 Hi, this is your host, Sapni Bhartiya, and welcome to another episode of State of Energy. And today we have with us Jean-Michel Glechon, director of Florence School of Regulation. Jean, it's great to have you on the show. My pleasure, Swethneel. And today we are going to talk about the recent LF Energy Report, which is more or less like, kind of showcases the collaboration that is going on there between Giant, like Alia, and RTN. And it kind of shows much more bigger picture as well. But before we talk about all those things, all the report, quickly tell us, you know, since you wrote the far word, what is this report all about? The topic of the report, the big picture is that climate change is a real emergency. We cannot let it go. It will destroy nature. It will destroy the pleasure of life. It will destroy insects, trees, animals, and many humans will be injured by it. Therefore, we have to act. We do not have to act tomorrow or after tomorrow. We have to act right now. And utilities are at the core of this action because utilities work with energy, produce energy, transmit, distribute energy and can be immediately mobilized to reduce the impact of energy on the environment because energy can be environmental friendly. It's not a curse that energy will inevitably destroy nature. Not at all. It is the kind of energy we have chosen with the humans and among the humans, the westerners, unfortunately, first. We have chosen fossil energy because it is easier to get cheaper and this easiness to extract fossil and the cheap price we can have to pay for fossil made fossil too attractive. If we make a small effort, we will go to renewables and renewables are becoming cheaper and are becoming easier to get. But it takes sometimes, it takes here 20 years, there 30 years, there 35 years. 35 years is not long if you look at modern age of humanity. Let's assume that modern age of humanity was born in 1770. But it's not yet 300 years. So for thousands of years, humans were living in alliance with nature and there is only 300 years that we are killing nature. So we can do better and we will do. First of all, thank you for putting it so beautifully because we don't hear perspective like these in general. And yet you're right. The funny thing is that it doesn't matter whether we're human in every ecosystem, there are always byproducts that can be dangerous for that ecosystem. But balance matters how much byproduct you're creating which could be dangerous. And when it comes to humans, the scale at which we have to either produce food, everything leads to an imbalance. So we actually need balance everywhere with food production or energy production and coming back to the point of energy sector, what I also see and I may be totally wrong is that as we are moving more towards let's say electric vehicles, electric cars, that's where you know, energy sector is going to play a much more important role because folks will be charging their cars or other vehicles at home as well. It doesn't matter whether we are going to use batteries or not. So energy sector is also setting a trend for a lot of other industries to look at and also it's also poverty. I mean, we talk about cloud and everything else, but if this power goes off, nothing matters. So this is powering our world actually. Now, let's talk about what kind of, you know, changes you have seen within the energy sector where it is driven by their own motivation to move towards something which is cleaner or is it driven more by political or is it driven more by economical? Oh, Swapnil, there is three major changes, not one. And it's incredible that a sector being an industry for engineers, an industry with assets, investments, thousands of billions invested, this industry is changing three times. This industry is changing because of the digitalization. Everything has become digital. What does it permit? It permits to monitor, to know, to adapt, to foresee, to forecast, to discuss, to take better decisions, to create algorithms, taking decisions quicker than you and me. This is digitalization. We know because if you buy, if you have the money to buy a Tesla, you will see that your car is also a computer. It's a car and a computer. There is no difference today between a car and a computer. And we know because of our funds. For my kids, a phone is a computer. For me, I know it is a phone. I know that it is a black box on the wall. And you speak a little bit because you are ashamed and because you are lost, you do not know exactly how it works. All of us, we have seen that phones have become computers and phones have become cameras. So we see what digitalization means and an anecdote because anecdotes are very good to understand. One of my younger brothers is now living with a new person. This person has been met on the phone because the phone has become a way of acting, interacting, discovering people and matching better with other humans. So we see that the life is digitalized. Let's digitalize the energy industry, the generation, the transmission, the distribution, also the consumption. If all our devices at home were as smart as a phone, they can detect if they have to stop working because they deliver enough utility for us, they can detect if they stop working because the central energy system is saturated with demand, is better to wait, etc. This, as you see, leads us to smart consumption. It has another name, demand response. So digitalization of the energy sector, particularly the electricity utilities, is a major societal and industrial change. But it is not alone. The second one is decentralization. In industry, we can have technological waves pushing to bigger assets, bigger units, enormous investments. A typical in the electricity sector is nuclear. In the nuclear industry, if you do not have in your pocket four to five billion euros, forget, you cannot do anything. But new waves of producing appeared. And one of the ways is very well known everywhere. It is solar PV. In solar PV, you can invest with 10 euros. I have a bag. This bag has 30 square centimeters of PV. With this, I can charge my phone. In summer, we are in summer, now in Europe, I can charge my phone with my bag. This is decentralization. So the big, big utilities are still there because they have a lot of money and a lot of workers and a lot of self-forces. But decentralization too is there. So more and more people can choose. And third, as you said, and I didn't put it as first, renewables, because first-side industry is pushed by renewable, renewable becoming cheaper. People can invest directly in renewable because it is cheaper for them. And where it is pushed by government decisions, regulatory decisions, renewable are literally exploding like we have in Europe. In Europe, we think we target that in 2030, 70% of all electricity in Europe will be from renewable sources. If you add these three factors of changes, digitalization, decentralization, renewable, this industry is entirely new. And being entirely new will create new challenges for the companies. The companies will have to be smarter, faster, agile, and therefore looking at new ways of understanding the world, understanding their assets, their customers. And this reactiveness can be extremely well helped by new softwares or new ways of conceiving softwares or using them. Excellent once again. So beautifully said. I'll talk about the first that you mentioned was digitization, which as you also said, if you buy a Tesla, it's more or less like a computer. We kind of, you know, it would be not wrong that we kind of live in a software driven world. Everything that we do around mostly is done by software, but which also means that unlike old days, software is something which, you know, folks can reuse, which, you know, we don't have to reinvent the wheel every single time, which we have seen in many industries, which various resources, which also creates a lot of fraction, fragmentation. With digitization, you know, software driven, which also leads to a second point, which is open source, because open sources make it easier. You write one code and if you want, you can share with others. They will join, collaborate, improve your code so you will benefit from their work. So also talk about the, when we talk about just digitization part, what is happening in terms of adoption of open source where folks, companies, the interesting thing with energy company is that there are not 50 companies in the same country. In most cases, there are monopolies. There's only one country, company per country, but there are so many countries. So talk about the role that open source is playing in helping companies digitize their infrastructure. But again, I will not start directly for open source. I will start with common words that many, many people know like sharing economy. What does it mean, sharing economy? It means you have assets. You do not use them all the time. You use them 20% of the time, 30% of the time. The rest you do not. And you think, well, it's a bit stupid. Other people also can use my assets. But to use your assets, we need a frame of communication, of mutual understanding, mutual operation, of control that everyone is doing exactly what was foreseen, et cetera. So we need a scheme, a common scheme where information flows, communication is done, and some verification is possible. But for this, we need a common standard. We need a common set. We know with another word, platform. What is a platform? A platform is exactly a standard where this information can be verified, obtained, and communication works. But sharing is not the only word. The second word is collaborative economy. Collaborative economy, why? Because if we have to interact, we will interact better if we really understand things the same way. If one day I help you, the next day you will help me. If when I understand something, I can explain you. When I do not understand something, I will ask you in this type of bilateral exchange and equality of rights and of duties, what we call peer, to be a peer. I am like you, you are like me. In this exchange from a peer to a peer, we are free as individuals, but we are also a community because we are peer, we have something in common. And at the level of the society, it's stupid having one million people speaking different languages because they cannot help each other. If they were speaking the same language, in practice it is always the case. In practice, in any country, we have at least one million people speaking the same language and frequently more, but even one million is enough. So that's a community. Within a community, we really help each other regarding knowledge, regarding information, regarding communication. Exactly the same applies inside a company and between companies. When they understand it, they are quicker, faster, more efficient and even cheaper, which is extraordinary. And remember that we were discussing that the starting point is a digital economy. In a digital economy, many things can be cheap because assets are cheap. So the resource we have to economize is the human resource, the human mistakes, the human resource. And the digital economy permits to create this very lively community. And Open Source is telling it with only two words. It's a source, something we share, but it's open. So we share it in something being an equal amount of possibility. And as you were explaining about, you started with shared resources, shared economy. I think Open Source has kind of now created a model that people can follow because otherwise, as you were saying, that they have to be there like each other, but it makes it easier. You get something, I get something, everybody wins. It's a win-win game. Let's now zoom out of this high-level discussion and just focus on this report. When you wrote the forward, you went to the report. What are some key highlights that when you read them, they caught your attention from the discussion we just had? The key points are the same. It's an emergency for the humanity as a whole. It is challenging to do it fast. It is extremely costly if everybody does it alone. And there is less central points having hierarchical rights. This I didn't tell about the electricity industry. Electricity industry was very centralized, very hierarchical, like in an army. Not because, like in an army, the general has rights and nobody else can give orders, but because engineering was dictating codes and use of assets. And engineering was dictating a single way of doing everything correct, and it was done from the central points. But we have seen that all of this decentralized demand becomes very important and not only supply. And decentralization of energy makes the consumers making real decisions as important as the supplier. And the suppliers are more diverse because decentralization of supply itself. So because of this, the electricity industry has become challenged by the needy changes, but also able to deliver them if they are smart enough to go to open source, to collaborate, to give entry points to others. This was really striking to me. In this report, it is a Dutch company doing distribution. Distribution means feeding each consumer. Each consumer is connected to the electrical grid by a company named Distribution Company. The other one, the French, is a transmission company. A transmission company is a very big company doing only very big things. A transmission company works for 100,000 people. Lower than this, they are not interested. It's cheaper to them, they do not do. But these two, one working for each consumer and one working for blocks of 100,000, they are facing the same challenges and they are addressing these challenges the same with open source, which is remarkable. And open source Linux Foundation, being localized in California. So you see that it does not matter where you are. Linux Foundation in California, transmission in France, distribution in the Netherlands, it works perfect. Anecdote, because I love Anecdote. I had to quit today a conference here in Denmark and I had to explain my neighbor why I was quitting only 15 minutes before the end. And I told, you know, I have an interview about open source Linux Foundation. He told me, incredible, you won't believe, my company is just switching to open source. We have discovered that open source is more reliable, more efficient and cheaper. So all the company is switching to open source, boom. And this company is a leading Danish company for transmission of gas, transmission of electricity. You see how it goes. Right. No, no, you, I mean, once again, yeah, it's open source kind of global phenomenon where it doesn't matter where the folks are based, they can search. Now, this case, you know, especially when Eliana, you know, as you mentioned, and you know, RT French and Dutch companies, they're working together with Linux Foundation Energy. Does this kind of also create a playbook for others to follow? Because as you mentioned, a lot of folks, they do want to embrace open source, but they don't know how to approach it. So will it help other energy companies also to have, you know, kind of a model to follow? In Europe, we have about 60 to 60 transmission companies, depending what you put in Europe. For example, Ukraine, but it's also Switzerland, and do you think that Europe is only European Union or all European countries? So we have 50 to 60 TSOs. We have several thousands of distribution companies. A distribution company, by nature, is smaller than a TSO, because the TSOs lose big things. But a distribution company can go down to 60,000 customers. All these small companies, they cannot afford to reinvent the wheel. Even inventing the wheel is too difficult for the small company. So for them, it's a blessing that such open source exists and can be used. And they can just add a small layer because they have individual needs, but the bulk of the software is already there, and they can have access to the experience of those who don't do the stupidities when you are new. So it's extremely useful for these companies. So it should expand inevitably. And I hope that what you are doing this evening will help expanding it. One more question I have for you before we wrap this, and which is that as companies do understand the importance of open source of the share, sometimes it becomes hard to find folks who are aligned with your interests. Trust becomes a big issue. Should I trust your code base? What if tomorrow you pull it out? So that's where the role of neutral organization, which in this case could be Linux Foundation, there are other foundations similar to that. What do you think roles these neutral foundations can play in bringing these, in some cases these companies can also be competitors, under the same umbrella, so they can share resources where the sharing is needed. At the same time, they can compete in the market as well. So talk about the importance of these kind of foundations. Of course, Linux can work like Wikipedia. We can buy Oxford on Cyclopedia, but it is printed. It's not a community. Novel things are on in it. And the thousands of individuals having knowledge cannot not share the on Cyclopedia being Oxford. Okay, it's excellent, but it's done by 60 people. And the same is true for this world of open source, having a foundation like Linux, having a name, having a record, having successes, is guaranteeing that if we go there, we have little risks and not a guarantee, but a very high probability of success. Second, which is true also, any organization has a culture and organizations have culture of doing by themselves, controlling by themselves, and shaking by themselves because they have the responsibility of the results of the performances. And here, a foundation can give incentives to explore, incentives to enter things differently. It's very well explained in the small report. It costs you very little to enter the world of open source. So if you invest very little, you will do very little mistakes too. And step by step, you will understand how it benefits to your organization and how your organization can trust this new way of working. And you will see that both Allender and RT, these two pioneers, were very reluctant at the beginning because the bosses of the organization were not believing that it can be useful to cooperate, to collaborate, to innovate. But finally, they do. Jean-Michel, thank you so much for taking time out today and of course talk about this report and share the broader vision about where the world should be heading, how we can make things more sustainable. I really love the discussion and I would love to have you back on the show again. Thank you. Thanks to you, Swapnil, and thanks to Linux Foundation, the wonderful job made there.