Are plug-in DERs going to spark a grid revolution?

[Music] Hello everyone, greetings and citations. This is Voltz for June 3rd, 2026. Our plugin, DERs, going to spark a grid revolution. I'm your host David Roberts. As Voltz listeners have heard many times now, large utility scale renewable energy and battery projects are being slowed to a crawl by a tangle of red tape from glacial interconnection cues to permitting hassles to environmental review and on and on. Smaller scale, customer side, renewable energy and battery projects collectively known as distributed energy resources or DERs move somewhat more quickly but unfortunately not by much. They too have interconnection and permitting hassles alongside the various and sundry soft costs that have been discussed on this podcast so many times. But there is a new class of DERs emerging that are even smaller and that you can simply plug into a normal wall outlet without getting any kind of permit interconnection or regulatory approval. This includes so-called plugin solar, which we covered on a previous Voltz pod, but also small scale batteries. Plug-in DERs might seem at first blush like a kind of cute novelty item. Fun, but irrelevant to the larger energy picture. But my guest today, James McGinnis, CEO of David Energy and co-founder of the DER Task Force Community and Podcast, believes that take is wrong. Dramatically, faithfully wrong, he believes that plugin DERs are eventually going to scale to a cumulative size larger than bigger DERs and that they are going to put a rocket boost under the small D democratic revolution in energy that DERs have long promised. McGinnis has been selling plugin batteries to small businesses in New York City, who are using them not for any high-minded green reasons, not even for resilience like the more expensive home batteries, but simply to reduce their electricity rates. And business is booming. We are going to talk all about the merits of plugin DERs, the market for them, and why he thinks they are going to spark a grid revolution. [Music] No further ado, James McGinnis, welcome to Voltz. Thank you so much for coming. Thanks so much for having me. I'm super excited to be here. At List Dear Podcast, I've heard a lot of your talks and you are deep in DERs as you affectionately refer to DERs. DERs, DERs, DER World, DER PILD, etc. For those in the audience, maybe who are not fully DER PILD and who are not totally familiar with distributed energy resources, let's just do some definitions. So as I understand it, there's DERs and then within that there's a smaller class of what we call permissionless DERs. And then within that there's a smaller class of plugin DERs, which is what we're talking about today. So let's start just by defining our terms. So start just by defining what are DERs. This is like, I think a deceptively complicated question. What is your personal definition of DERs? I'm going to attempt to give you a definition. I also think as time has gone on, I've continued to get surprised about what a DER is. I reserve the right to change my mind later and it's a bit of like, you know it when you see it kind of, you know. And most famously, Kirin actually from Arcadia told me an induction stove was a DER and I laughed him out of the room and then I learned about impulse labs and copper and battery embedded devices, which kicked off this whole permissionless conversation. And so I ended up eating my words that that was in fact a DER. I would just say that the property or the principle that is true across DERs or most exciting is that you're essentially citing supply or capacity next to demand. That capacity could even be the demand itself. Like you could have programmable thermostat or electric vehicles that you shift, load with. But at the end of the day, it's supply or capacity located where the customer is consuming power and that property of locating supply next to demand is what I think makes DERs so powerful. So in your mind, whether it is behind the meter or in front of the meter, there are DERs in both cases. You're not you're not a behind the meter guy. So I mean, I think if you look at a lot of what some of the current frameworks have started to do like a VEDER or avoided costs or non-wiles alternatives, placing solar and storage on distribution feeders like community solar, it could be a five megawatt system. That's a DER because it's helping reduce transmission and distribution costs, you know, or could potentially if you deploy them in the right way. And then on the other side of things, I think you can have gigawatt scale DERs. So you have large data center cited solar storage and gas primarily, you know, Duncan on the DR task force as well wrote that awesome off grid white paper, which isn't actually only about being off grid. So you can have fully off grid, you can have grid connected systems, you can have them front of the meters located next to a data center, all that stuff if you're augmenting how you're actually distributing power on the grid, those are DERs in our mind. So we look at DERs is everything from one of these small 400 watt plug and solar systems that we may talk about all the way up to a gigawatt scale system behind the meter at a data center. So it's mainly about locations, which makes sense since the word distributed co location. Yeah, right. That's the sort of property that excited me, you know, a decade ago. I would say though that I love all DERs. I get more and more bullish on distributed solar and storage every year and think that the lion share of what we think of as distributed capacity and supply will be solar and storage. Amen, brother. That is the thesis of this podcast. So then within DERs, there's this class of permissionless DERs, which is distributed energy resources that you can just install without getting permission from any sort of regulatory body. What is that? What is included in that class? What all falls in there? So it's funny. I actually think Duncan coins permissionless on one of our podcasts a few years ago. And at the time we were thinking about actually two applications in particular. One was impulse labs battery embedded stove where that is a plug in DER and then electric ERA's DCE fast charges that have batteries that keep you from needing to upsize. An interconnection to site a DC fast charger that's Quincy at electric ERA and we said, oh cool, you can deploy more DC fast chargers without interconnection upgrades or permission to interconnect. I actually you may need an interconnection there. I'm not actually entirely sure, but at the time in the early days of this we thought anything that sort of skirted the need for complex expensive and permission utility upgrades were permissionless right and also along on the lines of the impulse stove. What jigger shawz very excited about is carrier is going to start embedding batteries in air conditioning units that's right and they sell caged millions of those a year. Yeah, and you do not need a permit to plug your AC in that's right and also I think you could add some of this off grid like for data centers but not just for data centers like a micro grid or whatever you like you can put more and more batteries on your micro grid. And as long as your interconnection point stays stable you don't need additional permission to do that. That's right. I was going to joke that I even think X AI their data center was maybe as I've read about it since maybe like to permissionless. But you can also just you can also just do it even if you're supposed to get permission you can just do it illegally. I suppose that's a sub category. I appreciate the impulse to just build something more than waiting like six years for an interconnection as long as it's being done safely and you know it makes sense ultimately. I like the I like the wild and woolly approach it would just be nice if it were being done in service of you know renewables and batteries instead of a bunch. Yes, I definitely agree with that jet engines on on track trailer beds. Yes, okay, so that's permissionless and so then within permissionless there's plug in which is what we're talking about today. So plug in solar we covered that pretty extensively on the pie the other day is just these small scale usually like single panel or two. And then there's also plug in batteries which is what you are mainly doing. And so I guess what counts as a plug in battery like if you're going to put a Tesla power wall in. You got to get permission for that that's the scale of battery that triggers some regulatory. oversight. So how small of a battery do you have to get before you are avoiding these regulations when you can just do it? Like what size of battery can you just plug in at will? Well it's interesting because during your intro I almost I wanted to make an objection actually to calling plug in small. I would have said the same months ago but I don't think plug in is small necessarily. I'll expand on that in a moment. Plug into me is just you plug it directly into 120 or 240 volt outlet or any type of outlet but it's using existing grid infrastructure and interconnection points we have which is most commonly the 120 volt outlet. Right and the insight here which I guess is controversial but is sort of the core insight all this agita about finding usable interconnection points and the point here with plug in stuff is just like we're actually surrounded by already permitted interconnection points they are called outlets. That's right. And honestly through this plug in journey over the last year I've had multiple points during it that have blown my mind or like reader-pilled me to an extent to actually like god me even more bullish on this stuff somehow and the first one was just that idea that outlets are pre-existing bidirectional interconnection points bidirectional is the key here you can push power back into a circuit and that is totally allowed you know it's like and so that is a that's an important point to the great. It's allowed someplace we're going to get to that in a minute but before we get too far in let's back up a little bit and just tell us what David energy is tell us what your company does tell us what you've been doing since 2020 and what is different that you're doing since January of this year right January of this you sort of launched this plug in part of things pretty recently but like just give us a smidge of background on what David energy does. Yeah so maybe I'll give you the sort of overarching what the mission has been from day one which is to run the grade 24/7 on clean energy by that we mean we are a licensed electricity provider we can choose our own sources of supply our goal is to prove that it's possible to run our book 100% on clean energy in real time physically time-aligning supply and demand not like offsets or anything like that the reason for that is we think clean electrons are the cheapest electrons by far and if we can do that we're going to be the cheapest commodity supplier and if you're the cheapest commodity supplier you can grow incredibly fast and build a big business. So you're a retail energy provider in other words like a home or a business in a place that has retail competition which is not everywhere but in a place that has retail competition and people can choose their energy suppliers you are an energy supplier and your distinction is you're the clean one and the cheap one or that's the yeah and something can found me early on in the journey which is like solar and storage were becoming the cheapest electrons and that if you go and buy like a quote green product which is basically a wreck product it was a premium product and we're like why is this the cheapest source of power and actually if you want to buy it from a supplier it's more expensive than than the alternative and so yeah we think clean is cheap if you're not doing offsets if you're actually doing it unlike the real time demand supply matching basis day in and day out which this is where you know the problem that's fascinated me since 2015 probably is everyone talking about intermittency and and how do you manage lots of solar and storage or wind on grids how do you actually run grids with very high penetrations these and that problem has been what we want to solve through just doing it as a license supplier like are all your offerings 100% clean all your customers are getting 100% clean power tenet no and that's the goal and so we can talk about what we're doing now so what I would say is over the last few years we launched a software product to our customer base which is small businesses which we've viewed as very underserved in this market so think multi locations restaurants gyms cafes laundromat stuff like that whereby they get access to great features like thermostat management and bill auditing and community solar and that product is free to them if they're buying their energy through us the reason we did this is as early as we started there was not a lot of solar and storage to go out and get the path to powering our entire book on clean supply was a daunting I'd say right because in some sense you're buying wholesale power and selling it to customers so in some you're you're dependent on who's producing the wholesale power right for the most part that's right and we get to actually choose who we go and buy that power from and so what's changed recently as we see a much stronger path in the near term to actually get to very meaningful penetrations of clean energy supply within our own book over even the next year because of things like our ability to deploy plug-in batteries and also the proliferation of solar and community solar and things like that and so you can just think of it as up until last year all of our supply was not clean this year we're starting to get some clean and every year that goes on our percentage is going to increase towards a hundred that's our goal and the actually the more solar and storage we get under management the cheaper our power is going to be and the more we're going to be able to grow so the way that expresses itself in you know you mentioned this what we're doing today is we go to customers and we say because there's so much value in these plug-in batteries if you let us install plug-in batteries and take over your energy supply we guarantee that we will beat the utility month over month you will pay less to in this case con Edison then you would have without David energy where we're taking over the supply side of that bill and they're not paying for the batteries the batteries are effectively free for the customer yes so there's no cat-bex for them there's actually no even long-term lock-up which is one of those other sort of aha moments remarkable properties for us which is you can unplug the battery and move it very easily meaning you don't need to get the customer to agree to like a 20-year mortgage like lease on their on their home or the land they own or something like that there's not even a long-term lock-up for this so it's just if we come in install these plug-in batteries you're going to save money every month relative to what you would have paid the utility i got a bunch of questions about that a bunch of questions about the economics and various other things but let's just start with the batteries that you're selling today how big are they and what do they look like yeah well we'll work backward to my small objection at some point but the battery the the batteries we are deploying right now you could classify as small they're about you know just under two kilowatt hours you can configure them basically as like a two-hour battery we can do multiple of those in sequence and so our standard install will we'll put a few of those in series and you know sum up to something closer to a power wall i was looking at the pictures they look basically like a toaster like a big like the size of a big toaster that's right we're heading toward big here but let's not dis on small which means that you can tuck them anywhere in a business you can put them in a basement you can put them on the bottom shelf you can tuck them up above the cabinet you know so like almost any business will have room for a couple of these right yeah the first objection we always hear from like a new york city restaurant tours like there's no way i'm gonna have space for that and we actually have like a 98% success rate on installs and uh we we you can always find space which is great that's something that's nice about the current form factor it's interesting in particular that you're doing this in new york city because new york city is sort of legendarily kind of like highly regulated like you can't even install a Tesla power wall in new york city can you because of the fire risk so like there are regulations on energy storage systems in new york city right now it seems like your batteries are too small to kind of trigger those regulations but i was looking into this and it looks like new york city has issued some new rules that lower the threshold down to like one kilowatt hour and yours are bigger than that so i'm sort of curious like how are you sneaking past regulations here in new york city yeah it's interesting so i mean one thing that's important to recognize is that it's not that you can't install it's that there is so much red tape often and even getting something approved that a lot of folks have chosen not to do that and just take their efforts elsewhere and there's a few different companies out there you know from every electric or copper stoves that are doing batteries in this way and there's a few aspects to it one is that you will 95 40 and 95 40 a are sort of historically we're not certifications that these consumer level batteries we're going after and that is sort of the gold standard that fd and y and other jurisdictions take as what is necessary in order to be able to get a ceo a and and do these installations i think the other thing that you know and you had a recent podcast with kora from bright saver i think that's where you were mentioning before is that the way that rules are being written in many parts of the country it's clear that a lot of these use cases are not even being contemplated. that there's a certain amount of gray area in like what can and cannot be done. - Right, right, that's what I was trying to get at. And this is sort of like a, let's do it. And if we have to, you know, ask forgiveness later, rather than ask permission upfront, there's a little bit of like, let's just put a bunch of these out there and get them working, rather than waiting for this kind of regulations to resolve themselves completely. - We don't think the regulations here are in a lot of cases are clear for this type of application in particular. And on top of that, that the gold standard that these jurisdictions care about are UL-9540 and 9540A, which the products we're using do have. And what we focus on above all else is that what we're doing is compliant with NEC, UL certified products, it's completely safe the way that we're doing it. And we think as those gray areas are worked through that the intent behind the rules are driving towards that overtime. Okay, and so these batteries, they're putting in small businesses, it doesn't seem like they're kind of big enough to like if the power went out, you could run your business on them. That's not really the pitch here. The pitch is mainly reducing peak demand charges, right? So maybe just explain briefly like, what is a peak demand charge and why is it helpful to shave a restaurant's peak in order to avoid it? Right, so there's certainly some customers that we get into that level of detail. I think primarily customers don't get into that level of detail. The pitch is we are going to save you money against Conned. That's not true. But the pitch to me a podcaster. Yes, Greg. But we do get into the demand and supply side of the bill where on the demand side or the delivery side, they're still being billed by Connedeson. They're assessed to charge by their 15-minute interval peak every month. So the single 15-minute interval where they have their highest instantaneous draw from the grid. So we predict those peaks and we discharge the batteries during those. And that allows us to say, hey, if you didn't have us, your peak demand would have been 12 kilowatts instead of 10 kilowatts or something like that. The other side of it is a little more complicated. Because we're the energy supplier, there is responding to real-time prices, there is responding to peak capacity tag events, which is a whole other can of worms that we can get into. But sets how much they have to pay into the capacity market. There's demand response programs at the utility level and at the ISO level. And the customer does not need to think about any of that. We take care of all that complexity on the backend and just say, hey, this is the supply rate you would have paid con Edison. And it's lower because of some aggregate pool of money that we've generated with the battery and are giving them a discount on the supply rate to do that. And since lots of batteries are doing this, and I think this is a familiar concept to listeners, it's just arbitrage, right? Like you charge the battery when power's cheap and you discharge the battery when power's expensive, it's just you're doing that arbitrage on a kind of a micro scale within the premises within the business. It's sort of like a micro arbitrage, I guess. But the principle is basically the same. Like your shaving peaks, your, you know, responding to demand charges, you're enrolling in demand response programs. It's all the same thing kind of bigger batteries do, just kind of on a micro scale within the premises of a customer business. Is that fair? Yeah. And by micro, I just take it to mean, you know, we're, I'm going to continue, I'm going to continue tying up a small and micro. No, but I take it to mean that we're doing it through the demand. So an important note here is we are not exporting through these batteries at all. Yes, right. We're going to get to that for sure. You could, you know, and that's a lot of the great work that Bright Saver is doing. And I think it's particularly relevant for the smaller consumer applications and what's they're talking about. But you're not currently, you're not currently exporting any power into the grid. All this arbitrage is sort of within the premises itself, just moving power around within the customer side. That's right. Because we're the supplier, we pay that customer's energy obligation on their behalf. And if we lower that energy obligation during high prices, we can generate savings by doing that, which you can only really do if you are the energy retailer. Right. Let me, so let me ask this, like, there is some capex involved. You're buying these batteries. So I'm just curious, like, how long does a customer relationship need to last for you to pay off that capex of buying the battery yourself and eating the cost of the battery yourself? We think about it as sort of the non-capex expenses, actually, like traditional cac, basically, or even there are some minor setup costs for the installations that we're doing. But there are only like 10% of system costs instead of 50 plus percent, which is what you typically see. And that doesn't necessarily have to be true. So we actually do send a license electrician on site and create our own dedicated outlets for the batteries, which is sort of the gold standard of doing this very safely. Again, which is the main focus that we have in doing this. Right. So that's some cost and the batteries themselves are some cost. And then there are savings over time. I guess I'm just asking, like, is this kind of a loss leader in order to acquire customers? Or do you throw those costs get paid back to you? And if so, like, how long does that take? Without ITC or anything, or providing any savings to the customers, just the raw value of the battery is something like three years. And as we optimize that, we think that drops even more. And I'll get into that in a moment. But so the cost that we want to recover are sort of the cost of acquiring that customer and the minor cost of installation, which may be a much shorter amount of time, like a year. And if that customer were to turn, we can go pick that battery up and move it to the next location. So it's your battery. That's right. And we could do that in a day. Like I pick it up and eat think of the density and metropolitan areas. I unplug it. I unplug it. I pick it up at one restaurant and then I move it to our next installation of which we have a big cue of. And then you start, you know, running the meter on that side of things. So the cost that we focus on recovering, there's even like contractual things you can do around this is like the initial setup cost and the cost of customer acquisition. We only need a customer for a couple of years for that to make sense, which would be like the traditional, the life of like a traditional software or SaaS customer, right? And then because we're able to move the battery, we have the full useful life is reported as 15 years, but it could even be even longer to recover the costs of pay off the cap X that battery. It's just an asset that we own that we can place where we want. One of the really cool, I think maybe even like one of the coolest aspects of all this is that you can strike these deals with tenants rather than landlords basically like you don't have to get the owner of the building involved in this. It is a tenant relationship, which is cool because you know, as you say that's an underserved, you know, this is a problem in in multi family housing too, which we'll touch on in a minute. But I just wonder like what if landlords do butt in like do they ever object to having batteries on site, you know, people are very paranoid about batteries for a lot of different reasons or like I was thinking like if there's a fire in the business, even if the batteries aren't involved is insurance going to come in and see a battery and freak out like, you know, the tenant can do this, but are there risks from like landlords and insurance companies and that kind of thing. Yeah, and I think this even goes back to your question around regulations is that like we don't think as much about the regulatory framework that bright saver does because we don't export and are not currently. So when I said you're allowed to do this currently under code, I'm thinking like any C U L not requiring an interconnection agreement things like that because you're not exporting right and so certainly yes batteries the most likely scenario as they could become a scapegoat for other problems that happen on site, which we expect to happen over time any new technology is going to encounter that. And New York City has had some, you know, negative experiences with battery fires so there's some paranoia is not completely unfounded, but if you're going to buy a non you all certified product from China that's and then plug like 20 different ebikes into it with like 40 surge protectors like yeah that can probably be an issue like that's what we mean about this application not being contemplated really and how safe it truly is like we think deploying in the way we are is incredibly safe. It's possible that a local jurisdiction or a landlord says hey not in my building or not in you know this region or something but when you look at the broad scope of where this stuff is headed over time I think of those as like minor speed bumps because yeah have you run into that yet as anyone we have not no all that said I do want to emphasize your point that this being accessible to tenants is one of those other aha moments like the remarkable property of plug into it. And that's the property of plug in technologies it also gets into the tenure thing I mentioned like you can equipment finance this stuff you don't need a 20 year asset back to curitized loan with a credit where the off taker you just need you can actually look more at hey what is this unit can it be redeployable what is the resale value of this or something to that effect where that property on top of not all the friction from deploying these. Yeah, yeah. And vastly expands the customer pool. Another thing, I was trying to think about risks to sort of the unit economics here. Another thing is, like, as you say, this is sort of not customer facing. All you're really telling the customer is, you'll save money. But this is sort of dependent on arbitrage behind the scenes. And I wonder, like, if Khan Ed changes its tariff structure, or maybe like reduces peak charges, peak demand charges, is that going to hurt you, like, how dependent are your economics on the existing tariff structure? Well, not on the supply side, because that would be a much more substantial change, like deregulation at the state level, at the PSC level. Because what deregulation means is we're allowed to enroll that meter. It's our meter with the New York ISO. And the interval data financially settles to the ISO data. And so we have that financial obligation. So there's nothing on the supply side that you could change the tariff or something. Khan Ed can offer their own tariff or their own supply products in our mind. They would simply compete with the products that were able to offer. They typically don't really spend much time on it because they're not allowed to make money on it. They can only make money on deploying infrastructure. Right. And so, yes, we do benefit from peak demand charges. I suppose it's conceivable that could always change. So far, flung, then it's not really a risk that we think about. You can say like there are in residential customer classes, for example, they'll have like volumetric delivery charges, not peak demand delivery charges. And so that can impact your ability to recover. It also, if you have solar, though, can enhance it because it means if you're pushing volume and you're avoiding those charges. So like all of this is kind of, there's more elegant designs around tariffs and prices than others, but we think the base level framework in all the major ISOs like PGM, New England, New York or COT, where we're focused over time, give us the framework to deploy and have really solid unit economics. So you think you'll be able to beat Khan Ed for the indefinite future? Yes. And we should beat it more and more over time because as we get closer to 100% clean, right? So one thing we didn't talk about at the unit economics is we're actually starting now to deploy our own solar or aiming to this year. Deplug in variety. Well, that's something that we're starting to explore, but we would also do this sort of traditional front of the meter stuff as well as our own supply source. So as we get more and more of that, we beat the utility by more and more and that can lead to more savings for customers or more margin for us. But another question about the cleanliness, the cleanliness of all this, you're just kind of shifting around. And so the cleanliness of it to some extent depends on what's on the grid, what's available on the wholesale level. And like, as I understand it, like most of the nighttime power in New York is gas. So, you know, is this necessarily a cleaner? I mean, it's cheaper, right, for the reasons we've discussed. Is it necessarily cleaner? And some sense you're dependent on what's on the grid? Are you not? I mean, less so over time is you install more of your own, say, community solar, whatever, but currently. Right. So I would say two things. One is the point you just hit, which is deploying storage gives us an ability to manage solar in our book, like manage the exposure that the intermittency brings. Right. So even if the solar is not on site, we're effectively storing our own solar in our onsite batteries from like, you know, at the end of the day, ISOs are just like big financial markets. You have pluses and minuses. You have sources and sinks, exporting power or pulling power, producing or consuming. And so that's one big piece of it. Is this storage will allow us to deploy solar finally? The other part of it is that we use some very dirty peak sources in New York. We use fuel oil. We use nasty stuff. When things get really bad. And so if we're discharging during these peak times, yes, we're avoiding some of the most dirty and expensive resources out there. Got it. So almost always the customer will be getting cheaper power than they would on Connid's plan, but also cleaner power. That's right. And we, I mean, we don't talk a ton about the clean now because that, how clean it's getting is going to strengthen over time. Right. Right. It's a good place to pause and emphasize this because I'm not sure we emphasize it enough up front. You're just going to a customer and saying, Hey, I'll give you cheaper power. From the day you sign up, you'll get cheaper power. That is, that is a pitch that is sufficient unto itself and requires no additional motivations. You don't have to be green. You don't have to care about anything else, basically. Like, this is why this is intriguing to me is because for a long time, trying to sell doors, you know, you need people who care about cleanness. You need people maybe to care about resilience. You need these sort of other motivations to overcome the financial premium. But here it's just a pure cost play, right? Cheaper power, period full stop. Yes. And you don't even have to mention that it's going to get even cheaper the cleaner you get, which is, which is, which is what we're obviously psyched about. Yeah, I would love to emphasize that resilience and sustainability have been marketed as premium products. And that's been where DERs have had the most success. Of course, there are savings pitches out there, but it's unclear in a lot of cases whether those customers actually did save money because it's like a 20 year agreement. They're signing to it and there's some forward projection of power and you have to believe in, you know, inflation escalators and all this stuff, right? So we just say in a single month, if we do not save you money, you can leave and we will come pick up these batteries. So I think that's something that's very new as well. So let's now talk about feeding back into the grid. So right now, you're not feeding power into the grid through these outlets because although you say it is possible, it is in fact, I think illegal to do so most places like in the plug-in solar pod we discussed how Utah has sort of pioneered allowing a little bit, a little bit of feedback into the grid. I guess I wonder like how much of a restriction is it on you, on the size and number of batteries that you can install on one of these premises that you can't currently legally feed back into the grid and were you allowed to feed back into the grid? How much would that improve the systems that you're able to install? Like how much of a restriction is that you can't currently? Yeah, so we think more about the AHA like DOB or FD and Y or those types of regulations more so than the exporting one. The reality is is that our customer peak demands are quite large as commercial. You know, they range from 10kW if you're a small cafe up to north of 100 kilowatts and you'd have to deploy a lot of storage in order to actually be exporting. So we think even with no constraints at all that physical reality, it's unlikely that we'll export unless we're doing something to your point earlier about plug-in solar which also by the way does not need to be small and we can talk about that in a bit. So what we found is this is another sort of mind-blowing moment for me is that when you look at the National Electric Code and UL certification and how outside of whatever jurisdiction that you're in, just what is safe physically to do, you can do hundreds of kilowatt hours in buildings because there'll be multiple 200 to 400 amp panels. Each of those, you know, there's the 120 roll and you can push a lot more power into them than you think, not just like these little batteries. So we're keeping things small because of the current environment that we live in, but the physical sort of safe way to do it, I see paths to having, you know, imagine like in every panel on a commercial building, you have a stack of these batteries like a server rack. And they're all plug-in based. You're not just doing like one giant system on the roof which does have totally different safety and weight considerations and all this stuff in these permits, et cetera. But when you think about these metropolitan areas, you could imagine solar on every balcony, solar on the roof, storage on every panel, and they're all plugged in and you're talking about megawatt scale deployments. And so from that perspective, I don't think it's small, but we're not doing that right now and the bigger constraint is not necessarily the exporting because the peak demand on these buildings can be quite large. Right. So you're saying basically you don't need to export back into the grid to scale these systems up a lot. For this commercial application that we're focused on, that's right. And I imagine because obviously the original, you know, you think back to impulse, they're like, okay, let's plug a battery into a stove and now I don't need electrical work. Now we're looking at this whole balcony solar movement. David Energy is in this new category of like commercial plug-in deployments and this is also where you start bleeding into plug-in versus permissionless is like it may not be a 120 or 240 volt outlet or something, but the idea of deploying solar and storage, we don't understand all the form factors yet. And the reason I've been harping on this small thing is like you can do pretty large installations that are not exporting and are plug-in. In a big customer, in a large size customer. Yes. So big customers plug-in can be a superior means of deploying storage than a traditional system from like the techno economic like physical layer and what is currently allowed under national electric code in the UL, UL certifications. So when you say big, you think like for an individual customer, you can reach the same sort of scale that they would get by having a full on permitted rooftop solar installation in a full on permitted large scale battery. You think you can reach that same scale with plug-in Legos basically. You know, the solar one seems a little more unlikely like at some point you should just do a proper install and make sure it's wind rated and interconnected and all this stuff because solar is producing so much during the day. It's probably going to be exporting to and the point of the plug-in rule is like if you're only exporting a little, you don't need an interconnecture agreement. But if you're exporting a lot like you should probably have an interconnecture agreement. I think there's a limit there. I do when I think of like floors on buildings and how many panels are currently available and like these quote pre-existing interconnection agreements. I think it's very possible you got to a bigger installation doing that all regulatory questions aside like physically that's better than a rooftop or ground mount storage system. So if not bigger than the traditional way, certainly quite big. And I think that's even true of the solar side. Like there's someone you know, Raya Power out there is doing really cool stuff where it's like a not quite balcony. It's like its own self-balisted system that could be like a couple KW and I could totally see that being on New York City roofs. I find the subject slightly vexing because when I talk to like Koro and I talk to the plug-in solar people talk to you everybody's like a little back feed into the grid is no big deal. Let's just permit this. Let's I know there are people out there crusading just sort of change state laws on this to allow this. But then you know I hear from electricians you know master electricians and they're like well hold on now there's all these risks from back feed you know and I'm sure you've heard the whole litany of risks and I just like how are we you know sort of electromechanically ignorant you know onlookers to sort of assess this question like who's got the right of that how do you think about the safety of back feeding. Well I'd say there's two components and I would say I'm not an expert on this I would definitely defer to the bright saver folks that said one real concern I've heard from utilities is that if there's a grid outage and there's a line worker out working and because of back feeding you know line is energized that they don't know or expect because from the utilities perspective there's that line is down that that's a danger I think that's quite manageable you know for example even in the batteries we deploy if the grid goes down they trip off so there's ways you can do this with any sort of you know the way you're actually configuring these systems. The other one would just be you know I understand the utility desire to understand how much supply and capacity is being deployed on a given feeder for example so if you were to raise that limit from 1.2 KW up to 50 per home and everyone was doing it like you could be pushing a lot of power onto a distribution feeder just in like normal operation and I think that's a reasonable concern as well and that sort of gets into like up to a certain amount of capacity deployed do we need interconnection per system or could it be more of like an application where you're like hey just so you know I'm doing this thing. I think we're just starting to ask those questions honestly or their folks out there who know a lot more than that I do but those are like the two big ones as I understand sort of like legitimate safety concerns there might be others though. I mean this is like a bit of a crude heuristic but they have run this experiment in Germany you know and there were a lot of concerns upfront a lot of electricians you know objecting to this a lot of sort of apocalyptic predictions but they've legalized a little bit of feed in with their plug-in solar and they've installed now just like gigawatts and gigawatts of these plug-in solar systems and as far as I know there's been very basically no problem yeah the fears have not come to pass in Germany at least yeah and again I think that comes down to like when I say allowed I mean at the like physical electrical code what are we actually doing to the grid. Safety is very important and these systems are very safe and that's why that has played out and interestingly enough the bridge between those two things at least as I understand it is the choice to say 1.2 KW is mostly so that hobbyists and consumers who are going to self-install these systems don't overload at the circuit level so 1.2 KW or 1.9 KW even points at the 120 rule of like a 20 amp breaker for example or I think 1.2 maybe how much power you can push on to like a 15 amp circuit potentially and so if you made the rule you know 20 KW someone may just start like plugging tons and tons of solar into their home and actually overloading at the circuit level so the bridge between how much can you export with the 100 interconnection agreement actually does tie back to like circuit level physically what's safe what do we want to make allowed so that when customers are self deploying and when products are being offered they're being done so in a way that is safe naturally at the at the physical level. And I'll just wave my hands at this to just to say that I think in the future these distribution level circuits are going to be much more smart lots more sensors lots more software governed you know what I mean lots more ability to sort of see where power is and distribute it as you need it rather than relying on physical you know circuit breakers and that type of thing so I'm guessing it will get safer and you will be able to do more overtime. This is such a good point and why I think you know that having like real conversations between people in the industry and utility folks and regulators is so important because when you think back a lot of the safety standards of the utility and rightfully so are very mechanical in nature. Yes literally metal like flipping yeah it's like it and in talking actually at Durvos I won't I won't name names with the utility exec I was like hey if we could demonstrably prove that we were incapable of exporting not through a mechanical switch but through software in a way that was demonstrated you you believed that this was safe. He said yes that would not require an interconnection limit because of the export limit like when the grid is down and things like that if it handled the safety concern so I would just put it this way I think as an industry we need to ask the question what is interconnection like we have all these feeders are bidirectional physically you could export safely physically under certain conditions the same amount as you're drawing in right right. So it's like why do you need an interconnection to push out I could put batteries behind the meter and discharge and take that whole home offline and that doesn't need an interconnection or does it and there are different opinions around this around the industry of like what doesn't does not require an interconnection at all right and it's all going to get smarter yes and the pieces are all coming together. So right now you are in New York City selling to small businesses franchises laundromats the like who is next like what is the potential customer base here what other customer classes or types are you going to expand to as time goes on. Hey there everybody don't worry I'm not going to tell you about a new mattress or push a credit card on you this isn't an ad there are no ads on volts it is supported entirely by listeners like you. I started volts because we're all surrounded by depressing news about climate change and misinformation about clean energy and it's never been more important to share the stories of the real people on the ground doing the real work of transition and all the ingenuity encourage and public spirit they are bringing to it. People are hungry to hear these stories to learn from and find inspiration in them I've heard from people who change majors or careers after hearing episodes of volts people using it in classrooms and community groups even state legislators who have passed bills inspired by specific episodes sharing these stories matters makes a difference if you have found value in it and want to help me continue doing it. I hope you will join the community of paid subscribers at volts that WTF it's about the cost of a cup of coffee a month if you don't like subscriptions you can make a one time contribution leave a review on apple or Spotify or just tell a friend about volts I'm grateful for any and all support if you're already a paid subscriber thank you and now back to the show. Who is next like what is the potential customer base here what other customer classes or types are you going to expand to as time goes on and where is this possible do you require. where you require retail competition, right, at least. So, like, what is the potential kind of customer base and geography base here? So, we haven't gone too deep on other GOs, but just based on what we know, we can expand into across PJM in New England for the most part. They need it. Yes, I agree. You can think of really any storefront or even, like, direct-metered commercial tenant space, like an office, potentially, like maybe a legal office or something like that. What about multi-family? I don't know. If I just have a condo, you know, like, can I do some version of this? I mean, do I even have enough power? Am I even using enough power? Have you thought of it at all about multi-family or is that not a potential? Yes. Have we definitely aspire to launch a product, like a retail energy product that would cater to the type of people who are going out and will be buying and self-installing solar and batteries because of all the awesome work that Bright Safer is doing? We're just starting in this lane of self-deploying for now. But, you know, once solar and batteries are getting connected, there's ways to optimize them where without, you know, a counterparty with, like, David Energy aggregating them up, offering them into grid services, doing arbitrage, all that stuff, you know, your, your average multi-family renter is not going to be doing. So we don't have any near-term plans to do that, but we certainly aspire to over time. And I would say we definitely have our hands full now on the storefront perspective. I mean, we've been in cafes, restaurants, gyms for a while, but we're starting to get like laundromats and salons and grocery stores and you can think of that whole commercial space, commercial tenants across all the major states in PGM, New England and New York as areas that we want to expand into in the coming years, sort of standalone and then separately, there's new products like multi-family renters. Okay. You're installing all these batteries and you're the provider for all these, you're the retail provider for all these businesses. Are you doing any aggregation into VPPs or is that part of the play aggregating to provide grid services, you know, all the VPP stuff? Are you, are you into that? Yeah. So we, we aggregate our customers and dispatch them, you know, as an aggregation, basically. Interesting. I'm curious how big of a piece of the revenue is that? The VPP sign? Yeah. I would say it's a meaningful amount. In New York, you can drive a lot of value just through peak shaving on the delivery side. That's all value that goes to the customer. So actually like all of our revenue is the VPP side. So we dispatch it as one thing. So again, start demand obligation with the New York ISO and at the say a grid services program level, all of that we think of as an aggregation and that is where all of our value comes from. And you know, it expands over time again as you start layering in things like solar. It's kind of like the, the whole becomes greater than the sum of the parts. Right, right, right. You know, I heard you, you were talking about Shilcon on his pod and you were, you know, one of the hot subjects these days, which I've covered on the pod many times. Everybody's talking about is these data centers desperately need capacity. The fastest way to get capacity is theirs, in my opinion. Do you think that these, I know you're going to yell at me for saying small, but like, you know, like relative to data center needs any one of these installations is tiny. Are you going to be able to aggregate to a meaningful scale that it would matter to a data center like you think you're going to get big enough to play in that pool? Yeah, I mean, I actually think the white paper that you discussed with Kora is great of like, you know, looking at Germany, like how much of this stuff is going to get deployed in the coming years. And I think that's because we're only just beginning to understand that that's like one form factor of this stuff. And so if, again, and I'm talking theoretically about these like larger scale plug-in installations imagine something like that would be allowed under the varying regulatory environments that that could lead to far greater numbers of this stuff than we could imagine. Currently, but like what I would say in it, again, have not done the analysis or make me like a real projection here, but I think in terms of gigawatts and tens of gigawatts in the near term. And I don't see anything stopping us and other players in the market from doing that. Let me say it again in contrast to the current way we're deploying DERs. There's too much friction for the current permitted interconnected way to scale to something meaningful enough in my mind. Plug-in at least offers a path. So imagine if every time you bought an iPhone or went in bottle laptop or something, you needed like a permit in an interconnection, like the, the, the, in an inspection, like the internet number would have scaled, right? Like in order for this thing to really happen, people need to be able to go out and buy and deploy these things without as much friction as there is today. And so when I just like look at that property and knowing that we're actually probably quite naive right now and not understanding all the ways in which this stuff is going to express itself, I think plug-in, at least on a sort of like first principles level offer the DERs industry, the promise that got me excited about DERs 10 years ago. And I don't think we've actually, that promise has been able to deliver until now. Like I really do see this as like a dawn of a, just the totally different way of deploying that I'm incredibly excited about. So that's like the worst way to answer this. I know I'm sorry, but like. Let me know you did on one thing. Yeah. Yes, please. Just take New York State. Like do you think that plug-in capacity cumulatively will exceed traditional DER capacity and if so when I know this is the level of arbitrariness to this, to like approximately how you're thinking about this? I think yeah, definitely for storage. When I look at the whole commercial landscape, plug-in batteries just seem to make more sense to me. And like multi-family buildings, I don't know the extent to which balcony solar versus like a traditional system. How we're still in the early innings of exploring that, but I would say 100% yes for storage. Interesting. And here's kind of another slightly vague question, but do you ever worry that kind of the reason this is all going off so smoothly is that it's not yet reached a scale where like people are noticing. And if you do start to get to really substantial scale that the US is sort of, you know, red tape prone regulators and legislators are going to start biting at your ankles and trying to get in and regulate this more and trying to get in. I wonder almost like are you trying to sort of race to a certain scale before you draw the eye of Sauron as it were? Is that kind of how you think about it? Yes and no. I mean, like, sorry, I'm, I, I, I keep you can't put me down. I'm sorry, David, but in the long arc of things, I trust that if our system is working, like this stuff makes sense, it is safe. It is cheaper to deploy. It's good in so many ways. There are real safety questions and real like aspects of deployment that are unanswered, but certainly answerable and that we will answer over time. It's not like there shouldn't be regulations. It's like we should create the right frameworks around this like radically new technology and that like I trust the, we will grind through the mechanics of that over time. I mean, you are creating constituents, right? I mean, you are like every one of these little businesses who are getting cheaper power now or in some sense a constituent for this. Yes. And it's safe to do. So like, what are we going to say? Like no, they shouldn't get access to this like new technology, you know, which by the way would be a very politically challenging position to hold, I think. Clean cheap energy for renters and tenants like that. Yeah. Seems like anyone on either start of the aisle will support. We do lots of dumb stuff though, don't we? Yes. The short answer is like certainly with anything new, there will be jurisdictions or certain regulators or certain utility members that don't like this, you know, and some of their concerns are even going to be valid, you know, but I actually the best way to have those conversations is to show that it can scale and that it's something that must be contended with because people are going to go out and do this. It's good to do. And we should catch the ball as a system, as a society, not try and close Pandora's box, which I don't think is going to happen. It's like, that's the myth, right? It's like, it can't happen. It's open. We got to deal with it now. Well, speaking of that, you know, we've been talking about your business and David energy. Talk a little bit about like who else is in this plug-in. I mean, it's nascent. It's early, as you say, early, early days in this, but like who are the other players out there what in like. What are they doing? Yeah. So impulse labs has the battery embedded stove so that you don't need to upgrade your standard 120 volt outlet, which I think is awesome. Copper. Yeah. I interviewed them two years, like, three years ago. I was hyped about those battery embedded stoves early on. Yeah. And so that's another one. You know, eco-flow is currently the battery that we're using, which are making some really incredible products in this category. I just saw someone trying to raise funds on Kickstarter for something they're pitching as a fridge battery. Like it's literally a battery you put next to your refrigerator to ensure that if the power goes out, your refrigerator stays on. And my first thought was like, well, how long until refrigerator manufacturers just integrate that, just put the battery in the fridge? Yeah. I think the impulse and copper, maybe at the front end again, of like a whole wave of battery embedded products like the heat pump or the fridge. And I don't know that company in particular, but Pila, a big part of their value prop up front is actually resilience for something like a fridge. Right. Speaking of the locality. Like I've seen like probably a half dozen products like this just floating by on Kickstarter, just little batteries for various things there. You can sort of feel people grooping around around just the right way to market them. Like just the right way to present them to customers. You know, like is it backup? Is it cheaper power? Is it keeping your fridge on? It's so interesting to watch this sort of take shape. I'll even admit that we don't fully understand that yet. Like yes, people love savings. But one thing I was going to mention before that has really sort of warmed my der's loving heart is how much does the average customer thinks batteries are cool? Like if you went to a customer and a lot of retailers have done this and said, I'm going to save you 5% on your power bill. You're going to get a lot of skepticism, but you say, and I'm going to do it with a battery. They immediately are like, oh, that makes sense. And that's cool. And I want it. Interesting. And then I'm going to be like, oh, battery fires and leaching chemicals into this all this BS sort of misinformation about better flying around these days. You're not running any of that? No. And I think people are smarter than that. Like how many hours have they walked around with a phone in their pocket in a laptop and not had it. People are pretty familiar with batteries. You know, it's just like all of these things are like myths from a prior era. And we literally scoured the internet trying to find their people out there who literally try to start fires with these batteries and cannot. They're using power drills. They're using like water, all sorts of crazy setups and like they can't do it. So obviously, they're still like safety concerns. And again, we care a lot about safety. But like, I think we're in this era, especially with LFP, where we know that they're safe. And I think the average person does too. Yeah. And I really think also you can't understate how much the spread of electric vehicles have just kind of like got people thinking about batteries basically, like just sort of foregrounded batteries in general. Okay. As I said, the reason you can offer customers cheaper powers that you're doing a little arbitrage. So I wonder if in some future scenario, say in PJM, they install a crap load of utility scale battery installations or they do a ton of what Minnesota is doing, which is putting like these sort of mid-scale batteries on commercial and industrial land. It's just like the grid in general gets a lot more batteries on it. That is perforce. That's going to flatten things out and reduce the amount of arbitrage available, which will diminish the appeal of your current economic pitch. Will it not? Is that something that you worry about at all? I mean, we should have, would love to have that problem. But like, is that something you think about? It's not actually for two reasons. One is our whole purpose for vertically integrating across supply demand is the same as in any market environment or any sort of like commodity player is that if we are self-supplying the consumption of our customers, we are not exposed to price. We can earn stable margins in many different market environments. And so if prices are low, we're still just buying from our own solar and storage. If they're high, there may be some upside there. But so our goal and running 100% on clean energy is also just like it's also a statement of what is viable about the business. As if you look at NRG and Vistra, they own all the gen and that gives them their market power. The second reason I'll say that is that what I love about distributed energy is that because of that co-location element that we talked about distributed out competes utility scale. So there's a remarkable property of DERs that I think originally dirt-filled me 10 years ago, which is it's the same cost to build on a small scale as on a large scale. That's actually like increasingly becoming true with plugin because you don't need thermodynamic efficiencies of scale. So if I want to go build a coal plant, I should go build like a big gigawatt. Right, right, right. Same with nuclear. The same with nuclear. If I'm deploying utility scale solar, it's actually all the same components. There's like some efficiencies, but like not as much as you think. The panel is may even be similarly sized as like a rooftop instill. And so when you're manufacturing these things off the line, that's where your efficiencies of scale come from. What that means is if I place a battery or solar on the grid, the closer I place it to demand, the less I need to rely on wires. And the more there's an economic benefit of doing so. And so if the cost is equivalent, roughly, and there's a greater benefit from being connected to demand, it's going to connect to demand. You also get like resilience benefit and stuff like that. And so I'll just throw out this one stat that I always come back to. And it's something like in Australia, utility scale solar is like $1,100 a kilowatt. And rooftop is 1200. And California utility scale is like $1,200 a kilowatt. And rooftop is $4,200. So the difference is soft costs. It's not it's not the physical properties of this stuff. And so I always just come back to that that what that means is if anything, the grid edge stuff, and this is also where I'm going to continue harping on small, when you place that next to demand, you actually, I'd worry about the wholesale stuff being out competed. And because their only value is wholesale, they don't have a TND benefit. They're actually, they lose all their revenue potential. I think at the end of the day, when you think about, so say on the smallest point is like every meter, every home building should have some amount of solar and storage. Because that's the most economic place to put it. So that will sum up to a lot over time. You're not in the manufacturing, you're not designing your own batteries. I presume you're probably not going to get into that. So in some sense, you're dependent on the form factor of batteries that other people are producing. Is there any sort of form factor you'd like to see that you're not seeing now? Are there literally just like kind of the shape and size of these small batteries that you're legoing into installations? Are there, is there a form factor you would like some manufacturer to get into? 100%. I mean, we are already in conversation with a variety of suppliers about that form factor. And I think, you know, the rule in these partnerships, which is that they have their competencies, which is building this stuff. We have ours, which is doing all the commodity and energy market stuff. And if we're buying insufficient volumes that we have seen suppliers be very open to creating a form factor, not just for us, but that they think if we're deploying them in a given way that, you know, someone else will come along and want to do it. So they'll be some other customer for them. But like what form factor? Like what do you, like taller, skinnier, lighter? Like what do you, what would you like to see? I would say more stackable, not just like the, you know, you've seen how they stand up, right? The batteries we're currently using. I think like a higher energy to power ratio, so you don't need so many of them. You know, we haven't really gotten into the like other voltages stuff, but that is something we may want to do like 240 or 208 or something. But right now it just means we're using a few plugs if we want to do a bigger install. And so there's ways to consolidate the number of plugs you need and also how many inverters that means you need. And so that, that like you can get much more efficient over time. And you're using LFP, you know, less fire prone, slightly less energy dense, but safer as opposed to be the kind of tradeoff with with you, am I on? Is there a chemistry that, that would help? Have you, do you think about that at all? Is like any other sort of chemistry is on the horizon that you think would be good for these sort of applications? Or is LFP just fine? I think it's great. You know, I've been thinking a lot about like spectrum boxes. It's like you don't think about your spectrum boxes. This like expensive cat-x or something. There may be like a hundred dollar charge if you don't return it or something. I don't think batteries ever get there. This is your cable box, right? Cable, that's right. And so. I think plug-in batteries will approach something closer to that than we can imagine right now just on the like lithium ion and lithium ion phosphate cost curve where it's like Why would I not have batteries plugged in at the grid edge and my provider help facilitate that for me? Well, if they're embedded in every appliance like you're gonna be doing it whether you want to or know even know you're doing it at all That's right. Okay, final question real final question like if I'm a State legislator listening to all this I'm intrigued. I'm excited. I mean God knows New York in particular New York City New York in particular has a lot of congestion problems a lot of like cost problems with Deploying their clean energy, you know, they're trying rolling back their their laws now and their regulations So it's like if I'm a state legislator hearing this like do you need or want any particular regulatory or legislative help or Do you just want them to leave you alone? Why are you cook? Yeah, you know what I mean like is there anything that would be helpful? Look, I think the word bright saver is doing is incredible and those laws are incredibly important for the the particular class of Deployments that you know for the multi-family renter for example Again, I think in this plug-in conversation what we're doing the our application is not really being contemplated necessarily from like a regulatory standpoint So I think for our case it leans closer to Let us cook because we have the national electric code and you all certification and these things are incredibly safe There are these interesting questions around like interconnection and how much should be exported But I think what bright saver is doing is like all you need to do there for now at least until we understand more I would more just speak directly to them and say The customers that now have DER is available to them like multi-family renters and small businesses are not happy about rising electric prices and These are tools that they now have access to that we should help them get access to how we can especially if you're a clean energy advocate and you know the two things that everyone has always used as one is like Only rich people buy these which honestly is true to a lot of degree like their credit worthy off-takers and Two you need incentives like the ITC or what have you but if you just look at it from like a We're getting access to people who are feeling the pain and who need more affordable solutions and you don't really need any complicated incentives or regulatory regimes to do that It's kind of a no-brainer to support it however we can but I And again in our application. I don't think there is that much support that we actually need let you cook Yeah, well, we'll take it Super interesting James. Thank you so much for coming on. This is really like super intriguing stuff I can't wait to see where all this goes so Thanks for coming on and walking us through it. Thanks so much David. It was a lot of fun Thank you for listening to Volts it takes a village to make this podcast work Shout out especially to my super producer Kyle McDonald who makes me and my guests sound smart every week And it is all supported entirely by listeners like you So if you value conversations like this, please consider joining our community of paid subscribers at volts.wTF Or leaving a nice review or telling a friend about volts or all three Thanks so much, and I'll see you next time