Transcript 0:01 A road that hasn't been reached yet, but the idea of kinda home energy management and where does the privacy line kinda lie there, that's something that still needs to be developed. 0:11 But, but like I said, that, that FERC Order 2222, that's really shaking things up and, and forcing those behind-the-meter assets to participate and be able to participate, rather, in, in wholesale markets. 0:24 Um, so a lot of discussions going on, little set in stone. [upbeat music] Welcome back to The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. 0:39 Hello, listeners, and welcome back to The Peggy Smedley Show. I'm your host, Peggy Smedley. My next guest specializes in energy IT/OT systems and data analytics, as well as advanced metering infrastructure. 0:52 He has authored about 25 market research reports and has led several major custom engagements in various technology segments. 1:01 Prior to his current role, he worked as a research analyst at Energy Acuity, where he researched renewable energy projects and transmission planning dockets. 1:12 Please welcome Mike Kelly, senior research analyst at Guidehouse Insights. Mike, welcome to the show. Thanks, Peggy. Appreciate you having me on. 1:23 You know, Mike, I love having someone like you on the show who has a chance to really help us understand a lot what's happening, I think, in the energy space right now. 1:32 And I think more specifically, you and I are gonna delve into a little bit more about the growth of this wind and solar, which I think has kinda shaken up the utility market space. 1:44 Uh, you know, and before we even get to that, just give me a brief overview of Guidehouse Insights. For those who might not know that organization or you specifically, give me a little bit of an overview of you guys. 1:59 Yeah. 1:59 So Guidehouse Insights, operating under kinda the Guidehouse brand, we're a market research firm, um, also a consulting firm through our parent Guidehouse, um, really focusing on clean technology research across the energy landscape. 2:14 So everything from smart buildings to EVs to, like you mentioned, the rise of solar and wind, what are the software platforms that are gonna be required to drive all these new technologies and these new business models. 2:27 Um, a lot of interesting stuff across, you know, one of these new kinda paradigm shifts across the energy landscape. 2:34 And I think that's why you and I are talking today, because everybody's trying to figure out where we're gonna be, what, what's going on. You know, the president's making some big shifts, you know, in our country. 2:44 Mm-hmm. And so we're trying to figure out, and we're talking about it this year. 2:47 So I, I think the big thing I really wanna understand in your mind, as someone who gets it, who's been doing some serious research on it, what's your take, then, on the growth of, let's even start with wind or solar, you know, how that's shaken up the way everybody's thinking about it. 3:02 Or is it really shaking it up, or are we just talking about it maybe a little too fast? Yeah. So I, I think it's, well, it's an interesting question, depending on where in the world we're, we're talking about. 3:13 Let's keep us in the US for now. In the US, well, the train's already left the station- [laughs]... 3:18 when we talk about the idea of renewable energy, distributed energy resources, and kinda the shift from fossil, traditionally coal, towards more renewable resources. 3:29 Now, gas is still gonna get us a lot of the way there, so I wouldn't discount the idea of, you know, combined-cycle natural gas plants, even single-cycle natural gas plants. 3:39 That's gonna be a nice hedge to get us, you know, where we need to be for a renewable clean energy future. 3:45 Now, when we talk about solar and wind, solar is really gonna be the driving force, particularly in North America here as we move over the next decade. 3:53 Um, there'll be some strong growth in wind, but, but really the proliferation of solar, both at the utility scale and, you know, behind the meter, on homeowners', you know, rooftops, on your IKEA or your Walmart rooftop, that's the, the real kinda paradigm shift in which, you know, you see competitive pressures from a financial standpoint if you're the utility. 4:14 You see it from an operational perspective. You know, are my wires and, and transformers and pieces of equipment, are they able to handle that bidirectional energy flow? 4:23 So there's a lot of interesting questions going on across electric utilities and the vendor landscape of, all right, how do we facilitate this green energy future? 4:32 And a lot of it's gonna be driven by software vers- based strategies. So software, and we're gonna talk about that in a minute, but don't the utility companies themselves have to buy into this? 4:42 Because understanding solar, they have to be committed to it, because they're already doing a lot of things themselves in s- in smart cities and things, you know, when we think about that. 4:53 But do they have to really be committed in each community to wanna make that happen, to make solar really happen for our communities? Oh, 100%. They need to, to get on board, or they're gonna be left behind, right? 5:07 So you see a lot of innovative utilities trying to re-architect their business models, saying, "All right. We can't just be a, a poles and wires company anymore, right? 5:16 'Cause eventually these, these customers might not need us." Um, so you see a lot of them moving towards, all right, how do we become more service providers? 5:24 How do we focus more on the customer, whether it be through actually selling solar and storage to some of these, developing your own solar and, and renewable energy plans? Um, you know, how do we participate? 5:36 And that's, that's kinda the, the question that's getting at the heart of, of a lot of these electric utilities. 5:41 Um, and you see some of them shifting and, and like I said, being more innovative in terms of the products and services that they sell to try and, like I said, not get left behind.So i-it's kind of an interesting thing that you say here, because it, it, it comes to mind that in my case is that I'm thinking about how the car companies had to shift their mindset, because the tech companies came in and said- Mm... 6:04 "We're, we're gonna be mobility companies, and we're gonna take over how we see the car industry." 6:11 Are we seeing the utility companies saying, "If you don't start understanding the software side of this, you're going to be left behind," because we're seeing the data is so important on what you do with this, that we can see and we can improve things. 6:24 If you don't understand the software side of what's gonna play a role, you're gonna be left behind. Is that what you're saying? Yep, 100%. 6:32 And, and to your point, like just like the car companies, for electric utilities, you see a lot of non-traditional providers now branding themselves as, we'll say, energy players, right? 6:41 Tesla being one of the first in terms of kinda selling those power well storage systems. 6:47 But there's a lot of, the, the Googles of the world, um, you know, a lot of these kinda leading tech companies coming into the energy space, 'cause one, they see opportunity, and two, they see nascent market with, with low penetrations to date and a lot of potential across, you know, software applied to the grid, to renewable energy, to DERs. 7:07 And then you have this whole other, you know, swath of oil and gas companies, so your Totals, your BPs, your Shells of the world, just acquiring up all these startup tech companies, some of the more clean energy focused companies, and really trying to, to, you know, capture a market footprint where they traditionally haven't played. 7:26 So, you know, for utilities, you have competitive pressures coming from a lot of different angles, from the tech side, from the oil and gas side, um, that are really forcing these utilities that haven't needed to adapt for 20, 30 years to really think about how they have to augment their operations. 7:45 So as you look at this, it... This isn't gonna be cheap. I mean, we've seen it already. Mm-hmm. They wanna augment their operations, but this is gonna take time, but they gotta do it quickly. 7:55 So there's the yin and the yang on this, right? I mean, this is where we're at right now, where we're seeing that they've gotta really do it, they've gotta do it quickly, but it doesn't happen quickly either. Mm-hmm. 8:07 And that's where software comes in, 'cause software can cut through, uh, you know, a lot of that red tape or a lot of those traditional hardware or cost-based constraints. 8:16 'Cause essentially, if you, you know, if you have the machine learning and the AI-powered algorithm that can do what, you know, used to be required out of a hardware device, that's a huge piece of cost savings. 8:27 And for a lot of utilities that have to go through the bureaucracy of public utility commissions and, you know, investing in, uh, you know, a piece of equipment or, or a software platform isn't as easy as, you know, if you're just a straight-up private company. 8:42 Um, there's a lot of kind of innovative applications that are being leveraged to, to kind of mitigate some of those traditional cost expenditures that have been a constraint for, for years and years. 8:53 Let's talk about those. Are there some interesting or innovative use cases that you've seen either by city, by state, that you say... 9:01 Or, or tech company that's stepping up, that's saying, "This is gonna change the way we as consumers, we as businesses, go to market"? Yep. 9:11 So I think one of the most interesting ones, and, and probably one of the most nascent today, is the idea of truly, you know, advanced smart meter analytics. 9:20 So, you know, basic, you know, basic idea of smart meter, measures how much energy's, you know, you're using on your house on a daily basis. U- usually sends it back to the utility on maybe a 5-minute, 15-minute basis. 9:33 Now, what you have with Landis+Gyr, Itron, two of the major companies in the smart meter space, the next generation of smart meters that are coming out, well, one, they can now measure energy, voltage, and current at sub-second intervals, but they can also measure waveform. 9:51 So they... This gets a bit more into the engineering aspect, but essentially it can capture more variables at sub-second data intervals. What does that do? 10:01 That opens up a laundry list of use cases that were previously either illogical or impossible, um, for electric utilities and, and kind of the na- the architecture of smart meters. 10:12 So what's, what's an interesting use case that could be spun out of that? 10:16 Say, you know, we're a future where, you know, half the people in your neighborhood have an EV, um, places some unnecessary constraints on the grid. This is where you get into the idea of peak pricing. 10:28 Now, say I'm charging my EV. It would be really valuable if I could get a real-time notification sent to my smartphone that says, "Hey, you might not wanna charge your EV right now. It's a peak pricing period." 10:41 Now, if data's getting sent back every 15 minutes, you, you lose that real-time nature. 10:46 But essentially, it's, you know, that's one use case that can bring the utility a bit closer to their customer, provide some real valuable notifications on a real-time basis. 10:56 Um, and that's just, you know, one customer-oriented use case. 11:00 There's a number of, you know, other kind of home and, and building-based use cases, and then extending that out to the grid, there's a lot of use cases that, that utilities could use that, again, kind of reduces those hardware expenses and just streamlines the nature of some of these decision-making processes. 11:16 Do we have some challenges, though, with the home trying to make this affordable so that the average consumer can be able to do these EVs and charging in the home? 'Cause right now that's part of the problem. 11:27 You can't retrofit a, a, a, cost affordably, and now when you're building a home, it's not inexpensive either. Yep. 11:35 So a lot of that is gonna be, well, one, yeah, part of that is gonna be on, on kind of incentivizing the adoption of EVs, so that's kinda one angle. 11:44 And the other angle is the utility, you know, needing to, you know, incentivize the, the homeowner to participate in some of these programs. 11:51 You know, there's a huge knowledge gap, I would say, that, that still persists.You know, from the homeowner and, and kind of the utility perspective. 11:59 But what you're gonna see is a shift where, you know, there's gonna be more incentive-driven programs for, say, EV management or demand response or, you know, participation of your solar plus storage asset to provide grid services. 12:13 So there's really a whole re-architecting of, of the entire business model that, that has still yet to be seen. 12:20 We've seen it in pockets and in pilots, but in terms of kind of this full large-scale change, that's probably another five to seven years out still. So who's gonna take on the responsibility of that incentivizing? 12:32 Is it gonna be a government end? Is it gonna be, you know, pub- public-private partnerships? Where, where are we gonna see that, do you think? Do you have any idea, or is it too soon to say? So it'll be a mixed basket. 12:44 One, you're gonna see it from the utilities themselves, one, right? Because they still, you know, need to participate. They wanna be a part of this, this customer relationship. 12:53 Um, two, you're gonna have, like I mentioned, some of these non-traditional providers. 12:57 So whether it be a VPP aggregator, that stands for virtual power plant, that's a, a trend that's really taken off in Western Europe, um, but it's taken some time to, to come across here in the US. 13:10 But that said, there's a FERC Order 2222 which is kind of shaking up that whole paradigm, where that's really forcing some new non-traditional, like I said, aggregators and, and other types of companies coming in that, that have their finger on, you know, the residential solar, residential storage, the EV chargers, those, those, you know, smaller, um, let's say non-utility scale assets that demands, um, you know, people beyond the utility that, that have expertise in, in some of these emerging areas. 13:42 So are we gonna have to do it at the utility to make it happen, or are we gonna have to get buy-in from the homeowner, the, the consumer side that you describe here? Where, where... 13:52 Or is it gonna have to be at both sides to make this happen more expeditiously? Yeah. So both sides, but definitely more on the customer. I think that's where the crux of the problem probably lies today. 14:05 'Cause one, you're gonna need to incentivize them from a financial perspective, right? 14:10 You can't, you can't, you know, force me to, uh, you know, give you visibility and control of my solar and my storage unless there's, there's, you know, some side incentive kind of tied to that. 14:21 So financial incentives are still need to be developed. And then there's the whole idea of privacy, right? So that's probably, you know, uh, a, a road that hasn't been reached yet. 14:31 But the idea of kind of home energy management and where does the privacy line kind of lie there, that's something that still needs to be developed. 14:39 But, but like I said, that, that FERC Order 2222, that's really shaking things up and, and forcing those behind-the-meter assets to participate and be able to participate, rather, in, in wholesale markets. 14:53 Um, so a lot of discussions going on, little set in stone. Haven't we had a generation of sharing everything on social that we shouldn't worry about this privacy? [laughs] Aren't we past that already- [laughs]... 15:03 that we share everything? Yeah. I, I would just say there's a very vocal minority that, um, that can have some influence on, on the regulatory, uh, conversation state by state. Um, we'll, we'll say it like that. 15:19 So let's look at this. What do you say, in your, in your opinion, I should ask the question, what are the big technology areas to keep an eye on, you know, for 2022? 15:28 As we head to this year and we're really looking for it, what's your thoughts there? Sure. So DERs I think number one. 15:36 Again, and, and I think the, the term DERs is, is might be misused sometimes as distributed energy resources. A lot of times people think of that as, as solar, wind and, you know, maybe energy storage. 15:48 But what it really is is the full list of, of kind of energy sources or devices that could provide services back to the grid in, in theoretical kind of nature. 15:59 So that's electric vehicles, that's smart water heaters, smart pool pumps, uh, smart thermostats. You know, the, the idea of the home moving towards a smart home. 16:11 You could have a laundry list of devices that could actually provide energy back to the grid or grid services from the fe- in the, in, uh, in the nature of, of voltage or, or current. 16:22 Um, there's a whole kind of paradigm shift in the way that the home is gonna interact with the grid, and I think that's, you know, one where a lot of vendors are, are kind of putting all their chips a- around k- that paradigm. 16:35 Um, and utilities, you know, they need to adapt, and they, they realize this and it, it's a quick-coming train, um, that's really gonna shake up kind of the nature of, of electric operations. So that's a big one. 16:47 Um- I, I, uh, I love- Mm-hmm... that you're saying that. So the... Is there a couple others y- or, or is that really the big one you really think we've gotta focus on? No. 16:55 So I, I already mentioned this a bit, but the idea of data analytics. 16:58 So beyond smart meter analytics, there's also analytics that you can take from, from line sensors and substation sensors and, and sensors actually at the solar plant or the generation plant that, that haven't really efficiently been leveraged. 17:12 There's been a huge underutilization of kind of the data that utilities have under the hood, um, and underinvestment in the analytics platforms that can drive value, right? 17:21 There's a lot of innovation happening, you know, from the Silicon Valley type companies of the world, where you have these AI machine learning-based companies pivoting to try and capture some of the, you know, opportunity in the energy industry. 17:36 Um, so that's where there have been, you know, really some, some interesting use cases, interesting application, interesting algorithms, um, that are being taken from other industries applied to the energy vertical, um, that are really driving some, some interesting and, and kind of untapped conversations. 17:52 Well, I have to tell you, Mike, this has been great. Mike Kelly, Senior Research Analyst at Guidehouse Insights, thank you so much for your time today. Where can our listeners go to learn more about what you're doing? 18:04 Yeah. So you can find me on Twitter. The tag is just MichaelKellyGHI. Um, and on the topic of, of inside the meter analytics, I've recently published a, uh, paper in concert with Grid4C. 18:17 So I'd just direct you maybe to the grid4c.com website. Check out the AI at the Grid Edge white paper. Um, new interesting stuff that, uh, I'm particularly bullish on. All right. Well, Mike, I love this conversation. 18:29 Let's continue it on Twitter at connectedwmag, as you just said. All right, listeners. Remember, we are broadcast live every Tuesday, 12:00 PM Central. 18:37 Check out our website at connecttheworld.com or our show website at thepeggySmedleyShow.com. All right. This is The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. 18:47 And remember, with great technology comes great responsibility. Have an awesome week. [outro music]
