This week, Chris and Johan were joined by Seth Frader-Thompson, founder and president of EnergyHub. We talked about how decarbonizing the US power system by 2035 will require massive load flexibility - on the order of 500 GW. To get there, we need distributed energy resources in nearly every living room and garage to be part of virtual power plants. The key? Building customer-centric flexibility programs that deliver grid reliability, reduce costs for customers, and enable the clean energy transition.
This week, Chris and Johan were joined by Seth Frader-Thompson, founder and president of EnergyHub. We talked about how decarbonizing the US power system by 2035 will require massive load flexibility - on the order of 500 GW. To get there, we need distributed energy resources in nearly every living room and garage to be part of virtual power plants. The key? Building customer-centric flexibility programs that deliver grid reliability, reduce costs for customers, and enable the clean energy transition.
Transcript:
07:57.41
chrissass
Welcome to insider's guide to energy I'm your host Chris Sass and with me as always his co-host Johann Oberg. Johan what's going on?
08:01.60
Johan
Hey Chris I'm doing great another great week. However, slightly jealous on your traveling's and especially being in one of my favorite cities. So I'm a little bit jealous on you not being here and.
08:12.60
chrissass
I am in New York City and you know I was out last night I happen to have to walk through Midtown and you know it really does not seem like the energy saving capital of the world when you see how lit up the streets of New York are so it's a very bright place at night.
08:26.33
Seth Frader_Thompson
I.
08:30.25
chrissass
So I'm not sure how they're doing here on they're their energy saving. But I'm hoping they're on the right track.
08:34.25
Johan
Well hopefully it's renewable and they have started doing the transition that we spoke about so many times I remember last time I was there at least you start seeing more and more electrical cars which is I guess it's a 1 step in the right directions and we had some discussions around the charging infrastructure. In previous shows.
08:53.78
chrissass
Yeah I mean I spent time with con Edison and they're planning for EV fleets and things that they've been doing. It's been pretty interesting. Some of the work and I think we'll actually be covering that um in some upcoming episodes I think there's an episode that's going to talk about some of the planning for New York and Massachusetts and a few the northeast states so be interesting when we get there. But what's really interesting kind of along those lines is we're in North America we're talking to North American guests and you know we talk about the energy transition and we talk about moving to distributed energy. But I think. It's not that simple right? You know if we remember how we had these old centralized big generation plants. We start distributing and we start looking at how we can do things like demand response and things like that that the problem becomes more complex and I'm hoping that through today's interview we get a better feel for what energy companies are doing to deal with this and do this at scale. That's what I'm hoping we do here in the next little bit.
09:43.46
Johan
Yeah I agree and I think scale is probably the right word as well because one of the challenges is that we used to build everything around the 1 big production sites and the distribution parts and now millions. Of smaller devices is actually the system built for this is this what I'm really interesting to hear a little bit more about but also maybe a little bit. What are those resources. You know what? we know what we have today but are they changing tomorrow. Are we seeing new ones. Are we seeing better ones you know. Only a few years ago we would probably never talk about batteries in the way we do now but that's being a big part of it. So I think that's really interesting and coming back to that one as well. I think this whole concept of Byod is quite interesting. You know when I lived in the us it was a different meaning if you changed one of those letters at the end. But. We'll see what it is I'm looking forward to it.
10:35.63
chrissass
I am too and you know it's interesting. Both of us come from technology backgrounds and in an energy today I think so much of energy is about the technology because in order to do what we need to do in the energy transition. You really? It's the technology is enabling this. It's not necessarily It's having the software to manage that. So why don't we introduce us to guest and go into the conversation see what he has to say because he's done this already at scale with a lot of companies in North America so without further ado I'd like to introduce Seth Frader Thompson president of EnergyHub. Seth, welcome to the program.
11:10.13
Seth Frader_Thompson
Thank you and I do want to say that on your point about you know all those lights lighting up times square in midtown at the very least. We're not. We used to have this thing where if you were walking down the street in the summer you'd walk by a big department store and they would have their Ac blasting in the front doors wide open and so people would sort of. You know you'd be sweating your way down the street and then you'd kind of veer inside. They finally made that illegal so we've made some progress.
11:31.65
chrissass
They have made progress because I remember not the air condition I remember having to ask for water in New York City that was their environmental concern when water shortages were always going if you were at a table they didn't just give you water because that you had to ask for it. That was my New York experience when I was younger. Well welcome to the show as Johan and I say almost.
11:46.10
Seth Frader_Thompson
Interesting. Yeah yeah.
11:50.84
chrissass
Every guest is we have a really good idea who you are we invited you to speak on the show because we know who you are but our audience probably doesn't know that yet. So maybe we should start by having you introduce yourself professionally to your audience.
12:05.51
Seth Frader_Thompson
Sure. Yeah, so um, but so my name is Seth as you said I run a company called energy hub I've had kind of ah a winding career probably starting around. Maybe when I was five years old and got my first Legos and sort of 1 thing led to another became mechanical engineer. I did my masters in Mem's microelectromechanical systems where you're building kind of tiny systems at the chip scale using semiconductor fabrication techniques and. And think I spent enough time in grad school in like a full bunny suit dealing with harsh chemicals I decided I didn't want that to be my career so pivoted a bit to robotics in aerospace got to do some cool stuff working on kind of early-stage designs and research for some Nasa stuff. Um, and I think that kind of. Piqued my interest in how do you have software interact with the physical world so that the physical world can be more intelligent but I had a bit of ah I don't know a hankering for something that would have a broader mass scale impact and somewhere around 2007 as climate change started to kind of enter the Zeitgeist I started to say how can I do both of those things and so ultimately led to starting energy hub with the idea that maybe we can have the sort of energy efficiency or.
13:26.98
Seth Frader_Thompson
Sort of intelligent energy use be the first killer app for the smart home and I think that maybe broadly speaking we were right about that as kind of a thesis but we had. Not quite the right market focus or product focus and so it took us 5 years or so from the beginning of the company until when we sort of found our groove and then turned it into what it is today.
13:43.43
chrissass
And this you're saying the beginning is 2009 if I recall is that what you consider the beginning or is it somewhere around then.
13:52.56
Seth Frader_Thompson
Yeah I mean it was my second bedroom at the end of 2007 it was 4 people through 2008 and then yeah we raised our first Vc round in 2009
13:56.31
chrissass
Um.
13:59.91
chrissass
Got it and so you know you talked about all these devices and things like that and you had this vision now for many of that vision started. Let's say like with a nest thermostat or something like that. How does that parallel to what you're doing or does it not.
14:22.80
Seth Frader_Thompson
Ah, it. It's ah it's a direct line so you know the concept of demand response has been around for ah say 20 years in various commercialized forms. Um. But if you looked back 10 years and definitely twenty years ago everyone would say you got to do this at the commercial industrial sites because you can just go talk to 1 person at that site and you can enable the site and then they can become a form of um, flexible demand. Everyone said basically residential is too hard. But then as companies like nest and Ecobe and Honeywell came out with connected products. You started to have this sort of latent asset that was getting built up where people were putting smart thermostats in their houses and they were just there if only you could tap into them and so that's where this kind of bring your own device thing came about so we started experimenting with. Bring your own thermostat in 16013 and you know it was very rocky start like no scale at first but over time we sort of honed all the all the pieces of the of the playbook until we were able to get a lot of scale and ultimately. Demand response is pretty simple. You say okay, there's an extreme weather event or you have extremely high-power prices or you have some moment of kind of acute stress on the grid and we provide a utility with the equivalent of sort of a big red button that says you know give me all you got in that emergency scenario.
15:48.69
Seth Frader_Thompson
And so that emergency scenario is great for dealing with a true systemwide emergency but it is not a um, it's a hammer. It's not a scalpel right? So over the last ten years we've been adding a lot of capabilities so that utility can now go much more localized. Ah, they can say we're just worried about this part of our city or this part of the grid they can say I need a particular load shape. Not just like an everything you can give me um and that starts to point the direction in terms of ah you know toward a much more sophisticated form of demand flexibility.
16:17.70
Johan
Does that mean that if we go back to the bedroom not to your specific bedroom but to your start of your company in terms of where you more of a B Two C focus in terms of you. You mentioned the nest you mentioned that these the kind of the smart metering set into the homes.
16:24.54
Seth Frader_Thompson
Yeah, yeah.
16:35.40
Johan
We worked a lot in my previous jobs on connecting these smart readings with iot solutions but they were probably not specifically smart you took some data out of it and you didn't really do too much about reading this but and now you mentioned utilities as being one of your kind of key customers or 1 of your partners. When did you see that switch or did you see that switch to say okay hold on consumers is one but maybe priorities towards utilities or are you still balancing. Both.
17:08.87
Seth Frader_Thompson
Ah, well yeah, so I mean there's a couple questions in there. So I think the first thing was you know like so the first solution we built. It's weird to say this in 2022 but we launched our first solution. Or we started the company the year the iPhone was released but before there was an app store before they were third party. Um.
00:22.42
Johan
Yeah, Cool. So say if we go back to the early beginnings of starting the company. You talked about the consumer part and you mentioned Also the utility part is that been a natural transformation towards. Ah, utility as customers or are these kind of interlinked so it's actually to be a natural One. You still work in both areas.
00:50.95
Seth Frader_Thompson
Yeah, we do still work in both areas but the path was definitely not linear so we originally launched the company with the notion of being b to c we were going to build a sort of um, focused smart home system that was going to help. Customers understand sort of how much energy they're using and where they're using it and so I mean you know listeners on the podcast are not going to see this prop I'm holding my hand but we built this this little gizmo called the home base and this thing was like a little sort of network gateway that provided the ability to. Talk to a bunch of different things in the house. It could talk to a smart thermostat to a smart plug or power strip. It could talk to your utilitypro provided smart meter and the idea was and we were thinking about this in a sort of largely pre-smartphone area era that you would have this thing sitting on your kitchen table and it would be the thing that kind of controlled your energy use. And every time we realized that was really not going to be a huge market but it did kind of point us in the direction of how utilities could be part of the solution and so this was happening in the context of the sort of post financial crisis financial stimulus under Obama where utilities were getting. Big subsidies to put in smart metering systems and so through that phase we sort of I think kind of cast the mold of the company of a company that fundamentally understands how customers think about energy use and how to make that simple. Um and then also what the grid needs and so over time we were able to kind of.
02:24.20
Seth Frader_Thompson
Turn that DNA into what the company does today and so now our role is to we? Our customer is the utility. We sell an enterprise software platform to the utility but we partner with the companies that make distributed energy resources to yeah ers. And we help both of those companies kind of bring their customers into the fold because customers are so important to the solution here in in providing all that flexible demand.
02:55.11
Johan
So what? what kind of that's interesting say utilities I think we are pretty clear on we we're on the energy podcast. We both kind of you know I come from the utility world I work with them for fair bit. But if you look at the ah the device manufacturers you know we're talking about thousands and thousands um is there an api a natural a but how does that work because it's scale. You're talking about a number of devices you're talking about x amount of input. So how do you How do you? enable all this.
03:25.24
Seth Frader_Thompson
Yeah I mean unfortunately the industry has never aligned effectively around particular standards and so there's ah, there's a lot of brain damage I think for anyone in the space of sort of dealing with lots of competing Apis but the short answer to your question is still yes, um, any company that. That has a good digital strategy around their drs has some api and then energy hub has its own set of Apis and kind of a test and certification program and at the end of the day that's focused on a handful of things making sure we get the. The data we need from devices so that utilities have kind of at an aggregate have situational awareness of what's going on with drs and in particular when you bundle you know, ah hundreds of thousands or millions of dot into a virtual power plant giving you some sort of telemetry for that vpp. You need control so you need the ability to command a vp to a certain power level or to send commands to individual devices and then you need a bunch of ah tools around communicating with users and the user piece I think in many ways is kind of what has been unique about um you know the. Residential space. It's ah it's a it's a mass market space right? So unless you make the incentive appealing to the end user unless you make the pitch to the end user of like why you should do this to help your community and unless you make the logistics really easy. There will be too much friction and people just won't sign up.
04:55.40
Seth Frader_Thompson
And so you kind of have to get all of those things right? you have to get the user experience and all the technical details right? or else you can't scale this thing to millions of customers.
05:02.43
chrissass
So is the user experience. So the utility selling the thought to the user you're not right? You're enabling This is that the correct statement your technology enables it.
05:14.40
Seth Frader_Thompson
That's True. We enable it. But ideally the customer is hearing the same thing from multiple places right? So they might get an email from their utility that says hey we've got this new program where if you don't already have a smart thermostat or an electric vehicle. Here's an incentive for getting one and here's an incentive for kind of lending it to the grid and then at the same time. The manufacturers of the devices are kind of promoting the same program and so a big part of what we do is sort of running the marketing behind all that to make sure that it's consistent.
05:35.62
chrissass
Um, so.
05:41.34
chrissass
So like an analogy might be the energy star program that used to take place in the Us if you bought appliances where you get some bonus from your power utility company and then also there was some sort of value for buying an energy star kind of appliance is a similar type program.
05:55.90
Seth Frader_Thompson
It's similar but I'd say it's more engaging I think at some level those like little yellow stickers that show up on the fridge like people kind of tune that out. Um I think a better example would be um I mean the 2 touch points right? Let's just say you're. At the point of purchase or maybe you already have a nest thermostatic you already have ah an electric vehicle. You want something popping up in the native digital experience something that's in the app for that device that says hey we've partnered with your local utility. Why don't you sign up for this thing here's what's in it for you and here's how you can help that's kind of 1 piece and the other is point of purchase. So. Um, utility marketplaces will often. Ah, but this is a whole you know thing we probably don't have time to go into but utilities in the us have started running these kind of white label marketplaces where you can go buy a der from the utility and.
06:47.94
Seth Frader_Thompson
You know the reality is nobody wakes up saying like I'm going to go shopping at my utility today but when utilities do this? Well they're running a marketing campaign to their customers saying you can get a free smart thermostat or you can get a free level 2 electric vehicle charger and that takes you to this marketplace. The utility runs and if you sign up. To be part of a flexible demand program at the time. The utility will essentially pre-rebate the program which enables the price to be way lower maybe 0 ah way lower than it would be otherwise and that just drives the adoption of these things you know that much faster.
07:21.83
chrissass
Like you said something in your answer that kind of threw a flag on the play for me which was yeah is good for the community. Um I don't know that consumers really. I mean generally if you talk to people holistically, they'll say these things but right you go into the house. It's still at ° or There're. They're not really thinking about what's good for the community because they're a drop in a bucket full of water right? and they're like well my thermostat's not going to make a difference. Um, so is the consumer side of the equation ready for this. And what kind of impact will they feel so yes, they might save some X dollars a month or get some free cool tech. Um, but are they willing to make these sacrifices to move to this virtual distributed world yet.
08:08.30
Seth Frader_Thompson
Yeah, ah that so I think that is a hugely important question and the short answer is yes, you'd be surprised at how um how interested customers are right? So first of all, you know, ah ten years ago were that many people paying attention. No. But if you're a customer in Texas in the last few years you remember what happened in in February where the lights were off for many people for days if you're in the southwest you're seeing Forest fires all the time so we see this constantly people are saying like what can I do to participate. And in particular I mean we try to we try to think of these programs as not like why should you sign up for this but ideally the offer that you put in front of the customer is kind of like a why not right? like does this really cost me anything to sign up like occasionally my thermostat is going to change by ° or in the case of a car. Come home. You're plug in the car like you normally do and all that happens is the car might charge a few hours later than it would have otherwise like that costs you nothing. It's still ready for you in the morning.
09:14.69
Johan
So coming from marketing and communication I think this is quite interesting because you also have 1 thing of selling it to the energy company utilities that has ah obviously ah, a deep knowledge around the whole system how it works reasoning and obviously their business case moving that into a consumer communication.
09:32.15
Seth Frader_Thompson
For sure.
09:32.78
Johan
Slightly different. Yeah I remember back in the days in Stockholm when the smartphone came around all the utilities had what you've talked about in the beginning some kind of ah a quick look at your energy consumption. Nobody cared now they do because now energy prices are extremely high. So now suddenly that has changed but so it's a little bit but.
09:43.88
Seth Frader_Thompson
Exactly.
09:52.33
Johan
I think from coming also from the telco background how much educational do you need to be I understand if you have an ev you can get a rebate on your charger or you can get a cheaper energy. Okay that that speaks to my wallet that speaks to my directly but otherwise isn't it. How hard is to explain the. Bigger values to an end consumer that spends about 10 seconds a day on thinking something like this.
10:13.99
Seth Frader_Thompson
Yeah, yeah, the reality is if you're if you have to explain it. You've already lost right? like it's they're not going to sit there and like listen to ah an explanation or read a long document. It needs to be so simple. Um, but this is where this partnership between.
10:22.43
Johan
Um, me are.
10:33.20
Seth Frader_Thompson
The der manufacturer and the utility is so powerful because they're both saying the same thing right? They're both saying like all you have to do is sign up for this and we'll make occasional adjustments to your device and that's going to help keep the lights on and people have heard enough in the background about how peak demand is an issue. You look at how some companies like you know Nest ah Google nest advertises their program under the marketing ah term rush hour rewards. It's sort of intuitive. What this is and so ah, you know I can talk all about this. You know.
11:02.81
Johan
Hey.
11:09.43
Seth Frader_Thompson
Sort of theoretically and it may or may not convince anyone but the reality is like the scale is there. We energy hub are coming up on a million drs participating in utility and wholesale power market programs just in the us alone. We still have a very long way to go but the fact that we're that far and.
11:12.37
Johan
Yeah, yeah.
11:29.17
Seth Frader_Thompson
Ah, that should be all the proof you need that that customers are engaged.
11:34.71
chrissass
And then I guess at a million. Um, what kind you said you're more of a you know a fine tuning you can do things kind of gradually or you could do it based in a region or whatever what kind of impact can you make for the utility. So let's stop talking the consumer side. Let's look at the utility side a bit. Um.
11:51.25
Seth Frader_Thompson
Yep.
11:52.43
chrissass
How is this impacting their business.
11:54.60
Seth Frader_Thompson
Well, let's look big picture so you know the Biden administration has set out a goal of decarbonizing the energy sector by 2035 um, so if you assume that all our fossil fuel kind of ramps down to nothing over twenty thirty five you leave nuclear and hydro kind of roughly where they are. You're going to need about one and a half Terawatts of renewable generation to achieve that goal. Um.
12:23.88
Seth Frader_Thompson
The reality though is renewables are intermittent and at some level they make operation of the grid more complex right? So the old model was you get ah you get a forecast of your demand for the next few hours or days or weeks and you'd kind of schedule your power generation to match that demand. Flips that on its head now you have to look at what's the weather going to give me in terms of power for my renewables and now you need to schedule demand to match that generation. So for one and a half Terawatts our sort of you know 2022? Um analysis of like the literature that's out there. And ah, a bunch of research says that you need probably at least five hundred Gigawatts of flexibility to support all of that and you know I am it's not going to be easy to get there but it's not rocket science like it's pretty clear that this is just we're in the scale up phase of this. So we got to where we are you know energy hub of that of that five hundred Gigawatts we're going to need energy hubs got about one point three Gigawatts of dispatchable flexibility today. So we have a long way to go. But for the most part we don't have to invent things that are new. We have massive tailwinds right? like the electric vehicle adoption is happening with or without these challenges. Smart thermostats solar batteries all of these things are happening. The challenge is just how do you make sure all of that demand and all of that flexibility gets turned into something that's an asset for the grid.
13:52.38
Johan
So how much of this and I would say reliant. But how much of this is then driven or supported by electric vehicles because we you know only a few years ago that was not really still debating. Is it going to take off or not take off I started working with Tesla in 2013 and it was still very early and we're talking nine years ago alone so now obviously we know it has gone over the kind of the threshold when it's evies all the way in many countries, especially the Scandinavian countries where I come from but how much of that in in terms of from your point of view. We have a million today but how much of that is kind of reliant on evs and then the rest is that still the big bulk or is it because capacity is there.
14:40.18
Seth Frader_Thompson
Yeah I mean um, I'm always tempted to sort of put a little bit too fine of a number on things. But um, I'm sure that evs are at least a quarter of the solution and maybe half of the solution right? They're just going to be so big I think in the us alone. We'll have. 30 plus million evs by 2035? um evs in a way are kind of the perfect flexible resource. Um, based on the way most people charge you're plugged in for you know, 12 to 14 hours overnight but you only need a couple hours of charge. And so you have tons of flexibility just in when you charge the vehicle so that's sort of v one g and then you look at a typical ev being sold today. It's you know at least seventy five Kilowatt hours typically um in the battery you're building up this incredible base. Of energy storage that one day we will start using as vehicle to grid or vehicle to home or vehicle to business and between v one g and v two g I just think you have an enormous opportunity.
15:45.18
chrissass
You talk about the evs going in there. The one thing I've always heard or or hear quite a bit is the Us grid in particular is very fragile and it needs a little bit of help So you know we're overlaying technology. Ah, you talk about smart meters at the edge right? You got smart meter capabilities going in. Um, how much of the grid infrastructure. Can we Leverage. It's in place and how much of this is going to be new infrastructure that's required or is it just kind of keeping the fragile grid as people tell me up and running into the future.
16:20.00
chrissass
Do what you want to do.
16:20.13
Seth Frader_Thompson
Yeah I actually think that the fragile grid is um, it's probably not a fair characterization I mean there certainly are areas you look at you know Texas is failure to winterize power plants like that's clearly that was that was not a great source of ah. Resilience or reliability. But the thing that the us market has that lots of other markets like Northern Europe don't have is we have so much air conditioning. Our whole system is built around air conditioning that you have tons of slack built into the system. So. As long as you're not charging your car on the peak. So if you know you go to the southwest that peak is probably somewhere between four and nine p m on a hot summer afternoon as long as you're not charging on the peak. There's tons of capacity on the grid to deliver the power you need. It does kind of open up sort of a second order problem of well okay, you can't just you can't run a marketing campaign that says everybody please start charging cars at midnight because now all of a sudden you've grown a new huge peak at midnight where everyone's car starts charging. So that kind of goes to all right? Well so when should you charge these things and the answer is you should do it at whatever. The cheapest time is or whatever the greenest time is you imagine here on the East Coast if you've got a big offshore wind farm let the cars charge as the wind production picks up and.
17:45.65
Seth Frader_Thompson
Let them follow a signal around carbon intensity or market prices or something else. The distribution transmission capacity is largely there by the way I mean I should say like for anyone who's worried about oh are people really going to be willing to do this like your iPhone is doing this today. Most people have not really noticed that when you plug in your phone on your nightstand your phone will tell you that it may stop charging in the middle of the night momentarily to preserve the battery health. And then it'll kind of finish the last little bit of charging to make sure that it's there for you in the middle of the night. So the phone is learning about when do you plug in when do you unplug and this is going completely unnoticed by hundreds of millions of iPhone users all around the world. We're talking about almost exactly the same thing with ebs.
18:31.42
Johan
But isn't that a little bit of ah of a challenge in terms of it. Ah, could try to do a connection here between my iPhone and my electric car because the iPhone. Yes, I bought it from Apple and they I wouldn't say they took over my life but literally they have all the data that they want. So. Leave that. But when you come to the car. Suddenly now you have not only a car but you also have this capacity in terms of battery. Which means that you have at least 3 stakeholders around it. You have the owner of the car. Okay, what's in it for me I bought the car. It's my car. It's not like just charging my iPhone this is more than this this is valuable. You have the utility saying hey I want this because I want to utilize the much possible and then you have the oems saying hold on. We're not just going to be the car company here on Oem we want to tap into this one. So. Kind of 2 questions around is how do you see this and where do you sit in in this kind of triage of stakeholders.
19:30.47
Seth Frader_Thompson
Yeah, um I think everything you just described is sort of those are all the factors that are that that guarantee that this is successful right? So if you just look at V One G So essentially changing the timing of when your car charges that really costs. Nobody any sacrifice right? And in particular, if you've designed it so that the user has a really um, straightforward user Experience. You come home if your battery is at 15% you plug in your car's just going to charge because you need the charge. Um. But if you're plugging in and you're at 50% 60% your car is going to tell you hey I'm going to delay the charging until the greenest time to charge this overnight and you'll have a button on the dashboard or in the app for the phone that says no I need you to just charge now and as long as the user has that override capability everyone is going to be completely fine with this for enabling that service. Though, there's still value that is being delivered by you know, Typically there's some telematics that are involved in how do you get a signal from the utility to energy hub to the auto manufacturer down to the car for enabling that there's a revenue opportunity for the Auto manufacturer And. We've seen lots of announcements from Auto Manufacturers recently about their aspirations to have multibillion dollar services, business software businesses. This is right in the middle of that I don't I won't put a number on it. But most people think V to G is going to be substantially more lucrative.
20:54.48
Seth Frader_Thompson
Ah, in terms of grid value that's delivered and how much can be captured by kind of the customer and the auto manufacturer. Um, so yes, you're using the battery more right? if you come home and the first thing your car does is actually to discharge right? You're going to offset your car your home's contribution to the utilities. Um, system peak or it's going to make sure that you bridge between solar and wind or whatever. Um, there's a ton there that is using the battery more but if there's a bunch of revenue coming. Everyone's way I think people are happy to incur that you know, additional sort of quote unquote wear and tear. Where do we come in so we're an invisible player in this where the utility is kind of signalling an intelligence layer. So we're the layer that that looks at the forecast for renewable generation and says all right I have to get 100000 vehicles charged. When am I going to do that and we're the ones who say let's charge this this group of cars starting at 10 p m then this next group of cars starting at ten thirty and so on so you know we are in the mix. But we're not trying to. We're not trying to um, steal anyone else's opportunity.
22:02.82
chrissass
So would you consider yourself an Ai company or what I mean based on what you're saying you seem like you're doing a lot of predictive. You're taking large data sets of some from somewhere from what I'm hearing you say and then you're doing something actionable with it so is that more describe what you guys are.
22:13.72
Seth Frader_Thompson
Yeah.
22:18.99
Seth Frader_Thompson
Yeah I think ai is a is a huge piece of it and yeah, but yeah, that's that was the next thing I was going to say yeah I As a as a company as a culture where a little. We're a little anti buzzword and anti high hype.
22:21.96
chrissass
Um, buzzword.
22:36.19
Seth Frader_Thompson
So yes, you do need good ai to figure out. Okay, um, how do I resolve multiple overlapping challenges. So if you're looking at ah at a piece of the grid and you say all right? Overall the system is fine. There's no acute stress on the on the entire system. But we have a piece of the distribution system that is particularly stressed you might have one set of kind of what we would call grid services objectives that applies at the local level that conflict with another set of objectives at the system level. Um, that could go all the way down to like the individual service transformer you might have you know Ah the end of a cul-de-sac in the suburbs that has ah 4 Tesla is plugged in but the service transformer can actually only handle charging 2 at a time and so if you think about at a at a small layer. How do I figure out which of those 4 cars charges first and then which charges next and then start growing that kind of concentric circles growing around it. You end up needing to apply a lot of Ai having said all that some of the basics here of just following a set point of saying I've got. I've got this much carbon intensity or I've got these market prices. Those pieces are comparably less sophisticated or less they need fewer buzzwords applied to them.
23:53.61
chrissass
Awesome! And then I guess you've already got a million devices or a million signed up. Maybe give us okay about a million.
23:59.52
Seth Frader_Thompson
Almost a million. Yeah.
24:04.30
chrissass
Um, could you give me an example or a case study of something that's gone. Well I think we talked the precap you gave it. But I think our users love to hear a success story.
24:14.32
Seth Frader_Thompson
Yeah, so I will say that um you know one other piece of this that hasn't come up. If you kind of need a diversity of different types of d er each of these d er has sort of different physics different kind of use cases right? like ah most. Electric vehicles are probably not charged are not plugged in and charging at four o'clock in the afternoon if people are doing sort of standard pre- pandemicdemic commutes. Although who knows what happens later. Um, you know a smart thermostat controlling air conditioning is only helpful at certain times of the day and certain times of the year controlling key the same thing. So. Ideally, what you have is a really strong diversity of der types and you can kind of stitch those together into a virtual power plant that has that has the capability to deliver flexibility 24/7/365 so I guess where I would point in terms of case studies is kind of Arizona as a whole. Um, there's been a lot in the in the in the press recently about California because California kind of has a tendency to suck up all the oxygen. But. In reality go across the state line to Arizona and I think there's some really interesting stuff going on. So um, you know you look at utilities like Arizona public service Salt River project often they started with kind of an executive level mandate or a regulatory mandate that just says.
25:37.82
Seth Frader_Thompson
Let's try some things with customer owned resources and they started out at the pilot level and sort of sought out to figure out what are the what are the problems going to be is this going to scale. Is it going to deliver if you're on your fifth hot day in a row and one hundred and eighteen degrees is this resource still there. And what they found was that the answer was yes, it worked right? and so as that as those things succeeded they started scaling it. They started investing in marketing they started um, tinkering with customer incentives. They started offering a wider variety of drs and.
26:11.19
chrissass
But it take a take. Ah so you use Arizona as example in Arizona is probably the hottest place in earth I've spent time in the summer time where like you can't even do a car window open it burns your arm so hot. Um, literally so.
26:19.58
Seth Frader_Thompson
Yep.
26:26.30
chrissass
Is it a good litanus test because if you said your previous assumption was air conditioning causes extra capacity in their in their network. So is that one of the parts of the country because I assume you don't live in Arizona air conditioning or at least you don't live comfortably in Arizona without air conditioning at least half the year. Um. Is it a fair representation of let's say New York state or some other state capabilities because of the temperature there and I don't mean to cut you off, but that's what comes to mind when you start talking about it.
26:53.28
Seth Frader_Thompson
No, it's a great question I think ah no I mean I think sometimes it's good to look at the extremes to understand you know, sort of the fundamentals. Um, and the short answer is it still works in Arizona right? Like if you um. You know if you if you if you talk to people in Arizona for 1 thing. They've had time of use rates for um for years so customers are used to the idea of power might be more expensive for 3 hours on a hot so summer afternoon than it is in the middle of the night so people are already used to the idea of maybe I let my house go a little warmer. I run the air conditioning ah a little lower power during that period. So all you're asking customer to do is occasionally and we're talking in the case of demand response. You're talking about like maybe 2030 times per year for a couple hours at a time turning back the temperature of that thermostat by a few degrees and. Overwhelmingly customers are satisfied. What's shocking is that if you look if you survey customers and look at the net promoter scores the net promoter score of the people participating in a flexible demand program is higher than what they were before they joined the program right. Significantly higher like it's in the mid 40 s whereas the background nps of that utility maybe was 10 so this is not like wearing on customers. They actually like doing this.
28:15.55
Johan
But that's I think that's really interesting is that do you think that's because coming back to my question previously in terms of this engagement with the customer and trying to not just educate them. But at least inform them that by doing it this way. They're now.
28:15.57
chrissass
Got it.
28:31.20
Seth Frader_Thompson
Yes.
28:31.64
Johan
Feeling part of it. You know if you if you do if you do npi scores that promoter scores anywhere in the world utilities and telecom are never specifically high rated. Ah so maybe this is a lesson learned for a lot of other ones that engage customers to be part of it and not just telling them what to do.
28:39.28
Seth Frader_Thompson
Right.
28:47.75
Seth Frader_Thompson
Yeah I think this is kind of the essence of customer engagement and customer enablement and I think this is what is so much more profound than you know, just sort of like doing a better website or coming up with a better mobile app or something like that. It's the customer feels like they are specifically doing something ah real and if you look at how if I if I were to highlight aps as one of kind of our flagship customers. How they've they started with the they started with. The most obvious problem which is just manage peak demand but then once the once their virtual power plant got to a certain size other parts of the organization. Ah, the organization started to realize like oh something really interesting is going on with this vpp. What else can we use that for and so the market and trading folks.
29:36.81
Johan
Are.
29:41.11
Seth Frader_Thompson
Who manage essentially Arizona's participation in the energy imbalance market started realizing oh I can I can dispatch this resource when market prices are high and every time they do that they save money for the entire Aps service territory. And so now you start to feel like I've not only kept the lights on I lowered prices for everybody. That's the kind of thing that gets everybody's attention. It gets the community's attention. It gets user's attention. It gets the executive's attention and that's I mean that positive feedback loop is essential to making this happen at scale.
30:13.22
chrissass
so I think you're doing where I wanted to bring this together because we're coming up towards time is let's take the journey together so we had an example of Arizona you gave us a good use case and you basically said incrementally they started with a specific use case and then it kind of. You know the Lego blocks as you started your career with or thought about started adding up to the other killer apps that you could build along the way or killer application that could would use your tool for could you maybe paint a picture of where we are in the journey for demand response today and where does it go like where you know how does how does this in your vision.
30:31.52
Seth Frader_Thompson
She lived.
30:49.35
chrissass
Play out.
30:51.70
Seth Frader_Thompson
Yeah I think I think demand response is you know in the we're in the steepest part of the growth curve here right? Where essentially anyone who's doing this ah and who has a few years of experience under their belt.
31:08.40
Seth Frader_Thompson
Is now seeing you know climate change leading to more and more extreme weather events and they're just saying how can I get more of this right? there' their fifty megawatt target from five years ago became one hundred-megawatt target becomes a 500 megawatt target becomes a gigawatt target just for a single utility. So I think I think. We will need more and more demand response I still think that demand response is um, it leaves a lot of value on the table when you're running an effective mass market demand response program. What you've done is you've gotten good at interacting with connected devices. Interacting with users and getting them to sign up for some degree of flexibility. Um and figuring out kind of new operational principles within the utility none of those things have to change to go from peak load management to twenty four seven flexibility so I think what I was. You know what I mentioned with Arizona where they start to figure out new use cases I think where this goes is more and more use cases is somebody taking that that virtual power plant and pointing at a new problem proving that it can contribute to that problem saying wow just unlock more value and I didn't have to ask anything more of my users. Let's point it out another problem and you just enhance that positive feedback loop.
32:25.54
Johan
Which sounds like an interesting part to be on and now I think this is we've had a lot of discussions about how you integrate this technology into this transformation, especially moving into to smaller units or to less. Um, actively or active but less small energy units I think that was really interesting I have 1 final question I know we're running out of time but I have to ask this one little bit of the side note I think if I'm not mistaken with you're the first one that we brought on to the show interesting enough Chris being there as well. There's actually from New York city which is usually not. A energy hub that we had in the past we have the technology hubs in in California we have a lot from Houston and Texas and obviously some parts of Europe so how come how is it to be an energy start or an energy scale up company in New York City and how did you end up there.
33:02.19
Seth Frader_Thompson
Right.
33:16.61
Seth Frader_Thompson
Ah I mean this, there's no master plan here. This is where I lived when I started the company and I didn't feel like moving and so it was just go to play as is any I do think you have a um you know you have a particular. Ah. Sort of awareness of infrastructure in New York that is probably um is probably helpful as you think about all the complexity. Um, if you look at what is it about our business though like we're not a We're not a hard tech clean tech company right? We don't need a bunch of um, you know. Chemical engineers building. You know, new battery chemistries or something like that. We need people who are good at building software. We need people who are good at thinking about users and coming up with a compelling user experience and before the pandemic this was a great place to hire. Um I don't know if it's fair to say outside after the pandemic but whatever we're in now. Ah, we now hire people everywhere and then you know nobody minds. Ah, you know, coming to visit New York City ah to see the mother mothership from time to time. So it's a good place to run a business.
34:20.74
Johan
Fair point.
34:22.71
chrissass
But I think I think the conversation's been particularly interesting. Um, what we did do is focus quite a bit on us North America so how is this playing out. You're not your software company right? So borders mean very little to you as long as you have the nuance of the market and the energy markets. How do you plan to take this globally or are you already global with this.
34:46.33
Seth Frader_Thompson
No, we are really just in North America right now. Um, it's a good question. So the thing that has been a surprising advantage for us in the in the Us is regulated monopolies are actually regulated monopoly utilities are actually quite good at delivering value with ders in a way that so far we really haven't seen in a lot of deregulated markets. Um, if you look at the examples in the Us. Texas has like a you know quote unquote business. Friendly environment. There's not a lot of friction to doing kind of virtual power plant stuff in markets. But the value isn't really there if you look at California they've sort of deregulated and they have value but they have tons of friction. That's really difficult to do business. And so the question when you look at a market like Northern Europe or Australia or parts of East Asia is how do you make this stuff happen. Um, there are still some fundamental questions of who in the value chain gets to capture the value. Um. Ah, a regulated utility in the us has the unique ability to capture system value distribution value generation value, um, user engagement. All of those things and kind of bundle it into a so ah a single value stream or a single combination of value streams that can enable.
36:06.90
Seth Frader_Thompson
The business case. It's much more complex to do that in a fully deregulated market and so tbd on how well this works internationally I'm excited to try it I'm particularly excited to try it with things like evs. But um, time will tell.
36:22.27
chrissass
All right? So one last question So if our audience has been engaged. They think this is something they want to be a part of whether they're utility or a user at the end. What can they do to just start taking advantage of these things that you just told us about.
36:43.70
Seth Frader_Thompson
Um, so I would say 2 things if you're a user make sure and any purchase your any major purchase you're making whether it's a car or system in your house. Make sure you're buying energy efficient.
36:59.37
Seth Frader_Thompson
Right? Make sure the products are network connected and that one day you can turn them into an asset for the for the grid. So That means you know if you're putting in if you're replacing a water heater make sure you're putting in a heat pump water heater that has an internet connection if you're putting in a new Hfac system make sure there's a smart thermostat attached to it. Um, if you're on the grid side. I'd say the most important thing is don't reinvent the wheel. Ah there are there are so many companies doing this at scale in different combinations of geography and housing type and business types and system constraints in the Us someone has tried this.
37:37.89
Seth Frader_Thompson
Copy what they're doing one of the most interesting things about this industry is that people share information way more than they do in other aspects of the private sector and so ah, you know if 1 of our guests today is listening to this and wants to you know, learn more. You can talk to me. You can also talk to my customers I'm happy to put you in touch. So. Ah, copy what worked for them and then ah you know tailor it for your so your particular scenario.
38:01.91
chrissass
Thank you Seth so much for being our guest in the show. It's been a pleasure to have you on board. The conversation's been fascinating you on if you have any final thoughts here to wrap up the show.
38:11.90
Johan
No, not nothing further to add I think it was extremely interesting I know quite a lot more now about the topics I thought it was interesting and I got so many additional thoughts around what's going to happen this brings me back to my iot story when we talked about the 15000000000 devices connected. We're way past that now and energy is going to be 1 of the leading parts. So I really think this was interesting and I appreciate you coming on set.
38:35.78
Seth Frader_Thompson
I Really enjoyed it. You guys do a great job on the podcast. So thanks for the opportunity.
38:40.66
chrissass
And thank you for our audience. You've spent another hour listening to insider guide to energy. We hope you've enjoyed the content as much as we have if you have please share the content like it subscribe and recommend the show to your friends because that's how we continue to grow. We'll see you again next week, bye.