Guest Series with Dan Nicholls, Chief Product and Commercial Officer, SNRG

00:00:05 – Pete Aston
Hello, I’m Pete Aston and welcome to another episode of the Connectology® podcast from Roadnight Taylor. Now I’m joined today by my colleague Philip Bale, who’s often on our podcast, but, more importantly, we’re joined by Dan Nicholls from SNRG. Welcome, Dan.

00:00:20 – Dan Nicholls
Morning.

00:00:21 – Pete Aston
Nice to have you. So, Dan, do you want to just give us a little bit of a brief intro to like who you are, who you work for, what you do?

00:00:29 – Dan Nicholls
Yeah, so I’m Dan Nicholls. I am the Chief Product Officer and Commercial Officer at a company called SNRG, and SNRG is essentially a microgrids business. So, we work with the new-build residential sector, we also work with new-build industrial and commercial sectors and indeed some existing operators in the non-domestic space, and we fund, develop and operate what we call microgrids.

00:00:58 – Pete Aston
Okay, so how long have you been doing that? Has SNRG been going a long time? Have you been with them a long time?

00:01:05 – Dan Nicholls
So, we’re about six years old, founded in around 2018. And really, the hypothesis of the business was we need to electrify, to decarbonise. But obviously, if we do that, we’re going to deal with a number of challenges, and I’ll talk a bit about the challenges in a moment. But SNRG’s idea was that can we come up with a solution that we can fund and run, that helps us solve some of these problems and gives us a solution that allows the built environment to decarbonise in a way that doesn’t cost any more for developers and indeed for, yeah, businesses and residents.

00:01:40 – Pete Aston
Okay, that’s interesting because I think Philip and I, we’re tending to work with sort of bigger, the bigger end of the spectrum, with large scale energy developments and so on. So, we were having a chat just before the podcast started, so there was some really interesting stuff going on in the microgrids space. So, do you want to sort of just start at the beginning of the story with like the problem that everyone’s seeing around decarbonisation and sort of talk us through from there?

00:02:08 – Dan Nicholls
Yes, yeah, absolutely. So, I mean I, in terms of my background, I actually started out in land use planning, working in the public sector, and one of the things that I got interested in really early was how do we, how do we help the decarbonise, how do we have the built environment to decarbonise? And originally that perspective was what are the planning policies that can encourage development to decarbonise?

And the kind of hypothesis is that surely, if we’re going to decarbonise the built environment, the new build segment is the easy win – surely, we can achieve that, and what I’ve learned over the course of my career is actually that it’s really complicated. It’s actually more difficult than you realise. It’s not just a question of, you know, putting a planning policy together and saying we should have solar panels on the roof of all new houses. So the key thing here is to decarbonise the majority of new homes will have to be electrically heated and, of course, we need to move away from the internal combustion engine. So the likelihood is we’re going to have electric vehicles, electric vehicle charging, as part of our new built environment, and that creates a number of challenges for the industry as a whole, for the construction industry as a whole.

If you in, traditionally, the way that the large housing estates are put together is that what we call a master developer, who will typically pull together the site, get planning permission and look at servicing the site with infrastructure, and that has, traditionally been gas, water, electric and other infrastructures like telecoms and so on. But those are the key utility infrastructures that are required. The model over the last 20 years has really built up around the idea that you go to an independent contractor who will put that infrastructure in; that independent contractor will either work the DNO or on the gas distributor or they’ll go to an independent – if they go to an independent, they will get a what they call an asset value, an offset payment against those costs.

00:04:10 – Pete Aston
So, when you say independent, you mean like a IDNO type mode?

00:04:11 – Dan Nicholls
Exactly yeah, so, and the key thing about the IDNO compared to the DNO is the IDNO, if it’s is able under its license conditions, to dip into its future revenues to offer a payment to help to reduce those infrastructure costs – so that model is starting to mature.

However, if we move away from gas, which is something that is happening, we’re seeing the government’s intention to introduce new building regulations, probably next year, to prevent new natural gas connections in the new building housing segment. So effectively, moving away from gas means you have less infrastructure on the gas side, but you lose an asset value contribution, and you load that demand into the electrical connection and what that then does, is it creates an increased demand through your electrical infrastructure and we know that’s causing problems for the DNOs to connect.

00:05:04 – Pete Aston
So, the sort of average demand of each property is gradually going up with adding in the electric vehicles, the heat pumps and that sort of thing.

00:05:12 – Dan Nicholls
Exactly. So, traditionally, you would typically not have to worry about heating as a heating load when you calculate the demand on the electricity network. And of course, we’re looking at electric vehicles, which is a large load per home, but of course not everybody’s charging at the same time. So, it’s a challenging equation to work out how much that capacity is. But we know it’s a lot more and we know that’s a problem for DNOs. So, what that means for the infrastructure developer is they’ve got less asset value, and they’ve got more cost.

00:05:41 – Philip Bale
I think just going back, obviously one of the challenges for the DNO is they also have these potential larger demands for much longer periods of time. So the way the traditional homes have been built up is after diversity, maximum demands, but it tends to be quite short. The longest thing that would be on would be your electric oven, but then you have a 7-kilowatt, 11, 22-kilowatt EV charger that’s on for longer durations of times. It makes it much more difficult for them to have that diversity, and that could happen with neighbours, which then means beefing up the infrastructure for that, if they’re assuming everyone’s operating like a little island.

00:06:12 – Dan Nicholls
It’s difficult to forecast as well, which is the other thing we don’t…
Electric vehicles are still in its early stages, so we don’t know whether everyone is going to charge electric vehicles from home in the future. We certainly think more will, and of course, with heat pumps, the beauty about heat pumps is they are efficient, they will, you know, they tend to work on a sort of efficiency ratio of two to three to one. So if you effectively, one unit of power can give you two or three units of heat, which is great, but under other, a post-fault condition, when you’re restarting every system or when it’s very cold, the heat pumps don’t work quite as efficiently – so the network sizing has to think about this issue too, as well as hot water and as well as electric vehicle charging. So, what that means for the house builder and for the infrastructure developer is that’s a bigger demand on the DNO network. Now we know that regulations are evolving to try and rearrange where those costs sit, but today we’re seeing very much more expensive connection costs and long lead times to connect new housing developments – that’s a serious challenge for the infrastructure developers.

00:07:22 – Pete Aston
And the long lead times are coming, you’re seeing from the grid side to actually like reinforce the network or whatever to actually provide those connections?

00:07:30 – Dan Nicholls
Yes, that’s right, and you’re also seeing things like interactivity, so multiple sites being managed by the DNO, actually…

00:07:38 – Pete Aston
That’s a painful process.

00:07:39 – Dan Nicholls
Indeed, I think it’s something we could do – we could do better through collaboration, generally speaking, but all these problems are fairly new for the infrastructure developer.

00:07:50 – Philip Bale
If we take a step back a second, because myself and Pete we’ve both done times in innovation teams and there’s obviously a lot of people who have heard of the term microgrid, may understand it for a certain instance, but it’s probably worth just describing a little bit around how the existing network works and how a microgrid works and the key difference between them.

So, if I do the traditional network and then I’ll hand over to you, as the expert, to do the microgrid of how it differs.

Say, a home gets connected, each individual home has their own meter, their own supply that’s coming through and they have their meter as a boundary between their home and the IDNO or the DNO. If they have electric vehicle chargers, solar PVs, batteries, they could choose to do those, but often what a lot of residents look at is when they look at those, they’re putting the solar PV on the roof, the batteries, the payback, the return on investment can be quite long because at the moment, under the current market mechanisms, there are benefits, but they’re quite expensive to start with quite a big capital outlay, and often the people that are doing it aren’t doing it because it’s going to make them serious money, it doesn’t have a particularly quick payback. They’re doing it because they want to have a positive impact on the environment, the society themselves, and they size the solar panels, the batteries, their car and try and manage their own home load actively at a home level, and you could have a whole housing estate doing that on an individual basis, whereas a microgrid is different because…

00:09:18 – Dan Nicholls
So indeed, so in your scenario you’ve got, say, let’s put solar panels on the roof, battery under the stairs, electric vehicle and so on, and of course the ideal scenario would be all of those things work together and they minimise the demand for energy for that home.

00:09:32 – Philip Bale
Yes.

00:09:33 – Dan Nicholls
Which equates to cost as well as efficiency, but it’s efficiency back to the DNO as well, of course, because if you’re not drawing power from the network, then you’re reducing the requirements on the network. So that’s the ideal scenario. In this traditional scenario that’s very hard to achieve. Typically, solar panels on an all-electric home might use 40%, maybe 50% of the power produced by the solar panels in the home. The rest of that then would be exported to the grid. You might get a small payment from a supplier to do that, but the ability to really capture the value of that with the loan is really difficult.

00:10:07 – Philip Bale
I think just for context, that’s like about 10 percent typically, of what you’re actually buying. The power is what they’ll sell it back or buy it back off you. So if you’re buying it for it, it’s in the 20s of pence and if you’re selling it to them it’s one and a half pence, something along those lines. Is that right?

00:10:20 – Dan Nicholls
Yes, that’s about right and indeed, if you take a think about the volumes of energy as a typical solar array might meet sort of maybe eight, ten percent of the annual demand of the home in a modern electric home. So it’s not really that efficient in terms of using renewables. And if we assume that decarbonising is something that we want to do, so with a microgrid you take that meter you talked about and you take it out from the home and you put it at the edge of the community. So let’s say we have 200 homes in a housing estate. The meter that interfaces with the wider energy system sits at the boundary of the community and then every home, every PV array, all the electric vehicles and so on all sit behind that meter.

Why that’s good is because all of those solar arrays then can operate as one, working together. They can be combined with a single communal battery solution, and this is what SNRG does – rather than put batteries in their houses, we put one battery in the community. That’s more cost effective from an infrastructure point of view and it’s more efficient from an energy management point of view, because then you can move to a point where perhaps you’re consuming 40% of your solar in the house, so maybe where you’re consuming 80, 90, 100%, because one of the reasons why you don’t consume solar in a traditional scenario is when people go out. They maybe go out and work in the daytime, when the solar is available in a microgrid, that power can go to the neighbour or it can go to the battery, for example, and indeed you can manage things like electric vehicles to make use of that solar power – so it’s a much more efficient energy solution.

00:11:53 – Pete Aston
So, in the best case scenario with that microgrid, none of that solar power goes out from the meter into the DNO side of things; it’s all kept in that small microgrid.

00:12:05 – Dan Nicholls
Exactly that and we typically size our systems so there’s a bit of excess solar at the outset, but we do that knowing that as we optimise, increase efficiency of the microgrid over time, as we learn about people’s behaviour and so on, we can really target about 100% use of the solar on the site. And I think that’s a really important principle of decarbonisation, let’s generate it locally and let’s use it locally.

00:12:26 – Philip Bale
So obviously, at that point you’re optimising rather than as a household, you’re optimizing as a community. So, when someone’s out, you’re using their power and vice versa when they come back and then you have that diversity across their portfolio of property. Some people have EV’s, some people don’t, so you’re making best use of the energy when it’s available. And I’m presuming also, if you have a battery, you have one party, one entity, your company or others for doing microgrid operation, because there are competitors who can then take the intelligent choices of when to charge that battery, when to discharge the battery. So you’ve got someone that’s looking at it at a much bigger level rather than a householder trying to decide when they optimise their own individual battery.

00:13:07 – Pete Aston
So now I’m interested who’s doing the optimisation then, have you got someone in a little box, you know, sort of ramping everything up and down? Or have you got some snazzy controller? I’m assuming.

00:13:18 – Dan Nicholls
We do, we do. I mean, it’s obviously part of our platform solution. I would be lying if I said there wasn’t ever anybody in the little box working out how the solution might work and how it can improve it. That’s, that’s also it, we always say these are highly automated, but they’re a mixture of both.

00:13:35 – Pete Aston
Sure.

00:13:36 – Dan Nicholls
So yes, the system itself is programmed to follow the constraints on the site and the price signals that work in the site to efficiently optimise the use of renewables.

But of course, we have a team as well that look at the site and say, okay, could we do it better? How do we work differently? What are the market signals that we could work to, to make this all work better for everybody?

00:13:57 – Pete Aston
So, I guess from that point of view, each house/premises within that microgrid is then connected into that controller, so you know what the consumption of the house is, you know what the output of the solar (if there is some solar on the roof), that sort of thing, so is that infrastructure that you have to put in as part of the microgrid from day one then?

00:14:17 – Dan Nicholls
Yeah, so the key thing about a microgrid system is you need to put in communications alongside the energy assets and you need a control system, and that has some site components, and it has some cloud-based components, and they work together to gather the data about energy consumption. So we monitor the meters, so we know what each house is consuming, for example. We can also meter the electric vehicles, and we obviously meet a battery solution as well, and the data that we ingest then drives the run strategy that we use to optimize the assets. And, of course, we look ahead, we look at weather as well and we look at how we can run that system better tomorrow as well.

00:14:57 – Pete Aston
Okay.

00:14:58 – Philip Bale
And obviously we’re talking at the moment about residential, but it’s not just limited to residential – it can also be industrial, commercial, bigger industrial commercial estates, and that’s, it’s not limited just to one sector, is it?

00:15:08 – Dan Nicholls
Exactly, the technology applies to both. The key thing for the residential sector is, (and I’ll talk about a bit more in a moment) microgrids can benefit developers, infrastructure developers and house builders. That’s important because we’re going to decarbonise, we shouldn’t just leave the burden of that upon the house builder. It also can support the residents, but it also needs to make sure that the service that we offer to residents, allows residents to carry on with their lives, it’s not disruptive.

Ultimately, I’m a big advocate of the energy transition and really interested in that have been for some time but when I go home, I just want to live my life, so that’s an important part of the offering for residential sector. However, in industrial and commercial segments, there’s lots of applications for microgrids that vary from again helping to decarbonise in a light touch way but also working very closely with operators to tackle the big problems that face you know the transition away from process, you know high carbon processes to all electric processes.

00:16:09 – Pete Aston
And I guess an industrial commercial customers may be a bit more flexible with what they can do with their demand, like, say, residents, you want to go home and not think about your electricity, whereas an industrial commercial customer can maybe have some of their own systems in place to ramp their own loads up and down if they need to, to help with whatever microgrid controller is doing.

00:16:30 – Dan Nicholls
Yes, so we design, we fund, we operate – that’s our solution. We can offer the microgrid as a service to a client, but when it comes to working with operators of industrial sites and one segment submerging, we’re all aware of these days is data centres. So, working with segments such as that, we can work alongside those segments to capture the requirements, ensure that the microgrid can service those requirements. We know that, for example, data centres you know, the power demand enormous, the growth in the segment is also huge, but importantly, we need to make sure the system can provide the resilience to ensure that the key service that’s been offered is not interrupted.

00:17:11 – Philip Bale
So I think Pete mentioned that it’s something that Roadnight Taylor doesn’t do day in, day out because it’s fairly niche; it’s a fairly new market that’s coming through. One of the things that we do far more of is the private wire connections. So, effectively, someone saying I’m going to develop a big solar farm, I’m going to plug it into this big industrial commercial building, one of the challenges that we will often see is the solar developer community want to try and develop something as big as possible; they then have to try and work out – how long will that specific building need that power for? What happens if it goes? How much will they utilise of that? How could that change in the future? How much of it will be spilled back into the network, which then ends up having a different rate to the person that’s consuming it?

I’m presuming on a much bigger industrial commercial scale you can then have that one big plant, whereas if we were looking at as a project of doing 10 industrial commercial buildings, you wanted to put solar into each of the buildings. You’re talking 10 separate, either roof mounted, or ground mounted arrays being physically plugged via separate wires going into the individual properties?

00:18:16 – Dan Nicholls
Yes, and I think the microgrid applies the same principles that we use in the residential space, you know, it doesn’t make sense to put solar on every building if you’ve got excess generation as a result of that. So, a microgrid can then allow you to put the solar or wind potentially as well and storage and so on, in the best location and ensure that it can get socialised around the users of energy – so that’s a kind of key principle. It doesn’t mean we don’t have to do all that design thinking that you just talked about, modelling, forecasting, etc, that’s all part of the service that we do.

00:18:51 – Pete Aston
So how do you find the interaction with the DNOs with this then? So, obviously, this is you know, we deal with DNOs, you know, day in, day out, and some are easier than others, and you know there’s different challenges. But obviously microgrids are a fairly new sort of concept. So how are you finding that interaction with the DNOs on this? Are they getting it?

00:19:11 – Dan Nicholls
So obviously each DNO is slightly different. I think I would definitely say that DNOs understand the concept of microgrids and ultimately, we’re talking about a bulk supply from the DNOs perspective and the needs, with generation connected behind that meter and flexible load. So the DNOs perspective, it’s ensuring that they can connect those assets to their network. But what’s different is the microgrid has a control system and we talk a bit about the kind of connection rules that are emerging in the DNO and the IDNO space; but one of them is the G100 guidance that is evolving and has recently evolved to incorporate flexible demand as well as generation. So, our microgrid solution has a G100 compliant load control system that allows us to manage the flexible loads on the site as well as the generation. So, I mean, it’s a new area of guidance and regulation, but it’s something that we’re already starting to talk to the DNOs about using and trying to make sure that technology can be used to encourage the DNOs to be more flexible with their connection requirements.

00:20:18 – Pete Aston
So, I think there again go back to the residential scenario, there’s two different elements of where you get that flexibility. You can get the flexibility from the automated processes, which is your batteries, your heat pumps, your electric vehicle charging. But also, we’re having a conversation earlier around the residents can actively try and do things to, as a cooperative, as a group, to try and basically manage their own energy needs so that they are making active choices together which ultimately benefits everyone in the system.

00:20:47 – Dan Nicholls
And just to take that back to the DNO point, I mean, I think there’s a tendency, because the DNO is incumbent, for us as kind of industry actors to sort of be critical of the changes the DNO is working through and the pace and so on. I think to a point that’s slightly unfair. And before I joined SNRG, I worked for Centrica on a innovation program which was called the ‘Cornwall Local Energy Market Program’ and the real centre of that program was to build a technology that could allow flexibility to interact with the DNO and indeed the electricity system operator as well, so that the ESO. And we know that the DNOs are trying to introduce the use of flexibility as a way of managing constraint and congestion on the grid. The microgrid offers that tool; so rather than have, let’s say, 200 or 500 or 1000 homes connected to a DNO network, that’s a challenge for the DSO, (the distribution system operator) to try and unlock the use of flexibility. If that was a microgrid, all of that service can be curated and offered to the DSO as a service to help manage constraint.

00:21:54 – Philip Bale
And with the fact that you’ve got technology there as well as just people changing their habits, you’ve got the battery that can also back up the changing of habits as well, which then potentially gives you the double whammy of having that control system set up with one, and obviously presumably cheaper from the fact you’ve got one contract going to one party as opposed to 200.

00:22:12 – Dan Nicholls
Exactly the multiple levers to single point of interface. But I think the other key thing to note is that, that actor, the microgrid operator, SNRG is looking after the residents as well. So this has got to be about residents benefiting without residents taking additional risk and indeed being able to get on with their own lives, and I think that the microgrid offers that ability to create that curated interface between residents and the markets.

00:22:35 – Pete Aston
And I guess from a DNO point of view as well, you know, if you’ve got a thousand houses, all with solar on it, you’ve got no control over that. You’re just relying on some diversity type principles to work out how much is coming out from there. If you’ve got microgrid, you’re going to have a set export capacity that you are allowed out of that, and you’re controlling that within your system. And so, from a DNO point of view, they get that benefit that they don’t have to think about what’s the diversity of this group of thousand houses. They know what it is because it’s whatever you’ve agreed the export capacity to be at that interface point, so there is definitely a benefit to the DNO.

00:22:13 – Dan Nicholls
And indeed beyond that set of operating parameters, the DNO can also reach into the microgrid to say look, we’ve got an exceptional circumstances coming, could you turn down the solar inverters?
So in theory, technically, that could be done and that could be offered back as a service. Of course, the key thing is that’s got to be to the benefit of the residents. Yeah, so we still need the market mechanism to come to compensate residents for providing that service.

00:23:35 – Philip Bale
And it’s probably also fair to say that this is still a new concept is probably a sort of a harsh term to do, but it’s still a very new market. At the moment, microgrids are relatively small; a very, very small proportion of new houses will go in with this, but the fact that this is now something that’s being done is because you must believe this is a commercially viable option of going through which benefits the residents, because they have to, want to do it, but also benefits corporate entities who want to invest in and put the infrastructure in to actually make this work.

00:24:09 – Dan Nicholls
Yes absolutely, we do think that. We know that microgrids in the residential space is new, but microgrids have been around for a while in other segments. You know SNRG’s backed by private equity firm called Antin Infrastructure Partners and Centrica, the owner of British Gas in the UK. So we also know that others believe that this is a model that works and solves problems in the marketplace, and we’re not the only ones. That’s the other thing to mention – there are other microgrid operators in the domestic space as well as the non-domestic space that are also bringing forward models that can help solve the challenges for, you know, developers as well as for residents.

00:24:47 – Pete Aston
Yeah, I think that sort of competition is good in the sense it brings confidence in the market and, you know, common learning across different people and platforms.
From a more of a techie commercial point of view, I think you were telling me earlier that these microgrids are effectively classed as a private licence exempt network – is that right? Is that how you’re sort of running them?

00:25:10 – Dan Nicholls
Yes, so to move that boundary meter from the house to the edge of the community, you then technically the network becomes a private network because it’s beyond that final consumption meter point. So the model is based on the Energy Act, which still regulates all of the activities in the energy market. But within the Energy Act there was a set of exemptions, from the need to have a license effectively, and private networks fall within that; so they are regulated by the Energy Act, but you said you essentially don’t have to have the same set of sign-ups to the licensing conditions that the DNOs or indeed licensed suppliers have, and the key thing to say is that obviously that doesn’t exclude private networks and microgrids from the need to protect consumers – so consumer rules still apply. If you’re a resident sitting on a private network, you still have some rights around choosing your energy supplier, and there’s a requirement on private network operators to facilitate that. So it uses a license exemption. It necessarily needs to the way the energy systems be constructed and regulated, but we build our networks to the same standards as the as the license conditions, we work the same standards on suppliers and consumer protection still applies.

00:26:31 – Philip Bale
Yeah so it’s a quick question – why would a house developer not do this? Why are you not in every single new housing developer that’s going through? Why is this an option that they’re doing?

00:26:39 – Dan Nicholls
Well, I mean we think that that housing developers should do this and we’d be keen to work with as many housing developers as we can. I mean I started to talk at the beginning about the move away from gas and the burden of moving to all electric and challenges around the cost of the grid. The other thing to bear in mind, is that places a burden on residents. So all electric homes are good because we’re not using gas. So in theory, that’s a good step towards decarbonisation. We know that creates a problem for the DNO, we know that increases costs for developers, but we don’t really talk about how that increases costs for residents as well.

All electric homes cost more to run than gas homes. Even, you know, obviously we’re increasing the efficiency of those homes, but fundamentally, electricity is more expensive than gas, so that’s a key part of this equation. We need to then think about how we do that. That is about installing renewables and that’s something that we see that’s coming, and so from our point of view, if we’re going to solve this problem, we’re going to deliver sustainable homes, and particularly if we’re going to do it in areas where we’ve got large growth – we know the government is keen to push for that, we know local planning authorities want sustainable communities. We need to think about the renewable energy strategy and the key thing that SNRG can bring is funding for that renewables, so that allows developers to deliver sustainable homes that are also low cost for residents without the additional cost of doing so.

00:28:01 – Philip Bale
So just to follow on from that, in your perspective, if a home was to have its own solar panels, its own heat pumps, electric vehicle charging, compared to a conventional gas heated property it becomes more expensive from an operational perspective, and where you’re looking at it is basically giving the ability of having the rooftop solar on the most appropriate homes, sizing it to the community rather than the individual home, making better use of that and potentially then also putting solar PV on communal spaces where there’d be no incentive for a house builder to do that at the moment. Potentially even some ground mounted solar that would feed into the community. At that level can it then become more cost effective than a traditional gas connected, or gas connected estate, gas heated estate?

00:28:48 – Dan Nicholls
It can become at least as, at least as a comparison. So I think that’s the key thing. You’ve got to deal with the fact that electricity is three plus times more expensive than gas as a starting point. If you’ve got heat pumps, yes, of course that helps with that. But of course, the fundamental principle here is that if you’re going to have electrical home, electric transport, then it’s going to cost more than gas. So what you can do with microgrids is you can bring those and those sort of costs into a more comparative point of view and you can create the mechanism to allow future savings. And this is a key thing for me is that as the markets transition, as renewables get cheaper, as the market becomes more dynamic, the market can bring those savings forward so that residents can ultimately end up with, you know, much lower cost operating conditions as well.

00:29:36 – Philip Bale
Yeah, so I think we’re all in agreement that if we want to hit sort of requirements of decarbonising, transport and heat are the two big ones. Heating is probably more controversial than transport, I think, at the moment in terms of coming through and obviously anything that we can do to try and make it a logical choice that people want to do it, and one of them is price; finance always comes into it – capital costs, ongoing costs, but also to take out the headache of how to do things in the shock valley.

00:30:03 – Dan Nicholls
Yeah, I think we sometimes overlook the complexity of living and operating in a smart all-electric home with a, say, a heat pump, hot water tank, with a EV charger. You’ve then got to think about, well, who, who maintains those assets? How do they work together? As a resident, do you have multiple apps to try and control those systems? Do you have multiple suppliers? If you’re trying to get involved in? We talked about the flexibility emerging within the energy market, the role of aggregators in unlocking that, if that is going to emerge and introduce smaller chunks of flexibility, residents have to engage in aggregators as well as supplies. So, yeah, it could be really complicated to live in a smart electric home and, again, one of the key underlying principles of the product we’ve developed as a microgrid is to make that simple.

00:30:50 – Pete Aston
And I was going to pick up on that, you know what’s the experience of residents who are currently connected on these microgrids that you’re running is it; have they generally given some positive feedback, or do they just not know that you’re there?

00:31:07 – Dan Nicholls
Yes, I mean, ultimately not having any feedback is potentially also a good sign for us, and you know we’ve consciously designed our user experience to look and feel as if it was any home anywhere in the country.
So having no feedback can be considered a good thing. However, there’s always a nervousness when people aren’t talking to you, that you know, what do they really think. And we do have been really lucky in that some of our early adopters of our solution and again, these residents aren’t deliberate adopters of microgrids. Increasingly they may be, but really they’re just people buying houses and living their lives, and we’ve had some really positive interactions, you know, lots of dialogue, a number of our residents are interested in seeing what more can the microgrid do, what can they get out of it, what can they learn about it. So, we’re benefiting from having some really interested early adopters. But importantly, you know, we always want to hear about feedback, particularly if people aren’t happy, but sometimes no feedback is also a good thing, because then I think people are getting on their lives.

00:32:10 – Pete Aston
So, I think I’m keen to now talk about where this is going. So you, you say you’ve got a few microgrids up and running already. You know we’ve talked about the benefits of it, it looks like a great thing. So where do you see the future of this going over the next sort of five years or so?

00:32:30 – Dan Nicholls
So, I mean in industrial space, as we’re moving away from you know, fossil fuel driven kind of heating and processes, we think there’s great opportunities to integrate flexible generation, storage, low control. So microgrids has a big role to play, I think, in managing that space, particularly given the challenges of upgrading the distribution transmission infrastructure at the same pace. So I think we’ve got a big opportunity there for this type of product and technology, but perhaps the bit that excites me most is the ability to move into creating new communities, maybe even new towns using these energy systems we can create microgrids at the scale of hundreds or thousands of homes as we build up the new growth agenda that the government is promoting, then I think we can deliver genuine net zero new communities and, importantly, we can do that in a way that doesn’t place a burden on developers, but also creates the opportunity for residents to be more involved in that process and create a different model. So, for me, it’s really about potentially building new net zero towns and new communities.

00:33:39 – Pete Aston
And within that so, as this is scaling up, do you see any need for DNOs or TOs, ESO to change any of their structures and policies and, equally, do you see any sort of government level policy type changes that also need to come through to, to unlock all this?

00:34:01 – Dan Nicholls
So one thing we don’t commonly do is, we don’t commonly offer microgrids onto a retrofit environment, and that’s for a couple of reasons. One, because clearly the network has already been established and operated by either a DNO or an independent DNO, and that’s a key factor. So you can’t then take that on, potentially you could, but it would be subject to a commercial arrangement and of course there’s commercial decisions already been taken around that. The other complexity that we have is if in those existing environments everybody’s set up with their own meter, their own supplier.

So I think taking microgrids into retrofits hard at the moment; I think regulatory change could be looked at to encourage that. Certainly, it would be in the benefit of communities that want to decarbonise. If you want to introduce renewable, storage, electric vehicles into an existing environment, being able to do that using the principles of microgrid would certainly benefit, but we clearly need to think about how that impacts existing operators and obviously the regulatory side of things – so for me that’s one area of interest going forward. And then …

00:35:07 – Pete Aston
So, if any DNOs want to sell any network.

00:35:09 – Dan Nicholls
We’d always be open.

00:35:10 – Pete Aston
Alright DNO.

00:35:13 – Philip Bale
I think just to put in there very quickly of an example of why this makes a difference. So, as an example, I live on a new estate it’s an IDNO adopted estate, challenging to get an electric vehicle charging solution in that can be installed and adopted and it’s very painful. 10-50 meters down the road there is a charging port that’s there; that’s for the community use and for anyone to use. I can charge my car in my home if I had a charger installed that I could run a cable over a pavement for less than 10 pence a kilowatt hour. If I use that commercial entity one, I’m looking at, at least 50 or 60 pence per kilowatt hour.

The difference with the microgrid system is everything’s the same. It doesn’t have to have that significant markup in terms of going through, and I think that’s the thing that when residents realise that some of these options can end up resolving some of the barriers to entry. At the moment I won’t buy an electric vehicle until I can charge it overnight at home and get the benefit associated from using that cheap electricity which is then holding back the transition for lots of people who don’t have driveways, of purchasing electric vehicles and decarbonising. So I think the more little things that comes in, that smooths the way of going through, that’s for the benefit of GB PLC.

00:36:31 – Dan Nicholls
And we’re doing that exact solution on a site with a developer called St Martin Homes in Birmingham at Longbridge, and that site is a mid-density new build, all electric site so it doesn’t have driveway parking for all of the homes, but it does have dedicated parking on roadside and in parking bays. And the solution we’re doing there is putting dedicated EV chargers on those private parking spaces. The microgrid allows us to essentially integrate them into the energy bill of the house, so it’s no different for the resident whether they charge on their driveway or they charge in their parking spaces that’s on the street.

00:37:06 – Phillip Bale
I’m very jealous.

00:37:08 – Pete Aston
So yeah, anything else you want to ask Philip, anything else you want to raise down about microgrids, where they’re going?

00:37:16 – Dan Nicholls
One thing that’s on our minds is, as we scale up the microgrids, we deliver bigger generation plant, bigger batteries and so on, larger projects. What do you see, Roadnight Taylor, as being some of the key challenges that the industry is facing around going down that route?

00:37:29 – Philip Bale
That’s a good question. So, I think at the moment, it’s a very difficult transition with the market. At the moment networks, and markets in particular, are particularly full over 500 gigawatts worth of accepted technologies, and that requires in the past the National Grid would only be worried about 50 megawatt chunks worth of generation coming on the network at any one specific grid supply point, and that has scaled right back to 1 megawatt and in some instances, they have been interested in 100 kilowatts worth of battery or generation coming on specific networks, especially where there’s short circuit, current fault level concerns, lots of new information coming out at the moment as to what should be material, what shouldn’t be material. Demand also increasing battery storage limitations, ramped connections, all of these things.

A very influx of network rules and systems varying on different grid supply points, different network operators, and I think it’s something of being mindful of making sure we’re being fair, that people aren’t getting a free ride and slipping through and having an unfair advantage, but also not stifling the things that need to happen for decarbonising the UK and as you get bigger, 949 kilowatts is a magic threshold for most networks, if you go to a network operator and saying I’m putting on a two megawatt battery for my four, five thousand home estate; they may look at that and tell you your material and might say you can connect this in 2037, 2038, and there’s some things that can be done of working with them to try and get rid of that restriction.

But that’s one of the things I think is a challenge at the moment that you might see is how the rules and procedures might well stifle these types of developments, and I think how, as there is reform going on and understanding where should the lines be drawn, taking this into consideration.

00:39:31 – Dan Nicholls
Yeah, very interesting I think that it’s really important that if we’re going to see these innovations increase and we’re going to see the decarbonisation of the built environment, we need to make sure that the energy system operator, the distribution systems and the various different providers of products and service in the space collaborate, because there’s clearly a need to make sure that we connect generation and demand efficiently, there’s importantly harking back to my time at Centrica working on the Cornwall Local Energy Market Programme, a need to make sure that those assets that have flexibility can access the markets right through the segmentation, right through from the DNO, DSO, congestion management, through to offering services into the balancing mechanism and also helping the ESO manage their transition. So, there’s lots of complexity in terms of creating a whole system solution. So, from our point of view, we’re very keen to keep engaging and working towards those solutions.

00:40:27 – Philip Bale
I think from our perspective, this is really interesting to see because ultimately this is something that started in innovation sites and innovation projects usually start as being untested, non-commercially viable, lots of barriers in the way, both myself and Pete have both worked in innovation projects and developed some of these. One thing that we talk about an awful lot is around active network management, another thing that started in the innovation sphere and has become rolled out widespread across distribution transmission markets.

It’s nice to see another successful story of something that started as an innovative idea of being not commercially ready, not commercially mature, getting to that stage and obviously still sounds like there’s more to be done, but it’s nice that it’s getting to that stage and it’s another option/area/thing that the UK can do which is ultimately going to help us to roll for all games, which is decarbonising.

00:41:18 – Dan Nicholls
Yeah, and it’s clearly always going to be more that we need to do and we need to collaborate to do that. But from my point of view, going back through my journey, back to when I started out as a planner, thinking about what is the mechanism we can use to decarbonise homes which surely these are the easy bits in the decarbonisation agenda. It’s really nice now to be talking about working for a company that has a solution and engaging with the wider marketplace to try and drive forward the changes and the evolution that needs to happen and continues to happen. But ultimately, clearly, you know now the time where these things are happening, we have a solution today that works and we’re already delivering that. We’re keen to work with more house builders and more industrial commercial developers and operators to bring that technology to bear and, of course, we’re also really keen to work with the system operators to make sure that the way in which we connect new development, the way in which we operate flexible loans, actually services the system as a whole.

00:42:17 – Philip Bale
And, as you said earlier, it’s also really good to see that there’s other commercial operations, there’s other competitors of yours coming along the line, but that’s actually for the benefit of everyone. It shows that there is a market and it’s been driven that way, and the more people that are doing this in their own way, the better it will be for everyone in terms of the market.

00:42:33 – Dan Nicholls
Agreed, and if you want to find out more about SNRG and the products and services we offer, please go to our website, which is www.oursnrg.com.

00:42:46 – Pete Aston
I think we’re out of time. Dan, this has been absolutely fantastic to have you on. It’s been a real eye-opener for me, learning more about the microgrids, so thank you so much. You’ve come all the way from Cornwall to see us, it’s been great. Philip, thank you for joining us as well. Thank you for listening or watching as well, and we hope you join us for another podcast in the future. Goodbye.

0:43:11 – Philip Bale
Cheers. Thanks all.