Kehlan Kirwan Q&A:Paddy Finn of Electricity Exchange

In this week’s column, Kehlan Kirwan sits down with Paddy Finn of the Limerick-based Electricity Exchange. Mr Finn recently sold half the company to Bord na Móna and discusses his plans for the future.

Explain to us what Electricity Exchange does.

We’re a virtual power station operating on the Irish electricity system. Whereas conventional power stations have a large power station and a conventional control centre, we simply have a control centre based here in Limerick.

We don’t have any generation assets. So what we do is to use backup generators that are in companies all over the country and we aggregate those to form a virtual power plant. It’s not just generators either.

Even if a site can turn down their refrigeration we can take that excess power and sell it on to the grid system. We sell it in the same way a power system sells its electricity onto the grid.

So how did Electricity Exchange, the startup, begin?

Well, my PhD was in this area, it looked at how you can change consumer behaviour and actually have consumers become part of the electricity market in order to facilitate more wind in the electricity system.

So through my studies, I became very familiar with the consumer electricity market here.

Then there was an Irish company doing work with an American company. That US-based company then spoke to me about setting up these units for them over there.

The Irish potential for this was great, in terms of the rates you get paid etc. for this company though the Irish market turned out to be too small for them.

This was an energy provider who (adds) 1,500 customers every month in the States, and Ireland was just far too small for them.

However, I realised that it wasn’t too small for me. So, that was a large part of the genesis of Electricity Exchange.

How did you scale it in those few short years leading up to the Bord na Móna deal?

I started with my business partner, Duncan O’Toole, and in February 2013 we thought we’d be making money by next Christmas.

That turned out to be not quite that way.

It was quite a slow process because we are regulated the same way a power station is regulated, which is to say heavily. So the licensing was very onerous.

As well as that we weren’t exactly very easy on ourselves. One of our objectives was to stay five years ahead of regulations. We had two main objectives, staying ahead of the regulations and the other was that in five years to be a company that was one the big players in the market would want to buy out.

So in terms of staying ahead of regulation, at the time in our industry, you needed to get power metering values back to Eirgrid every 15 seconds. That was the industry standard requirement.

We set out and delivered it every second, instead of every 15 seconds. So, we were quite tough on ourselves in terms of the targets set. We had a waiting period for us to pass regulations for licensing, etc. and in that time we got very lucky in that we were able to get on board some really big companies.

We were able to work with a big soft drinks manufacturer, a very big multinational. So we had to be very good at what we do just to get in the door with these types of companies.

Once we were able to do that we had references and that, in turn, allowed us to approach other multinationals. It gave the company this snowball effect of getting people on board with us.

I remember we joked about getting one installation done a week. At the moment we have 30 units on back order that all need to get installed.

Then you sell half the company to Bord na Móna, but it took nearly a year for that deal to come in?

It began when we saw Bord na Móna had a tender out looking for backup generators. For what they were looking at we had an idea that they were probably looking at something in our area. So we called them to find out more about what they were doing, almost a fact-finding mission more than anything else.

The response we got back was that they were glad we called, because if we hadn’t called they were going to call us. It turns out they had done their homework on who were the companies to look out for on this side of the industry.

We all grew up with Bord na Móna and we know them as this wholesome Irish company. I think what a lot of people don’t see is how innovative they are. The amount of wind energy they are bringing on to the system and that they are currently powering 8,000 homes from landfill gas. So it dove-tailed nicely with what we’re doing, developing systems that make Ireland a smart grid exemplar.

Why sell only 50%? Did you consider selling all of it and took an extended holiday?

Well, the company is doing quite well and I suppose the question on top of that then is why sell anything at all?

Why not retain total control between me and Duncan? The answer to that is that with such a strong partner on board like Bord na Móna, what our task is now is to take that 25% that I now have and make it more valuable than my 50% could ever have been.

So that leads me to ask what’s next for Electricity Exchange?

It’s very much a technology play, where we’re moving to right now.

At the moment we operate two virtual power stations within the electricity market and they are going incredibly well. One of them is growing at a faster rate than we ever expected.

At the moment we’re developing an IoTAS system, an Internet of Things Ancillary Services system.

The reason why that is important is that if you can monitor something by the second you can tell how fast it can react with much better resolution.

So our new system will monitor 32,000 times per second. That is an enormous amount of data. To put that into perspective, a typical monitoring system will measure two parameters every 15 minutes.

So our system will capture as many data in one minute as they will in 63 years. As we are able to grow our distributed infrastructure, we’re seeing that as a distributed computer network.

We can then send tasks back down to the devices, they respond and we can aggregate that information.

Say, for example, an electricity generating station goes offline, we can then shut off loads really quickly.

Say a big facility that would have a lot of chillers and air conditioning, we can shut those down for 90 seconds in order to allow the station to recover and IoTAS allows that to happen within seconds.

This allows the system to recover quicker with less effect on the consumer. That’s important for Ireland as we’re an island and we have to get pretty good at sustaining ourselves here.