Latest / Clean Power Hour / When 1,500 MW Vanished: Peter Kelly-Detwiler on the Hidden Crisis Breaking Our Grid

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When 1,500 MW Vanished: Peter Kelly-Detwiler on the Hidden Crisis Breaking Our Grid · Clean Power Hour

• 0:50
  Peter Kelly-Detwiler: I think as more and more people become aware of power, they become more and more aware of some of the nuances and how it works that plays right into the hands of microgrid developers. Because let's face it, at one level, we're offering a really simple solution, which is, we'll take away your power, your concerns about losing power, et cetera, et cetera, you know, for a price. But if someone wants to know more, well, how do you do that? What's the cost going to be? What are the benefits? And so on? The conversation is now more prime for that than it has been in the past, because people are more aware. It's kind of like back in the day before, er and all the medical shows, nobody knew what an ACL was, or this or that or the other. Now half the people in the world can tell you how to take your gallbladder out, what to watch out for, because they watch surgery on TV shows all the time. Same sort of thing, to a lesser extent, with electricity awareness, and I think that's only going to grow.
• 1:44
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• 1:55
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• 2:12
  Tim Montague: today on the Clean Power Hour micro grids. My guest today is Peter Kelly Detweiler.
• 2:15
  Tim Montague: He's a returning guest. Check out episode 207 where we geeked out on the hydrogen economy, and then before that, we geeked out on his book, The Energy Switch.
• 2:26
  Tim Montague: But Peter is a well known grid expert and the principal at northbridge Energy Partners.
• 2:31
  Tim Montague: He's best known as PKD, and he does a Weekly News RoundUp on YouTube and audio platforms.
• 2:38
  Tim Montague: Check it out. Welcome to the show. Peter, thank you. It's a pleasure to be here. Tim, I love this topic. It's very important, both macro and micro grids. And I want to really set the table a little bit, though, right at the beginning, like, where do you decide? Or how do you decide, what is a micro grid and what is a macro grid?
• 2:58
  Peter Kelly-Detwiler: That's a really good question. But I think, you know, most people just talk about the grid in general. And then, of course, micro grids are considered maybe could be, like, 20 megawatts or less. I mean, some military bases could be 15 or 20 megawatt microgrids, for sure, yeah, from the grid, but I guess you know, your typical microgrid has multiple different types of end uses and then possibly multiple different supply components to it all united by that controller, right? So the supply could be diesel and batteries and solar, et cetera. Some of these so called macro grids are like, for example, could be for a 200 or 500 megawatt data center, where they have a connection to the grid, but then they have a backup generation resource that enables them to island off from the grid and continue functioning for some specific period of time. Now, with one of those macro grids which are emerging in the data center space, they are in some ways less sophisticated, because you're just dealing with your servers and the associated equipment, and you're just dealing with generally one resource batteries switching over a generation, like diesel Often, but now often gas too. So I guess the distinction is size to some degree, but let's not artificially try and constrain that too much. And then what's, what's the general nature of the beast that we're talking about?
• 4:24
  Tim Montague: Yeah, and you know, with the advent of community scale micro grids that I learned about from Craig Lewis, check out episode 160 with Craig Lewis from a couple of years ago. Now, he is the CEO of clean coalition in California, and they're developing literally micro grids for 10s of 1000s of people. And this could be an entire small city or a neighborhood. And, you know, I think of micro grids traditionally as powering a facility, like a factory or a neighborhood or a home, yeah, yeah, but yeah. But in any case, I think the lines do blur once you get into the hundreds of megawatts or 1000s of megawatts.
• 5:08
  Tim Montague: I mean, some of these data centers that we're developing are five plus gigawatts. They're ginormous. And data center load, we're going to talk talk a lot about data centers today, because data center load is one of the major growth areas. And data centers, I saw a story today that they're going to triple the amount of electricity that they consume in the next five years. Today, it's like 4% of the grid. Tomorrow, it's 12% of the grid, you know, and that's that's a lot of growth.
• 5:43
  Peter Kelly-Detwiler: Yeah, there's a really great report that came out last week from Epic AI, and every looking at what that future consumption could. Be by 2030 and the drive, the underlying drivers, the graphics processing units that are the chips, and then what's happening with the large language models, and what happens when we move over to inference and all that? I spend a stupid amount of time now trying to figure out the data center space and the emerging technologies and where it's migrating to, because it has such a critically important impact on the future grid
• 6:14
  Tim Montague: for sure, and you know, fundamentally, micro grids are potentially very good for the grid and good for consumers and good for business owners, because everybody wants electricity when they need it.
• 6:30
  Tim Montague: Nobody likes power outages. And so whether you're at the facility level or the community level, being able to micro grid from the greater grid, if the greater grid goes down, is a huge asset. And as we were discussing in the pre show, the NERC, the National Electric Reliability Council, North American Electric Reliability Corporation, North North American Electric Reliability Corporation is the the entity that is responsible for reliability of the grid. Why don't you tell us a little bit about what's going on there and what's on their radar?
• 7:10
  Peter Kelly-Detwiler: Yeah, so they're always looking at the supply demand balance among other things, and and they have standards, these critical infrastructure protection protection standards, and they're everything from, how do we keep terrorists from attacking Transformers or large power stations, to how do we make it all cyber secure to do we have the adequate reserve margins, you know, the surplus of supply over demand, so that if you lose a large generator or power line, you still keep the grid up and running. Well, they look at all those issues, and one of the things they're now starting to look at are these large data centers. Because what's happening in that large data center space, and you correctly articulated, some of these are going to be like the Stargate. One that complex is 5000 megawatts, plus there's another one. Meta is building in Entergy in northeast Louisiana.
• 7:55
  Peter Kelly-Detwiler: That's a 2000 megawatt system and so on. Well, what happens if these things that, I mean, they're the they're the opposite. They're like the inverse of a large Generation Station, right? It's a single asset connected to the grid, just like a nuclear plant is, except on the demand side. So if they go on or off, they impact power quality and reliability just the same way that a large nuke or coal plant or gas plant does. So they're looking at these issues, and how are they connecting to the grid, and how, how do they interact with the grid? If you think about it, a large data center, any data center, is essentially a micro grid or a macro grid, in the sense that it has, by design, an uninterrupted power supply and backup generation. In fact, I was writing a blog for one of my clients, and I was talking to the chief technology officer, and he said, the way we think about it, our backup generation is our primary source of power.
• 8:50
  Peter Kelly-Detwiler: I said, What? What do you mean?
• 8:53
  Peter Kelly-Detwiler: You take all your power from the utility. Goes, Yeah, but our backup generation is the primary source of power. The utility powers happens to be cheaper, but when we design it, our first line of defense is backup Gen.
• 9:03
  Peter Kelly-Detwiler: We just don't happen to use it that often, but it always has to be in working condition. So by so they're already macro grids right now, what's interesting about them is they because their chips are so valuable. Now, an NVIDIA chip, a GPU Graphics Processing Unit, could cost up to $30,000 so each one of these is a car in terms of its cost, and some of these data centers have 10s of 1000s or more of these chips in them, so they're super valuable, super expensive.
• 9:37
  Peter Kelly-Detwiler: Those data centers are designed that if there's a disturbance in the force, to use Star Wars term, if there's some frequency or voltage issue that could cause damage to the chips, they're designed to trip offline and immediately go over to UPS, to the uninterrupted power system, and then to backup generation. That wouldn't be a problem if these were small, if they were micro grids, but once they're macro grids, this becomes an issue. Let me give you an example last year in Dominion, service territory in Virginia. Dominion, by the way, has it hosts enough data centers that 70% of the world's email traffic moves through Virginia, through a couple counties. They have, they have 40,000 megawatts of potential data center demand, and about 5000 energy service agreements signed, like another 8000 where data centers are committed to building infrastructure well last year and they served last year, only 17,300 megawatts of peak demand, so data center load dwarfs all of the load in the system, and they already had some data centers in their system last year. So what happens in August?
• 10:42
  Peter Kelly-Detwiler: Lightning strikes, a lightning fault arrest, are meant to protect the grid fails and there's a voltage and frequency disturbance. Data centers in the grid. Sense this problem with voltage and frequency, and what do they want to do? They want to protect their equipment, so they immediately island off from the grid. So now the rest of the grid still generating.
• 11:02
  Peter Kelly-Detwiler: Everything's still running. Now they run into an over, over frequency situation and a voltage disturbance issue, because they have 1500 megawatts less load than they had seconds ago. And so it's like the inverse of ripping a power plant out of the grid. They almost had a grid failure. So the North American Electric Reliability Corporation NERC says we're going to solve this ride through issue and make sure that as the population of data centers grows, we don't have these situations where something fails and all of a sudden these huge macro grids pull away from the centralized power grid, so places like ERCOT, Texas, they're now saying in ERCOT to the utilities there, you guys have to solve this issue with your data centers that sign up so that they create buffers that don't cause this potential problem for the grid. So it's a fascinating issue, and one that actually has really significant implications for the future power system that we're all building, and indeed, our ability to keep the lights on.
• 12:56
  Tim Montague: Yeah, I feel for these grid operators who have an onerous task of keeping the grid running, 99.999% of the time, and it is truly a very dynamic time for the grid. Now there's so many different things going on. We've talked about the increased load of data centers.
• 13:21
  Tim Montague: We also have electrification of transportation and the electrification of HVAC and industrial processes simultaneously. So there is growing load. We had a plethora of solar, wind and batteries coming onto the grid. We still are in that boom, right? We're about to see that flat, you know, go flat for a little while because of the BBB, right? I think the latest stat from Enver us I saw, is that only 30% of solar wind projects are going to survive the BBB in the next five years, something like that. But the grid operators are going okay, well, guys, what are we going to do? And because you can't just snap your fingers and build coal and natural gas plants or turn them back on, what do you think about that?
• 14:14
  Tim Montague: Like, how does that play out with all of this big extra load on the grid? How do the grid operators respond to that?
• 14:23
  Peter Kelly-Detwiler: Yeah, so you're right about that. You can extend some coal plants. You can revitalize a few nuclear plants, like, you know, constellations, doing with Three Mile Island for$1.6 billion NextEra is bringing Dwayne Arnold back in Iowa.
• 14:37
  Peter Kelly-Detwiler: That's 600 megs there. And then there's Palisades in Michigan.
• 14:41
  Peter Kelly-Detwiler: But after that, you kind of run out of retired nukes to resuscitate, and there's only so much coal you keep around, and gas the real issue there. Scott strazik, the other day, CEO of GE vernova, says, you know, we're sold out now. We're back order through 2028, 2029, so not a lot of supply relief coming from your traditional hydrocarbon based, dispatchable resources, and the nukes, they won't come on till 2030 and later, the modular nuclear and advanced geothermal, yeah, it'll grow, but nothing reasonable. So what you're up against is a capacity constraint, because you have all this demand on the supply side coming in, and most of it is data central load.
• 15:20
  Peter Kelly-Detwiler: Yeah, there's going to be some EV load and some other but most of it's going to be data load, and you got so lots of more demand, very little supply. And the real critical issue isn't really the terawatt hours as much as it is the terawatts.
• 15:31
  Peter Kelly-Detwiler: It's a capacity based issue.
• 15:31
  Peter Kelly-Detwiler: It's serving. It's solving for those 20 or 30 or 40 critical hours in the year. So that's where storage can really help, and microgrids can really help, because if you can essentially take pressure off of those limited numbers of hours in the year, you could continue to add more demand. So you're starting to see in places like Southwest Power Pool recently, SPP approved. It needs still to go to the Board of Governors there, but they basically said, if you bring your own capacity as large loads. That is, bring your own backup generation and commit to turning that Gen on when we call you, so that we essentially don't see any load on our grid because you've displaced it with generation. We'll let you connect within three months, instead of a typical longer term situation. So I think we're going to see, well, I'm pretty confident we're going to see more and more grid operators saying, okay, look, if you want to come onto our grid, you got to bring capacity with it as well. In places like Ireland, they're now approving data centers with self gem like not just bring your own capacity, but bring your own energy. Build your own macro grid. They. That may or may not be connected to the centralized power grid. So you know, this whole new dynamic evolving
• 16:50
  Tim Montague: Yes, and I've noticed that even these data centers, some of them are taking an off grid approach, or a hybrid approach, where they might initially develop the facility as an off grid operation, so they don't deal so much with the long interconnection queue. They build a solar farm, a battery farm, and prop up their data center. It includes some natural gas generation and then eventually a grid connection.
• 17:19
  Tim Montague: And it's the best of both worlds. So a micro grid can be wind, solar, batteries, natural gas, any you know, any other sources where, you know, I'm primarily interested in battery and renewables micro grids, but they're going to be all kinds of hybrid micro grids. And so truly, we're kind of entering the age of micro grids for the grid, and they're and they're going to vary in size from very, very big to reasonably small.
• 17:50
  Tim Montague: And you know, it's like, yeah, why not? It's the best of both worlds if you truly want resilience and and up time. I guess it's, it's like a both and and then there are companies we discussed a project with, with Chick fil A. There are companies that are that are doing this energy as a service right where they're providing micro grid services to larger entities or fleets of entities, like Chick fil A. And maybe you can tell us a little bit about the Chick fil A story. And I can't remember the name of that developer, but that's a new phenomenon.
• 18:39
  Peter Kelly-Detwiler: Yeah, that's in stone California. That first one, they cut the ribbon a couple of years ago. And the idea was, they wanted to provide a refuge, if you will, to their customers when there were power outages. And as you as we all know, California has a lot of those public safety power shut off outages, and sometimes they have unplanned outages because of transformers are overheating.
• 18:56
  Peter Kelly-Detwiler: They weren't designed for hotter weather, and now we're getting that hotter weather. So there was an outage like that around Stockton a couple years ago too.
• 19:04
  Peter Kelly-Detwiler: So what they did in that particular instance is they put a solar carport, and, you know, you drive underneath and do your order for your food or pick up your food, and then they added storage to the solar and then they have gas fire generation as well. So they bring in a bunch of resources, and then they have that point of common coupling with the grid so that they can island off and so, you know, to your point, I think we're going to see a future grid architecture where used to be five years ago. You'd say, Oh, if you've seen one micro grid, you've seen one micro grid. They used to be to Peter as missus, you know, famous joke when he was a kite guy, pointing that every single one of them was different. But now, now that we've been at this long enough, yes, there's going to be a lot of different types, but there's also a lot more expertise in that space. They're able to be developed more quickly. There's still art involved, but there's a lot more repetitive practice involved. It's more more Lego piece than it used to be. And so I think, on a go forward basis, we may well see the emergence of a somewhat fractal grid where there are a lot of different pieces of that, you know, fern leaf, if you will, that are able to isolate off at any time, and they're part of that larger corpus, that larger body, and provide that resilience. So that if you did have a situation like, say, winter storm Yuri, where you had to have these rotating outages that ended up not rotating because they didn't have enough capacity. You can actually activate a whole bunch of different microgrids, Section those off and keep the remaining part of the grid whole or certainly under a lot less stress, but other than would otherwise be the case. And the cool thing about artificial intelligence, Tim is that this is a big data play. It's really about the what, the where, the when, the how much, for how long, and also at what price.
• 20:48
  Peter Kelly-Detwiler: And this is something that, up until now, you mentioned the grid operator. Up until now, we haven't had the grid architecture and data manipulation and management capabilities to do that sort of fractal grid approach, where you have all these interactive devices and little pieces happening and being interactive all over the place. When you bring AI into the game, and the grid could be one of the largest data plays in the history of humanity. You actually would have the capability to figure out how to do this. And what you got to do, among other things, is aggregate the information at the right places, so that the grid operator doesn't get overloaded with data. But if something goes wrong, we forensically have the capability to go back and interrogate and find out, well, what broke where, so we can fix it for the next go round. So it's not going to be easy grid operators and.
• 21:40
  Peter Kelly-Detwiler: Tilde is going to have to invest billions of dollars in this. If you look at something like, you know, someone like SoCal ed in Southern California, they have a 20 year roadmap for IT investments. I I warned it's going to have to be accelerated well, well beyond 20 years, because the future is coming at us faster than we imagined a few years ago. But the pieces are there. You can see them on the board. Now the question is, how do we assemble them and at what cost relative to the benefits?
• 22:07
  Tim Montague: So you're referring to AI driven controls, right of grid services,
• 22:13
  Peter Kelly-Detwiler: not the load side. But now, what can we do with AI? Yeah, we're building out the grid is in a way. We're building out a second central nervous system for the planet.
• 22:22
  Peter Kelly-Detwiler: Right? Each one of us is a micro grid. As a human being, we have an electrical system that runs through our whole body, and our hands and feet and skin are the sensors. Our tongues are sensors, etc. We pull all this information, and then our central controller makes the decisions. Our brain Well, we're kind of building a decentralized central nervous system for the planet right now, and a piece of that is the power system, because just like our central nervous system, we're building out the electrical system. It has to support it all. But the cool thing about that is, with AI, we can create a better nervous system that pulls information more quickly into that central computer, if you will, to make the right decisions.
• 23:03
  Tim Montague: The Clean Power Hour is brought to you by CPS America, maker of North America's number one three phase string inverter with over 10 gigawatts shipped in the US. The CPS product lineup includes string inverters ranging from 25 kW to 350 kW. Their flagship inverter, the CPS 350 KW is designed to work with solar plants ranging from two megawatts to two gigawatts. CPS is the world's most bankable inverter brand and is America's number one choice for solar plants, now offering solutions for commercial utility. ESS and balance of system requirements go to chintpowersystems.com or call 855-584-7168, to find out more. Yeah, I love this, and I am a big believer that AI can benefit grid operators and the grid, and ultimately, consumers.
• 24:02
  Tim Montague: It also, you know, I think raises the bar for the importance of things like virtual power plants. You can imagine at the at the neighborhood level, right? You have a bunch of homes and businesses with batteries. They range from 10k w, H to hundreds or 1000s of kWh, right? For a commercial. And if you're an operator, you can then, on demand, leverage those resources. And that is the essence of a VPP, yeah.
• 24:38
  Peter Kelly-Detwiler: In fact, California just did it on the 29th of July, the three IOU investor owned utilities, working with sun run and Tesla dispatched 535 megawatts of batteries from over 100,000 customers, homes, wow, for two hours, you know, from seven to nine in the evening. So that's still only part way there, because it's still not a fully elastic response where the devices are interacting with the grid on their own, but we're getting there, and you can see a future state where you could have a transactive environment where, let's say your micro grid. Tim says, okay, every time the price of electricity is under 10 cents, I'm going to pull it from the grid. And every time it's more than that, I know what my cost of generation is. I know my storage, my solar, and whatever my other fuels might be, I'll generate on site if it's more expensive than that.
• 25:27
  Peter Kelly-Detwiler: And so you could have a highly elastic, price responsive and diverse ecosystem of multiple micro grids all interacting with the central price formation function and thereby create grid efficiencies as well.
• 25:44
  Tim Montague: And this can benefit the hosts of these facilities, right? They can be paid for grid services. Is the technology that good now that we can reliably know that our battery is properly being monetized.
• 26:03
  Peter Kelly-Detwiler: He we see signs of it. So for example, companies like stem, right? They have, stem has an Athena platform that they call an AI platform, who's machine learning. It's not full generative AI like the ability to think sort of thing and come up with new ideas, but it had if then statements all over the place, so it could look at across its 1000s of batteries, what's the state of charge, what's the heat, you know, what's the what's the local grid condition, etc, and then decide across that whole fleet which ones to dispatch and or charge, and how fast, because it's a big numbers game. Now, the other thing about. The way, once you're starting to deal with bi directional flows, a grid was designed to be a one way, you know, bulk power system, one direction down to your distribution utilities. One way becomes sort of a one way cart path. Now you're going to be pulling energy from the grid and delivering energy back to the grid. So now with not just hundreds of devices, but potentially 1000s and 10s of 1000s, your water heaters, your batteries, your electric vehicles, your air conditioning switches, some are just shutting off, but some are bidirectionally flowing power.
• 27:11
  Peter Kelly-Detwiler: Now you need to know things like, well, what's the voltage and the frequency down at the distribution level in ways you didn't have to before. So again, it becomes a very big data play, requiring the application of artificial intelligence to make sure that the grid is healthy and all the conditions are met before you can exercise these potential options.
• 27:33
  Tim Montague: So what else should our listeners know in terms of where do you see the real opportunities for developers, EPCs, asset owners, companies like Seoul micro grid that are asset owners and developers. But where do you think the real opportunity lies?
• 27:50
  Tim Montague: And I'm sure it's regional, like everything in energy kind of got the California world, you've got Texas, you've got PJM, but paint a picture for us. Where do you think energy professionals need to shine a light?
• 28:09
  Peter Kelly-Detwiler: Sure. So what I typically do when I think about this for clients is I say, well, let's put together a matrix. In fact, I did something like this for a client about five years ago and said, All right, let's look at two things.
• 28:21
  Peter Kelly-Detwiler: Let's look, look at physical risk. Where have we seen the most expensive weather related or other related issues that compromise the grid and cause loss of power? These are areas you might want to think about micro grids. And then where do we see the highest energy prices or capacity prices? These are areas you might want to think about micro grids, where you can either avoid costs from the grid at certain times, or export value back to the grid. And so, you know, places like cat like Florida, for any place with a high Waffle House index, you know where they shut down the Waffle House during storms, right the there was a famous FEMA Director that put that a Cray. I can't remember his last name, but you look for places where high avoided costs. So one area that unfortunately, costs have gone up a lot, but I'm pretty excited, from a micro grid perspective, is PJM, the Mid Atlantic Power Pool. 21% of us, GDP, 13 states, they just saw their capacity prices go from the high $20 range. This is capacity dollars per megawatt day. It's essentially, what do you pay for the ability to consume power? And it's, it's your contribution to the five system peak hours in that grid.
• 29:31
  Peter Kelly-Detwiler: So they have this auction, and for all the steel on the ground, the generators or demand response providers, they say, okay, who's bidding in at what price for us to get the ability to instantaneously supply power.
• 29:46
  Peter Kelly-Detwiler: And so for years, these prices cleared at $30 per megawatt day,$28 then last year, the auction for 2025, 2026, delivery year cleared at 260 $9 and change almost 270 and everybody freaked out. So Pennsylvania, Pennsylvania Governor Josh Shapiro went to PGM and said, Okay, we don't want that to happen again. Let's set a floor and a ceiling. Floor, 175 ceiling, 325, okay, and 175 the floor was higher than any year that had previously occurred, except the one just happened. So it was a high floor. So then they just have the next auction prices, this time cleared at 320, 9.173 2917 now that's more than two hours. Actually 325 is above the cap because they adjusted the cap a little. Okay, so then they simulated and said, what if the cap weren't there, the price would have been at 388 Okay, so now that's more than 25% of somebody's power bill on the wholesale you know when you're buying from retail. Okay, so now they have the cap one more year for next year. The auction is going to happen in December for the 2027 2028 year.
• 30:55
  Peter Kelly-Detwiler: And then they have, like, a couple more options every six months apart with no cap on them right now. And meanwhile, nothing's being built in PGM, and PGM is one of the epicenters in the country for data center load. So we're looking at an inflationary price environment for capacity and probably energy as well, because there's no supply relief coming into the picture, and there's going to be more demand. So if I'm looking all across the US and trying to figure out, well, where do I have the highest avoided cost, where I can provide the most relief to customers and avoided cost value. I'm going right at PJM, because that's a really big Epicenter right now.
• 31:33
  Tim Montague: Yeah, when you look at the PJM map, it covers Virginia, West Virginia, Ohio, Pennsylvania, New Jersey, Maryland, Delaware. Area, yeah, the Washington, DC metro area.
• 31:46
  Tim Montague: It's big, and Virginia is the epicenter, as you pointed out of data center, traffic and well, infrastructure.
• 31:55
  Peter Kelly-Detwiler: So then you look, you know, it's not, it's no surprise that, for example, Hawaii was the first place we had lots of solar and batteries because their electricity avoided. Costs were high because they imported oil and coal to generate their electricity. Now you have places like California where people are paying 40 cents a kilowatt hour more. Also a good place to put microgrids, because your avoided cost environment is really, really high. So if solar and batteries can get you cheaper power, then go places like that.
• 32:23
  Peter Kelly-Detwiler: So look for physical disturbances and look for high avoided cost environments. Those are the two major overlays, yeah.
• 32:30
  Tim Montague: Now the other thing I think that's going on is states are leaning in with their state leavers and programs, right? These are programs that incentivize the installation of batteries. This is happening in California, in Massachusetts, in New York, in Illinois, and I think the state programs are becoming more important because of what's going on with the federal landscape. Any thoughts about that? Do you see when you see the when you read the tea leaves are, is there going to be a cascade of more states getting in that game? Yeah?
• 33:09
  Peter Kelly-Detwiler: You know that probably ends up being a red state, blue state thing, because mostly it comes down to what are the articulated climate goals that come from the legislature and then flow into the public utilities commission then get turned into policy?
• 33:20
  Peter Kelly-Detwiler: Yeah? So like New York, a classic case where they have 6000 megawatt target for storage, right? California, obviously, Massachusetts, places like that. They tend to be those, if you want to call them that, progressive states that are pushing those kind of agendas. But yes, I should have mentioned the incentives for storage because, and yes, the ITC still stays in place for storage as well, so that certainly is another thing that I would look for as a developer say, Okay, where are the dots on the map? Which states have those beneficial subsidy environments as well? Yeah.
• 33:56
  Tim Montague: And then from the utility perspective, I'm curious if you were advising both investor owned utilities, so called private power and public utilities. These are rural co ops and Munis. What is your advice to utilities about this modernization? How can they lean in and benefit themselves and their constituents?
• 34:22
  Peter Kelly-Detwiler: You know, it's interesting. So Xcel Energy, northern states power right in Michigan, they have a program there. They've proposed a tariff that's been approved where they're going to put batteries and solar in people's homes, but they're not owned by the residences there. It's a distributed capacity program where they're basically locating many power plants all over the place. They're not even macro grids, because it's not like rooftop solar right now, where it's meant to sort of feed the home. And you know, you're building these little nano grids. This is more about a distributed power plant that they're putting in. And there's some people saying, well, why should the utility be able to do that and rate base? And the answer is because maybe they can do it faster with the lower cost of capital. And ultimately, if one is concerned about climate, I tend to be saying, well, whatever's the fastest way you can get it done, who cares? Who owns it? Right? That's a little bit of a broad brush, but yeah.
• 35:15
  Peter Kelly-Detwiler: So certainly that for that it matters. But also, Tim, if you look at avoided costs. So Kavala did a study for the California Public Utilities Commission about four years ago where they said, What if we fully electrified all transportation in the state of California? What would that cost in terms of the upgrades for substations and feeder lines and transformers down to the little trash can transformers outside of people's homes? And they said, if we didn't do anything, if we didn't manage charging or do anything, the cost could be up to $50 billion and what you're really talking about are thermal violations when equipment overheats a certain number of times of the year, when it's hot outside and you're pushing a lot of electrons through that equipment. And so if you can change when you're moving the electricity through the equipment, you don't have to replace the equipment as quickly could push it out for a number of years. And the best poster child for that is Brooklyn Queens demand management project, which started in 2016 I want to say, in New York, Consolidated Edison. So Brooklyn Queens, they had an influx of young people, drove up demand in that area, and they were going to have to replace a substation and feeder lines costing about$1.2 billion and instead, I just looked at the report the other day for a client, they ended up spending about $150 million and they put in some voltage management equipment, but most of what they put in was fuel cells, batteries, solar and a lot of energy efficiency and demand response. Process right that whole grid edge side, and so for about an eighth the cost of building central infrastructure, they were able to do something a lot more cost effective, to lower rates for everybody. So in a future, state utilities are going to have to look at stress systems with additional load growth and water hotter climate, more equipment reaches thermal violations faster. So now you say, okay, all things being equal, if I'm going to put a micro grid in here here, where would I put it?
• 37:12
  Peter Kelly-Detwiler: Oh, if I'm new to it, I'm going to put it over here. Why?
• 37:15
  Peter Kelly-Detwiler: Because this piece of equipment I won't have to replace. If I can activate that micro grid 10 times a year, right? And have them island off from the grid and pay them for that. It's better to lower voided cost than me upgrading this equipment. So in a really smart future state system, you could, in theory, have every single piece of equipment know when it's going to be in thermal violation and know what the avoided cost is of that. What's it going to cost me? How might, how long might I be able to forestall replacing that? And what's it worth to me to do that? So now again, with AI, you could create a system with hourly or 15 minute avoided cost for every single piece of equipment on your entire power grid. Not happening today, but it's conceptually feasible, and with AI in the future, it's entirely possible to at least map that and model it. And you'd start, obviously, with the higher, most expensive equipment, further along on the margin, needing to replace, and then you'd ripple down to less.
• 38:12
  Peter Kelly-Detwiler: But it's doable.
• 38:16
  Tim Montague: So back to that study that you referenced, where they concluded that electrifying transportation in California was going to cost $50 billion is that right? And a an ideal scenario where they're also installing more storage, for example? Right? That infrastructure upgrade is lesser. But what does the dollar figure turn translate
• 38:40
  Peter Kelly-Detwiler: into? No, it depends a lot on the assumptions. I think they ran some numbers on that, the cost thing that stuck in my head. You can find the study if you just Google California Public Utilities Commission, Kavala, you'll find
• 38:52
  Tim Montague: it's K V A L A, E v a l a, yep. K e V, E, A L A, yeah. Kevala sounds like, Yeah, okay. Kavala, got it cool? Yeah.
• 39:03
  Tim Montague: I want to geek out on that report for sure in our last couple minutes together. Peter, what else should our listeners know about micro grids? I love it that you have coined this phrase, yeah, the fractal the fractal grid. I love that the fractal grid. That really resonates. But what else is on your mind about the future of micro grids and the future of the grid?
• 39:29
  Peter Kelly-Detwiler: You know, I think because we are now further along in the digital age, and the digital age needs electricity. And, you know, because now every time I jump in my car, I'm aware that it's driven by electrons. In fact, my wife the other day said, Isn't it cool? We're driving around on batteries. And I said, and I've got a Hyundai IONIQ five, which is a really great upgrade from the last Hyundai i had. But people are becoming way more aware of the fact that electricity makes our society run, whether it's because they're complaining about the power bill, or they've got an EV, you go to a cocktail party.
• 40:04
  Peter Kelly-Detwiler: Now, I'm sure this happens to you. Tim, and someone asks you, what you do before, you know, the eyes glaze over and they wouldn't have the intelligent question. Now, half the time, they'll ask you a pertinent question about the power grid, which is when my wife says, Are you sure you want him to answer and because she wants to pull me away, because they're going to get the sermon on the mount for the next half hour for me. But my point being, I think as more and more people become aware of power, they become more and more aware of some of the nuances and how it works that plays right into the hands of micro grid developers. Because let's face it, at one level, we're offering a really simple solution, which is, we'll take away your power, your concerns about losing power, etc, etc, you know, for a price. But if someone wants to know more, well, how do you do that? What's the cost going to be? What are the benefits and so on? The conversation is now more prime for that than it has been in the past, because people are more aware. It's kind of like back in the day before, er and all the medical shows, nobody knew what an ACL was, or this or that or the other. Now, half the people in the world can tell you how to take your gallbladder out, what to watch out for, because they watch surgery on TV shows all the time. Same sort of thing, to a lesser extent, with electricity awareness. And I think that's only going to grow?
• 41:24
  Tim Montague: I mean, it is kind of amazing how little most people know about where their power comes from. Like, when I tell people that 40% of their electrons come from nuclear in Illinois, they're like, what really, I had no idea. And it's so important, right? Because of.
• 41:39
  Tim Montague: Uh, computers, the internet. I mean, we freak out when we don't have the internet. If you're a knowledge worker, like, forget about it, right? You got to have internet access. And luckily, in most places, the grid is very reliable. But the challenges are mounting, right? The climate challenges and now the load challenges with the explosion of AI, and we're just seeing that it's going to, it's going to get even more intense, even though this tripling sounds like a lot, the tripling of the AI demand sounds like a lot. I could see it going tenfold. You know, in the following five years.
• 42:21
  Peter Kelly-Detwiler: It's moving so fast. But, you know, I think in some ways, the industry is a victim of its own success.
• 42:25
  Peter Kelly-Detwiler: The same way, you know, water utilities like, we turn on our water, or we flip a switch and the stuff comes out of the faucet, or the lights go on, and then the bill comes at the end of the month, and we treat it like it's a tax, like, god damn it. Why do I have to pay this thing? Right? That's what we do.
• 42:42
  Peter Kelly-Detwiler: I mean, we take it as a given, almost like it's a natural right, like the sun should rise in the morning without any awareness of the sophistication, from the linemen climbing the poles in a storm to inertia to, you know, all the physics that govern what that thing is. And my my career is basically predicated on educating people around how this super complex machine works. Because I find it to be, yeah, it's a fragile Marvel, but it is an incredibly marvelous thing, and I'm hopeful that as we move forward in your world, educating people about micro grids and more and more data centers come in, that we will create more of an energy literacy within our society, so that we actually do come to appreciate the value that we're getting for the Electron. If we didn't have it, we'd all flop over dead within a short period of time, right? So for me, it's like All hail the electron. It keeps us alive.
• 43:41
  Tim Montague: Hey guys, are you a residential solar installer doing light commercial but wanting to scale into large C&I solar. I'm Tim Montague. I've developed over 150 megawatts of commercial solar, and I've solved the problem that you're having you don't know what tools and technologies you need in order to successfully close 100 KW to megawatt scale projects, I've developed a commercial solar accelerator to help installers exactly like you.
• 44:09
  Tim Montague: Just go to cleanpowerhour.com click on strategy and book a call today. It's totally free with no obligation. Thanks for being a listener. I really appreciate you listening to the pod, and I'm Tim Montague, let's grow solar and storage. Go to clean power hour and click strategy today. Thanks so much.
• 44:29
  Tim Montague: Well, if you're listening to this, the takeaway is that batteries and micro grids are a huge opportunity, whether you're a energy professional or aspiring energy professional or a prosumer. Batteries and micro grids are the future. Check out all of our content at cleanpowerhour.com. Please give us a rating and a review on Apple or Spotify. Follow us on YouTube, reach out to me on LinkedIn. Tell a friend about the show and Peter Kelly Detweiler, where can our listeners find you?
• 45:02
  Peter Kelly-Detwiler: Best way to find me is peterkellydetweiler.com. Our website.
• 45:06
  Tim Montague: Very good. Well.
• 45:06
  Tim Montague: Thank you so much. Peter Kelly Detweiler, author of Energy Switch and regular news updates coming out of his mouth every week on YouTube. Find him on LinkedIn. You can't miss Peter Kelly Detweiler. He is a tremendous voice for the industry. So with that, I'll say, let's grow solar and storage. I'm Tim Montague, thank you so much. Thank you, Tim.