Hello everyone and welcome to energy in transition weekly series of virtual fireside chats where we'll be speaking to key movers and shakers in the clean energy sector to get their expert views on the future of the industry, how we get to Net Zero and how things are being affected by COVID-19. My name is Jim Jordan and I'm an energy lawyer at the leading national law firm Weightmans where I specialise in construction and commercial aspects of projects. Each week we're going to be tackling a different topic and today we're going to be discussing battery storage. I'm delighted to be joined by Marek Kubik from Fluence. Now we've only got fifteen or twenty minutes but Marek's CV is really rather impressive. He's a Market Director at Fluence. He's a recognised industry influencer and leader. He's spoken at TED conferences. He's spoken at the United Nations and One Young World and Forbes summits and not that long ago Marek was honoured by Forbes 30 under 30. Now thanks so much for joining me today. Before we start please could you introduce yourself and Fluence in a little more detail perhaps and also a beginner's guide as it were to exactly what we mean by battery storage. Yeah, sure happy to Jim so thanks for inviting me to join. Yes Fluence, if your listeners are not familiar is an energy storage technology company and so put simply we design, install and deliver large scale energy storage systems predominately on the grid and predominately for independent power producers, utilities and the like basically to help integrate renewable energy to the grid and well fundamentally battery storage is exactly what it sounds like. It's the same technology that's been around for several hundred years. In 1799 the first electrochemical battery was invented by Alessandro Volta and really the lithium-ion battery which is predominantly what's being used today in a lot of these energy storage systems, has been around since the 70s and we're very familiar with it for our phones, our laptops, iPads and so on consumer electronics but increasingly it's been used now for stationary storage and largely also electric vehicles and it's really electric vehicles that have driven the uptake of lithium-ion batteries and significantly increased the volumes that are being produced which has brought down the cost. But we're taking the same basic technology that's used across all of those sectors and putting them in stationary energy storage systems, putting them at strategic points around electricity grids basically to charge up and discharge at other times so that rechargeable obviously so essentially to help integrate renewables into the grid and solve various challenges that system operators would face. OK thank you and your particular role within Fluence, I've worked with you before and I know that you travel around a lot you, you keep very busy. I did pre-COVID! This is week seven of lock down now here and so been grounded for a little while but yes I have a role spanning a few different markets so predominantly I lead the team for UK and Ireland to a lesser extent Middle East and Africa but the UK and Irish markets are very busy for storage so my role essentially spans sort of the origination BD through sales and up to and including contract negotiations and then at the point we've signed projects with customers is handed over to our deployment team and their execution team. And for those people who perhaps aren't familiar with with Fluence and your business could you just give us some examples of the sorts of projects that you've been working on over the last say 12 to 18 months. Yeah sure, so Fluence is actually only, it'll be two and a half years old as a company as an entity, so we're a joint venture between Siemens and AES both of whom were, well are very large players in the energy space but we've been standalone for about that period and really I'd say it's characterized by massive growth globally when we launched in January 2018 we had I think four or five hundred MWs of projects either operational or awarded, so contract signed and in the that period we've grown into something around to approaching two gigawatts. So it's a really phenomenal growth rate and that's if you plot it exponentially it's very much following that sort of trend, some of the particular projects of note recently, one I find very interesting is first in new markets or first for new applications so we recently earlier this year delivered for Statkraft a project in Ireland which is the first project in the Republic of Ireland that's come online as energy storage particularly for providing good services and for relatively new forms of Grid services. So some of your viewers and listeners might be familiar with frequency regulation in the UK. The Irish market has an equivalent of that but it's actually rewarding significantly faster response times and we're talking orders of magnitude faster than the UK because of the stability challenges that a small grid like Ireland faces when there's very high levels of wind and really energy storage is starting to show that it can help provide digital equivalents of inertia and the kind of services you need to get more renewables on the grid in real time which is obviously important if you want to get to 100% renewables at some point. Parking COVID-19 just for a moment what other challenges do you see the energy storage facing, it's obviously it's getting a lot of press and it has done for quite a while now, what do you see as being the key challenges for now excluding the COVID-19 pandemic. So to unpack that I think there's two ways that I would answer it, one is an awareness issue so there is a lot of things you can do with with battery energy storage and the irony of it is not much of it is actually about what people think it is about which is the perception that you're using the battery specifically to co-locate with say wind and solar and to store the energy on the site. It is much more at the moment about solving grid stability challenges that let you on a system level integrate high levels of wind or solar or non synchronous generation in general and solving the network constraints that limit that as well so obviously the grid is there. It's quite difficult to upgrade transmission distribution lines and the way that we generate electricity as we move to more distributed and variable sources has to become more flexible and energy storage is really key for solving several of those but it requires a sort of shift in thinking to allow storage, allow technologies like batteries to compete against poles and wires or to compete against peaking power plants or to provide the equivalent services that thermal generation would provide like inertia like frequency response so an awareness that that is possible and to remove the regulatory barriers that prohibits it because often the barriers are not intentional. We reward for instance in the UK frequency response in ten seconds because that's what thermal plants could do in the past. The fact that you can respond faster and has value needs to be recognised and it is being recognised but there are other things like the transmission and distribution network which it's still very difficult to get a battery in and say hey we can do an equivalent job and better, so that's probably one of the main barriers. It's just recognition and then removing the hurdles that are in the way and the second would maybe be the misinformation lobby. There was a big, the first phase of the battery storage was people saying it can't be done, you can't do these services with batteries and technically they have proven that it can and commercially that it makes commercial sense so now I see the arguments, the barriers have moved on to, there isn't enough lithium or you can't recycle batteries and there's responses to each of these points, basically they can be very robustly addressed but the more they are repeated the more it sinks in as a perceived truth so I would say those two outside of COVID are probably the big ones. Okay, that's really interesting I suppose the million dollar question which no one really knows the answer to is the impact of COVID-19. Obviously we don't know what's going to happen in the coming days, weeks and months and even years to the economy and to the way that we work and operate but do you think what's happening now will substantially impact the development of battery storage or investment in battery storage projects? It's gonna be an "it depends" answer So the way that I view energy storage and in general the complimentary nature of deploying renewables is to an extent those two trends are inevitable and regardless of COVID-19 or anything else they are happening and are going to continue happening because renewables have become the cheapest form of electricity generation so if you have cheaper and cleaner energy and you don't compromise reliability and you can get the same level of reliability from that grid by definition that's a win-win-win on the policy and so it will happen. But what matters is how quickly it will happen from a climate crisis perspective and this is where I think the uncertainty of COVID, it could go either way. On the one hand we've certainly, albeit it's not necessarily the recommended economic way of significantly reduced emissions, we will see a huge dip in global emissions this year as a result of the short-term impacts of COVID and we're seeing essentially with record low oil prices massive oversupply falling away demand a lot of oil companies shuttering wells probably permanently, so there is a real opportunity there to reset on a low-carbon pathway in a low-carbon economy. But on the other hand it could just rebound and we continue not exactly business as usual because as I said I think the renewables and storage trends are inevitable but certainly we don't necessarily accelerate the reduction of emissions if we go back to doing things as normal. My view is there are some silver linings and we are seeing cleaner air, lower traffic deaths, people travelling less, things like that that might well play into policymakers' views particularly as a lot of them have put out Net Zero legally binding targets and they have to do these things anyway in law. And do you think what's happening at the moment will require a change to the way that deals are done, how deals are structured or are you seeing a sort of a fairly consistent approach, follow through on deals being implemented and structured? Do you mean specifically the contract phase of a project or in general across the piece? A bit of both really, I think I guess so on the contractual side of things obviously technology is changing very quickly in the battery storage market so you've got some long-term operating arrangements but I suppose the question there is where will the technology be in five, 10 15 years time and also how will COVID-19 impact operational requirements for projects and whether that changes things going forward as to how projects are operated. But I guess also given what you're reading the press around potentially the lack of finance being available. Do you think that's a major concern or do you think we just have to get battery storage going in greater quantities because that's the only way we're going to get anywhere near Net Zero? Yeah, that's an interesting question because there's a few different ways you can think about answering that so partly we actually aren't really seeing ourselves, there are obviously some challenges with COVID and Fluence, organizationally where we're quite distributed anyway we're all over the world in terms of our setup so we have 200 people plus contractors in different offices so in a way we're quite remote workers anyway. I was a lot on the road, so the immediate impacts of that, we decided to start working from home before it was mandated in the UK or in Germany for instance and so we're quite used to that but what is becoming interesting is we've got some deals that are in contract phase at the moment and we've never really done that where everyone is remote and everyone's in a different place both on the client and on the Fluence side. So it's interesting that experience to see how it will happen. So far it's been actually quite efficient but I think a lot of people will have concerns if you don't get heads in a room and really focus on getting stuff done that it drags out so I think there is a short term mechanical should we say or process-based impact as a result. In terms of projects and pipeline we're actually not seeing any slow up and I think that's quite interesting and if you look at the fundamental reasons for why that is it's because energy is sort of underpinning to the whole of society in general. If anything is essential work it's keeping the electricity flowing because without it you don't have ventilators, you don't have home deliveries of food, people aren't comfortable and safe at home so that work needs to continue. I guess what does matter suddenly in this period is the uncertainty about how companies will weather the initial storm and in that regard Fluence is pretty well set up. We're backed by two investment grade companies, Siemens who have been around a hundred and seventy years so it's a very dependable company to have standing behind us and know that Fluence will be there to serve and maintain systems come what may with the situation so from that standpoint I think it matters in the short term to investors and you might see a difference between those that are on the utitlity side looking to develop projects and those that are financial players looking to more speculatively build-out energy storage based on merchant revenues, merchant business models so the latter probably is more shaken because it's an equity based environment but equally we are seeing an environment where you could have utilities or infrastructure funds those that can put debt or long-term money into projects and infrastructure so it comes back to the earlier point, it depends what storage is used for. If you're playing it in grid services it's quite market-based environment with the contractor you're all real time, if you're looking at replacing poles and wires you're entering a regulated utility space where investment can get a 20-year contract and guaranteed revenue. In some markets we see that, National Grid is starting to look at it for the UK for things like it's Pathfinder projects that could make management stability pathfinders and so on so it's a long-winded way of saying I think it depends, but yeah it's definitely interesting to see how it's impacting things. You touched very helpfully on some emerging trends that you're seeing in the market where some things are changing, some things are staying the same. In terms of positive trends one of the things that I'm hoping becomes the norm is the fact that given the pandemic and people staying in, that the pathway to Net Zero is getting even more publicity than normal because you're seeing on the front pages of newspapers pictures of coastlines and beautiful crystal-clear seas all linked to a reduction in activity, a reduction in in boats, a reduction in industrial activity so I'm sort of wondering whether in terms of the emerging trends what this is actually doing, what this thing that we're going through, its opening some people's eyes to the actual genuine impacts on our country, on our world that carbon has and if people get a glimpse of what the outcome can be when we have reduced carbon then it may be that some people who were perhaps quite cynical start showing more of an interest in the pathway to Net Zero and start understanding that the likes of wind farms and solar farms combined with battery storage are the way forward so maybe, you talked earlier about some of the sort of perception issues of battery storage and some of the, some false, some true, stories have been run on battery storage but I think if nothing else what we're going through is hopefully going to increase the public's understanding of how serious the situation is and how important it is to move towards Net Zero so it's really interesting to hear your views more generally. I mean do you think, do you think this is a temporary glitch or do you think using technology such as battery storage, applying it small scale charging cars in your driveway but also applying it larger scale, tying it into wind farms and solar farms, do you think I mean that is inevitable isn't it? Irrespective of what's happening now there's going to be a move towards Net Zero but the question I suppose is how much that's impacted or how much - delayed or in fact how much that whole process is speeded up on the back of the public perception of what the world looks like when we're not pumping out pollutants into the air. Yeah, it is, the question, yeah it can go either way and my opinion, but it's a crystal ball view if you look at what COVID has done. It's ironic actually because just today I had a Suncast podcast that I did recorded seven or eight weeks ago so just before the lock down started. I'd just got back from a flight and got home and I did it late at night and one of the things that came up in that was exactly the discussion around human behaviour and human psychology and what things did I think wouldn't change and would but you know just evident truths in energy and one of the ones that I said, now I probably have to reflect on caveat, was that human behaviour won't really change, people want to use electricity there's a subset to that really care and will turn off the lights or change the behaviour or not use stuff for just the ethical and environmental reasons. Many of us just do it if it's economical and it's convenient we want to enjoy the same thing as I talked about that from like food perspective. If you have vegan food that is as tasty and enjoyable as meat and it's the same price people will very easily switch, whereas if you just tell people not to eat it some people will but it's a harder harder push and I think that's a very interesting reflection now to the COVID situation because one of the few things that can really give a shock to the system and actually reset human behaviour is what's just happened and how serious this got because one of the big things that does impact our carbon emissions and our footprint is travel to work, it's international travel, suddenly we're all working from home and actually finding out, well with exceptions, I appreciate every situation is different, but it's actually to some extent got a lot of advantages, you save on the commute, you have more time in the evenings, you spend more time with your family and you're doing that then reducing power emissions so that's something that might well stick. I think if any human behaviour thing does stick it's that one because organisations realise they can save money and time and probably productivity for it. The other aspect, it really depends on what rebounds or not so with aviation for instance it's under a huge strain at the moment and a lot of airlines potentially will go bankrupt or scale back services. Low-cost travel with airlines is probably going to reduce at least for several years, maybe it'll never recover and if it doesn't that certainly accelerates the pathway to decarbonisation. On the other hand if airlines, oil companies are bailed out and end users continue to survive it again I think we talked about are inevitable in the long term but the pace of change you can see it going either way and I think the net zero point and joined up policy thinking on that could really accelerate things so who knows. Interesting things to think about and unpack there. Okay so I'm going to be slightly unfair with you now Marek, I'm going to ask you a bit of a cheeky question. I want three words from you that represent getting us to Net Zero renewables, batteries, faster. Good answer, okay, so unsurprisingly I now want three words from you that represent stopping us achieving Net Zero. Regulatory, hurdles, policy, I don't know, it's quite difficult to form a joined up sentence but I think you get the theme at least. I get the theme Marek and the regulatory hurdles and policy all link back to my business as a lawyer so if you're suggesting that lawyers are holding things up I take huge offence to that. Unfortunately that is all we've got time for on today's session. Marek, that's been really, really interesting. There's some really good food for thought in terms of public perceptions, technology issues and also the wider views on decarbonization and how the world may look sort of post COVID-19 if we ever get there. If anyone is interested in finding out more I'm sure the Fluence website is a good place to start, also I'm sure Marek won't mind being contacted directly. He's definitely worth following on LinkedIn. He puts some extremely interesting and thought-provoking articles up on LinkedIn which are well worth a read. More generally this interview will be published on the Weightmans website which is Weightmans.com and it will also be shared on social media channels including LinkedIn and Twitter. So all that remains for me to say is thank you for joining, there will be further fireside chats with other key players so please watch this space.
