Virtual power plant project will unlock billions of savings for consumers

Markham interviews Renew Home CEO Ben Brown about the launch of North America’s largest residential virtual power plant.

What is Energi Talks?

Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.

Markham: 00:04

Welcome to episode 308 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. May 9th, and we're recording this on, Friday, May 10th, saw the launch of North America's largest residential virtual power plant. It's called Renew Home, and it was created from the merger of Google Nest, Renew Service, and Ohm Connect. The project currently controls millions of home devices that are able to respond to market signals and grid needs in real time, helping to stabilize the grid and reduce home energy costs.

Markham: 00:39

Renew Home makes up 3 gigawatts of electrical energy use already with plans to expand to 50 gigawatts by 2030. That alone is about 25% of the total VPP growth recently projected by the US Department of Energy, which forecasts that VPPs could meet 10% to 20% of peak electricity demand by 2030, avoiding $10,000,000,000 in grid costs. I'll be talking to Renew Home CEO Ben Brown about this very interesting project. So welcome to the interview, Ben.

Ben: 01:15

Thank you so much. I really appreciate the time.

Markham: 01:18

Well, this is very cool because we have done interviews, in the past about, virtual power plants. And, Jigger Shaw, from the Department of Energy, is basically an evangelist for VPPs. He goes around. I've read a number of his op eds and comments about about them. He's a big fan.

Markham: 01:39

But to my knowledge, I mean, this is the first time I've had the opportunity to interview somebody who's actually doing it as opposed to studying it or talking about it. So maybe just for the benefit of our listeners, give us an overview of Renew Home and what it's up to.

Ben: 01:57

Yeah. Absolutely. So, you know, as you mentioned, VPPs are, kind of the new term that we've all aligned on as an industry around the ability to really think about how we aggregate all the devices, that are kind of distributed energy resources that are available across households, which has been our focus as residential households, but also parts in the embedded assets that exist in in the grid today and think about how it can provide a resource, that balances the needs of intermittent intermittent generation resources like wind and solar, you know, when we think about decarbonizing the grid. And so, therefore, BPPs, we believe, are really critical elements in terms of actually hitting the larger goals of decarbonization in a way that reduces cost for customers versus other infrastructure resource that would need to be built and then, put on bills, for customers to be able to kind of pay that halfway. So renew home specifically, our approach to this has been looking at all of the kind of latent devices that exist in people's homes that people want to use more efficiently and effectively to reduce their energy costs.

Ben: 03:11

The most significant one of that over the last 30 years has been our HVAC system. It's been our way to heat and cool our homes. And so the ability for the Nest learning thermostat, which was created by the Nest team 15 years ago, to be able to be this beautiful enchanted object that can replace an existing thermostat in the home and then magically save you 15 to 20% on your heating and cooling costs just from an efficiency and learning perspective, also represented this amazing opportunity to think about how, if that, with coordinated to the active growing needs of the grid could be, you know, could provide a massive resource in terms of paving this way for decarbonization.

Markham: 03:50

Okay. So, VPPs basically are an aggregator, and, you need a a residential. You need a home with, solar panels on top and, preferably with a with some kind of battery storage. I imagine down the road, we'll have, v our our electric vehicles will be integrated into the grid, but for now, that's, in most case that's usually not the case. So we're talking about a battery maybe in the garage.

Markham: 04:18

And and then all of these devices and Google's Nest, Google the thermostat controls all of that, and you the, VPP, aggregates all of that output and then releases the energy if it's basically an arbitrage service. Right? So buying and selling into the grid when when that energy is needed and when that energy gets the best return for the residential customers. Have I got that basically right?

Ben: 04:48

So I think, I would take a step back and actually say it in a kind of maybe a little bit of a simpler way, the the, you know, kind of the way we thought about it is before all of that, before we think about kind of the adoption of solar and storage and EVs, we actually have 80,000,000 plus, you know, households, in in the US specifically that have central HVAC, and that is we think about every home in the US, being a a large thermal battery. That is a leading resource that actually has not been used really effectively at scale to be able to help support and balance the grid. So even before all the adoption of new distributed energy resources like EVs and solar and storage, which are gonna be very important and part of the broader electrification journey, The fact is we have so many households that are using energy inefficiently and not actually coordinated with the real time costs and need of needs of the grid.

Markham: 05:48

Well, now that I didn't understand. I assume this was a VPP where you you know, was the sir solar plus battery, aggregated, and so that well, now that's fascinating. So even if you took solar and batteries out of the equation, just the way we do things now, there's still a tremendous amount of efficiencies to be gained using this system.

Ben: 06:12

100%. Right? So I think that that's kind of the the thing for me in this broader conversation around VPPs that I think has missed out a lot is all of the latent devices that we have in the home. You know, if you really think about the way we heat water for the home, the way we heat and cool our home, that most households have across the country and in Canada as well. And if we think about that resource, both going for deeper electrification, which is part of what we're going through, but the fact is actually some of those resources are already highly electrified, specifically the way we cool our homes.

Ben: 06:47

That is a huge latent resource that probably represents anywhere from 40 to 80 gigawatts of virtual capacity. And that when we speak to kind of what renew is managing, yes, we are managing batteries and solar. Yes. We're managing EV chargers. We talked about our partnerships there.

Ben: 07:03

But, actually, a huge amount of volume of households, you know, everyone mostly has the HVAC system, central HVAC system in the US, and the ability to to to manage that is really, really important.

Markham: 07:14

So if a home already has a Google Nest, what and and that's helping to use electricity more efficiently in the home, What then does the virtual power plant or including that home in a virtual power plant, how does that then provide further efficiencies?

Ben: 07:38

Exactly. So the efficiency the 2 ways we think about how we drive energy savings for customers is, 1, through the energy efficiency. Just using less and part of the Nest Learning Thermostat has been able to say, hey. When you're not at home, let's not heat or cool the home. Let's do be smart about learning the patterns of your home to just reduce the total amount of energy used for heating boiler.

Ben: 08:01

The second part of it, which is actually growing in terms of cost for customers, and a part that renew has been really focused on driving down and rewarding customers for, is the ability to do small energy shifts throughout a given day in a way that actually really doesn't change the internal temperature of the house significantly, but optimize it against the needs of the grid, which has huge cost benefits to customers, but also represents this opportunity around BPP, which is this idea of being able to have an aggregation of shippable resources that allows us to move, you know, load, demand 15 minutes before clouds roll in and block the solar power plants or an hour before the wind starts dying down. Right? So being able to actually pre cool your house so by the time, those events happen and electricity's, crisis spike on the grid, you actually don't need to cool the house in that mode. So there's a lot of really intelligent coordination that can exist there, and that's a huge latent resource in the US.

Markham: 08:59

That that's very cool. Now does this all take place automatically using artificial intelligence and software in the existing system that we've got, or does, you know, is there new hardware that has to be installed? Anything like that?

Ben: 09:14

It's all based on existing hardware. Right? So the hardware that's installed in the homes, obviously, a household will give its preferences when it's setting it up, but as part of being part of the Nestle service, and opting into this, and giving some preferences around it, this is all done automatically with, artificial intelligence, with existing hardware that's out there. And so it's a very, very nice simple way to engage customers in a way that they don't have to do a lot more than just use the existing way that you can pull their home with a smarter device that actually gives them more controllability.

Markham: 09:46

I I can see how this would work in our home. Like, 2 years ago, we brought in a, we we, our natural gas furnace had to be replaced, so we installed a heat pump. And then, about 6 months ago, we had our gas hot water heater had to be replaced, so we replaced it with an electric one. It was, a heat pump, hot water heater just wasn't economic. It was about 3 times the cost, and so we went with the the electric.

Markham: 10:13

And, really, the only gas we have in in the, in the house now is the fireplace. Right. My wife is still not, until we get, battery storage, she's still not prepared to get rid of the gas, in case we have, you know, an outage for 2 or 3 days, and we have to turn the fireplace on to heat the darn place. But but beyond that, like, I could see where under your system, if you needed x hours where, we normally keep our thermostat at 21, which is that c, and then in Fahrenheit, that would be about 70. Yeah.

Markham: 10:49

So if you raised it 2 or 3, degrees, you know, 23, 24, 25 c, it's a little uncomfortable, but, I mean, you know, it's not that bad, or if you lowered it in the in the wintertime, I guess. So, you know, still not it's still pretty comfortable. We might have to put a sweater on. Yeah. That you know, that sort of thing.

Markham: 11:08

So but there's a fair amount of of, demand that you could shift in our house alone, and that makes perfect sense to me. And if that's the kind of if you do that on a large scale, I could see now why where you would you could potentially have a significant impact on the, on the grid.

Ben: 11:28

Yep. And I think and to your point, that's what we did with when we launched Nest Renew 4 years ago, it really was to say, hey. You know, across millions of households, how can we actually look at small energy shifts? So, actually, you know, really understanding the preferences of household so that it's not about putting anyone into discomfort. It's actually if you can do something, it's more continuous 365 days a year, small little things.

Ben: 11:52

It's actually imperceptible, but you're able to drive down cost for customers, enhance their ability to pay them rewards. And that's actually a very, very, very valuable system. First, it's kind of the traditional even demand response that existed before, which is very important but may not be exactly for everyone. Right? Because some folks may not want to deal with some soft pricing comfort for cost savings or or or dollar savings.

Ben: 12:14

And so I think that those types of things would depend on on the user type.

Markham: 12:18

This is this leads to a very interesting conversation that I've been having in Western Canada of late, and I'd say about in the last year. Because there is a pushback against the further integration of renewables, into the grid. I mean, the grid is mostly and and where I live in British Columbia, it's it's hydro. They're, like, 97, 98%. But on the prairies in Alberta and Saskatchewan, there's a lot of there was a there was a lot of coal.

Markham: 12:43

Now they're switching and there'd be a lot of gas, and they, but they have great wind and solar resources. And so the pushback comes in and, oh, well, the sun doesn't always shine and the rain, the wind doesn't always blow. And we've had experts on, like, Gerhard Schlager from, from Hitachi Energy, who say, look. Once you get into a significant amount of renewables, you need to reengineer your grid. It's not wind and solar are not a drop in replacement for coal and gas, and so you have to do things a little differently.

Markham: 13:17

And he talked about, you know, power electronics and and, digital controls and all sorts of things. We didn't talk a lot about demand response, and that seems to be both on the residential side. And and I know you don't do industrial, but that also seems to be a place someplace where there'd be a fair amount of potential, to, to do a demand response. But that I can see how this, coordinating with all of the those other technologies, makes the grid a lot more resilient, a lot more reliable. You're lowering costs.

Ben: 13:58

Yep.

Markham: 13:59

And what do the utilities think about this?

Ben: 14:03

So I think that, you know, over the last decade, you know, NEST and, NEST has worked with a 100 plus utility partners across, North America to be able to drive a lot of the scale in these programs, to really prove out that residential demand response and now residential VPPs can really become a reliable resource to actually help deal with some of these demand growth challenges that are in front of us in addition to the complexity, but also trying to decarbonize at the same time. And so we've had a lot of great relationships and partnerships over the years that we believe are gonna become even deeper in this world where in which how do we think about, you know, retiring that coal fired power plant? How do we think about not extending the life of that? How do we think about not needing to add new natural gas capacity when existing resources where we don't have to spend new money to build new infrastructure already exists if you can engage direct customers in a way that actually helps them save money. It makes complete sense, and so it's one of those things around.

Ben: 15:03

And that was why we saw it as so important to do what we just did, which was spin out and create this larger entity with a lot more money and a lot more investment to go into this because we realize how important this moment in time is gonna be.

Markham: 15:15

What's the incentive for utility to work with Renew Home instead of just doing it on their own?

Ben: 15:23

Yeah. So, I mean, again, I think the you talked about it before. I think in some of the other interviews we've had historically. For us, we've taken a customer centric approach that says, hey. You as a homeowner, you wanna have better control over your energy costs.

Ben: 15:38

You wanna have more control over when you cool and heat your home. It makes sense to adopt a smarter, beautiful device that you can put on the wall. It was a very easy conversation for us to be able to build that with that trust with the end customer, and that is a much better relationship where much you're empowering households to help save money and contribute to good reliability where it feels like it's customer out versus, you know, kind of the traditional demand response programs that existed 34 years ago with HVAC switches that had a really tough time with customers because customer didn't feel like they were in control. And so this is a very customer centric view where customers are always in control, and a lot of the automation intelligence is trying to help orchestrate things that maximize their savings while maintaining comfort and hitting their aspirations for a more reliable rate.

Markham: 16:27

Is your value proposition, and I'm by that, I mean, renew home, the fact that you're nimble, better plugged into the technology. You you kind of bring a package solution. You know, Utilities are kinda like governments in some way. You know? They're big and ponderous, and they don't change very often.

Markham: 16:51

And I could see a a utility trying to do this and hiring some company to write its own software or whatever put in, and it would, you know, not work very well. Better to partner with somebody who just specializes in this and especially, you know, maybe a a company that has ties to Google and, you know, that sort of depth of of understanding. So I I could I could see from the the utility's point of view where the advantage is. Is one of those advantages the fact, like, I I understand that you integrate with other devices or other controls, like, Amazon's Alexa, Tesla, LG, Honeywell, SunPower, and Sense. Getting other systems to talk to each other is never an easy thing.

Markham: 17:38

How did you go about doing that?

Ben: 17:41

Yeah. So, I mean, I think that's been the long standing investment that, both own connect and Google Home and NASA have had over the years, which is wanting to be platforms that work with a lot of different device partners, recognizing that the goal ahead is so massive in terms of the scale we need to bring with a very diversity of device types, that it really matters that we're able to partner across the ecosystem. And I think a good point to make here too is but the you know, like, the main reason why it's very important for us to have this deep relationship, kind of as one of the foundational partners for us with with Nest is that smart thermostats and the Nest learning thermostat is such an important, I think, funnel and driver of scale for other, energy devices that are gonna be coming into homes over time. Like, we know that a Nest Thermostat customer is significantly more likely to be the person that is also going to be buying an EV over that coming years. People that are looking at electrification of, hot water, people are looking at storage and solar.

Ben: 18:41

And so being able to have millions and millions of households that we engage with in providing a core service and building trust for those customers around reducing energy costs, contributing to this VPP and a reliable grid, and then being able to help, oh, to help them along the journey of other home electrification is just just so natural, and it feels very, again, customer centric, customer forward, where in which, you know, partners like utilities have loved working with us because of that, because we have that ability to help drive scale for these programs.

Markham: 19:12

How close are we getting to the electric home and not the electric sparkle? I interviewed a podcaster a couple of years ago, and I can't remember his name now, but but that was what his, podcast was about. How to, integrate new technologies that come along so that eventually you would have a 100% electric home, and it would be really smart. It would do all of the things that we're talking about and a lot more. Yeah.

Markham: 19:43

But so how close are we to to getting to that state, and then how long will it take before all homes are like that?

Ben: 19:54

It's a great question, and I think about it in terms of, again, from, like, building trusted households where you're delivering core values for them around, I need my house to be comfortable. I need my car to be ready to take the trips I need on a daily basis. I need the hot the water to be hot when it's when it's needed. I need to be able to cook food when I need. That is so core and fundamental that you we need to have products and the way products are delivered to homes that, you know, find a way to actually elevate those experiences while also driving down costs and driving reliability to folks.

Ben: 20:26

And so the smart thermostat was such a great starting point because it had an elevated experience for the home. It actually helped enhance comfort, helps reduce cost savings, gain more controllability. So it's a natural adoption curve, and that's why we've seen a really good adoption curve for smart thermostats over the last decade. I think the next ones that make sense are gonna be EVs because it's natural to wanna electrify transportation. It's gonna take time.

Ben: 20:48

That doesn't happen overnight. Also things like electrification of hot water also makes sense. It's getting natural. There's part of regulation around that, but it also makes sense, especially in the world where we're trying to decarbonize. To me, some of these things will take time, but I think we have to build off of the things that have been really effective to date, which had been the electrification or the intelligence added into things like heating and cooling the home as kind of a linchpin of trust and value a customer that you can build off of.

Ben: 21:16

And I actually think that's a really natural point where in which a lot of the device adoption that is happening in some of these other categories is really kind of is spinning off of those things, which is really, really nice. So I actually think we might be 5 to 10 years away from fuller electrification. But this we're we're we actually have electrified and made intelligence some components of the home.

Markham: 21:35

We've only got a few minutes left, Ben, and I wanna talk about, Ben Brown. Be it it before we get on the interview, you and I were chatting and and you noted that you've got some employees, who are located in Victoria, on the Vancouver Island, just probably about a 150 kilometers south of south of me. You're located in California. And how this technology gets developed? Why it was it it started in Google, and what you brought to the table, and how you manage this team, which appears to be distributed, you know, sort of around.

Markham: 22:15

Tell me about that. I've got kinda kinda kinda curious.

Ben: 22:19

Yeah. It's a great question. So we actually had, you know, the coming Renew Home is the coming together of 2 incredible teams that have worked in parallel for the last 10 to 15 years. So one is, the Nest Energy team that had worked on the Nest Learning Thermostat and then worked on our grid services programs and was acquired by Google and a a team that, I worked on and and and and led the components of, within Google over the last 12 years. Then there's the other team, which has been incredible in terms of the innovation and that's own connect.

Ben: 22:50

In terms of the investments they put into actually making VPPs a reality in California, in New York, through their retail electricity business in Texas. And so those 2 teams coming together, we are now distributed across 17 states, 2 provinces in Canada. We are a fully remote company. It has been incredible bringing those teams together. There's so much energy, so many different diverse perspectives, and I really feel like we're in a great spot to help drive and help lead in the space that really needs that right now.

Markham: 23:21

Well, you got my attention with the 2 provinces in Canada. Which are which provinces are those?

Ben: 23:26

So, also, we have we have a bunch of folks based in in Toronto as well as in Vancouver. So, so British Columbia and, Ontario. Ontario. Yeah. My bad.

Markham: 23:39

The home of the Blue Jays.

Ben: 23:40

Exactly.

Markham: 23:41

We would say home of the Maple Leafs, but the Leafs unfortunately got bounced in the first round yet again, So we're not talking about them, these days.

Ben: 23:49

Well, I'm from New York City, so I'm a I'm a Rangers and a Yankees fan. So

Markham: 23:52

Oh, well, there you go. They're, they're up 3 nothing in their, or is it 31 in their series? So good good luck to your rangers. Now, one of the things, I was gonna ask is when will the service, come to to Canada?

Ben: 24:09

So, actually, you know, currently, both, there are, both HomeConnect and, Nest Energy, Nest Renew Services exist, or or Reshara rewards exist in, in Canada. And we have plans for continuing to expand and launch new products over the coming years, so it should be fun. But yeah. You know, I think, we have a a large diverse user base across, Canada and, the US, both for Nest Thermostat customers as well as our other partners.

Markham: 24:36

Well, is this something that that I on Vancouver Island can subscribe to or some of the listeners we have a lot of listeners in Alberta and Saskatchewan. Is is that something that they can subscribe to now?

Ben: 24:48

Not yet. So in terms of specifically Nest Renew and, some of the own connect products, we do work through partners in Canada. So we can talk about that. But but in terms of directly, you can buy a Nest Learning Thermostat, but Nest Renew and rush hour awards is only available in certain parts of Canada.

Markham: 25:06

Gotcha. And so for somebody like me that's, already got a thermostat that's designed to work with the heat pump, Is there any are there any problems in transitioning to one of your devices in terms of making that heat pump work and meeting warranty, I guess.

Ben: 25:25

Yeah. I know. So the Nestle Thermostat and the Nestle Thermostat models as well as our other partner models, I mean, we do work with Honeywell, among others, are built to be compatible with most heat pump systems.

Markham: 25:36

Excellent. Well, Ben, this has been fascinating, and it, one of the things that's become very clear to me over the last couple of years is that many of these technologies have passed the inflection point on their own s curve and are now kind of, they're in hockey stick growth. And it's, you know, the we talk often on this podcast about the big ones, which are wind and solar and EVs and batteries, heat pumps and electrolyzers. That's one thing. But it's fascinating to get a glimpse into some of these other maybe less well known, technologies, but ones that still have a significant impact on, how we live, how we're going to electrify our economies, and do it without building you know, doubling or tripling our infrastructure and incurring incredible costs.

Markham: 26:28

And and so this sounds very interesting. I'll we'll, we'll wait for the launch in Canada, on Vancouver Island, and and check it out. Thank you very much for this.

Ben: 26:37

Well, thank you so much, Mark. Appreciate the time.