I'm joined by Eric Gimon to discuss "energy parks" — essentially large-scale microgrids that combine renewable generation, storage, and industrial loads behind a single grid connection. We explore how this model could accelerate clean energy deployment while creating new economic opportunities, despite some complex regulatory hurdles.
(PDF transcript)
(Active transcript)
Text transcript:
David Roberts
Buenos días, everyone. This is Volt for January 15, 2025, "Assembling diverse resources into super-powered 'energy parks'." I'm your host, David Roberts. Most people who follow energy these days are familiar with what are called solar+storage power plants. This is where some solar panels and lithium-ion batteries are co-located together behind a single point of interconnection to the grid. To the grid, they present as a single entity. And it’s a pretty cool entity — it has the generation powers of a solar field and the storage powers of a battery field, in one, like a Voltron!
Now, imagine some wind turbines, solar panels, lithium-ion batteries, and flow batteries behind a single point of connection to the grid. That's a bigger Voltron, with more generation and storage powers.
Now, imagine, along with generation and storage, a big energy consumer, a load, joining the fun.
So, say: solar panels, batteries, and a hydrogen electrolyzer behind a single point of connection. Or: solar panels, thermal batteries (hot rocks!🤘), and a cement plant. Or: solar panels, advanced geothermal, batteries, and a data center. Different Voltrons, all with different sets of powers.
A new paper from the research firm Energy Innovation calls these Voltrons — collections of diverse energy resources behind single points of connection to the grid — "energy parks," which isn't as cool as Voltrons, but supposedly we're "adults" around here, so, fine. The paper argues that energy parks are riding a wave of momentum, with enormous potential to bolster a renewables-heavy grid, but that they face substantial challenges in the form of a legal and regulatory regime designed before they existed.
This is a subject of intense, geeky fascination for me these days, so I was extremely excited to see the paper and I'm excited today to talk with Eric Gimon, its lead author. We're going to get deep into energy parks — their benefits, their challenges, and what can be done to support them.
With no further ado, Eric Gimon, welcome back to Volts. You're in the small fraternity of returning Volts guests.
Eric Gimon
I feel very honored. Thank you, Dave.
David Roberts
So, let's talk about what an energy park is. I feel like in the energy world here, there's a lot of different ways of clumping resources together and there's a lot of different people experimenting with them and there's a lot of different nomenclature flying around. I think in some sense, the nomenclature is still a little bit kind of up in the air. So, maybe just to start, like, how is what you're talking about as an energy park not just a microgrid, right? It's a collection of resources with a single point of connection to the larger grid. Isn't that just a microgrid?
Eric Gimon
Well, that's a good question. I mean, the short answer is "yes," but the longer answer is: microgrids are typically seen as connected to the distribution system and kind of meant to be these kind of islands, you know, like, would you imagine, like an army base, right, with some generation resources that's kind of managing their needs. An energy park, the way I think about it, is a much bigger scale connected to the transmission system with a strong generation element to them. But you could — you know, Lynne Kiesling calls these microgrids as well. I think it helped to use a term like energy park just to give a sense of the scale and maybe differentiate a little bit.
But a lot of the issues overlap.
David Roberts
Maybe this is a subset of microgrids: large microgrids connected to the transmission system with heavy generation. And I also think of microgrids, I guess, as primarily designed to support the loads that are on them, whereas these energy parks are, I think, doing more than that. But I want to kind of start at the broadest level and then hone in on the specifics. So, I just want to talk a little bit about why chunking is attractive, why people keep sort of gravitating toward it. And by chunking, I just mean grouping resources together and treating them as a single entity.
The main thing that comes up with me, and you sort of touch on this deeper in the paper, is just in a world of renewables and distributed energy resources, there's just going to be a lot more things on the grid, you know, for grid managers to manage. We're going to go from like dozens of power plants to hundreds, thousands, hundreds of thousands of little things. And unless you can chunk them in some ways, you're just going to get a combinatorial explosion that sort of just like exceeds any entity's ability to plan. Does that, is that accurate?
Does that make sense to you?
Eric Gimon
It does make sense to me, Dave. I try not to start talking to people that way about it, but one of our co-authors, Mark and I, have often commented between ourselves that a lot of this looks like what's called object-oriented programming in the computer world, which is a concept that evolved in the 50s and 60s along the lines that you're talking about. Basically, it just gets too complicated to pass everything through. And so, the idea of creating kind of discrete boundaries where all the knitting happens inside and you just pass back and forth the essential information is something that became very important in computer science and it's a way of managing complexity.
And as you said, the grid's getting more complex, so...
David Roberts
It's also called layering, I think, sometimes too. Just like you, you resolve all the complexity at the lower layer, and then it just reports to the layer above it. You know, behaves like a single entity toward the layer above it. So that's part of what's going on here, almost by necessity. Like, we're going to have to do some chunking to simplify things, but there are also more prosaic benefits of doing this. So let's run through a little bit of these. And maybe, you know, I discussed them sort of as though they're theoretical, but there are some energy parks out there to reference.
So, maybe let's just talk through some of the benefits you name, starting with just you can share some equipment. So, maybe say a little bit about that. Like, what can be — if you have an energy park, a bunch of stuff sharing a single point of connection to the grid — what can and can't be kind of shared and economized?
Eric Gimon
Well, one of the early examples we use in the paper is solar and batteries, as you mentioned.
David Roberts
Right. That's kind of the simplest version of this, right? The simplest version of a park.
Eric Gimon
And in that case, one of the simplest things to share is the inverter. Right. The solar comes out DC. The batteries are native DC, so you can flow energy back and forth until you're ready for the power to go out to the AC network, and then you put it through the inverter. And in the old days — I mean, the old days, a couple of years ago.
David Roberts
Things are moving quick these days.
Eric Gimon
Yeah, but, you know, people started realizing that they could save some money by shaving some of the costs on the inverter, by oversizing the DC solar field relative to the equipment to connect to the grid. Usually, it's about 30%. So, if you see a 1 megawatt AC solar farm, that's really a 1.3 megawatt DC setup behind it with a coupled battery at the kind of DC level, you can go to, say, 1.7 or something like that. Right. Because now, instead of wasting any extra power that you get during the middle of the day, you can put it into the battery and then that can go into the AC later.
So, that's an early example of that kind of equipment savings. A more recent example is if you — there's this big park in Oregon not too far from you, the Wheat Ridge Project, and they have solar, they have wind, they have batteries and so on. All these different things are connected at a medium voltage network, and then they all connect to a substation that then bumps that up to high voltage. So again, a lot of the kind of knitting happens at this medium voltage level. And only one piece of equipment is needed to go to the higher voltage.
And you know, that equipment isn't cheap. And also, a lot of equipment is not easily available right now.
David Roberts
Yeah, yeah, there's a huge supply backup specifically for those transformers, aren't there?
Eric Gimon
Yeah.
David Roberts
And then, you can also — and I think this is more of a financial thing — there's lots of different tax credits, tax savings that you can kind of maximize by putting resources together. Say a little bit about how that works.
Eric Gimon
Well, in the early days, you couldn't get a tax credit on your battery. You could only get a tax credit on your battery if it was considered part of a solar project.
David Roberts
Right. And that changed with IRA.
Eric Gimon
Right, that changed with IRA, right? But that was kind of the early stimulus for mashing the two together, for chunking them, as you say. But then people started realizing that there were a lot of advantages to having them together once they were kind of forced in the same room together. But that, like you said, the tax savings, that changed with IRA. There are other things though. For example, with things like hydrogen, the source of the power is important to whether you call it clean or not. Right. So if you're co-located right next to each other, it's pretty clear to any kindergartner that the power is coming from the clean source.
So, that makes navigating a lot of the tax rules easier. And then there's some tax rules that are given on a production basis versus investment basis. And if you're not putting the power somewhere, you don't get the tax credit. So, if you have a source, a sink right there for any kind of excess power you have, then it's easier to collect that tax credit.
David Roberts
You can maximize your production. And then, what are some of the other benefits? The one that intrigued me here is new abilities. And this gets to kind of the Voltron thing, like, what can resources do together that they can't do alone?
Eric Gimon
Yeah, and that's one of the most enticing elements to picture. So in Colorado, they have a coal fleet that they're retiring, right? And the latest coal plant that they built is the Comanche plant. It's got three units. One of them is retired, one's about to retire, and then the latest one that was built is supposed to retire in 2030. So questions are, "What would you replace with it?" And so I got curious as to how you would replace that plant with an energy park, right? If I went to Pueblo, could I connect a solar field, some wind, maybe some geothermal, with regular batteries, with thermal batteries — which I know you love.
"How would that combination work? And it's quite interesting because I developed kind of an analysis layer by layer, right? And you start out with, say, a target. What would you want this to look like? And say, well, "The easiest target is to make it look like the coal plant that was there before." That may not be the most desirable target, but it's the easiest way to tell the story. Right. "Whatever you can do, I can do." So you start with a bunch of wind and solar and you can produce power when your putative coal plant is producing power, you know, 80% of the time or 70% of the time, right.
And then, the rest of the time, you don't have quite enough. You also have a lot of extra a lot of the time. And so, you have to be able to kind of export the extra. And then you say, "Okay, I'm going to put in a regular battery." So now, you put in a lithium-ion battery and it soaks up some of that extra, means that there's more you can export and it gets you through some of the lulls. But there's still like, if you looked at 2023, there's like an early January week where there was very poor wind and low solar.
So, how do you get through that? Well, if you could just build more wind and solar, right? But if you build more wind and solar, so you have more power in January, say you want to produce an extra 50 megawatts in January, well, you might produce another 500 or 1000 megawatts in the summertime. Right. And so, you need a bigger battery also. Just a lot more stuff there, right? A lot more power than just to go somewhere. And that's where something like a thermal battery becomes really advantageous, right? Because it's a soak for all the extra power.
The more you can soak up renewables in the periods where you have more than you need, the more you can put in and have available when you really need it. And then with the thermal battery, eventually, you can take some of that heat in the battery and put it back through a turbine and actually get something dispatchable. And so you start putting one piece after another in there. And then you start looking at this and you start asking yourself, "Well, this is starting to look pretty dispatchable, right? And maybe I don't even want it to look like a coal plant. Maybe I want this thing to soak up power some of the time when there's lots of wind elsewhere."
David Roberts
I mean, that's kind of the whole point of this. It's better than a coal plant, right? It can do what a coal plant can do and other things.
Eric Gimon
Yeah, it's faster and it can soak up power.
David Roberts
Right.
Eric Gimon
Which is really useful, right? So, when there's extra on the rest of the grid, it could flow through there. The initial impetus for this is that the people of Pueblo County, where Comanche is, wanted to know, "Well, what about our tax revenue and jobs when this thing goes away?" They're worried that if you just put in some amount of renewables there, it's not the same. So, they went through this whole rigmarole to conclude that they should build an SMR there. I guess that's expensive, so there'll be more taxes and jobs. But the advantage of the energy park with the colocation, right, is you start getting a more and more controllable resource as far as the grid is concerned.
And you're adding more renewables there to kind of have that extra power available to you, the extra energy, and then you're sinking some of that energy through the thermal battery available for like a thermal load. Right. You could run a brewery or a cement plant or feed some to the steel mill that's a couple of miles away. Pretty soon, you start building a portfolio that has a lot more jobs, creating economic development in the area and is a very modular, diverse portfolio of resources there.
Now, that brings you back to the first question you asked, "Well, isn't that what the grid is supposed to do?" Right?
And I think the answer is "yes, but." The grid is expensive, right? You have to build the lines, you have to build the interconnection. It takes time. So, you want to take as much advantage of that infrastructure as possible, right? So, to the extent you can manage some of that complexity locally and provide something that's more singular for the grid operator to deal with, more controllable, that's a big advantage.
David Roberts
Well, also, the grid is slow.
Eric Gimon
That's the other big thing.
David Roberts
Theoretically, private money could build this stuff behind the grid connection really quickly.
Eric Gimon
Well, in Colorado, they're looking at like 10x their rate base to accommodate new data centers.
David Roberts
Good grief.
Eric Gimon
And so, the day our report came out, there was an announcement from Google and Intersect to create a big energy park for data centers.
David Roberts
Interesting. Well, what you hear is, I mean, what all the tech guys are saying is, "Oh, we need nuclear plants because we need always-on steady power." I can't tell how much of that is like, they know something I don't, and how much of that is like they're just new to energy, so they're making a mistake that a lot of people new to energy make, which is that reliability is a net result of a grid, not a particular power plant. So, are we now building energy parks where data centers are going to be supplied by renewables?
Is that happening?
Eric Gimon
Yes, and not only that, it was happening already with Bitcoin mining, which I know, a lot of the audience probably are not big fans of Bitcoin mining, but it is a kind of interesting canary in the coal mine in terms of what can be done. So there are these mining operations that have bought up wind farms and will shut off when the wind farm's not blowing. So they're matching their flexibility with the resource in a very nimble way. That's hard to do with tariffs and other kinds of schemes on the main grid.
David Roberts
Yeah, and it's the exception for data centers to be flexible, isn't it? Like most of them, I guess it's sort of up in the air a little bit right now. I guess there's a lot of people researching this, but most data centers are pretty inflexible, aren't they?
Eric Gimon
It really depends on what they're doing. I'm not an expert on it, but my understanding is that some tasks are kind of like "need to do right now." Some of the learning elements could be kind of managed and moved around between data centers. They're also a source of instability for the grid in the sense that their loads go up and down a lot and can shut off. I think the attraction to things like nuclear baseload resources is the data center people don't want to be in the energy business. They want to be doing what they're good at.
And so, the idea that they have one resource that has all your needs taken care of is kind of attractive. I think a little bit of an illusion, a mirage. Right. I mean, for example, a nuclear plant has to refuel. It usually takes a couple of weeks. So, what's your plan when you're —
David Roberts
Yeah, I've been wondering about that. Like, when your nuke plant goes out, they go out too, if only for maintenance, but they also just trip off sometimes. And like, that's your whole data center. You don't have any remainder.
Eric Gimon
Well, they're — I think most of the ones have some kind of diesel backup.
David Roberts
Oh geez.
Eric Gimon
But if it's out for two weeks, that's two weeks of running diesel, you know.
David Roberts
Yeah.
Eric Gimon
So, they're kind of put out there as this kind of perfect resource, but they're not. And it is kind of interesting though, like FERC had this big conference about colocation and so on. They spent the whole time basically, if not directly, indirectly talking about the case of a nuclear plant, existing nuclear plant, connecting to a data center and ignoring these things. But most of your queue is filled with wind, solar, and batteries.
David Roberts
Yeah, that's crazy.
Eric Gimon
They're just the best resource available.
David Roberts
Like, this is what I want to keep saying about: you can connect an existing nuclear plant to a data center, but you can't do that very many times. That's not a — that can't be the model. Right. Or we're very rapidly going to run out of existing nuclear plants with data centers next to them. And building a new nuclear plant — like, I don't, they just seem to all be talking around this, but it just takes a long time, you cannot — And they're all in a panic to get data centers online. And the disjunct between that and talking about nuclear — just like, I'm not even seeing anybody addressing it.
But we don't want to get down a rabbit hole about this. But, one of the advantages you cite for energy parks is synergies in that they're all sharing the same point of interconnection to the grid. And so, that I kind of want to talk about, like when I, the way I first encountered the notion of colocation was when I talked to Rondo, the heat battery people, right. And you know, so their idea is you build solar. All the solar dumps into the heat battery, the heat battery dumps into the factory and at no point is there any connection to the grid.
Like you know, that's kind of an off-grid energy park, if you will. And then there's, you know, you could do it a different way. You could overbuild your solar and then you could have it where some solar goes into the heat battery and the excess solar goes back onto the grid. But anyway, the whole attraction of that model from Rondo's perspective is you don't have to wait for a grid interconnection. It's a way for renewables to build, build, build without waiting for grid interconnection, which is the big holdup these days. But what you're talking about, these energy parks that you're talking about, are connected to the grid.
So, in a sense, aren't you right back in the interconnection queue? Do you know what I mean? Like, aren't you right back waiting a long time? You know, you've clumped your resources, so in a sense they're all going to get online at once, but they're all as a clump still waiting. So, in a sense, has any individual, one of those resources, gained anything now? They're all sort of in line together, but they're still in line, you know what I mean?
Eric Gimon
Yeah. So, I call that Rondo model a siloed park. So, it's still an energy park, it's just siloed, it's not connected to the grid. Then, we talk about export-only parks where they have enough for their needs and they export, and then you have an export and importing park. So, I thought this siloed model was a great model.
David Roberts
Yeah, I was very captivated by it when he described it to me.
Eric Gimon
But I started digging into it and you realize it's not that viable. There's a couple of problems. Like, so his first project was in Fresno. You know, it's a pretty good solar resource, but you're still getting almost twice as much in the kind of spring, summertime as you are in the wintertime. So, you know, you either have a load that is adapted that way where they're using more heat in the summer or in spring, or you have to oversize your system so that you have what you need in the winter and then, then you have to dump something in the summer.
And I could see that. But we talked about this in our thermal batteries paper that we wrote last year at kind of this end of the spectrum for feeding a battery. And it's still viable.
David Roberts
Well, thermal batteries are pretty cheap. Like, oversizing thermal batteries is less daunting than oversizing lithium-ion, isn't it?
Eric Gimon
Well, it's oversizing the solar field that's starting to cost you. Right. If you have to double the size of the solar field, then your solar energy is twice as expensive. And you know, you're trying to compete with natural gas on its own terms. Right. So, but I'll tell you what I hadn't realized until later, which is that works at a kind of small scale. That project is, you know, a few megawatts. Once you get to the gigawatt scale, you have a financing problem. If you, Dave, are suddenly no longer — become a hopeful capitalist working at Goldman Sachs.
You look at things with your little green visor and pens and you're like, "Hang on, what if the thermal battery part doesn't work out? I don't want to finance your park if there's no other place for the power to go to." So, they need a plan B. And without a plan B, you're not getting financing. And nobody's got the balance sheet to finance a gigawatt of infrastructure. Right. They're going to need to get the money from somewhere else. And so, that's a big barrier to this kind of self-consumption, fully siloed.
David Roberts
So, you just add a connection to the grid. This allows you to export power to the grid when the thermal batteries aren't taking it. And that resolves some financing issues.
Eric Gimon
Right. It also creates this kind of plan B if the thermal battery project falls through.
David Roberts
Right. But then you are waiting like —
Eric Gimon
In the same queue.
David Roberts
Yeah, I guess what I'm trying to get at is an interconnection for a park is basically the same thing as an interconnection for a power plant, isn't it? I.e., you're in the same line, waiting the same amount of time, etc.
Eric Gimon
Well, it doesn't have to be, is the point, right? I mean, if you appreciate the flexibility of these resources, you can put them in the queue in a different way. Already in the queue, there's typically a difference between a dispatchable resource or firm resource and an energy-only resource. Where, "We'll take your energy but we don't guarantee we'll take it." And that creates a lower hurdle for connecting to the grid. So, if I'm only occasionally going to export to the grid and the grid occasionally tells me, "I can't take your power," and it's not a huge source of my revenue
A big part of my revenue is just going to my local load, or I can always send it later because I've got some flexibility. Then, I'm more willing to go into that energy-only queue than the firm connection queue. So, that's already a difference between the energy park and just your plain old generator.
David Roberts
And these distinctions are made by the utility? And are utilities making them now? Do you know what I mean? Like, are energy parks entering queues? I'm just wondering how much of this is going to require some new thinking or new policy on the part of utilities and PUCs.
Eric Gimon
It will require a lot of new thinking on the part of utilities and PUCs, which is why they're not being built in the investor-owned utilities regulated by PUCs. They're being built in munis and co-ops who are much more flexible in their dialogue with the builders. They also get around some of the legal problems that we talk about in the paper in terms of who owns the retail relationship and all these other things. But they can also be much more flexible in how you connect to their grid. There's still the overall balancing authority that might be bigger than that entity that you have to deal with, but they typically do have different processes.
And Texas is basically the best place to do this right now, because the ERCOT system is much more open to this type of arrangement, mostly because of oil and gas.
David Roberts
Are there oil and gas energy parks?
Eric Gimon
Yeah, I mean, all those big refineries and so on tend to have their own generation.
David Roberts
Oh, right.
Eric Gimon
And you know, for a long time now. And so, they are the ones that kind of push for the rules to allow private use networks and things like that back in the day. And it's only now that data centers and other people are starting to kind of get into that zone. But originally, that was kind of their playground. So, we're in this funny space where oil and gas have kind of pushed the envelope for us.
David Roberts
Oh, funny. And this is the Texas "connect and manage." That's what we're talking about, where they just let you on the grid without the long wait, with the proviso that "If we need to, for temporary conditions, we can shut you down or curtail you." Is that the basic idea?
Eric Gimon
Yeah, that's what they call connect and manage there. There are, I think, in some other jurisdictions — I'm not an expert on this part, it's really hard to get a clear understanding of how these rules work — but in other places, you can have a choice too, of the type of connection you want. Like in California, I think. But typically in California, in order to get some of the credits you need, like resource adequacy and so on, you need the first kind of service, the dispatchable one. So people don't necessarily go that route. But yeah, it's a whole rabbit warren of different rules and so on.
And one thing I discovered, kind of diagnosed into this, is that even just plain batteries are suffering from this. Batteries are being built in Texas and in California, but, like, batteries aren't being built in MISO. They had something like 20 gigawatts in the queue and none of it, like, hardly any of it went through. Like, they got their assigned, "This is what you need to do." And then they were like, "Oh, well, we're not doing that." Because of the way the rules are being crafted for them to connect, I wouldn't go too much into it because I don't know a lot about it.
But I do know that basically that's prevented the batteries from being built in the MISO system.
David Roberts
Interesting. And presumably, would also prevent energy parks if they're...?
Eric Gimon
Right. And so, I think where it starts is with the munis, co-ops, public power, and that brings a lot of — not only do you get the generation, but you get the economic development that comes with it. I'll give you an example. This is not an energy park, but it's adjacent. There's a startup ammonia company, green ammonia company, called Talus, and they have a project in the Midwest where they buy power directly from a muni co-op, but they're willing to be flexible about their consumption. So, they're running like 50% of the time, but they're able to get a cheap price, which is the reason you would connect to an energy park similarly.
And that's only available to them a) because it's a muni co-op, but two, the muni co-op kind of wants them there because they're making a product, you know, ammonia for fertilizer, that a lot of their members use.
David Roberts
Right, right.
Eric Gimon
So, it's advantageous to their community and so on. I guess the way I see the story is, you see these energy parks happening in Texas where the muni co-ops are, and maybe in other places, and then other states, other places want some of that. The other reason why other states might start looking at this a little bit with more interest and so start changing the rules to attract them, is it's a lot of capital to build out for these new data parks. Right. So, if you want to build 10, 20 gigawatts worth in Colorado, you're going to have to build a lot of transmission, distribution infrastructure that's going into the rate base.
And then, if you're a Colorado customer, that's putting a lot of risk on you. These are long-lived assets. But what happens if the data centers don't use them? You know, something happens to data centers or AI becomes less attractive or more expensive, or they just decide to become more flexible, use less energy. And you made an agreement with them that's based on kind of how much energy they use. Right. So suddenly now you're not getting as much revenue. There's a lot of risk around that. I mean, just generally, if I have a $10 billion rate base and now the utility is coming to me with proposals for $50 or $100 billion more of investment, you know, it's a big gulp, right?
So, if there's a possibility that some of that investment risk can be pushed back onto the utilities and these new customers, either directly in an energy park or some kind of arrangement where the customers pay for some of the infrastructure, which is basically kind of scaling up the energy park context to the grid. But, I think that is another reason. So, the kind of carrot is the ability to attract interesting economic activity to your region, your state, and your territory. And then, the stick is when some of that comes in a very concentrated way, this is a way to manage some of the risk.
David Roberts
Well, you list three broad challenges. It's funny, I went into this very geeked about energy parks, even though I didn't know that term existed, but just co-located resources, super geeked about them. And then I read the paper about all the challenges and by the end of it, I was like, "Geez, this is, this is —"
Eric Gimon
Why bother?
David Roberts
I know exactly. Like, this is so much more difficult than I appreciated.
Eric Gimon
Let's just touch on "why bother" a little bit before I talk about those barriers.
David Roberts
Yeah, yeah.
Eric Gimon
I kind of got into this for a couple of weird, geeky reasons that you might appreciate. One reason was we need flexible loads. We need flexible loads and not just on the margin, flexible loads, things that can change their consumption by 10, 20% from one year to the next. Why do we need those? Because we're moving from a system with fuel where the fuel is the opportunity cost to a system with all capital. In California where I live, 10% of the electricity comes from California hydro. But some years we get 15% of our electricity from hydro, some years we get 5%.
David Roberts
Right.
Eric Gimon
So, it goes up and down, and that creates a supply and demand imbalance. Now, what happens when we are down to 5%? Well, the gas covers it. And what does that mean? It's not like we roll in the little gas generators. The gas generators are there, but we have the pipelines to bring fuel into the state. And why is the fuel available some years and then when we don't need it, we don't take it and it's still available the next time? It's because it's in a larger market, right? Where other people might use the fuel. And that market's regulated by prices and so on.
And so, that allows us to manage that supply balance. So, maybe the price of electricity goes up a bit on a low hydro year, but we still get it. Now, imagine that we live in a world where we're trying not to burn gas.
David Roberts
Well, this is why all the models have storage. Right? I mean, this is why they all say we need long-duration storage because you pull gas out of that mix and if you don't incorporate a bunch of flexible load, then the only really other answer is a crapload of storage.
Eric Gimon
Well, it can only do so much, right? Like, you can't afford to store power for three years.
David Roberts
Right.
Eric Gimon
I mean, even if you had dirt cheap storage, you have to finance it. Who's going to finance an asset that only gets used every three years? How do you even know how reliable the revenue models are, or the operational models are, and so on? So, you really need something else. And the something else is things that soak up power. You're really into electrolysis for cement and all these things. Well, that's a way to soak up power. You can imagine making more or less cement, or more or less steel, or more or less hydrogen in California based on the price of electricity.
So, having these other sectors that can adjust their consumption is really key.
David Roberts
Yeah, this, to me, is a big, fascinating, unsettled area of exploration in the next few years, I feel like. How much of the industry can be flexible load? Right. Because the conventional wisdom is the industry needs 24/7 power. But I think my impression is when people get in and start really looking, you find more flexibility than you think, generally.
Eric Gimon
Well, it's a really interesting topic, but I think in the hour we have, I don't think I can touch on it too much. It's just to say that to the extent that there are those flexible industries, I thought to myself, I think a lot of them would work well in an energy park. There'll be new loads and their whole model is to use the cheapest power. Right? Otherwise, why bother being flexible, right? And so they're going to be flexible. They want the cheapest power. The way to get that cheap power is to be right next to where it's made.
Right? So, it's the kind of marriage made in heaven.
David Roberts
Maybe this is obvious, but I'll just point it out anyway. The reason that power is so cheap is that, you know, I think regular Volts listeners will know this, like what they call the "busbar power" of renewables, which is like the cost of generating on site is lower and lower and lower just because renewables are getting cheap. But the price of delivered electricity is rising because of T&D costs, transmission and distribution costs. So if you're sitting right next to it and you don't need any transmission and distribution solution, you're getting that sort of raw busbar price, which is cheaper than any other power available anywhere, as far as I know, right?
Eric Gimon
I think there are two elements to it. So that's one element. The other element is if you think about the power coming out of a wind farm in Texas or whatever, at first you think of it as all the same, right? But power that I'm generating during the big heat wave, you know, demand spikes in Houston, that's valuable power. And power that I'm generating in the spring when all the wind farms are all going like mad and nobody really needs the power, that's not that valuable, right? So, you can start sorting the power that comes out of your project into a kind of less valuable, more valuable stuff.
And if you're right near the project, you can kind of feed off that low-value stuff, right? And then the project can export the high-value stuff to the grid. And so, that ability to kind of sort to create this kind of filter between the low and the high value right there on site is important. And then that goes hand in hand with the T&D, right? If your average wholesale busbar power is really dropping, right? If you're getting really smart about when you consume power so that the price you can get that power is down to like $10, $20 a megawatt hour, you definitely don't want to pay an extra 20 or 2 cents a kilowatt hour or whatever for the T&D.
I mean, you just doubled your cost again, right? So, as you become more and more of a price hunter, you become more and more sensitive to the transmission and distribution adder to your supply, right? And so, to talk about the opportunity, right? So, we want these flexible loads and this is a good place for them to appear. And then, how much do we want? Well, if you look at the industry, if you want to replace things like cement and steel and all these things with, and then process heat with electricity, you're talking about a lot of electricity, right?
Like easily double how much we use today. And we're having trouble getting the wind and solar onto the system, right? So, if there's a way to like get it on, or at least some of it on without incurring a lot of extra cost, that's really attractive, right? So, that's really the opportunity. That's the reason I put a lot of effort into this report and thinking about it, right? Which is, even though there's barriers, I see this as like an essential element to where we want to get to reaching our climate goals.
David Roberts
Yeah, but this is like, the speed thing is something I come back to. It does take a long time to get an interconnection, but if you jump in an energy park, you're still waiting for the interconnection, aren't you? I mean, you're all waiting for it together, but you're still waiting for it. The speed thing is something I come back to.
Like, it does take a long time to get an interconnection, but if you jump in an energy park, you're still waiting for the interconnection, aren't you? I mean, you're all waiting for it together, but you're still waiting for it.
Eric Gimon
"Well, yeah, so that's a good question. And you know, there's no simple answer there, Dave. I mean, at one level, I gave you one answer, which is you can kind of downgrade the type of connection you have, right? And so that speeds your access to the grid. At another level, you can imagine maybe you negotiate for a smaller connection. Now that doesn't satisfy your Goldman Sachs banker too much because now your plan B is eroding. But maybe you tell them, "Look, my plan B is to have at least this much, and then if really things fall through, I'll scale up, I'll get a bigger transformer or whatever. But for now, that covers some of your risk."
So now, it's not about zeros and ones. Is it connected? Is it not connected? It's kind of, how much is it connected? And then, how much credit can I get with the utility, with the grid operator for that so that I can get on faster?
David Roberts
Right. Is there any prospect of utilities distinguishing — because, you know, one of the things I wanted to say earlier is we lack good terminology for this stuff, like the entity that is the energy park. We have the same problem when we talk about virtual power plants, right? Like, they're not just producing power, they can also store power, they can also shift power. So whatever that entity is, that can do all those things, we do not have a good word for that entity. Right? We keep saying power plant, but that makes us think about just generation.
But these things can do more than generation. Like I said, they're Voltrons. They have all these different kinds of powers beyond what a normal power plant can have. So, is there any prospect for utilities prioritizing people waiting in the queue based on the powers of the entity being connected? Do you know what I mean? Like, could these things get bumped up in line because they are so helpful for the grid?
Eric Gimon
Yes, but it's tricky because right now, people are making those arguments in order to get more gas online. They're trying to get gas to skip the queue because everybody's convinced that gas is the be-all and end-all of useful resources. But I agree with you that there should be some advantage to that or some recognition of the dispatchability of these things.
David Roberts
Right. Because now you're describing, when we were talking about the challenges, the three buckets of challenges to these things, the first bucket is just the rules for connecting to the grid. And the way you describe it, like, right now the rules for connecting a generator are different than the rules for connecting a storage mechanism. Like, and so right now, connecting an energy park almost seems vastly more complicated and uncertain than connecting the constituent parts. Just because there are rules governing the constituent parts and there don't seem to be yet rules for governing the collective entity. Who makes those rules?
Like, who solves this problem? Is this something legislators can get involved in? Or is this something PUCs need to do? Or is this something utilities are basically going to have to do on their own?
Eric Gimon
Well, to some extent, this has been solved in singular cases like Alcoa, which is a big producer of aluminum. They own generation as well, coal plants that feed their mills. So there's one in Indiana, for example. And they've come to some arrangements with utilities already. A lot of that tends to be bespoke and kind of hard to get a lot of information about. At least, I found it so. And then, CHP is a bit similar.
David Roberts
Combined heat and power.
Eric Gimon
Combined heat and power. Let me lay out the land a little bit, and then I can get into it a little bit more. So, there are three kinds of centers of difficulty: One center that we kind of touched on here is just how does the grid talk to you? And how does the grid bill you?
David Roberts
Right. What are you to the grid?
Eric Gimon
What are you to the grid? Right. Because as far as the grid is concerned, today, a generator and a load are treated completely differently.
David Roberts
Yeah, yeah.
Eric Gimon
They go through different processes; they're charged with — they're responsible for different kinds of expenses and so on. So now you mix the two. It's a bit complicated. Say you got beyond that. There's still like, ultimately, you have to decide what is the service being delivered to the grid and from the grid. And we're used to thinking about all these services tied volumetrically to kind of how much electricity you consume. So if I consume this much, I'm using this much services. If I consume 1,000 times more electricity, I'm using about 1,000 times more services. And so everything's kind of scaled.
It goes into the cost of electricity. But suppose you have something like a thousand gigawatt facility that hardly ever consumes power. Maybe it consumes like 50 megawatts every once in a while to kind of help fill up the battery.
David Roberts
Because most of its generation is on-site.
Eric Gimon
Because most of its generation is on-site. But if something goes wrong, it might suddenly want 500 megawatts.
David Roberts
Right.
Eric Gimon
But very, very rarely will that happen. That's still a service you're providing.
David Roberts
Yeah. What is that?
Eric Gimon
But it's not tied to their annual consumption. So, what is that, like backup? Right, it's like a backup. So, like in New York, combined heat and power, they pay for that backup. And I think the big grid operators, ISOs, are still struggling to understand this. If you look at what's being debated in these FERC proceedings, it's very early days. There's not even recognition of existing arrangements, much less an effort to kind of very thoughtfully develop new rules, you know. And that's going to take time and that's why reports like this one are important, because you have to prime the pump.
David Roberts
FERC just did this whole thing, didn't it, on co-location? I mean, what was the point of that if not —?
Eric Gimon
They never talked about new energy sources like wind, solar, and batteries. You know, they were mostly focused on existing generation. And you know, one speaker mentions —
David Roberts
Like a missed opportunity.
Eric Gimon
Yeah, a big missed opportunity. One speaker talked about the experience in Kentucky with combined heat and power or whatever, and they just kind of ignored them. They just went right back. They were basically all talking about this Pennsylvania deal between the nuclear plant and Microsoft, while at the same time being constantly told that they shouldn't talk about it. This is what triggered the conference. Right. They shouldn't talk about it because it's an active proceeding.
It was kind of funny in a sad way. So, that's one pillar of issues. And Texas has done a good job because they're not regulated by FERC.
David Roberts
I mean, is the desired outcome here that FERC settles some of this, sets up common rules for energy parks? I mean, is that what you would like to see happen?
Eric Gimon
It'll have to be some combination of FERC and the states, because there's just too much overlap in kind of jurisdictions.
David Roberts
Yeah, this is another thing. It's like if you're connecting these to the transmission grid, right? You have a combination of local energy, which is state jurisdiction. And then if you're connecting to the transmission grid, that puts you under FERC jurisdiction. So, you have multiple jurisdictions here too, right?
Eric Gimon
Right. So, Texas is all one jurisdiction.
David Roberts
Yes, that's true. Texas doesn't have to worry about that.
Eric Gimon
And they have a set of rules called "private use networks," inspired by oil and gas, that allow you to net your metering. Not net-metering like with solar, where you do it over a year in each interval. But even that's like a contested approach elsewhere. They're like, "No, no, you can't look at the actual flow through the interconnection. If you have a load back there, it's like any other load, it needs to pay all these other stuff."
David Roberts
Right. If every constituent part of your energy park has to obey all the rules applying to that kind of thing, you're not gaining anything by clumping them together anymore. You're just clumping together a bunch of individual problems into a mega problem.
Eric Gimon
Exactly. Yeah.
David Roberts
So, we need some sort of rules that standardize how grids treat these things.
Eric Gimon
Right. And those rules have to be fair both to the energy park or people won't build them, and to everybody else so that these large consumers don't take advantage of everyone. Typically, large consumers do because they're just a loud voice in any hearing, right? Whereas, most of us individual consumers aren't. So, there's a lot of mistrust.
David Roberts
So, that's some combination of FERC and state legislators, state PUCs?
Eric Gimon
State legislators to some extent, especially with some of the siting stuff, but also just the grid operators. Some of the grid operators are regulated by FERC because some are just vertically integrated. And so, a lot of what they do is regulated by the state they're in.
David Roberts
Well, that's a tangle. And then the second bucket is a whole separate tangle, which is if an energy park is located in a deregulated area, a wholesale market, it might want to participate in that wholesale market as a singular entity. But then you run into a very similar problem you get with the grid connection thing, which is there are wholesale market rules for generation assets, separate rules for storage, separate rules for loads. And once you clump these things together, how do they interact with wholesale markets? Is there an answer to that question, or is that entirely TBD?
Eric Gimon
There is an answer to that, to some extent, because some of these arrangements already exist, right? Like the power plant that serves Alcoa in Indiana also exports to the grid.
David Roberts
Are all extant arrangements like this bespoke? I mean, are they all one-off, basically?
Eric Gimon
I'm not sure, Dave. That's a little bit outside my expertise. I mean, I've tried to get an answer to that, and I have not found — even for a lot of the stuff I learned about Texas, I had to buy stuff from some law library to get the details. You know, as soon as you're dealing with industrial stuff, it's a lot less transparent.
David Roberts
Yeah, yeah, yeah.
Eric Gimon
And then, with batteries, that's interesting. How do they deal with this hybrid thing? Basically, FERC decided that they were negative generation.
David Roberts
Negative generation.
Eric Gimon
And so, everything they do is treated as generation, whether they're drawing from the grid or giving to the grid. But that has caused problems because you can treat them as a market participant, as a kind of negative generation. But as something that you interconnect, the utilities are kind of scrutinizing things a little bit more. They're like, "Well, what does it mean that you're negative generation? Like, where is your power coming from and when and how is it coming? How's that going to affect our wires?" And if you're a storage person, you're not buying your power from a specific thing, the whole model is that you're buying cheap power from whoever when there's extra.
Right. So, that creates a big tension in the interconnection process. That's what slowed things down in MISO. And ultimately, it's because we've kind of tried to cheat our way through this problem of "What's load? What's generation?" by taking this asset and putting it all into the generation side.
David Roberts
Yeah, that doesn't seem like it's going to last. Like, more and more, you're going to get these chunks that do generation and storage. Like, we don't have a word for that yet. And we clearly don't have an interconnection category for it yet. And we don't seem to have a wholesale market category for it yet either.
Eric Gimon
Yeah, I mean, I'll give you a simple example there. Suppose I want to do long-duration storage with hydrogen. Right. So, I call this thing a long-duration storage unit. It takes power, converts it to hydrogen, puts it into some cavern, and then when I need power back, it goes through a fuel cell or a turbine back. Okay. Simple as you can imagine, that's storage. Now, suppose I say, "Yeah, but sometimes I made too much hydrogen for what I need and my cavern's getting kind of full, I want to be able to sell it off. Or sometimes I didn't make enough hydrogen, my cavern's not full enough, I want to buy some."
Right. So, suddenly, that middle component is in a different market. And now, the electricity that was always for resale — the reason you put storage back into this wholesale bucket is you're like, "Well, you're not actually selling the power for resale. It's all going back to the grid." Now, some of it is going into hydrogen, which might go somewhere else. So, your whole category falls apart.
David Roberts
Yeah, we just do not have good categories for these things. Well, I mean, who solves this wholesale market problem that's even more fragmented than the grid interconnection problem, it seems like? I mean, is this the ISOs that figure out how to solve this?
Eric Gimon
Well, I'm going to spend a lot of my time in the next year or so, talking to ISOs, among others, about whether they should solve this problem, why they should be motivated to. To some extent, it's being solved at a smaller scale in Texas, in munis and co-ops across the US, in other countries, and so on. So, we'll get more and more operational experience on how this stuff works.
David Roberts
Right.
Eric Gimon
That hopefully will make it easier to think about how the rules work. But I think there's a big reluctance. The utilities see this the same way they see kind of distributed solar. Right. You're stealing customers. It's really when they start seeing that, "Well, these guys will go somewhere else and you're leaving money on the table." Maybe they'll be a little bit more interested in working with the ISOs, with their regulators and so on to find provisions.
David Roberts
Yeah, that does not sound like a rapid process. It does not sound like the kind of thing we will do quickly, unfortunately.
Eric Gimon
Well, I mean, the good thing is everybody and their dog wants to build the AI stuff as fast as possible. Right? So that will crack the whip. And then the reason I care is less about AI, it's more about, you know, power for electrolyzers and so on. And that's going to happen over decades. Right? I mean, the Rondo folks are going as fast as they can, but they still only have one project on the ground, right, still. So it's about kind of, I see like my role as like those guys that like sweep the ice in front of a curling thing. Right.
David Roberts
What are those guys?
Eric Gimon
Like help. Help the thing get to the target.
David Roberts
The third bucket of problems. So, you have these grid interconnection rules, which are not. We don't really have a category for these hybrids, these energy parks. You have wholesale market participation rules, which again, we don't really yet have for these energy parks, at least not beyond sort of bespoke arrangements. And then third, you have something which I was thinking about a lot when I was reading about this, which is that you have the whole question of "What is, what are the limits of the monopoly franchise?" basically. Like, who has a monopoly on what? And it looks like if you have a big enough energy park where you've got generators and batteries and loads and they're all connected with wires, it looks a lot like you are acting like a mini utility.
Right. But you can't legally do that. So, describe the confusion here and then again, like who could resolve it? Who is the agent who could tell us how to get past this?
Eric Gimon
Well, there's two parts to that, right? I mean, you touched on the sales part. There are rules about who can sell electricity in a given state, right? So, who has the right to sell to any load? You kind of have to get around that. And one way to get around that is to be both the generator and the load, co-ownership, right? Because then you're not selling to anybody. You're just using your own stuff. And the other way is to do what's called "sleeving," where you have a friendly utility or retail energy provider, somebody that's allowed to sell electricity, and they take a little cut on top and they manage that transaction for you.
Both of those things happen. Then, the other component is the poles and wires. And that was kind of interesting to me. That gets into the legal part of it.
David Roberts
This is something microgrids run up against, right? Like, you're not allowed to run a wire across a public right of way unless you are a utility. As I understand it, that's the main problem.
Eric Gimon
It's more like, what is a utility? So, pretty much anybody who has these poles and wires becomes a utility. And then there are exemptions. And what's interesting, I didn't realize there's an exemption for generators. So, like, you could own a wind farm in East Washington and run a wire all the way to Seattle and plug it into the grid there, and all those wires are called Gen-Tie, and you are allowed to own that and run it, and you're not violating the franchise.
David Roberts
Interesting.
Eric Gimon
That's a stated exemption in the law. But then, the minute you draw that power to, you know, run a pizzeria or whatever, the exemption's out the window. So that's the tricky bit.
David Roberts
Well, couldn't you just say you're running your wire from the wind turbine to the grid, you know, through the pizzeria, but it's still basically the same thing. Like, is that just a matter of interpretation, or is there...?
Eric Gimon
So, that's come up in legal cases in Texas with oil and gas units; it's been interpreted pretty strictly.
David Roberts
Oh, interesting.
Eric Gimon
So, that's why you again go to the co-ops and munis. They provide you the sleeving deal and they're willing to let you do what you want with the poles and wires because it's their territory or they can own it — or I don't know how the legal bit of it works, but they make that part work for you.
David Roberts
Right. And so, presumably, you don't want for every energy park to literally have to become a utility. I don't even know what that involves, but I'm guessing it's not fast.
Eric Gimon
What you want, it's not even necessarily available. What you want is to create a set of rules that make sense for this kind of arrangement. Now, I've shown you all kinds of problems.
David Roberts
Who makes those rules from who?
Eric Gimon
Well, so I got interested in, like, how do you get consensus building around this, right? And I talked to a professor at MIT, Professor Susskind, who does a lot of work on siting. You know, I first talked to him about it, he's like, "Oh, siting's a nightmare. And now you want to make it like ten times the nightmare." Then we talked a little bit longer and he was like, his way of dealing with a siting is to kind of create state-level rules that require people to go through a kind of mediated process that brings in the local government and so on.
And it takes place over six months. But it's kind of one of those, like, "If you want to go far, travel together, if you want to go fast, travel alone" type things. Right. Like, if you have the right stakeholders in the room and you have a set time limit, you can actually build stuff faster than you thought.
David Roberts
Right.
Eric Gimon
And he's saying that a lot of people's impulse to try to kind of run roughshod over local concerns, to try to build as fast as we can, is misdirected.
David Roberts
Yeah.
Eric Gimon
That we need just better consensus building. And apparently, there's some kind of process like that in New York. I hadn't found out more about it. And so, talking to him, I was like, "Well, what if there were kind of special zones that were set up for these energy parks that not only helped get around some of these utility rules and who could own what, but also brought in some of this consensus building, siting stuff." Right. So there's a kind of carrot and the stick, where the carrot is. You get to go around some of these rules that are a pain in the ass, the stick.
But, you need to do something for us, and that's like a better consultative process with the local community and benefits agreements and so on. And maybe, if you can, sometimes if you take a whole lot of intractable problems and you deal with them together, you can get to a solution where you can't with things alone. So, that's my Pollyanna vision.
David Roberts
Well, I mean, part of becoming a utility, I mean, it's not just that you get legal permission to string the wires. It comes with a lot of legal accountability too.
Eric Gimon
You don't have to become a utility to get various exemptions. Right. I mean, like PURPA gives you exemptions for smaller renewable projects. Combined heat and power gets exemptions. Like, you can create new laws.
David Roberts
So if I'm like in the energy park and there's a failure related to wires, I want to sue someone, who am I suing? You know what I mean?
Eric Gimon
If you run wires from Eastern Washington to your pizzeria in Seattle with a Gen-Tie line, you also have those issues. So presumably, some of that's not inherent to the problem.
David Roberts
Right, right. I can't believe we're over time already.
Eric Gimon
Yes, sorry.
David Roberts
There's, as I was saying, so much to this. The model of chunking resources to me just conceptually makes so much sense just in operational terms, just on the computer science terms you were discussing earlier. But then, the minute you scratch the surface, these energy parks engage every different kind of rule, every different layer of jurisdiction, every different ruling authority. And it's not even clear where the lines between them are. It's just such a tangle trying to figure out how—
Eric Gimon
But people are solving this, Dave. I mean, I don't want to leave people with a very negative view. The day our report came out, there was this announcement with Google and Intersect in Texas again. But you know, they're talking about tens of billions worth of, I don't know exactly, I think it was maybe 3 gigawatts. I mean big, big projects. Presumably, they'll be working in muni co-op or monopoly utility territory inside Texas, I assume.
David Roberts
But yeah, I mean, you'd like to see it spread beyond Texas. You'd like to see it spread beyond just the sort of giants who have the wherewithal and money to make bespoke agreements with their states. You'd like to have an off-the-shelf model where you could get people experimenting with different forms of these different combinations of resources.
Eric Gimon
Couldn't agree more.
David Roberts
Different ways of operating, like you, need rules of the road so people can do this.
Eric Gimon
But my experience talking to policymakers is they're very loath to do anything without very concrete examples in front of them. So, I think we're very lucky that we have things like Rondo that are doing the siloed version, that we have these projects in Texas that we have.
David Roberts
Are there international models to look to?
Eric Gimon
Oh, yeah. I mean, look at what's happening in Western Australia.
David Roberts
I mean, is there a grid that solved this in terms of the rules of the road?
Eric Gimon
Well, I mean a lot of it is in Texas, like I told you, but even elsewhere it's just less complicated. I mean, in Western Australia, they're setting up 30 gigawatts, they just upped it to 50 gigawatts, a local transmission grid to feed the mines. I mean it's an energy park on a huge scale. But yeah, it's going to be bigger than the rest of the Australian grid.
David Roberts
No kidding. I guess, by way of wrapping up, I mean, there's a, you know, like we've barely scratched the surface. Like there's so many more different kinds of rules you bump up against here. But I think we've conveyed the larger point, which is just that policymakers at every level need to be aware of these things and engaging in these processes for trying to make them easier. But just maybe, by way of wrapping up, describe sort of, you don't get to this toward the very end. This is a little bit of the kind of utopian stuff that I love.
But, like, describe the universal participation model. Like this, it seems like what we would want in the end is something like what we've set up with the Internet. Which is just, you have certain protocols and then you have universal access, basically. Like, if you obey the protocol, you can connect to the network and, you know, all the good and bad that's about the Internet as a result of that. But, like, it seems like you want something similar for the grid, no?
Eric Gimon
Yeah, exactly. I mean, going back to what we were talking about with layers, right? We want to be able to create rules for the layers. And part of what we're advocating for is those rules will have to become agnostic as to whether you're importing or exporting power through the layer, right? Now, we evolved from a world where you made power in these big, clunky, steam turbine-driven power plants, sent them over wires through distribution networks to people, right? And now, people can make power at their home, people can make power anywhere. And that you can move the generation, it's sensible to move some of the consumption closer to the generation.
And so, that arrangement doesn't make sense anymore. And the universal participation model is kind of one way to talk about how you would make sense of this. It's not just breaking that generation consumption layer, it's also breaking the idea of like a single resource at the interconnection point, right?
David Roberts
Yeah.
Eric Gimon
The complexity is going up. We need to be able to manage at a layer without knowing too much about what's going on behind the layer. And there's a control freak side to system operators, which is completely understandable, where they really want to know exactly what's going on because their job's on the line. And so we have to move away from that. And I call that a paradigm shift. My co-author, Michael, really got on my case. He felt like "paradigm" was too grand. But to me, it really is, and I know Mark agrees. I shouldn't be airing our laundry here on the podcast, but I really think there's a fundamental shift there.
David Roberts
Well, this is stuff I discussed with Lorenzo Kristov about layered grids and — the microgrid people, I'm sure, listening have been wrestling with all of this for a long time. Like, in terms of chunking, like, if you, as a large grid, let's say you've got an energy park and it's got a single point of connection to the larger grid, and it's sort of what the park is doing is summarizing all that internal complexity and presenting kind of a single number. Right. "We need X power, or we have X power available for export." If the people who run the larger grid are going to be content with that arrangement, there need to be some pretty clear rules and accountability on the energy park that they're doing that accurately.
Right. Like, that's, I think, the concern you're getting at. Like, if you're asking the grid operators to lose a little visibility at the local level, they need to have a lot of trust that the local level is operating properly and accurately.
Eric Gimon
That's true, and there needs to be certain guarantees. On the other hand, the advantage of going to a lot of variable generation, right, is the grid has to deal with things kind of coming on and off, not always on their schedule.
David Roberts
Yeah.
Eric Gimon
And so, if they have processes for that, they'll have processes for some of these energy parks not quite doing what they need to in real time, and then they can penalize them later. It's about gaining trust, you know, gaining experience, gaining trust over time. It's not going to happen overnight, but we need to do a lot of this over the next 20, 30 years. So, we got to get started.
David Roberts
And I mean, if they wanted, like whatever 3x our power demand in the next five years, they really need to get moving. It's sort of fun. Like, on the one hand, I find AI annoying and bitcoin and all the rest of it, but on the other hand, like, it has really come along and put a giant jet engine behind everything that clean energy people want to do. Right. Like, nobody's ignoring this anymore. This is, you know, it's one thing for some little solar company to come knock on your door as a member of Congress, but then, like, once Google shows up with a giant sack of money, like, then, you know, things really start moving.
Eric Gimon
Exactly. I mean, at first, I was kind of resentful. You know, I was kind of like, I have this great idea and then you have like this dumb cousin who's in every room before you.
David Roberts
Yeah, but now I'm kind of grateful.
Eric Gimon
Not only that, politically, the crypto bros all that kind of overlaps a lot on the right. So, it's maybe an arena where you can find consensus and move forward that's not as polarized.
David Roberts
Yeah, that's what I was going to say. Like, it's bipartisan too. Like people, you know, big companies with giant sacks of money tend to resolve partisan differences pretty quickly. So, there is a chance of this stuff moving — God knows where and in what direction and who exactly. What a time to be alive, as they say. Well, thank you, Eric, so much for coming on and talking about this. This seems to me like one of the really most interesting and sort of fluid areas in energy right now is this sort of chunking, this parking, co-locating. So, thanks for coming on and talking through it.
Eric Gimon
Well, real pleasure, Dave.
David Roberts
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.
Share this post