Network September 2018

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NETWORK / 42 / SEPTEMBER 2018 Q What is the best way to try innovations on a huge customer base/ national operation? A At Faraday Grid we are con- vinced that the best arbiter of innovation is the consumer. A dazzling technology has no value if it doesn't fundamentally improve outcomes for the end user. For this reason there needs to be as few layers as possible between innovation trials and consumers. This is the lesson from the world's greatest innovation platform – the Internet. The Internet was successful because it allowed for permissionless innovation. While there are clearly system stability and safety con - cerns in the energy sector, we need to try to minimise the level of permission required to test new innovations directly with customers. There are positive signs in this direction, like Ofgem's regulatory sandbox that allow innovators to trial business propositions that will benefit consumers without incurring all of the usual regulatory require - ments. Q What cutting-edge technologies are you most excited about? A Technologies that can im- prove the consumer value proposition are most exciting. We have seen enormous gains in the cost of clean energy pro- duction over the past decade, however with higher integration costs this has not translated to benefits for consumers. Today we do not consider the electricity value chain beyond THE FARADAY GRID the household meter, despite this being the greatest area of expenditure for end users. The introduction of technol- ogy to enable transactive energy and greater use of price signals to convey decentralised infor- mation could produce exciting new offers for the consumer. But this needs to be done in a way that recognises that what is most important to consum - ers is 'hot showers and cold beer' rather than new layers of complexity. Q As an SME, what are some of the main challenges you face when it comes to engaging with the wider sector and the regulator? A The biggest challenge for an SME introducing a new category of technology is communication. There is a natural tendency for start-ups to become obsessively focused on continual product development and technology readiness levels without engaging with the wider ecosystem. Our experience is to invest just as heavily in telling your story and building a narrative about how you are seeking to improve things. Q How smart is the smart revolution going to be? A The big constraint to the smart revolution is that we are not starting with a blank canvas and there needs to be the capability for interoperabil- ity between systems, devices and technologies. The area to watch is the rapid developments taking place with artificial intelligence and deep learning. If AI can become the brain of the power system, there is a possibility of radically cheaper and more efficient pro- vision of energy to the world's population. Q Why do UK utilities need to evolve? A In 2004, the UK had 80 generation sites, while today there are close to one mil- lion points of generation. These points of generation are decen- tralised all over the country with volatile and unpredictable supply. Utilities across the world are facing an existential threat to their traditional business mod - els, in large part driven by the rise of these distributed energy resources. The network operators in the UK are very proactive in think - ing about their ongoing value proposition as regulated mo- nopoly providers. With changes such as the move to distribution system operators, there is mas- sive opportunity for utilities to become platform businesses. With the emergence of grid defection the utility death spiral change is inevitable. By provid - ing new players access to their networks and customers, utili- ties could establish powerful enduring platform businesses that connect us all together like the Internet. Connecting utilities This new section will feature regular interviews with small and medium-sized enterprises (SMEs) to highlight the work they're doing with networks and the types of technologies that are driving innovation forward. Richard Dowling, chief economist and head of government affairs at The Faraday Grid, kicks off proceedings. GET IN TOUCH If you're interested in in being featured in the new Supplier Side section, or know of someone who might be, please get in touch with the editor at 'The biggest challenge for an SME introducing a new category of technology is communication.' l The Faraday Grid is an Edinburgh-based energy technology company founded in 2016. Faraday is developing a new category of energy system powered by the Faraday Exchanger to transform the electricity grid and solve two of the biggest problems facing grids today – how to maintain network stability and increase renewables into the energy mix at the lowest cost.

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