Octopus Energy is launching the ‘world’s first’ EnTech research centre to help create a tech-enabled green energy system.
The London-based Octopus Centre for Net Zero (OCNZ) is to be run by CEO Lucy Yu, who has over 15 years of experience working both in tech and in governance.
Current± caught up with Yu to chat about the “dream job”, the centre’s initial focuses and the benefits of bringing together a broad range of experts.
Why has Octopus chosen now to open an EnTech research centre?
I suppose in general terms, there are a lot of different people, organisations, parts of government and industry thinking about the transition overall and mapping visions of a future in maybe 2050, or in 2035, as two of the timeframes that a lot of work has been done on.
I think where there has maybe been a bit less fidelity has been the piece between where we are now in 2021, and the next 10 years say. So I think there are truisms, or maybe principles that are generally agreed. For instance, the need to decarbonise heat, with a big focus on residential heating where a lot of households still have gas boilers. Then I think there is less understanding of what the actual detail might look like over the next several years.
Although we’re independent of Octopus Energy – we have effectively an arm’s length relationship – we have the ability to use the insights that they have. Decarbonising heat is a space where the real innovators have a lot of insights that will be really helpful for us to understand what you need to start filling in some of that detail and understanding of different possible scenarios.
Octopus has had for some time some of the most innovative products in the market. So the Agile Tariff that’s been in the market for some time, we’ve had the opportunity to look at how people respond to the price signals that that tariff creates. And there’ll be the possibility in the future for the Centre to use that if we want to understand the impact of more granular price signals in the market, and they could relate to things like time of use, they could relate to location, they could be something closer to real time than currently exists.
So now is the right time to do this, because there is innovation starting to come to the market and it makes sense to really understand the effects of those different innovations.
With your initial focus on heat and transport, are there any standout technologies you’re looking at?
I suppose there are the obvious ones, like electric vehicles, but I think they will be interesting in their own right because we’re seeing a lot of innovation in that sector. It’s a sector I’m reasonably close to, because I spent a lot of my previous career working in and around mobility and transport. If you look at some of the top end models of the market now, there are vehicles coming in with battery capacities of maybe 100kWh. When you look at the kind of average daily household power consumption, it is something like 28/29kWh. So already, you’re in a position where if you have one of those vehicles and the battery is fully charged, you have enough to power the average house for three days potentially already. And we all know that we will see more energy efficiencies of devices over time, and we will probably see improved battery technology and all of these things. So that to me is already quite an exciting proposition.
And then on the heating side, air source heat pumps and potentially storage as well. And then – I guess this is taken as a given – more smart meters in people’s households as well, to really understand energy consumption profiles, but also to be able to exploit things like APIs, which will mean that people who are maybe particularly price sensitive, or just want to take advantage of things like plunge pricing, have the possibility to do so in quite a hands off automated fashion.
Of course, there are probably also things that don’t even really exist now or are conceptual or they’re in our lab somewhere and that’s also exciting.
How will the centre help to address the fact that heat has lagged behind?
So at the moment, something like 90% of households in the UK have gas heating. I do, and I don’t know very many people who have an electric heat pump or electric heating in the moment. So it’s a big shift that needs to be made.
I think one of the things we can do is if we can understand the profiles of how people use heat and how people use energy when they have an electric heat pump, then we can start to understand what that would look like on a system wide level.
The other thing with these sorts of transitions is they often don’t happen in a linear and uniform fashion across the country. What we might find in some of our modelling work is that there are parts of the country or parts of the building stock that lend themselves to this transition earlier. So that might mean that these are places that we could potentially focus investments sooner in order to get more of the benefits earlier.
But also, a lot of people are talking about the kind of fairness of the transition to net zero and it is one of the things we can certainly look at. There are models out there that currently do things like optimise for cost and optimise for carbon. But I think one of the things we can also probe to try to get a better understanding of is trying to get an understanding of the distribution of potential impacts as well.
That will be important, because people will not support the transition if they don’t think that it’s being done in a way that is fair. And obviously fair is quite a loaded word, it has different meanings in different contexts. But I think we can certainly help that conversation, as well.
How important is it for the research centre that you brought together such a broad range of experts from a broad range of disciplines?
Very important, is the short answer. There are a number of things that are important here, obviously having a rigorous modelling competence is important. We need to have methodologies that are accepted within the research community. We will, as far as possible, try to adopt an open approach, so that will mean being open about the assumptions we use in our models, ideally using open data that would be available for other researchers to use in their own work. Ideally, open sourcing the actual models we’ve used themselves, so that others can use them contribute to and build on them.
So we of course need to have a rigorous scientific approach which can be peer reviewed and validated by the community. But this isn’t just about modelling the physics of the system. It’s important to have the input from people on the policy side of things or people with an understanding of policy and governance, because they can help us think about what the different scenarios we might want to model are.
For instance, we might want to think about a future system, which has different levels of organisation and optimisation. And one of the units could be, for instance, a community. So rather than looking at the household level and the national level and maybe not having much in between, we might also want to think about well, if we had an agent in the system which was a community, which could be a different size, different shapes, what might that look like? I think that’s where having the policy and governance knowledge becomes really important.
And then, again, in terms of the sort of behavioural insights, I think that comes back to thinking about the different types of innovations that we might create and we have some early ideas of that already through Octopus Energy, and through some of the products that I talked about, things like the time of use tariffs.