Insider's Guide to Energy
The Energy Industry is uniquely evolving as traders are under increasing pressure to manage costs, cash, limits, and risks. The Insider’s Guide to Energy Podcast addresses current and emerging challenges business executives face daily through stories shared from peers and industry experts while covering topics such as innovation, disruptive technologies, and emerging trends.
Insider's Guide to Energy
186- The Future of Energy: Challenges and Innovations with Peter Kelly-Detwiler
In this enlightening episode of "Insiders Guide to Energy", host Chris Sass sits down with energy expert Peter Kelly-Detwiler to discuss the unprecedented challenges and transformative opportunities facing our power grid today. With over 30 years of experience in the electricity sector, Peter shares his insights into how decarbonization, digital technologies, and the evolving role of consumers are reshaping the landscape. From the integration of renewables to the advent of AI and electric vehicles, this conversation delves into the critical issues that will define the future of energy.
Peter provides a comprehensive overview of the current state of the power grid, highlighting the need for a flexible and innovative mindset to navigate the complexities of modern energy demands. He discusses the significant impacts of climate change, economic growth, and technological advancements on grid stability and infrastructure. The discussion also covers the unique challenges faced by regions like Texas, emphasizing the importance of investment in grid resilience and modernization to withstand extreme weather events and growing energy consumption.
As the conversation progresses, Peter and Chris explore the potential solutions and strategies that can drive a more sustainable and efficient energy future. They examine the role of AI in optimizing grid operations, the promise of new battery and renewable technologies, and the critical importance of standardizing protocols across the industry. This episode is a must-listen for anyone interested in the future of energy, offering valuable insights into the dynamic interplay between technology, policy, and consumer behavior in shaping a resilient and sustainable power grid.
Meet our Guest: https://www.linkedin.com/in/peterkellydetwiler/
Visit our website: https://insidersguidetoenergy.com/
00:00:00 Peter Kelly-Detwiler
Our power grid is facing unprecedented challenges driven by the need to decarbonize driven by digital technologies and a new role in which the customers engaged with the electron like never before.
00:00:13 Peter Kelly-Detwiler
Thinking about that and preparing for that requires a new flexible mindset we haven't needed in the past.
00:00:22 Intro
Broadcasting from Washington, DC, This is Insider's Guide to Energy.
00:00:36 Chris Sass
Welcome to another edition of the Insider's Guide to Energy. I'm your host Chris Sass, and with me today is Peter Kelly Detwiler. Peter, welcome to the program.
00:00:44 Peter Kelly-Detwiler
Thank you. It's a pleasure to.
00:00:45 Peter Kelly-Detwiler
Be here, Chris.
00:00:46 Chris Sass
We're happy to have you on the show. I always like to start our segments with a little background of who our guest is. So our audience knows who we're.
00:00:53 Chris Sass
Talking to today.
00:00:55 Peter Kelly-Detwiler
Sure. I'm. I'm. I've been in power markets and in electricity for over 30 years and I was involved in retail power back in 1997 when that started with new energy ventures, which then got bought by AES, which got bought by Constellation and ultimately ended. I ended up heading up their demand response group where we paid.
00:01:15 Peter Kelly-Detwiler
Customers not to consume electricity during periods of peak demand. We got that to about 1700 megawatts. I eventually took severance when we got bought yet again another golf shirt added to My Portfolio. And then I just started researching and writing for Forbes and others and for the last, oh, 12 years or so, I've been in full on research and communications mode I.
00:01:35 Peter Kelly-Detwiler
Read 40 newsletters a day and try and stay up on top of everything having to do with the electron.
00:01:41 Chris Sass
Well, it seems like it's a pretty busy place to be. There is quite a bit being published. I think I get offers to subscribe to newsletters almost every day. How do you pick and choose what? What are the voices that you want to follow? Who, who are the voices that are making sense today?
00:01:56 Peter Kelly-Detwiler
Well, certainly the Canary media always has really great contextualized articles and their stable of writers has been at it for a long time. Jeff, say John for example, you know, 12 or 13 or well probably 15 years now at green Tech Media, some other ones really good there.
00:02:12 Peter Kelly-Detwiler
Through Trellis, the Green biz group that's now writing under trellis, they've got some really wonderful content there. And then hydrogen insights over, I think they're from Europe, electrive that comes into my mailbox at like 3:00 in the morning. So I try and cover all the different sectors, batteries, EV's, hydrogen, renewables.
00:02:32 Peter Kelly-Detwiler
Policy utility dive has wonderful articles. Herman Trebitsch and others right there really, really well. So it's a small.
00:02:39 Peter Kelly-Detwiler
Sharing and I I actually have a spreadsheet with about 40 of them on there and I rate them all with the URLs and the and the subscription links and if if people want it just e-mail me or reach out to me on LinkedIn and I'll share my reading resource list.
00:02:53 Chris Sass
All right, so you're.
00:02:54 Chris Sass
Tracking a lot, that's what's going on. You've definitely fallen the utility space. What are some of the things that we should be talking about today? What are some of the trends that you're seeing that you think would be interesting for our audience?
00:03:06 Peter Kelly-Detwiler
Yeah, I think there's two major ones on the bulk power side, you've got this whole issue where demand is starting to ramp up again because of AI and beneficial electrification. And there's long interconnection queues.
00:03:19 Peter Kelly-Detwiler
Multi year delays in getting Transformers and we're facing a changing and evolving power grid because of all the renewables which which have their variable output. So resource adequacy, how do we grow the grid and keep the lights on as a?
00:03:32 Peter Kelly-Detwiler
Big one. And then at the same time you're seeing all this change happening on the low voltage distribution grid, which will be, I believe, the front lines of a lot of this change certainly from the perspective of the customer, that's where it's going to be all visible, whether it's electric vehicles or heat pumps. And as we've seen in multiple storms recently.
00:03:46
So.
00:03:52 Peter Kelly-Detwiler
Just keeping the infrastructure going, I mean, what what happened in Texas?
00:03:56 Peter Kelly-Detwiler
This month was incredibly disturbing to a lot of people in terms of how long the outages lasted, so a lot more stress and change on the distribution system as well. So bulk power, resource adequacy, distribution system, how do we evolve that, make it smarter, make it more resilient?
00:04:14 Chris Sass
Why do we see Texas in the forefront whenever there's something big, whether it's a storm or hurricane or cold weather event, why is it Texas that comes first and center? And why are we always focused on Texas?
00:04:27 Peter Kelly-Detwiler
Well, first of all, it's a pretty big state, so it's it has a lot of different climatic variability. It also happens to be often in the bullseye of a lot of hurricanes. So it tends to get extreme weather frequently. As a consequence, I mean that what do we see 30 inches of rain with that storm? Harvey, I think it was years ago.
00:04:48 Peter Kelly-Detwiler
And then, but the last one, Beryl was kind of a surprise because it's only a cat, one which is still significant, but it just smacked right into Houston. Houston's low lying. The infrastructure needs to be upgraded.
00:05:01 Peter Kelly-Detwiler
And then there's also, you know, for the winter time, the challenge there is you have these fronts that drop all the way down when you have climate instability in the polar vortex, that tends to dip down further than maybe it used to.
00:05:14 Peter Kelly-Detwiler
You have a system that is not winterized, and this is oftentimes in the winter a thermal issue that we're dealing with. It's weatherization of homes plus weatherization of power plants and so on. So it just tends to be in the crosshairs because of the size and because of its unique location in the country.
00:05:31 Chris Sass
But in my perspective.
00:05:33 Chris Sass
Texas is on the forefront of a lot that's going on with the renewables.
00:05:36 Chris Sass
They're an early.
00:05:36 Chris Sass
Adopter. So is this a Canary in the coal mine, so to speak? Are we expecting to see these kind of problems ripple out to the other regions?
00:05:45 Peter Kelly-Detwiler
Well, I think we'll see some of these issues now if we think about Texas as sort of the Canary in the coal mine, it's got more. If it were, if it were a nation state, it would be the third largest renewable economy on the planet with all the wind that it has almost 40,000 megawatts of wind and closing in on 20,000 megawatts of solar.
00:06:05 Peter Kelly-Detwiler
And the interconnection queue is just off the charts in terms of how much wind and especially solar and now batteries are coming into that.
00:06:12 Peter Kelly-Detwiler
Red and it is a market that doesn't have any price for capacity, it just pays for energy scarcity prices. So it it and it's really relatively easy to interconnect there. So you can move assets more quickly and there's lots of land and there's a lot of land owners, ranchers and so on that are looking to have solar panels and wind.
00:06:33 Peter Kelly-Detwiler
And batteries installed, so it has some unique things that make it unusual plus.
00:06:39 Peter Kelly-Detwiler
It's its own grid. It doesn't want the Federal Energy Regulatory Commission to regulate it, so by definition, it does not export AC power across lines to other States and therefore the the fork has nothing to do with it. So it does, it is its own sort of unique laboratory in that way. And even though it's a red state in terms of its political or.
00:07:01 Peter Kelly-Detwiler
The fact that it is open for business has been really great for, you know, wind and solar and batteries. And we see what happens in a free market versus you look East Coast, West Coast, it tends to be more policy, regulatory driven where there's more incentives and mandates from governments to do things. So it it is its own unique cat in that sense.
00:07:21 Peter Kelly-Detwiler
But if you go back to the reliability issues that has less to do with market structure and more just to do with, well, what are utilities doing in terms of investments to harden the grid.
00:07:33 Peter Kelly-Detwiler
Center point, for example, had a multibillion dollar plan in front of the PUC for weatherization, but they haven't done, for example, what FPL done has done FPL forward power and light, they they put all these huge concrete poles in, they're they're weatherized 4 hurricanes. Same thing with the Mexican.
00:07:52 Peter Kelly-Detwiler
Grid on the.
00:07:54 Peter Kelly-Detwiler
Not the Yucatan, the California banana peninsula. They've put all composite poles in down there and they've got been hit by a heavy hurricanes and not had major issues. So this has doesn't have to do with market structure. This has to do with what the PUC and the regulated utilities are doing in terms of investments to harden the grid.
00:08:14 Chris Sass
OK. So you talked about to the left and the right hand. You talked about the, you know, kind of the distribution grid and then we talked about the utility scale.
00:08:24 Chris Sass
Where are we focused today? Where do we need to focus? Is it? Is there a chicken and egg problem is to the consumers you said are going to be impacted most when the low voltage distribution we just talked about outages and infrastructure.
00:08:36 Chris Sass
You also mentioned you're opening AI and demand going up. Where do we need to be focused right now?
00:08:42 Peter Kelly-Detwiler
Yeah, let's, let's focus on the low voltage distribution grid because we could talk for hours about this. I mean, I teach A7 hour course on the fundamentals of the grid and even there we don't cover.
00:08:51 Peter Kelly-Detwiler
At all. So, but let's talk about what's happening in terms of the the, the transformation of our relationship as customers with electricity. OK, so for the first time now, now we have.
00:09:05 Peter Kelly-Detwiler
Electrification of transportation. I have an electric vehicle. I drive it almost every single day and I plug it in with my 120 voltage. But most people have, you know, the level the the faster 240 voltage and then there's 400 kW charges. I don't know if you just saw that was a Mercedes-Benz.
00:09:23 Peter Kelly-Detwiler
And and Starbucks are planning on putting it 100 charging locations at different Starbucks along I-5 and the West Coast between Canada and Mexico. And they're going to be 400 kilowatt chargers, 400 kW charger four and kW is larger than a really decent size grocery store. So and so now you've got, you know.
00:09:43 Peter Kelly-Detwiler
Thousands and thousands of EV's, the slowdown in sales notwithstanding, that's probably temporary. It's a better tech at the end of the day, and batteries are getting.
00:09:51 Peter Kelly-Detwiler
Better. So you're going to see this huge influx of transportation being dominated by the electron and then also space heating. You're going to see more and more air conditioning. That's ground source and air source source heat pumps and so on. So now you start to see all these stresses on the distribution grid, which by the way.
00:10:11 Peter Kelly-Detwiler
Is right now operates at around 41 to 43% of its capacity total Max capacity. The utilization factor is around 41 to 43%.
00:10:22 Peter Kelly-Detwiler
I like to say if we ran our airlines that way on Thanksgiving, everybody could show up the day before Thanksgiving, come up to the counter, get a ticket guaranteed for maybe under $300.00, fly anywhere in the US and then the rest of the year, we'd all be able to stretch out because the planes would be like 4142, forty 3% full now.
00:10:42 Peter Kelly-Detwiler
As we start to electrify transportation, these other end uses, plus bringing data centers and everything else.
00:10:49 Peter Kelly-Detwiler
What's going to happen is our grid, which has traditionally in the last decade or so, only grown at about 1%, sometimes even less, a whole lot of states grew negative. Last year they're going to start to see localized stresses depending upon where these EV charges are, depending upon the where the data centers are, etcetera. And so you have for example a study.
00:11:10 Peter Kelly-Detwiler
That the PUC in California Commission that said, if we see a full electric.
00:11:14 Peter Kelly-Detwiler
Location scenario by 2035, we might have to spend $50 billion to upgrade our infrastructure, mostly Transformers and feeder lines because they won't be able to handle the loads and especially the thermal stresses. Things overheat when they tend to be over utilized and so.
00:11:34 Peter Kelly-Detwiler
We're gonna have to think about how to manage the charging, manage these other end uses, and of course, we're integrating all kinds of batteries and EVs or batteries on wheel.
00:11:43 Peter Kelly-Detwiler
So what we're going to have to do real soon, Chris, is take a look at this patchwork and start to organize it way better than we are now, which means we're going to have to infuse it with a lot of artificial intelligence and know the what you know, what's that thing? What's the device? Is it a battery? Is it an EV? Is it a water heater that can respond? Where is it located?
00:12:03 Peter Kelly-Detwiler
We're laying on the utility grid and knowing where the Transformers are reaching their thermal.
00:12:07 Peter Kelly-Detwiler
What is it doing? What can it do? How much can it do for how long? And what's that worth the society and so?
00:12:14 Chris Sass
So, but isn't that already happening? I mean, you know, a while back we heard that had the first smart meters and they were kind of in the infancy. If you look now what's coming in the meter technology and you look at companies like span and folks that are smart in the house and they also can work with the utility, isn't that ship already kind of here? Are we not seeing that people just haven't deployed it wildly yet?
00:12:29 Peter Kelly-Detwiler
I've lost her.
00:12:34 Peter Kelly-Detwiler
Up I I lost you for a second there, Chris.
00:12:37 Chris Sass
OK, what I was saying is.
00:12:40 Chris Sass
There's software companies out there doing that today right there. There's there's, you know, we had the 1.0 version of smart meters and that kind of was an incremental step. Now we've got pretty smart technology going down your appliances or connect to the Internet. So from a consumer's point of view, isn't software already being put in place to do what you're?
00:12:57 Chris Sass
To help manage what we have.
00:12:57 Peter Kelly-Detwiler
Yes, at at some level, yes. So I I think about it sort of as a spoken hub right now where there's specific vendors like stem with batteries behind the meter and commercial arm connect with a whole bunch of different devices. Tesla with its power walls and so on and they're all doing this in sort of one off or building virtual.
00:13:17 Peter Kelly-Detwiler
Power plants. But what we're not doing is looking at the entire grid and saying, well, what's the avoided cost of all this infrastructure replacement and some of it's only 5 or 10 hours a year where it's really stressed. So what's the value of not consuming electricity right now or injecting power back into the credit at this?
00:13:37 Peter Kelly-Detwiler
Sort of macro over level, but then going down into the micro and saying where are these avoided costs? A really good poster child use case example for that is the Brooklyn Queens demand management project where.
00:13:49 Peter Kelly-Detwiler
In Brooklyn and Queens couple years ago, a lot of yuppies were moving into that area, and the peak demand was pushing towards the evening 678910 o'clock at night and consolidated, Edison said. We're going to have to put in a new substation and feeder lines worth $1.2 billion unless we invest in the alternatives.
00:14:09 Peter Kelly-Detwiler
So they put in about 100 and 1600 and $17 million worth of voltage management demand response, fuel cells, efficient lighting and batteries, and essentially avoided the need to build that substation.
00:14:23 Peter Kelly-Detwiler
By at least 10 years. So essentially you can look at the avoided costs of these build outs that you otherwise would build and say, well, if we change our behavior and incentivize people to do X and stream prices to devices, then we could actually create a more efficient grid and not have to build so quickly. And we could actually get from say, 4342%.
00:14:45 Peter Kelly-Detwiler
Up to maybe 464748 percent capacity utilization. So yes, there are green shoots right now, individual companies.
00:14:52 Peter Kelly-Detwiler
You're doing this and no. Holistically at a macro level, the utilities aren't yet making the fundamental IT platform investments and creating those capabilities to interact with the vendors. And I should also add there's a group that I advised called competitive utility solutions and it's a nonprofit, and we've been talking to different state.
00:15:13 Peter Kelly-Detwiler
Utilities commissioners. The idea do like what Australia and Germany have done, create a universal registry so that every single device that interacts with the grid has its own unique ID. Like we have Social Security numbers and you would know who the manufacturer is, what The thing is, what it can do and.
00:15:30 Peter Kelly-Detwiler
Go on. That would allow for really efficient aggregations. And Chris, one of the critical things is if CAISO, for example or New York ISO, calls for a Dr. event, where are the Dr. devices? They're all in the local distribution grid. The local distribution grid often doesn't have visibility into what's happening, and so the situational awareness.
00:15:51 Peter Kelly-Detwiler
Piece of this whole thing is missing because right now it's vendors doing this.
00:15:55 Peter Kelly-Detwiler
Thing independently and individually, and there's not a landscape that allows everyone to see what they need to see when they need to see it. That's permission based. It protects privacy and creates something that would build a lot more efficiency into future transactions.
00:16:11 Chris Sass
Well, the good news is I I think that there are a number of folks working towards this. I think it's it's a work in progress and I've seen a number of software vendors and other folks that have that vision. I I guess what I would then say is how does this change? I mean when you're talking, you're kind of implying the big utility and things like that but with micro.
00:16:30 Chris Sass
Bread.
00:16:31 Chris Sass
And a distributed architecture. How much is transformative? The architecture along with the software?
00:16:39 Peter Kelly-Detwiler
Well, so the first thing, yes, you need the you need the microgrid architectures, but big picture you got to figure out, let's start with the utility and the control room. Right now, the control room operator sees what's going on in SCADA, and there may be hundreds of devices, but it still manage.
00:16:58 Peter Kelly-Detwiler
People now when you get into this future state with all these, ultimately if it's PG&E for example, with 5,000,000 meters you could have 20 million devices out there and and and by the way, if you have got multiple, you've got vendors doing this, each state can't adopt what they're doing now. New York has its own nomenclature.
00:17:19 Peter Kelly-Detwiler
And California has its own taxonomies, right? So in a future state?
00:17:24 Peter Kelly-Detwiler
You have to build some kind of efficiencies that will make that happen. Now think about the architecture that needs to take place. You have to understand latency. First of all, how fast do you need the data? You don't need the meter data right away, but you certainly need the meat. The data from whatever that vehicle to grid charger is, whether it's the telematics in the vehicle.
00:17:45 Peter Kelly-Detwiler
Or the charging infrastructure itself, or the battery in somebody's garage, or in a in a commercial building basement.
00:17:52 Peter Kelly-Detwiler
Where are the decisions made that can't be made in the control room? If this is local situation based because there's a voltage issue or a frequency issue or some kind of thermal constraint right now affecting a transformer that has to be an edge decision. But that information ultimately we have to figure out how to aggregate it where it's aggregated.
00:18:12 Peter Kelly-Detwiler
What flows back to the control room, what they see, what they don't see, so that we don't overload those operators in the control room because they can only take in so much.
00:18:21 Peter Kelly-Detwiler
Data I had a chance to chat with the industrial psychologist from ERCOT years ago, who basically explained to me how they were building these maps so that the control room operators saw only what they needed to see and weren't overloaded and became paralyzed by the data. So the fundamental architecture of how we pull this stuff back.
00:18:42 Peter Kelly-Detwiler
And where we aggregate it and what the control room operator sees and what they don't need to see, that's something that still hasn't been fully developed yet. And yes, there are individual software operators doing pieces of this, but building out a holistic vision that's not there yet.
00:18:57 Chris Sass
Yeah, I I guess that makes sense. I mean I I see in your opening comments you talked about AI. I've seen vendors that have like Invidia down at the meter, you know, built into their cards, you know, helping decide what information gets acted upon locally. And then aggregating this stuff and moving it upstream. So who ultimately becomes responsible? Who, who owns that? You you mentioned that Texas doesn't want to be a part of the federal.
00:19:19 Chris Sass
System. So how? How do you get everyone to play nice in the sandbox? I mean, we did it in telecom. We've done it in networking. How do we do it in energy?
00:19:28 Peter Kelly-Detwiler
Well, I think you know at the end of the day, a lot of this does boil down to some kind of federal overlay and Texas is going to be its own thing because they've said they're going to be so there. For example, with First Order 2222 that came out in September of 2021 of the things in 2222, it said, you know, thou shalt.
00:19:48 Peter Kelly-Detwiler
Grid operators come up with operating models so that aggregated devices over 100 kW will be treated like any other device in.
00:19:55 Peter Kelly-Detwiler
The grid, one of the things that it also said was you need to figure out the communications protocols and the ways of interacting between the grid operators and the distribution grids and the vendors and also regulators need to see it as well, right. And retailers so that so it's.
00:20:15 Peter Kelly-Detwiler
The the the the Protocols need to be universalized to make this thing more efficient. Among other things. If you think about it, Chris, if vendor a goes out of business or you want to integrate ultimately over time we're going to see consolidation. I can tell you from experience, when at Constellation we bought sea.
00:20:33 Peter Kelly-Detwiler
Or it was a major pain because all of their taxonomy was different than ours. And even when we were doing demand response with different ISO's take.
00:20:44 Peter Kelly-Detwiler
Noon, noon to 1:00. Some of the ISO's had our ending. Thirteen others had our ending 12 at the end of the day. This has to be somebody like NIST, you know, some national level entities saying we need to standardize around these things and we need to do it sooner rather than later. Otherwise we're going to create a Tower of Babel.
00:21:03 Peter Kelly-Detwiler
That's going to defy the ability to scale this and build the future efficiencies in, and then Texas is going to be going and doing its own thing because it always does.
00:21:13 Chris Sass
Where are we on the journey? You. You also talked about storage and all the new elements getting added in. So let's assume that that standards body is going to come because it probably needs to and there's going to be some sort of layer that you can help manage and control the number of assets or Internet of Things and devices out there.
00:21:31 Chris Sass
What about the other technologies, the renewable technologies? How are they playing in and where are they in this equation?
00:21:37 Peter Kelly-Detwiler
Well, I think the thing that's fascinating about renewables is and and storage as well is the the post COVID supply chain blip notwithstanding, we're seeing exactly what we expect to see, which is a learning curve continuing to play out that whole concept of of rights law where you know back in the 2010.
00:21:57 Peter Kelly-Detwiler
I'm nineteen 10s or whatever, Theodore Wright, the Economist, looked and said Ohh, every time airframe production double s globally, the cost of Labor falls 4:50.
00:22:04 Peter Kelly-Detwiler
15% well, nowadays the experience curve or rights law is every time battery production double s globally or solar panels, the costs fall by roughly 20 to 25, even 28%. There's a couple things going on there. One is efficiency of manufacturing and supply chain, but the other one which is.
00:22:25 Peter Kelly-Detwiler
Has to do all about artificial intelligence and the dedication of machine learning to the way we make stuff. So couple of years ago when I wrote my book, the Energy Switch, I had a chance to go to Lawrence Berkeley Labs and see a super computer named Corey and she could do 14 petaflops, which.
00:22:44 Peter Kelly-Detwiler
Is quadrillion calculations per second and one of the jobs she had to do besides modeling The Big Bang theory and stuff like that was to help find better battery chemistries or better solar chemistries. That would help us convert photons into electrons more efficiently.
00:22:59 Peter Kelly-Detwiler
And so one of the chemistries with batteries helped them drive down the cost and create a more efficient cell. And I thought Corey was cool.
00:23:08 Peter Kelly-Detwiler
She was in a big cavern and all these crazy computers wired together, but I walked into the next room, which is empty concrete cavern and said what's going to be in here. And they said, you know how fast ships are moving. Right. And I said, yeah, they said, well, Corey's going to be obsoleted within a few years. And sure enough, now she is now there's Pearl Mother Pearl. Mother does.
00:23:28 Peter Kelly-Detwiler
Like 64.
00:23:30 Peter Kelly-Detwiler
Quadrillion calculations per second, and Corey used 3.5 megawatts Pro model uses 2 1/2 megawatts and pro model is specifically designed for material science to make better things. So whether it could be better transmission lines, whether it's going to be better battery chemistries so on and so forth, right, perovskites.
00:23:50 Peter Kelly-Detwiler
For example, figuring out peraves guides, which are a cheaper way to make solar panels.
00:23:55 Peter Kelly-Detwiler
Those sorts of material science inquisitions get faster and faster. Oh, and the other.
00:24:00 Peter Kelly-Detwiler
Thing.
00:24:01 Peter Kelly-Detwiler
I was talking to a guy on the airplane about this and it turns out he was a nuclear physicist and so he looked at me pityingly and said yeah, but it takes years to synthesize these molecules. These theoretical compounds, once you've to find what they are, created the.
00:24:15 Peter Kelly-Detwiler
The cookbook the recipe.
00:24:17 Peter Kelly-Detwiler
I said yeah, but I just found out from a conversation with LBL. They're now enlisting robots and robots can do the synthesis 24/7 and they they also record all their data, even their failures. And so now there's more raw material for us to interrogate to accelerate the process of material.
00:24:37 Peter Kelly-Detwiler
Science and at the end of the day, what's the grid? It's physical assets, generation wires, poles, it's physics and it's chemistry. So taking raw horsepower and accelerating that horsepower and you can get to the human mind.
00:24:52 Peter Kelly-Detwiler
Is guaranteed to accelerate the process of technology and make better stuff if you will, to make a more efficient and more cost effective future grid.
00:25:05 Chris Sass
Wow, that was a lot.
00:25:08 Chris Sass
So your your hypothesis is that better computing and robotics helps accelerate it, and getting us through the energy transition is that a a Cliff note version of what you just told me.
00:25:20 Peter Kelly-Detwiler
Yeah, hashtag can't not happen.
00:25:26 Peter Kelly-Detwiler
It's inevitable.
00:25:29 Peter Kelly-Detwiler
Because there's so much money that in in there's so much money to be made in the efficiencies around that, plus the benefits for society and avoiding carbon and dealing with climate change. So it's it's inevitable that the technological advances will continue.
00:25:48 Chris Sass
So we have technology driving, we've got robotics, we have AI, but those are also the same elements driving the demand for more energy.
00:25:59 Peter Kelly-Detwiler
True.
00:26:00 Chris Sass
Which wins the race?
00:26:03 Peter Kelly-Detwiler
A really good question and and certainly one of the things that one finds the longer ones in this game, is that prediction is a fool's errand. Almost nobody a year ago or a year and a half ago foresaw how much AI driven data centers right now are in the pipeline.
00:26:23 Peter Kelly-Detwiler
Almost. I looked yesterday at a report from Cushman Wakefield from January of this year. It's like across the Globe, 43,000 mega.
00:26:32 Peter Kelly-Detwiler
Lots of data centers are in pipeline development right now that that exceeds what's what's in the data centers built space already. It's huge. And so, yes, I think there are going to be a lot of future demands on the grid, especially because electricity then gets used for hydrogen. We already talked about transportation. So on the electron becomes.
00:26:54 Peter Kelly-Detwiler
It's a more elegant.
00:26:55 Peter Kelly-Detwiler
Energy deliverer, if you will. Then a lot of other fuels are and, and so it certainly has its place and I think will grow as a consequence. And because we're really building out a parallel central nervous system to our own on the planet, sensors would be that the nerves and just like we have an electrical system we're building, we're putting fiber.
00:27:16 Peter Kelly-Detwiler
Cables all over the planets, you know, submarine cables, that takes a lot of energy. And so who wins that thing? I think it's still not clear, I think, but but what is obvious is that atmospheric chemistry really doesn't care about.
00:27:32 Peter Kelly-Detwiler
So you know what we think it's going to do, what it's going to do. And so ultimately we get forced into making a cleaner grid and a cleaner energy economy win because the costs, if we don't do it, could be are likely to be quite considerable in terms of economic damage and human suffering.
00:27:52 Chris Sass
Yeah.
00:27:54 Chris Sass
I I see where you're going, but I also live. I live in the DC area outside of DC, I'm on BG and E power, and what I've also seen is a trend to really bad power. I I'm used to have you'd flip the light switch on. It always came on and always worked. And what I see now is short blackouts or brownouts. I mean the the power grid and the customer experience.
00:28:07
Yeah.
00:28:15 Chris Sass
Doesn't seem to be the stability to come to grow up being used to it at this point. I remember in the 80s having upses on my computers because I was afraid they'd go away, and then for a long time I didn't worry.
00:28:24 Chris Sass
About it and now again, if I want to work all day, I probably need a UPS because my likelihood that there's a power outage during the day to reboot my PC is high. So how is that transition going on and why are we seeing and why do most folks in the industry like myself believe that there's some more instability before it gets better?
00:28:42 Peter Kelly-Detwiler
Well, let's let's first of all, let's look at where that instability is.
00:28:48 Peter Kelly-Detwiler
Bulk power system we still have for the most part, the reliability that we need. Yes, there are some issues around resource adequacy as we bring in more renewables, for example, but so far we figured that out and the the map to the future is more longer duration storage and certainly complemented by natural gas and so on.
00:29:07 Peter Kelly-Detwiler
But really, what you're talking about, the average outages that are most people are facing these inconveniences that come out of nowhere. It's not like you see it coming on The Weather Channel, cause it's a storm for the most part.
00:29:18 Peter Kelly-Detwiler
It's the fact that the grid, the infrastructure, you and I, drive by every day is almost as old as I am. The average transformer in this country is well over 4 decades old. We have under invested to the tunes of 10s of billions of dollars. So I think sometimes we tend to think, oh, there's all this stuff happening with decarbonization of the grid.
00:29:38 Peter Kelly-Detwiler
That must be responsible for these outages, no, for the most part, those are decoupled. The outages have to do with under investment in a grid that is getting older every single year. Plus we seek.
00:29:50 Chris Sass
So is that the ISO or?
00:29:51 Chris Sass
Who is that that's responsible for that?
00:29:53
No.
00:29:53 Peter Kelly-Detwiler
That's Public Utilities Commission. Local infrastructure is all about the state Public Utilities Commission. So, for example, with Texas Center point and asked for a multibillion dollar, you know, plan now people are coveting about rates, they don't wanna pay for reliability. It's like if you live in a house and you don't pay for any upgrades for a long, long time, you get rolled into thinking that the cost of living in that.
00:30:15 Peter Kelly-Detwiler
House is a lot cheaper than it actually is because you haven't been paying the price every single year of making those investments to keep the house up to snuff, and then someday it's falling around you. That's kind of what we've done with the grid and the Public Utilities commissions basic.
00:30:30 Peter Kelly-Detwiler
Way.
00:30:32 Peter Kelly-Detwiler
Haven't in many cases working with the utilities, haven't upgraded stuff as quickly as they needed to do in many cases, so that's part of what we're seeing. Plus now you see economic growth in some places that that tends to cause things to burst at the seam as well.
00:30:48 Chris Sass
So how do we get there? Is the ratepayer going to be needing to pay more to get us through this transition, or is it built in like you said, you know, if I if I haven't painted and you know, suddenly I have wood rot, I got to rip out the wood and do more construction than having painted along the way. So for your house analogy, what do they do then? How do they get this infrastructure fixed?
00:31:05
Yeah.
00:31:06 Peter Kelly-Detwiler
Well, I mean, you look at places like FPL where they went and put in all these concrete poles and communicated to people, hey, we're going to be outside your house. We're gonna be there for three days and you know, the infrastructure is bigger too, like it's at FP. And Li was reading some of this anecdotally, cause I was doing work for a client on on power poles. And people complain because it's bigger. You know, it's a little bit.
00:31:27 Peter Kelly-Detwiler
Uglier than wooden pulse, but boy is it capable of responding to a cat. Two or three hurricane. Yeah, because it's a big concrete pole. That's an expenditure. And you know the.
00:31:38 Peter Kelly-Detwiler
One thing climate is changing, and so a lot of utilities are now saying look, we need to harden our infrastructure in ways we didn't have to do. PSEG in New Jersey, we have to, we have to essentially elevate our Transformers and a lot of our infrastructure along the coast because sea level rise, you know so so there are those costs. So yes, the answer is.
00:31:59 Peter Kelly-Detwiler
We're probably going to end up having to pay a lot more for distribution costs than we have now. People look at California, Chris, and they go well. How come rates are so high? Well, one of the reasons is because the utilities, especially PG&E.
00:32:11 Peter Kelly-Detwiler
Are having to spend billions of dollars to protect against wildfires. That's a phenomenon they didn't have to deal with at nearly the same scale 20 or 30 years ago. I highly recommend the book California burning by Catherine Blunt, the Wall Street Journal reporter. If you want to get a sense of.
00:32:26 Chris Sass
Hey, Catherine. Spinal program. She's a friend of.
00:32:28 Chris Sass
The program she.
00:32:29 Peter Kelly-Detwiler
Oh yeah, yeah.
00:32:29 Chris Sass
She.
00:32:30 Chris Sass
Been on the on the show talking about that and talking about the aging infrastructure there. I mean, in California there's a different situation because you can also use micro grids to help help reduce the risk and all.
00:32:32 Peter Kelly-Detwiler
OK, good. Yeah.
00:32:42 Chris Sass
But I I guess the the one consistency I hear is you mentioned in your opening remarks how long it takes to get Transformers and the supply chain for a lot of these things. So if everybody decided today?
00:32:55 Chris Sass
To upgrade infrastructure to fix the infrastructure.
00:32:59 Chris Sass
It wouldn't happen today because I don't think the supply chain is is in place. Do we do we manufacture and have enough of the pieces on shore or near shore or somewhere to get the pieces we need to do?
00:33:09 Chris Sass
What?
00:33:09 Chris Sass
You're talking about.
00:33:10 Peter Kelly-Detwiler
No, let's take one example. So you have a certain grain steel for Transformers and even before the AI deluge for, you know, AI, data center deluge now, which is just incredible. Even before that the the administration and the Economic Council was looking at Transformers. And would Mackenzie has a report that says, you know, it takes now.
00:33:32 Peter Kelly-Detwiler
Years to get a transformer we manufacture 20% domestically of the transformer amount that we need in this country. It's all a lot imported from Japan and places like that, right? China, Japan, etc.
00:33:45 Peter Kelly-Detwiler
Front.
00:33:46 Peter Kelly-Detwiler
And and so that's the other thing we've offshored so much of our industry that we're reliant on these international supply chains and we've made ourselves vulnerable as a consequence, cause everybody's clamoring for this stuff. You know, I was just looking for a client at data center construction around the world. Yes. Northern Virginia is the largest, but Mumbai is growing.
00:34:06 Peter Kelly-Detwiler
And places I'd never even heard of. As cities are putting in gigawatts worth of data centers, they're all going to need Transformers. So we're stuck in a global world. And yeah, a lot of the things we need, we're not going to be able to get because we're not the only place faced with these same sorts of problem.
00:34:23 Chris Sass
Well, we've gone all over the place in our conversation today, I guess. How do we pull this together as as we come to the last couple of minutes of our conversation?
00:34:32 Chris Sass
Pull this together for us. What are your? What's your take of what you're giving us and what do we do with the information I just received?
00:34:39 Peter Kelly-Detwiler
Sure. So I think if you if you look at this in terms of the context of the 3D's.
00:34:44 Peter Kelly-Detwiler
Digitalization, decentralization and decarbonization, they're all happening. The digitalization cause IT and AI and so on and decentralization because all this technology is now showing up at our doorsteps, whether it's EV's, batteries, solar panels, etcetera and decarbonization, well, that's a pretty obvious one for most people.
00:35:04 Peter Kelly-Detwiler
Pretty logically, depends where you sit, but the science is the science, so the grid sits at a really critical juncture right now where we're facing a lot of really challenging decisions within the context of a high level of.
00:35:18 Peter Kelly-Detwiler
So one of the things to do is to figure out what are the potential scenarios we might be facing over the next 5 or 10 years. Linear growth isn't going to be what we're going to face. We just know that now. So now you have to start planning for optionality on uncertainty in ways you never did before, which is really scenario planning. And you have to start to say, well, what if we are towards this?
00:35:37 Peter Kelly-Detwiler
Outcome instead of that one. What are the things we need to have in place? And now you say to yourself, OK, and the scenario planning, what are the, what are the milestones that tell us we're arcing towards this outcome rather than that one and what are the pre established scenarios we have to start making investments in?
00:35:54 Peter Kelly-Detwiler
And so it's not going to be an easy task. And as we know, just when we think we know something, things change, whether it's EV sales or you know whatever we project, it ends up being wrong. That's just the the reality of things recently. And our ask for for adoption and so on, they they tend to be steep and surprise us, but.
00:36:15 Peter Kelly-Detwiler
But there are some knowns, and the knowns are that the change is accelerating faster than it ever has.
00:36:21 Peter Kelly-Detwiler
And the customers getting involved in ways they never have before and that the grid is digitalizing. So utilities, for example, have to hire a whole new breed of cat who's way more IT savvy. And they also have to break down their vertical silos and start to to communicate horizontally with each other. They have to integrate.
00:36:41 Peter Kelly-Detwiler
It's more vendors into their activities, it it really requires is a much more versatile mindset like what he goes kind of done in Hawaii with the PUC there, which is try and plan for future state. That's very uncertain that involves a lot of dynamism, dynamism at the grid edge within the context of the mandate to decarbonize.
00:37:02 Peter Kelly-Detwiler
Not easy, but flexibility is a watchword and certainly scenario planning is absolutely critical now.
00:37:09 Chris Sass
I think.
00:37:10 Chris Sass
We've covered a lot. I appreciate you summering it together. I'm looking forward to the journey ahead. I think it's gonna be a bumpy Rd. before it gets better, but there's a lot going on it. I'm more optimistic on the software because I come from the software side of the house and seeing some of the control that's coming, and I think there's nice and good things to come. Standards are always a plus in.
00:37:29 Chris Sass
My.
00:37:29 Chris Sass
Experience, Peter.
00:37:30 Chris Sass
I want to thank you so much for coming on the program today. It's been a pleasure having you as a guest on Insider's guide.
00:37:36 Peter Kelly-Detwiler
Thank you, Chris. It's been a pleasure to have the conversation with you.
00:37:39 Chris Sass
For our audience help keep the conversation going. Add comments, ask questions in the threads on your YouTube. Or were you subscribe for your podcast around LinkedIn and we will see you again next time on the insiders guide to energy. Bye for now.
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