Connected Smart Homes Coming Soon to an Electric Co-op Near You
Episode ID S2E06
June 22, 2022
Solar panels, backup generators, smart home devices: As more consumers adopt disruptive technology, what does it mean for electric co-ops? CoBank’s Teri Viswanath and Tamra Reynolds explore the way forward as consumer technology upends the traditional relationship. Their guests include J.T. Thompson with Generac Grid Services, Nora Barr Hennings with Sunrun, and Jim Bagley, CEO of United Electric Cooperative in Missouri, who shares the win-win solutions he’s creating with his members.
Teri Viswanath: The promise of a new era of smart home technology for consumers is that it's going to save us a lot of money, protect the environment, and maybe most importantly, provide an important backup layer of resiliency when the lights go out. Welcome to Power Plays. I'm Teri Viswanath, your host, and lead economist for power, energy, and water, CoBank. Admittedly, I love home gadgets. Isn't that right, Alexa?
Teri: I'm joined with my co-host and CoBank managing director, Tamra Reynolds. Hello, Tamra.
Tamra Reynolds: Hey there. We wanted to have a thoughtful conversation about the smart home in the future and what this consumer technology might mean for co-ops. In this program, we asked J.T. Thompson, vice president of enterprise accounts for Generac Grid Services, and Nora Barr Hennings, senior director of business development with Sunrun, the largest residential solar and seller in the U.S., to talk about their technology. We followed up these conversations with Jim Bagley, CEO of United Electric Cooperative in Missouri, to talk about what these technologies could mean for his members and the community served by electric co-ops in general.
Teri: Our first conversation begins with J.T. and it occurred back in March on the floor of the NRCA TechAdvantage exhibit hall in Nashville. Our booth was actually situated kitty-corner from Generac's display, and it was really impressive. I think that the company's done a terrific job with engaging our co-ops. Listen in to that conversation with J.T.
Teri: I am joined with J.T. Thompson. So I want you to explain to us a little bit about Generac, a little bit about your booth, then a little bit about Grid Services.
J.T.: Yes, absolutely. What happened over the last two-plus years is Generac started to make some acquisitions initially with a group called Neurio which does some metering, then with Pika which is an electric battery, then, of course, Enbala which is the software company that I came over with, and most recently with some other acquisitions like Ecobee and Apricity, which provides more in-home control.
What Generac did, and part of building up this grid services business was to say, "Let's go out to the member cooperatives or to the cooperatives through the G&Ts to the utility space and use the software and the connectivity to those assets to provide a value-added resource, both to the grid in times of need for capacity needs, things of that nature, but also to now provide an incentive to the homeowner who's already made an investment in that resource." That's what we do.
Teri: If these consumers are making a large investment in backup generation, backup generator, for most of the time that is not going to be, it's an investment they made, but it's going to be the inactive use. They've already made the commitment.
J.T.: Right. They've made this investment $10,000, $20,000 in either battery or home standby generator, but it sits idly by 99% of its life. What could it be doing to benefit both the grid and the consumer during that 99%?
Teri: I think what's really fun is that so when we go over to the Generac booth, you're going to see a screen and you're going to see the U.S. map and we're able to dial in. I think of all the equipment Generac brought in probably the most used is actually that screen.
J.T.: That's right. It's a tool that we use internally called “power insights.” Because we have a line of sight of every battery and generator that's ever been purchased and installed, this gives us a heat map initially that we can then drill down by ZIP code, or even by electric cooperative, we can type in that in and get their footprint and then look and see, you have a thousand home standby generators. You have a hundred CNI generators. You may have 500 power cell batteries.
That really helps drive the conversation with the cooperatives and with our utility customers in saying, "This is the installed base, would you like to go and harness the flexibility that those resources have to provide a grid benefit? If so, let's collaborate on what that program looks like. Do you want to run it? Do you want us to run it? Do you want to do the marketing? Do you want us to do the marketing?" It's a collaborative, iterative approach that we take. We don't have all the answers, but at least we have the starting point. We know where they all are so we can build from that.
Teri: The conversation and what you bring into the co-op conversation is, one, we know where the assets are at, and then the second one is that we can work with you. Let's talk a little bit about the ways you're collaborating with our co-ops right now in terms of the Generac Grid Services Program.
J.T: The fundamental building block of that is really the Energy Alliance Partner Program. That is a way by which the cooperatives, and there's quite a few cooperatives that are already partners, it's no cost to them, but it allows their members to get basically wholesale rates for these products versus going to Lowe's or Home Depot or Costco, and we can partner them up with a local dealer. We also have cooperatives that have taken the extra step to actually be the installer, to be the dealer and installer to do the commissioning of the unit as well as to do the annual operation and maintenance of it because there's that local touch point. You might even call it fellowship if you will.
Teri: That's exactly member engagement.
J.T.: From there, that's the building block. Then from there, it's really saying, "Okay, two different paths that we can go down." One is to say, "Let's look at the install base, let's build a program around that, incentivize, create some different incentives, whether it's a financial incentive or an extended warranty, or something else that may resonate well with the members, let's do that.
Do you want to incentivize further installs?" You may, outside of them getting a lower price than if they were to go to Costco or Home Depot or someone like that, there's also an incentive upfront that we see a lot up in the Northeast around batteries where they'll incentivize you to a couple of thousand dollars to buy a battery and get it installed in your home type of thing.
Teri: A bring your own battery program.
J.T.: Yes, absolutely.
Teri: Very popular.
J.T.: Then from there, it's really just, "Okay, does it make sense for the message to be coming from the cooperative, or do you want us to direct market?" Sometimes we'll get into conversations where if there's an individual feeder or substation within their footprint that is very problematic, is highly constrained, we can dial down and look at what resources are available that we could target market to those specific homeowners or owners and say, "Would you like to be a part of a program that would help your cooperative?"
Teri: Being able to figure out what that added flexibility with having equipment already installed in the field so you can actually pinpoint working with the planning group on where our problems are and figuring out a solution.
J.T.: I think I'd be a fool if I didn't make the statement that, yes, this is about Generac and being able to look and see our resources, but especially when we're dealing with target areas on feeders, we're agnostic. The grid services group is agnostic to the brand that's on the outside.
Teri: The equipment behind the meter.
J.T.: That's right. It can be a thermostat, it can be a process load, it could be a Tesla battery versus a power cell. We really don't care because our view is that of the co-op or the utility, it's to say, "Look, you don't want to have to worry about what the brand name is. You just want to be able to harness the value that it can provide, control it, and get telemetry back on how that asset is performing in real-time." That's what we do.
Teri: I'm just thinking immediately out of the gate, the advantages that we're able to have right now, in terms of being able to manage our peaks, managing our demand charges are ways that this program really helps immediately with our co-ops. Other use cases and benefits you've seen?
J.T.: A lot of the conversations that I've had most recently with some of the member cooperatives has been, for every KW that you can shift, how much does it save your members? And then asset preservation. That gets down to that distribution level. Do you want to overhaul that substation? Do you want to overhaul the feeder or can you manage the assets downstream to prolong that investment that you're going to have to make, eventually, you can push that out five, 10 plus years?
Teri: Let me know where the future is in terms of where Generac is heading a lot of acquisitions that I've seen, and so very dominant behind the meter now kind of stepping out, working with our co-ops at the distribution level, but what's ahead for Generac?
J.T.: I think a lot of the same, a lot of trying to grow the business and get more into the home. Like, again, with the recent acquisitions with Apricity, which is a low control switch for water heaters, pool pumps, et cetera, and Ecobee, our most recent acquisition, it is getting further into the home and providing a homeowner other tools that they can use to actually balance their own home and then participate in programs that their cooperative or their utility might be offering that, again, incentivizes them.
Teri: Really excited to have you in Nashville with us having Generac move and work with our co-ops. Appreciate the time with us.
J.T.: Thank you so much for having me. I enjoyed it.
Teri: Thank you.
Tamra: Teri, Generac is the preeminent supplier of generators with 75% market share in the U.S., but with recent acquisitions of Ecobee and other companies, they're expanding their consumer technology offerings. As J.T. put it, providing homeowners with other tools that they can use to actually balance the electricity in their own home.
Teri: Generac is not the only preeminent home technology provider that is expanding their home offering. We caught up with Nora Barr Hennings from Sunrun. Our listeners are probably familiar with Sunrun's residential rooftop solar offering, but their battery installation business is red hot. They've partnered with Ford Motor Company, to connect their new Ford F-150 Lightning to the home. Here's that conversation.
Tamra: Nora, thanks for joining us on our podcast to talk about Sunrun's connected home offering. Let's start our discussion with the basics. Why are homeowners increasingly looking to install rooftop solar and on-site battery storage?
Nora Barr Hennings: Great question. First, I would say we actually are seeing dramatic increases in consumer interest in residential solar and battery storage for a variety of reasons. The first one is the economics for the everyday homeowner. What we can provide with solar and with battery storage is savings associated with those utility bills and also an ability to lock in over the long-term, the cost of their electricity.
The solar is going to generate when the sun is out. When you add a battery, you can then use the battery at different times of the day to provide value to the homeowner. Where Sunrun operates, we typically see anywhere from 5% to 40% savings on a customer's electricity bill. Another reason is a lot of consumers are becoming really highly aware of the environmental impacts of the grid and of fossil fuels.
Then I would say the other main driver that we're seeing that's really contributing to the attach rate for stationary batteries is the need for resiliency during power outages.
Teri: That's interesting. I have to ask you, Sunrun is also Ford Motor Company's preferred installer for their home 80-amp power charging station for their new F-150 Lightning, right?
Nora: Yes, we announced with Ford in the last year or so that we were going to be the preferred installer for, as you mentioned, the 80-amp Charge Station Pro, which is the EV charger that's coming with the F-150 Lightning. In addition to that, we've actually collaborated with Ford over the last couple of years to design the home integration system, which is the system that when paired with the 80-amp Charge Station Pro allows for the vehicle to actually power the home.
This is the first vehicle that's coming to market in the US that allows for the vehicle to actually broadly charge the home. Initially, we're going to be offering this as a resiliency play, so intelligent backup power. When the power goes out, the F-150 Lightning can charge your home and power everything that you need in the home. When a customer buys the F-150 Lightning, depending on what vehicle type they purchase, they may get the Ford Charge Station Pro included with the vehicle, if they would like to have this backup capability and the capability for the vehicle to power the home.
What they then need to do is actually come to Sunrun site and they can purchase the home integration system from us. With that, they can then also explore options to pair that with solar and with stationary batteries. Definitely, there are a lot of synergies to pairing these systems together. Primarily, the step one is we talked about the economics of adding solar and the savings that customers can get by adding solar. When you purchase an electric vehicle, you're going to be adding a lot of electrical load to the home if you're charging at home.
Consumers aren't necessarily used to increasing their electrical load, they're used to going to the gas station. It's a mindset shift that a lot of consumers are going to have to go through. If they're able to then create savings on their electrical bill with solar, that savings can be even more valuable when they're adding to their home usage. The battery on the F-150 Lightning is one of the largest in the market, if not the largest. Depending on how much a consumer drives their vehicle, they could be adding significant usage to their home and to their local grid.
Tamra: I think it sounds like you're maybe looking ahead further and saying maybe that stationary storage in a home isn't the end game, it's the vehicle that's now going to be a potential stationary storage item or I guess it's not stationary, stationary on wheels, option for consumers.
Nora: I actually think that the stationary storage and the electric vehicle can be complimentary. When we think about an outage, the vehicle can only provide power to the home when they're actually at home and plugged in. You may need to actually leave the home to go run errands, get some groceries, do some stuff during an outage, in which case a stationary battery would still be on the home and able to provide that resource.
Teri: Now when we think about purchasing, distributed generation at-home solar panel, it's a complicated process. How can consumers make sure they understand the benefit of these Sunrun offerings that are here and really choose the right solution for their home? You talked a little bit about that, but I want you to expand on that.
Nora: Yes. It is a very complicated decision when a consumer is looking at putting solar and batteries and electric vehicles on their homes. To your point, as we add in electric vehicles and other smart technologies, smart thermostats, heat pump, water heaters things like that, we're actually doing a lot of work right now on how to simplify that process for consumers so that they understand not just specifically what they are getting with solar but what their options are, and how they can think about their home for the future and their broader energy engagement and electricity usage at the home now and in the future.
I think one of the key things that comes with that is as we are engaging with the customer through the sales process, through our marketing materials, things like that, we're very careful to be extremely clear about what they're actually getting. That's everything from the pricing to what the system will actually do, what the production looks like, things like that, and then also the contracting and the ongoing relationship with Sunrun.
We actually have an app as well that we offer to all of our customers to help them track what's going on with their solar, how their production's looking, how their battery's operating, what they're billing is, things like that, to really make it a one-stop-shop and easy for the customer to engage with their system and understand what they have. The customer education process really it's a life cycle. We've got everything from the marketing materials making sure we're not over-promising there and that we're being very clear on what the opportunity is there.
Tamra: That's great. From your perspective, how can utilities, and maybe co-ops in particular because that's our key market, really helps support that customer education component and decision-making process so that they feel like they've done their job is that trusted energy advisor?
Nora: When they read information from the co-op or from their local utility, they know that it's true. Providing customer education materials, I think, is a huge one and providing opportunities for customers to get their questions answered are very valuable to customers. Co-ops can really help customers understand what the value is in their territory to adding solar and battery storage.
Then they're not just getting generic answers about, "Oh, solar can generally give you savings," but rather, "You should add a battery because we offer these programs because we have these capacity constraints," or things like that your battery can help meet, or, "Our rate tariffs, you should be on this rate if you get solar because you're going to save the most money that way and it's going to look something like this." That type of information is so localized that we try to put it together for customers and really explain things as best we can but it's something that the utility can really help provide in the long run for end customers.
Teri: That's really helpful. Nora, you provided a really good overview on the product offering and ways that co-ops can work with their members with regard to these consumer technologies. Really want to thank you for your time today.
Nora: No problem. There's a lot of exciting stuff happening right now between solar, battery storage, EVs, and other electrification efforts, so we're very excited to move this all forward and be able to talk with you guys about it.
Teri: Tamra, we heard from Nora that there are three big drivers that influence consumer adoption of rooftop solar and batteries. It's controlling their electricity spend, concern about the environment, and the need for greater resiliency.
Tamra: That's right. When we think about resiliency, consumers often think about producing all the energy that they will likely consume. Simply the notion of living off the grid. I wanted to level set that desire against what the technology actually offers up. I also wanted to understand how this technology would impact planning for co-ops. For that discussion, I thought Jim Bagley from United Electric would be a great guest. Here's what Jim had to say.
To better understand how emerging consumer DER Technologies might actually benefit our electric co-op communities, we ask United Electric Co-op’s CEO Jim Bagley to join the discussion. Jim, welcome to Power Plays.
Jim Bagley: Thank you for having me.
Teri: Let's start our conversation with the specter of the “utility death spiral.” That's the electricity consumer and attempting to keeping bills low and perhaps wanting to lessen their impact on the environment decides that they want to opt-out of the utility-provided energy. That consumer of the future has decided they're going to live off the grid by generating their own electricity. Is it reasonable? Is it really an us versus them when we think about membership?
Jim: I think the term “utility death spiral” is actually misleading and not true. If you see the more the electrification of America and the way the country's going, I think the demand is going to overrun supply unless we think these things out.
Teri: It maybe involves everyone coming to the table with their best game. It's not an us versus them, it's all of the above perhaps, in this world where demand is going to rapidly increase.
Jim: I agree so much with all the above. MISO and some other RTOs are predicting shortfalls this summer. We're doing a lot of planning for a very short period of time to keep the lights on.
Tamra: Jim, that's a great perspective. I think while most consumers in the case of co-ops members probably won't find themselves living off the grid, even though they like to say it sometimes. There's a growing interest generally in DER technologies, and that looks like a bunch of different things. I think United has a terrific way of engaging their members. Can you talk a little bit about what your programs look like?
Jim: If our membership believes that solar is the right option for them, we want to make sure they have economic, reasonable options. We're trying to engage our members on a, "Let's see what's best for you" approach instead of, "Let's see what's best for us" approach. I think some of the things we've just scratched the surface on is the smart home. Aside from DER, if we can get more efficient and be able to push usage to different timeframes, it's better for everybody. Any solar installation right now without batteries, to me, is a step back. It needs to be dispatchable.
When the battery technology is affordable, which it may be in some cases and in some cases it's not now, that totally changes the equation of a solar installation. I go back many years in this industry, and there's always some technology we're scared of. I don't necessarily think this is the one we need to be scared of. I think we need to find the ways to integrate it in a truthful way. Quite frankly, I think you start there by getting your rates in line for what your costs are. If we can send the right rate signal that mirrors our cost, the member can make great decisions on, "How do I lower my cost at this while at the same time lowering the cooperative's costs?"
Teri: That's really interesting. I do think that there's a really important fairway that you're defining for co-ops in terms of working with these technology providers. It's an important time, the rise in acceleration of new consumer technologies. It's trying to piece it together and figure out how this compliments the consumer member offering. Now, J.T. Thompson, he's over at Generac, he mentioned a program where co-ops and utilities can offer their consumers wholesale rates for equipment installation, which is really smart.
Jim: I can say, from United’s standpoint, we're going to engage directly with our membership. We're going to be coming out with an offering where if you want to look at a battery solution, a solar solution, or even backup generation for emergencies, we want to be that provider. We want to be who you come to as your trusted energy source to provide these solutions for you. Even right now, if we implemented batteries without solar, we could cut a tremendous amount of risk and cost by charging the batteries when electricity on the wholesale market is cheap and discharging it when it's high.
To do this correctly, though, we have to have seamless interconnection and integration with our G&T so they can actually send the price signal of when to charge and when to discharge. On our level, we pay per kilowatt-hour the same charge all the time to our power provider. We also pay a demand charge that's on our peak times as everybody else does. There's also an economic peak that the G&T deals with that's a whole lot more of a wild card. If we could integrate all this together up through the G&T level, where they could actually have that load control, that's as powerful as selling extra kilowatts of saving those kilowatts when they need to.
Tamra: The fact that you can provide either electricity or some solar plus battery solution and manage all of the pieces seems to me to lead to the equation that you probably have a better handle on helping them ultimately save the most money, which also leads to a better customer experience at the end of the day. Would you say that that's probably a fair statement?
Jim: Oh, I definitely think that's a fair statement. I think the biggest impediment to a lot of our members to any investment in this is the upfront cost. Now, with the distributed generation, when the member takes on the risk of that generation unit as well, as far as like 10 years from now, 20 years from now, how long does this really take off to pay? Is this a valuable investment? I think the more we can be involved with them up front and maybe be the provider of that solution, the better off we'll both be. I think the earlier we are in the process and the tighter our relationship is with our member, the more satisfied they're going to be, the better benefit it's going to be for the membership as a whole, and as a whole, from top to bottom from G&T to distribution cooperative.
Teri: Being able to provide those services, being very clear about performance, and figuring out where they're best suited in terms of your members, I think those are just great ways as we define the fairway of how consumer technology and the co-op can collaborate to get to the best end result, a lower cost, more reliable, and a happy member. That's super helpful. Are we missing anything?
Jim: I think the reliability portion is something we need to really talk about. Just simply sticking kilowatts on the grid at any time is not reliable because you're not taking them back out at the same reliability levels where you put them back in. It's like how much is a cup of water worth during a drought compared to during a rainstorm?
Teri: That's a great point.
Jim: We have to have the assets to serve the member 365, no matter the weather conditions. No matter the time of day, we have to be there. I think the topic we're talking about on a micro level with individual member is actually being seen in a macro level in the power markets. Capacity has to be dispatchable at some point. That's where I think the batteries can help us all in this. When the technology's there for the batteries, it helps everybody down the line.
I do want to say we are nowhere near a point where reliable base load generation is not needed. Right now with electric vehicles coming online. That could change the way we totally look at electricity. That can make everything we've done today look minor. I think everything we're doing now quite honestly has to be thinking ahead to if the electric vehicle implementation goes like what they're saying it will be, we're going to have to be ready. That's with a lot of new generation from a lot of different sources and a lot of different ways of thinking about how we sell power and how we generate power and how we interact with our members.
We don't need to interact with our members once a month through a bill. We need to be interacting with our members continually through helping them with pricing signals, load control, and giving them the power to make good decisions, to help them and help us both.
Teri: That's a wonderful point. These consumer technologies are really electricity technologies and so making sure we're aligned and that we reinforce that point of charge is really the point. Jim, thank you so much. I think you've helped us better define what the fairway is with consumer technology and co-op education and interaction. I appreciate your comments.
Jim: Thank you for having me.
Tamra: Jim made this really important point, just simply sticking kilowatts on the grid at any time is not reliable, because you're not taking them back out at a time that has the same level of system reliability. How much is a cup of water worth during a drought compared to during a rainstorm? That's the question we're going to get the answer to next month.
Teri: Consumer electricity bills are becoming increasingly complex, as a major cost of service components - that is generation, transmission, and distribution - are replaced, reinforced, and possibly re-envisioned in light of these new consumer technologies. Tune in next month when we're going to talk about those issues and really go deep into the rate discussion. Bye for now.