The need for energy innovation has never been more urgent. To effectively reduce climate change, we need to implement new technologies at scale quickly. Yet, the politics and regulations that dictate the energy industry make it incredibly difficult to put new ideas into practice. Despite the challenges around change, the use of solar energy continues to grow as production becomes more and more affordable. So, how do we navigate public policy while brilliant ideas can take a decade to adopt on a large scale?
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by Nori, the world’s first carbon removal marketplace. Here are your hosts, Ross Kenyon and Christophe Jospe.
Ross Kenyon: Hello and welcome to the Reversing Climate Change Podcast with Nori. I’m Ross Kenyon here with Christophe Jospe and Paul Gamble. We are in the Nori HQ in Seattle. We have a guest today that we met at, we have a Cleantech Brain Trust that Christophe, you’ve been quite involved with in getting going here. And we met our guests and thought this guy would be great for the podcast.
Christophe Jospe: I helped start the Clean Tech Brain Trust with a friend of mine, Aoi Senju, who inconveniently left Seattle, even though we’d come around the same time. And it was kind of like, hey, we’re clean tech entrepreneurs, and we don’t like going to... Yeah. Through that, I was really fortunate to meet Connor, who I guess Aoi knew through Element 8, which is a group of people with money who like to put it into clean technology programs. Connor is a research fellow and he is also working at Seattle City Light. I’ll say the disclaimer for him.
What he says represents his own opinions and not those of Seattle City Light. And maybe he’ll say it again, but this way we can really get your true thoughts. Connor came in. It was electric. We plugged in the podcast equipment and made a circuit break. Connor was like, oh yeah, I know all about that. I’m an electrician or was an electrician. Maybe we’ll learn about what that means too. But Connor, welcome. It’s great to have you in here. We had a lot of fun at the last Cleantech Brain Trust and Ross turned to me and was like, oh, can we just farm people for the podcast for this?
Ross Kenyon: I called it our farm league for the podcast. So that’s what it is now.
Christophe Jospe: Yeah, outed you there. But anyway, Connor, we like to start with people’s story and really understand their motivations. What got them into working on climate change and really where did it all begin? How did it start for you?
Connor Birkeland: Yeah, so I guess it’s a little bit longer of a story than I would imagine sometimes, and it gets longer as you get older, right? So initially, I got into renewables probably back about over a decade ago, right around 2006. And initially, I spent a lot of time as a younger gentleman outdoors Doing a lot of camping, canoeing, basically just being outside as much as possible. And that really kind of instilled a love for nature as I think a lot of people who are in this industry have. So I initially got involved while working on my undergrad at the Evergreen State College in astrophysics, working with a professor that did a lot with NASA and mainly trying to get an idea of solar physics in general.
So during that time frame, I did work a little bit with NASA satellites, did a lot of spatial calculations, working on kernel mass ejections, all the fun things. Solar flare stuff. Initially went out to Colorado after that and began working in commercial, residential, and utility scale solar installations out there as an installer for a while. So I did that for a bit of time.
Ross Kenyon: Sounds like that might have been your electrician time.
Connor Birkeland: That was part of my electrician time right there, definitely, yeah. Yeah. So, and unfortunately, that period of time, I think that was about 2010, the solar industry is much more of that solar coaster term that a lot of people don’t like as much. But unfortunately, the whole boom and bust subsidy went out overnight and the industry kind of collapsed in that state. And I was kind of forced to come back to Washington State where I helped with iTech Energy, which is one of Washington State’s only, actually, I think it is the only Washington State solar panel manufacturer at the moment.
So, yeah. Helped them get off the ground. Worked there for a couple of years. Got my master’s in renewable energy policy. Worked as a solar system designer and salesperson here in Seattle for a while. And what else did I do? I worked for the DOE on a different grant.
Christophe Jospe: It’s the Department of Energy.
Connor Birkeland: Exactly. The Federal Department of Energy on a SunShot grant with the Solar Foundation. They’re the ones who do the solar job census every year. I was doing rural renewable energy policy advising for small communities out in northern Minnesota. Also, I have my own consulting firm. I also work at UW as an instructor doing renewable energy and blockchain kind of stuff. So, yeah.
Ross Kenyon: Yeah, you dropped that one on us. We were like, oh, that’s a nice surprise. We’ll have to get into that too. I was thinking we haven’t had anyone do solar on the podcast yet. You think maybe it’d be a good thing to just give us a general overview of what the lay of the land is these days?
Connor Birkeland: Sure. Sure. So I think any time you really talk about solar right now, I think kind of the first thing to talk about is just how drastically the industry has been changing over the last 5, 10 years. It’s been slowly growing, but just the price drop within recent years has been astronomical compared. A lot of technologies out there. As it becomes more commonplace and more accepted, it becomes a lot more easy to kind of integrate. And kind of that’s a lot of the stuff that I do with the city on my current contract with the DOE again.
And so I think as people... It’s been growing. It’s really picked up purely economical argument in a lot of places. So at this point, it’s beating a lot of other generation out, which is fantastic. The amount of operation issues that you have with malfunctioning equipment has really dropped off dramatically as well. But yeah, I think generally just over the next couple of years, it’s going to be a major... I mean, just looking at the EIA, which is the Energy Information Agency with the federal governments. And if you look at the amount of installed capacity per year per unit type, it’s pretty much always solar and wind that are beating out everything else out.
Yeah.
Ross Kenyon: Yeah, I remember my favorite article about this that I’ve seen, and I suspect you all have as well, is that one from, I think it’s Georgetown, Texas, which was statistically one of the most conservative places, so you wouldn’t expect a passion for renewable energy, but it was so cheap there that it ended up displacing natural gas and just petroleum generally.
Connor Birkeland: Yeah, I mean, any time that you see solar being natural gas is kind of an amazing article in itself too, so...
Christophe Jospe: One of my favorite graphs that the IEA puts out are projections on solar that always underpredict just how rapidly solar will proliferate. Like they’re always wrong. Each year they’re wrong and then they need to improve it. And I think one of the reasons for that is because there’s this mindset that is very linear. It can only be linear progression, but actually with solar technologies, we’ve seen exponential scale. So what is it about solar that makes it able to scale exponentially?
Connor Birkeland: I think right now it’s... It’s hard to say. I think part of the issue too, I mean, the biggest driver is obviously the economic aspect. And I think for a long time there’s been a lot of kind of baseload generation that is just kind of ingrained. And I mean, people talk about stranded assets where these things have been built and they’re built for such a high cost and they have such a That doesn’t pass our censorship muster.
Unknown speaker: Don’t worry. You’re done. Podcast. Cut off. I mean, to say whatever you like, do not feel restrained. If you must curse, if it’s to make for dramatic effect, we’ll allow it.
Paul Gambill: Well, I would prefer not to put the explicit tag, but saying hell is not going to do that. Yeah. H-E double hockey sticks.
Christophe Jospe: I remember that from grade school.
Ross Kenyon: Hold on podcast listeners. We have an important issue to resolve before we can continue.
Christophe Jospe: Okay, so you’re talking about costs. What are the main drivers of costs? So we’ve got obviously the manufacturing, the installation, other things like that. How does that all work? I mean, it’s cool that we’ve got manufacturing here in Washington State, but I was under the impression that a lot of the solar manufacturing happens overseas where you’re just able to take advantage of cheaper labor or potentially large industries such as steel capacity. What do the dynamics look like there? Where do the costs come from?
Connor Birkeland: Yeah. So mainly when you talk about it with the federal government, they kind of break it down into two different aspects. And that’s the solar sunshots with the Department of Energy. Their main focus is on the soft costs. So that’s basically anything that’s not balanced systems, BOS, which is basically like anything you can hold in your That’s hardware, that’s rails, that’s clips, that’s kind of anything that would kind of fall into that category. And soft costs are like the permitting, customer acquisition, which surprisingly for solar is one of the largest costs and is one of the hardest ones to kind of break down for some odd reason.
Customer acquisition. Customer acquisition. For some odd reason, that’s a very large component compared to other industries. Interconnection costs, which typically can be anywhere between like $500 and $1,000 per system, depending on where you’re at. And so the soft costs, typically I think last time I looked at NREL was right around 40-ish percent. 25% for commercial, but like 40% for residential sometimes. And yeah, I think as you get the economies to scale with international kind of manufacturing, that’s kind of mainly the case with you have like Gingli, you have SunPower, which actually is from the United States.
I think they’re Arizona and they’re A lot of the major solar, like for solar, they’re all from outside the country. And this really is that economies of scale. So once you can start buying, I guess, the ingredients like the aluminum, the glass, the back sheet, all on these massive scales, then you really get that cost reduction.
Paul Gambill: Is it just photovoltaic now or like maybe this is just showing off my naivete on this. When Ross and I were in college at in Arizona, I was involved in some research, but everything then was about concentrated solar and PV was still way more expensive. So how does that fit in? Are you just talking about PV right now?
Ross Kenyon: We should probably explain. Is it concentrated where it all bounces and like heats up water and it turns into steam and it runs a turbine, something like that?
Connor Birkeland: Typically, I mean, at this point, it’s mainly molten salt, sodium chloride, where they just have it in tubes. That’s what they use for the thermal. So, yeah, they have these huge parabolic troughs, which... I’m making a gesture with my hands, which y’all can’t see.
Unknown speaker: It looks like a bowl.
Connor Birkeland: It looks like a bowl, exactly. And so they have this long trough running along on these rails that actually attract the sun. And inside, at the exact point where all the trough kind of concentrates is where this pipe is.
Unknown speaker: The focal point?
Connor Birkeland: The focal point, yeah. Yeah, it’s a focal point, but it’s like some other, I think, specific term. But yeah, something like that. Anyway, so that heats up the salt. But I’ve been primarily talking about PV, so photovoltaic exactly. And the reason for the drastic increase in PV has been that reduction in cost of the last decade or so. And I think as it’s, there’s other forms of PV. So there’s basically monocrystalline, which is based on the ones that don’t have any fractal patterns in it. And there’s also thin film, which is also kind of commercially viable at this point too.
For solar, one of the largest manufacturers in the world, they have solar. I mean, their main technology is thin film, but it’s a little bit less efficient. There’s a little bit more kind of rarity materials that kind of go into. It’s a little bit harder to scale up sometimes. And I think as we move forward, hopefully there’s some kind of more innovations in regard to the aspect of non-rare earth minerals. So essentially if you think of copper, silver, all these different aspects that go into a panel, they’re not really common and they’re kind of expensive and they really fluctuate a lot with depending on the market.
So right now UW actually is, University of Washington is one of the best researchers when it comes to material science, when it comes to photovoltaics as well. And they’re looking at a lot of like iron oxide kind of style panels, which is really cool.
Ross Kenyon: Photovoltaic, that’s just directly taking the light and turning that into electricity?
Connor Birkeland: Yep, taking the photons. And there’s some, it’s actually quantum mechanics that happen inside of that. But yeah, and then just turn that to electrons. So I can get more into that if you want to, but it gets really deep quick.
Ross Kenyon: What a magical grin you had on your face. We talked about this a little bit when we first met and we’d like to dig into the life cycle analysis of solar panels because it sounds good and it’s clean and it’s becoming cheaper and cheaper. And just how clean are solar panels?
Connor Birkeland: Yeah, I think there’s a lot of ways to kind of break that down too. And I think one way to look at it is the embedded carbon is one easy way. So I think I haven’t looked at this in a while, but one of the ones I looked at a year or two ago was about, I think if you look at the amount of carbon that is ingrained in the panels, about two years worth of power. So basically every single time it’s producing clean power, it’s got to produce it for about two years to be able to offset the amount of carbon that went into it.
And so lifespan-wise, these things have warranties of up to 25 years, manufacturer warranties typically. So workmanship is actually installed. They’ll do about 10, but 25 years. So if you break it before the 25 years without any kind of fault of your own, then the manufacturer is supposed to replace it at that point. And I mean, if you think about it too, a lot of these things are actually rated to be, last a lot longer than that, but you have this annual cell degradation rate of about 0. 5%. So every five years, it’s going to produce about 0.
5% less than it did the year before. So that kind of varies on the technology too a little bit.
Ross Kenyon: How do you do in apples to apples comparison with more conventional power plants?
Connor Birkeland: That’s really the harder part, I think. There’s a lot of methodologies out there that are kind of widely accepted at this point. And for example, right now I’m doing a lot of work with Seattle City Lights on net metering. So basically evaluation of net electric metering, which is I think kind of how most solar system owners get compensated. And so... Because we’re not a thermal plant, which is anything gas, coal, or even nuclear, it’s really hard to make those comparisons sometimes. But there’s a lot of different figures that you can kind of use on a 15-year, 25-year time frame that makes those apples-to-apples comparisons.
Christophe Jospe: And so net metering is a policy incentive that allows homeowners to actually get paid for generating power. And oftentimes that just pays for the installation of the solar itself. So you’re not actually going to see an increase at all for installing this. And oftentimes it plays out in your favor.
Paul Gambill: But it depends where you live, right?
Connor Birkeland: Very much so, yeah.
Paul Gambill: I remember, I don’t know the exact details of this, but after whatever that last big hurricane that tore through Florida was, I was reading stories online about how the local utility, this is somewhere in northern Florida, wasn’t allowing them to operate their solar panels and run their house off of it because it was affecting the grid in some way.
Connor Birkeland: Interesting. I totally believe that, too. And I think, I mean, one of the laws that’s actually really kind of heavily followed by manufacturers is called something UL 1741. So it essentially says that anytime that you’re producing, if the grid is down, you can’t actually produce back onto the grid for safety concerns. Because if you do that, then you’re going to be able to shock the line workers, which you don’t want.
Christophe Jospe: So it’s really fun to have people on the podcast who work at utilities because you provide an insight into something that a lot of people take for granted and don’t really think about. It’s like you turn the light on. It just happens. I mean, it’s almost like a human right.
Ross Kenyon: Yeah, if it doesn’t work, you’re in trouble. But if it does, then you’re invisible.
Christophe Jospe: But you’re also an innovation guy who’s like, utilities, come on guys, you’re kind of like dinosaurs and don’t move very quickly. And so what are some of your frustrations working at a utility?
Connor Birkeland: So I think it’s interesting kind of before getting this fellowship. So, and again, just qualify. So I actually clarify. So I work with the Department of Energy as a fellow for Seattle Sea Light. And so one of the biggest things is the fact that I think a lot of these industries with utilities have a much older kind of employee group. So I think with Citadel City Lights specifically, it’s right around like 57, 58, 60 sometimes. So they have a huge population of workers that are about to retire. And I think a lot of the times the apathy that I find is very...
So they’ve been doing these same things for about 20, 30 years. The industry hasn’t really evolved that quickly compared to what it is doing now. And so their perspective, I found a lot of times, is why change what I’m doing when I’m going to be gone in two years? I don’t want to learn this new way. It seems a lot more complicated. I’m kind of writing things out. And all I really want is my pension. And yeah.
Christophe Jospe: Kind of sounds like the installation of coal or gas-fired power plants that you just build it and you expect to recoup your costs over a period of 40 years. And why would you even consider designing that plant differently? Yeah, cool. So we’re in Seattle. And the state of Washington, and that means that we get a lot of our energy from hydroelectric, which is billed as a renewable source of energy. And hydro is one of those things that probably does the lion’s share of work right now with producing resources.
Unknown speaker: Wait, what does that mean, accumulates carbon behind the dams?
Christophe Jospe: Yeah, well, I’m going to turn it around and just ask you, Connor, because that makes the carbon accounting geek in me really angry because I’m like, these hydro dams need to be buying CRCs if they truly want to call themselves carbon neutral.
Connor Birkeland: Yeah, I guess. So I’ll answer my short perspective of this too and then kind of bound it back to you. So the way that I see the embedded carbon behind the dams mainly is when you have a newer dam that’s installed, you’re essentially taking up a lot of land that was previously used for a lot of different stuff. And so we’ll use the example of Washington State where we have a lot of, I mean, Woods everywhere, these beautiful big Douglas firs. And so anytime you do this dam, that whole valley that gets flooded has a lot of CO2 that was embedded in the trees.
And so once you have the water come along in there, then you start to decompose and release carbon into the atmosphere again. So that’s kind of what you’re talking about, correct?
Paul Gambill: Mm-hmm. Okay, so it’s like embodied carbon in buildings, similar sort of concept.
Connor Birkeland: Except this is actually released within the first one to two years, I think, typically. That decomposition starts releasing that CO2. So it might last a lot longer than that, but that’s from my understanding, which is very slim. That’s what happens. But I mean, there’s also the embedded carbon within the concrete. So I mean, a lot of these dams are concrete dams and there’s a lot of CO2 within every single cubic foot of concrete, which I mean, a lot of these dams run for about 100 years. But despite that, too, it’s I mean, I don’t personally know kind of that levelized carbon content, but it’s not a small amount at all.
Ross Kenyon: I’m always very curious about the actual environmental impact of dams. I always liked Edward Abbey a lot. I thought he was an interesting writer, and I wonder what we’re losing. I think it was John Muir who was angry about Hetch Hetchy in Yosemite.
Connor Birkeland: Very much so.
Ross Kenyon: I spent like a week or two backpacking in Hetch Hetchy, and it was beautiful, but I wish I could see most of it that’s underwater now. I’m wondering how you quantify what you’re actually losing when you’re damming up things.
Connor Birkeland: Well, and it’s interesting, too. So, I mean, a lot of the time when I was working in the solar industry, it was kind of fluctuating, too. So, my time off from doing solar work when the industry didn’t work was as a whitewater raft guide. So, I spent a lot of my life on rivers. I love rivers. And it’s very depressing sometimes to kind of hear stories of these beaches. There’s beautiful canyons that are just gone now. They’re still there, but they’re underneath a huge reservoir. I mean, Glen Canyon, for example, I think that was back in the 1930s, 40s, too, that the gentleman who was working with that, he saved the Grand Canyon by basically sacrificing Glen Canyon.
He said it was one of the worst mistakes of his life, allowing that to happen. And it’s just yet sad. It’s in a lot of these places, like if you look at the Columbia too, and you mentioned fish earlier as well. I mean, Snake River, all these Columbia River dams basically prevent just a mass amount of salmon from breeding. And they, historically, salmon born in one river will go down to the ocean, live there for a while, come back up and go to the exact same tributary that they’re from. But if they can’t get there, then you just basically lost, I don’t even know what percentage of your salmon population from that.
Yeah.
Christophe Jospe: It’s really interesting to think about. I mean, our listeners will know that we like to address issues systemically and think about all the various forces that are going in one way or another. One fun fact, or not, I don’t know, is that the World Bank likes to fund dams. But they are looking at economies of scale. So they’re funding the huge dams. And the huge dams aren’t the best, but the sort of more modular approaches scale a little bit better or maybe are at least causing less harm on the environment.
Or it’s just easier to get those through the bureaucratic process. And so that I kind of want to transition this conversation a bit. I mean, you have this great little perch working with the Department of Energy and a utility and sort of understanding how innovation might flow from idea into business. And so how do you kind of think about energy innovation or good ideas that can just make a great impact on maybe it’s obvious since you’re on the Reversing Climate Change podcast, but great ideas that make an impact on reducing or reversing carbon?
Connor Birkeland: So I mean, kind of the topic of watching some of them die. So I think I’ll kind of caveat this with the fact that I think a lot of the rationale for this is that the energy industry as a whole is a very difficult industry to get into. It’s very entrenched. I mean, it’s utilities. And typically what happens is you kind of like a valley of death that these innovations will come into. And so they’ll have a great idea. They’ll try to market it. And when you’re dealing with energy, you basically have to work with utilities or not.
If you don’t, then you kind of you die in that death valley. And that’s kind of the issue, too. The frustrating part is that even if you have a brilliant idea, it takes about 8 to 10 years for utilities to be able to adopt these technologies on a large scale. So you have to kind of weather a storm for about 8 to 10 years. And so I guess one example of a particular situation of this would be Not anything drastically new, but kind of a newer concept, an old idea of high voltage DC transmission.
So I mean, currently we have HVAC, high voltage DC kind of going across the nation, which has been the traditional kind of grid backbone Can I jump in and ask if money, time, and politics weren’t an issue, what would we do to update our grid? Money and time, we would have a bunch of microgrids with a lot of kind of localized energy usage and then a couple of like large peaker or large kind of baseload plants distributed across this.
Unknown speaker: A microgrid is like neighborhood level?
Connor Birkeland: Neighborhood, city, anytime that you’re kind of moving power across states, that just gets ridiculous for the most part because I think line loss on average about 7% to 9% or even 10% just with transmission. And so if you look at distribution on top of that too, it just kind of starts adding up quick. But yeah, I think this idea of the HVDC is kind of taking this concept of what you just mentioned too, like the ideal situation and then saying like, all right, what do we currently have to work with?
And we have this old antiquated grid with a lot of kind of large producers, large generators in one spot. HVDC is much more efficient at moving that power, and the line losses are a lot less. And so Clean Line is a group, I think, out of Illinois that’s been going at it for about 10 years trying to get HVDC lines privately funded all across country. And they have a lot of them in place, regulatory-wise, and none of them have been built yet. And the biggest one, I think, is... God, it’s basically, it’s bringing generation from Ontario down into New York.
And I think it’s Mountain Pass or something like that. And it’s one of the most contentious transmission lines in the country right now. A lot of people are finding is basically it’s supposed to over this beautiful mountain and the whole NIMBY aspect. They don’t want to see a whole large transmission line going across the backyard, which... This is tough. It’s a lot of eminent domain as well, which I really don’t support personally that much. But it’s the fact like, all right, we have a international issue of climate change. If we don’t do something now, then we’re kind of screwed.
So how do you kind of work with what you have? So, yeah, it’s tough. And CleanLine, I wish the best of them. But yeah, they’re still struggling hard.
Christophe Jospe: NIMBY, that stands for Not In My Backyard. And it’s a really intentious issue for sure. Because, I mean, another thing that our listeners can’t see is the awesome shirt that Connor is wearing, which has a bunch of windmills.
Paul Gambill: When I was in college and working at the decision theater at ASU with Jason actually, We worked on this project called AZSMART that was, I don’t remember what, it was some acronym, but it was all about solar, knowing that Arizona is the best place in the world for solar insulation and you could easily build enough solar capacity in Arizona. Arizona to power North America, but the problem was transmission. But what we seem to find, not only was it just like, how do you build that stuff, but the politics of the different states, like in Arizona, you have a corporation commission of five elected people who then have to like make the decisions on how all of this infrastructure works and the agreements that they broker with the other states.
And like, it’s no wonder, I mean, it’s It’s not just an engineering problem. And if it were just engineering, it probably wouldn’t be that hard.
Connor Birkeland: No, and you’re exactly right. It’s definitely not the engineering. I think it’s the policy and the politics and the regulatory by far. And I think the interesting for me on this whole aspect is the fact that the federal government’s trying so hard to kind of fix this. And FERC specifically, I think Order 1000 actually looks directly at trying So you really take, give the power to states to promote this. And if they don’t, then say like, all right, we gave you the option. We’re going to take it away from you.
We’re going to do it federally right now and mandate these things. And it’s been a perpetual battle in lawsuits all across the country because that’s basically what’s been happening is people will call this order and say like, all right, We gave you the time frame you needed and you have one to two years to do this and you didn’t respond. So we’re just going to go straight to the federal government and get their permission and then build it anyway. And then once it happens in all these states, then try to step in the public service commissions or public utility committees will step in and say, like, actually, this is not your authority.
You’re overstepping your boundaries. And then it always gets tied up, which eventually most likely the manufacturers, the high voltage DC lines will win. But you can’t really last for 10 years is the issue as a company without any kind of revenue. Yeah.
Ross Kenyon: Given your comments about politics, I was wondering if I could gauge you on just how often utilities ought to be regulated as utilities rather than something that’s more familiar to us who interact with the competitive markets. Do all of them need to be quasi-monopolies or explicitly so?
Connor Birkeland: That’s kind of a deep question right there. I do think they need to be regulated. I think quasi-monopolies, I mean natural monopolies essentially, yes. I think It’s that moral hazard that it’s easier to do certain things sometimes and it’s not necessarily the benefit for all to do that. And it also makes sense that you don’t really want to have multiple different power lines going to your house. So just having the one power line and kind of managing it that way. But at the same time, it really causes a lack of innovation sometimes, hence my position with the feds right now.
So all that aside, it’s really heartening to see all these public utility commissions, which is essentially the entity with the state that kind of regulates utilities typically, and essentially always the IOUs, which are investor-owned utilities, which are the private ones. They’re really trying to start to be more innovative in how They kind of require these utilities to present information. So Integrated Resource Plan being one of them, which I work on a little bit at Saddle Street Light, which says for the next 20 years, here’s our goals. Here’s what we’re going to do.
Here’s what the landscape looks like. And here’s how we’re going to respond to it. So these PUCs, Public Utility Commissions, are really starting to say, like, all right, cool, you’ve given us this information in the past. We want you to start looking at this instead or this in addition to what you’ve looked at in the past. So, for example, a distributed energy resource plan on top of your IRP is one of these where We say that, all right, how does renewables present opportunities for non-wires alternatives? So essentially you say that traditionally you would build another transformer in this area or upgrade the transformer.
And they’re saying, well, all right, that’s cool. But if you did a bunch of DG, distributed generation in that same area, how much can solar potentially offset that need for new transmission or new distribution infrastructure? Yeah. It’s getting there, but yeah, I think it’s a deep hole to dig into that question that you asked. Yeah, I think short answer is still that they do need to have that regulation.
Ross Kenyon: Okay, fair enough. And maybe we’ll see that change if microgrids take off or solar seems quite, well, not in the production because economies of scale are in play and they’re built in China for the most part and shipped. But that seems like quite decentralized technology where maybe that can be provided in a more non-market or market form of interaction rather than something like the utility regulation. Or maybe I’m totally wrong and this is something that’s just a natural monopoly and always will be.
Christophe Jospe: Well, I want to steer your comments with something that maybe you brought up early on that Connor said these magic words starts with a B, ends with a lock chain. What does that have to do with the whole energy innovation space and how do you see that coming together?
Connor Birkeland: I think it’s a great question. I think blockchain is kind of establishing itself within the industry. I think there’s a lot of potential there. And specifically for certain things that a lot of people had issues with before that there was no solution for. An example, secure trading of information and kind of credits. And so I see... Going to your earlier question about natural monopolies, I mean, if you look at California right now, which has a much more deregulated market than we do, which I would try to explain that, but it’s kind of, it’s essentially a lot more freedom in your energy market within states.
So they have a lot more opportunity for the CCS, which are community choice aggregators, excuse me, CCAs. Essentially, there are these group of people that say, if you want to deflect from your utility, you can, you can start paying us. And we have a lot more of what you want, whatever that want is. So that can be, we want more I don’t know. And typically it’s renewables within California. So we want a much greener portfolio. And they’ll say like, all right, pretty much all of our energy is green. It’s great.
So people are like, all right, cool. I’ll sign up with you all instead. Leave my utility. So we don’t have that option within Washington State. But down in California, this aggregation aspect is becoming huge, especially I mentioned the Fed’s FERC, Federal Energy Regulatory Commission, the one who had that order with transmission. They also have one for distributed generation and aggregation of these solar, whatever it is. And so blockchain really allows this to happen that you can actually have... Oh, God, there’s such a deep, deep hole to dig into. I’m going to try to keep it as shallow as possible.
Ross Kenyon: Trying to figure out like how much information is actually necessary.
Connor Birkeland: Exactly. So, I mean, the one I’ll mention is Rule 21. So, it’s a huge thing within California. I think it’s IEEE. What I’m saying means is smart inverters. So that says when you have solar on your roof, it’s kind of an on and off traditionally. You just let it run whenever it can when it produces energy. Great. But if you let it be a smart inverter, there’s a lot more potential for generation shedding, generation clipping. All these different things are much more integrated into the grid that can actually work with.
Basically the needs of the grid. So since you say you have a glut of solar all of a sudden, you need to kind of like shed some of it before you blow out all your transmission, you can easily do that with smart inverters. And so blockchain can really be the mechanism that does this. Currently with Rule 21, their whole ideas are going to create this very secure communication structure, which Basic could be done with blockchain if blockchain was ready to pick it up, which I think there’s some certain things that need to be kind of resolved.
I think specifically the amount of gas per transaction sometimes a little bit costly when it comes to some of these transactions that happen on a regular basis. But yeah, it’s definitely getting there.
Ross Kenyon: Yeah, for systems like that, the proposals I’ve most commonly seen are not public blockchains and they’re oftentimes trusted parties. So they don’t require the same amount of electricity as other things. So people are thinking about that because that irony is literally right in your face.
Connor Birkeland: If you look down in Grant County, a lot of the blockchain operators are here in Washington State and they’re causing havoc with utilities down south.
Ross Kenyon: They were doing some sort of rate arbitrage thing and moving out to Wenatchee, but then the utility caught on, right? And they said, you’re actually paying a higher rate, something like that.
Connor Birkeland: Yeah, exactly. Because basically within two years, the low being how much power per all the customers use, I think doubled in that specific county. And they’re like, what the heck? We don’t even know what to do here. Which they’re fine now, but still, yeah, they definitely put them into a different class than they were before.
Ross Kenyon: So then they’re going to the next district that will have chief electricity. Okay, that’s nice and fun.
Connor Birkeland: Yeah.
Ross Kenyon: We should start wrapping it up, I think. Any last words on maybe what we can look forward to the next couple of years of electricity generation and utilities? Like barring minds want to know. Woo!
Connor Birkeland: I mean, it’s going to be a very interesting time. I think if you just look at what’s happening with PG&E, which is Pacific Gas and Electric down in California, which is one of the largest utilities in the nation right now, they just filed for Chapter 11 bankruptcy like a week ago due to all the fires that happened there. As these risks become greater and the balance sheet for utilities become a lot more uncertain with certain types of generation, I think you’re going to see a lot more of a shift towards renewables.
And it’s going to be fascinating. I think it’s going to be kind of tumultuous. I think it’s going to cause some issues of rates might go up. But I think generally the writing on the wall is there. It just depends on how long people take to read it.
Ross Kenyon: You’re very well trained with defining your initialisms and acronyms. I think you might know more of them than any person I’ve met. Yeah. Is that your life working in the government?
Connor Birkeland: That is my life. With utilities in general, there’s so many acronyms. I’ve been trying to really hold back on them too.
Ross Kenyon: You were really good at it. So thank you for defining all of those. Thank you. Thank you.
