Crude oil production in the U.S. Lower 48 (L48) states, which excludes Alaska and offshore production, reached a record 11.3 million barrels per day (b/d) in November 2024, according to our estimate in the latest Short-Term Energy Outlook (STEO) published on December 10. Crude oil production in the L48 states increased 3% year over year despite fewer active rigs in most major producing regions, demonstrating gains in operational efficiency.
In this episode, I speak with Ben Brown, CEO of Renew Home, about the company's groundbreaking 1-gigawatt virtual power plant deal with NRG Energy in Texas. It will be the nation’s largest VPP, leveraging existing smart thermostats to control millions of residential HVAC systems. We discuss customer experience, data privacy, and the ability of VPPs to rapidly scale to meet rising electricity demand.
Hello everyone, this is Volts for December 20th, 2024, "The promise of residential VPPs." I'm your host, David Roberts. These days everyone is talking about virtual power plants, the somewhat regrettable name for a new class of entity starting to pop up on power grids. A VPP is composed of multiple distributed energy resources (DERs) — think rooftop solar panels, home batteries, EV chargers, and smart appliances — scattered across hundreds or thousands of households, coordinated through networking and software.
By acting in concert, these resources create a kind of super power plant, one that can generate, store, or shift power, precisely and in real time. No other power plant can do all that.
VPPs can help grids avoid expensive peaks (and thus avoid building new gas peaker plants), but that's just the beginning. As Distributed Energy Resources grow in number and variety, the value and capacities of VPPs will increase, as described in the Department of Energy's recent Pathways to Commercial Liftoff report.
Ben Brown
A company called Renew Home just made a big splash in this nascent market, announcing a deal with utility NRG Energy to develop a 1-gigawatt VPP in Texas, initially based on smart thermostats. The company grew out of Nest Renew, a Google company coordinating Nest thermostats, and OhmConnect, a VPP startup.
Ben Brown, the CEO of Renew Home, has been in the home energy management space his entire career, including 10 years at Google leading efforts like Google Home. I thought he'd be a great person to ask a bunch of questions I have about this space, which is exploding lately. We're going to talk about the customer experience, the security of customer data, other devices that might be networked in the future, and the upper limits of VPPs.
With no further ado, Ben Brown, welcome to Volts. Thank you so much for coming.
Ben Brown
Thank you so much, David, for having me.
David Roberts
Tons of questions about this. VPPs are the hot thing right now, everybody's talking about them, and they're starting to move from kind of stars in people's eyes to real things on the grid now. So, we're getting to where we can answer some questions. But let's just start with a bare description of what you're doing here in Texas. What exactly is this deal? Why is NRG involved? What are you aggregating? Just so to me, describe what's going on here.
Ben Brown
The biggest thing is, we look at Texas, we look at the opportunity to work with hundreds of thousands of households across the state to help them shift energy usage into times where the grid is less stressed. We deal with a lot of these peak issues for tens or hundreds of hours during the year. With NRG, we worked with them to say, "Hey," they were thinking about investments in new capacity resources to deal with the growing demand that they're seeing from a lot of different vectors, and we worked with them to say, "Hey, we can build a VPP at a tenth of the cost that it would build to a natural gas power plant." And so we do that working with the target is over six hundred thousand homes across the state with predominantly smart thermostats, the Nest learning thermostat, Vivint thermostat to start, but we'll bring in EV chargers, battery storage as well over time.
David Roberts
So is the right way to think about this, NRG is the utility and you are a genco and they're signing a PPA with you? Is it more or less just like any other deal between a utility and a power provider?
Ben Brown
Yeah, I think it's a little more involved. I think it's a good way to think about it for maybe the value that we're putting together. But when we think about VPPs, it's really important to focus in on what the end customer experience is for being able to provide this type of service in the home. So, you're trying to empower customers to be able to save money on their energy bills. So, being able to have a really great end-to-end experience that is integrated between the Nest experience and the NRG experience and or the Vivint experience is really critical in this. So, it's not just purely, "Hey, you know, there's a gigawatt of capacity we're building," and then we're just going forward and talking about a fifteen-year PPA or something like that.
David Roberts
Right, well, that's your face to the utility, and then you have a different face to the customer.
Ben Brown
No, that's a good way of talking about that. Yeah.
David Roberts
You're starting with thermostats. There's a fine line, if there's any line — maybe you can tell us if you think there's a line — between what is now currently called demand response and virtual power plants. Now, in my mind, the distinction is demand response is just you can move usage, power consumption from one time to another, which is very useful. But when I think of a virtual power plant, I think of something that can do that and then also store energy and then also generate energy at times of need. And it looks like to me where you're starting with thermostats is just demand response, isn't it? How is this not just demand response? Or do you think there's a meaningful distinction?
Ben Brown
I think there's definitely a distinction. Right, so I would say when we look at the history of being able to engage residential customers in being able to shift their energy usage to support the grid over the last thirty years, that really has been around using the home's thermal properties around how you cool or heat it to be able to shift when you do that. Essentially, the home is a large thermal battery, so it's really no different than an electric battery, a chemistry battery that can discharge.
David Roberts
Same with water heaters, water heaters are always touted for this.
Ben Brown
Exactly right. So, when I think about what thermostats or HVAC systems have been doing over the last ten years, and if I back up for a second, we, as Renew Home, working with the Nest Rush Hour Rewards of running that program as the Nest Energy team for the last decade, as well as what we've done with OhmConnect in markets, we've been able to both showcase the value of demand response at scale but also being able to, when we launch Nest Renew, show that we can do billions of energy shifts a year across five plus million customers across the United States. That does represent a really resilient, dispatchable, reliable VPP nationally, but also in highly targeted ways. So honestly, I think that it's really important we think about VPPs. The only way we're going to get to our goal of trying to have 160 gigawatts from VPPs across the country over the next five to ten years is really by employing the biggest latent resource out there first, which is the 70 gigawatts of potential that exists across all the heating and cooling systems in the country across those eighty million homes.
David Roberts
I mean, I guess that's my question. It's like, as long as that's what you're doing, moving heating and cooling around in time, it just looks to me like very sophisticated, very scaled-up demand response.
Ben Brown
I do think that because of what you can do with load shaping, you can make it look very similar to what — because we also manage a diversity of assets, not just smart thermostats but batteries as well. And when we look at what we're able and capable to do over an hour, three-hour, five-hour periods on the population basis, because we're talking about massive scale here. The best benefit we have going for ourselves is that when we're engaging in Texas, we're talking about doing it across hundreds of thousands of homes. What we're doing in California is across hundreds of thousands of homes. And so when you look at that in aggregate, it actually creates the same type of load shapes as you would with any other generation asset or kind of a physical storage assets.
David Roberts
Yeah, well, when you throw batteries in there, then you can start discharging energy right when you need some, and then you can start storing it. I think it's when you throw batteries in that you get something that looks, I guess, a little bit more like a VPP to me, although I guess these definitions are fuzzy.
Ben Brown
I think it's important on this one because most batteries aren't giving, you know, they're not discharging back to the grid, right? Most batteries are about the behind-the-meter, giving back to the home and shifting, right? You know, mostly it's usually solar or taking grid energy and then discharging it at different times, same thing from an EV charger. So when we really think about this and we're talking about the scale we're getting at, I think it's very important not to overlook that we've already showcased that thermostats are the backbone.
Smart thermostats and HVAC systems are going to be the backbone of the scale of VPPs moving forward and absolutely there's a diversity of assets that should go into that, that we support. But I would really advocate that we believe that actually building the largest residential VPP in the country, which Renew Home has done, we believe that a lot of that's going to have to come from smart thermostats and HVAC systems in addition to, as the adoption curve ramps up, with EVs and behind-the-meter storage that will be a key component of as well.
David Roberts
HVAC is where the energy is, right? I mean, it's like, "You go where the money is" — I forget what the old cliché is — but that's where most of the residential energy is. It's a sensible place to start.
Ben Brown
50% of energy usage in the home is related to HVAC, and there's going to be an adoption curve for sure around broader home electrification, which we're super excited about. And I think that smart thermostat users like Nest users historically have been five times more likely to be adopting other home electrification devices.
David Roberts
Yeah, that makes sense.
Ben Brown
You know, it kind of makes sense. It's usually the first device that people adopt.
David Roberts
This does seem, I mean, I'm getting a little ahead of myself here, but this does seem like a smart way to address the big problem around VPPs now, which is that so much of it is theoretical. So much of it is, we're on the verge of a ton of stuff, but like, what's the foothold? What's the first step, you know, like how do you get established? And these thermostats, these smart thermostats, are already there. I mean, they're already installed.
Ben Brown
You know, I think if you look at why we created Renew Home to begin with, it was that we already have five million households across the country that represent over three gigawatts of VPP capacity, flexible capacity, that we work with over one hundred plus utility programs across the country.
David Roberts
With Nest?
Ben Brown
Yeah, with Nest plus other devices as well, it's not just Nest.
David Roberts
This is a side question, but is all that just the market, like is all that just Nest selling as a private product for people's private usage, like is that the result of some previous utility program or is that just a bunch of people have bought these things?
Ben Brown
I mean, it's the best part about a little bit of everything. Which is obviously, the Nest thermostat was, I believe — obviously worked on a lot of these products for a long time, I come from a consumer product background as you mentioned — I think it was one of the kind of those magical devices that was very desirable so you had so many people that would just buy it because it helped them save money.
Being able to have a device that can help you automatically save energy and use energy more thoughtfully is something that just people went out and bought on their own. But also, yes, we worked really tirelessly over the last decade to work on state and utility-based rebate programs for both energy efficiency with Energy Star as well as with demand response pre-enrolled type programs wherein there were really good subsidies given by utilities to be able to help get thermostats into homes as well.
David Roberts
Yeah, but just to sort of emphasize the point here, that the kind of advantage you guys are working with is that you do not have to persuade customers to install anything or to buy anything. The products you're working with are already in homes, at least to begin with.
Ben Brown
Yeah, right, we get to take advantage of there's a very large existing population of Nest, Honeywell, Ecobee, and Residio thermostat owners across the country, but there's also millions of new households that buy them each year. And we have a great experience that we built so that when you're setting up the device, we make it really simple to empower you to connect that to a program so that you can enhance your energy savings when you do so.
David Roberts
Okay, so let's talk about the consumer experience then, because I kind of wanted to start there. I mean, from what I totally get, and I think most listeners of Volts will get, the appeal to a utility of having a gigawatt of movable, shiftable, controllable demand like that's an obvious asset in balancing your grid, especially in Texas where you've got, you know, very well understood problems at this point with the grid.
But the consumer; so I'm a consumer, a couple of years ago I bought a Nest thermostat, it's now controlling my whatever my HVAC. You come knock on my door, what is the customer acquisition process? Because that's the pain point I hear from everybody in this space, right, is customer acquisition is the difficult bit. So what's the process?
Ben Brown
So, just to speak a little bit about the background, my background, and then some of where a lot of us have come from building great consumer products. I think you do try to figure out the best, most frictionless way to be able to, when a household is going through setting up something like a smart speaker or a camera or a smart thermostat, you really create a very seamless experience in that process wherein you are enabling them to do all the things that give that device its superpower. And so when we think about like the job or the superpower that a smart thermostat really was intended to do from the early days, there was a lot around you know, "Just make sure it's not heating and cooling my house when I'm not home."
So, there's a lot of really brilliant things around using, you know, IR sensors and new modern sensors to be able to better understand the patterns and rhythms of the home to just help me use less energy. Then, obviously, as the grid has gotten more complex and more constrained, especially in not just ten hours of the year but hundreds of hours of the year in which we're seeing real-time prices really spike and move around all the time, and that will only get kind of more exacerbated over the coming decade, we realize that the other big superpower of a smart thermostat, as an example, was its ability to be predictive about those elements and your patterns in the home so that it could use AI to really create a very smart schedule for when you're heating and cooling your house that minimizes your costs while also supporting the grid.
David Roberts
You mean predict elements like grid congestion and weather events, things like that?
Ben Brown
Exactly. Like, so you know what the weather is going to look like for the remainder of the day when you're most likely to be coming home? How do real-time prices on the grid look? Where are there going to be issues on the grid? So, being able to do all those things is really impossible for a consumer to be able to do themselves, right? Like, that's a lot of the power of AI. It would be like, "Help me do things that represent my preferences but things that I can't sit with, like an energy clock every single day, and then try to optimize and predict when I should be cooling my house for ten minutes to get it to seventy degrees."
David Roberts
Well, I feel like one thing that everyone in your space learns quickly is just how little consumers will do, just how little you can expect them to do. I find that no matter how low your expectation is, you end up having to kind of lower it. So, you really do have to make these things almost entirely weightless, you know, almost entirely automatic.
Ben Brown
As you mentioned, I think the best products you ever build and the simplest experiences you ever build mean that you've spent millions of hours trying to rough out all the rough edges and smooth them out because you got to make it super accessible and do something that, again, someone couldn't do themselves. I think that's where a lot of the value you're creating for them comes from.
David Roberts
Okay, but you're describing the process of setting up your new Nest, and I see how, like if you buy a Nest, that's an easy customer get because it's just one more thing they have to click when they're setting it up. They say, "Yes, I'll participate in this program." But you're starting with a bunch of existing Nest customers, are you not? Is the utility helping you reach those people? Did you spam email them? How do you contact all these people?
Ben Brown
Well, the benefit is we've been doing this for the last ten years. Like, Rush Hour Rewards is a program that started with three utilities and has now ramped up to over one hundred plus across the country. And then also, we launched Nest Renew five years ago and what Nest Renew was doing was working with you to help you shift your energy usage on a daily basis to help minimize cost and to be able to shift to when the grid mix is cleaner. So, doing those things and having that already built in means that we've really built up a very large user base that is already enrolled in programs.
But, we also have a really good ongoing experience with customers around how to engage them with enhanced energy savings. And so, that's something that we've also built out those experiences really well through the Google Home and Nest apps over the years. And now, we're bringing that philosophy and those learnings around because I think people have talked about this in the industry around smart thermostats specifically, but even other types of devices that people bring in which is really low enrollment or adoption rates.
I think that utilities will communicate, "Oh, we've been able to get three percent or five percent of people enrolled." When we have seen this historically, we've hit numbers where we've been able to get seventy or eighty percent of households engaged in energy shifting. And then we've been able to get orders of magnitude larger than the three percent or five percent people are talking about in terms of being able to get people enrolled into VPP or a utility.
David Roberts
Is that a communication strategy? Like, what's the secret? How are you getting these people to do something when other people haven't been able to?
Ben Brown
I think the best proxy for it is, you know, I think we learned a lot from coming from being the company that was working on a bunch of these other devices as well. Which is, when you were setting up your smart speaker as an example, you know, we made it really simple and natural for you to be like, "Hey, yeah, if this smart speaker is going to be a great product for me, I need to be able to link it to my Spotify account or my Apple Music account or my YouTube Music account."
And so, we made it a really good default part of the experience where you really kind of like, we did a lot of learning from that. And then I think it's the same thing here which is, "Hey, if you really bought this smart thermostat to help you manage your energy cost, that's why a lot of people are buying these devices, being more thoughtful, more control over comfort." So of course, it makes sense when you set this up to link your utility account. Like, how would we know how to kind of shift your usage and minimize your costs if we don't know your time-of-use tariff?
And so, I think that type of kind of more of a normative approach to helping people do the thing that makes the device able to do its job more effectively is really, I think, an approach that has helped us really change the game in terms of enrollment numbers.
David Roberts
So, from the customer's point of view, they're setting up their smart thermostat, they click "yes" to this one question that comes up like, "Would you like to have us help you save more money?" And then, from the consumer point of view, that's it, right? Like, they click that button, things happen behind the scenes, they save a little money. Like, does the specific savings from participation in the VPP show up in some separate ways such that it's sort of flagged for users?
Ben Brown
Yeah, so we were talking about the consumer experience, and how do we kind of simplify that as much as possible? And so in the background, part of what we'll do is we're also saying, "Oh, you know, that next step after you click 'yes, I want to be able to opt into energy optimizations for minimizing costs and maximizing cleanliness of the energy mix I use,' the next step is really like, 'Oh, we've also seen that you're, you know, there's a program available for you in your local Duke utility or your local PG&E program.'" And so, you know, then we're able to do that and in doing so, users will get an additional benefit that comes not just from reducing usage but also a benefit that's coming through and a rebate that comes back through their bill.
David Roberts
And it will say, "This is what you get for participating in this program"? I'm just wondering how invisible is this? I sort of go back and forth. I mean, part of me thinks that like there's no real reason that customers even need to know much about this is happening at all. Just like, "Check the box and don't worry about it."
Ben Brown
I think it's about how proactive we are in terms of really spamming them with a ton of information versus being available when you are interested in jumping in. So, this idea of when there's a moment in time — we call it this line of visibility — so when there's a moment in time to communicate to you about some benefit that you've just accrued. So, you've come to the end of a summer program, we've been able to save you $50, we'll communicate that to you.
And also, you always have the ability to jump in and be like, "Oh, I want to see what happened here," and then being able to look at it there. Because there's such a diversity of ways these programs are being scaled nationally, there are a couple of different models that we have to manage behind the scenes. But we want to try to make that as simple, abstracted, and engaging to customers as possible.
David Roberts
Let's talk then about data. I just recorded a pod with Cory Doctorow just a couple of days ago, who you may know as a tech guy, tech writer, coined the term "enshittification", specifically about platforms. And you know, the idea is like you get users on your platform by offering them all sorts of goodies, a really great deal, and then you get them on your platform and then they get locked into your platform.
And once they're locked in and it's hard to leave, then you start exploiting them and selling their data, etcetera, etcetera. And I'm sure if you've read any Cory, you know the process. Obviously, as he and I discussed, that's one thing when you're talking about your smartphone or whatever, but it's a whole different thing when you start talking about your house, right?
When you start talking about how you're going to find out you don't actually have control of your own house, and I've been thinking about this sort of platform enshittification, the danger here. There's also such an information asymmetry between you and the customer in this situation. They don't know anything about what the grid's doing, they barely know what their own appliances are doing. So, it just seems like a situation that is ripe for exploitation and I'm just wondering how much is that on your mind and what kind of things are you, do you want to put in place to avoid that.
Ben Brown
Yeah, I mean, it is definitely something. It's obviously coming from a place like Google, which is very, very conscious around, you know, data access for customers, being really transparent about how data is being used and really being strong around opt-ins and how data is exchanged. I really believe strongly in that kind of transparency while also being able to enable customers to sign on to be able to do things on their behalf based on their preferences that really help them achieve their goals.
And so, I definitely think the data component of this is important, but also, in order to help them achieve their goals, we have to make sure that they can see everything and see what's going on. And to your point in the last question, being able to double-click into stuff to understand how things are working and what happened in the last energy shift. But being able to also make sure that customers are always in control of all of these components.
They're always in control of what data is being shared. They're always in control of being able to maintain comfort in the home. It can control the thermostat in any way possible. And so, I think that part to me is super important around customer empowerment end to end, and I think that's a very strong thing to mention here.
David Roberts
Yeah, you know, we say people opt into these things and agree to these things, but you know, everybody's familiar with the last screen of the setup which is a big wall of text, "Here's our terms and conditions, scroll to the bottom and click yes." We all know that no one reads those things. So, I don't know that — I don't know that having the customer opt-in is all that much protection. I mean, you're going to have a lot of data here, you're going to have a lot of very intimate data about people and how they behave. Do you not think that there's going to be a temptation to misuse that data or sell that data? It seems the temptation lurks here.
Ben Brown
Yeah, I mean, I think that's why we take ourselves, you know, as serious stewards of information, which is, you know, we're definitely working with companies like Google and others that also take that really seriously and really care about customer empowerment with that data and being able to also make sure that folks are able to opt-in or out at any time to your point.
But, I think that in this world of trying to empower devices and households that own and control these things to be able to take part and save money in these aggregated ways, it's really important that we're able to find solutions for that. And I think that's why we were really strong around supporting and developing the Matter protocol, which was a really good unifying way of making it straightforward for smart home devices to connect to any platform so there was less of this kind of "lock-in" mentality. I think that's a good example of that.
David Roberts
Let's talk about that for a second because the other big — Cory's other big thing he gets into a lot is just lock-in. So one of the things that I would be, as a newly sort of Cory-pilled, this is just all on my mind now, but like if I'm signing up for a platform now, one of the things I want to know is, "Am I going to be able to leave this platform and move to a different platform and take all my data with me at any time?" Do you know what I mean? Like, is it going to be easy to get out of this if I want to opt into some different VPP?
Ben Brown
Yeah, so I mean, I definitely think with Matter being an example of places where Nest smart thermostat owners can work with different smart home platforms, that is definitely a way to do so. So, it makes it more fluid. And then, I think, you know, one of the things that is important to balance because I think you mentioned it before and it was a good example, you know, when you're talking about batteries, batteries are a great example, heat pumps are another good example.
When you talk about these really big, significant investments and places where, you know, someone is going to subsidize potentially to be able to enroll a battery in a VPP for ten or fifteen years, there are some benefits around the ability to have some vertical relationships. Otherwise, it's very hard for a company like ours or a company like Sunrun or others to be able to fully subsidize, or a utility to subsidize, these upfront if there's not some ability to say, "Hey, we have a way in which to kind of help ensure that folks are able to participate in the program over time."
David Roberts
Yeah, speaking of being able to get in and out and interoperability, one of the things that I've been worried about with the home electrification space just seems like a very typical tech case in that it's like a new market, people are herding in before we've done the work of establishing interoperable standards here. So, like the danger seems to me, you're going to get a bunch of different appliances that are geared to different communication protocols and different VPPs won't be able to talk to each other. Consumers are going to end up confused, like they're going to have their EV in one VPP and their heat pump in another, etc. So, what's your take on the state of the industry in terms of planning for these things all to work with one another?
Ben Brown
Having worked on supporting the Matter protocol buildup for a while, in terms of it coming together, I would say one of the things we're still at the beginning of is actually hitting scale. There are such different ways in which programs, even the ways we think about VPPs being supported on the state or the regional level, are so diverse and different. Being able to even have a set way of how people believe that if they are supporting households in terms of investing in home electrification and enrolling these devices into VPPs, there's some kind of clear way that households are going to get compensated for that.
I think that's a really important thing here too because, as we are scaling up, it's important to have ways in which we standardize communication. There's a lot of standardizations for IP communication and underlying device communication, and I think a lot of those actually are taken advantage of with things like Matter. I think when it comes to the grid level, I still am concerned that there's for sure not nearly enough being done on the state and regional level from a policy and regulator perspective to really help make sure that VPPs are, you know, there's a clear path for households to be compensated for their ability to participate in these programs.
David Roberts
Right, are there currently any rules about, you know, like I don't know, minimum compensation or transparency? Like, is anybody regulating this stuff yet?
Ben Brown
Definitely, on the state level, where in which there's open markets. I think that you know, obviously, we participated directly in building VPPs in the California market. OhmConnect has, over the last ten years, and we've been kind of ramping that up pretty significantly. Obviously, in Texas, where in which we've just talked about the energy partnership, and then in New York. And then there are more of these, I think, on the state level VPP bills being passed in Maryland and Colorado that really help from the state level encourage utilities to really value and encourage the kind of the ramp and adoption of VPPs on the residential level. And there are pushes in other states like Virginia, Illinois, and Michigan.
David Roberts
Are they sort of aligned? Like, you know, are these bills kind of learning from one another and do they have similar content? Or, you could also see the regulatory environment becoming very fragmented and difficult to navigate.
Ben Brown
You know, back to the thing you were talking about from the beginning. We are definitely in a crisis when it comes to both trying to decarbonize our grid and trying to deal with the hundreds of gigawatts of peak capacity that needs to be added over the next ten years. Actually, a lot of that needs to be added more quickly if we really want to support a lot of the generative AI and data center growth and a bunch of the other pieces that are really kind of flexing over the next three to five years.
And so, when you think about that, I think there's a lot of interest both from our energy partners on the utility level as well as on the regulator level around how to learn from each other and push some of these things forward because I do think there's a lot of commonalities. I do think there's a lot of leaders in the space, both from the regulatory side but also from the utility side, that really are trying to push some of this stuff forward.
And the main reason being that it's different from the past is that we're not in a phase now where it's about kind of switching from different resources to others. We're actually in a phase now where almost unanimously across the country, everyone is trying to figure out how to get access to more capacity.
David Roberts
Yeah, I feel like people talk around this a little bit, but the real truth of it is the quantity of power that these people need and the timescale upon which they need it rules out everything except VPPs. There's no kind of power plant that you can build fast enough to satisfy the kind of demand people are talking about on the scale and speed they're talking about. Only, you've got to somehow find a way to exploit existing resources. You just don't have time to build new resources.
Ben Brown
I absolutely couldn't agree more, and it's definitely the thing that we have been trying to kind of yell from the mountaintops over the last year and a half, two years specifically.
David Roberts
I think people are getting that. I mean, I think the DOE report kind of prompted that, and it's just like a bunch of entities with giant sacks of money wandering around being like, "Can you give me power? Can you give me power?" That will definitely spur a lot of thinking.
Ben Brown
I mean, I was just at a conference earlier this week where we were talking about data center growth, and I worked really closely with the data center team at Google, coordinated with a lot of the early teams on PPAs for renewable energy and a lot of the 24/7 goals that folks like Google have. And I would say, I'm actually, the amount of growth that they're trying to go after, and I, coming from a consumer product background, really believe in these use cases.
I do believe — we talk about the electrification of everything. Generative AI is like the electrification of creativity, the electrification of productivity. It is a real, real thing, and I think that the consumer benefits of it, the user benefits of it, and the workflow benefits of it are going to be so massive that it is going to be this next big jump in the computing epoch, like the smartphone revolution, like the internet revolution.
Really, I do believe it's going to be significant, which is also why I even think the estimates we think are happening and the desire for folks to build new data centers to support some of these new use cases, that's going to be even bigger than I think we can even imagine.
David Roberts
Well, even if it's bigger than projections, if you look out into the mid and long term, that's still going to be dwarfed by the electrification of transport, the electrification of industry, and the electrification of materials. And you know, who else knows what we're going to electrify, but we're electrifying the entire economy. So, like, there is no such thing as enough power, I think, for our, you know—
Ben Brown
Couldn't agree more.
David Roberts
for a while. So, if you have resources that are underutilized, wherever they are, you got to start finding them and utilizing them. That's to me what VPPs are.
Ben Brown
Think about the environment that, you know, we have spent the last 20 years, for me, and you know, I know for a lot of people much longer, trying to operate in, which is working with energy partners, utilities, and regulators in a world where, honestly, demand has been mostly flat.
David Roberts
Yeah, which means you put anything on, you take something else off, right? Whole different kind of calculation.
Ben Brown
100%, that's a totally different conversation. And I think in this environment, I will say, we're seeing so much collaboration because we all see the problem.
David Roberts
Everybody's desperate.
Ben Brown
Totally. And I think that, I mean, but I think in moments of the impending crisis, I think that's where in which you're seeing a ton of activity. And obviously, we all believe that climate change is the crisis that should have been pushing us even faster earlier, but this one actually now is both the combination of that and actually real, massive growth —
David Roberts
And the giant sacks of money. That helps move things along. One final thing on the interoperability bit, which is just right now, you're starting with mostly thermometers, mostly Nest thermometers, and then this other brand of thermometers, Vivint. What, practically speaking, is involved in adding other appliances or whatever?
Like, if I'm in a home, you're controlling or partially controlling my Nest thermostat, and I have, I don't know, a water heater. Like, do you need me to put something on my water heater? How is it that your system is going to start talking to my water heater? How does that work?
Ben Brown
First off, for smart thermostats, yes, obviously the history that we have with Nest. We work really closely with Nest thermostats, but we also work with Honeywell and Ecobee. Then for the Texas relationship, we've talked about our investment with Vivint thermostats as well. But what I would also call out is that the benefit of a smart thermostat, you know, the keyword being "smart" there, is that in and of itself, that is the internet connectivity.
David Roberts
Yeah, it's already hooked up to the internet, it's already smart. My water heater is dumb and not talking to the internet. So, how do you overcome that?
Ben Brown
So, as an example, we partnered with Rheem to also be able to think about the future of hot water heater electrification or hot water electrification and ensuring that we can partner to incentivize and ensure that most of those electricity electrified hot water heaters that are going to homes will include a comms module. I think that's going to be a really important thing going forward when we think about the opportunities in front of us and, you know, we're still in the early days of that.
David Roberts
That's going to be all appliances eventually, right? Don't you think eventually, like being smart and connected to the internet is going to be sort of a default thing for appliances?
Ben Brown
I think so, to a degree, but obviously, we care really deeply about the ones that are using the most energy because those are the most meaningful to households for financial savings and then the grid for reliability. So, you know, definitely when it comes to the majors like heating and cooling for HVAC systems, smart thermostats or direct comms on the heat pump, hot water heating, EV charging, and batteries clearly are going to be really significant. And then of course, smart appliances like refrigerators and washing machines and things like that probably also come along.
David Roberts
But if my water heater, my existing water heater, is dumb, do you just write it off or is there some way you can bring that into your VPP?
Ben Brown
So, I think that there are definitely different opportunities with retrofit modules and things that can come along. That's not yet a focus of ours.
David Roberts
Right, I'm just talking about the future when you start thinking about adding other devices. I'm just curious about the sort of mechanics of it. How do you bring those in? Because the Nest, as you say, the smart thermostats are kind of a gimme because they're already smart, they're already online. But once you start going to other devices, it seems like a little bit more of a challenge.
Ben Brown
For hot water heating, I mean a huge part of it is going to be that most of the fleet will be shifting over the next five to ten years, both because of regulation but also because of financials, to going from gas-based or oil-based to electric-based. And so, I think in that changeover curve, you really care about ensuring that, to your point, those devices are connected. I think that's a really important one and that's obviously a big part of what we've been talking with partners like Rheem about, and that they are pushing themselves really and advocating for.
And then, obviously, for other device types like storage and EV charging, more and more and more, they're clearly an incentive for those things to be connected and built default that way. But there are challenges with that because I will call out that most of those devices exist in places that actually don't get great Wi-Fi connectivity. So, there are other things that we focus on there too.
David Roberts
You mean like literally in the home, like the basement of the home? You mean like literally like Wi-Fi doesn't reach down to your basement?
Ben Brown
Yeah, so I think that's why things like the Matter protocol and other things are helpful to make sure that there's different comms components of how to maximize connectivity to some of those devices. But I think that it is very important that default-wise, going forward, that you know, Wi-Fi at a basic level, if not other communication standards, really helps solve that problem.
David Roberts
Well, when I think about the big energy users, as you say, in your documentation, HVAC is the big one. So right, if you're going to go after the big one, and it is helpfully smartened and connected to the internet in many hundreds of thousands of households, so this is a helpful place to start. But what's next after HVAC?
I just think intuitively, it seems like the next biggest prize is the EV, the next biggest consumer. Is that right, or would that be the next on your stack to go after?
Ben Brown
Yeah, so I think you can look at it in a couple of different ways, right? So one is what we talked about before which is what are in people's homes today, you know, that hits massive scale. And that is definitely the heating and cooling of air and the heating of water. And so you know, you have eighty plus million homes with HVAC systems. And so I think that's why it's such a great focus on the electrification of heating, cooling, and the ability for that to be enrolled in grid flexibility programs and VPPs. And then the hot water for sure, also again an existing thing that has — it's not an additional ask of a household to put in a new expense.
To your question around EVs: I do believe that EVs clearly are going to provide a massive benefit to customers from an energy savings perspective overall and really making sure that charging and managed charging is done well in a way that doesn't challenge the grid as it really scales up, especially on a localized level. But it's an interesting thing to think through around the shiftability and how EVs are enrolled in VPPs. I think we see a lot of excitement around that and we are excited about that, both because there's going to be an accelerated adoption curve for that over the next decade but also around really looking at specifically for programs when people are charging and how shiftable is some of that charging.
David Roberts
I've been wondering if it makes sense to fold EVs into a larger VPP that includes all these other appliances, or whether they are kind of their own beast and you kind of need a separate — just because they, relative to other household appliances, are very unique. They leave the house frequently. So, I've been wondering if you just need kind of a separate, vehicle-to-grid is going to be kind of a separate thing from residential VPPs.
Ben Brown
Yeah, I mean, I think that if I look at the different time horizons, right, and we talked about it a little bit in a position paper we put out a couple of months ago. When you look at over the next five years to hit meaningful scale for VPPs, a lot of that has got to be coming from HVAC and hot water. Just to be super clear, like there's just that we're not growing fast enough on EVs and storage and the cost benefits of storage.
It's just going to be hard to kind of move that as quickly as you need it to be to hit the scale that we're talking about to get to one hundred gigawatts of scale, as an example. But of course, as we think about how to support customers when they're adopting EVs or how to support customers when they're investing in solar and storage, and making sure that those assets are participating and supporting VPPs in aggregate.
Because to your question before, imagine like a perfect — the best part of a population in five years could be that you have 90% of your households that are heating and cooling and hot water heating shifting or just heating and cooling, and then five percent or ten percent are both EVs and storage. And then actually, they can complement each other super well and at scale that hits what you want to from a gigawatt perspective. But they all have inherent benefits in terms of the types of shiftability they provide and so I think they all matter a ton.
They all have different scale in different time horizons, and that's why we're excited about partnering with folks across the industry. So, it's why we care about working with battery folks. It's why we're definitely working on the EV charging side as well. But it's one of those things that we really, from an urgency perspective, want to make sure that we're not just talking about smart thermostats. But for the next couple of years, I want to make sure that it's really clear to the industry that to light up these VPPs at scale — we have three gigawatts of capacity ready to enroll in programs across the country.
David Roberts
You mean three gigawatts of installed thermostats?
Ben Brown
No, we have three gigawatts of ready-enrolled VPP flexible thermostat —
David Roberts
Enrolled in your VPP, you have three gigs?
Ben Brown
And not all of those are enrolled directly into programs wherein they can provide the resources that the grid needs. And so, they're ready to go. They've already enrolled in terms of energy shiftability, but we haven't been able to bring them fully into the program where the grid and utilities in the local markets can value them completely.
David Roberts
And that's three gigs in Texas or is that everywhere?
Ben Brown
It's national.
David Roberts
And you're targeting some ludicrous amount, what, 30?
Ben Brown
Yeah, so we're actually targeting, I mean, again, by 2023 we're targeting 50. And again, I think that we all have to be setting aspirational goals here because —
David Roberts
And no one knows. I mean, no one knows. This is such a fog of war here.
Ben Brown
Yeah. But I think it's important because the scale and the kind of challenges in front of us are so massive. And what I mentioned before too, the smart thermostat is one hundred percent like the first device that most people adopt along their home electrification journey. So our ability to take, you know, let's call it, you know, the five million plus households we work with. They, we know that as an example, Nest thermostat owners are three times plus more likely to be people that are adopting EVs, to be people that are thinking about solar and storage, to be thinking about heat pumps. So we really believe that we can help support accelerating that adoption curve even more so.
Going from building trust over the experience and seeing the value in enrolling a smart thermostat in a VPP and then being able to kind of grow a deeper relationship with a household so that they can do more is.
David Roberts
It fair to say that the value of a VPP scales linearly with its size? Like this thing just gets more and more powerful the more and more people you have enrolled and the more and more different kind of devices you have enrolled, right? I mean that's like to me the logic of VPPs is the ultimate end is like a Skynet style super intelligent central coordinator of all the devices in the country or whatever. Like if you, if you want ultimate efficiency, you want a super smart Skynet controlling all the devices.
Obviously, you know, I've got Cory in my head worrying me about monopoly power, monopolies, and lock-ins which militates the other way, right? Like you want competition. So what do you, how does that — I mean this is all obviously down the road — but how do you think about the logic of size and scale versus competition?
Ben Brown
I think that the whole benefit of VPPs — and getting back to the thing you were talking about around the scale of value or how does value scale — is that it's a decentralized, aggregated, consumer-driven resource. And so, when you have five hundred thousand households in a state equally distributed throughout all the different parts of the grid that need that resource on a localized level, it is a far more valuable resource, I believe, than a single centralized big power plant owned by a single company. And so, I think that being able to have those resources distributed both because they can provide more localized grid value but also because they provide a massive amount of redundancy.
We talked before about the big difference between the type of smart thermostat programs we've run over the last decade. The fundamental part of it is that users always have control. If we're adjusting the thermostat by a degree, they can always change it. They have complete control all the time. But the benefit you have when you have one hundred thousand of those users is, you can, you know, balance each other. And you know, not only are we very smart about anticipating needs so we actually have very low kind of opt-outs and kind of in events and things like that, but you also are able to do that across the benefits of, you know, laws of large numbers, right?
David Roberts
Exactly. If you have fifty participants, you have to juice all their thermostats by five degrees. If you have five million, you can juice all their thermostats by 0.1 degrees and get the same effect, and they won't notice. Which gets back to my logic, why not just aggregate everything into one giant VPP? What is the limiting logic, I guess?
Ben Brown
At the end of the day, there's always great competition in building this out. We have a lot of partners that we work with. There's a lot of other folks that are innovating in this space. We're not the only ones. Right now, we're still at the phase where we have to prove scale. I think that's why we've been so public about our numbers and so public about talking about "No, like, this isn't a new thing."
That's kind of why, even when you were asking questions earlier on about VPPs and DR, I'm like, "No, we've done this for ten years. We have millions of households enrolled and it's here. It's ready to be enrolled and it's highly personalized." So, to your point as well, it's like there are some households where a shift of 0.3 degrees is what's meaningful now and another household actually where they care about maxing out savings, so two degrees makes sense.
Or another household, no one's home and so I think that all those things really are this amazing benefit again of like distributed — you know, you talked about VPPs and obviously, I think a lot of us like to think about it as a distributed power plant, but that's the whole benefit of that. Batteries can also represent a key component of it, but it's so helpful when you have that plus a million thermostats right because you're able to do all these much more interesting things and the scale is meaningful at the utility level.
David Roberts
Yeah, and anybody who's studied or even read about computer science, or like I used to be in philosophy programs and read a lot about cognitive science, knows the merits of distribution are highly theorized. There are millions of books about it and they're very deep. You know, but just intuitively, I think people can get that they degrade gracefully.
Like you could lose, you know, if you have five million households enrolled and like one hundred thousand households go offline all of a sudden, it's pretty seamless, right? Like, it adapts seamlessly, it degrades gracefully. There's all sorts of merits to doing things in a distributed way that reduces the risks you have when it's all centralized in one place. It was a long obsession of mine in grad school, thinking about how the brain works in a distributed way but anyway, that's all off topic.
One thing I wanted to ask is, you are operating in Texas, which is very market-ish relative to other electricity markets, and they have retail competition in Texas. So, Texas is kind of like the petri dish for a lot of different people I talked to on this pod, trying out their new thing because it's kind of a wild west. What regulatory environment do you require to set up a VPP? Could you do it in the Southeast where they have the vertically integrated monopolies? Can you do it in any wholesale power market? Where could this work outside of Texas?
Ben Brown
To your question before, I mean, we're already doing it in many markets across the country.
David Roberts
Texas and California.
Ben Brown
Yeah, so to define it, we have more of a direct market enrolled VPP where we're working directly into wholesale energy markets, and so that is in California and that's in Texas where we are also partnered. Either we are running our own REP, which we have our own REP with OhmConnect Energy, and then a —
David Roberts
Retail Energy Provider.
Ben Brown
Exactly. Sorry for the shorthand. And then also, now we partnered massively with NRG and then we also operate in wholesale markets in New York as well. Then, in addition to that, to your question around the Southeast, that's where the one hundred plus utility programs that we built over the last decade come into play. Most of those programs and most of those utilities that we're partnered with, they're all really interested and excited about being able to expand and invest in building large scale residential VPPs. And so, in those markets where the regulatory structure is different, that's where we have kind of more of a direct engagement with those utilities to build out that resource.
David Roberts
Do the utilities, I mean in those markets, in those areas of the country, the non-restructured, pre-structured markets, the utility owns power plants. So, do they own the VPP in that case? Are you some sort of contractor that helps them create it? Like, who owns the VPP in a southeastern context?
Ben Brown
Because these are DIY and were brought to us by customers bringing them along, customers own it, right. It's a distributed customer VPP. And so, when we think about how and some of the regulatory support that we've been working with utilities on, it is giving them a way to be able to make it easier to actually procure capacity with us, with customers. And so, that kind of looks more like a true power plant in those markets where they'd be buying it similar to an independent power producer from another entity, and we, on their behalf, would be buying it from customers.
David Roberts
But this can be done anywhere in the US?
Ben Brown
It's not — as we mentioned before, it is not, especially with FERC 2222, it has not been completely set up and supported across all the different ISOs and RTOs. It's adopted differently and then definitely within the state level and regulatory environment for utilities. We keep on working with them to find creative ways to expand on this. But there could be even better support, absolutely, from regulators around making it easy for a utility to say, "This residential VPP of five hundred megawatts, we can say this is accredited capacity and you, utility, can use this as part of your resource planning." And so, I think that's an important thing that we're starting to see and we're all talking about.
David Roberts
When you think about what politicians could do to help structure and rationalize and grow this market, is there a big federal lever to pull or is this mostly a state thing? Is it mostly a utility thing? Is it utility regulatory commissions, FERC, who can help here by doing what?
Ben Brown
So, it's all the above, and I think we're definitely planning for the environment over the next few years to really be focused on the state level and definitely continue to work with utilities. I think, you know, from our experience over the last fifteen years, a lot of amazing work has been done on the state level. I think that's where we've seen a lot of these kinds of programs come to life and grow.
And I think, on the state and the utility level, I think we're, as we mentioned before, we are all good friends in trying to solve the massive supply challenge we have in front of us. And so, I think everyone is the best of friends in trying to figure this out right now and I think that's a very, I'm really optimistic because of that.
David Roberts
Yeah, I think that's such an important point to emphasize. It's such a change and it's happened so quickly, I'm not sure people have caught up with it. But like, you're not fighting these partisan battles as much anymore. It's not a zero-sum game anymore. Everybody wants whatever is available, whenever and wherever it is available. Like everybody, everybody's oriented in the same direction for once, which is a really fundamentally new situation in our world.
Ben Brown
Absolutely.
David Roberts
Do distribution — conceptually, this all makes total sense. VPP, all makes total sense, but it sort of assumes seamless power flow among all your connected houses — do the limitations of distribution grids and distribution networks impose any meaningful restraints on you or hurt you, or is that an impediment to you?
Ben Brown
No, I mean, I think the more and more that those are actually incorporated into the way in which the resource can be valued, the better. Because of the fact that we're distributed, it actually makes it so that we can be really thoughtful around targeting, you know, specific nodes or —
David Roberts
Yeah, geographical targeting, another thing a normal power plant can't do.
Ben Brown
Yeah, and I think that's actually one of the things we're most excited about. A lot of the stuff that we've been talking about with our utility partners and showcasing in our platform behind the scenes is all these amazing things that we can do with our customers to be able to kind of help provide more targeted benefits to the grid, especially as the distribution grids are going to be going through more challenges with deeper EV adoption, more electric. You know, obviously, load growing on more parts of the grid with home electrification.
And so, I think the ability to actually be really targeted about that and help kind of defer or avoid a bunch of crazily costly distribution grid upgrades. I think that, you know, we all are exhausted with rising energy costs, whether that's because of system upgrades or because of new power plants that need to be built. And I think that's why VPP is being by far the cheapest resource, both from a capacity side but also from an ability to be thoughtful about distribution upgrades that need to be made. I just think end to end, it's such a powerful resource. It's not just that it's the only one. I think it also provides so many of these ancillary benefits that we're really excited about.
David Roberts
Yeah, even if you throw in some grid upgrade costs, it's still cheaper, I think, than building power plants. Well, as a final question, and this is sort of one of the geekier aspects of this which I really am taken with: People who are familiar with conventional traditional demand response programs, you know, a lot of those were manual, I guess analog, I guess you'd say. You know, a lot of them traditionally involved, you know, like customers getting emails saying, "Hey, could you turn your AC down on Wednesday?"
Things like that. So, but all those were geared around, I think, designed around big, chunky responses to big, chunky events. So, like, you got a big storm or something, you need a sudden, big surge of power away from here into there, and that's what demand response is for. I think that's the mental model people have of demand response, insofar as they're aware of it at all.
These are small groups of people we're talking about, but that's how people think about demand response. And what you're doing here, what the internet connection and the automaticity of this and the AI of all this does, is allow you to be making sort of micro tweaks constantly.
So instead of big chunky responses, you're constantly fiddling and balancing. So the way I think you capture this in one of your position papers is, you said you can't just shift a demand curve, which is like moving it from one place to another, you can shape it. So talk a little bit about what that means and what the implications are for the grid.
Ben Brown
First, as you mentioned, traditional demand response programs, which have provided a really important resource for critical events over the past twenty years, all the way going back to HVAC switch programs, which no one loves, all the way to smart thermostat programs, and a lot of innovations —
David Roberts
I don't think anybody wants to get an email asking them to turn off their stuff, even if they can make money.
Ben Brown
Yeah, 100%, totally. And so, the ability to have smart thermostats support those kind of ten critical events more automatically, more thoughtfully, more personalized to users, that still will matter, and those things are important. But one of the stats that we mentioned a little earlier that I think is so exciting is that last year our platform did three billion energy shifts, three billion. And that is because that's across a large base of users on a more continuous basis. That might be fifteen minutes, it might be thirty minutes to shift out of a kind of dirtier grid mix or time on the grid when energy prices are more expensive because of the time-of-use rate or the real-time rate.
David Roberts
So you could tweak an individual house's consumption two or three times a day, like multiple times a day, in just little increments?
Ben Brown
To your point, too, in the smallest of ways, right? So, by 0.5 degrees in a way that is absolutely not noticeable but helps a customer save money or helps them maximize their —
David Roberts
Do you guarantee people when they sign up that they won't notice comfort wise, like is that some sort of guarantee like "We promise you won't know this is happening"?
Ben Brown
I think it's even more interesting than that, which is what we do. We obviously deploy a lot of artificial intelligence and ML to be able to optimize our algorithms. And what we do is we're very cognizant of what the prevailing rate of changes would be on a thermostat manually.
So, if you're adjusting your thermostat manually or through the smartphone app, we know what that number is. And so, we actually think about optimizing the shiftability component here by ensuring that the prevailing rate doesn't actually change. So, kind of in an almost RCT style way, we really are trying to optimize for the fact that it's unnoticeable to customers.
And so, you're doing things in very, very small ways that provide them value, the grid value, but you're not actually changing, to your point, anything around comfort, which would be perceived through them changing the thermostat.
David Roberts
Right, right. So then you're doing these tweaks all day long, which means you cannot just herd into peak times and reduce peaks, you can sort of flatten the demand curve throughout the day, right? The ideal, like in our perfect future, the demand curve is just flat, right? And it's very predictable, everybody knows exactly how to meet it, there's no spikes or anything. We could get there, right?
Ben Brown
Actually, I think it even needs to be better than that, which is in the new world we're moving into where supply is variable and demand is the thing that you don't want it to be flat. You actually probably want it to be much more responsive to the real-time needs of the grid and the anticipated needs of the grid. And you have to think about something like a smart thermostat or charging, you also have to be anticipating how to optimize that against when people are in their rhythms and when people are moving in and out of the home and what they need.
And so, there's a lot of complexity that goes into that so that you can maximize the value to the grid, minimize cost to customers, while actually all maintaining an elevated level of experience in the home, whether that's comfort, whether that's time to charge, all these other dynamics.
And that's what's exciting about doing that at a scaled level is that you can really do these things in highly personalized ways that actually elevate customer experience because one, they're achieving the same kind of control over comfort, but they're actually doing it at significantly less cost and they're supporting decarbonizing the grid at the same time.
David Roberts
When we say customers save money, I forgot to ask this earlier, but I might as well ask you now, what does that mean? Is that like a couple bucks a month, ten bucks a month, like what do we, what's the range? How meaningful is it? I mean, given that all they have to do is check a box and then they're done, I guess anything is gravy, but like how, what kind of numbers are we talking about?
Ben Brown
Yeah, so when we think about customer savings, there is both from the efficiency side — so when you adopt a smart thermostat, we've done a lot of research on this. You're likely to save ten to fifteen percent on heating and cooling in your home versus not having it, just because it's smarter about not heating and cooling your home when you're not home compared to a prevailing programmable thermostat or a non-smart thermostat or essentially an old standard, not smart thermostat. There's that.
I think in the future we're moving into, and what we've seen over time with optimization against what has become more prevailing, which are time of use rates, there's even more significant savings that can be had there. Because if your peak period is from four to nine PM, really anticipating the fact that you could pre-cool your house.
David Roberts
Yeah, pre-cool. You could preheat, you could preheat your water, you can pre-do a lot of stuff. 100%, I really appreciate that.
Ben Brown
That adds up, and we're talking about a meaningful amount of money each year. I mean, it varies by climate, region, and state and stuff like that, so it's hard to go through an average number, but we're talking about something that people will feel, and they see when they interact with our product.
David Roberts
And finally, I asked this of the Base Power guys too. You're probably familiar with Base Power. They're another retail provider down in Texas doing something not totally dissimilar, but they're basically installing batteries on customer property. They use them for energy arbitrage, sell energy when it's expensive, store it when it's cheap, and share some of the profits with the homeowners where they have installed the batteries. And what I asked them is, "If once you get enough controllable load, isn't the opportunity for arbitrage going to eventually go away?"
Like, do you know what I mean? Like, aren't we eventually, once we have your fifty gigs of controllable load or whatever, beyond however far we go, isn't arbitrage, aren't you going to eat your own lunch eventually? Eventually, there's going to be nothing left to arbitrage. Does that make sense?
Ben Brown
Yeah, I think it's kind of a good first-order principles way of thinking about it, and I think that what's happening in the background at the same time, though, is that more of the supply resource that's coming onto the grid is variable.
David Roberts
Yes, you're chasing a receding target, I guess.
Ben Brown
Yeah, so to your point, there's definitely a point in time where optimizations only go so far. But when the baseline is going from 20% of your mix is variable to 50% or hopefully 70%, then you're in a world where you're really trying to balance that. And even if you're — especially in that world where there's maybe a couple of really critical moments a few times a year when the grid is tremendously under stress, then I think you're seeing a ton of value from these things for a long time. I think that we're talking about, I think we're fifteen years of really trying to grow this resource where we have hundreds of gigawatts of flexible resource across the grid that will help support decarbonize more variable supply resources coming on.
David Roberts
And you think we'll get to a place where buildings are connected to the internet and their load is somewhat controlled as a kind of matter of fact, as a default, as a universal, like all buildings eventually or something close to all buildings, you think that's where we're headed?
Ben Brown
I think that the ability for customers to save a lot of money by being able to manage their costs more effectively is such a big driver of this. It's not — this is kind of what you were asking before around standards and regulation. There's a ton that we need to be doing on the standardization and regulation around ensuring that customers can receive the benefits they're generating for the grid by doing these things. But I think the value will be so massive to a customer versus them not doing that, that I think it becomes more of just like, "Yeah, I'm worried about my rising energy costs, I want to be thoughtful about this, I want to be responsible."
David Roberts
Right, awesome. Well, this is such interesting stuff, such an incredibly fluid, promising, and interesting industry to be in. So, thanks for coming on and talking us through.
Ben Brown
Well, thank you so much.
David Roberts
Check back in a year or two and see. I mean, who knows what things will look like.
Ben Brown
Oh, absolutely. Well, thank you so much for having me, and yeah, we'll have a lot coming, so I'm sure we'll probably want to talk more before that.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I'll see you next time.
WASHINGTON, D.C.—In a hearing today, Growth Energy—the nation’s largest biofuel trade association—urged the U.S. Environmental Protection Agency (EPA) not to retroactively reduce renewable volume obligations (RVOs) for cellulosic biofuels under the Renewable Fuel Standard (RFS).
Earlier this month EPA proposed a partial waiver that would reduce the requisite amount of cellulosic biofuels that needed to be blended into the nation’s fuel supply, as stipulated by the RFS, for the 2024 compliance year. In testimony, however, Growth Energy General Counsel Joe Kakesh warned that following through on the waiver could set a dangerous precedent for future retroactive reductions, and would undermine the growing market for cellulosic biofuels, which are biofuels produced from leftover plant parts like stems, leaves and other fibrous material.
“EPA’s proposal to partially waive 2024 cellulosic volume requirements is inconsistent with EPA’s recent RFS policies and with the RFS itself. While 2024 cellulosic volumes may not yet have achieved RVO targets, many biorefiners have nevertheless been making headway in cellulosic biofuel production, and we’ve seen more and more of their cellulosic registrations being approved by the agency,” said Kakesh.
“In any case, any waiver of 2024 cellulosic volume requirements here should not provide precedent for the future of the RFS program or suppress RFS program goals, which are to drive production and innovation of biofuels, including cellulosic biofuels, and not to passively track a biofuels marketplace without them,” he added.
To read the full testimony as prepared for delivery click here.
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