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- [00:03]
A
Latitude Media covering the new frontiers of the energy transition.
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B
It's pretty wild that we've been recording together long enough that Tim is back on the show after almost a decade. Tim, how's the last decade gone for you?
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A
Oh, wow. Well, listen, first things first. I think this should be the cold open. I'm. I'm. I want to say this. I'm so grateful to be here today. And as I've told you many times privately, this show and its predecessor show has had such a profound impact on me professionally, and I've learned so much from you all over the years. And I'm very grateful to Jigar for his service, but I'm also happy he's returned from his sabbatical and is back to being a ruthless capitalist. So that's good.
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C
We're definitely gonna cut that statement out.
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B
He's trying to butter you up, Jigger. He's wearing a shirt that says deploy with Jigger's face on it.
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A
That is true.
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D
You don't realize this is a hostage video.
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B
Yeah. From Latitude Media. This is open circuit this week. Are Ders about to become essential infrastructure or will they stay stuck at the margins? Distributed resources have never looked stronger. For the first time, fleets of batteries are performing like gas plants. Virtual power plants are getting dispatched every day, and data centers are seeing them as a real capacity resource. But at the same time, the gatekeepers, utilities, regulators, even officials in California are acting like they're still optional. Utilities are planning well over a trillion dollars of infrastructure in the next few years, but they still aren't prioritizing Ders. So are these resources about to finally break through or get sidelined again? Welcome to the show. I'm Stephen Lacy. I am the executive editor at Latitude Media. I am here, as always, with Jigar Shah and Kathryn Hamilton. Kathryn is the co founder and chair of 38 North Solutions. Hey, Katherine.
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D
Good morning. I'm so excited to do this with one of our best friends.
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B
Yes, and Tim is an advisor for 38 North Solutions. Is that right?
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A
Senior advisor. Thank you very much.
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D
I just mean you're old. What does that mean?
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B
What differentiates between advisor and senior advisor?
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C
You have to be on the energy gang at least twice or now open circuit to be able to be called a senior advisor.
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A
That's it. That's right. That's right.
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B
Jigar is the co founder of Multiplier and the former director of the DOE's Loan Programs Office. How's it going, Jigger?
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C
Ah, fantastic.
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B
Excellent. Well, joining us is Tim Hay, the voice you heard. He's the co founder of Brightfield Infrastructure. Tim was also the co founder and COO of Scale Microgrids which he recently departed after the company was acquired this year. And he is a well known DER evangelist and entrepreneur in the space. Tim, welcome.
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A
Thank you all so much for having me. I'm stoked to be here.
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B
I want to start with a little story that you told at last year's Durbos conference. I was not at the show, but I watched the video afterward and what some people might not know is that you were an officer in the Air Force and in your keynote you relayed this story from when you were in the Air Force that you heard when you were in the air Force about FDR and Henry Ford during World War II. And I think it's a great story that maybe sets the stakes for what we're talking about today. Tell us that story quickly and what it says about the moment.
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A
So I guess first of all, right, this is a great opportunity to plug the upcoming Durvos conference that this year is being co sponsored by yours truly, jigar shah. October 16th. I think there's still a limited number of tickets available and if you care about Ders, that's the place to be. With due respect to the Latitude media conferences, that is my favorite conference of the year.
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C
I think you got that wrong, Tim. Like the advertisement should go like Sunday, Sunday, Sunday.
- [04:18]
A
100%. But yeah, look, I think the main point that I was talking about last year and Durvos last year was shortly before the election was that in order for the United States to lead the energy transition and address the cost climate crisis, we really needed a public private partnership. And the story that you mentioned was basically in the lead up to World War II, the German ambassador came to the White House and was basically like, we build more bombers than the United States and don't mess around. And FDR sat there and listened. And then the German ambassador left the White House, FDR got in a plane, flew to Detroit, met with Henry Ford, who he didn't like and they didn't get agree with, they didn't have the same sort of leanings and hadn't talked in like 20 years and they made this deal. And then like shortly thereafter, the Willow Run plant in the Ford Motor Company's Willow Run plant was producing more bombers a day than the entire country of Germany. And you know, the, the sort of thesis of, of my talk was that, you know, if we're going to do this, it has to be a public private partnership. And, and then the election happened. And so, I don't know. Right. Like, candidly, this year has been a journey for me. Right. Because I think my view on this is like, the sad reality of the situation is that we're not going to have that type of public private partnership for the foreseeable future. So now we're in a position where my view is the US Energy transition is going to be private sector led, private sector enabled. And look, I think the good news about that is I know how to make people money. Right. And our industry knows how to make people money. And so, you know, I think there's still a path, and it's not the path that I would have chosen, but, you know, I think, you know, we as an industry are resilient, and, you know, the leaders in this space are figuring things out and figuring out how to pivot and move and, you know, adapt to this new environment. And look, I think there's a lot of reason for optimism. You know, there's headwinds that, you know, we're facing for sure, but there are also a lot of tailwinds. And. And I think we're going to have a big sort of next few years, and we'll see what happens.
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B
Yeah, I loved that story, and I think that's a really important take on what's happening now. So we brought you here because it couldn't really be a better time to talk about what's happening in DERs right now. There's a really interesting conversation going on about the role of distributed energy resources. I mean, this is a conversation we've had for 10 years or more, but there is a bunch of stuff that's happening that I think makes it important to revisit this conversation explicitly. So I think it's really well framed out in a couple of pieces of writing that sort of show the two ends of the spectrum. So Andy Lubershain, who is a partner and head of research at Energy Impact Partners, recently published this stellar piece on substack on his substack called Steel for Fuel. And his argument is basically that DERs have always been the right idea, but they were the right idea at the wrong time. And 10 years ago, when you were on the show with us previously, Tim, at that time, the grid didn't need them as much. They were still fairly expensive. But now everything has flipped. Demand from data centers, extreme weather, transmission bottlenecks have utilities desperate for capacity, while of course, batteries and other tech have gotten a lot more cheap and reliable. And he says that DERs are now turning into distributed capacity Resources with this on, off switch that grid operators can actually count on, like real power plants. So there's a great interview with him on the September 18th edition of Catalyst. It's a really superb breakdown of the history and evolution. But then when you go to the latest financial review from the Edison Electric Institute, which is basically a snapshot of where the money is going in the utility sector, it's like ders don't exist at all. And the headline number is staggering. Utilities plan to spend more than a trillion dollars this decade. The biggest investment wave in their history. And when you look closer, almost all of that is going into concrete and steel, transmission lines, substations, plants, utility owned storage. And what you don't see in that document at all are virtual power plants, customer sided batteries, flexible loads. So I think this gets to the tension of what we're going to talk about today. Are we living in a world where DERs are finally becoming essential infrastructure? Is the moment now? Or in EEI's world where there's still a rounding error? Katherine, which do you think is more representative of reality?
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D
Ooh. So I'm going to go in the wayback machine because Andy's not been alive as long as I have to. When I was working for utility and I was designing systems for, for grids there, and DERs were absolutely crucial and the reason was that load was growing faster than we could manage it. And we had plenty of supply side. We had a nuke, we had pumped storage, but we did not have enough substations. So to buy us time to building substations, this is really on the distributed side. We had TOU rates, we had thermal energy storage rates. I was learning how to design ICE systems for schools and hospitals. We had demand response programs, very sophisticated. This is the late 1980s, early 90s, 1990s. And what is consistent with that and what we're facing right now is the utility. The utility got to decide, we need this, this is what we're going to do. They know how to do this. And the reason, you know, Andy makes some great points about why things have or haven't moved forward, but I think consistently it has to do with the utility and whether the utility wants it and needs it and is willing to monetize it or not.
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B
So, jigger, when you look at EEI's report and you see almost no mention of distributed resources, and then you look at all the activity that we're going to start talk about on the show, what do you make of those two very different realities?
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C
Oh, this is going to be fun.
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B
Meaning what?
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C
You have a New Jersey governor's race right now where electricity rates are a top three issue. When you talk to the head of the Republican Party in Virginia, he's like, I have never seen energy be a number one issue in a gubernatorial race. Right. Like, it's on. Like, the notion that utilities can just raise rates indiscriminately by 10% a year, that these utility CEOs who are basically just glorified, like, head of, like a regulatory commission, like, they should get paid exactly what the head of the airport Authority or the water and sewer Authority or the transit Authority get paid. But no, these guys think that they're worth $26 million a year and they're going to basically put one in six people in their territory such that they can't afford electricity bills. Like, the Buzzsaw that's coming for them right now is sharp and it is going to cut right through them. I am very worried about the utility monopoly franchise itself. Like, that's how pissed off everybody is right now.
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B
There was this time around the 2015, 2016 timeframe when everyone was talking about the utility death spiral. Kind of points this out in that piece of history.
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C
Do you think.
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B
Do you think we're overselling it?
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C
No, we're still there. Like, I just want to make sure that people understand that in California, SoCalGas has put forward a proposal to the Public Service Commission that says that they want to take all industrial clusters in California off grid based on Duncan's paper. So they're just going to make it solar, plus battery storage, plus simple cycle gas plants.
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B
When you say Duncan's paper, you're talking about his solar microgrids paper that we talked about like a couple months ago.
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D
Duncan Campbell.
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C
Yeah, yeah. So Duncan Campbell of its scale. So now you're at a place where the gas company is saying that they want to eviscerate the sales of the electric utility company in a formal filing with the Public Service Commission because they believe that doing this de novo would give you 11 cent per kilowatt hour rates for industrial clusters. I don't think people understand that the death spiral is real. The death spiral is defined if people believe that they can generate their own power instead of being part of a system that supports each other, which is what I support. To be clear, I don't want a death spiral. I want people to be part of a greater system of resiliency. But at some point, you give people no choice.
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D
Yeah. And remember the reason we didn't have the utility death spiral per se was because utilities are very organized, and they figured out a way to try to make money and to keep DER is completely out of the market. So they said, all right, we're not going to interconnect anything, and we're going to not compensate anybody for anything, and we're going to make aggregation of resources illegal. We're going to do that. In 16 states, they were simply made illegal. So they have been the ones who have been putting barriers up all along, and now all of a sudden they're like, oh, we need to raise our rate. So it's really the ISO's fault, not our own fault, that this is happening. But the utilities are very, very organized about this, and they've been consistent, their messaging has been strong. And you can see, as you referenced Stephen in the EEI report, they're all in lockstep.
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B
Tim, what did you make of Andy Luberschen's thesis? I know you. You read it, and it was resonating with you. What do you think he got right about the history and to Catherine's point, the role of utilities in sort of delaying this, the deployment of DERs.
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A
Yeah. So, I mean, I guess, to begin with, right. I think Andy's brilliant, and he's one of the best people I've ever met at SOR of synthesizing complex ideas. And so I would encourage everyone to go read his piece that was put up on LinkedIn a few weeks ago. But look, I think the thing that I would maybe branch off from Andy on is I think he is very conservative with respect to how he talks about the sort of macro situation. And so, look, to put it simply, I think the US Electric grid sucks. Right? And before I get a bunch of emails from, like, you know, retired utility CEOs, you know, look like the American Society of Civil Engineers gave us a D plus this year on the electric grid. I think the World Economic Economic Forum ranked America as having the 19th best electricity system. So, like, I remember when I was a kid and we were like America's number 19 and celebrated, right. You know, we're. We're in a situation now where, you know, one in five, one in six Americans can't afford to pay their electricity bills. There's really nothing that's happening that gives me any confidence that electric rates are going to come back down to earth or rate inflation is going to come back down to earth. Brian Deese, who I think was on the show a few months ago, wrote a piece in Foreign affairs calling this an electricity crisis. Certainly in the state I live in, in California, the word electricity crisis is thrown around quite regularly. And so, listen, I think what we're watching play out in real time is the electricity system is failing. And so what I think utilities generally miss about this moment is they don't have a choice on DERs. DERs are inevitable. What we're talking about is the timeframe. And so one of two things is going to happen. Utilities are either going to use DERs to prevent the electric grid from failing, or the electric grid is going to fail, and then people are going to deploy DERs, and either way, DERs are going to get deployed. And so I think, to jigger's point, what a lot of people in our industry are trying to work on right now is, is preventing failure from happening. Let's try to get ahead of this as much as we can and make good things happen before people have to pay the price. But, look, I don't think that's happening fast enough. The one thing I'll say is that, and I know you guys make this distinction all the time on the show, it's hard to talk about utilities as a monolith, right? And so the EEI has sort of their perspective on things, but there are good utilities out there that are incorporating DERs into their integrated resource planning and things like that. And I think what you're seeing is that the utilities that are leading on that front are generally providing a better service to their customers than utilities that aren't. And so, again, I think, generally speaking, this is heading in the right direction, but it's not happening fast enough. And if we don't pick up the pace, we're going to see big consequences. And again, I think you guys talked to Charles about this the other week, and I listened and. And thought he had some really good points about this. But ultimately, people care about electricity. This is the most important thing that's the foundation of the future of our economic growth. And when that system fails, people are going to care about it. And so the question is, when do we get to the point where normal people start to really care about this? And to jigger's point, I think we're getting there. This is a big thing in New Jersey. This is a big thing in Virginia. This is a big thing in California. Normal people who aren't part of the electricity industry, who don't own Jigger Shaw paraphernalia, are really starting to care about this. And just like walking around town in Santa Barbara, people come up to me all the time and ask me why Is my electric bill $600 a month when it was $300 a month four years ago? Or, hey, what happened in LA? Can that happen here? I don't feel safe when the wind blows and things like that. This is becoming a kitchen table issue. And I think things like what Catherine's doing at Common Charge and a lot of other initiatives in the country are sort of coming together to give people a voice. And so, look, I think ultimately the message to utilities is like, you don't have a choice about this, right? Like, either get on board or the electric grid's going to fail, and then you'll get on board afterwards. And I hope we can avoid that.
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D
To speak a little bit to Common Charge, Tim, you're totally right. We did just a soft launch, and I had so much outreach from small business, from homeowners, from people of all walks of life, all regions of the country, saying, this is a major issue for you. And we really are at this acute point where we have to start dealing with affordability and with reliability. And that's where all of this conversation about DERs, which Andy talks about so well, really comes to the fore.
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C
Can I say it maybe a slightly different way, which is that we were at roughly 60% asset utilization as a country for the assets that the utility operates, you know, in 2000, 2001. Today, we're at 40% asset utilization. Right? So that means that we have built a lot of stuff and not a not. And not enough kilowatt hours are going through that stuff. Right. And so every kilowatt hour that goes through it has to pay more to pay for it. Right. And so we are in a magical place right now with load growth, where we can resolve that situation yet, get back to 60% utilization by 2030. But the only way to do that is to take the EEI report and say half of that is necessary maintenance, need to do it stuff is old, it has to be replaced, and half of that is optional. And the optional stuff can be better served at 90% discount to what you were going to do with DERs, right? That's the moment we're in right now. Right. And if you fail to meet the moment because you insist on investing a trillion or $1.1 trillion, then you're going to make electric so unaffordable that the DERs are going to be like, the cheapest way for people to serve themselves. Right? And so that, I think, is what's in front of us. And I would say that as someone who has talked to the vast majority of CEOs and CFOs of the electric utility industry in 2024, given the energy infrastructure reinvestment program that I was running for loan programs office, I'd say almost all of them get it. But their middle management is fighting it tooth and nail. Their public policy people are fighting it tooth and nail. They old habits die hard. I don't think that the CEOs and CFOs are the ones that are like not on board because Wall street has already told them that. Like, we're worried about your monopoly franchise, right? We're worried that governors are going to go to extreme measures to make sure that this gets solved politically.
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B
So let's talk about some of those potential consequences. You talked about the potential disconnection of industrial loads. You talk about it forcing more deployment of distributed resources, creating more competition. You talked about potential political outcomes threatening the business model of the utility. Unpack which of those you think is the biggest threat for utilities right now if they don't sort of embrace this suite of solutions? It feels like we're talking a very different language. By the way, like you read the EI report, they're just in a completely different, different world and they're really psyched about all this load growth because they're going to build a lot more stuff. But talk about the potential consequences, which of those you think are most acute if they continue to ignore them, these resources.
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C
So, I mean, I think we should balance the conversation from within the PJM governors conference that happened last Monday. Right. And so you're in a place where all these governors went on stage, right, led by Shapiro, but then you had Wes Moore and Governor Youngkin from Virginia, et cetera, and they basically issued a veil threat that they're going to leave the pjm. Right. And the reason that they did that is because they believe that their populace wants them to be tough against the pjm. Make no mistake that it's the dumbest idea ever to leave the pjm, Right? Like, it is so much better for everybody that we're sharing power between Illinois and Virginia. Right? So let's just be clear, right? Then you know, like you, you follow up with all of these super smart people, some not so smart, that work for the governor, Right. And you say, what are your list of demands? Right? Like you've issued a veil threat. Like, what is it that you want the PJM to do differently? Zero demands. Not just like bad demands. Zero demands, right? So Shapiro made earlier demands, which is that we want to cap sort of the capacity auction results we want to create a tighter window within which they operate. But if you ask them, have you demanded that the PJM implement for a quarter of 22, 22. Have you demanded that they do grid enhancing technologies to expand the amount of capacity in the current grid that they're operating? Do you? Actually, we want them to implement, connect and manage. Right. Like we have in Texas, so you can bring new assets on board faster. Right. So you're not guaranteeing them transmission capacity, you're just guaranteeing that the new asset is safe to add to the grid. And then if they get curtailed, they get curtailed. Right. These are all things they could have demanded, but they don't know enough to demand these things. Right. And then when you talk to their Public Service Commission, their Public Service commission's like, look, it's not my job to micromanage the utility. They're supposed to like submit a rate case, I'm supposed to review it. And sometimes I push back on certain things, which is what Marissa Gilbert was doing in Connecticut. And the utility hated her so much that they spread nasty stories about her and got her fired last week. Right. And so now the utility is going after their regulator, after the judge that is supposed to like, oversee them, because they don't like how they're being regulated. Right. And so we are in a period of maximum discord. Right. The governors don't know what to ask for. The regulators are saying it's not our job to micromanage the utilities. And the utilities are in la la land saying nothing is wrong.
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D
Well, they also would love to blame the ISO too. They would love to say it's not their fault that their rates are going up. Well, they're causing us to have our rates go up. One of the things that Shapiro did demand was, and other states too wanted to have more say on the pjm, structure the board. I mean, there's something to be said about the ISOs and the way they function and the way that they operate, which is like the people who are members of the ISO, the companies that are members of the ISO, those are the supply side resources. Those are the resources on the grid. So they're the ones that have the say, not the homeowners and small businesses that are desperately trying to get into a VPP program to be bid into the market. They just don't have any power right now. So part of that is really a power structure that I could see having to be somehow rethought and reorganized. But being out of the market, as Jigger said, that would Be really unhelpful to everyone, especially since Pennsylvania is a net exporter. Who's going to buy their stuff if they're not in a market?
- [25:24]
A
Yeah. I mean, just one of the things I think Jigger touched on that I think is really important for people to understand. Right. Is I think people generally understand that state policy has a huge impact on energy markets. I think what's been shocking to me over the past few years is how little the average state politician understands about the electricity system in general. And so as an anecdote, I was meeting with a fairly high ranking person in the California legislature a few weeks ago and we were in the middle of talking about some complex electric grid issues and she asked me, she was like, hey, can you just clarify the difference between the transmission and the distribution system for me real quick? I don't really get that. And I kind of laughed. I thought it was a joke. But then I realized she was serious and so I explained it to her, right? And we got where we needed to go. But look, I think the thing people should understand about state assemblymen and state senators and legislatures who are making a lot of these decisions is they have a lot on their plate, right? And I think until recently, electricity issues haven't been at the top of the list in terms of things they're worried about and things their constituents are worried about. And so as we talked about in the beginning, that's changing, right? And so now these folks are learning about this stuff. And a lot of the rhetoric from utilities and regulators and ISOs and RTOs and all these folks about, hey, this is impossible to do and we don't know how to do this and we can't do this. People are getting smart about this stuff and they're realizing that, no, you actually can do it. There's a ton of precedent for doing it. Jigger in the loan program's office wrote this liftoff report and this liftoff report and this liftoff report, and it gives you all the information you need. And so I think the difference between now and 10 years ago is that there's a ton of evidence out there and there's a ton of credible work out there to show that, you know, a better way is possible. And so I think, like we're in this period right now where it's just taking time to educate folks about what the solutions are. But those solutions are out there and people are going to find them. And so I think, you know, that's the case for optimism, right? Is that, you know, as this becomes a Big issue. And, you know, constituents care about it, normal people care about it. And, you know, Charles keeps going on CBS and doing his thing. Right? That's right. That's right. Like, you know, like, as people get educated about this, they're going to demand a better product. And I think we're the beginning stages of that happening. And the good news is there are better products out there.
- [28:02]
C
Yeah, I mean, I've, I've talked to a lot of those legislators, as you know, too. And, and I think what a lot of people have said to me is that basically the only way through this moment is through state legislatures. Right. That, like, what the utility CEOs and CFOs have said to me is that they're never going to go to Wall street on their own and say, we're going to deploy stuff that's 90% cheaper. Like, that is never going to happen. And so they're like, what we need you to do is to pass a law that forces us to do stuff that's 90% cheaper. And then we can say, there's a law. I'm so sorry, but we have to comply with the law. And the regulator is like, yeah, once the there's a law and we have to implement it, well, then we can implement a law. Like, that's something we can do. And the governors are like, yeah, like, we're happy to think about putting that law into our package of bills in January 1st so that it's more likely to get passed, as opposed to it being some sort of grassroots bubbled up idea that then we' like, being forced to sign this law. Right. And so you're seeing a lot of governors talk about, you know, like, reaching out and saying, okay, I know I ignored you for the last four years, jigger, but, like, maybe we'll think about, like, you know, writing a law together to put this forward, which I'm excited about, because I feel like, you know, we're starting to get real traction from the governors and the legislators around, you know, actually putting a prescriptive set of solutions together.
- [29:24]
A
Like, I don't want people's impression of this to be that. My view is like, the der industry is perfect and we're batting a thousand and we just need utilities to get out of our way. And then, like, all, you know, everything will be great. Like, one of the real problems we have as a der industry is that I would say, you know, generally speaking, we're politically naive. Right. And so, I mean, you guys know, like all our friends, right, who run these companies and they tend to be introverts who kind of like sitting in front of AutoCAD and designing stuff and doing weird things and building cool projects and things like that. But again, the reality is that our future is going to be dictated, at least in part, by state legislators and state regulators. And to date, we as an industry haven't done a really good job of investing and educating those people. And so, you know, Jigger and Tom Mazzi and Catherine and all these people who are leaders in this industry have gone out and talked to so many companies about, hey, you, like, need to put some money in the kitty so we can go and launch these programs and educate folks and do things. And more times than not, people haven't stepped up to the challenge. And so there's a price that you pay for this education, and we as an industry have to take that more seriously. And so I think part of the problem is that people don't know this stuff. And part of the problem is that we as an industry haven't done a good job of teaching them, and we have to get better at that. For sure.
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B
Katherine, that is literally what you have devoted your career to. Does that reflect your reality?
- [30:58]
D
Yeah, absolutely. Just so much education, and sometimes it feels like there's so much on the other side of educating the uneducating part of it that it's a hard battle to fight. I would say we are. I think we're at a tipping point, which is what we've been talking about, that people are going to start demanding this stuff. They're going to start saying, you have to give us the keys, unlock the door so we can actually start participating and saving money because we can't afford to pay our bills. And I would give an example. Jigger was talking about legislative initiatives, and I would just say there's an interconnection technology company that was telling me this story. It's. It's very simple. Interconnection technology, very inexpensive, would be super easy for a customer to get either EV connection or solar connection. And they've done this. They've deployed it in multiple utility areas that have been open to it. But they recently went to two different utilities in two very different parts of the country. And the utility each said individually the exact same language, this is probably illegal, so we can't do it. And it was like they had been given that phrase, just as they've been given the phrase cost shift, which is also ludicrous to say, you know, this is illegal. And this company said, if all of this is outlawed, only the Outlaws will have it. And we need to make this legal. We need to not have a bunch of outlaws. But I'll tell you what they're going to be if they're not. People are going to deploy DERs. Whether or not they're given permission. We need to give them permission.
- [32:37]
B
One of the things that has changed is the comfort of certain utility teams in bringing these resources into the operations team. Right? So planning teams have gotten used to modeling a lot of solar on their grids, but it is only until recently that operations teams have been thinking about this stuff as delivered capacity. And so I just wonder, like, how significant you think that shift has been. And if these DERs are now turning into distributed capacity resources with batteries as a backbone, will that accelerate inside these historically skeptical operations teams, inside utilities?
- [33:21]
A
Yes. Yeah. Look, this is an important thing, I think, for people to understand about sort of the technical journey that we've been on is what's happened in sort of the battery energy storage industry over the past decade has been remarkable, right? And so when I was starting scale in 2015, I would talk to engineers all the time and I would say, hey, I want to build a solar storage micro grid. And they would be like, storage doesn't work, right? Like, it's not a real thing. And now it's a very, very, very real thing, right? Like, battery costs at the cellular level are down 40% year over year. This year delivered CNI systems, which is what I spend a lot of time procuring, are down 20%. The economic value proposition of batteries as sort of a capacity resource is an absolute no brainer in a lot of areas of the country, right? It's not everywhere, but it's a lot of places. And so again, I think, like, at some point, the math just gets so obvious that people can't ignore it anymore. And I think we're at that point, right? We've hit that tipping point where, you know, putting a powerwall in your garage or a megapack outside your industrial facility is just an obvious sort of economic value proposition for the end use customer. And so that battery capacity is going to get deployed. Right. And I think the real question is, do we use that battery capacity intelligently to help improve the grid, or do we just let people do this sporadically on a case by case basis? And so, you know, the thing I worry the most about in sort of the DDR industry is there are a lot of people, right, who just kind of think, like, let's just let the electricity system continue to do what it's doing it's going to fail. We have a better value proposition. We'll come in and pick up the scraps. And I think really what that leads to is a very unjust system where Fortune 500 companies and rich people have solar panels on the roofs and batteries in their garages and all that kind of stuff. And then people who don't have the right credit score or enough money to put a down payment on a solar system are still paying the fixed costs of the grid and we don't want to live in that world. If you've ever been developing countries, that's how it is in a lot of the developing world and it sucks. And so again, I think the key for the folks that run the electric grid is this stuff is going to get deployed anyway. The question is, how do you manage that deployment in a smart way so the benefits percolate across society and aren't just concentrated in a certain sector of the economy.
- [36:00]
C
Well, and the thing that I think is so important right now is that we have to understand that the utilities have a really rickety software system, right? They're mostly on SAP and Oracle, which are really terrible. And so the way Oracle has built themselves is they just bolt on companies that they just buy companies, right? And then they just have this band aging system, right? And so as a result, the operations people can't do the things we're asking them to do, right? So if you ask them like to integrate smart meter data into their operations, they don't know how to do that work, right? It's not possible. The vast majority of utilities don't have a DERMS platform by which to dispatch ders, right? And so the reason why Dana Guernsey at Voltis or the folks at C Power or others are doing such a good job is they've just created an entirely parallel effort, right? So every time they build a commercial system, they have their own metering system that's revenue grade on that system that they pay for separately. So they can actually settle their, you know, their dispatch with the PJM or whatever it is, and they can respond to a signal which is not cost effective to do for residential, right? And so the weird thing is in this moment is that the one technology that can solve all the utilities problems happened to be AI, right? What AI does for a living, right? I don't believe in AGI and all this other crap, right? But it's very obvious that what AI is, is 20,000 paralegals that you can get for like 20 bucks a month, right? So like, so the utilities have enormous amounts of unstructured data by which they can't make any decisions, right? AI can turn those data sets into decisionable data sets, right? That's what ThinkLabs does. That's what all these other groups do inside the utility, right? So when you think about the key to OpenAI being successful as a business, it's actually having a real paying customer that is worth serving right now. Like, every time they serve them, they lose money, right? Every transaction. But this is a use case where they could make a crapload of money, right? And you know, and so like, we're in this moment where it's. I don't know what's going to happen, right? Does the utility actually want to solve this problem or do they not want to solve this problem? Because my experience is the distribution people at the utility are in the basement. They do not have nice views of the park. They don't actually have the right floor. They're like, where's your office? Oh, we're in the parking garage. And so in this moment, everything the utility does is utility scale generation, upgraded transmission, upgraded distribution, serve the load, right? It is clearly way cheaper just to figure out how to like, serve the load at the distribution line, right? And like, it is. All the tools are there now, right? All the tools are available. And Lord almighty, is this going to be a cultural shift?
- [39:11]
A
Like, this is actually one of the things I'm really excited about with like the hyperscalers getting involved in this industry, right? Because I think, like, what Jigger said is 100% true, which is one of the problems with integrating ders into utility systems is utility software is archaic in a lot of cases, right? And so now all of a sudden you have this situation where the customers who care most about utilities fixing their situation are literally software engineers, right? And so like, the utilities come to, you know, Amazon or Google goes to the utility and they're like, hey, we need X megawatts of power of capacity to be able to build our data center. And the utility's like, oh, we can't do that. And Google's like, well, why don't you just put batteries all over the city? And then like, we can do it. And the utility's like, oh, we don't have the software capability. And Google's like, what are you talking about? Right? Like, we could fix that problem for you in eight seconds, right? And so like, you now you, now you have these people who have deep understanding of what's capable in a software world, in an AI enabled software world who are coming to the table and helping to solve these problems. And I think you're starting to see a lot of really cool pilots that are kind of partnerships between tech and utilities rolling out across the country. And I think those programs are going to be really successful, right? Because now, like the tech companies who have the most resources to be able to upgrade utility software and sort of address these problems, have a seat at the table and like a deep concern about this issue. And so I think that's like one of the reasons for optimism. My view, my bet is that utility distributed energy resource management software platforms are going to get a lot better over the next two, three years.
- [40:52]
D
So the other piece of that, and Tim, I totally agree and with Jigger as well about the software piece, is that that does not just affect the utility operation, but also affects the ISO. And that's part of what the disconnect is, is that with Order 2222, in which DERs are supposed to be able to actually completely participate in the markets, it's taking forever because of all these software updates. And it's, you know, it's software updates that have with like the bidding parameters, all the information and data that they need from all the DERs, what are the locational requirements, like what are all the different nodes that they need to pull in, metering and telemetry requirements. And all this coordination has to be done with the utility. So you have an issue with utility and the data that they have, which I would argue they have a ton of data, they just don't know how to use it. And then conveying that and coordinating very closely with the ISO, that is the way DERs are going to become really unlocked is to actually be able to monetize those wholesale markets that will bring down, put downward pressure on prices that will go to everybody in the ISO and all the customers in the utility side.
- [41:56]
B
Let's go to a couple other stories here. I want to turn to California. We hinted at this story previously. California has historically been great at promoting DERs, but awful at utilizing them. We've railed about this previously on the show, but it is now potentially defunding this VPP program called dsgs. Catherine, how much of a blow is this to the market in California?
- [42:23]
D
Yeah, it's ridiculous. It's the demand side grid support program. And what it allowed was for existing assets, like not new stuff, but existing distributed assets that were out there to be brought together in virtual power plants to really solve some of the most crucial issues. Peak demand and other events on the grid. They were Extremely successful. There were hundreds of thousands of customers participating. Almost 550 megawatts brought to the grid in a way that was really, really effective. And it was companies like Sunrun and Tesla who knew how to do that and were able to monetize it. And what happened is that in the budget, they only have about 15 million left for this program and they need about 75 million to make it work. So that's been part of the issue. They think they might be able to get a billion or compete for a billion out of the cap and trade fund in the reserve. But it is a blow because it's a program that was actually working and solving some issues on the grid and allowing customers to participate. And it was unlocking these resources that were sitting there not being as useful or effective for the grid as they could be. I'm sure Tim has a lot of stories about it too, but it seemed one of those things that's, you know, pennywise, pennywise, dollar foolish.
- [43:41]
C
I'm torn about this thing. The DSGS program basically is a program that's designed to be the quintessential we are incompetent. So this is what we're going to do program, right? And so because you can imagine the CCAs, right, the community choice aggregators have to buy resource adequacy so they could pay for these batteries, right? Now that they've already been geotagged and allocated. Here you have this emergency load response program that they could get paid by the California ISO, could pay them under FERC Order 2222. But the California Public Service Commission has deliberately sandbagged that program by making the effective load carrying capacities that they calculate for the California ISO program impossibly low so that nobody can make money in that program. And so you basically have all this dysfunction up and down the state of California. So they're like, screw it, we're not going to fix anything. Let's just pay them through the DSGS program, right? And like that bothers me to no end, right? Because along the way we're just gold plating everything in California, right? We continue to keep building out new distribution grids because we refuse to like use DERs to make those grids run more efficiently. Like some of the grids in California are down at 15% capacity utilization. @ some point you're like, what are we doing? Right? And so I'd like to actually solve the underlying problem, which is that the state of California has a CPUC which hates DERs and the staff that work there, which by the way, is 650 people on the electricity side. Right. They've got 1200 people with gas and everything else. Right. The largest public service commission in the entire United States thinks that what consumers want is dynamic pricing. So they hate DERs and they hate aggregators. And they're like, what we need is to give people a different price every five minutes of the day and make them check their app before they turn on their dishwasher. And I was like, in what freaking world do you have a job? I don't understand how you either are employed here. Right. And so, like, so the DSGS program is fine, but it's a band aid to the fact that the state of California can't figure out what Texas has done and actually just integrate decision making for the ders and how they get paid through a stacking of multiple different revenue streams from all these different things that they could do to make things more affordable in the state of California.
- [46:09]
A
Yeah.
- [46:09]
D
And they've had a demand response, like, forever. Since the beginning of time, they've had a demand response, like a very simple tool.
- [46:15]
A
Yeah. All right, so I guess before I talk about the state of California, it's probably worth noting that I live in the state of California and is Santa Barbara.
- [46:26]
C
The state of California feels like its own little enclave.
- [46:31]
A
Some have called it a bubble. Look, I think one of the caveats is, before I ever talk about the problems with the California energy system, I do think it's important to note that California has done more than any state on climate leadership. And I don't think it's close to Right. And so if you think about the history of the solar industry, the wind industry, the battery industry, the EV industry, so much has been done in this state to move those technologies forward. And a lot of other states are benefiting from the early work that was done in the state of California. With that said, California has the worst electric grid in the United States, and it's not close. Right. And so you look at any metric. Right. Reliability, resilience, price. Right. It's terrible. I think in my county of Santa Barbara, one in four people can't afford their electricity bills, one in four households. So, you know, it's bad on a national basis. It's worse in California. Average retail rates here for residential customers in my area are, like, 35 cents a kilowatt hour, which is, I don't know, two and a half times the national average. And it's like a safety issue. Right. And so, you know, again, I guess there's still a court case going on. But like, potentially, the electric grid burned down Pasadena, right? And so, you know, I think we're in this situation now where California is like the Normandy for this issue nationally, where, look, I think the average person I know in the state of California, part of the problem with this is it's so confusing and it's complicated and people don't understand the difference between a kilowatt and a kilowatt hour and how does any of this stuff work? But what they know is that we've been listening to the same people in this state for 20 years, and the result is we have the worst electricity system in the country. And so now you have this whole other group of people on the sidelines who have been saying, hey, there's a better way to do this over and over and over again and being ignored. And I think normal people are just like, hey, let's change direction, right? And so, look, I think the challenge with this, right, is we talked about the education piece with the state legislature and California Public Utility Commission. But look, ultimately, from my view, right, like, this is going to be a massive issue in the 2026 gubernatorial election, right? And I think in my mind, there hasn't been a governor who's done a worse job on electricity policy than Gavin Newsom. And so I think when we have this gubernatorial election, especially the Democratic primary, people are going to need to answer for that, right? And so ultimately, I think the gubernatorial candidates are going to have to get smart about this stuff in order to answer the questions people have about why is the system so bad. And when they're preparing for those questions, they're going to find out that, like, hey, there's a lot of stuff that we can do to make this better that we're just not doing. Because this person at the IBEW or this person at X IOU doesn't think it's in their best interest for quarterly earnings or whatever the case might be. But this is going to come to a head. It's coming to a head right now. And I think, again, right, the good news is that we have a lot of companies in California. We have a lot of innovators in California. I think we're going to get a shot to deploy this technology and show what it can do. And I think once we do that, people are going to find out we're ready for this and we're going to be able to build a better system. And so part of the reason I live in California is because we have the worst electric grid in the country. And again, you guys Talked about this in terms of painkillers and vitamins. Good electricity technology is a painkiller in California. And so I think ultimately we're going to get our shot on goal and we got to to step up and meet the moment, make sure we're doing it the right way. I think once we do that, California is going to become a model for how you build the 21st century grid. @ least that's what I hope happens. And then, you know, the rest of the country can steal our innovation again and hopefully we land in a good place.
- [50:19]
B
Is there any lesson to take from California about how to fund these programs? So, you know, we've learned throughout the history of solar in particular that these sort of stop start programs are bad for the industry. We had early rebate programs that would sell out really quickly. You know, how do you structure these programs so that you're not at the whims of state politicians so that when they are squee, they're, when they're in this budget squeeze, they don't just strip funding out of your program. What's a better way to fund these programs so that they're market based and, you know, stacked appropriately?
- [50:55]
C
Well, it depends.
- [50:55]
A
Retail choice.
- [51:00]
C
Look, I think it depends on what you're trying to accomplish, right? So obviously when you're in the commercialization phase of a program, right. Rebates and incentives are going to be critical because they're clearly very expensive. I think the challenge you have in California is that that pivot to a market based system is very hard when people get addicted to the rebates. Right. So when you look at like Texas, Texas is clearly, you know, was basically started as a market based system. They had some wind mandates early on, but solar was really not allowed in Texas until it hit some sort of threshold and then it was allowed to do as much as it wanted to do. Right. And you're starting to see the der stuff because Texas unlocked a lot of the smart meter data early on and has innovated in that area. Right. So that you could actually access a lot of the der work. Whereas California has really been frustrated by entrenched interests. I mean, you see, like with the NEM programs in California, we knew a long time ago that the net metering programs needed to be reformed in California, but they just had so much power that they were able to stave it off until they basically just went too far the other way, which is where you are now today. And so I'm hopeful and you see that with New York now New York has Eviscerated the solar industry in New York and has not committed at all to doing any of the permitting reforms or other reforms that are required to cut the cost of doing business in the state of New york by half. And so residential solar in in Texas now is $1.90 a watt unsubsidized, and in New York it's $4. Right. And so you're in this weird spot where New York has not gotten the backlash that California got, but New York has done exactly the same thing to cut the legs out from underneath rooftop solar in that state. Right. And so one of the big challenges that we have in front of us is as we commercialize these technologies, we have to figure out a really secure off ramp for these subsidies as they get bigger and bigger, Obviously, as the technologies get deployed at more scale and they get fully integrated into the way the utilities operate. So you can get all the best benefits out of them.
- [53:13]
D
Well, and you need open markets. So the utilities in California fought against community solar to the point where it's only going to be allowed by utilities. Third parties can't participate. And that's where you get the benefits to customers, is through third party programs. Because those third parties come in, they compete, they provide all of the benefits. Well, part of the benefits will go to themselves, but most of the benefits will go to the customer. Whereas of the utility, if they own it, it goes to the return on equity and to their shareholders. So something has to also give in the utility. And maybe that's through the legislature, as you had mentioned earlier, Jigger. But we need to somehow break that so that we get the ability to have open and fair markets so customers and all of these DERs can actually participate.
- [53:56]
A
Yeah. And one other thing that I think is really problematic in California is the complexity of the market is mind boggling. And so almost no one understands how the electricity markets in California work. I'll give you a distinct example. When I moved out here, I had to learn about resource adequacy, which is the capacity market in California. It cost me $150,000, something like that, in consulting fees, to feel like I had a good understanding of the resource adequacy market. And I still don't really understand it. And so now I go out and I want to build a battery system, and I'm like, okay, my revenue streams are dependent on this abstract concept of a resource adequacy market. How do I think about how much money I'm going to make over the next 10 years? And it's impossible to figure out. And by the way, trying to figure it out is dependent on do you think Diablo Canyon is going to get relicensed in 2032? The underlying assumption in the model. And so none of these markets make sense to anyone. And so ultimately, you're in this situation where you want to have utilities and the private sector working together to try to figure out how to deploy all these resources. And it's really, really hard to do when no one understands what the market dynamics are. And I think honestly, there are some entrenched interests in Sacramento who like it that way, because there are like six people in Sacramento who actually understand how this works, and that's like their competitive advantage. And so when people like me want to understand it, I have to pay them a lot of money in order to explain it to me. But that's not a good way to run a state electricity market. Right. And so I think ultimately one of the problems in California is it's way, way, way too complex. We're very, very good at writing laws. We're not good at taking laws away. We're very, very good at writing regulations. We're not good at taking regulations away. And so if you want to be an entrepreneur and get into the electricity sector in California, like, I'll print you out 100,000 pages of documents that you probably won't understand anyway, and you have to read all those things and then kind of guess. And so look, if you really want to create like a vibrant market, people have to understand how that market works. And, you know, that's a huge problem in California is people just don't get it. And I'm one of those people.
- [56:08]
C
Well, what's so sad is that, as you know, we had that gathering of all those California companies a few months ago, and they all basically said, yeah, we're based here, but we don't do business here and we'll never do business here. So we do business in Texas and Massachusetts and all these other places, and we're based here with our headquarters, but we'll never do business here.
- [56:25]
B
That actually brings us nicely into something that you've been thinking a lot about, Tim, which is soft costs. The costs around permitting customer acquisition, navigating the regulatory environment. That's the stuff that hasn't budged. As hardware prices have fallen. And Tesla recently put out this report saying we could could potentially lower residential soft costs by 40% with better automation. We're seeing companies like Aurora Solar 257 use AI to slash customer acquisition costs. And I know that this is something you've been sort of looking into more. Why do you have soft costs on the brain?
- [57:05]
A
Yeah. So, you know, if you think about the pro, the problems with distributed energy, and, you know, there's. There's some stuff we own too. Right. And I think Jaeger wrote a LinkedIn post about this two or three weeks ago that's really good and explains the issue in a very concrete way. The biggest problem with the distributed energy resources business model is soft costs. And so if you think about a typical distributed energy resource project, it varies a little bit whether it's residential or commercial, what size of the commercial or whatever the case might be, 50% of the costs are not hardware installation. And so the cost of putting solar on your roof in California, if you just look at like hardware and installation, is like two bucks a lot. Right. Something like that. The actual cost that the homeowner pays is four bucks a watt. Right. And the difference between those two things is soft costs. And we've known that as an industry for a long time. There just hasn't been like a clear solution. And then AI. Right. And that's the most excited thing. You know, the thing I'm most excited about with AI is AI is a really, really good way to reduce SO costs on these projects. And so you think about the primary drivers of soft costs. Legal, Right? Legal and contracting, like Jigger mentioned it.
- [58:19]
B
Right.
- [58:19]
A
It's a lot easier for me to write a contract today than it was three years ago. Financial modeling, energy modeling, engineering, one line diagrams and things like that. Permitting. The town of Bakersfield, which isn't considered one of the most innovative places in the state of California, just implemented AI the other week. That allows you to get an instant permit to put solar on your roof or a battery on your property. All of these drivers of soft costs can basically be solved with AI. And so I think ultimately what you're seeing is now we're on this path where hardware costs are dropping, installation costs are going up a little bit, but soft costs are just being eviscerated. And I think in the distributed energy space, whoever wins on soft cost is going to win. Right. So you have a lot of innovative people in the space who are really taking this seriously and looking for sort of every dollar, every cent that you can extract out of the installed cost of these projects and how you can apply AI to these things. And the early results are phenomenal. Right. I think Jigger was telling me he was talking to some companies that think they can reduce soft costs by 80% today by using sophisticated AI tools. I'll take the over on that. I think in the work I'm doing, 30 to 50% is probably reasonable. But even then we just dropped the cost 30 to 50%. Then you're in this environment where the hub of DERs moving forward is going to be batteries. And I think a pleasant surprise from the last year is that the battery ITC withstood the OBB process. And so you didn't even lose the battery tax credit. You lost the solar tax credit, but you didn't lose the battery tax credit. It so when you think about the installed cost of these systems, they're plummeting. At the same time retail rates are rising. And again, I think the industry in general is going to hit that tipping point where this stuff just becomes super obvious from an economic value proposition standpoint to off takers. But then within the DER industry, the race right now is who can do the best job attacking soft costs. And I think there are a lot of people coming up with a lot of innovative solutions really, really quickly.
- [60:24]
B
I totally agree that this is one of the most important areas where AI can have an impact. And Jigar, I share, I think I agree with your take earlier in the conversation. Like I share your skepticism around AGI, you know, whatever, however the AI labs are defining that. But I think this is a very clear example where AI is very good at distilling data, synthesizing things, improving processes. I know to Tim's point, you were writing about this Jigger. I think you mentioned257's pink platform that can cut acquisition costs by 33% for installers through automated outreach, prediction modeling. Aurora Solar has been using machine learning for years. How much are you seeing this actually impact soft costs now? Jigger?
- [61:18]
C
Well, so EnergySage has put out these awesome reports every year and certainly every quarter as well. And the last quarterly report they put out was right before RE plus and showed a huge decline actually in the average install cost of residential solar that it was tracking. I think it was like 14% or something. And so one of the things that I did a lot at RE plus was just talk to a bunch of people and we put together events. And I'd say that something on the order of 20% of the industry is fully committed to this. They're fully committed to hitting basically a $2 a watt benchmark residential system cost installation by the end of 26. That's going to change. Obviously it's $1.90 and maybe 245 a watt in Massachusetts, but they're committed to whatever that equivalent number looks like for their region and their state, which is not nothing. Right. And I do think that the other people may not come along and they may all go out of business and then the people who decided to do this will take up their market share. So I think like most things in life in solar, the people who are willing to innovate and actually push the envelope are going to have much larger businesses. And the people who want to things the exact same way they did last year will go out of business. And the solar industry, megawatts will still go up and to the right. So I think the industry is going to continue to deploy more technology and more panels and all that stuff as ever before. And unfortunately, you might have a bunch of people who go out of business because they decide that they don't want to commit to the number of changes required to make this a reality. But I do think in this Moment, you have 25% rate increases across the country the last four years. You have another 25% rate increases that are coming over the next four years. I mean, solar's never been more cost effective. And as Tim suggested and Catherine has said multiple times, battery storage is the bacon of the grid. And so at some point, people want more bacon.
- [63:22]
D
Every single kind of distributed energy asset company should be using AI to squeeze every kind of efficiency out of their processes, no matter what they are. I mean, the ones that do that are going to succeed and be more cost competitive than others. Definitely. On the regulatory front, I think it's obviously going to be a little bit slower. It's a higher risk environment, and I think that it'll just take a little bit longer. But if you have the der companies doing this and becoming very cost effective, as long as the structures are enabling those to be unlocked and allowing customers to participate in a market, that's going to be what's needed. Then hopefully we'll be able to show the way to the regulators that and to those who are, for example, processing permits and all of that to be done on a local level that we can kind of de risk it so they can feel comfortable.
- [64:15]
C
The one other thing that's happening, which I think people are not paying enough attention to, is that people have gotten super smart about how to get around the regulations. So like carrier just announced that they're putting a battery in their H vac unit. Right. And what that allows you to do is to just, you know, take away the ramp. Right. Because when you're turning on an air conditioner, you have A huge amount of inflow current. And so they get rid of that by having the battery, but magically, by having a battery in your H vac system, there are no interconnection rules whatsoever or permitting requirements. And so they control 100 gigawatts of H vac load in the country. Right. So as all of those H vac units are being replaced and they replace them with a battery in there, that's 100 gigawatts worth of demand response that carrier now controls. Now, look at copper and what they're doing in their induction stove. They've got a battery in there. There's no permitting or interconnection required needed to put in a copper stove. And guess what? I'm pretty sure next week someone's going to come out with a battery inside their water heater. And when that happens, no permitting and interconnection requirements there either. Right. And so I just think this is going to be awesome.
- [65:26]
B
All right, guys, let's round this out. So, Tim, we talked to you almost 10 years ago. Hopefully we'll have you on the show in less time than that. But let's say we talk again in 10 years.
- [65:37]
A
I only do once a decade.
- [65:38]
D
Once a decade.
- [65:39]
C
That's in my contract.
- [65:40]
B
He's that good. So we're having this conversation in another decade. What is the optimistic scenario for Ders that you think could play out? Look, we were all feeling pretty optimistic about DERs 10 years ago. The utilities did everything they could to stall the transition. There wasn't the same urgent need for these resources. We sort of saw a lot of really interesting concepts developed, but not deployed. So 10 years from now, are we going to be having a materially different conversation? We'll go down the line with each of you.
- [66:14]
A
Look, I think what I know, or what I deeply believe is that what we do in the electricity sector over the next decade is going to define America in a lot of different ways. On a global stage over the course of my lifetime. And whether that's from a climate perspective or a national security perspective or not losing the AI race to China perspective, which I guess is also an national security. This stuff is really, really important. What I'm also convinced of is that the future of electricity systems will be wireless. Right. We're heading towards a world without wires. And the activity that I always ask people to go to when they tell me I'm crazy about that is just imagine the best possible version of the electricity grid. Why would we have wires? You would just have buildings that made their own power and vehicles that made their own power and all this type of stuff. Stuff. And you won't need thousands of miles of transmission lines and distribution lines and all that kind of stuff. And that's going to happen, right? I don't know whether that's going to happen in 100 years or 200 years or 300 years, but the electricity system is 120 years old. We're still in the infancy of this. And the idea that the way this currently works is going to be the way it works forever is kind of preposterous. And so you believe those two things, that this is where America needs to lead on electricity innovation. And the future is heading towards a more distributed electricity system. And we have a big role to play in that. And so look, I think to Andy's point, Andy Lubershain's point that we talked about with the time for ders is now, I think if you look at this from an investor perspective and you look at the metrics and you look at the cost curves and all this type of stuff, there's a pretty good argument to make. I think the big question is, are we ready for the this, right? Like we as an industry and you know, Jigger and Catherine and some of the other leaders in our field, right. Like 10 years ago, they were ready for that and we were not. Right. Like the rank and file, you know, soldiers of the distributed energy movement were not. And now I think we are right. I think like we're battle hardened and we have experience and we understand how this shit works and we're ready to go. And so, yeah, like I'm going to bet on us, right? And I think what you're going to see in 10 years is that we're going to be closer to having the number one electricity system in the world than the number 19 electricity system in the world. And I think that's the beginning. Right? We can continue to grow this thing and improve and ultimately set the standard now again, right. I think there's definitely headwinds in our way, but ultimately I'm going to bet on innovation over everything. And so that's where I hope we get to.
- [68:57]
D
I love that Tim and I would just say Jigger was talking about how the DER folks have been stuck in basements. Remember, my examples are from the 80s, and when I say 80s, I mean 1980s, where we kept our files in the back of a funeral home. And we are going now to literally in 10 years. I look at organizations like Common Charge and others as really being pathways to break down and heal some of the divisions that we have in our country. And I feel like we all kind of want the same things. We all want to be able to have electricity. We all want power all the time. And this can bring us together. And I think DERS will be a means of doing so. It's been heartbreaking to see how clean energy has become political. And I'm hopeful that some of what we're working on on the distributed side will start healing that.
- [69:42]
C
Look, I thought it was impossible for us to pass SB540, SB541 and SB254 this year. The California legislature, it took 10 years to get those things passed. So we are now allowing California to trade with the rest of its neighbors, which really wasn't allowed before. We are now mandating VPPs and DERs in the state. And the CEC is going to lead it. The CPUC is going to follow. Thank God Alice is leaving. And so we'll be in good shape there. And254 basically helps to securitize $6 billion worth of PG&E debt, which starts to bring cost down. My sense is that we're going to pass legislation like this in another six states next year because of the political tailwinds we have. And my sense is the environmental groups are all going to get on board. And so when you think about all of the momentum that we had in the early 2000s around renewable portfolio standards and how much coordination it took to pass those, we will have the exact same level of coordination over the next 10 years to pass consumer bills of rights across the entire country. And those consumer bill of rights will include DERs at the very top. Grid enhancing technologies connect and manage some of these other things that are 90% cheaper than what the utilities preferred route to do things are. And that is what is going to make for, as Tim said, right. A century where America continues to have a world beating a world leading electricity system. Which I know that the people who work in the electricity system, I mean everybody that I know that works in the electric utility industry is proud of what they do every day, and I'm proud of them and all the great work that they do every day. And I'm proud to be part of that broader industry. And I do think we have what it takes, but I do think we're going to have to pass laws in all 50 states to really give the consumer the sort of bill of rights that they deserve to be able to be protected in this moment.
- [71:46]
B
A great place to close. What an extraordinary moment. It is. Tim Haid is the co founder of Brightfield Infrastructure. He's a former COO and co founder of Scale Micro Grids. Tim, this was awesome. Thank you so much.
- [71:58]
A
Thank you all so much for having me. It's my favorite show and I'm happy to be here.
- [72:07]
B
Jigar Shah and Kathryn Hamilton are my co hosts. Good to see you guys. Open Circuit is a production of Latitude Media. You can read about all these subjects on our website or subscribe to our newsletters. Just hit the subscribe button at Latitude Media and while you're thinking about subscribing, subscribe to the show if you haven't already and give us a rating and review and we will catch you next time. Thank you all so much for being here.