Episode 7: How batteries can reduce fuel poverty and limit burgeoning grid costs

Future of Utilities Podcast 

How batteries can reduce fuel poverty and limit burgeoning grid costs 

This conversation is brought to you by Modulr, the payments automation platform. 

Lindley Gooden: Hello, I’m Lindley Gooden. Welcome to the Future of Utilities podcast. Let’s talk about flexible energy supplies and domestic batteries with Davide Turi from E.ON. Great to have you with us. Davide, how are you? 

Davide Turi: Good. Hello, everyone. It’s great to be here. My name is Davide Turi. I work at E.ON. 

My job is to look for opportunities to solve an energy system challenge, but also lower our cost. 

Lindley Gooden: Great to have you here on stage at the summit. Now, there is a lot of pressure on electricity, on companies, on suppliers, with the electrification of everything that we do. And I wonder, what do you think about domestic batteries and how they could hopefully start to stabilise, plug gaps, and do something good for us? 

Davide Turi: Yes, absolutely. We love batteries. We believe they are the easiest and fastest way to help more homes become an active part of the energy grid, and also generate savings, both for the energy system and for the houses hosting batteries. 

Lindley Gooden: And how is that possible? I guess in some ways it’s intuitive – the energy can be stored and then stabilised, released at the right time, and hopefully your home stays warm, does what it needs to do, and stabilises your local network. 

Davide Turi: Yes, so without going too much into technical detail, there are two key reasons. One is related to the way energy systems are designed and built, and the other is related to the decarbonisation of the grid. 

In terms of how energy systems are designed, they’re normally engineered to meet the highest peak of demand in an area. What you can do with batteries is spread demand away from peak times – enjoying lower prices for charging the battery at night, such as with our E.ON Next Smart Saver tariff, and then discharging the battery in the evening when energy is more expensive. In this way, customers generate immediate benefits, but there are also benefits in terms of decarbonisation. 

What happens, very often, due to the way renewable energy works, is that it’s unpredictable. So when there’s peak demand between 4 and 7 in the afternoon, that’s where we have to fire up a gas power plant to meet demand. By shifting demand away from peak time using energy stored in the battery, we can use less gas and produce less CO2 to generate energy. 

Lindley Gooden: It’s worth saying that, because even though everyone here at the summit, and everyone watching and listening to us now, might understand what that is, a lot of people out there don’t. We’ll get into communication shortly, but let’s stay with price and cost – on the macro level, it’s very important to keep costs down. Do batteries help suppliers in some ways not to have to invest quite so much in infrastructure – that by managing local supplies, you can be a bit more focused about what you invest in on a larger scale? 

Davide Turi: Yes. With electrification, what’s going to happen is a massive increase in electricity demand. We’re shifting away from heating our homes with gas boilers and using electricity instead. We’re shifting away from oil, from internal combustion engine cars – oil was used to produce energy for cars, now it’s going to be electricity. That’s increasing the demand for energy massively, which in turn may trigger investment in upgrading the distribution network, for example. 

We did an analysis, and we believe there are going to be at least 3.7 gigawatts of constraints in local distribution areas. Upgrading local distribution networks to meet that will cost billions, and needs to be invested. What we’re doing is working very closely with distribution system operators to devise options – areas where the network has to be upgraded, but also areas where flexibility coming from residential batteries installed in customer households can help optimise investment, and let us use more of the existing network by spreading demand away from peak time. That’s something we’re really invested in, because it eventually delivers a saving for the energy system, making it more efficient, while also delivering a direct saving to our customers. 

Lindley Gooden: So there’s cost at that level, at the infrastructure level. There’s also cost to me, the consumer, and in a time of bills being the way they are, cost is of paramount importance to a lot of consumers. I want to bring that into the communications piece – how do you communicate to us, the consumers, that this could help us, that domestic batteries could be a solution that even brings down our bills? 

Davide Turi: It does bring down cost. Batteries are the easiest and fastest way to participate in the benefits of the energy transition. It takes half a day to install – there are no major changes you have to make to your systems at home. An engineer comes, screws a few holes in the wall, runs a cable, and that’s it. You start saving from the day after. The way our pilots are demonstrating, there are, on average, £250 that customers can save by having a battery installed – £250 a year, at least. And that’s simply by aligning your battery with a time-of-use tariff – it charges automatically during the night and then discharges energy into the home in the evening. 

We went even further than that by installing batteries for free in customer households in zones where distribution system operators are experiencing constraints. Those batteries, in our pilots, have demonstrated guaranteed savings to customers participating – around £480 a year. 

Lindley Gooden: Well, that’s great, because the outlay cost is obviously going to be a factor as well. If we can be helped to invest in a battery and integrate that into our system, then we’re winners – hopefully it will help us. 

Davide Turi: There are a couple of considerations here. First of all, we strongly believe batteries should be part of the overall Warm Homes Plan. When we look at helping customers who are in fuel poverty, and at upgrading the energy efficiency of homes overall, batteries can play a big role, because they deliver savings immediately, from the day after customers install them. But there’s also an opportunity to use batteries to make the distribution system more efficient and avoid the risk of overbuilding. We know we need to upgrade the system – but how much of it do we really have to do, and how much money can we save on our bills as a result? 

This conversation is brought to you by Modulr, the payments automation platform. Modulr automates how money moves, delivering the efficiency, accuracy and reliability that your finance operations need to scale. 

Lindley Gooden: Often with these conversations around communication, around the controversies, the news and so on – certainly in the UK, and I’m sure it’s true in many other countries around Europe and the wider world – we come up against the idea that people live in tower blocks, in condensed housing, so it’s really difficult to install an air source heat pump, or you can’t have batteries of this type, and so on. What do you feel about that? How can we help make sure everybody is included in this? It’s really important to think about people who are perhaps forgotten in other conversations. How do we make sure batteries are available to us all? 

Davide Turi: We’re actively working on this. Some of our pilots have been targeting fuel-poor customers, ensuring they understand there’s an opportunity to save money on their bills, and that they don’t have to choose between eating and heating their home. They can save money, they can consume more energy if they need it, and all of this comes from having a battery installed. We hope the government will consider including batteries as part of the broader interventions for fuel-poor customers. But at the same time, as I said, there’s an opportunity for anyone who wants to enjoy the benefits of the energy transition – the fastest entry point is getting a battery installed and letting the battery do the hard work. 

There’s eventually no need to change your behaviour, really. You can switch on the kettle whenever you want, knowing you’ll get savings generated by a battery. Very often we see a battery coupled with solar PV, which is obviously very efficient – but a battery by itself can generate substantial savings for customers. 

Lindley Gooden: You mentioned government help there, and that’s probably a very important thing. Forgetting the politics of net zero, which has become a political football in so many places – what regulatory or government help could actually start paying for some of this, so it becomes a reality for ordinary people, but also just boost the message that this is something we can consider? 

Davide Turi: Our effort is, first of all, to use whatever’s available on the market and make it more efficient, and use that to deliver savings directly and indirectly for customers. For this to happen at scale – to scale the benefits of what we’ve been doing as a pilot – the first thing we need is longer contracts for flexibility with the DSO, the Distribution System Operator. That means working closely with them, as we’re starting to do, to ensure that our batteries placed in customer households can manage distribution constraints over a longer period of time. That will help us invest confidently in batteries being placed at customer homes, potentially for an upfront cost. 

The other point is the government element – ensuring batteries are part of the Warm Homes Plan, as one of the key measures for lowering customer bills and fuel poverty. That will also help distribute more batteries across the country, delivering benefits for customers directly. There’s also an energy security element to distributed storage. We’re not discounting large-scale industrial batteries – we know they’ll be very much needed for the renewable energy system – but at the same time, we can pair that with thousands, hundreds of thousands, of batteries distributed in customer households, delivering benefits while also increasing energy security. 

Lindley Gooden: You raise a very important point there, and I won’t go too much into this, but at a time when we worry about our energy security, the use of batteries is never really in the public conversation. Do you think regulators, perhaps governments, need a little more convincing that there’s a solution here – one that could help locally with communities, with individuals, but also start to stabilise our energy security? 

Davide Turi: Absolutely. We’re working very closely with Ofgem and DESNZ, and I believe it’s a productive, ongoing conversation. So far, they understand the value in what we’re doing, and I’d go as far as to say there’s a productive conversation happening about making this happen at scale. 

Lindley Gooden: Well, let’s bring out the crystal ball. In ten years’ time, if you can predict that far ahead – what role will batteries play in our energy system? Do you think they’ll be a future form of storage device? 

Davide Turi: So, future energy systems and renewables come with unpredictability – we can’t control when the sun is shining. Batteries overall will play a key role in the energy system of the future. We see a future where, alongside large-scale batteries, there are also hundreds of thousands of batteries in homes, making them an active part of the energy system, as opposed to passive, which is what they’ve been. 

Lindley Gooden: Or first adopters. Lots of first adopters have batteries in their homes now, bringing in different energy sources – but it’s still one for the geeks in many ways. It needs to be much more accepted by the rest of us. 

Davide Turi: Yes, a little bit. There’s also an element of simplicity – what we’re doing is ensuring our solution is easy to use. There’s no app, no technical things to set up, you just forget about it. When we speak to our customers where a battery is installed, they say, “Every now and then I can see the battery blinking, but the most important part for me is I can cook more, I can bake more cakes for my kids, and I can see every month I pay less.” That’s what matters to them. And I believe that’s the key direction of travel for bringing flexibility into the mass market. Make it simple. 

Lindley Gooden: Davide, I think you’ve hit on the exact thing we need to bring into communications – make more cakes, get a battery. 

Davide Turi: Yes, make more cakes, get a battery. 

Lindley Gooden: Fantastic. What a tagline. Davide, thanks for joining us – it’s been wonderful to have you with us. And for now, that’s it from the Future of Utilities podcast. Great to have you with us.