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Alex Blumberg on Turning Buildings into Grid Assets with DaisyChain Energy
00:38:52
Alex Blumberg is Co-founder and CEO of DaisyChain Energy, a company building a hardware-enabled software platform that turns commercial buildings into flexible grid assets. Best known as the founder of Gimlet Media and co-creator of Planet Money, Blumberg’s second venture focuses on solving one of the most overlooked problems in climate: the misaligned incentives inside buildings. In this episode, Blumberg explains why building decarbonization has stalled—not because of smart grid technology, but because of economics. The conversation explores how DaisyChain uses submetering and rate arbitrage to create immediate financial value for building owners, while unlocking the ability to deploy batteries, heat pumps, and other distributed energy resources over time. They also discuss their expansion into hospitals, where power quality issues create major operational risk, and how the same platform can solve both problems. At a system level, Blumberg outlines a future where aggregated buil...
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- [00:00]
A
Today on Inevitable, our guest is Alex Blumberg, co founder of Gimlet Media, co creator of Planet Money, and now co founder and CEO of Daisy Chain Energy. Alex was on the Show Back in 2022, not long after selling Gimlet to Spotify, when he was figuring out what his next chapter might look like. What came next was his second startup, Daisy Chain. You've heard a lot on this show about the grid stress problem. Alex's answer starts in an unlikely place. Apartment buildings and hospital campuses where rate arbitrage and real time monitoring can turn ordinary commercial buildings into flexible grid assets with energy economics that beat the status quo from day one. Full disclosure, McJ is an investor in Daisychain from McJ. I'm Cody Sims and this is Inevitable. Climate change is inevitable. It's already here, but so are the solutions shaping our future. Join us every week to learn from experts and entrepreneurs about the transition of energy and industry. Alex, welcome to the show.
- [01:25]
B
Hey, great to be here.
- [01:26]
C
Last time we did this, I think it was 2022. You had just left Spotify maybe and were figuring out what was next for you. So you're on to the next. What was next?
- [01:37]
B
Yeah, so I started a company since then. Yeah. I was trying to remember, like what did we even talk about back then?
- [01:44]
C
It was like your climate journey. Right. Like going from being a podcaster to like diving in on climate change. And the pod you were doing on climate.
- [01:53]
B
Right.
- [01:53]
C
The leaning in you were doing at the. But you certainly were not all in. I'm going to go start a company, a technology company in this space.
- [02:01]
B
Right, right, right. Because I was still maybe doing how to Save a Planet back then, I
- [02:04]
C
suppose, just wrapping it up.
- [02:05]
B
Yep, yep. Yeah, it was interesting because I think a lot of what I'm doing now came out of that time because when I was doing, I sold the podcasting company, was working at Spotify, was hosting a climate podcast called how to Save Planet. It was about solutions. The idea was like, we're here now, what do we do about it? And very eye opening for me. A lot of the people I was talking to, a lot of things I was learning was really the basic message that that podcast reinforced to me was that solutions are here. There's things that can happen. The private sector is going to be doing a lot of the heavy lifting, ushering in this transition and making it work and making it affordable and making it work well and more and more. As we were doing that podcast, I was like, I sort of want to get involved in that. And partly for Me, it was. I mean, I'm not gonna lie. When we started Gimlet and then I sold the company, there was a big part where I was like, okay, never gonna do that again.
- [02:59]
C
Especially when you chronicled it to the world, at least the starting part of it. With startup podcasts, it did sound a bit painful, to be honest. No fun, but painful. As it always is.
- [03:10]
B
That podcast was so funny because, just for listeners who don't know, I was a radio journalist. I started a company, and I documented the whole company journey on a podcast. So it was a podcast about making a podcast company, and I sort of made myself the star of my own sort of reality.
- [03:26]
C
I thought you were going to say Internet famous, but, you know, you kind of. You kind of already were.
- [03:30]
B
So I don't think Internet famous is probably stretching it. Corner of the Internet famous.
- [03:35]
A
Possible.
- [03:36]
B
But yeah, I mean, it was just like my wife and I were both doing it. She joined very early. We were both sort of executives inside the company. Our kids were 2 and 4 when we started the company. So it was just like, oh, my God, that was exhausting. But then over time, you start to think, or I did, that it's such a unique educational experience, starting and scaling and selling a company, and the things you learn along that way are so hard to access any other way.
- [04:01]
C
The school of hard knocks, man.
- [04:02]
B
Oh, my God. You can't learn it anywhere else. You know what I mean? Like, there's no substitute for doing it. And so I just felt like I had somehow gained access to this privileged knowledge, this privileged skill set, this very hard to achieve set of experiences and capabilities that had arisen from those experiences. And it more and more just seemed like a waste not to put them back to use in some way or another.
- [04:27]
C
Says the repeat entrepreneur.
- [04:31]
B
I cannot believe I'm a repeat entrepreneur. I cannot believe it. I never in a million years would have thought it. So I knew I wanted to do something in climate, and I knew I wanted to do something they would try to help, that would try to usher in this transition. The problem was, unlike podcasting, podcasting, I was the expert. I was a subject matter expert. I was the product guy. And in climate, I'm not. I'm not an engineer, I'm not a scientist. So I was like, well, what part of it could I get involved in? What I did have, I think, going for me was I'd worked. I launched this podcast called Planet Money at npr. We'd done that for five years. I had. Still goes on, but it's still ongoing. But I'd worked on it for five years. It was a big podcast about business and economics and it was sort of a crash course in economics. Doing that podcast for five years, I really felt like I had fully imbibed the economist mindset for folks background.
- [05:22]
C
I mean, it was during the 2008 housing bubble, crash, financial disaster. There was a lot you had to wade into to do that show.
- [05:30]
B
Yeah, we have experts on financial markets and sort of like capital markets and economics. And there was all this, like the Fed and all this sort of stuff. We really went deep and it was like one of the most formative and intellectually challenging periods of my life. I loved it. But the one thing, the main, main, main takeaway you come away with is that incentives matter. If you want to explain something that's happening in the world, look at what the incentives were and then you can sort of follow what happened. So I felt pretty good about my ability to sort of peer at a corner of the world and sort of understand what the incentives are. So I thought, okay, I'm going to try to run towards a sector of climate that a lot of entrepreneurs are maybe running away from.
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C
You have a theory of change, you have this lived experience and a motivation which was to work in climate and sort of how do you apply those things together?
- [06:16]
B
Right? And so I looked around at like some of these ones where it's like, okay, well, this is a technological solution, you know, sort of new energy generation, new battery, chemistries, all that stuff is going to be science engineering. But buildings, we sort of know what we need to do. And the thing that's stopping building decarbonization is it's a kludgy mess and it's a super fragmented market. You've got big, weird misaligned incentives with multifamily apartments in particular, where you've got building owners and building occupants and they don't necessarily want the same things. And then in the center of the whole thing, you've got this big weird incumbent, which is the utility with its own very complicated set of incentives that don't really necessarily interact with the other ones very well. It's highly regulated space. So it's just a mess. And I was like, that's the mess I want to try to get involved in. Because I think my background in setting economics will help me sort of understand this and puzzle my way through it. And buildings are a big part of the problem. A big chunk of emissions come from buildings, particularly, you know, the fossil heat that we use heat our spaces. If you can Sort of make an impact there. That could be. That's what I wanted to get into. As I started looking around, I did what I do, which is I started talking to everybody I could in my circle around. This is the thing I wanted to do. Gradually I get introduced to people and those people become my co founders. That's what happened the last time, that's what happened this time. So I found a couple of co founders who had actual expertise and we formed Daisy Chain Energy. And so we started that in the spring of 2024. Daisy Chain is a hardware enabled software platform for the built environment. What it does is it connects matches the needs of commercial property owners with the needs of the grid to create mutual value. One of the things that I think about is that let's take a building, let's take a multi unit building. New York, where I live, has a lot of really good policy on climate. It's got one of the most progressive climate laws in the states, Local Law 97, which creates real meaningful penalties for buildings if they do not reduce their carpet emissions. So there's a real stick and then there's all these carrots in the form of state subsidies. It's sort of a perfect policy environment to actually try to decarbonize the built environment. And one of the things they do in New York City is they put these shaming signs all over the building. So every building gets a letter grade.
- [08:32]
C
Really? Wait, it's like a smoking label sort of.
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B
Yeah, yeah, yeah. No, it's like the same thing that they do with sometimes with restaurants where this restaurant has an A grade or a B grade or a C grade. And you're like, oh, it has a C grade, I'm not going to eat there. I want to eat in a clean restaurant. So it's the same thing for building admissions in New York. Every building has a big prominent sign and it's like FDC. So our building, my building, I live in a 189 unit condo building in Brooklyn. We had an F. And so I got on our board to try to change the F to something better. I was like, I'm the climate guy, I'm going to try to do that. The building's largely aligned. We're all sort of like Brooklyn people, but like everything. Nobody wants to pay more money back to incentives.
- [09:12]
C
As you were saying.
- [09:13]
B
I got on the board, started looking around, we're like, okay, well what do we even do? How do we even start to make a dentist? Just to figure that out, you have to hire a consultant that costs A lot of money costs a lot of time. So you have to look around, who are the consultants? You got to find them, hire them. They cost a lot of money just to sort of tell you what you need to do. And so that's whatever $20,000 or something like that that we have to shell out. And then, you know, they prepare this report. They go. It takes a year. They do like blow door tests, they study the envelope, they pull sort of utility bills, and they eventually present you with a report. And the report says, here's all the things that you can do, here's their payback, and here's their climate impact.
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C
Let me ask, who's responsible for whatever energy the building is using?
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A
Is it the tenants?
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C
Is it the board? Is it some financial developer who owns the real estate? Where does that responsibility actually sit?
- [10:08]
B
The building will get fined. And that's the weird thing about buildings, is that there's murky ownership. If it's a rental, it's pretty clear somebody owns it. And then the residents pay the person who owns the building. And the person who owns the building is making the decisions around the building. If it's a condo or a co op, there's a management company, but they work for the board. It's the board really of the condo or the co op that is the one making the decisions, but they're all volunteers like me. So that's who's doing it. And then the bulk of the consumption. So, like, what the building is actually using in its energy is all the residents. We, the board, don't have much that we can tell residents about how they should be or should not be consuming electricity. And in many cases we don't even know because the residents are paying directly to the utility. So the building itself, who's on the hook for these fines, doesn't know what is actually happening inside the building.
- [11:03]
C
So the residents, each of them have their own direct relationship with the utility, which in New York I think is mostly Con Edison. But the building or the co op board is responsible for the emissions that all of their usage generates. And I assume the building or the board is also responsible for upgrading any kind of energy infrastructure in said building. If you wanted to go from a fossil furnace to a heat pump or something, it would be up to the board to have to decide to take on that project for everyone.
- [11:39]
B
Yes, exactly. In most buildings there's a board. In many buildings there's a management company or an ownership group, but essentially they're all making the same calculation that we were. What are the Options for what we can do, how much are those options going to cost and what will they actually do to our emissions?
- [11:57]
C
So everything you just described is all the reasons why with my venture investment seat on, I, when I hear built environment pitches, my eyes glaze over and I'm like, oh my gosh, this sounds like a nightmare.
- [12:08]
B
It's a nightmare, it's a nightmare. But that's why I wanted to get in, because I was like, there should be a solution. And the problem is that all the incentives are not properly aligned. So this is just one example. The building is on the hook for the emissions, but we don't even control the emissions and we don't even know about our usage because all the tenants are the ones using the electricity and we don't see any of their consumption because they pay directly to the utility. So we have no idea. So that's problem number one in a building is like you're on the hook for all your energy consumption, but you don't know what your energy consumption is because you don't actually see it.
- [12:48]
C
So you had all this, aha, you got in on the board, you saw this rat's nest of incentives.
- [12:54]
B
There's a rat's nest incentives. And there's one more thing that I really want to get across, which is this consultant report comes back and they give you a long list of here's the things that you can do and here's the payback. And there's things from like replacing your normal lights with LED high efficiency lights all the way down to ripping out your fossil boiler in the basement and replacing it with a heat pump is a huge range of options. And then it has the payback and it has the carbon benefit. And all the things with almost zero carbon benefit have very short paybacks, like a year or two years. And then the big things that have a huge carbon benefit have really long paybacks. So for example, like I actually pulled up the report, the number one impact that you can have, the single act that you can take that has the biggest carbon benefit is to replace the fossil heat in the basement, replace the boiler with electric heat. The carbon impact of that is like an order of magnitude greater than anything else you can do in the building. But the payback ON that is 20 years. And that's just not gonna happen. And that's just for the capex, you know, that's just for the cost of replacing that. That doesn't take into account how much it actually costs to operate and the complexity of operating and all that sort of stuff. So I was sitting on the board and just seeing this and I was like, there's these big things that cost a lot of money that no one will ever do, so this will never happen. So the idea of daisy chain is a platform that flips those incentives and can we make actual decarbonization the smart financial choice? That is what we want to try to do. And so we put together this platform that does that, and it does that by realigning the incentives. And so the way it works in multifamily buildings is the first thing you have to do. Our platform basically works in stages. First you come on the platform, you have actual visibility. We solve problem number one, which is a building doesn't know what its actual energy consumption is because all of that is on the tenant bill. So you can't even see it as you're on the board. That's the first problem we solve. And we solve it by doing something called sub metering. And one of the great things about our platform is the happy accident of solving this problem is that we create a new cash flow for the building. So let me explain how it works. So most buildings are what's called direct metered. That means that every individual pays directly to the utility. The board or the management company doesn't have any visibility into what most of the building is consuming. The only thing that the building sees is the common load. Hallways, basements, et cetera. That's the small minority of consumption. So the first thing that our platform does is we do what's called a direct to master plus subconversion. We replace the utility meters with, with our own meters that our platform can read. And we measure tenant resident usage and we generate the bill. The bill is exactly the same. Nothing has changed for the resident.
- [15:53]
C
By the way, the utility clearly knows how much energy the whole building is consuming because it knows the sum of all the individual tenants, which I assume is how they end up with that emission score in the first place. But it's that the building itself doesn't have access without this sub metering in place. To have the sum of all of the tenants.
- [16:14]
B
Yeah, and you can get access to it, but it's hard to work with and it's not real time. They usually give you like 12 months or something, but they're not giving you up to the minute platform of your usage. You don't know exactly what your peaks are. It's a very inferior experience.
- [16:29]
C
So you sub metered and it's like a sublease. So now the building itself is the Official ratepayer of record to the utility and they are sending bills to their individual tenants for the individual tenants usage.
- [16:43]
B
Yeah. So they're doing that all through the use of our platform. So we essentially turn this building into a mini utility. Again, on the residence, nothing has changed. They're paying the exact same bill. We calculate the exact same way. By law you're not allowed to raise the rate. We would never want to raise the rate. So nothing has changed to them. The only difference is that they're paying the building now and not paying the utility. But the utility is no longer sending 180 or 200 or 300 tiny bills to each individual resident. They're sending one big bill to the building. And the building pays through a master meter that we have installed. And because it's on a much larger load, it's at a different rate class, it's a lower, a lower rate than the residents are paying.
- [17:21]
C
So the sum of all of the residents bills which go to the building is greater than what the building itself owes the utility.
- [17:31]
B
Exactly. They buy in bulk from the utility and sell it retail to the residents and they keep the difference.
- [17:37]
C
And the residents aren't paying anything different, they are paying their normal bill.
- [17:40]
B
Residents are paying the exact same. So it's a very much a nice scenario where the building is now getting, just from doing this conversion, they get a new cash flow which is the resident sort of electricity bills and they now have real time, up to the minute data about their building's total electricity consumption.
- [18:00]
C
Why weren't they doing this? The way you describe it sounds kind of like obvious financial engineering.
- [18:05]
B
So there's a couple reasons. First, regulatorily it's like you need to have a reason to sub meter and so you can't just like go and do it. You have to have a reason. And so advanced electrification, demand response and on site generation are all reasons to sub meter. So our platform does that.
- [18:20]
C
We'll come to that in a minute. I guess those are some of the downstream benefits.
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B
It sounds like. Yeah, yeah, yeah. Also, buildings, they didn't want to like think about having to build their tenants necessarily because in their minds it's complicated and like hard. That's one of the things about our platform is it makes it very, very straightforward and simple and you can just manage all that and it's not a big deal for the building.
- [18:39]
C
So even though you came at this from a how do we get these buildings to be emissions friendly and lower emissions, lower carbon? It sounds like at the end of the day, for the Building owners themselves. This actually isn't a quote unquote green building story. This is a rate arbitrage story. It's giving them the ability to have like you said, a cash flow positive operating business and some, I assume multi year, but not 177 year, maybe 2 to 5 year payback period on the hardware. It's speaking in the language that building managers and building owners understand.
- [19:13]
B
Yeah, we present this not at all as our ideal customer, which is an idea you told me about Cody in the book that you wrote a chapter
- [19:21]
C
of for all the founders listening. I co wrote a book many years ago with some of my friends called Levers and one of the chapters is about your initial customer needs to be as absolutely narrow as possible. And if you can get your initial customer set so narrow that they say yes 100% of the time, you found the right one.
- [19:39]
B
Yes, as your ideal customer profile. We are not selling based on a green premium. We are not selling. Our customer probably is curious about electrification, but not because they really want to do it or not because they're environmentalists or whatever. Maybe they've heard about the laws, maybe that residents are talking to them about it. But it's not excitement around electrification that is necessarily driving them to us. In most cases it's probably dread and fear and they're just like ah, crap, that's going to be a gigantic pain in my ass. What we can say is no it won't. Our platform will help you. And by the way, while we're getting ready to help you, we'll generate you revenue. Really what we want. When we talked about who is our ideal customer profile from your book, either it's a portfolio or a management company that has over a thousand units. So it's big enough, it has a nice size, they're mostly market rate, they're mostly direct metered. So we can do the direct transfer. And they have some goal or fear or worry around electrification and decarbonization. That doesn't mean they have to be enthusiastic adopters of it. In fact, it's fine if they're not. It has to be on their minds a teeny little bit. Because if it's on their minds a teeny little bit, then our platform is a no brainer because our platform makes all their questions go away. We can actually help them answer that.
- [20:57]
C
You can come in and decarbonization isn't the reason to adopt daisy chain, but it certainly, as you adopt daisy chain for financial reasons, it helps you with those decarbonization challenges.
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B
And it Makes those decarbonization changes. The smart financial choice. That's what we ultimately want to get to is we want to make it a financial no brainer to make this right choice. And if we can be in there operating, if we can be understanding your usage profiles, if we can be starting to implement all this new technology that's coming in, like batteries and heat pumps, all that stuff that's coming down the price curve, that's getting better, that will be easier and easier to install, we're there, we're ready to integrate it all. And once it crosses that little curve where all of a sudden it's the smart thing, we can help get it there and we can get it installed.
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C
How many buildings are you in today? How's it working?
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B
Yeah, it's working really well. So my co founder sort of invented this business model by accident. He was the president of his co op in Sunset park back in 2011 and wanted to put solar on the roof. Ran to the split incentive problem, bowled his way through, read all the regulations, got set up on the sub metering. They didn't even realize that there was going to be this raid arbitrage. They just wanted to get solar distributed to other residents. And they found out that in fact they also have the raid arbitrage as well. So he sort of discovered this. We joined forces in 2024 and so we now have over two dozen buildings on our platform. We think in terms of units under management, and we have 1200 units under management. We're set to more than double that this year. We've been growing very rapidly in terms of customers onboarding it and in terms of revenue.
- [22:38]
C
You were hinting at this a minute ago. Once you get this sub metering in place, obviously it unlocks this cash flow we talked about. But what does it unlock in terms of more flexibly working with the grid, with utility? What does it unlock in terms of the ability to do these clean energy upgrades like solar or other things? Batteries, EV chargers, et cetera, heat pumps even?
- [22:58]
B
Yeah, I'm so glad you asked. So we have a saying in our office, which is x is better with daisy chain. What happens when you have what I think of as aggregated the load behind a master meter? So you've taken all these disparate little measurements and all these disparate little usage profiles and you've put them together into a big huge building size profile. When you do that, magic happens because now that aggregated load becomes an asset and you can extract value from that asset in many ways. So first Way you got the building paying for electricity through the master meter and then collecting from the residents. The master meter bill is slightly different than a residential rate in that it has something called the demand charge associated with it. So basically you get charged more for your peaks than you do for your everyday usage. A couple of big peaks can cost a lot on that master meter bill. It'll never get you above the residential rate necessarily. It could in very, very rare occasions, but it hardly ever gets you above the residential rate. But it can shrink that margin.
- [24:07]
C
Eat into your profit margin.
- [24:08]
B
Yeah, eat into your profit margin. So what our platform does is we are building in control capabilities so that we can shape that load, we can shave the peak, and then we can sort of widen that margin that the building is collecting.
- [24:23]
C
How are you in control? Like you have a building, you've got 190 residents. You can't control when they're using a toaster or mining bitcoin or whatever they're doing in their unit.
- [24:32]
B
Yeah. So there's a bunch of different ways of shaping the load inside of a building. Some of them are behavioral. We are in constant contact with those residents. So we can do simple things like sending out an email saying like, hey, it's a high usage day.
- [24:45]
C
Oh, like a mini demand response event.
- [24:46]
B
Mini demand response inside the building. We can control non critical loads that the building controls, like elevator banks, chillers, etc. Whatever they have that we can sort of control. But ultimately we are going to be deploying DERs at the building level. And so that's EV charging infrastructure, heat pumps and batteries. And those are, I think, the three big things that we will be able to control at the building level to really, really shape this load and really derive a lot of value from that load. So again, right now in my building, a battery doesn't really make that much sense because we can't derive that much value from it. Once we're on the daisy chain platform, all of a sudden we know exactly, man, if we shrink this peak by this much, we're going to make ourselves this many dollars a year. And then we can also now bid that load into a demand response program. So we can say to the utility, the utility pays you for kilowatts curtailed in a normal building scenario. If all they have to control is their own little common meter, that's not a lot of load that you can sell bid into a Dr. Program. But once you've aggregated the load, you've 10x the size of your total load. It's a lot more money that you can make doing that.
- [26:03]
C
So your software sees obviously the consumption happening at the master meter level. You see it happening at the individual resident level because you're the one issuing the bill to them. You understand the bill coming in and I guess you're getting real time notifications from the utility somehow through an API or something when there's a demand response event that you might need to react to so that you can control that via software.
- [26:29]
B
Yeah, so we're able to sort of monitor exactly what the peak is. We are able to say we're coming up on a peak. We want to think about curtailing some things. We are hooked into a bunch of outside data sources, weather, et cetera, so grid conditions, et cetera. So we know when it's likely that there will be a demand response event. So we can be start to prepare that and then when we do get the call, usually you get the call sometime in advance, we'll be able to respond.
- [26:52]
C
So this is sort of one rate arbitrage you've discovered, which is that the sub metering works somewhat regardless of the absolute price of electricity. You sort of captured a structural gap in how utilities price different customers. You're helping to leverage that. You've been doing this with these co op boards and then you've also got another customer type that came out of the blue. Describe that. And then I want to try to understand where they actually have some commonality.
- [27:20]
B
Yeah, yeah, yeah. So we were fully going to be like a multifamily solution. That was our coming out of the gate. This is what we were going to do. We formed our company to sort of go after that market and then we somehow landed as a customer of the largest hospital network in New York, Northwell Health. And that was like our first five months as a company. We felt like the dog that had caught the bus. Northwell knew. So my co founder Bob had previously run a derms management company called Smarter Grid Solutions. He's very, very much around sort of management. All this stuff worked. And he sold to utilities. So he was like on the utility side of things. He exited that business to Mitsubishi Electric, but he'd written a couple of white papers that one of the people at Northwell had seen. So that's sort of how we got connected. And Northwell had this problem which was that they are a hospital and like all hospitals, they need to maintain what's called N plus one redundancy, meaning for all critical procedures you have to have a backup system. So if the lights go out during the procedure A backup comes on, nobody dies. All hospitals are required to have it. Northwell had it. Problem was, what kept happening is their backup system would trigger even when the power had not gone out. All of a sudden, the backup generation comes on. They're no longer attached to the grid. And when that happened, it caused chaos because they were no longer at N plus one redundancy, so they had to cancel all their critical procedures. So patients who were scheduled for surgery that day, all of a sudden they had to send to their competitors. They were losing up to a million dollars a day in lost revenue because of these events. And they had no idea why they were happening, because they, like everybody in the commercial real estate space, I'm realizing, has no visibility into their electricity consumption. They are like everybody else. They get one bill a month, and that's what tells them how much electricity they use them. So they would go to the utility and say, hey, like, our backup system triggered again. Was it something you guys did? The utility would be like, no, it wasn't us. It must have been you. They had no idea.
- [29:18]
C
Same principal agent problem that we talked about with the residential buildings.
- [29:23]
B
Yeah, yeah. They were like, you're building this data platform for electricity consumption. Can you do it for us, too? So we're like, sure. So we did the same thing. We put meters throughout their facility, across the hospitals, in all these different rooms, and we were able to start monitoring what was happening. We used much fancier meters for them because they measure down to the millisecond sort of consumption and measures a whole bunch of their stuff, like voltage and reactive power and all this stuff, but basically created a profile of what was happening. And then they had one of these events. Backup system triggered. Our system was running, and we were able to tell them, oh, look, here's exactly what happened. And you could see that it was like this one day in June. The voltage from the utility had dropped below this contracted tolerance levels, and that had triggered the backup system. Come on. They were on for three days. That was three days of chaos. And now they were able to go to the utility and say, look, we have it. Here's the screenshot, you know, here's the data. And they were able to start sort of working towards a solution. They were very thrilled with that. So we went basically from two campuses to six last year. We're doing six more the first half of this year. The goal is to do all 28 campuses over the next two years. And so that opened up this what we're now calling a power quality market. So as We've started to sort of talk to other hospital networks. This seems to be a fairly widespread problem.
- [30:48]
C
Back to the incentives with the co op board, it was, oh, we can actually help you build a rate arbitrage here and make money. And then, oh, now we can do all this other stuff for you and it's going to get better and better as you do more of it. Does the same incentive apply here or here? It sounds more like a monitoring problem.
- [31:06]
B
Here's how we present it for the multifamily. We increase noi, we increase net operating income, that's what we do. And then secondarily we enable future increases and we enable electrification without the headache for the hospitals. We protect revenue by protecting against these events which are gonna sort of threaten your revenue. So that's how we presenting it. And then long term we enable all these other things that you wanna do. So there are two different wedges. The long term is pretty much the
- [31:35]
C
same because these hospitals are also all installing batteries and everything, right?
- [31:40]
B
They're putting tons of solar across all their parking lots, they want to electrify their fleets, they want to put in
- [31:45]
C
heat pumps and they're being told by the utility, oh, then you need to go fund this new substation and do all this to enable local transmission.
- [31:53]
B
And for the utility and for the hospital also. One of the issues though is they know that these events are happening. They know that they're partially triggered by voltage dips at the utility level, but they are also discover some power quality issues internally. To them, they have these wrecked power qualities, quality problems. So they are going to need to install equipment to solve that problem. And often that can be a battery which can do sort of power conditioning. And so for the hospital, they're especially going to need a platform that can be able to operate that battery across a bunch of different optimization scenarios. The battery might be used for power conditioning, it might be used for redundancy. Maybe they want to be in an N plus 2 posture on a hot day. It might be used for backup, it might be used for peak shaving and it might be used for generating some extra cash through a demand response program. They want to be able to do all those things.
- [32:43]
C
Are you the controller layer for that with them?
- [32:45]
B
And we're the controller that understands exactly, we understand the pricing, so we know exactly how much every minute of electricity is costing them, depending on sort of what the peaks are and where it is. And we can make these cost benefit analyses based on that number about what's the best, highest value use of the battery at that moment, that's the value that we bring at the facility level. We can optimize your consumption according to your needs.
- [33:12]
C
And you don't ever do power trading on these devices. You're just deciding when to charge and discharge based on the shape of the peak.
- [33:21]
B
Yeah, I mean, at scale, I could imagine us being able to enter into these power, you know, sort of capacity markets and things like that. But like right now it's mostly distribution, distribution grid sort of demand response programs that we're, that we're working with.
- [33:34]
C
So ultimately a race to some extent to who can have the largest fleets of batteries or fleets of EV chargers or other things, because it gives you more control over helping the grid manage itself.
- [33:46]
B
And that's the thing that's like placing these things is hard. You hear a lot from like, I was just at a battery conference. People were talking about all these siting issues. It's hard to get the financing. And then if all you have is the revenue from demand response, that's risky. Maybe the demand response programs change. Maybe events don't get called. Maybe it's a cool summer and there are no events. You know what I mean? So you're really reliant on a utility program to set your revenues for you if all you're relying on demand response. What's nice about our platform is that we generate lots of different kinds of value from a battery. It's easier for them to pencil in our scenario because we can generate a bunch of different kinds of value streams from them.
- [34:23]
C
Backing it back out to the broader picture, the bigger picture landscape. We started out the conversation by saying that built environment technologies have been hard because there's so many complex actors involved. But let's imagine a world where this daisy chain that you've created and the stacks all start to feed off of one another. And we have a distributed energy network in these individual buildings where there's micro controls available. What does that look like? How does that shape change the grid? How does that change the emissions conversations? How does it change what our power model looks like?
- [35:01]
B
Yeah, I mean, I think that's the thing that's exciting. So I think ultimately what we're building is the integration and control layer of electrification for the built environment. And what that enables is it enables the built environment to live out the dream that many people have had. So the big problem with the electric grid is that it's built sort of on a parking lot model. The parking lot is like most of the year it's half empty, and then there's two or three days a year where it's beyond full. But people who build parking lots build for those two or three days. And the grid is the same. It builds for peak load, even though it's very rare that you get anywhere close to peak load. But everything that it has to do, it has to be able to always deliver that load. So on those days when it's super, super peaky, when it's getting up to the top, they'll call the coal plant upstate that doesn't operate for most of the year because it's too expensive, but during the peak, they'll pay whatever. So call the coal plant. The coal plant fires up. So that's the dirtiest heat is during those peaks, and it requires all this overbuilding. Now, with technology, we can say to electrons, stay home or come from a battery or you don't need to tap into the grid. But that dream has not been realized. And what this enables us to do is actually use the built environment to provide those flexible solutions to the grid so that you can increase consumption without raising costs. You can satisfy your data center desire without driving power or cost through the roof, because you don't have to build to that huge capacity anymore. So that's the beautiful dream. And I think the problem has been getting enough flexible assets out there and then being able to get those things used so that they can actually start to reduce those peak events and can actually start to flatten that load and can actually start contributing to grid health. And once I think as we scale and as other solutions start to scale, and as these new electrification technologies come online, we're moving further and further in the direction of that beautiful world. And that's a great world. It's a world where you don't have to build as much generation because you can control your peaks.
- [37:11]
C
I hope so. Jayvon's Paradox would say we'll just use all those peaks. We'll use all the spare energy anyway somehow, and we'll keep building it regardless. But maybe, maybe we don't have to build for the peak side of it. We just build for a broader baseline usage side of it.
- [37:25]
B
Right? Right. I'm not saying we're never going to have to build new generation, and obviously we're going to have to replace generation that's coming off, et cetera. But this is one of the biggest problems right now on the grid. Satisfying that peak and trying to figure out ways of lowering the peak, curtailing the peak, is one of the biggest challenges we have facing us.
- [37:41]
C
Yeah, Alex, thanks for making the time. Loved hearing the update and what a bunch of stuff you've jumped into over
- [37:47]
B
the last few years.
- [37:49]
C
If you could go back to just your 2022 self before you had jumped into Daisy Chain. Now just four years later, what advice would you give yourself for when you were just starting the company?
- [38:00]
B
What advice would I give myself? You just gotta jump in. I now know a bunch of things that I was like, oh, we probably didn't need to mess around with this thing and spend two months learning that that was a bad idea or that's just part of starting a company. You got to go through that stuff because that's how you learn what you should and shouldn't do.
- [38:16]
C
Amazing, Alex. Thank you.
- [38:18]
B
Thank you.
- [38:20]
A
Inevitable is an MCJ Podcast. At mcj, we back founders driving the transition of energy and industry and solving the inevitable impacts of climate change. If you'd like to learn more about mcj, visit us at MCJ VC and subscribe to our weekly newsletter at Newsletter MCJ vc. Thanks and see you next episode.