Takeaways from LCP Delta's 2023 New Energy Summit

Over 100 people from the leading edge of the downstream energy transition gathered in Frankfurt to share, discuss and explore key industry trends and issues. In this episode, Jon and Sandra share and discuss each of their three takeaways from New Energy Summit 2023.

Episode transcript

[00:00:04.570] — Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta. I'm Jon Slowe.

 

[00:00:09.370] — Sandra Trittin

And I'm Sandra Trittin, and together we are exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

 

[00:00:23.250] — Jon Slowe

Hello and welcome to the episode. Today, Sandra and I will be talking about the LCP Delta 2023 New Energy Summit. Sandra, I got home at about midnight last night. How about you?

 

[00:00:37.770] — Sandra Trittin

I was a bit quicker, actually, but not a lot. But also due to the reason that I stayed pretty long. Keep on discussing with the people because it was quite interesting.

 

[00:00:50.130] — Jon Slowe

So, for those that don't know our Summit, it's gathering of this year, about 110 people over a couple of days from a mixture of energy retailers, product manufacturers, finance sector. Who else, Sandra?

 

[00:01:08.970] — Sandra Trittin

Quite a range of technology providers. Right. And then also new energy companies. So, like the new Entrants, new solution providers.

 

[00:01:19.330] — Jon Slowe

And from across Europe, from Japan and in Frankfurt this year. Sandra it's one of those trips when I went from the airport to the hotel. I don't think I even walked outside of the hotel. And then I went from the hotel back to the airport. So, sorry, Frankfurt, I didn't get to see any this time.

 

[00:01:40.480] — Sandra Trittin

So next time you just have to stay at a different hotel overnight because at least I got to see a little bit around, but not much. But it was quite busy because there were several famous concerts in that area as well during the two days.

 

[00:01:55.670] — Jon Slowe

Could have been quite an interesting energy music combination. So, what we thought we'd do today is talk about the key themes that came out of the discussions and panel sessions at the Summit. And Sandra and I have each picked our identified our top three themes and we genuinely haven't shared them with each other. So, what we'll do is hear each other's top three, see what we've got in common. That's different. And then should we unpack them a bit after that, Sandra?

 

[00:02:29.970] — Sandra Trittin

Yes, sounds like a plan. You want to start or should I?

 

[00:02:30.390] — Jon Slowe

You start.

 

[00:02:29.970] — Sandra Trittin

Okay. So, first of all, I think there were many interesting topics. There was no specific hype topic, as it was like some years ago, for example, with blockchain or anything.

 

[00:02:48.390] — Jon Slowe

Yeah. Or when Google bought Nest, and everyone Google was coming to the energy market.

 

[00:02:54.680] — Sandra Trittin

Exactly. Or hydrogen or something. So, I think it was covering quite a broad knowledge base also, and many different topics and areas of interest. The three I picked for myself, which I found most interesting is one on the technical side, which is all around the technical integration and standardisation. I think we heard that several times from manufacturers, from solution providers, but also from the retailers saying, like, we need to get this technical stuff going together. Right. Integration between heat pumps and inverters and storage and chargers and smart home appliances, et cetera. There just need to be a way of getting this done in the long run in an easy way to integrate and to provide there something to the customer. So, this is one topic.

 

The second one is all around the commercialisation of solutions and doing that in a consumer centric way. Meaning we are all energy geeks. We all have normally enough knowledge around the technology and how everything works. But the normal, let's say, consumer on the street outside, he needs to have some help and some explanation, but also have it as simple as possible to understand for him. So, there was one presentation where it was said that now we are going from the early adopters into the follower customer segment. But this follower customer segment has quite some different needs than the early adopters, which are normally quite close to the geeks like us. So, I think that was pretty interesting to see. It's the commercialisation, its new business models, but all from a consumer point of view.

 

[00:05:02.370] — Jon Slowe

Have you read the book Crossing the Chasm, which is about going from so it's exactly about going from innovators or the early adopters to the followers and how a lot of businesses never manage to cross this chasm between the two. They get stuck in the innovators, or the early adopters and they never make it to the mass market. I guess that's exactly the point you're making.

 

[00:05:27.440] — Sandra Trittin

Exactly. And then the last one, and this was the most surprising one to me, not only on your Summit, but in general that I hear this year on different kind of conferences is around financing. So, it seems there is enough money in the market. It's probably not the optimal timing in terms of valuation, et cetera, but there's so much money which is seeking a home, I think this is how you phrased it at the end of the Summit. But the question is, it seems there is no connection between the money and the market.

 

[00:06:08.950] — Jon Slowe

Yeah.

 

[00:06:09.610] — Sandra Trittin

So, I'm asking myself how can we support that and bring that forward to bring the money into the market? Coming back from another event two weeks ago, it was quite impressive because on one side you have a panel with an installer sitting there and saying like oh, and these are the concrete challenges we are having when getting a heat pump into the home and like technical challenges, physical challenges with the wiring, et cetera. But then on the other side, this guy should also sell the heat pump for over €30,000. And then you had the next panel talking around the financing and saying like, oh, and then you can bundle the assets and you can structure them and then you can market them to some pension fund or whatever. The discrepancy could not have been bigger between the two stories.

 

[00:07:07.260] — Jon Slowe

Right.

 

[00:07:07.930] — Sandra Trittin

And how to bring these two together, I think was one interesting point for me. And I have not found the solution yet, but I hope that some of the players in the market will do soon.

 

[00:07:19.860] — Jon Slowe

You found the question, but yeah, but not the answer.

 

[00:07:25.150] — Sandra Trittin

But now I'm curious to hear about your three points.

 

[00:07:29.230] — Jon Slowe

Okay. So, I'm going to start with one that's the same, which was the finance point I've written down on my notebook, the need for service-based propositions. So, in a way, exactly what you say. Creating a home for this finance through propositions that are no upfront cost propositions for customers around a heat pump or solar and storage or potentially even charging as-a-service EV charger. So yeah, find that connecting that all of that money that's looking for a home. And the onus is a bit on the finance sector to understand the energy sector, but possibly more on the energy sector to create the types of homes for that finance that are going to work.

 

[00:08:29.570] — Sandra Trittin

Finance is one and the second so one is the overlap. So, one bingo. One bingo point.

 

[00:08:39.510] — Jon Slowe

A second one around customer centricity, which I think links a little bit to your second point. I wrote down lots of people talking about it, but very few people doing it.

 

[00:08:57.470] — Sandra Trittin

In which way would you understand this point? Consumer centric approach? Probably a bit more details.

 

[00:09:10.130] — Jon Slowe

Yeah, so I think I still hear people talking about the customer. But to your point, there are so many different types of customer segments and what I did like at the event was a couple of people talking about taking customers on journeys. So, I think a lot of customers are really confused about what the right thing to do is and when they're confused, the default answer is to do nothing. And if you can work with customers to inform them, empower them, collaborate with them, then you can really help customers to make the right decisions. But you need true customer centricity to do that, not just to say we're customer centric. And I still see a huge way to go for the energy sector to be truly more customer centric, organise themselves around their customers and talk to customer segments and individual customers in ways that work for those customers. And then my third point was I think so that's similar to some of the things you were saying. Third point is different. So maybe half a bingo.

 

[00:10:23.990] — Sandra Trittin

Okay, so one and a half.

 

[00:10:25.500] — Jon Slowe

One and a half. Yeah, the third one is different and around residential flexibility and how I think its time is coming quite soon. I mean you could argue its time is there already to a point, but I think we're going to see more and more value unlocked in the next years. Maybe that's sort of a quarter linkage with your tech integration and standardisation because as part of capturing the value from that flexibility you need a certain amount of integration.

 

[00:11:02.650] — Sandra Trittin

Yeah, I guess, but it's interesting that you're mentioning that residential flexibility and that it's showing up. So, what would be your guess? How long will it take until it's really there. I mean, it's almost a crystal ball question, right?

 

[00:11:20.760] — Jon Slowe

Yeah.

 

[00:11:21.050] — Sandra Trittin

That's out of your gut feeling.

 

[00:11:23.790] — Jon Slowe

So, I think in some markets so if you look at some of the Nordic markets where you've already got dynamic tariffs and you've got quite progressive regulation around residential assets being able to be aggregated for the TSO (Transmission System Operator), you've got probably still pilots around distribution network congestion and flexibility supporting that. So, in some areas I think we're probably only one, two, three years away from it becoming more standardised so that a retailer could create an offer that would work for a lot of their customers.

 

[00:12:07.290] — Sandra Trittin

And how much would you think are the dynamic tariffs at the moment a driver for that residential flexibility? Would you think it's the main cost that it's now kicking off?

 

[00:12:19.950] — Jon Slowe

I think it creates a starting point because conceptually in the Nordics the dynamic tariffs are cost reflective. In other markets there's I would say some sort of semi commercial dynamic tariffs where people are experimenting with it. But conceptually it's really easy to understand, okay, I charge my car at this time, or I shift my demand at that time. And technically you're not dealing with lots of interoperability, you're just dealing with maybe one EV charger or one EV and the tariff. So, I think that's a really easy starting point. But I think there's so much more to then layer on top of that. And not every customer will want a dynamic tariff. So, some might want a fixed bill. And to see that flexibility, they just want to know their car is charged and in the background they're energy retail aggregators, moving the charging around, creating value from that and then sharing some of that value back with the customer in maybe a fixed bill offer.

 

[00:13:28.850] — Sandra Trittin

Yeah, I think that's pretty interesting what you're mentioning, right. These two kinds of different business models that are rising in that area, which is either the I call it more the explicit flexibility offering which relates to the car charger with dynamic tariffs and it's fully clear to the customer what's happening and what's going on. And it's probably also somehow understandable for the customer or there are these implicit flexibility solutions, as you were mentioning, it's somewhere packaged and then probably just given back to the client with a fixed energy bill price or something. But it's not really mentioned what's going on or why. Because in that case it's also not of so much interest.

 

[00:14:18.610] — Jon Slowe

Yeah, customer centricity finance, residential flexibility, your three-tech integration and standardisation commercialisation of solutions in a consumer centric way and financing.

 

[00:14:34.710] — Sandra Trittin

So one three quarter of a bingo!

 

[00:14:42.170] — Jon Slowe

I think that's maybe Sandra, is it that reflective of how much there is to do at the customer end of the energy transition? There's so many things to work on, it's not one thing to fix and then hey, everything off it goes.

 

[00:15:00.290] — Sandra Trittin

Yeah, I think there's one point which we also have to get in or to keep in mind, right. The consumer centricity is normally relevant once you design a product that you think from the consumer end. But the even more important point is around the communication and the education of the customer. I mean, luckily, now it's getting more and more common to talk around, let's say flexibility, demand response, et cetera. Also, with that big trial in the UK from beginning, like from last winter, right. So, people are getting more and more into these topics, but I think there's still a long way to go because we have to make it as easy for them to understand as possible. And I always give the example that we had at tiko, where one of our first flyers was, like, six pages and we tried to explain how customers would help to balance the grid. And we made nice pictures in comic style, et cetera. But people were looking at us afterwards and having big question marks, and it took us weeks to develop that flyer and to make it really simple, nice looking. And we said, like, wow but now we tried our best, we tried to make it simple. And then afterwards we took the next flyer, and we just reduced it to four lines saying like, oh, and by the way, you are helping to stabilise the grid in your advantage. We will make sure that you are never cold, or you never have a disadvantage out of doing that. And that was it. And no one was asking it and it worked. Yeah. And it worked out. Right. So, just to give you that example, I think this communication, but also education, not hiding anything, but making it as simple to understand and as easy to understand, I think is really important.

 

[00:16:52.930] — Jon Slowe

Yeah.

 

[00:16:53.840] — Sandra Trittin

And I think that's a big task to do, to work on.

 

[00:16:59.960] — Jon Slowe

And I don't think the energy sector has been particularly good at that.

 

[00:17:03.430] — Sandra Trittin

No, because in the past it was not necessary, right. If you sell a contract, energy contract, it was pretty simple. I mean, you get electrons and then at one point in time, the retailers were able to explain there are green electrons and blue electrons out of water and yellow electrons out of solar. But besides that, there was never the need to go further.

 

[00:17:30.390] — Jon Slowe

Yeah. And do you see many good examples of that today, Sandra? Like, I don't know, tiko's not the only company to go through that journey. Those examples that you described, are you filled with optimism about that challenge, or do you think it's going to be it's really hard to get right, and we've got a long way to go to get that through that learning and trying different things.

 

[00:18:02.010] — Sandra Trittin

So, I think we are still at the beginning. Right. Also, that we even have to align on our jargon and how we use different phrases in the long run. But I think this will come over time by itself. I think there are more and more companies also focusing on that part of communication and education of the customer, but it's still some way to go.

 

[00:18:31.250] — Jon Slowe

One topic neither of us mentioned in our top three, but we did chat about in Frankfurt was partnerships. And that's true. I guess we're now talking about language and communications. We're talking about standardisation and tech integration, talking about taking customers on journeys. No one company is going to have.

 

[00:18:55.230] — Sandra Trittin

All these no, no. And as we discussed in Frankfurt, as we said there, many of the participants were talking around partnerships, right, even on stage during their presentations and saying like, oh, and then we are looking for partnerships, or we want to partner up. But if it's really true, then as I mentioned, normally we should use your event as a business matchmaking, and there should be at least four or five matches coming out afterwards where you could say, okay, this will be a new product or a new way on how to approach the market or how to approach the consumer. So, I'm not really sure on how serious the companies are seeing that. But what's your reflection on that point?

 

[00:19:43.450] — Jon Slowe

I think people and partnerships makes people nervous because it's like, well, how long are we partnering for? I think people understand that they don't always have the skills. You've still got occasional debates about do we build it or buy it? But even when people understand, okay, we probably should partner, it's like, how do you structure that partnership? Do you do a trial? And I know in tiko there's the death by 100 trials because you could spend your whole life trialling and doing nothing. Do you partner with someone that might be your competitor in a few years? Does it actually matter? And do you just have to have a more relaxed attitude to doing things together?

 

[00:20:34.250] — Sandra Trittin

Yeah, but I think there is a point of just being honest with each other. So especially if you're working at a technology provider, there's always the fear if you're going into a partnership that in three years from now, the partner will do it themselves, right. And we can see that quite regularly happen in the market. Some companies want to have a quick market entry. They are looking for a technology partner, and then after two, three years, they are saying, oh, but now we do it ourselves. So, thank you very much, dear partner, but time is ending. I think as long as this is clear from the beginning, then it can be fine for both sides, right? Because then it's clear enough the pricing and this legal setup of the partnership can be done in a way that it reflects this kind of improvement or evolvement of the process. I think it only doesn't work if it's not clear from the beginning. And then for sure you have the exceptions, right, where it changes over time, just during the project. So, these are more the exceptions, but most often companies, especially on the technology development, they know if they want to do it themselves in the long run or not.

 

[00:21:47.160] — Jon Slowe

Yeah. Well, Sandra, let's get the talking new energy crystal ball out and instead of asking our guests to wind forward to a year in the future, let's do that ourselves. So, let's go to 2030 and let's go through each of our three points and just give an elevator picture as to where we'll be in 2030 with each of these points. So let's alternate and go one by one. So, you start with one and then I'll do one.

 

[00:22:21.200] — Sandra Trittin

Okay. So, I will start with the technical integration and standardisation. I think in some areas we will have made quite some improvement in 2030, meaning that protocols, for example, in the charging space, like OCPP (Open Charge Point Protocol), et cetera, will really become the standard and there will be not even a question around it. Unfortunately, my assumption is that there will be still some exceptions. Especially, my feeling tells me in the heating and in the solar space, where manufacturers are still trying to protect their garden, meaning their cloud access, by not following a standardisation. But this is more a feeling, but I hope that it will improve over time.

 

[00:23:11.470] — Jon Slowe

I have a similar feeling.

 

[00:23:13.210] — Sandra Trittin

Yeah.

 

[00:23:18.030] — Jon Slowe

So, for me, customer centricity, will it be really in practise rather than words by 2030? And here I am quite optimistic, actually. I think there's enough examples I'm seeing already. We had our two sponsors, Eliq and NET2GRID, who I think are embodying the types of customer centricity and journeying that I talked about. So, I think over the next years we'll see more and more good examples. And then quickly, the industry is sort of racing towards this becoming the norm. So, I'm quite optimistic about that.

 

[00:24:05.710] — Sandra Trittin

Yeah, I would join you on that. I would take the commercialisation and the business model as the next one based on the consumer centricity. And actually, also there, I'm quite optimistic and I think we will see it pretty soon over the next, let's say, 24 months, especially for the reason that at the moment, there's quite an oversupply of technology in the market, right, either heat pump, solar, et cetera. And the sales channels will need to have a look on how to get it out. And for sure, there will be some competition based on pricing. But once you arrive to a certain price floor, you don't want to go further down, right? Because then you will ruin the market. So, in the end, the only way on how to differentiate then at one point in time will be through this specific thought on how can I make an attractive and integrated business model for the client? So, this is why I'm also quite optimistic for that 2030 goal.

 

[00:25:14.890] — Jon Slowe

Yeah, I agree. And I think there are some really great front runners in the market demonstrating this today.

 

[00:25:23.100] — Sandra Trittin

Exactly.

 

[00:25:23.880] — Jon Slowe

Yeah. So, from my side, I'll do residential flexibility next. By 2030, I believe. In some European markets, we'll see residential flexibility being the value being of this, several tens of euros a year, possibly the hundreds of euros a year, and it being something that is maybe not part of every customer's bill. But a lot of customers will be seeing material benefits from the flexibility they can provide to the system.

 

[00:26:04.740] — Sandra Trittin

Yeah, I think I would join you on that, especially on that point with the fragmentation that you will have different markets, but in the different markets, also different products to monetise that flexibility. And then I have the last one right, the finance.

 

[00:26:21.620] — Jon Slowe

Yes, we both have that.

 

[00:26:23.420] — Sandra Trittin

Yeah. So, on the finance side, I'm not as optimistic as with the other ones, I have to say.

 

[00:26:33.100] — Jon Slowe

Why?

 

[00:26:35.710] — Sandra Trittin

Just because I think the gap between the industry, like the energy industry and the finance industry is still too big, and we need people who are helping and supporting to cover that gap. We heard a few presentations on the Summit, right, where people are making an attempt, but it's like even different languages that people are talking meaning, like different phrases, different words, there is no overlap in the end, besides the point that both want to bring the energy transition forward and both of them want to earn money. And also, what we heard is that over the next one to three years, the situation with the market valuations, et cetera, might not get as good as we would be hoping for. So, we will face some delay. Nevertheless, for sure, it's better than today. I also want to be an optimistic person.

 

[00:27:40.930] — Jon Slowe

But you're a realist as well.

 

[00:27:42.920] — Sandra Trittin

Yeah, exactly. I think there is most of the work to be done.

 

[00:27:48.730] — Jon Slowe

Yeah. My biggest question with the finance, the area of finance is will energy providers, energy solutions, company energy retailers, will they be successful in creating service based business models? And I still hear too much of, oh, that won't work because of this or that or that. And yet we can point to examples of companies that are making this work today. But it's almost like a shift in mindset to actually show what's possible to create. Not to focus on the negatives and the can't dos, but to really pioneer and push a proposition where a heat pump is financed or house refurbishment, or renovation is financed. That would be my biggest worry about the finance area. I think I'm a bit more optimistic than you about the two worlds meeting.

 

[00:28:54.890] — Sandra Trittin

Yeah. Let's do our best to make that happen.

 

[00:28:59.630] — Jon Slowe

Yeah. Okay. So yeah, I think Sandra were probably both glass half full people by nature.

 

[00:29:08.910] — Sandra Trittin

Yeah.

 

[00:29:10.130] — Jon Slowe

Look into 2030, and I think what we certainly learned in Frankfurt was the passion and the energy and the motivation of everyone in the room to drive the energy transition forward.

 

[00:29:29.190] — Sandra Trittin

Yeah. And I think it's great to see, right. That people are also not giving up because we all know about the challenges and the difficulties, but people are going through it and saying like, hey, we have to find solutions, we have to go the way forward. And also, with all the companies presentations that were given, these are really amazing solutions and also stories which are behind, especially when the founders were presenting.

 

[00:29:57.870] — Jon Slowe

Yeah, it was very inspiring, wasn't it?

 

[00:30:00.060] — Sandra Trittin

Yeah.

 

[00:30:02.450] — Jon Slowe

Okay, great. Well, let's leave it there for this week.

 

[00:30:05.970] - Speaker 3

Yes.

 

[00:30:06.560] — Jon Slowe

And I think we'll both have a relaxing weekend after all that travel intensity of the couple of days. Appropriate, for sure.

 

[00:30:14.300] — Sandra Trittin

And if anyone has further questions, they can always reach out to us, right?

 

[00:30:18.860] — Jon Slowe

Yeah, keep the discussion going.

 

[00:30:20.980] — Sandra Trittin

Exactly.

 

[00:30:23.350] — Jon Slowe

Thanks everyone, for listening and look forward to welcoming you back to the next episode soon. Goodbye.

 

[00:30:28.900] — Sandra Trittin

Thank you very much. Bye.

 

[00:30:31.930] — Sandra Trittin

Thanks for tuning in. We are excited to bring you captivating conversations from the leading edge of Europe's energy transition. If you've got suggestions for topics or guests for future episodes, please let us know.

 

[00:30:43.930] — Jon Slowe

And if you're enjoying the podcast, then please do rate it and share it with colleagues. For show notes, transcripts and more, please visit www.lcpdelta.com.