 Good afternoon, this is Guillermo Sabate here, your host on Perspectives on Energy, excuse me, I am the director of international sources for HSI, and once again, thank you for having me as your host on today's show. I will not be having any guests today. It'll be myself. Turns out I'm traveling for work. I'm in a town, small town called Murphy'sboro out here in Tennessee. So working with the local utilities and co-ops. Pretty exciting work, but I sure will not miss an opportunity to host a show in things like Hawaii. And today with a topic we're covering is going to be a distributor energy resources, otherwise known as DERs. And I'll be using that acronym throughout the show, distributor energy resources, DERs. And we'll talk about their use and how we're expecting to see perhaps the proliferation of peer to peer energy marketing in the future. Maybe last year I wrote an article that's posted on Energy Central. We'll be sharing that later on in the link, but kind of talks about all we're going to be discussing today, but in a nutshell really it's how that's going to shape the future of distribution, how it's going to shape the future of utilities. And as we move further ahead, you know, hopefully regulation will take place and hopefully keep that running reliably. What are DERs, right? Usually what they mean by that is distributed energy resources. That could be anything from a simple standby generator or somebody's house that runs on gasoline or runs on natural gas. It could be solar panels. It could be the micro hydro. If you live a slightly elevated location that you have a source of water and you collect it and there's enough volume and flow that you can probably run yourself some micro hydroelectric energy. And a lot of cases that's usually enough to run your house and the idea of a generator of course usually in Florida. I see that quite a bit. That generally happens to be there for emergencies, but in a lot of cases that they're usually too expensive to run compared to the utility prices, right? So Florida there are 11, 12 cents a kilowatt hour. I know Hawaii is like in the high 20s, low 30s. And so they're pretty expensive energy compared to the rest of the world, right? So for the most part, the incentive for most people to put on these DERs really has to do with the fact that they want to offset the cost they're having on utility energy. So usually they do this with solar panels or rooftop solar, right? And that's usually not to be confused with the utility scale solar that the utilities themselves mustaw in larger facilities, right? These are like dozens of billions of acres. This rooftop solar really is at a residential level and usually produces anywhere between 10 to 20, 30 kilowatts, right? That's the capacity in some cases, sometimes less, sometimes more different in size. You also see them on some commercial sites, industrial sites, and usually they throw that up on those roofs. So as you can imagine that ends up being a lot more capacity and they end up with a lot more space, right? So how does this impact the utilities, right? So normally these DERs, in some cases, they end up being shown as a reduction of load. So for example, if a consumer, a residential rate payer is consuming about say a thousand kilowatt hours. Well, if you have a 500 or similar capacity rooftop solar system, then you will be offsetting that by that much. Of course, remember, you're only doing this during certain hours of the day. The rest of the day, you still need to be connected to the grid and you will still be connected consuming energy for those other, was it 20s, 18 hours, right? When the sun doesn't shine. But for the most part, right, you are generating electricity and the system is big enough and you're not running a lot of appliances that consume a lot of energy. So you will be perhaps producing energy and access of your consumption, right? Now some utilities of course have net metering, others have some kind of other arrangements where they'll buy your power, others bank your power in your account where it's like, and that becomes useful. I'm not familiar with it in my state. They usually bank it and the winner, you generate a lot of electricity, you bank that and then when you come into the summer months, then all that extra banked credits usually come into effect and they benefit you. All the utilities and other regions that what they do is they pay for that energy at a wholesale price, which is never quite the same price you get for generating, of course, right? So different economic incentives here. So that's great if you're producing it, but unless you store it, you really can make the best of it, right? So naturally, what's going to happen next, right? They are going to, you're seeing a lot of other sources. Like for example, Tesla, Tesla Powerwall is one example where you're storing some of that excess energy. So what else are we also using? Given that they're bringing back the EV tax credit, so you're going to see a lot more EVs entering the market and it'll only be a matter of time before some of these EVs are used and dispatched by the utilities. So we're already a pilot program happening right now at Pacific Gas and Electric. So part of that is these micro grids and DERs and how they will impact the system, right? So what's happening there is they have, they're going to be using that as a virtual power plant. And they're being aggregated by that. And what's an aggregator? Well, as authorized, FERC Order 2222 was a Federal Energy Regulatory Commission. They authorized third parties to aggregate all of these energy sources into one virtual power plant that they will inject some kinds of system, right? Normally they'll be doing this at the distribution operating bus since most of these plant, most of these DERs are being sourced at the customer rooftop solar and along their energy storage, whether it'll be batteries or it'll be an EV used in conjunction with the actual solar rooftop solar source. So ultimately these won't longer be consumers, those will be producers of power and which are known as prosoos. In this regard, right, it's only a matter of time before they are able to buy in cell power from their neighbors, either the cell power to the neighbors, cell power to the system or cell power out into a third party application, which that's already headed this way. And it'll be interesting to see how that impacts reliability, how that impacts support and how that impacts cybersecurity. These different answers are all discussing. Now, when it comes to the utilities, right, the ones that get ahead of this and actually stay in control, so process by either by incentives, whether it's incentivizing it through laws and mandates, incentivizing it through per patient, they control the economic benefit of them. They stand the better chance of actually implementing the system and leveraging them to the advantage of the utility. But at the same time, rewarding customers that actually operate them reliably. What's a good example of this? Well, a power plant, say a utility needs three, four hundred megawatts, and usually they're installing a salt site is not feasible. It can be dispatchable as easily and a lot of those usually need to operate during the peak anyway. Putting together a conventional power plant that usually convert natural gas. And it's dispatchable usually not feasible unless it's, you know, it's it was it's normally what they go as a solution. However, in some places is becoming increasingly difficult to site this get a permanent get installed, and it takes years to deploy. The benefit for utility at this point is to when they incentivize the resource, they also allow themselves the ability to be able to dispatch this as a generation resource. So instead of buying building one facility that can generate three, four hundred mats, they will use their customer base was already producing electricity and storing in and sending it back to the grid. They'll give them an incentive to go ahead and sell that they're part of the grid rather than using or storing it. In this regard, the customer is the utility wins by applying it away at cost. And at the same time, they, they come out ahead by not having to go through all of these environmental legal and regulatory loop hoops that they were normally going through by upgrading lines, building power plants, building a fuel line for this. And so it benefits everyone. Now, when a customer is not really setting power to the grid or consuming it, they're normally be storing it right in this regard and no mind you they're using all this during the day when there isn't any there, there's, you know, some might in an environment where there's not a lot of air conditioning requirements and it's a lot cooler than they can probably pull this off, but in a hotter day that it will be mostly unlikely. But let's say they can well now they have the and they build a large enough array. So to collect all that solar energy or they have a pretty adequate storage capacity with batteries. Now, or say, for example, they're using their electric vehicle that's storing energy at home. That can be dispatched and now they can decide to once their cars fully charged they can go ahead and sell power to one of their neighbors. Right now, there's about 14 different party companies that are in organizations that are working and competing towards coming up with a common protocol to be able to manage this. So far, there's a few as one company that definitely dominates the wholesale energy markets by putting the software that managers of that at the utility scale level. And they dominate across the nation and internationally and they are the most likely to probably get ahead on this. They are they are finally getting into the hardware market by actually building smart meters. So, and along with the smart meters are the equipment and infrastructure that will manage and govern all of these devices for these consumers. So what does this all mean. Ultimately, you'll see you'll see the possibility of using something as simple as an app to be able to or that kind of mobile platform that will connect with your devices and they will of course be able to buy and sell energy from their neighbors, even on the same secondary bus, which means these are your next door neighbors like it can get that granular will be able to buy and sell power to the neighbors. So a customer has a large system that is pretty efficient compared to other competitors, or you'll be able to sell that to different neighbors and then these neighbors are probably by power from others so it will be interesting to see how that happens. So, there's a couple of concerns with that. Currently, it's the reliability aspect. A lot of these distribution circuits were only designed to have power flow in one direction. So when you're introducing the power flow or current flow going the opposite direction that's going to affect a lot of dynamics right now and a lot of the protection systems are that are in place. So that may need to have a little bit of change when it comes to understanding where they're at. Another issue too is being able to resist a cyber attack. If this is a platform that becomes one or two platforms become the dominating provider for this particular service, you know, if it's one or two platforms, one of those becomes a compromise in a cyber attack, then you can imagine the type of damage they could do and not just to customer identities but really be the grid that could easily pretty much disable or black out the grid. So that that could be a considerable challenge when it comes to maintaining security in that regard when it comes to selling. So against a cyber attack. So that is something else that keeps me up at night anyway. And of course, the final challenge really comes from the point of regulations right so when you think about how that is regulated. Right now, the FERC, which is federal energy. And then NERC North American Electrical Liability Corporation, they generally apply standards and regulation on the utility industry right, whether it's generators, vertically integrated utilities, transmission operators, even the distribution well to a certain degree, an aspect of those serving entities which are distributions. But this is going to impact the distribution side so it's a side that NERC really doesn't govern very much. And it's going to have to require a lot more oversight from FERC and from the Department of Energy. So this could be a little bit of a new field. And I think we're lagging behind a little bit when it comes to the aspect of whether the technology is currently at where it's going, the speed at which is developing. And it's racing ahead and utilities are trying to keep up with it and trying to get ahead of it so they stay in control of what's happening and not lose a handle on their reliability because it's not really a competitive issue with them because they always have the economies of scale to really be back anything that the customers could throw up on their roof and be efficient and cost effective. In some places, customers that live in areas that the rates are really low, they are never going to see a return on that investment. They may get some solar but really they finance the system costing them tens of thousands of dollars. The likelihood of them actually getting that money back in their investment based on what they'll save on their bill. It's going to be more than several decades. So the likelihood of them enjoying that before those solar panels degrade to the point of that they're no longer efficient. It's just not going to happen. However, in other parts like California, Hawaii, even even Alaska, the cost of energy there are much higher. So the incentive and the payoff for it's a lot more tangible. So with regulation, I think it's going to come up quite a bit of change. I think once one of those major companies wins the protocol. I mean, and that is what it's used for communication amongst all these devices. The next step will be of course, regulation for the sake of cyber reliability and then also regulation for the sake of cybersecurity. There's a lot of strict security standards already in place for the utilities. Those are called the SIP standards, which is critical infrastructure protection and those are quite severe. A violation of one of those, a severe violation and one of those NERC standards is usually can be upwards of $1 million per infraction per day. So that can add up pretty quickly. But given that distribution is going to be a much larger widespread area, it's going to be interesting how that is applied. My opinion though, and I'm just one man with one opinion, I think it's going to be interesting to see how markets will play out against regulation, especially in these decentralized markets and decentralized control really. Ultimately, it'll have to be a lot of automation taking place with a lot of these distributed energy resources and DRs. So the other interesting factor or aspect of this is as things become more and more affordable, you're going to see a whole lot more solar panels storm up on roofs. The inverters that go along with them, the equipment of controlling, they're a way they tie to the utility service. So meaning that they're going to be synchronized. So these inverters are going to be a lot smarter. And then there's going to be protection, for example, during the event of an outage. It won't allow these resources to be tied to the grid in order to protect the utility and utility personnel, especially when they're operating or working on restoration. The other challenges, of course, is that any devices have, they are going to create a, the output of any of the solar panels and batteries, of course, is DC direct current. These inverter devices, of course, have to convert all that to AC, create a nice clean signal at 60 Hertz, if it's the US, and then of course synchronize and tie to the utility. One of the requirements they have already a utility scale is to be able to ride through a fault or right through a disturbance. So at the utility scale, they already have those requirements. But they don't have quite the same requirements yet. I mean, for distribution, usually distribution, if it there's a fault, the lines basically be de-energized and re-energized as the fault clears. In some cases it isn't de-energized for a long time because they're either line damage or there's some kind of vegetation on the line or somebody drove into a pole. That's usually what you see in distribution circuits. So a lot of that is things to be considered, right? So not as complicated or as critical as a transmission level circuit, but as you have enough of these systems out there in place, they will play a significant role if there is an aggregate response to a disturbance, right? So as we march forward, right, one of the things that I think would be interesting is of course us as the public and as the consumers and also utility customers, right? It is to get a lot better acquainted and better educated with these systems. Another example of what's happening at least in Florida, one of the very large Florida utilities are, they're providing an incentive plan for the installation of EV chargers. And I talk about level two EV chargers, which is kind of like the Tesla charger. It's like a, can provide about 32 amps and charge your car in about a couple of hours. Normally the installation of this device, the device itself runs about $1,200 for a Tesla unit, maybe three to $600 for a different brand like EV revolution. So, and then of course the permitting and the labor is another grand or couple of grand or so. So basically you're looking at spending anywhere between three to $4,000 on total cost for the installation of an EV charger in your house. So this utility in Florida is giving you an incentive to install one of these chargers and they handle the actual hardware, they handle the labor installation, they handle the permitting. And then they also give you unlimited off peak charging for your EV. And all of this is done at a mere $36 a month, which really is a bargain and all that requires a 10 year commitment. So if you're going to live in your house for 10 years, even if you saw the house, the next buyer is going to inherit anyway. So if you buy, if you live there for 10 years, I mean, charging your car off peak for $36 a month is maybe one third to one fourth the cost of being able to charge your Tesla at the same time, by the way, off peak, which is kind of we pay it like $100 a month in charging our Tesla. So it's way better and that will be really attractive for somebody who is just getting into the EV market and they don't want to do the extra expense of installing a charger. So not only that, when you think about it, that actually will improve the value of a home. And the other thing that I think they're doing, of course, in this case is they are, they are, they are controlling the rate and the time at which these are these EVs are charged. So they can control how they can charge off peak. The utility then of course can can offset the problem they're having with with valleys, which means too much power, not enough load. The utilities are beginning to see this valley happen twice in a 24 hour period. Sometimes normally happens at night between the hours of two and two one and five in the morning. But now you're seeing it happen in the middle of the day, just when you have a lot of solar and everybody's at work and everybody settled in. So that's one way for the utility to control what it is are doing in this regard. The other aspect I see is like they're going to have the ability to then dispatch these distort energy resources, right? They'll be able to use them as additional megawatts for any contingencies or any events. They might be able to pay customers for a dispatch availability. They'll pay them for the actual megawatts. In a customer's perspective, there'll be kilowatts a day that they supply to the system. This is another opportunity to have these devices generate income for the customers while at the same time, helping the utilities avoid cost and then also counter as a resource. And the final, I think most important aspect is the fact that these DERs are spread out throughout the system, meaning that they can be deployed and activated at times where they have a certain need for voltage or energy and certain specific parts on their system. And that becomes really, really critical when it comes to problems with frequency or more importantly problems with voltage decay. And of course, they can also push back on an area where some customers are consuming a lot of energy so then of course they can use the other DERs or prosumers to supply part of that load. So a lot of exciting things to happen, I think. Not to mention the fact that that same utility and other groups of utilities in the state. I think their goal at some point in partnership with evolution chargers is to basically have the equivalent of a supercharger at nearly every gas station in Florida. So that is going to be significant and that will be over the next five years. So that doesn't speed up adoption of EVs. I don't know what will. And theoretically, right? If you have EVs at every gas station, you technically wouldn't even need to have a charger in your house, especially if it's a supercharger, right? Of course, we don't know what that does to our batteries on an EV. So you're better off charging at your house at the same time. And why not? Because you'd have the opportunity to be able to do this while the utility subsidizes the actual installation, the equipment cost, and even the charging. Now, the next question is, how are they going to supply? How's the infrastructure going to be able to support all of these new... What resources are they going to support all of these new EVs and its charging infrastructure? Well, part of that answer to that question, they say, is the DOE recently released news of their approval of the first small modular reactors. So these are going to be SMRs, they call them. So these SMRs, the expectation is that within the next three to five years, you're going to see thousands of those deployed throughout the country. It's very, very difficult to install one large nuclear site, but it is going to be very, very easy, economical and difficult to actually oppose thousands of smaller nuclear sites. And these are basically 30 to 50 megawatts that they can place in different parts of a town or city or location, remote location, and it can last several decades reducing energy. So SMRs seem to be another aspect that we're going to be seeing, because apparently the viability of utility-scale renewables has proven to be a little bit unreliable when it comes to system reliability. Their output is not always steady. The utility-scale storage has not penned out as well as we thought it was. We have a few promising technologies, but for the most part is just not quite as practical. So one of the views is that system-wide adoption of EVs along with the chargers and solar panels is going to be likely the answer, or rather the direction we're going to be headed as of industry. Well, thank you so much for today's show. I know we just got about a minute left. I don't see any questions yet. And of course, this will be aired tomorrow. So I'm sorry, this will be aired a video on Friday. So hopefully, if you have any questions, just feel free to write them down in the comments and I'll get back to you as soon as I can. But then again, I always enjoy responding. I start to catch up on a lot of these comments. But once again, thank you so much for watching. Remember, click like and subscribe. And thank you for watching Think Tech Hawaii for Spectives on Energy. This is Guillermo Sabatier, Director of International Services for HSI, the Health and Safety Institute. Signing off. Have a wonderful afternoon. Bye-bye. Thank you. Donate to us at thinktechawaii.com. Mahalo.