Peter Kelly-Detwiler, Will Bachman
Will Bachman 00:02
Welcome to Unleashed the show that explores how to thrive as an independent professional. I’m your host will Bachman. And I’m excited to be here today with Peter Kelly Detweiler, who is the author of one of the Umbrex best books on the energy industry. And the title is The Energy Switch how companies and customers are transforming the electrical grid and the future of power. He’s also a former exec in the industry. And he is a consultant. And tell us all about it. Peter, welcome to the show.
Peter Kelly-Detwiler 00:33
Thank you, it’s a real pleasure to be here. Well,
Will Bachman 00:36
Peter, maybe you could start with sort of just a one minute sketch of your background. And then we can start diving into the book a little bit, but but just kind of give listeners a sense of what you’ve been doing, you know, over the course of your career,
Peter Kelly-Detwiler 00:49
sure event in power markets, in the power grid in some way, shape, or form for 30 years. And for a number of years, I was involved in retail power, which many of you are involved in that game, where your company’s out where you’re buying electricity from a third party, rather than from the utilities. So I was involved in operations there, making sure that you know, data flowed and bills got out and that sort of thing. And then I ended up running something, we were building virtual power plants, and paying people not to use electricity during periods of peak demand, if you like building a virtual highway on the road, and paying people not to drive between the rush hours of six to nine in the morning, for example. And then after that, I left and I left constellation, which was the largest retail energy company in the country, and ultimately set off on my own, into that daunting world of consulting, which is where I live right now.
Will Bachman 01:42
Great. Let’s get into your book. So the Energy Switch, tell us about the status of the energy grid. It’s something that maybe we don’t really think about that much day to day, you think about the kind of generation people can see plans. But but we don’t so much think about the energy grid, how are the demands on it changing with with renewable sources of power, and solar and local storage and so forth? How’s it changing? What should we be concerned about what has to happen with the energy grid?
Peter Kelly-Detwiler 02:16
Yeah, that’s a great question and one that I actually have a seven and a half hour class on, but we can condense that. First of all, it is, according to many engineers, the most complex machine that humanity has ever built, if you think about it, it’s all connected with these multiple parts. And it delivers electricity from a power plant or a solar panel or battery to you almost instantaneously at nearly the speed of light. And it’s the only commodity we buy, that is simultaneously produced and consumed with relatively little storage in that whole ecosystem. It’s also because of a global effort to decarbonize our energy economy. It’s part of the largest transformation economically that humanity’s ever consciously tried to attempt. I mean, we sort of got into the industrial revolution in an ad hoc fashion. But this we’re trying to engineer from a governmental level and a corporate level and so on. And the the electron, the electricity piece of it, actually, the grid is going to get even bigger, because we’re going to start pushing hydrocarbons out of transportation, which we’re already doing today with electric vehicles, we’re going to start pushing hydrocarbons out of industry as well, in the form of hydrogen produced from electricity in the so called hard to abate sector. So the grid is going to get bigger over time, even as it gets increasingly complex because of all the rooftop solar arrays and batteries in people’s garages. And now electric vehicles that can actually plug in and deliver energy back to the grid. In some instances, already. Cars are becoming storage devices and miniature power plants. So we’re just embarking on this period where the end US consumer is no longer this passive participant, but now becomes a very involved actor in this increasingly complex ecosystem, which will involve so much data will, it could be the largest data play we’ve seen so far.
Will Bachman 04:11
Yeah, so let’s just level set for listeners that are not like experts at the grid, and I only have the passing knowledge, but let me kind of just share these my kind of very basic understanding. So historically, there were, you know, generation stations, and in some cases, it would be vertically integrated. So one company was always like generation stations that are brought probably burning some kind of hydrocarbon or nuclear power, right at producing electricity, and some of them have characteristics, they would just stay at 100% and keep going for 18 months until they need to refuel like a power nuclear power plant. Some you could maybe ramp up with with sort of a notice of hours and some with minutes, natural gas, coal, right and then there’s the long distance transmission lines. And then there’s a third business, which is that local distribution, what we think of as our utility, right? So the local getting that power from the long distance transmission line, stepping it down and voltage getting into the local neighborhood, right, running all the wires and the meter and stuff. And then that was running just fine for a long time, there was people who could plan at the system operation level, and could kind of plan out, alright, we’re expecting some power usage to go up, it’s going to be a hot, sunny day, so tell a certain power plant to come online. But then, over the past decade or two with renewable energy sources, it’s really messing with that system. Because if someone has solar on the roof, and the cloud passes over, then all of a sudden that drops off, but people still want to use electricity. So it’s becoming much more challenging is my understanding, talk to us about some of the challenges that the system is facing now, given the renewable power and some of the other things that are happening?
Peter Kelly-Detwiler 06:02
Yeah, I think you’ve adequately characterize it as the high level, there’s one more bifurcation there, which is still have a lot of utilities that own their generation and the wires and poles. But more than half the country lives in competitive power markets, where third party companies now own all the generation and sell into these really complex markets where there are prices every five minutes, and very, very volatile, where, you know, if it was gasoline, let’s say average price is $3 a gallon, there could be days when the price of gasoline, three hours from right now could be over $1,000 a gallon. That’s how volatile power markets are. And so you do now have the situation where we’re retiring a lot of the coal plants that we used to be able to use to fall demand almost instantaneously, are we actually making our gas plants ramp up and down faster to follow demand, and especially to deal with the intermittency, the variability of all these solar resources, both the ones on rooftops, and the huge ones that cover, you know, perhaps a square mile or a half a mile, and then you’ve got solar is interesting, a lot enough in its variability, because of clouds come over, you know, changes the output, even more challenging will is wind, wind energy, the output is a function of a cube of the wind speed. So 10 miles an hour versus 20 mile an hour, wind speed gives you eight times as much energy on the high side. So you still have demand that’s been doing what it’s done all the time. But now you have much more variability in the system, which means all these other resources have to be operated in new ways. And then you’ve got, you know, people starting to put batteries in their homes and, obviously, more solar on the rooftop switch in the middle of the day, when the sun is shining, you’re not consuming all the electricity from the solar panels on the roof, that power is flowing back to the grid in ways the grid was never designed. It was designed to be a one way street. And now we have traffic flowing in both directions, a lot of the time. So it becomes a much more complex energy challenge. engineering challenges have ever been in the past.
Will Bachman 08:07
So are there kind of three or four or five or six major categories of challenges that you’ve bucketed all these things into? It sounds like one of them is just the mismatch of timing of supply and demand of power. Another one is kind of having bidirectional flow perhaps but are there like sort of four or five things if you’re talking to a policymaker and say, and you need to keep it simple for them of how to communicate what the different major buckets of challenges are?
Peter Kelly-Detwiler 08:40
Yeah, so the first one is you have to keep on decarbonizing because the grid is under increasing stress just because of climate change. For example, two years ago, that heat we had in the Pacific Northwest, where temps got to 115 degrees, that stressed out transformers, and you know, the power system didn’t work very well in certain areas. So you got to keep on focusing on cleaning up and getting carbon out of the economy. So that’s sort of step one, then step two is, as we start to retire more and more of these assets, like coal that have been around forever, and replace them with reason, these renewables, adding enough storage or flexible power plants that can step in when the wind and the solar aren’t there for what is called Resource adequacy. It simply means keeping the lights on that is now job one for grid planners at the high level in that sort of full power wholesale market system. And then down at the distribution level. Yeah, the real challenge there right now is because there are so many actors in that space, that Tesla has put the batteries in the garages and the sun powers and the Ford f150 that can now be your home and that sort of thing. The number of actors living down at the local circuit level, you know where you and I have our homes that’s getting there. are very, very challenging to manage on a completely different level. And partly because the federal government said to the grid operators two years ago, you have to compensate people aggregate all these devices down in the distribution markets as if they were wholesale market players so, so it just the level of layer on layer of complexity is really, really challenging. And then, of course, sitting on top of this whole thing, physical and cybersecurity, you might have seen last week, whoever it was unknown assailant shot up to transformers in North Carolina, putting 40,000 people out of power for up to five days Well little known to most people, there were six attacks in the Pacific Northwest the two weeks prior, and Oregon and Washington state. So both cybersecurity and physical security of the power grid are also critical things we can never forget to keep our we have to keep our eye on that ball as well.
Will Bachman 10:59
What about just the age of the grid and some of the like, for example, transmission lines fairly unsexy. And even setting aside all the challenges of distribute distributed energy resources, like, you know, solar on your roof or batteries. I think I’ve looked somewhere that, you know, some of this transmission lines are built maybe 4050 years ago, and maybe it’s time for an upgrade to talk to us a little bit about some of those features.
Peter Kelly-Detwiler 11:31
Yeah, definitely a real challenge. And if you look around like just again, in your local neighborhood, the Transformers you’re looking at, on average, are is almost as old as I am. And I’m 62, the average transformer is like 50 years old, somewhere in that range. So we built a lot of this stuff a long time ago, and it’s antiquated, and the new technologies a lot better. For example, you now have high voltage, direct current lines that can carry more power more efficiently than the alternating current lines that we see strung across the landscape. So there’s a need, and there’s a, the American Society of Civil Engineers does a report card every year on the power grid, they basically give the grid like a c minus d plus, and indicate that we’re under investing by at least $10 billion a year in terms of keeping up with, you know, the investment that we need just to keep the grid where it is. And then of course, we need all these additional investments, to grow the grid to accommodate the increased demand for electric vehicles and all the other things that electricity is now beginning to do, you know, the massive growth in data centers, for example. So you’ve got this challenge of not only, we’re not quite replacing what’s aging out, but we have to also build new stuff, new transmission lines, substations, transformers, etc, to accommodate the economic growth in front of us, and of course, all the build out of wind energy in the central part of the country, and solar energy in the southwestern United States, and so on. So there’s some pretty big investment challenges ahead of us.
Will Bachman 13:02
Let’s go through some of these topics. So you talked about storage. Tell me a bit about what are some of the things happening with storage at the, you know, at the at the wholesale level for buy it kind of the utility scale level, as well as storage at the kind of homeowner or smaller skill level? What are some of the developments that are happening now around that?
Peter Kelly-Detwiler 13:25
Sure. So we’ve always had a little bit of storage in the grid in the in many areas of the country in the form of pumped hydro, where we you know, take a whole bunch of water, pump it up a hill, stored and reservoir up on the top of the hill, and then let the water run down through the turbine, so we’ll be a power was cheap at night, put it all up. And then when power is expensive, in the daytime run through the turbines, you’ll lose about, by the way, about 25 to 30% of the raw energy and every cycle in that transaction. So that was the old storage in three or four years ago, that was like 97% of all the megawatt hours we stored. But then we started to see with Tesla and with others, the electric vehicle space scale up. And also we saw the same time renewables coming in. And so there was this new need for storage. And the most cost effective resource out there was lithium ion batteries because of the Evie industry. Every time you see a doubling of global cumulative output, cost of batteries has fallen by roughly 20% Until recent supply chain issues. So now you’ve got all these developers on the grid, putting storage and in fact, will half of the new solar installations in this country are having four hours of lithium ion batteries attached to them. And the real critical reason for that is you everybody’s producing solar energy at the same time, which depresses the prices. So if you could store that energy for during those cheap hours and shift it to later in the day when it’s more valuable. That’s the thing to do, especially in markets that are solar saturated like California, Hawaii, other places. like that. So we’re seeing this massive influx of batteries in markets like California, Texas, the northeastern United States, especially where they’re competitive markets. And then behind the meter and homes, you’re seeing the same sort of thing in certain places. Because in Hawaii, for example, they won’t let you put new solar on the rooftop. Because there’s so much power flowing into the grid from solar, they can’t accommodate anymore. So if you want to put solar on, you have to put a battery in at the same time. And in California, as early as tomorrow, they may, they may be changing the rules on how people are compensated for the surplus electricity from their solar panels at certain times of the day. And California regulators are pushing really hard to get homeowners to install batteries in their garages, basements, etc, to to help balance out the grid. So there’s this big push right now for about four hours of storage duration, and a couple of years, we’re going to need to see longer duration storage, six hours, eight hours, 10 or 12 hours. And there are even some companies out there with batteries that can offer up to 100 hours of duration. So as we migrate towards more and more renewables, we’re going to have to have the need for more and more longer term storage, not just for hours, but right now the tool that everyone’s using in the box is lithium ion batteries.
Will Bachman 16:22
And when you say four hours, are those different durations? What’s that measuring, like max production of the solar power unit? Or is that hours of you could run your house for four hours? What Yeah,
Peter Kelly-Detwiler 16:33
so Okay, so what it means is, let’s say I buy a battery that has one megawatt of instantaneous output. So it’s rated at a megawatt, who would be rated at one megawatt four megawatt hours. So I could get one megawatt for a period of a full four hours, let’s say so some of them, you’ll see rated for two hours, you know, in a shorter duration situation. And originally, when lithium ion batteries came in, they would be only like 10 minutes. And their job a couple years ago was just to balance the frequency on the grid at 60 hertz, the the oscillation of sine waves every second in the alternating current grid. But as we get more and more renewables into the space, the lead for longer durations, there are the days when periods when the sun has, you know, clouds coming over solar panels, or when the wind doesn’t blow for hours at a time. So that’s the general trend is longer duration.
Will Bachman 17:26
For and I’m actually quite interested in this topic, because I’m sort of thinking about my wife and I are thinking about getting solar for our house and thinking about when’s the right time to do it, like seems that prices keep coming down. So like, you know, should you wait longer for the prices to come down? But for for storage? What do homeowners typically do? Or what you know, what would you suggest people think about, like, how much storage should you get? If you want to get it for your house? Should you get like 24 hours so that you could be like self sufficient for a while or what’s practical right now?
Peter Kelly-Detwiler 18:01
No, you don’t want so you don’t usually get the thing about it is if you want to size storage for the home. First, you have to think about what’s your maximum instantaneous demand. So I refer to it as the three kids with the long hair hairdryer problem, right? So if you put in batteries, let’s say you wanted to go off the grid and have 24 hours of storage all the time, you really have to figure out what’s the maximum demand at any given time. So you couldn’t have all three kids using 800 Watt hair dryers plus have your fridge running and your TV on or whatever. It’s kind of like living on a cabin off site. So what you really think about in terms of the duration of storage you want is what am I trying to accomplish? Do I want storage for a five day power outage, not cheaper to get a gas fired Generac or coal or generator or a gasoline fire generator. But if you’re in a place like California or someplace where you have solar on the rooftop, and you want to optimize the economics of the solar plus still have a little bit of backup power in the case there is you know, four or five hour outage, that might be the way to go. And typically what you’re finding is all these companies that used to be solar only companies three or four years ago, are now solar plus battery companies because they’re trying to optimize the economics of the whole package that they deliver to you. And one other note, so you get your typical batteries for your garage, and it’s probably 12 kilowatt hours. That means it could deliver 12 kilowatts for one hour or six kilowatts for two hours, that sort of thing. If you take a look at that Ford f150 Lightning, you know, the pickup trucks the canal, they’re engineered to feed your house in the event of power outage. The little one has 98 kilowatt hours gives you about 210 miles of driving range 98 kilowatt hours so it’s like six times seven times larger than the typical battery so you’re paying $20,000 For to have installed in your home. So many people are saying, I don’t know, if I’m gonna bother putting a battery in my garage, I might just have for backup power, I might just have the vehicle do that, because the average home uses about 30 kilowatt hours per day. So that’s 150, the little one could give you three and a half days worth, if assuming all your circuits. If you’re isolated, just your critical circuits, you get even longer. And the big Ford f150 is 131 kW, kW eight, so that could kilowatt hours, that could give you like four and a half days. So right now people are really recalibrating, oh, these electric vehicles coming out and so on, what am I going to do, and many of the vendors, the solutions, providers are now saying, We’ll give you a package with solar on the rooftop, and a certain amount of battery storage in your garage, and then integrate the electric vehicle to that and build a whole whole ecosystem around this thing. So my counsel to a lot of people is wait, because the technology is getting better. But even more importantly, the business models are getting more refined, and the financing is getting better leasing and those sorts of things. And it’s still very nascent ecosystem solutions being developed. And in a few years, all of its going to get better. And one other thing is, we’re kind of in the world of the iPhone five or iPhone seven right now, in terms of the technology in electric vehicles, and storage, and so on. And just like, you wouldn’t want to plunk down a whole bunch of money on an iPhone five and keep it forever. I’m counseling a lot of people, if you’re going to buy electric vehicles, for example, lease it, because the tech gets so much better. And with batteries, you might want to wait a little bit longer if you don’t need to jump in and make the purchase. Just because the trends are moving in your direction for waiting,
Will Bachman 21:45
that’s crazy that the battery storage in a truck is like five to six times what you’d get for paying 20,000 It’s like cheaper just to buy the truck and park it in your driveway.
Peter Kelly-Detwiler 21:56
Yeah, yeah, it is. And I mean, you can get just have a righteous tailgate party with a Ford f150 with the frunk. Right. I saw one of those home renovation shows the other day. I don’t know what Ford paid for it. But they had immediately the vehicle drove up to the home, they started pulling out the power tools. And I’ve watched him open up the trunk called the bronc and start to plug in their nine volt tools and stuff and power their job site right out of the vehicle. And I thought ah, what great product placement. But that’s the world we’re about to see is this really interesting convergence between the transportation system and our existing electricity system and creating mashups we’ve never seen before. No
Will Bachman 22:36
at the utility scale, beyond putting a lot of lithium ion batteries destroyed, distributed. And beyond pumping water. Are there other things that utilities are doing maybe producing hydrogen or that they can then burn or like doing other stuff, I don’t know heating metal up to like 5000 degrees or something like are there other things that are going on that are you couldn’t do at your home because they’re too capital intensive, but that you know, that are have the power and more utility scale kind of storage?
Peter Kelly-Detwiler 23:11
Yeah, there are some interesting technologies out there like Siemens, for example, has this stuff where they take volcanic rock, and they heated up with resistance heating, and then take that hot rock and they can store like days worth of heat. And then they use that to boil water and create steam and spin a turbine. But guess what, they lose 60% of the energy in each round trip cycle. But there are other companies for example. Well, there’s one right now, that is building these factories on site and their buildings. And when they dig out the foundation, they abused the dirt, they impregnate the dirt with this resin. And it’s made by SeaMAX, the Mexican cement company. And essentially a creates 35 ton of bricks that can be stacked on top of each other for theoretically decades on end without degrading the bricks. And they raise and lower the bricks to either absorb or release energy, right because if you raise it, it’s it’s potential energy. And if you lower right, you’re starting to release kinetic energy. And so there are companies there is another company that’s lowering weight down into abandoned mine shafts as deep as a mile long and releasing energy as they unspool the coil lowering the weight into the mine shaft. There is another company that’s building rail beds on on chains in Nevada, and they raise and lower these heavy, multi ton railway cars with weight on him to again absorb and release power. But the one I’m most excited all these are sort of still in the science project stage. And it’s unclear whether they’re going to be able to do this at scale economically. The one I’m most interested in right now is a company here in Massachusetts. And it’s a guy Matteo Hart amela was the CEO. He spun out a Tesla he was the battery guy there. He now has a technology Eat, which is Neil Young would love it, it’s reverse rust, right? It’s it’s iron air battery, when metal rusts. When steel Ross, it releases energy in the oxidation process. And then you can direct it using electricity to do that. And so right now, they have two contracts where they can deliver one megawatt for 100 hours. So giving you really long duration storage. And because these things are made out of iron, they think they can make them a lot cheaper than lithium ion batteries. And they just raised $450 million for their first giga factory. And they’ve got their first contracts rolling out next year with utilities. So there’s some interesting stuff in the offing. And then you mentioned hydrogen. So the DoD is offering $8 billion right now to what they call hydrogen hubs, places where they’re going to match hydrogen supply with and use demand, we have a huge amount of demand for hydrogen in this country. But it’s all down in the chemical processing, and fertilizer and ammonia creation region and the Gulf Coast. Fact, we have hundreds of miles of hydrogen pipeline down there steel pipeline. The problem, though, is if you use hydrogen as a storage device, right, it’s sort of a battery. And there’s a caverns, they’re building right now to store a compressed hydrogen and then run through turbines later, if you take 100 units of energy, and put it into the electrolyzers that use electricity to split water into hydrogen and oxygen, and then liquefy or compress and then store that hydrogen, and then run it through a turbine or a fuel cell, you lose two thirds of the energy of the round trip equation. And that makes the economics not that compelling. And so that’s one of the real challenges right now with hydrogen is these. And then the laws of physics, you kind of have to obey them. There’s some real challenges around just the round trip efficiency losses in that technology in particular, compared to some of the competitors, which won’t give you the duration that you need, but are much more cost competitive. So there’s, it’s kind of like a zoo right now, where there’s all kinds of different animals in the zoo, in terms of these technologies, each one of them has its own characteristics that are helpful, and some that are drawbacks.
Will Bachman 27:16
So you’ve convinced us, let’s say that, we need to big a big investment in our energy grid? What are some of the current barriers either at the public policy level, or just in terms of the private company incentives of getting those changes made? So maybe some of the companies, some of the companies, maybe they could invest in, in fixing the grid, but they wouldn’t be able to capture the benefits of that perhaps, or maybe public policy prevents companies from investing, it just talked to us about some of the things they’re gonna need to change from a legal or regulatory perspective to allow us to move forward?
Peter Kelly-Detwiler 28:03
Sure. So the first thing is, this is really all about carbon, right. And as a trained economist, it annoys me that we’re doing all this about carbon, but all the subsidies and programs are essentially advantages one technology or one approach, rather than focusing on the issue of carbon. And carbon is like many other things, it’s an externality, right? It is, it is an outcome of our economic activity that is not priced into the actual products or activities themselves. If we had a carbon price, we would then figure out the most efficient ways of dealing with carbon. Instead, we have subsidies for wind and solar and batteries, and all that stuff, which creates very indirect and inefficient economic approaches to solve the main problem we’re trying to do, which is build a world for our kids and our grandchildren. That is still in that Goldilocks range, if not too hot, not too cold, 1.52 degrees centigrade above where we are now. Right. So that will be the first thing. Fortunately, though, we do have this less efficient set of tariffs and incentives. And the IRA that we just passed, is the first time this country has really come up with some kind of an integrated industrial policy in my lifetime. And it has some interesting components as well. Companies, though, the main thing, you know, as being in the enter in the I’m sorry, in the financial space, all of us are in some way, shape or form. The one thing investors need to see more than anything else is certainty. Right? What they hate is when they make a series of investment decisions based upon policies or subsidies, or what they think is a fixed landscape, and then someone pulls the rug out from under them changes the subsidy environment, the regulatory environment, whatever. So what you really need to start with is building the rules of the sandbox in a way that are relatively straightforward and that in Esther’s can count on. And once that’s established, then money tends to gravitate like water flowing downhill. And one thing we have seen in the last few years is 10s of billions of dollars. And ultimately, will some estimates are that to decarbonize the global economy, we’re looking at 100 Plus trillion dollar investment between now and 2050. So then it really comes down to how do governments and policymakers create the most effective and transparent framework, so that that money is efficiently deploy that capital, and as little of it as as possible is wasted. So the opportunity costs aren’t just enormous. That’s big picture, where we have to go with all this stuff. Because if you set the rules of the sandbox or the zoo, right, the animals will come and play, they’ll do what they’re meant to do. You know, companies are not immoral, they’re amoral, they chase profits. And so setting up those structures in a way that they efficiently deploy capitalists who achieve the outcomes that policymakers want, is still probably the best way to do this. But a carbon tax would certainly help.
Will Bachman 31:06
You talked about data earlier. Yeah, let’s get into that a bit. So what are some opportunities? And what do you see happening with data on the grid over the next years? And, you know, decade or two, in terms of how that’s going to be, you know, change things?
Peter Kelly-Detwiler 31:26
Sure. So why is it so why will it be so big? Okay, so today, your simple power grid has a supervisory control and data acquisition system, a SCADA system, that is an industrial operation system, if you know, operating technology system that essentially integrate operates, maybe 200 devices, your power plants, your massive transformers, it wasn’t a very, very big universe that you had to monitor. Now, you start to bring in a whole these batteries on the grid edge, you know, down in the lower voltage distribution system where the distribution utilities live, and you have all these bidirectional flows. And you might have in a utility, the size of say Pacific Gas and Electric, there are 5 million meters, you know, and use customers, well, they each might have a smart water heater that takes a signal and doesn’t heat water during periods of high demand, they probably will have an electric vehicle, they may well have solar on the roof, they could well have a programmable AC switch on. And there could be, you know, battery electric vehicle, right? So they were thinking that of these 5 million meters, on average, there could be four devices in every home that are addressable in some way, shape, or form to interact with the grid. So 20 million devices, can one utility. Now take those devices and recognize you have to constantly monitor what they’re doing? And are they on? Are they off? How much are they consuming? And then if I asked them to change their behavior, when did they start? How much did they deliver for how long? And when did they stop? And what state did they return to? Suddenly, you’re talking about, and I had to do this for a client, I My job was to estimate how many billions of transactions were likely to occur over x period of time in the United States, as this whole distributed ecosystem started to ramp up. And you quickly get into the 10s of billions of transactions. Because a water heater, for example, could be interacting with a grid every day, some do already with utilities around the country. And so pretty soon you have these massive amounts of data flows. And then it becomes critically important to understand, at the very locational level where we’re transformers are, you know, and down at your feeder level, your circuit level, the stuff that feeds all of us, like the what the where the how much the how long, and which directions, the power is blurring, creating situational awareness that we can kind of take for granted in the past, we can’t anymore because there are so many actors potentially doing so many things. So creating situational awareness for the multiple actors in that space is now really job one, from an IT perspective. So you see a lot of utilities now mapping out for the next 20 years, the types of investments they have to make, and what is now going to be a cyber physical landscape in ways that it never was before. That’s why it becomes such a huge data play.
Will Bachman 34:29
And I think you referred earlier to kind of virtual power plants where you could do the effect of generating more power by in a coordinated way, getting a bunch of people to turn off their air conditioning or turn off their water heater.
Peter Kelly-Detwiler 34:44
Yep, or their factory. We had a big when I worked at Constellation we had a 20 megawatt rock crusher that was making concrete and we would bid that into the system every single day for something called spinning reserve which is can you get a power plant to ramp up within 10 minutes, we’re ramped down within 10 minutes to fall demand this case, we could only go in one direction, which is shutting stuff off, right. And so we would be it in. And we get paid every day, whether or not the grid operator call on us or not. So essentially, when I was a kid, there was a movie called don’t raise the bridge, lower the river. And essentially, what you have to do here is now that we can focus on the demand side, we can either raise the bridge by adding more supply, or we can lower the river by focusing on demand. And the real answer is, we’re going to do both in the ways that are most efficient as we possibly can.
Will Bachman 35:39
Let’s talk a little bit about your consulting practice. So we’ve covered some of the points from your book. But tell us a bit about the kind of work that you do the kind of clients you serve.
Peter Kelly-Detwiler 35:49
Sure. So when I left constellation, I didn’t know what kind of consultants I was going to be or even did I want to do it. And I had this really good fortune, which I highly recommend any of you to do, which is get a year’s worth of severance, which constellation gave me because I’ve been there for 15 and a half years and they were trying to skinny down their executive suite because we got bought by Exelon. So there was redundancy. And they didn’t want the virtual power plant that I built. They spun it out later on because they had 20,000 megawatts for generations. So the year I left, I ended up writing for Forbes about 150 articles that I interviewed CEOs from battery companies and solar companies and some Evie companies and all you know everybody doing everything, possibly connected to electricity. And I did another bunch of articles the following year, then GE started asking me to write for them. And at some point, I realized, Oh, I’m reading 30 newsletters a day. And I’m scanning 150 article titles. And I actually no more I don’t, I’m not the subject matter expert in any vertical. Like, I’m not the guy who knows the most about hydrogen and the most who knows about electric vehicles. But there are very few if any people who know more about how it’s all connected, because I spent the last years trying to understand the connective tissue. And if you pull on this over here, what moves over there and why. So what I found is two things, a lot of people want to hire me for my strategic understanding, because I understand contextually how the pieces are likely to move. And the other one is I found people hired me, because I know how to be a storyteller. And so now, two of my key clients are the American American Public Power Association, and the Smart Electric Power Alliance, which are, you know, APA has, like 3000 member utilities, and smart electric power lines has 1000s of utilities and regulators. And so I teach the seven and a half hour courses on, you know, hydrogen, electric vehicles, storage, renewables, et cetera, et cetera. And then I have other clients who say, hey, write a white paper on what’s going on in the distributed energy resource space, and how many transactions or tell me what’s going on in offshore wind, we’re looking at buying companies who’s doing what with cabling or platform development or whatever. So at this point, people kind of hire me to write a master’s thesis for them over the course of a month, documented, like heck, most of my papers will have 125 or 150 footnotes in them. And then I do a lot of keynotes where I talk about something and then basically say, okay, ask me any question you want to know about electricity? And I can probably give you a defensible answer or tell you where to find this stuff. Because I read three hours a day, and I have all these newsletters that I track. So I’m kind of like a gossip monger around technology, and business models and regulatory conversations in the power space. And people fortunately, will pay me for that.
Will Bachman 38:45
That’s awesome. What other sorts of kind of consulting projects do you see happening that, you know, either utilities or other players in the space are engaging consultants for, you know, in the energy industry?
Peter Kelly-Detwiler 39:02
Oh, gosh, there’s a lot of them. I mean, in the IT space, just the grid architecture, trying to figure out how this data is going to flow and the latency, you know, the speed with which data has to move around? And how do we architect how this data is aggregated at what level so that we don’t blow out the minds of the operators, we give them enough data, but not too much. So we overload them, and then fall kinds of work trying to figure out, for example, if we’re going to electrify our highways, and bring medium to heavy duty trucks, and how big do we have to make the charging infrastructure? And how are we going to integrate that with the grid? And I mean, if you think about it, we’re reinventing the entire power grid over the next couple of decades. And since electricity touches humanity in every single way, shape, or form, there are plenty of opportunities, sociological studies, like behavioral stuff, how people are going to do this financing, what’s the best way to bring money to this space? So and then obviously, you know, the folks who are in the power airspace but there’s plenty of room for everybody from the McKinsey in the Accenture is doing high level work to smaller boutique firms trying to figure out for specific utilities or corporate actors, how they slot into the space, where deploy capital, where society likely to move, and and Where should one, anticipate that and start to be ready. So there’s a lot of strategic work to be doing as well with various companies, you know, who either buy electricity, or who were somehow otherwise engaged in the game, I’ll give you one good example as well. I got hired by a quick serve restaurant chain with 2200 facilities to figure out where power markets were going to be most volatile for them, and also where they were most likely to see their supply interrupted by weather events. So as a risk management game, a lot of work in that area as well. And you don’t necessarily have to be a power expert to understand a lot of this, you just have to bring in a consistent intellectual framework for the right questions in order to provide answers that the clients need.
Will Bachman 41:07
You mentioned that you wrote a whole series of articles for Forbes, where are your where can people find your writing now,
Peter Kelly-Detwiler 41:14
I you know, the funny thing is, so back in the day, when I wrote for Forbes, I was paid on a per click basis. And unless I could find a way to weave Kim Kardashian into the article, I’d never get more than three or 4000 views, but they were people who mattered. But what I found was, it was my you know, it was a really fun way to make five to $10 an hour, but it wasn’t lucrative. I mean, I don’t think I ever made more than $10 an hour because you interview a CEO, you craft the story, you put four hours of time, and you might get $25 per clicks. Well, now people pay me ridiculous amounts of money to write for them, you know. So now, I don’t write anywhere except pretty much ghost writing. Because it’s way more lucrative than writing for Forbes and where my where my sort of research product is now is I do a weekly video every week where I say, as I mentioned, before I scour all these articles, I tweet out every day, the two or four that I think matter. And at the end of the week, I gather up and check all those out. And I get the five to 10 that I think are most valuable. And I put a five minute video together, which I’m almost done with today for this week. And then I put that out on LinkedIn, I have a YouTube channel and a couple other organs that pick it up and distributed, you know, just because I give it to them for free, and they give it to their members and so on. So what I’ve figured out as the that’s the most effective way for me to communicate right now is via these really quick five minute videos that are super condensed.
Will Bachman 42:49
That’s amazing. So for listeners that want to follow up and find out more about you and watch some of your content, where would you point them online? What’s the best place to go?
Peter Kelly-Detwiler 42:59
Yeah, find me on LinkedIn. There’s only one Peter Kelly Detweiler in the world. Once I married my wife, she was the Kelly I was the Detweiler was a merger, not an acquisition, there’s only one of me. So from a brand identity thing. I can’t commit crimes, but it’s easy to find me on LinkedIn and then just you know, just shoot me a quick thing and say, Hey, can I get your newsletter and then I’ll sign you up for it.
Will Bachman 43:22
Fantastic. Peter, this has been fantastic discussion. Really interesting to hear about all these developments and how you built your practice. From big string of content creation. I imagine you’ve built a ton of relationships as you were doing all those articles and then converted it into more paid projects. We will definitely include those links in the show notes. It’s been great having you on the show.
Peter Kelly-Detwiler 43:48
Oh, thank you for the opportunity. I’ve really enjoyed the conversation.