The UK’S prioritization of demand side response (DSR) is being monitored internationally, as the country’s present energy system is seen as a harbinger for the rest of the world to follow.
One company garnering attention for its contribution in this vital area of concern is Origami Energy. Diarmaid Williams spoke to the company’s head of strategy and solutions, Alex Howard.
Although Origami was formed just four years ago, its founders’ prescience in seeing how the market would unfold has been borne out by strong financial backing, most recently seeing investment by global temporary power specialist Aggreko.
The UK is at a crossroads in terms of the improvement and future-proofing of its energy infrastructure. Decisions must be made on where to invest, and for the moment nuclear and renewable energy are to the fore, while aging power generation is being phased out or replaced.
Where Origami comes in is in enabling a proactive approach to the use of existing energy assets and their flexibility, thereby avoiding significant investment in generation and distribution networks.
Energy flexibility (the ability of an energy asset to turn up/down or on/off) is becoming increasingly valuable to help balance electricity systems around the world, as increasing amounts of inflexible and intermittent renewable generation are added to the energy mix. Origami has developed intelligent technology to optimally generate value from this flexibility in real-time.
They provide their tech through strategic partnership agreements with energy suppliers and traders, and also provide fully-funded turnkey storage solutions designed to reduce costs, generate new income streams and enhance energy security.
Rick Parfett, policy officer at the Association for Decentralised Energy, summed up Origami’s contribution: “The ability of energy users to provide flexibility in their demand is key to helping the UK meet its decarbonization targets while maintaining a stable and balanced electricity grid. By removing the need for costly reinforcement of existing infrastructure, demand side response can offer a smart, innovative solution, while providing UK industry with an invaluable competitive edge in the global economy.”
Diarmaid Williams (DW): In setting up Origami, were the founders motivated by looking at the wasted potential in the system, through the lack of smart intelligence being deployed?
Alex Howard (AH): Partly yes, but partly also it’s been driven by opportunity. There is a huge transformation happening with investment of billions of pounds in the grid edge without very much visibility of what the future would look like. Meanwhile technology was moving on at pace, with the ability to measure, communicate and analyze data really coming together in a lot of sectors outside energy.
Marrying those two things together giving greater visibility and control and ultimately optimizing the system with machines rather than people was something that was required to unlock all this wind and solar hitting the system. It led to an understanding that, while we want to hit these carbon targets and are making terrific progress, if we want to continue along this trajectory we will have to get a lot smarter. Otherwise we will stymie ourselves with an enormous infrastructure bill to go with this green energy we are buying.
DW: Is the presence of companies like Origami enough to avoid the need for the enormous infrastructure bill you mention?
AH: There is already flexible generation and storage on the system, albeit we probably need some more, and there is demand that is potentially flexible with the right kind of technology. If you can invest in software that is very scalable rather than using picks and shovels and wires and transformers you can potentially do something faster with lower regrets and ultimately something we can afford as a country.
DW: Are there case studies you can talk about which demonstrate the efficiencies Origami Energy can bring to a project?
AH: One we have dealt over the last year is a generation asset behind the meter and several-megawatt scale. We were able to install a piece of hardware to unlock several value streams. We had time off use to be able to generate a try-out period to provide ancillary services to National Grid. By switching between value streams, we were effectively able to do more with the same existing asset. If you expand that example out you start to see we can use that flexibility that we already have in a smarter way.
There are ways to stack use cases on the same physical hardware as long as you have a feed of what the market is doing, and a feed of the state the asset is in. You can be a lot more dynamic, so rather than the asset providing one service forever, we are able to move it between value pools in order to generate that asset owner a better return. For them it was zero investment, no new hardware, all that was really required was a bit of brain power and some software to activate and manage that asset.
The partnership model
DW: How important are partnerships to the Origami model?
AH: Partnerships have been incredibly important to us. In the early days we dealt with people who owned assets directly, whether factories or generators. We negotiated with them to use their assets in a different way. But in the last year or two we have changed our model to say there are actually players in this industry who already have a number of those relationships, in particular the people who buy energy from them or sell energy to them. They often have the balance sheet or risk appetite those people expect to deal with rather than contracting directly with a tech startup.
People are comfortable contracting with a supplier or an offtaker. We also realized that access to wholesale energy markets was critical to us, but this wasn’t just about selling services to National Grid or DNOs. We realized if we were to really live this philosophy, the value might shift between different services.
You have to be able to re-optimize and you need to be able to work with partners who have a trading desk, that had the collateral to take market positions on energy as well as flexibility services.
We signed our first big strategic partnership with Smartest Energy earlier this year and we are now looking to replicate that model with a number of other UK suppliers.
DW: What distinguishes Origami Energy from other players in this market?
AH: There are a couple of things we think are unique. We’ve invested quite heavily in our technology side, in our optimization capability, the brain at the middle of our system that decides how each asset should be put to work. That best benefit, rather than having a human making those decisions. The platform does it a lot faster over a lot more assets and more revenue options than a human ever could.
The second thing is how we are positioned in the market. I mentioned we have moved to a model where we work with partners and I think for someone like Aggreko for example, being able to work in a way that is not in conflict with their offtaker or energy supplier has been important.
Being able to say actually we are not in competition with Smartest Energy or the ‘Big Six’ here – we provide technology that enables them to do more with their portfolios, and I think people like Aggreko can buy into that. There is a whole heap of change in the energy market and being able to say this is what our model is and we are a technology company and not a player in the market is quite important.
DW: Just how much untapped efficiency is Origami Energy finding in a typical site?
AH: Some sites are really high on untapped potential in terms of percentage points. For other sites, installing our technology gives them greater ability to roll with the market changes but doesn’t improve their position today.
Maybe they are making 100,000 positions today and they are doing that in one way, and they have limited ability to adapt to any change so if the price of that service dies they are exposed. We have found cases where we can’t do better than 100,000 today but what we can do is make sure, if prices do change and new services come in, that these sites are the one who can switch quickly and adapt to a future where Ofgem will be intervening and National Grid will be reforming the way they buy their products. Change is inevitable but may just be difficult to predict.
Having the ear of government
DW: With growing awareness of what the technology can do, not just for the power infrastructure but for the overall economy, does the government facilitate companies like Origami?
AH: I think we’ve had good dialogue with Ofgem over the last few years. They recognize they don’t have all the answers in the sector and need to listen, particularly to new entrants, for perspectives on challenges and solutions.
I’m not sure the smart energy world is yet something the man on the street can really get excited about, but within the industry it’s something people are quite actively thinking about. There is a lot of thought on how we enable or accelerate the adoption of these technologies. We find Ofgem quite open to new ideas. There are a lot of established interests in this market so I don’t expect them to push through change immediately, but I do believe they share the same view on the direction this is headed, with more decentralization and disruption to business deals in the name of the consumer – whether that’s energy prices or security of the system five or ten years out.
DW: What is the potential market opportunity for this particular technological niche within the power sector?
AH: It’s a pretty new market. I’d say there aren’t a great many market size reports out there yet. The National Infrastructure Commission compiled a recent report that had the clearest analysis of how these techs would benefit the UK. They calculated that by 2030, the benefits could be £8bn ($10.6bn) per year to the UK primarily in avoided asset buildouts, smarter use of what you’ve got rather than building new gas peakers, new substations and new carbon capture plants.
We’re not really shooting at that number. Clearly there are a lot of people who will take a share of that pie but it’s a big opportunity in the UK, and if you consider that about 2 per cent of the world’s generation is here, and that there is quite a lot of opportunity overseas as well, we are in an interesting position.
We are an island and have a pretty high build-out on renewables and a high reliance on nuclear power. So, we have this intermittent and inflexible renewable energy and fairly inflexible nuclear generation, and you have fewer connections to other markets in continental Europe or the US.
That all adds up to the UK’s challenges being five to ten years ahead of other markets. We are getting a lot of inbound interest from outside the UK as they see it as a bellwether for what might happen in their market next.
We clearly need to absolutely need to nail it in the UK first, but that gives us really great reassurance that we are doing the right thing and building a really versatile system because there are likely to be pretty similar requirements around the world.
If we can adapt a platform that’s proven in the UK that’s potentially a better solution than starting from scratch in another market.
Demand side response is one of the hot topics being discussed at Electrify Europe in Vienna in June. To make sure you hear – and can be part of – that debate, click here.