There’s enormous potential in clean energy. Not only will it finally wean us off of harmful fossil fuels, but it will create an entire new industry with lots of new jobs.
But in order to make this vision of the future a reality, businesses and government need to work together. That’s where Graham Richard comes in.
The former mayor of Ft. Wayne, Indiana, Richard is now chief executive of Advanced Energy Economy, a San Francisco-based advocacy firm that is working to bring about a “prosperous economy based on secure, clean, affordable energy.” Richard works with companies such as Apple and Facebook that want to purchase more clean energy. He also works with federal and local governments to put policies in place that encourage the growth of the clean-energy sector.
“I’m more optimistic today than I have ever been,” Richard told CALInnovates Chief Evangelist Kish Rajan during an interview for the podcast “A Step Ahead.” “Because of innovative forces, the job-generating and economic impacts are becoming more effectively understood.”
Richard understands that in order to bring about a truly robust renewable economy, we need more than clever entrepreneurs coming up with great ideas like Nest and Tesla. We need the government to make fundamental changes in the way utilities are built and regulated. Instead of siloed regulations that look at things like the energy grid and renewables as different beasts, we need system-wide regulation that can bring lots of different players to the same table.
“Innovation in environmental technology is creating a $200 billion market,” says Richard. “That could climb to a $1 trillion market by 2030 and create new jobs all across the country.” If everyone comes together to make it happen.
Listen to the full interview below:
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A Step Ahead: Graham Richard
Hi, everyone. Kish Rajan, Chief Evangelist at CALinnovates, and welcome you to this, the latest edition of A Step Ahead, the CALinnovates podcast. This time we’re joined by Graham Richard, who is the CEO of AEE, Advanced Energy Economy. They are a nonprofit that’s been around working with businesses across the energy landscape and the technology landscape, and as you’ll hear in our conversation, doing tremendous work all across the country helping to catalyze this new change towards advanced energy, and promoting all the economic possibilities associated with that.
He’s an interesting guy with a great background and a great story to tell about how much progress we’re making and how much more progress there is to make, so I hope you’ll enjoy the conversation I’ve had.
Graham Richard, thanks so much for joining us today. We appreciate it.
Graham Richard: Kish, great to be here.
It’s good to have you here on A Step Ahead, our new CALinnovates podcast, so thanks for being part of it. We’re here at your offices in San Francisco, at Advanced Energy Economy. For our listeners, just give us a quick orientation to tell us what AEE is all about.
We’re a relatively new business association with a national footprint, and we have a vision, Kish, of a prosperous world that runs on secure, clean, affordable energy. We now are active in 27 states, very active here in California, and we have over 100 national companies, wonderful companies, the names of which you know from your work.
Innovators like Apple, and Microsoft, and Intel, and Salesforce, and Facebook, and General Electric and Schneider Electric and Sun Power… a long list. Wind, solar, storage, systems integrators, and now, companies that want to buy advanced energy, they want to buy clean energy. And we’re helping face this wonderful new opportunity of creating jobs in the advanced energy, the clean energy sector, by encouraging policy that will make the growth of these new technologies become more present in our lives.
More real. And we think that that’s a prosperity agenda. So we’re a business association representing many of the companies that I’ve mentioned, and others, and every state is a different challenge, because every state has a different energy mix. My home state of Indiana, we were just talking about, right?
Yeah, I want to get into all of those issues that you’ve talked about. What you do, and policy, and I love what you said about this being a path to prosperity now going forward, I want to get into that. But very quickly, you’re from Fort Wayne, Indiana and now here you are in downtown San Francisco. How did that happen?
Well, it’s one of those wonderful opportunities. I had the chance to be an energy investor and serve as a state senator in Indiana, and Mayor of my city of Fort Wayne for eight years, and through mutual friends I was introduced to some funders and founders. Tom Steyer, Hemant Taneja, individuals that have a strong track record in investments and they were looking to support a business-based voice across the country and so, I’ve been on the board of an organization, The Clean Economy Network, which was merged into the Advanced Energy Economy and then I was selected to help build the organization. So, what we do is to make sure that the technologies and all the innovation around these wonderful new technologies is able to be embraced by policies that open up the market for these new technologies. And, as you know, energy is a highly regulated market-
and its regulated state by state. So, we really have to work at the federal level, at the state level and the city level to open up the markets to encourage the adoption of technologies that even four or five years ago didn’t exist. Remember that company Nest? Who thought about having a thermostat that could ultimately do security, it could help you with… so, the technology has now created a demand for opening these markets.
There really is this tremendous confluence as we speak of amazing new technologies, inventions that creating brand new technologies that are taking place, but at the exact same time, there is clearly greater political awareness and demand for changing policies, to change behavior that would change the way that we create and consume energy for environmental preservation purposes and certainly here in California we’ve been very much at the forefront of that. You know, landmark pieces of legislation and other policies that it seems are quite at the forefront of driving a national and global movement in this regard.
And, is that policy that opened up the market years and years ago for clean wind, solar, and now batteries and storage and so, we want to see policies open these markets. The good news, Kish, is that this is now a very cost competitive opportunity. We were in Texas recently where we have our Texas Advanced Energy Business Alliance and one of the largest industries in Texas includes DOW Chemical, which has a plant. And, DOW Chemical announced purchasing 200 mega watts of wind and they did that on the basis of the economics.
Apple, one of our member companies, buying over $820 million worth of clean solar power from solar here in California and its the 20 year economic value of that. That is the driver, not just the fact that it’s great for the environment. That’s important and we want that, we want to be able to deal with that but it’s also because it makes economic sense. That’s the innovation that’s happening in the market place.
That’s what .. and it seems to me that that’s so critical because that has been on the political side, and the arguments… one of the great criticisms has been and continues to be amongst some that these technologies—solar, wind, geothermal, go down the line—that they actually aren’t viable unto themselves, they aren’t economic and that engaging or purchasing those types of services or products really is a philanthropic exercise or it’s an exercise in at least public interest first and not purely business decisions. But, you’re saying that that’s…we’re seeing that change in the marketplace?
The innovation is coming in a number of ways. Improvement in overall systems cost in wind and solar is now making those, particularly the large scale, large city, a cost competitive purchase. So, you see a company like Warren Buffet’s MidAmerica’s power in Iowa throughout the upper Midwest, who are planning to have 100% clean energy by 2028. They just made the largest purchase of wind power in the history of the country and they’ve indicated that they’re going to keep their rates flat until about the end of 2020, 2027, 2028. So, this is cost effective and cost competitive.
In this last year, if you look at new installations in the electric power sector capacity, these innovations in clean energy, advanced energy have been so great that over 90% of all new installations have been what we would call advanced energy, clean energy. There’s another that’s happening. So, lets give some companies some roots here.
This is CALnnovates. You’ve got Sun Power, one of our very active members. You’ve got a company called STEM, which is a battery manufacturer, based here in California but then you have EnerNOC, which has a home base up in Boston. They’ve formed a partnership and what are they doing? The innovation is to take the software from EnerNOC, take the panels that are manufactured by Sun Power and put them into a system that is supported by storage to be able to deliver to a customer, perhaps a commercial or a industrial customer.
And, they say we would like to have more of our on site power, we would like to do more energy efficiency but we would like to have all of that integrated in a way that’s very different when you just used to have… envision in your mind a plug you plugged into a socket and the electricity will come to your device, but now all of a sudden you got to have more like the internet, a system that’s two way. So, it’s not just a plug in electrical socket with an extension cord. And, the innovation around the technology driven by the public policy to open those markets is creating a market that we estimate today to be a $200 billion market. We think that market can go to a trillion dollar market by 2030 and have job creation opportunity all across the country.
What are the keys to that you think, to continue to unlock that market? What’s it going to take to get to that next level of growth that you are suggesting?
Continued innovation by the great companies we are talking about. Continued innovation in public policy. We have to rethink how the electricity system is governed and operated and what is the business model for return on investment for electric utilities, so our association is involved in that across the country. I think continued innovation in finance and what I would call a systems way of regulating versus a silos way of regulating.
Tell me more about that.
For example, if you are an individual who buys a company and you have some use for natural gas, lets say you also use water, lets say you also use electricity. Right now, we’ve got systems and if you add to that broadband and the smart of the smart grid, the smart of the smart city, the smart of the smart transportation is wireless and fiber optic broadband. We need more of it just like we need more cloud computing, more storage capacity so it’s thinking how about you put all those pieces together.
This is a secret of the US economy. Obviously, it’s happening all over the world but one of the things we do well here is we figure out how to put pieces together. Just go back for a minute, I use this analogy a lot but I have a different frame line—recent studies and talk about when President Kennedy said we’re going to go to the moon –
and, people said we don’t even have the technology to do that. How are we going to do that? We don’t have… so, part of the solar industry got its start by talking about the solar cells on spacecraft.
It was the integration of all kinds of scientific advancement that drove ultimately a very successful outcome. Today, hey, we have private space companies. Tesla, Elon Musk-
Space X. Right.
and, Bezos has got his company. And again, what are they doing? They’re integrating systems including energy systems for the moon for Mars. So, what I think is exciting is we’re starting to see a change in public policy that encourages thinking about “wait a minute. Why are we regulating all of these technologies and services separately?” So, the California Public Utility Commission, Public Utility Commissions across the country are starting to say-
We’ve got to rethink this.
we got to rethink this. You might have a smart water system here in California and Texas and other places where there is droughts and water issues. We’re not going to get it from a silo-based solution.
Well, I think you’re right and it’s such a fascinating thing to think about from a policy standpoint because listening to you talk to how we sort of re-imagine and help inspire new systems that can get the next moon shot to sort of follow your analogy. We do have all these layers and legacy at the legislative level and at the CPUC level, the current construct and conditions that we use to regulate our utilities today, both energy power utilities but then also from telecommunications standpoint… I don’t want to lose that thought… that you are also suggesting that in order to achieve these big advancements in energy well, if we don’t have the underlying information, technology systems that can power these smarter approaches you’re describing, it won’t work. So, re-envisioning energy regulation, telecommunications regulation, and other things I’m hearing you say are indispensable to getting to this economic potential you’ve described.
And transportation opportunities. I was just meeting with a group of chief sustainability officers from hospitals. And, hospitals are big consumers of energy but they’ve been focusing on, and I think this is fantastic, energy efficiency. Now some of the hospitals are saying, “Well, wait a minute, I’ve got all these–my customers, my patients, my consumers, trying to get to the hospital and we’re trying to provide services at home and we’re trying…and in addition to that, we’re having constituencies who are saying we want cleaner air, we don’t want that old diesel stand-by generator there, we want a new micro grid, we want a new energy storage devices, we want systems that will integrate that.
So, the demand side of that is creating a lot of the innovations. We convened a group of-
Doesn’t it always, right?
we convened a group of our major companies that were all saying we’ve made a pledge to add 100% clean energy by a certain time in the future and many of these are companies that own data centers. Well, it’s predicted that at the current growth of the cloud, you could have 1,000% growth of cloud computing in the next 10 years. That could go from 2% or 3% of the consumption of electric power to who knows what that number would be and if that’s clean energy or if it’s fueled by traditional energy, particularly heavy fossil fuel energy, there’s a different dimension to that and the innovation that comes around combining new solutions.
Let me give you an example… I’m going to go a little different direction. We have a lot of people that feel that innovations happening in cities, and a lot is happening in cities, and it’s very important but we see technologies move to other locations around the world and in this country. So, one of our member companies, I love telling this story, they said in a small town that might have a rural electric cooperative providing electricity, maybe it has a telecommunication provider that is cable TV and they haven’t gone fully to broadband, they’re beginning to see that you can piece together technologies.
So, in the case of one of our members, Jewel Energy, in northern Minnesota with another member company, General Electric, they’ve designed a system that they’re bringing up in the next 60 days and it’s a small system that is wind, solar, and battery storage and they put that battery storage, and I love this as a Mayor, together with the critical resiliency assets. So, they put it in the police station, the fire station, the hospital. They put it at the 911 center. They put it at places where it really matters that when the power is out, particularly if it’s in the middle of Minnesota winter, you got-
resilience. It’s a problem. And, the pricing on this appears to be at 4.4 cents a kilo watt hour and because of the way they are designing this system, it’s going to be firm, dispatchable, 100% clean power. Now, it is the innovation of each individual piece of that low cost wind, low cost solar, lower storage but it’s putting it together as a package.
Well, it’s a really great story and has great resonance I would think with policy makers. Understanding that instance you’re providing is a tremendous value to the community that you serve because as you said, you’re creating resilience around those critical operations and assets. That sort of leads me to the question, a bigger question I was going to ask which is, you and I had both served in government and we have great respect for the role and the importance of government and the communities that they represent and protect and serve. It seems to me, at least this is my thought, and I just want your reaction, your experience, that when you think about the way we are regulating the energy utilities, the way that we regulate telecommunications and other critical systems is with a concern about everyday folks that if we don’t continue… the feeling to me seems that if we don’t continue to keep things the way they are that we somehow we will be abandoning our responsibility to protecting those folks… that we’ve created what we believe are these protections around them to this point.
I feel like there is a real reluctance on the part of regulators to let go of the old constructs for fear that they will be exposing vulnerable populations. A legitimate concern but I’m wondering: ‘A,’ if you sort of agree that that’s part of the driving force of where we are at the regulatory level and if so, what do we do to break through that and change that mindset?
Well, there is a power of an incumbent regulatory structure and economic order, and whenever changes come through innovation we have to deal with it so our belief is that we aren’t having enough of what I would call critical conversations among and between folks who don’t get a chance to talk to each other in a safe trusting environment. That doesn’t mean you don’t disagree but you least have a conversation.
So, our organization works heard to bring together people as we’ve done in now 10 different states, in California, New York and Michigan, Pennsylvania, and we bring together, in this particular case, the PUC regulators, members of our advanced energy network, executives from our companies, and then, say, regulated gas utility, electric utility, water utility, and we have a conversation. And, we say what is the need that you see each of the different parties having? And, of course, public utility commissioners and sometimes regulators that are advocates come to that table and express their view. So, out of that you then, we call convene, connect, collaborate for an action that will open up the market but also make sure that those who need some opportunity for transition get it.
Right. I’m curious what we see with the leaders that we’re talking to is new generations, new attitudes, new information is creating, it seems, a new era of legislators or mayors that not only understand these issues but are prepared and enthusiastic about getting in front to try to usher in this new kind of change.
And, part of this, as we say, this exchange of ideas and understanding, is so many folks aren’t as familiar with the public utility regulatory process but just think there are about 198 people that are elected, less than 200 people, some elected, most appointed-
who have authority over about a 100 billion dollars a year of investment in the electric power sector. So, how does a person maybe recently appointed by a governor and not have the depth of knowledge of all these technology innovations, how are you going to look at regulatory change if you don’t understand the technology that you’re having influence over? So, we work to bring together small groups of public utility commissioners by region and innovative technology companies to say this is a challenge, here is a potential solution so one of those areas is the use of micro grids, the use of on site power generation, the use of innovative software to help people whether it’s a hospital, whether it’s a school, whether it’s a factory, college, university, whatever…to be able to understand how their energy management, their energy savings, how that can integrate with all the other things in that environment that you’re working in. Transportation, for example.
Those PUC commissioners have signed up for some pretty important jobs but it’s a big deal. No doubt. Your personal energy seems to be as high as I’ve seen it in the last several years. As we wrap up here, I would love just sort of get your sense of the time you’ve been here and what you see in to the future. How do you feel about the progress that’s being made in ushering in this new era of advanced energy and how do you feel about where we’re headed?
I was in a conversation with the chief sustainability officer who works for the Cleveland Clinic, a very well known, innovative, Midwestern clinic and we were both commenting that we are most optimistic today as it relates to the future of advanced energy and clean energy then we ever have been because the innovation forces in finance and policy, in technology and now at a national and state level, around the job generating and the economics, that’s becoming more effectively understood, Kish. And so, as we seek first to understand and learn then the innovation is easier.
I will give you a specific anecdote. I was attending a conference that we hosted with CEOs of major electric utilities on the East Coast in October of 2013 and I brought up the question. I said, “What if, as an electric utility, by 2020 you could have a significant part of your revenue, certainly by 2030, that would come from electrification of transportation?” And, this executive turned to me, we were at a break time in the meeting, and he said, “We aren’t even looking at that. That’s not a strategy we’re even interested in because the regulators will never allow us to do that.” That same executive in a conversation said, “We’re investigating today, so that was 3 years ago, we’re investigating putting in charging stations, working with our regulatory authorities, talking with the automobile manufacturers, and I’m not just talking Tesla, I’m talking a whole wide range.
So, it’s that kind of shift. Why did the shift happen? Because the technology and innovation and number of vehicles and consumer demand. So, he’s seeing healthcare institutions, or colleges and universities, that want an EV and they want a place to charge it and they’re calling the electric company and they’re saying… and then there are fleet buyers so the mayor of Indianapolis, Indiana, who I’m working with. Greg Ballard, established the first all electric ride sharing vehicle system. So, like you’d have a bike share you can now put a card and you can get a electric vehicle that you just drive around town and drop it off on another location-
100% electric vehicle. And he’s put in place, in his 8 years as mayor, the purchasing of an entire EV fleet for the city.
So, what I’m seeing is a combination of demand, policy, cost curves coming down and integration of systems that allow all those things to happen.
That’s really fascinating.
That’s why I’m very optimistic. I believe we’re going to solve all these challenges because the combination of innovation in all these dimensions will produce solutions.
Well, the convergence is clearly happening. We’re at the cusp of a really exciting time and clearly Advanced Energy Economy is making a very significant contribution to helping, to working each of those areas that you just described but also that confluence of those factors that will make a big difference. We appreciate your leadership. Graham Richard, CEO of Advanced Energy Economy and thanks a lot for your time. It was great to have you here.
Thank you, Kish.