Transcript: How Utilities Actually Think

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Robinson Meyer:

[0:00] This week’s episode of Shift Key is brought to you by Lunar Energy, brilliantly designed, endless, clean energy.

Robinson Meyer:

[0:06] Heatmap Labs recently sat down with Sam Wevers, Director of Product at Lunar.

Sam Wevers:

[0:11] At Lunar, we are trying to build the technology to turn homes into essentially active participants in the power system. And our vision of the future of home energy is a world where home batteries are as ubiquitous as home fridges, where heating and transport and cooking and driving are all electrified. And with that mass household electrification and the massive deployment of really smart software, we think that we can create a power grid that’s distributed, resilient, clean, and also cheap.

Robinson Meyer:

[0:42] Listen to the end of this week’s Shift Key to learn more about Lunar Energy and its vision for the future of home energy and the power grid.

Robinson Meyer:

[0:57] Hello, it’s Tuesday, April 7. There’s a question at the root of basically every fight about energy policy right now, and it’s really simple. How do utilities make decisions about the grid? Why do they decide to build this power plant instead of that one, or that transmission line instead of this one? It may sound mundane, but these decisions are what gave us the grid we have today. On this episode of Shift Key, I’m talking to Alice Yake, the Vice President of Grid Modeling at Breakthrough Energy. She’s basically done everything you can do in the electricity system, as you will hear. But most recently, she was senior vice president at Xcel Energy in Colorado, which is one of the most aggressive decarbonization targets of any utility in the country. Today, Alice is going to walk us through the history of America’s power grid as seen by the utility sector. All of the major energy decisions of the past 60 years were driven by utilities facing or trying to solve some kind of constraint. We’re going to talk about those constraints, how utilities responded, and what it all means for the future of U.S. electricity and climate policy. I’m Robinson Meyer, the founding executive editor of Heatmap News, and all that and more it’s all coming up on this episode of Shift Key, Heatmap’s podcast about decarbonization and the shift away from fossil fuels. Alice Yake, welcome to Shift Key.

Alice Yake:

It’s great to be here. Thanks for having me.

Robinson Meyer:

So you have had such an interesting career. You’ve worked at basically every possible place someone can work in the electricity system. And I thought just to start, can you give us a sense of the different perspectives you’ve had on the electricity industry, kind of what the shape of your career has been like and the different ways you’ve had of seeing into the industry? Because you’ve been both at the utility side and also on the big consumer side, right?

Alice Yake:

Yes, I have. My career has taken some twists and turns. And it’s always fun to go and have conversations with people because I do this conversation at university that’s called From Toe Shoes to the Boardroom. Because even before I was in the utility industry or the energy side, I was a ballerina. So, you know, right?

Robinson Meyer:

[3:01] You know, I was a music major. Have we had this conversation?

Alice Yake:

I don’t think we have. But yeah, ballet was like central to my life growing up. So, yeah, that’s one that maybe we should dig into sometime. But yeah, I came out of college with a degree in management information systems, which is this mashup of computer science and business. And I went to work at Enron. It was a great start, but everybody knows the ending of that one. It was short-lived, fast and furious. But I learned a lot of really good things from that perspective, too, of just working with really smart people that are very, very focused on what it is they’re doing and being kind of on the edge of cutting an innovation. I was programming applications to do broadband trading. Nobody was doing that at that point in time, you know, in the early 2000s, late 1990s. And so very, very creative and different. This is like Enron also had like a video streaming, like it was beginning to put together a video streaming business. There’s like all these interesting business ideas, unfortunately, submerged in Enron. Yeah, unfortunately, there were some corrupt things that were going on with the accounting books and things. So, yeah. So it was a pivotal time, right? and changing the industry and impacted the energy industry, particularly a lot with deregulation and everything else that happened during that timeframe too. But I was really fortunate in that I got picked up by Occidental Petroleum. So large industrial customer, largest producer of enhanced oil recovery in the Permian Basin, and the second largest producer of chlorine globally. And so both of those are very energy intensive processes.

Alice Yake:

[4:28] One of the things that was happening was the ERCOT market was deregulating at that same point in time. So I got this fateful email one day that had an XML file attached to it. My computer science nerds out there are going to understand what that is. Everybody else is like, I have no idea what you just said. It was the odds too. XML was a big deal. It really was back then. Now I’m not so sure it’s used as much, but it was a great way of being able to transmit data in a common format, right? And all the email said is, can you help us with this? And Oxy was starting their own retail electric provider and needed to figure out how to stand up essentially a shadow settlement system and a system that would take the costs associated with being in the market, in ERCOT, and disseminate those down to oil wells. So I programmed those shadow settlement systems, which led to reading the protocols of ERCOT, learning about the energy systems, everything from what is unaccounted for energy, distribution and transmission line losses. How does this all work? How do the costs actually come down to the customer? How do those transmission costs get actually allocated to customers, which is really interesting in ERCOT as opposed to other locations, too?

Alice Yake:

[5:32] In doing all of that, I eventually moved over to the business side and ran that retail electric provider that I had programmed the application for and then picked up more and more responsibility for electricity procurement and, quite frankly, looking at utilities and how the utilities were allocating costs to industrial customers, participated in industrial customer committees and in groups that intervened in rate cases. And that’s how utilities got to know me. Oxy is the single largest customer of Xcel Energy. And about 15 years ago, Xcel Energy’s general counsel called up and said, hey, instead of taking apart our rate cases, how would you like to put them together? And that’s what I went from running the retail provider, working in the industrial side, and moved over to the utility sector, to Amarillo, Texas, and worked at Southwestern Public Service Company, which is one of the organizations, the holding company of Xcel Energy, and ran the regulatory department. So learned a completely different perspective then, right, of like, okay, I’m looking at this from the industrial side, had to do interconnections and get substations and compressor stations set up and connected to utilities, looking at the pricing that was getting put to the industrial side, figuring out demand response to actually running these regulatory teams and interacting, filing rate cases, being the testifying witness, very different perspective, and also learned a ton about how utilities work. There’s not a better department to be in than a regulatory department to truly understand how the utility operates.

Alice Yake:

[6:58] And so went from there, moved to Colorado and Denver with Xcel Energy, became operating company president here. And then ultimately, when I departed from Accel, I was serving as the chief planning officer. The chief planning officer is responsible for looking at the transmission, distribution, generation and gas pipeline infrastructure investment. So running the models to look at what is needed for the system. So that’s where I really got back into, you know, some of the detail analytical side of what is it that we need to build to solve this problem? And remember, Xcel was the first utility to announce moving to a zero carbon system by 2050. So that team, my team, was taking that problem on. What does the future really look like? How do customers need to use the system? And does that match up with the system we have today? How do we overcome problems like an aged infrastructure, but a completely different environment? How do you align the human element of all the stakeholders in the process of understanding and getting to, yes, this is what we’re going to build, even though there’s a ton of uncertainty around what you actually need. So lots of pieces of the puzzle, but yes, you’re right. The career trajectory has been left and right, zig and zag, but it’s all kind of built to what I get to do today.

Robinson Meyer:

[8:09] We’re going to talk about what you do today in a little bit. We kind of pinted at this, but like you’ve seen the electricity system as a big buyer of electricity and Occidental, of course, huge industrial user of electricity. But to some degree, it’s the industrial use of electricity that anticipates where we are now because data centers are massive industrial users of electricity. We just don’t necessarily think of them in those terms. Yeah, it is completely true. I mean, the load factor, which is a word that many people don’t connect with as much, but it’s these entities like data centers and oil and gas or chlorine, when they turn on, it’s not like they turn off like we do with our lights or our air conditioning. It’s not like they cycle. They turn on and they stay on until there’s a maintenance piece. And that’s a very different animal. They use a ton of energy and they need a lot of infrastructure to be able to do it. The time you’ve spent in the electricity system has been a really interesting moment because at Enron, for the first few years of the aughts, we watched electricity demand rise. And then there was a long period of time where electricity demand was pretty stagnant, I mean, not necessarily in Texas for all of that, but talking at a national level, there was not a lot of load growth and utilities had to operate in that environment. And now, of course, we’re back in a world of load growth and some of the assumptions and processes that have guided us for the past 20 years are no longer operative and we’re figuring out how to deal with that now.

Robinson Meyer:

[9:28] But can you give us a sense, did people see this era of no load growth coming? And then when it arrived, like, how did that shape utility decision making? Because I think to some listeners, these might sound like esoteric historical questions, but they are so central to understanding the system that we have now and the constraints that we operate under now. So just like, did people see it coming? And then how did they deal with it once it started to show up? You know, I actually think we need to go a little bit further back than what you were describing there, because it wasn’t something that just started. And you are so correct. This history is foundational to understanding where we are today, why we have some of the pieces of the puzzle that we need to change around in the systems that we operate in. Let’s go back a little bit further.

Alice Yake:

[10:12] So this industry is 80 to 100 years old on the electric side. And that is something we all have to appreciate and understand. And there have been these kind of time periods inside of that that have been foundational and formative to how we make decisions and operate the systems we have today. So think about like the 20s and 30s as power to the people, right? You really had to build out the systems. There wasn’t distribution infrastructure across the country. And it was a physics-based exercise to get that built, right? In city-dense areas, it came more quickly because it was easier to serve more customers in those regions. But that’s the advent of munis and co-ops and all of those kinds of things in the more rural areas. So that’s where we came up with the different organizations that we have.

Robinson Meyer:

[10:55] And the big problem in the 30s, we should say, is that the cities had electricity and then the rural areas didn’t have electricity. And there was a lot of focus on getting rural areas electricity.

Alice Yake:

Yeah, no, legislation was passed and all kinds of things in order to incentivize it getting to those rural areas. And that’s why you have those cooperatives that are owned by the farmers and the communities in those more rural places. So that organizational structure is different and that decision making is different in those regions because of that. And that’s something also we need to appreciate. As you move forward through time, we came into the 70s. And there’s large volumes of people these days that don’t remember waiting in line for gasoline or the fear around energy, we don’t have enough of it. And that energy included not just oil, it included electricity. There was a fear at that point in time that natural gas was not going to be prevalent enough. And therefore, we needed to change the generation assets. So if you look back at that, you know, kind of early 70s through the early 80s timeframe, we built a lot of infrastructure. We built the nuclear plants largely during that timeframe. We added coal plants during that timeframe. And we thought the natural gas was going to go away. Along with building those plants, you built the transmission to go with them, right? And then with the energy crisis, the focus of the nation then turned to efficiency. We started looking at efficiency in homes, efficiency in cars, efficiency across the board. And that’s where we saw more of a stagnation starting of the energy consumption, both demand and energy consumption, because we went from consuming tons and tons of energy per device to that became more and more efficient. Even as we were adding devices, it wasn’t a problem, right? So really that stagnation started back then. And because of the overbuild that happened, we didn’t have a need to build a ton of plants or a ton of transmission. There was distribution infrastructure, and yes, neighborhoods were being added or things along those lines, but the massive infrastructure additions happened back then.

Then we shifted this focus from this engineering, get power to the people, to this environment of, okay, well, who gets rights to what? And how do we price it? So there was a lot of litigation that happened in that 80s timeframe. Then we moved to, okay, we have an overbuilt system. We’ve now figured out how to price it. Now we need to harvest from it. And how do you get the best cost? And so I would say it was more of a banking mentality almost that came out of it. And that’s if you look at the leadership of utilities, you’ll see that those are the leaders that were predominant in each of those eras. You had engineers initially, you had lawyers in the middle, and you have financial slash lawyers now.

And what I would sit here and say is looking at the time that we are sitting in, we are now back to very much an engineering question. But we have a system that has been put in place that has a lot of politics, that has a lot of financial incentives or disincentives put in place. And I would also say is that when we put rules in place back in the 50s, 60s, and 70s, we’ve never really stopped having some of those requirements. So we haven’t evolved fully into this current state that we need to be in, even from the rate pricing. So we use Bonbright. And for the listeners, it’s a very boring book, but it’s a very integral book to understanding how pricing happens for electricity and utilities. And every regulatory person needs to understand and usually does Bonbright. But it’s how we allocate the costs of this system.

One thing I would say is if listeners are really curious to truly understand this system that I’m talking about and the incentives and disincentives into your question that you asked, Rob, it’s like, let’s break down a little bit of why do utilities make the decisions they do. There was a good book published on this. Now, most people see this book as a book about wildfire. California Burning, really, the perspectives — don’t read it for the wildfire risk piece. Read it for the decisionmaking: what system was in place, what incentives or disincentives, what history came to be in order to create the outcome that happened there. That is very real across utilities across the country. And that is something we have to respect and understand. Can you just give an example of what you mean by that? Yeah. So ideally, you could sit back and say the utility should always make the decision in the best interest of the customer. I don’t necessarily disagree, but let’s talk about what they’re incentivized and disincentivized to do. You have regulators that are largely across the country appointed by governors who have political views, and those political views then weigh in on decision making. When you go through a regulatory process, you’re trying to get to the best outcome, not only for customers, but also for the longevity of the business that you are operating, because it has to be financially sound to make the investments that are necessary to provide the infrastructure. You have stakeholders that come into this equation. Those stakeholders can come from very walks of life. You know, large industrial customers like I used to represent, right, when I was on the industrial side. Utility perspective, environmental perspectives, academia can intervene, other states intervene in different states’ cases, and then they present these perspectives.

Largely, the regulators, they have such a difficult job because they have to call the balls and strikes. But what’s ending up happening is that the utility then has to come in and go, okay, what’s the best way to get to where we need to be to provide reliability and we get to affordability and we meet the investor’s perspective. So you’re constantly trying to go, okay, which decision is going to be made? Is it going to be politically influenced? Is it going to be factually influenced? We’d all like to think that this is logical and factually influenced. It’s not 100% of the time. And so what ends up happening is you split the baby. The regulator has to split the baby to satisfy so many different pressures. And I would argue when you split the baby on physics, You’re only increasing the risks to the system being reliable.

Robinson Meyer:

We’re going to get back to this. So you gave us a history of the power grid, which was amazing. Let’s talk about kind of this moment. We built a lot in response to the 1970s, in response to the energy security moment. And it took a while for it to get built. Like a lot of the 80s is actually about making the investments, the physical investments that were kind of authorized in the 70s. And to some degree, even when you look across, I mean, this is my perspective, but when you look across the U.S. economy and what was happening in the economy during the Reagan administration, a lot of it came out of decisions that were made during the decade prior. But then you get to the 90s. We build all that stuff. It’s great. It’s operating. It’s expensive.

Robinson Meyer:

[17:30] Part of what I’m hearing from you is that the other thing that’s happening in the 1990s is the shift to electricity markets that happens in different parts of the country, Texas, the Northeast, the Mid-Atlantic, parts of the interior, the West Coast. And part of the reason for doing that is to find the best way to allot the costs of what was at that point quite an expensive system. And a system which the problem that policymakers had at that point identified was that utilities had actually overbuilt to demand. And now we had to crack the whip so that utilities wouldn’t keep overbuilding to demand. And so in your understanding, is that part of what drove the shift to electricity markets, which are now this major institution in the electricity system that we deal with, And then where did that leave us? Like tell the story, I guess, through 2005 or 2010, because there were about eight years.

Where investors, investment banks, infrastructure investors were willing to invest in new power plants on the basis of price risk, basically just on the assumption that electricity prices were going to go up in these wholesale markets. And so they would invest in it. And then two things happened. The first was the Great Recession. And the second was this huge shift in efficiency and specifically in lighting technologies where our lighting became much more efficient. And because of that, basically, we stopped seeing electricity demand grow for 15 years or so. Just like draw us up to the system as it stands in 2010.

Alice Yake:

Yeah, absolutely. So you are correct that when you make decisions, it does take a little bit of time to build things, particularly when you’re looking at, you know, fossil based generation or nuclear plants. We all see that. So yes, construction was largely complete in the 80s, which meant once, and this is the way the utility pricing works, is you don’t typically include those capital costs in the payments that customers are paying until after that asset is in use, right? There’s a little bit of construction work in progress. It depends on what jurisdiction you’re in, just to be really specific. But generally, that bulk of capital investment doesn’t come into rates. And it may be taken as a snide comment. Isn’t it interesting how we demand that there needs to be change in the energy sector when prices start to rise?

Robinson Meyer:

[19:46] We’re at that interesting inflection again, aren’t we? I think this is one of the big challenges right now is that prices are rising. And so we’re like, oh, man, we need a lot of investment. But investment is also a driver of long-term price increases.

Alice Yake:

Exactly. And so if you think about it, you look at it as like, OK, prices started to rise because we built out all this infrastructure because we said we had the physical need for it in order to meet the needs of the economy and customers in the country. And yes, load did move in the direction absolutely of what was said. Remember, one of the driving factors, though, is that we thought a whole sector of the types of plants were going to go away because natural gas wasn’t going to be available. And so the country was responding to a call to action. Right. And they had to do something. We took that action and then that action didn’t pan out as being a risk. Right.

Robinson Meyer:

And so therefore it was natural gas action, you’re saying.

Alice Yake:

Yeah. So we overbuilt the generation. Therefore, we overbuilt the transmission for the future that we’re needing because we had a hypothesis that something wasn’t going to be available. Oh, that’s such a key part of that.

Robinson Meyer:

Yeah, of course. Of course. I mean, we tell a story about liquefied natural gas being the U.S. was preparing to import a ton of LNG. Correct. That’s why we built a lot of terminals. And then after fracking happened and we were able to access gas and shale, we had to reverse engineer all of them so that we could export LNG. But of course. We expected all these power plants to fall off the map too.

Alice Yake:

Exactly. And so that’s why we ended up with a system that was overbuilt. And, you know, different stories, people like to demonize, it’s like the utilities push this. No, it was a national call to action because of this hypothesis around the availability of this type of fuel. And those plants were no longer going to be assets that we could use. So now we end up in this situation where we’re at the tail end of the energy crisis, we’ve overbuilt the system, and we’re investing in efficiency. And so therefore, then we don’t need as much and we’ve overbuilt. So we have a lot of time to grow into this. But prices went up because all that capital had been spent, right? And the prices went up. And so therefore, people started looking at, well, what can we do about this? Well, how do we build a market that makes the prices come down or have people compete? And so a lot of this was happening at the same time, though. You saw telecom deregulate. You saw other industries, you know, pipeline infrastructure. You know, all of those things were happening. This was the grand idea at that point in time that this was going to save people money.

I would argue it did in some places, it didn’t in others, right? And we’ve learned from that as well. But then it stabilized because how much have people really paid attention to their electric bill in the past 20 years? Not a ton, right? When we have bad storms or there’s some kind of excursion or maybe natural gas prices spiked or something along those, that’s when they were looking at it. I remember coming into the utility sector 15 years ago and one of the comments was, what’s the average amount of time that people spend thinking about their utility? It was 12 minutes a year, 12 minutes a year, one minute a month when they had to pay their bill and whether that was writing a check. And then when it got automated, you know, it was even smaller. It was maybe doing your budgeting every month, one minute a month. So that tells you a lot about how stable it was, right? And also where prices were. Now you can’t go a day without seeing a headline about rising energy prices and what’s happening. And so moving forward through time, where we got to was, is we had all this infrastructure. So we really, we didn’t have to be good at building a whole lot anymore. We didn’t build a ton of plants. If you look at the grass or the transmission infrastructure, but we know that we need it. And we also know that it’s aged now because do your math. If you go back, it was built in the seventies and eighties. We’re now looking at things that are on average, 55 years old with asset lives of around 60 years. So that means you have a lot of things that you have to replace.

It’s not unique to the utility sector or the energy sector either look at our highways look at our water infrastructure this is happening across the board and for those of you that are math nerds and financial out there you go back to the rules of bondbrite which are applied to utilities and straight line depreciation we had a really expensive brand new system like we were talking about in the 80s now we’ve got our 55-year-old gremlin clunker that takes a lot of maintenance investment, but we have to buy a new car. And when you buy a new car, you have to spend the new capital, right? And when you spend that new capital, you start your depreciation over. So right now we have a really old system that’s low cost, but we have to replace a ton of it.

Robinson Meyer:

[24:18] I mean, you’re kind of describing two interesting phenomena here. The first is that we have this old system that presents challenges because it’s old and we have to figure out how to replace it. The second thing is also, it’s even more complicated than just buying a new car, because part of what I’m hearing from you is that we also, of course, it’s not like we have car factories set up the scale of the grid. We’re out of practice of making these investments. And so... Just I want to dwell briefly on the 20 teens. So you were working at Xcel and or at utility in the 20 teens. And I think this period where electricity demand is increasing.

Alice Yake:

[24:54] Natural gas is flooding the energy system in the U.S.. And so it’s very cheap, but utilities still have to make a return to their investors during this period. And I think sometimes during the 20 teens, there’s this accusation of people say, well, this is when utilities really started to overbuild or gold plate their infrastructure because they’re looking for a place where they could make a return on investors. Is that something you saw? But then also like just what was going like, what were the equities that utilities were trying to balance in the 20 teens between stable costs, this aging system and now and cheap natural gas? Yeah, what I would say is I have never sat in a utility room having a conversation of we need to find another place to put capital so we get a return. Right. There have always been, it’s like, okay, what parts of the puzzle do we need to make the investment in? In the 20-teens, we didn’t really have load growth. We had a shifting load pattern that was starting to show up some. Remember, this was the early days of rooftop solar being part of the equation. But really, the focus on that timeframe was on the technology side. Because remember, there’s a very big difference. People see the pipes and the wires, right? Those are easy to see on the road as you’re driving around. But there’s also the software. So think about your own company that you work in. If you’re not in the energy industry, you’re not carrying around a cell phone that’s still a brick. You’re not carrying around a laptop that weighs 20 pounds, right?

You have a small device. You have to upgrade this just like inside a utility, just like everywhere else. But I would say it’s even more complex inside of the utility to change these systems out. And that was the focus of a number of the 20 teams. Think about smart meters coming on. So we had technological advancement that was going to enable future changes. In the 20 teens people were talking about hey we want more distributed capabilities well you didn’t have visibility shoot at excel it was 2016 that i filed a case to move to advanced meters that would give us visibility into the distribution network that we didn’t have to wait for three people to call in to triangulate a distribution outage to send a truck and so that’s not all that long ago but during that time frame it really was about how do you invest in that customer side how make the experience better, get better visibility in the system, and do your predictive maintenance and analytics. But that meant devices, right? It meant analytics. It meant software. So it’s a different kind of investment that was necessary during that time. People could call that gold plating, I guess, if you wanted to take a perspective of, okay, I want the least cost system out there. But customers also demand incredible reliability. And without these, you can’t get there.

Robinson Meyer:

[27:38] Let’s kind of skip ahead to today. There’s three different parts of the grid. There’s generation, there’s distribution, there’s transmission. Just talking about from a today standpoint or from what you saw at Xcel, what shapes the decisions that utilities make on, let’s start with generation.

Alice Yake:

Yeah. So generation primarily is you’ve got to have enough assets available to cover the system needs. So generation, do you have enough capacity online to meet your needs all the time within the reserve sharing group that you’re in. So you can share a jurisdiction and others can help you back you up, but you’re required to bring to the table at least enough to meet your customers’ needs plus what’s known as a reserve margin. So not everything’s going to work all the time, right? So you have to be able to cover everything plus risks that you may be facing, and you can share that risk pool with others in order to bring down the volume of what you have to build. So that’s kind of the look that you make, and you have to meet the peak load.

Robinson Meyer:

[28:31] What goes into shaping utility decisions around distribution? So this is the local, you know, poles and wire system.

Alice Yake:

Yeah. So once again, a lot of that these days in the 20-teens, particularly it’s very much focused on maintenance, changes to consumer patterns, interconnection. So growth, if you think about it, you may have a distribution line that’s serving a neighborhood and then all of a sudden a shopping center is put in to serve the area because it’s growing. Does that fit on the existing line? So it’s infrastructure and it’s designing that infrastructure so you don’t have to keep coming back and redoing it. So how do you build out that infrastructure sufficiently? Old neighborhoods, maintenance and, you know, going in. So remember, we said this is an 80 to 100 year old system. That means in the oldest areas of your system, you are going in and replacing transformers and wire and you’re improving the technology. You’re upgrading substations. And then also there’s new neighborhoods coming in all the time that you’re looking at. Granted, that slows down during economic downturns, it speeds up during, you know, good economic times. But really, it’s that maintenance and interconnection.

Robinson Meyer:

[29:35] When we talk about a 60-year-old system or an 80-year-old system, I think we’re often talking about the distribution system, right? We’re talking about the actual network that delivers electricity the last mile. Sometimes in the popular press or even in the trade press, one reads claims like, you know, the entire system starting to need to be replaced. Are these costs that we are going to be able to manage iteratively over time where we replace a neighborhood at a time and every year gets a neighborhood, a neighborhood gets a new system. Maybe there’s a natural disaster. It wipes out a whole area. We have to replace the distribution grid for a whole area. That’s been the story in the Southeast of California recently. But like when we talk about an old system, should we think of this as the costs of keeping the system operating are a little higher or maybe slightly higher than they used to be? Or should we think of this, but it’s like a very stable kind of like, oh, we’re going to have to start paying this kind of down payment on rebuilding the distribution grid every year. Or is this a true tsunami of costs that are about to hit all at once everywhere?

Robinson Meyer:

[30:43] And we really are going to have to rebuild whole states or whole counties worth of distribution networks in a very short period of time because we basically build the entire distribution grid in the 70s and it’s all about to age past its life?

Alice Yake:

Yeah, so I think it’s and it depends. We have some decisions to make. How long do we think we have before we need to have this infrastructure replaced is one of those questions.

Robinson Meyer:

[31:09] And who is the we, can I ask? Is it federal policymakers? Is it state regulators? Is it utility executives?

Alice Yake:

Unfortunately, I think it honestly goes state by state because that’s where the regulatory commissions are. And that’s where the rubber hits the road on making the decisions on the timeframes. It’s generalizable to a lot of areas across this country. So remember that timeframe, we went back to 20s and 30s, where we’re really building out this distribution infrastructure, and then, you know, evolving the way that it was used. And so those areas that were built way back then, you also have to replace them. But what we’re coming to is this kind of a bubble, right? Because there was this ad after the Great Depression and, you know, coming out of the war, you know, there was this huge, just like we did with highways, right? There was this huge push on infrastructure. And so we do have a bubble.

One of the things that we’ve always looked at as utilities is, you know, kind of the timing of distribution versus transmission versus generation investment. And you’ve had these periods where you could do, it’s like, okay, now we’re having to do more generation. We can replace that at existing locations so you can minimize some of the transmission infrastructure. Oh, now we’ve got to do some transmission pieces, or maybe we need to transmission and generation. I would argue the past 10 years, we’ve been doing a lot of the combo transmission and generation because we’ve been changing where the generation is located. So that’s the wind and solar piece, right? On the distribution side, like I was saying, it’s been a lot of maintenance. So replace, maintain and replace the assets that are on the system as is, right? So that’s the other question we have to answer is how much of this aged infrastructure do we need to change in what timeframe, but also what do we need it to be? Because what we’re finding is that the existing distribution infrastructure, the underpinnings of the design basis that the engineers use. So every engineer does not start with a design from scratch, right? They have this book that they pull out. It’s like, I’m building a new neighborhood. It’s going to have a hundred homes. They’re going to be of this size. This is the transmission that I need. This is the distribution I need. This is the substation. This is what it’s going to look like, right?

Those, you start from that design basis. But that design basis, unfortunately, is inadequate for what we think customers are going to use in the future. Bring in the EVs. If people electrify their transportation and they charge in their home, that is a distinctly different pattern and consumption size than what they’re using today. But if people convert home heating from natural gas to all electric, right? And there are things that we can do, right? People are going to say, well, Alice, talk about heat pumps or Alice, talk about time of use or talk about the way that you can do this distribution of energy consumption. But the assumption is that’s one house on an existing infrastructure. What if it’s all of them on that feeder? What if every single home wants to put rooftop solar on and only half of them want to do … The output from a solar system without a battery in order to meet 100% of a customer’s consumption is four times the size of the input to that house for their air conditioner.

Think about that for a minute. That means the wire is inadequate. The transformer is inadequate. So this system we have to build in the future, so this is the second question we have to ask is, what are we building for? What are the assumptions? And that’s why I say it’s complex and it depends because those decisions come back to each state regulator. Or if you’re in a muni or co-op, it comes back to the muni co-op board, right, that has to make those decisions.

And this is where, you know, I have these conversations around this takes incredible alignment because this infrastructure investment, you’re going to have to set the basis of what you’re going. You have to change that design basis that that engineer is going to come out with every single time. And do we have 20 years? Do we have 25 years? Do we have 10 years? How do you pick where you start? Do you go to the places where people are more likely to change their way that they use energy first? And then that’s probably in the more economically viable areas. So then you’re increasing the reliability in those areas. And in the lower economic areas, you’re not. How is that fair? What decision? So you can see how this snowballs into decision making, but how we absolutely have to answer some of these questions because here’s my biggest fear if we don’t answer these questions and we don’t get to alignment on what we need to do you’re going to continue maintain and replace and if you continue maintain and replace that system is inadequate specifically the distribution system is inadequate for the customers the long-term future these assets are 60-year assets 50-year assets let’s call them if you put them in next year and they are inadequate in 10 years you then have to rebuild a system and charge it to the customers again.

This is why I’m doing what I’m doing inside of Breakthrough, because the planning is foundational and fundamental to getting this right and to helping with that alignment to get to a future where the costs stay reasonable versus getting doubled or tripled.

Robinson Meyer:

Perfect segue. I was just about to ask, what are you doing at Breakthrough and how does it fit into these challenges you’re describing around utility decision making and future planning?

Alice Yake:

Yeah, so I’ll do this in two pieces, because one piece is what is the assignment specifically from Breakthrough, and the other piece is why did Alice decide this was important for her to go through? So on the first piece, so Breakthrough Energy, remember, is an organization that was started by Bill Gates to figure out how do we accelerate the technology that is necessary for decarbonization and economic vitality when it comes to energy. There’s a big VC portion of that in order to invest in new technologies. There’s a component that’s even before VC where it’s like we need to seed the ideas and put the problem statements in so that people can solve them. And then there’s my team. My team is the GRIDS organization. And our specific task is to reduce the amount of time that it takes to get to infrastructure investment. And particularly looking in areas of the world where people do not have electricity or they have insufficient electricity and they’re going to be adversely impacted by the climate impacts that are coming our direction. So how do we solve these problems? Fundamentally, it comes back to planning. You can’t make massive capital infrastructure decisions without a plan. And you have a lot of decision making that has to go through to get to that plan.

We are in a more complex time for energy now than we were previously, and we are not as complex as it’s going to get in the future. And so that means the tools that we use, as well as, you know, the human element that results from these tools and getting to alignment are incredibly important. And right now they are protracting the timeframe it takes to get to investment. So our team fundamentally believes we have to have repeatable, open, transparent planning processes and tools so that people can shorten the time frame that it takes to get to decision making, as well as come to that alignment piece. Because right now there’s a lot of distrust. We talked about here on this conversation, gold plating, right? Not understanding why people are making decisions. If you can’t replicate somebody else’s complex environment of understanding what decisions do they put in there, then you get to all kinds of assumptions. They’re putting their finger on the scale so they can spend more capital. They’re putting their finger on their scale because they don’t believe in this type of asset. They’re not giving this enough credit for what it can actually do for the system. You have to have transparency to then have a common conversation on the logic. And remember, physics does not bend to politics.

Physics, they’re the laws of physics. They are not the laws of people. And so we have to live within them. And that means reliability and resource adequacy and those kinds of things live in that area too. So we need logic, right? We need to have conversations where you’re not splitting the baby on an emotional decision because of politics. We have to look at the details of the inputs and make a logical decision so that we can solve the problems that people need us to solve. So our team. Is fundamentally focused on creating this ecosystem of open source planning tools for the grid.

Robinson Meyer:

This is like software for the grid that helps people kind of plan.

Alice Yake:

Generation, transmission, distribution, all of it. So people can run the data that goes with it, so they can do it faster. They can look at it more deeply. We are not picking capacity expansion models, production cost models. What we are doing is creating the environment so people can pull them together. You don’t have to have a PhD to run them, but you have the compute engines. You know how to do it. So regulators can see it. Different community stakeholders can see it. Industrial customers could use it. Utilities can use it. Countries that don’t have access to the commercial tools can use it, etc. Fundamentally, you have to have a plan.

Robinson Meyer:

It’s funny because on the one hand, we’re talking about huge policy decisions made by regulators, executives, officials, outside observers of the system. The issue is that all those policy decisions are mitigated by basically software and your access to the ability to simulate or understand grid planning, physical grid planning decisions and physical grid constraints as they exist. And so if I understand correctly, right now, all the infrastructure to do that is proprietary and you guys are putting together an open source model that will let people examine and simulate and conduct their own grid planning, which is important in the U.S., but also so important abroad, right? So important in developing countries that are just spinning up their electricity systems.

Alice Yake:

Yeah, this is a global need. This is not something specific to the U.S., which is one of the reasons why it was like, yes, I want to take my expertise that I have to try and make this impact. It’s one of the things we didn’t talk about, Rob, is that my perspective on what my role was inside of the utilities shifted from a job for my family for, you know, feeding my family and all that kind of stuff, because I got a lot of boys that I feed and, you know, clothe and put through school and everything else to this is the fundamental space where you impact society. There’s not a single person that doesn’t depend on electricity in a developed economy. It is a life essential. So doing this well and figuring this out and having the cost be as low as I shouldn’t say as low as we possibly can, as reasonable, because it’s not about building a cheap system. It is about building something that has longevity, that makes sense for what we need, right? And people have to understand there’s trade-offs. If you want it 100% of the time, you’re going to have to gold plate it because then you’re mitigating any risk that’s coming your direction. If you’re okay with the 99.998, which is the average availability in the U.S., then you’re seeing some of the costs associated with that, but the world is also changing. Wildfire, it changed the environment, the risks that we are facing with climate. So there’s all these questions that come in, but we have to respect the fact that this is a fundamental need for people. And that means you have to do better planning. And when I go back to it, Rob, whether it’s the climate risks, the changing environment of variability that we’re facing, or it’s the costs associated with the equation.

The modeling and the planning pieces have to be more flexible. I think you did a previous podcast about, and Jesse published a paper that talked about how the deterministic models that we have and the linear way that they’re thinking don’t give us the flexibility. I completely agree. That’s why we had to run so many simulations and sensitivities to see how far does this plan stretch.

Robinson Meyer:

[42:25] You’ve already talked about distributed solar and how if you’re putting a new neighborhood, a lot of people in the neighborhood want rooftop solar, but maybe don’t want to build a battery. That really changes the constraints you put on a distribution grid. Can you give us another example? I mean, you were at Xcel. Xcel has this ambitious 2050 climate goal.

Alice Yake:

Yeah, zero carbon by 2050 on the electric side. Yeah.

Robinson Meyer:

[42:47] Give us another example of how these planning constraints and the planning environment that people are in the software, the assumptions they take into account, interacts with decarbonization and climate goals.

Alice Yake:

Yeah. So there’s a big difference if you make different assumptions. So if you sit there and you say, we have zero flexibility for the demand side, that you just have to take it, right? Whenever they’re going to be, you have zero flexibility on the demand side. You build a very different system than if you can assume 20% of the energy on the system at any point in time is flexible. You pick different size transformers. You pick different size generators. So for years, the system has been planned with very little flexibility on the demand side it’s like customers rule the day i mean how many people call the utility to say hey i’m about to flip the switch and that’s the same whether you’re it’s just the light switch at your house or you’re an electric arc furnace that’s going to go from zero to a hundred megawatts you know in less than three minutes so nobody calls the utility to say hey i’m about to come on right and start my process yeah that’s been the premise for planning for a long time is we have to be ready for whenever the customer wants to use the system, right?

If you change that premise and you sit there and say, OK, we’re now going to assume that with the digital visibility that we have, the communications capability that, say, 20% of the energy on the system is flexible at any point in time, you plan a very different system. But guess what you have to do in order to be able to do that? You’ve got to stack your hands and say, we’re all on board for this and customers are going to participate in this transition. So we’ve always looked at the modeling whenever you look at moving towards a zero carbon system by 2050. You have to have a symbiotic relationship with customers. Those customers have to be in it with you. They have to have alignment of, I am willing to shift my life and the way I do things. Now, you need to make it as easy as possible, right? But I’m willing to shift my life and the way I do things to align with clean energy’s availability. Whether that’s wind or that’s solar or that’s the bomb cyclone that comes in or that’s, you know, whatever is happening at that point in time. That’s a different system to design. And that takes a lot more coordination and that takes a lot of alignment between the utility and the consumer base in order to be able to achieve that outcome.

Robinson Meyer:

[45:08] Now, presumably one way you could do that is that some subset of your customers have batteries. And so they’re flexing their demand as far as the utility is concerned. But maybe from the user’s perspective, they can turn on their dishwasher or their induction stove or their heat pump whenever they want, because it’s that battery that’s actually going to control how they interface with flexible supply on the grid. However, in that case, I would imagine you still do need to take all those batteries into account in your planning process.

Alice Yake:

That’s exactly right. and you have to have coordination because think of it this way. Every feeder that goes out to the distribution customers, to your houses, to your commercial homes is a fingerprint. Even if it was the same length of wire with the same infrastructure on it, the same number of types of customers, those customers still choose to use energy in different ways. You cannot have one of those feeders providing all of your flexibility, right? Because then that feeder is going to go dark. So there’s that back to this physics question, right? It’s like, how do you keep the voltage, the stability, the inertia, everything of the system where it needs to be to meet the laws of physics? But you have this dispersed energy, interaction. So each customer has a choice that they can make. If we assume 20% flexibility on the system, for example, you need 20% of customers to participate in that, but they have to be dispersed across the system. They can’t be concentrated. So that comes to that coordination piece, that visibility piece, that communications piece. So is it possible? Absolutely. Is it something that has to be once again coordinated and people are aligned around how it gets done and there has to be a central visibility to maintain all the physics of the system, I would argue yes on that too.

Robinson Meyer:

Can you talk a little bit about how utilities or how your experience of utilities making decisions around transmission were? Because it’s the one part of the system we haven’t talked about as much. And I do feel like it’s the one part of the system where people make the biggest claims about like, well, utilities are very happy, for instance, to build transmission within their own systems. Essentially, this would be for-profit utilities, but they’re very reluctant to like connect to other utilities because it decreases their pricing power and their maybe ability to monopolize their customers. As a former utility executive, how did you see decisions get made around transmission?

Alice Yake:

I love this question because there’s this perspective piece that I think is flawed in what people’s assumptions are. This goes back again to incentives and disincentives in the system that you have. Imagine being a utility that files a rate case at their regulator that sits there and says, I need a transmission cost increase for a transmission line that is not connected to me, that is located in a different state, but that I’m getting charged for. That regulator is tasked with keeping costs reasonable for the customers that are located in their state. The risk you have of that cost recovery being disallowed is high, unless that particular regulator understands that we voluntarily participate in this broader market, that there are benefits that we assume come from doing that, and we are completely aligned with it.

That regulator was appointed by a political individual generally, not in all cases, in that state to uphold that political party’s viewpoint. That is going to depend on whether or not they are pro or anti markets or not. What kind of business do they like? When you make investments, this goes back again, these are long-term investments. But unfortunately, political wins, policy changes in the timeframe in which you have to have that cost recovery. So going back to the incentives or disincentives, is it easier or harder to have to go make that argument? It’s harder on the utilities part. So it may have nothing to do with their own capital investment or the earnings that they may have. It’s the risk of recovery because they’re not making a dime maybe off of that transmission project that they have to include in their cost of service. If the regulator disallows it, then what ends up happening is they have then lost the income on the other thing. So their earnings go down. And so you kind of sit there and you’re like, okay, the risk and reward associated with that, it’s really difficult. This is where that alignment comes back in, but it’s not short-term alignment. It is long-term alignment. How do you get everybody saying, this is what is necessary for customers for the life of that asset and the cost recovery you’re going to have? It is not an easy place to be.

Robinson Meyer:

[49:41] What I’m hearing from you is basically that all these decisions would be easier if politicians, utilities, local advocates were kind of agreed on what the direction of travel in the system was.

Alice Yake:

Yeah. As it is, look at Uruguay. They turned their system around in less than 10 years because they had alignment across people, politics, and process. It was amazing what they’ve been able to do there.

Robinson Meyer:

[50:07] I totally agree. But that’s not always the case, right? There’s disagreement between political parties about what use the electricity grid should be serving. I think we’re only beginning to see fights over, say, what kind of customers, utilities, and the power system should be serving and what it shouldn’t be serving and what that means for ratepayers, you know, residential ratepayers in an area. It would be amazing if we could always get that alignment. And if we all agreed we wanted a clean, reliable, and affordable system. But there’s a lot of disagreement over different aspects of that, especially clean.

Robinson Meyer:

[50:40] So given that reality, how should people proceed when they think about influencing utility decision-making? And is there any way of getting to a better utility system or a better electrical system where incentives point toward the kind of alignment that we want to see?

Alice Yake:

Yeah, I think number one, I will sit here and say the work that we are doing and the modeling and the planning, right, is fundamentally coming back to understand what are the trade-offs in some of these decisions. How flexible is the system that you are investing in, building, designing? What is it going to get you to? What is it not going to deliver? I think it’s just as important to understand what it’s not going to do or what it will not serve as it is what it will. Because we all would love to have a perfect crystal ball. That would mean stock market earnings out the wazoo, it would mean we could go and bet on our favorite sporting events, you know, whatever it was, right? But the crystal ball is very fuzzy.

But you still have to look in the crystal ball and make decisions in order to move forward in advance time. So the best thing I can say is transparency, repeatability, put together a plan, make decisions, include different constituencies in the discussion, which happens at the regulators. But ultimately, we have to make a decision and we can’t change that decision every three years. Because once again, this infrastructure is long term and it’s foundational and fundamental to our success. I do think, Rob, there are a few things that we should be all able to stack our hands together on. That is, resource adequacy and reliability are fundamental to a healthy economy and providing the services of life essential. Those need to be paramount in all of our analytics. Understanding and increasing the capability of the tools that we have to show what range are we flexibly designing the system to cover. And we have to understand that we’re going to be wrong, right?

Robinson Meyer:

Well, and I think that this is the core thing, right, is that everyone agrees on resource adequacy as a value for the grid. The question is, does one particular decision around a thermal power plant or around a transmission line or around a solar farm, equate to actually provide the resource adequacy that advocates claim it will provide, whether those advocates are on the utility side or the climate side or whatever? Or how do we interrogate those assumptions is kind of the core of the whole question here.

Alice Yake:

Exactly. And how do you then look at the data and the information that you have, respect the fact that it is not 100% accurate, but still make a decision and move forward?

Robinson Meyer:

[53:22] If you want to influence utility outcomes and utility decision-making in your region, how should you think about doing it? What are the kind of arguments that work best and the kind of campaigns that work best? What maybe did you find to be less effective?

Alice Yake:

Yeah, what I would say, number one, is make sure you’re well-educated. Understand the processes. Do things like go read California Burning, not for the purpose of understanding wildfire, but for the purpose of understanding the ecosystem that this operates in. Understand the pros and the cons. Show some empathy, you know, first off, and understand. And it’s like, this is a system that has been around for a long time and comes with a lot of rules and regulations. Even if sometimes you’re like, why did they make that decision? Try and understand why. Walk in somebody else’s shoes a little bit. And I think the utility has to do the same thing for its customers, right? And for the politicians and regulators and others in its area as well. The best way of participating is always going to be making comments at the regulatory commission. Now, sometimes maybe that’s a little too late, but participate in the programs that the utility has. Give feedback. Send in messages. There are ways. I mean, utility outreach these days is more than what it’s ever been to try and understand what are people seeing? How are they feeling? What is it that they want? How are things changing?

And that’s an important piece of the puzzle to give back. What I would say is on the industrial side, there are some states that have more involvement and some states that have less. I think these customers need to come to the table to talk about what their futures look like and what they really need? What are the priorities that they have so that they’re understood? So often utilities run surveys and receive that information back and provide it to the regulatory commissions. But then when those people don’t show up to have the discussion in the regulatory process, that feedback is discounted. And so the customers need to come to the table to have that conversation too. So find a way to participate, whether it’s in the public comment or it’s joining a group that’s intervened to present before the commission in in each of these regulatory activities.

Robinson Meyer:

[55:17] Last question, totally off any of this. We were talking about the distribution system, how you have to size it for different kinds of uses. You have to size it, you have to weigh up size it if your customer, for instance, wants to build rooftop solar, doesn’t want a battery. Is one of the original sins of the U.S. Power system as it exists right now, that we have 110-volt, 110- or 120-volt system, while Europe or the rest of the world, lots of parts of the rest of the world, have a 220- to 240-volt system?

Alice Yake:

Hmm. This is a fun debate that we’ve had. And it’s like, and also, you know, do you just stop building lower voltages, you know, on the distribution network, because then you can move more power through pieces? I don’t think it’s necessarily a, you know, it’s like, this is the be all end all or not. What I would say is, there are a bunch of different ways of serving, we just have to make decisions. I think there’s a lot to be said for looking at pods on the distribution network as operating more like they’re not designed necessarily today as a microgrid. But that may be ways that we need to look at how are we serving customers that adds to the resiliency conversation we’ve been having. So I do not think the 110 versus 240, 220, whatever is, you know, a fundamental design flaw at this point in time. But I do think that we are at a pivotal moment where we have to make decisions about what we think the future is going to look like. If we ever were to have a time in the next couple of decades where we get the opportunity to redesign what was designed in the 20s, 30s, 40s, 50s, it is now. And that is where we have to ask the right questions. We have to challenge ourselves on what is this future system going to look like. And we have to answer things like what you and I were talking about is how symbiotic is this relationship going to be between customer and provider of this energy system versus how much are we just going to say, we’re going to build for anything. That will have financial consequences. And it is an important decision to make along with the how quickly do we think we need to get there.

Robinson Meyer:

[57:24] We’re going to have to leave it there. But Alice Yake, so much. Thank you so much for joining us here on Shift Key.

Alice Yake:

It’s been great. Thanks for having me.

Robinson Meyer:

[57:35] Thank you so much for listening. We’ll be back at least one more time this week with another episode of Shift Key. Until then, Shift Key is a production of Heatmap News. Our editors are Jillian Goodman and Nico Lauricella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Kromelow. See you later this week. And until then, remember to stick around for a special message at the end of this show from our sponsor, Lunar Energy.

Mike Munsell:

Hi, my name is Mike Munsell, and I’m the Vice President of Partnerships with Heatmap. I recently sat down with Sam Weavers of Lunar Energy to discuss virtual power plants, rate design, and what the U.S. can learn from power markets abroad. Stay tuned over the next few Shift Key episodes of as we dive into each topic. In today’s conversation, we cover the rise of distributed energy in the U.S. and what it means for the grid.

Sam Wevers:

[58:33] My name is Sam Wevers, and I’m Director of Product at Lunar Energy. Our mission is to power homes around the world with endless clean energy, and we’re doing that in two ways. So we are building amazing home electrification hardware, starting with the Lunar system, which is a residential battery that provides generation, storage and control and looks good doing it. And then we are also building and deploying a world-leading residential VPP platform called GridShare, which connects with Lunar batteries, but also third-party batteries and other devices to control them and maximize their value to customers and the grid.

Mike Munsell:

[59:08] And can you help us to set the scene? Can you talk about residential solar and batteries in the U.S. today, like where we are on the adoption curve and how they’re interacting with the grid?

Sam Wevers:

[59:17] Rooftop solar has grown pretty steadily. It’s now contributing around about, I think, 2% of total U.S. electrical generation, and it’s growing at about, I think 10% year-on-year. On the storage side in 2025, just over three gigawatt hours was added, which was actually over a 50% year-on-year increase. And that was driven by growth in various markets, including places like Massachusetts, Texas, Arizona, Illinois, California. And so we are really starting to see this stuff tick up to serious sort of grid scale levels and a big part of that transition has been a move away from sort of one-to-one net metering towards more net billing structures where without net metering the value that you get for selling solar back to the grid reduces and because of that there’s a real sort of incentive to attach a battery to that solar system to essentially maximize value for the customer.

California is a particularly interesting example. So the battery attachment rate for residential was about 11% in 2023 and before the net billing or NEM3 reforms. Whereas now, according to a report from Wood Mackenzie and the Solar Energy Industries Association, that’s now pushing up towards 70%. And I think we can expect that that trend is going to go national as markets move away from net metering to net billing. and the economic case moves to sort of maximizing self-consumption and maximizing the value of the juice in those batteries. Another key element, aside from the sort of move from net metering to net billing, is also the emergence of virtual power plants or VPPs, where that’s now becoming a key value stream for the install of these residential batteries, because customers can get paid for their batteries providing services to the grid. And the other thing that’s probably important to flag is that at the end of 2025, the investment tax credit that was available for cash purchases of these systems went away. And so that may have caused a decent amount of demand coming back into 2025. But as the market shifts towards leased systems, sort of third-party owned systems where that tax credit is still available, we are still seeing a significant amount of demand in the market. And these products are delivering genuine value to customers and to the grid and their adoption is only going to increase.

Mike Munsell:

[1:01:35] And when you think big picture, what’s Lunar Energy’s vision of the future of home energy?

Sam Wevers:

[1:01:41] If you think about how homes use electricity, since Edison, most homes have been passive recipients of power, right, with very little ability to reduce their bills or avoid outages. And at Luna, we are trying to build the technology to turn homes into essentially active participants in the power system. And our vision of the future of home energy is a world where home batteries are as ubiquitous as home fridges, where heating and transport and cooking and driving are all electrified. And with that mass household electrification and the massive deployment of really smart software, we think that we can create a power grid that’s distributed, resilient, clean, and also cheap. And not only is that transformational for the power grid and for the environment, but it’s also going to have a big impact on the economy because we can more quickly and more cheaply add high value demand to the grid and those households utility bill savings can all of a sudden be spent on other things.