Raghav Murali:

All right, folks, why don’t we go ahead and get started? I imagine that there’s going to be folks trickling in here [inaudible 00:00:11], but we have one hour to tackle what I think is probably the most complex and important issue facing this energy sector today, which is creating a grid for the future. And I emphasize that word for, because actually the title of this panel is really important.

Raghav Murali:

And I’ll get to that in a moment, before I do that, I’ll introduce myself. I’m Raghav Murali, I’m a director of policy and government affairs at Enphase Energy. And for those of you who may not know, Enphase is a global energy technology company based here in California, just a couple of hours away in Fremont. And we do solar technology, storage technology, and EV charger technology currently, is that our … National leader in solar microgrids, which are essentially the brains of the solar array. The latest version of that is actually pretty cool, it’s a great enabling technology that actually allows the sun to continue to power [inaudible 00:01:03], even without a battery, without the grid being online. So we’re very proud of that innovation.

Raghav Murali:

We’ve also shipped over 300 megawatt hours of our, excuse me, our IQ behind the wheel batteries over the last couple of years, and finally we are integrating EV charging into our system, having acquired another California company called ClipperCreek, which is an EV charging company based out of Auburn, this past December.

Raghav Murali:

So I say all that just to point that Enphase is acutely aware and very interested in the issue of how we create a grid that can actually [inaudible 00:01:35] enable these types of technologies, both to the benefit of our customers, obviously, but also [inaudible 00:01:40] for the grid, writ large. So that’s my interest here. I am privileged to be joined by three esteemed panelists here, Kurt Johnson, Allie Detrio, Lorenzo Kristov. For those of you who have taken a look at the agenda, Angelina [inaudible 00:01:55] was planning on being here, she’s the chair of the board of governors at Tyson, but due to an emergency she wasn’t able to be here, so wishing her very well. Kurt is a subject matter experience definitely in his own right, and so will be filling in reading her slides. Before we introduce our panelists, let me just get back to that title, as I mentioned.

Raghav Murali:

A month or so ago when I was talking to Kurt about this panel, he was very insistent on using that word for, grid for the future. Which I found interesting, but I think he was spot on. We often hear in our industry the phrase, “grid of the future,” which sort of conjures up images of the Jetsons in flying cars. You think about some abstract sort of notion of [inaudible 00:02:35], when in reality, it’s [inaudible 00:02:37]. The speakers [inaudible 00:02:38] this morning [inaudible 00:02:40] that future is here, it’s now. And it’s calling for a massive increase in distributed energy resources, DERs, particularly behind the meter DERs. So really, the opportunity in front of us, and I use the word opportunity, because as he pointed out, [inaudible 00:02:54], well, many if not most of us in this room have been clamoring for and advocating for increasing DERs for several years, so we should view this as a good thing, when it is an opportunity. We’re facing a minefield of constant issues to ensure that the grid is in the position to accommodate these new vital resources, and also enable the technology to the full extent.

Raghav Murali:

So that is a, quote, “Unmitigated benefit not only to asset holders, but the grid at large and all Californians [inaudible 00:03:22].” So with that, I will just kind of tee up a few of the issues, I’m going to be the moderator, I’ll just kind of race through the issues that we’ll discuss and not answer any of them, I’ll defer to our panelists here. But hopefully the next 55 or so minutes we’ll be covering a lot of ground.

Raghav Murali:

Grid for the future is not an acute issue, it’s a Christmas tree with a bunch of ornaments. Some of the issues we’re going to be talking about the IOU business model, that came up actually a few times this morning from Allie during her panel discussion. Is the IOU business model, I don’t want to use the term outdated, but the longstanding IOU business model, how do we reconcile that with what is today and is going to become increasingly over a distributed grid? The structure of the greed, we’ll talk about TSO models and ways to actually make sure that the grid can actually accommodate the sheer volume of [inaudible 00:04:14] DERs [inaudible 00:04:16]. Equity and access is an incredibly important issue. How do we use tools of community resiliency planning, [inaudible 00:04:22] front and center. And [inaudible 00:04:25] microgrids to make sure that folks from disadvantaged communities, low-income communities, rural communities, high-threat wildfire district communities, how can we make sure they all have the same resiliency and [inaudible 00:04:42]?

Raghav Murali:

And then finally, [inaudible 00:04:43] part of the presentation about technology is incredibly important, the technical issues. Interconnection, how do we interconnect these DERs? How do we tackle issues like cybersecurity? How do we tackle issues like aggregation of DERs, the terms and conditions therein? These are issues that get pretty wonky pretty fast, but as with all things, the devil is in the detail of this stuff, and I think therein lies really our, the way to get the most out of these technologies.

Raghav Murali:

So with that, I’ll begin by introducing our panelists. We’re going to have a brief Q&A, about 20 minutes at the end, and hopefully we can save 10 to 15 minutes at the end for audience questions from you guys, and Kurt’ll be taking those from you at that time. First we have up Angelina, and I want to briefly introduce Angelina just because Kurt is going to be walking through her slides, so you should have a sense of whose slides they were. But Angelina is, most recently in March of 2020 she’s reappointed to a third term on the board of governors at Kaiser, this time as chair, and so she’s in a, obviously a unique position when we talk about [inaudible 00:05:51]. So I guess Kurt’s going to be walking through those slides. Kurt is a subject-matter expert [inaudible 00:05:58], he’s been with the Climate center in the role of community resilience director since 2019. He was with the EPA for 11 years, where he founded the EPA’s renewables program over there. He was in the solar industry at McKernon for many years, so Kurt’s got really strong experience.

Raghav Murali:

And followed by Kurt is Lorenzo Kristov. So Lorenzo is an independent consultant, and he’s focusing on power system transitions to integrate high levels of renewables and DERs. From about 2019, excuse me, from 1999 until 2017, Kurt worked at CAISO as a principal market design infrastructure [inaudible 00:06:34], where he was the lead designer of the locational marginal pricing market system CAISO [inaudible 00:06:39] in 2009, and was the project lead in redesigning CAISO’s transmission plant in the process, and new resource interconnection procedures.

Raghav Murali:

And last but not least, we have Allie Detrio, who you heard from this morning, and Allie’s the chief strategist of Reimagine Power, which is a boutique microgrid and clean tech policy consulting firm headquartered in San Francisco. She has authored numerous microgrid publications and presentations, and served as an expert witness at the CPUC and state legislature on DER policy issues. Allie is also a senior advisor with the Microgrid Resources Coalition. Prior to Reimagine Power, Allie was manager of policy and strategy at ENGIE, which is a global microgrid [inaudible 00:07:17], and so we have a great panel this year. I am going to now hand it off to Kurt, to run through Angelina’s slides, followed by Lorenzo, and then finally Allie [inaudible 00:07:26].

Kurt Johnson:

Thanks, Raghav. And just a process note, we’ll be doing questions the same way. There’s note cards on your table, so as questions come up, scribble on cards and put them down there, and up, and pass them over to [inaudible 00:07:45]. So I’m just going to run through some background data thanks to Angelina. If you look at … what’s happening with costs, obviously, you get the message. I like this chart, if you look at costs of P&E, it only goes back 10 years, but it’d be even steeper of a ramp in terms of [inaudible 00:08:07] costs for both wind and lithium ion. So therein is the opportunity we have in front of us to build a radically accelerated DER infrastructure across California and the world.

Kurt Johnson:

Speaking of the world, some fun data on the relative cost of using wind and solar, where things [inaudible 00:08:29] the lowest cost options today. Lots of high renewable penetration that David Hochschild mentioned this Scotland number, [inaudible 00:08:41] 153% in Scotland. So other places are even farther ahead of us in terms of making these things happen. We are in an unprecedented era of change, there’s lots of issues that can be talked about, obviously, and [inaudible 00:09:01] probably familiar with [inaudible 00:09:02] challenge [inaudible 00:09:06]. We have fossil retirement, we have proliferation of consumer-owned power, we’re going to be talking about that both today and also sort of the rest of the afternoon, there’s great panels after this that are going to go into more details about what that looks like.

Kurt Johnson:

Again, on fires, that’s truly what got The Climate Center into this stuff in the first place, so, as you heard from our CEO, Ellie. Climate Safe California has various [inaudible 00:09:32] programs, one of which is community resilience. When you look at climate impacts on California, radically enhanced fire risk has manifest in radically increased wildfires, as these numbers show, and that’s led to some sort of really debilitating power outages, costing tens of billions of dollars, killing dozens of people. So in terms of climate impact, power outage is associated with higher fire risk.

Kurt Johnson:

The number of 2020 of 4.2 million acres burning, it’s worth putting that in perspective. We’ve only got about 100 million acres in the whole state. So in just one year, 4% of the state burned down. So you sort of play that tape forward and see what’s going to happen. It’s pretty rough. I might slightly disagree with this, but this is not my slide deck. We are aggressively pursuing a low-carbon future. There’s a myriad related RPS legislation in place, obviously David talked about the governor’s executive order to phase out internal combustion engines by 2035.

Kurt Johnson:

And then we get into some of the more specifics, transportation is a key focus, and also I think big opportunity. So there are a couple million electric vehicles nationwide. We got about half of those here in California, that’s kind of a cool thing to be proud of. Embedded in our million electric vehicles, there’s a huge amount of battery storage that’s currently largely untapped. We have an afternoon session actually right after this, I think Peter [inaudible 00:11:06] that opportunity. We have, transportation obviously is also our largest source of greenhouse gas emissions in California, indeed, nationally. So it’s a huge opportunity to both decarbonize our country, but also capitalize on all of that electric vehicle infrastructure as a grid resilience opportunity that’s largely untapped, we’ll be talking more about that.

Kurt Johnson:

There are obviously mandates associated with our existing RPS targets in California, and then you start looking at the forecast going forward, what is that going to be in terms of new capacity needed? Pretty giant numbers. So 75,000 megawatts of new solar, I look at that number … I worked on something called the California Solar Initiative at the California PUC in 2006, and Gov. Schwarzenegger then said, “Hey, we’re going to build this great thing, we’re going to build 3000 megawatts of new solar.” Like, okay, now we’re going to build 75,000 megawatts of new solar? So the times have changed a lot in the last 15 years.

Kurt Johnson:

CAISO projections on what the increased capacity and various load type, as shown here. Same story as the earlier slides, lots of wind and solar. Lots of solutions necessary to make these things all happen in storage, [inaudible 00:12:27] talk about that demand response, since you’re making it quick and easy for people to get paid for bringing [inaudible 00:12:33] offline during [inaudible 00:12:35] every day. Time of use rates, that can be a big factor. We don’t have that hardware now. Expansion of the Western Interconnect, that’s kind of a complicated political story which we’re not going to get into, I don’t think so. Obviously electric vehicles we can talk about, and [inaudible 00:12:51] flexible resources across the board. Allie talked about that this morning. Living in a world where everyone has control over what’s in their house, when is their car charging or not, when is their electric water heater charging or not? When are people essentially islanding from the broader grid and getting paid for that hopefully in the future? Lots of opportunities with sort of taking every single household and making it not just a consumer but a prosumer and a provider of grid services. So [inaudible 00:13:18].

Kurt Johnson:

New low carbon circle. [inaudible 00:13:22] these think of, I don’t know if I heard this [inaudible 00:13:26] in terms of the future that we want to create. Digitized, decentralized, decarbonized, diversified, and democratized. Yeah, sign me up for that, that’s what we’re going to talk between today. There’s no Planet B, so it’s all on us. And with that …

Allie Detrio:

Thanks, everybody, great to meet with all of you this afternoon. As Kurt mentioned, Allie Detrio, I’m chief strategist for Reimagine Power and senior advisor for the Microgrid Resources Coalition. So I’m going to talk just briefly today about some of the policy pathways, and if they can help us get to a grid for the future and how we really can realize this for everyone.

Allie Detrio:

I love this slide, I stole it from the Climate Center. It’s one of my favorites because I think it really captures some of the big highlights of microgrids and distributed energy resources. First off, I think it shows a great visual of what we want the energy system in our communities to look like in the future, which is powered by decarbonized clean energy resources, so clean. Also doing it in an affordable way that’s also reliable, equitable, and safe, and I think this picture really captures the true value of microgrids and distributed energy resources that gives us that vision for what we want our grid for the future to look like.

Allie Detrio:

I also really love this picture, though, because it shows what a microgrid is, but it goes a step further in not just talking about the resources that are in microgrids, you see we’ve got storage, got battery storage, got fuel cells. We’ve even got a little [inaudible 00:15:07] generator to show that we still need some fuel-based resources for a truly islandable system today. But I love that it also talks about how there’s, microgrids can also predict weather, and energy market, and prices, and also interconnect with other microgrids, and then we can do all of this and interconnect these tiny resources with the larger grid, but disconnect from them [inaudible 00:15:29] either island to provide the capacity that the grid needs and help reduce demand, or provide other sort of low-flexibility and grid services that might be needed. So I think this is a really great graphic to show the true power of microgrids and all the different services that they can provide.

Allie Detrio:

And microgrids really do achieve a lot of our core objectives here in California. As I said, decarbonization, resiliency, reliability. But also allowing us to really pursue innovation, as Raghav talked about, all the cool things that Enphase is doing, so many other companies and technologies that you can hear from later this afternoon. Another really huge thing with microgrids is that they are allowing communities to be empowered, and take control of their own energy needs, instead of having to be procured and paid for by traditional incumbent utilities and fossil fuel corporations that have put profit over people for far too long these days.

Allie Detrio:

And finally, allowing us to achieve true sustainability, which allows us to essentially continue on and make sure that we are providing a good future for future generations, not just ourselves today. And so microgrids can really help achieve all of these objectives, and I think it’s really important to remember all of these different benefits as we go forward with thinking about our policy priorities as a state.

Allie Detrio:

So in terms of microgrids, how they can help us achieve a grid for the future, some of the big pillars I think about with how our energy policies need to evolve, it’s with energy market evolution, where we need to diversify our portfolio of market participants, technologies, and solutions, and in doing so we need to really think about how we can enact policies and regulations that are based on performance. So I think a key thing I would like to explore further is performance-based regulation and how we both incentivize technologies and solutions that are helping to achieve the goals that we’re setting out for, but doing it in a way that’s based on performance rather than picking technology winners and losers or market winners and losers, just because those have been in power and in business for over 100 years, does not mean they still are doing the task they’re supposed to be doing and doing it well, so performance-based regulation will really allow us to elevate our energy future for, in a more sustainable way. And then looking at value-based compensation frameworks, and really again, we continued along with the performance-based regulation, doing it in a way that’s providing the most value to the grid, and to the rate-payers, and to communities.

Allie Detrio:

another big thing with microgrids is that they can really help us in this pathway to strategic decentralization and grid modernization. DERs and microgrids can be optimized to achieve a wide range of objectives that I mentioned before, but it’s also really important to remember that microgrids can actually help us with achieving greater energy affordability and infrastructure cost management. I was just talking with Richard McCann, I was talking about the rates in the general rate case, like we’re going to be doubling in the next three years, largely due to transmission, undergrounding, and other large infrastructure investments, as well as wildfire mitigation, and we’re really going to need to keep these costs in check, otherwise rates are going to go through the roof and all of us are going to be struggling to pay our bills. And obviously this has a great impact on those that can least afford it. So in terms of achieving our equity goals, one of the biggest [inaudible 00:18:45] is affordability, and in order to do that, we really need to look at strategic decentralization and grid modernization in a cost-effective way, which means opening the door for more market participants and solutions to come in to fill that gap.

Allie Detrio:

And then finally, embracing consumer investment and empowering communities. Grid services revenue is a way for communities to build wealth, and I really think that policymakers and regulators in the state of California need to acknowledge the benefit and maximize the value of customer investments, not just handing procurement to three large corporations and call it a day. And the way you can do this is by financing resiliency at the community level, and really looking at deploying these strategic solutions at the bottom up, and that’s how we’re able to actually get the decarbonized clean energy resources that we want, along with finance and resiliency without having to assign a specific value to it, we can just acknowledge that it happens and that it’s benefit to the communities, and it’s an ancillary benefit of doing these larger grid modernization and clean energy deployments.

Allie Detrio:

And so just to conclude with some of the policy pathways I think we really need to do to realize this clean energy future that we all want in a strategic decentralized way, and Lorenz will elaborate on more of this as well, is to create an open-access distribution system operator network with a performance-based regulation framework. We need to invest in community energy resilience, and fund local government planning implementation, and just as a followup to my other comments before, making sure that we’re also including community-based organizations and nonprofits in that. We need to explicitly encourage microgrids that are owned and controlled by communities, develop tariffs that promote local electron sharing between neighbors or within communities, developing value-based compensation frameworks for consumers to provide grid services and low flexibility, and that will help us monetize these resources, and allow us to pay them back over time and really do it in a cost-effective way, and really promote an interconnective and transactive energy future for all.

Allie Detrio:

Because ultimately, we have everyone interconnected and participating, that is how we are going to lift the most people up and participate in this clean energy transition to the benefit of all, especially those that are the most vulnerable. So just wanting to leave you with, again, this slide about microgrids and distributed energy resources being clean, affordable, resilient, equitable, and safe, and that is why we need to be investing in these resources here in California. And with that, I’ll turn it over to Lorenzo.

Lorenzo Kristov:

Thank you all for being here, good afternoon. It was mentioned, Raghav mentioned that I worked for California ISO for a long time. And I started getting interested in distributed resources back in the early 2010s, around 2012, 2013, realizing that this was perhaps going to be the biggest transformation of the industry overall. Even shifting to renewables on the bulk power system still keeps everything very centralized. But this notion of distributed resources really challenges that.

Lorenzo Kristov:

A lot of people are talking about distributed resources, and what I wanted to add to that conversation, a lot of good stuff had been said already, but what I wanted to add to that is to try and sketch out a vision of what does this power system look like? I’m thinking, say, of 2030 as a target year. If we were to implement the right policies, many of which Allie just went through, if we were to implement the structural changes, how would it work by the time we get there? So that’s what I want to talk about today. Can I just hit the down arrow? I can.

Lorenzo Kristov:

So for context, 21st century needs and mandates. I think most of you probably got the memo, climate is disrupted. Ecosystems are disrupted, and they’re having impacts that are going to play out in ways that continue to get more destructive and harder to predict. The impacts fall most heavily on vulnerable and disadvantaged communities, that we’ve heard a lot today, but it doesn’t just fall on them, it falls on just about everyone. And I think one of the concerns I see in our culture is that there is a prevailing belief that if you have enough money, you’ll be okay.

Lorenzo Kristov:

And that may be true for some people, but for a lot of people, money isn’t going to make the difference. You can’t eat it or drink it. So causal energy systems are the cause of the a lot of the disruptions, but we can’t just say, “Stop using energy.” We have to figure out how we’re going to use it and do a better way of extracting and consuming it. So I try to describe things in terms of three major goals which reflect 2020s and beyond, goals that were not present, really, in the 20th century, when the power systems we have were being developed.

Lorenzo Kristov:

Sustainability, also known as mitigation, stop making things worse. In contrast to resilience, sometimes adaptation. That means prepare for the impacts of the damage that’s already been done. If we were to stop running fossil fuels tomorrow entirely, we still have set climate change factors in motion that are going to play out over decades with devastating impact, we can’t stop those now. Things are unfolding already. Equity needs to be given more practical meaning, certainly prioritizing environmental or social justice, but make that concrete. What do we mean about the actual impacts? What are the benefits to the communities that we care about? Correcting past harms, certainly. Adjust transition, certainly.

Lorenzo Kristov:

So all three goals have local dimensions, and this gets to a point that Allie mentioned in her morning panel about this false dichotomy between do we build up the bulk power system or do we have DERs? And people who want to build up the bulk power system say, “Well, DERs are just a little bit of noise around the fringe, but isn’t going to really amount to anything,” and it almost is posed to us as a choice we have to make between the two. I think that’s a false dichotomy, but the important thing for us here is that every one of these goals cannot be accomplished just with the bulk power system. Not saying that it’s going to go away, but it’s not sufficient.

Lorenzo Kristov:

If you think about sustainability and decarbonization, it’s initiatives at the local government level that are going to be making a big difference. If you look at what’s in urban planning, that was talked a bit about this morning, what do urban planners do? Well, for one, in California, they have to come up with climate action adaptation plans, they have to come up with general plans about developments. They make decisions about zoning and land use, about building codes, development strategies. Housing density, locating housing close to transit, changing the things that actually generate carbon emissions, which have a lot to do with how do we move people and stuff around?

Lorenzo Kristov:

Well, an awful lot of that is local. So electrification of mobility, and so on. And so that gets to kind of the basics of what we need the power system to do. You’ve heard that this morning from [inaudible 00:26:19] and others, that you have to make the power system completely renewable, clean energy, sustainable, and so on, and then you need to electrify everything that’s using fossil fuels as much as possible, so you’re using more power. So that’s saying, “Well, we’re going to need a lot more electricity if we convert all of these things that are now doing fossil fuels, how is the grid going to provide that?”

Lorenzo Kristov:

Well, part of my answer is that the grid is not going to provide all of it, that local power systems are going to provide a share, an important share. A larger or smaller share in different places, but in any event, an essential share. Same thing about resilience. We saw it in Texas in February a year ago, 2021 when the freeze came through and a couple hundred people died because they lost power and had no place to go. There’s a lot of interest with the new infrastructure bill that came out of the federal government to make the grid more resilient. So you’ll hear resilience often coupled with grid resilience, make the grid stronger.

Lorenzo Kristov:

Well, I think, and now a lot more people, after seeing what happened to Texas and these other kinds of devastating things is, “Okay, let’s invest some of it in the grid, but let’s invest in resources that don’t require the grid. Let’s plan for when the grid actually goes out of service and we don’t have the power.” What do we do then? Because the impacts can be matters of life and death.

Lorenzo Kristov:

And similarly, when we get to resiliency, it’s about what’s going on at the community level. It’s really all very local kind of stuff. So if we insist on the paradigm where the bulk power system’s going to provide the answer to all of today’s needs, it’s going to be really short on addressing resilience and equity, and to a large degree, the sustainability aspect as well.

Lorenzo Kristov:

Meanwhile, what’s happening globally in the electric industry, and I put the word global in here because there’s certain fundamentals that are the same everywhere in the world, or at least everywhere that there’s a bulk power system, high-voltage transmission. So we’re talking about Europe, the UK, North America, and parts of Asia. [inaudible 00:28:40] a little bit longer, [inaudible 00:28:43]. So the new distributed resources coming along are really enabling all of this localization. And there’s the massive innovation in technologies, the costs are coming down, the performance is going up.

Lorenzo Kristov:

Meanwhile, the grid gets more expensive, right? And what Allie just mentioned about rates potentially doubling in the next few years. So the grid gets more expensive, it’s still vulnerable to outages. DERs start to get cheaper, the technologies are getting better. Pretty soon it becomes a reinforcing positive feedback loop, that as the incentives are, “Leave the grid,” because you’re much better off just economically, and in terms of resilient power. And of course [inaudible 00:29:31] society. And we see it starting already, with people who own [inaudible 00:29:35] mansions, we see it with businesses and industries that are saying, “Let’s just create our own power system, we don’t need your stinking grid.”

Lorenzo Kristov:

So that’s a problem, that’s something that we need to be concerned about. How do we create a grid system where customers are better off staying connected because they’re able to be participants in this network? That’s where I want to go with this future design. Reimagine electricity system policy, planning, operation, and ownership, as now a bottom-up meets top-down set of activities. We need policy that enables things, but we also need to use bottom-up methods to bring in community voices, to identify what are the priorities, what are the needs, and design possible solutions.

Lorenzo Kristov:

So here’s what I think it looks like. This is what I want to suggest as an image of the electric power system in 2030, say. A bimodal system. It used to be the old way of thinking was just that big globe on the right, it’s on the right. The light colored one, which is the bulk power system, [inaudible 00:30:43] more resources. So everything’s right there.

Lorenzo Kristov:

That still is there, it doesn’t go away. But on the left side, what’s in this local area now is all sorts of locally-powered [inaudible 00:30:57] resources. You still have individual customers, as you did before, but we also have things like smart buildings, where a building completely integrates the energy, and maybe the water and other systems, inside the building, and interacts with the grid. We have the front of the meter distributed resources, which are community-level, that may serve a group of customers. We have microgrids that may serve multiple customers. We have individual commercial and industrial and so on customers.

Lorenzo Kristov:

But instead of just seeing them as just consumers, which is what they’ve been for the first hundred years, they’re participants. And by the network connecting them, they’re now part of a transactive network where, say, customers that have rooftop solar and battery storage can provide grid services and get compensated for that, which is better than just installing your own equipment and leaving and leaving the grid, participate, defray some of your costs through your earnings on the grid.

Lorenzo Kristov:

And as we think about electrification and really adding significantly to the load on the grid, let’s not send all that load to the grid, let’s meet a lot of it with multi-supply. If local government has a fleet of 50 buses and they want to electrify the buses, well, don’t just have them all charge and get power from the grid in order to do that, start building local resources, charging stations that have rooftop solar and stationary battery storage, ways to manage the charging cycle, so that what you’re doing as you do this transition is having minimal impact on the grid.

Lorenzo Kristov:

Ultimately, where this is going is distributed resources are a substitute for grid infrastructure. Not that they’re a complete substitute, but as much as we’re able to build local power systems, besides enhancing sustainability, resilience, and equity, we’re also offsetting the need to build grid infrastructure. That’s part of why the battle is so difficult, because there’s a lot of money to be made in building grid infrastructure, and parties understandably don’t want to give that up.

Lorenzo Kristov:

So what do we need to do to create this participatory distribution network? So one, view DERs as key to the clean energy future, not just a problem for the grid. And I see this in proceedings that are going on today, they’re viewing distributed resources as this thing that’s coming at us. The ISO has the duck curve, it’s been a struggle, which has a big belly in the middle of the day and a steep ramp in the afternoon. We see it in the high-DER grid planning procedure at the PUC, where they’re viewing distributed resources as this kind of exogenous tidal wave that’s coming out [inaudible 00:33:47] go, “Oh my God, what are we going to do? We better invest billions more in building the utility infrastructure in order to handle this tidal wave that’s coming at us.”

Lorenzo Kristov:

And what happens is that viewing DERs as a problem creates this mindset of worst-case planning. In other words, we have to look at everybody behaving in the worst possible way at the same time, so that it has massive impacts, and that means build a lot of infrastructure. So it’s really important to get past this mindset.

Lorenzo Kristov:

And then, the next step of that is go actually to the communities to find out, “How can DERs make your life better?” Let’s look at what’s needed in various disadvantaged, low-income, but really, communities everywhere. DERs have the potential to provide local benefits, meet local needs, meet local priorities, serve local initiatives, et cetera, but we need to find out from them, they need to be participants in this process.

Lorenzo Kristov:

The second big goal here, compensate DERs and aggregators for grid services. That doesn’t exist right now for the most part. Very limited opportunities for DERs to provide non-wires alternatives in distribution planning. Very limited, almost no actions to take, just because it’s so constrained. And again, we’re coming from not really integrating the potential DERs into how we plan the system, but assuming that they’re just going to be out there behaving in the worst possible way.

Lorenzo Kristov:

So let’s implement policies that encourage and reward parties who invest in DERs, parties who can aggregate them to perform in certain ways to actually perform in a way that supports the whole system and provides societal benefit. And then finally, the last piece, which Allie mentioned as well, reform the distribution utility to be an open-access DSO. DSO is a buzzword that I started using back in 2013, distribution system operator. It’s not a well-defined thing, lots of people have different ideas about what that means. But the basic idea is that it’s something that has capabilities beyond what today’s distribution utilities have. It’s an entity that operates a distribution network that has lots of distributed resources, customers interacting with each other, transacting over a network.

Lorenzo Kristov:

The archetypal definition of distribution service comes from NARC, the North American Reliability corporation, and they define distribution services as moving energy from the bulk power system to customers. So it’s just a one-way flow, that’s the definition. And that was okay for 100 years, it’s not anymore. So we need to think about changing, then, the role and function of the distribution utility to serve that role of providing a transactional network, and base it on natural monopoly principles. In other words, the idea of a wires-only utility, where their business is running the network. Their business is not retail kilowatt hours like the CCAs and ESPs can provide, we have competition in retail kilowatt hours. Their business is not building charging stations, that’s a competitive technology industry where we want a vibrant technology community. When the utilities invest in things that are potentially competitive, we’re locking in innovation, we’re locking in investment that’s liable to be stranded, because it’s going to be obsolete in a few years. That’s where we want a vibrant marketplace.

Lorenzo Kristov:

And then compensate the DSO based on performance. Right now, the fact that they get a guaranteed rate of return and want to maximize capital investment, that’s one of the biggest barriers. So compensation based on how they perform as providing an interactive network. Last bullet here, separating metering and telemetry data management as a regulated service. Those of you who’ve been involved with the CCAs in California realize that it’s very, very difficult to get the data that they need to understand what’s happening with their customers to be able to forecast, to be able to bid into the ISO market, et cetera. That data should not be any corporation’s asset. It should be a publicly-available, regulated, in a way, so it’s not abused, and it’s allocated to the parties that need it, have appropriate needs for the data, protecting privacy and all those things. But it’s separate from the corporation that’s holding onto it to try and make profit.

Lorenzo Kristov:

So, finally, last slide. In conclusion, the central controversy today is the persistence of the 20th century electric system mindset, centralized planning, operation, and investment built on bulk system generating plants and high voltage transmission, versus the 21st century urgent needs for resilience, energy, justice, and decarbonization, and the potential of DERs to decentralize and democratize energy.

Lorenzo Kristov:

What do I mean by democratize? The community are determining their needs and their priorities, they’re making decisions about what their energy sources are going to be, how they’re going to obtain and use energy, and local ownership, which I haven’t mentioned up until now, but locally owning assets, when we have DERs and all those technologies, it’s not just decentralizing the technology, it’s decentralizing the ownership, so we can now have local cooperatives, local goverments, et cetera.

Lorenzo Kristov:

A few quotes to take with you, the best way to ensure nothing gets done is to convince people they’re on one side or the other of a false dichotomy. That’s the well-known practice of divide and conquer, which is rampant in our culture, and the more we can get together around common interests and start to advocate collectively, the better-off we’ll be able to make these changes. Einstein, of course, saying, “We cannot solve our problems with the same level of thinking that created them” and then a mentor of mine back in the 1970s, Buckminster Fuller, “You never change things by fighting the existing reality. You change something, build a new normal that makes the existing normal obsolete.” Thank you.

Raghav Murali:

Great, thanks Lorenzo, Allie, and Kurt. Great presentations, there’s so many different directions we can go here, but I’m going to spend the next 10 or so minutes just doing a roundtable discussion with our panelists on some of these issues before we can hopefully save five or 10 minutes at the end for questions [inaudible 00:40:28]. I’ll start here, I was going to ask this to Angelina, but perhaps, Lorenzo, since you just got off from [inaudible 00:40:34] doing this [inaudible 00:40:35] the notion of a high-DER future, we are as a state expecting approximately 300% increase [inaudible 00:40:47], 800% increase [inaudible 00:40:49] storage, and 400% increase in [inaudible 00:40:53] between now and 2030. What structural changes do we need to make to the grid to just accommodate the sheer volume of [inaudible 00:41:01] DERs? Particularly as we did [inaudible 00:41:01] like EVs and electrified buildings.

Lorenzo Kristov:

Yeah, so where I’d start is going back to the point that I made about viewing DERs as necessary for the future that we want to accomplish, and not just as a problem. If you view them all as, “Autonomous households and businesses are just running their [inaudible 00:41:20] way they want and collectively effecting the worst outcomes on the grid,” well, then it gets really expensive. So if we look at it instead as, what are the policies we can implement so that we’re able to coordinate their behavior and their activity, so that we’re able to use [inaudible 00:41:39] way. I’d start there.

Lorenzo Kristov:

Certain things will be necessary as investment. I try to think in terms of least regrets. I think the DSO or whatever is the next incarnation of the distribution utility, it needs good visibility to its system, it needs to have the telemetry data, it needs the sensing, it needs a lot of the automation, [inaudible 00:42:01] in topology changes when you’re switching circuits and so on.

Lorenzo Kristov:

So I think it’s that basic operational stuff, but it should not be building infrastructure for the sake of more capacity until we look at the potential to solve problems locally and [inaudible 00:42:19] capacity [inaudible 00:42:19].

Allie Detrio:

Maybe I’ll just add to that a little bit, with needing … A lot of the strategic decentralization is co-optimization of resources. So we know there’s going to be large amounts of electric vehicles, or rooftop solar with heat pumps, but making sure that we have [inaudible 00:42:37] energy resources sided along with those resources to help us with alleviating the need for lots more massive grid infrastructure. And also with smart controls and the SOC layer, expanded technologies that we’re in the process of developing, and I think are just really now starting to show their impact on the electricity system and the power that they can provide in computing, data management, and Linux, that those things will also really help us, predicting when load might go up or down and providing some ways for which we can be creative about managing that flexibility. But I think ultimately, co-optimization of resources, especially at the local level, is going to be really critical.

Kurt Johnson:

I spent 15 years in Washington, DC, working on Capitol Hill in the EPA, and in DC the economists kind of run the place when it comes to policy. So I’m acknowledging now that I drank that Kool-Aid while I was there. So with that caveat, [inaudible 00:43:33] how frequently I’ve been [inaudible 00:43:36] this conversation, no, I think there’s a role for pricing in this that can do a lot. Talked about this morning, we don’t have a good way to create a value benefit for DER [inaudible 00:43:49], and that’s [inaudible 00:43:52] and incentives that Allie talked about, that pay people to, say, run their house off of their Ford F-150 Volt between 4:00 and 9:00 PM [inaudible 00:44:00]. You can start making a lot of things happen in a way which is more efficient and beneficial to everyone.

Lorenzo Kristov:

Just going to add a footnote to that, because rates exist in a larger context, and we can’t lose the larger context. So in other words, I see this coming up, for example, in the NEM conversation, we don’t know what the [inaudible 00:44:21] going to do about that. But NEM’s been a big debate. And I view NEM as just kind of a little piece, a silo, a way, in a bigger picture. We need to couple it with reform of the distribution utility, and think about what is that distribution utility’s revenue modeling? What services does it provide, how does it charge for them? And so really changing the revenue structure of the essential entities, not just changing the rate in isolation.

Raghav Murali:

So [inaudible 00:44:49] with that larger context line, the next question is, and perhaps this is more interesting to, or frustrating, perhaps, to the four of us than a lot of people, because we’re so engaged in the [inaudible 00:45:00] process with … In California here, the state is obviously heavily invested [inaudible 00:45:06] our future, they’ve made that clear. But it’s so fragmented over a myriad of regulatory proceedings, you mentioned them, that CPUC’s also handling. But with 21 interconnection, it’s also [inaudible 00:45:17] the high-DER future, the CEC has created a high-DER future for [inaudible 00:45:20]. CEC is handling the codes and standards process, it just goes on and on and on. And I think the four of us are engaged in almost every one of these, and it feels sometimes if you turn your head and you miss something, then it’s hard to know sort of where the decisions were really made. How can we sustain that’s well-intentioned, that has the goals in place, streamline and make more cohesive our actual policy-making process? And that’s really [crosstalk 00:45:46]-

Lorenzo Kristov:

You’re asking me?

Raghav Murali:

… that’s [crosstalk 00:45:53]. I think that’s a shared frustration.

Lorenzo Kristov:

Does anybody else have input? [inaudible 00:45:53]. I was just reading a book from the 1990s, where the author, Robin Morgan, says, “If I had to name one factor as the genius of patriarchy, it would be compartmentalization, institutionalizing disconnection among things.” So I think we need to see the proliferation of silos as a strategy to keep the rest of us limited in effectiveness. The utilities have armies of regulatory staff and attorneys, and they can populate with really smart people every proceeding. And maybe they see the connections of things or whatever, but it’s going to mean for those of us who want to engage in substantially changing things to start to talk to each other more, form bigger coalitions that work together on things, start to form whole-system understandings of how those pieces together, but you jut have to do that work, I think that’s kind of the essential piece of it.

Lorenzo Kristov:

But if you go into a proceeding and there’s 50 parties that file comments, what the commission sees is, “Oh, there’s 50 different people who are saying what they want.” Well, suppose 20 or 30 of those actually get together and advocate for [inaudible 00:47:11] thing, because we formed a vision of how we do that. It’s not trivial at all, I’m not saying that, but I think that’s the work we have to do, is bigger coalitions.

Allie Detrio:

I think the coalition-building is a critical piece of the pie, so I’ll just re-emphasize some of that. I mean, I think another thing the state needs to do, as I mentioned, is acknowledge that customers and communities have made investments like solar, like heat pumps, like electric vehicles, and embrace those. I think right now they do consider it more of an annoyance and a problem rather than acknowledging the benefit, and also acknowledging their own policies, right? I mean, the legislature created the net metering program, the legislature has directed 100% of our [inaudible 00:48:00] electric sales of energy to be clean by 2045. So rowing in the same direction, not having this backhanded discussions about whether customers are doing the right thing or not. I mean, we’re trying to make those investments. So I think it’s true to be doing the coalition-building, but I think the state also needs to acknowledge the role of customers and communities in a much more meaningful way than they’re currently doing, and that’s just a product, I think, of a lot of entrenched interests that we need to overcome, which comes back to the coalitions are the most crucial thing.

Kurt Johnson:

So I think it’s about leadership. I [inaudible 00:48:38] California Solar Initiative back in 2006, and I was at the EPA at the time, and Gov. Schwarzenegger said he wanted to build 3000 megawatts and a million [inaudible 00:48:48] in California, and sort of drove the process. And there were flaws in that and whatnot, but it happened, and that transformed the solar industry. So leadership from the governor embracing the vision, I would love it if Gov. Newsom would embrace [inaudible 00:49:05], and that could start to trickle down, and all the related certain policy conversations at the PUC and with legislation that’s happening here in [inaudible 00:49:18].

Raghav Murali:

And just one last panel discussion before we open it up to you all for questions, because I want to [inaudible 00:49:23] for that, but Allie you mentioned, I believe you used the phrase both and, rather than either [inaudible 00:49:28] or … This notion of utility business model, and incentives, you hear the phrase perverse incentives, and you talk about performance-based [inaudible 00:49:37], how do we reconcile that IOU business model with a distributed grid? How do we combat the narrative that we have to make a binary choice, essentially between investing in utility scale infrastructure and distributed energy resources? Both from a substantive standpoint, but also just from an optics standpoint, because it seems to be [inaudible 00:49:57].

Allie Detrio:

Yeah, that’s a great question. So kind of, touching on something Lorenzo said about having a comprehensive vision for what the future looks like, I think that’s something, and hopefully with the CPUC and the CEC both opening the high-DER future proceeding that we’ll see some meaningful visionary planning come out of that. But I think the biggest thing is what is the vision for the future, and incorporating all of the different resources and technologies into that, and making sure that there’s a role for everyone to play, especially customers and communities. So I think that’s one thing.

Allie Detrio:

I think also, we need to drop the hammer a little bit on these utilities. They have burned down and let down our state for the last several years, and they continue to profiteer off of customers. And so I also think that there needs to be a little bit more strength from the legislature and the governor to reign them in, and I think one way which you can do that is instituting performance-based regulation with revenue caps, with profit caps on their rate of return for things like big infrastructure, and really look at more of optimizing the resources that we have in a system and again, opening up the hood and looking to others to fill some of those gaps, not just these same three companies.

Allie Detrio:

So I think that’s one of the biggest things, and I think that we can implement performance-based regulation. Hawaii’s actually doing it right now. They’ve come up with a clear set of performance metrics, like outcomes that they’d like to see in the energy system, and then they’re kind of working from those outcomes and metrics to develop performance standards, what are the rates looking like, what is the utility’s rate of return, what is the role of the utility? So I think we also need to think about what are the outcomes that we really want for our energy system of the future, picking dates like 2030, setting targets for 2045, et cetera, and really try to plan backwards from that, like what do we want this vision for the future to look like, and really set up performance targets and metrics that will align, and then make sure that they’re meeting them, and we could do both carrots and sticks to do that.

Raghav Murali:

Great, thanks. And with that, I think we’ll open up to audience questions for a few minutes here. So if you have one … [inaudible 00:52:03]. (silence)

Lorenzo Kristov:

No one can read my writing, [inaudible 00:52:36].

Raghav Murali:

This one seems to be a certain common thread, [inaudible 00:52:39]. [inaudible 00:52:41] more as a comment, I think, than as a question. “How about we fund grid transformation by treating it as a public good, funded by a progressive taxation of the common wealth?” [inaudible 00:52:56] that, treating it as a public good and a public benefit, any of you have thoughts on that?

Kurt Johnson:

There’s multiple ways to answer that question. So, and the ISO recently came out [inaudible 00:53:08] to spend $30 billion to upgrade the transmission system [inaudible 00:53:14] cost. Well, there’s this nifty thing that means that the [inaudible 00:53:22] get 12% greater return on that. So there’s a big incentive, and there’s a big amount of cost that’s going to take forever [inaudible 00:53:30] get that all funded through these current models. There’s a bill, and myriad bills related to funding transmission infrastructure. One of them would follow a model from Mexico and say, “Hey, why don’t we borrow against low-interest public money and build the build-out of the transmission system?” Because for all of us rate-payers, it’s going to cost a whole lot [inaudible 00:53:47]. That sounds like a great idea.

Allie Detrio:

I’m definitely not opposed to the public option. I think that might be ultimately one of the only ways that this is ultimately successful, because I think there is a lot of centralization and concentration of wealth within the energy system, and so that is definitely an option. But I think that’s also still a very expensive proposition for taxpayers. And yes, in California we do have a much more progressive tax structure, so I think that some of that can be done and should be done through our public, a general fund and other public investments.

Allie Detrio:

But I think it’s really important to remember the role of the private sector in how we can encourage more public-private partnerships, but do it in a way that’s a lot more community-focused and community priorities. So things like local government clean energy resilience and looking at how we develop clean energy resilience planning and implementation, and helping to fund that both through the state government, but also through the private sector, through price signals and other rates and tariffs, and I think will help with the cost-sharing aspect, I think that’ll be really important to doing this in a more cost-effective way. I don’t think we can ask the government to fund everything, even though ultimately that may be what happens.

Lorenzo Kristov:

The only thing I would add to that is to recognize that equity is a public good as well. That having massively inequitable distribution of wealth, distribution of the benefits and burdens of our energy systems is damaging to our entire society. And so the public good is, my view, a piece of it needs to be, a large piece of it needs to be investing in the ability of communities to determine their own energy future, to make their decisions about, “How do distributed resources benefit my community, my neighborhood?”

Lorenzo Kristov:

Build EcoBlocks. I don’t know if some of you know about EcoBlock, which is an advanced energy community project funded by the Energy Commission, it’s not replicable. It’s a beautiful idea for retrofitting urban residential areas to have microgrid energy systems that serve the community, and it can’t be replicated because the laws don’t allow it. So [inaudible 00:56:13] are going to really strengthen the capability of communities to meet their energy needs locally, invest at that level, because it is a public good to take care of everybody.

Raghav Murali:

Thanks, so this is the last question, so apologies to our audience members who didn’t get to [inaudible 00:56:32] stay on time here. This was one of my questions too that we didn’t get to, it’s about current funding sources for microgrids to build community resiliency, and I’ll expand that more broadly. Allie, you talked about today, as you [inaudible 00:56:45] microgrids [inaudible 00:56:47] resiliency, as a way to both decarbonize and also democratize energy. Where did we see progress within the last couple of years, and where do we still see the need for regulatory changes [inaudible 00:57:00], particularly within the context of climate [inaudible 00:57:02] bills, [inaudible 00:57:02] machines [inaudible 00:57:02]?

Allie Detrio:

[inaudible 00:57:02] take my stab at that. So I think where we made progress is the legislature did pass a bill in 2018, SB1339, by Sen. Stern, to commercialize microgrids. And that was inspired in part by the CEC’s grant funding projects and programs for microgrids. And so I really do think California’s had some great innovation and leadership in the microgrid space and funding some of these pilot projects, and really looking at commercializing these technologies so they can be more widespread.

Allie Detrio:

I think one of the biggest challenges is what [inaudible 00:57:43] doing academic policy, of [inaudible 00:57:45], like what happens between when the legislature passes a bill that’s kind of high-level and just gives broad policy direction, to when it gets kicked down to the implementing agencies and actually having to implement regulations that allow us to deploy these resources. And I think where we are still really lacking is these comprehensive rates and tariffs that provide the market signals for both the public and the private sectors to deploy these resources in a cost-effective and strategic manner. And I think we can get those right and get these price signals right for a lot of different things, like capacity, resiliency, clean energy resources. All of those things will allow us to build more and get more of our projects deployed in a strategic manner. So I think that’s really crucial, and ultimately getting steel in the ground is what’s going to allow us to actually meet our climate goals. Because if we can’t get these projects built, and they’re not cost-effective at the end of the day for both public and the private sector, then they don’t get built. And we can’t meet our climate goals by just setting targets, we need to actually build the projects that are going to help meet these goals, so I think that’s critical.

Lorenzo Kristov:

And [inaudible 00:58:57] the next session, which starts in 10, so …

Raghav Murali:

In 10 seconds?

Lorenzo Kristov:

Okay, I guess two things that I will emphasize in terms of progress. One is tell a different story. Everybody knows the story of the utilities and centralized power system and bulk scale solar farms and wind farms and big power plants, and what we, and using we, I always ask when someone says we, “Which we are you talking about?” Because a lot of the problems are that there isn’t really a we that’s operative. But I’m using we to mean we who really want to change the system. What we are getting better at is telling an alternative narrative. Here’s the story that’s really now business as usual, it’s well-known, legislators understand it, policymakers understand it. What’s the alternative story? How do we shift from, and this is happening more, shift from speaking out about what we oppose to speaking out for what we want, and articulating what we want as clearly as possible, as specifically as possible? We’re improving in the ability to do that. It’s a slow process, because we’re not used to thinking that way. We’ve been, to a large degree, reactionary to things we don’t like, like that [inaudible 01:00:15] decision back in December. Real easy to say, “We hate that.” But what’s the alternative that we want? That’s where I think [inaudible 01:00:24] is making progress and needs to go further.

Kurt Johnson:

Clearly what we want is more community energy resilience at first, in frontline communities, et cetera. Where we are on that is almost zero. The final session this morning will talk about where we are in terms of number of critical facilities in vulnerable communities that have clean energy resilience. It’s essentially zero. And so we have a huge amount of work in front of us. So that’s kind of a good transition, just a quick commercial, we’re going to take a 10 minute break and the next panel’s going to start in 10 minutes, [inaudible 01:01:02] on distributed energy resources technology solutions, and the final panel will start after that. It’s going to be a 10 minute break, and then an hour session, then 20 minute break, then we’ll have a final session focused on project development [inaudible 01:01:15].

Raghav Murali:

With that, I just want to say, [inaudible 01:01:22] it’s been incredibly, incredibly dense, incredibly detailed conversation, [inaudible 01:01:27] inspiring [inaudible 01:01:29], about how we can actually see the opportunity to create a grid that could accommodate the [inaudible 01:01:35] in our future to meet our state goals. So thank you to our panelists, thanks for [inaudible 01:01:40].