by Stephen Lacey
October 25, 2017

Stephen Lacey: From Greentech Media, this is The Energy Gang. A weekly digest on energy, clean tech and the environment. I'm Stephen Lacey and this week are live in San Jose California, GTM's Grid Edge World Forum.

So here's what on the docket. This event is mostly centered on utilities and power sector upheaval but we're going to kick off the show and look at oil majors. We've witnessed oil companies toy with renewables over the last decades with mixed success but is it time to take them seriously in the era of electrification?

Then the latest experience with distributed renewables as grid assets. We're all awaiting the release of a DOE report ordered by Energy Secretary Rick Perry on how wind and solar are threatening base load power and potentially the reliability of the grid. And we're going to go beyond the politics and look at how real world applications are guiding what is actually happening on the electricity system.

Then we'll complete the circuit, in our last segment we're going to quickly flow through the most talked about current events including block chain artificial intelligence in the role of tech giants in energy and I'm joined by two giants in their own right. Katherine Hamilton is the partner with 38 North Solutions, she has a very storied career in this industry. She is the former executive director, president of the Gridwise Alliance and started her career as a distribution engineer at Dominion Power. Hello Katherine, what would you be doing now if you were still in the electricity sector, do you think? Would you be CEO of Dominion Power now?

Katherine Hamilton: Oh gee, no, I hit the glass ceiling really, really quickly.

Jigar Shah: But there'd be a lot of cracks in it.

Katherine Hamilton: No but it was the best place to start. I would tell anybody if you get a chance to work for utility because I really did have to take, I wasn't an engineer so I had to take night classes in engineering and a test every six months and learn how to design French drains and vaults. I designed the first splice of 1,000 MCM underground cable and the instructions came in Japanese. Luckily there were pictures. It's a great place to learn. I was super grateful for those 10 years.

Stephen Lacey: Katherine's got some serious bonafide. So when you hear her talk about the electricity sector both eking out on policy and the changes in the grid, you know she's got the experience to back it up.

Jigar Shah also has a lot of experience. He is the president and co founder of Generate Capital, he's also the co founder of Sun Edison, the former CEO of the Carbon War Room and was formerly in business development at BP Solar. So you've been the oil industry as well. What do you think you'd be doing if you were still in oil industry?

Jigar Shah: Well when you're a senior executive at BP you get these folks called turtles that help you do your work. I do have turtles. Thomas and Logan, say hello. At Generate Capital so, and I'd be telling people what they told me, which was, "We don't want to talk about implementing your technology unless it has 100,000 hours of experience in one location in the field."

Stephen Lacey: That brings us to our first topic which is oil and gas majors. This is a really interesting topic, if you look back over the last few decades, companies like BP, Chevron, Shell and Exxon, they led the market in solar manufacturing and biofuels, geothermal, wind development, even energy efficiency and one by one those renewables businesses were marginalized, divested, they were walked away from and in the case of Exxon, a whole decade's worth of research, climate research was even covered up and walked away from.

But it feels like we're in a different period now. Faced with carbon constraints, low oil prices, a coming shift to electrification, oil companies may yet become the biggest players in solar, wind, electric vehicles and storage. According to a new report from Wood Mackenzie which is our parent company, GTM's parent company, a fifth of revenues from the biggest oil and gas firms could come from wind and solar within the decade. Is it watch out electric utilities?

Katherine we've seen this movie before, what do you think makes this different?

Katherine Hamilton: Climate change. It really does. I mean we're at a point where we have to move forward on lowering emissions and I think just for the risk profile of these companies. There's 2.3 trillion, one third of their CAPEX of all the oil majors is considered unburnable carbon, so it's carbon that has to stay in the ground. That's a third of their CAPEX that's on their balance sheets that has to stay in the ground or else we will blow through two degrees centigrade. I think they are all very, very aware of it. They're all thinking about, what is the transition to a low carbon future? They have some ideas about how they want to do it that will benefit them certainly and they're not the ones, the first people on the hook are the coal folks. They have a tiny bit of time but they have to leave all of that in the ground up until 2025 or we're done.

Stephen Lacey: I can tell you what we're hearing is that many of the large oil companies are not just interested in understanding the numbers behind renewable energy growth, but about carbon pricing policies and the impact on their reserves. I think that is fundamentally different as well.

Interestingly Shell signed onto this energy transitions commission report recently which called for aggressive reductions in petroleum use, aggressive emissions reductions, record investments in wind and solar and so you have many of the biggest industrial and oil and gas companies who are signing onto some pretty progressive plans for addressing climate change.

Jigar Shah: Bullshit.

Stephen Lacey: Why?

Jigar Shah: I'm just saying look, I think that when I was at BP and even today, I would say that they believe that they're a monopoly markets. So they take oil, it doesn't matter whether it's trading at 40 bucks a barrel or it's a 100 bucks a barrel, people need it because there's not alternatives to their fuels in their cars and they don't make money by the way, on oil in terms of on gasoline and diesel, they actually make money on waxes and all of the other value added products that come out of the stack. 50 percent of their profits come from those other materials which Soldesign and all these other guys are going after.

When you're Total and you buy Sunpower, that's the worst investment you could make because they're not actually good at manufacturing stuff. They're good at selling into a commodity strain. And so unless you think Sunpower is a commodity, which I don't think they believe they're a commodity, Total has made the wrong bet.

What Total should do instead is invest in projects. Because what they're really good is they have 5,000 engineers that work within the company who the smartest people on the planet and so they should be figuring out how to build offshore wind farms which are very engineering intensive or they should figure out how to do geothermal projects which are very engineering intensive. They should not be doing solar because that stuff clears at 6-1/2 or 7 percent interest and they don't make money at 6-1/2 percent

Stephen Lacey: That's different than oil companies signing onto a plan to dramatically reduce global emissions.

Jigar Shah: That's the same, you're right. That's the same as mayors signing on to reduce their carbon emissions and not doing anything. That's great.

Stephen Lacey: But many of the oil companies are investing in projects.

Jigar Shah: No they're not.

Stephen Lacey: Shell has invested in ...

Jigar Shah: No.

Stephen Lacey: Ten of the biggest offshore wind farms in the world.

Jigar Shah: No.

Stephen Lacey: In the world. No you're wrong.

Jigar Shah: I'm tired ...

Stephen Lacey: No come on. Chevron was a leader in geothermal project development. Shell has invested in some of the biggest offshore wind farms in the world. Statoil is in investing in many of the same offshore wind farms and is developing other projects, independent floating offshore wind projects.

Jigar Shah: Okay, Stephen let's calm it down for a second and let's start from the fact that if what Katherine is saying is true, which I believe, Statoil which is probably one of the more progressive groups in the world given Norway and also other stuff, they are just now hitting 5 percent of their entire capital budget. It's not their balance sheet, the stuff they've done for 40, 50 years. 5 percent of their incremental new spending is going into something that we could characterize as clean energy. When I talk to the people of Statoil, they're like, "Jigar, we can't find enough opportunities to invest, otherwise we would do more."

You and I know through years of doing this podcast and hosting this forum and other things that if they were really serious putting together, for them it's 15 billion maybe, a year that they put into new CAPEX. Five percent is less than a billion is what they're putting in every year? You're telling me that I should call them a leader, give them a medal, put them on stage and sing their country's national anthem because they hit $800 million of investment per year. I did that last year. Give me a freakin' medal.

Katherine Hamilton: Yeah, so I think we can find a happy medium. That would be me. What I would just say, yes, they're talking about it. Part of the reason they're trying to come together and talk about it and they haven't acted as much they want to or they could do given their balance sheets, is that they want to be in control. It's a little bit like utilities want to be in control of their own fate. If they can be more in control of this and decide together that we have a much more holistic carbon reduction plan, we have transparency, we have more certainty, we're able to decide what we want to invest in, it's not going to be overnight they're not going to do what you want them to do but at the same time they are coming together in trying to figure out, there is something here that is more important than digging for, drilling for oil. It's money, but money's going to be an issue when they have all these risk profiles to deal with. Money is going to be an issue when they're thinking about a little ...

Jigar Shah: I'll give you another example. You look at Dong Energy out of Denmark. They're by far the largest investor in offshore wind in Europe. Not Shell, not Statoil, not BP. So now Statoil six years later comes in and says, "We're going to buy the rights to do the project out of New York." Fantastic, at the time at which you're even in the top three of investors in offshore wind, I will think about giving you a medal for something.

Stephen Lacey: But we're not asking to give these companies medals, what we're saying is that there's something different happening.

Jigar Shah: No.

Stephen Lacey: That the macroeconomic trends and the carbon constraints are creating a long term investment trend for these companies.

Jigar Shah: I am saying that they ...

Stephen Lacey: Growth for oil demand will grow a half a percent a year from now until the mid 2030s. Renewable energy demand will grow 10, 15, 20 percent a year globally. The writing's on the the wall.

Jigar Shah: We've all read the Wood Mackenzie report, the Bloomberg New Energy Finance report. We've also read their press releases. That being said, I'm telling you right now that 20 years from now it is far more likely that BP, Shell and Exxon Mobile are bankrupt than that they're actually good investors in all this stuff.

Stephen Lacey: Wow, that's bull, I don't even know how even to really respond to that. What's the pathway to bankruptcy?

Jigar Shah: Well how many wood companies are you heralding from the 1880s that became big in coal? How many coal companies are you heralding from the 1930s that made the transition to oil? And how many oil companies will I be heralding that got into renewable energy? Practically zero. I'm just saying that at some point you actually have to read a history book, you can't just read the press releases that came out from them last week. You have to say, have they actually ever done something that looks and feels like leadership? In any way? Except for doing some sort of Shell Future scenario or whatever else.

The CEO of Shell was onstage a year and a half ago and said, "I don't believe that renewable energy industry can power the world therefore I have to continue to look for more oil and gas." On top of that if you look at their data, since 2008, the financial crisis, every dollar that they've invested in new oil and gas exploration has cost them about $57 a barrel just to find the oil. Oil prices are now $43 a barrel so they by definition are making a negative 4 percent return on equity on every dollar they've invested. I know that I can beat a negative 4 percent return on equity. I can do much better than a negative 4 percent return on equity. But they're not shifting their $100 billion budgets between Chevron and these guys, they're continuing to do deep sea oil drilling. Figure out how to do more shale in it's place. Figure out how to do more tar sand.

Katherine Hamilton: National Parks.

Jigar Shah: Right, while giving you a great press release. No I'm not going to let them off the hook for that. Thank you.

Stephen Lacey: Katherine, let's just talk about some interesting investments that oil companies are making. Is there anything that stands out to you that you think is notable? We're not handing out medals here, but we're talking about specific investments or company strategies that you think that are worth mentioning, talking about.

Katherine Hamilton: So the one thing that I think is worth mentioning is the Exxon shareholder decision. Last year only 38 percent of the shareholders voted and this year, for positive and this year it was 62 percent. The resolution was just to be more open and give more details and an analysis on the climate risk based on what the company's doing. But that to me is big signal and a step forward and Exxon, as we know, has been pretty disingenuous for many, many years about this. But I think that signals a shift and all of the majors, just from my work with the World Economic Forum, they're all coming to the table to try to figure out how do we stitch together whether some of them survive or not. They are trying to figure it out.

Jigar Shah: I do think you're going to see a extraordinary amount of investment in solar by the Saudi Kingdom and the main reason is because the IPO for Saudi Aramco is in trouble and the reason it's in trouble is because a third of all of Saudi's oil production is being diverted to the Saudi Electricity Company at $6 a barrel so they can provide their people electricity at three cents a kilowatt hour. So they're saying, well actually we should put a bunch of solar in, free up that oil, sell it for $43 a barrel instead of to ourselves at 6 and then Saudi Aramco will be more profitable, we might actually hit those $2 trillion IPO.

That's very self serving and if they get $30 billion of solar in the ground I'll be very happy about it. I do think that the sovereign oil companies who are basically doing a lot of negative economic things like giving their people subsidized energy, that they could be actually selling to outside parties, are going to do a lot proactive things. But I don't think that the big oil majors are going transform themselves into energy companies away from being fossil energy companies.

Stephen Lacey: I read a good quip recently that oil companies think of themselves as energy companies but they're commodities companies.

Jigar Shah: Right.

Stephen Lacey: Interestingly, Saudi Aramco set up a major renewable energy investment fund with Shell earlier this year.

Let's move on and dig a little bit deeper into the grid and talk about some novel approaches to using distributed assets for actual grid reliability. Using distributed assets for reliability services, for a variety of grid services isn't new. In the 90s engineers were using variable speed drives and scada systems on wind farms for voltage control, creating the first grid services enabled wind farms. Of course, air conditioners and industrial loads have long been used for demand response but again, I think, as is the premise for our oil company discussion, we are entering a very different world and PV plants can now be used for frequency regulation, electric vehicle are proving pretty effective at load shifting, houses and buildings are able to become real time resources, battery storage is here for real, can be paired with any kind of power plant.

Admittedly it's very early for many of these resource and of course the business models to support them as many people in this room can attest to, but they are opening us up to a pretty new pathway for the grid. Since we're all sitting here awaiting this DOE report on renewables and their impact on base load and broader grid reliability, we want to talk about some of the real world case studies that signal where we are headed. Let's start off with our picks on the most interesting uses of distributed assets for grid services. Katherine let's start with you, what's your top pick?

Katherine Hamilton: I decided to pick SMUD, Sacramento Municipal Utility District and luckily I ran into someone here from SMUD that I could interview which is super handy. When I was running Gridwise Alliance, SMUD in 2009 got a huge grant to do smart meters and I know Val Jenson was here yesterday and I don't know if he's still here but ComEd also got a big grant to do smart meters. All of these utilities have scars, permanents scars based on the rollouts of those meters where people thought they we're going to start controlling their brainwaves and all kinds of other things.

Fast forward to today, SMUD has taken a ton of learnings from all of that data and the nice thing about SMUD is that it's really representative, it's fully integrated utility, it's got 500,000 customers, they're of all socioeconomic statuses, they are of many, many use cases, every representative use case and they can really be a living laboratory.

They're looking at, and they've done a ton of pilots and they've learned from those pilots. So now they're trying to stitch it together with using third party innovators that they work with daily to try to figure out how do we solve these issues. Some of the things they're thinking through is how do we take this customer adoption data and forecast DER in a way that DERs become useful to us and become a way for us to actually help our business model? Because remember they're a non-profit utility, they're very, very worried about the cost to the consumer because those are their owners.

They're looking at how is the distribution grid impacted. They have the data to really figure out how is it impacted and the bulk power system because they're fully integrated. And also then overlay that with utility financial models. Really stem to stern look at what's going on in the grid and they can do this, find these learnings and then how do we package them and help actually monetize those to help other municipalities. I know Jigar beats up on the other mayors, well maybe SMUD can teach the other mayors how to really become a 100 percent renewable and how to really use DERs so that they're much more beneficial and become not a cost but a resource to the grid.

SMUD did this report with, they used their test case with SEPA and Black and Veatch study to look at how are customers really leading the investment in the utility? How do we make sure that we don't look at DER individually but really on aggregate and how does that impact us? And then how do we change policies and business models so that municipalities and really any vertically integrated utility or system and a system of systems can stay in business and grow? I thought that was the most interesting one I read.

Stephen Lacey: So they're modeling out to the mid 2030s as well in that project.

Katherine Hamilton: Definitely.

Stephen Lacey: I think a shout out to SEPA is due because they have attempted over the last couple of years to create standards for data collection and ways to work with consumers and model that data and think about behind the meter assets as ways to provide grid services. That was a foundational report for how SMUD and Black and Veatch modeled this.

Katherine Hamilton: And let's stop talking about cost shifting. Let's just stop that conversation and let's talk about how do we really reap the benefits of DER? And enable everybody to benefit.

Jigar Shah: Amen.

Stephen Lacey: I think it's still fair to still talk about cost shifting but you very quickly can pivot to the conversation of utilizing these assets and I think that conversation is getting a lot more mature.

Jigar Shah: I don't think that SMUD's having a conversation about cost shifting which is why it's good. That's the benefit of having a basketball superstar as your mayor. You can talk about the benefits.

I'm a huge fan of what SMUD's done and I really do think that they are a model. I think they're helped by the fact that they're a municipal utility and helped by the fact that they really had some dark days in the 90s and they really took those lessons from their dark days to become more prosumer. That started back in 2003, 2004 with their solar programs and I think it's continuing today.

Stephen Lacey: The stats coming out of California are pretty remarkable and in SMUD territory and particular in this report, they estimated that every year third parties and customers are financing around $200 million of projects. Behind the meter, distributed projects which is more than what they're paying for for renewables. They also see the writing on the wall, they've got to do something.

Jigar, what is a project that is most interesting to you?

Jigar Shah: The project that is most interesting to me is ...

Stephen Lacey: Oh you were actually looking it up on your phone, I thought you were ignoring me earlier when you were ...

Katherine Hamilton: No, it's his notes. I have mine on paper.

Jigar Shah: It's a stupid phone. I got this new phone, it's Samsung and it constantly goes into sleep mode, every three seconds and then it needs my fingerprint to turn back on. I feel like I'm a CIA agent over here.

Basically it's the first solar and real balancing grid with utility scale solar. It's not the utility scale solar bit as much as the 300 megawatt project out of Mojave, it's more that inverters actually had this extraordinary capability of providing voltage support, frequency regulation and other services back in the 80s. We sort of banned them from doing that through the I triple E 1547 standards. And then I remember when solar first launched it had this program with Tucson Electric Power in 2001, 2002 where they were dumping all the solar panels in there to test them to make sure they were working. The inverters were of such poor capability that Tucson Electric Power actually thought it was destabilizing their grid. I think it was called Springerville Project.

Now to see first solar actually saying, no we're unlocking all of these services in the inverter. We're actually providing grid benefits so that when a cloud goes overhead we can actually dynamically operate within the grid to actually make it more stable not less stable. We can get extra revenue streams if the rules allowed us to do so. Then it also I think, allows you to co-locate batteries and some of these other technologies to get the same benefits. Because if you're going to manage it for that purpose anyway, you might as well manage other resources within the same markets and bid that capacity in.

I do think that this is something that can go all the way down to 600 kilowatt solar systems on Walmart stores. I don't think it's actually only the First Solar utility scale plants. I think it's really unlocking the potential of inverters to provide all of these additional services to the grid.

Stephen Lacey: And I presume that none of that is going to be covered, none of those technological capabilities will be covered in the DOE base load threat report.

Jigar Shah: Oh yeah.

Stephen Lacey: First of all, a shout out to Jeff St.John who's one of our grid reporters, our grid editor who wrote a couple really good pieces on what First Solar is doing to provide voltage control with that plant. And that project has actually been in the works for the last seven years. They've got a lot of data and a lot of experience and inverter models have changed a lot over those seven, eight years.

Interestingly I think what a lot of people miss when they see solar as this on off resource is that these ride through capabilities and voltage support capabilities are being mandated by NERC. So many of the big power plants being developed have those inverter capabilities and so they are more reactive resources. Also this solar power plant, this 300 megawatt plant, is much faster responding, it's more akin to a battery than a natural gas resource and it's much faster responding than natural gas.

I think this says a lot about where we're headed with the controls of large scale solar systems.

Katherine Hamilton: And wind is doing the same.

Stephen Lacey: And wind has been doing the same thing for a long time too.

Jigar Shah: Oh absolutely.

Stephen Lacey: Since the mid to late 90s.

Jigar Shah: I think GE's actually even including batteries in some of their new wind turbine offerings.

Stephen Lacey: Exactly. That's what my case study was. Last month, what month are we in? Are we in June? Yeah we're in June.

Jigar Shah: For a few more days.

Stephen Lacey: Earlier this month GE said that it has a hybrid platform for batteries or thermal and renewable generators. That it is releasing. GE controls one third of all power plants. GE technology is integrated into one third of all power plants around the world. What it says now is we've tested this battery natural gas platform that allows us to basically create an instantaneous resource for natural gas. You don't have to wait for it to generate or to turn on and off. Creating this spinning reserve system. We've deployed that for SCE and it worked really well and we have a control system in place to integrate that on any type of generator, thermal or renewable. So on hydroelectric facilities, on wind, integrated with solar and natural gas and coal plants.

Jigar Shah: Can they get 1,300 gigawatts out of those hydroelectric dams?

Stephen Lacey: Yeah, right. I think that's the key to getting to 100 percent renewables according to Mark Jacobson's study. That's a conversation for another day. I think what this says to us is that batteries are here. They're ready and we're going to start to see batteries put on pretty much everything. We're not quite there yet but it's a signal that GE says the technological capabilities are there, one of the biggest industrial, most important power plant technology providers in the world says we're there and now it's just a matter of market signals. Katherine you can probably speak to the market signals. I sat down with a bunch of executives who briefed me on it and they said, we're ready to do this now it's just about how the markets evolve. Can we get rewarded for this.

Jigar Shah: I'm curious whether you guys think that Jeff Immelt's tenure at GE was clouded by the fact that he thought about this stuff 10 years ago and never moved the needle on GE's sales. In the end they bought ...

Stephen Lacey: It can be too early.

Jigar Shah: I don't think it's too early. The technology was there he just couldn't get utility companies until they blew a hole in the ground with Aliso Canyon to actually deploy it. It's one of those weird things where, he launched this entire eco-imagination thing, they've got this extraordinary sales effort but they end up buying Alstom which is basically the largest coal servicing company in the world because they had to double dot on coal to meet their revenue targets because this next generation stuff wasn't moving the needle on their stock.

Katherine Hamilton: Yeah but when I was Gridwise Alliance and Immelt came and spoke at our conference, they really were ahead of it. They really were ahead of their time because as utility were trying to roll out these smart meters, consumers were not ready to engage at all. Now just think about how much control consumers have over every aspect of their life now. They have the technology out there and consumers are willing to engage and I feel like we've come a long way since then. I do think they were ahead of where utilities were certainly.

Jigar Shah: But what does that say about someone like Immalt? Does it say that when you're the CEO of GE, you should wait longer? That you shouldn't be ahead of it? You shouldn't tell people that you're revenues are going to come from eco-imagination 'cause they're not?

Stephen Lacey: Well look, you can be too early to this market. I think GE has gone through a number of evolutions over the last 15 years, it has finally dialed into this industrial internet concept, it just wants to throw sensors on everything. It's been doing that as part of eco-imagination for a long time on the wind development side. It's been creating these so called brilliant wind turbines. That's been a significant piece of it's business.

Katherine Hamilton: Just on their smart grid team which is not part of eco-imagination, they've got a lot of learnings from what they've done.

Stephen Lacey: Right. So I think like many of the oil companies that we talked about in the first segment, who are way to early to the renewables game, I think that's what happened with many of GE's investments.

Jigar Shah: I just think that S&C Electric, which of course is sponsoring this event, but then you've got ABB and Schneider Electric and all these other companies, which frankly not like oil companies and they're not like utility companies. They're more like Haliburton or Schlumberger where they're really the place where all the patents and the IP and the know how and the tech gets placed such that when a utility company wants to make the move, they're the people to call and say, okay, here's a billion dollars, go retrofit all of our stuff and get it done and give us a warranty and make sure it works. I want to see those contracts flowing and I'm just saying that I think that part of what clouded Jeff Immalt's tenure is that the contracts never started flowing under his tenure.

Stephen Lacey: But it's not flowing for anybody. You talk to pretty much any vendor in this room and every project can be a headache. We're just not at that point yet. That's the case for this entire industry right now and it has been the case for the last decade.

Jigar Shah: But I think that's what we're saying is that basically the technology is ready, the case studies are proven, this is far better, it's not around consumer cost shifting, it's about the benefits.

Stephen Lacey: Right.

Jigar Shah: We're not making the case well enough to regulators and other influencers to get them to stop building boondoggle natural gas plants and instead do this stuff.

Stephen Lacey: We're getting there. It does take a crisis for people to start realizing the value of this stuff. Aliso Canyon gas shortage, the shutdown, the Diablo Canyon nuclear plant, the overloading of circuits in Hawaii due to massive amounts of solar PV. These things cause people to focus on new technological remedies and so GE can come in and deploy a couple of these new hybrid systems, test them out and say, "Okay now they're ready for the broader market." And so this crisis is actually a good thing and gets people to wake up to the technology alternatives.

Katherine Hamilton: So that's California and Hawaii. I just spent the last two weeks at regulator conferences, the MARC conference which is mid America and MACRUC, I was just there on Monday in Hershey Pennsylvania and that's the mid Atlantic people. They're not there yet. They really aren't. They're still talking, the incumbent utilities are still saying, "Well you know we need to prop up all those old plants and keep them going for base load." So not everybody has shifted their thinking yet. This room is full of people who have but not the regulators.

Jigar Shah: That takes us back to Rick Perry's study. That is his audience.

Stephen Lacey: But when you have a massive utility like Southern Company invest in a micro-grid developer like Power Secure and then partner with Advanced Microgrid Solutions to develop behind the meter services, that's a signal that there is a shift going on among utilities that may not have been the early adopters or who are facing the same kind of grid constraints like utilities in Hawaii, California.

Katherine Hamilton: And who are trying to get rate relief for huge boondoggle projects.

Stephen Lacey: Right. Again, a conversation for another day. We've talked about those projects a number of times.

We're already running down the clock here so let's go around the circuit and talk about some of the most discussed stories in the industry today and I'm going to present some framing for many of these stories and I want you two to react to them.

Let's talk about block chain first. The great disruptor in energy? Or just a novel application?

Katherine Hamilton: I don't think it's either. I think it's an enabler. I think it will help us to be able to monetize and be able to do seamless transactive energy at edge of the grid. I don't think that's a disruption, I think that's enabling.

Stephen Lacey: So an enabler of the disruptors. Jigar?

Jigar Shah: I need to see 100,000 hours of testing in the field.

Stephen Lacey: How drastically is artificial intelligence going to change the utility workforce? Jigar.

Jigar Shah: I don't know. It's one of those weird things where you go to this conference and people are like, "God, what am I going to tweet out? God, I have nothing to tweet out. Oh, we should tweet out artificial intelligence, that sounds good." I'm just trying to get my utility company to do a little basic tree trimming. We just lost power for two hours last week because they forgot to tree trim the tree in my front yard. At some point I'm just like, artificial intelligence? Maybe just some intelligence.

Stephen Lacey: Totally fair and I agree that a lot of these concepts are over hyped but everything from, you can call everything from AMI to drones artificial intelligence.

Jigar Shah: No.

Stephen Lacey: Clearly that's going to change the utility workforce. The way that you roll trucks out in the field, the way that you survey downed lines.

Katherine Hamilton: They can get ...

Stephen Lacey: They can get smart service things remotely by using augmented and virtual reality. These things are here, they're being tested out in a major way and so they will change how people are interacting and servicing the grid. And I think actually potentially provide a positive because if you can tell a good story then you can attract a younger workforce.

Katherine Hamilton: The cats in the trees still need the firefighter to go get it. You still, when the transformer goes out, you still somebody to go out and repair it, you still need physical bodies. But I think for planning purposes, for back of house or all their systems I think it will be helpful.

Jigar Shah: Artificial intelligence to me is really about big data. You look at all the big data firms for the utility companies, they've all gone out of business or shifted. Tom Siebel is one of the billionaires here in the valley, University of Illinois grad, he basically shifted his business away from utility companies. He got his initial investment from Exelon and and Exelon didn't want to deploy his stuff. So he's like, let's figure out how to use this in oil and gas. Let's figure out how to use this in other industries that actually value big data and doing all this stuff. He made all these calculations and then no one bought his stuff. Anele did but not any other utilities.

Stephen Lacey: The same thing is being faced by many of the companies here at this conference. That brings us to the next question, perfect segue, will by the end of the decade we see a billion dollar software company servicing the grid edge?

Katherine Hamilton: It'll have to be broken up like the big telecoms.

Jigar Shah: Isn't Oracle a billion dollar company?

Stephen Lacey: What's that? Organic growth. You're talking about Oracle's acquisition of O Power, I'm talking about a company that grows organically into a billion dollar software company.

Jigar Shah: I doubt it. The way this stuff always works, in this space, is you get to be a maybe $100 million company and then GE buys you and says that you're part of their smart software play, that they've got some big office here in the valley for and ABB will buy you or Schneider Electric will buy you or SNC Electric will buy you and they have good sales men or women to get into the channels. I don't see these guys organically getting to a billion dollars

Stephen Lacey: We hear something for a couple of weeks and then we don't hear anything again or hear very little.

We've talked about this subject many times and I think it's time to revisit this one because of the surge of in home speaking devices like Google Home and Alexa. Are Google, Apple, Amazon finally ready to be players in energy management?

Jigar Shah: I think it's going to be an app on top of them. So yes, I think that they're technology will be used for residential DR. Something in the order of 60 percent now of the duck curve is residential load. Everyone wants to talk about EnerNOC and their acquisition of INL and all the other stuff but ultimately 60 percent of the problem is really residential loads. Most of those thermostats, at least in California, but also now increasingly around the country are smart thermostat enabled. They can actually be controlled by Alexa or Google Home or some of these things.

And then in California and Texas they've unlocked the Zigby Communications technologies within the smart meters. I think you're going to have these companies who are sort of apps on top of this stuff to integrate all that stuff and then sell their wares and convince people to opt into their service and all that stuff. But I don't see Google and Apple and Amazon doing it.

Katherine Hamilton: It's going to be lifestyle apps.

Stephen Lacey: Yep, totally agree.

Katherine last one, what's the single most important design question you think this room is facing or the utility sector is facing?

Katherine Hamilton: And I bet you think my answer's going to be FERC.

Stephen Lacey: I was going to say, I bet it's a FERC on storage.

Katherine Hamilton: No, there really is a need for us to, it's bubbling up, this state versus federal jurisdiction. The biggest short term thing is making sure that we allow third party innovators to participate in the grid and allow them to be able to have access to consumers and to data. In the long term the biggest issue is global warming and what are we going to do about it and how are we going to be the solutions providers?

Stephen Lacey: All right, let's wrap up and tell all our listeners something they may not know. This is the part of the show when we take something that we're reading that's interesting or something from our daily work lives and share it with you. Katherine, what's yours?

Katherine Hamilton: So I want to mention a new program called Million Solar Stars. It's modeled after Jane Goodall's Roots and Shoots program. It's a group of people really working with schools to enable schools to benefit all over the world. They have projects in Dubai, Denver, Shanghai, Honolulu, Kenya, to really teach kids how to build solar, how to think about solar, how to put it on their roofs and then have those school systems benefit. It's called Million Solar Stars, it's pretty and it seems like it's a great idea.

Stephen Lacey: Jigar, what's yours?

Jigar Shah: I was reading an article by Todd Meyers in the National Review where he went back after this we are still in effort where thousands of folks have signed up to stay in the Paris agreement and he looked at the 2005 pledge from mayor Nichols from Seattle. How many folks actually reached that their goals there. Found out that not a single mayor reached their goals out of that pledge. Very few even tracked whether they were meeting the goal. Only 17 mayors or something were even tracking their progress.

One of the things that I think this room need to recognize is that mayors like to put out press releases and I think that's fine, they probably have good intentions as well but it's incumbent upon us to continue to pressure them to actually follow through on their promises. I don't think that they naturally are going to prioritize our work without that pressure. And I think that's what that stat really tells us from 2005.

Stephen Lacey: I think this is probably one of the most interesting stories over the next couple of years. The people in this room are going to have to hold municipal officials' feet to the fire on reaching these targets and next week we're actually going to have Sam Brooks on the show who worked in DC government and who wrote a great piece for us last week on why many of these claims from cities are a sham. They're great press release opportunities but they're not measuring their progress and we need to hold them to account. Particularly as more cities step up after the Trump administration walked away from the Paris agreement and they've said that they want to hit 100 percent renewables or live up to the Paris targets.

Super important story.

Mine finally is, we got into an argument about this backstage. EIA released data on March and April generation and for the first time renewables including hydro, surpassed nuclear generation for a period of two months. And Jigar said to me, "Oh you and your framings, always renewables versus nuclear." But I think the reason why I brought this up is because it's kind of a Rorschach test for how you view nuclear. I saw some people cover it differently. I think a lot of anti-nuclear websites said, "This is a great thing, we're finally transitioning away from nuclear." A lot of activists said that, "Look we can develop renewables and account for lost generation in nuclear." And then of course people who are worried about climate change and pro-nuclear say, "Well we're going to be running in place if we start losing a lot more nuclear power plants, you're going to have to develop a hell of a lot more renewables to account for that lost low carbon generation." I think the way I see people approaching this is interesting, it says a lot about your stands on nuclear.

Jigar Shah: We should focus on coal.

Stephen Lacey: Yeah, right. Not on shutting down nuclear plants.

All right well that's it. Thank you so much everyone, what a great conference we've got an excellent day stacked up for you. Katherine Hamilton and Jigar Shah are my co-hosts, you can get all of our episodes on SoundCloud, iTunes, NPR One, Stitcher, Overcast, anywhere you get podcasts. Make sure to check out all our backlogs and subscribe to us. You can send us an email to [email protected]. If you want to berate us, debate us, send us show ideas or you can find all of us on Twitter and again have a conversation there.

Thanks everyone, we appreciate it.