In a decision published May 1, the CPUC has approved an Integrated Resource Plan (IRP) to guide the purchasing of new power supplies over the next ten years.  In total, the plan calls for nearly 12,000 MW of new renewable and storage resources, with some big surprises as to the specific quantities and types of those resources.  This is a plan, not a mandate, but purchasers are well-advised to heed the guidance of the CPUC.

What began almost 50 years ago as a simple process at the CPUC to ensure the investor-owned utilities were coming up with a Least Cost Plan to add new generation to meet load has incrementally gotten more expansive and vastly more complicated.  All 49 Load-Serving Entities in the state, whether they are investor-owned utilities, municipal utilities, community choice aggregators, or energy service providers that serve customers directly, now must file plans every two years to ensure their plans are optimal and harmonized to achieve a long list of objectives.  At the top of the list is achieving the goal of SB 350 to bring GHG emissions of the power sector 40% below the level of 1990 by 2030, and the goal of SB 100 to have 60% of all power come from renewable sources by 2030. Both of these goals must then be met while assuring reliable power, with enough flexibility to ramp up and down as power supplies and load fluctuate, with enough in reserve to meet unexpected conditions, and all at least economic cost.  It is a massive computer modeling exercise.

The results are summarized in the following table.

This decision creates some clear winners and losers in the game to sell power projects.  For some, it’s a gold rush. But for others, not so much.

If you have a product for storing energy that can be delivered quickly over one hour, you got a big boost in your potential market—to over 2000 MW from the 90 MW the LSEs wanted.  On the other hand, if you have a technology to provide power from storage over a longer time frame, your sales strategy got much more difficult.  Why the shift? To know for sure, one would have to tear into the mounds of details in the assumptions in the computer model. A good guess is that 4-hour storage didn’t provide enough ability to ramp up quickly at an acceptable price.  Disagree? Catch the next train because the planning cycle is about to begin all over again, leading to a new decision on a ten-year plan in 2021. Make your case. Or sell your 4-hour technology to a customer and install it on-site.

If you are a developer of solar and wind projects, you might be a little disappointed. Each were cut about 1000 MW.  But still, there’s 7,000 MW to be sold. Some good news: The decision explicitly provides for purchasing power from these sources on a schedule that maximizes the opportunity to qualify for the remaining terms of the Investment Tax Credit and the Production Tax Credit for renewables.  LSEs are allowed to buy in advance of immediate need.

If you have a great biomass project, bummer, you got a goose egg.  Find a customer to buy your project and use it directly.  Don’t try to sell the power from your own project to a user, because that makes you an LSE and, congratulations, you will have to file and be a part of the next two-year cycle.

If you are a geothermal developer, jump for joy!  Your potential market just got a 5X boost.  Get the drilling rigs lined up fast before your competitors do.  Again, it is hard to tell why the results so heavily favor geothermal, but it is likely because it is the one fresh source of carbon-free baseload power that is out there.  Adding 1700 MW would boost the total installed capacity of geothermal in California by 62%. That’s a lot in ten years. There’s a pretty good chance making this decision public will affect the price of geothermal power contracts.  It will be interesting to see how that affects the 2021 IRP decision.

If you develop natural gas-fired projects, you didn’t even make the list.  The decision assumed no new projects and the shutdown of once-through cooled power plants as they reach 40 years of age.  It is assumed the younger plants still operate and provide a great deal of the ramping and reserve capacity. So, this decision will favor on-site cogeneration as the target for developers of natural gas projects.

Another big implication of the decision is that the buyers of power are not going to be the traditional utilities, but will be the Community Choice Aggregators.  The twenty CCAs participating in this process would end up being the buyers of 90% of the 12,000 MW authorized.  That is a much different prospect than the way this has been happened before.  The traditional utilities may in fact be trying to shed some of the power purchase contracts they already have.  To avoid this becoming a circus, the CCAs will likely try to come up with a few that will buy for everyone else in order to get the best deals.  Watch for that how that process happens. It is likely already underway. But for a time, it will be difficult to know with whom to negotiate your power deal.  There are many that doubt the CCAs can pull this off, and want there to be a back-up buyer. The CPUC will be smack in the middle of that controversy as well.

This process has been going on for a long time, but in the background.  Now the race has begun. Try not to get trampled.

If you want to read the whole decision, it is here.

We recently caught up with Zach Denning to see what progress he has made.  He developed artificial intelligence software used to optimize climate control in medium-size buildings using existing controls and sensors.  The biggest news is that they are now included in “Cohort 12” in the LAUNCH Accelerator, which puts them in the big leagues of early stage investing.  A small handful of companies are taken into each cohort (seven in Zach’s) and then over 12 weeks hear a number of notable speakers and pitch a series of investors.  

LAUNCH is a gateway to a number of events, classes and meetings that put young companies in the forefront of fundable ventures.  The Accelerator is just one. LAUNCH was founded by Jason Calacanis, founder of Weblogs which he sold to AOL and famous for turning $100,000 in angel investments into $100,000,000 by being early to get into Uber, FitBit, and Dropbox among others.  The LAUNCH Accelerator has invested in over 150 startups, six of which have gone on to achieve valuations over a billion dollars. It is huge for EnerDapt even to be selected to join this group. LAUNCH itself can invest in the companies in its programs and typically invests $25,000 to $1.5 million.  But the big value is getting connected to the premier network of venture investors.

The second big news is that Zach changed the name of the company to Hank, after the AI energy engineer assistant in his software. He felt this was a more memorable and unique brand.   They have a great new website http://www.hank.re.  “Hank” has really caught on as the shorthand for what the company does (“Happy tenants, ridiculous savings”).

Zach was connected to LAUNCH through local LAUNCH members Sonny Mayugba (Red Rabbit Bar among other things) and Brandon Brown with GRIN in Roseville (which does fast-acting influence campaigns) .   Once the connection was made, the door opened to fundraising and customer contacts. Zach is now more focused on mid-size buildings in the 100-300,000 square foot range. These tend to have professional operations managers and many are in REITs.  These companies easily get the opportunity Hank provides. Zach is showing 60+% HVAC savings in these buildings with a 50+% ROI.

The focus is more on closing investments to allow growth to scale right now, but the team is getting more customer projects which build the portfolio of case studies.  The team is still small with 3 core members and a couple part time. The plan is to add 2 more to fill out the sales engineer and business development function once funding is closed.

Over 50 attendees packed into the Cleantech meetup at Uptown Studios.  The venue was amazing and we had a great discussion. There were several attendees from Sac EV, IT-S Davis, SMUD, CSUS Engineering, and our regulars.  We kicked it off by introducing every single person there followed by calling everyone to join Global Startup Weekend: Sustainable Revolutions June 21st.

Director Rose of SMUD talked about all the internal things SMUD is doing to reduce their carbon footprint. Including electrification of their fleet.  He also shared information about SMUDs recent investment in a Mobility Center in Sacramento.  Following him was Professor Tracy Toups giving us a detailed rundown about problems a Electrical Grid will have as Electric Vehicles (EV) and their infrastructure grow.  The increase will generate Harmonic Distortion and unbalance the grid load. Professor Toups highlighted ways to mitigate these issues but constantly reminded attendees that it is difficult to predict as EVs and people move across the grid. Similar to problems highlighted in CleantStart’s Utilities of the Future talk.

Keeping with the theme of electrification of transportation and Startups, Kevin Farvo introduced us to EVLife and shared his experience from a past startup weekend. EVLife wants to give consumers confidence when shopping for EVs by using people personal driving characteristic gathered from user cell data.

The exciting thing to me is always the conversation that gets pushed. During Professor Toups presentation SMUD board members and other came to me wanting his slides. The discussion went way to late that the automatic  lights (environmentally friendly) of uptown studios went off. I look forward to seeing every one at the next one.

Make sure you check out Startup Weekend, Green Drinks, and our Next Meetup!