Start-up Interview: “We Combine Different Revenue Streams”

Start up Interview– January 23, 2023

To ensure a reliable power supply and stable grids, the flexibility of battery storage systems is an important factor. Entrix is a start-up company that uses smart algorithms to unlock the full value of flexible energy assets. They determine the ideal combination of revenue streams in each case, taking into account the battery’s wear and degradation. In this interview, founder Steffen Schülzchen explains the company’s business model.

Steffen Schülzchen is founder and CEO of the Munich-based start-up Entrix

You founded Entrix with the support of an investor in the late summer of 2021. What makes your business idea of marketing the flexibility of grid-connected battery storage systems so attractive?

As conventional power plants are being shut down one by one, we need storage systems to close the gap between power supply and demand. And it’s not just about charging batteries during the day and discharging them at night. In practice everything is a little more complicated. Therefore you need suitable software to control the storage systems intelligently. There wasn’t really a solution for this in the past, because marketing battery storage systems is completely different from marketing renewable energies.

What kind of batteries are we talking about here?

We are currently focusing on grid-scale standalone batteries. Grid-scale means that we’re dealing with megawatts and the batteries are actually directly connected to the power grid. Standalone indicates that the storage devices are not coupled with any energy producers or consumers, although this might be about to change. In Germany, co-location with renewable energy systems, especially photovoltaics and batteries, is currently gaining popularity. Synergies can be used for a better marketing profile or lower costs in the construction of the plants, for instance. We have recently started working on some projects and are honing our skills in this area.

Our plan for the future is to enable much more flexibility, and to go beyond grid-scale batteries. In the future, we expect that many elements of the energy system will be controlled flexibly – which will create a host of new possiblities. We will be talking about electric vehicle fleets, residential storage systems, industrial parks, microgrids, electrolyzer and much more. This might be way off in the future as far as Entrix is concerned, but generally speaking and in given time, this is the direction we’d like to head in.

What exactly is Entrix marketing and how does it work?

We’re the interface between a battery and the energy markets. On the one hand, technically, and on the other, we provide the intelligence that determines what the battery should do at any given time. We decide whether the battery should be charging or discharging at precisely this point in time. To achieve this, we need to predict which way the short-term energy markets are heading, and so we basically observe all trading activities that take place on the intraday market live.

In addition, batteries can be used to provide balancing power. Using a frequency meter, the battery measures the current frequency of the grid. If it is set to offer these ancillary services, the battery automatically reacts and absorbs electricity from the grid when the frequency is too high, for example. From a marketing point of view, you need to plan in advance whether you want to offer this service the next day in a specific time slot, which are blocks of four hours each, and if so, at what cost.

You’re not the only company to offer flexibility. What makes Entrix exceptional or better?

We combine the different types of revenue streams, which wasn’t an option before. Other companies that offer flexible energy assets are usually limited to providing balancing power. Our system, on the other hand, considers different options in real time, like whether it makes more sense to provide 100 percent balancing power, or maybe offer 70 percent balancing power and 30 percent on trading markets. And if I combine that, I obviously need to be active on trading markets. That’s a lot more complicated than just selling it as balancing power.

To put it simply: We take care of all the possible combinations of revenue streams and try to find the ideal marketing option for each 15-minute interval. This is called value stacking.

Your algorithms take the battery’s life cycle into account, as well as ageing and degradation. How does this affect marketing?

Similarly to a smartphone battery, a large battery also ages more quickly when it is run at extremes, like when it is charged or discharged with too much power or speed. The costs vary depending on the battery’s current charge level and on the capacity at which it is being used, and we include these conditions in our calculations. You need to weigh all aspects, as you can prolong the battery’s service life that way.

And then your software figures out whether it's worth putting a load on the battery or whether it's better to conserve it?

Exactly. If I want to charge it from, let’s say, 90 to 95 percent at maximum power and just leave the battery sitting there for a long time, that’s pretty expensive in terms of degradation. So you have to determine how high the degradation costs are, and then see whether they are lower than the potential market revenue.

Your start-up is still relatively young. Are you already marketing battery capacity somewhere?

Yes! In Germany we are already operating a 7.5 MW battery in the transmission grid of 50Hertz, and we’re putting one in operation in the UK this spring.

Who are your potential clients?

Our clients are basically the owners of the batteries and some project developers. The owners can also be utility companies or municipal utilities, although the latter – especially the larger ones – often have solutions of their own. Therefore, our offer mostly appeals to smaller to mid-sized municipal utilities that are a bit more innovative and want to run their systems profitably.

Is Germany an interesting market for Entrix, even though the energy transition has so far been sluggish?

Germany is certainly an interesting market and ranks among our top five markets in Europe. The United Kingdom is at the top of this list and that’s unlikely to change. Italy and Spain could become quite interesting going by their size. In addition, the Benelux countries and some Scandinavian countries could also be attractive. Although they are small markets in terms of connected load, they’re still interesting candidates when it comes to optimization. The size is not all that matters, you also need to take the energy markets’ characteristics into account – and volatility in the short-term market ultimately is our main criterion. Batteries can make a particularly important contribution here.

What’s the potential of marketing grid-connected storage devices?

Generally it’s great! Although giving concrete numbers is tricky. According to the International Energy Agency, we’ll need 150 times more battery storage systems worldwide in 2050 than we had in 2020. That’s a market with 1.2 trillion US dollars’ worth of investments. This money, which eventually needs to be amortized, basically runs completely through marketers like us. That’s the global perspective.

We are just going to focus on Germany and the UK for now. We intend to market several gigawatts of output – but achieving that is still going to take a while, since it takes time to implement a battery project of this kind.

The interview was conducted by Simone Pabst.

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