Summary

In this final installment of the 3-part series, Ben, Jack, and Charles wrap up their exploration of virtual power plants (VPPs) with a deep dive into development strategies. They bring their coffee shop-focused VPP concept to life, tackling questions like: How do you stack revenue streams? How do policy incentives like the IRA shape the economics? And how do you overcome the challenges of site control, permitting, and community buy-in? Turns out, the answer sometimes lies within a bite of mincemeat.

Episode chapters:

* (1:07): Intro to guests

* (3:55): VPP hackathon catchup

* (5:12): Policy influences on project feasibility

* (16:38): De-risking projects

* (23:49): People are key

* (30:23): Project finance

* (41:25): Making money on projects

* (59:10): Resources to go deeper

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* James Gordey

* Ben Hillborn

* Wyatt Makedonski

* Charles Jurczynski

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here:

Episode transcript

Well welcome back everybody to this next episode of the intermediate podcast. today we're talking about project development and all the, all the ins and outs of it. we're going to do our best to frame this as a bit of a follow on to our, coffee shop that we, that we talked about in the, in the previous two episodes. but if we stream, of course, we'll still try to make it, fun and entertaining. And, today we have with us, my co-host, Charles Shensky and our guest, Jack Kirby Miller. Jack, I have to say, do you want to say a quick hello? Hi, everybody. yeah. Excited to be on. And, I get to spend a lot of time with Ben and excited to spend some time with Charles as well. Yeah, likewise. Thanks, for coordinating. It's been good to be here with you and and with Jack. And I'll just, like, super brief background. I think a lot of people know generate, as an investor, operator and owner, distributed generation assets, we do so much more than that. And, a big part of my day to day role is in what we refer to as delivery, encompassing development and construction of assets. so any portfolio that generate buys from a developer, where there's still leftover construction or development work to do comes through our team. So hopefully I have a little bit of experience in that space that I can I can speak to. Amazing. And, Jack, you've got, you've got a good amount of background in the space as well. Do you want to give a quick primer on yourself? Yeah. So I spent my early career working in the built environment, developing energy efficiency projects. decided that looking at first cost and the decisions that are made around it, we need a better financial tools and, spend some time in finance, all in, early stage clean technologies and, managed, spend some time, at Swell Energy, the distributed energy storage developer, which, you know, operating across the US, and their structured finance team. And that's really sort of informed my opinion on, what it takes to get lots of little assets out there, really quickly. And I think hopefully I can bring a bit of a different perspective if you're thinking about development from, you know, the the extremely distributed versus, you know, 1 to 5, ten, 20 megawatt scale. so, yeah, I work, Ben and I work together at Pearl Street, and, I wish I had been at your VP. VP coffee shop because, I work a lot with our, VP programs. so. Yeah, happy to happy to be here and excited to dig in. Amazing, amazing. Well, a quick recap. So in our, in our VP episodes, we, we kind of dove into, finding a niche in the, in building a BPP. And we came up with the idea of a, a virtual power plant, specifically designing a program for coffee shops. And the, the outcome of that was that we wanted to deploy solar and batteries to coffee shops, around, around certain metros in the US that aligned with, you know, a high solar generation potential, you know, high density of coffee shops and, and, you know, friendly, friendly environments for, for actually deploying VPCs. And so now that now that our motley crew has decided that this is our niche, this is where we're going to go now, we have to figure out how are we actually going to build this thing, where's where's the money going to come from? How do we structure projects? and how do we go from this idea of a virtual power plant to a physical operating virtual power plant? and we we do talk a lot about policy, here on intermediate. And that's possibly one of the, probably a good place to start. And I'm wondering if either of you guys want to, want to talk about a little bit about what you've seen around policy that influences the feasibility of, of putting together a project like a, like distributed assets in a BPP. I'd like to give people a framework first for when we talk about development and demystifying. I think sometimes this is even lost in project finance, community and people who are quite adjacent. Really, development is everything that comes before you start construction, and that's a lot. There's a lot, a lot of paperwork that you have to do, and you're really dealing with people and you're dealing with communities and neighborhoods. And so where we start is land. You want to get site control. You want to know where are you going to put your project. And we have the right to to rent that land out or own it. You want your permitting to make sure that you are allowed to put it there. According to the local zoning and bylaws and things, and there's a lot of work that goes into that. And then you want your interconnections. So you want to know that if you're building a power project or if you have a connection to the grid that you're able to to give electricity or take electricity back, assuming it's a power project. The fourth one, and this is where I just wanted to jump into this, into what Ben was talking about is your revenue. And this is going to be really key when you want to go get financing someone to give you millions and millions of dollars for your coffee, VP, coffee shop, PPV, revenue is going to be different for every project. It could be a PPA, which is perhaps the simplest approach. I'm. I'm looking at you. this could, but it could be multiple different layers. Right. And one of the big layers in this, particularly if you're using newer technologies that can sometimes be a bit more expensive, for example, batteries or EV chargers, if you're incorporating them into your VPP. There is so much incentive money to defray the upfront costs of the equipment, and that is a big part of what makes the economics of this project pencil. And it'll be different at different places. To bring this full circle back to Ben's point, is getting there, is that a lot of this is policy and regulatory driven? Well, policy driven, regulatory, not so much. it is the I.R.A., the Inflation Reduction Act of 2022. It is the IJA, the infrastructure, infrastructure investment and jobs Act of 2021. And together, these account for over $1.5 trillion into infrastructure in the US built environment. And probably more because a big chunk of these, these policies were to extend tax credits, which are a financing mechanism that form the basis of building these projects as well. And it's a real expansion that people say could go much further beyond the I think its budget is $369,000,000,000 billion. the industry expects it to generate a lot more than just 369 billion. And these are, our tax credits. So we can go into that later on. But there is a lot of policy that drives the revenue for, these projects. And I skipped over it a little bit, but on the local level, you've got municipal considerations. So there is policy at the state and local level that can drive where we might choose to site of VPI as well. I actually yeah, I would definitely put a lot of emphasis on that local level. development is almost always except for the of skills where I have worked. Right? Development is almost always a ground game. Right? for those like if you're building, VPI, you need to concentrate enough distributed assets in a concentrated geographic area to be able to provide meaningful load to utility that's working in a much higher level. And so paying attention to the friendliness of that local geography, the utility service area, that's really important. A lot of the work that we do right is identifying where you can, pull different. Right. You're obviously going to be using, you know. Yeah, there's there's some flavors to this as well. Right? A lot of VPNs, specifically are not owned assets. Right. So you have a contract with an asset that was already installed. So, to operate it and provide energy services to the grid. if you're looking at trying to bridge the gap to close the financing, where you can have a VPI that's owning its batteries is a, third party that provides services, you're going to need to be able to stack a number of those different revenue streams, right? Obviously, the, tax benefits, state level incentives and then hopefully incentives, or, revenue streams from the utility service service area you're inside of. so there's this idea of like, you know, multiple overlapping geographies that that are going to have an impact on what, what policy environment you're in. And I just want to tie this back as well to the, the coffee shop VP is that you'll think of maybe the coffee shop or the coffee shop owner. The person who owns the building is being your host, who you're renting land from. Effectively, you're putting all your equipment onto their site. but then they're also you're kind of like your base customer. You're trying to do something that gives them value. You're trying to lower the cost of, running air conditioning or covering their Wi-Fi electricity bill or whatever. You're trying to bring down their energy bills to make it cheaper. And a big part of serving that customer with cheaper energy bills, because at the end of the day, they're going to make this decision based on that. Well, hey, is it cool? But also, hey, does it send me money? And so in order to drive that down while, you know, imposing a very big cost upfront to get all of this various different equipment and to, to retrofit and get electricians in there kind of twiddling with wires in order to reduce that cost. You're defraying that with these incentives, with these, these cash flows that have been created by the regulatory structures. So that makes it at the end of the cheapest for your core customer. Would that that person. I'd actually so in this specific instance and I think it's representative. So throw a hand up if I'm diving in too deep into these details. But in, in many like one of the biggest values of distributed resources is resilience. so coffee shop is actually a good example, but I've seen this with, universities with, you know, any, any, any, any business that that relies on refrigeration, business interruption is a massive cost. and it's a huge risk. And so if I were looking at developing this coffee shop, coffee shops, you know, they're distributed throughout a community, when our power goes out and we no longer have wireless internet throughout it. You know, for folks that work from home, like coffee shops, become a center where people go to gather, and so, like, you know, that actually could be some really high revenue days that you're missing out on because, you know, your your, your power is down with the rat, with the remainders. That's actually a pretty good way to look at, sort of a baseline justification of, of getting some assets and some services provided. so it isn't policy dependent. It's interesting where there's a similar concept on both sides of the equation here, where on the customer side we're stacking reasons for, but we're stacking values for why you want this. there's, there's resiliency, there's lower energy, there's the cool factor, so on and so forth. And on the product development side, we're also stacking revenue streams to, to make the, make the project make sense. you know, stacking in an incentive with your PPA, with, you know, other, other pieces. and it's kind of interesting that there is there's commonality between both sides of, that both the seller and. The customer here. So we've said we've set the policy drives revenue. And, Charles, one of the things. That partly and customer demand drives revenue, right? So you're more on hand, you've got all this kind of you got incentives, you got tax equity, you've got, local, you've got utility programs all kind of policy driven on the, the wholesale or the like the, the energy market level. But at the end of the day, if we're talking about distributed like that, coffee shop has to have a reason to make that decision. Somebody has to make a business decision to say that I want to retrofit my coffee shop with all this equipment in a way that is going to lower my costs, be kind of cool, because I can show all the energy. Maybe it's going to be green and sustainable and renewable, and I'm also going to be resilient and the like. It'll be a decision from the business owner to say, I want to do that. And that that underpins whether or not the vfi goes ahead, and then it is up to a developer to make the business case or to make the numbers stack up in order to deliver that service to that customer. Right. And a big part of the numbers stacking up is the policy back end is the can we find enough money elsewhere to justify this massive upfront cost? So I just want to be clear, like customer comes first, but policy is a key driver of the total revenue. That's good framing. yeah. I think when you think about the, when you when you think about the development game, it's pipeline, pipeline, pipeline, right? Companies are valued at approximately, you know, yeah, the public companies are valued based on their pipeline in that space. and, you know, there may be some exceptions to that, but that's the general rule. and so it really does come to, you know, how do you a bring a bunch of like, how do you go out and sell to a bunch of distributed, business owners or residences or, real estate portfolios? And then how do you bring those, those that wealth of, you know, many different sites through the pipeline, to the point where they are, you've kind of. And I think maybe it'd be worth talking about what de-risking is, but where you do the rest of the project and that's ready, to either, you know, take onto your balance sheet and, perform construction or sell off and have someone else, perform that construction. So, yeah, I think. I think, yeah, I was gonna say there's, there's a couple of buzzwords here that I think, I don't know if we want to get into a, a developer's glossary, but de-risking is just one of those words that I think people really throw around when you're in project finance and project development. so I'd love to hear a definition from you. thinking about development generally, it's filling the pipeline and then everything else mostly is de-risk, de-risking the project. the kind of stodgy textbook definition is, transferring risk away from the project to the parties that are most capable of assessing and mitigating that risk through contracts. so, for example, big thing that, folks talk about for, like mid and larger size projects is yeah. And maybe it would be better to, to, to talk through that sequentially. Right. But you know, getting there's a bunch of data you need to understand about your, your, your site. So, what is interconnection going to look like from the outset? Are there any environmental concerns that need to be remediated that might result in costs? what is the cost of building on that site going to look like? and basically you can do a high level assessment of those and then move through towards land control, which means you have the rights to, develop that property. and then as you move through the later stages, you're kind of trying to, you know, set up and, set up, insurance, around, like long term performance insurance against hail, other hazards, and ultimately get to a place where you're able to get a, what you call like a turnkey construction contract, where as the project developer or eventually the project owner. you are not on the hook for delays in construction or cost overruns and construction. and you've passed that off to typically a third party firm that is going to be, procuring all the equipment and bringing it onto the site and installing it. And then, basically, applying to make sure that that can all go through and, and that you can, commission those projects and keep them running. To wildly oversimplify. yeah. I don't I don't want my lawyers building a solar project, but equally, I don't want my contractors trying to negotiate the, negotiate the finer points of a of a tax equity structure. So, I mean, obviously, I'm overexaggerating, but at every stage of the project, there are so many different skills, just like and I that example really illustrates the breadth. And you've got accountants and you've got bankers and you've got lawyers and you've got contractors and you've got, environmental consultants and insurance consultants, insurance advisors. And it's just what a developer does is coordination. It is making sure that all these work streams need to get done and allocating the roles and responsibilities to the person who needs to get it done right. And I really like to think about, responsible and accountable. I am trying to hold I use financial contracts to hold the responsible parties for delivering these workstreams accountable. And that means how much I'm going to pay you to do that job. But what happens if you don't do that job right? Like you're also on the hook. And so ultimately, I'm sitting here in front of my financial model, prima, I said at 2:00 in the morning trying to figure out how are we going to spend the money responsibly, but also what happens if somebody fails to perform their job and thinking through all the different, downside cases, as we call it? Like if there's something goes wrong, what, what what then has to happen. And so I'm trying to put myself in the shoes of different people. I can't do any of this stuff. You know, that's just that's the crazy truth is that I'm not I'm not an engineer. I'm not out there turning wrenches in the field. I'm not a lawyer. I'm not sitting in, like Manhattan high Manhattan office, like turning pages on a contract. Although I'm pretending to be every single one of those things at any given time. I am sitting across the table and say, that sounds about right. Right. And like, I'm learning this and I'm learning what I need to, what I need to know. And I am moonlighting as any one of these. But ultimately, I'm also working with a lot of people who are acting on my behalf. And you're kind of like the general, I guess you're trying to marshal all the different troops and make sure that they can go out there and fight a battle where you ultimately win a project, right? Like you get it done. For us, victory is well, the victory is a couple for victory is what we call NP or notice proceed. That is when you've agreed with the local town that you've got all the permits and you've agreed with your contractor, but we sometimes refer to it as EPC, which is engineering, procurement and construction. so the contractor who you've signed a contract, they're ready to go out, build, they've got all the permits they need. And then you say, okay, you go, you have I will give you a notice to proceed with construction, and they'll go out into the field. And so that's victory number one. I think in some ways that is the key victory for a developer. But victory number two is when you go to the utility and say, I have built a project and now I will start exporting electricity. And they take a look at all the electrical. It's like a teacher marking your homework. They're going to go and look and make sure you've done it the way that they want to see it done. And there's a whole bunch of rules and regulations around connecting your project to the grid. And then the utility comes back and says, yeah, you can start exporting electricity or importing, or you can start operating your project in conjunction with our grid. And at that point, that's when you can start making money right away. So if you're working from a spreadsheet, you're trying to figure out how to make this into something that makes financial sense, right? Like, I would love to say we are greening the grid. We are making this coffee so cool. And but but at the end of the day, there is this financial consideration and it costs an awful lot to build this thing. And you want to be pretty certain that you're going to get that cash back. And so once this is operational and running, you've reached that point, you're going to start to see some of the cash flow back because you're like, you're really in the hole here, right? You've given somebody given a lot of people a lot of cash. And you're like, I'm kind of flat broke right now. I got to start making money from this. We should probably touch on where did all that cash come from. And let's talk about project finance showing. Let's talk a little bit. Oh can we I. Love to talk about project finance. I just want to touch on one thing that Charles said that's like kind of important around the skill set of a developer. And I think to some extent you're the general, to some extent you're a project manager. You hopefully have a pretty robust financial model that you're stressing about in the background. but in my experience, like the number one critical skill of a project developer is like relationship and people management. you have a ton of these circumstances where, yes, you have a contract or you're working on getting a contract, but you are working with people from across the political aisle. You're working from with people who have explicitly different, motives and incentives around the project. And like, the most valuable thing you can be doing with your time most of the time is helping make sure those relationships run smoothly. so I just, I think it's easy to get buried in the contracts and easy to get buried in whether this project to get a pencil or not. But, you know, if you go to, if you go to some, if you don't know until you go up for approval that, you know, there have been entrenched entities that were like against the project and weren't, weren't listened to. you've put a lot of effort into this, without, pulling it back. I want to get the pants question. Yeah, yeah, but to that point, one of the words of wisdom I, I live by here is a contract is only as good as the lawyer who's paid to unpick it. Like at the end of the day, it's a paper document that governs the relationship. But the underlying relationship is what matters. It's there to protect you. If you get into a dispute or if you fight somebody. But you can't just say and you can just say it's in the contract. But at the end of the day, that contract is it's a commercial negotiation that you said that says, I'm going to give you something, a VP and microgrid, whatever, and you're going to give me something, the permission to build it, for example, or, you know, the the construction labor. but it is the relationship that underpins that contract. First, the contract is only meant to describe how the relationship is supposed to work. In an ideal circumstance. That's a really good clarification. and figuring out like, it's like a pie with a bunch of different flavored slices and you want to give the pumpkin to, you know, The person who really likes pumpkin pie. Yeah. My brother. Yeah. And I want this slice of apple. and there's going to be like, the mincemeat slice at the end that nobody wants. and hopefully it's pretty small. But you're going to pay someone a lot of money to eat the mincemeat pie. Yeah. You're going to pay an insurance company, probably. Or or, you know, the equity is going to take on that risk. And, they get the second pie. So this is, I've got, this actually is a funny segue into a real life development story. It's not buy it. But it's a good friend of mine was, developing, I want to say it was it was either solar or wind, but developing it for a big utility scale project in Wisconsin. And the locals were not having it. They're like, no, you're a big city coming into our little town, and you're going to force wind down our throat. We don't want it. And and she's like, no, no, no. I'm like, you know, I just I work for I think it's, I think it's next year. It's like I work for a big company. Sure. But, like, I'm just a Chicago girl. I drove up here like, you know, I came by and I wanted to say hi and and literally to the to Jack's point about relationships. She went to a town hall where nobody wanted this project and said, nobody's consulted us and just talk to people. It was like, yeah, this is the plan. You know, these are all the community benefits. Usually there's like, there's tax revenue for the local community. You pay taxes that school taxes like this is helpful for your community. And this is not a takeover. There's no sort of deep state worries behind here. And everyone started to warm up to her and thinking, okay, like this isn't so bad. And they said, well, you know, we're going to go post-meeting. We're going to go to the, you know, community hall, and we're going to have a little get together. And, and she walks in there and they've, they've laid on a spread and it is white hamburger buns, uncooked onions and uncooked mincemeat. And they're just throwing these things on together into a hamburger, like an uncooked hamburger. It's a bun. It's raw onions and raw minced meat, and everyone's just eating and they're like, well, aren't you going to join us? And she's like, oh, I guess I'm the one eating the minced meat slice. I like. And you're just like, yeah, you do, because this is what everyone else is doing. You're part of the community now. You're representing your company, but you're also trying to show them that you are your relationship building. And that relationship building can come in so many different ways. And that's just one example. Yeah. You eat a raw, you eat a raw hamburger, because sometimes that's what you've got to do in order to get this project done. Yeah. And I wouldn't under emphasize like being there and listening to concerns is like especially at community scale and larger like that's so important because your project will have a big impact on the community. And like you need to become, have at least to some extent become part of it. So, and yeah, we've seen this in the distributed side as well. especially when, working with low income communities, it is absolutely paramount that you work with folks who have existing relationships there. Like there's, there's been a lot of mistrust built up over the years with, for like really good reason around things like upside down solar, people's, where, like, the pricing is set up to escalate, yeah. And, you know, there's not really a substitute for working with with folks who know that community and have trust there. yeah. Anyways. Very good point. Very good point. okay. So the point that we, just bounced off of and we should probably come back to is where does the money come from to, to deploy these, you know, these pairs of, batteries and solar panels to coffee shops across, across the western seaboard? Oh, it all comes from generate capital. Oh, perfect. Easy answer. That's good. Jack is Chuckling. Yeah yeah I mean sure. Also you know I think thinking about as basically. Fundamentally capital has different expectations for risk in return. And the more risk it's taking on the higher it expects the return to be. and so as a project moves through the pipeline, different types of capital will become available to it. So, you know, high level early stages, you're looking at something that looks like development equity typically, you know, there's a few folks out there. This is perhaps one of the most underserved, areas of the capital market. I know. seg sustainable infrastructure, is doing a lot of really great work in that space. not to namedrop too many non generate names. and then as you move towards, completion, you're, might have the long term project owner start to take a stake as early as, you know, it might be pre NTPC or it might, it's depending on the asset class. It's often starts at NP and then you'll often get varying types of debt coming in with that. typically the earliest step will come in is during construction. And that'll be like a short term construction loan. and then you'll have long term debt once the project is quite, you know, verbal air quotes, de-risked, and operating, and then sometimes you'll get really low cost capital from, sort of the biggest investors think your, sovereign wealth and, pension funds, after a couple of years of operating history, especially with new, asset classes or new new portfolios, which is $0.02, yeah. Charles, I think you have. Yeah. I just wanted to jump in here with a quick explainer, which is when we think about a project, it's just it's moving things from left to right along a timeline, and we find ways of segmenting that. So I think there's probably is actually a relatively recent concept that I'm still playing with. But maybe for segments we want to talk about we talk about development. And that's like that's just paperwork. That's that's moving paper. It's getting all your planning and permits and your leases and a lot of the sort of call it the white collar work of building the project. and that ends at entropy. To give you a bright line, just a little bit fuzzy area around that. But development leads, leads up to notice, to proceed. And then you notice to proceed. And that's when the blue collar work starts. That's when you get your contractors on on site turning wrenches and building the infrastructure. and that will go from NP to code completion development. We also have a couple of other things in power. We refer to permission to operate. We call it placed in service. there's completion of code, completion of development, a couple of different, names there. But let's you code, you go forward and then after code, you really kind of have you have operations. But I said for I'd split operations into this kind of wrap operations where typically for the first two years you have some teething issues, things break down. they take a little bit of time. Each of these projects can be their own special beast. and you sort of figure out, where things are breaking and you fix them. And that's the sort of wrap period. And then after about roughly two years, give or take, depending on the complexity of the project and how well it was built in the first place, you'll get to a sort of steady state operations, and that will kind of go for on a go forward basis. And that's, that's sort of where the pension funds are interested, particularly at the bigger pork belly of utility scale projects. But we're talking distributed here. So let's put them to one side for now. Each of these call it we'll call it three for now. development construction operation stages is going to match quite well with a different pool of capital. And we talk about risk. It's this really nebulous concept which is basically, almost like, percentage likelihood of the project to die for one reason or other, maybe your grid constraint. And the utility says, look, you built it, but I can't take the electricity anymore. I can't, like you just can't connect it. And I'm. Putting the electricity that I'm putting into the ground because I can't like there like the utility can export it from my site and I'm not getting paid for it. Maybe it's the townspeople saying, we don't want this here. Thank you. But no, like this isn't good. Or maybe it's, you put some, equipment into a coffee shop that went bankrupt, and the guy is like, look, it doesn't make sense for me anymore. I'm walking away or I'm retiring. And then, you know, you've got electrical equipment on a coffee shop, and nobody's paying for it, right? So there's like, that's those are examples of risk where things could happen and you want to understand whether or not they will or won't happen. It's a lot harder when you sort of rocked up and you said, I'm going to build a solar project here. and then somebody turns around, says, over, my dead body is going to be, you know, that's that's quite high risk, right? But once you've once you've got all your paperwork and said that you're allowed to do this, you know, there's definitely construction risk. And I also want to say that development doesn't cost a huge amount of money. We're not talking crazy big sums, but it is very high risk. So this you'll have, investors who play in this space. You mentioned Segway. We can just go it, let's be fair about this nexus as a development capital solution. You've got lacuna. You've got, ley line that's doing this green backer. I think those are probably the 4 or 5 when you're talking about, like, distributed energy. but then also a lot of developers who've recently got private equity money are doing this with their own balance sheet. So there's a whole universe of different funding providers at development stage. And then you get into construction, and that's when you have to start, like buying equipment and equipment's expensive, so there's less risk, but there's a much bigger need for a lot more money. So all of a sudden that's a whole new, group of investors who feel like, hey, this I'm I'm ready to dip my toe in the water here, and I'm willing to take less. Less, risk on than than the, development funders. But I'm also willing to deploy a lot more capital. And so they come in, they help you buy your solar panels or EV charging equipment or your, your thermostats and meters and things to help you manage load or maybe your refrigeration units, and then they'll take it through to operations, and then you've got a whole new universe of investors who are going to think of this more like, an investment product. They the way that solar really got to scale was that they discovered that a lot of pension funds who had a lot of underfunded liabilities, could see solar in a similar way to, say, Treasury bills. So when interest rates on treasuries plunged, they were like, well, a solar project, kind of, if you squint a little bit, looks a little bit like a a Treasury bond, but with a higher rate of return. So we're just going to put our money in that and it matches the pension funds liabilities. And, and they don't really need a huge return on their capital. So that's a whole new universe of people who could potentially invest in your project at that point. But each of these investors is going to have a whole list of concerns that they want met. And that's when we talk about de-risking it. You want to make sure that those concerns that you're getting out of those concerns as a developer, and you're able to answer them before you even go out to talk to those people, because they will come back and they'll say, but what about this? But what about that? But what about the other? And you say, don't worry about it. We've thought about it. We've taken care of it. That's not a problem anymore. And then they give you their money. It's just that simple. This is something that said, oh yeah, this is this isn't like that. that Jack is all too familiar with. I, I can hear a chuckling away in the background. It's like the time and the time to make sure you. Can answer all the investor's questions is before you talk to the investors. That is 100%. So like when you're when you're at the negotiating table, when you're going out to find someone to fund your project, it's really not the time to be improving the quality of your project. You should have you want to do that ahead of time. other just like notes on, risks that are helpful is a lot of your risks. They're they're greater and they're often binary. Meaning, is this project going to go forward or is this project not going to go forward until you reach NP once notice to proceed, right when you've got, when you can actually start construction? once construction starts, it's actually quite rare for the project to stop. and so your, your, you know, your return might change, you might have some cost overruns, but. Yeah, I see, like, that grimace. Yeah. The, that there are such thing as stop work orders. so sometimes going back to the policy question, sometimes policies change, sometimes communities issue moratoriums and they're like, we don't want any solar in our town anymore. that has been known to happen. Or you become non-compliant with the permit that has been previously issued. So it can, but it is much less likely at the construction stage that that is binary. And to Jack's point, it'll be cost overruns, which could be a problem. Right? Like you don't want to be spending more on your project than you'd initially budgeted for, because now you've got to make more money somehow, and people don't want to pay more, because once you start building it, they're like, so you're going to do it for the price you said you're going to do it for. And so it's very hard to make more money. So you want to make sure that you're not spending more money. So worth worth noting here. If you find yourself on the don't build side of the develop don't develop divide, slowing a project down, for a significant period of time is like actually a reasonable way to make sure that that project doesn't happen. Amazing. So we have, we structural projects. We have a solid pipeline of projects of, of all of these coffee shops. We have, we've done some de-risking on these projects. We have signed agreements with, with EPCs. We have signed agreements with capital providers. We have, signed agreements with, with our off takers. So like the coffee shops that, that want these, that want to participate in this virtual power plant and, but let's talk very quickly about, about how do we actually make money off of this. And this comes back to, one of Pam's questions from the from the very beginning, what is a PPA or more broadly, how do you monetize these assets and make sure that everybody that has taken a gamble on you and developing this pipeline of projects is able to get payback yourself included? Who wants to take that? I want to start with that, but but let's start. Could you you. Rephrase the question for me? what is, yeah. What is what is what is contracted revenues. Sure. yeah. And I don't let's start with contracted. But there are two ways you can get paid contracted revenues and contracted revenues. Yeah. And, investors, project finance investors love contracted revenues and VCs. BP's live on contract is. Oh. Well, is. That why is VP. Is broadly. Right like. BP's would love. Contracted. Revenues. If they were typically enough to cover the cost of the capital and they were in the business model of owning the assets. if you're building a VP with other folks assets, then it makes a ton of sense. You can have a more aggressive risk profile. So, yeah, talking about, contracted and, contracted revenues. You know, one of the biggest. and honestly, one of the early stage things you will do when you're developing a project is securing what's called an offtake contract. And, it, it can look a few different ways. The kind of, the, the, the standard, in kind of the solar space is, PPA or power purchase agreement. And it's basically, an agreement between the asset owner and someone who needs power. So that could be a utility or a commercial entity or even a homeowner to pay a certain price per unit of energy produced and delivered to that, so, well, unit of electricity specifically, these tend to be long term documents or long term contracts. So, they should cover a good chunk of the useful life of the equipment. Typically they will cover at least the, period of time over which you are financing the equipment. lenders in particular. Right. Lower risk capital really like to see a solid revenue contract set up. but you could also have an agreement that is, structured differently. So you could have, contracted revenues through a lease where, you are giving the use of equipment regardless of the specific, kilowatt hour production to a particular off taker. yeah. And there's other things as well, like tolling agreements, and things like that for energy storage. more capacity payments would be another, although those tend to be relatively short term contracts, at least in the, the, areas where I've worked. but yeah, so that's, that's on the contracted revenue side. part of the logic of the, of those contracted revenues is, the, the off taker right to the customer, so to speak. is getting a what is projected to be a better deal on the energy that they're purchasing, by locking it in for a long period of time. And that allows you to finance the, the equipment, with. Well, specifically with that on the other side, you have, uncontacted revenues. So this could be, you know, basically based off of retail electricity rates, or, and like, you know, something that is, that is unfixed or floating, and that can give you much higher upside. but it's harder to get, debt to support that. So that's something that's, as, Charles was just saying that's, that's really helpful for, or is really interesting to folks that have a greater risk tolerance, in the equity and venture space. And also know where at time. We are. Meeting apart this. But I am loving it's, it's, looking forward to part two. I think we're pretty close. I don't know if there's a whole lot more we need to cover here. I think one. Thing I would love to highlight is just thinking about, like, we've talked a lot of it'd be good to clarify the difference between, like, one off project development and project development, where you have a portfolio of assets and pre rent financing. because like specifically for Dars, like. It's usually portfolio. Yeah. Well it yeah, it should be for portfolio leases. That's my position. Which I can take two more minutes if you want to, if you want to dive into that. Let's I think that would be good. yeah. And it shouldn't take ten minutes. So, So what's the Segway from where we were to here? So we're talking about people's contracted, contracted revenue and different kinds of contracted. I think. So things are on the spectrum. These revenue contracts can go all the way from, I think when you think about a very to kind of clean basic PPA would be, the sort of agreement you might have signed if you'd, put solar on your rooftop, right on a residential solar PPA. So pretty, pretty standard. but then the bigger the system is that the bigger the counterparty, the more they might want to negotiate it. So. So you can get into quite negotiated elements here for contracted revenue, though there aren't too many different types of contracting structures, PPA leases are the typical pathway to structuring a power uptake. To be clear, leases you can actually probably use in different cases, even for batteries and for, EV charging. I've done a lot of distributed battery leases. for example, which is something that generate was very happy to finance and is very happy to finance. and I think we can do you can do leases for, for busses. So we have a portfolio of electric busses where we get paid X number of dollars, flat rate every single month by our counterparty to use those busses. And then, you know, they get the benefit of the busses. There's no utilization risk. There's no like, pay by the mile or anything like that. But that's a good example of where, like UN contracted revenues are, right, where we could in fact, some of our early battery projects, we split the we did a shared savings model where whatever dollar we saved you, we would get, you know, 80% of that and you get 20% of that. Now we'd get 80% because we cleared. We were clearing the, the costs that we paid. So we need to finance those batteries. But you're getting that 20% savings free and clear. And so that's reducing your overhead bill. But, you know, I don't know how much I'm going to save you in any given month. I can make an educated guess. I can use some really fancy venture capital backed software to determine what that number might be, but I can't hang my hat that I'm going to get that every single month. And then what happens if you, you have an outage or you close your shop and go on holiday for a month and you're like, I'm not. You know, I'm turning everything off for a month, then I'm the one who has to ride with that. I don't get anything from that because I know you're not using power. so generally, project finance doesn't like that because there's a lot of uncertainty. Right? The whole goal from the project financiers perspective or the lender that the bank lender's perspective is, I want as much certainty as possible. If I'm going to give you a home mortgage, I want to know that you're going to pay that mortgage, which is why I do credit checks. And, a lender would do credit checks on you and, and want to understand your, your financial position and your income. It's a pretty similar process obviously with a lot of differences, but it's a pretty similar process for investing in a, in a renewable project. You know, it's a big outlay of cash upfront. I'm giving you a lot of money. I want to make sure that you're going to be responsible with the money that I give you, and I'm going to give you a score and determine how likely it is that you are to repay that. So if you're going to go and say, well, I'm going to take that money and I'm going to go to the casino and start spinning, spinning balls and like, don't worry, it's very likely that I'm going to get red every single time. Like the balls are pretty weighted to in that favor. You're like, I don't know how you know you're going to hit red every single time, but maybe you found a way to beat the house, right? Like maybe you have an angle on this. Maybe you have a a technology that is just more sophisticated and, and actually you've seen something in the market that says, if I go and invest in, AVP, there's going to be ways that I can operate it to really capture something, some pricing that that isn't otherwise there that I or I can. I think about those as bilateral contracts, for example, where. Like it could be it could be market access. So like getting or taking a portfolio of smaller assets and then bidding them into transmission, double ancillary services, contracts. Right. That wasn't like maybe that's just a more lucrative, lucrative market to, to, offer my energy services to right at the core, I am offering handheld. we'll get to bilateral contacts in a second. But at its core, I am providing, a unit of power or a savings on that power on the on the power you would have otherwise use. and then also, I'm kind of moving it around, so you might pay one, one price at one time of the day. You might pay a different price at a different time of the day, or I'm reducing your total demand, or I'm providing electricity to, to reduce your demand or to reduce the amount that you're taking from the grid. And, and it's some triangulation of these. But in each I may I'm probably over complicating things now. But basically whatever I use the hardware to do, I'm looking for a way to be compensated. I can either get compensated through a contract or I can get compensated by bidding into a market, or bidding it into a certain time of day, or splitting the revenues with you. And there may be there may be savings. There may not be. So it's a really a question of certainty. And the savings could be huge, right? yeah. And especially the newer the technology, the newer the market, the less track record you have around that. the higher the bar for like getting financing on the back of a variable, variable outputs. Right? Yeah. For sure. Kind of across the, across the spectrum from like market risk to, you know, performance risk. and yeah. Okay. So quickly bilateral contract is two people getting together and saying, coming up with paperwork in an agreement to say I give you this in return for that and really in energy, it will I will give you a kilowatt in return for a price. A pay is a bilateral contract. It's not negotiated through a market. It's not wholesale. it's not kind of a public document. It is you and me getting into a room and negotiating paperwork that says you can. I will give you this service for that price. Yeah. And I think of these a lot in terms of, providing like capacity or other services to like relatively tight geographic areas or tight markets, where, you know, for like to put a bit of a point on it where a utility has a problem, they've got transmission lines that are no longer, that are no longer serving load well enough, like, non-EU, whereas alternatives contracts are kind of my favorite there. But it's basically a contract between those two parties where one is the service provider and the other is the utility. And in the cases that then I spent time thinking about at least. yeah, absolutely. And so just to zoom back out, like where we're really in that revenue spot, like if you're going to go back to the four things that are valid for really cares about revenue side control, permitting and interconnection revenue, revenue, revenue, we are sort of touched on, incentives. And so tax equity is global. A lot of, subsidies or rebates or incentive payments will be quite local, often at the state level, and will vary by technology, of course. and then you've got your customer revenue. And so when you talk about the customer revenue component of that, you're stacking all these different revenue types. You've got the customer revenue. And that could be where it's either contracted or about, it'll be a bilateral contract or a wholesale contract. So you're kind of stacking all these different revenue streams on top of one another. And here we are talking about one subset. So I just wanted to situate ourselves in the context of this, this monster of a project that where all these different work streams that you've got going on. Amazing. Jack, did you get to to cover what you were hoping to. No, no, but. There's always more. yeah, I think the the highlight is just that, the, the framework for project development is, is mostly focused on moving one asset through a pipeline. and it looks a little bit different if you're at asset costs like $30,000, then ten, $10 million. specifically like, the financiers tend to have, minimum thresholds where they're interested in giving you time. And so, like, you know, five seconds on, well, give me 15 seconds on the process. So, like, in order to set up, like, you know, a bunch of, residential batteries, for example, you're going to prove that you can access the homeowners and make those sales, you're going to set up contracts, you're going to work with financiers to basically set up a fund like entity that has sort of, prearranged thresholds for financing. So you might have, you know, $10 million that's going to get deployed into a bunch of, residential, assets. And then, basically, you will start placing those, bringing those assets through. Each subset will go through these known set of, milestones in order to get, a certain amount of allocation of funding. And then it goes in and then you get to play with what are the good assets, what are the bad assets? How do we well, what are the less good assets and how do we mix those up so that, the overall requirements of the financing we secured previously, are met and it's just, for each asset, the process tends to be much simpler. But the overall financial operations and development operations around that are often much more complex. because the level of effort does not scale with the dollar or megawatt value, it turns out. To wrap this up, I think that we've, today we've learned that, this is a big multi-variable problem, to solve. And while there are some overarching commonalities, you're going to find, a huge amount of differences depending on where developing these projects, what kind of size of projects are developing, what kind of financing your, you're using for this or what kind of customers you have? and so, you know, part of the reason that we pulled this episode together, with Charles and, and Jack is because both of you guys actually work on, on this complex problem in, in a couple different ways. And so just as we close on this episode, I think one of the, one of the best things we can do for, for people is help them understand who is out there in the industry that knows this stuff. And is actually there to help. In case somebody who's listen to this episode is honestly seriously thinking about going and developing projects like this, Charles and Jack, why don't you guys each give kind of a quick breakdown around, just for, I guess, a recap of what you do and how you help developers. Oh, good Lord, that's a big question. so, look, there's a universe of developers out there, and they come in sizes great and small and left and right that some just do pure development and do a little development. Epic like this is a skill set that for all the developers we have out there, we need more. We need better, always more. I think the development is the bottleneck. People who can get projects across the line are worth their weight in gold in this industry, and that is very what keeps the ball moving forward. So now my plea is anybody who's listening to this who's considering a career in development, absolutely do it. And come talk to me. I want to give people resources. I want to empower them. I want to encourage them. so me first. But, if there are, you know, if there's any subset, if you're interested in project finance, I'm happy to put you in the right direction. There is an absolute universe galaxy of different investors who are willing to take different slices of the pie, as it were. and they like their different flavors. So again, if you want to dive in, if there are certain areas that you think you have a good skill set in and you're kind of like, ooh, that development sounds really cool, or you know what? I just I'm just going to sit back until, you know, generate traditionally. And typically we'll look at Npx do the construction where the big capital that comes in and then and then hold for the lifetime or, or one of the first people to really see these is evergreen projects where we could hold for the life, and we're structured as a balance sheet entity. So we don't have a, a fund that we have to sell out. And, and like send money back to the investors. At some point. We can hold on to these to a long term. so that was a bit of a novel concept when we started. So, you know, that's a different flavor on the same thing. So I know that's a roundabout way of saying it really depends. So align your interests. Come talk to me. I will point you in a subset of the people who I was talking to. And maybe we can put something in the show notes. Oh quick shout out to KVK to kind of take VC folks. They are doing a really good job in trying to corral all the different, you know, what they call the climate capital stack. So the venture capitalists, the developers or the development finance entities are really thinking about it from a finance perspective. But if you want to know who an investor is, who takes on different types of risk, then, they're doing a lot of good work. And maybe we can put that the show notes. Amazing. Yeah, we'll do that and check. Yeah. I mean, I've been in I work at Pearl Street. and if we were talking about always needing more and better developers, we help developers focus on adding value to their projects. Right. So, Pearl Street is a financial operations platform. we help manage all of the chaos, financial models across, you know, tens, hundreds of projects as they move through the development pipeline, help keep an eye on cash flows and help make a developer's job a lot easier with regards to finance and financial operations. So they can, you know, as we said earlier, focus on the things that really matter. You know, coordinating those contracts, helping, make sure that people feel heard and that, you know, that their projects are moving forward. Amazing. Well, I think, I think with that, we've kind of come to the, comes the end of our developing a, virtual power plant series of episodes. Thanks again to Jack and Charles. If you have any questions or comments, please make sure to check us out at www.indermediate.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com

Summary

Co-hosts Pam, Ben, Charles and James are joined by listener Pegah and Isaac Maze-Rothstein in part two of the InDERmediate Virtual Power Plant (VPP) hackathon. In this episode the team dives deeper on key VPP inputs like financing / business case then wrap up by grading the viability of our Coffee Inc. VPP and outlines key next steps and open questions.

Episode chapters:

* (1:07): Selecting a location

* (8:59): Financing options

* (16:44): Key business case inputs

* (20:45): VPP revenue streams

* (35:03): Key market selection criteria

* (42:15): Changes to increase success

* (43:33): Coffee VPP Inc. feasibility

* (50:45): Battery API’s

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

* Charles Jurczynski

Relevant links we found helpful

* VPP Data substack including spreadsheet of all US VPP’s

* Department of Energy Virtual Power Plants Liftoff Report

* DER/VPP Reading List

* VPP insiders group and supporting #vpps slack channel within DERTF

* Challenges and Opportunities for VPPs (what I know so far...) by Clint Amadeus Chan

* https://www.purepower.com/blog/why-energy-storage-is-more-difficult-to-scale-than-solar-pv

* https://developers.google.com/maps/documentation/solar/overview

* From Pam

* ResStock: https://www.nrel.gov/buildings/resstock.html

* ComStock: https://www.nrel.gov/buildings/comstock.html

* FERC 2009 (not 2008!) report: https://www.ferc.gov/electric/industry-activities/demand-response/national-assessment-action-plan-demand-response-2009-national-assessment

* https://gridintegration.lbl.gov/der-cam

* https://zomasleep.com/blog/most-awake-city

* California Self-Generation Incentive Program (SGIP)

* California Demand Side Grid Support Program (DSGS)

* Federal tax credits for batteries

* Get energy prices:

* Directly at the wholesale market’s website (CAISO, ERCOT)

* Through aggregators in different markets (Leap, Energytoolbase, Stem, Sunnova, Sunrun etc)

* New England ConnectedSolutions Program

* AutoDR Rebates in California

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

Welcome back to intermediate and to part two of our creating a VPP series if you missed part one

I'd highly recommend you go back and listen to that first because we pick up right where we left off without any recap

With that out of the way, enjoy the show

What are those things that we have now available that are renewable?

That can be worked in quite a different way into the economy of the United States

Which are concerned primarily with the design of nuclear power plants and this type of thing

We do not know what the magnitudes or the side effects will be.

Hi, I'm Pamela Wildstein.

I'm Wyatt McAdonski.

I'm Ben Hilborn.

I'm James Gordey.

You're listening to Intermediate.

Intermediate.

Intermediate.

To Intermediate.

Intermediate.

The place for people trying to get into or already working on distributed energy resources

and clean energy.

This is the podcast that makes it easy to learn how the grid actually works beyond the office.

Okay, so sufficient lack of density.

There is a time of use and or flexibility program that is conducive to us doing this.

Coolness factor.

So like, let me just, I think the density one is fair.

Like New York City, San Francisco, probably too dense.

But like, let me just test some things.

Like I would probably say that in many cases, Seattle is probably a little too dense too.

like it's a pretty pretty big densely populated place but like what about

the place i used to live portland oregon like do we think portland might have

like enough lack of density for that to make sense or is that also too big and

we want to go some smaller place i'm i'm happy with that i think somewhere

along the the western seaboard is um yeah we need like a market that's

gonna have some like time of use or like yeah you know flexibility goodness

Okay, so Portland has 368 coffee shops for a population of 656,000.

This is Portland proper.

So that's a good, decent density.

That's timely.

Hey, Ben.

I just want to call out Isaac from Leap, who is kind enough to pop in and be our phone-a-friend

quasi-expert in here and help us out a little bit.

Hi, Isaac.

Hey, Isaac.

Hey.

How's it going?

Thanks for having me.

Isaac.

So just to catch you up, Ben, if I could.

So what we have kind of gotten to is that we want to create a virtual power plant for

coffee houses with the rationale being that coffee houses mostly operate during the day.

And so we could either like shift them to a time of use rate so they'd save some money

like because they're operating mostly not during peak hours and or solar plus

storage on the coffee houses and they could kind of like use that excess kind

of like energy during the times when they could get compensated for it. These

can't be in like Manhattan because they don't really have rooftops probably for

the coffee houses and so we're trying to figure out like sufficient balance

between density and places where there's a good time of use tariff to tap into or a good

flexibility program to tap into.

So that's kind of where we're at, and you're pretty knowledgeable about this stuff, so

Ben is raising his hand, Ben Hilborn, but also I thought maybe we could shortcut the answer

a little bit and see if you have some ideas.

Yeah, we should let Isaac give some ideas.

Sorry to throw you in the fire, feel free to ask any qualifying questions.

So yeah, the question is, where would I go if I were trying to do a VPP of coffee shops?

Does it need to be, is there, with solar and storage, and you're thinking about generating

revenue for, or not generating revenue, your primary focus for the customer is bill savings

through changing time of use tariffs or generating revenue with this kind of like extra solar juice that we're getting.

If anyone else, feel free to chime in. I feel like this makes sense or made sense five minutes ago when we were thinking about it.

Yeah, the only thing I had I had my hand up for was, you know, maybe we can simplify this a little bit by just removing solar from the equation and just do batteries.

right in that there's a kind of overlapping need of coffee shops need a

you know a decent a decent electrical service much more so than say a you know

a clothing retailer that might be in the same space the coffee shop needs to run

commercial fridges they may have commercial ovens because they're doing

baking in-house they have all of the you know high draw boilers in there you know

14 espresso machines, all this kind of stuff. So they need a decent amount of service

and they're probably going to pay the utility a reasonable amount to have that service

at the building. And so there's an internal need to have a lot of power available at certain

kind of internally determined times. And at the same time, this business doesn't operate when the

grid needs, when the grid demand is highest.

So there's potentially an opportunity here

to have simply battery buffered service to the cafe

where we don't have to pay for an install of,

call it whatever, 400 amp service for your cafe.

Instead, when we build up, when the cafe gets built out

or if somebody's upgrading or whatever it may be,

instead our virtual power plant is going to provide a battery that helps this

cafe operate all of its internal internal load peaks are absorbed by the

battery and then in the evenings when the when the grid is going to pay for it

most and the cafe is closed this battery then just discharges back into the back

into the grid to make some extra money based on the business that we set up for

virtual power plant. Okay, helpful context. So you're going to need some other type of incentive

for a battery that isn't paired with solar. In general, batteries sold for small commercial

would probably be justified on a resilience basis. They aren't going to have a short enough

payback period for a business that isn't really deep in energy to want to do any type of financing

for a seven, 10-year payback for a battery,

which makes me think that you're probably

gonna go to California

with a self-generation incentive program.

Pat loves SGIP.

Isaac, if I could, I think we're open

to what makes sense for coffee houses.

We're just trying to figure it out

and appreciate your guidance,

given the different options and markets

and constructions of hardware we might use.

So, you're, yeah, I mean, you probably, I would probably start in California. There's also,

with the challenges around building gas plants, there's increasing prices for both energy, well,

capacity prices available, so you're likely going to be able to generate some meaningful revenue.

There's also a recent program that came out last year, demand-side grid support, DSGS,

that batteries are able to participate in where the battery is used as the source of truth

for valid for measurement and verification. So that is probably where I would go for these

coffee houses. I would probably pair it with solar because the primary solar will still provide the

of savings and those solar and storage assets will be under net energy meeting 3.0 so that

they'll be offsetting primarily really high peak usage. And I think to your point, coffeehouses do

often have a pretty big drop-off and so they would have some flexibility to use that battery to

to participate in demand response.

So that would be, for this example,

probably where I would go.

What kind of batteries would you guys wanna use?

Have you thought about?

That's a great question.

We haven't got there yet.

Let's dive into it.

What's, hit us with some options, Isaac.

Well, so there's,

so the battery landscape's really interesting

in terms of how do you access these batteries?

Do you work with a financier

who might have access to the terms of how those batteries

are being financed?

Do you work with an individual OEM

to integrate with their APIs and pay them an API fee?

Do you try to work with both of them?

Is there some general installer that you might work with

for a small commercial batteries?

And so those would be some of the people that you,

or folks in the ecosystem that you could engage with for how to access that battery,

for thinking about programs in California.

Let's call up Charles again, bring him back to the front here, because this is his ballpark.

So, I'm at Generate Capital. We love to finance batteries. That is a shameless plug for my day

job. Long story short, I mean, there are numerous ways we can kind of create financial structures

that allow for this. And just putting my infrastructure hat on, if you can get contracted relatively

certain revenues into the future, so if somebody is willing to commit to having that battery

and having a charge, we can finance against that. And what I've seen done in the past

is to offer performance guarantees.

So we can still guarantee that you will not be out of pocket

having that battery.

It'll still save you money, right?

So as long as we can use the batteries in the right way,

make you a saving or even revenue,

if they can export back to the grid through some program

and then obviously allied through the SG program

and other, maybe GSGS,

there are ways to make the numbers work.

So I think from a commercial side,

that is one perspective, we can dive into that more.

The next question is technical as well.

Just to make sure I understand it,

our options are we could buy,

like the customer could buy the devices out of pocket.

We could help get some financing for it.

Or like what are the general models

that typically get used?

Is that just for buying the battery

or is that for how they participate in a VPP?

Yeah, in the context of like people doing virtual power plans, there's having these

assets in general, like how are they typically like purchased or financed or however you

want to say that, just so people can understand the options.

Yep.

So in many instances, if you think about the folks generator doing, building this complex

financial model that is taking in different revenue streams, there are some instances

where a individual virtual power plant is included

as a specific revenue stream,

there's a clear line of sight

on a particular portion of that revenue.

There are other instances where the battery

might have already gone through, it's installed,

and then afterwards there might be an offering

for a virtual power plant that comes along

where they can make incremental revenue

by participating in that battery.

So it really depends on where in the point of sale

a customer will consider or a financier will consider

integrating into a given virtual power plant.

If we're doing a new system to install

on these various coffee shops,

I would expect that it would probably be included

in the initial financing package would be like,

is the ideal solution for an end customer.

Oftentimes that is complicated enough

because as Charles was referring to,

So you ideally want to be able to see what the prices would be for 5, 10, 25 years out. Many of these programs will, especially if you're participating in a wholesale market to start, you're relying on prices for the capacity market as well as energy prices,

those are much more merchant, much less reliable.

cycle. And then utility programs are often going to be updated on a recurring cycle anywhere

from three to five years, depending on the public utility commission cycle that they're

on. Charles, curious for your perspective on this on the financing side, but both of

those make virtual power plant programs with long-term stable revenues a little more complicated

for financiers to consider.

Well, yeah, for sure. And I think what made it work for us is a lot of the upfront and

center programs. So we are very invested in SGIP. Not to get too finance wonky on you all, but

a big metric that investors use is IRR or internal rate of return. Now, that shows that I get a

a return on my money, but there's like a discount component.

So money that comes in sooner is worth more, right?

I'd rather get $5 tomorrow than $5 in a year.

That $5 in a year is worth less to me

than if he gave it to me tomorrow.

So an incentive program that gives me the money up front

can be really positive to my IRR.

So for that reason, something like SGIP

that comes in early, there's a five-year performance-based component, or at least was when I was looking

at it, is really valuable.

So that's one element.

Programs that run over five to seven years can be viable and can be a good component

of the overall, what we call the revenue stack, so the different forms of revenue that we

can earn.

And we will look at volatility and certainty of those revenues, and then basically take

a best guess at the likelihood of capturing those revenues, and then we'll do what we

call discounting back.

So if those revenues are going to earn me $10, I'll say, well, you know, that's going

to be, I'll pay you $8 or $9, or I can build it for $8, right?

I'll give you $8 up front to build your battery.

So the amount that I can afford for the battery today

is gonna be some combination of future revenues,

but discounted back to a present value.

Yeah, that's helpful.

And so if I could repeat back what I think we've heard,

and then I wanna like maybe dive deeper

into some of these individual ones.

So there's some component of how does the hardware

get like purchased and be available?

And so, you know, maybe the coffee houses already have solar plus storage and that's great. We can use that and help them with that.

But if not, there's some like, you know, some calculus some process by which we kind of decide like how that's all going to get paid for and like if it makes sense on paper, the economics and so one portion is like the actual hardware costs.

Another portion is the virtual power plant revenue

from the different energy markets and compensation methods

and maybe some things around that

that can help with the financing include incentives

and things like that.

Absolutely.

So I think we're getting into a really interesting part

of the process where we've decided who our customer is,

what we want the solution to look like,

And now we're trying to figure out, okay, how do we make this work as a business?

And we've talked about, so we're going to go to, so CoffeeVPP Inc. is going to go to

Charles Capital LLC to finance our batteries.

And Charles Capital is going to want to see some good numbers on IRR and, you know, make

sure that he's actually going to get his money back out plus some.

And we need to look at, you know, how we're going to stack some value streams here to make sure that we don't have kind of this single point of financial failure.

And so that we can start to get a return on investment for everybody involved sooner rather than later.

And so we're going to have some tax equity, some IRA incentives,

some other pieces of the puzzle that we're going to layer on here

to make this make financial sense.

Charles, is there a quick question from James here

before I ask the question to Charles?

Yeah, and so I think in my mind what we're trying to do is like understand how we can

like make some kind of economic equation, you know, TBD if that actually makes sense

right in pencils, but I think what's helpful to people is to figure out like with enough

detail into it like what are the different like inputs of that formula and like how do

you like understand what those are to like even understand like what the economics are

And so to the extent you can speak to like enough detail

without like going way down the rabbit hole,

that would be super helpful, I think.

Yeah, what would you be,

Charles, what would you be looking for

when someone comes to you with a proposal like this?

So I think the first thing, just from a very high level,

no specifics, but universally applicable

is what are my revenues and how high can they go?

What are the different options?

And then what are the costs that I need to incur

to buy software as a service,

buy new battery technologies or EV charges or whatever

to power the microgrid?

And how can I get that cost as low as possible?

Because these are close run things.

We're trying to make energy as cheap

and accessible as possible to everybody.

And the incumbents are,

say what you like about your utilities,

but that's your benchmark, right?

you gotta beat that.

So your revenues are naturally gonna be capped

because then people are gonna say,

eh, well, you know, you're more expensive,

I'm gonna go with what I already have.

So you have to provide a compelling value proposition

and get those costs as low as possible,

and that's really hard.

So I'm gonna go and say, okay, what do we need to do?

And then what is the infrastructure that I need

in order to shift from what you do today

to what you're gonna do in the future

that will unlock all these new,

different grid services programs and load control

and SGF, of course. So as an investor, I take all that information, I plug it into a financial

model in order to try and determine what the IRR is on that. Now, you know, that is the

sort of the commercial prospect. What are your revenues? What are your costs? And then

how much money can I make from it? Obviously, your cost, a big component of the cost is

going to be the technical side. And I think I will hand it back because I don't want to

monopolize people's time.

But when I think about commercial

side, there's going to be a

technical input there.

So what do we use

to build this BPP?

What what are the the underlying

components?

Yeah, and would it make sense to

unpack those one by one, like

what are the costs, like literally

specifically, and then like what are

the revenues? I think the revenues

are the different markets

that we can participate in and what

we can do.

So maybe, Isaac, I don't know which

one makes more sense to go to. But like, if we could speak to

like, what the potential revenue streams are, in like, reasonable

amount of detail, but not too much, I think that would be

helpful for people to really understand, like the stuff

that's hard to figure out, without talking to people, you

know?

So yeah, in terms of revenue streams, when you're at your

action, while you're talking about VPPs, really, you're

asking about what are the revenue streams for a battery, in this

instance with VPPs being one of those inputs. Oftentimes the biggest savings will be bill

savings related to being able to basically get renewable energy from solar on the roof

and the arbitrage between that versus the price of electricity that they would have gotten from

the utility. And that is going to be the majority of those revenues. SCHIP is going to be another

great example that's gonna offset those costs. Sorry, what was it? The self-generation incentive

program. It's gonna, that's gonna be, I guess, I don't know, Charles, what you think of that as a

revenue or we think of that as just a... So it's a revenue, yeah, and that's an interesting point

to make is that revenue can come in different forms. Revenue could be like an incentive program,

which utilities want to do to kind of subsidize the cost, the upfront cost of putting something

they won't necessarily pay for the whole thing, except for maybe S-chip resiliency. But typically,

utilities don't want to pay for all the hardware. But they can significantly reduce the cost.

Now, if I can get reimbursed for all the hardware that I'm buying this much earlier,

the hardware becomes cheaper, and it means that I don't have to find that revenue elsewhere.

So, I can, the bill savings could be smaller, right? It directly leads into

lower revenue needs from other value propositions

and makes the business case easier.

So incentives can help drive new revenue opportunities,

say where the bill savings are not quite as high,

where they couldn't justify paying

for all the infrastructure

and the BPP orchestration software on their own.

So yeah, I think about them as revenue,

but two different types of revenue,

like one-off or incentive revenue,

upfront incentive revenue, and then recurring revenue.

Yep.

Helpful.

Helpful context framing.

From there, you then get into revenues

is what we think of as participating in a VPP.

And that could be a utility program.

That could be participating in a wholesale market.

That could be participating in some adjacent program

like DSGS, wholesale market adjacent, excuse me.

And then those revenues are often come in the form

of like a capacity type payment,

a dollar per kilowatt month,

and often an energy type payment.

And that's often in a dollar per kilowatt hour,

a dollar per megawatt hour depending on the specifics

of the program and mechanisms involved.

And so those are some of the common categories

that we see partners at Leap considering

for battery participation for a VPP.

So Isaac, where would you go to get some of those numbers

when you're trying to figure out the model for your VPP?

Where would I go?

So S-chip, I would go look at where we are

in the different tiers in terms of pricing

or the different saving tiers

that are available for S-chip in terms of federal tax credits.

Similarly, looking at guidance for the specifics

around batteries and where we are today

and the percent discount available.

For pricing on the VPP component of these different programs,

there are a bunch of different aggregators

that you would probably want to shop around, Leap being one of them, to see the pricing

that they could offer you based on different programs and the different capabilities you

have available for these batteries.

The other thing to consider is that sometimes the battery control software layer, someone

like a STEM or energy tool base might already be able to participate these batteries into

a bunch of different programs, and that's part of the stack that they're providing.

Those are two of the partners that Leap is working with to enable wholesale market participation.

So you might end up just going through one of these battery software providers.

Yeah, Pam?

Yeah, I was just going to ask in the wholesale market, how are you, how are, is the resource

like as like the resource as an aggregation, how is that being valued in the market?

So I guess if it's participating in the energy market, it would just be how much it's producing

I guess if you were to go to ancillary services,

it would be through, I guess, a demand response program,

but then not applicable to California,

but if you were in PJM, ISO, New England, MISO, or NISO,

what would you do in the capacity market?

Which I know they haven't complied

with order 2222 yet necessarily, but.

Yeah, okay, there's a few different layers there.

So it's going to vary by ISO and RTO,

but at a high level, there's oftentimes an annual bid or bilateral contracts of some

sort for capacity.

And so you're going to get a contract either through a open or closed process for a capacity

price in a dollar per kilowatt or megawatt month.

And then there are different ways of calculating how you've met that.

Some of it is just, what is the nomination that you put into the market?

What is the forecast of what you said you could do?

Some people will be judging you based on your actual performance for

very specific events.

That is, I think, the highest level of how, the core question that I heard is,

how are you evaluated for capacity payments?

That's the core, or the fundamental construct, and

it varies, some of the nuances vary by market.

Does that speak, was there a second question there, Pam?

No, I think that was it.

Okay.

I have a couple of follow-up questions too. We don't have to answer them all here, but

I at least want to get all the links so that we could go deeper and give people the ability

to go deeper if they want to. So self-generation incentive program, SGIP, I Googled it and

I found something on the California Public Utility Commission website. Is that like the

right place to start to learn about that?

Yeah, that would be a good initial source.

Okay.

These federal tax credits, we didn't get specific,

but like, where are people Googling

or going specifically to learn about that kind of stuff?

For batteries, and Charles,

you'll probably be more expert than me,

I believe it's ITC and PCC would be what you'd be Googling.

And specifically for, I believe it's either now for batteries

with some of the recent changes.

And so that would be some related to tax credits.

If you wanted to look for a specific market just to understand energy prices generally,

you could get a quick summary going to a given, let's say the Kaisa website or the ERCOT website

just to see prices for a given day or month.

That's going to give you a really summary view, and some of these markets have a fair

bit of nuance.

And then reaching out to some of the different aggregators who provide VPP offerings, whether

that's a LEAP, in the case of batteries, energy tool-based STEM, as some examples, on the

residential side, someone like a, you might see someone like a Synova, another partner

of ours or Sunrun, those types of partners.

having specific offerings in different markets,

different incentives for their customers

to participate in a VPP.

And just to make sure I understand that piece,

so are you saying that you could either go directly

to like one of the markets, be it the utility

or the, you know, Kaiso, the wholesale market operator

and like register to participate directly

Or you could go to someone who's already participating and have them like assist you and they would give you a price to do so

like per kilowatt

per month or per

kilowatt-hour

Yeah, depending on the specifics of the program and whether there was an energy component or it was just a capacity

Oh and or vice versa and similar if you want to go into ancillaries as well

and

With a battery you might want to consider ancillaries as well

just because you can respond relatively quickly.

I'm curious, like, do we want to do a quick,

like Isaac, you're at Leap, Leap does this.

What about a quick shameless plug for what Leap does

and how that works, right?

Because if I'm a customer and I have energy needs,

I don't necessarily know utilities,

I don't know grid interconnections,

I don't know all like the different ways

that I could potentially make revenue.

I come to you and say, what can Leap do to help me recognize, I run a coffee shop, right?

I'll get a battery, but it may or may not make sense.

I talked to Charles over here, he says he can pay for it, like, but there's still sort

of money on the table here.

Like, how am I going to make money from it?

What does that look like?

Yeah.

So just context on Leap, we are a platform that connects assets with markets and programs

is like the fundamental interaction we're playing

or connection point.

So oftentimes we will not communicate with an end customer.

We might work like if your company is a coffee shop

as well as has bought some battery,

the battery operator might be the one

who ultimately is going through LEAP.

And so those are some of the examples

that I've been citing before

around like an energy tool base, for example.

So you're like, we want someone to provide software

to our battery to make sure we're getting

the most value out of it.

Let's work with them.

But to be clear, like if we're the coffee VPP Inc provider,

we would work with Leap kind of like as in between Leap

and the coffee companies, right?

That's more your typical model.

Yes, yes. Did that speak to both questions? Or was there a fall in there?

Yeah, no, I think that's, that's good. So, like, I go to a coffee shop and I don't know

anything about energy. And so I go to like a Stem or a Synova and say, operate this battery

for me. And, you know, save me on, save me from my ludicrously high refrigeration and

coffee machine, electricity coffee, of course.

So yeah, I go to somebody who then,

and I guess the way to think about this is like,

they can run it, but they can't necessarily

put it into utility programs, right?

There's a universe of really wonky energy revenues

that exist in kind of a nebulous form

for me as a coffee shop owner,

or even like my buddy over here

who knows how to install batteries,

and they put one in the back and I'm good to go.

And they said, they'll run it for me.

They're then going to leap and you're gonna make sense

of all those different nebulous revenue streams

that exist at a much more,

both on a utility scale and the transmission scale.

I don't know if now is a great time,

but for 2222, if you wanna talk about those interplay,

I know that may be going down a rabbit hole

and I know James also has something to say, so.

I can start with, for Corona 2022, our general perspective, and I'm not on a regulatory team,

so just as the caveat there, is that it is going slowly.

There is movement incrementally towards DERs being able to participate more in wholesale

markets, and more and more stakeholders are seeing the need for this.

The DOE liftoff report is a really good example, and definitely including a link to that report

summarizing the fact that VPPs, there's a lot of flexible load that's about to

come on the grid with energy storage, EVs, and other smart devices. VPPs are

cheaper to operate than a traditional power plant as well as utility scale

storage, often because people are buying these assets regardless. So the coffee

shops sometimes might just be buying it because they've been through five power

prodigies with a given utility, for example.

I went on a little rant, but that was the initial context

on 2222, and then more broadly on why VPPs

are being considered, and there is movement

in that direction, and it's slower than we want.

Yeah, James.

Yeah, and Isaac, you helped us take a shortcut,

if I could call it that, in that we sort of figured out

like loosely the type of EPP machine we wanted to build.

And then you just said like, yeah, California,

like that's the one to go.

Could you help us understand like, or correct me,

like my assumption is that you're like given your knowledge

of this market and how this works working at Leap,

you basically like know in your head,

like, okay, like for these types of devices

and this type of like small CNI type customer,

I know that like California has really good compensation

Mechanisms given like time of use rates and also like all these other like demand response programs energy services things like that

And so you said that's the reason you chose, California. Am I correct? It has good compensation mechanisms. And if we wanted to look

For other options

We would be like

Looking market by market given our type of devices and trying to figure out like what makes sense based off the compensation

mechanisms, is that correct or

Yeah, so for me, there were two things at play.

Being able to, assuming that the batteries

were being installed up front,

being able to offset costs immediately with S-chip

was part of what pushed me.

If the batteries had already been installed,

I might consider suggesting doing something in New England

through Connected Solutions.

That is a relatively lucrative program

across many of the utilities in New England

for batteries in particular

to provide services during the summer,

often participating in a daily basis.

And because in many parts of New England,

there isn't a lot of advanced metering infrastructure

installed, the battery is the source of truth

for measurement and verification there,

making that in some ways simpler

if you have access to that kind of data.

So that was some of the background of why,

given the battery wasn't installed yet,

we're trying to figure out the cheapest place

where you might be able to install it.

The other thing to consider is that

because you had a battery,

while there might be more lucrative programs

like in Con Ed in New York City,

the fire codes are such that you wouldn't

be able to install a battery.

If you're doing something more with like thermal storage

or trying to manage,

like there are partners of ours that control thermal store,

like the coolers, for example,

or the refrigeration for this type of coffee shop.

That would be an example where I might be looking at another market or considering something

like an auto DR rebate in California to provide additional savings as you're installing these

different types of assets.

Now for-

It's a lot, but that was like, that's the background of why I said simply California.

For anybody listening who, maybe they have a novel idea for a type of VPP or they simply

want to get into the market and want to figure out what these kind of opportunities of interest

are.

Is there some location or some aggregator of information that shows, you know, here

are the kinds of, you know, pluses and minuses to VPPs in one jurisdiction over another?

Is there some sort of resource like that that you know of?

I would, so again, going back to the Department of Energy's VPP liftoff report, they do have

a few like a summary of where VPPs are located across the country. And you'll see that there's,

I think, five states that have more than 10 VPPs. Massachusetts, New York, California,

Texas, and I believe North Carolina is the fifth. I would need to double check that last one.

But that just gives you a sense of where VPPs have been concentrated to date. And often that's

reflecting some of the underlying grid changes we're

seeing around there being increasing EVs, more

renewables, and more difficulty installing new gas assets. And

so VPP stepping in to provide these services that Peeker

plans used to provide or provided to some degree. And so

DOE liftoff report is the long way short answer to that

longer.

Yeah, that's really cool. And Isaac, like, thanks for all

this, like, it might be a lot for people to parse,

like, listening through it once.

Like, our typical audience is, like, reasonably familiar,

but not quite an expert.

But, like, I think we're giving people the tools

and the threads to pull on themself

to, like, try and figure these things out on their own

and their details, and that's really

what we're trying to do here.

So, Ben, Pam, Pega, Charles,

I'm looking at, like, our loose outline

and also the fact that we have 19 minutes left.

I see at least one more question or bullet point

that we haven't, I don't think, touched on yet.

Do we wanna do that?

Which is kind of a deeper dive on specific requirements

and things that we're kind of like pointing towards now,

or is there another way we'd like to spend the time?

What are you thinking when you say specific requirements?

So, to summarize where I think we're at,

We are a company that is going to help coffee houses, you know, through whatever term you

want to say, flexibility, virtual power plants, primarily through, you know, helping them

with solar and storage so that they can save money with time of use.

They can, you know, tap into some incentives and credits to kind of like reduce the cost

of installing these devices if they don't already have them.

And then through some combination of utility demand

response programs, wholesale energy markets,

capacity markets, ancillary services markets,

within California is where we're going to start.

And so I think in order to flip from where we are now

to putting how we would actually build this,

I think the next step is to say, OK,

okay, we know what the aspects are

that we need to figure out, but it's more like

looking into the actual incentives

and the actual markets and the compensation mechanisms

and trying to build out maybe a spreadsheet

or maybe just a Google Doc with all the information

to try and make an informed decision

about how to piece together all those different

building blocks we need.

Yeah. I think it's going to be getting into the modeling. How do we make a business around

this work when there are so many ins and outs of capital over a long period of time?

So we maybe don't have enough time because that's a lot, but we can maybe create a next

steps that we would do given what we've learned so far the rest of the time, or we could just

stop recording and give people time back.

Happy to do whatever.

So I would just point out some nuances

of how you're thinking about the business

and ways that I would change it

to increase the likelihood of success.

A few things that stand out to me

is batteries are gonna be a 20 to 25 year asset,

maybe 15 to 25 years, let's say, depending on the battery.

Most commercial leases are gonna be 10 years.

So there's gonna be some added complexity

if you're installing the battery already, what I would think would be much easier would be to

market to coffee houses that already have installed solar in storage and enable them to

get incremental revenue or incremental savings by participating in a demand response program.

That if you were to change it to more of a software model where you're not you're not

needing to go out and get financing but you're simply going to different batteries like small

commercial battery customers and saying, hey, we can provide you incremental revenue to

participate, that would allow you to probably start generating revenue sooner and have a

wider base.

So just some things that I would consider from the way we've seen commercial, residential

and industrial VPPs participating.

Yeah, well, I think we've kind of got to the point where if we wanted to take this any

further, we would need to start doing some real number crunching around what's our density of customer within the locale that we want to launch this.

What does our model look like in terms of where are we finding incentives?

What does our revenue stream look like?

What kind of revenue streams are we unlocking for our customers?

To Isaac and Charles, I'd say the two people that probably see the most of these projects

being developed, what would you score us on a very simple 1-10 of, hey, would this work?

is there, you know, could you see somebody picking up this idea and starting, you know,

the VPP for coffee shops? Feel free to be honest, that's okay.

And do you want to jump in before or after?

I have a completely separate question. I was just saying, like, after.

I have a question after we're done.

So, from my perspective, I think one of the big hurdles is always scale, and as we talk

about this, yeah, I can help a friend out with one coffee shop, but where it starts

to really make sense is how many can you do, and there are a bunch of different aggregation

points here, right?

Like, I could go to, like, a solar installer in whatever town, and they know all the people

who want to get batteries and solar installations on their roofs and want to be part of the VPP.

And I think, so somebody who can go out and get a bunch of different projects is a really good tip

of the spear for an investor like Generate. Kind of, I'm sure Isaac will say something similar,

but we partner with the same kind of people from different perspectives. Somebody who can get that

critical mass, because for me, it's a lot easier to write a bigger check than a smaller check.

and it's a lot easier to kind of procure at scale a number of batteries rather

than just one here and there you know if you can do this yourself you can go talk

to an installer you could even go talk to some some vendors out there you could

probably buy a battery on Amazon really but then you wouldn't necessarily know

how to wire it into your your electrical system so you know I'm looking for that

kind of scale. Now, as we've discussed, there are a number of places in California that

have some real density of coffee shops. So if somebody could go and convince everybody

in that region to say yes, I think there's something here. But for me, it's that question

of scale. How do you bring them together?

I think Charles picked up a really good point around scale. You focused so far very much

on how to interact with the customer, you haven't focused as much on how to continue

to engage with the battery, and how you're going to be controlling that battery, and

what are the costs associated with controlling that battery?

Or do you want to create a layer of software that is controlling the battery, or do you

want to be a financing primarily institution?

Are you more of an infrastructure type organization that is building owning these assets and then farming out the controls, or do you want to be controlling these assets, if you want to be doing more of the control, then you want to be a much broader.

If you want to just focus on infrastructure with VPPs being one of the revenue sources among many,

then I think that there is probably a small business around installing batteries and solar in coffee shops and similar small CNI.

Just before, Pega, you've got an additional question here.

Could you just expand very quickly on a quick pros and cons of picking one path or the other, Isaac, from those two choices?

Yeah, there are really great businesses that are focused on being installers, being asset owners.

It's just a very different kind of business than a software company that has recurring

SAS fees, or some other similar model to control batteries.

And maybe a customer communications layer.

And so the depending on the skill set of the specific team founding team would be the question

of which of those paths you would want to go down is where my head goes.

And yeah, I also want to just chime in, it's like, I'm absolutely a hammer sitting a nail

here when it comes to financing and development.

I can kind of put myself in the project installers' shoes and I can put myself in the financier's

shoes.

But one element, and I think it's probably relevant to our loyal listeners, is the, is

the SaaS component, is the VPP, like the software, is like this all works together because some

sort of intelligent brain sits behind and says, turn this on, turn this off at these particular

times. So there is that angle to like, how does this operate and how do you monetize that? Is it

a share of the, the revenues that transact is it a sort of, so you get based, based on your

performance and the revenues you're able to generate using that asset portfolio, or is it

like pay me a recurring fee and I will make you a lot of money. And there's a lot of question

and marks in there as well, which we can unpack

because there's a couple layers.

There's like an energy layer.

So can you actually control a Tesla battery

versus like one of the other ones,

sunburnt battery or a Panasonic battery.

Those will have their different technical challenges.

Whereas Leap will kind of sit on top

and be the brain on top of the various different arms

that controls the switches at that granular level.

So there are, there are different types of SAS in here as well.

Right.

And Charles, this is an important nuance where actually we won't, we'll

never control the battery directly.

We'll be the integration with the market so that battery can commute, can

like interact with a given market or program and consider multiple markets

and programs there often is another entity that is truly controlling the

battery and incorporating insights

around the tariff considerations or other constraints

that the customer has.

I know there were a few other questions.

We call that a battery management system

and an energy management system, a BMS and an EMS.

So just to throw out even more three-letter acronyms here.

Gaga?

Sorry.

Yeah, there is an influx of information here.

And as you were just adding and talking more,

I now have 10 different questions.

So my last question was, for Leap,

is it safe to assume that if we are a software company

and we want to connect with the batteries,

if you're not controlling the batteries,

does it mean that you are not paying for the API access?

And so how does it work?

How are you getting the information necessary to connect

them to the markets?

And if you do need to have an access to those batteries,

because there are different manufacturers,

is the cost of getting all these API access,

is it feasible?

Like it's gonna be very expensive

because it's like $10,000 just to have access

with a limitation on average $10,000

for only one model of a battery.

How does it work at scale?

Yeah.

Now you're getting into the fun part of the business model, or one of the fun elements.

So many original equipment manufacturers will have an API.

Some of them charge, some of them don't.

The rates that they charge vary significantly.

Many of them are paying these rates on a dollar per system month or dollar per system year.

And so what I would say is, oftentimes those individual fees are low enough to be able to enable a VPP.

So long as they're participating appropriately in the most lucrative programs in those markets.

But there is a lot of nuance that folks like Leap will parse to make sure that you're getting the most revenue so that you can pay off those API fees and still have a meaningful margin for your core business, if you were to go that software route.

And so you have folks like Energy Hub, Resideo,

others that are DERMs that do are connected

with many of these asset types,

paying those different fees

with those different OEMs across batteries,

but also other types of asset classes.

Okay.

I have one last question

because it's been eating me up inside

since we talked about the capacity markets.

Why is it being valued as a kilowatt,

yeah, kilowatt month, like what's the logic behind that?

Because I'm trying to think of how to think through this.

Because we care about capacity in the moments

for a loss of load, probability is more than zero.

And that would just tell me the month

where there's a probability that will be more than zero,

not the specific hours, right?

So like, yeah, I know that it might be really useful

in the month of July,

but that doesn't mean it, because it's a variable resource, that it would be useful at 8 p.m.

on a specific, you know, on an 8 p.m.

There's two different layers there. So, again, capacity, the way that we'll explain it

to partners is, it's the ability to show up, like you said, in the case of an emergency,

or just be available. Just the ability, in the same way that it would cost a lot of money to

to build a power plant to connect to the grid,

and just that having that power plant around being useful,

that is how we think about,

or the way that we'll frame the value of capacity

being available for a given month.

What is the layer down that you're getting at

in terms of the variability by day

is when you are bidding into a given hour

of the energy market,

what is the connection between the energy markets

and capacity markets?

And that's going to vary a little bit by market before it is like the initial answer.

One of the things that as a good steward in virtual power plants, you want to be putting

in a nomination or a forecast of what you expect that load to be able to be decreased

that is reflective of a given site's actual abilities to do that.

And so that is how you're incorporating the very, so you're assuming that let's say in

California, there's generally a duck curve at the end of each day where there's an

immense amount of load towards that afternoon evening.

That's often the most lucrative time where you should be bidding in or

that's a requirement is getting a capacity payment.

And you're putting in a nomination that is reflective or a forecast that is

reflective of what you expect that load to be able to drop

during a very specific time of day.

Does that get at your question?

Yeah, I think so

Okay

Well with that, I think that kind of brings us to the the end of our brainstorming session

We now have a wireframe for coffee VPP

Launching across California to a coffee store near you

investors give us a call and we'll

Put batteries and solar across all of your favorite all of your favorite coffee shops

Isaac, thank you so much for being our Fona friend.

And Pega, thank you so much for joining us

for the brainstorming.

This has been a lot of fun.

And I think we really kind of turned over a lot of rocks

that showed just where all the nuances in this space are.

And hopefully we've left you the listeners

and especially those of you who are interested

in potentially starting a VPP company of your own,

some of the places you need to go to look

to answer some of these questions,

to build out a business model that makes sense,

and hopefully be one more brick in the wall

that's going to build the resilient grid of the future.

Pam, Charles, James, again,

The Intermediate team is always game to try fun things like this.

If you, the listeners, have any suggestions or questions or comments on the episode,

feel free to write in at intermediate at gmail.com or reach us on Twitter at Intermediate.

And we will be back next time with some more fascinating insight into the wild and wonderful

world of DERs.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com

Summary

Co-hosts Pam, Ben, Charles and James are joined by listener Pegah in part one of the InDERmediate Virtual Power Plant (VPP) hackathon. In this episode the team embarks on their journey to roll up their sleeves and build a VPP within two hours live on the podcast. After the obligatory attempt to define the nebulous term “Virtual Power Plant”, the team begins to answer the key questions required to build a Virtual Power Plant.

These questions are:

* What type of customers to serve - Residential or Commercial and Industrial?

* What type of devices will the focus? ie. Solar and Batteries

* What location to operate in? ie. California

* What markets to operate in - Utility markets via time of use and demand response or wholesale markets

Episode chapters:

* (0:00): Introduction

* (3:30): VPP outline in 2 hours

* (4:38): What’s a VPP?

* (8:20): Key questions

* (9:39): Resi or C&I?

* (16:40): What devices?

* (36:56): Location criteria

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

* Charles Jurczynski

Relevant links we found helpful

* VPP Data substack including spreadsheet of all US VPP’s

* Department of Energy Virtual Power Plants Liftoff Report

* DER/VPP Reading List

* VPP insiders group and supporting #vpps slack channel within DERTF

* Challenges and Opportunities for VPPs (what I know so far...) by Clint Amadeus Chan

* https://www.purepower.com/blog/why-energy-storage-is-more-difficult-to-scale-than-solar-pv

* https://developers.google.com/maps/documentation/solar/overview

* From Pam

* ResStock: https://www.nrel.gov/buildings/resstock.html

* ComStock: https://www.nrel.gov/buildings/comstock.html

* FERC 2009 (not 2008!) report: https://www.ferc.gov/electric/industry-activities/demand-response/national-assessment-action-plan-demand-response-2009-national-assessment

* https://gridintegration.lbl.gov/der-cam

* https://zomasleep.com/blog/most-awake-city

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

I think Pam's audio is unbelievably loud.

Yes, Pam, you're too excited.

The game thing?

Yeah, yeah.

You need less game.

We fixed it, though.

Pam's just really excited.

She's just really excited.

I think that's just her indoor voice.

What are those things that we have now available that can be worked in quite a different way

into the economy of the United States?

which are concerned primarily with the design of nuclear power plants and this type of thing.

We do not know what the magnitude of the side effects will be.

Hi, I'm Pamela Wildstein.

I'm Wyatt Makaronsky.

I'm Ben Hilborn.

I'm James Gordey.

You're listening to Intermediate.

Intermediate.

Intermediate.

To Intermediate.

Intermediate.

The place for people trying to get into or already working on distributed energy resources

and clean energy.

This is the podcast that makes it easy to learn how the grid actually works beyond the

office.

Okay.

We are live.

As live as we're going to get.

Welcome to what will 100% be the messiest intermediate episode to date.

Let's go around the table very quickly and just say who's on the mic, say a quick hello,

and then we can dive into trying to build,

trying to figure out what it takes to build a VPP

in two hours or less.

Who are you?

I'm Ben, I work in energy finance

as well as on Durham's systems

and yeah, love hanging out with you guys

every time we do this.

James, who are you?

Hey, it's James Gordey, your co-host.

Excited for this.

Excellent.

Pam?

I'm Pam Wildstein.

I'm a PhD student at the University of Michigan.

And also excited for this, particularly to have toasters in this VPP in some way, we

have to get toasters in.

Yes.

I think toasters is like a thing here.

I'm Charles, Charles Orchinski.

I am currently working in energy finance at Generate Capital, and I'm also very interested

in project development.

So, I am keen to figure out if we can make a VPP make money.

Amazing.

And last but not least?

My name is Pega.

I have a few years of experience working in a lab at university that was about clean energy,

and that's where I was exposed to VPP and DERs.

But then my professional background is mostly ML

and product development.

I'm very excited to learn more about VPPs in this session

and contribute in building one.

Well, thanks, Pega, and welcome to the show.

Yeah, and I just want to say shout out to Pega.

So we put this out in the DER Task Force Slack channel

and just asked for help

because we're literally just doing this

and hit record and trying to do the best we can.

And Pega just reached out and said,

That sounds really cool.

How do I join?

And here they are.

Easy.

Amazing.

So what are we trying to do?

What does it mean to build a VPP in two hours?

What, how are we gonna put a little,

nice little box around this

and what do we want to have at the end of this?

Well, it won't be real because we have no money.

Oh, yeah.

Minor details.

And since you want the electros from the Power Grid game, I have a lot of those.

So to address Ben's question, I think we were going through in the lead up to the show trying

to figure out what to do.

Do we structure like a normal education episode?

And I think one thing we highlighted was just, there's a lot of material and a lot of buzz

for sure.

A lot of buzz around VPPs, but we said, I think we could cut through the buzz and try

and figure out what's real and help people learn

how to engage more with actually building in this space

if we just tried to build one,

at least understand how to build one ourselves.

And so I think what we're trying to do

is either we're going to be successful or not

in the next two hours, but we're going to try

and build a VPP or know how to build one.

And we're going to share the Google Doc,

which outlines what we did.

And we're going to share this recording

and hopefully this helps to get more people

building in this space.

Absolutely.

Absolutely.

Do you guys want to start with the definition of a VPP?

Oh, yeah.

What's a VPP?

Just keep using acronyms.

Yeah.

What's a VPP, Pam?

Oh, I didn't say I was going to do it.

I'm going to set a timer because I don't want this to take two hours.

We could absolutely spend two hours.

What's a VPP and what's a DERMS?

NDE aggregation.

Oh, my goodness.

Charles.

Charles or Pega, why don't one of you guys take it away?

Okay. A VPP stands for virtual power plant. All right, children, I'm going to tell you

that this is a bedtime story. A VPP is a virtual power plant. It is an aggregation of a number

of distributed energy resources in intermediate DERs, and it is when you get them working

all together from a technical and commercial perspective so that power can

be produced in one place and sold in another place either physically or

synthetically using market mechanisms that allow everybody to keep the lights

on and socialize their power use with their neighbors, people in their

community, or more broadly on the technical side it also has useful

applications for utilities as grid support and regionalize energy support for utilities

and grids.

So it also facilitates much broader electrical stability, which is critical as we get more

and more renewables on our power grids.

So VPPs can do it all.

Is that right, Pega?

Do you want to take it on?

Did I miss anything?

That was a great description of VVPP and my understanding of VPPs or virtual power plants

is working around DERs which are these flexible assets that either produce electricity energy

or they can store electricity so they are flexible and that you can because the prices of electricity

they're volatile, you can take advantage of those and buying cheap and selling high

at a higher price. And a VPP's job is to orchestrate these flexible assets and get a revenue and

then distribute it to the DER asset owners and everyone wins just an extra source of

income for something that it's made like its main job isn't to produce revenue in that way

but it's a nice extra cash that you can get. I think that's a really key component is

you know what's going to incentivize people to join a VPP is the cash you get out of it.

One of the things that I saw from this recent cold snap is you know too many

utilities asking people nicely,

hey, can you please curtail demand?

A VPP is a way to just encode that

and here is the business relationship we're going to have.

If you curtail demand, here's what you get.

And so that's a big part of what we're going to

figure out today is based on the hardware

that's gonna be the backbone of our VPP

and the amount of load we can shift and when.

How much how much can we offer to our consumers?

To incentivize participation. I wanted to like zoom out a bit

Get my game face on here

so what we're trying to do is

Identify what type of virtual power plant we want to build and when we ask people who know about this stuff

They said there's several kind of key questions

which will narrow down like the type of thing you could do and so one key question is residential or

or what's called commercial and industrial.

That's generally how electricity customers are bucketed

in the electricity world, for better or worse.

Geographic location is another kind of key question

to answer for us.

What types of devices, be it a toaster or something else,

might you want to manage and bundle

into our virtual power plant?

And then once you have all those questions answered,

Another kind of key question is, as I understand it, there's two broad types of programs and markets you can participate in.

There's a utility program and a wholesale market program.

And so what we're trying to do is think about what type of virtual power plant we want to build and kind of go through those questions and arrive at some answer so that we can actually roll up our sleeves and really see a couple options and start to put some meat on the bones.

So, let's jump into some kind of really, really high-level splits, like where do we want to

work?

Do we want to be in Resi, which is, you know, there's a few different players in this space.

Do we want to look at CNI?

What do you guys think?

Where is an opportunity that potentially hasn't been explored enough?

Resi.

Resi it is.

I know you're all shocked. I want Resi.

Because it involves toasters, right? I mean, how many C&I toasters are there?

Very few. They're only in the commercial buildings.

More importantly, I think in 2008, the federal, I think it was 2008,

the Federal Energy Regulatory Commission released a report on untapped demand response potential,

and the majority of it, or not the majority,

I don't remember if it was the majority or not,

but compared to commercial and industrial,

there was significantly more untapped demand response

potential in residential.

Perfect.

Yeah, I just wanna ask a question though on the solar,

or on the, sorry, are we jumping into devices now, or?

No, go ahead.

Yeah, so what I've been told is resi is easier,

and so I do think we're trying to get reasonably far

in the process.

And so in general, we're probably gonna make things

that are easier to our decision.

And we got some like input on that.

My question on toasters, is that even reasonable

to like make a toaster virtual power plant?

Like, I guess we can get into this,

but there's like, it's not a huge load, right?

And so I don't even know if it's like big enough to matter.

I have two.

But I, sorry, go ahead, go for it.

Yeah, I want to, I think for residentials,

you know, the number of residentials is much higher.

So that might, it's more complicated

to work with a large number of DRs

that are small in scale.

It might become a more complicated one.

But most VPPs nowadays, from what I know, are focused on C&I, so that might make sense

because the residentials are kind of left out.

My second comment is, what about small businesses?

Because from talking to them, it sounds like the extra cash that they can get, it really

makes a difference to their business.

And so are they even an option that we can think about?

Somewhere in between the two.

So I just want to jump in here.

There's technical and commercial issues.

And I wouldn't worry too much about the size.

It all contributes.

I actually once heard of a company

that was offering to install an app on cell phones.

And because if they could get this into hundreds of thousands

and cell phones that formed,

and they could turn off the charging simultaneously

and that on a large enough scale

with enough phones signed up

could meaningfully impact the grid.

You can think about everybody-

I believe Apple has that baked in at the OS level.

They do have on an operating to optimize their charging,

but that is more around battery life preservation

than it is about I can turn on and off a load

through an app in order to manage the grid.

So that was, I don't know if that company ever went anywhere, I just heard that and it was quite a while ago now, so they clearly didn't break through.

So toasters are not necessarily, I mean, they may not be the optimal unit of electricity, but they make for a fun one.

But at a large enough scale, aggregated more broadly, in the same way as one home doesn't really make a big impact on the grid at large.

But when you have thousands, and particularly like we're talking about concentration, right, so you can have thousands of homes across the country and that's not going to make an impact.

Whereas if you have 1000 homes in Sacramento, right, like in a subdivision that's going to really impact that, that local grid and you're working with SMUD or maybe PG&E if you're further out.

So, geographic density matters.

And I think in some ways you can then tip that over

to look at CNI, where one CNI provider

can be a much larger demand consumer,

especially if you're looking at bigger.

And I also wanna be clear.

It was bigger, you made a good point.

There are different sectors within CNI.

And this is really interesting.

I did work on a fairly substantial portfolio

deploying and financing.

behind the meter batteries to be used as micro grids.

So we orchestrated the whole portfolio

and every different customer had a different load profile

and some were pretty predictable.

Something like a cinema,

like you know when they're gonna turn on their projectors

and you know when showtimes are gonna be.

Maybe slightly more predictable

versus like a hair salon or whatever,

or like a grocery store may not be as predictable,

but it's much more flexible.

So for example, with grocery stores,

they have freezer aisles,

which are the big demand consumers, the big demand loads.

So those freezers can be really deep cooled

and then you can reduce the energy demand

by moving that load around.

So they're much more shiftable.

And I think what's, well, so from a commercial side

where that's really important,

is just to this point, one more from a commercial side where that gets really important is you,

you then have to sort of shape your, your hardware to fit that and to manage that.

And, you know, they are sort of bigger loads. Generally, commercial will be more micro grid

or tech heavy, like hardware heavy, because it's all about the physical, like the site,

You're trying to manage their energy, whereas residential tech is important,

but it's going to form a smaller component.

It's much more about the software pay.

It's about the orchestration.

So if we want to go down commercially, you're thinking much more about how do

we make all the hardware on site pay nicely together so that we can meet the

demand or the load curve of the onsite resource.

Residential is going to be much more about how can we use loads that already exist?

Right?

Like there are retrofits, but it's, they're smaller, they're harder.

it's less about what hard work can I get into there, like obviously there are people who are

doing home energy efficiency retrofits like electric water heaters, but it'll be much more

about how can we use people who have already made the decision. I think based on what we've

said so far there's a lot of opportunity in Resi and especially you know there's a ton of different

options for devices and now if we think about the kind of devices as well I think we should put a

on that. And as much as we love toasters, toasters themselves do not necessarily

have the ability to shift. When you want toast, you move the plunger down

and it draws power from the grid and then it's done. Unless we're

going to go about retrofitting thousands of homes with smart toasters and

battery backup. So this is one of the filters that maybe we think about.

okay, within a home, what's an opportunity for a device

that has a load that is theoretically shiftable

without ruining the customer's experience

and is something that people already have.

So let's take the approach that we wanna build

a lean VPP company.

We don't wanna have to deal with hardware.

We're just gonna use what you already have.

How does that sound?

Does that make sense to me, Pam?

Yeah, I would just add with the geography component too, that's especially important

when combined with the technology, because your load needs to be, your load and the way

that you shift it needs to make sense for the location and any reliability issues they

might be experiencing.

So that's why, for example, your direct load control programs in California are mostly

always being dispatched during the summer with air conditioning.

You could run a direct load control program, which just turns off the technology that it's

targeting for toasters in California instead of the air conditioning unit, but that doesn't

really make sense because that's not where most of the load is coming from and really

it's not probably being run in significant amounts during peak electricity usage hours.

You know, people aren't running their toasters in some way for three hours at a time at seven

or 8 or 9 p.m., which is when those programs tend to get dispatched.

So for example, you could run a direct load control program up in the ISO New England

area, for example, in the middle of the winter for air conditioning units, but that would

be very silly.

Okay.

Pam, I think that's a good grounding input.

We're trying to balance what actually makes sense and is feasible, what is cool and fun,

and kind of based off of that.

And so I don't know how we want to take this.

So we could just say, like, batteries

are the most common thing, and let's just do residential

and pick a geography.

And that's just very, like, I don't know.

There's not a lot of whimsy and fun to that approach,

but maybe it's the most broadly applicable to the audience.

Or we could try and say, like, could we

take some of those inputs, right?

The load flexibility needs to make sense,

and we want to use load that's already there to come up

with something really cool.

I'm not saying this is the answer,

but one idea that popped in my head was I'm a big fan of local restaurants and grocery

stores and businesses and things like that. I know that's light commercial, not quite residential,

but I think it'd be really cool if you could come up with some VPP way to enable your favorite

local coffee houses or your favorite restaurants or something to create a virtual power plant and

come up with some side cash to help them stay more economically viable. That's something I

literally made up and I don't know how feasible it is, but that's where my brain is going.

Could you go to all the local brunch places and say, or maybe not brunch, maybe it's some

other place, and say back to the toasters, I know normally you serve avocado toast,

but if there's going to be a grid event, no avocado toast on the menu, change the menu

up and then you will reduce your toaster load. Again, I made that up, but thrown it out there

for inspiration.

Amazing.

And yeah, James, I think on top of that, you know, there are gyms, there are dentist clinics,

and the prices that these businesses charge their customers can be varied based on a potential

BPP that is really giving them significant cash, and it'll be fun.

And I think the customers, most of them also care about a restaurant participating in this

program.

And then they also are taking part in this, and it would add something dynamic to it.

I think it would be fun, at least at the beginning, you know, maybe a few years from now, everybody

is doing it, and it's not fun anymore.

But for now, that's another branding message that these small businesses can have to attract

new customers even.

I say let's try that.

The idea of a VPP for coffee shops sounds super novel to me and fun.

I really like the idea of doing coffee shops and I guess that moves us squarely from resi

to commercial, because you cannot model a coffee shop in ResStock, which is NREL's modeling

tool, but you can model a coffee shop to a certain extent in ComStock, which is the commercial

building modeling tool.

Yeah, Pam, question on this, right?

So we would need to find a place where it makes sense for a coffeehouse to change their

electricity usage with, and aligned with,

a grid of reliability event, right?

Is that feasible or practical?

I'm asking.

Well, it would be multiple coffee shops.

Yeah, yeah, many.

Because, yeah, so you would find.

What I'm thinking about, I'm thinking about peak,

like around, you know, like when it's cold,

when it's kind of like peak hours,

like four to nine or whatever it is,

when coffee houses are like mostly closed.

And so like maybe they're not traditionally using

electricity during that time,

but maybe there's some other reliability event that would make it make sense.

Like we put a bunch of batteries in coffee houses and they charge it with cheap

solar and then they dispatch it later.

I don't know.

Like you tell me.

What if you targeted the belly of the duck instead of the bill?

So as opposed to shedding, shedding load during high demand, we absorb

available energy during the cheap periods.

Yeah.

Yeah.

So they get,

And then they could sell it back during the build of the docking.

Okay, so okay. A quick distinction that I want to make

is I think if you were to look at the kind of proper definition of a

virtual power plant, this is where we're talking about

something that is technology-enabled, remotely

controllable, and

And kind of gives the utility some control over the functionality of the power plant.

And the reason that I bring this up is because, oh, you know, it'd be cool.

We could make a coffee shop where, you know, we do a ton of baking in the middle of the

day when, you know, when solar is at max potential and there's a ton of cheap energy on the grid.

And then as you go on into the evening when power is getting more expensive, well, we

We actually, we really kind of shut off most things

and we just sell, we're not selling hot food

in the bill of the duck, right in the evening.

But that is, that's more business design

than it is virtual PowerPoint design in my mind.

What do you guys think?

Ben, I don't know, like where my brain is like lighting up

is like cool intersections of VPP design

and like business design that already makes sense

for these things.

like, you know, could you have a bar that's normally, you know, has lights, do a disco

or do a candlelight thing, like, during grid reliability events, or is there something with

the coffee house where they charge during the day and they sell it at night, or you

turn the coffee, like, in the office, right, they did cafe disco, where, like, people dance

in the little room. Could you have, like, a coffee house that normally doesn't run at

but turns into a bar at night or maybe that's the opposite of being grid reliable, so I don't know.

This is me pointing my fingers in a very rave-like fashion, but what I think is key here

is to understand the underlying consumer behavior, right? What does this coffee shop do,

right? Is it typically running at four to six? Probably not, because that's not when people are

ordering a whole bunch of espressos and steam milk. So you think about the

underlying business case and then you create a hardware layer to best, well so

okay, you create an optimal load profile or a grid profile and then you add the

hardware to get you from the base case to the optimal load profile and it could

be a combination actually of hardware and business model or like energy use

So sometimes you can just say, hey, have a rule that people don't run the espresso machines

from four to six to help with load curve or to shed load.

And then you use hardware to make up the difference, right?

So you kind of want a predictable use case where the same thing is happening, the same

behavior is happening on a day-to-day basis, because that minimizes the cost of the hardware

that you need to get to simulating

an optimal load profile.

And so typically, you think about this

as being something you can either attach to hardware

that automatically shuts it down.

Things like HVAC are the low-hanging fruit

where a lot of VPPs got started, a lot of the VPP software

systems.

You think about EVs, especially if you

have some sort of leak component, which probably

not in the case of coffee shops.

Or you have energy source.

So I'll try and keep my points tight.

Take the low profile.

Adjust it to what your optimal profile would be.

And then identify what you can do

to match the existing low profile to the optimal profile.

That will be hardware.

And then you will add a software layer on top of the hardware

so that you can affect those low profile changes.

Okay, so if I'm thinking of our cafe, right,

we have, a cafe is highly, they're busy in the mornings.

There's also a peak in demand in the mornings,

not as high as in the evenings,

but it is there in the morning.

So if we think about, okay, a cafe has espresso machines,

it has refrigerators, it has ovens.

Um, I'm drawn to refrigerators because they are, I'll be it inefficient.

They are a thermal battery.

And let's say that in across our, you know, our cafe VPP, uh, we have, you

know, a thousand commercial refrigerators potentially under management.

And we could say, all right, we are going to lower your set point in the

hours preceding your morning open.

And as grid demand rises in the morning, as people are getting up, going, you know, getting

ready, but nobody has really made it to out the door and going to the cafe yet.

In that hour, two-hour window, that's when we're going to raise the set point of these

refrigerators, let them just kind of idle, let the temperature slowly rise while still

being food-safe.

James, what do you think?

So, I just have a quick question, I just want to sanity check the coffee house idea.

I like, I love coffee houses, I'm drinking a nice latte as we do this.

Are coffee houses viable even though most of their operations happen during the day and

when most of the grid reliability issues happen later in the day, like, are they still viable?

I'm just asking, like, maybe Charles and Pam are more familiar with this.

It could be a coffee house in the morning and a bar in the afternoon.

But it doesn't even need to be it doesn't even need to be open at night

It just needs if anything a coffee house is really great because they're using all their power

In the beginning in the middle of the day, which is what we want and then at night they're just sitting there dormant

So if they can discharge anything from their solar plush storage system back into the grid

Then they're perfect

This comes to geography though because it depends on what the policies and regulations are around discharge. So are we talking about a

a building that can go both directions, like absorb and export power, or are we just talking

about a load control facility? Because that will depend on the utility and what utility

programs you can bid into.

Yeah, but my comment is related to this. My question was, are we considering a distinction

between a demand response program and a VPP? Because what I'm hearing from your guys'

those opinions and ideas mostly reminds me

of a demand response, you know, shifting low

rather than having actual DR assets

like storage or a PV system.

And also, are the utilities charging

their invoice structure?

Is it considering the time of use?

because when I look at my bill from PG&E, sometimes it gives me some additional cash or

some sort of a reduction in my bill because I usually start, I usually use my dishwashing machine

or you know most of my electronic devices during the day and I think that's how I get those

rewards. And because most of residential, they have smart meters and every 15 minutes my

power consumption is, the data is going to the utility. So if I own a cafe, I am already

incentivized to turn on my ovens and bake all the muffins at noon and how does a

VPP help have a like an additional offer me an additional value or additional

cash on top of what utility is giving me? I think I think that again is a

geography question because you said you're PG&E in California right? PG&E I

I think around, it was either 2020 or 2021,

they started moving and then eventually moved

their whole residential stock at least over,

or sorry, all of their residential customer base

onto a time of use rate.

But that's not the majority of the case

for most of the country.

They're just a very specific situation of that happening.

So that's why you're seeing those reductions,

especially relative to the past.

So if our coffee shops are all in San Francisco,

then yeah, they're already seeing that incentive.

But if our VPP is in, you know, Ann Arbor,

then they might not be on a time of use rate

and they might need some company to step,

they might need some other entity to step in or some way.

How about the demand response question?

Are we now designing a demand response program

or are we still focused on VPP, or is it not even a difference between the two?

That's a question we've come back to many, many times.

And I want to avoid getting into the minutiae of the differences between demand response and VPP,

if we can. But I think for the sake of this episode, let's just say any controllable

And I will add one thing about that and then I'll hand it over to James, but I will just

say, I would say we should operate under the Federal Energy Regulatory Commission's definition

of a distributed energy resource aggregation, which does include demand response.

And also I'm biased because I studied demand response.

So I want to talk about demand response, specifically residential demand response, because it may

makes me happy.

So good to have you here, Pam.

You do such a good, eloquent, and official way

of describing all the stuff that we're trying to say.

Yeah, and so what I just wanted to try and do

to stitch all this together, and I

do think we probably need to decide and then cut

into actually trying to spec out what we're going to build here.

But I do think it's an important discussion.

So to repeat back what I think I've heard,

So, a coffee house normally is not using electricity during a peak time, but if we were to add

solar and storage to it, that's one way where we could basically have them suck in a bunch

of electricity when it's cheap and bid it out during peak hours and they don't need

that electricity. So it's like basically completely free to use

as Charles analogy. Or two, if the coffeehouse is in a place

where time of use rates are not pervasive across coffeehouses,

you could have coffeehouses switch to a time of use, and

they'd probably save a lot of money, like both of those ways

would help coffeehouses save monies. Yes or no, I guess to

the to the team, it feels appropriate to answer.

I second.

Yep.

That feels, that feels good.

Okay.

So then, given that, I think we can decide, right, like going back to our key questions,

which of those do we want to pursue?

Like the solar plus storage is like a cool, like, you know, you know, juice up your coffee

house or however you want to say that.

Like there's a lot of good stuff to do there.

And that's like a very like mainstream relevant example

to lots of people who probably want to include

solar and storage in their virtual power plants.

And so given that,

what like, do we like the solar plus storage?

It's like, that's what we're gonna do.

We're gonna like help coffee houses install

solar plus storage and then make money

from this flexibility.

Yes or no.

And then if we do that, where geographically does that make sense, basically?

Well, I think that I think you guys have laid out some fantastic reasons why solar storage make a ton of sense for a coffee shop, especially because they can self, they can consume their own generation throughout the middle of the day.

And then feedback to the grid, any excess they have stored up, or any kind of shoulder amounts that they're still producing, as you know, they're winding down, you know, three, four o'clock.

And that's as demand is starting to rise, but you know, the sun probably isn't setting until 7pm, so it innately works.

And, James, for location, I'm going to suggest your corner of the world, you know, the birthplace

of Starbucks, Seattle.

I would love that.

I also know that we have, so when we polled some people before, they said, yeah, Ben,

your voice sounds spectacular with your potential strep throat today, so I just want to applaud

you for that.

Thank you so much.

Applauded.

So people said do Pacific Gas and Electric and the utility program, because that's the

easiest to implement in two hours, I guess.

Do we want to, like, do that, or do we want to try something else, like, Seattle, right,

and see, like, if there's a program out there that makes sense.

I know with Seattle City Light, we maybe don't have, like, the most, like, that many, like,

complicated tariffs, but maybe that's better in C9, we could unpack it.

I'm open.

Well, a quick Google says that San Francisco is America's most awake city, with the highest

ratio of coffee shops to people, with 528 dedicated coffee outlets serving a population

of 866,000.

I disagree.

Find a college town.

If you want many people consuming aggressive amounts of coffee, you want a college town.

Okay, so let's try and come up with some criteria here, then.

I have one argument against doing California, when I think of California utilities and California

programs and also CAISO on top of it, the California independent system operator, if

we look at wholesale, we can look at wholesale, they are, they're not necessarily representative,

they're just a little bit further ahead in some ways, like the, everyone in the residential,

all the residential class for being defaulted

into time abuse rates, for example.

So if we wanna look at maybe what the future is

for everywhere, then maybe California,

and then they clearly have very extreme reliability issues,

so maybe that's a reason to go there too.

And they have the duck curve, they're very distinct.

But if we wanna look at more what the status quo is

for the rest of the country,

then maybe Seattle might be a better case

or somewhere that's just not California.

I also think that if you want to consider solar for coffee shops,

it doesn't make sense in San Francisco.

It's always cloudy here.

And also, there are tall buildings, so.

Density.

Density is definitely very relevant.

OK.

The density point is very fair.

I just want to, on the cloudiness,

there's something, feel free to correct me,

Charles or whoever's pretty familiar with solar, but there's um

Something called like sun hours. I forget the term but like even in seattle solar is just viable and it's certainly much more cloudy than

uh

san francisco

um

So I just wanted to kind of like say that out loud, I think

Yeah, likewise with with victoria. It is so much cloudier than um, you know much of uh,

Much of north america, but it's solar still viable. It's just like a slightly longer payback period

Okay, and so I think we're trying to tease apart like criteria here to select one

So density Pega, I think that was a really good input. Like if we're in Manhattan, that's not really a viable like coffee

Coffee house approach, you know

And so we need a place that

The coffee probably has like a roof, you know, or it's at least like in most cases. It's gonna have a roof

Maybe where solar plus storage makes sense question mark and

Yeah, I don't know, wherever else we think is fun, I think that's like my three criteria

right now.

And on that note, we're going to take a break here.

Join us next time on Intermediate to hear us dive deep into the details of building

the Coffee Shop VPP.

I'm your co-host Ben Hillborn, and I can't wait for you to hear part two.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com

Summary

In this episode of InDERmediate co-hosts James Gordey, Pamela Wildstein and Ben Hillborn are joined by special guest CeCe Coffey to unpack the Wild West of interconnection, FERC, Order 2023 and its potential impact on distributed energy resources (DERs). They talk through the role of FERC in energy regulation, how orders get named, then explain how interconnection works simply and highlight the problems with interconnection today. Finally we summarize order 2023, its impact on DER’s and brainstorm what might come next.

Note: This episode was recorded before FERC granted an extended compliance deadline.

Episode chapters:

* (1:33): Ice breakers

* (3:38): FERC intro

* (4:53): Interconnection stakeholders

* (8:35): How does interconnection work?

* (12:51): Interconnection studies

* (16:11): Interconnection x FERC

* (19:05): Naming FERC Orders

* (23:54): Prioritization

* (27:12): Interconnection problems

* (35:05): What's in FERC 2023?

* (38:07): Transmission provider penalties

* (42:44): Commercial readiness

* (44:46): Interconnection hipsters

* (51:51): FERC 2023 x DER’s

* (54:42): FERC order lifecycle

* (1:00:41): What’s next?

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

* Charles Jurczynski

Relevant links we found helpful

* THE ACTUAL ORDER: https://www.ferc.gov/media/e-1-order-2023-rm22-14-000

* https://www.eenews.net/articles/ferc-approves-historic-rule-to-address-renewables-backlog/

* https://www.power-grid.com/policy-regulation/ferc-issues-final-ruling-to-tackle-clogged-interconnection-queues/ 

* https://www.utilitydive.com/news/ferc-interconnection-queue-reform-spp-miso-pjm-rto/689965/

* Dr. Volts podcast on interconnection in August 2023

* https://www.troutman.com/insights/troutman-pepper-summary-of-ferc-order-no-2023-on-generator-interconnection-reform.html

* Background: https://www.utilitydive.com/news/energy-transition-interconnection-reform-ferc-qcells/628822/

* https://emp.lbl.gov/sites/default/files/queued_up_2022_04-06-2023.pdf

* Site to track interconnection queues across all the ISOs and a few utilities as well by Steven Zhang

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

What are those things that we have now available that are renewable

That can be worked in quite a different way into the economy of the United States

Which are concerned primarily with the design of nuclear power plants and this type of thing

We do not know what the magnitude of the side effects will be

Hi, I'm Pamela Wildstein. I'm Wyatt McAdamski. I'm Ben Hilborn. I'm James Gordey

You're listening to InDERmediate

to Intermedia, the place for people trying to get into

or already working on distributed energy resources

and clean energy.

This is the podcast that makes it easy to learn

how the grid actually works beyond the office.

Hey everyone, welcome to the show.

I'm your co-host, James Gordey.

Today we have Pam.

Hi Pam.

Hi.

And today this is gonna be a bit of a two-part episode.

So in part one, we're gonna cover FERC

and interconnection kind of generically.

And then in part two,

we're gonna cover the hot off the press

in energy terms for quarter 2023.

And then kind of after that,

we're gonna spend some time and look forward

to where things are going from here.

And joining us on the show today

to help us level up our game,

we have Cece Coffey.

Cece, thanks for joining us and welcome to the show.

Thanks, James.

Happy to be here with you and Pam

and to talk about interconnection.

Okay.

Okay, so just jumping into it, we always like to start with some icebreaker CC, so play

along with us a little bit here.

You personally, this is a show about learning about clean energy and DERs in general.

How do you learn about clean energy?

Well, thanks for asking.

Honestly, it's something I've thought a lot about.

When I got out of undergrad, I moved down to DC, which is a great place in the country

to be working in energy, but I was really trying to learn as much as I could as quickly

as I could.

So I was reading Utility Dive and other trade press, I was attending conferences and panel talks,

and I also joined the Clean Energy Leadership Institute in 2016 and have stayed involved

with them since. So I think for me, learning about energy isn't just reading, it's also

talking with people. And that's why I'm excited to be on the podcast and also to have been involved

in DER Task Force, because I think when everybody gets together, we have some pretty cool ideas

about the future of clean energy. Yeah, no doubt. Always the obligatory

So moving on to the second one then, there's a lot going on in energy.

What portion or topic are you most interested in right now and learning about?

Yeah, there are a few, you know, on a large scale, I've always been interested in how high voltage transmission gets planned and built.

You wouldn't think of that being clean energy necessarily. But, you know, there are a lot of examples going back to CREZ and Texas and others about how building transmission really gets new generation online.

And on a smaller scale, I've been really excited to see how clean tech companies have been

able to unlock distributed energy resources, not only to provide demand response, but also

dispatchable power, following Octopus and others who've been doing virtual power plants.

And then one thing that I don't know that much about, but I'm curious to follow is just

this kind of rebirth of nuclear, whether it's large scale commercial or the small modular

and micro reactors.

I think those are so interesting and kind of the way that they can do community energy

maybe in the future.

And then I know we had asked you ahead of time, Cece, for some deeper dive resources

if people are curious.

So for anyone following along with the podcast and online on the show notes, we'll put all

of those links there and links we found helpful.

So kicking things off, at a high level, can you explain what FERC is and why they have

authority?

We touched a little bit in a FERC overview that Pam gave on our great overview episode,

but good to unpack it more here.

Okay.

That's great to know.

And for everybody who's listening who I haven't met yet, I'm in law school right now, so please forgive the brief detour into legal history.

But I think it's important to understand what FERC is and how it came to regulate the transmission system.

So going back more than 100 years, actually, Congress in 1920 authorized what was then the Federal Power Commission to oversee the nation's hydropower resources.

And the Federal Power Commission was formally established in 1930.

But it was five years after that, in 1935, when Congress passed the Federal Power Act,

which transformed the Federal Power Commission into an independent regulatory agency, and

it granted that agency the authority to regulate, among other things, the interstate transmission

system.

And that's really generally the same jurisdictional authority that FERC, the Federal Energy Regulatory

Commission, has today.

Its interpretation of that authority has changed and evolved as the system has changed

and evolved.

But, you know, on the transmission side, at least,

BERC regulates all transmission between states

and as kind of by virtue of that,

the transmission that happens at high voltage

with both power systems.

So who are the stakeholders in the interconnection process

that Order 2023 is gonna be regulating?

Sure, so there are actually a number of players here.

It's who you'd guess, right?

The project developers.

Those are the people who are building, owning,

and financing new power plants, new generation resources.

And it's the transmission providers who are receiving the request of those project

developers to hook up to their system.

But there are also other indirect stakeholders.

Transmission customers should care because they're the ones who ultimately pay the costs

that the transmission providers pass along.

And we're transmission customers ourselves.

Those rates that we pay to our local utility cover what the utility pays to the transmission

provider to get energy off of their system.

And states should also care.

States have policy priorities.

they're trying to get a lot of different types of resources built and if those

resources are you know proposed but can't actually get interconnected and

can't reach commercial operations that's really going to slow down states who are

trying to maybe meet their 100% renewable energy goals. And in this case

just you know because when I was first reading through the order I got a little

confused on this. Transmission providers in this case are both in restructured

and non restructured areas right so it's both the independent system

operators, such regional transmission organizations, and then also monopoly utilities.

Yeah, that's exactly right. And I should say, you know, you all are pretty familiar with this. I

know it's a bit of an alphabet soup, but Pam, when you're saying restructured areas of the country,

you're talking about those parts of the country where generation is separate from who owns the

transmission and distribution systems. And as you pointed out, those are operated in many cases by

entities called independent system operators or regional transmission organizations,

who not only dispatch the systems but also operate the markets for buying and selling

energy in those regions.

But there are parts of the country, as you mentioned, that are not restructured.

They still have, for the most part, vertically integrated utilities that own generation,

transmission, and distribution.

And there are also transmission providers and need to comply with these rules.

Because one thing that I could have mentioned earlier is that for jurisdictional authority

over transmission, I said with the interstate system, but really any transmission provider

over a certain megawatt threshold is jurisdictional and needs to comply with some of the transmission

related rules like order number 2023.

James, you can say it.

What is restructured and non-restructured translate to for you?

Yeah.

In my mind, what is it?

No.

Deregulated and regulated.

Pam and I had a whole conversation where we were trying to simplify this in people's

mind and at the end, Pam was actually using my words, but then we mind tricked her into

And that was my question too, just to like unpack transmission providers.

So Pam, we're on the same page today.

Totally.

I think the way I think about it, honestly, Pam, we can come back to this, is just that

whoever physically owns the grid and that grid is a patchwork of different systems that

are owned and operated by different entities.

And I think sometimes it can get confusing to think about, well, who's in a region and

who's operating independently, because all of these systems need to be operating at

same frequency and overseen by the same reliability regulators in the end, that being FERC and also

NERC, the North American Electric Reliability Corporation. But I think it's worth noting that

even though they all operate together as one seamless machine, they're owned by different

entities, and those different entities are the ones who are responsible for processing requests

to put new generators onto their systems. So those are the transmission providers that I'm

talking about. Those are also – this will come into play later – the entities that maintain

open access transmission terrace. Those are the sets of rules for not only interconnecting onto

the transmission provider systems, but also for taking transmission service as a transmission

customer. So at a high level, Cece, this is covered in other places, but I think it's helpful to give

people the foundation. How does interconnection work today? We hear about it. We hear about the

fact that there's so much new projects in the interconnection queues that it's more than is

actually on the grid today, but like, can you speak to what it is at a high level for us?

Yeah, absolutely. And I totally agree. I think it's easy to get bogged down in all of the details

about interconnection, but historically interconnection is just a three-step process.

It has a number of sub-steps, but I think for me, it helps to keep track of these as stages.

So the first step is that a prospective interconnection customer submits an

interconnection request. And what that means is you have a new facility, you want to interconnect

connect it to the grid, and you need to submit a request to the transmission provider who

owns and operates that grid to start the whole process.

And then the second step is that that transmission provider assigns a queue position and conducts

technical reviews.

And this is something that we'll talk a lot more about later in this episode, and especially

the next episode, is what is a queue?

And honestly, you can think about it like waiting in line at the grocery store.

The first person in line lines up, and the next person in line gets in line behind them.

And so, that queue is something that we talk about when we talk about power plants

interconnecting to the grid. It's the same sort of wait-your-turn system.

And then, the third step is that both parties, both the prospective interconnection customer

and the transmission provider, once the transmission provider has conducted all of

those technical reviews and determined what's necessary physically from an engineering

sense to interconnect that power plant into the grid, then they execute an interconnection

agreement, which is a bilateral contract where they both make certain commitments,

and that interconnection agreement is what green lights

the interconnection of the new resource onto the grid.

And at this point, there's no guarantee

that you'll generate power, right?

That comes later through whatever,

I'll stay with restructure,

because that's what I know the best,

that would come to the market.

Yes, definitely.

I mean, your dispatch instructions, again,

will come through the market.

There may even be a different provider.

It may not be that transmission provider

who tells you turn on or turn off,

but really the interconnection agreement,

again, I think of it as the green light. You're cleared for takeoff. Everything's in place that

needs to be in place for you to start injecting electrons onto the grid. And there are a number

of different factors that will determine later how often you do or whether you do or for how long.

So roughly how long does this interconnection process take from beginning to end?

It's honestly pretty astounding. The average right now is about five years,

although that number can vary a lot. It depends not only on the size of the facility

and the region of the country,

but also on the unique topology of the transmission system.

And I didn't get this number.

Researchers at the Lawrence Berkeley National Lab

put together a really comprehensive guide

to interconnection queues

that they published in April of this year.

I'm sure you all can link it for the listeners,

but LBNL has done a great job outlining

not only how long it takes

from interconnection request commercial operation overall,

but how that varies in different regions of the country

and even for different types of resources.

That's crazy.

I did not know it was that long.

People would always complain about how long it was, but wow, five years.

On average, five years. My world is startups and technology. When you have an employee join,

you give them equity to vest because you want them to stay at the company for a long time.

And the equity normally vests over a four-year period. So it's less than an interconnection

queue average process. Less than an interconnection queue,

right. So if someone complains about how long it takes for their equity to vest,

You can just point them to this report.

Actually, this is not making it into toasters because of this podcast, we like to try to

translate numbers into the number of toasters, but it does take five years to do a PhD.

So it takes a PhD for this interconnection process.

Right now.

But as we're going to talk about later in this episode, that's a long time and it's

long enough that it's slowing down not only project development, but also safe policy

goals and so one of the goals of broader interconnection reforms of which order number 2023 is a huge

part is going to be shrinking that five years until a more manageable amount of time.

Maybe we can make it into two years, which would be a master's.

No guarantees, but we're well underway. That's, that's for sure.

Chipping away at the problem. So one thing that I think is a little bit confusing to

folks not as familiar with the interconnection process. These studies right we need to study

it and we need to study it again.

And if one little variable changes, we need to do some different studies.

Maybe, could you kind of unpack these interconnection studies?

Like why do we do them and what do we learn from them?

Absolutely.

So, uh, again, historically this was done project by project.

And as you alluded to, uh, if that, if that line changed, if that queue

changed, if someone ahead of you decided to go back, go back and get

another item for their grocery cart, then all of a sudden everything changes.

And I think it helps to just start from a really high level.

we study the interconnection system to determine whether there's enough spare transmission capacity

to accommodate a new generator, or whether the system will need to be upgraded before

new resources can interconnect without compromising reliability. So what that

means is essentially, is there enough headroom on the existing transmission system? Are the

capacities of the existing transmission lines in the area where you're trying to put a new

generator at capacity, or is there space? Is there additional megawatt capacity that would allow

more electrons to be pushed across that line routinely. And if there is enough space, then

it really speeds some of the interconnections. The interconnection generator will still have to

go through studies, but they may not be assigned those costly network upgrades that you may have

heard about that can really jeopardize a project's economic viability. And if there isn't enough

space, then that's where network upgrades, as we're saying, are assigned. And a network upgrade

is essentially when an interconnecting generator is told that the existing transmission system

does not have enough spare capacity to facilitate their participation. And so if they do want to

get built, they're not only going to have to build their own facility, they're also going to have to

build or at least pay for the transmission provider to build upgrades to the transmission

system to make sure those electrons can get from power plant to customer.

Yeah. And then like one tricky thing I was listening on a Dr. Voltz podcast was talking

about like, it's almost like musical chairs or on luck of the draw, where like, if you are the

person that is going to require the transmission upgrades,

then you get stuck with the cost.

And so people are trying to not get stuck with the cost,

in a sense, and that causes a lot of people to,

going back to the grocery store analogy,

maybe get out of line if they realize

they're going to have to pay extra for their bread.

Yeah, I may have pushed the grocery store analogy too far,

but I think it's something to make it

a little more concrete, right?

And I totally agree.

The musical chairs piece was one of the big reasons

why FERC and Order Number 2023,

and several regional transmission organizations

on their own before they're required to decided that this one-by-one processing wasn't just inefficient,

it was also creating incentives for people to, if not intentionally game the system,

at least deal with delays and cascading restudies that led to some of these really,

really long gaps between interconnection requests and commercial operation.

And so I think one big change, which we'll talk about later, was doing the whole process by group by group

instead of one by one, meant that there was a little less of that luck of the draw, that

you would be assessed for how many network upgrades needed to be built as a group collectively,

and then the cost of those upgrades would be shared.

And so it was a little less that you would get really lucky and get away with having

headroom on the system and not have to pay anything, and it was also less likely that

you would get stuck with a bill for 10 people's interconnection.

Going off that, what has FERC done in the past?

What's the history of interconnection?

And what are the FERC orders that it relates to?

Sure, so it's really not as long a history.

We talked about the history

of the Federal Power Commission earlier,

and that's a hundred year period of history.

But the process of FERC managed interconnection procedures

is actually pretty short.

So before 2003, interconnection procedures

were fairly inconsistent across the country.

Each transmission provider generally had the authority

to determine the procedures that it thought could work for its own system and to manage

that set of procedures. But then in 2003, IEEE established technical standards for the

first time, first for small generator interconnection. And the same year, FERC issued Order No. 2003,

which established federal interconnection rules for large generators, and you can look

at those online. But for the next 15 years, FERC largely approved incremental changes

the transmission provider's interconnection procedures. And FERC also established rules

guiding a provision of reactive power and frequency response from interconnecting generators,

things that we can all think of as really needing to maintain the reliability of the system more

so than managing this queue process. But in 2018, five years ago, FERC issued its next major reform

of interconnection procedures. That was order number 845. And 845 was designed to enhance the

interconnection process, both to account for changing technologies and also to facilitate

additional generator interconnections.

The energy transition was already well underway in 2018, and these queues were getting longer,

wait times were getting longer, and so FERC took action to try to raise the floor and

make sure that transmission providers across the country were complying with certain more

rigorous minimum standards to make sure that they were trying to process generator interconnection

requests.

But 845 did leave several gaps.

It retained the serial queue process that was contributing to queue backlogs, that one-by-one

processing that we've been talking about.

And 845 also maintained a standard that transmission providers only needed to make, quote, reasonable

efforts, unquote, to comply with study deadlines, and that's important.

That means that there's really no binding deadline by which the transmission providers

need to finish their studies, and that really contributed to uncertainty for interconnecting

power plants about exactly how long it was going to take to figure out both what their

costs would be and when they'd eventually be able to start reaching commercial operation.

And I guess one more thing I'd say about 845 is it included pretty anemic penalties to back up

those flexible deadlines. If transmission providers didn't turn around a study in the 60 days that

were required or 90 days that were required, it was kind of a shrug, you know, okay, well,

try better next time. And that was something that also really contributed to some of the

And as you can see, these are problems that FERC was realizing as, as we were heading into 2022, 2023, we're maybe going to need to be addressed again.

Yeah, real quickly before jumping into the next question.

Totally okay if we don't know or if it's random or whatever the answer is, but like, can we speak a little bit to how these like numbers and the names of these orders get generated like sometimes.

Favorite question.

Order 2003.

Favorite question.

Do you know the answer like is this Pam do you have a surprise like I mean forward right the tear does choose I know that actually former commissioner and chairman Chatterjee cleared this up with 2222 right the famous the er aggregation order because he explained that those numbers were actually a combination of the birthdays of members of his family and and told everyone publicly that the order number is up to chairman's discretion 2003 I think you guys can see it was issued in 2003.

I think that one's pretty straightforward.

Another pretty common one is order number 888, which ensured open access to the transmission

system, was named after the new building that FERC moved to in D.C.

It used to be on North Capitol Street, but it moved one block over to First Street Northeast

at 888 First Street.

So that was one that commemorated the move.

So sometimes they're fun, sometimes they're random, sometimes they're tied to the year,

but yeah, no serial order for those.

Wait.

2023?

Is there anywhere?

Yeah, 2023.

2023 came from because this was such a big deal came from 2023. Yeah. Yeah. That's yeah.

Wait, is there anywhere online that lists all the orders and how they got their name?

No, I don't have a document though, where I keep track of it though. Oh my gosh, Pam,

we need to publish that. No, it's just like a random like Google docs somewhere that I started

as a joke. That's what InDERmediate is all about. What would Indy want you to do, Pam? Do we want

to get this out here? Is it just your own Google Doc?

It's my Google Doc. Actually, it's not my own Google Doc. It's

at the bottom of my typed up law notes from when I took energy

law. But I will say that when I learned to order 888, the exact

like line when my professor opened, you know, opened the

discussion on it was, you know, it was an important order,

because they named it after their address. Yeah. It seems

when you look at the history of the interconnection processes

and for the amount that FERC's regulating it,

that they're almost moving towards

more standardized processes.

And I'm thinking in the context of RTOs,

like the RTO taking more of a planner role.

And I think Clements brought this into her discussion too.

Who's Clements?

Sorry, Commissioner Clements.

I'm thinking of how back in 2000,

there was this goal of the ISOs transitioning into RTOs,

which is where the name difference comes from.

And the RTO was gonna be this large centralized

system operator, system planner,

And the switch to, you know, the R in it was that they were going to plan the transmission system and they were going to take a much stronger role in having the centralized system that they were going to operate.

And when you start to, when you go from, I didn't realize that it was in 2003 when they started to do these interconnection procedures and I guess maybe an attempt and maybe it was just because of IEEE but like an attempt to make them more consistent.

and that just feels like that push

to have more centralized planning entities

for a more complicated system.

I think that's definitely part of it.

And I can't say that these are connected.

This is just totally, you know, out of left field here.

But what else was happening in 2003

was the great Northeast blackout.

I mean, there might be other things that were happening

that led FERC or others.

I think 2003, the process for that rule

was already well underway at that point,

but may have added some urgency to figuring out if there were additional resources that were needed

on the system, as there may have been, right, in 2003, as loads are continuing to increase and more

people are looking to interconnect. It might have just been more necessity. And I think one other

thing that's important to keep in mind is that the ISOs and RTOs themselves are pretty new. I mean,

the New England Power Pool, I think, was the first one in the mid-1990s, and then

NISO organized and others over the course of the late 90s and early 2000s.

And so I think one of the reasons that may have prompted 2003, and again, this is just

my opinion, is that you have all of these organized markets that are still pretty new.

And I think FERC was still trying to figure out what its role would be and how it could

help ensure efficiency in the interconnection process and also provide some certainty to

interconnecting generators.

And to your point about standardization, I think in theory, one reason why you might

want to have standardized processes is to remove an incentive for power plants to want

to build only in one part of the country, to make sure that any resource that was built

across the country would generally have the same expectations and would generally be put

through the same paces in a way that might kind of democratize access to the grid.

I think that's what I would guess it would be, but I have no idea.

Yeah.

A question I had, if I could ask.

So FERC orders come out, it seems, like I've been in clean energy maybe three years now,

So, you know, we've had 22-22 and 20-23 since I've been here, you know, kind of following it since COVID.

Is it, like, it's probably transparent, but is it worth talking about, like, how they decide which issues to tackle and orders to do and what order?

Because obviously there's a lot to work on, and I'm sure there's some big process by which, like, orders get issued.

But curious, like, how that prioritization and, like, order creation process happens.

It's at the discretion of the chair, right?

Yeah, it is.

That's what I was going to say.

Oh, sorry.

And you've heard some recent chairs talk about this, right?

Chairman Chatterjee, I mentioned.

Chairman Glick has been pretty outspoken about his priorities, and now Acting Chair Phillips

has also been clear that getting Order Number 2023 out was a priority of his.

And so while the entire commission works together to study what updates to existing procedures

may be needed, the ultimate final rule process is really guided by the chairman and their

priorities.

That's fair. And my understanding and research leading up to the show is that there's four

or five commissioners and then one chairman within that group?

Yes. Five commissioners is a fully seated commission. Although, as you may have noticed

in recent years, depending on term ending dates and reconfirmations and even nominations

from the president that have lagged behind some of those vacancies, the commission's

often sat at three or four commissioners,

but a number of the commissioners,

the current and former have said publicly

that the commission functions best when it has all five.

And so I think that's something that those of us

who work in energy law and energy regulation like to see

is the ability to have five commissioners

because not only does it lead to stronger,

unanimous orders on rulemakings and general adjudications,

but it also gives a little bit more room for compromise

and for really working out

some of the nuances of these issues.

As you saw with order 2023,

all four commissioners voted in favor of that order.

But through their concurrences,

you can see that they may have had

different policy priorities or

different conclusions and

different parts of what they were approving.

Yeah, and I'll emphasize this again in part two.

I thought it was very impressive that this ended up

being a 4-0 vote but you

should definitely go read the concurrences,

because that's where you see

the commissioners start to have

their own opinions and really where they get to

shine. And you get to see all the interesting nuances and what might happen in the future.

Definitely. And for anyone who doesn't know, what is a concurrence?

Concurrence is a yes vote. A concurrence is saying that I conclude in the ultimate

outcome of this order or this rule, but I have either slightly different reasoning or I have

other facts or considerations that I want to introduce into the record. Or I might, as Pam

said, want to highlight areas for future work. But a concurrence, it's important to remember,

is a full yes vote. It's nothing short of a normal agreement.

Yes, and. Yes, and. That's a good way to put it.

Okay. It's the stand-up comedy of orders.

Yes, and here's 15 pages of my opinion. I mean, hey, if the mic's turned on. So

kind of wrapping up part one here. So you see, could you help us understand,

like, I think a lot of people trying to get in, maybe trying to help with this problem,

you know, from many angles are curious, like, what are the biggest problems kind of understood

or explained in a simple way with the current interconnection process?

Definitely. So I think one of the largest challenges for all of the stakeholders that

we talked about earlier, that's not just project developers and transmission providers, but

also transmission customers and states, it's uncertainty. So the marginal cost of energy

is falling. And, you know, that's something that we've talked about, there are more clean

energy resources on the system, solar and wind and other types of renewables tend to

have a zero marginal cost or near zero marginal cost of operating.

And with that marginal cost of energy falling, more projects are operating on thin margins.

When they're looking to interconnect, let's say you have a new solar facility that's looking

to interconnect, they're going to make some money from selling energy, and they have

some fixed costs that need to be recovered through other means, whether it's by contracts

or participation in a centralized capacity market.

But if they're assigned really hefty transmission upgrades, network upgrades, that's going to

cut into their profitability and may even mean

that it doesn't make financial sense

for them to interconnect.

And so dealing with this uncertainty

and especially dealing with uncertainty

around network upgrade costs is a really important part

of making sure that new resources

can be hooked up to the system.

And for transmission providers,

this cascade of generators withdrawing from the queue,

not only generated just an unmanageable number of restudies,

but also led to cost allocation problems.

I think we teed this up or hinted at this

at least a few minutes ago.

But if you, for some reason, were in a queue and you hadn't been assigned many network upgrades

because someone right in front of you was going to build an addition to the system,

but they withdrew from the queue and they essentially took their money with them,

you might be hit with that upgrade cost, which you weren't anticipating.

And you may have now been further into the process of requesting your interconnection,

and it may not make sense for you to go forward.

And so when I say cascading restudies, it's because when one person pulls out,

But if you're dealing with each generator in turn, one by one, then when their costs

are pushed down to the next person in line, it can cause many different people behind

them to pull out as well.

And that leads to uncertainty, of course, for those folks who are interconnecting, but

also for the transmission providers, who are honestly doing a lot of work, doing the lion's

share of the work here, to continually re-study the topology of their system to determine

where there's existing headroom and to find out network upgrade costs.

And if that's changing every time someone pulls out, then it creates almost an impossibly

long process for them.

Yeah.

Thank you for walking us through that.

Would you say then, just to restate, right, that uncertainty and then kind of the unanticipated

like network or project costs that come from it are definitely like two areas.

And then the third is just given how that process plays out with uncertainty and then

people like pulling out, not pulling out, things like that, it just creates a lot of

work for the transmission providers and operators.

Yeah, definitely.

I think that's a good way to summarize it, right?

Uncertainty in cost, uncertainty in timing,

but then you're right.

It comes all down to this idea of the length of time

it takes to get from submitting that request to actually

reaching commercial operations.

So all of the delays kind of become their own problem

at a certain time.

Yeah, for sure.

I'm trying to think.

There's like obvious, you know, like cascade effect, maybe

ripple effect, like whatever you want to say. Okay, so just like so we know that's

the conclusion of part one where we talked about FERC and InConnection at a

high level. Now we're gonna move on to part two, which is where we're going to

focus on FERC Order 2023 and kind of some forward-looking ideas and

brainstorms the group might have. Wait, can I actually make one last point or

comment. That's also a question, so tell me if I'm wrong. When you think about the amount

of uncertainty associated with Generators withdrawing and the amount of time you might

spend in the queue and where you'll end up in the queue and all the uncertainty that

that would cause you as a company and a business or as a project developer, that probably really

limits the type of projects that can get built too, because the only people then that can

submit projects are those that have the capital on hand to deal with that uncertainty.

Yeah, that's a really great point. I think that's changing a little bit, and I'm definitely not a

finance expert. I'm sure there are folks you could bring on the show who can talk a little

bit more about this. But there are essentially some of these delays that become barriers to

project development, and it means that you have to have a lot of working capital in order to both

build these projects and to withstand the expected delays that come up at this point,

as well as to maybe put up more money

or at least more collateral to cover unexpected upgrade costs

that you may need to pay.

So yeah, I think your point is right,

that typically if you're a larger product

developer with deeper pockets, you're

going to have a better chance of withstanding

some of the uncertainties that was present in the one-by-one

process than you would if you're a small kind of mom

and pop developer.

Yeah, and you made some comments before about standardizing

things and driving more certainty in the process

to try and raise the floor, I think is a good way to talk about it and let more people access

the grid from an interconnection standpoint. Because it's not ideal, I think, at minimum

to say, okay, if you have deep pockets, then you can interconnect. But otherwise, it's kind

of a hit or miss process. Great if we can make it more certain.

Definitely. And I guess one other point that's important to note is that it's not just certainty

having these standardized procedures, it's also essentially removing the ability for

transmission providers to discriminate.

And we want to believe the best in everyone, right, but if you're a transmission provider

and you have your own resources, maybe, that are interconnecting onto your system, especially

in the parts of the country that aren't restructured, where there are more vertically integrated

utilities, part of the reason that 2003 and then after it, 845, and now 2023 were put

forward is to make sure that everyone's playing by the same rules and that if you own a transmission

systems that you have publicly available transparent procedures that any generator can

follow to get connected onto your grid. And then the flip side of that is as a transmission

provider that you follow those procedures in a non-discriminatory way. And what that means is

that you process the interconnection request, you conduct studies, and you execute or sign

interconnection agreements with third-party power plants in the same way and on the same

timeline that you would do for your very own affiliates. And so I think that's something to

always keep in mind in the back of your head when you're thinking about energy is that there are

those competition and maybe sometimes anti-competitive urges. And so a lot of the

things that FERC says to regulate and state public utility commissions do to regulate

is to remove both the opportunities and the incentives for any preferential treatment.

Yeah, I mean, it's the real world. I'm almost thinking about like,

you know, every market is different, of course, but like to the extent that you can make

the across all market playbook the same.

That's helpful in allowing more people

to actually be able to get their arms around it.

Definitely, but we won't say standard market design

because I'm sure there are people who are still haunted

by that from the early 2000s.

Yeah, I've only been here since 2020,

so forgive any ignorance or things I'm stepping on

that are sensitive topics.

We at a high level have talked about the challenges

to interconnection.

I'm sure lots of people have lots of opinions or you know that the document and their concurrences or otherwise to improve interconnection.

So, I think.

Can you provide a summary of like what actually is being improved in 2023.

I can do my best. And I know Pam said that there would be some sources that are shared.

I know there are a couple of law firms who've done a really good job of this. I think Rocky

Mountain Institute has done a couple of good, has done a very good job of this. And as we've

all talked about, the commissioner statements can highlight some of the main changes. But

for me, I can organize these into a few categories. One is that the overarching theme is that order

number 2023 requires certain new procedures to improve the efficiency of interconnection.

efficiency is the main focus. And there are a few different ways that the order goes about that.

One is by requiring the use of a first-ready, first-serve process. What that means is there's

no holding your place in line indefinitely, and you can't sit in the queue if you're not

ready to move forward with conducting some of the further studies and eventually moving to the stage

of interconnection. And we call that commercial readiness, and that can be demonstrated a number

different ways, not only by signing certain agreements but by putting up deposits as

collateral. And commercial readiness is a real focus of order number 2023.

And then the second part of that efficiency and using the first ready first serve process is that

order number 2023 requires that all transmission providers use cluster studies. What that

means is that groups of generators are studied together, not one by one, and the cost of

upgrading the transmission system to accommodate their interconnection are shared among the

different generators in the group and the cost allocation of those upgrades can vary.

It's been a real subject of debate and Order 2023 offers really detailed guidance on that

cost allocation.

But I think at a high level what's important to know is that the costs are shared and it

removes some of the uncertainty that we focused on about whether you're going to be lucky

and get a low cost upgrade or be unlucky and get a high cost upgrade.

And then I'd say the third major overarching part of improving efficiency is on the transition

provider side.

It's that order number 2023 establishes binding deadlines

and pretty substantial financial penalties

for transmission providers who may not,

if they don't meet the deadlines that are in the order.

And that's for a few different reasons.

One is just simply to encourage their staffing up, right?

A number of transmission providers,

I will say they have a lot on their plates right now.

They're trying to do a lot to manage their changing systems

while operating the system on a second by second basis,

right? They have a really heavy lift. But the lack of finding deadlines or substantial penalties

may have led to transmission providers not prioritizing completing these Q studies on time

and getting answers back to interconnecting generators. And so one focus of the order is

to essentially raise the stakes and to make sure that transmission providers are allocating all

of the resources that they need to, or hiring new people if they don't have enough currently

to make sure that they can get through all of the studies that they're required to do

by the deadlines that the order requires. No, that makes sense to me. If I could ask a

quick question on that. Yeah.

The penalties, not all transition providers are the same. If I understand it correctly,

like ISOs and RTOs are one example of a transmission provider, but then there's also,

I would say, utilities and restructured or regulated markets. Do you think the penalties

are still, and it's okay if you don't have a fair answer for this, but are the penalties

like interesting and enticing enough for like both cohorts of transmission providers there?

Do you think like one being a nonprofit and one being, you know, like an IOU, they kind

of have different pocketbooks and different senses of what's important for them financially?

That's a really interesting question. The penalties are pretty substantial. And so,

as you mentioned, there are some large transmission providers and some smaller transmission providers.

And this is where I don't remember exactly right, whether they're the same or not,

but I think they're uniform penalties. It's a certain number of dollar amount per day of delay.

But essentially, they do have different pockets, and they also do have different cost structures.

And so this is something that Commissioner Christie actually highlighted in his concurrence,

that RTOs and ISOs, which are nonprofit organizations that are funded by their

stakeholders, their customers, may not have the same incentive to feed their processes

based on these financial penalties, in theory, they could pay pretty hefty financial penalties

and just pass those costs on to their transmission customers.

And that in and of itself is a cost shift, right, from the interconnecting generators

who need the studies to transmission customers who may not be making any changes at all.

And so that's something to keep in mind, too, and it's kind of a broader theme of what to

consider moving forward.

Are there ways that beyond order number 2023, the cost allocation between interconnecting

generators and transmission providers and then those transmission providers

customers can be modified so that the people who are benefiting from the

studies are paying, or in the case of transmission providers who are behind

the eight ball, the people who are causing the delays are actually

penalized in a meaningful way.

The transmission providers though, um, that are in non restructured areas.

Could, could they still rate base?

I don't know.

I mean, the penalties wouldn't be rate-basable, just like a five-bar, the penalties can't

be rate-basable because it's not an investment or an asset of the utility, if anything, it

would be an O&M, so it would be in that O part of the rate case, and that's usually

a fixed negotiated amount that's an estimate, right?

And so if they're delayed a number of years, they could then assume that they'll continue

to be delayed to the same extent in the future, and they can ask for an amount of that money

in their next rate case as part of their overall revenue requirements. But I wouldn't be surprised

if it came down to study delays if a state PUC would force them to allocate some of those costs

to their shareholders instead, not give them the full amount in their revenue requirements. But I

think all of that gets a lot more into state retail rate making, and I can't give you a

solid answer on it. No, I was just going to say,

that's a very interesting question, I think. The cost allocation issues are the ones that

I'm most interested in, because I think it's really tricky to figure out how you can get

a nonprofit or someone who passes through these costs, who actually have a meaningful

reason to change their procedures. And I think that deadlines are part of it, that theoretically

if a transmission provider was just consistently failing to meet deadlines, they would be noncompliant

with a FERC order. That could be the subject of an enforcement action, and that could carry

its own penalties. But I would be shocked if the commission really wanted to pursue that.

Obviously, I have no personal insight into it, but I'm curious, beyond the financial penalties,

which the transmission provider may or may not pay itself, I don't really know what else you do

to try to encourage them to speed up these studies. And I do want to recognize, again,

as I said earlier, they have a lot going on. Interconnection is a big piece of their work,

but it's not everything. They're operating real-time energy markets. They're balancing

on a second basis the frequency of the grid. I mean, they have a lot going on. And so, I think

One, one challenge and one reason they've been cut a lot of slack in the past is that they are the experts on managing and operating their own system, but it did get to a certain point with the queue delays and a lot of the backlog, but I think the commission decided that needed to step up and that even though transmission providers.

Maybe do a thing they were doing the best they could that the imposition of some more standardized procedures and deadlines could encourage them to move things along.

One quick question on commercial readiness, and this is just me not having a very strong background in project development.

So maybe this technically should have gone in the first part, but when we talk about whether a project is ready,

is that on a scale of intent to make a project to a wind turbine exists and is on the ground or what are they expecting?

Well, when I say commercial readiness, and I think this is a good thing to clarify, I'm really talking about financial readiness, right?

I definitely will not get into the engineering of what it takes to build a wind turbine or

200 wind turbines.

But I can say that what Order 2023 sets out in terms of commercial readiness is what type

of financial deposit and other showings, whether it's site control or necessary permits or

approvals from your state commission, what boxes do you need to check before you can

move to the next stage of the interconnection process?

And that's what FERC is setting out some standards for.

And so that might not, that might be a certain percentage of site control, I think order 2023 has that you have to have 90% site control before you can move to the cluster study process.

And then separately that you need to post certain financial collateral to show that you are not just invested but then you have some skin in the game, and some of those deposits are are forfeitable, if you pull out of the queue and as you get later

into the interconnection process, a larger portion is forfeited.

And so all of these checks are supposed to work together to make sure that the

interconnecting generators are serious about planning to achieve commercial

operations, that they're not taking speculative queue positions and beyond

their intentions, that they actually have the money to back this up, that these

are serious projects that are going to be added to the system and therefore are

worth the transition providers taking the time to include them in the cluster

studies and to allocate them costs.

Yeah.

for me, if people are really curious about the details, because no doubt there's a lot of details,

both in the summaries, and then if you really get crazy, look at the order. They do have some very

specific and tangible commercial readiness requirements, which people can kind of look

at to get a better feel for it. Definitely. That's a great reminder.

What we've heard is that some people have already implemented some of these actions,

some people being some transmission providers, I guess is the right word to say.

And so I guess, Cece, if you could just like speak to that, and then like, yeah, I guess

just starting there, like, you know, some people have done this, but we're really raising

the floor here.

Right?

Absolutely.

So I can just give a brief overview.

I know that I did some quick digging and found out that KISO, MISO, NISO, and PJM had already

submitted proposals.

And in some cases, we're already using a cluster study process.

So, that represents California, the Midwestern part of the US, New York State, and the Mid-Atlantic

out to Chicago for those people who are listening who may not be as familiar with those regions.

And I think one thing that's worth pointing out is that BERC, as you said, tends to raise

the floors, right?

This is not an untested process.

Cluster studies is something that has been done before, that other RTOs and ISOs have

done successfully for a number of years in some cases, and ISO has had a classier process

for a long time.

And I think that's one reason that the commission may feel confident taking such definitive

action is that they're not requiring something untested.

This is a process that not only has been in place and used successfully by certain regions

of the country, but has also been shown, at least in those regions, to contribute to relieving

some of the interconnection queue backlog.

So I think one way I like to think about it is that FERC is likely never going to be the

first mover in an area.

And that's for good reason.

I mean, if FERC came out and required transmission providers to do something that was untested and

maybe wasn't feasible in the end, then that might set back energy policy and, in this case,

interconnection queue reforms a number of years. But I think by waiting to see what works in

certain parts of the country, and then, as we've talked about, grazing the floor,

making sure that once something's been shown to work, that every part of the country can

implement that and can use it to more efficiently process their interconnection request,

I think that's really one of the benefits of having a federal regulator is to be able

to provide that consistency and whether the transmission providers want it or not to spread

some of those best practices across the country.

One question I had related to this to pull on this as a little bit more, would it be

fair to say that this practice of kind of seeing what works in different pockets of

the country, like maybe at the state level, maybe at the market level, and then using

that given that it works like federally is something that has been done before or is done

often? Yeah I don't want to get too far ahead of myself here but I think there are some recent

examples that we can really look to. So I think order number 841 was a really good example. There

had been regions of the country where energy storage was being deployed and deployed effectively

but was running into certain barriers where energy storage resources weren't getting compensated for

the full range of services that they were technically capable of providing.

And there were some regions that were starting to experiment and were calling energy storage

negative generation, or were trying to figure out how to solve some of these problems of getting

these energy storage resources paid for the electrons that they're putting onto the grid.

And I think FERC served kind of a dual role when thinking about energy storage. One was a

convening authority that the commission organized a series of technical conferences that brought

people together from different regions of the country to talk about what was working

for them or areas for future improvement.

And then the commission used its rulemaking authority to direct certain regions to comply.

And I think one thing that we saw in the energy storage context at least was a little bit

more flexibility than we see when we're thinking about interconnection.

And part of that comes from having a new technology.

I mean what 841 required was that energy storage resources be able to participate and

And what that means for transmission providers, and in this case it was for independent system

operators and regional transmission organizations only, was that they develop a participation

model.

But that participation model was really more guideline-based than prescriptive, and the

commission left a lot of the details to the compliance process.

And so I think that was one example, a little different than interconnection, kind of along

the same lines.

order number 2022 took a similar approach when it talks about requiring transmission – excuse me,

independent system operators and regional transmission organizations, again, to develop

a participation model for aggregations of distributed energy resources. It was the

same sort of requiring a structure but leaving the implementation details to a case-by-case basis.

And I think you can see shades of that in 2023 with interconnection.

And interconnection we know a little bit more about, where the order is a little more prescriptive

because there are these procedures like first ready, first ready for cert processes and

cluster studies that have been broadly successful across the country.

But there is still some room for flexibility.

And this is something I wanted to mention earlier, which is that the ISOs and RTOs,

in complying with order number 2023, still can take advantage of what's called an independent

entity variation.

What that means is that there is some level of deference given to the fact that these

RTOs and ISOs are independent organizations that operate their grids and have some level

of expertise and also facility with the interconnection process themselves.

And if there are things that work in certain parts of the country for one reason or another

that may not work everywhere, the ISOs and RTOs are free to propose and explain to folks

why their alternative is actually comparable.

This is something that can get a little confusing,

so maybe it's worth touching on here.

The ISOs and RTOs have one standard,

independent entity variation,

where as long as their proposed option is comparable

or equal to what the order requires,

it may get approved by FERC.

If you are outside of an ISO or RTO region

and you're a transmission provider

or in that other non-restructured part of the country,

you do have a higher standard.

Maybe last thing I just wanna like say on this section,

and then maybe we can move on.

I just think this is very cool to see that things

that work in kind of smaller geographies

can get adopted as like good models.

And so if anyone says like,

why should I really like get active in my local community

and like get a new legislation passed just for my city

or just for my state or something like that,

I think the point is, if you can prove that it works, then it's a model that kind of

maybe the state can adopt or it could even get adopted at the wholesale market or the

federal level.

And so I think personally, one, help your community because it's good for your community

and it's the right thing to do, but these things can be proof points that can eventually

get adopted at broader scale, which I think is really cool to see.

Yeah.

I would just add that.

I would just add that, you know, this is where urban planners, this is where we get our best practices from, like, from real things that real communities do.

So this podcast is called InDERmediate, with the DER being distributed energy resources. So what are some ways that you think that this order will impact DERs?

Yeah, that's a great question. When I looked back at order number 2023 before this podcast,

I realized that most of the reforms, or at least many of the reforms, are focused on

the interconnection of large generators. But order 2023 does direct transmission providers

to modify their small generator interconnection procedures. So those are the procedures used

by generators that are less than 20 megawatts in capacity. And that those modifications

should allow for consideration of alternative transmission technologies and some other discrete

changes. Order number 2023 also requires transmission providers to maintain a publicly

available heat map of available transmission capacity. And this is something that I think

system modelers at least are getting pretty excited about. I'm not a system modeler. I'm

also somewhat excited about this because even though some people who've criticized the order

have said that this is a pretty heavy lift for transmission providers, that they have

enough to do. They shouldn't have to build and maintain these heat maps. This is really

kind of a key for distributed energy resource developers, because these heat maps are

essentially treasure maps to show which parts of the grid are underutilized. And if you're – if

you have a low budget, especially because you've got a small resource or a number of small

resources, if you have a heat map that's being updated, if not in real time, at least relatively

recently, that can show you where there's headroom on the system, well, that's really a key to

unlock some easy, low-cost interconnection. And small generators typically have their

own interconnection procedures that are dependent on the distribution utility and their systems,

but I think the heat map could be a really powerful tool if you're developing distributed

energy resources in figuring out where you should locate those resources, not only to make sure they

can get hooked up to the system, but also to give them a chance at making money, at relieving

congestion, and at being in a location of the grid where they're really providing value to the

system. Yeah, I'm also very excited about the heat maps. I

didn't see that. I'm curious to see what that looks like.

Go heat map. I'm so excited for the heat map too. I'm sure

energy Twitter will be very excited as well to have more

things to screenshot.

Oh my gosh, I hope energy Twitter survives for the era of

the heat map. Energy X.

I'm assuming it'll be like the, the heat maps with prices. I

hope it is.

Lulumastodon Skythread.

And then without saying like specific names,

just to be neutral,

I know there's some startups that are like

kind of working on heat map type products as well

for like project developers

and people developing projects to use,

which I also think is really cool and I love that.

That's great.

Folks can name names in the comments.

I'd love to see those.

So we love heat maps.

I think we could talk about them for a while.

Do you think that's like the main takeaway for DERs?

or do you think there's other like key areas?

You know, I'm not really sure.

I think honestly,

and this is something we'll start to talk about

just in the last part of the episode.

I think one thing that I wanna emphasize

is this process is just beginning.

We can talk specific dates and compliance,

but one thing that I saw from following

the compliance process for orders 841 for storage

and 845, which was the last round

of interconnection procedures,

is that there are some questions

that transmission providers haven't figured out yet,

and even FERC may not have figured out yet.

and only when those issues are raised by transmission providers to attempt to comply

or by stakeholders whose projects that are under development are affected will we start to iron

out some of the details. So I think maybe I'll put a pin in that for implementation details. I think

we'll start to see pretty soon what parts of this final rule DER aggregators are interested in

debating and whether some of those proposals make it into FERC orders in the form of compliance

orders on compliance filing.

Yeah.

And I think to touch on that, cause this maybe is intuitive, but like, isn't

totally obvious unless you think about it for a second here.

Um, and we are like, so an order gets issued, right.

Or whatever process, like whatever step in the process we are today.

Like, could you raise that up one level and just let people understand

like the full process from, or like the life cycle of a fork order or like

whatever the right way is to say that.

Oh man.

Yeah, I'll do, I'll do two parts.

So I think it makes sense maybe to start with going backwards.

The way that a rulemaking is initiated is typically by a notice of inquiry, an NOI,

and that can be a number of years before the final rule gets issued.

And after the notice of inquiry, the commission takes comments in many cases and will start to

scope out the range of problems that it may want to address in a single rulemaking.

And the next step is to issue either a notice of proposed rulemaking, a NOPR, or in some

cases for really big rules, there'll be even a step before that, an advanced notice of

proposed rulemaking, an ANOPR.

And through either the ANOPR, NOPR process or the straight NOPR process, the commission

will set out the range of possible issues that will be addressed in the final rule.

And that's a somewhat binding range.

There are legal reasons for that, but essentially the stakeholder community needs to be put on

notice that these are the things that the commission is considering changing, and if

you have comments to submit on this range of issues, submit them now.

And typically, because that NOPR has to be almost entirely inclusive, the only changes

from the NOPR to the final rule stage tend to be determining which issues not to take

up yet.

Because, again, you can't put in a new issue in a final rule without notice, without adequate

notice of the stakeholder community and an opportunity to comment on those changes.

And so the progression from the NOPR to the final rule will essentially just be a removal

of certain issues that the commission has decided based on stakeholder comments are

either not right for consideration or the commission needs to gather more information

before they're ready to move forward.

And then you get to the stage just before where we are now, which is the issuance of

the final rule, which happened over the summer.

And that's when the final requirements are written down and the commission explains that

the requirements will go into effect at a certain date in the future, and that all of those

implicated, in this case transmission providers across the country, will need to submit compliance

filings to show either that they're already in compliance with the rules or that they're

making changes to comply with the rules and laying out what those changes are. And so that's

really where we are right now. For compliance, the rule was published in the Federal Register

in September, and it becomes effective in early November, which is just a bit of a quirk of

official effective date. But we're really well on the way towards these rules being translated from

prescriptions to actual policies and procedures. Because compliance filings are due starting in

February 2024. And the commission has signaled that it's interested in moving quickly through

this process. Often final rules will give longer opportunities for compliance, maybe 120 or 180

days. But order number 2023 provided 90 days. And that is a pretty strong signal to transmission

providers that commission serious about changing these timelines and improving efficiency immediately.

So that'll be interesting. I mean, complying with large final rules like order number 2023

often takes multiple rounds of compliance. That means that transmission providers will be submitting

proposed tariff changes and FERC will be reviewing those changes and then telling them where yes,

you've achieved compliance or no, you're not there yet. And that's going to be an iterative process

over the next couple of years. So I think it's just helpful to get a sense in terms of timing,

how long this can all take. I don't remember exactly for order number 2023, but often this

can be a process of three to five years total, from scoping the notice of proposed rulemaking,

trimming the issues into a final rule, issuing the final rule, and then processing several rounds

of compliance. I think that compliance for order number 845 only wrapped up a year or two ago,

so that was issued in 2018. It may have taken three years to get through to the point where

every transmission provider with compliance.

And I think we could probably expect

something similar for 2023.

Yeah, going off that, I'll also add that

regarding DER aggregations, you know,

just because order 2222 became final and passed and whatnot,

they're still going through compliance for that.

Yeah, that's a great point.

Just because, you know, you can have DER aggregations now

doesn't mean that everyone's complied.

We don't necessarily know how they will comply.

and so therefore we don't necessarily know how that will interact with this order.

Great point. This is where we bring up toasters again. Just because everyone's working on

compliance doesn't mean your toaster can participate in the grid. Exactly.

We love toast. So I guess we're certainly making progress here with order 2023, but

can we sort of get a feel for like what's next and maybe what the key open areas are that might

be kind of improved upon from here are. Yeah, definitely. I think this is one of

the most interesting areas for discussion. So, when we think about interconnection procedures

and what needs to happen to continue to facilitate more efficient interconnection,

I think one thing that's really important is to remember that interconnection and transmission

planning are really interrelated. And you can look to some of the Commissioner's separate

statements for hints at next steps beyond the scope of Order 2023. And a couple of those issues

really do focus on this transmission interconnection interface. So one thing that order number

2023 did is that it's declined to require any additional integrated transmission planning

or to require reforms to how transmission providers allocate the cost of new transmission.

But this issue of transmission planning and especially, you know, more thorough transmission

planning is something that both Commissioner Clements and Commissioner Christie flagged

in their concurrences. And one other issue that's related is inter-regional transmission

development. It's been something that FERC has talked about, at least individual commissioners

have talked about over the last couple of years. And I think those who work in academia,

those who post on Energy Twitter have talked about inter-regional transmission planning

and development as kind of this holy grail, whether it's the macro grid that you see or

whether it's just making more efficient processes to consider transmission lines or transmission

upgrades that can benefit more than one system. That's an area that is outside of the scope of

this order and probably still a focus for the commission,

but something that because it's by its nature inter-regional,

I think we'll have to be a more collaborative solution

rather than maybe something so top-down.

But there are also a couple of issues that I found

really interesting from the commissioner's concurrences.

One of them was that Order 2023 declined to

change the funding requirements for upgrades on affected systems.

Affected systems are transmission providers,

but we can think of them as the unlucky third parties here who get affected.

So, for example, if you have a new power plant that's trying to interconnect in Virginia,

but it interconnects in southern Virginia, the transmission provider could be Dominion

and the interconnecting generator could be trying to participate in the PJM market.

But because of the physical topology of the transmission in that area, there may be electrons

from this new generator in Virginia that actually will affect the system in North Carolina operated

by a neighboring transmission provider. And so that North Carolinian utility that owns its own

transmission system may also need to build upgrades to facilitate the interconnection of

a generator nearby, and that's an affected system. And there are different rules for

different parts of the country right now that govern both what affected systems have to do,

whether they have to do those actions by any sort of date certain, and then how those upgrades,

if they build them get paid for whether it's passed along to the interconnection customer,

whether it's refunded by the neighboring region. That's an area that Commissioner Christie

highlighted as being a potential area for further inquiry and maybe for the rulemaking and that's

something that I would love to see and especially love to learn more about. And then kind of along

the same lines about you know shifting costs and who pays, again both Commissioner Christie

and Commissioner Clements, but especially Commissioner Christie, emphasized that Order

Number 2023 declined to address certain other cost allocation issues. Again, this challenge,

perennial challenge of who pays and is it the person who caused the cost versus the person

who benefits from the infrastructure? That's something that I think will keep energy regulators

busy for a very long time. Cool. Cece, thank you so much for joining us. This has been awesome for

me, especially as someone not as familiar with policy and FERC and regulatory things

like this.

I feel like you allowed me and Pam has always allowed me to engage, even though I'm outside

of my comfort zone and I've learned a ton and I hope other people did, so thank you

so much for coming on.

Absolutely.

Thank you both for having me.

It's always great to talk interconnection and I think outside of our comfort zones is

something we can all have in common, right?

These are pretty weedy rules and I think unless you're an interconnection engineer, it's going

be hard to know exactly what all of it means, but it's great to talk about it and to try to

try to wade through some of that together. Thanks for listening to this installation of

the InDERmediate Podcast with CC Coffee and our hosts James Gordey and Pamela Wildstein.

I'm Ben Hilborn and you can find us anywhere you'd like to download your podcasts such as Spotify

or Apple Podcasts. You can also find us on the web at InDERmediate.com.

If you have any questions or comments about this episode, feel free to email us at InDERmediate

at gmail dot com.

See you on the next one.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com

Summary

Ben and James are joined by Carl Lenox from Sunrun and Spencer Fields from EnergySage to shed light on all things solar. They start by diving into solar’s history with a special nugget on Albert Einstein’s pioneering work on the photoelectric effect which netted him a Nobel prize back in 1921. Then Ben stokes the flames of a hardware jam session that covers the solar system, Christmas light string inverters and a three minute face melting solo on maximum powerpoint tracking 🤘. The episode wraps with a rundown on buying rooftop solar and solar ducking utility bills.

Episode chapters:

* (1:05): 👋 Carl and Spencer

* (2:07): Ice breaker #1: How do you learn about clean energy?

* (6:01): Ice breaker #2: What energy topic are you currently most interested by?

* (16:06): Solar’s history

* (19:15): Solar efficiency

* (25:04): Cost down and manufacturing

* (32:20): Types of solar

* (39:27): Solar PV hardware

* (43:59): Holiday season & micro-inverters

* (50:36): Ben “MPPT is essential”

* (53:31): Rooftop project steps

* (1:00:53): Financing & utility bill savings

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

Relevant links we found helpful

* General resources mentioned as helpful for learning

* https://www.ctvc.co

* https://www.canarymedia.com

* https://dertaskforce.com

* F-150 Lightning: Ford Intelligent Backup Power | F-150 | Ford

* Solar basics

* Solar history: Timeline & invention of solar panels

* A guide to the energy transition by Tsung Xu does a good job on historical cost curves of solar and other technologies

* How solar panel cost and efficiency have changed over time

* https://www.nobelprize.org/prizes/physics/1921/einstein/biographical/

* Community solar overview

* Community choice aggregation in California

* Microinverter vs String inverter

* Maximum power point tracking

* Solar financing

* Solar panel utility bill savings by state

* Interesting state specific utility tariffs for solar

* California’s net billing tariff

* North Carolina's new net metering policy

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

What are those things that we have now available that are renewable that can be worked in quite a different way into the economy of the United States? Which are concerned primarily with the design of nuclear power plants and this type of thing. Hi, I'm Pamela Wildstein. I'm Wyatt Makaronski. I'm Ben Hilborn. I'm James Gordey. You're listening to Intermediate. Intermediate. Intermediate. To Intermediate. Intermediate. The place for people trying to get into or already working on distributed energy resources and clean energy. This is the podcast that makes it easy to learn how the grid actually works beyond the obvious. Hey everyone, this is James Gordey. This is episode three of the Intermediate Podcast. Today we're focused on solar. In addition to myself and Ben Hilborn, who's a regular on the show, we have two guests today. He's our first guest and we're really excited. I'll let them introduce themselves, maybe starting with Karl. Sure. Yeah. So I'm Karl Lennox, currently the VP of product at Sunrun, been in and around the solar industry for about 20 years, starting in a, you know, engineering product development role and then moving into product management and strategy. and I've seen a lot of stuff. So I'm hoping to chat about that today. I'm excited. Awesome. And I'm Spencer Fields. I'm the Director of Insights at EnergySage. I have not quite 20 years of experience in solar like Carl does, but I have 10 years in clean energy. I started out as a consultant at Synapse Energy Economics before moving to EnergySage five years ago. And even in the last five years alone or 10 years, uh, the pace of change for clean energy and solar in particular has been truly remarkable. So also very excited to be on the show and thanks for having us. Yeah, absolutely. Um, and so before we break into the core content here, I thought we could, um, get warmed up a bit. And so we have two kind of icebreaker questions here. Um, maybe we'll each let you answer, uh, kind of in the same order we did the intros. Um, the first is just, you know, for you, this show is all about learning about energy and DER is beyond the obvious. Um, what's your kind of go-to way about learning about this, this sort of information, Carl? Oh, wow. Interesting. So I think for me, it's like, it's like the sea I swim in. Like to be very honest, um, uh, I, I to kind of learn about what's new and what's coming. I actually, you know, spend a lot of reasonable amount of time connecting with startups and innovators in the space who were kind of thinking about problems in new ways. Sometimes they're thinking about problems the same way as somebody who's thought about that problem 10 years ago and maybe they've figured out a way to overcome a barrier that was insurmountable at that time. I also obviously keep up on the media sources that people tend to follow in this space. I think Canary Media is a great one, for example. But, yeah, just in general, you know, just keeping ears open, eyes open, talking to smart folks as much as I can, and always, you know, challenging myself to challenging my priors. That's one of the disadvantages of being in this space so long as you do come with a lot of priors, which is sometimes good and, you know, but it's always important to challenge those. So I do try to do that every day. So I don't know, that's my approach. You know, it's interesting, I'm absolutely with Carl in terms of paying attention to the main media sources, really Canary Media, obviously paid attention to GTM before Canary, but love what everybody's done when they built the new publication there. I think beyond that, there are a couple of newsletters I follow, obviously pay attention to what's happening in the DER task force and the Slack channel, I think that's a connected to get here. But my favorite newsletter in the space is the Climate Tech VC newsletter, which if you're not subscribed to is really, really wonderful. And they just raised some money to turn it into a sort of a bigger platform and begin to build their voice even more. So I'm excited to see what will happen with them. But that's the main way. And then I think beyond that, it's getting asked questions by friends, family members, coworkers, other folks in the space and thinking that I know a lot about solar clean energy. And then as soon as somebody asked me a question, realizing that in fact, there's still a whole heck of a lot more to learn. So like Carl said, keeping ears open and really trying to listen to what it is that people are asking. Yeah, and I'll add to that too, I think. So first of all, I should have also pitched in on the DR Task Force in general and the Slack community specifically. It's just a great way to connect and really ask all sorts of people who have tons and tons of experience on really any topic. I'd also say that to the point of talking to friends and family and things like that, neighbors, people in the street, you can tell you're interested in this stuff, is a really good way to learn about how people who are not in the space look at the space and the kind of questions they have, that continues to be eye-opening for me, frankly, because it shows you what people really care about, and that's ultimately what we need to care about, right? And so it's not exactly learning about solar, but it's learning about how other people think about solar and other DOs. Yeah, and I mean, I think all of us here, right, we're always learning. We think we know, and then people ask the question, like Spencer said. Carl, do you have a specific aspect of DER as an energy in general that you're still like exploring right now or curious about? Yeah, for sure. I think, you know, one area of keen interest, you know, to me is the vehicle to grid space. It's an emerging space. I think there's, it's one of those areas where actually there's probably more questions than answers for everybody, right? There's still a lot of things that need to be out. So it's one of those areas where, you know, there's just a lot of inquiry happening about how should it be, and what are the constraints that are real, what are the constraints that are regulatory or there for historical reasons, why are those constraints in place. So that would be like for me the top of mind, but you know there's many examples of that. I think like one of the interesting things about the DER space is that there is like layers upon layers of historical practice and rules and regulations that can sometimes actually be kind of hard to bottom out. If you really want to understand why do we have this rule in place, oftentimes you learn it's kind of a rule of thumb. And then it's like, well, why is this rule of thumb in place? Where did that come from? And actually, it can be, it can take like several levels of digging to kind of bottom that out. And then you sort of realize, like, maybe like, does that still make sense? And if not, like, what can we do about it, right? So I think I think that's another sort of class of open questions that's always intriguing to me. Yeah, super interesting. And, you know, you sort of pulled the words right out of my mouth, Carl, with vehicle to grid. And I think bidirectional charging in particular for electric vehicles certainly opens up a lot of opportunities. It also opens up a ton of questions. I think, you know, even today, a colleague of mine was asking, hey, why did you select the level two charger that you did? Why didn't you select a bidirectional EV charger? And I think there's this sort of already this misconception around what an EV can do. And obviously, Sunrun is working directly to try to change, take that misconception and turn it into a reality. But when Ford ran a Super Bowl commercial two years ago with the F-150 Lightning Electric and said, this will power your home in a blackout. At that time, that was not true, right? That didn't exist in the US. And so there's this sort of difference between the reality of the products and getting closer to what it is that consumers want. And that's always been the case in solar, right? At the beginning of solar, there was this notion that, oh, if you have solar panels on your roof, you'll still have power in the blackout. That is not how it works. Then it became solar plus storage. Oh, you'll be able to power your whole home in the event of a blackout. And for most folks, that's not the case, or it's not the case without a lot of batteries. That doesn't mean that you don't have resiliency in the event of an outage, but there's sort of this missing 10 to 15% of the consumer perception of how solar works. And now finally we're getting to the point where actually this technology is going to provide the benefits and the services that people want. And so I think that sort of gets to what I'm really interested in in this space, which is primarily virtual power plants. Because all of these distributed energy resources, when you start stacking them in an individual home or business, Now all of a sudden you have a fully operational power plant in your home and that can provide a ton of different value streams to a utility, to a grid operator, and understanding how to monetize that appropriately for the homeowner to make it worth their time to forgo comfort, to not forgo comfort, and to make it worth their while to actually participate in these programs, because I think there's a ton that they could do, but they haven't seen a ton of success yet, in part, in my mind, and Carl, you'll come from a different place than me on this, in part, in my mind, because the incentive structure just isn't there for a homeowner to say, okay, yeah, utility, you can come use my battery 20, 50 times a year in exchange for 150 bucks over the course of the year, when I'm getting battery to be as far removed from the utility as possible. So that's sort of the space that I'm interested in seeing how we move from taking what's a really cool idea and has potentially huge ramifications for the clean energy build out in this country in terms of deferred transmission and distribution costs, in terms of integrating more renewables, et cetera, et cetera, and turning that into something that consumers actually want and actually start to adopt. Yeah, Spencer, I 100% agree with you actually. And it is to our earlier discussion it actually is like one of my huge open questions about DER is like, why is it so difficult to make a scalable, viable, consumer-friendly virtual power plant offering? Now, of course, we're doing that in various places around the country. They're always a little bit bespoke. So why is that? Why is it that it's so difficult to work with utilities to create these programs in some cases? Why is there a set of misalignment here? What can we do about that? So these are sort of existential almost, or almost philosophical in some degree. But so it's not really about facts so much as it is about just political realities, economic realities, how to kind of cut through these, you know, what do you call them? I would say hairy problems. Anyway, you know, just cut through the Gordian knot of some of these like areas where I think, you know, the solar system has historically kind of been in opposition, you know, and utilities have found themselves in opposition. And I think, you know, how do you find yourself so that you're actually actually have that alignment to deliver like what's really the best experience for the customer? Because what you don't want And from a technology standpoint, I think over the next five years or so, we're going to see that it's going to be viable and economically feasible for some customers to leave the grid if they want to. Nobody wants that. That's not a good thing. The network effects that you get from interconnection with your neighbors and your community via the electrical grid is valuable. And so, like, but you need to be able to deliver that value to customers, and they need to be able to see the value, right? And you have to share that value appropriately among different parties. And so that is like, I think, a huge open question for our industry. And I really resonate with that as someone who's, you know, been in energy about maybe two or three years, spend so much time and energy and effort just trying to like learn things as they exist and how they are so I can orient myself that I don't have as much brain capacity to like synthesize and think about like what should it be how can I drive it in the right way because it's just such a steep learning curve right and like you're trying to figure all these things out much less drive them in the right place. So there's a lot of power in these detailed things that are they're pretty nuanced so like a number of years ago there was a or a kind of a received truth in the industry broadly speaking that you can only get distributed solar right like no more than 15% penetration like you're never gonna be able to get beyond 15% of your power on like a district on a distribution circuit from from solar and you know people are saying we're gonna reach that pretty soon you know so you know the next in the next few Here's like, where's this coming from? Is this really true, right? And so it started to dig into it and what you find out is this. So where does 15% come from? So 15% came from this idea that in a normal distribution circuit, typically right on average, your peak loads and your minimum loads. So your minimum loads are about one third of your peak loads, right? And so at the time in particular, they really only measured annual peak loads. So in every circuit they had a number and that number was the annual peak load. Say cool divide that by three all right and you're like an estimated minimum load and then to be safe we're going to cut that in half and then we're going to round down 15 percent. That's where this came from and moreover it actually wasn't a hard and fast rule it was actually intended originally to be a screen so if you were above that 50 percent threshold that kicked you into a situation where you needed to do studies and things like this But it was received as this sort of like, you know, wisdom from, you know, the gods, right? Well, it turns out that like that's, you know, it's a lot more nuance than that. And we worked through how to represent solar more appropriately. By the way, that made no sense for solar because your minimum load is usually in the middle of the night, right? So as you work through, you know, you kind of work through those things and you realize like, oh, actually, yeah, we can easily go to 100% of minimum load or we can go even higher than that. And that's actually been, you know, revised and interconnection codes all around the country to kind of take this new knowledge into account. But that all starts with like, just sort of questioning, like, where did this never come from? Yeah, and so to jump into it, what I thought we could do. Yeah, no, this is great. I'd say like, this is our first episode with guests and like, very clear to me, listening to you guys go back and forth, like, definitely we should have our guests because just like the level of like, expertise really flows through beyond like us in our current level. So what I thought we could do, Spencer, I found an article from EnergySage where you give a brief overview of, and shout out to you all for your content. You do a great job. It's definitely helped me a lot. The history of solar, just so good people have some historical context. And then if we could, bonus points, overlay on at the different key milestones in history, talk about the cost so people can understand how we've gotten to where we are today of solar being just like a fantastic and economic solution. Yeah, totally. Thanks for the energy sage shout out and for coming and reading our content. Yeah, so the history of solar is pretty interesting. I mean, I think there's a little bit of debate around who the inventor of solar cells or solar panels truly is. There are some folks who credit a French scientist named Edmond Becquerel who in sort of the 1800s found the photovoltaic effect. There's some folks who in the 1870s discovered that selenium had this photoconductive potential which basically means that when sunlight photons hit this material the electrons start to basically bounce around 1883 Somebody by the name of Charles Fritz produced the first solar cells from selenium wafers And so some people credit that man with the invention of solar cells But the way that we think about solar cells today, they're made with silicon, not selenium. And so some folks point to Bell Labs in 1954 as the inventors of the, the true inventors of PV technology, because that was the first instance of solar technology that could actually power an electric device for several hours of a day. And so, I don't have the exact cost of what that particular panel was, but in 1954, that first ever silicon solar cell could convert sunlight at 4% efficiency, whereas today, solar panels on the market, like the best-in-class residential solar panels, are over 22%, 23%, maybe even approaching 24%. So pretty significant change in the quality of solar cells in the technology over time. I'm actually curious. I haven't looked recently, but what is that curve looking like? I assume that there was some sort of kind of accelerating exponential of, okay, we're getting rid of the early bugs and having some big leaps and bounds and I feel like the past few years, it's really been half a percent, 0.1% increases in efficiency every year. What is that looking like and what do you think is it is gonna take to change that? Yeah, I'll go first then. I'm very curious to get your take on this as well, Carl. We see sort of in the residential space in particular, we see very incremental gains in terms of efficiency. for solar panels. A lot of the announcements that you see around larger and higher watt class solar panels, so you know a solar panel is rated in terms of the number of watts that it can put out. And then also we talk about costs in the solar industry in terms of dollars per watt, the same way that you talk about dollars per square foot when you're looking at an apartment our house. So watt is sort of our standard metric here. You know, even five, ten years ago we were looking at solar panels that were under 200 watts. I was actually at a solar install today that was using 405 watt solar panels that are the same form factor effectively as those older solar panels that were 200 watts. When you see these higher watt class, power class solar panels that are coming out that are 500 watts, 600 watts, they're huge, they're gigantic, like they take up more space than a typical residential solar panel does, which is, you know, a typical residential solar panel is about four by six, so it's about the size of a hockey net, for comparison's sake. Whereas these larger ones are going to be, you know, maybe even eight feet tall. So, in terms of where the efficiency is coming from, certain folks in labs have modeled efficiencies over 30 or 35% with perovskite. I'm probably butchering how to actually pronounce that, cells and that technology. But in my mind, you know, most homes today, sorry, let me step back. Solar panels are powerful enough that by covering the side of your roof that faces the most southward, you can power more than your electricity needs for an entire year for an individual home, right? So most homes have 500 square feet or more of usable roof space, and you're going to be able to fit 8, 9, 10 kilowatts of solar in that space, and that's going to produce more than an individual home is going to use over the course of the year. Certainly with net metering, that changes the way that you calculate the benefits and the credits and the value of solar. But, from my perspective, I think that there isn't as much of a need for efficiency gains in residential panels in particular because they're already powerful enough to accomplish what they set out to do, which is power an entire home. Now maybe that equation changes as folks electrify more and more of their homes, right? So if you move from an internal combustion engine car to an electric vehicle, now you're charging at home you know once every two weeks once every week once every day that's that all of the sudden is the largest appliance in your home by a mile you know if you're trying to fill a 70 80 100 kilowatt-hour battery every day compared to the average residential usage of 30 kilowatt hours a day right so that's that could change the the calculus pretty significantly once you install heat pumps if you move to induction stoves as you electrify more things in your home, you're gonna use more electricity, maybe now you become space constrained again, and there is this need to really push for higher efficiency solar panels. But again, Carl, I'm really curious to get your take on that too. Yeah, Spencer, that's exactly right. I mean, I think efficiency is actually a really interesting topic to dig into because again, kind of coming back to how consumers think about solar, For many people, the first thing they think of is efficiency as a proxy for technological sophistication as a proxy for quality, when in fact, it's almost like when you think about when you use it by a computer and you care about how much ram it had or the clock speed of the chip. Nobody cares about that anymore, because it reached a point where it didn't have a practical difference. And efficiency is kind of like that. In a lot of cases, all efficiency is impacting is basically the physical space, the amount of kilowatts that you need takes up on your roof. So if you can get the amount of kilowatts on your roof, doesn't matter what the efficiency is. As Spencer points out, if you start to run into space constraints, that efficiency becomes valuable to you. And that's where it matters. And electrification is certainly gonna drive that. In terms of the evolution of efficiency, it's actually interesting because it's actually been, I think, fairly linear over time. The real innovation and exponential impact on solar has actually been in cost down, right? So that's where you see kind of your experience curves, your 15, 20 percent per doubling of cost reduction. Efficiency comes with trade-offs. So I spent most of my career SunPower. SunPower is very well known for its high efficiency modules for its special cell technology and they were for a very long time and still today they have the highest commercially available efficiency modules. The cause of that is in order to achieve that level of efficiency you have a much more complex manufacturing process and every step in the manufacturing process of solar cells you have an issue of yield. So every time you move a cell with a robot from one station to another station, a certain percentage, a tiny percentage of those cells break. And the further along you get in that process, the lower your yield is, right? And so, and by the way, in order to create that process, you have to invest a lot of money in specialized tools. And you have to have literally a bigger factory because your lines are longer, right? And so, it becomes like this question of, yeah, you can get higher efficiency, but at what cost? And what's that cost efficiency trade-off? Because yeah, I can get an extra couple of points of absolute efficiency, but it may not be worth it if I can just add another couple of modules of lower efficiency to create the same power in the same space or in a little bit more space, right? So that's how this kind of ends up playing out. And I think you touched on something that, Karl, that James asked us to cover that I missed, which is, how have the costs of solar changed over time? And I think that's sort of a natural transition. Yeah, and so, exactly. So the cost of solar has really come down over time, especially the installed cost for residential systems. Like Carl said, there's so much efficiency from learning within the industry, not only for the installers and the manufacturers and the sales teams, but also for the authorities having jurisdiction, the AHJs that have to come out and inspect these systems and provide the permits for them and the utilities that have to provide permission to operate and interconnect to the system. So for those that aren't intimately familiar, what is an AHJ? An AHJ is basically a local permitting office, so an authority having jurisdiction. So, they're the ones, you know, for instance, they're the local building code or electrical inspector or fire inspector, depending upon the municipality, that come out to your site and do either a spot check or a sort of a more in-depth check on the quality of install the system and make sure that everything is electrically set up and installed to code, whatever that code is at that individual municipality. And that's basically what an AHJ is and the role that they play in this space. What's really, I think, unique about solar is that each municipality is different and has their own processes. And so one of the largest sort of remaining sources of costs for, in particular, residential solar are these soft costs, which are permitting, inspections, interconnection, also sales and marketing. But I think permitting, interconnection, and inspection, PII, are things that are spoken about pretty regularly in an area that's really ripe for innovation and bringing down costs like what NREL is doing with the solar app. Yeah, I want to talk about cost and a little slightly different framework too. Like I 100% agree with what you're saying, but kind of going back a little bit of the history of solar and actually why is solar where we are today? So for the fundamental thing about solar technology, which it shares with some other technologies that I'll talk about in a second, is that it's extremely modular. So you think about it, at the beginning of the industry, first launched. Let me put space applications aside for a second, like terrestrial applications. Where was Bell Labs selling a PV module? Well, they were selling a $50 a watt PV module in a place where the only thing that could provide power to that thing was a PV module. It's like a buoy fully out in the ocean or whatever, or some remote tiny little light. And then you get into applications where like, oh, I need five modules to power my off-grid yurt or whatever in Humboldt where I don't want to connect to the utility because you know for reasons right well that's like actually like one of the places where the solar industry started was people who were like had a lot of cash we're not really cost-constrained needed power and you know we're kind of the middle of nowhere and didn't want to connect to the utility so that was like that was like the original original market and so but you could do that because you could buy five of these things and you could set up a one kilowatt system, that was possible. Like as opposed to any other kind of power generation where just the increment of it is larger, right? So the way that manufacturing learning curves work is the fundamental thing for solar is that just in general, when you manufacture a widget, that widget comes down in cost by some percentage for every doubling of manufacturing volume. In solar, we've had, I don't know how many doublings, right? But the basic principle is that PV module, whether it's 100 watts like it was forever ago or 500 watts now, you're still producing it in increments of a couple hundred watts. And so that mass production cost down is a huge lever, huge lever. That's why we've been able to create this kind of these curves. And the same thing exists for batteries, right? That's why lithium-ion batteries, it's this little thing that goes into your cell phone, go into your laptop, now all of a sudden it's in your car, now all of a sudden it's in your house, now there's containers, 40 foot containers full of them, 50 of those containers on a site. Well guess what's inside of those things? A pouch cell, or a cylindrical cell, just like it's in your laptop 10 years ago. It's scale. Also, going back to history, Albert Einstein got the Nobel Prize for the photoelectric effect. That was what he got his Nobel Prize in. So there you go. That's a good, that is a good DER trivia. No kidding. Nobel Prize for physics in 1921. It was, you know, obviously theoretical, theoretical physics. So I don't know if it was directly, who knows, that's an extra good question. Hard to believe we haven't covered this yet. but I think now it would be helpful to just kind of describe like the world of solar and the different types. You know, maybe people have heard, we've talked about rooftop or commercial, or maybe people have heard about community solar. Like, Karl, I know you had some thoughts on this. Like, how would you describe the categories or characteristics or categorizations of solar so people can kind of understand what like all the buckets or types are? Yeah, sure, I could take a crack at it. So, you know, I think really The one fundamental distinction is what we would refer to as behind the meter versus in front of the meter solar. So behind the meter solar is your residential, your commercial, maybe even industrial scale. The main point being that you have a photovoltaic system that's installed by a customer for their own use to offset their utility use. So, you're offsetting retail rate electricity. There are some exceptions. I won't go into that, but that's basically the rubric. Front of the meter is where you're installing basically as a wholesale power generator in some form or another. And again, it gets very complicated in terms of how off-take contracts are structured and whether you're actually getting wholesale value or some other value. But at the end of the day, you're delivering that energy directly to the utility grid. you're not offsetting retail electricity. You're operating like a power plant, like any other power plants connected to the grid. So that's sort of one distinction. The other distinction I think people tend to think of is the turf in terms of scale, right? So residential, typically, you're gonna be similar between, I don't know, four and 10 kilowatts. Commercial can be kind of in the low end, like a small SMB, small medium business, could be 10 kilowatts up to, but it could be all the way up to a megawatt, right? You see, in fact, going back to history, when I first joined the industry, we were very excited when I was at PowerLite, which is a pioneer in the CNI solar space, because we sold the first one megawatt rooftop system that had ever been seen in the world. It was like an amazing moment. Now that's like bread and butter for hundreds of companies, right? Anyway, I think at one point we did some massive roof somewhere. It was like a 10 megawatt rooftop system or something. That sort of thing exists, but it's unusual. And then you could have also ground mount, in some cases. You can have carports in commercial. It makes more sense to put it in a car. So you actually have a pretty broad range of scale behind the meter. Front of the meter, you have everything from what we call kind of like a wholesale distribution interconnected. So you're interacting at what we call medium voltage, you know, directly to the distribution system at say like 20 kV, and that could be anywhere from like a 1 megawatt to have a 10 megawatt up to like maybe 20 megawatt. But still wholesale system connected to the distribution side, all the way up to, you know, a truly, you know, multi 100 megawatt utility scale system that's going to interconnect directly into the transmission system. that's going to look a lot like, you know, a large-scale conventional power plant. So, again, that modularity, right? You can literally go down to, like, you know, something that's sitting on your RV to, you know, hundreds of megawatts, and the basic unit of it is the same. I think that's helpful. Yeah, one open question I had, I guess, is community solar. Spencer, I know you guys are pretty knowledgeable about that. Like, where does that fall in here? I, you know, it's kind of like a funky, it's maybe in front of the meter, but the compensation method, you know, is on your bill. So it's behind the meter. So just like curious how that fits in here as well. Yeah, totally. You know, community solar is designed for folks who either can't or don't want to put solar on their property is basically the idea. That's a big piece of it. And then the second piece of it is to try to aggregate buying power of people who live in various communities or in certain utility territories in order to drive better pricing and to support the investment in solar. Those are sort of the, in my mind, the two main reasons behind community solar sort of existing. And so community solar is very much one of those generating assets that's front of meter. The on-bill credits that you receive for that are due to an agreement that the sort of your utility has come to with that developer or with that sort of owner of the facility or subscription aggregator. And so it's not that you've signed necessarily a power purchase agreement to get a certain amount of kilowatt hours per month or per year from that solar per se, it's saying, I wanna support solar and I'll get a, call it a 10% discount on a certain amount of electricity on my bill by supporting clean energy and participating in this community solar program. So it's a little bit more complex and there are some sort of accounting cartwheels that you kind of go through to explain how it works. But that's basically where it sits. Anything to add to that, Carl? No, I mean, yeah, I agree. It's a sort of a type of an offtake agreement in a way. I think the other kind of similar concept is what we have very commonly here in California around community choice irrigation where you have an electricity provider that's effectively like a retailer, right, except they're nonprofit and community owned or community managed, I should say, that is basically procuring in many cases actually building and installing solar, for example, that then is basically offsetting their purchases from the wholesale market. It's almost like net metering for a for a quasi utility, interestingly. But, but that's another sort of similar kind of structure where you can go and subscribe, I can get like, you know, the the green plus, you know, plan from marine clean energy, which is what I happen to be. And they're they're saying great, like, we've allocated, you know, that's gonna that's, that's gonna create additionality, because by subscribing to that plan, that's going to require us to build more solar to make sure that we can deliver against a plan that your your electricity is 100% green, right? Yeah, very cool. And for people not as familiar with the hardware side, I think everyone is pretty familiar with the concept of like a solar panel. We've talked about that a lot. But like, what is like a solar system? You know, what are the aspects of it just so people can actually understand it without having to install one themselves? And is there a better word than solar system? So you don't get people thinking you're talking about planets? I usually say PV system, but not many people actually, a lot of people get confused by the term PV, which stands for photovoltaic, by the way. First of all, we talk about panels, we talk about modules, we talk about PV. It's all kind of the same thing. It's that, you know, that flat-looking box that goes on your roof that does the magic. It collects photons, it turns them into electrons. That's a photoelectric effect, wave-particle duality. It's frickin' amazing. We'll talk about that another day. All right, that's the panel so that so first of all like what is for what actually let's talk about Like can we talk about that? Like what it what the hell is that? So a PV module is made up of a bunch of cells. All right, each cell is a diode It's a photoelectric diode It's kind of like a light emitting diode, but like in but backwards in fact Actually, if you forward bias interesting little known fact if you forward bias a PV cell Where you apply voltage across it and it's dark It actually is a light-emitting diode. It actually emits infrared light, and that's used to do quality control checks on solar modules. You can do a non-destructive inspection of cell cracking by looking at the patterns, by looking at that image. It's pretty cool. That's incredible. I knew the theory that, yeah, okay, it's a diode. I had no idea that there was a utility to just driving it essentially in reverse. That is fantastic. Yeah, it's an end-of-the-line test in every modco. If you go visit a modco, you'll see it. Anyway, but the bottom line is like, where I was going with that, is that the module creates DC electricity, right? Because you pump in photons, outcomes, essentially a voltage, you connect a circuit, they flow through the circuit, Okay, it's direct current. So fortunately or unfortunately, depending how you want to look at it, like we don't use direct current for the most part. We use alternating current. Why do we use alternating current? Well, because like our whole system was built up around like driving motors and driving generators and generators span at 3600 RPM, which creates 60 hertz or 10, conveniently drives a motor 3600 RPM, which is or 1800 RPM, which is very convenient if you're, you know, running a factory, right? So, plus for other reasons. So, anyway, so we got, we have to match that 60 Hertz, we have to match that 60 Hertz waveform the utility provides us. So that's what an inverter does. An inverter is a very cool piece of power electronics that takes DC and synthesizes an AC waveform. People don't talk enough about inverters and it's a key, key, key piece of technology. Actually, think about like PV systems in general and the evolution of technology and where is this all going? Two key pieces of technology were invented in the early 1990s that have enabled us to be where we are today. One is the inverter. One specifically, the insulated gate bipolar transistor, IGBT, which is the heart of an inverter, is the piece of power electronics that you actually is able to switch on and off. It's a transistor, right? So you switch it on and off very quickly. Solid state. And you put these things in a certain arrangement and by switching them on and off in the right sequence, you get a waveform, right? It's, by the way, also in every virial speed drive, in every EV, like it's a fundamental piece of technology for solar and really across electrification in general. So that's what an inverter is and how an inverter works. Also invented at the same time frame was a lithium-ion battery, by the way. So there you go. What a fantastic time in history. So very important that all these things happened to get us where we are today. So, those are like, I'd say those are kind of the two sort of major, you know, components. You think about what makes a PV system. You can make a PV system in your backyard a day. You buy a cheapo PV module. You buy, you know, an inverter from the hardware store and you plug those two things together. You probably want a battery too, but, you know, you can make that work. Modern grid-tied inverters are very, very sophisticated though, like because they have to synchronize with the utility grid and perform all sorts of grid protection functions. So we'll get into all that. I do have a question. Some terminology that I struggle with, the difference, and others might as well. What's the major difference between and benefits between a string or microinverter and an array single inverter? So as I've been talking a lot, I'm going to let Spencer take that one. Thanks, so micro inverters and string inverters perform the same function of producing that waveform that AC, you know, taking that DC electricity and turning it into alternating current, but they do it in different places, I think is the main way to think about it. So, a string inverter, you could also call a central inverter, and for a typical residential solar install, you only need one of them. And it's going to go on the side of your house, in your garage, next to...

to your utility meter, and it's going to aggregate all of the DC direct current output from the solar panels on your roof and convert that to that alternating current in a single location. And so that's why you could call it a central inverter because it's all happening centrally. It's typically referred to as a string inverter because the panels are all on input, individual strings and like literally like a string of Christmas lights yeah it's exactly that's the that is the most common analogy is a string of Christmas lights so if you it is it isn't a perfect analogy but and so the idea is that you're connecting all of these solar panels and the output from all these solar panels or call it up to ten solar panels onto an individual string and then bringing that string of electricity back down to the inverter where it's it's converted to alternating current. And most, you know, most typical string inverters today have can accept four different strings so you can have multiple different roof planes and not have to worry about the output from one of those impacting the output from the other. Can you go into that very for the audience why the output of, you know, one like a west-facing array would impact the output from a south-facing array if they were connected together? Totally. I'm gonna get into it and then have Carl correct me where I go wrong. So the reason that Christmas lights or a string of Christmas lights are used as an analogy, an imperfect analogy for a string inverter or solar panels that are connected to a string inverter is that, you know, historically if you had Christmas lights and one of them went out, all the rest of the lights beyond it on that string of Christmas lights would go out. And when string inverters first came on the market, something similar would happen with the production from the panels behind a malfunctioning or even a shaded solar panel on that string. It's not necessarily that their production would be reduced, but I believe it's their voltage would be reduced, I think. Is that right? To get the whole string to be the same level of... So yeah, so the current through a string, you can only have a certain current, right? And so, yeah. It's a little nuanced though, because I think the reason why this analogy imperfect is that unlike a Christmas light, if you have a module and a string that is under-producing, whether it be that shade or any other reason, there's actually a protection in the module called a bypass diode that knocks that module out, which will actually recover the string's current. Interestingly, these module-level power electronics, be they micro-inverters, which is just a PV module, an individual inverter for every PV module or something called an optimizer, which basically conditions the voltage coming out, it adjusts the voltage coming out of every module, so it balances the voltages basically. Ostensibly solves that problem because it's like, okay, you can actually produce some energy out of this module that was shaded and would have otherwise knocked itself out of the string. In reality, it actually doesn't create a huge benefit. It's been over-marketed, I would say. There's other reasons to have this architecture, unrelated to shading and all that, but as an analogy, you have rabbit shutdown, different roof planes, short strings. And so that's where the roof planes come into play, is that one reason that a solar panel could be underperforming compared to the other panels in a string is if you have panels all in a string on different roof planes. And so maybe in the morning, the sun is hitting some of those solar panels. But then as it progresses to the afternoon, the other solar panels are now being hit by the sun and are beginning to produce. And so because of that mismatch in production, that can change the output of the entire string of modules. So allowing for multiple strings on multiple different roof planes You can get around that like Carl was talking about the sort of the most popular Central inverter string inverter that's installed in the residential setting in the US is a solar edge inverter and they're almost always Installed with optimizers, which are these right they condition as Carl said condition voltage at the individual panel They're module level power electronics MLPE is an acronym that you'll hear thrown around. On the other hand, microinverters, instead of converting DC to AC electricity in one central location, do it at each individual panel. So they sit in the same spot that a power optimizer would, right underneath the solar panel. But instead of conditioning the voltage, they actually convert it at that individual site to AC electricity. So that's the main difference between micro inverters and string inverters or optimize string inverters And just before we leave like we're a little in the in the technical weeds and just before we leave this I think it'd be really good to have a brief primer on maximum PowerPoint tracking since that's Since that's pretty important You want to take that one Carl? Yes, that's a PowerPoint tracking I waiting for that? No, I mean, do I? Yeah. So, um, so we talked about how a solar cell is a diode, right? So all diodes, if you have any, if you're familiar with electronics, there's probably not that many people do, but hey, what the heck. Um, the, uh, a diode has a, every diode has what's called a current voltage characteristic, and so solar cells, when you, when you hit them with photons, they have a response characteristic of voltage and current, and voltage times current is power in watts, right? Amps times volts equals watts. And so what you see is that as your voltage goes up, all right, your current goes up kind of linearly, and then you sort of hit a point where you hit kind of like a knee of the curve, as you go over the knee of that curve, what happens is basically your voltage will drop, as your current increases, your voltage drops very precipitously. So your power drops precipitously. And so if you were to plot that as a voltage versus power curve, there's a maximum point where for any actually given any cell in a PV module, each individual cell has its own individual maximum power point. And when you string them together, the module has a maximum power point. And when you string modules together, the string has a maximum power point, which depends on irradiance, its temperature, and a bunch of other stuff. So in order to extract the most power out of a photovoltaic module or a string of modules, you have to keep the voltage and the current at exactly the right spot, which is matching kind of the the impedance of the system. So if you think about what that means, it means now remember this is shifting around and changing all the time, right, as irradiance changes, temperature changes, the wind blows over the thing, cools it off, right? A shadow transits across the module. So one of the things that an inverter does is it has very sophisticated control algorithms that dynamically adjust where the voltage and current are on that string to extract the maximum possible power. And that's called maximum power point tracking. It's actually really cool. And that's what I get excited about. Okay, we should get out of the weeds now. We've had our brief foray into electrical engineering for the day. One thing I did want to talk through here is what like a typical project looks like kind of end-to-end. Kind of starting with the you know sales marketing and then like going into install and then how customers actually like get compensated or the system is compensated. Happy for either of you to take that and I can appreciate that there's differences either behind the meter or in front of the meter? Totally, I'll take the first stab at it, just given that sort of where energy stage sits in the market. So most, right, so people generally learn about solar, they're researching solar, they're researching their clean energy options. A lot of people will have somebody in their neighborhood come to their door probably and ask if they're interested in going solar. A number of people come to EnergySage to request quotes from our installer network and receive quotes. The process of actually gathering a solar quote is pretty straightforward, and you want to make sure that you go out and get three to five to compare. But the solar installer will come out to your site, or they can do a lot of this remotely these days. they'll take a look at the roof planes, the orientation of your house, the angle of your roof, and they'll ask you potentially to send a couple of pictures of your main electrical panel, things like that. They'll get a sense of how much electricity you're using. That's a really big aspect of this, is understanding how much electricity you need to be able to offset or avoid pulling from the electric utility with solar. You'll get a proposal that has a layout of the solar panels on your roof that has an estimate of how much those solar panels are going to produce in the first year. It'll have obviously the name of the installer and any sort of reviews, recommendations, things like that, as well as usually also the equipment that's included, so the brands of equipment that are included, whether or not you're getting what wattage solar panels you're getting, whether or you're getting micro inverters or string inverters, things like that. And you can compare and contrast across a number of different metrics, whether it's the installer reputation, the brand of the equipment that you're receiving, the cost of the equipment, and that's, you know, the installed cost of solar in the U.S. right now has gone up over the last couple of years just with supply chain shortages, labor shortages, cost of capital getting more expensive. But I think is, you know, around $3 per watt, maybe $3.50 per watt, maybe $4 per watt, depending upon where you live in the country. The portion of that, I know you had a question earlier about sort of what the portion of that cost that comes from the equipment. Solar panels themselves are probably around 60 to 70 cents a watt, maybe at this point for top-tier solar panels. Inverters might be 20 to 25 cents per watt, so that gives you a sense of sort of the percentage of the overall cost that comes from that sort of hardware. Once you get the quotes and you sort of are working with an installer to move further along in the process, you'll want to have a site visit so that they can come out, take a look at your roof, make sure it's in appropriate condition to actually install solar, they'll get into any crawl space or your attic, take a look at the rafters, rafter spacing, things like that, finalize the proposal, see if there are any other upgrades that you need, whether to a main electrical panel, or if you want an EV charger, a battery, things like that, and then once you sign a contract, the, and we haven't talked about financing yet, but there are a couple of different ways that you can finance a system, cash purchase, a solar loan, or a lease or power purchase agreement, sort of where you aren't the owner of the system, there are a lot of benefits to that as well, as Carl can speak to much better than I can. But once you sign the system agreement, the installer will begin the process of pulling permits, the actual and making sure that they have all the equipment, scheduling an install day. Most solar installs can happen in a single day at this point. They run typically one crew of four people, two people who get started up on top of the roof, putting all the flashing, mounting, and racking in place to hold the solar panels in place on your roof. Those things are super strong. You can stand on them and they won't budge. And then the two other folks who are electricians who are getting started with main electrical panel and the inverter and making sure that everything's wired all together at the side of the house or next year electrical meter or main electrical panel. And then once everything's sort of laid out and set up it's just the process of getting solar panels, carrying solar panels up onto the roof on a ladder, putting them in the right place, connecting them to either the optimizers or the micro inverters, and then screwing them into place and making sure that everything is sort of laid out the way that you want it to be. And, you know, each individual solar panel, once everything is laid out, might take, depending upon how steep the roof is, connecting a single solar panel probably takes less than five minutes from ground to actually screwed into the racking. So that's sort of, you know, once that's all done, then you have final inspections from your local utility and your municipality, once you get the go-ahead to actually interconnect in the permission to operate your system, you either go out and flip the switch on the side of your house, or your installer can do it remotely, depending upon the inverter that you're using. What I missed there, Carl? No, you got it. I think there's a couple of things I would just add onto that. One, I would say like, you know, in most places the- it is fair to say that the timeline to get residential solar from like the time you sign to the time it's up and operating can be rather extended, a matter of, you know, many months. In most places that is because- not because of the time it takes to actually install this or actually do anything, but because we're waiting for somebody to do something. So you're waiting to get permits or you're waiting for the utility to take an action or you're waiting for permission to interconnect, permission to operate. And so that's actually, I would say, one of the lesser understood soft costs that we talk about. One of the things that happens is like when people have to wait, they get frustrated. When they get frustrated, they cancel. When they get canceled, companies like ours have to spend a bunch of money on a customer that we didn't actually acquire in the end. And that's actually turns into a soft cost. So we like to avoid those things. We like to try to pull in upcycle times And, but some of that is inevitable. The other thing I think I would just touch on briefly is on the financing side of it. You know, there is basically three major options. There's cash, so you basically take, you know, $15,000, $20,000, whatever it is, you put it on your roof instead of in the bank, and you make money off that. The other option is to take out a loan. You still own it. you pay that loan off after a certain period of time. It's just like a home improvement loan. And the third is kind of unique actually to solar, which is a lease model where basically it's owned by a third party if you don't own it. So a third party entity owns it and you're paying for the service. So the service you're paying for, you're paying for electricity that this other entity from this asset is generating that happens to be on your roof. And the interesting thing about that is that you don't have to, there's no money down. So you literally start saving money on your bills the moment it turns up. which is pretty attractive for some people. Now you're not saving as much as if you had, you know, made the investment yourself. But, you know, for a lot of people it's like, hey, you know, I saved a little bit compared to the utility and I'm using green energy and I feel good about that. I have more independence from the grid goes down, for example, if you have a battery with it, et cetera. And I think one thing that you just touched on there, Carl, that's really important that we haven't talked about yet is how you actually save with solar, Which is sort of a crucial piece of the whole puzzle here. And you save with solar because when your solar panels produce electricity, they offset consumption from your utility. And so you're really just avoiding electric bills. And each of the ways that Carl just laid out to finance your system allows you to avoid paying electric bills or to reduce the amount that you spend on your electric bill any given month. And so with a, you know, so for instance, if you're paying $100 in electricity costs per month today, if you put enough solar on your roof, you should be able to avoid all of that or all of that outside of non-bipassable charges or customer interconnection charges, which might be only $10 or $15 a month. So you're saving money straight away. Now the question is how did you actually pay for, and sorry, the reason that happens is because when you are producing more electricity than you are using on site, you send that electricity to the grid, run your meter in reverse. When you are using more electricity than you're producing on your roof, you pull from the grid and run your meter forward, you're billed on net. That's how net metering works. And so, and then also if you're using exactly the amount of electricity that your solar panels are producing, you're just, you're not pulling from the grid. So it's just avoided cost offset, right? And so, if you have, if you pay for your system in cash, that's a sunk cost, it's all upfront. and then month one, now whatever your savings are on your utility bill are your savings, but you've put a lot of money down in order to achieve those savings. Over 20, 25 years, you're going to see, like Carl mentioned, higher net savings over the cost of the system, but you have to have access to that capital and be willing to invest it in a solar panel system to actually get those highest level of savings over 20, 25 years. With a solar loan, Until very, very recently, it was very easy to design a solar loan where your solar loan payments were less than what you would have otherwise paid your utility and electric bills. So in other words, if you had $100 a month electricity bill and you're offsetting 90, 95% of that, so you still have a $10 a month bill, you should be able to get a monthly loan payment at $75 or $70 or $80. So you're saving, again, more or less from day one without having to put down any money to install the system. And then at the end of the loan term, you own the system. Because you own the system, you can take advantage of the tax credit, the federal investment tax credit, which is a 30% tax credit for solar, and you get the benefit of owning the system at the end of its life. lease PPA is the same thing but you don't own the system and you're not taking out a loan and like Carl said you're reducing your electricity spending from day one which is is pretty enticing yeah no doubt like what I've learned talking to people is like there's a lot of details here and it depends like market by market and the like compensation models no doubt are changing and then to your point and I would guess this is probably Related like in the loan model the like interest rates have had like a pretty decently sized impact on like the economics for customers, too So it starts to get pretty Pretty difficult to figure out or at least much more complicated than just a simple. Yeah, you're definitely gonna save and you know, here it is Yeah, well in the interest of time. I think we're gonna wrap it up here This has been really really great Carl Spencer. Thank you so much for joining I think as a follow-up to the guests, we're going to try and collect a few more resources to kind of go deeper if people are interested, teach the audience how to fish of it for themselves. In general, though, thank you so much for joining and really, really appreciate the time. Thanks for having us.

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Summary

Join Pam, Ben and James as they turn up the voltage on a fun, electrifying chat! Starting off with a quick dive into the difference between kW and kWh, the team then converts energy usage of different items in toaster SI units. They shed light on the journey of energy from generation to your home, in the very first squadcast game - dish out some electrifying acronyms (and admit when they’re stumped), and explore the bustling world of electricity markets. And if you've ever imagined the ISO as a bar, you're not alone. Pam even shares her experience of ringing up San Diego Gas and Electric’s demand response line. Whether you're a seasoned electric buff or just plugging in, this chat promises high energy, high voltage, and high fun!

Episode chapters:

* (2:16); kW’s and kWh’s explained

* (6:23): Toaster energy use for scale

* (10:31): Generation, transmission and distribution

* (22:15): What’s that acronym?: Part one

* (33:40): The three North American grids

* (35:40): Balancing authorities, ISO and RISOTO

* (37:58): Utilities + Pam calls San Diego Gas and Electric

* (41:48): Sub-utility and ISO zones

* (44:39): Electricity markets

* (59:44): Whole deregulated market types

* (1:02:36): The ISO is just a bar

* (1:05:00): Deregulated retail markets

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

Relevant links we found helpful

* The basics of electricity

* What is Energy?

* The basics of entropy (aka why electrons go where they do)

* How Power Gets to Your Home (this entire physics series is probably helpful)

* Moving Electricity: The Three Steps of the Grid

* https://www.eia.gov/energyexplained/electricity/electricity-in-the-us.php

* https://www.eia.gov/state/

* Substations visual

* Transformers

* See a map of all the electricity providers in the USA here.

* The US Grid

* The “seams” of the grid

* f you want to learn more about BAs (all 66 of them in the US), check out these great links by the EIA: here and here. Balancing authorities are typically ISOs/RTOs, or utilities.

* https://www.e-education.psu.edu/eme801/node/534

* FERC: https://www.ferc.gov/power-sales-and-markets/rtos-and-isos

* Demand response

* Buying and Selling Electricity: Energy Markets

* How to plug your product into the grid

* What’s the right way to read your electric bill?

* https://en.wikipedia.org/wiki/Electricity_meter

* https://en.wikipedia.org/wiki/Electricity_pricing

* https://en.wikipedia.org/wiki/Independent_power_producer

* https://www.energysage.com/other-clean-options/retail-energy-providers/

* https://www.ferc.gov/electric-power-markets

* https://en.wikipedia.org/wiki/Peaking_power_plant#:~:text=Peaking%20power%20plants%2C%20also%20known,as%20peak%20demand%2C%20for%20electricity.

* https://competitiveenergy.org/consumer-tools/state-by-state-links/

* Grid Governance

* https://www.nerc.com/Pages/default.aspx

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

I see voltage i see current no i see math no no intro the episode oh i thought you meant do the now we'll make ben do the formulas it's fine i saw math and i saw i saw math and i saw variables and i said no what are those things that we have now available that are be worked in quite a different way into the economy of the united states which are concerned primarily with the design of nuclear power plants and this type of thing. Hi, I'm Pamela Wildstein. I'm Wyatt Makaronski. I'm Ben Hillborn. I'm James Gordey. You're listening to Intermediate. Intermediate. Intermediate. To Intermediate. Intermediate. The place for people trying to get into or already working on distributed energy resources and clean energy. This is the podcast that makes it easy to learn how the grid actually works beyond the office. Welcome to Intermediate. Hey Pam, how's it going? Terrible, I have to do the intro. Tell me about the weather in Michigan this week. It hailed aggressively for multiple days. Well, it didn't ha- no, it rained really aggressively. There were a bunch of days with tornado warnings and then it hailed. That is surprisingly similar to the weather that Alberta got the past week or so. Tons of tornado warnings, just a massive amount of hail that shredded everybody's vegetables and whatnot. It's just kind of a miserable midsummer weather. It's hot. We're here to help. Yeah. Pam, what are we talking about today? We're doing an introduction to the electric grid, an overview of the whole system. The whole thing. Whole thing. Are we going to put out the accompanying blog post that we wrote a couple months ago on this? Are we? Yeah, I think we should. Right? Oh, okay. That's good work. And there will be a blog post, a blog post. Very nice. Two for the price of one. Yeah, we'll do everything from interconnections to physics. All right, is that leading into me doing some physics? Yeah. Yeah, do the formulas, Ben. No, I hate the formulas. Tell them how the math works. Okay, all right. If you've made it this far and you don't know electricity works. Well, I mean that's kind of why we're doing this. That's me. I made it this far and I don't know how it works. Pam, you're busy scheming how to write policy around the stuff. Ben, explain the basics of electricity to us with the formulas. Like we're in, I don't know, we're 10 or something, maybe five, maybe 10. All right, so the important metric in in energy systems is power. There's a lot of, there are a lot of pieces of the puzzle you can go into inductance and reluctance and we're not talking about any of that today. We're just gonna talk about power, which is current times voltage. Everybody's heard of amps, everyone's heard of volts. You know, most people listening to this podcast know that hey, my house has 120 volts at the outlet. And, you know, maybe you know that your hairdryer or toaster takes 15 amps because it said so on the box because sometimes people do that. So the terms that you need to know most clearly to work in, even to simply understand energy systems are kilowatts and kilowatt hours. And the difference here is kilowatts, I guess, watts is the base SI unit in kilowatts is like, that's a thousand watts. And that's a measure of power. That is a measure of the, call it the capacity to do work. And if you think about the easiest analogy to this for most people is plumbing because everybody's used to turning on a tap. When you turn on a tap, how fast the water comes out, that's your kilowatts. That is the speed at which the energy is leaving the source and going to the receiving device, we'll call it. On the other hand, you have kilowatt hours. ignore the the reason for the hours for a second but a kilowatt hour is a measure of capacity so now if you think about okay I you know stopper the drain I turn on the the tap and I fill up my sink the amount of water in the sink that is my kilowatt hours that's how much energy I have accumulated in one spot and now the reason for the hours on the end of it is actually really math if you turn on your tap and you turn it on to one kilowatt amount of flow and you left it on for one hour and let's say that that filled a bathtub the capacity that the amount of water that ends up in that bathtub after an hour that's one kilowatt hour so the the flow of energy times the amount of time it flows for tells you how much you can you've accumulated or used in that So that's your kilowatts versus kilowatt-hours. People are squinting. Can that go all the way down to like a second or whatever you want it to be, right? And you just take like this amount of time times the power for that period of time. Is that how it works? Yeah, that's the beauty of SI units, right? Where I can say if it makes sense for my application, I can talk about watt seconds or, you know, kilowatt years. Um, it's, it, it all works. Some of those units might not be super commonly used. Um, but people, people will know what you're talking about. Should we give people a sense of scale, like make it a bit real for different things they might relate to? For context, for context, the average home uses 1.25 kilowatts or 1.25 kilowatt hours per hour, hours per hour is going to confuse people. That's what it is. that's what it is that's what it is no we've got some nice in the blog post or we've got some nice charts a light bulb 60 watts um well that's you know that's pretty old school not too many people are using incandescent bulbs anymore what's so what's a modern light bulb then what do you think like five watts five watts okay we gotta update our chart EV charging, level one, 2.3 kilowatts, DC fast charge, more like 30 to way more than 30. Way more than 30. Yeah, so let's, I don't know, the things that things that people use every day. So you know, your average like little desk lamp LEDs is five watts. Your iPhone might charge at 10 watts. your toaster which is like one of the one of the highest draw appliances that you can you can plug into a standard household receptacle that's between 1500 1500 and 1800 watts so at the top end that's 1.8 kilowatts and the reason for that is you know electrical code and limits on that on wiring of your house the beyond that you're just you're looking at bigger things that you know most people might not necessarily have have exposure to or or experience with but those are like that's what the average person would would understand beyond that yeah like you like you said you've got like a DC fast charger call that a hundred kilowatts you want to understand how electricity it takes to like crash a grid um what would crash tech the texas grid during the 2021 february freeze was a 30 gigawatt loss of natural gas generating capacity when you add everything else that they lost too because they lost i think some nuclear too and some wind it ended up being 40 gigawatts so that's how you crash your grid that is insane Okay, so Giga is billion. Billion watts, so million kilowatts. In the Texas freeze, they lost the generating capacity of approximately 26 million toasters. And it was like that. Just offline. Like that. Like 1 a.m. or something. Crazy like that. It was 2 a.m. 26 million toasters to take down the grid. Only in Texas though. Only in Texas, yeah. And Pam, you'll be able to tell us why that's why this only happens in Texas a little bit later. Yes. Yes. Okay, so now that you know the difference between watts and watt hours, or kilowatts and kilowatt hours, another place that you will start to see this more and more often, and we talk about this in our EV episode as well is the rate that an EV can charge at, which is kilowatts, and the capacity of its battery, which is kilowatt hours.

So the, call it the average EV will add a fast charger. Let's call it, it will charge at 50 kilowatts. And if that EV has a 50 kilowatt hour battery, which I think is around like a Nissan Leaf or a Chevy Bolt or something like that, that they're in that ballpark, It'll take you an hour to charge up, give or take, and there are complexities to that because of charge curves and whatnot, but we'll get into that at a later date. But that's the rough math that you can understand. So now that you know what power is and how it's measured, now we have to talk about how it moves. Yeah, this is the grid, right? What's the grid? Yeah, how does it get from point A to point B? Come on, the grid. We know what the grid is. It's the greatest, the greatest machine ever built. Yeah. Yeah. That quote by every physics or every energy professor ever. I was going to ask you if you could read that. Yeah, it's the obligatory. Like if you're on a podcast and you have some like insert entrepreneur or other person talk about like, they're about to say about how the grid is really bad or like why it's changing and they're going to help fix a part of it. They say the grid as it exists, the greatest machine ever invented, at least man-made accomplishment in the 1900s, right? And then they produced you to talk about all those things. All those things wrong. Okay, why is it the greatest machine ever built? Let's contextualize that for people. Because all the other machines rely on this machine. Ooh, okay. The base machine. Yeah, that's a good take. Yeah. That is a good take. That's the geographers' take. I also, the way I like to think about it is, and I think we might talk about this at some other point the you know how we talked about why why power factor can crash a generator remember how we talked about that no yes okay we will come back to that anyways the the idea being that the you can actually you can think of the wires between the phone that you plugged in and the natural gas turbine that's you know a hundred miles away as a physical connection it is a physical connection electrons are physical things and when you have an input at one end some conduit for that for that power and then an output that does meaningful work like that's that's a machine and when you zoom out and you look at this as like there is one machine with countless tentacles that covers the entire continent not only this continent but every continent except probably Antarctica I don't know how the grid works in Antarctica we'll do an said but the this it's all one thing it is all one machine and that part just blows my mind a good metaphor is I always think like the circulatory system in our bodies about how everything's connected and how it keeps the blood pumping through your veins almost keeps their frequency and the way that the grid keeps one at 60 Hertz and all the different generators are almost like little mini hearts across the country all just pumping electrons throughout system. Okay, so you generate the power at one point, you move it to another point with transmission, and then you distribute it to its to its end point. And so, James, what tell us about generation? Well, I identify as a millennial, and the ones for us are the boomers. Yeah, so we've got to generate electrons, the old way to do it, or what most of our is today is nuclear power and then fossil fuel stuff where I started my career so coal but increasingly kind of renewables and natural gas as well hopefully not increasingly natural gas but definitely increasingly renewables and clean sources and so most of the grid today is still like fossil fuels like 60 percent is what this chart says nuclear hanging on at 19 percent although there's some activists that would have it go the other way, and some venture capitalists who say just have it, a million nuclear reactors and we're all good, which they do in some countries like in France. But then increasingly we have these renewables, right? Wind, solar, geothermal, hydro up here in the Northwest, like Seattle City Light, which is the electricity utility here in Seattle. We have like 94% clean energy, which is like best in the country for any place that's like reasonably big. And that's because it turns out We have a lot of water and, you know, you can use water to create hydro energy. Yeah. Same thing up here in BC. It's like always 90 plus percent hydro, but totally depends on like where you're at about the mix, you know, like Florida versus the Midwest versus Texas versus where Pan's at Michigan. Totally different. Just depends. And it is, it's worth pointing out that every type of generation does have its downsides. There is no, what was it called, like a cure-all. That there is no one type of generation that is perfect. You definitely destroy a lot of natural habitats when you build hydro dams. Every type of generation is like this. It's all a pros and cons game. Then once you've made it, though, it's got to go somewhere, right? And how you take it somewhere. My understanding is across big distances with a lot of power is transmission, right? I'm looking at the blog post of this. I think it's the Simpsons. They have some power lines just moving electricity Yeah, the transmission lines are the big towers that you see on the highway while you're driving down it Also the things that we have a really hard time building, but our life would be way easier if we could right? Do you guys know why there are so many lines? I always wondered this as a kid Yeah, because you look at a transmission tower and you'll see six or nine or 12 lines strung up all in a row and I always wondered as a kid why this why this was like oh why don't they just do like one big line you guys know? I would guess something about yeah like redundancy and then something about the limitation of what it's made out of and like how much you can actually move in a good way based off the technology they used it's yeah in in a ways yes um so they're in sets of three because of three phase power uh first of all when you divide a circle 360 degrees into three um each of these lines carries power that is 120 degrees out of phase with the other so they're the lines are run in sets of three and they're often run in triangles and the reason for that is that the like Electromagnetic emissions from those lines cancel each other out in an equidistant configuration Which is super cool. You get you get less losses you get like less environmental EMR all of this kind of stuff and So now the reason that you wouldn't okay. Why don't you just have like three giant lines as opposed to like six or nine? lines And the reason is the skin effect is electrons like to travel on the edge of a conductor they don't like to travel through the middle and So one big conductor not only is it huge. It's heavy It's like, you know a single point of failure, but you're not using all that mass in the middle That the power is only traveling Along the outside along that along the skin of the conductor So now, you know Just dusting off my engineering degree for this. OK, let's talk about voltage a little bit, a little bit. Because we want to talk about voltage levels, transmission distribution, and local, right? So you generate power at some voltage, a voltage that is native to the generator. And this is different for every different kind of generator. Then to transmit it, to put it on those big transmission lines, you want to get it a very long distance. You want to lose as little of it as possible because every watt that gets to your customer is more money in your pocket. Energy that gets lost is just wasted money. And because of the way power works, power is voltage times current. If you can increase the voltage way, way up, the current goes way down. And that's important because your line losses are dependent on resistance and resistance is a factor of current. So if you can get the voltage way up you have less resistance and you have less line losses. So transmission lines are very high voltage. You know I'm not actually gonna quote a figure because I guarantee I will get it wrong but you you'll see like 12.4 you know kilovolt lines you'll see higher. Then you get distribution. So now you're at, you know, you're serving a like a whole municipality or you're serving a section of a municipality and you don't have to

go such long distances. Yes, you could you could keep the voltage high because that would that would reduce your line losses but it's now a trade-off because the equipment that has to handle this power has to be handle extremely high voltages so there's a trade-off here and when you get to distribution level you drop the voltage to I should really know these these numbers but you drop it to call it a few thousand volts and then it moves through the distribution system goes to kind of your your neighborhood like interconnection box it gets distributed to your neighborhood and You'll see that like the little green boxes that you see on, you know, like on a corner of the street or in somebody's front yard That's the last Transformation step. That's when you're stepping it down to 120 volts for sorry You're stepping it down to two phases of 120 volts in in North America So your house is actually getting 240 volts and then you use it you use it at 120 volts in your house Don't even need a textbook. It's so simple. There are three steps of the electric grid you generate power You transmit it across long distances and then you distribute it to your home There you go. We were chopping ten minutes down to ten seconds. Thank you, Pam I'll even get voltage in there for you The transmission lines have higher voltage because you got to get a lot of stuff to these locations so much faster Amazing has higher voltages on the distribution lines go much there's less stuff and it goes slower and high voltage like kills people and we don't want to kill people so we use a lower voltage we don't want to kill people i agree that's pretty solid decision making right there okay so there you go that's three steps to the electric in 20 seconds we're gonna we're gonna publish that on as its own sound bite can i generate power In New England and sell it in California No, but that's well into my we're not there yet Aren't we into it was we are there we are in the u.s. Grid. Okay, since we're on the u.s. Grid It's time for our new grip our new game. What's that acronym in which I tortured that James and Ben with energy acronyms Okay This is all their fault they brought it on themselves because they took they made fun of me for not knowing what an acronym meant A non-energy acronym, and this is my revenge. So to kick off this section, I will play, what's that acronym? And I will, of course, be more US-centric with this, because I am a US student that studies the United States grid, but I will try to be fair to Ben, and I got Canada in there. He's going to have a fighting chance. Okay. There's five questions and then a bonus. You'll never get the bonus. For full transparency, neither of them have seen these acronyms. I made them up last night. Okay. They're fake. No, no. The questions. They haven't seen the acronyms. I'm going to give them. One, what does ISO, RTO, and BA stand for? And what are the differences between them? Do each of us take it? Whoever goes first. It's like whoever gets to it first. BA is balancing authority. Balancing Authority, and then Regional Transmission Office. Operator? Yes, Organization. Oh, so do I get two? Yeah. No, well you guys see what the difference is between them. So firstly, all three. So ISO is Independent System Operator. RTO is Regional Transmission Organization. Yes, it's very annoying, but the O's stand for different things. And then BA is Balancing Authority. And so what are the differences between the three of them? Ben looks like he's having a meltdown No one basically knows the difference between the first two. There's a 20 minute podcast explanation, which I feel like you can give us. There isn't really a difference. Don't even bother There's no difference between any. No, there's no real difference. Is that it? That's the trick question. Is there What about the BA's? What do the BA's have to do? Okay, so if I'm I'm probably getting this wrong, but a Balancing Authority, I think, is responsible for balancing generation and against demand, but lacks the free market coordination powers that ISO and RTO have for actually selling into a pool. No, all balancing authority, sorry, all ISOs and RTOs are balancing authorities, but not all balancing authorities or ISOs and RTOs. Balancing authorities operate the regional electric grid for an area and ISOs and RTOs, which I'll talk about later, do so in a very specific special way with the whole cell market, with the restructured whole cell markets. And I support Ari Pesco's Twitter initiative to combine ISO and RTO acronyms as one brand new acronym called Rosoto to make FERC filings much easier for us all. And more delicious. Yes. Two, what are the acronyms of the nine North Americans? So inclusive of Canada, ISOs and RTOs. And I will be impressed if you can say what they stand for. I know what ASO is. That's, that one's easy. Upper Electric System Operator. There's MISO New York, ISO. Miso is mid-continent. Miso? Yeah, not miso soup. Is it mid-continent? It's more fun to say miso. No, it's not. You'll get kicked out of your conferences. Miso and New England, ISO. NISO. PJM. I was going to say PJM. I get it. There's New England, New York, NISO, PJM, which is Pennsylvania, Jersey, Maryland, and a bunch of other states. I remember that much. It stands for nothing. There's Arquette, Arquette, which is Texas. I don't know what it stands for. Electric Reliability Council of Texas. SPP, Southwest Power Pool. Yes. Yes. OK, great. Yeah. Is that all? No, CAISO, California. You're missing one, and I will tell you that it is Ontario. Oh, Ontario's is like weirdly vague. Like, you don't know that it's Ontario, right? Yeah. I had to Google where it technically was. Canada. No, I meant where that's specific. I knew the operator, I just didn't know where it was located. Is it IESO? Yes. And the O is not Ontario. No, it's independent electric system operator. So I will say them very quickly for everyone since we were kind of messy with it. With the correct pronunciations, and no me-so in this podcast, Kaiso or CAL ISO is the California Independent System Operator, you will hear both. ERCOT is the Electric Reliability Council of Texas. SPP is Southwest Power Pool. MISO is the Mid-Continent ISO or Mid-Continent Independent System Operator. PJM stands for nothing, but if it helps you remember it, it's Pennsylvania, Jersey, Maryland, and nine other states. NISO is the New York Independent System Operator. ISO New England is the New England ISO. I don't I ESO is it I see I used I don't know how they actually would say it. We're in Canada now I'm lost. Uh, is the independent electric system operator in Ontario and what'd you say? It was a so a yes So a so a so is Alberta electric system operator. Okay bonus points Why are there only two in Canada because it's like America and you had to willingly enter into them Yeah, there are only two power markets Alberta and Ontario Every other province is just crown controlled. Stop taking over my game. Okay. Three. What is an LSE? Load serving an entity. Eh, the utilities that sell you power. Boo. Okay. What is FERC and NERC? And I get away with this one because one of these entities has jurisdiction over Canada and how are FERC and NERC connected, at least in the American context. I feel like you both know except for the last part, right? I don't know this. Federal Energy, was it F-E-R-C? Federal Energy Regulatory Council? Commission. Nuclear Energy Regulatory Commission? OK, we got it all wrong. Absolutely not. Absolutely not. Is it North American or national? North American. Okay, Energy Regulatory Commission. No? Wow, that would be too easy, wouldn't it? Yes. Oh my god, there's a dog. Sorry. My entire family on the podcast right now. So FERC is the Federal Energy Regulatory Commission. They are an independent United States agency tasked with ensuring just and reasonable rates on the transmission system, among other things, so they are just in America. And NERC is the North American Electric Reliability Corporation, and they're an international regulatory authority that ensures the reliability and security of the bulk power system by developing

and enforcing standards. And if you do anything with the transmission system or with wholesale markets in any way, you will definitely come across FERC. You will hear about them all the time, worth going to their public meetings. you might hear about NERC, especially if you're working in the academic context. You will, and you're doing transmission system and reliability, you will be reading many, many NERC things. And the way that they're connected is that NERC's jurisdiction in America comes from FERC. They had to choose some entity to have that regulatory, not that the regulatory, oh yeah, that regulatory authority over full power system standards and they chose NERC. Okay, last one that you guys have a fighting chance on and then the bonus which I know you won't and it's just what is a PUC or a PSC in the U.S. context? I don't know what the Canadian equivalent would be. Maybe there is no thank you. Public utility commission? Public service commission? Yep. And those are U.S. state regulatory entities for utilities. That's just the general name for them. Every state kind of has their own little way of doing it. Sometimes it's PUC, sometimes it's PSC. I think for example, New Jersey's is like the New Jersey Public Service Commission or Public Service Commission of New Jersey. Everyone's got their own little thing, but like when talking about them, generally we say PUC or PSC. Okay, here's your bonus for fun because I recently spent an egregious amount of time figuring out Kaiso's API for this and the documentation was the stuff of nightmares. What does Oasis stand for? Oh god. They make classic songs. Oasis is classic now, I guess, right? What did you say? Oasis is, that's like classic rock now. Yeah. So can we start with what Oasis does? My understanding of what Oasis does is it's a piece of software used by California ISO. They do other ones, but the most I've heard people mostly talk about it with California. And it's a software interface you use to get data about the wholesale market and the ISO. Very close. That was pretty good. That was pretty good. Pretty good. Yeah. It actually has a regulatory. I have nothing to add. I don't know. So OASIS stands for Open Access Same Time Information System. And it's the platform that the ISOs and RTOs use for bids and offers and info about the system. And this is per fork order 889. The existence and usage of this is actually federally required. All of the ISO RTOs use it? So order 888 in the late 90s, was it like 96 with order 888 that said ISOs exist And then eight eight nine came right after and it says you all have to use this You all have to use and have this this platform for managing your markets and It needs to be publicly posted and it looks like we use it in Canada as well. There you go Good to know that's a deep cut Thanks for playing Thank you for playing my game that was fantastic, let's absolutely do that again I have to hop off, but you guys take everyone else through the nitty-gritty. So thank you for playing my game. I really enjoyed my revenge. But now to move on to the US electric grid with all that context and all those new acronyms that you've all learned. I find it helpful to consider the different layers of the electric grid from a geographical standpoint. And it's a way to look at a map and say, where am I physically located in the system and whose territory I'm in? So, at the biggest level, you have interconnections, and the US grid has three separate grids or interconnections with minimal transfers of power between them. And these three separate interconnections are the Eastern interconnection, the Western interconnection, and ERCOT, the Electric Reliability Council of Texas. So they are both... Yeah, questions on this. So if I, you know, back to the question, right, like if I generate electricity in Massachusetts, which is on the Eastern Inconnexion, can I definitely not use it in the Western Inconnexion or AirCut? Like the electrons never flow between the two, or like what's the division there? Very rarely. You would need high voltage transmission lines to do that, and we currently don't have that capability. Gotcha. And that's the way that these interconnections result in physical limitations to the system, because they are essentially operating as their own separate grids with very few connections between them, then you can't get power between them. I think regardless, it would be very hard to get power from California to New York. But that is one big hurdle against that. But yeah, so we have the Eastern interconnection, the Western interconnection, and then ERCOT, the Electric Reliability Council of Texas, which is both an interconnection and an ISO, or an independent system operator that we talked about before. Because no man is an island, but Texas sure as hell is. These borders of the interconnections are often referred to as the seams of the grid. So if you ever heard of the seam study coming out of NREL, that's what that's from. And like I said before, those interconnections result in physical limitations to the system. So within the interconnections, you have BAs or balancing authorities. And these are the regional grid operators that do the day-to-day operations of the system. They keep dispatch generators, predict demand, and keep the grid happy and content at 60 Hz, meaning that supply and demand is always equal. The US has 66 balancing authorities, and they're typically either the ISOs and RTOs that we mentioned before or specific utilities. ISOs and RTOs are special balancing authorities because they have extra responsibilities, they're regulated a bit differently, and they use different mechanisms to balance the system. relative to when the balancing authority is just the utility for the area. I'm just going to call them ISOs for the rest of this. ISOs and RTOs are functionally the same thing. ISOs are non-profit, independent organizations who manage the transmission system. They dispatch generators using a competitive market, run models and forecasts to make sure that there is always enough power on the system to meet demand, and have certain transmission planning requirements from the federal They also operate Oasis, which we spoke about before, which gives you lots of historical information about the system like prices and load and demand. If you can figure out the API. If you do, please let me know. ISOs one day will get their own episode with their history and drama, but it's just important to know that they exist, operate the grid, manage an open competitive wholesale market that uses economic dispatch. Just to make sure that people connect the dots here, before we named, but just to make sure that people are following right. We had these interconnects, which is like the three-piece slices, kind of broadly East-West and then ERCOT in Texas, but not all of Texas, weirdly. And then these ISOs, we're going to call them, right? That's like the Cal ISO, or the MISO, or PJM, just so people are tracking. Yep. And that's why a lot of them have ISO at the end of them. Except for, I love it when, for example, ISO New England has ISO in it, but it is an RTO. Yes. Yep, it's the same thing. That fooled me, exactly. Yeah. Within the balancing authorities, you have many utilities, our good old utilities who you are all familiar with because they send you a bill once a month, unless you're DTE. Examples include DTE, Detroit Edison, Con Edison in New York City, and San Diego Gas and Electric in California. San Diego Gas and Electric, I spent a whopping 2.5 hours on the phone with yesterday. So thank you to the very patient customer service people who put up with me as I tried to figure out when your demand response programs were dispatched in 2020. Real quickly, you called up San Diego Gas and Electric demand response line and waited or talk to them for two and a half hours to figure out when their demand response events were dispatched?

Well, no. I used the chat first, then the chat gave me the number two, the demand response line, and then the demand response people sent me back to the general customer account. Then the customer account people just sent me back to the demand response, so then I went back to the chat. You're being transferred all the time? Yeah. And then the chat people gave up and they sent me back to the demand response. Then I did some Googling based off of some of the information that the demand response people gave me. After I finished doing some Googling, I called the demand response people back, got the same guy that I had heard from the time before that. He was very unhappy to hear from me again, and then we figured it out, and we found a way for me to get the times when the program was dispatched without them explicitly telling me. And so all you're trying to do is figure out when the programs were dispatched in 2022. And that took me two and a half hours. 2020. Oh no, it ended up being 2022. Yeah, it was 2022 actually, yeah. And everything you just described just to get the answer to that question. It was just one program, too. It was just their program that's called Power Saver Rewards, which is technically peak time rebates. Alright, everyone, be encouraged by the fact that everyone is out there doing things similar to what Pam just said to get answers to simple questions. Well, I think to be fair to them, they really weren't allowed to tell me. So they could give me hints. Yeah, I think they could only really give me hints. They could say, well, you know, it was dispatched 11 times and- Why can't they tell you? Some utilities can tell you. I did this for all the utilities in California. Some utilities can tell you, some can't. They can tell you for some programs. They can't tell you for others. Sometimes they just don't know you need to find the right person. That's fair. Yeah. So thank you San Diego Gas and Electric for your for your help. One last thing on San Diego Gas and Electric. For some reason they they made the effort to make the demand response line a different hold music than the normal line and it was just really bad. They should just keep everyone. It's bad regardless. Yeah like they should just keep the whole music the same. It was like someone went through effort, extra effort to make that whole music worse. Utilities. You might also hear utilities referred to as LSEs or load-serving entities because they are serving load. Wow, the lawyers are so creative with their terms. Utilities, generally speaking, operate the distribution system, so the poles and wires of the grid, and they sell power to consumers and deliver it to your house. They also run energy efficiency and demand response programs, have fun asking for the dates those are dispatched on the phone, as well as offer multiple rate designs, which we touch on a bit I know for sure in our EV episodes. Depending on the state that the utility is in, they may own and operate transmission lines, and in most cases, they do generate power regardless of whether or not they are in ISO or not. Markets, which I have alluded to. No, real quickly, before we get into markets, this was in another version of the blog post, um, inside an individual electric utility, there's like sub zones or like buckets within the utility, right? Like, um, I think you called them. So sub laps. Yeah. Let's talk about sub laps a bit so people can really understand. Sublaps stands for sub load aggregation point. I know for a fact, Kiso has them. I don't know if other ISOs do, for example, other ISOs might have zones, for example, that they use. And basically, you don't just offer your generation or buy electricity from the entire market. There are dots all throughout the map or zones throughout the map and you offer into those specific, the dots are called nodes. If you look on ERCOT or KAISO's website, for example, they have very clear visuals of this. you offer into a specific node or zone. The sublaps in QISO are just a collection of those nodes. Yeah, my understanding is that they're not going to have... Huh? Yeah, go ahead. No. And I think the idea behind that is that for some services you offer into a sublap or you're generating, if you're, for example, offering in an aggregation of distributed energy resources, which are smaller and located on the distribution system, they can be anywhere in that sublap. Yeah, my understanding is not just at the ISO level, but even within the utility, they'll have, let's say, Con Ed has a certain, this is the Con Ed territory. Inside the Con Ed territory, there's little portions that are broken down even further. And I think it depends, what they call those, depending on the utility. So apologies to the audience for not knowing. But if you're trying to start from the entire grid to the three interconnects to different ISO regions, the different utility territories. I think there's one step below that even, which is like the portion of the utility territory. Maybe those are just nodes or I'm not quite sure what they're called. I don't know what they call them. I know in the different California utilities, which I don't normally work specifically with utilities, but I do know the California ones the best, they split areas up based on their baseline allocation, which is the maximum amount of electricity that a home could use before they get bumped up a tier on the price. And so their baseline allocation is based off of where they live and how much air conditioning they're expected to use and whatnot. I see. This gets really specific. If people are interested in learning more about like these very, very nuanced, any gritty details, please let us know. We never know where to do deep dives, but I just wanted to like highlight, you know, the levels continue. Yeah, it's bureaucracy. There's always another level that you can go down in specificity. Now that we've done the geography of the system, we've talked about markets many, many times and not said what we meant by that. So there are two types of markets, wholesale and retail. I'm gonna start with wholesale and then we'll talk about retail. So everyone take a deep breath now before we do wholesale markets in the US because you need a deep breath before you talk about them. Wholesale markets refer to transactions that occur on the transmission system. I think that the easiest way to understand wholesale markets is to understand it as this how we got from one to the other. Yeah, that's fair. Yeah. So I like, when I look at them, I break them down by like, regulated, like is more simple. And then you kind of like unpack a bit more. Yeah, of course, because one's an easy monopoly and all three steps are owned by owned and operated by the same entity. And then the other one's like, Whoa, we created an entire policy market to do this thing that we want. And we keep making this policy market more and more complicated, so that it takes into account more and more things. So wholesale markets refer to transactions that occur on the transmission system. And this essentially means utilities selling power to one another. This is not an all encompassing definition, but if you're new to it, just go with this definition because your life will be significantly easier. And at this point, here lies interstate commerce, meaning that there are many, many lawyers involved. If you are in an area that is not restructured, meaning that the utility is a monopoly and owns and operates the generation, transmission, and distribution steps, then you just submit your wholesale sale to FERC or the Federal Energy Regulatory Commission, and then they approve it if the rate is just and reasonable. So I guess what I'm confused about, and maybe other people understood it, when I look at the markets, I do like regulated markets and deregulated markets. And the way I understand it is, regulated is mostly what you just described, which is the utility. Let's use an example, Con Ed in New York. They handle everything. So they handle the, I guess, generation, transmission, and distribution. Not in New York, but I'm trying to think of a lot. Yeah, it's a bad example. Let's say, in Georgia. Who runs New Mexico? Well, there's three in New Mexico. You've got PNM, then you've got El Paso Electric, which has the coolest logo of any utility. And then Excel does some work there, too. So I can give you a pick in Albuquerque or Santa Fe. PNM is doing generation and also doing transmission and distribution. Yeah, if it's regulated. If you're in a regulated or a non-restructured wholesale market, then every step of the process is owned and operated by the utility. So they choose what generators they build, they build their own transmission lines, and then they choose the order in which those generators get dispatched to meet demand. And then the wholesale sales come between those utilities buying and selling power to one another. I see. But like in, in PNM, aren't they all just, they're just buying and selling to themselves basically? Well, they might take from a, there might be another utility next door. I see. so they can buy from next door. Yeah, or we could get into power pools, but utilities might be in like a power pool and they all might buy and sell from each other. Okay, that's a little tricky. The way I was thinking about it was like, if you're an electricity customer, you have this bill, like you talked about the bill, and then there's the supply portion, which is like the cost of generated electricity, and then delivery, which is the cost to deliver it through transmission distribution. And then in the regulated market, once again, the utility, like P&M, they're going to bill you for both of those things, supply and delivery. Yeah, you're going to get bills all from the utility regardless, but... Only get a bill from the utility. Yeah, regardless, you're only getting a bill. But how they get the electricity, right, like generate and move it to you, they may or may not be generating it themselves or buying it from other utilities is your point. Sorry, in a regulated market? Regulated market, yeah. Regardless of whether or not you're in regulated slash un-restructured or deregulated slash restructured markets, the power could technically come from a different utility or from a different entity. It's just how that's being regulated, like the wholesale market. So in a regulated market, if utilities buy and sell power between one another, that sale has to go through the Federal Energy Regulatory Commission. The individual sale goes to them and then they approve it as just a reasonable and then it gets to happen. But all three steps of the process are still owned by this one utility. I see. There are many less players involved and the utility gets to decide the order in which they dispatch generators or whether or not they're even going to sell or buy power in the first place from someone else. They might say, oh, we're going to buy from this other utility, or they might say instead, we're gonna build a new generator. And they can do that basically, they can do whatever they want because they run the whole show, or is there any process? Yeah, of course the Public Utility Commission slash Public Service Commissions that we spoke about earlier have regulatory authority over them in some way. And FERC can say whether or not the sale is just and reasonable if one occurs.

Yeah, it's a bad example. Like let's say in Georgia, well, there's three in New Mexico, right? You got PNM, then you've got El Paso Electric, which has the coolest logo of any utility and then Excel does some work there too. So like if you pick in like Albuquerque or Santa Fe, PNM is doing generation and also doing transmission and distribution. Yeah. If it's a regulated, if you're in a regulated or a non-restructured wholesale market, then every step of the process is owned and operated by the utility. So they choose what generators they build, they build their own transmission lines, and then they choose the order in which those generators get dispatched to meet demand. And then the wholesale sales come between those utilities buying and selling power to one another. I see, but like in PNM, aren't they all just, they're just buying and selling to themselves basically? Well they might take from there might be another utility next door. I see so they can buy from next door. Yeah or we could get into power pools but utilities might be in like a power pool and they all might buy and sell from each other. Okay that's a little tricky. Yeah. The way I was thinking about it was like if you're an electricity customer you have this bill like you talked about the bill and then there's the supply portion, which is like the cost of generated electricity, and then delivery, which is the cost to deliver it through transmission and distribution. And then in the regulated market, once again, the utility, like P&M, they're going to bill you for both of those things, supply and delivery. Yeah, you're going to get billed all from the utility regardless, but... Only get a bill from the utility. But how they get the electricity, right, like generate and move it to you, they may or may not be generating it themselves or buying it from other utilities, is your point. Sorry, in a regulated market? Regulated market, yeah. Regardless of whether or not you're in regulated slash unrestructured or deregulated slash restructured markets, the power could technically come from a different utility or from a different entity. It's just how that's being regulated, like the wholesale market. So in a regulated market, if utilities buy and sell power between one another, that sale has to go through the Federal Energy Regulatory, like a commission. The individual sale goes to them and then they approve it as just a reasonable and then it gets to happen. But all three steps of the process are still owned by this one utility. I see. There are many less players involved and the utility gets to decide the order in which they dispatch generators Or whether or not they're even going to sell or buy power in the first place from someone else They might say oh, we're going to buy from this other utility or they might say instead we're gonna build a new generator and They they can do that basically As they can do whatever they want because they run the whole show or is there any process? Yeah, of course the Public Utility Commission slash Public Service Commissions that we spoke about earlier have regulatory authority over them in some way and can say whether or not the sale is just and reasonable if one occurs but yeah that's their choice that's their choice as the monopoly and as the system operator okay does that make sense wholesale markets are hard that's why we took a deep breath yeah and that's why like for me when i think about regulated markets i almost like forget about the wholesale market and i just think about like the utility is mostly doing everything and they bill you like you only have an option to get billed by them i almost think about it from like the customer standpoint, but I guess like, like all things, there's levels here. Well, yeah, well, so. We're like explaining what's technically correct. Well, yeah, because there's, there's, we're only talking about wholesale right now. Just because your wholesale market was deregulated or restructured doesn't mean that your retail market is. And just because your retail, well, I think they are not mutual, sorry, they are not, what's it, they're not mutually exclusive, like the deregulation of both. Yeah, understood. Yeah, the wholesale market is because there's interstate commerce and there are all the lawyers involved. That is the federal sphere of things There is a bright line between them. It's a lot. There's a bright line between them The retail is the state level. They are two separate things. Just imagine them as being separate things Yeah, and I think I understand that Largely because you helped me understand that the thing like that I think that all this stuff is confusing and so the like mental model I use to try and understand the different markets is there's two kinds of markets.

Again, high level, regulated, deregulated. And then in regulated markets, the utility is the only person you're getting billed by. And they are managing pretty much, again, let's keep it simple, generation, transmission, distribution to you. If that's not correct, then I think it's hard for people to understand all the differences. So you're only getting, so you're only getting billed by one person regardless. It's whether or not that the person that's billing or the entity that's billing you is buying from somewhere else. Are they getting billed by someone else? And so in a, and we kind of skipped the levels. I didn't even get to what restructured deregulated markets are. They're getting billed by someone else. And then that bill gets passed on to you, but you're still only receiving one bill. Yeah, as a customer, and I guess like when I try to understand regulated markets myself, I mostly just think about like the utility kind of managing things, and then the customer gets the one bill, and then to further unpack it, I then go like, okay, if it's a deregulated market, then there's what you said, which is you can have wholesale market deregulation, and or you can have retail market deregulation. Yeah, you don't have to have both depending on the different markets. Yeah, I think that's that's fair That's a good way to think about it. Yeah What we just spoke about mainly before was the regulated markets, which is also called a non restructured market if you are in a deregulated area in the transmission system or what I call it would call a Restructured area you're working with the ISOs the independent system operators and the RTO the regional transmission organizations that we were talking about before. So the Energy Policy Act of 1992 kicked off this general process of deregulation of the wholesale power markets. And it's really actually very fairly similar in concept to the when they deregulated the airline industry. But in practice, it turned out a bit different. So at the wholesale level in the electricity system, this deregulation meant creating a to break up that regulated monopoly, that monopoly of the utility owning generation transmission and distribution and operating all three. So the Energy Policy Act of 1992 was when Congress said, FERC, go deregulate the industry the same way that we're deregulating the airlines. And FERC said, okay, Congress, thank you. We will do this through encouraging states and utilities to restructure the wholesale market through the creation of these ISOs and RTOs. So no longer do the monopoly utilities get to decide which generators get dispatched when now this independent non-profit ISO will operate an open access market that anyone can participate in. So it's not just DTE anymore that gets to sell power to the market. Anyone gets to do it and these merchant generators that are not monopoly utilities can out offer the utilities and get dispatched first. Their wind turbine can get chosen to generate power before DTE's coal plant. I see. And so in one of these, and so real quickly, just to make sure I understood it right, 1992 is when this all started. Yes. Okay. And then in what are we calling it? There were more memories of it from beforehand. This idea didn't just come out of nowhere. I think people were really excited about breaking up with the monopolies. There's a really great book by a very well known book by Richard Hirsch called Power Loss that goes into extreme depth about this. And I haven't finished that book yet, but one day I will. But that goes through a whole history of how this happened. And it was like a long time coming. So the utilities or electricity retailers or load serving entities then will buy power from the market to sell to the consumers. So DTE, let's will offer into the market. The market will then dispatch the generators. DTE will get paid by the market for what they generate. And then they'll buy the electricity back from the market that they're going to sell to their customers. And that's where the billing gets weird because all those costs from the market get passed on through whatever they charge you. So they might be paying for the wind turbine, the merchant generator wind turbine. Yeah. And so then in, again, like a place with deregulated wholesale markets, like the utility, like DTE, can sell power into that market as a generator, but also third parties like a solar developer or some other generator can also sell power into that market and get paid for it. Exactly. Yeah. And then on the other side of that, like, there's some like pool, right, and so you're dumping a bunch of electricity into the pool, and then DTE will be buying some amount of that as a retailer or load serving entity. And so they buy some power from the pool, and then they sell it to their customers. Yeah. And so the difference from the regulated wholesale market is that before DTE could have just said, well, we have this much demand, we're going to meet it with natural gas generator one, natural gas generator two, and coal plant three. But now that they're offering into this market, the market might say, well, we'll take natural gas generator one, we'll take however many megawatts from natural gas generator, or however many gigawatts from natural gas generator two, but we will take coal generator, coal plant one. We have someone else that's going to do that for us. We don't need your coal plant. It's too expensive. Yeah, that makes sense to me. Yep. So notice how I switched my terminology from deregulated to restructured halfway through that. These terms are often used interchangeably, which is why I thought it was important that I use both of them, even though they are not necessarily interchangeable. um but everyone does it anyway so it doesn't matter. I'm a stickler though for using restructured specifically after the Texas freeze in February of 2021 because deregulated makes it sound like there is no regulation happening whatsoever. When uh the whole ERCOT thing happened everyone threw their hands up and they said they are deregulated markets nothing's being regulated nothing has happened and ERCOT isn't as much regulated as other areas but please do not It's sad. That is not the case. You like restructured instead of deregulated because there are some rules in regulation, right? It's not totally deregulated. It's almost like capitalism, right? In the US, like, of course, we're not pure capitalism, but we're not communist, of course, but we're not pure capitalist either because there is some government influence, you know, so like, yes, like you could say like, you know, the US is capitalistic, but it's not like purely capitalistic. and so in the same way we're not like purely deregulating these wholesale markets. I see what you mean. I do also think though like when people learn about this stuff, the terms they normally hear like and they're just trying to keep the stuff straight because as a new person it's pretty confusing. They hear deregulated, they're like great I'm latching on a deregulated. There's deregulated and regulated and I know the difference and I'm really happy with that. I'm gonna like check the box and move on for now. Yeah it's tough because I think in industry you hear deregulated and regulated a lot. And I did a lot of my initial energy education in law classes. And so I learned restructured and non-restructured. So it depends on where you're coming from. All right, Pam, the question I have to ask, do we wanna cover these kind of three main buckets of market types in wholesale deregulated markets, energy markets, capacity markets, and ancillary service markets? Yes, we do try and explain these to us simply I will and I have such a fun metaphor for you Isos and RTOs run three types of markets not all of them run all not all of them run all of these For example or caught SPP and Kaizo don't have capacity markets but they all show up and you will hear about them all so energy markets is what everyone has and These are the day ahead hourly and real-time sales for electricity This is the bulk of where the buying and selling of your electricity is occurring and where it's coming from ancillary services are markets for services that help balance the transmission system like frequency regulation and reserves that's the little stuff that's happening on much smaller much smaller time scales reserve is just in case you need it extra stuff that you have on hand like it's like they're on hand in case you need it as like all right I I can call it as needed, but maybe hopefully I don't need it. OK. Maybe the demand is a bit higher than you initially predicted it would be. So you just have a little bit on hand in case. Yeah. And then there's 26 million toasters we lost. We need something. Yeah, yeah. We got to find 30 megawatts of, I'm sorry, 30 gigawatts of reserve somewhere. Good luck with that. Ancillary services are small timescales, small amounts. It's a little stuff. that just keeps the system going on the minute-by-minute basis. Small calibrations to keep things on the rails. Little teeny things, yeah. Frequency regulation is just the easiest way to think about ancillary surfaces. Then finally is capacity markets, which I know everyone has their own opinions on. Capacity markets could have their own episodes because they care so much about them and they have so many opinions about them. Here is an entire book I am holding up. She has electricity capacity markets. Yes. Todd S. Agard and Andrew N. Clite. Yes, this is all about capacity markets. They don't have books like that for ancillary services, guys. Capacity markets provide payments to generators for their generating capacity that they provide to the system. You're not paying them for actual electricity generated. That's what the energy market does. You're paying them for the generation capabilities that they will offer the system in the future. You want to have a reserve margin, the capacity market helps you have that reserve margin. Capacity markets are just at their core paying generators to be available and exist. A metaphor for these three markets and what I think is the easiest way to think about them is that ISOs are essentially a bar. Capacity markets are the cover fee that you pay to get in the door and ensure that the band will be playing that the bartender will be there to make your drinks so that you can pay for them later on. The energy market is the actual drinks that you buy and the ancillary services are the bar peanuts and the popcorn and the fries that you eat on the side to keep you from getting alcohol poisoning when you've bought so many drinks from the energy market. And of course this metaphor eventually breaks down. I have no idea what the equivalent of the net cone or the net cost of new entry or the Mopr minimum offer price rule or reliability must run contracts would be in relation to the cover fee here, but the vibes are there. This is, the ISO is just a bar. I mean, sometimes you don't need to know everything about how the sausage is made right at the bar. What do you mean? You don't want to read elections anymore. Okay, let me test this a little bit then. So I'm gonna go out with my wife on a Friday night and we're gonna go to a bar that has live music in downtown Seattle. To pay 20 bucks to go see the concert, let's pick one. I saw M83 recently. Or maybe Dead and Company, with John Mayer, they're touring. They just came to the Gorge Amphitheater. So my price to get into the bar or the concert venue, let's say 50 bucks or something, that's the capacity market payment for me. As long as the main reason you're there is the drinks. Yeah, yeah. The main reason I'm there though is the drinks. I don't actually like this band that much. I'm just going because, you know, I'm trying to be a good husband. And so I'm going there for the drinks, right? It's all about the drinks. And so all the money I spent on the drinks at the concert is the energy markets. And then if I want to, this breaks down a bit because I was going to say like money for the jukebox or the salty peanuts or the snacks or the other stuff kind of around the edges, kind of small things, that's the ancillary services markets. Yes. That's a great way. That's a great example. Okay. All right. Go ahead. What I made this example, just I guess for people to know, if anyone went to Penn State, I was specifically thinking about the bar champs. Deregulated retail markets. Ah, retail markets. I'm going to admit, I don't know as much about deregulated or restructured retail markets as I do wholesale markets because I spend all my time doing wholesale markets. But these, the decision whether or not to deregulate trust slash restructure your retail markets is a state decision at the state level, because states have jurisdiction over retail markets like we spoke about before, and the federal government has the jurisdiction over wholesale markets. Retail markets are when monopoly utilities and non monopoly utilities sell or retailers sell power to you, the consumer, and the restructuring process opened at the retail level opened up the market to non monopoly utility providers. So you'll offer here to this referred to as consumer choice, because you get to go out and you can choose who you want to buy your power from. And those entities are buying their power that they will sell to you from the wholesale from the wholesale market. Most likely the restructured wholesale market. I don't think I can think of a place that has a non-restructured wholesale market and a restructured retail market. Actually, there might be. Maybe the closest one that's at the top of my mind, California, because California has a deregulated wholesale market. And then you do kind of have a choice with community choice aggregators. But like, you don't have like a choice of anyone in the entire state, I think in a lot of cases. It's like, if you live in San Francisco, you have like Clean Power SF, or you know, like someone like that who's like you're designated, like you could buy from them in addition to buying from Pacific Gas and Electric. That's like really weird example though. So like maybe did more damage than I just helped. Ah, there is one example, sorry. There is one example of a state that has a restructured retail market, but a non-restructured wholesale market. And if I'm reading my mouth correct, I think it's Oregon. Oh, no, no. I was just about to say, hey, shout out to Oregon, right? Yeah, Oregon. We've got Seattle from Portland, so I can speak a little bit about this. Yeah, I don't know the specifics of how that works with the wholesale market, but that is the one place that does not have a wholesale market. I think it's a decent example, though. So we love Oregon, Portlandia. So you kind of don't have a choice if you own a house. If you're in a house, you're below a certain threshold. I think it's like 50 kilowatts, I think. And so if you're below 50 kilowatts in Oregon, you have no choice. And you have to buy from the utility, like Portland General Electric, or Pacific Power, or Idaho Power or Eugene Co-op or whatever. But if you're above that like 50 kilowatt threshold, which is kind of like bigger businesses, it is a deregulated retail market with a lot of asterisks there. And so you can choose where to buy your electricity from. So another one, which I think is like, you know, it depends. Like some states are just fully open, like Texas, you can just buy your electricity supply from any retailer and then the delivery um is from the utility or like in New York, I know this one well, like in New York you buy electricity delivery from Con Ed always, but you can buy from a third-party supplier, although um by default you're normally still buying supply from the utility, like you're putting both things on the bill, but you have the choice to leave. Yeah and that's a great point to from someone else. And that's a great point to make, um is that in deregulated, or sorry, Restruct in restructured retail markets the poles and wires are still owned and operated by the monopoly utility It's just the transaction is occurring with some third party Yeah, that's fair. And then there's there's like so many details and all these are weird like maybe you could speak to Michigan I know Michigan has like a lot of strange like Details to the fact that they have retail choice. I actually really can't I really in an apartment complex where I don't have an electricity bill, so I've never purchased electricity in, I've never purchased electricity in Michigan before. So I guess like the rule here, there's regulated and deregulated markets, and then within deregulated markets, you can have wholesale power deregulation, which is where third party generators, in addition to the utility, can sell power into the grid, sell power into the wholesale market and get compensated for it. And that happens at the ISO level, like PJM, New York ISO, those levels. And then you can also have deregulated retail markets, which happens at the state level. And so in Texas or in Oregon, You have different rules at the state level for retail deregulation, which kind of overlap and have a weird mishmash with the deregulation of the wholesale markets. And so no two places are the same. We're doing our best to kind of help you sift through it. But as with all things electricity, it's pretty messy. There's a couple of helpful charts in the blog post, but a lot to unpack here. If you have to choose between spending your time studying wholesale markets or retail markets, you should choose the right, you should choose restructured wholesale markets. Damn it, you got me saying deregulated. Stop. I didn't go through three plus semesters of energy law to say deregulated. So I've won because I'm creeping into Pam's vocabulary now. Thank you everyone for joining Pam. Till next time. See you next time. Maybe last thing. If you like the show, please leave us a review that was helped greatly or share the show with anyone else, you can find us on Apple and Spotify and Substack. Until next time, thanks for listening to Indermediate.

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Summary

Join Pam, Ben and James on a fun-filled ride through the ins and outs of electric vehicle (EV) charging, utility tariffs, and the ever-evolving grid technology. Our lively discussion kicks off with the basics of home EV charging and its potential to revamp your utility bill. We also delve into the role of the Public Utility Commission in managing fair rates in the growing age of time-of-use tariffs, especially in states like California and Michigan.

Episode chapters:

(00:00:00): EV banter & intro

(00:06:25): EV tech

(00:15:38): Batteries & EV charging

(00:17:00): Level one toaster charging

(00:21:08): Level two charging

(00:23:29): Level three DC fast charging

(00:31:38): Charging connectors

(00:35:29): Battery sizes and charge curves

(00:47:25): Utility tariffs and metering

(00:49:20): PG&E resi EV tariffs

(00:52:10): Types of EV charging tariffs

(01:00:53): Obligatory V2X hype

A key topic is consumer response to variable rates and its effect on curbing peak electricity usage. We explore ways to design rates that accommodate different lifestyles and spur shifts in energy consumption. Then, we turn the spotlight on "utility tariff hacking," considering how EV batteries could even power homes, thus exploring the realms of Vehicle-to-Home (V2H) and Vehicle-to-Grid (V2G) technology.

Our chat veers into the importance of EVs in shifting electricity usage, with a highlight on level two chargers for overnight charging. We introduce the intriguing concept of an EV time-based charging incentive for charging during off-peak hours.

Rounding off, we ponder over utilities, their awareness (or lack thereof) of home EV chargers, and their varying adoption of time-of-use rates. With a promise of deeper dives into V2G, demand response programs, and grid participation in the future, we leave listeners eagerly anticipating more.

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

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* Spotify

* Give us feedback: We’d love to hear from you via email, [email protected]

* Follow us on social media

* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

Relevant links we found helpful

* Overview

* https://www.energysage.com/electric-vehicles/costs-and-benefits-evs/evs-vs-fossil-fuel-vehicles/

* https://www.rewiringamerica.org/app/ira-calculator/information/electric-vehicles

* https://www.reddit.com/r/evcharging/wiki/public/

https://www.sheld.org/uploads/enel-x-smart-charging-for-dummies-2021.pdf

* Charging

* https://www.youtube.com/watch?v=_43-CPgqp4g

* https://evcharging.enelx.com/ca/en/resources/blog/552-ev-charging-connector-types

* https://support.fastned.nl/hc/en-gb/articles/205694717-How-fast-can-my-vehicle-charge-

* Impact on utility bill

* https://www.pge.com/en_US/residential/rate-plans/rate-plan-options/electric-vehicle-base-plan/electric-vehicle-base-plan.page

* https://www.pge.com/en_US/residential/rate-plans/rate-plan-options/tiered-base-plan/tiered-base-plan.page?

* https://www.firstenergycorp.com/content/dam/customer/get-help/files/PEV/nj-ev/jcpl-ev-customer-program-guide.pdf

* https://medium.com/@alubershane/our-decarbonized-electrified-future-ii-b6c581f6701c

* https://www.shipleyenergy.com/resources/energy-guides/cost-to-charge-an-electric-car-how-it-affects-your-electric-bill/

* Other links

* https://www.osti.gov/pages/servlets/purl/1576484

* https://www.eia.gov/tools/faqs/faq.php?id=97&t=3

* https://www.nrel.gov/docs/fy21osti/73762.pdf

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

Well, hello and welcome back to Intermediate, where you can easily get the knowledge you need to work in clean energy beyond the obvious. I'm Ben here with my co-hosts, Pam and James. Hey Ben, good to be back. Hey James. Hi. How are you guys doing? Yeah, doing well. Question of the group, how many of us have EVs? Yes. How many of us? Yes? Oh, I have whatever car I could get and then bring to school. But then I make up for it by walking almost everywhere and taking the bus when possible and carpooling. All right, that's even better than the EV. Yeah. All right. I do not have an EV. I guess I could cheat and say I don't have a car because we sold my car when gas prices were high. I was convinced this was the beginning of the end for gas. Our one gas car, which we have because it's paid off, is a 2013 Ford Fusion, so not an EV. OK. Is it fusion powered, though? Not even fusion powered. It's just gas powered, unfortunately. I do, in fact, have an EV. I have a 2018 E-Golf. it is it's from the era where EVs were slightly more handicapping than they are today you know on a good day it'll do about 150 miles of range and that's you know you might think that oh you can go pretty far 150 miles but when you're you know when you're running around doing a bunch of errands you eat that up pretty quickly. But on the other hand it's amazing. I love it and I'm hopefully never going to get rid of it. Yeah so question for me, the next car I want to get is an EV and I'm actually like causing issues in our family because I insist on it actually. I'm being very stubborn. But our requirements up here in Seattle like I need it's basically like you want an electric Subaru with long range, which doesn't exist. You know, I need high ground clearance. I need to be able to travel greater than 200 miles probably. I need it to be not a million dollars. So like the Rivian's kind of out. I don't know what my options are here. And so I was like, okay, if I think about Subaru has the Soltera and that's all of those things except something with long range. What if, could I get some rig that's like, put it in my car and it's a battery and solar panels and I could like when I get to the trailhead or camping or something like charge up my car based off the Sun is that feasible there's actually a guy that has prototype this at least and is trying to sell it for Tesla's where not only is there a kit where you put a pretty sizable solar panel over the top of your model 3 but there's actually, when you park, just like you said, when you park, you unfold this kit from the trunk and it goes up for like 10 yards behind your Tesla, and it just lays on the ground and trickle charges your Model 3. So it's like a mobile ground mount. I guess you wouldn't, yeah, that makes sense. See, the issue though is the Model 3 has really low ground clearance. And so that's, obviously that would be a great option, but you don't wanna destroy it and have the EV and all the components fall out as you go up the trailhead. Yeah, well, one of the things we'll get into today is actually the charging standards. And kind of aside from, okay, this thing needs to fit on the roof of a Model 3. If you put that part aside and just think about the panels you lay on the ground, the charging is actually the same between whatever, a Soltera or a Model 3, or God forbid, a Hummer, like an electrified Hummer, which, you know, which is the high end of the price bracket there. Pam, why do we care about EVs? Because they're storage on wheels, and they're cool. And we get a lot of emissions from just the average car that runs on gas, like ICE vehicles is what they're called, internal combustion engines, but ICE sounds way cooler. In America, 29% of emissions are coming from transportation. And within that 29%, 58% of those emissions are coming from light-duty vehicles. And a lot of that is from short-range trips. So if you want to abate those emissions, then switching to EVs is part of your answer. What are those things that we have now available that are renewable, that can be worked in quite a different way into the economy of the United States? which are concerned primarily with the design of nuclear power plants and this type of thing. Hi, I'm Pamela Wildstein. I'm Wyatt Makarovski. I'm Ben Hilborn. I'm James Gordy. You're listening to Indermediate. Indermediate. Indermediate. To Indermediate. Indermediate. The place for people trying to get into or already working on distributed energy resources and clean energy. This is the podcast that makes it easy to learn how the grid actually works beyond the office. Hey everyone, this is James Gordy and this is episode two of the Intermediate Podcast. Today we have the esteemed co-host guest of Ben Hilborn and Pam Wildstein. Hello. Hey Ben and Pam. Thanks for jumping on. Yeah. And so I think today we want to cover a slightly in the weeds version of electric vehicles. So we're really just going to take you through. And so I guess just to kick it off Ben, do you want to give us an intro on EVs and why they're awesome? Yeah, I mean so if you're if you're in the energy industry if you're in EVs This is this is gonna seem pretty rudimentary But this is for anybody who's you know Who's checking out the episode because they want to get really in-depth and if you don't know some of the basics It's hard to hard to build on top of that understanding. So At the most basic level, you know, a car is a car. It is an enclosed cabin that has usually four wheels and some way, some mode of propulsion to move you around. In nearly every vehicle up until, call it 10-ish years ago, maybe 20, most vehicles were internal combustion. they had a tank of combustible fuel, you know, diesel or gasoline, and an internal combustion engine, which you would feed that fuel into, you would get small explosions of your old dinosaur juice, and that would be turned into, you know, rotational power which would move the wheels. Now, instead, we have in an electric vehicle, you have a battery pack, and so Instead of a tank that holds gasoline, you have a battery which has a chemical potential that when you let that chemical potential equalize, you get electricity out of it. That goes into a little electric motor, the electric motor turns that electricity into rotational force which moves the wheels. At the end of the day, two different ways of moving the vehicle forward. The, kind of the big difference, and this is what everyone talks about when it comes to EVs, at least at this point in time, which is date of recording, you know, April 17th, 2023. We're like, I would say that we're fairly far along in the EV revolution. We've seen, you know, multiple generations of vehicles come out now. And the main topic of conversation is still, what's the range? So while an electric motor is way more efficient at turning input power into output motion than an internal combustion engine, it's a fact of the matter that a lithium-ion battery is way less energy dense than a tank of gasoline. There is so much more potential energy in a tank of gasoline than there is in a battery pack which you know will be much much larger and much heavier than that tank of gasoline and So at the end of the day, you've got all these numbers that kind of balance out you get, you know, call it 500 miles out of a You know out of an efficient car with a with a full tank of gasoline and you'll get you know 300 and change out of a you know an efficient EV with a with a full charge. So in the same ballpark we're not there yet. That's kind of the That's kind of the big talking point. You get other people also talk about how EVs are are greener. You've got and the the important thing to focus on here is tailpipe emissions. So when you look at the vehicle itself how much how Polluting is the vehicle. And so you put a certain amount of energy into the vehicle. It gets charged up where the gas tank gets filled. And what comes out of that as you drive? Nothing comes out of an EV. You get carbon dioxide, nitrous oxides, different things coming out of an internal combustion vehicle. Especially when you talk about how green these vehicles are, you really do get, you know, can get some people riled up about, oh, well, like the power for that EV is coming from dirty coal plants and whatnot. There's a whole conversation here. My favorite thing that I like to come back to is it's called entrained emissions, where if I'm going to build a brand new vehicle today and I build an internal combustion vehicle, that vehicle can only ever run on fossil fuels. It can only ever, it's probably, the day it rolls off the factory line, that's the most efficient it's ever gonna be. It is never going to get cleaner than it is that day. You build an electric vehicle. It has some amount of emissions that take to build it. And yes, it's drawing power from the grid that will that has some amount of carbon footprint today but the beauty is that as the grid gets cleaner so does the vehicle and so that's that's my my favorite way to think about that what I don't know what do you guys think how do you how do you like to talk about how clean or not clean EVs are yeah I think you just brought up all the the sticky topics I might happen at Thanksgiving table with my older relatives Ben I know I know I wanted get them out there early. No doubt we can unpack those. I think one thing they just like highlight though right, electric vehicles isn't just the four-wheel things that you are going to park in your garage like electric vehicles are you know school buses and transit buses and semi trucks right like Tesla's announcing their semi truck or even boats and airplanes like it's a thing that moves it's a vehicle and you know in many cases it makes sense to make it electric. Um, I think there's a lot of, um, things that kind of talk about the benefits, the pros and cons, I think like at a high level, people will tell you EVs are awesome. Um, I don't have one myself, mostly for those range challenges, right? Like we live in Seattle and so like when we drive our car outside the city, it's normally like pretty long and it needs to be off road. And, um, there's not a whole lot of like off road type SUVs that are electric that aren't like a Rivian, which is super expensive, right. Um, but I think, um, you know, in general, like they're a good, smooth driving experience, you know, I've driven one a couple of times and, um, when you look at the total cost of ownership, both from like an electricity purchasing stick in the car standpoint, and also the maintenance EVs are normally cheaper, um, and we'll get into this a lot more, but that implies that you're going to manage and like charge it in a smart, efficient way. And so while it might be hard out of pocket on the front end to say my EV is cheaper, and batteries are pretty expensive, so it can be out of reach for some people, they are getting cheaper and cheaper and more accessible like we talked about. And if you can manage the energy in a smart way, they are cheaper from a total cost of ownership. You can try to make that argument at the Thanksgiving table. It's hard to whip out the spreadsheet though in practice, and so we need to get better at saying that in a simple way. I can be very disappointed if I hear that you didn't whip out a spreadsheet about EVs at this Thanksgiving dinner. You know, Pam probably did, right? Oh, probably. No, absolutely not. I think when I think about EVs, though, and I think kind of going off your earlier point, I think they're a really great example and probably one of the best examples for why, when we talk about electrifying everything, it's not just make everything based on electricity. it's also if we want to truly decarbonize we also need to make sure we're coming from clean energy sources because you can have an EV and it can be you can have an EV but if all the electricity is coming from coal then you haven't really helped the environment that much or you haven't really led to system-wide decarbonization at all so it's really be being proactive about how you're managing your system and what you're actually using to fuel your EVs now And I think the one other little sticky point on EVs, and maybe this is more from, I hear this one a lot and I think it's really important for us to consider in the future, is the batteries themselves, the lithium ion batteries themselves, the mining processes that we're getting those resources from have a lot of environmental harms associated with them and also a lot of justice concerns with human issues associated with them, and that's And that's something that there's not, there's not like an easy fix for that one. It's not like, oh, you know, there's a, you know, there's, my EV is currently being, you know, fueled by coal. So I just need to create a transition to clean energy. It's like, well, if the processes behind which I'm getting the battery for are really toxic for the environment and really terrible for the people that are doing the mining. Like that's a tough one. Yeah, absolutely. there's I think my favorite part about the EV industry it's you know AI is all the rage these days everybody is talking with experimenting with you know just experiencing how quickly AI is is progressing and one of the things I'd love about EVs is the the EV industry is kind of having this the same kind of extremely rapid development cycle that a lot of people don't really see because the the end consumer product isn't like oh man I'm gonna go to the I'm gonna go to the grocery store and get the newest chemistry of Evie battery like that's that's not something that you buy as a consumer, but you'll see What is it? There's a I think BYD out of China is releasing their seagull evie with the option for a sodium ion battery you know slightly less energy dense than lithium ion but it's like you know one of the very first generations of this battery this is battery tech but they're putting it into a car that you can buy and so the more you can deploy this into real life the more you can put it into people's hands and just like iterate iterate iterate where we're gonna be in five years from now, like, EVs today are gonna look like relics. It's I love it. Yeah, I remember I think it must have been like, five years ago at this point, I was listening to an episode of the podcast called the interchange before green tech media got shut down and bought out and back when it was like really clean energy oriented. And one of the guys on the podcast was like, I'll eat my shoe the day that I see like a pickup truck EV. And then I and I was like, Yeah, we're never see it's going to take like 10-20 years and then like two years later we got a pick up truck ev and my whole class was losing their minds over it and we were all we watched the commercial in class and we all like a little party over it was so cool just like the speed that the industry's going is insane tell me you mailed him a shoe no no i hope someone did okay well just to like just to like continue leveling the playing field making sure that basics so in the same way that you can you can buy different octanes of gas for your car there there are different ways that you can that you can fuel your your EV and it's just that everybody kind of has the the same understanding here not that not that any one type of fueling like gives your car more power or anything like that no in the way that you know and an octane rating has has an influence over you know ignition timing so you go out you buy your you buy your first EV you're super proud you bring it home and in the trunk they give you a a charger like a home charger also important to note that a sometimes charger what's that sometimes it's not always sometimes that's true right yeah that's right it used to be included in the model 3 and now you have to buy it separately. I forgot about that. So sometimes, sometimes you get a charger with your EV. Also worth noting that the proper name for the thing you call a charger is actually an EVSE, the electric vehicle supply equipment. And the reason for that is the thing that actually charges the battery is in the car. It was in the car from day one, it'll always be in the car. But that is semantics. If you ever hear the term EVSE, they're referring to what most people think of as the charger. Anyways, if you're lucky enough to get a charger in your car from the from the showroom, it'll likely be just kind of a 110. This is North American focused, obviously. It'll just be a 110 volt charger that you can plug into any wall socket in your garage. You plug it into your electric vehicle and you wake up in the morning and you stare at the dash of your car and you realize I only got 50 miles of range overnight. Oh, that's not what I expected. Everybody tells me that I can plug my car in and it's fully charged every morning. Well, they're, just because some salesperson tells you that and leaves out some of the details doesn't change the mechanics of how the grid and your home electrical equipment works. So what you what you've experienced there is called level one charging. This is just charging your car at the the same speed as a toaster essentially. So you're taking it a one ton vehicle and you're supplying it with the same amount of power as it takes to make your bagel in the morning and you're expecting that to move your car around all along. Okay, so there's there's a little bit of a mismatch there. For some people, people that you know have have short commutes or maybe that don't commute at all and you know only take their car out once every couple days, a level one charger is actually totally sufficient. And this is, it's a cheap way to charge your car. It's very gentle on the batteries. You're not you're not taxing them by you know heating them up by pushing a ton of current into them It's you know, it's a simple nice easy way to do it most people that buy an EV will eventually upgrade to what's called a level 2 charger and These can be found in homes or out at the mall or at a hotel A level two charger, this is somewhere from five to 20 times as fast as a level one charger. And so starting to get into a little bit more details here, your level one charger is probably capped at around one kilowatt. A level two charger can be anywhere in the range of like five to 20 kilowatts. And this to reference back to episode one where we talked about the difference between kilowatts and kilowatt hours. A kilowatt is the rate of charge is how fast you're charging. A kilowatt hour is how much you can charge in an hour. It's the amount the aggregate amount of charge. And so you'll go hire an electrician they'll come mount a fancy shiny box on your wall the charge cable is gonna be much thicker and you plug your car in and now it's gonna be fully charged potentially in three hours or something like that. You get home from work, you plug in, by the time you wanna go out for dinner, your car's fully charged again. That kind of thing. That's the kind of experience you can expect from a level two charger. And it's the same kind of thing. You go to the mall, you plug in, you shop for a couple hours. By the time you come out, your car's fully charged. That's the level two experience. Quick question, Ben. Yeah, yeah. So I definitely like I know some people where like they live on the side of a hill here And they don't like park their car in the garage because the garage is just full of stuff That's not a car you can imagine Yeah And so they run an extension cord out to the street to plug in their Tesla Model 3 Is that a level one a level two or something else? That's janky. It doesn't qualify. Is that legal? Yeah, more people do this than you might think actually. Oh, I believe it. Yeah, there's actually a very cool company called Voltpost that's looking to kind of make street side charging a little bit easier for owners like this where you're charging during the daytime and you use power that's not being used for lighting. Anyways, little small shout out to Voltpost there. That's likely going to be just a level one. The reason being is if you have to run an extension cord from the side of your house all the way to the sidewalk and then it's like a souped up extension cord yeah is it it's entirely possible that people are actually doing like level charging level two charging street side that's totally possible ingenuity ingenuity indeed indeed just hope to adapt overcome persevere okay okay i'm gonna finish my spiel on charging wait we've made it through one. We got level two. And what's after that? Well, level three. So this is this is called DC fast charging. And the reason you call it DC fast charging is level one and level two were AC. So this is the power that's in your walls at home. You know, it's the same like same thing. You plug in your toaster, you plug in your oven, your clothes dryer, all this kind of stuff. It's all AC. DC fast charging is much different, primarily because it's direct current, not alternating current. And the reason for that is because of that charger that I talked about earlier. When the charger that is in the car, not the EVSE, but the little box that's hidden in your car somewhere, the thing that charges the batteries, it's what takes AC current that's into the car from your wall and converts it to DC current and puts it into the batteries. Batteries are inherently a direct current device. When you plug into a DC fast charger, it says, hey onboard charger, I don't need you. I'm going to throw power into the battery pack myself. I'm going to manage it. You can get out of the way and the kind of the management capabilities, the power delivery capabilities of a DC fast charger are much, much greater than the little charging block that's hidden in your car somewhere. So whereas a level two charger on your wall, let's say it can deliver, at the very top end, let's say it can deliver 20 kilowatts, most are not that fast, but let's say it can deliver 20 kilowatts. and the little charging, the charger in your car. It can accept up to 20 kilowatts. You're kind of maxing out all ends of the system there. A DC fast charger, depending on the vehicle, can put up to 500 kilowatts into a vehicle. Now, no consumer vehicles can accept 500 kilowatts. You get things like the Porsche Taycan or the, I don't think even the IONIQ 5 can accept 350, but the maximum that a commercial, commercially available vehicle for a consumer can accept is about 350 kilowatts. So an order of magnitude larger than level 2. And the experience here is intended to be as close to pulling up to a gas station as possible. This is something, it's not that fast yet. It is, we simply aren't there in terms of technology. But this is something where if you're road tripping with your car, you can pull up to a DC fast charger, plug in, you know, go into the nearby convenience store for a snack, go to the bathroom, you know, just, you know, look at the birds for a minute or two and by that time, your car's ready to go. You know, you're aiming for somewhere between like a 15 to, you know, 30 minute stop for most of your battery capacity. That's kind of the experience of DC fast charging. James, you said you've tried driving an EV a few times. Did you get to try supercharging or DC fast charging? Indirectly, I was up in British Columbia like kind of on the way to Banff driving from Vancouver one time and when we were driving up like we got to Squamish and they had like a Tesla supercharger station there and so we got to use one of those and we basically just like walked got a coffee you know Starbucks and it was kind of like pretty crowded so it took us like 20-30 minutes we got back and like we definitely were most of the way there Um, but then we got up to actually like Whistler, um, and we were just using like a level two charger, right? Um, cause we just like driven up the mountains and all over. So we had like drained down a lot. Um, and we probably went like into the Whistler village for a couple hours, came back and I would assume this was level two, not level one, but like. It didn't make that big of a dent, honestly, you know, like we were probably there for a couple hours and we may be added like 30, maybe 40% onto it from the public charger. Yeah, yeah, that's a very apt description of level three versus level two charging. And it's really important to note that all of this, all of these things are entirely vehicle dependent. It's the same kind of thing. If I have my 1995 Toyota Camry, right? It doesn't matter if I put a hundred octane into it, It's not going to go any faster, there are limitations of the car. It's the same kind of thing with charging of any type. The charger in your car is going to limit how fast you can AC charge and the battery itself and onboard battery management system is going to limit how fast you can DC charge. So in my eGolf, I can only DC fast charge at 40 kilowatts. It doesn't matter if I plug into a 350 kilowatt capable station, I'm only charging at 40 kilowatts. The great thing is it's an extremely efficient vehicle, not like a Hummer EV or something. And so it still doesn't take me that long to charge up. But there are limitations of the car. I can't take advantage of the full capabilities of the of the DC fast charger and so people kind of need to think about the fact that like it's not just like the charger or even the car itself it's kind of like both and like what they can support in like a charging experience is that like the right way to think about it yeah it's i think one of the one of the interesting things about the transition to EVs is that the average driver has to know more about their car than they used to. It's interesting. There's a little bit of like a dumbbell curve here. You know, back 30, 40 years ago, the average driver had to know like roughly like how to adjust a carburetor, right? It's just, it's one of those things that like if you're driving up a mountain pass, you need to know how to adjust a carburetor so that you can adjust your air fuel mixture. it's just one of the necessary tools in operating that vehicle. And then we got to the modern era of internal combustion where everything is automated, computerized. It is as simple as, I don't even take the key out of my pocket anymore. I get in the car, I turn it on, I go, and that's it. That's the extent of the experience. Because we kind of shifted to this new technology, in a way is we're kind of back towards the like, you've got to be a little bit more involved. You have to understand your vehicle a little bit more to have the best possible experience. Yeah, but I mean, that's kind of asking a lot of people, right? I think there's a lot of change management or difference here. Like people just want something that's simple. Like even me, who's like relatively, you know, excuse the pun, plugged in to the EV scene. Like it's kind of a lot to know. So can't you just like go plug in more or less and as long as you have the same connector, like it'll charge and it'll go kind of as fast as it will but like you just kind of have to know or like be surprised by how long it's gonna take like is that fair you can mostly just like plug it in but it might just take a long time like is that gonna cause problems you know you kind of touched on something interesting there is the different connectors right there's we've everybody kind of knows about the oh which which usb cable do i need do i need the you know type a type b type you know micro mini That whole thing has happened with EVs as well. So To your to answer your question so long as you're not in a rush Yeah You can mostly just go plug in anywhere and just see what happens and the vehicle and the charger will sort it out It's just you at the end of the day as the human are gonna be you're kind of left holding the bag You're just kind of waiting for the process to finish now that the hard constraint here is making sure that you've got the right connector There are a bunch of different connectors per market, so us as North Americans, we don't have to worry about seeing like a European style EV plug. It's called like a Menekes plug, and you just, you're never going to see it. You're not going to see it on a charger. You're not going to see it on a car. It has never come to North America. We have J1772s for our kind of level one, level two charging. Same kind of thing for fast charging. You've got this kind of this standard. It's called CCS, CCS-1 or CCS-2, CCS-1 is the North American standard, CCS-2 is the kind of European slash rest of world standard. And then you've got the complexity of the Tesla plug where Tesla don't have any of those, Tesla has its own plug shape and architecture and you need to use adapters if you want to use a Tesla on a non-Tesla charger or a non-Tesla vehicle on a Tesla charger. There's another layer of complexity.

So, to answer your question, it kind of sucks for user experience right now. There is a big learning curve. Do people just carry around a bunch of adapters? Do you kind of realize that you can't charge one time and then you order something on Amazon like an adapter kit? How do people normally deal with this? Manufacturers try to make your life a little bit easier in that, you know, with every Tesla, you'll get an adapter so that you can charge at any J1772 charger. And as for other vehicles, yeah, if you want to charge at a Tesla level two charger, you have to go buy an adapter on Amazon, and they're not the cheapest things. Tesla's just recently started opening up their Supercharger, that's their fast charger network. they've started opening it up to non-Tesla vehicles and what they've done is they've included an adapter as a part of the charging station. So if you pull up and kind of unlock the station with the app, there's something on the supercharger called a Magic Dock. And if you say, oh yeah, I'm charging a non-Tesla vehicle here, when you pull the charge handle out, it actually, instead of pulling out just the Tesla charger, it comes out with a CCS-1 adapter on it. So then you can fast charge it on Tesla. So people are working on it. It's not there. Stuff is a little bit hacky, but it's getting better. That's fair. Did you want to cover the bit, Ben, about how the chargers and the battery don't automatically just charge at the same rate? Or is that best left to a visual that we follow up on, you think? I think I touched on it a little bit. I think that should be fine. OK. All right, I did want to give people a sense of scale, best we can. And best we can means if you have a relative are following us as far as kilowatts and kilowatt hours go. Can we just talk through some vehicle batteries and just say what the vehicle is, how big the battery is, and roughly how long it would take to charge with the different chargers, a few examples helpful for people. Yeah, I'm gonna plug my own. I have a real example that I had written up for my part. Oh yeah, let's hear it. Yeah, so, well I guess pretty said this, but a kilowatt is a rate. It's how fast you're getting the electricity, and the kilowatt hour is the amount of electricity that you're getting. So one kilowatt for one hour is one kilowatt hour. So if my UV has Capacity of 80 kilowatt hours and my charger charges at a rate of 10 kilowatts Then I would need eight hours to charge the battery from empty to full Yep What level would that be Pam? That'd be a level two Good work This was a test This was my final today. This was it I will add one thing. Yay, I passed. I will add one thing. The difference on a residential home's electricity usage between level one and level two is staggering. Just from the residential sector's electricity usage standpoint, it's huge. If you think of an hourly time series of a home's kilowatt difference you're not really going to notice that because the home really is generally from like 0.5 to 1 kilowatts anyway that's maybe like that's really maybe that's like it's not that much of a difference but adding 5 to 20 kilowatts is huge like you'll see homes at like 5 or 6 pm they'll plug the car in with level 2 chargers that that's like 10 times the amount electricity use, it just increases by, you know, ten times tenfold. It's wild to see on a graph. Because I have two competing thoughts. The first one being that math that you did, Pam, is great and works well at low charge rates, but it really breaks down when you start increasing that charge rate because a battery doesn't perform linearly it's not like a bucket it's like it's not how how fast can I pour the water into the bucket that's how fast the bucket will get full it's much closer to an elastic band where in many ways actually where if you take an elastic band and you haul on it super fast there's a good chance it'll just snap but if you if you pull it gently from you know totally loosey-goosey all the way till it's you know fully extended that's that's much gentler on the on the elastic band and as you as the elastic band stretches more and more till it till it gets that point where it would change from elastic to you know elastic deformation, you'll feel more and more resistance. And that's exactly what happens with a battery. So when you're DC fast charging, this happens at all charge levels, but the effect of it is much more prominent when you're DC fast charging, the closer you are to full, the slower the battery is going to charge, because there is more resistance to the electrons flowing into the battery. And this is just kind of like the last little cherry on top of the charging experience I wanted to give. And that's that math doesn't specifically work at higher speeds. If I have a 100 kilowatt hour battery and I go and I plug into a 100 kilowatt capable charger, that doesn't mean that I'm done in an hour because my battery is likely going to start charging at 100 kilowatts. And as it gets closer to full, that charge rate's going to taper off for things primarily because of heat. As the battery fills up and there's more internal resistance, the electrons moving around, it starts to heat up. And there's much more minutiae to do with why DC fast charging has to slow down I don't know well enough but it's just important to talk about for the experience where different cars have different battery management systems they can deal with this DC fast charging in different ways and it's it seems like a very strange thing to look at when you're buying a car but if I Right, like it's came out in like 2016 or something like that. It's kind of old tech But when you plug it in to fast charge The the charge curve of that vehicle is a flat line. It charges at 40 kilowatts basically from 0 to 100% It's crazy. But then you look at a brand new vehicle like the Toyota BZ 4x or like Subaru Solterra same car Um, it starts near its, uh, its maximum charge rate and immediately starts declining from there when you think, Oh yeah, my car can, my car can fast charge at a hundred kilowatts. And you just kind of do that mental math and factor that into how long you're going to be at a, at a rest stop charging, that's not what's going to happen because you're going to be down below 50% of your max charge rate before you know it. I think to paint this picture, though, Ben, we're looking at graphs and it's really easy for us to tell. Like if you can imagine like an X and a Y with like the X axis left to right being like the percentage battery or often state of charge, and then the Y axis up and down being like the rate in kilowatts, right, at which it's charging, you can kind of imagine this like really steep ramp up as you like plug in and start the charge session. And if it's a really good charge curve, that rate will stay really high all the way across until as close as possible to like the battery at being at 100% state of charge. The dicey ones though, like Ben's kind of describing, are like they'll ramp up and then very quickly the like charge rate will drop really, really quickly. and so instead of it just being like 10 kilowatts, 80 kilowatt hour battery, it'll be more like eight hours. It'll be like a lot longer than that because like your charge rate is declining on the graph, right, and so it'll kind of like shoot up and then like go down pretty quickly and maybe that helps a little bit. Yeah. Alternatively, one of the guys in my lab explained it to me as people going on a bus and their comfort level of being on the bus and how many people you can get on the bus at once. And when the bus is empty, you can very quickly get many people on the bus. But then as time goes on and the bus becomes more full, you have to sit near more people. Now some people are standing. Now you're at the big stop and all the people come in and now everyone's smushed together and you're like slowly getting as many people in this bus smushed together as possible. And it becomes really uncomfortable. I love the bus analogy. It's a really good analogy. It's a really good one. It's a great one. I didn't understand this at all until my friend used the bus analogy and then I completely understood and then I also understood from that analogy why you don't want to keep your battery fully charged because you're putting too much stress on it like you don't want your bus at your max capacity because it's just not you know it's not comfortable for everyone you put strain on it all right if it's cool I'm just gonna name a couple popular vehicles and like their battery size and then we can move on to Pam section is that cool let's do it all right so people pretty familiar right Tesla you know everybody wants one maybe maybe you don't so like a Tesla model 3 somewhere between like a 50 to 90 kilowatt hour battery you know model Y it's kind of like the SUV 75 to 100 Chevy Bolt 60 kilowatt hours Nissan Leaf maybe the older ones are kind of 40 they get all the way up to 100 now, Volkswagen ID.4 or Ford Mustang Mach-E, these are kind of like they call them SUVs, but they're not really type vehicles. They have about 75 to 100 kilowatt hours. You have the Hummer EV 210 kilowatt hours, or like a Ford F-150 Lightning. That's 98 to 131 kilowatt hours. And so like, oh, I'm going to add in the RAM rev. So like, Dodge has come out with its competitor to the Ford Lightning, which is the RAM rev. It has a 229 kilowatt hour battery pack, which is an insane. That's like a school bus. Like an electric school bus, yeah, pretty similar. Yeah. But in coming back to pounds point about like we are still in this era We don't have a great handle on how to do this perfectly ethically and you know, perfectly You know good for the planet from cradle to grave man that the people that are buying vehicles like the Hummer EV or the Ram Rev and just Using it to you know, do their 20 mile commute to work every day it really is the same kind of excess as buying a Hummer and using that to do your commute to work. Like buying a car or something. Yeah, but I don't know though, man. Like I'm from New Orleans, spent a lot of time living in like Texas, Mississippi, or places like that. Like it's less about practicality and it's more just like cultural, you know? Like people have trucks, they use them for work. They don't use them for work, right? Like they might never get a speck of dust on it, But you need to provide cars and electric options that people really resonate with and are almost cultural. In middle America, a truck is much more than just a car. It's a cultural symbol, a status symbol. And so I think it's good that we have these options. How we make them practical, I think that's a totally fair argument. But in the Northwest, everyone makes fun of you. You get a Subaru when you move to Portland or Seattle or something, right? We need to have a really good electric SUV for people like that. Otherwise, even us, it's hard to really justify that trade-off or that sacrifice. People don't wanna do it. We need to meet people where they are. Yeah, I can agree with that. I'll get behind that. Okay, Pam, I think we did wanna talk a little bit about electric vehicle energy use and how that impacts people's utility bills. In theory, in magic, EVs are cheaper because the electricity is cheaper than gas. But could you take us through that world and help us start to engage with it? Speak to the people that maybe aren't in it day to day like us and are really just curious. All right, now we're peeling back. We have a good feel for the hardware and the options here.

How does this interact with utilities and the grid? And speak to people really trying to engage. Yeah, so in theory, like you said, in theory, they're cheaper, in theory, they are better for their, you know, have lower emissions, but that's, you know, all theory and practice it gets messed up and gets crazy very quickly. So the big difference between and I'm going to stick to the residential level here. So all this is going to be mainly residential and in theory, not very sorry. The big difference between an EV and an ICE vehicle is that with the ICE vehicle, You're paying at the pump and then the EV assuming you're doing a level one or a level two charger at home now You're paying at the end of the month for your utility or utility bill and the cost of charging that EV is going to depend on your rate structure and how much you're paying per kilowatt hour and Then depending on that rate structure the time that you're charging So in general there are two options for charging your EV You can either meter the EV with your house and then everything is on is the same on the same one bill And that's where, when I spoke about earlier, when I said we can really see the difference between a level one and a level two charger in your hourly electricity usage for the home, that's where you really start to see that. Your second option is to meter the EV separately, and then you get two bills. So you have one bill for your house and then one for your EV. So, for example, PG&E, as of February 2023, has two residential EV rate plans. Their home charging EV2A combines the vehicle and the home, and then their EVB rate requires you to install a second meter and keeps the two on separate bills. So then the question becomes, well, why would you want to keep them separate? That just sounds really annoying to have to pay two bills a month and keep them in line. And it's because the EV specific rates, like that EVB rate I was speaking about, tend to be more dynamic and there's more you can do with them and there's more savings that you could get with them. So there are two, I guess, technically three styles of EV charging tariffs. The first is the normal plot. Before we go there, can I just try and make sure I understood it for anyone that's maybe not quite as familiar with utility bills and how kind of like energy usage flows through? So, what I understand it as is that, you know, right, like you kind of use however much energy use electricity, and then that gets tagged on your meter, and then like every month you get a bill from the utility. Now you have this like net new load right electrifying everything, maybe the first thing is your EV that energy. If you don't do anything else is going to get fed in through to like the usage is going to get fed into your meter, and then translated to your bill through the tariff that you're on, correct? The utility is called tariffs? Exactly. And then how do people even know this stuff? Like you're talking about an EVB and residential, you know, a whole bunch of words, right? How do people engage with this stuff? How can you even figure it out? Unfortunately, you have to be kind of proactive about going on the utility's website and looking for the options. Some utilities make it really easy. sometimes they'll even come to you and they'll tell you these are the options available to you or this is where it can be found on our website or here's some mail about it and then other and and maybe their website's like really easy to use and navigate like i've seen some really great websites and then others not so much um so if you're going to get an ev like we were talking about before people need to know more about their vehicle they need to interact with their utility in new and different ways that they haven't had to in the past part of that process And this is something, when my parents were getting an EV, I had to walk them through, because I, as an energy person, was kind of familiar with it, is going on the website, going through the pain of calling the utility, and doing some research. And hopefully, over time, as EVs become more normalized, then more of these processes will already be set up, and there'll be more resources available for people. Yeah. Makes sense. Sorry. You were talking about the two different types or three different types maybe of tariffs. Yeah. Technically three. Yeah. So when you go on the website and when you look at the different tariff options available for you or maybe you get something in the mail from your utility or maybe you have a friend who got an EV before you and they already know what's going on, there are generally two or three different styles of EV charging tariffs. The first and these can go for either if it's coupled with the home in your normal electricity usage or if it's separate So the first is just the normal flat tariff, which is you? Probably what you're already paying for your home, which is just you pay the same amount for charging at every hour of the day And this is generally the default for most utilities Increasingly, this isn't true. If you look at San Diego gas and electric DTE here in Michigan consumers in Michigan et cetera, like this is starting to change. But generally, for most of the country, this is the default. The second option is a dynamic time of use or TOU tariff. And the reason why, sorry, these dynamic time of use tariffs are where the price of electricity varies throughout the day. EVs are a particularly special case as users of electricity in the sense that one, they pose a large addition to a residential electricity load, like I spoke about earlier, people's electricity usage multiplying by 10, just because they plugged in their EV. And two, at their core, EVs are just simply battery storage on wheels. They're just batteries moving about space. And to also be clear, two things that make grid operators particularly stressed are one, relatively rapid, large, unplanned additions to residential load that are physically moving across space and to untapped unreported storage assets. So in this sense, EVs are kind of a double-edged sword because they run the risk of causing huge unplanned increases in load, but they also offer significant value in the form of storage if we find a way to harness that. So grid operators will seek to avoid the former and realize the latter through these dynamic time of use rates. The time of use EV rates are specifically designed to incentivize EV owners to charge at what the utility deems to be optimal hours and they achieve this by leveraging price, so changing the price of electricity throughout the day. In a time of use tariff design there are generally two or three periods on peak, off peak, and sometimes super off peak. Other times they'll name them different things but it's generally two or three different periods. The on peak hours are when charging would be most expensive and the off peak or the super peak would be the cheapest. I remember hearing some story of I think a utility in Texas where for their EV rates the super off-peak hours of cost of electricity was zero. I never got to, yeah I never got to, I remember just seeing it in passing and I should have looked more into it because that's just it, it was something to do with wind. Anyway, so for example- So what does the average consumer do? Because obviously the on-peak times are to be the most convenient times for the average person to charge. And so how does the average consumer deal with that? What do they do? Just pay the exorbitant price or? I guess it depends on what you're able to pay for starters, which is a whole justice issue on its own. But the goal is to push people to charge at night or to charge when solar is producing. And that is because? Because there's just less electricity usage. And I think wind tends to be better at night. More performance at night, yeah. Yeah. So push people overnight when there's less demand for electricity, because people are like sleeping, et cetera, et cetera. Is that the idea? Well, either times of less demand or times of high production. Because if you're trying to, instead of ramping supply up to meet demand, instead you're matching supply with, I'm sorry, instead of ramping supply up and down to meet demand, now we're looking to demand and ramping demand up and down to match supply. So it's times of- I see. So in the middle of the day, maybe, when solar is really producing. Yeah. So for example, in PG&E's EV2A rate, which is the one where the home and the EV are metered together, the off-peak hours, which are $0.24 a kilowatt hour, are 12 AM to 3 PM. The partial peak, I don't know why they call it that. The partial peak hours are 3 PM to 4 PM and 9 PM to 12 a.m., which are 44 cents a kilowatt hour. And then the on peak, which is four to nine p.m., which is when everyone gets home and wants to charge their vehicles and they're all cooking food and they're watching TV and all their lights are on, is 55 cents a kilowatt hour. And so, as time goes on and as I think utilities are taking these time of use rates more seriously and public utility commissions in general are starting to see their value and they're pushing them more, we're gonna get more granular, I guess is the right word for it, and more, I guess granular is the right word, kind of more granular and structured rates where, you know, there's part of your partial peak time is one hour, just three to four p.m. And so you can compare that time of use rate that I just explained to their base E1 residential flat tariff, which is always $0.35 a kilowatt hour. So if you're smart about how you charge or if you have the ability within your schedule to be really picky about when you charge, then you can save a lot of money. I think an issue is that not all of you have these multifaceted rates that are two, maybe three different rate tiers for different times of the day. And they might not even be like sequential. They're, you know, they're split up. They're spread out throughout the day. But a utility could change them, you know, as different generation capabilities come online in that power jurisdiction, it might be in the utility's best interest to change around those rates when they're applicable, how much they are, those kind of things. I can see it being kind of difficult for the average homeowner to really stay on top of, honey, you gotta remember to not charge the EV right now. But that kind of- Yeah, I mean, that's true. And that's one of the things I'm- That's an opportunity. Yeah, I mean, I think that's true, but that's either up to the different actors to try and like help people along that journey to drive a better outcome, right? like either like the utilities providing a price incentive, which is like a market way for them to like incentivize you, but sure that's complicated. So like, do you get a text message that says like, hey, you know, don't charge now, or it's already plugged in and you don't charge until later, or, you know, like I think there's opportunities and people are working on this to kind of help people on that journey and make this more simple, kind of more set in, forget it, I think. And I think too, This is something that the Public Utility Commission, or at least in the US, the Public Utility Commission, I don't know what the equivalent is in other countries, but that's something that especially as these time of use rates begin to become the default, which we're seeing in California and in Michigan, I know off the top of my head, that's something that they need to be proactive about, about managing fair rates and communicating with customers and consumers and seeing what works best for them while still having the best outcomes. and a lot of the really early research at the time of use.

And I think too, this is something that the Public Utility Commission, or at least in the US, the Public Utility Commission, I don't know what the equivalent is in other countries, but like, that's something that especially as these time of use rates begin to become the default, which we're seeing in California and in Michigan, I know off the top of my head, that's something that they need to be proactive about, about managing fair rates and communicating with customers and consumers and seeing what works best for them while still having the best outcomes. a lot of the really early research at the time of use and I just know some of this because this is the type of work that I do and like the type of research that I'm studying was just well are these rates gonna work are people gonna respond and then they found out okay yes people will respond we're seeing reductions in peak electricity usage and now the question is well if we start breaking it up into three different periods are people are we just gonna lose people or what you know what design of this is gonna get the best results and what design do people like the most? And what is not infringing upon their daily life the most? What's the easiest for people to work with? And can we create different rates that are better for certain lifestyles? A rate for someone with young children is gonna look very different than a rate that works best for me, a grad student living alone in an apartment, that can sometimes work from home, it just depends. and one thing I think is interesting and you touched on this right so these time of use tariffs from the utilities are becoming more common and people are shifting their usage or responding to them you know at least somewhat right like I can appreciate that it's complicated for the average person but like we can help them get there I also think what's cool EVs also have a battery right so like in theory like let's say and again not everyone's this lucky and this doesn't nothing's one size fits all but like you could in theory have rooftop solar, charge up your EV battery during the middle of the day, and then use your EV to power your house during the peak window, right? And so like, you're not even using like in theory, any electricity or not that much during the peak and you're saving yourself a lot of money and you're also like using directly those solar electrons like that concept and that like stitching together of the solar system with the battery in your EV to kind of like optimize or I almost call it like utility tariff hacking I think is really cool and very interesting. Do you want to do you want to just expand a little bit on like V2H and V2G? Yeah, this is certainly a whole episode but like I think that like we talk about again in the industry like people there's like we take this for granted there's these terms of like behind the meter and in front of the meter right I think we talked about that utility meter like It's very literal in that sense. And so behind the meter is like, you're not moving those electrons in front of the meter and like selling them or dispatching them into the grid. That's in front of, behind is that you're not. And so in theory, your rooftop solar system sits behind the meter and so does your electric vehicle and so does kind of all of the energy use demand in your house. and so you could charge your electric vehicle battery or maybe even a standalone battery or maybe both behind the meter and then use your batteries to eat or like power the load of your house you know maybe it's your heat pump powered by a smart thermostat at home maybe it's just your tv or dishwasher any of these kind of things and if you go back to those time of use tariffs right like that makes sense because you're getting the solar from the panels and then like it's cheaper to kind of like charge during those off peak hours right like in the PG&E there was 55 cents a kilowatt hour for on peak and then off peak was like 24 cents or something like that yeah so like if you're using less or no energy during that peak and you're shifting that load with your battery or your EV to those kind of like during the day hours like one that's cleaner and like also like you're almost like becoming more self-sufficient and so you're able to like really really reduce your you know your your energy charges and so like all of this could kind of like happen without needing to dispatch your energy in front of the meter into the grid in like a vehicle to grid type scenario and so there's like a lot of work I think and I think like people are excited about all of this potential and I agree it's very exciting like let's talk about all of it let's do a whole V2G episode let's I think is very cool and maybe gets overlooked a bit is like doing a lot of interesting things behind the meter to optimize and reduce your energy cost. I think also I kind of got away for a second by talking about time of use program design and I ended up being more about like everyday life but the real reason to try to target EVs with these time of use rates, specifically. And why we want people potentially on these time of use rates if they have EVs is because EVs are relatively easy to shift electricity usage for, because you can charge them overnight, especially if you have a level two charger. And the amount of load that they add to the system is so much, just to wrap that all up. Um, there's one other type of EV charging rate that you might come across, and it's, I don't, not very many people use it, but I recently learned it existed. Um, it's, it's called EV time based charging. It's an EV time based charging incentive, which if you know what peak time rebates is, it's kind of like that, but like not really. I don't really, I don't see this type of tariff, um, taking off, but you know, maybe I'll eat my shoe like the guy from the through a dynamic time of use rate. Instead, the utility can incentivize charging at optimal hours through a rebate. So JCP&L in New Jersey, for example, offers a two cents per kilowatt hour credit for the hours an EV owner charges during what they deem to be off peak. So it all happens, all the math happens like behind the scenes after the fact. Interesting. I don't really like that program design. I don't know how I feel about it. I feel like that's a little more opaque for the user you're not really seeing the immediate impact of like okay I'm using what is cheaper. It's Yeah rebates are hard yeah, it's also I it's also just different in the impact because on the Time of use the dynamic time of use in the moment type of rate, then it's almost like I Not that I want it's you know, it's almost like An extra charge here. It's like here's a savings. So maybe their idea behind it is that you know, they're giving people a carrot So maybe they're more likely to do it But I just don't know how I feel about that design And to be clear most Utilities are using the time of use construct or the pricing right like this this rebate thing is a bit less common Let's assume they are using something at all because plenty of utilities don't have time of use or they don't have anything at all and they're just having all these you know, But you don't have to tell your utility when you install an EV charger in your home. So they might not even know that you have one. But if they do offer an option, it's most likely always time of use. I was shocked when I saw this JCP&L example. Someone showed it to me. I had never seen that in my life. Someone's going to come back with five more examples in the Slack and be like, here Pam, here's like 10 examples of this EV program that you said you've never heard of before. but it's super popular. But I had never heard of it. Well, I do have to run pretty quick here. And I think we've kind of, I think we did a good job. I think we covered a lot of different aspects of this. Like you said, James, we should spend an entire episode talking about VitaG because electric vehicles are this super interesting potential piece of the grid where you can move like a source and sink of electricity. You can physically move it around very easily and dispatch it in different ways throughout the day. It's, yeah, there's a lot of complexity we can go into there. We are getting closer and closer to you guys wanting to do a DEA aggregation participation in a wholesale market episode. We're getting so close. The next step after that would be order 2222. Yeah, no doubt. I mean, just to tease it a bit, right? Like we talked about behind the meter, using your battery and your ED to kind of hack your tariff and reduce your cost. I mean, I think we'll dive into this deeper, but certainly you can use your battery to participate in a utility demand response program, or like Pam sort of hinted at there, become part of an aggregation into the wholesale market. And I think that's kind of more where this concept of V to G comes into play, right? like not just impacting your own behind the meter footprint, but participating in the larger grid. And there's a lot of complexity. It's moving very quickly, but it's certainly very interesting and we plan to cover in the future. That's a huge area of interest of mine. I can't wait. Can't wait.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com

Summary

Hop in with James, Pam, and Ben as they take a journey through the confusing, wonky and brilliantly exciting world of today’s clean energy landscape. The trio kick-starts with some personal tales of how they learn about energy themselves including diving head-first into the complexities of energy law reviews and DER aggregation or building home solar + battery storage + EV systems to truly learn how things work!

From hitting up energy industry conferences and writing extensive papers to discussing funding opportunities and mainstream adoption of Distributed Energy Resources (DERs), they cover it all with a friendly and engaging chat. They even dive into the world of equitable clean energy and the exciting transition to customer-led energy revolution.

So if you're keen to know about the growth and opportunities in the energy industry, electric vehicles, or just how everyone can join in the clean energy wave, this episode's got something for you.

Help us out!

* Subscribe, share and rate the show wherever you’re finding this podcast!

* Apple podcasts

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* Give us feedback: We’d love to hear from you via email, [email protected]

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* inDERmediate on Twitter / X

* James Gordey

* Ben Hillborn

* Wyatt Makedonski

Music

Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: 

Episode transcript

Welcome to the intermediate podcast. This is the show to

easily get the knowledge you need to work in clean energy

beyond the obvious.

Don't sound so excited about it.

I need to do better. Huh? Not excited.

Don't be like too hype though.

Welcome to the intermediate podcast. This is the show to

easily get the energy knowledge you need to work in

clean energy beyond the obvious. My name is James

Gordey, co-host of the show.

I'm Ben Hillborn.

I'm Pamela Wildstein.

OK, maybe to get things kicked off,

should we all introduce ourselves?

Yeah.

Most interesting person in the room.

Not even close.

My name is Pamela Wildstein.

I am a dual PhD student at the University of Michigan,

studying environment and sustainability

and urban and regional planning.

I study energy geography and power systems planning.

I had no idea you were a dual PhD.

That sounds like torture.

It's not particularly,

it just means you have to do some extra paperwork.

I just don't suggest it.

Two hands, two PhDs.

No, no, it's one PhD.

One PhD with two departments

and one department is on North Campus

and the other department's on Central Campus,

meaning they're like four miles apart.

So I have to bus back and forth between them

for advising meetings, which is just amazing.

Yeah, that sounds like a good time.

Maybe one thing that's interesting,

they talk about this on the DER Task Force podcast.

How did you get into clean energy, right?

Like they say, how'd you get DER-pilled?

When'd you get DER-pilled, right?

Like, what's the like genesis

of your clean energy journey, Pam?

I was studying environment sustainability

and climate change in undergrad.

And when I was a sophomore, I clicked on the wrong,

I had already had a general interest in energy

and taken a couple of classes.

Um, but one day I clicked on the wrong podcast and, uh, it was the interchange,

which back when it was run by green tech media and I just thought it was really

interesting and I kept, uh, listening and I got really into wholesale markets

specifically in the intricacies of, um, like federal policies for energy.

And I just kept self teaching until I got to a point where I could take,

uh, like energy law and then, uh, I got really interested in D U R

aggregation, participation, wholesale markets, wrote my undergrad thesis on

that. And now I'm a PhD student studying, um, distributed energy resources.

Amazing. That's a fantastic story that you clicked on the wrong podcast.

And now here you are recording a podcast. It's, it's come full circle.

Someone is going to make the wrong click.

They're going to click on intermediate and that's going to be the genesis of

their journey.

I hope so. And I hope just like me, I hope just like me,

they were so bored during their biology courses that they would listen to the

energy podcasts and the background of the biology homework to make it

bearable.

That's how you know you're in the wrong class.

It's meant to be.

Yeah.

So James Gordey, I started my career in actually in oil and gas as an

engineer and so like energy, but fully 180 from where we're at today on

the clean energy side, made the jump over to regular startups and then

right around when COVID started, I was just looking at like what I

to do next. I'm very quickly gravitated towards climate and clean energy. It's like the thing

I wanted to work on for the next however long, right? And so really just poured everything I

could into learning about clean energy to try and make the shift from general tech

and have been lucky enough to kind of come up the learning curve the hard way,

which we can talk about in more detail. I live in Seattle and I self-identify as a

person in startup line very nice I'm a stone's throw from well a very long

stone's throw from from James in Victoria BC you know just up here in the

Pacific Northwest and my my journey kind of started it in a somewhat similar

way my backgrounds in electrical engineering and I I have only ever

worked in startups I've never worked in a company larger than like 120

people. And that was like, that was a peak number for sure. COVID came around and the timing was

just enough that my startup that I was running then, we ran out of money and everyone was

just scared for the world falling apart. And, you know, that kind of spelled the end of it

for us and I was just working in IOT stuff at that point.

And that was a huge shakeup for me

in not only just like having to wind down a company,

but also just like what, why am I doing what I do?

Like why, what is giving the work

that I'm putting out into the world meaning?

And, you know, part of this is compounded by the fact that at the time I had I had one young kid. I have two now

and

just

this search for

meaning in in what I'm doing as well as a

just kind of growing sense of responsibility to

while I really do need to leave like if I if I care about

my child the way that I think I do and the way that I tell people I do, I really do need to leave the Earth a better place than it was when I came to it.

How am I going to do that if I'm not working on that every day?

And so that was that was the start of my journey was, and at the time I had no idea what a DER was.

the, I just, I knew that, okay, batteries are cool. Solar is cool. EVs are cool. All these things,

like they're making impact and the energy transition is super cool. I didn't, I had no

idea that there was this umbrella term for all of this and that these things were at a much

deeper level than many people think, you know, interrelated and going to be even more

interrelated, but the day that I, the day that I learned the term distributed

energy was that like light bulb moment doesn't describe it, uh, it doesn't

even come close to like, Oh my goodness, this makes sense.

And this is where I need to be.

I, I understand my calling now.

And that was, yeah, ever since then it's just been, how do I, how do

I build things that matter in distributed energy?

Shout out to Ben Atoson, it's a major climate popper. Energy coming in right

there with the purpose. I guess we didn't cover this on the top but like

Indermediate of course is a pun for distributed energy resources so we're

just gonna lean fully into that and stay on brand. Maybe shifting over then

Ben you kind of touched on this already. I think it's helpful for all

of us to kind of talk about like our why and how we got to being people

I kind of like loosely met through a long line community

to recording a podcast here.

I think like for me, the why is very much tied

with my own like experience in climate journey.

And so I thought I came up with the idea for the show,

but Pam actually did, and she can touch on that later.

I kind of very quickly was looking at climate

from like a first principles discipline, right?

Like IPCC and working backwards,

all like realistic paths to solving climate

involve abundant clean energy, even if we're

going to do tons of carbon capture,

you need to power that with clean energy, et cetera,

et cetera.

And so I kind of picked that as my segment of climate,

as many people do.

Maybe you have if you're listening.

And what I've learned is that there's

really great introductory resources, which

go to a decent level of depth.

Just to name a few, Rewiring America,

I really, really enjoyed that book.

That was a really profound moment for me to like,

I'm focusing on clean energy or the MCJ podcast or the interchange and the green tech media shows

those are really like impactful for me and they really helped me like start to come up the

learning curve and learn what is solar what are batteries what is demand response kind of these

kind of like concepts loosely but then like you very quickly realize that if you want to

move beyond like what is the stuff to how does the stuff actually work how does it work

together, what are all the details in it,

you're kind of left with a really tricky choice.

You're probably on energy Twitter following people,

and they're tweeting really wonky things

that you don't understand.

And if you try, it's really hard to understand.

Or if they link to something, it's a 1,000-page PDF

document from a utility or a regulatory filing.

And so you're kind of having to wade

into this advanced-level content, which is just

extremely, extremely intimidating.

And so if we need thousands of people working on clean energy in this problem to really like

lay the foundation for all viable paths to solving climate, like we've got to lower

the barriers.

We've got to help people come up with that learning curve.

And so that's very much like the why for me is, you know, people have come before

me and really helped me out and, you know, on one-on-one Zoom calls, like educated me

about stuff or, you know, waded through different documents and do different deep

I think we all do, how can we help people go up that learning curve more quickly and

efficiently so that we can all work together because the clock is ticking on climate and

we need to go as fast as we can and we need as many people working on this problem as

possible.

Yeah, there's definitely, it's definitely a case of kind of solve your own problem

for me.

I will, every minute I spend with you guys, I'm learning something.

And it's also the same thing of, yeah,

like getting super interested in energy

and coming up against this wall of, okay,

like there's a bit of a slow ramp of, okay,

you can understand kind of what solar is

and how it works and you like EVs

and you might understand some things about that.

But then there's just this cliff of knowledge

that you have to climb if you wanna get really into it

actually participate in the space and one of the just a personal philosophy of mine is I don't care

to ever to be the smartest person in the room I'm just not important to me what I do care about is

being able to hang out in the room where the smartest people are and so if we can do that

with the intermediate podcast of you know just arming you the listeners with you know just

letting you hang in the room where the smartest people are

and having just enough that you can understand

what the conversation's about

and then from there build your own deeper understanding.

You know, I think we'll have done our job.

Yeah, I think it's like, you know,

hopefully we're a more eloquent fly on the wall,

but if the fly could ask questions

we don't quite understand

what's being talked about in the room, right?

Not to say we're, yeah, just,

not to say that we're the smartest people in the room,

but we have like taken our lumps

learned a decent bit, but you know, we hope to bring in folks that can kind of have these

interesting conversations that we can all learn from. Yeah, I am so grateful to all the smartest

people in the room that over the years have helped me because I remember like the minute

that I hit that cliff and I realized like, wow, there is no more materials that are easily

accessible for me to understand this topic. I have to go talk to people, I have to cold

email people, I have to like go to FERC hearings and watch them

myself or, you know, go start reading academic material that

I'm not ready to read or read law reviews. And I just,

whenever I think about that, I never want anyone to be in

that position that I was in, like, I want to make those

materials for people. And when I think about specifically

why I want to do this, the other day, someone in my lab

was at a conference, and she was asked, you know, how do

balance your work and your public engagement because academics have like a certain amount of public engagement that they're like kind of obligated to do, and you know a lot of people apparently on the panel were like yeah you know I tweeted my paper where

you know I talked to lots of people about my paper and I helped the community understand you know I helped other people understand, you know what my research and findings were.

And at my core, my dissertation is really about this question of how do people interact with the electric grid?

What happens when we expect more of them? And what happens when they have more agency within the system?

And how do we encourage this and adjust in an equitable way and make sure that we have good outcomes?

um and instead of just you know researching that and coming up with like those answers

i want to like make sure that that can happen i want to help people have more agency i want to

give them the materials and the resources that they need to be more active players in the system

and to get more benefits out of it i hope as a side effect of all this we drive your

tiktok viewership up it's a it's a private account i'm sorry i don't have time to make

Publish, publish or perish.

Speaking of, that's a great segue.

God, you're just like, queuing us up so well.

Speaking of publishing, you got a ship.

Ben, do you want to kind of speak to the release schedule?

So as much to give some regularity for those people

that really enjoy what we do

and want to keep up to date with the podcast,

as well as to keep ourselves accountable

Um, and on some kind of reasonable schedule, that's, that's why the, um, the

every month and why the first Monday, um, I think we've all been in a position

where it's really nice to just settle into your morning commute and listen to

something that gets you, uh, excited or informed or just generally into the

material that you might be working on this week.

And so we hope this can be your introductory podcast to kind of

get you ready for July, 2023.

Hopefully you've had, you know.

We would be honored to be the,

to be what you put in your ears on a Monday morning.

Ben's words, not mine.

Do not associate me with that.

Ben's words, not ours.

Everyone is speaking their own.

Yeah, so a bit about where to find the content.

You've already found it somehow,

and thanks for, you know,

listening and making it this far. Surprisingly, not so surprisingly, maybe Intermediate,

not Intermediate as a DER pun, was widely available on the internet. And so you can

find us at Indermediate.com. That's right. We'll be posting out the content and substack. And

then of course, wherever you get your podcasts, Apple and Spotify, I myself like to be a

professed that I'm a cool kid and get my podcast on overcast.

So that pulls in the Apple feed as well.

So wherever you get your podcasts, but at the very least,

Substack, Apple, and Spotify on the first Monday of every month.

Pam, what are we going to talk about?

Ah, the syllabus.

Yes, Professor Pam on the mic.

Please God, no.

Yeah, I guess for like a syllabus of the podcast as we currently have it

envisioned, we really wanted to start with just like the basic

technologies and resources themselves,

because the institutional landscape and whatnot

doesn't make sense unless you actually know what's in it.

So talking about distributed energy resources

like solar, electric vehicles, heat pumps,

demand response, whatnot, all those type of technologies.

And then once we have that base level knowledge

to work off of, then going into the different types

of markets, the different type of institutions,

the policies, the resource adequacy of the system,

How does it function and how all of that plays within it?

And I could see this keeping us honest to other things, like, let's say

the equivalent of FERC 2222, but whatever the next one's going to be drops.

There might need to be an emergency intermediate episode

where we figure out what it says and then try and update folks about it.

Those things do not just drop.

I will let you know more than 90 days before it will see the light of day.

Like these they take years and years.

We knew about 22, 22, like six years before it happened.

Yeah, that's good though.

That's own brand for energy, right?

Like it's emergency, it's happening fast,

but it's like 90 days, you know, that's the time.

90 days for public comment.

Yeah, so I think that the takeaway, right?

Is like, we're not gonna shy away from the details.

We're trying to learn this stuff just like you are

and learn from all the really, really kind,

generous, like but also incredibly like talented and smart people working in

this industry and try to help you kind of get up to speed just like we are.

It's important to call out that it's not possible for us to, to be

experts on, on everything.

You know, look at, uh, saw a great article a couple of weeks ago about a

totally new type of heat pump that relies on acoustic resonance, uh, as

the pump did not exist before, before now.

There's no way we could have talked about it.

But now we can roll it into an episode about heat pumps

and now we can talk about it.

Yeah, and I think on that, right?

Some episodes will be with this core team

and sometimes we'll have guests

and we've already recorded a few episodes

with some really, really talented and knowledgeable guests

and we're excited to share with you all.

So very much a mix of us,

but also leveling up our own knowledge with guests as well.

Now you're breaking the timeline,

letting people know that we've already recorded

actual episodes more than just the intro.

Time is a relative spectrum, Ben.

And I think another thing to highlight,

we're all in this together, we're all learning together,

and so we want your feedback and participation.

Ben, I know you had some ideas about this

and how I might be able to engage the audience.

Yes, okay, so one of the things that I've always wanted to do, all my favorite podcasts,

not only do I find the hosts extremely charismatic and I want to speak with them and hopefully

people find that about us too.

But you know, the podcast will get deep into a topic and there will be just an element

of it that I didn't quite get the answer that I wanted out of it, where they didn't

go deep enough into detail or they there was some tangent that I wish they would

have drawn a little bit further or even there's something where okay I have

this kind of question that's relevant to the to the the topic at hand but I

don't have any way of reaching these people I don't I don't know how to do

this so what we're going to do is every few episodes not not putting

anything in Estonia but every few episodes we're going to have a Q&A

episode and what we'll do is on the near the end of the previous episode we'll

let you know hey our next episode is going to be Q&A please send us your

questions and I'll let you know now we'll let you know then that questions

can be sent to intermediate at gmail.com again der not ter and we'll

We'll pick some of the the best ones if we don't know the answers. We'll go out and research them

We may bring in a guest. We'll figure out how to how to bring these answers

to your questions back to the show

and um

And yeah, get them get them answered right here. And this is uh, you know, it's a perfect time to plug

Make sure that you're subscribed. Uh, the the only way you're going to be able to

uh

to get one of your questions answered is if you know when we're

when we're going to be doing a Q&A episode.

And being subscribed and listening to the podcast

soon after it drops is one of the best ways

to get that chance.

Pam, give us some icebreakers.

How do you learn about DER, no, sorry, okay.

How do you learn about DERs and energy topics?

Wait, is this how do they or how did we?

I think that was my question.

How do we learn?

How did we?

How did we learn?

How did we?

How do we?

God, we're a mess.

I'm happy to talk.

So, I mean, I think I started with podcasts and that's like how I engage, but like

you can only get so much given the content that was out there.

And so what I would do is just, I think there's so much content out there and so

things to learn about, that you just kind of like, for whatever reason it's relevant to you,

you pick something you're trying to like learn more about, and then you kind of try and double

click on it. All right, let me try and find all the knowledge that's, you know, in 20-page PDFs

or articles, you know, let me do a deep dive, let me find podcasts for those companies, let me

reach out to people that work in that part of the business, right? You know, I think a

really good example is like, Ben Laurel wanted to know about VPPs. And so he started a VPP

group and just started talking to experts in the industry and

like finding a lot of content. And so I think it's some

combination of find what's out there, take the time to consume

as much as possible for me, and then talk to people,

unfortunately, right? It's kind of what we're trying to

help level up or make more high leverage. But when in

doubt, I think people are really friendly and kind and

knowledgeable and down to talk, at least for 30 minutes

on Zoom. And so I find it super helpful to just reach

out to people.

I have a highly inefficient way of learning

and that's by, with reckless abandon,

just trying to make things.

And I'll learn when I hit the boundaries

and when people tell me, hey, like,

did you know that you're supposed to do it this way

or that's already been tried and that doesn't work?

Like, oh, okay.

That's-

What do you mean?

Like you go buy some old batteries and you hook them up

and then you start a fire and then you're like,

oh, I kind of crossed the line, or what are we talking about here?

I mean, that specific scenario hasn't happened.

But getting down the road of designing a totally behind-the-meter solar project.

And this was totally very early in my DER journey.

I knew nothing.

I had no idea that there were any sorts of regulations on what you can and can't do that,

you know, what some of the what the effect of, you know, having a local power source

connected to the grid during a power outage that how that's crossing a line, things like that,

You know full disclosure. I never did any of this. I didn't actually build

Anything it was this is purely the arrest for forgiveness not permission. Yeah. Yeah

I tend to err on that that side more often than not but yeah, that's I try to learn by

Learn by doing learn by designing and then seeing what seeing what people think

and I think a lot of people tend to be really open with

uh with feedback and resources when you come to them with hey i have an idea or hey i have uh

uh i've got this design or i'm working on this thing people get really interested

i would just uh i like before i was you know in grad school and you know had functioning

health and guidance i would just show up to stuff that there was no way i was ready to handle

like i i would i was like i just want to know about this thing okay there are webinars

these webinars are way too hard but I'll just show up and I'll write down terms and then I'll go look

up those terms later or I would just like law reviews by the way are free there are tons of

energy law reviews and they're like all really long and they're incredibly complex but you can

go read them so I would just go read them and this was like before I had taken real law

classes and I was like okay and I just wasn't scared to go to things that maybe were or read

things or interact with people that were like way smarter

than me. Or I just, I got the funding to go to some like

energy industry contract to get some energy industry

conference. And that's where I learned about DER aggregation

participation wholesale markets. And then I convinced

one of my professors to let me like spend the entire semester

writing an entire paper on it. I was nowhere near ready to

write that paper. But they were like, Yeah, go do it. So

I would say my advice when it comes to energy topics would be don't be afraid to go to

something or read something that you think might be too hard for you because you might

find that it's not, or you might get one piece from it that's exactly what you needed.

Someone in the industry once said, hey, you should check out this webinar.

And I emailed him back and I'm like, well, I can't attend that webinar.

And he said, of course you can.

It's free.

Who's going to stop you?

I love that.

But that's the kind of approach that we need to foster, we need to give people the confidence

to do it.

Like, yeah, just that this industry is here for the taking.

It is growing exponentially.

There's so much opportunity to get in there and learn and make your impact.

And, you know, don't let things hold you back.

And if we can be a part of that of,

hey, if we can arm you with just enough knowledge

that, you know, that you can sneak into that event

and not immediately be tossed out

because people know that you don't know a thing,

well, maybe we've done our job.

Yeah, I mean, I think imposter syndrome is a real thing.

Everyone pretty much, unless you're kind of a crazy person

probably struggles with it.

You know, I know I do, right?

And so it's intimidating, but know that everyone

has kind of gone through that,

is going through that actively.

And so I think go for it

and then let us know how we can help.

Yeah.

So to put a bow on that,

we're gonna ask these questions to guests

when we have them on the show as well.

We want to, you know, at the same time

while we want to make the information

easily digestible and understandable.

We also want to make sure that everybody understands

that all of these people that are experts,

they're human, that they all got their start somewhere,

that they weren't always the leading expert

in that field, right?

And so we're gonna bring these questions up

when we have guests on

and we'll see where people got their start.

Yeah, and maybe second one, right, Pam?

Oh, yes.

Oh, what's an aspect of DER is that you still have open questions about, or what upcoming

developments are you most excited about?

I guess for me, this is the same question, but.

Yeah, I'm happy to go.

Again, I put five seconds into this.

I just thought of it as Pam was reading the question.

So, you know, I'm sure there's a lot of things I think we're all excited about.

But I think there's this banner, like, you know,

you think about the grid and the history

and like the slow kind of like move from centralized

and how things used to work to distributed

and maybe more customer driven.

And I think we're kind of been in this phase

where we've kind of just been like amassing

kind of early market share,

but not really like mainstream adoption

of a lot of these things.

And it's maybe caused some issues around the edges,

but like, hasn't really like gone full-gone

and maybe with some of the grid reliability or mainstream adoption of DERs, we're starting to

see this. But I think for me, I'm really curious as we move into the second phase of mainstream

distributed energy and adoption of it and more customer-led energy revolution, what does that

look like? What does it look like when we really need to do real actual flexibility to

keep the lights on or we have high penetration of renewables or people in West Texas who work

on the oil field or buying an electric vehicle

because it's just better.

These are things I'm really curious about

as we move into the mainstream market

and this stuff really starts to come real,

2030, 2040, 2050.

These are kind of nebulous,

far out into the future targets,

but those are starting to happen sooner than we think.

And so what does that look like

as things start to get real,

I think is what I'm really interested about.

I like that.

Something that's really important to me

you know the energy revolution is nothing if it's not equitable right like we can't have the the

haves get clean energy and the have nots don't and how do we how do we uh you know the the

people building things or uh the people designing policy or how how do we make sure that we're

we're making this across the board a win.

And when do we start to see that actually happen?

You know, the electric car revolution arguably started

with the Tesla Roadster,

which was absolutely a toy for the rich.

And that has, EVs have come down market

and you can, in some jurisdictions

with the right incentive stacking,

you can get an EV for around $30,000, sometimes even a little bit less, but that's still a

new car purchase.

And what's that going to look like as you get deeper EV penetration into the market,

you get a stronger used market, those kinds of things.

Um, and the same thing for, for solar and, uh, and distributed energy resources,

like, like batteries, um, this is, I don't know, it's something that I have

a lot of curiosity about and very little insight as to what's currently being done.

Yeah, totally agree with that.

Ben, um, like one thing that I really think about a lot, um, I'm from

Louisiana, I've spent a lot of time in the South, right?

not necessarily places where everyone's got solar

on their house and driving a Tesla

and working in clean energy jobs.

How can we really make sure that,

this is the wind for everyone, like you said,

and make sure that there's this tremendous area

of wealth and opportunity creation, job creation.

How can we let all folks in an equitable boy

participate in that?

I think it's a huge opportunity.

There's certainly challenges there,

but we have the opportunity,

as we're building a new system, to do it right.

Is it gonna be perfect?

I'm sure it won't, but we can at least try

and really have these design considerations

or inputs top of mind

as we're working through solutions, right?

Yeah, absolutely.

Well, why don't we wrap it there?

We'll call that episode zero.

And I learned some things about you guys

that I didn't know before today, which is awesome.

And hopefully everybody listening has an idea who we are.

Well, I don't know, maybe we'll have little bios

on the sub stack or something so people

can see our faces at some point.

Who knows?

Yeah, just a reminder as we wrap this up

that we're going to be releasing these

uh, the, uh, the first Monday of every month that you can, uh, uh, you can find

us at Indermedia.com as well as if you search Indermedia on Apple podcasts and

Spotify and, you know, remember to hit the subscribe button, um, on the, on

the podcast.

So, uh, so that you, we can be, we can be the first thing you listen to,

uh every month because that's a that's my level first of the month and then i'm i'm told but you

know who knows how these things actually work reviews really help so if you like this please

share it with people you know in the clean energy community or otherwise and give us a

review um to really help us especially as an early show give us the tough feedback

yeah be honest we'll appreciate it um well i think that's probably good for now right

Um, Ben, Pam, that's a wrap until next time.

Great month.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.indermediate.com