Turning the grid Upside down

Transmission Lines - Image via ChrisHunkeler/Flickr
Transmission Lines - Image via ChrisHunkeler/Flickr

At peak times, the electricity grid runs dangerously short of capacity. To meet this demand, the oldest, dirtiest, most expensive power stations are turned on.

Upside Energy is a UK smart energy start-up with an aim to overcome this reliance on fossil fuel. Upside Energy has developed The Virtual Energy Store™, a cloud service that aggregates clean energy from the existing EV, PV and heating systems that people and businesses already own, before selling it to the grid to balance supply and demand. Revenue generated from The Virtual Energy Store™ is shared with device owners and manufacturers.

Upside-Energy-Graham-Oakes-CLEAN-10-copy-copyFounded in 2013 by Dr Graham Oakes, Matt Potts, Matt Fisher and Andy Molineux, Upside Energy has been a hackathon finalist, gone through Climate-KIC’s Accelerator programme, and has most recently
won £150,000 of support to develop and scale its technology.
Climate-KIC caught up with founder Graham Oakes to discuss the challenges of scaling up and ambitions for European expansion.

DP: Upside Energy has been on a real journey, progressing from Climate-KIC’s Dynamic Demand Challenge with Nesta and NPL in 2014 through the Accelerator and Innovation UK projects. What three things have been key to your success?

GO: The first point is just persistence, I’ve been a Shell Springboard regional finalist three times. It’s a case of just keeping coming back and eventually we got through, won the regional finals, got through to the national and won that. So it’s persistence.”

The second is having a good team. That’s been key to how we got through to the national final. What we’re doing is a big thing. We’ve got to touch on lots of points, and so we’ve got to have good people to deal with the energy system, build the software, and deal with the manufacturers we’re talking to. A good team is key.”

Third is the partners we’ve been working with. Climate-KIC has been tremendous and given us a real kick-off. Partners like Sharp have supported us right from our first project, as have people at Manchester University, Heriot Watt University. The ecosystem of partners we’ve been working with are core to what we’re doing.

DP: The innovation is about demand-side energy, helping the grid overcome reliance on dirty power stations. How did you identify the problem and solution?  

GO: The National Grid ran the Dynamic Demand Challenge asking how we might engage domestic and small business in demand response. That opened up a completely new world for me, because I knew nothing about the energy system or demand response. It alerted me to the challenge there, and from that, it’s all grown.

[The next step was to identify that] small businesses have already got batteries, and the question was how can we use those? Everything came from the idea that if we can manage the backup batteries that small businesses have, then we can manage home battery systems, hot water tanks.

Expanding from there, we can ask where there is storage already in the system or how we create the economic use for people to put more storage in the system. Then we harness that storage use to create value, which creates a virtuous circle.  

If people create more value from the storage there’s more incentive for people to invest in storage. That creates a portfolio because you can put scale on diversity of storage, and you can address progressively more services and create more value.

DP: What is your business model? How has it evolved since starting out in 2013?

GO: [At the core of the business model is a] scalable service to coordinate tens of thousands of small battery systems. We recognised there is value in diversity: it’s not just about battery systems, it’s about ecosystems, different types of batteries. Our core technology permeates that diversity and scales up there.

[We then use] intelligence to get the maximum of that portfolio value. We need to to be able see where the grid is going to go, asking how we position our storage to deliver value, or how we integrate different types of storage to the grid. That advanced intelligence is the work we’re doing with places like Heriot Watt, Oxford, and Imperial College.

The final thing is keeping your operational costs low, because we need to make this cost effective for households and small business sites with electric vehicles and hot water tanks. All the existing demand response applicators are doing this with large industrial clients and their finances just don’t scale down. By working with the cloud and our partners and manufacturers, we’ve built a business model where we can scale our costs down, and cost-effectively do this with household loans as well as industrial loans.

DP: Your end goal is to create an open platform that people can use to coordinate distributed energy storage and use to reduce the grid’s environmental impact. How would people use this? How would this open platform fit with your business model?

GO: The openness will be for the manufacturer — someone like Sharp that’s building home energy management systems and home battery systems. We want to make it easy for it to integrate those systems into our service so we can add value — and make it easier for Sharp to sell those systems to homes with PV on their roofs. It’s just this economic barrier right now, and that’s where we work with Sharp to solve that economic problem. 

At the other end of the system we make it easy for people who develop algorithms, or doing machine learning to integrate into our system. We run an ensemble of different algorithms to predict the grid, manage our portfolio, to maximise value. We share that value with the algorithm developer, so we’re sharing value depending on what we’re doing with that core very scalable partner.

DP: By 2025, you aim to have 515MW of capacity under management in the UK. What is, or will be, the greatest challenge in scaling up?

GO: We’ve been getting fantastic traction with EDF. We joined its innovation programme in December. With that, we’re aiming for a much bigger target. Right now it’s 8MW in the UK. By 2025, we expect to be in Europe and North America so we’re looking at multiple gigawatts globally. 

The challenge in scaling is about continuing to get maximum value for the battery owners — the people we’re working on behalf of. Because our initial target service, the new response market for national grid and with a gigawatt of capacity, we would saturate that market and start to drive pricing down. That’s where we need to have a portfolio of services, because we can do things for the distribution networks and for the energy suppliers.

That gives us a much bigger market to address and, hence, much more scope to create value for everybody. The challenge is we’re a small firm trying to work with quite complex ecosystem, so it’s about focusing our energy and our attention.

DP: You’ve just won a considerable sum of funding. How will you use this? What’s next?

GO: We’re now a start-up in scale-up mode, and the scary thing about €176,000 (£150,000) from the Shell Livewire Award is that it’s six to eight weeks worth of salaries for the team. It extends our runway as we’re preparing for the next funding round. We’re finalising [employee] numbers but I think we’re looking at having 60 people (from 12) by the middle of next year. Funding will help recruit good people, and support with that challenge of scaling up.

DP: You’re a UK start-up. What lessons are there for other European countries with this particular climate innovation?

GO: The UK is somewhere ahead of the curve on demand response. Most of Europe is probably a little bit behind. I don’t want European companies to take over [from us] — I want us to take [Upside] to Europe. It’s a credible goal for the UK to turn off a large gas turbine plant and replace it with demand response. If you spread that across Europe, particularly Eastern Europe, we could turn off significant amounts of coal generation.

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