When the sun hits San Diego, there’s no place finer. A glowering marine layer kept that sunshine largely at bay during Greentech Media’s recent Grid Edge Innovation Summit, but the energy inside the event helped make up for it.
Discussions of the grid edge have always been more challenging for me as a viewer than events on solar or energy storage. The grid edge tent covers much ground, and finding a throughline to connect microgrids, utility data collection, distribution automation, wildfire safety, virtual power plants and voice-controlled home energy devices can tax an acronym-addled brain.
But this time felt different. The conversations anchored around concrete projects, either in the ground or hitting it soon. The disparate pieces were woven together under a broader theme of utilities leveraging new technology for a more resilient and effective distribution grid of the future.
That feeling of progress, though, coexisted with a contradictory sense of delay. The sector unquestionably has advanced further than ever before, but the arrival of mass-scale grid edge deployments, used to their fullest potential, feels a long way off. It's as if the grid edge has an elastic quality, and the closer you get to it, the more it stretches away from you.
That contradiction could prove disheartening, but the only way out is to keep pushing ahead with projects and turn preliminary wins into wider-scale followups.
In that spirit, I’ll highlight storage-related efforts from the conference that notched discernible, if preliminary, victories in the years-long campaign for a smarter, more distributed grid.
Who says energy hardware startups can’t exit?
Lately, it’s hard to find a buzzy, upwardly mobile, venture-backed energy startup that isn’t playing in software or pivoting that way.
Go Electric, the maker of a blipless microgrid controller, bucked the trend by building premium hardware and securing a positive exit, which conveniently coincided with the Grid Edge event.
Go Electric has bucked a few trends, in fact.
First and foremost, it's shown that hand-finished, resilient microgrid equipment, based around proprietary power electronics backed by energy storage, could be an attractive acquisition target for an incumbent energy company. The buyer was legacy battery manufacturer Saft, itself acquired by French energy major Total back in 2016 for $1.1 billion.
Go Electric also built itself up in Anderson, Indiana, far from the traditional hubs of cleantech entrepreneurship. And CEO Lisa Laughner strategically sourced financing from an array of grants, government contracts and incubators, so as to minimize dependence on venture capitalists salivating over a quick return.
Lastly, Go Electric took a refreshingly straightforward approach to creating value for its customers. It looked for entities willing to pay to keep the lights on in an outage without any brief loss of power. The military put the tech to work backing up bases, and contracted for a mobile version for use in the field.
With this value proposition, Go Electric eschewed the value stack model that dominates among startups pitching energy storage to customers behind the meter. The company noted that it easily could use its controls to dispatch localized capacity for aggregated capacity or demand response contracts; it just isn’t banking on that revenue to make a deal work.
That avoids the fate of peers that expected aggregation revenue to materialize faster than it did.
This market continues to float on the horizon. Sunrun’s first publicly announced capacity contract kicks in for 2022; sonnen’s neighborhood-wide distributed power plants don’t actually have contracts in the U.S.; the commercial storage market for multiple value streams has proven tougher to scale than originally expected.
We don’t know what Saft paid to acquire Go Electric, which had raised roughly $10 million beforehand. Laughner said "it was a nice exit for all the stakeholders," and that employees had their options paid out, indicating it sold for more than investors had given her.
Still, even that success sounds a note of caution for cleantech hardware entrepreneurs. After eight years of operation, the scrappy company delivered a handful of projects and sold for something more than the $10 million it had raised. They showed that hardware venture success is possible within modest expectations, and that real scale can come via acquisition by a larger manufacturer.
Compare that to a software startup that made the headlines recently. Omnidian just raised a $15 million Series A to grow its residential solar O&M software, which provides a production guarantee. In three years, that company has grown to employ as many people as Go Electric, while raising $20 million and reaching 80,000 customers.
You can’t run the grid on software alone, and Go Electric’s success may inspire other inventors to take new and improved hardware to market and pursue big customers. But the relative pace of growth and impact lends credence to VC preference for software-driven investment opportunities.
Utility microgrids for the people
One of the nation's more intriguing microgrid sagas has played out in Chicago, and now there's something to show for it.
Utility ComEd really wanted to build some microgrids. It asked the legislature for permission to build five of them. That didn't work, so the company went the regulatory route, and eventually got permission to build and rate-base one in the Bronzeville neighborhood of Chicago, approved in February 2018.
The Illinois Institute of Technology already had a microgrid of its own. The new project would connect to that one, forming a microgrid cluster, and give the utility a chance to learn about controlling distributed energy and islanding critical infrastructure in the case of blackouts. The approval stipulated that generation assets had to be owned by third parties, to maintain the proper boundaries of the competitive landscape, but ComEd would own the distribution grid equipment.
The utility completed and tested the first phase of the microgrid this spring, VP of Engineering and Smart Grid Shay Bahramirad told me in our keynote interview at Grid Edge. (Squares can watch on demand in high definition and tell me how my linen suit looks.)
The onsite solar and batteries have been integrated, but when the second phase wraps up, the microgrid will control 7 megawatts of generation and serve roughly 1,000 customers, including a police headquarters and fire department.
"The learning associated with going through this exercise is definitely going to help us from a technological standpoint," Bahramirad said.
That includes mastering controls for dispatching third-party-owned distributed generation, ensuring sufficiently fast communication and coordinating multiple modules of distributed equipment.
But the most transformative learning happened beyond the realm of distribution grid engineering. It came when the utility learned that telling the community about the technical aspects of the microgrid was not sufficient.
"We started with 'microgrid' and the technological conversation," Bahramirad said. "It moved to a collaborative process, working with people within the neighborhood and understanding the priorities of the people who lived there and making the case for a microgrid or resiliency in a broader sense."
"We moved away from a technology provider into solving social problems," she added.
This is crucial for any other utilities and technology providers hoping to navigate the choppy waters of public opinion with their desired projects. Science projects appeal to scientists, but reaching the general public requires speaking their language. That may be common practice among industries that compete for customers, but for regulated utilities, it bears repeating.
ComEd plans to study the microgrid cluster for 10 years, so I asked what the next step will be in putting the lessons into practice.
"There are no plans as of now that we are going to install another microgrid somewhere else," Bahramirad said. "The elements of it, different parameters of microgrid, we have already started thinking about using them elsewhere."
There we see that elastic grid edge again. ComEd has come further than most utilties in gaining regulatory approval for a futuristic microgrid concept and then actually building it. But then the grid edge stretches away again: No similarly ambitious follow-on is forthcoming.
That said, elements of the modular grid will trickle out into other, more targeted projects, like using decentralized control to defer transformer upgrades.
Engie brings the batteries to San Diego Airport
This technically came a little after the show, but it's grid edge-y and in San Diego, so I'm counting it.
Engie Storage, the artist formerly known as Green Charge, won a deal to build a 2-megawatt/4-megawatt-hour storage system at the San Diego airport by early 2020. It will work in concert with 5.5 megawatts of solar installed previously and tackle demand charges that the company said generate 40 percent of the airport's monthly electricity bill.
That's large for a commercial scale system, and hints at a broader airport market, which has not been widely tapped by storage providers. These facilities have heavy demand requirements and face significant peak charges; their leaders also know how to think in longer time horizons than the typical commercial property manager.
Engie bought into the U.S. energy storage market in the great wave of colonization by European energy majors, but the expected wave of storage deals backed by beefy continental balance sheets has yet to materialize. This project serves as a reminder that at least a few projects are chugging along behind the scenes.