Supply chains, ESG risk and energy security

Adam Sroka (00:00)
Hello and welcome back to the HyperGov podcast. I am joined today by Sarah Montgomery, is CEO and co-founder of Infios. Sarah, thank you for joining us here in not so sunny glass bed today. So for people that maybe don’t know you or Infios, could you just give us the life story kind of Genesis and all that jazz?

Sarah Montgomery (01:02)
Of course, yeah. I’m, as you said, Sarah set up Infus about five years ago and what our kind of day-to-day focuses on is supply chain due diligence for renewable energy developers. So how do they know what their supply chain looks like, whether or not they have human rights issues, ESG risks, are they breaking regulation across their supply chain that ultimately either blocks their financing or

blocks their projects being deployed on time. And to do that, we use a combination of AI data platform, which I’m sure we’re going to go deep into at some point, and also in-house consultants, because sadly you can’t quite solve everything with AI. But I guess, life story in a very short nutshell of how I got there was I used to work in diamond supply chains, then moved into other kind of high-risk raw materials, some of which were battery raw materials, and was living out in

China, speak Chinese, worked in China, working in Chinese supply chains and kind of realized, okay, the energy transition is going to be entirely dependent on Chinese supply chains. These are some of the highest risk raw materials. COVID came along and was like, some, yeah, my life is now open in terms of how much time I have in my hands if I don’t do something about solving this problem now.

there’s not really going to be like another obvious time to do it. And so yeah, me and Tony, five years ago, we’re like, right, let’s set up Infus, let’s make it as easy as possible for the energy transition to happen, but also for the supply chains behind that is a transition to be ready for it to happen.

Adam Sroka (02:37)
That’s amazing. You touched on something, risk of not getting your finance approved. How often does that actually become a massive hurdle in the process? And are people aware or are people, I guess, the more mature developers are?

Sarah Montgomery (02:52)
Yeah, so it’s a spectrum. think you have to, know, the developers that maybe just started haven’t even really looked at any large scale financing, maybe don’t aren’t aware of it. They’re kind of just thinking about, how can I get some money from anyone? Whereas as soon as you start going into more of the like sophisticated investors, whether that’s asset financing, you know, on the debt side, on the equity side, or where other other developers come across it is on the sale of their assets where

It might not be like we don’t have any options, but it might be actually our preferred financing institution that’s going to give us the best deal has said you don’t meet the supply chain due diligence requirements. And so it’s one of those like for a lot of developers, it’s kind of.

and nice to have until it becomes a must have. then that’s like one camp and then there’s other camp here like who’ve already been hit by this before. Like, okay, let’s not wait until it becomes a must have. And it’s sometimes too late to do something and we miss out on the deal. It’s like, let’s get ahead of this and make sure every time we do procurement that we’re doing this properly.

Adam Sroka (03:59)
And so you spent time in China, you said to speak Chinese, I’m just thinking like you, how has that shaped your view of the risk on the supply chain? like, does that give you the confidence to able to kind of unpick it on that side, which might have seemed quite opaque, right? So the kind of naive like brand new developer.

Sarah Montgomery (04:18)
Yeah, yeah. So 100 % China is like the future of renewable energy supply chains for the next 10, 20 years. You look at batteries now, about 80 % of them manufactured in China. You look at solar, similar numbers. And it’s not just that they’re being manufactured in China. It’s that the whole supply chain, so, know, battery, the system, the cell, the cell components, you know, anode cathode electrolyte, then into the processing, the raw materials. So much of that is in

I’d say raw materials is the only place where lithium, for example, is more Chile, Argentina, Australia, significantly growing in China, but less so. Or graphite, for example, actually China’s very dominant in. so effectively, China owns that whole supply chain and realistically is going to own it for the foreseeable future. And so if you are looking at deploying renewables in the next decade, you are pretty much guaranteed to be.

buying from China and from a risk point of view, obviously having one country that you can buy most of your batteries or solar from creates an obvious risk. Then you add in the geopolitics on top of that of 10 years ago, actually, we were quite happy to be buying from China. Now, you know, obvious US China tension, but that’s really trickled into Europe and trickled into realizing at the same time that energy is not just a like, ⁓ we should

deploys and batteries, but actually is becoming critical infrastructure. So geopolitically, that’s becoming problematic. And then you have the realities of like how these raw materials are mined or how they’re processed where there’s huge challenges in terms of, for example, on human rights side, but 75 % of global battery production at some point in its supply chain is connected to an allegation or incident of forced labor. so it’s like, yeah, you’ve got all these kind of risks on top of each other on top of each other that

That’s why the financing now coming in and saying, you need to actually understand what your supply chain is, what the risks are and need to prove to me you’ve mitigated some of these major risks before I want to put money into it because they’re investing on like 10, 20 year time horizon. You know, they’re trying to think, whereas geopolitics try to go in 10 or 20 years or at what point do you

Adam Sroka (06:32)
See you.

Sarah Montgomery (06:39)
Yes, does these ESG requirements just become the industry norm? Quite likely in the next 20 years that we can’t sell this asset if we’ve not done.

Adam Sroka (06:47)
Yeah, so for me, like deep technical supply chain anytime I’ve ever really dipped a toe in it’s like massively complex. There’s a lot of it. It’s like really detailed and I just I can’t I suppose I’m not in that world. How do you

How did you see the opportunity for doing this for better? So anyone, start a company, do you think, I can do this for better for the market? Does that come from seeing more mature practices in the diamond supply chain management experience you had? Or what was the kind of thing that made you think there’s a real opportunity here to accelerate this?

Sarah Montgomery (07:28)
Yeah, I think it’s one of these really interesting things of like the energy transition and, know, deploying more battery energy stores, deploying more solar, where like, you know, financially makes sense, but also from a climate change point of view makes a lot of sense to do. We have to stop climate change as quickly as possible. This is a solution. So you’ve got this like very positive impact lens. And then when you look at the supply chain, you realize like, actually, these are one of the highest risk supply chains in the world.

And interestingly, would say the energy industry is one of the furthest behind if you compare it to say fashion industry or automotive industry in understanding and managing that risk. so.

I think, yeah, you have this weird dynamic at play where it’s like, everybody’s just talking about this is great. This is good. Let’s go as quickly as possible. And then you’re like, at some point, this is going to explode. And you already saw that, you 2021 where major solar manufacturers got banned in the US pretty much overnight, killed off a lot of major solar projects because they just couldn’t get the products out of customs. And so, yeah, you can see this, like the shift is already happening. And then you look further forward.

you see the number of regulations that are coming in. know, like EU battery regulation that’s come in the last few years, it’s ramping up over the next five, 10 years. You look at the due diligence, supply chain regulations, financing regulations and so on. so you can see, okay, so regulations are shifting geopolitically, but living in increasingly tense world. At some point, you’re seeing just more and more of these projects getting blocked. How is this like?

this problem’s not going away, I guess is one way you can look at it. And then on the other side, when you’re looking at the solutions, it’s like, okay, right now people are just like putting a line in their contracts to try and protect them. Like that isn’t gonna, that doesn’t really do anything.

Adam Sroka (09:22)
And the thing that gets me is like, feel if I ever spoke to people about this throughout my career, like it’s very clever and it’s consultants, you need 6,000 consultants to really think about this and write reports. Maybe I’m just naive here, but what made you look at that and think, no, no, no, there’s a technology solution that’s deeply integrated into what we do here. We can do this more efficiently with tech as well as

Sarah Montgomery (09:46)
you

Yeah,

yeah, I think there’s a few things. think there’s one, the structure of the supply chain. So you’re right, it’s very complicated. know, a battery supplier can have over 10,000 suppliers in their supply chain network. So you’ve already got a data problem just by number of suppliers. Then on top of that, you add that this is not a static report one at a time. It’s they’re building new supply chain relationships every week of the year. And so that 10,000 is not the same 10,000 in six months time. And so your risk profile is changing over time. And then you add on top

of that, that for each of those 10,000 suppliers, they’re doing new ESG activities or new, you know, one of them might have a fire at one of their factories, one of them might have a spill that contaminates local water for like surrounding towns. And so how do you monitor on top of the 10,000, the 10,000 other data points relating to each of those 10,000 suppliers? And so because of that,

it’s naturally a problem where that you need to capture that data and you need to capture that data and how it’s changing over time. And then I think the other way to look at it as well is like, it’s exceptionally concentrated supply chain at the top. when you talk about battery energy storage manufacturers, solar manufacturers.

There’s not that many that you’re buying from. And so there’s a huge opportunity for rather than every developer going out and asking, Hey, can you tell me what your supply chain looks like? Can you give me all this data? And they’ll set up an Excel spreadsheet. They’ll write their own questions and then what suppliers hate.

is the amount of hours they spend filling out these spreadsheets with roughly the same information, but not the same enough. That means they can actually just rinse and repeat. And so from that point of view, you’ve got huge data complexity, but also huge benefit in streamlining how you collect the data and how also you then support suppliers to drive decision-making and improvements and mitigations based on that data. And so from that point of view,

It’s like, of course we need a solution that can make this a lot more efficient.

Adam Sroka (11:57)
Yeah, okay, now I get it now, because it’s like pushing towards becoming that, the joining table within the many to many relationship, right, that simplifies everyone’s life. If you can just push yourself into that platform play and be like, no, we’ll manage this, we’ll make it structured, we’ll make it easy, and then it should grease the wheels and accelerate everything.

Sarah Montgomery (12:17)
Yeah, yeah, and they are porcelain from the supplier point of view. It means rather than them spending all this time just collecting data, you’re getting them to spend time actually taking actions to improve their performance. And it’s like a win-win. Everyone benefits from that because this isn’t really an area where developers are trying to compete with each other. They’re trying to make sure they don’t end up in, you know, the bottom 25%, but they’re not like, oh, I have the top 1 % and you’ve now got the top 10%. Like, I’m not, I’m not better than you.

Adam Sroka (12:46)
Which means you need to like meta-analyses and sort of being able to support the industry as a whole, like airline safety and things like that. You just want everyone.

Sarah Montgomery (12:55)
Yeah

and there’s big challenge because people don’t publicly talk that much about what they’re doing. Actually companies understanding like what does good look like? Am I doing good enough?

That’s where us being able to say, have a view of what all these different suppliers and supply chains look like. And we can see, yes, you currently are in the bottom 20 % on being on track to meet this regulation is very helpful for them to know. And there’s just no other way they’re going to know that with a PDF report isn’t going to tell them.

Adam Sroka (13:25)
Yeah. You’ve touched on geopolitics and I just question, does the recent US-Europe relationship start? Has that changed anything that you’re seeing on the supply chain side?

Sarah Montgomery (13:37)
I think it’s so interesting how much politics and regulation is focused on like, need to localize supply chains as quickly as possible. You see that like the US came out with the Inflation Reduction Act, which was trying to give a lot of financial incentives, then in the EU, you’ve had the EU Critical Minerals Act, which is said, you know, we’re going to import X percentage and we’re going to produce

mining at this level and then that level. The reality is, as we were talking about earlier, like 80 % of it’s coming from China today. From when you look at what actually developers are buying, they’re buying from China. And the reason for that is that technically it’s the best performing, it’s the cheapest. And even on things like ESG,

there was a perception of Chinese companies are going to be behind. They were some of the most innovative companies in the world. They realized this is a requirement. They’re going to move. Well, not all of them necessarily, but a lot of them are going to move and figure out how to solve it. Unfortunately, better than the European or the US players. And so I think you’ve got that dynamic. then you’ve just got, you look at like the structure of the supply chains and, you know, to build a mining site takes at least 10 years to build a new battery manufacturing facility.

takes about five years could take less if they’re doing it in China, but it roughly takes five years. So if we’re talking about needing to hit clean power 2030, we’re not doing it based on technology. And then you look at examples like what’s happened with Norfall and a lot of other European battery manufacturers that have had the right financing behind them and they haven’t been able to figure out the technology and the scale up. And so, yeah, I think there’s a reality of a reality check that a lot of government needs to do of like

Yes, we do need to diversify our risk away from this single point of one country, but you can’t just randomly set a target of we’re going to start manufacturing 30 % of batteries in Europe and expect it to all add up.

Adam Sroka (15:33)
Yeah, unless you’ve got like a 50 year timeline on which you’re going to invest trillions.

Sarah Montgomery (15:37)
And then that’s where unfortunately China has an advantage because it can work on those log scale timelines. They’re not looking at the next four year cycle, right?

Adam Sroka (15:45)
also better at that.

So we talked a lot about batteries and you started in batteries, you do like all renewals. Is that the case?

Sarah Montgomery (15:55)
Yeah, so batteries, I think, was a natural place to start because it’s, we’ve known about solar since 2021 and the huge human rights risks that sit there that blocked a lot of financing and projects. And then when you look at the structure of the supply chain, so batteries, even more complex set of raw materials going into it, but structurally still, you know, comes from some of the high risk regions where they’re exposed to forced labor, human rights.

And so that means that we started in batteries, now work in solar, but also work in the likes of wind has huge challenges around where the rare earth magnets coming from. for example, balsa wood that goes into wind, 90 % of that comes from Ecuador.

And that is hugely connected to deforestation, community rights where really that land does not belong to the logging companies that are cutting it down. then you look at something like inverters. I think inverters is one of these interesting ones where the big kind high risk component there is the semiconductors, which then have the wafers, which then are based on quartz, is the same silica, early stage, the same supply chain that’s going into solar. And so there’s a lot of

conversation around like, okay, everybody’s talking about the solar high-risk supply chain. So far, semiconductors hasn’t really been as focused on, but when you look at is there a risk there, 100 % there’s a risk there. And so that’s beginning to shift things.

Adam Sroka (17:23)
It’s really interesting, just think it must give you a lot of like material to talk about, to write reports on. Like what’s the what’s the influence experience if I’m like trying to trying to build my site and I don’t I just want to think about smoothly but I’m interested in doing it well. What’s my experience like?

Sarah Montgomery (17:43)
Yeah, I think the reality with most developers is either they have one person that’s working on ESG and risk or compliance, or quite possibly they have no one. And so often we’re coming in as effectively that extended extension of their team of like, we will come in, we’ll work closely with you and solve this problem. so depending on the developer we work with, some of them are just like, come in, tell me what the risks are. Tell me how to mitigate these risks.

monitor that nothing changes or when it does flag it to me and tell me how to fix it but otherwise like just solve this problem for me I have a hundred other things on my to-do list I need to do this but I just trust that you’re going to do it and then there’s other developers that maybe do have people on the ESG team and they’re like okay no I want to go into the digging down off like exactly tell me what this raw material is why exactly have they got this risk profile and so on and so for for most developers the way we work is like we know this is a problem you probably wish you didn’t have

We’ll just work as closely with you as you want or as hands-off. You can be as hands-off as you want and we’ll ongoing make sure that this doesn’t become a problem that blocks your financing.

Adam Sroka (18:55)
Very cool.

like, so you’ve worked with a lot of companies then at different stages of development, of maturity, like scale, I imagine. You’ve worked with different finances. What, like, what are the biggest or most common gaps or like quick wins and things that people just aren’t doing? Like, what was the thing that like you always bump into again and again that you think would be an easy fit?

Sarah Montgomery (19:18)
Yeah, so I would say there’s two camps of developers that we work with. There’s the ones that are like, we’re doing something, but we’re just not sure we’re doing enough. And then there’s the other ones that are like, we haven’t really been doing anything on this or, you know, we put a contractual clause in on this. We’re kind of getting told that’s like, might as well not have that. It’s so meaningless because everybody will just sign anything in their contract around this, but actually we don’t really know anything. And so from, guess, that latter point of view, what they need is,

You’re running your procurement process. Typical is that you’ll be doing technical due diligence when you’re selecting between five, ten suppliers in the early tender process. Then you’ll whistle it down to your one or two suppliers later in procurement. Technical due diligence is looking at like do they technically meet your specifications? Commercially does it add up? Then you might be doing legal due diligence as well.

And then we effectively sit alongside that of like, okay, we come in and do your supply chain and ESG due diligence. At the early tender process, like, look like, okay, you’re just trying to find, are there any major red flags where we…

shouldn’t even bring that supplier to our final shortlist and let’s make sure that we catch that early on so we don’t end up with a supplier we can’t actually work with. And so that’s the early tender process and then later the tender process. That’s when you’re kind of like, okay, we need to go start, we need to understand exactly what does their supply chain look like? What are the suppliers across their supply chain? Are there any major incidents in that supply chain? Have they mitigated those incidents already? Do they have the right policies, processes, disclosure?

in place to meet international standards, to also meet EU battery regulation or UK Modern Slavery Act or UK recycling regulation, so on and so forth. And then where they don’t, that’s fine, but what do we need to do to close that gap? And then getting them to commit to that. If it’s major, you want to do it pre-contractually.

A lot of things you want to have in your contract. like standard clauses, but also if you’re identifying specific gaps on like, okay, they’re currently not meeting the recycling regulation obligations. Let’s put that in the contract and make sure we’re protected on that. And then ongoing where, okay, we’re procuring today, but actually this is a project.

that we’re not building till 2027. They’re not compliant with some of the 2027 regulations. That’s normal, that’s okay, but we need to make sure that they are compliant by the time it comes across the border. And so that’s then when you want to have that ongoing monitoring step of they need to demonstrate that they are making progress against that.

And you also are not just looking for that, but also is there supply chain changing over time? Have new incidents come up over time? Have regulations, a new regulation come in or shifted? That means that what you had when you first made the contract, actually, they might now be breaking a new regulation. And so I would say in terms of where we see some of the gaps happen is they’ll get a PDF report at their.

you know, the point that they sign the contract and they’re like, okay, this looks good enough. But actually the international standards of the financing, one of the big components of that is ongoing monitoring of how things are changing over time. And that’s where often you end up with with gaps. Then your financing comes in and says, you’re no longer aligned with our financing requirements.

Adam Sroka (22:38)
How does that play out? that like there’s a like a milestone or a gate like at some point in a year or 18 months and then the due diligence team of the investor or whoever says, what’s happened here? There’s like, you’ve not looked at this first. So is that how that plays out or?

Sarah Montgomery (22:55)
Yeah, so

investors, some investors will have quarterly reporting requirements where they’ll be looking every quarter of like, are you still monitoring these incidents? Can you prove that you’ve monitored it that you found? If you found any incidents, what you’re doing to mitigate those, that’s quite standard is quarterly reporting. Then you’ll have annual reporting to your investors. Often there’ll be certain data points that they need to like there. Then depending on the structure, you’ll often have investors on either kind of final investment committee for projects or you’ll

have investors sitting on your board where you need to do regular reporting to them, potentially make some key decisions with them and they need this data as part of being able to approve any of those key decisions.

Adam Sroka (23:37)
Who delivers the bad news? Is it you? Have you ever had to like, go in and say, ⁓ I’m sorry, but you’ve breached something that’s going to really call a massive delay or headache or…

Sarah Montgomery (23:48)
Like,

it’s me, it’s the rest of the team that works with these clients. Like, obviously our view is there’s…

almost always a mitigation that you can take for even you. We find a forced labor incident in this specific part of the supply chain is like, okay, can we actually use a different part of their supply chain that isn’t connected to this? Or can we confirm that the product’s not coming from that part of the supply chain, for example? And so like our job is we want to make sure this project goes ahead as much as possible. Also from an ESG perspective, you’re much better to not just be like, we’re going to

ban the supplier. Much better to be like, this is a problem. This is how you need to engage and mitigate this problem and solve this problem. And if you do this, we will happily work with you. And that’s actually the sign of a much better supplier that’s willing to engage and improve than a supplier that says, like, no, we have no problems. We’re a completely zero-incidence, perfect supply chain. Because the reality is that doesn’t exist.

Adam Sroka (24:44)
And I was going to ask like, have you gone up to the supply chain? Have any of big suppliers of the supply, the battery manufacturers, example, approached you and said, like, actually, did you coach us in what can we do? because it’s a network, it’s a big graph, right? So you can just move up the tree and find, like, keep supplying similar information and support.

Sarah Montgomery (25:09)
Yeah, yeah, yeah, yeah. So we do a little bit work further out the supply chain, but really our kind of theory of

change on the supply chain is when you speak to suppliers, they will do what their customers require them to do. And so the end customer really is actually the financing. The developers will do whatever the financing tells them to do. the best integrators or whoever it is will do what their developers tell them to do. And so really in terms of who’s going to actually drive the change, it’s the financing and the developers. But that said, is definitely, depending on the supplier speaking to a

in, okay, we know we’re being asked for traceability data but we can’t actually figure out how to get it and so we have teams that kind of specialize in very specific problems that can help to troubleshoot those so that ultimately the whole supply chain is getting better.

Adam Sroka (26:01)
That’s really cool. And what does like, what does excellent look like? What does good look like? If I’m a developer and I’m trying to like up my game here before engaging with you, what does, yeah, what like the increasing sort of expectations, more of a supply chain, what does good look like?

Sarah Montgomery (26:16)
Yeah, so.

Thankfully, there are some international standards and some regulations that have kind of default become international standards. so OECD due diligence guidelines, which affects how they set how to do the ESG due diligence process. So you need to identify your risks, you need to mitigate your risk, you need to monitor them, you need to able to report on them. And you need to see that as a cycle on an ongoing basis, not a one-off exercise to do. so understanding what do those international standards like OECD require.

And often that then will be what your investors refer to or when they’re due diligence on you to see, you actually done this? They’ll be looking at like, have you actually done all these different steps as part of your procurement process? So you’ve got that. then thankfully, the good and the bad is there’s increasing regulations coming in. So you have EU battery regulation, which has requirements on supply chain traceability for batteries, supply chain due diligence, how you identify risks up into the supply chain, product carbon footprint,

print, recycling and so on. obviously even what we’re seeing is even in the UK projects where technically they don’t have to be under this regulation anymore, they’re actually voluntarily aligning with this regulation because it’s kind of becoming this like global industry standard because it is the most clear and easy to follow regulation. they, they, the UK developers don’t want to end up with inferior products coming onto their projects. And also a lot of them are operating in Europe. So they’re signing a special deal across multiple different regions.

Eric, you to be EU.

Adam Sroka (27:49)
English. Okay, now that makes sense. guess like moving, sort of shifting gear a little bit, the data that you deal with must be a total nightmare because you’re talking about like multiple organisations across country boundaries, cultural boundaries, like you’re asking for stuff they maybe don’t have or maybe don’t know they have. What’s the…

Yeah, how does the process go like data gathering and cleaning phase in the early stage of like unpicking a new supplier?

Sarah Montgomery (28:25)
Yeah, so.

100%. I think to be honest, that’s part of the problem that we’re solving. Like, yes, it’s a nightmare, but like, this is also a reason why we exist. So we’re kind of like, we love this stuff. And so, you know, it’s small things from right. Like typically is you were saying like they would get an Excel spreadsheet where they have to fill in the questionnaire. Actually they hate filling in questionnaires. So what we do is just say, here’s all the documentation that any of those questions we’re going to be based off. Give us the data dump of that documentation. And then our AI processes that into a standard data framework.

And so for the supplier, that means that they spend less time giving the data. For the client, that means that they’re getting much better quality of data, but they’re also getting the underlying documents that verify.

whether or not that data is likely to be true. And then for us, we’re getting the best data outputs as possible. And so that’s like one example of where data technology is kind of coming in and helping to solve problems. But also I think it’s saying like, we know you’re not gonna get perfect data overnight. We’re not expecting that. We will take whatever you give us. We will flag to you where there’s obvious gaps that we’re like.

This is likely you do have this, you just probably need to go to this team to ask this or so on. And then we’ll also help you build the road back of what do you need to do to solve these major gaps where they do still exist. And so I think reframing due diligence as this like one-off tick box exercise, you either pass or you fail to actually like everyone’s somewhere on the spectrum. Some people are moving a lot quicker towards improving than others, even though they might.

at day one look like they’re performing better. And so let’s work together between us, the developers and the suppliers to solve this as quickly as we can.

Adam Sroka (30:10)
It’s funny because like when we go in and do a strategy or a tech strategy or try and help people like make more money or save stuff.

It’s almost the same process. It’s just like, us everything you’ve got. Give you a look at things and try and put it through our kind of machinery and insights pop out. And I just think if you’re going through all that work to sign a tick box and stick it in a cupboard, you’ve wasted a lot of the point of doing it. It’s like there’s gold in that, like that information and actually analyzing it and thinking about it and doing exactly what you’re saying. Or can I coach this, but this team or can we compare these projects which you

do if you’ve not got this sort of in a place where you can easily look at it and and yeah like read about what’s going on.

Sarah Montgomery (30:56)
Yeah, yeah. And what seems like important information to them, like our annual ESG report, super important. It’s like, no, we want the like 10th degree of detail underneath that. But they’re like, no, everybody wants to see this. And it’s like, no, give us all the data and we’ll figure out what actually the important data is that’s going to drive whether or not you have risks in your supply chain.

Adam Sroka (31:18)
Yeah, and so what’s the roadmap for the tech thing? Have you got a vision for what you’re doing on that technology front that you can share?

Sarah Montgomery (31:29)
Yeah, so like the big challenge as we were just talking about is data. It’s how do you build the data in a way that is understandable? How do you verify that data? How do you ongoing monitor that data? And so our tech team is constantly looking at, what’s the…

Data confidence scoring we have against our data. How would we improve that? Okay, where are we having to do manual interventions on the data that either the clients hating the suppliers hating or we’re having to solve something internally and we’re like, why do we keep having to solve this? Okay, how can we build a tech solution to that? And also, I think important looking at where are we not going to add data and tech around this? Like, where do we have to accept, know, when someone’s

making a hundred million pound decision on do I buy it from the supplier or not, even if you had perfect data to help drive that decision, there’s something nice about getting on a call with a human. We can confirm that we said this was a low risk supplier of the platform and we still believe it’s a low risk supplier for X, Y, Z reasons, which are the same reasons we said on the platform, but talking that through, there’s something in the kind of human or they’re like, okay, but you said that and actually now we find out this other piece of information. Can we talk that through?

And so understanding where is this a tech product roadmap solution that we can solve versus where is this actually there’s a benefit of having humans dealing with some of this complex data that AI models can’t quite interpret. Okay, when they said it was this allegation and they’ve solved it in this way, does this really count as the allegation being solved or actually know we would want this further piece of evidence based on everything we’ve seen?

Adam Sroka (33:07)
Yeah, and it’s like, it’s that classic thing of you’re in an environment where I deeply, deeply believe the specific context of what you’re trying to do anywhere, it always trumps most other things like the actual, that’s why I pick you as energy focused because understanding the sector trumps being good at tech, right, tech as well. But that’s the easy bit. Yeah. And like,

You’re in a situation where you’ve talked about tens of thousands of elements in the supply chain, data coming out your nose, and it’s complicated and it’s messy. Do you really want to be pointing AI solutions at a question that’s maybe never been asked before by anyone? Like, it’s not, this is the first time that question’s been asked in that context. You want a human. Like someone with judgment and actual reasoning to sit and maybe phone a friend and kind of check through it.

Sarah Montgomery (33:57)
Yeah, a hundred percent and I think that’s

One of the opportunities that we have as well is to be able to say, you know, similar to you only focus on energy, that we only focus on energy and their supply chains. Like we are very specific. We understand exactly what most of the developers are thinking across the landscape on this place. We can see the actual data of how suppliers are performing against this and we can start to spot trends that sometimes our AI data hasn’t yet spotted.

Adam Sroka (34:27)
Yeah, that’s cool. And is it easy to find talent in the space? People that know it or do you grow your own? What’s your approach to building your team with both techies and consultants?

Sarah Montgomery (34:38)
Yeah, so I’m sure working in the tech space, know, talent is never easy to find. think having a very specific problem you’re solving and something that they can get very excited about, like if we build this technology, we completely shift how the energy transition supply chains are going to work. I think that helps on attracting tech talent. We were talking about it earlier. It’s also building a company that tech talent actually wants to work in. How do you set up to be flexible? How do you optimize if they think they do the best work?

at one in the morning versus I do my best work at eight in the morning, how do you allow for that? And then on the kind of subject matter expertise side, it’s new, right? There’s not, we’re never going to be able to hire someone that’s like an expert in supply chains, data platforms, energy, sustainability.

Like you’ll maybe find two or three of those, but that’s then where it comes back to like, you’ve got to find the right person over this right CV. You’ve got to find somebody who’s like very smart and driven and willing to be like, yeah, this is, know where my gaps are and I want to solve these gaps. Like I genuinely find this interesting to solve for, know, okay, I don’t quite understand why this regulation is performing in this way. Let me go and read the entire regulation document. And that’s like, those people are hard to find, but when you find them, you’re like, this is great.

Adam Sroka (35:56)
I totally like the kind of people that are genuinely curious about the thing you’re at. They’re enthusiastic, they know how to work hard, they’re not morons like that. If you get that set, they’re the absolute A-stars, you can put them into any environment and they will succeed as long as they’re still interested in anything you point them at. Oh, 101 questions, everything. mean, what’s the, any hot takes or any controversial opinions or predictions for the future?

Give us a scoop, heard it here first.

Sarah Montgomery (36:29)
heard

it here first on controversial takes on the industry.

I think one of the big shifts that we’re seeing right now is there’s two, there’s two shifts happening in supply chains. One is that the cell suppliers for battery energy storage are moving into being integrators. So they’re saying like, okay, I’m not just going to sell you the cell and then sell the cell onto some other integrator. I’m going to build the whole system for myself. That’s one dynamic that you’re seeing happen. And then the other dynamic that you’re seeing happen is the integrators that don’t have their own cell manufacturing.

shifts are you having? One is that they’re trying to become their own cell manufacturers. Or two is that they are diversifying from rather than just saying we’re an integrator, we have one cell supplier, where they’re saying, here’s five different cell suppliers you can pick from. This is the price, this is the technical spec of all of these. So it gives a lot more optionality in the supply chain when you’re a developer, who do I want to pick from? And so I think

from a supplier point of view, you’re seeing them come out and say, you know, we’re moving upstream. This is, you know, means that we’re much lower risk because we have control over more of the supply chain. And then so you’re seeing that as one, I guess, pathway that the supply chain and the industry is going to take. And then this other pathway is actually, you like we want more optionality in how the structure of these supply chains are going to evolve.

And as a result, I think what you’re beginning to see is a lot more, a lot wider spread of different types of technologies and systems setups that’s happening. And so from a developer point of view, that’s like a huge opportunity to potentially diversify your risk of different projects. But from a financing point of view, it’s additional complexity to try and understand. And so I think one of the

One of the takes on the world is like, it’s all just going to consolidate in one or two cell supplies that everybody’s going to buy from. Whereas actually, I think you’re going to end up with an even bigger diversity of suppliers in the supply chain.

Adam Sroka (38:39)
It’s interesting to hear. Yeah, I know what I think about that. think like geopolitics again probably ends up naturally to pushing for that. And I do come back to an earlier point, I think investment will be there to try and encourage some of that, just to try and take some market share off of China. Not skeptical how it will play out in reality though. Yeah.

Sarah Montgomery (39:01)
Yeah.

I think definitely, taking that is China is still going to be here 10 years from now, dominating. And yeah, so far I fairly low confidence that Europe or the UK has figured out how to truly shift away from that. US is trying, but still the US has a long way to go. then their domestic politics means it’s hard to predict what direction that’s really going to travel in.

Adam Sroka (39:30)
And even like, it’s some of the US manufacturers, it’s like they’re still shipping most of the components from China.

Sarah Montgomery (39:36)
Yeah,

yeah, no, you look one layer deep at the US manufacturers or the European manufacturers. I think that’s yet another big thing. It’s like we see US manufacturers, European manufacturers and financing having to say, oh, buy from Europe, buy from Europe. And then you go one layer down and it’s like, it’s still Chinese. And if anything, it’s even more complicated because it’s still Chinese. But because they’re in Europe, they have even less control over that upstream supply chain. And the upstream supply chain is actually where the complexity and the risks sits as well as in the manufacturing base.

So, yeah, this idea that, okay, just get your manufacturing in Europe and the US and you’re fine is going to shift.

Adam Sroka (40:14)
Just ⁓ something I’ve been meaning to ask for the last half hour. I’m just thinking, like, you diversified your kind of expertise away from citing various other renewables classes. Are you eyeing up data centers? Is that interesting for you?

Sarah Montgomery (40:30)
Yeah, I think there’s a natural kind of convergence, right, between what you’re seeing is the energy players are now also becoming data center players because of the energy consumption of data centers, the amount of rationale that there is for co-locating of solar and best with data centers. so, and then when you look back into the raw materials, have semiconductors, for example, same semiconductors going into inverters as it is going into data centers. And so I would say, you know, really it’s,

solar and battery energy storages where there’s a lot of pressure on the supply chain, but it’s a matter of time before you’re already seeing that shift to wind and inverters and then data centers. it’s

Adam Sroka (41:11)
It’s

rapidly working. Yeah. Yeah. Okay. Well, look, this has been amazing. Before I let anyone leave, I would like to ask the same question. If people want to find out more about you or about Infuos, or if there’s anything at all you’d like to plug or promote, where should we point them?

Sarah Montgomery (41:30)
I guess the big question that we see developers asking us is like, one, am I doing good enough? And two, I think you’re kind of doing nothing, but I don’t actually know what I should be doing. And so you touched on this earlier of like, okay, we have all this data, we have all this research. And so one of the things that we focus on doing is putting as much of that data and research as, we physically can into content that developers can digest and make decisions on. And so if people want to understand a bit more about like,

what will my financing require on supply chain due diligence? Then for example, on our homepage at infias.com, we have a white paper that talks about kind of overview of battery energy storage, ESG risks, what do you as a developer need to do? And so, yeah, diving into that, or if they want to dive into like, actually, I want to understand the EU battery regulations, and someone just asks me a question, I don’t understand that, then finding that data on our websites is place to go.

Adam Sroka (42:24)
Very cool. Look, Sarah, it’s been amazing having you on board. Thank you so much for joining us here. And yeah, look forward to reading some of the white papers and finding out more about what we’ve got to do through conference season.

Sarah Montgomery (42:37)
We love

conferences then. Thanks so much for having me.

Adam Sroka (42:43)
Thank you once again for listening to the Hypercube Energy podcast. As always, if you have any feedback or comments or you want to get involved, please get in touch. And if you want to find out more about what’s happening in data and AI across the energy sector, please join the Beyond Energy community. And I look forward to speaking to you soon.