Tedom from the Jet Investment group Igor Faita is a long-term manufacturer of cogeneration units. Tedom recently announced that he is also starting to trade in energy. The main reason is the urgent energy revolution.

“Smart energetics, these are not mobile phone chargers installed on Prague benches, but new procedures in energy production and services,” says Tedom CEO Vladimír Hlavinka (you can watch the whole interview with him in the video above the article). Tedom wants to be one of the pioneers of the new field.

The traditional energy model is represented by large power plants, the production is sold by specialized trading companies. A new trend is decentralization, in which production, consumption and network regulation are fragmented and sometimes intertwined.

With the advent of renewables, many new small entities are entering the industry. A distribution whose network faces growing instability must adapt to this. Although solar or wind power plants, when the weather is good, large producers produce cheap ones, they have fluctuations in production. The whole system thus needs backup capacity and tools for operational increase or decrease of consumption.

Digitization significantly helps in this. Thanks to the software solution, the output of small sources, from solar power plants to cogeneration boilers, batteries and storage to home appliances, can be combined or “aggregated”, as the industry says.

“Digitization allows you to turn a lot of small resources into one big one, capable of providing a variety of services. It can stabilize the system, function as a large power unit. This is called a virtual power plant. We have ten years of experience in this area, it would be foolish not to use it in the future, “explains Hlavinka. The long-time power engineer, ex-manager of the ČEZ Group and former head of his power plants joined the Igor Faita Group last year precisely to lead the Třebíč cogeneration producer Tedom to a new “smart” energy industry.

The technological change Tedom wants to build on allows a number of remotely controlled small resources – such as cogeneration or rooftop solar – to offer their services and the energy they produce on the market. “Thanks to digitization, such an aggregated block with a size of 100 megawatts, for example, is controllable. And then it can be made available on the market to end consumers, for example, “describes Hlavinka.

However, a virtual power plant composed of small sources does not just have to supply electricity. “It is also relevant to balance variations for different suppliers. And because, according to the legislation, one standard of these support services is being created for the whole of Europe, such a virtual power plant will also be a power grid, ”explains Hlavinka.

The need for these services increases as the large fossil power plants and heating plants, which today keep the whole system running and in balance, will be shut down. “Today’s regulation needs to be replaced. Otherwise, they had to admit that sometimes electricity would go and sometimes it just wouldn’t work, “notes the head of Tedom.

Tedom is not the only company that is preparing for a new form of energy. Large energy groups, led by ČEZ, are involved in connecting smaller sources to virtual power plants, but smaller players, often from the IT sector, also enter the games. Hlavinka estimates the number of people interested in this type of business to ten. According to him, the overall estimate of decentralized production in the Czech Republic can reach up to 30 percent.

Cogenerations, which Tedom specializes in, can play a role in this. “Today we have about 350 megawatts installed in gas cogeneration, the potential of the Czech Republic is around 800 megawatts. There is a really big change going on in energy now. It would come even without political pressure for decarbonisation, simply due to technological developments. Maybe a little later. But it will happen whether we want it or not, “adds Hlavinka.

Since 2010, Tedom has owned a joint venture, ČEZ Energo, which operates dozens of cogenerations combined into 120 megawatt virtual power plants. Last year, Tedom sold its stake in CEZ Group, but also provides CEZ with its virtual unit. He wants to go his own way. This year’s entry into energy trading is part of this process.

In October, Tedom bought the energy trader Free energy, with which it took over its first thousand end customers. So far, it offers consumers the only tariff in which the price is based on the daily spot electricity market. The service is intended for a specific group of clients who are willing to monitor the price of electricity on the stock exchange and adapt their customer behavior. For example, owners of solar installations or larger consumers able to regulate their consumption.

“We do not want to end the spot tariff, we will expand the offer. We only sell what we have bought or what we are able to produce in our own cogenerations. Our strategy is to have a block of another virtual power plant, which we are now putting together, “describes Hlavinka.

“In the future, we want to have people among our customers who want and can apply with some flexibility, not just production. Those who want to keep energy costs under control perceive that the market is still growing and falling, and are willing to deal with it. The forthcoming legislation coming from the European Union says: every consumer and everyone who has some flexibility can be different on the market, they have the right to use it, “he says.

“Owner of one small source, one heat pump or one battery, but no price for the market. Only when you combine small resources into larger units with the help of IT solutions, then their capacity can be used, “he adds.

First, larger consumers who have the conditions will join the system. Hlavinka explains this on the example of a freezer: “You have a large freezer hall where you start the compressors to maintain the temperature. The ideal temperature for your goods is minus 18 degrees, but it can be from minus 17 to minus 19. When you cool more, you consume energy unnecessarily, when you are above minus 17, you do not follow the given parameters. Flexibility means that, say, from minus 17.5 to minus 19, you let us into the system and let us turn your compressor on and off remotely. When I have surpluses in the electricity market and I know it is cheap, I calmly cool the freezer to minus 20 and then let the temperature gradually rise. Conversely, when I have a shortage on the market, it is better to turn off the compressor for a while. This is great flexibility, easy to regulate for large consumers. ”

The provision of these services even for smaller players is brought about by “smart” devices for measuring electricity consumption. Smart meters will allow not only energy reception, but also supply to the network, for which users will receive paid. “Technology already allows remote switching on and off of appliances. We already have the software, it is possible to scale it for different appliances. It’s just a matter of putting it together. You then store megawatts from small appliances, “Hlavinka plans.

According to him, the change in the system will also lead households to better plan their consumption over time. “You will have to control it more, because it is already a big cut in the family budget today. But if you need enough market and some regulatory potential, then you get something for it. “

Households will thus be forced to time consumption as much as possible outside peak hours. Need to run washing machines, dishwashers or pool filtration at night. Or it uses cheaper off-peak tariffs to charge home batteries and electric cars.

While in the Czech Republic flexible customer behavior is more of the music of the future, other countries are still in the process. “In France, for example, we are already talking about really smaller appliances. This development is advanced in Germany, the Netherlands and Belgium. Even Finland is already reaching the end customer, Germany is more likely to go to larger customers. It will come to us as well, but the distribution system and regulation must be prepared. Households equipped with batteries, electric cars, pool heating, heat pumps, simply large appliances can participate in this system. “

European countries use various incentive tools to build new energy. As Hlavinka describes, for example in Germany, the state has decided to involve a large number of biogas plants in the stabilization of the network, which start and stop according to the needs of the network regulator.

If the operator agrees to join the system, the investment in the construction of the biogas plant is paid by the state. According to Hlavinka, the country now has a capacity of six gigawatts (three times the Czech nuclear Temelín) installed in flexible biogas; biogas is usually switched on at peak times for six-hour cycles.

Will decentralization of energy make consumers more expensive, who will have to start paying for a completely new service – aggregation and small resource management? According to Hlavinka, there are no higher costs.

“Distribution can develop in two ways. Either as before, when the most robust transmission system is being built, or in a decentralized manner. Investments will be comparable in both cases, only in the latter case it will be done smartly. It is the only option if we want consumption as close as possible to the path of renewable resources and balancing production and consumption, ”he claims.

According to him, the advent of smart metering systems and decentralized energy with the involvement of households in the Czech Republic will come quickly. “I guess it’s a maximum of five years, because there are deadlines that come from European legislation. And the European market is starting to build as one thing in common, “he says.

You can start the whole interview with the energy matador and head of Tedom Group Vladimír Hlavinka in the introductory video. In addition to the energy revolution, it also talks about the expected development in energy prices and the importance of gas in electricity generation, and comments on Czech energy policy.