Freeing Energy: An Interview with Bill Nussey (Part 2)
Hi, this is Chris O'Connor, your IEEE Newsletter Editor. Welcome back for the second part of our interview with Bill Nussey, CEO of Freeing Energy and CEO of Solar Inventions. We are focused in this conversation on the phenomenon of local energy, during Part I we outlined what Local Energy is, what means and how it has become something we all should be aware of for our local environment, our local communities, and most importantly how Local Energy is a part of how we think about power and power generation for the future. Today we are going to learn more about the technologies and opportunities that Local Energy presents to all of us.
In the following, Chris and Bill’s words will be marked with C: and B: placeholders, respectively.
C: Bill, thank you for joining us today. What are the technical breakthroughs we’ve had on this journey to Local Energy and is still to come to make Local Energy viable? You’ve said that the basic cost structure is now “cheap enough”, are we done? What technical breakthroughs should we look at that were the crucial points that have led this to be affordable and then what should we look for in the future on the horizon that is exciting to think for Local Energy?
B: My friends send me 2 to 3 articles a day about something they read in some academic journal or that their friends sent them. These articles are typically about some new battery breakthrough that's going to power the world. I always say thank you. But very few of them are ever going to see the market, most of these are expense science experiments. I talk in the Local Energy book extensively about what does it take to make commercial storage and solar. What are the underlying economics that everybody misses? The good news is unlike natural gas nuclear or coal, solar and batteries are a technology not a fuel. Fundamentally these are different economics. There is only so much you can do to make coal or natural gas cheaper. Fracking for example helped make natural gas prices cheaper, but the next global crisis can just wipe out that improvement. Utilities have entire departments to examine and hedge the cost of fuels in the wholesale market. Technology doesn't operate under the rules of fossil fuels in the ground. There is not a finite amount of fuel in solar technology, what you make is what you get, and you can keep making more.
There are 440 nuclear plants in the world. The United States is constructing only one right now, and it is likely to take 15 to 18 years to complete it. China is making one every 3 or 4 years, so on a technology curve we are not learning a lot about how to make them cheaper. There are about 3000 natural gas plants around the world. So General Electric is making a few a month and they are getting better every new version and the frequency of new systems is higher than nuclear. Now take Wind Turbines, there are about 500 thousand wind turbines, and that's why wind keeps getting cheaper, wind has become a more economical option. The rate of technology change is much higher due to the volume and speed of systems production. Every new system represents a chance to be more energy efficient or use different and improved parts. Now lets look at solar power. It is on a completely different track, since the beginning of solar the world has produced about 120 billion solar cells. The amount of learning about how to tweak and optimize solar technology is off the charts. The opportunity to iterate and create the next generations of solar cells takes place every week. For the technical investment community, the greatest economic benefit is in solar. If you and I had $10 million of venture capital and we wanted to improve energy technology let’s look at the choices and timelines. Nuclear Energy has only a few hundred consumers, and a long process to adoption, your improvement would have to be large say 10% or more to move that industry. Whereas in solar power there are fewer regulations, thousands of suppliers, and hundreds of thousands of consumers and billions of parts and components. So, in Solar you only need a very small fraction of improvement for the economic return to be huge.
So many people and governments just don't understand basic economics as to why solar continues and will continue to get cheaper. Solar and all its associated parts such as batteries are following the same trend. So that's why prices and systems are generally cheap now. In five and 10 and 20 years this will be the absolutely the cheapest way to generate an energy that’s ever been created by humans.
C: If I buy a house in Europe or in the United States is solar being priced in? Are homebuilders starting to think about this idea of Local Energy and this is a part of your roofing package?
B: Let me put a pause button on your excellent question and just tell you that all the stuff I just told you by getting cheaper for Local Energy doesn’t matter at all.There is a bunch of technology to think about such as perovskites, better metallization for silicon PV and more, this is all cool to talk about, but it's not interesting at all related to affecting the price of local energy on your Roof.Let me tell you why, if you in United States you put solar on your roof it's going to consistently be about three dollars per watt.So, if you put up a 4 kilowatt system, the average size United States, this will cost you $12,000.If you take the exact same you put that in Australia and install the exact same size for 4KW system in Australia, that system is going to cost you a $1.10 USD.
C: Why the difference?
B: Red tape - Australia had this crazy notion to not make it a ridiculously expensive from a filing and regulatory point of view, so they streamlined it. So, their costs are 1/3 the cost for the identical system.
C: We are not talking component Cost.
B: We are talking about the identical system. This country wants to have roof top solar, and has few barriers between the consumers, utilities, and the government. Australia decided they wanted to have local solar, and not fight it, they are $1per watt. In Japan it's $1.50 per watt. United States its $3.00 per watt.
C: So for our international readers the viability of local energy is even more promising. If you're in Australia, Japan or someplace else you can install at a more efficient price, join the grid optionally and at the same time it becomes a part of the way of life?
B: I think Australia has the highest penetration roof top solar per capita of anywhere in the worlds, compared to the United States its eight times higher. Something to realize is the price to own a system is not related to the brightness of the sun or operational efficiency. While it’s another reason to have solar, having more sun is not the driving factor. So, what's happening in United States is that there's some fantastic efforts to lower with our so called soft costs led by the Department of Energy.
C: So we have some leadership models taking place in United States?
B: We are doing some interesting things, but to institute change we must individually tackle over 3000 different energy jurisdictions that compose the United States. One at a time.
C: Each of the 3000 must make these adoptions by themselves?
B: Yes, and it's a bit ironic and frustrating.For example, if you live in neighborhood in the United States its likely your homeowner’s association has a rule that no solar can be visible from the street. In my own neighborhood your application of solar cannot be visible, which means that this is a challenging problem.But other industries have tackled this problem.The TV Satellite network companies in the United States worked together to have federal legislation passed years ago that said no homeowner’s association can outlaw dishes on roofs. There is just no such ruling for solar and your house may or may not face the right direction for that front of the street.
C: So you’d better by your home facing the right direction.
B: Yes, a little teeny bit of federal legislation would change this.One could image that having roof top solar as a national priority is a bit more important than your tv channels.Satellite TV has a complete waiver; you can’t stop someone for putting one up.So, working on items like these are what we call the soft costs of rooftop solar.
C: So you mention to 3000+ individual utility companies that are out in the United States, is there anybody leading the way?
B: You know you don't hear pioneering and electric utility a lot in the same sentence.But recently I did want to find the most pioneering utility in the United States.This would be the one that was doing everything that I would do if I were the CEO.I found it, it's a little utility out of Colorado called Holy Cross.The CEO is a PhD who for the good of humanity decided to throw away career as a global client modeling scientist and show us all the path to follow.
C: We will provide that podcast for reference will be provided at the bottom.
B: Holy Cross Utility is working as a startup would.They are working with the National Laboratories, working with startups and large industry, talking to all the industry leaders, talking to his consumers, and trying to create a leading edge public utility.They are knocking out myth after myth of what public utilities can do.Virtually everybody wants roof top solar, whether they are red or blue rich or poor everybody wants it.They just don’t want it so expensive in the United States.I cover a lot of this in the book.In short, a small group of incredibly wealthy and powerful organizations called electric utilities that would like to not see solar as a threat to their hundred-year-old monopoly. I’ve met and interviewed many people in these utilities, they are not malicious, they believe in what they are doing, and just don’t have the ability to change.
C: Please give me example of community collaboration that you see with this Utility in Colorado? I must imagine it is a much more collaborative environment and interaction between local government policies, the utility and with homeowners etc.
B: So let me give you another example that is a demonstration of what a Utility and a local community can accomplish together. This story made me I shudder when I first heard it. In New Mexico there is utility call Kit Carson, it's in Taos, New Mexico. This is a conservative place. As a community they wanted to only purchase “clean energy”, specifically they wanted solar generated energy. They were paying a very high price for electricity generated primarily by the usage of coal from their local electricity utility. In this case the smaller Taos based Utility had to purchase energy from a larger utility, they didn’t generate the electricity themselves. The smaller utility asks for cleaner solar only electricity and the largest utility simply said “no”. This goes back and forth and finally the larger utility pulls out a contract that is 60 years old and says, we are holding you to this contract. Well ultimately the smaller utility takes the steps needed to break the contract so they can have freedom to shop for power. The small utility has revenue of only $42 million a year, and the larger utility tells them its something like $100M to buy out the contract. This goes back and forth, and they eventually get it down $37 million to terminate the contract. This is where the folks at Kit Carson became creative. Little Kit Carson solicit help from a dozen investment companies all over the world to get the funding underwritten. Everybody signed up, they had a line of people out the door. Ultimately, they selected a boutique investment bank called Guzman & Company to finance the $37M and manage the transition to sourcing clean energy for their grid. What Guzman did was buy power on the electric wholesale market which was far lower than what was being paid in Taos, and instantly the power cost went from something like $.14 a kilowatt hour to $.12 a kilowatt hour. The reason Guzman was able to do this is that you can buy up to 6 years of power on the wholesale market at a fixed price. So just off that purchase, Guzman not only lowered the electricity bills in Taos, they now have the freedom to pursue “clean energy”. A big win for Taos, the Kit Carson Utility, and Guzman. Next step is that the community and Kit Carson worked together to create a community funded local energy initiative. Essentially the proposal was that Kit Carson would build a solar plant, creating jobs for the community, and installed it to generate power that cost $.07 per kilowatt hour.
B: Yes! Kit Carson now generates distributed across their region, energy that is built and run by the communities, and bright summer days already they generate 100% of their energy for the entire utility.
C: Lets summarize this back: at Kit Carson they invested and trained the residents to be able to install, manage, run, and maintain profitably the local energy system. So that’s job creation, which is also socially responsible, this system is a community wide resource and they're doing this for a fraction of the cost of what it would take via traditional power generation.
B: That’s correct. Electrical energy, and local energy are going to be the biggest disruption in the business history of United States.
C: So is this a similar moment that we have seen in other industries? We had PayPal tear apart the whole payments industry years ago. Suddenly local businesses could do different business find if transactions around payments. In hospitality we had Airbnb come in take apart the hospitality industry, now Airbnb and like competitors are causing the industry to rethink themselves. There are other examples such as Uber coming into transportation. For this Utilities Industry, is this the same moment? Is there this going to be led by a breakout sponsoring company as Airbnb and Uber did in their industries?
B: There might be in our future a leading company as a catalyst, just keep in mind this is bigger than business model changes. What’s important is that we need to get to clean energy as a world. Local Energy is the fastest way to get clean energy that has ever been created. Right now, in the United States a typical interconnection request for large commercial solar project takes 3 to 4 years, 75% of the large solar projects do not come to fruition. That said in America we can put a system on your roof in three weeks, but if I was in Australia, I can do in the afternoon you place the order. So, this industry can move at a rate of speed to get to clean energy that is unheard of.
C: If one wanted to learn more, are these guys in New Mexico available for case study to help the others?
B: Absolutely, while I did one of the first interviews with them, they are now famous you look them up on your time they're all over the place such as the NY Times and other journals.
The second reason that this is important is that local energy is job creator. This is different than what you see our current Federal approach to putting up high power transmission across the country. Our president tells us this is going to create a lot of jobs. We see the same promise around putting up offshore wind farms, a lot of jobs. The problem is we can’t find the math that this will create a lot of jobs. In my book you can see the math played out about where the jobs will and will not be created. Our numbers are based on many sources, we list over 400 citations, 100% of which are from government sources not from environmental firms or anyone with an agenda. So, what the numbers show is that if you build small scale systems like the one Kit Carson did, or like the one your neighbor has on their roof, those systems create 10 times more jobs than the giant projects of transmission lines or wind turbines.
C: Bill, for all these components exist to make these local energy systems, that implies there is a thriving ecosystem of companies out there today that are making all the components that you've describe. This is everything from solar chip technology to the software that goes around it, to the inverters, to everything that goes into a home, to the battery technology and everything else. Is this industry well-funded? Is it an established community? What do see today?
B: Chris, I threw away a good career in software tech because I believe this is the single largest business opportunity history of the United States.In the back part of my book, I list out across the world 50 separate multibillion dollar business segments that are emerging just around local energy.This doesn’t even cover the initiatives around water, hydro, and wind clean energy.Now it's still early, but the broader climate tech space according to Bloomberg there was in venture capital last year a total investment of $165 billion.So, the amount of money flowing this way has literally the last 12 months has just exploded.If you open the first page of my book it tells you the book is dedicated to the 10,000 entrepreneurs have yet to enter the industry.
C: So if I'm a young IEEE member in a university considering where to go and apply my trades in my skill as a new graduate with a double E degree, where would you tell your children to go as EEs into this market today?
B: People from the high tech space are shocked at how primitive the technologies behind local energy are. One startup I know just creates software that tells you how much electricity your commercial scale solar projects are generating. This sounds stupid, but in a commercial system there is limited or no software that tells you so when your building top solar goes out or is optimal. You don't just don’t have good connectivity and operations.
C: So the Internet of things connectivity to all the things on the roof down into your phone or your command center, all that type of technology.
B: Yes, there is so much basic stuff that doesn't exist.So, there are just a 1 million angles to take on this.You can get in on the science side and help invent the next solar and battery technology.There is the policy side where you can help the grid operators make better decisions, or you can be innovative in other areas.In my book I talk about the five orders of local energy, one of them is the technology components, one order is on integration, one is on services, one is on platforms.So, across this you can pick your career path.
C: Electrical Engineers are needed across all of these.
B: Exactly! With this model you can pick your path.Do I want to do things that are more hard science, or more policy, or more business integration related?There is a need in every one of these fields.In short there are just too few EE’s.Every solar company I talk to tells me they do not have enough EE’s.
C: Engineers that understand the practical science of a local energy system.
B: These are integrated systems.For example, how do you plan the physical rack load to install a local energy system.EE’s and Mechanical Engineering must come together in practical integrated systems.There are years and years of thought that have gone into this space that needs to be shared as this industry grows.How efficiently can they provide power, what is the battery system needed, can the system survive a hurricane?As we say in the south of the United States “you can’t swing a dead cat and not hit something interesting in this space”.
C: Tell us about your book. You’ve mentioned it a couple times your book, it was a labor of love and passion. Tell and what it has meant to you and types of people you’ve met on this journey.
B: So I had a really good job in tech and work IBM at a time.I was expected to go start another software company or become a venture capitalist or something.Along the way I fell in love with the clean space because I realized it was the biggest business opportunity in history.The more I looked at it, the more I realized the opportunity was bigger than I realized, and the economics were becoming more favorable faster.And critically no one anywhere was talking about.
I don't like writing books, it takes me forever, but I just realized that there is all these data points and facts that everyone was missing.There were political votes and legislators all talking with no facts, they were just missing it and relying on outdated myths.For example, I’m told in the state of Georgia that they slowed down a major decision on solar big solar for the state because they were afraid that all the retired solar panels in 30 years would overflow the Georgia landfills.There was no one doing the math, there's no one doing the data gathering and there was no one talking to entrepreneurs.
So, I wrapped this all together, it was supposed to take two years, it took 4 ½. Along the way I integrated some professional help, writing coaches, and the book came together as a collection of stories about people in Local Energy and their journey. Stories about people you are rooting for, some successful, some not successful, all of whom dedicated their lives to change. We explain the industry and how it came to be, we go back to the beginnings of Thomas Edison who created the first grid in the southern part of Manhattan, up to the modern day of history solar cells. What we learned from the Wright brothers and the things we learned from creating a plane and how it applies to solar. The book then it goes to the science of solar and what technologies and economics. It then has two chapters on the myths that are being put out there that are slowing people’s adoption of clean energy or specifically local energy. In the last two chapters are stories of amazing opportunities about amazing entrepreneurs who are creating billion dollar industries. The very end of it tells what if you're a reader and maybe you're not an engineer, maybe you're just a homeowner or apartment renter or someone who cares about local energy and talks about what you could do.
C: So the book provides you as an ordinary person a to do list of things that we could consider doing and I could take part in to enjoy the financial benefits, enjoy the social benefits, enjoy the environmental benefits out of the whole thing!
B: This is one of the few places where you will find what you can do in energy that isn't about just picketing or demonstrating somewhere. You should do that too if you feel strongly as there are so many myths that we all must help by writing letters to legislature and making our desires known.
C: If you had to pick a place in the world, or region of the world, or a country that is most progressive on this notion of local energy, who would you pick?
B: Australia, and they just elected a new Prime Minister.You must remember that this country has huge fossil fuel interests.And they just elected a “greener” leader.Australia is leading the world and they are about to go faster.
C: Bill, I want to thank you for your time. We will come back to you with some of our feedback and will pick another area we'll dive deep on this to continue our multi part series.
Thank you for joining us today, this is Chris signing off, thank you!
Christopher O’Connor is a 30-year software and services technology leader, strategist, and CEO. He received his engineering and computer science degrees from Rutgers University and management certificates from UNC and Harvard. He’s led everything from startup R&D to large company balance sheets as a General Manager of the Internet of Things for the IBM Corporation. Chris added to his achievements in 2019 a stint as the worldwide CEO of the public company Persistent Systems LTD from Pune, India, where he led a successful turnaround of a declining business. Chris is an experienced software and services operator, having occupied all C-level chairs from Sales to R&D to CEO throughout his career. With the pandemic, Chris has focused more on Venture Capital advisory roles by providing strategic leadership in Healthcare, Financial Sector, and Industrial Sector software and services. This includes extensive work in the field of the Internet of Things and Enterprise Asset Management, where he excels as a thought leader.
Bill Nussey is CEO & Founder of Freeing Energy, and CEO & Co-founder of Solar Inventions. He is a 25-year tech CEO with several exits, including an IPO. His companies have created thousands of jobs and billions in shareholder value. Along the way, he also worked at Greylock as a venture capitalist and, after selling his marketing tech company to IBM, he was promoted to VP Corp Strategy to help lead IBM’s global strategy for their CEO and SVPs. In 2017, he jumped into clean energy. It started with a TED talk which grew into 100+ articles, then became a top 10 energy podcast and, as of late 2021, a book called Freeing Energy, which has hit Amazon’s #1 new release in three categories (solar, energy, and energy policy). He also has a startup called Solar Inventions that is commercializing a patented breakthrough in the manufacturing process of silicon PV. He has a degree in electrical engineering from North Carolina State University and an MBA from the Harvard Business School.