← All episodes
S1E14

Scaling Flexibility: VPPs, Storage & Business of the Decentralized Grid | Marko Svetina | TEB S1E14

with Marko Svetina· BM2solar· 83m

TL;DR

Plummeting battery storage costs and rising power price volatility are shifting grid flexibility from utility monopolies to independent power producers. Co-locating utility-scale solar with battery energy storage systems enables lucrative participation in balancing and ancillary markets, but non-harmonized grid rules and double taxation remain key bottlenecks across Europe.

Synopsis
Serial entrepreneur Marko Svetina traces the evolution of virtual power plants and grid flexibility, from founding early demand-response pioneer CyberGRID to launching BM2solar to optimize utility-scale PV and storage assets. Svetina explains why traditional utilities naturally resist decentralized balancing and how European market integration rules like PICASSO and MARI are opening high-margin ancillary markets to independent power producers. He outlines the economics of battery storage—highlighting paybacks as short as two to four years—while pointing out persistent structural barriers, including Austrian double grid tariffs, restrictive 100 MW entry thresholds in Spain, and market-distorting solar subsidies in an era of routine negative prices.

Key metrics

by the numbers · 5
  • 100 megawatts
    grid connection threshold in Spain required to provide ancillary services
  • below 10 cents per kilowatt-hour
    estimated levelized cost of energy from co-located PV and battery storage
  • 5 and 50 megawatts
    typical target size of connected power for plants optimized by BM2solar
  • 8, 10 cents per kilowatt-hour
    grid tariffs paid on electricity in Austria
  • between two and four years
    payback period for an optimal battery energy storage project

Topics

7 tags
virtual power plantsbattery storagedemand responseancillary servicesgrid flexibilityenergy tradingelectricity market design
Stats
Duration
1h 23m
Words
13.1k
Questions
129
Speakers
3

Daniel Schaub · Marko Svetina · Rahul Mishra

Timeline

10 chapters

  1. Origins in Industrial Peak Shaving

    Marko Svetina recounts how early industrial load management systems led to the founding of CyberGRID in Vienna.

  2. Pioneering Commercial Virtual Power Plants

    Svetina describes partnering with Elektro Ljubljana and SAP in 2011 to launch one of Europe's first commercial VPPs.

  3. Utility Resistance to Decentralized Flexibility

    Discussion on why traditional utilities resist demand response and how lobby group smartEn pushed for EU-wide market access.

  4. Challenging the Utility 'Gentlemen's Club'

    How trading and balancing markets remain lucrative closed clubs and how PICASSO and MARI rules are opening access.

  5. BM2solar's Focus on PV-plus-Storage

    How co-locating battery storage with PV plants allows independent power producers to access ancillary and intraday markets.

  6. Decentralized Grid Security and Resilience

    Insights from Fifthvolt's projects in Ukraine highlighting the military and operational resilience of distributed energy.

  7. The Market Distortion of Solar Subsidies

    Why ongoing feed-in tariffs in negative-pricing environments distort market signals and disincentivize flexibility.

  8. Regulatory Obstacles and Double Grid Fees

    Comparing cross-border storage policies, including Austria's double grid fee penalty and Spain's 100 MW entry barrier.

  9. Scaling Capital and Software Accounting in Europe

    The challenges European energy tech startups face in raising growth capital and navigating software capitalization rules.

  10. Battery Storage Economics and Paybacks

    An analysis of falling battery cell costs, system ROI, and two-to-four-year payback windows for optimized storage.

Key insights

4 takeaways
  • 01

    Trading and balancing remain an exclusive utility profit engine

    Large incumbent utilities earn their highest margins not by transporting kilowatt-hours, but through trading, redispatch, and balancing backed by physical assets. European frameworks like PICASSO and MARI are crucial because they dismantle this closed system, enabling independent power producers to trade flexibility directly with TSOs.

  • 02

    Co-located storage resolves the solar curtailment paradox

    As massive PV penetration leads to routine negative pricing during sunny periods, standalone solar faces severe revenue cannibalization once initial subsidies expire. Adding battery storage allows independent operators to perform price arbitrage and provide grid-stabilizing ancillary services, unlocking ROI paybacks of two to four years.

  • 03

    Subsidies for mature solar distort price signals and deter flexibility

    Feed-in tariffs pay solar plants to generate during periods of negative pricing, forcing taxpayers to absorb the spread while disincentivizing asset owners from investing in storage or curtailment. Market reform should focus on simplifying market access and pre-qualification rules rather than handing out CAPEX subsidies.

  • 04

    Inconsistent grid fees create unlevel competition for BESS across borders

    In countries like Austria, storage facilities are treated as end consumers when charging from the grid, incurring transmission and distribution fees of 8 to 10 cents per kilowatt-hour that erode arbitrage profitability. By contrast, markets like Germany reimburse or waive these fees, creating significant cross-border friction.

Pull quotes

5 quotes
  • Well, I think the biggest or the the the thing is is yeah, as we worked also with large utilities, right? Is we saw that basically pretty much the large utilities don't have the the interest to to work. I mean, in principle, they would still like to be where they were like 20, 30 years ago, right?
    Marko Svetina
  • Well, yeah. That that's where where, obviously, the you know, if in a large utility, if you look the the who makes the money is the trading part. The trading part always makes the money backed up by assets, right?
    Marko Svetina
  • No, no, no. For the, you know, for the existing, it is as it is, right? But especially, I think for the new ones, I mean, it's, you know, I don't want to don't want to go into any of the, you know, specific discussions, but in principle, I'm saying, is, you know, if you're paying tax dollars, tax money, tax euros to fund something which basically is losing a lot of money to the taxpayers on the other side, you shouldn't do that, right?
    Marko Svetina
  • I'm going to pay the whole grid tariff as I was consuming the power.
    Marko Svetina
  • Yeah, I would say if it's an optimal project, the the payback can be probably between two and four years.
    Marko Svetina
Transcript264 cuesClick a timestamp to jump
  1. Daniel Schaub: Welcome to a new interview here in the Energy Bridge. Today, we are with Marko Svetina, and we're going to explore the connection between the utilities' needs with renewables and grid flexibility. That's the main topic today. So, yeah, we're very happy to have you here this early morning.
  2. Marko Svetina: Happy to be here.
  3. Daniel Schaub: Yeah.
  4. Rahul Mishra: Thank you, Marko. We're just reading about it, and I just made a joke before we went on air that you're from Slovenia, and most of the people, entrepreneurs from Slovenia, are very R&D focused. What's about that?
  5. Marko Svetina: Yeah, that's a good one. I was trying to think about it, what to say, to say something smart about it. But in principle, I think technical education is actually really strong, or there's technical schools. So, it's good for electrical engineering or for computer engineering, so on, mathematics, whatever, right? So, they're very strong. And I think also in the, so, in many cases there were a lot of companies which were supporting the industries in, let's say, Germany, Austria, Italy, whatever, right? So, I think technical knowledge is quite, quite strongly present in Slovenia.
  6. Daniel Schaub: Yeah, you are known for IT or tech kind of.
  7. Marko Svetina: Yeah, I think so. In comparison to, to maybe some other countries which are, might be more financial or more, let's say, promotional stuff, yeah, I'd say Slovenia is definitely one of the technical ones. Yeah.
  8. Daniel Schaub: Cool. So, yeah, to start, you are coming from a business background and you got into the energy sector. So, if you can tell us, what was the journey?
  9. Marko Svetina: Sure, sure. I mean, I can, yeah, I can briefly describe how, how we, it all got started, right? So, I was actually working, I was in the US. This was early 2000s. Then, we, was working for a Swiss company there. We were promoting some industrial-grade mixing equipment. I started the company there. And after the change of management, came back to Europe, and there I, so back to Slovenia, actually. And I was looking, so there was a company which was looking for a sales manager, right? So, or the, yeah, sales manager. And this was a spin-off from a technical institute of Jožef Stefan. And yeah, I applied. I think did some tests, and it all went well. So, they, they, they selected me. And they actually had a bit of a unique problem, right? So, because their market pretty much collapsed, right? They, their, I would say, yeah, biggest focus was basically energy management for the large industrial customers.
  10. Daniel Schaub: Big consumers.
  11. Marko Svetina: Big consumers, like steel mills, big aluminium smelters, yeah, stuff like that, right? So what they did or before, let's say, in the late 90s, early 2000s, the the energy bill, or the electricity bill, was was basically had a part of the energy obviously and of the grid. And on the grid side, the peak consumption was really heavily penalised.
  12. Daniel Schaub: Like peak demand.
  13. Marko Svetina: Peak demand, yeah. So, so if you could reduce the peak demand inside of a 15-minute interval, you could basically make a lot of money, right?
  14. Daniel Schaub: Yeah, you said that they were projects with a payback of
  15. Marko Svetina: Months. This was months, yeah. So, in principle, all the large consumers which so, you know, had to have something like that.
  16. Daniel Schaub: That's a peak shaving.
  17. Marko Svetina: It's peak shaving, yes. And the, the company did a really good system, automated, fully automated system which basically looked at the, let's say, projection of the peak demand inside of a, each interval, and basically based on on projection, made some, some changes, either switch off some loads, or turn off generation, whatever. And, but, obviously, the, the, the tariff system changed. And this company basically stayed without market. So, we we were trying to, to, or they were trying to do something. They got me. So, we started working heavily on the market, and transformed a bit the focus, right? Part was industrial automation. But on the other side, we started working also, or we started thinking of, what if we combined all of these systems together, right? So, you have a lot of these peak shaving systems. If you combine them together, you get some meaningful load, right, on a national scale, pretty much, right? Which could offset the, the peaker, right? So that that was, we, we did some, some European-supported projects. It, it ran great. Also, the, the company picked up. They appointed me COO. This was 2008. And we were starting to transform or trying to to transform that company really into the direction of, you know, becoming more or less an energy-related company, going more to the energy sector, not industrial. That proved a bit, a bit risky, risky for, for the, the owners, right? So, they, they didn't decide for that. So, at the end, we, we split, and we created, basically, CyberGRID.
  18. Daniel Schaub: Okay.
  19. Marko Svetina: In Vienna. Which was, so, yeah, at that time also there was there was, were some starts, or there were some really good, good companies already in the US doing that.
  20. Daniel Schaub: So, you brought the concept.
  21. Marko Svetina: Yeah, so we, we saw EnerNOC was, was one of them that was really taking off. So, we, we talked to, to the founders there a few times, also cooperating a bit more. But at the end, we, you know, we, we just said, "Okay, let, let's go for it, because it, this seems to be really a, a good, good market." So, we, we three, or altogether three colleagues, we, we made the company.
  22. Daniel Schaub: Okay, just one small question for that. So, you saw a business in energy sector for sure. So, how was for you coming from a business language to go into energy language, which is more technical, maybe? How was this shift?
  23. Marko Svetina: I don't think it was all that much, right? Because as I said before, right, so I was kind of the already, we were trying to really do this transformation, and this transformation we made pretty much, I would say, 80%, 90%, right? So, already from trying to understand what the company does, what what the assets are, and trying to transform it into something which is market ready. The only thing is, at that time, the owners there weren't ready for it. So, you know, that that's fair enough.
  24. Rahul Mishra: Was it market ready for something like CyberGRID?
  25. Marko Svetina: Not really, no. No, but, that's, I think, we were definitely lucky that there was support and understanding also on one side from the European Union, right? On the other side, also from some national programs. So, we got the project called European Demand Response Centre from FFG. And that basically kicked off CyberGRID. Right.
  26. Daniel Schaub: So, maybe for the audience, what is CyberGRID? So.
  27. Marko Svetina: So CyberGRID was basically the, the first or one of the first companies producing software for virtual power plants. And our major customers were large utilities. So, we, we started, the first utility was was Elektro Ljubljana, which was very advanced. So, we, we started working with them 2011, 2012. So, 2012 already marketing a tertiary reserve at that time. So, that was kind of unique at that, at that point in time, yeah.
  28. Daniel Schaub: Yeah, so it's a you are working helping the utilities to balance the the load with flexibility and demand response. That's the
  29. Marko Svetina: Well, our idea was always, right? So, we, we said, "Okay, we can do the technology, right?" And the utilities, they have a lot of customers already, right? So, we said, "Okay, why double the efforts and go after the same customers, because utilities already held this customer base?" Which in the beginning worked really, really well, I think, especially, you know, this was this was, as I said, right? So, we started with Elektro Ljubljana on some, we, we had at the old power plant, we had a like a big room, a few rooms for ourselves, right? So, this was basically part of a museum. So, they had the old, they had the old metering equipment there. So, we they painted it really nice for us. It looks really super, right?
  30. Daniel Schaub: And so you had an office inside, you did?
  31. Marko Svetina: Inside of Elektro Ljubljana, yeah, yeah. Yeah. So, and then because we we got quite some attention, I would say, on the market. So, SAP was at that time our really big supporter. So, we went to all of the events together with them, promoting also their HANA in-memory computing together with virtual power plant. That that was a big part of ours, I would say, success at that point. And
  32. Daniel Schaub: A partnership with them.
  33. Marko Svetina: A partnership with them, right? Because they, they were, they they saw us as really on the site where we could use or make use of real-time data, and they, on the other side, were trying to implement the HANA system. So, that kind of was, was a very good match. On the other side, I think a lot of utilities were just looking what's go, at what's going on here, right? So, we had we were pretty lucky. So, we got visits from basically all the major European utilities. We started working for EDF, for Vattenfall, we had after that, we also got, got yeah, a contract from GDF Suez, Electrabel, and so on. And so, as said, so the the first commercial project started, I think January 1st, 2012 already, which was I think pretty much the first virtual power plant. And it was also a bit lucky, right? Because that, as you said about Slovenia, right, Slovenia is luckily very small, right? So, everybody pretty much knows everybody.
  34. Daniel Schaub: Knows each. Yeah.
  35. Marko Svetina: So, they they kind of trusted us, and and we could basically persuade also the TSO, the utility, because this it was completely new, right? So, that we can also supply power in the same way than the peaker, or the the peaker or the industrial peaker can, obviously with a significantly lower cost.
  36. Daniel Schaub: Okay. Nice. You want to go?
  37. Rahul Mishra: Yeah. I, I just wanted to, uh, understand, like, uh, for you, you were three founders and you, you started the company in Slovenia?
  38. Marko Svetina: No, we actually started the company in Vienna in in Austria, and the decision for that was, so from the entrepreneurial point of view, it's obviously, it's pretty important how to get the financing. So, financing at that time for Slovenia wasn't all that really, all much, all that much developed, right? Also Austria, I think was, we didn't know at the time, but obviously was way better than than than it was in Slovenia at the time. But for us, I think we just decided we we went for Austria, and, you know, we didn't know really. So, we, we went for Austria. One of our colleagues was, is Austrian. So, we and we set up an office in the in Vienna.
  39. Rahul Mishra: Okay. And, and after that, you, you got a project together with the utility in Ljubljana.
  40. Marko Svetina: We got the project, yes. We got the project with utility. This was the first commercial project, but, as I said before, even before that, we started with the Austrian FFG project European Demand Response Center. So, and that was that was, that were the early starts, and then after a couple of years, Toshiba already came, and they acquired 76% of the share.
  41. Rahul Mishra: And, we already were talking about it and previously. But what, what was so attractive, because even currently, the VPP has not been integrated by all the utilities properly. But 10, even 12 years ago, that what, what was the hook that they were they wanted to know about it, or it was so novel that that was attracting all the all all those utilities?
  42. Marko Svetina: I think the the it was, so always in technology part, right, you have the basically it's an S-curve, right? So, you have the early adopters, then it's a big jump, and then you have the late adopters, right? So, right now, probably there are some late adopters that don't have it. But, in principle, I think the the demand responses or, let's say, virtual power plant kind of competes with the core business of the utilities. Right? So, because the core business pretty much is producing energy, then through a distribution company or transmission distribution company, distribute to the end customer, right? So, and here basically the idea is obviously that the the the consumption or, let's say, the the distributed generation part also contributes to the stability of the overall system, and tries to to counter the imbalances. And that is, I would say, not natural for most of the large utilities, right? So, they do some demo programs, they even support some programs, but at the end, they don't really scale it up. And that's that's just the nature of their business, right? So, we have we are seeing obviously that the design, even of the market, design of the overall system, it's kind of designed in that way, right? So, the the even, I think, at 2010 already, late 2010, we we put together, we are the founding member of Smart Energy Coalition at that time. So, this is smartEn now. It's a kind of a lobbying institution inside of the EU, which basically had to go and basically implement the rules into the energy, into the into the grid code, into the, you know, that there was a bunch of laws which were adopted in the last 10, 15 years where they had to allow basically incumbents like us, right, or basically newcomers to be to participate in all of the markets on somewhat level playing ground. And this has just been, I think, a major breakthrough was, obviously, the the introduction of PICASSO rules, PICASSO-MARI,
  43. Daniel Schaub: Yeah.
  44. Marko Svetina: in the which actually happened, the big boom or whatever, happened last year.
  45. Daniel Schaub: Yeah. Just you mentioned the early adopters in this adaptive curve. How do you convince the first utility in Ljubljana to try to use virtual power plants?
  46. Marko Svetina: I think the we had relatively good relations with them from the beginning, right? So, we had, as I said before, right, Slovenia is relatively small. So, there was personal trust that we could pull it off. But the utilities had also, so I think each of the large utilities has has several programs that are competing inside development or, you know, I would say, the research, whatever you want to call it, programs. Because they invest a lot, right, in different novelties, different new approaches. And Elektro Ljubljana at that time decided, so they, they saw an opportunity here, and they, you know, they, they basically became one of the top companies in Europe, right, for the time being on on this topic, right? Because they were the only ones that had something like that, that had really hands-on experience, and it at the end, it was really also a relatively cheap project, right? Because there is no big infrastructure. No, but you don't have infrastructure investment, pretty much, right, besides the, you know, servers and and know-how algorithms, stuff like that. So, that that I think all contributed.
  47. Daniel Schaub: Okay, and how have you seen the evolution of this kind of solutions? At the end, is to solve demand response to this congested grid. So, how have you seen the evolution in the last years, and what is the current like technology status for demand response?
  48. Marko Svetina: I think, yeah, I'm not sure if I'm following all the developments right now, right? Because I I exited the company. I sold the company first, maybe just just as a background, I sold the company then to Toshiba. We became Global Demand Response Center for Toshiba Group 2013. Then Toshiba pulled out of Europe 2014-15, so we basically acquired the company back. And then we resold the company 2022 to EVN. So, but the the basically what what I think is there was a lot of incumbents coming to the market in the latest years, some with more expertise, some with less. And the market basically went, so before in the beginning, it was kind of very entrepreneurial, you know, a few we everybody knew everyone, right? So, there was a guy in UK, Kiwi Power, YoYo, and there was a guy in in Germany, Entelios was the company, and there was us. It was the three of us, right? So So, then this was 2010, and then right now, I think you have hundreds of players trying to do something in different segments, so industrial, home demand response, whatever, right?
  49. Daniel Schaub: Yeah. Yeah, we were talking that another solution for demand response, it's these aggregators that they are now, and and they have customers, and they can interact with them, and then to to make or to give them recommendations to turn on or to increase the demand in certain moments. So, we was just talking before camera that there are companies in Europe making that, and there is one in Austria. How do you see this aggregation solution?
  50. Marko Svetina: I think there is a bunch of them in Austria right now, so, but, but I think depends really which markets you're targeting, right? So, if you're going into the home-type demand response, or if you're going especially to the energy markets, you're working more on a larger base and you're working more on recommendations. If you if you're doing really grid support or ancillary services, you you basically are targeting a bit bigger loads. Typically, you try to do fully automated systems. This is one of these segmentation that happened. So, and, as said, so most of the large utilities now have their programs already in place. So, that's on the utility side. So, but I think for at least for us, what I see is that the the system is opening up to the new players also on the, I would say, not just on the technical side. So, so not just on the tech, so is also what we're trying to do now, right, is is moving more to the to become a a more wholesome player, right? Which means also to have assets that that bring to the
  51. Rahul Mishra: On that note, we move forward. Just want to ask you one entrepreneurial question. So, you you got to sell you sold your company twice, and you were associated with CyberGRID till 2022?
  52. Marko Svetina: Yes. In I was still advising until 2023 in kind of this the the posts.
  53. Rahul Mishra: How was the experience, because I mean, working on on something your own for over 10 years, and then not working on it anymore, and then selling it off, how how was the experience?
  54. Marko Svetina: Well, for me personally, I think I think, obviously, great, right? Because the company's still working right now, so they are part of the big utility, so happy about that. But, obviously, it's it's also a change, right? So, even after I I didn't work for an employer basically since, I think, 2010, right? So, it's kind of, I like it, right? And, and obviously, each sale is is a success, right? So, because you, you know, you created something, there was somebody who also thinks, "Okay, this is not completely bollocks, right?"
  55. Daniel Schaub: Is it like having a kid, and then they grow, and and?
  56. Marko Svetina: Yeah, something like that, yeah. Something like that, right? So So, you you I think the only question is, you know, how many ideas, how many things you you have to to develop still, right? So, there are some things which you, obviously, would like to change, right? Some some things which you liked, and, you know, you get the network, you know. Yeah.
  57. Daniel Schaub: Yeah. And well, with an entrepreneurial spirit, you sold, but you started something new immediately, right? So, you saw a gap?
  58. Marko Svetina: Well, I think the biggest or the the the thing is is yeah, as we worked also with large utilities, right? Is we saw that basically pretty much the large utilities don't have the the interest to to work. I mean, in principle, they would still like to be where they were like 20, 30 years ago, right? They did have to adapt a little bit, right, to the all the rules that come from European Commission, right? But, at the end, they're still pretty they're still pretty much living in the world where they own everything.
  59. Daniel Schaub: Monopoly.
  60. Marko Svetina: Yeah. Well, they they own the whole thing, right? Pretty much. Yeah. Business as usual, yeah. So, you know, the the all these small players are pretty much small, and and and and it's hard to work with them. So, but on on the other side, right, I think the the you know, the there's always gates, right, which open up. And the thing is who does these changes is, I would probably say, how to say, that a lot of that came through the EU, right? Because in the on the national level, the utilities are typically pretty strong, right, and connected pretty much with the government, and so on, right? So, for whatever reason, right? But on a European s- on a European Union really tried to push for for decoupling the grid away from the market and opening up market to the other players. And they did open it up, I would say. The intraday, or the energy markets, are pretty much open now. So, anybody with, you know, anybody can can work there with some meaningful capacity and do it, some experience, right? So, that's open. That gets open, but, you know, if you look at the market segmentation, right? So, I would say that there is still so-called so, there's still so-called gentlemen's club, right? And this gentlemen's club are a lot of markets which aren't all that open to the to the general public, right? And that's where basically all the large utilities make the money, right? Because it's they don't make money really on on, you know, on selling energy from from one place to another, right? They do a lot of trading, they do a lot of balancing, they do a lot of, you know, redispatch, whatever services, right, that are really not all that open to to to incumbents.
  61. Daniel Schaub: And they remains closed.
  62. Marko Svetina: I I would say also with with the new rules, right, that that we were we were discussing, this the PICASSO rules, PICASSO-MARI, another part cracks open, right? But, in principle, if you if you look at if you're an independent producer of power, right, say you have a PV plant, right? That's a typical one. You don't need much money. You need a few thousand euros, you're already on the market pretty much, right? But the only thing what you can do is you can sell it on intraday or day-ahead market. That's it.
  63. Daniel Schaub: Not, no PPAs?
  64. Marko Svetina: Well, yeah, but PPA is still the same thing, right? So, you but that's not really where where a lot of money is being made, right? So, or you get a subsidy, for instance, right, which I I think is pretty bad. But the, in principle, that's the only thing you can do, right? Balancing services, as I said, auxiliary services, you know, redispatch, all of this.
  65. Daniel Schaub: There is the business.
  66. Marko Svetina: Well, yeah. That that's where where, obviously, the you know, if in a large utility, if you look the the who makes the money is the trading part. The trading part always makes the money backed up by assets, right? So, that's who makes the money, right? So, now the question is, how can we or let's say, going back to the to the previous question is, right? We're trying to think how we can help this this let's say, how we can balance the field a little bit, right? Yeah, that that's our challenge right now.
  67. Rahul Mishra: And, so if you can explain. So, you started with BM2solar, and what exactly is that?
  68. Marko Svetina: So, yeah, thanks. So, it's so BM2solar is basically the is the project or the company we're working on right now. And what we're trying to do is again is is balancing this market a little bit more, right? It's opening the gentlemen's club also to the to the, let's say, to the new players, to the IPPs, so-called independent power producers. So that these guys also can offer or can tap into the other markets.
  69. Rahul Mishra: Okay.
  70. Marko Svetina: So, how can they do that, right? With just with the PV plants? Partially yes, right, but the the new technology, so, obviously, the battery storage actually can help a lot, right? So, now that especially in the last years the prices of the battery storage went really down,
  71. Daniel Schaub: Really down, yeah.
  72. Marko Svetina: right? So, that helps a lot. And there is a lot of PV plants out there, and they're all the same, right? So, they're applicable. So, the PV plants pretty much the same in Portugal, Spain, Austria, wherever, right? Or Central Eastern Europe, doesn't matter, right? The question, as we discussed before, right, so now the markets are opening up, right? So, the question is is how can you can you now access all of these markets? And this is, I would say, this is not the markets there or the work there is relatively highly, I would say, highly adapted or really specialised to a certain market, right? So, you you know, you need to have some infrastructure like the balance group, you need to have the the access to the intraday market, day-ahead market, you need to have the trading desk, obviously, pre-qualification if you want to do ancillary services with the TSO, and you need to know what to do, right? So, all of that is is something which is basically a part of the utility business, which makes money, right, for the utilities, and is being now gradually opened. And that's what we're trying to do, basically. It's basically empower the the IPPs to come to a next level of services, not just the the PPA, the energy markets, but to create a wholesome offer of energy services, basically.
  73. Daniel Schaub: Okay. Like in in internal services for from a battery system, but also arbitrage?
  74. Marko Svetina: Sorry?
  75. Daniel Schaub: Also arbitrage?
  76. Marko Svetina: Arbitrage, yeah, sure. Sure, absolutely, yeah. Well, the thing is, I think there is basically, there are two parts, right? One part is trading, the second part are the assets, right? So, in principle, the assets can hedge the the the trading, right? But that's part of the trading, but as said, also you can do the the the all the services as said before, right? So, I think the especially in the in the in the parts where there is lots of renewables, right, we we are seeing extreme prices happening, right, on the markets. And I mean especially also right now, I thought, let's say, you know, there was always a question, when you do all of these balancing services, right, will these extreme events, they won't happen anymore, so nobody makes any money anymore, right?
  77. Daniel Schaub: So, it's at the beginning. It's like cannibalism at the at the beginning.
  78. Marko Svetina: Yeah, right, right. But we're way off of that, right? We're way If you looked at, because we we're
  79. Daniel Schaub: Just starting.
  80. Marko Svetina: we're we're monitoring the prices quite a bit quite a bit, obviously, and and the let's say the just the extent of extreme events has grown dramatically, actually. So, you have you have a lot of prices in the tens of thousands of euros per megawatt hour,
  81. Daniel Schaub: Negative, also.
  82. Marko Svetina: right? And negative as well, right? So, so that that's something that that is, I think, bringing in the dynamics, and, you know, it's it's lucrative definitely, and these are the markets as I said before, you know, if if you have just a typical PV plant, you can't do anything there.
  83. Daniel Schaub: Yeah. And and what are you doing in your other company that you are part of the fifthvolt?
  84. Marko Svetina: Okay, it's actually like that, that fifthvolt is is is a is a kind of a holding company. It has shares in BM2solar, right? But, in principle, most of my work is is BM2solar, pretty much everything. We do have, however, with fifthvolt we have a project in Ukraine where we are working to basically look into the energy transformation, and also from the energy security point of view for three cities, I think, Nizhyn, Kalush, and one more. Sorry, I forgot now. But, in principle, in principle, yeah, the the I think this transformation which we were discussing about, so also the war in Ukraine was a major shift, I think, also in the European thinking, right? And we are seeing that the the large infrastructure energy projects are really vulnerable.
  85. Daniel Schaub: Yeah.
  86. Marko Svetina: Right? So, you saw the Nord Stream gas line or you see all the all the bombings that go on around the the big power plants. So, I think that is definitely one of the things which will, so, as I said before, PV plants are really not worth destroying, right? Because they're so dispersed, and we saw that actually this is definitely a way to bring resilience to the system.
  87. Daniel Schaub: Wow.
  88. Rahul Mishra: And what exactly is the business model then, like, for, I mean, not just for the people who already have the plant, but also for you, that apart from getting them access to the market, but
  89. Marko Svetina: So, I'll say it's two twofold. If I finish off the the fifthvolt story, so I think with the with there, we're looking into creating security in the energy supply, and security of the balance, you know, also balancing the grid, stuff like that, right? So, the services. So, the this is sad, right? So, Ukraine now really is under big pressure of transforming their energy system away from also, you know, the the energy so, also Russian gas and so on.
  90. Daniel Schaub: But like to decarbonize faster?
  91. Marko Svetina: Decarbonize faster, but also, you know, bring it to a level that is sustainable, and that is also, let's say, manageable, and it's relatively distributed, right? So, that on the city level, you can already see that there is some self-sufficient self-sufficient supply. But, obviously, this is, again, the the the fastest or one side is energy efficiency. But the biggest or the the, I would say, probably one of the things in the future what we will see is, again, is renewables combined with storage.
  92. Daniel Schaub: Yeah.
  93. Marko Svetina: Because this is is distributed, it can also be grid-forming. So, this is one part of the of the thing, right, is the security. And the second part is, as I mentioned before, right? So, this is the thing that is basically competing with the traditional utilities model, right? There is a lot of, I would say, sometimes also resistance on different, you know, still a lot of rules, I would say, on the markets that prevent the incumbents really to grasp the whole possibility of the markets. There's the rule of, I don't know, for instance, in in Spain, you need to have 100 megawatts of power to be connected to the grid to be able to provide, I don't know, for instance, ancillary services, right? So, grid tariffs sometimes are, you know, the grid tariff for the storage systems are completely different, let's say in Germany and then in Austria, right? So, stuff like that, right? So, these are the things that obviously the the, you know, the traditional systems are, I would say, still kind of opening it relatively in a in a or opening the markets in a bit slower pace, but the change is coming.
  94. Daniel Schaub: Yeah, it's inevitable, and
  95. Marko Svetina: I think it's inevitable. And and the the sooner the the the companies grasp that, the the better also for them.
  96. Rahul Mishra: Yeah.
  97. Marko Svetina: Because it's it's going to be hard to to control the market, you know, or to to keep all the the system kind of really rigid for the next, I don't know, 50 years.
  98. Daniel Schaub: Yeah. And would you say there is an opportunity for the CEE region that now they are installing not PV alone, but they like they leapfrogged the the only PV projects and now they are starting with PV plus BESS, right?
  99. Marko Svetina: Yeah. I I think PV plus BESS is one of the things, right? Which is, but this is obviously the the the cost of kilowatt-hour produced on in such units is really compatible to, or sorry, competitive to pretty much also intraday prices, anything, right? That's right now in the market. But I would say, in short, yes. So, there are huge projects also in Bulgaria, Romania, right, where battery, BESS, also some closer, so to, let's say, Croatia, also Slovenia, Austria. So, there's a lot of work there. So, but as I said before, I think the major part which is adding to the to to the movement is the the just the pricing.
  100. Rahul Mishra: Mhm.
  101. Marko Svetina: If you can, you know, it doesn't cost much to run the sun, right? So, that's that's how it is. So, and if also the batteries are most of the costs are connected to the technology behind it, and this technology, yes, they are obviously the the global superpower there is China, which is to a certain extent, especially, for can be risky, right? So, so that's, but in Europe we have we have definitely a couple of suppliers, or at least a couple of suppliers of of control, or of the management equipment that can use the the, let's say, the the cells from from Asia, that can also, let's say, cover the security risk, but I think just the the price point, right? So, if you're if you're looking at the, you know, PV panels, they cost now, if I buy it for the single home, you know, glass variant with two glass parts, they cost like €60 or something, a panel. So, the the the cost of producing the energy is pretty much nothing, right, or is a few cents, right, per kilowatt-hour. If I had to if I had the battery storage, which, again, is relatively competitive, I'm coming to sun below 10 cents per kilowatt-hour, right? From a completely, I would say, renewable source. Yes, there is energy which needs to be put in to produce these units, but this energy can be also come from renewable sources, right? So, I think that that is really a good good development.
  102. Daniel Schaub: Yeah, I mean, I have read an article a few time ago that there is this carbon payback for PV solar panels, for example, because you need energy to manufacture the solar panels. And it's like depending where they are producing, because it relies on the source from the sun, but it's like four or five years of carbon. Because if they are manufactured in China, the energy matrix is mainly coal. So, that's exactly the point,
  103. Marko Svetina: Yeah, that that's exactly the the point, right? So, but on the other side, right, they are investing huge amounts into renewables, right? So, should we ask them, you know, I don't think it's fair also towards development developing countries to say, "Oh, you shouldn't produce anything," right? You know, they are developing, and it's way better that they invest a lot into the renewables than to coal, right? But yes, there is obviously still lots of coal, but just the the sheer amount of of renewables that they produce, right? Or implement also. It's you know, in a month they do much more than we do in Europe in a year, right?
  104. Daniel Schaub: Yeah, it's crazy numbers. Actually, they have two years in a row, and this diminishing the CO2 emissions. So, it's something to know, I think, at the end.
  105. Marko Svetina: No, but I think at the end, you know, we can talk all about the policies, all the stuff, right? But when the competition the competitiveness of the new technology, and if it's green, it's obviously great, right? But once you have the the PV plants' roll-out at that scale, right, so then also your CO2 or, let's say, the the energy mix the CO2 emission of the energy mix is, obviously, is going to be way better, right? But, you know, coming coming back to to, you know, to the also to the installed power, and, you know, because at the end, we are consuming energy all the year, right? So, but what we're ending up is to have triple, quadruple amount of PV plant installed power on the grid, right, which obviously means that if there is sun out there, and maybe even some wind, we're going to have massive overproduction of energy, right? And then we can obviously, so because it's the PV plants kind of, you know, it has lots of power, but no control.
  106. Daniel Schaub: No control.
  107. Marko Svetina: So, you can you can turn it off, right? So, the stupid thing is obviously if you pay subsidies to still for the that solar power to get to the grid, right? So, what you need to do is really manage it, right, or try to do to cover some gaps, try to do something more, right? So, and that's that's I think that's why this combination, battery storage is such a natural match.
  108. Daniel Schaub: Yeah.
  109. Marko Svetina: Right?
  110. Daniel Schaub: Just a small question, because you said that you are you don't like much subsidies. Could you expand more, why you are
  111. Marko Svetina: Well, I think subsidies basically, um, I would say, distort the market itself, right? So, in the beginning they're good, right, to to start the business, like also the solar, right? But right now the solar does not need subsidies, right? They they should not get, because it's so much overproduction, right? So, if you put subsidies there, that just means that they will have no interest in doing anything, right? Because it will run for the next, whatever, 10 years, 15 years, and it will pay taxes. On the other side, we see the negative prices pretty much constantly, right, on the weekend. So, imagine you're you have now a PV plant that is on a feed-in tariff, gets 8 cents, 7, 8 cents, right? It produces all the time, right, at 7, 8 cents. But that market that the market value of that power is negative 7 cents, right? So, the question is who pays the the difference, right? So, typically the taxpayer, but, you know, and, you know, that that's that are all the things. So, I think what's important is to is to empower the owner of this plants really to have access to the whole market, and try to to provide all the services, and that's plenty enough, right? That's plenty enough, because it's otherwise it gets it gets into a direction where we don't want it to be, right, where we have the assets which don't do anything. They're there because they they're paid to be there.
  112. Daniel Schaub: Yeah. But from the business perspective, you applied or you plan a power plant with subsidies. You made your your your flow, and you got financed from banks, for example. So, you said that the subsidies could be cut for the new projects planned, or for all of them?
  113. Marko Svetina: No, no, no. For the, you know, for the existing, it is as it is, right? But especially, I think for the new ones, I mean, it's, you know, I don't want to don't want to go into any of the, you know, specific discussions, but in principle, I'm saying, is, you know, if you're paying tax dollars, tax money, tax euros to fund something which basically is losing a lot of money to the taxpayers on the other side, you shouldn't do that, right? Unless you have some bigger goal. But, you know, I just don't see it.
  114. Rahul Mishra: Okay. Well, I want to I mean, subsidies you don't like, but, uh, a lot of the a lot of subsidies are still going on and on the technology which it should not be going, for sure. We can we can totally vote for that. I just want to ask you again about that, uh, so is there any specific industry that you're targeting with the with the proposed model for the IPP that you were talking about? Any specific industry? Any
  115. Marko Svetina: Uh, any specific industry, or?
  116. Rahul Mishra: Any specific producer? Like when I said industry, like the the small producer like maybe farmers, agriculture?
  117. Marko Svetina: Oh, yeah. So, typically, I think it's always, you know, like always, also when we started with demand response, right, you start with the, I would say, the most appropriate players for the market, right? So, the easiest are, obviously, bigger plants, right? So, if they are PV plants which are, I would say, you know, outside connected to the grid and have size of about 1 megawatt, they definitely make sense, right? Big or the connection size.
  118. Rahul Mishra: What is the, like, typical size of plant that you look into?
  119. Marko Svetina: Typical size is between 5 and 50 megawatts of connected power. Obviously, in Austria, they're a bit smaller, right? So, it's between 1 and 10, or 1 and yeah, 1 and 10, I would say. And they can, you know, I think the difference for them, let's say, is they can really potentially make much more money, even double their revenues, the without major risks. Let's put it this way, without major risks. So, the thing is that the especially larger, you know, the effort that you need to do to control a plant is pretty much the same if it's 1 megawatt or 10 megawatt or 50 megawatt, right? So, when you when you ask me which which plant, obviously 50 megawatt is makes more sense, right? But, in principle, it can go down, it will go down in the next years. The typically what So, you have a lot of independent players like financial institutions, like also some entrepreneurial individuals that invested into the PV plants, and they made some money, right? And let's say they fall out of the the the subsidy scheme, right? Now, there's a question, they need to do something with it, right? And if they even if they have a bank loan sitting there, right, so it makes it tough, right? Especially because also I think the subsidies also deepen the or even push the prices on the intraday down, right? Because there is constant oversupply. So, the now, this these guys are a bit under stress, right? So, they need to decide what to do. So, there are some utilities which offer them, you know, or, yeah, maybe even from the other side, some utilities also now try to buy these PV plants, right? Just to add to their, I would say, position on the market, to to add to their portfolio, right? They even create new new teams to to purchase that, right? Which is obviously also a a strategy. But I think it's important that that, at least from the energy world, that that the system is not monopolised, that you have also you have a lot of, as said, financial investors that understand really well the financing. But the trading, because the there is a big difference between operating a PV plant and operating a flexible, 24/7 asset, right? There's these are completely two different subjects, right? So, you can do you can do a PV plant, you can sell it on PPA, you can sell it via, you know, marketing agent, market agent. If you have basically, if you're running, I would say, kind of a trading desk, you need to run that professionally and constantly, right? You can, and you can outsource that to an independent aggregator, right? And then the question is, what portfolio does this independent aggregator have, how what's the priority for your asset, and so on? Or you say, "Okay, I'm big enough. I'll do it myself." So, to do it yourself, you I would say you need at least 10 to 50 megawatts power at least to make some sense. And even then, it's going to be a lot of effort, a lot of, you know, and it has to be operated 24/7. So, this is the gap we're trying to to come in, right? So, really to specialise on, so we have two, three mathematicians that are constantly developing the algorithms for the PV plants with storage themselves, right? Market algorithms, and so on.
  120. Rahul Mishra: What are the like, do you already have some, some some projects, with some case studies going on?
  121. Marko Svetina: Yeah, absolutely. We have we hope to have the first plants actually connected to the market with all infrastructure. So, so, obviously, there is a lot of infrastructure which which needs to be built to do that, right? So, before one, right, you need to have the balance group, you need to be connected to the to the intraday day-ahead markets, right? So, all the securities need to be paid, right? So, this is just to access the markets, the intraday day-ahead markets. Then, if you want to do the ancillary services, you need to have the system, and you need to be pre-qualified with the ancillary services system, right? Then, you need to have the control center, you need to have the you need, and you obviously need to do what you need to know what to do there, right? So, to to put all of this together, right, there is, um, yeah, I'd say 2 to 3 years' work with a dedicated team, and then you you can start there, right? So, the the more experience you have, obviously, the better. So, and the as as we discussed before, right, so there are several different types of flexibilities which are being addressed, right? So, you have a lot of companies that address, let's say, home consumer, industrial consumers, you know, anything. Our story is pure PV battery, right? We address, we just want to optimize. We see there is a lot of PV guys out there that that are struggling, and, as said before, right, so we're trying to to open the gap to to also this kind of gentleman's club of the utilities for them.
  122. Daniel Schaub: Okay, okay. Well, time is flying. So, there are some questions that I don't want to miss to to ask you. You are in the storage businesses now. Okay, and it's a hot topic. What would you say that there are some permitting difficulties or barriers for the business? Because you mentioned one of them before the interview, the double fee tariffs for for the grid. But which other challenges and obstacles you see in the market?
  123. Marko Svetina: So, that's a very good question. So, it's a long, you know, we could discuss about this for hours, right?
  124. Daniel Schaub: That's why I didn't want to miss it.
  125. Marko Svetina: So, in short, if we talk Austria, you have basically local each plant, right? Has its own kind of set of rules, its own set of grid connection.
  126. Daniel Schaub: Federal.
  127. Marko Svetina: Yeah, so so that obviously does not help into, you know, into opening the market. That's that's one thing. But,
  128. Daniel Schaub: It's not a national rule. It is
  129. Marko Svetina: Well, there are parts of the rules which are national, but each of the, basically, each of the, how do you call it?
  130. Daniel Schaub: Layers.
  131. Marko Svetina: Land, so the the each of the
  132. Daniel Schaub: Regions.
  133. Marko Svetina: regions, yeah, basically has its own set of rules, its own list, and so on. And that is one thing, right? But it is way better, it's gone way better, right? So, and a lot of these governments, local governments, are also fund to, you know, to promote this local entrepreneurship, and so on. So, that does help. But, I would say, you know, we we still have we still have double taxation in in Austria, let's say, if we if we So, there are big gaps between countries, right? So, if you get, let's say, part of grid fee even reimbursed in Germany, or you get paid, you need to pay, double. You you basically pay the the grid fee in Austria like you were a consumer, right? Even though you so, if you basically charge your battery and discharge it later, let's say I I buy it from the intraday market today at 12:00 because there is an oversupply, and I want to resell it in the evening,
  134. Rahul Mishra: Yeah.
  135. Marko Svetina: I'm going to pay the whole grid tariff as I was consuming the power.
  136. Daniel Schaub: So, you pay when you are buying and selling energy.
  137. Marko Svetina: No, no, no. When you're buying it, but when you're selling it again, right, you're going to so, the consumer will pay it again.
  138. Daniel Schaub: Ah, so it's double tax tariff, but not for the same player. One
  139. Marko Svetina: Yeah, yeah, yeah. Well, for the same, for the same energy, right? If there is excess of energy, right, and I will charge it at 12:00, the battery, right, and because I I want to store it and I want to help the system to balance itself out, right? In some parts, right, there is a huge difference in Europe how that plays out, right? So, if you, you know, if I need to pay, and grid tariffs, by the way, are really getting really high, right? So, they're 8, 10 cents per kilowatt-hour, right? So, so if you need to put that on top of your cost, right, this is basically the the arbitration part, right? So, you need The profit that you can get. Yeah, yeah, absolutely. Yeah, yeah. Yeah, so that that's these are the things. But obviously, if you're looking at some, let's say Germany, some parts of Germany, right, you you don't you pay zero, or you even get some part reimbursed, right? So, and now we're working on the same market, right? So, we're working on a, let's say, European energy market with such different rules. It's kind of hard, hard to to compete in many cases, right? But, these are these are the exceptions. You know, let's say these are the things which will which are changing, right? Also with the new ElWG, I think this there will be a change in this. It's been in parliament, I think, for a couple of had a couple of tries. But, that that these are the things, right? If you look also on the grid connection permits which are necessary, so, you know, also the the possibility of PV plants to charge from the grid, do you need to pay the grid connection fee again or not? And there was a ruling last year.
  140. Daniel Schaub: It's under discussion now.
  141. Marko Svetina: No, no. This I think has been solved. There was a Supreme Court decision end of last year in Austria, let's say, this this has been resolved, right? But stuff like that, right? So, this makes it These are the things that are way more important than the, I would say, than pure, I would say, or than pure, I would say, or parts of the subsidies, or whatever, right? Because what what you need to have is is basically, um, yeah, incumbent-friendly environment. And if incumbent-friendly environment can can, you know, obviously, it does cause some problems.
  142. Rahul Mishra: But you operate in several countries already, uh,
  143. Marko Svetina: Yeah.
  144. Rahul Mishra: in in Portugal, Spain, and in Austria?
  145. Marko Svetina: Yes.
  146. Rahul Mishra: Uh, do you, if you have to assess like where you find it a bit more, uh,
  147. Marko Svetina: Well, we've we've been on Austrian market on secondary also reserve since 2014, right? So, so we pre-qualified, we worked with several utilities to to bring them to the market. So, obviously, Austria is a is a good market, is a very advanced market, but it's, I would say, the the, um, the good part is the experience and also the help from the TSO, and so on, right? But the the, I would say, the drawback are some rules which are really slow to change. So, if we talk about really new comp- so, Spain and Portugal have been more new in this respect.
  148. Rahul Mishra: Yeah.
  149. Marko Svetina: So, some rules have already been adapted there, but a lot of parts are still missing. So, but that's like a set. So, in in Spain, there is a rule for 100 100 megawatt to start the production. It makes no sense.
  150. Daniel Schaub: Why? Yeah.
  151. Marko Svetina: Well, I think they had before, they had 200 megawatt in a control zone, they call it, right? And it's because obviously the TSO, it's a bit different system. It's, again, a long story. So, it's a production-based system. It's a system where where you basically the TSO controls much more what's going on on the on the grid. Um, but, in principle, it makes no sense. It it's it's basically, you know, if you can beat at 1 megawatt, you know, intervals, or in 1 megawatt bits, and you need 100 to start with, yes.
  152. Daniel Schaub: Is there a European-level framework to foster this?
  153. Marko Svetina: Yes, yes. Yeah, absolutely. That that's the the question is just the adoption, right? So, there you have the European directive, and the European directive is being then implemented in the local legislation.
  154. Daniel Schaub: Okay.
  155. Marko Svetina: The the so, that's always how it happens, right? So, European directive. So, we we worked a lot with with the grid codes and with different directives, right, energy directives. The question is how are this being adopted, and typically the rule is is that the the the local implementation of the directive has to be at least so, the minimum criteria is the directive itself, but then can be some additional, or a bit, let's say, friend even friendlier than that, right? But the way we see it is that, obviously, you know, time to implement the directive is quite long, right? And also the variations of implementation are sometimes changing.
  156. Daniel Schaub: And that's to avoid the double back tariff?
  157. Marko Svetina: For instance, yes. For instance, because, in principle, all the all the players on the market should have kind of balance, yeah, balance.
  158. Rahul Mishra: Are the other decentralized uh objectives, like energy communities, are they going to help you in in your goals that you're trying to do?
  159. Marko Svetina: Um, yeah, absolutely. So, I think the here, the Austria has been a front-runner, right?
  160. Rahul Mishra: Yeah.
  161. Marko Svetina: So, in the energy communities, I definitely So, this goes into what I was talking before, right? So, this is the you can either have large, centralized producing units, producing, and and and so on, right? Or you can have smaller units which are more take care of the local supply. I think the energy communities are definitely helping the the latter ones, and that's also from security point of view, from from cost, from grid point of view, it has many benefits.
  162. Rahul Mishra: We are really looking forward to having you in the forum.
  163. Marko Svetina: Okay.
  164. Rahul Mishra: We can discuss this in more detail.
  165. Marko Svetina: Great.
  166. Rahul Mishra: But, again, going back to the entrepreneurship part, you've you've been a serial a serial entrepreneur, and how do you see the securing investment part for when you start something new for a new energy company? Can you tell us about
  167. Marko Svetina: Okay.
  168. Rahul Mishra: about BM2solar's journey so far, as well?
  169. Marko Svetina: So, with BM2solar, we are two partners. So, Susana Quintana-Plaza, so she's basically an expert there. So, she's So, she's really good, and she was running basically the venture fund of E.ON, and also later Next47, and so on. So, I'm really lucky. So, to to have that part solved, right? But, I would say investment into the so, if we look at the venture, or in the seed financing stage, that is relatively good. What lacks, or so, you know, there's also here in Austria, there are several programs which support that. This is in a few hundreds of thousands of euros, right?
  170. Rahul Mishra: Yeah.
  171. Marko Svetina: If we get into a more meaningful investments, right, there is pretty much desert, right? So, to get some millions or to get, you know, it's the question is the burning rate. So, when you're starting the company, you have a fund, and then you have the burning rate. So, if the burning rate of the company is, you know, you always want to have some kind of lifetime of, I would say when it's six months, it's already pretty bad, right? So, about 12 months, 12 to 24 months with the burn rate, you know, because something can happen, whatever, right? So, if you imagine you're getting €300,000, or 3, 400, whatever, the the typical seed investment, right? You have, you can spend about €30k a month for 12 months, right? €30k a month. And until we're we're trying to get the really smart guys together, we're trying to put some infrastructure together, it's peanuts, right? It's nothing.
  172. Daniel Schaub: Yes.
  173. Marko Svetina: Yeah. So, then if you're get then you're getting to a 60, 70, €80,000, right? So, then you need already 2 million, right? So, 2 million investment, 3 million investment to get here, either in Austria, or something, I think it's it's not it's tough. Right? So, you have to have either good records, good you know, good set of contacts, whatever, right? But to have a much more dynamic, entrepreneurial point of view, I think, yeah, taxation issue of the, you know, like in the UK, they have a very favorable taxation policy towards investment into start-ups, that that felt greatly. Yeah, we
  174. Daniel Schaub: Yeah. We
  175. Rahul Mishra: Just just one question,
  176. Daniel Schaub: are missing, okay.
  177. Marko Svetina: maybe one one thing which which I have to mention, I think which was a big challenge for us, right, is that we we are a software company, and basically based on accounting rules, we had to write all our development off, right? So, which basically put it to the cost, right? So, because own development software cannot be an asset, let's say, here, right? So, and that basically was not, not not a good thing for us, because if you're running a software company, we invested almost, I think, €15 million into the investment of into the development of software, and we had a balance sheet which was worse than, you know, Würstelstand. Right? So, that was you know, then trying to compete with this balance sheet on big projects, with bigger utilities, stuff like that, it's that that was tough.
  178. Rahul Mishra: Yes. You also mentioned that that's like one, only one question with that that about the burn rate and and getting the smart people around, is it difficult right now, and the market is tough with the with attracting talent?
  179. Marko Svetina: Right now, I think not so much. Right now, I think attracting talent is better. That's because, I think, there is a bit of a downturn. I mean, correct me if I'm wrong, but, but I think there is a bit of downturn on the economy, and there is some talent around.
  180. Rahul Mishra: Yeah.
  181. Marko Svetina: But, in principle, yes. I I mean, you if you want to get the talent together, they cost, right? And especially if you want to retain them.
  182. Rahul Mishra: Yeah.
  183. Marko Svetina: And then with the burn rate, right, so then you need you need the the Obviously, you know, if you're typically, with each start-up, you you have some potential revenue, some projects you're targeting, and some, you know, you have a business plan, right? And if that business plan, if if the project, I don't know, is delayed for a month or two months, or whatever, right, and if that kills you, right, that's not a good thing, right? So, you you need to have some stability, because then also all the the the people that work for you will basically, you know, they they perceive you way too risky, right? And that's that again, you know, because for a young guy or, you know, especially, or a young lady or whoever, right, who are making their families, you know, they they need to have at least some some stability, and that that's a tough one.
  184. Daniel Schaub: Yeah. I mean, we have more questions in terms of entrepreneurship, but maybe closing and seeing in the future. I mean, we would love to have you again maybe, and looking forward for seeing you in the next forum in the panel.
  185. Marko Svetina: Mhm.
  186. Daniel Schaub: How the discussion is going.
  187. Marko Svetina: Mhm.
  188. Daniel Schaub: How would you foster the hybridization of PV plants and at best on them, would you use more stick measures or carrots?
  189. Marko Svetina: That's just me. But, but I think the main challenge which a lot of the the the I would say the the PV plants face is basically, you know, once you're on a subsidy scheme,
  190. Rahul Mishra: Mhm.
  191. Marko Svetina: and then you fall out, and you're really in the desert, right?
  192. Daniel Schaub: Yeah.
  193. Marko Svetina: Right? So, then the big challenge is, what do you do, right? So, you can either sell your com- sell your PV plant to a utility, right, and the utility package that one, right? So, or you have the incentives or you have the infrastructure to get you through there, right? So, you you basically can maintain your ROIs, right? To maintain the ROIs, I think right now the the this is, again, this is the opening the gates to all of these exclusive clubs, right? Because the in principle, let's talk talk about redispatch right now, right? So, redispatch can in most cases be provided by, you know, by any asset, right? So, can this be provided just by the battery, in some cases, I mean, or, in some cases, just the generators. So, there is a lot of rules which are, which are many times local, right? Country-specific, and would hinder you to get to the market quicker. So, for us, the biggest importance is getting to the market quick, and having as so so we basically would need kind of bootstrappers in the system, right? Bootstrappers meaning, "Okay, I have the case, I have battery, I have the the PV plant. How much time do I really need to get to the to everything, or to all the potential markets that can be supplied with this battery?"
  194. Daniel Schaub: Yes.
  195. Marko Svetina: If this can happen relatively quickly, right, then it's fine. If there is a number of rules why I can't, right, even though, and let's say I with the battery I need to pay some grid tariffs where my competitor doesn't need to pay it, so then the question is why, and so on, right? So, but bootstrapping the system is a, I think, a a big priority for for everybody. That also can be seen, you know, when when they opened up the the, I think which was really good also from the subsidies and from the whole thing, is the introduction of solar, introduction of wind to the market. And that took off,
  196. Daniel Schaub: Yeah.
  197. Marko Svetina: right? That's really good. That took off. We have a lot of solar, you know, Germany, Austria, wherever, right? We saw we saw that this happened, right? But this is now the the level one, right? Which is intraday day-ahead markets. Now the question is, how do we go that, as we said before, that these systems can also contribute to the stability, to the security of supply, that these systems are the integral part of the energy infrastructure, not just the, let's say, the feeding unit when it's sunny outside.
  198. Daniel Schaub: Okay, so would you go for subsidies for BESS in this early stage?
  199. Marko Svetina: That's, that's a hard one, right? Because I don't want to say no, right? So, but, I don't think they're needed. I I don't think in in principle, you know, when you when the subsidy, right, also ties your hands to a certain extent, which means in inside of a, you know, which means, I don't know, there was a subsidy in Austria also for the large large battery storage, and there was a rule that I think you need to charge at least 75% of the battery from your PV plant.
  200. Daniel Schaub: Okay.
  201. Marko Svetina: For that, which makes sense to a certain extent, but on the other side, what if there is way too much on the market from other sources? I don't know, you know? That's something which is hard to predict, and then you're getting, I don't know, 20%, whatever, of the of the subsidy. Would it be would it be just much simpler to say, "Okay, let's let's help these guys come to the market real quick, and, you know, just not pay a just and not pay a bunch of of system that basically needs to write the subsidies, needs to put all the rules there, needs to do." You know, yeah.
  202. Marko Svetina: So in in short, I would way rather sit, because also on the world scale, we need to be competitive, right? At the end, our industries, or whoever, our households, I just saw the inflation rate, I think Austrian inflation rates pretty much influenced by energy prices.
  203. Daniel Schaub: Yeah.
  204. Marko Svetina: I don't want to say anything, but.
  205. Rahul Mishra: That was a good one.
  206. Daniel Schaub: So, for you, it's it's much better for the market to open doors to new possibilities, to new business,
  207. Marko Svetina: Yeah. Absolutely.
  208. Daniel Schaub: and not subsidies?
  209. Marko Svetina: Absolutely. Absolutely. So
  210. Daniel Schaub: To be solved by the market itself. It is not needed.
  211. Marko Svetina: You need rules, right? It's not that the market really really, so it's it's about level playing ground, I would say. If you can achieve pretty much level playing ground for everybody, that's something where you need rules, where you need authority, right? And that's it. So, not to fund somebody because the other one has some protection, and you're, you know, you're getting into parts where
  212. Rahul Mishra: Marko, you you have a lot of, uh, overview about the new innovation that it that should be coming in in the energy market. What if you have to count like two or three avenues for new entrepreneurs to get into in the energy energy field, what what would that be?
  213. Marko Svetina: I think the the, um, there are probably two parts to it, right? One is digitalization of the energy, which, and this is happening, right? This is what we also do, this is what a lot of the thing where the things are going. This means that we can really adapt quickly to to any changes on the market, right? So, there is sun, we produce, we generate, we consume, right? Or we store, whatever, right? And this needs to happen in in second intervals, right? We don't need to wait 15 minutes, and so on, right? So, digitalization and decentralization. Decentralization, we need to do it. Even, you know, it's it's this, I think we are really being lucky to live in a in Europe, or in this part of the world at this time. So, but we have to think about also the, again, this security part, right? So, the security part meaning you need to have the the possibility also, or at least to have a system that is some somewhat can stabilize itself,
  214. Daniel Schaub: Mhm. More independent, resilient.
  215. Marko Svetina: more independent, more resilient, smaller units, distributed, grid-forming technologies, stuff that can bring up the the grid, and that will be a long process.
  216. Rahul Mishra: Yeah, it's
  217. Marko Svetina: That's not something that will happen over the year. That's probably 20, 30 years. It has to have some strategic thinking behind it. Why is it important? I think it's, as said, you know, just just look at the the the stuff that's going on in in Ukraine, right? That that's, you know, and as we see today, electricity is going to be even more important for us, right? Even the heating comes from electricity, the transport comes from, you know, the whole thing, telecommunication, everything, right? You don't want to be exposed there.
  218. Daniel Schaub: Yeah. So, it sounds very like the next energy forum for September. So, we are very happy to have you there in the in the panel, and and we can discuss this kind of topics. And yeah, we have this question that, what would you do with €100 million to accelerate energy transition?
  219. Rahul Mishra: We're going to make it 100 billion now.
  220. Marko Svetina: Yeah, I think the, yeah, the 100 million probably is to to create a fund, and to to basically go into the direction, as I said, decentralization and and digitalization. And these are the two things where I think we've been going into this direction anyway,
  221. Rahul Mishra: Mhm.
  222. Marko Svetina: right? The question is just how I I would throw in, definitely, the 100 million to to to
  223. Daniel Schaub: In R&D, like in startups?
  224. Marko Svetina: Um, yeah, there there absolutely, startups is one area. The second area is also the critical infrastructure, which we need to put in place also, you know, just just the storage itself, right? If we had if we had so much more storage, I think that would definitely be something, because the paybacks are relatively good, right?
  225. Daniel Schaub: How much is the payback of a BESS system?
  226. Marko Svetina: For a battery system, right now, it's probably upper teens on the ROI. So, it depends really where you are. So, it can be
  227. Daniel Schaub: But in years, just to
  228. Marko Svetina: Ah, yeah, I would say if it's an optimal project, the the payback can be probably between two and four years.
  229. Rahul Mishra: Wow. Okay, that's a
  230. Daniel Schaub: Because they last 15 years?
  231. Marko Svetina: Well, it depends how you use them, right? So, if you're if you can if you can use them if you can use them, uh, if you use them extensively, and I think that the the question is, you know, the question is where are we on the on the storage pricing? Because in two years, if you bought storage two years ago, and today you would be hardly competitive, right? Because the the price went from 200 now to €60, €70 per kilowatt, or from 500, right? So, the or, probably around 300. So, it's it's way less than half
  232. Daniel Schaub: Mhm.
  233. Marko Svetina: of the cost for the storage itself. So, how far this will This has something to do with the overcapacity production or capacity in China, and so on. But, you know, I think right now is is a relatively perfect storm for for this kind of business, yeah.
  234. Daniel Schaub: Amazing.
  235. Rahul Mishra: Just on the closing question, what is your, uh, if you have to give one message to, because we most of our community is also of the young people, so
  236. Marko Svetina: Mhm.
  237. Rahul Mishra: who are entering the field. So, any words or any insights for them?
  238. Marko Svetina: Ah, yeah, I think definitely the the energy markets, or energy systems are becoming much more much cooler,
  239. Daniel Schaub: Yeah.
  240. Marko Svetina: right? To a certain extent. I don't want to say, I mean, especially because of of
  241. Rahul Mishra: No entry to the gentlemen's club.
  242. Marko Svetina: Yeah, because because you don't need to work for a huge company where you need to to work for your boss, and maybe in 10 years you're going to get promoted to another boss, and so on, right? So, you can basically, again, I I think this is a really big thanks to European Union, and its efforts with the with all the, you know, the decentralization, and also decoupling, which has been happening since, I don't know, you know, 10, 15, 20 years. So, it's I think we're seeing really a lot of exciting startups, also in Austria, also, you know, Germany, a lot of companies here. So, you know, like, you know, just we discussed before our talk, right, so we discussed this Avatag guys, right? I really like those guys, right? Because it's, you know, you can even if you're a consumer, right, you can already go, and you can charge your car, or whatever, during the night, or whenever you you want to, right? So, you can already kind of play a little bit with the system, right? Without anything. Right? So, this these are the kind of companies or, let's say, the the community now the the communities, right, which we addressed, right? So, you get a bunch of communities also, some supported by banks and supported by, you know, local players, where you can also source your power from directly from from PV, or whatever, right? So, this was also, you know, past government, I think, implemented that, right? So, that was great as well, right? So, a lot of guys, so, all of these dynamics, and this, I would say, brings attention also Europe-wide, right? So, now everybody from Europe starts looking at Austria, "What what have you guys done?" Right? So, I think this kind of stuff is exciting, right? So, if we talk now also, you know, AI, all of that stuff, right? Digitalization of the, because, in principle, it's it's not complicated, right? You have consumption, and production, they need to You can't, you know, They need to be balanced. That's it, right? If you if you if your production starts playing crazy, right, your consumption needs to do something, or you need to have some storage, right? So, it's it's a simple thing, right? And then you have a lot of smart guys or smart girls trying to think what what what to do there, right? So, that that makes it exciting.
  243. Daniel Schaub: Yeah. It's a good opportunity to start something also in the field. I mean, there are opportunities now.
  244. Marko Svetina: Absolutely. Yeah, absolutely. So, big scale, small scale. And the system is still is is open, right? So, obviously, you need resilience. I think the the major obstacle still is probably the financing
  245. Daniel Schaub: Mhm.
  246. Marko Svetina: and some legislation, right?
  247. Daniel Schaub: So, there is a space to play, I would say, still.
  248. Marko Svetina: I would say at least, yes. But it's it's a it's also a thing where you need to be dedicated. So, there is lots of So, the playground has some rules,
  249. Daniel Schaub: Yeah.
  250. Marko Svetina: and you need to understand these rules, or at least to a certain extent, that you can play there, right? It's kind of, you know, they don't want to let you into the playground without, you know. Let's say financial markets are relatively, I would say, like 80% easier to get into,
  251. Rahul Mishra: Liberalized.
  252. Marko Svetina: 80% easier to get into, right? So, to options, to all of this stuff, right? Energy markets, a lot of rules, physical constraints, right, physical constraints, rules, and so on. But if you master them, right, there is a there's a, you know, you can hand your your own your own set of set of tools, yeah.
  253. Daniel Schaub: Okay. Amazing.
  254. Rahul Mishra: Yeah. Thank you, Marko. It's been it's been a pleasure, and I think we could have just gone on for a couple of hours, but, uh,
  255. Marko Svetina: It's a pleasure.
  256. Rahul Mishra: cut it for now, but it's been a pleasure. Thank you very much for giving the time.
  257. Marko Svetina: Super.
  258. Daniel Schaub: Thank you for coming.
  259. Marko Svetina: Thanks for the invite.
  260. Daniel Schaub: And thank you to the community for watching the interview until the end, and, yeah, we would love to have you again, maybe, and looking forward for seeing you in the next forum, in the panel.
  261. Marko Svetina: Okay.
  262. Daniel Schaub: How the discussion is going, and, yeah, see you in the next episode interview. Thanks, guys. Bye.
  263. Marko Svetina: Thanks, guys. Bye.
  264. Rahul Mishra: Bye.