some of the surface energy in that battery. We'll then be trying to keep that boundary connection as low as we can so we keep the capacity cost for that site down and then we decide when the battery is supplying back to the homes overnight, uh, when there's less solar, wind in the winter and all the rest of it. So there's a whole balancing process that's going on across that whole site and that means we can offer zero bills or lower rate bills because we're managing the grid in a smart way.

Speaker D: That is amazing because a lot of people are ah, sort of always fresh to connection or capacity. But I remember when Greg was at the Spectator Energy Summit last year, he was saying that his long term dream is that every Octopus comes customer, that Also has an electric car. Uh, actually could potentially the car be both ways. You know, the battery, when it's not in use, being used for other things and obviously when it needs charge, it gets charged. Is that the real exciting thing that you think you could link four or five devices in people's houses from their hot water to their car power that essentially works with the M micro grid?

Speaker C: Yes, I mean, exactly right. So if you've got home solar battery system, we can trade that battery and we can have balance the grid with that balance. If you've got a car, do the same thing when we get V2G property happening. So obviously we've got. The BYD was announced here last year, so that's now growing. Uh, if you've then got an air source, heat pump and hot water tank, then you've got more flexibility there. So you might increase the temperature of the house by a degree or so and then it coasts between 4 and 7 peak period when the grid is under stress. So it's all about balancing and you can do that across all of those, those three, four assets.

Speaker D: Now, while I've got a future technology evangelist, I'd love you to dispel some myths about heat pumps. Because I meet people and they're like, my property. Can't do it, it's never going to work. I met, um, MCS who are saying Alex and the whole of Wimbledon, there's only been 15 installed and the whole of all the unspouted houses. What would you say to someone thinking about a heat pump, um, about why they should go for it and essentially some reassurance about how you guys take them on the journey to avoid the stress parts of it.

Speaker C: First thing, um, the size of the heat pump is based on what's called heat loss and the ability for heat pump to heat a home is based on that heat loss. So heat loss is, um, what is the fabric made of, what's the insulation like? And so on is the cavity wall insulation. So any survey to modify heating system, even if you're replacing a gas boiler, you should still get an analysis done as to what the loss of heat is. That tells you this is the size heating system. You need a boiler or air source heat pump. So our cosy is a cosy six cozy line. That's the kilowatt of heat that it provides. Heat pumps will heat heat any home. It doesn't matter how big the heat loss is. You just got to put in a slightly larger heat pump to cope with the heat loss. Um, so there's no issue with will a heat pump work or not. It's down to that thermodynamic analysis of the property. Um, second point is location. Um, so space in a garden, um, get the right distance from neighboring windows and all the rest of it. So lots of properties can cope with heat pumps. Uh, so that location shouldn't be an issue. Um, hot water, uh, so a heat pump will provide both heating and hot water and it'll actually balance. And you know, what we do with our heat pump is run our hot water middle of the day and then overnight at say 2 in the morning. And we actually do that against the cosy tariff, which has different rate time we use rates. Um, and that brings me on to coefficient of performance. Uh, and there's probably a term you've heard, spark gap, which is the difference between cost of electricity and cost of gas. Right? There's electricity, there's gas. Now when you run a heat pump, um, I started to refer to it as drawing energy from the air rather than heat from the air. Because everybody says, will a heat pump work when it's cold because it feels cold, where's the heat? Right? But actually it's energy in the air. So absolute zero is like -273 degrees. So there's always energy in the air at -5. Whatever. It's just a question of the process. You get that energy out of the air, ah, amplify in the heat pump and bring it into the home so they'll work in those colder temperatures. That's coefficient of performance. So because it's extracting energy from the air, the electricity uses is the pump and the fan and all the rest of it. Um, and it actually means that a kilowatt hour of electricity will give you somewhere between three or four kilowatt hours of heat. So that spark gap is that multiplier. So if you've got a kilowatt hour of gas at 6p and you've got electricity at a 25p kWh cost, if the spark gap is like 3 or 4, if the coefficient is, is for, then you're more or less parity on the cost of running a heat pump against electricity versus gas. Right? But that's comparing flat rate electricity at 25p with gas at 6. But our cosy tariff has a dip in the morning and a dip in the afternoon and a dip overnight and there's a peak between 4 and 7. So actually the cost of electricity is lower on a time use tariff, which actually means quite often we can see that, um, the spot Gap goes the other way and actually becomes cheaper to run a heat pump than run gas because you're using the combination of time used, tariff flexibility and all the rest of it.

Speaker D: Now, as you said 12 months ago, you announced the relationship with uh, BYD. You've made it very easy to get house electricity bills, cars. What would you hope from a technology point of view in the next 12 months as we head to various targets in 2013, 25, 35, but specifically in 12 months time between Battersea now and 12 months time, what would you like to see as our final question today?

Speaker C: So, um, we are going to start to see assets being metered. Uh, so what's my car doing? We already do that to some extent with intelligent Octopus Go. But we'll see that more. We'll see heat pumps monitored and so on. Um, we'll see uh, things like the heater product that I mentioned that is completely changing the way in which you create hot water. You're putting a data center on the side of a hot water tank. And that's kind of, it's like um, Edward De Bono, um, lateral thinking, right? You want to solve the problem, which is carbon emissions, and you want to solve, uh, grid balancing, all the rest of it. And actually do you go that uh, head on or do you come across it because somebody's invented something really different? So actually what I'm excited about is just to see what else appears in the next 12 months.

Speaker D: Phil, it's been an absolute pleasure to all of our listeners. We'll get a whole summary of Climate Action Week, but can we thank our, ah, Technology Future evangelists? Phil still from Octopus, thanks so much, Alex.

Speaker C: Pleasure.