![The demand stack: Turning customers into grid capacity [partner content] — Open Circuit cover](/_next/image?url=https%3A%2F%2Fmegaphone.imgix.net%2Fpodcasts%2F7ec68a0c-e24b-11ef-b277-7b3d3c3c73b9%2Fimage%2F796dd136afa5782eae8ad683dd946957.png%3Fixlib%3Drails-4.3.1%26max-w%3D3000%26max-h%3D3000%26fit%3Dcrop%26auto%3Dformat%2Ccompress&w=1920&q=75)
Loading summary
Transcript52 lines
- [00:03]
A
This is partner content from Latitude Studios. Hannah Bascom found her way into clean Energy in 2009, working for PG&E to design energy efficiency programs. It was right after California adopted an ambitious roadmap for efficiency, a plan that would influence how utilities across the country approached energy savings.
- [00:23]
B
Somebody the other day called me OG of the climate tech world, which was both flattering and seemed a little wild.
- [00:31]
C
You have to put that on your conference name tag.
- [00:33]
B
I know, totally.
- [00:36]
A
Efficiency has always been the less glamorous part of clean energy. Hannah believed in the mission, but the work itself often felt bureaucratic and incremental. These programs weren't driven by market demand. They were driven by regulatory compliance. Utilities ran them because the commission told them to.
- [00:53]
B
It was very much a framework of, well, the CPUC says we have to offer these energy savings programs. We have this amount of budget to do it. How are we going to kind of maximize cost effectiveness and the impact that we can drive within that paradigm?
- [01:08]
A
After nearly three years at PG&E, Hannah started thinking about the next step in her career. She had learned how utilities work, but she wanted to work on the other side of the equation, helping enable faster decisions through technology and new business models.
- [01:21]
B
How do I move outside of a world of compliance? And so I wanted to take the knowledge about how utilities make decisions and move to a kind of more. More nimble enablement partner, really.
- [01:34]
A
She landed at Nest, the smart thermostat company that was redefining the relationship between consumers and energy. For the first time, utilities were seeing a device that customers actually wanted, not because it saved energy, but because it made their home smarter and more comfortable. And once those devices were in homes, they could also become tools for the grid.
- [01:54]
B
I think moving to Nest was interesting in a lot of ways because for the first time, utilities realized, oh, there's customer demand for these products, besides just the fact that they save energy.
- [02:05]
A
A decade later, the role of demand side technology has shifted in a big way. Today, Hannah is the Chief Growth Officer at uplight, a company that coordinates the demand side of the grid, combining efficiency programs, dynamic pricing, and distributed devices into a resource that can reduce peak demand and improve reliability. And as electricity demand surges and affordability concerns mount, utilities are starting to see those resources in a very different light.
- [02:32]
B
We are absolutely seeing utilities start to realize that these assets are valuable for their grid. We are definitely making progress, and the load growth that we are seeing from AI has been a major catalyst to this change. I think that it is vastly different and we still have a lot more work to do, to do to really truly transform the way we value these assets.
- [03:00]
C
And so you're thinking about these demand side resources as part of what you call the demand stack. What is the demand stack? How do you define it and how is it similar in definition to the supply side?
- [03:16]
B
So the demand stack is really a framework for aligning customer programs, utility operations and planning so that these DSM programs can deliver reliable system value across all hours of the year, while boosting grid resilience and managing costs, especially amid growing infrastructure and investment needs.
- [03:34]
C
And how does uplight work across the demand stack?
- [03:37]
B
Sometimes I talk about the demand stack as a cake, both because I really enjoy suites and because I like to think of the base as your energy efficiency programs. Right. Which we deliver. Right. So we deliver home energy reports that are mailed kind of old school style. We are also doing high bill alerts and web portals for both residential and business customers. So we are enabling that foundation of the cake and saving energy every single hour all year long. We also have rates programs. So those are like your mid tier resources on the supply side where you are leveraging them every single day at particular peak hours in the afternoon. And then we also have virtual power plant or demand response programs that are the icing on the cake and are used dozens of times now per year, sometimes even more, but that are really targeted to the times where the grid needs are the highest.
- [04:36]
A
Utilities are facing a stark reality. Electricity demand is rising faster than they can build, infrastructure equipment is more expensive, and customers are worried about rising rates. And some are taking a closer look at the resources that already exist on their systems, often inside homes and businesses. Uplight itself is going through a major change as well. This month, Octopus Energy and the Schneider Electric announced plans to back Uplight while keeping Uplight as an independent company, a move designed to accelerate the growth of demand side flexibility.
- [05:10]
B
I think it's a real vote of confidence that the demand stack strategy that we have is a really essential one for the grid of the future. And it represents for us the ability to continue to innovate on and scale those demand stacks programs.
- [05:30]
A
This week, Stephen Lacy sits down with Hannah Bascom, the chief growth Officer at Uplight, to talk about a new era for demand side resources. For years, programs like efficiency, time of use rates and demand response were treated as separate tools, often managed by different teams inside the same utility. But as load growth accelerates, utilities are starting to rethink that approach. In this episode, Hannah talks about how the demand stack works in practice and what it can mean for utilities trying to keep up with rising electricity demand and costs.
- [06:08]
C
What is behind that vote of confidence? What does that mean about the market opportunity itself and uplight's ability to execute on it?
- [06:15]
B
Yeah, so we all look at the load projections for what AI is driving and to a lesser extent now, electric vehicles and other electrification. Right. But we're just seeing load growth certainly outpace our collective ability to keep up. And so there's a time problem and a cost problem where the business as usual of investing in more power plants and poles and wires is impossible because of all the reasons. Right. Supply chain reasons, community pushback. And so it will take too long to do the thing that we have done previously to ensure that the grid is reliable. And even if we could do that, it would cost too much. So you're already seeing such strong pushback from communities. One in six customers in the US today are unable to pay their bills. So energy costs are becoming really top of mind and major election issues. And so I think for those two reasons, we are having to rethink how it is we incorporate not only DERs in the grid, but just leverage the existing grid in a new and better way than we have before.
- [07:26]
C
And utilities are seizing on this opportunity and they are doing what they do well, which is build more infrastructure. But you have argued, and many people argue, that like, just building more has limits. What are those limits?
- [07:43]
B
Yeah, I mean, it gets back to what I just said previously. Right. Time and cost. Utilities are sometimes unable to build in the places they want to build because there are supply chain issues or just real physical constraints on that node within that grid that prohibits them from perhaps investing in the way that they would like to as quickly as they would like to. And, and if you look also at the costs to do the full build out in the way that a status quo approach would suggest, the rise in rates is pretty astronomical. And so my perception is that communities won't like, they won't stand for it. Right. You're already seeing in New Jersey, in Virginia, these places are trying to freeze rates. They are demanding that utilities look at VPPs, at better grid utilization and kind of alternative approaches. So I think that we are, are pretty quickly going to see a world where those alternative approaches are the first thing that utilities do have to do or do. And then there will be a bunch more. Of course there's going to be a bunch more infrastructure that is required as well, because load flexibility and customer assets won't get us all the way there in solving the problem.
- [09:01]
C
Do you see any real movement where utilities are taking the demand stack as seriously as building infrastructure.
- [09:10]
B
Yeah, we are seeing a lot of excitement about this approach with our clients. And one of our longstanding clients actually partnered with us and with Brattle to do a study. So I think that one of the biggest problems is that everyone loves a demand stack cake. Right? Sounds nice, going to be delicious. But how do you actually go about shifting the thinking within the utility around these programs? How do you, how do you actually bring all of them together in a way that your supply side, your planners can really understand and value and also your regulators too. Right. So that is what we are embarking on with Brattle and Evergy right now.
- [09:46]
C
Yeah, let's dig into it. So let's start with where ever G was to start with what were their demand side capabilities and then how did you start to layer in this demand stack framework?
- [09:57]
B
Yeah. So today ever G in their Missouri territory has a peak reduction capability of about one and a one and a half, a little less 1.4% of their system peak. So that today is about 52 megawatts. And the study that we're doing with Brattle is focused on the potential of implementing the demand stack to unlock new capability and new capacity. The study is evaluating five key demand strategies that when used together can really improve the impact of the DSM portfolio. So first, improved forecasting. Second is increased enrollment. Third is improved event experience. The fourth is staggered dispatch. And five is new programs. The high level finding of this is that if you were to implement all of these, it will take a couple of years to actually realize the results. Right. But between now and 2030 you will see a greater than 50% increase in the capacity that would have been realized A major. It's actually a 5% peak reduction capability with the demand stack strategy that we just talked about.
- [11:06]
C
So I love a good metaphor. And if we keep rolling with this cake metaphor, you talked about some really key ingredients to put in the cake. The first is point of sale enrollment. That is like someone enrolls in a program when they buy a thermostat or an EV charger. Why is that so powerful for increasing capacity?
- [11:25]
B
It all comes down to making it easy for customers to participate. So all of us in our daily lives are pretty busy and we are not really thinking about enrolling in any of our utility programs. Top of mind. And so if you are able to at the time of installing a new device or buying a new car, enroll in a program with one click, it massively impacts the adoption rate. So we see about a 10 times greater adoption rate for customers that are buying a thermostat with pre enrollment versus buying a thermostat and installing it and then later on having to go back through to enroll. So that makes a really big difference. The other thing that I love that Evergy is doing is leveraging devices that have not gone through the formal enrollment process for kind of micro shifts and targeted shifts during grid emergencies. This is a really promising model because there's only a certain percent of customers that will ever say, yes, enroll me. But if there are imperceptible changes that are inherent to the device and the experience that customers have every single day with the device, that then can be triggered at times that it benefits the grid, then I think that that is a really, really compelling model for. I don't know if we're going to go with the cake metaphor. It's like a cake mix where you don't have to go back and add in the baking powder and the baking soda and the vanilla after the fact. Right. It comes all packaged. It makes it really easy to get the outcome that you are looking for.
- [13:07]
C
Yeah. If you want this to be a long term resources, you want customers to be satisfied, you don't want it to be a regular interruption. So are you seeing this approach really helping with customer satisfaction and ultimately the way they participate?
- [13:22]
B
Absolutely. Another thing that we are running at Uplight is something called predictable capacity dispatch, which is basically a strategy to make a demand response event look exactly the same as a power plant. So one of the if I rewind to my NAST days, one of the major critiques of thermostat demand response was that you get a very big reduction at the beginning and then over time that reduction deteriorates as people get hot and make a change to their temperature. And so we have leveraged AI and a lot of our own ML algorithms to enable a portfolio of devices to be dispatched and get a consistent flat result across a four hour window or a two hour window, whatever is the duration that the utility really needs. And as we become more sophisticated, we actually think that it's possible to stagger all the different kinds of devices. So you're getting much, much longer dispatch and you're demanding less on any single given customer so that overall the experience that they have with the program is less bothersome to whatever their experience is in their home.
- [14:33]
C
And your forecasting is getting way better. How are you utilizing AI for forecasting and how does that play into this improvement in capacity utilization?
- [14:44]
B
AI is playing a really big role here as it enable Enables us to better understand and predict what an individual customer or business is going to do in an event. So we can understand if this person with this kind of advice has the propensity to stay in an event for the entire four hour duration, or to opt out after just an hour. And then we can start in a much more customized way, design an event that will work best for them and then ultimately maximize their impact to the entire program.
- [15:14]
C
All right. To really push this metaphor to its logical conclusion, the utilities are planning a feast right now. Over a trillion dollars in capital expenditures through the end of the decade to meet load growth from AI, increasing manufacturing capacity, electric vehicles. Do you expect this demand stack, this cake that you've baked to show up meaningfully in these planning conversations enough to defer some of these supply side investments that utilities are planning on making or are already.
- [15:46]
B
I do. We are seeing a lot of different companies come at this from slightly different angles, right. So if you look at the model that is, let's bring a bunch of batteries to an overloaded node on the grid, that I think is an alternative model to the one that we're seeing business as usual. And what we are doing with the demand stack can be leveraged in much that same way you, in that it's not one big battery, it's a lot of smaller resources. But if you're able to pinpoint all of those resources at a given place on the grid where you need the extra capacity, then it will have a meaningful cost deferral impact. And so I think that we are just getting started, obviously. But I do think that the investment projections that utilities are seeing will be altered as the bring your own capacity approach comes online. The demand stack really becomes more part of the narrative as also we see the approach that is better utilizing the capacity of the grid today. Just moving from a 50% average utilization to something that is much higher. I think that all of those together will mean that the projections that utilities have made on the infrastructure, the investments that they need, will probably not shape out in exactly the way that they envision today?
- [17:11]
C
I'm interested in the technology story. So a lot has changed over the last couple of decades. There's just intelligence embedded in everything. We've seen the rise of batteries, EV chargers everywhere. Like, what is the most interesting technology change that you've seen? Is it a combination of all of these things together or is there anything that jumps out at you as particularly transformative?
- [17:37]
B
I really do think it is the combination of all of these things together. And to put a finer point on it. It is bringing together all of the different devices in people's homes and businesses to equate to a very big resource. The notion that when all of us do a little, it can add up to a lot. So I think that, like everything that's happening right now in the world, the distributed nature of the resource is very interesting because the grid has never had to operate with a bunch of mini platforms all over the place. And so I think that it is the notion that we actually need as many people as possible, kind of all of the customers that we have to participate in order to get where we need to go. In a world of rising load growth, more extreme weather events, and just, you know, generally more expensive power, it does
- [18:39]
C
feel to me like the conversation has materially shifted in the last couple of years where utilities are getting increasingly comfortable with these resources, seeing these resources hit the system and knowing that they can make good use of them, and also trying to find any solution possible to meet growing demand. How should utilities be thinking about using this demand stack in their integrating resource planning? What are the things that they need to think about?
- [19:06]
B
First of all, I would say that utilities already have a lot of these tools in their back pocket today that they just need to consider as one unifying resource. So I think that the first step is let's look in the toolkit, let's look in the, I don't know, the ingredient drawer, and see what ingredients we have lying around that we can leverage today in a way that we haven't. So we've definitely seen this with some of our clients where they, over time had a DSM group that was kind of steadily building demand response program with, you know, maybe one or two asset types. And all of a sudden the supply desk was like, wait, what? What do you have over there? Can we use that more regularly? And so I think that we will start to see, see this happening more and more. And utilities are starting to recognize, ooh, we actually know how to run these kinds of programs. And if we just juice them by removing caps, by adding new asset types, then all of a sudden this resource that we have can be a lot bigger. So that's one thing. I think the second thing is I still very much believe that rates are an underutilized resource. So to try to get your entire customer base to shift towards something that flexes the peak is, I think we will see more and more jurisdictions do that because it is a very easy tool to start to shift the peak in a larger way involving all customers. And then the Third thing is, I think that we will start to also see more both regulators, PUCs, but also the legislators themselves push forward with these alternative approaches. Because a lot of times utilities don't necessarily have the right earning mechanism even to start to approach the problem in a new and different way that leverages ders. And so I think we'll start to see more both carrots and sticks to encourage adoption of again, more distributed assets as a real resource.
- [21:19]
C
And for a decade or more, people who have been in this business have been sort of rallying and saying, like, look at these powerful resources and you know, regulators haven't necessarily kept up and utilities have been slow and suddenly there are new pressures on the system. What is driving the increased trust among utilities? Is it that they have more experience with them? Is it that they're just under such pressure that they're, you know, willing to utilize these resources? Where, where's the trust come from?
- [21:49]
B
I think it's all the above, honestly. You know, when one utility does something in a successful way, and there is a big study that gets published, many more utilities and regulators are willing to adopt that same model. And so I think that now we have, gosh, the first demand response programs with nest were, you know, 2013 or 2014. So, you know, well, more than a decade of data on these kinds of resources. And so now utilities are moving more quickly into full scale deployments and they're not stopping along the way to have to do pilots and evaluate the pilot for two or three years. So I think that that really helps the speed and the scale element of it. And then I also think that necessity, what's the saying, Necessity is the mother of invention. And I think that that is definitely true as well as utilities are really understanding that they need to be creative and cost effective in how they are ensuring that they can keep pace with rising load as well as the extreme weather events we see.
- [22:52]
C
And what about utilizing the demand stack across the grid for more than just system peaks?
- [22:58]
B
Absolutely. The reality is that an electron saved every single hour of the day is going to also impact peaks. Right. So I think that leveraging efficiency is going to be more cost effective than it has been previously, particularly as we see that capacity gets more expensive. Right. In a kind of boring but important detail, cost effectiveness tests are based on avoided cost of capacity. And as that increases, you will start to see a lot more programs be in the money. I am hopeful that we will see a resurgence in efficiency. I think that there is definitely tension in many states because it's also an adder on people's bills. So we've seen places where actually regulators are trying to pull back on those programs just to offer immediate bill relief. But I think it's the sort of pennywise pound foolish approach to take. So I am hopeful that efficiency will continue to be a major resource that we are investing in.
- [23:57]
C
You've talked to a lot of utilities, so I'm kind of curious about what you think is different about the utilities that are further ahead on leveraging demand side resources. Like what's different cultural about them or the way their teams are structured or maybe they're willing to take more. I mean these are not risky resources, but they're willing to do something new and sort of take more risks beyond what they do traditionally.
- [24:21]
B
I think that it is a combination always of the cultural attributes, the leadership at that utility and the willingness to do new things. And also then frequently regulatory carrots or sticks, usually carrots, that incentivizes utilities to try these new approaches and then compensates them appropriately for doing that. I would say that's probably my historical view. I think the go forward view is maybe a little different in that there will be utilities that are seeing very intense load growth in their area and or more extreme climate events that mean they have to do things differently. And so it's just, it's kind of a fire under them. That means they have to explore new possibilities because they're looking at all the spaghetti they can throw at the wall.
- [25:14]
C
If utilities don't embrace the demand stack and we're looking at this extraordinarily load growth and set of infrastructure development through 2030, what are the consequences?
- [25:26]
B
I think that part of it is real cost and part of it is probably opportunity cost. So in the Evergy example, today their DSM portfolio is able to impact about six hours of performance. And with the demand stack strategies we increased that to about 27 hours. And so there's both the capacity and temporal aspects that can make meaningful contribution to system outcomes. So if you're not taking advantage of the demand stack, things are just going to be more expensive. You know, from a procurement perspective, from potentially an actual investment in the infrastructure side of things. But then I think that the opportunity costs also or the, you know, utilities that do this well will also see the benefit of actual relationships with their customers that they perhaps haven't had in the past. And there should be this virtuous cycle where by empowering customers to participate in demand stack programs, you give them more agency and control over their bill and you're, you're lowering their bills overall. And then because the system costs are less, you also see, you know, just downward pressure or at least less upward pressure on rates. So I think that it is both of those things.
- [26:41]
C
This is certainly like the most interesting period for the power sector that I've ever seen in my career. It's, you know, a little nerve wracking in thinking about the demand that is coming to utilities and the strain on the grid, but there's just so many new technologies and business models that are being unlocked at the moment. What is exciting you right now about this moment?
- [27:06]
B
I am excited to be in a world that is no longer about compliance. Compliance probably inherently is just not that exciting. It's slow moving. It's kind of a box checking exercise. And now it is truly driven by market demand and also by necessity as customers, as consumers are adopting various ders that can either be a problem or a benefit for the grid. So I think it's that confluence of those things coming together.
- [27:31]
C
Hannah Bascom, thank you so much. This was a lot of fun.
- [27:34]
B
It was my pleasure. Thanks so much for having me.
- [27:40]
A
Hannah Bascom is a Chief Growth Officer of Uplight. Uplight is a clean energy technology company that unlocks grid capacity by activating customers and their connected devices to generate, shift and save energy. To learn more about the demand stack and how distributed resources can unlock new flexibility on the grid, visit uplight.com and you can find a link to the report we discussed in the show Notes. Thanks for listening.