⚡ DISTRIBUTED ENERGY RESOURCES Archives • The Impact

Case Study: When it makes sense for utilities to island its customers

Swarnav S Pujari — Mon, 27 Sep 2021 16:08:33 +0000

It’s commonly known among people in the solar and DER (Distributed Energy Resource) space that utilities tend not to want to see their customers be islanded.

However, absolutes are never true.

In some cases it does make sense for utilities to island customers from their electric grid and BoxPower is one such company helping service that need.

Grid Edge Communities are a loss on the books for utilities

If you remember an earlier edition of the DER deep dive we’ve been doing – utilities are typically incentivized by avoiding losses more than they are about gaining new revenue. This is critical to understand because it lays the groundwork for why companies like BoxPower need to exist.

Grid Edge Communities are causing significant, guaranteed losses for utilities as regulation doesn’t allow utilities like PG&E to not service customers or rate hike specific individuals.

The reason these communities at the edge of the grid cost the utility so much is due to various factors:

Difficult terrain makes it hard to service power lines
Certain powerlines may be subject to wildfires or require heavy maintenance
Powerline upgrades are expensive especially with demand increasing and the movement towards cleaner and more variable sources of energy

Rapidly deploy and let third party entities manage microgrids

BoxPower introduces the ability for groups like PG&E to take a modular approach toward deploying microgrids. This creates a financially viable option for utilities to consider when debating upgrading power lines to increase reliability.

The modularity approach to building a microgrid – stacking batteries, solar panels and generators – definitely has proven to be a useful strategy as we see companies like Tesla standardize even residential solar install sizes as opposed to custom engineering a project each time it comes in.

However, for utilities this presents a cost effective path to go down to deliver clean and far more reliable power to customers living at the edge of the grid.

Outlook

BoxPower has begun to pilot projects with PG&E and has done deployments in places like Puerto Rico. The thing that excites me is the space of modular microgrids and how new electric retailers or utilities will take advantage of the flexibility these assets can deliver.

Companies like BoxPower or Scale Microgrid Solutions could really be key players in supplying new advances in energy technology as modularity may enable the ability to hot swap components – making the grid far more dynamic and interesting to follow as new technologies could be adopted much faster than usual.

About The Author

Swarnav S Pujari

Founder of The Impact

Swarnav has over 10 years of experience in the energy & climate tech space, holds 2 patents and is active in the tech, climate and media industries. He specializes in Product/Product Innovation as well as Go-To-Market and Growth Strategy.

By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).

He founded TouchLight a utility backed energy company focused on developing IP for utilities and startups pushing electrification forward. He also serves as the appointed Chairman for the Town of Yorktown’s Climate Smart Communities Task Force, where he helps with drafting legislation and enabling sustainability efforts within the town.

Concurrently, Swarnav founded The Impact to help investors, emerging founders and driven climate enthusiasts discover and identify new climate-tech startups, technologies and opportunities before they hit the traditional media sources.

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Yotta Energy Is Making Storage Easy To Deploy On Commercial Buildings

Swarnav S Pujari — Tue, 07 Sep 2021 02:20:45 +0000

The US solar industry grew by 43% in between 2019 and 2020. Most of the newly added capacity is likely coming from utility scale deployments or residential installs.

Ignoring the commercial and industrial (C&I) space for solar has become almost a status quo. While many in the industry recognize the hugely untapped opportunity of deploying solar plus storage on C&I properties – the challenges it can bring tend to drive installers to look towards the utility scale deals or focus on residential projects.

The reason C&I solar plus storage projects get avoided is because they tend to have the permitting complexity of a utility scale project, but the “smaller” check size and behavior of a residential project.

Pair this with the rise of more energy storage systems (ESS) being deployed and utilities wanting property owners to prioritize buying solar plus storage – for grid management purposes – and you run into multiple new challenges:

Financing C&I projects
System design and standardization (modularity)
Keeping project economics reasonable when including ESS in project bids
Enabling ease of deployment and maintenance of a solar plus storage

What is Yotta Energy?

Yotta [yah-tah] Energy – founded by Omeed Badkoobeh and Vikram Iyengar – is building a solution to address the system design and standardization as well as the project economics challenges plaguing solar installers in closing more deals in the C&I market.

They do this through a solar panel integrated battery system.

Much like how Enphase enabled the modularity of deploying solar on residential properties, Yotta Energy is bringing the same approach to deploying energy storage effectively.

The hidden cost of commercial storage projects

Many people see the battery cost or the inverter as the primary driver in making projects expensive in small commercial and industrial battery projects. However, as shown by the graph it’s ancillary protections and installation that can drive the cost through the roof.

The benefit of taking a modular and panel based approach – as Yotta is doing – is that it allows developers to now avoid most if not all of those “extra” costs associated with these projects.

Yotta could create MWhs of easy-to-deploy storage capacity - which may position them as a leading player in deregulated electricity markets

The monetization of energy storage through VPP contracts or by trading flexible capacity on the wholesale markets (post FERC 2222) makes Yotta a really interesting player going into the future.

The ability to rapidly deploy low cost energy storage in a market which struggles to adopt energy storage (small commercial and industrial) means they’ve discovered a way through their system architecture to bring new capacity into the marketplace.

The potential to play in these markets and generate additional revenue from the creation of this capacity makes them positioned as a strong candidate even as other similar technologies may prop up.

Outlook

Yotta excites me given their key focus on servicing the small commercial and industrial niche. This sector has remained largely untouched from a financing, install base and adoption front purely because economics have been limited even with tax incentives.

New technological approaches like Yotta’s are what are needed to open this sector up.

About The Author

Swarnav S Pujari

Founder of The Impact

By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).

The post Yotta Energy Is Making Storage Easy To Deploy On Commercial Buildings appeared first on The Impact.

Why Clean Energy Startups Underestimate Selling To Utilities

Swarnav S Pujari — Mon, 19 Jul 2021 21:28:03 +0000

Working and building solutions in the energy industry is complex – especially for new energy tech startups.

Be it new geothermal solutions or even natural cave/mine based energy storage solutions – every single energy tech startup faces the same navigation hurdles in selling to utilities.

Utilities think differently and operate highly dependent on their local geography, political preferences and ISO.

This energy market is at a point where if in the US the grid nationalized, 1000s of clean energy entrepreneurs would wake up in a utopia as it would become easier to estimate what the economics of their new energy technology would deliver in each state.

These days if a clean energy startup has a team member with previous experience in selling to utilities – they may even be able to land governments as their initial customer.

You Need To Demonstrate Significant Revenue Gains Or Significant Loss Reductions

Help utilities avoid or reduce the losses on their balance sheet even more than create new revenue streams. Given the regulations around being a utility or a retailer – many times utilities will end up going deep into the red with a full region of customers. This could be due to the standard O&M costs they have with servicing those customers or even caused by the location + energy usage profiles of their customers – in turn driving up transmission costs.

Startups that can effectively demonstrate that their technology can reduce losses at a tenth of the current alternative’s cost, increase their odds of landing a contract significantly.

Even still plan for a 6-month-to-pilot and 18-month-to-contract sales cycle. If it’s a big enough purchase you’ll have to deal with the ISO as well, but that’s for a later article.

Innovation Departments Are Your Way In, But Not Where You Close

Innovation departments are great, they are paid to look for startups and have specific types of companies they are actively seeking. The best part is that they tend to know the right stakeholders within the utility you’re attempting to sell to – which means easier access when it comes time to selling to the right stakeholder.

However, many times startups get stuck in this part of the process – running pilots and losing money on deals.

Hardware is expensive and even cloud software costs money to operate. Pilot budgets rarely end up making startups net positive in terms of revenue. This strategy is perfectly fine until the startup realizes that the utility didn’t have this as a priority action within their needs list as innovation departments may run pilots for technologies they know are years away from the implementation stages.

When navigating a pilot with a utility via an innovation department the most important thing is ensuring frequent, pre-scheduled calls with the stakeholder(s) within the utility that you believe your technology makes the life easier of.

9 times out of 10 get to know the CFO…

Can You Really Beat The Economics Of Solar?

If you’re an energy tech company this answer has to be a resounding yes to even be considered for a conversation.

Now where many energy tech startups tend to falter is forgetting to check all their regions solar incentives. Speak with installers & engineering firms that specialize in utility grade solar projects – they tend to have people on staff who can do deep dives into finding and structuring solar projects in a way where tax incentives and intelligent deal structuring can effectively make your energy technology not worth a single look.

This makes it challenging for frontier energy tech solutions like geothermal to truly take off at a large scale.

While the Department of Energy funds many projects for pilot purposes, utilities rarely want to make the move to be a first mover on frontier solutions until incentives significantly drive the cost well below the cost of solar.

Does That Region Even Need Anymore Power?

This question alone can either save you months of heartache or if you’ve gone too far along it’s going to cost you months of your life and kill the project on the spot.

Community solar projects have been blocked by the Midwest ISO in Missouri because the grid already has too much capacity available, so solar would just be adding more to a system that can’t use everything available.

Solar farms in locations that have no additional demand needs can kill an entire project and if the power lines can’t support the capacity expected to be flowing through it can throw the economics out the door entirely if not kill the project as well.

Also be prepared to speak in terms of capacity factor as opposed the traditional “kWh” lingo residential and commercial solar installers convince you to purchase on – working with the grid is a different beast all together.

So how do new energy tech companies combat these challenges?

Unfortunately, they can’t easily – The best way is to come prepared.

Ensure your solution is fitting into locations where outdated peaker plants or soon to be retired coal plants are located – these are regions with capacity most likely needing to be filled
Explore every possible incentive or grant you can fall under to drive the project economics far below a solar project in the same region (don’t compare location, utilities think based on their service territories)
Most importantly find service territories where utilities actively lose money on every customer they service (utilities are obligated to service at a specified rate, even if it loses them money). If you can locate a region where your energy technology can be utilized and it results in significant savings to the utility by “islanding” customers which currently lose them money – you have a serious opportunity on your hands.

How To Think About Utility Sales Going Forward

A utility’s sole purpose isn’t to buy as much solar as they humanly can afford. Their purpose to ensure uptime across the grid and service all of their customers while making money and dealing with regulatory checks and balances.

Everyone – even those within utilities are mostly bought into the transition to clean energy sources. However, it’s the pace at which they can decommission and adapt solar or your energy technology into the grid that tends to make these projects complex.

While typically ill advised in “Silicon Valley Startup Lingo” – you need to find where you can fit your technology into the utility’s roadmap and needs for power across their service territory. Partnerships with developers may help with finding opportunities though it’s not a usually viable option in the early days.

The best way is to be intimately familiar with the region and state you believe your energy technology can dominate in. Winning a single region in the US alone is a huge success – especially if it helps drive more trust into the type of clean energy solution you’re working on bringing into the market.

About The Author

Swarnav S Pujari

Founder of The Impact

By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).

The post Why Clean Energy Startups Underestimate Selling To Utilities appeared first on The Impact.

How Local Towns & Cities Could Be The Best Early Adopters Of Microgrids

Swarnav S Pujari — Tue, 13 Jul 2021 18:56:21 +0000

While microgrids and distributed energy resources (DERs) have picked up in popularity over the past few years within a small, yet vocal audience of energy infrastructure enthusiasts – like myself – it has demonstrated slow adoption.

Most companies entering into the space tend to struggle predominately with a mix of finding sources of capital to finance projects or struggle with customer acquisition.

However, many startups – whether providing a new hardware or software solution – may find success tapping into the budgets of cities and towns in climate progressive states like NY or CA.

Follow The State & Utility Subsidy Programs

I’ve worked in the climate space and in local politics for years now – predominately focused on DERs. Among the most untouched sources of capital that are rarely reported on are the ones made available directly to local governments to adopt new energy infrastructure.

Startups can leverage these programs as a means to drive adoption of their systems – mainly because cost tends to not be the barrier for adoption.

ConEdison in NY subsidies up to 100% of EV charging infrastructure for approved towns as of writing this, NYPA may cover the entire cost of putting solar on government-owned properties should the capacity result in reasonable community solar economics, and NYSERDA subsidizes a significant portion of energy efficiency upgrades through grants provided directly to the town or city.

However, many startups tend to miss the chance to bid for these projects or introduce their alternative to local town or city councils.

How To Win RFPs For State-Funded Grants

Crafting your product to fit within the constraints of the grant and creating relationships within both the grant issuing organization and local towns and cities is extremely important. Larger entities like ChargePoint or Flo will have dedicated regional sales managers who go out and actively engage in local politics as a means to understand the challenges each community is facing – which results in making effective introductions of your solution at the right time.

The best way to win or be in strong consideration for these town or city level DER related grants is to be:

Entirely or mostly subsidized by the grant giver
Highly de-risked by the grant giver (if utility issuing grant, get pre-approved through utility, this helps bypass the “previous projects” concern)

Managing Sales Timelines & Burn Rate With Government Grants

As with any SMB sale or Enterprise sale, you must plan for a 6 – 18 month close time. However, for many deep tech cleantech solutions in the DER space looking to close their first “commercial sale” it’s best to start building relationships within your local community and engaging as a thought leader in your sector well before you’re ready to begin your commercialization phase.

Most early sales for startups when dealing with local towns or cities tend to come from personal relationships.

Programs like 76West in NY are a great example of how local city partnerships can result in funding opportunities for startups.

So, if you or a team member have time over a weekend – investing early in learning about funding opportunities being issued to local towns or cities – it is highly likely you can get your first few sales with a government – though you should plan to be as competitive as possible during the RFP process.

How Local Town Climate Funding Will Prove Valuable For Climate Focused Startups

These grants are issued to help move states closer to their overarching climate goals. With bipartisan support for new renewable and resilient grid infrastructure, there are new programs being introduced across the US to help each community tap into state funding to make the climate-friendly choice.

As startups begin to learn the landscape of these grants I fully expect to see this as a preferred route for many hardware and software DER startups to get an early customer. As these grants make DER projects rather de-risked for many of these local towns.

About The Author

Swarnav S Pujari

CEO @ TouchLight | Founder of The Impact

Swarnav is the CEO of TouchLight, a utility backed energy company that develops grid-edge management software for residential and commercial properties.

Concurrently, Swarnav founded The Impact to help provide a platform for operators within the industry to share their opinions about how the cleantech space is evolving. He also is appointed as the Chairman for the Town of Yorktown’s CSC Task Force, where he helps with legislation and sustainability efforts within the town.

Swarnav has a background in building physical products and has been working in the energy space for a decade. He also holds 2 patents and is active in the tech, energy and finance industries.

The post How Local Towns & Cities Could Be The Best Early Adopters Of Microgrids appeared first on The Impact.