How Dynamic Demand finalists KrakenFlex are lighting the way for renewables

Low exposure photo of beams of light

Author: Devrim Celal, CEO, KrakenFlex

Discover how market leaders in distributed energy resource management systems, KrakenFlex, used the momentum from the Dynamic Demand Challenge to tap into an underused infrastructure in the energy sector.

It all began with a lightbulb moment: KrakenFlex’s genesis came from the sudden realisation that the key to optimising energy usage was to utilise a pre-existing national network of electrical facilities: data centres, car charging points and, yes, lighting systems. That was the blue-sky idea of less than a decade ago that sparked the process that now sees KrakenFlex enjoying exponential turnover growth and a boom in consumer usage.

But after that initial inspirational thought – literally dreamed up in a garden shed by someone with no experience in the energy sector – probably the next most important milestone in our evolution was reaching the final stage of the Challenge Works Dynamic Demand Challenge some eight years ago. The funding, recognition and increased profile that taking part brought us was the springboard that enabled us to convert an abstract idea into an active venture.

So many start-ups – even if they are driven by a strong founding idea, as ours was – never make it that far and that’s why we are such enthusiasts for challenge prizes. Without ours, I don’t know if we’d be here at all.

READ MORE ABOUT THE ROLE OF CHALLENGE PRIZES IN THE UK INNOVATION STRATEGY

 

Making renewable energy feasible

In 2013, the Dynamic Demand Challenge was established amid warnings from Ofgem, the gas and electricity market regulator, about Britain’s ability to keep the lights on as demand for electricity continued to grow.

Where we came in was in addressing the disconnect between when energy demand was at its highest – the famous kettle surge in the ad breaks in Coronation Street and the like – and the fact that renewables couldn’t just burn more carbon fuel then and there to cope: if the wind blows at 3am then that’s when the turbines will generate most power and there’s no solar power when it’s overcast.

Our founder Graham Oakes – and his co-founders Andy Molineux, Matt Potts and Matt Fisher – whose genius idea was to harness back-up power supplies, such as those batteries in traffic lights, to create a virtual energy store which could be drawn on when needed, tapping into an infrastructure that already existed but which wasn’t being harnessed. By building a deep-tech platform that connects this network capacity in real-time we can make the widespread use of renewable energy more viable.

And Challenge Works recognition gave that idea the instant momentum it needed to become a reality.

From zero to 100

I was personally involved from an early stage, initially as a consultant, eventually as CEO and it’s been quite a journey. In those early days the team consisted of just four full-time staff; by the end of this year we should number around 75.

And that expansion has been essential to managing our transition from when we were concerned just with developing viable software to the point where we actually began to have real-world impact: the number of megawatts under our management has gone from zero just four years ago to 79 by the end of 2019; it more than doubled in 2020, to 180, and has more than tripled already in 2021 to date, to 600 – and we fully expect to exceed 1,000 megawatts by Christmas.

We’ve had similar rapid growth in our customer base: from zero at that software-only stage to dozens to hundreds over the same period as our megawatt surge – and we expect to reach thousands and then tens of thousands in the next 12-24 months.

Challenge Works’ support kick-started all of this but what’s lately allowed us to expand in this way has been joining the green energy technology pioneer Octopus Energy. We began life as Upside Energy and in becoming part of Octopus our new incarnation as KrakenFlex was born.

Watch this to learn more about the Challenge

Creating a carbon neutral world

The next step for us is to apply our optimal energy model to the growth sector of electric car charging. Because what’s the point of taking the eco-underpinned decision to invest in an electric car if you’re still burning fossil fuels to power it? Our smart system has been adapted to ensure that car charging at controlled time points makes optimal use of renewables without affecting performance. This is already happening. And we hope it too can take off big-time and quickly.

And we are now rolling out our platform internationally: in Germany, Spain, the US, Australia and New Zealand with further launches planned. We believe we are going to be an active player in the march to a carbon neutral world.

Without Graham’s garden shed and without the early support from Challenge Works through the Dynamic Demand Challenge, this global vision would have been unthinkable. Challenge prizes can be the spark that ignites innovation, lighting the way to a better world.

If you want to learn more about how challenge prizes could be part of a revitalised UK Innovation Strategy read our report below.

Read our report on Mission Possible

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Graham Oakes freely admits that he “threw together” the idea for Upside Energy in his spare time.

Just five years later, Upside had gone from being a “wild and speculative” idea to attracting almost £10 million of investment, employing 35 staff and catching the eye of some of the biggest players in energy market.

“It surprised me as much as anyone,” said Graham, a geophysicist who had never worked in the energy sector before.

Graham was one of 75 entrants to Nesta Challenges’ Dynamic Demand Challenge, which was launched in 2013 amid warnings from Ofgem, the gas and electricity market regulator, about Britain’s ability to keep the lights on as demand for electricity grew ever greater.

Created in partnership with the National Physical Laboratory’s Centre for Carbon Measurement, it challenged teams from across Europe to find ways take pressure off the National Grid.

This could be by shifting electricity consumption away from peak hours when there is little spare capacity in the system. Or by making better use of the surplus energy generated by renewables and so cutting carbon dioxide emissions.

Models of wind turbines sit on an office desk

Graham’s idea, to harness the energy in back-up power supplies, such as batteries in data centres, traffic lights and electric car charging points, to create a virtual energy store which could be drawn on when needed, earned him a place in the final.

He received £10,000 to develop a business plan and prototype and Upside Energy started trading 18 months later, in April 2015.

Three years after the challenge ended, the finalists including Upside and Powervault, which makes a device that stores solar energy for use at night, had secured over £10 million in grants, crowdfunding and other investment.

By the end of 2018, five years after Graham had jotted down his idea on a quiet day, Upside had raised more than £3 million in grant funding and £6.7 million in equity finance.

This included investments from Legal & General and grants from Department of Energy & Climate Change, the EU’s Climate-KIC accelerator programme for start-ups and Innovate UK.

It had also signed a deal with EDF Energy, one of the largest energy suppliers in the UK.

A green United Kingdom 3 Pin plug as a symbolic Green home, plugged into a white wall socket.

The challenge prize did exactly what a challenge prize was supposed to do: It brought someone from outside with some different thinking into the sector.

It gave a little bit of seed funding that we were able to use to pull ourselves up by the bootstraps and we turned that into some incubation money, some grant money, eventually some angel equity and then some venture equity.

It’s a classic model of how innovation is meant to work. Lots of tech innovators have nice ideas but they don’t really connect to a problem people have actually got.

The challenge prize pointed us at a real problem and I feel very lucky to have been presented with that problem.

Graham, who has stepped down from Upside to return to consultancy

Dynamic Demand Challenges