Leap, the San Francisco-based startup with software that’s dispatching big building HVAC systems, EV charging fleets, and other distributed energy resources to serve California’s grid, has a new partner to test a novel pathway to mass-market residential demand response. 

On Tuesday, Leap unveiled details of a partnership with Google Nest, the flagship product line of Google’s smart home division. The product has been open to customers of Northern California utility Pacific Gas & Electric for the past month or so, Leap CEO Thomas Folker said in an interview. 

Under the terms of the deal, Nest customers with central air conditioning can get a free Google Nest Hub smart speaker device in exchange for signing up for Nest’s Rush Hour Rewards program. That’s Nest’s program to get customers to reduce peak energy use via automated settings and alerts and reminders, which has been rolled out in partnership with utilities across the country, including in California.

But in this case, Nest isn’t linking its Rush Hour Rewards program to an existing PG&E peak-reduction incentive or residential demand response program, Folker said. Instead, it’s programming its devices to receive and respond to price signals coming from Leap’s Distributed Energy eXchange platform. 

These price signals, in turn, are linked to Leap’s real-world exposure to bids it has made to state grid operator CAISO, promising to reduce grid demand by a certain number of megawatts in the coming hour — or suffer financial penalties. 

In this sense, “This is the first time that single residential customers are providing flexibility in the wholesale market,” he said, at least without a utility program as an intermediary.

“The only thing that PG&E does is provide us with the metering and verification data to verify the reduction happened.” 

The partners now have about 2,500 customers in the pipeline, Folker said. At an average of 1 kilowatt of load reduction per home, that’s roughly 2.5 megawatts of load reduction available for the right price, and it's ready to shed load “over a couple of minutes” to meet CAISO’s dispatch signals.  

“We’re essentially a market-maker; we run a market separate from the ISO,” Folker said.

But “to CAISO, we are a firm reliable resource — we are a scheduling coordinator — so we have to assure that these predictions actually happen.” 

A range of C&I customers

Leap joined the California distributed energy fray in a big way last summer, winning a combined 90 megawatts of commercial-industrial load reduction capacity under the Demand Response Auction Mechanism (DRAM) program.

Under this pilot program, bid winners have until the following year to gather together the promised megawatts of distributed generation or load reduction. Then they must deliver that capacity for up to four hours per day when the grid needs it — primarily during the late afternoon and early evening hours when fading solar and rising post-work energy use combine to form the “neck” of the state’s "duck curve" load shape. 

Since winning its DRAM contracts, Leap has integrated over 4,000 participants onto its Exchange from 10 different partners.

Its C&I customers range “from very well-known car manufacturers with charging infrastructure, to traditional demand-response aggregators, to partners in the Central Valley, mostly agricultural participants — there are a lot of water pumps out there that are capable of being grid-connected,” Folker said. 

While most of its customers remain confidential, startup Axiom Exergy has revealed that Northern California customer Whole Foods is using Leap to coordinate Axiom’s refrigeration-based energy storage systems with CAISO market signals. And an EV manufacturer is tapping Leap to manage EV chargers in the Bay Area, Folker said, though he wouldn’t give the name. 

Other big customers include Central Valley farms and water districts that can shift when they pump water to take advantage of market pricing. Pumps, refrigeration and other year-round loads help Leap round out its portfolio of smart thermostats or building HVAC systems that are primarily useful during hot summer months, Folker noted. 

Leap has “really solidified our technology” since winning its big DRAM contracts, both on the grid-facing and customer-facing sides of the business, Folker said. 

As part of its DRAM contract, Leap has become a scheduling coordinator in CAISO, which “allows us to trade at the wholesale level, and we look like any other participants,” he said. 

Leap has raised $1.6 million from VC firm Congruent Ventures, as well as angel investments from SunPower co-founder Tom Dinwoodie, former SunPower CEO Howard Wenger, and Grid Singularity founder and CEO Ewald Hesse. It has enlisted former Federal Energy Regulatory Commission chairman Jon Wellinghoff as an adviser.

Growing the pie for everyone

As for integrating with customers that include existing demand-response aggregators as well as discrete C&I users, “We have a flexibility market, essentially a mini-version of the ISO, but for demand instead of supply,” Folker said. While big demand-response providers in the state such as Enel X/EnerNOC and CPower/LS Power have large-scale C&I contracts in the state, Leap can offer them a cost-effective path to automating many additional smaller devices, he said. 

“We have to be very competitive, obviously, to make this proposal,” he said. “Many of our customers switched from more traditional aggregators or their own platforms to ours, because they see the value of having a bigger platform that connects on the back end,” via API integrations to Leap’s Exchange platform.

"We do all the settlement and verification. Of course, we charge a little bit for it — we do a revenue share," Folker said. But if Leap’s platform can reach more load-reduction capacity at a lower price than the alternatives, “the pie gets bigger for everyone.” 

Google's Nest now has hundreds of megawatts' worth of capacity enrolled in demand response programs around the country, typically in coordination with utility programs, although it has worked with partners in California’s DRAM program before.

For example, it joined DER management platform provider EnergyHub in a 2016 DRAM bid involving smart thermostats. And San Francisco-based startup OhmConnect, which has won the majority of DRAM’s residential contracts to date, joined the Works With Nest program last year, easing integration with future Nest customers. 

“These open-market programs provide a unique way for customers to still participate in — and benefit from — supporting the needs of the grid,” Hannah Bascom, Google's head of energy partnerships, wrote in an email.

“Google Nest is running its standard Rush Hour Rewards program, with Leap dictating when events occur based on their price signals. Although we can’t get into the financial details, we can safely say that we collect revenue for the RHR service, and in this case, since they’re also providing Google Nest Hubs, Google benefits from our hardware being distributed as well.”