Decentralized, Decarbonized, and Fully Electrified – Tomorrow’s Grid

Hello hi everybody well that was Brilliant wonderful fascinating Discussion about the future of Agriculture and how to make it more Sustainable But how do we make energy sustainable at The moment our grid is very centralized As we know from the last couple of years It's coming under enormous change from Climate change and the climate crisis so What should we do well we've come up With the a session title today called Decentralized decarbonized and fully Electrified which sounds wonderful Doesn't it let's Electrify everything But is it is easy swapping smoke stacks For solar power and wind power it could Actually mean an entirely new kind of Electrical grid so in this session Tim Dechant who's a senior climate reporter With TechCrunch is going to uncover how We might possibly move towards that Future and he's joined By Angelo campus Who's uh co-founder and CEO of box power Kathy Hannan who's co-founder and President of dandelion energy and John Mueller who's CEO of block power so give Them a big sustainability stage welcome Everybody Foreign [Music] [Music] Thank you everyone for sticking around For the last panel of the day we'll make

Sure we keep it energized for you So as Mike said the grid we rely on to Power our modern world is over 100 years Old the utilities that run it let's be Honest can be kind of dinosaurs Heat waves wildfires cold snaps and Electric vehicles these are all things The grid is not quite prepared to deal With So should we leave the utilities by the Wayside and build around them Angelo They're here whether we like them or not And their critical tool in thinking About decarbonizing Um coming from the microgrid industry It's incredibly polarizing uh you know People are very adversarial with Utilities particularly in the renewable Industry but at the end of the day they Are the largest entities Distributing The largest amount of electrons across The country and It would be incredibly difficult to Rebuild what they currently offer and I Think that the industry as a whole needs To think of them as a really critical Piece of any electrification strategy That being said they're not easy to work With yeah John and Kathy you work with Utilities frequently what's what's been Your impression I'll go first so yeah um at dandelion we Installed geothermal heat pumps and Utilities provide very generous

Incentives to our homeowners who switch To geothermal heat pumps and it's Actually been a very positive experience Um Utilities for a really long time at Least in the Northeast where we're Focused have provided small incentives To put in a high efficiency lighting or A high efficiency refrigerator and all They've done is scaled up the amount of Money to the amount of efficiency if you Will of a geothermal heat pump and Geothermal heat pumps just replace so Much fossil energy with Renewables that These subsidies are anywhere from 10 to Literally thirty five thousand dollars Per home so it just makes an incredible Difference to homeowners Yeah thanks Kathy uh at black power we Um we decarbonize multi-family and small Commercial buildings Which means we call it turning buildings Into Teslas or maybe a Prius so removing Fossil fuels from a building and putting In all electric infrastructure generally Heat pumps and so we interface a lot With utilities uh we they're great Partners they've provided incentives For heat pumps they provide data and Obviously they have the customers I think what everyone's wrestling with Including us and utilities is like Trying to identify and prioritize who The best electrification prospects are a

Lot of utilities have electrification Goals or state goals and we've developed Analytics it's called block maps to help Identify and prioritize these we can Talk more about that later so it's I Think so far it's been a good Relationship with utilities I think we All want to move faster on the Electrification piece so yeah and John We can start with you on this one What do you think the biggest threat to The grid is is it the push to Electrify Everything is it aging infrastructure is It sluggish regulators Is this sluggish regulators Yeah Probably sluggish regulations I mean We've um We've you know I think we've so far We've won a few utility deals and I Think my previous company would want a Few as well I think that utilities have Done a good job of uh piloting uh new Technologies and getting out there and And putting some r d dollars to work I Think it's then really moving past that To get to the you know the scale and That requires you know uh Cases cases and approvals and that sort Of thing so that's I think what's really Slowing us down the first part I think All of us are achieving Yeah Kathy what have you experienced I would say that in order to have a

Renewable grid there's going to be a lot Of infrastructure that needs to be built When it comes to transmission lines heat Pumps going into all the buildings and So I would agree with you that it's the Regulations but specifically we need to Just be able to build infrastructure More quickly because without that it's Going to be very difficult and I think If the regulations come into line to Allow that new green infrastructure to Go into place then it will be able to be A fast transition So Tim it's interesting we were talking Backstage yeah all three of us are using The same utility consultant for for Policy work so if that tells you yeah The answer to the question there you go There you go I Angela I mean I I have an Idea but I'd like to hear from you too Yeah Um so the combination of Aging Infrastructure and climate change is Creating a really devastating situation For utilities particularly in rural Areas Um I think the clean transition is Miles Ahead in urban areas but for rural areas The utilities face a really devastating Combination of challenges Over 70 percent of the infrastructure in The US is over 25 years old and almost 50 percent is approaching its end of Year 45 to 50 year mark

And here in California we have over 60 000 miles of distribution lines crossing Through high Wildfire threat areas and The result of that has been billions and Billions of dollars of damage from Catastrophic wildfires six of the most Catastrophic wildfires in California History were started by a utility Infrastructure and now over a third of Some of California's investor and Utilities budgets are dedicated to Wildfire mitigation which ultimately Gets passed on to the consumer and so we Have a really devastating situation of Increased risk increased cost and Decreasing reliability that's going to Be a big problem for the clean Transition in rural areas and if I could Just build on that really quickly I Think the additional challenge that that Poses is it's true and Cal I mean those Of us who live in California the Electrical price the bills are very high And that disincentivizes electrification In a major way right because you're Choosing you have to choose to switch From what's often natural gas or Gasoline depending on if it's a heat Furnace or a car to electricity and even If you have a very efficient electrical Appliance if you're paying 50 cents a Kilowatt hour that's tough and so it's It's these problems are all interrelated Yeah 70 increase in the last 20 years of

Cost paired with a 10x increase of major Outage events in 20 years that's Remarkable and and you I think Angela When we spoke earlier had some Statistics on exactly how many wildfires Are caused by this aging infrastructure The cpuc tracks wildfires in California They started tracking it in 2014 so we Have eight to nine years of data and There's been over 4 500 fires that Utilities have admitted to starting in California That's pretty shocking So we have issues with aging Infrastructure we have Bills that are going up we have you know The threat from Wildfire is this the Biggest bottleneck to electrification or Is there something else Let me start with you Kathy I think the biggest bottleneck to Electrification and I can speak mostly About heat pumps of course Is just The Upfront cost to the customer We we need to make it strictly in Homeowners Financial best interests to Electrify for them to Electrify but once We do that they will Electrify so in Some ways it's simple but of course Creating products that Are affordable for customers you know It's a challenge Yeah I think that I would agree with That and I think you know what we've

Tried to do is You know there's more than 100 million Buildings in the US right and trying to Prioritize those because a lot of folks Here are not going to Pony up Immediately is just prioritized and and Show the attributes of heat pumps so When people do need to upgrade or they Do their furnace or boiler brakes that They're they're educated and ready to Make that decision because it's some Like 10 of um 10 percent of furnaces fail per year Something like that so there's a pretty Significant amount so there's the ample Opportunity to step in yeah yeah And I disagree with the cost for our Constituents we build microgrids for Rural communities and Rural energy Consumers uh focused exclusively in Rural areas reliability is the number One concern we see with electrification We have people thinking about if I have An electric car and there's a power Outage and a wildfire am I going to be Able to evacuate if we have a winter Storm historic winter storms like we had Last year and power outage was will I be Able to heat my home and there's a Really deep set fear that reliability Will stop the electrification of Households Is that is that simply because when People are looking at that the other

Alternative is an expensive generator or Something like that or just nothing at All Yeah they're faced with either Generators or micro grids all of which Are Um expensive still Um you know our focus is in making Renewable microgrids more accessible to Rural consumers but Um at the end of the day it's a lot Easier to just have a gas stove and have A gas furnace and have a gas vehicle That will work when the power is out and That's a big obstacle to overcome for People we get that question from Homeowners too one thing I would add is I think in addition to making heat pumps And microgrids and other renewable Technologies cheaper we're also starting To see policy turn where we're Stop not subsidizing the fossil fuels Quite as much which is also very helpful So one example dandelion has started Offering geothermal to new Builders who Are putting in new housing developments In Colorado recently enacted a change Where the utility will no longer rate Base or just make it free to the Developer to extend the natural gas line And once they got rid of free natural Gas it's actually cost effective it's Actually less expensive to put in Geothermal for those new developments

Compared to the cost of extending gas And I think that's really remarkable Because you know if you're faced with The choice between free or you know Paying for a geothermal heat pump it's Really hard not to do free Yeah I think I think another Point another Obstacle we're seeing is you know the Workforce is trained more on the gas Infrastructure and so when something Breaks they say Hey listen I've got a Furnace out on the truck I can put it Right in and so one of the things block Power is trying to do is uh train the Next the green green Workforce and so We've got a few different Workforce Training programs around the country Most the biggest ones in New York we've Trained a few thousand people so that Way when this question is asked they Know Um they know about heat pumps they know The selling points which includes air Conditioning which a lot of buildings Don't have and so they're really ready To go when that that that selling moment Comes I think that's something that's often Understated is the ability to improve The comfort for a lot of these folks Yeah I mean the the heat pumps Especially like in New York when we saw Them in New York there's you know

There's lots of Zone issues where it's Cold over here it's hot over here the Classic window open in Winter where it's Overheated and so the heat pumps provide It's a modern Appliance provides much Better control and timing and Thermostats but then it also you can Just reverse the same process during the Summer so it includes air conditioning Which is um you know much more relevant Interesting we were talking to someone In the Northwest the other day and I I Wouldn't have thought Um we should talk much about air Conditioning but our our guy on the Ground there says yeah it's been super Hot this summer you should bring it up It's gonna it's gonna resonate yeah [Music] Um now none of you are using deep Tech Right it's all proven Technologies so What's your Innovation and let me start With you John Yeah we've um You know sometimes they call it the Block power that the sun run for Electrification and low and moderate Income community so it's basically Putting it all together it's just Putting a solution together And so we've identified a few gaps you Know one is which buildings should we Decarbonize and that's our software and Analytics offering

And then Um it's how we're going to pay who's Going to pay for this and how and so We've raised about 80 million uh from Goldman Sachs and Microsoft and put Together like pretty Innovative Leasing platform to really stretch out The payments and and put a lot of Different Scopes into one project Particularly for low and moderate income Communities And then third we talked about is who's Going to actually do the work and so Um training folks to actually install These items so it's putting this all Together because otherwise as a Homeowner or building owner you have to Kind of figure it out on your own we Also do all the utility incentives and And Ira to come which is complex even You know for people in the industry so Yeah that's a nice service I would agree that the solar rooftop Solar metaphor or analogy is is fitting I think like when you think about how Far that industry has come in the last Two decades it's because there's been a Lot of innovation around everything from The financing to I don't know the racks that you use to Install the solar panels on the roof That make it super easy for anyone to do And you don't have to be a specialist or Like you know it's all the components

That make it just super straightforward Or the software that lets you model the Roof and figure out what panels to put There we have analogous problems for the Inside the house how do you take out the Furnace or boiler and put in a heat pump And make it uh streamlined and easy Process for the homeowner because Otherwise they're not going to do it so We really were standing on the shoulders Of the rooftop solar industry We've productized the entire micro grid Life cycle process starting with design Software that optimizes micro grid Sizing and performance we then have Hardware solutions that are productized Integrated rapidly Deployable solar Battery generator microgrid systems and Then we also offer the software to Operate and maintain and manage that so It's a combination of software and Hardware all the goal of streamlining Accelerating and productizing the Experience of procuring a microgrid for Customers Um and I think it's a really interesting Similarity that our company is all have Is it's the tech is out there how do we Make it easier for consumers to get is It a combination of streamlining user Interfaces offering financing reducing Capital barriers it's all of it um but I Think there's a Not enough can be said about the tools

We already have to Electrify the grid That we don't have to wait for some deep Tech Revolution to achieve our Decarbonization goals So along those lines where do you all Stand on nuclear Kind of an old grid centralized Technology I'm not a nuclear expert but I've talked To several of them that have now moved To the Renewables industry they love Nuclear but solar Plus Battery has Gotten cheaper than nuclear ever was and In their opinion ever will be I think it's very relevant to our Conversation about regulation and Infrastructure like if I was going to Choose the most difficult at the Intersection of those two things it's Probably the nuclear energy industry but Philosophically I will say I'm Definitely pro-nuclear it seems like Um if that were not the case if it were More practical or if if one of the Innovators currently working on it can Figure out how to make it truly safe and Truly modular and easier to build I Think it could be very very very helpful Base load non-carbon power I think You know we're pro clean grid so you Know whatever we're more technology Agnostic on that sorry important answer That's all right that's right

So I can imagine that there have been Tremendous changes on the ground since The IRA the inflation reduction act has Been enacted what are you seeing Specifically Kathy yes it has been Transformative The IRA for geothermal is a 30 federal Tax credit that's in place for a decade Which is incredible and Um when you have a new development of Homes or a third party owns the heat Pumps it can be upwards of 40 or even 50 Percent So totally game changing and then in Addition to that there are incentives in The ira to upgrade your main panel so Your house has enough capacity to Support a heat pump or insulate or you Know do all this other Energy Efficiency Stuff so It was Um yeah that was really good news for us When that passed Yeah I would agree I mean we there's Tons of uh incentives I think um Building on what you said Kathy is we do A lot of work in low and water income Communities and it's even amped for low And water income communities so Something like 14 000 per unit Um you know there's like 30 40 million Multi-family units in the US Many low and moderate income and so it's 14 000 for low income and then moderate

Income it's like 8 000 which is a lot And can do to a lot right there I think This is really besides all of us and Consumers but it's really motivated the Manufacturers they're super excited put A lot of resources into this as well Um it's been groundbreaking Um specifically the expansion in Microgrids to include the full cost of Energy storage plus microgrid controls And balance of system has been a huge Change to the economics for microgrids And for us some of our biggest customers Are utilities they buy our systems to Avoid or replace upgrades to Distribution lines in remote areas and Without any incentive the cost of a what We call a non-wires alternative a micro Grid that supplements instead of a Distribution or substation upgrade was Already cost competitive now you have an Investment tax credit that can reduce The cost of that non-wire's alternative Another 30 percent whereas distribution Infrastructure didn't have any Provisions within there the second big Thing they don't think is getting talked About enough is the direct pay option Within the investment tax credit that Makes this accessible for small non-tax Liability organizations that's Rural Electric cooperatives municipalities Public util public utilities it used to Be you needed a minimum 10 million

Dollar project to be worth the Transaction cost of a tax Equity deal to Sell your tax credits to someone with Tax appetite now with direct pay Non-profit tax exempt organizations can Directly monetize and benefit from the 30 investment tax credit so it's huge Have you gotten different interests or Outreach from investors after the IRA Was passed I think I heard the question but um were Investors uh bullish after that yeah Yeah definitely I mean we did our series B uh we closed about December and I it Definitely um accelerated the Conversations I think it helped that It's a 10-year life I think that It certainly helped um that up to 40 is Supposed to go to low and moderate Income communities and so we were a Pure play but a good a good play for That Um I think everyone in the space I'm sure You guys as well like is waiting for More guidance from the state energy Officer for the from the federal Government and the state energy offices So There's there's so much talk that I Think we're ready to like actually do Some projects with it yeah through it's Like uh what I imagined it would be is The IRA has been signed

Done really what it is is now we wait to See what will happen like how it will be Interpreted and where the money will go And all these things so that's true I'll Agree with you as well that I think Um for any business that has a fair Amount of policy or regulatory uh Element to it like ours Um investors are very happy to to see a Decade of certainty because if you have The incentives for less than the obvious Question is well what will happen if They go away so it was nice that you Raise money too in December right so did You see it was an accelerator yeah it Was late it was a little bit before that But yeah we also did we closed around And the IRA certainly helped Um I won't yeah that's absolutely true In February so I'm noticing a pattern I Think it uh mitigated a lot of the Negative effects that the greater Economic inflation interest situation Has and has put clean tech in a really Exciting position where we're seeing Layoffs across the tech industry and Every clean tech company I know is Hiring as fast as they can right now Back to the labor shortage issue Um it's really sort of given cleantech And specifically companies that benefit From the iron investment tax credit a Little Boost of speed and what's otherwise a

Pretty challenging market right now yeah I was going to say along those lines Speaking of jobs Um you know I think you all agree that We don't have enough electricians in This country to handle what's coming How do you solve that I'm We saw this coming a while ago and That's part of the reason why we Productized microgrids there's such a Shortage of certified field electricians And Union electricians that it was part Of the decision for us to productize and Prefabricate microgrids because it Reduces the need for electricians in the Field and I think we'll see other Need for Less labor-intensive Integrated Solutions Um to counteract that because I've heard Stats that you know electricians are Retiring faster than they're entering The workforce right now wow John this is A key part of your company right yeah so I mean we've um These training programs we talked about I mean I think what we've also looked at Following the Sun Run You know what Sunrun did is they when They first started they were all Channel And then over time they became more Vertically integrated for control and Margin and reasons and so looking at Some early vertical integration maybe

Acquiring electricians are just hiring Them internally instead of using thirds Parties because yeah it's hard to find People right and it's expensive and if At least to have it in house It can be win-win right because Electricians on their own and they can Go into a company and maybe have some Options and benefits and a steady income And then we Have better access and aren't like Calling around to identify the Electrician in the new city I'm sure You're doing the same thing as you guys Expand The integrated so we have electricians On staff but we're also pursuing some Product Innovation to try to reduce the Amount of electrician time that we need To get around the shortage Yeah are you running across any Interesting startups that are working on This the idea of finding more Electricians or maybe product Productizing key components that you Could then use You know Sam steyer uh Folks probably know him Tom Styers uh His father who's the founder of Galvanize and um Fairlawn capital And ran for president so he Sam has a um A startup that does solar training That's pretty good I don't know if they Do uh training for electricians which

Might be more challenging and the Licensing component might be tougher Look at a big shout out to one of my Favorite organizations grid Alternatives Out there they have an incredible Workforce Development program training Solar and electricians in the industry They do an amazing job I don't know too many I was going to Mention Sam steyer actually but yeah I Don't know too many focused on this Particular problem yeah Um You know as we think about Um The shortage of electricians the Regulations I mean there are a lot of Challenges here but do you see any Opportunities where there's hope Of course we do It'd be hard to be in this line of work Without that Um Yeah I think I'll start because here Here I am but I think um As it becomes more inevitable and people Recognize it's more inevitable that We're gonna make the switch to heat Pumps the workforce You know more people Realize that there's money to be made And there's an opportunity to get Involved doing this work in homes and so I think it's going to be a huge

Challenge and take a while but I also Um I do see a lot of Hope and I I think also as an organization I bet You have experienced the same but as We've gotten better at training people And identifying people maybe who in our Case like aren't Drillers for example Very hard to find geothermal Drillers in The United States so we just were like You know what we're not gonna find them We're just going to hire people who Might want to be a driller someday and Train them and it's working so Um I think there is going to be a lot of Companies training people to do the work As as they go I think yeah I mean there's lots there's Something like 200 gas mortariums in the Country and Counting and a lot of times These are um that's natural gas Moratoriums right where the natural gas Natural gas more terms yeah where um you Can't put gas in new buildings and a lot Of times you know these are over many Years But I'm part of a Uli and some of the Councils there that's a big real estate Organization and even though these are Out years ahead of time it gives to Developers they start to think about This And I've heard multiple developers say Even though we can build gas a building With gas right now we don't want to we

Don't think we're having tenant demand And we don't want to be the last Developer to do this you know it's kind Of a stigma and so even though it's Somewhat toothless initially it it Causes people to think twice I think that with great adversity comes Great opportunities particularly here in California and so we have sixty thousand Dollars of Bayer overhead conductor Crossing High Wildfire threat districts We have to replace it we have to Underground it And the traditional methods cost three Million dollars per mile that's 180 Billion dollars to get California's grid Underground It's cheaper to do it with microgrids It's cheaper to do with solar and Battery the cpuc put out a report that In order to meet California's goal of Electric vehicles by 2035 it'll be Another 30 to 50 billion dollars of Substation upgrades distribution Upgrades It's going to be cheaper to meet that Need with solar and batteries so the Challenge is huge the costs that are Required are huge but what we're Increasingly seeing is renewable clean Electrification is the best tool we have To rise to the challenge and so we're Seeing gas peaker plants be retired and Replaced by solar Battery Systems we're

Seeing microgrids instead of Distribution upgrades It's going to be hard but it's an Opportunity to show the value of Electrification of microgrids and of Renewables yeah now Kathy you are going After the higher end of the market in Part because the sheer upfront cost of You know geothermal is it's still not Come down quite enough how do you ensure That people in lower income brackets Eventually have accessibility to those Sorts of things and that they don't get Left behind in the transition Yeah I will say that we do have higher End customers but we also have some Lower and middle income customers and The reason for that is we targeted the Northeast as our first Market because Millions of homes still use fuel oil Even in places where you wouldn't expect Like New York City has a ton of fuel oil Westchester the suburbs of Boston There's just lots of fuel oil everywhere And so when you're paying four to five Thousand dollars a year just to buy fuel Oil Um you you know have a high incent like We can save those people money with Geothermals it is cheaper so about 70 Percent of our customers Finance so they Pay nothing up front and then their cash Flow a lot of them not all but a lot of Them are cash flow positive

So some customers do switch to Geo Because it literally is cheaper it's a Purely economic decision they might not Be motivated by the environmental aspect Of it and I think like for me that's Very exciting because I think that's What we need to see in order for this to Take off If I could add one quick yep no please To Loop it back to the first question Um utilities play a critical role in Specifically that and making these Technologies accessible to low-income Customers they have an obligation to Surf they have to provide energy and for Us that means we've partnered with PG e Through their remote grid program to Provide state-of-the-art microgrids to Low-income residential consumers here Because PG e has an obligation to serve So it's a critical area where utilities Can act as financiers Because of their obligation to serve to Make these Clean Energy Technologies Either through subsidies or direct Ownership and financing accessible to Low income and so I think it's one of The critical roles that utilities play In the transition I guess yeah just Going back to the utilities in Regulation I mean in some cases the that Kind of Regulation or aging Infrastructure can actually help I mean There's as you probably know there's

Some of these aging gas pipelines or That a utility might do the math and say A gas utility and say hey it doesn't Make sense for us to rebuild this and We've seen this I'm sure you've seen it Where there's non-wires Alternatives Which means we're going to Electrify This area even though we're a gas Utility and so it just kind of kind of Figure out where the money and the Opportunities are yeah excellent well John Kathy Angelo thank you so much Thank you thanks [Applause]

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