With the complete shift to renewable energy on the grid as the intended outcome, NEXTracker’s CTO Alex Au sat down in conversation with Sunrun’s VP of energy services Audrey Lee about the best ways to do that. Part of Energy-Storage.news’ #SmartSolarStorage2020 series.
As outlined in the first post in this series, in order to scale the modern, clean energy ecosystem we must take a holistic and collaborative approach to building better power plants and #DefeatingtheDuck (aka, the Duck Curve). We must coordinate our efforts and resources in order to reach our collective vision of transitioning towards a 100% renewable energy grid.
When I think about where we are in this process, I often think of my children playing with their LEGOs®. We’ve laid down the blocks, but got thousands of pieces ahead before finish the set. For the remainder of the series, I’m sitting down with some of the best minds in the industry to discuss their perspective and understand their customers’ needs so we can align our solutions.
First up is my conversation with Audrey Lee, vice president of energy services for Sunrun, the US’ leading home solar, battery storage, and energy services company. Not only does Audrey have an extremely robust resume, but her journey into the industry is non-linear. Audrey and I discuss the challenges in creating the future grid and much, much more.
Alex Au: To start us off, can you give the readers an idea of your background and how your journey has led you to where you are today?
Audrey Lee: My background is in applied physics and electrical engineering – I'm a proud child of immigrant parents who encouraged engineering. I was working on a very narrow PhD program – quantum computing and semiconductor physics. I decided to take my engineering background and apply it to understanding public policy and how to implement sustainable policies like incentives to influence human behaviour.
I spent many years at the Department of Energy (DOE), and the California Public Utilities Commission (CPUC). I began to feel uncomfortable making the rules without ever participating in those markets. I decided to utilise my technology background and join the private sector.
I was able to take the optimisation algorithms that I learned at the DOE and apply that at Advanced Microgrid Solutions (AMS) to battery management. We have all these energy assets; how do we optimise the use of them? Because they're expensive, they're heavy capital investments: how do we make the best use, and operate our grid?
Alex Au: The optimisation standpoint is what gets me, too: finding the most efficient approach to solving problems If you were to kind of jump back into the policy side now that you do have the outside perspective, do you think you learned lessons you could apply?
Audrey Lee: Make rules really simple. You have to think about the scale of the problem that we have: of mitigating climate change. We are no longer talking about improving efficiency by 20% or reducing consumption by 20% along the margins.
Now it’s, how do we get to 100% clean energy? If we have to move faster, then we need to experiment, we need to prototype while maintaining safety and reliability, but we can't get too bogged down on the policy side with over-analysis. Our future can’t afford to waste any time.
Alex Au: I agree. One of the things that really frustrates me about the solar industry is that we're the only generation source that has a duck curve. To me, that’s the [power] industry telling us: “Hey solar – you are a nuisance; you're only available for a certain period of time and you're never available when I need you.”
Audrey Lee: It's an old paradigm – many people assume that this is the way the energy market should work because this is how it was built when we had centralised power plants. They think solar needs to fit neatly inside the market that they have created. Instead, we should be asking what does the market need to look like to get us to 100% clean energy?
Alex Au: Exactly. About three years ago, we created an RFP at NEXTracker called “Decapitate the duck.” We started to look at software companies, power conversion companies and storage companies. What we found is there isn’t a holistic solution, we're all still talking about individual components. We still sell this brand of a battery, with this brand of the inverter, and we're still debating, is it AC-coupled, or DC-coupled? When there is no connection – you’re creating a unique ‘snowflake’ every single time you build a system.
Going through this RFP process we realised pretty immediately: we needed an inverter standard. We brought together the California utilities and actually got them to agree on the five things they needed from inverters!
The result was a test to see if you actually need a meter with the inverter – if an inverter that is DC-coupled with a battery passes the test then it proves that you don’t need a meter and the inverter can standalone. We’re very excited because recently it was adopted by UL 1741.
Audrey Lee: That’s great. I agree, we need it to be plug-and-play and mature quickly if we’re going to act with urgency. But you can use the meter inside the inverter?
Alex Au: Correct, as long as you pass tests that show you wouldn’t be charging from the grid. The lack of future-proofing across the industry presents a tonne of opportunity for improvement. What I’m hoping to create with this series is to get ideas for an industry standard for inverters and different components of the system. For instance, and I’m just throwing out numbers, an inverter should be at 1,350 volts DC at utility-scale and 800 volts at the C&I level and then 400V on the residential side.
Audrey Lee: We just put out a report that aligns with what you’re saying called the Sunrun Neighborhood Grid Report, where we explore what the future grid needs to look like. We’re hoping to bring the industry together to imagine the grid differently. We’ve outlined our initial thoughts on what the grid could look like, but we’re not the distribution system experts, we’re not technology hardware experts. We need the industry to work together to solve this problem.
A lot of the microgrids that utilities have created in the past have been very front-of-the-meter (FTM) heavy, where there's a big generator at the substation, or big battery, but now we have customers investing capital in their own onsite generation and energy storage. How do you utilise that power more effectively, so that the 20% who might not have that can share the power their neighbours are creating? How do you organise that kind of sharing?
Alex Au: Exactly. We need to collaborate and call on all facets of the solar industry to answer these questions. If we are to look at this from a utility’s perspective – how do you think we would should create our power plants to meet their needs? What do you think the ideal framework of a solar power plant looks likes?
Audrey Lee: This is not a utility per se, but take our participation with ISO New England. Last February we won about 20 megawatts in that market – about 5,000 homes in New England – by competing as a virtual power plant (VPP) in that auction.
Our customers are choosing solar-plus-storage. In these scenarios, instead of just using the battery for backup power, we can maximise its utilisation by including it in wholesale market capacity so it can be used like a power plant. In order to do this though, we had to work with the ISO New England to evolve their rules.
The qualification process was actually harder than the actual auction and the bidding, because to get qualified, the ISO was asking questions they would ask a power plant like, “Have you acquired land for your project? What's your cost of capital per project? How are you financing this plant?”
Those questions just needed to be adjusted for aggregations of customer-sited systems. It takes a progressive ISO, like ISO New England that's willing to evolve their rules to new technologies, because they see this new valuable resource that can add reliability to their system.
Alex Au: Is the requirement on the customer? Or is it done through Sunrun?
Audrey Lee: Sunrun is the aggregator. We approach our customers who have bought solar-plus-storage and ask them if they want to participate in a virtual power plant where the ISO New England uses their battery. We let the customer know what is involved and share the revenues with them. Right now, that revenue sharing happens on an ongoing basis but as things become more predictable, we can actually bring those cash flows upfront and offer our customers a further discount on the system, allowing us to reach more customers.
Alex Au: At our scale right now at NEXTracker, if we turn on our software program, TrueCapture, it would be equivalent to creating a nuclear power plant in terms of energy saved. We’re now working directly with the people who are operating the plants and who will benefit the most from these technologies in the long run. I’m very excited to hear you guys are doing a similar thing and you’re not just thinking about the end product, you’re thinking through how the financials enable the resources.
Audrey Lee: What’s more important to Sunrun than the cost of batteries coming down is figuring out how we can maximise their utilisation. When you have a platform that can connect demand with supply and the data transparency, you can lower prices overall and get additional revenue – a win-win. Right now, there are batteries sitting out there only being used for backup and that is waste when we have so much capital, we need to deploy to make our energy infrastructure more sustainable.
The role of Sunrun as the aggregator is really to create that platform to connect customers’ assets, to utility programs and markets, so that we can add additional value. An individual customer isn’t going to sort through how to participate in ISO New England – so you need a software platform to do that for them.
Alex Au: I couldn’t agree more, Audrey. Thank you so much for your time!
Read Alex's first blog post for the #SmartSolarStorage2020 series, Clean and lean: What a power plant should look like, from now on