When it comes to local, distributed electricity production, most of us think of solar. But an Ohio-based company is challenging conventional wisdom by offering cost-competitive on-site wind generation for industrial customers.
In this episode, Freeing Energy Podcast Host Sam Easterby talks with Jereme Kent, founder and CEO of Ohio based One Energy. Jereme shares his journey from the biggest utility-scale wind projects in the United States to the complex world of behind the meter wind energy focused on industrial users and how new distributed energy models allow those users to save on one of their biggest expenses: energy.
Listen to this podcast and others in our series on these platforms:
http://freeingenergy.libsyn.com/jereme-kent-can-small-scale-distributed-wind-allow-companies-to-embrace-clean-energy-and-lower-the-electric-bills-at-the-same-time
Additional reading
- To learn more about One Energy, be sure and check out their site: https://oneenergy.com/
Transcript
Host Bill:
Can small scale distributed wind allow companies to embrace clean energy and lower their electric bills at the same time? In this episode, Freeing Energy Podcast host Sam Easterby talks with Jereme Kent, founder and CEO of Ohio based One Energy. Jereme shares his journey from the biggest utility scale wind projects in the United States to the complex world of behind the meter wind energy, focused on industrial users, and how new distributed energy models allow those users to save on one of their biggest expenses, energy.
Sam:
This is The Freeing Energy Podcast and these are the personal stories from local energy champions and leaders in the world of renewable energy that are shaping our future.
Sam:
Welcome to The Freeing Energy Podcast. And most of the time, we spend a good bit of time talking about solar energy. And there are some very other important forms of renewable energy that are equally as plentiful and have an extremely dynamic model around them, from an economic standpoint.
Sam:
And in fact, today we’re going to pick up on Bob Dylan’s theme of it’s blowing in the wind, my friends. So we’ve got a very exciting show today and it’s a story that actually goes back probably about 2,000 years in using wind powered water pumps and wind powered grinding machines all across the world, as a matter of fact. But between 1850 and 1970, there were about 1 million small wind turbines that were installed in the United States alone, and they were primarily for water pumping.
Sam:
But today, wind is playing a very different role in the world of energy and if our guest has anything to do with it, that role will only get bigger. Let me welcome Jereme Kent, founder and CEO of Ohio based One Energy Wind for Industry. One Energy develops behind the meter, utility scale projects consisting of about one to three wind turbines and it’s all onsite and it’s primarily for industrial energy users.
Sam:
Jereme, welcome to the show.
Jereme:
Thanks for having me, Sam. It’s nice to be on.
Sam:
Jereme, before you started One Energy, you were running some of the biggest utility scale projects in the world. How did you get into renewable energy, first of all, and then why wind?
Jereme:
It was fun because straight out of school, I was looking for a bunch of concrete jobs. I was a civil engineer coming out of the University of Michigan and I accidentally applied to a company called DH Blattner, who most people have never heard of even to this day, and they are still the largest installer of wind turbines in the US on the contractor side.
Jereme:
And so I applied to them by accident and after an interview when they told me that they build wind turbines, I said, okay, I’ve got to go figure out what a wind turbine is. And once I realized how big the scale was, I said, well, this sounds way cooler than concrete and ended up working for some of the biggest owners, biggest contractors in the country, all kind of by accident.
Jereme:
And once you get into this, you tend to get hooked and stay, because there’s not a whole lot of like this, Sam,
Sam:
Then you left that position and started One Energy. And I’m curious, why did you leave that world of huge wind farms and focus on smaller scale and more distributed systems?
Jereme:
The wind industry 10 years ago was still very young, and it was an interesting industry to be in, because there were billions of dollars flowing into it every year, but it was still only five years old. People were trying to figure it out and everybody was jockeying for position and it was a place where you tended to move from different companies a lot. I think I worked for four different companies in five years, running big projects. It was not the best work environment and it was 100% travel type projects and lifestyles and put a lot of kind of blood, sweat and tears into some companies that all of a sudden just decided not to be in it anymore and changed so drastically that it was unfortunate.
Jereme:
And I kind of said, I keep doing this over and over and the same thing keeps happening. Put pencils down on everything else and decided to go take a swing at doing this. I never thought we’d get where we are today. I actually said that the original plan with the gentleman I started this company with, was to go build turbines for farmers and backyards and put up 100 foot tall turbines.
Jereme:
And as you know, and as we’ll discuss, we’ve gotten toward doing stuff that’s just a little bit bigger than that, and it’s been a fun ride ever since.
Sam:
You started One Energy back in 2009, so you’re sitting on top of your 10th anniversary, practically.
Jereme:
That’s correct. We’re just a couple months away.
Sam:
A lot of us, I think, who have had the opportunity to fly back and forth across the United States, we’ve seen those giant wind farms as you go east or west on both routes and they just go on it seems like for miles and miles. It looks like from the air and from some of the ones that I’ve seen on the ground, those are pretty darn big machines that are sitting out there. By comparison, the Statue of Liberty is about 305 feet high or something like that and you’re talking about wind turbines that come close to what, 1,000 feet?
Jereme:
The majority of the big wind turbines that you see in the country are between 400 and 500 feet, and that’s the space that we play in. There are some turbines that you’re starting to see both offshore, and then some big onshore experiments. They’re getting up into that 600, 700 feet range.
Jereme:
For the ones we build, it’s a 26, 27 story building that has a football field spinning on top of it. It’s just big, and the scale that people aren’t used to seeing every day. It’s an acre and a half of air for every rotor that we have and some of the rotors now on wind turbines being installed are two, three acres of air on a single wind turbine. So it’s impressive to see their scale and their size.
Sam:
By two or three acres of air, you’re talking about the blades on the turbine swings through a couple of acres, two or three acres of air.
Jereme:
The swept area of the rotor captures, for us about an acre and a half of air and for the big turbines, upwards of three acres of air in that swept area.
Sam:
Those particular kinds of turbines, just to give our listeners a little more clarification around what those are, those are called horizontal axis wind turbines. More and more, we’re starting to hear stories about something called a vertical axis wind turbine. Can you give us a quick idea of the differences and advantages or best uses of one over the other?
Jereme:
Yes. A horizontal wind turbine is the modern machine that’s the product of billions of dollars of engineering and investment to create some of the most cost effective energy and cleanest energy produced anywhere in the world. And vertical access wind turbines almost without exception, are basically lawn ornaments that shouldn’t be installed by anybody, anywhere.
Jereme:
And unless you’re talking about the huge offshore ones that people aren’t really talking about yet, other than R&D labs, that look like big kites, most of the vertical access wind turbines that you hear about or you see at an airport or on top of a building somewhere have zero financial payback and make no sense and have all kinds of fundamental economic problems to actually matter. But they look cool and they’re great lawn ornaments, in my opinion.
Sam:
Now, you mentioned onshore versus offshore. What’s the difference there?
Jereme:
So onshore turbines are what 99.9% of the US wind industry is. Offshore turbines are turbines actually installed in a lake or an ocean. Right now, there’s I think two small projects in the entire United States that are actually installed offshore. It’s very big in Europe and a bunch of landlocked countries, where they don’t have the land and geographic resources that we have, but it is always far cheaper to build a turbine on land and you have far lower power pricing.
Jereme:
The issue is a lot of European countries don’t have the land resources that we have in the United States. So it makes a lot of sense, given the land resources we have, as you talked about, those long flights across the Midwest, and you realize how much land we really have.
Sam:
One of the things that intrigued me about the work that One Energy is doing is that you’re focused more on the industrial sector. And in fact, you have trademarked the name wind for industry, but that implies that it’s probably not providing energy back through a public utility or say through a electric membership corporation. So that’s more of a distributive model. So what is distributed wind energy?
Jereme:
Distributed wind is an interesting term that I’ve been arguing with the Department of Energy about for quite a while. The definition that the Department of Energy uses for distributed wind, so if you read the distributed wind market report put out by the Pacific Northwest National Laboratory, it’s a great report written by a woman named Alice Orwell and her team. That defines distributed wind as any project interconnected at a distribution system level, regardless of how it’s actually interconnected.
Jereme:
So any project that’s connected at 34.5 KV, 34,500 volts or less, is a distributed wind project, whether that’s a 10 turbine project that the local co-op is doing or that’s feeding into a major utility, but happens to be connected locally, and is a bit smaller, all the way through what we do, which is true behind the meter projects. So behind the meter projects are a different subset of those projects that talk about wind turbines connected on the customer’s side of the meter.
Jereme:
And so in every state, the demarcation point between the utility and the customer is that meter. And a lot of your solar listeners are familiar with projects that are on everything installed on roofs, and for their house, that are directly powering facilities behind the meter. We have the same thing in what we call wind for industry, which is direct to load, onsite behind the meter wind. And that’s a subset of distributed generation or distributed wind.
Jereme:
There aren’t good terms for what we do, so we keep making them up, like distributed wind has become so broad, it doesn’t make sense for us anymore. It’s onsite wind. It’s direct to load, it’s behind the meter or it’s just what we decided to call wind for industry and trademark it and just keep saying that over and over.
Sam:
One of the key differences would be that you’re providing an opportunity for somebody to generate their own energy from wind onsite, in a smaller setting than say a utility might set up a wind farm to generate or provide electricity.
Jereme:
Correct. All of our wind projects are designed to primarily power the customer they serve. Now, excess power still flows back onto the grid. These systems still operate in parallel with the grid. The customers we serve are usually taking power from both the grid and the wind turbine at any given point in time, just like a solar project that you’d see on a roof. But we tend to get a lot better pricing in scale and going big in what we do.
Jereme:
We tend to serve what we call industrial customers, but typically that’s 100,000 plus square foot factories that are using 5 million kilowatt hours a year or more. Our smallest customers use the equivalent of 500 homes worth of power.
Sam:
That’s a lot of energy. And wind, at least in 2018, generated about 6.5% of the total electricity in the United States. How much was of that is utility versus the model that you’re looking at where you’re behind the meter?
Jereme:
99.99% of that right now is utility. The utility scale wind industry in the last 15 years has really come of age, gotten scale, and has become one of the largest new sources of electricity generation in the United States. What we’re doing, frankly, we’re the largest in the country at it, and the one or two other groups that are doing it have had a hard time kind of getting to any real scale. We expect to see this get to scale and see some exponential growth happening, but most people have no idea how big the power demand is in the United States.
Jereme:
It’s on a scale that’s hard for anybody to comprehend or imagine. It’s in the hundreds and hundreds of gigawatts of power needed to power this country. It only gives you perspective of how many wind turbines have been built to get the scale to actually provide that much power.
Sam:
In the industrial sector in particular, that sector is consuming about 54% the world’s total delivered energy. It’s more than residential. It’s more than transportation.
Sam:
Wind actually is now a little bit cheaper than solar. It’s made quite a bit of progress on the economic front.
Jereme:
So wind has always been cheaper than solar. We just forgot to tell everybody. Solar is finally getting cheap enough that wind the cares. It hasn’t been the other way around, at least when you’re talking about scale projects. That’s a whole different conversation if you want to put up something for your house. If you’re talking about a small business, a farm, your home, solar has always been cheaper, but at utility’s scale, the scale we talk about in this megawatt class of wind has always been far cheaper than solar.
Jereme:
You bring up an interesting point in that the industrial sector is the main user of power in the world. And so in our view, if the main reason the power grid exists is to serve industrial customers, then it makes a whole lot more sense to find a way to serve industrial customers directly. And if you think about that, we’re taking out all of the middle waste.
Jereme:
If we do our job right, we enable as many industrial customers as possible around the state, the country, and around the world to produce their power onsite and to eliminate the need to take stuff from the grid. And that eases the stress on the grid, that provides them with a standalone, self-sufficient facility, and it truly puts them back in charge of the grid.
Jereme:
And the real theme to everything that we do, whether it’s our wind for industry or some of the managed high voltage stuff we do in addition, is that we’re enabling customers to take back control of the power grid. And we find that to be important.
Jereme:
The power grid started with the biggest industrial players in the country and around the world installing their own power plants. So as electrification was happening, it happened in large industrial facilities. You had huge companies that were the bedrocks of the true industrial area, installing generators to power their plant, to add electric motors to their plant, to start going into true mechanical type processes, as opposed to just the physical processes and using electricity to do so.
Jereme:
And that’s where the power grid actually started. So what happened is, those companies that became dependent on electricity started then saying, well, now I have to have a backup. So if I’ve got a 100 kilowatt generator, I need a 100 kilowatt backup.
Jereme:
They started realizing the neighbor down the street had another 100 kilowatt generator in a 100 kilowatt backup, and they realized that, hey, if you have 50 kilowatts and I have 50 kilowatts of backup, and we could share that power back and forth when we needed to, we can both save a bunch of money and have some better redundancy. So they started connecting these big industrial facilities and they started synchronizing them, and then they started saying, well, everybody in the middle works for one of us. So let’s go ahead and hook up the houses to it as well. And all of a sudden, that’s how the power grid started.
Jereme:
But if you think about it, the power grid is really designed to provide power for the big energy users. The big energy users are the big industrials and the big industrials like to control things. They like to control all their suppliers, all their commodities. And that’s what we’re enabling nowadays.
Sam:
From your standpoint, when that model, that utility scale model began to take place, you see that some of the industrial customers in some regard lost control of their energy. And now, the newer models around wind or around solar are enabling them to take that back.
Jereme:
Companies absolutely gave up that power, and they gave him that power because at the time, it was far more efficient to generate power in large 1,000 megawatt facilities, centrally located and controlled entirely by utilities, who had state and federally gifted monopolies. That was the most cost effective way and so companies made that trade.
Jereme:
And then as you got into the 70’s, the ’80s and the ’90s and the laws started to change, technology started to change, people started to install onsite cogeneration and onsite CHP, and being able to do things with taking additional waste heat they had and turn that to be more efficient and used that to make power because it was heat they already had. And as you started seeing deregulation happen in several states and businesses could now shop for power again, the technology got better and better to where you could start operating large scale, distributed energy resources. Things that were directly powering that plant, from solar to wind, to micro turbines, to all kinds of other technologies that people were working on.
Jereme:
And that, as I like to say, woke the beast back up to where the huge purchasing departments of the trillions of dollars of market cap of companies who are huge energy users went, wait a second, energy is a huge part of what we do. It’s one of our largest costs. We have no control over it. And every year, our power bill seems to go up without us talking about it at all. How do we get control again?
Jereme:
And so since the late ’90s and early 2000s, companies have been tasked with it and in the last 10 years, they’ve truly been enabled to go out and do things like, I’d like to get half of my energy produced onsite. And they can start taking bigger and bigger chunks of it to de-risk themselves and to take back control.
Jereme:
And the one thing any large operations executive likes or any big plant manager likes, is to have as much control as possible, because they’re going to get the blame when their profitability goes down. So they’d rather control it and be able to negotiate for it and have a say in how it’s done, as opposed to hoping that big monopolistic utility don’t just decide to raise the rates anymore.
Sam:
Some of these onsite generation projects including wind projects really were not possible for commercial industrial customers or consumers, until very recently and that required a lot of changes it seemed like, around both state and federal laws, to enable that to take place. What has your experience been through the 10 years of One Energy, along with your experience in building some of these giant wind farms that you have encountered, with regard to the changes in federal law that has kept this march going on?
Jereme:
There’s a couple of important parts to that answer. The first is that the law is still a patchwork of craziness across the country, where with the exception of interconnecting under PERPA as a QF, there is almost no coherent answer I can give for, what’s the policy of the interconnect behind the meter around the country? Because every state and sometimes areas inside that state, very wildly and we spend a ton of time with our team just understanding what the laws are.
Jereme:
So it is far from a welcoming environment to come into. It’s a very complicated environment, and the opposition in this case is utilities who are the best in the world at getting what they want from politicians, from governments, from everybody else. Because they just have been doing this for 100 years. It’s one of the oldest, established, permitted monopolies that exists and it’s very tough to change that.
Jereme:
But market forces that are going to drive it to change. If they didn’t have their monopolies, they would’ve been dead a long time ago, because they have fundamentally flawed business attitudes and business models. And so now, you’re seeing this transition where utilities are dying and they’re trying to figure out what that process looks like and no one really has figured it out.
Jereme:
I like to talk about the five stages of grief that somebody goes through when they get a terminal diagnosis. And those stages are denial, anger, bargaining, depression, acceptance. And if you actually apply that to the utilities, the model fits really well. You see a lot of utilities still running around or at least up until a couple of years ago, saying renewable energy is a fad, distributed generation is of fad. It’s not really going to happen. They’re in this denial period.
Jereme:
And then you get into this anger period. Well, wind turbines behind the meter are unsafe, customer generation is unsafe. You aren’t qualified to install and tie to the grid. If we screw this up, everybody loses power and grandma dies. And they get into this massive anger period and they sue cities that are trying to do wind onsite and they sue companies, and it’s this big nasty, fight that ends up in huge political fights.
Jereme:
And then you get into this bargaining phase. Well, I think we should make it easier to do onsite generation for customers, because that’s what they want. But it should all be done through us because we’re the best at it. And that fight is happening in the states right now when utilities are out saying, we’re all for a distributed energy future, as long as we control it.
Jereme:
And then you get into that depression phase, where people just start giving up. For a while it was hard to give examples of that, but I have to thank PG&E because they’ve given us some great examples of just a depressed utility. Well, I don’t know. Let’s just turn the power off to that entire area. We can’t take care of our lines anyways. We can’t make this work. Better just give up. Otherwise, you’re going to be mad and sue us. Right?
Jereme:
Are you kidding me? Think of another industry where they could just stop supplying something that’s life safety critical, just because it’s hard to do, and they haven’t taken care of their stuff and still have a business. The stage that we’re all going to be coming into that I’m looking forward to seeing is the actual acceptance stage, where maybe we started having some real conversations what the power grid of the future looks like.
Jereme:
But there’s this just crazy period right now, where it’s about as close to the Wild Wild West finally getting paved roads and rail and the whole world is changing right now in the utility space, and is changing more in the last 10 years and the next 10 years than it has in the last 100. So it’s a fun time to be in this business.
Sam:
You’ve got both state and regulations to contend with. What about local zoning? Sometimes we hear about this not in my backyard sort of thinking process. How do you deal with that on the wind side of construction and development?
Jereme:
Yeah, so the fun part for us is almost all of our projects to date have been governed by local zoning rules, and we actually prefer that. We like the local community to make a decision about what’s right for that community. And usually, it factors in that we’re helping one of the largest local employers and manufacturers make a 20 year commitment to a community.
Jereme:
However, anytime you deal with a small group, a small village, a township, you get all kinds of uncertainty in what’s going to happen. And some of that uncertainty creates risk for us and creates problems to solve. But I think it’s important to understand too, that the wind industry for the last 20 years has had a major attitude problem. It has not done a good job of educating communities and individuals about what it does. You can’t watch an hour of TV without seeing some commercial for Exxon and how they’re saving the world and a bunch of happy, smiling people and how natural gas is great.
Jereme:
That commercial, so that the public thinks natural gas is great, that commercial would make it easier to install the next pipeline. The wind industry has figured out how to take air that’s above everybody’s head and produce 6% of the power in this country and essentially, have a free and infinite fuel source and have the cleanest, safest form of modern power generation in existence and we forgot to tell everybody.
Jereme:
And so if you’re the average person and you hear that Jereme and One Energy are coming town and we’re going to install a 26 story building with a football field spinning on it and the tip of that football field, the tip of the rotor will do to 150 miles an hour, you very reasonably have some excellent questions to ask me, because I would have those same questions.
Sam:
150 miles an hour. Yes.
Jereme:
That sounds ridiculous. And I am an expert in wind energy, so I’ve gotten used to it, but we forget that for the average person, that sounds absolutely nuts. And so we spent a lot of time remembering, a lot of time realizing that when we go into a community, we have to teach, we have to educate, we have to communicate, we have to share, and we have to practice what we preach.
Jereme:
When we built our new corporate office, we built our new office at one of our projects underneath our turbines. Where I’m sitting right now is 625 feet away from one of our operating turbines, and we’re doing that to let everybody know that we believe it’s safe, and that we practice what we preach. And then we can bring people out and give tours, educate, let people will stand below a turbine and realize that there aren’t 1,000 dead birds and the sound isn’t evil. We have school kids who have picnics below wind turbines. It’s a completely safe place to be. It’s a great place to show people. It’s a fun place to be.
Jereme:
I like looking outside and seeing the 10 turbines I see all within a mile from my office, for our customers that we serve. But the wind industry as a whole hasn’t educated people. So when you don’t educate people and you have a very large, very scary sounding magic machine that turns air into money, you better believe I don’t want it in my backyard without some answers too.
Jereme:
We’ve done well with locals, but we know that a lot of others haven’t. And we think a lot of it rests with the people trying to put up the magic machine that turns air into money who aren’t doing a good job of communicating.
Host Bill:
The answer to your question for this episode is really complex. So get ready for a headscratcher. Does the intermittency of solar and wind energy make electricity more expensive? Several studies all conclude that future electricity prices will increase as renewable penetration goes up. But here’s the problem. They base their conclusions on mostly pre-2015 prices, back when solar and wind were more expensive than coal, nuclear and natural gas. It’s like concluding that Netflix will be too expensive by analyzing the cost of 1990s dial up modems.
Host Bill:
So the real question, which these studies don’t address, is what happens when the clean energy resources are less expensive as wind and solar have been since 2016? Unfortunately, the answer isn’t simple. It’s actually pretty complicated, but it’s worth looking into. So if you’d like to learn more about this, take a look at thefreeingenergy.com website and just search for intermittency.
Sam:
In some of the reading that I’ve done about wind, I’m really intrigued by how an industrial complex or how a large campus, if they were looking at, say, they’ve got several acres that they could set aside for a solar farm versus several acres they could set aside for a wind farm, how do your industrial customers approach that problem and how do they decide between the two?
Jereme:
So I think it’s important to understand that business’ first job is to run a good business. We like you it when businesses are responsible and sustainable and all of that stuff. But to be truly sustainable, they have to make good business decisions, right? You can be the greenest company in the world and if you’re bankrupt, you don’t have the right kind of green.
Jereme:
And so companies take this first as a financial decision, which is what they should do. It’s de-risking it, it’s giving them control. It has to be financially smart. So usually, companies set out and say, I’d like to look at what our energy options are and they go out and they learn about them. When wind works onsite, it works and it works better than everything else. When it doesn’t work, it’s usually really clear.
Jereme:
You can’t do wind projects next to airports. You can’t do in projects in places in the country that don’t have good wind. But when you’re in the right place, when you’re in the Midwest, you’re in the wind corridor, you’re in the Rust Belt that we’re in, when you have the right site, most every other form of behind the meter generation at this scale can’t touch the pricing that wind touches.
Jereme:
We are usually significantly cheaper than solar or anybody else at this scale, but we don’t always work. So for the customers we work for, it’s usually a no brainer. And for the customers that we don’t work for, usually we’re the first one to say you should go look at other stuff, because we can’t help you in this particular case. Because you’re land constrained, you’re next to an airport, you don’t have the wind resource. Hey, you happen to be just downwind of that big hill over there that’s blocking all the wind from the prevailing wind direction.
Jereme:
So the fun part of what we do is that when it works, it works and when it doesn’t, it doesn’t. So there’s not a lot of marginal stuff that we deal with.
Sam:
I don’t think many people think about just how much energy goes or the cost of energy goes into the products that they buy and that they use. One of the examples I saw was that in the US glass industry, energy makes up 14% of the cost of that glass once it’s finished and ready for customers. So cutting those costs is pretty important. And as your customers take a look at that, they’re certainly looking at which option is going to be the best for them as they move forward.
Jereme:
Absolutely. And so every process that takes energy in manufacturing draws on the need to have more and more energy onsite. Sometimes that’s heat, sometimes it’s electricity. But if you think about it, every time a manufacturer heats something, cools or freezes something, welds something, stamps something, bends something or does any sort of electrical process from a chemical reaction, they need energy. And the more they’re doing that, the more they draw.
Jereme:
We have customers who have energy costs as low as 0.5% of their total cost, all the way up through customers who are in that 20%, 30% range. We have customers whose sole job at a particular location is to turn on a 3,000 horsepower electric motor, have it run, and then when they’re done, they stop. And so for that one facility alone, it’s a substantial portion of their cost. Energy is a huge component in what we deal with every day. But every transformation that happens in manufacturing takes energy from somewhere and more and more in the United States, that’s electricity.
Sam:
Do you see some of these industrial customers looking for a blend of renewables, so that they can extend the amount of time that they have energy available at a lower cost? Or, are you seeing blended models of buying energy from the local utility along with cutting some of their costs by producing some of their own energy?
Jereme:
So the most cost effective thing a customer can do right now is make as much of their energy as possible onsite easily, and get the rest from the grid. But it’s important to understand that every single form of energy generation in existence is intermittent. Every power plant is intermittent.
Jereme:
When you actually take the entire generation capacity of the power grid in the United States and you look at the quote-unquote capacity factor of the grid, it’s like a 55% to 65% capacity factor. That means that at any given time, the grid is only producing 55% to 65% of what it can produce. And that goes down to every factory, every coal plant, every nuclear plant, every natural gas facility, every wind turbine.
Jereme:
And so no matter what you do, no matter who you are, no matter what size you are, you need a range of resources. You need the ability to share those resources, and you need to be able to balance those resources. So it’s easiest right now for a homeowner or a business, a large industrial customer, to bring something additional to the table and rely on everybody else for the rest. As you see more and more distributed technologies, you’ll see that get better. And that sharing will all be done more locally than through the grid.
Jereme:
But no matter what you do, you need a range of technologies and people love to talk about storage. But right now, storage is missing about two zeros to matter. The biggest battery in the world is still insignificant by all measures to our customers. So until storage exists in a better form, you have to be able to balance power across a range of technologies and a range of loads.
Sam:
One Energy has taken a little bit different approach to providing wind energy to industrial customers. You’re not just coming in and setting up a windmill and then walking away. Can you walk us through a little bit, because it looked like you have a complete spectrum of services to help the customer from beginning to end, including some of the financing models around applying wind energy to their particular situation.
Jereme:
Let’s talk about like a specific customer for example. Whirlpool Corporation is one of our customers. They are one of the best and most brilliant manufacturing companies in the world. They manufacture in dozens of countries. They build products that are in everybody’s home. They are absolutely brilliant at what they do, but there is not a single person at Whirlpool who’s looking at a wind turbine going, okay, here’s my plan for how I’m going to build this, or maintain it, or how I’m going to now work 300 feet in the air, how I’m going to deal with producing this power on site. That’s not what our customers do. That’s not what a Whirlpool does.
Jereme:
But a customer like a Whirlpool can say, I see the benefits of having wind energy. I want those wind turbines for us. I want them dedicated for us. I want them to behave, act, priced the way that we are asking for them. But I want to have someone to help me do it. And it’s the same way that I can go home and try to figure out how to wash my dishes by hand, but it’s a whole lot easier to put them in a dishwasher and have someone else take care of that.
Jereme:
And so what we did is we talked to all of our customers early on and they said, look, we want the benefits of this, but we don’t want the risks. We don’t want the hassles. And we realized that to make behind the meter wind work, we had to take all that risk away from our customers.
Jereme:
So we do everything for our customers. They sign one contract with us and they only pay us when we deliver the power. And we do it that way, we’re able to take all the risk of development, of the engineering and the construction, of the operation and the customer gets all the financial benefits of the project working without any of the risks, and we make more money by taking more of that risk than if they were to own it outright.
Jereme:
But we’re really, really good at designing, building, constructing and operating wind turbines. Whirlpool’s not. Whirlpool’s the best in the world at building great appliances for homes, we aren’t. And so it works well for us to take our scope and take our risk and de-risk the project for them, and for them to still be able to get the benefits of having clean, efficient energy produced onsite, cheaper than they can get from the grid.
Sam:
I guess then, some of the tax implications and some of the tax incentives that are offered to developers and owners of renewable energy projects accrue to them a little bit differently than if an end user doesn’t own that project. And in this case, it sounds like One Energy is leveraging some of those tax incentives. Does that model change for you as these tax incentives begin to decline and go away?
Jereme:
Yes. My life gets a whole lot simpler, because the way that tax credits are structured, the way that tax equity, which is where you actually go out and essentially sell an investment in the project that has a very positive tax implication to a company that has a large tax liability. The way those structures actually are put together, administered, dealt, financed, sold is absolutely ridiculous. It makes no business sense other than that’s how we deal with the laws that exist from the IRS today.
Jereme:
As that goes away, this becomes simpler and simpler, and it looks a lot more like a normal contract, where we can just build, own and operate and all the capital comes from one source that’s a much easier financial structure. As much as there’s a financial hit as those go away, I look forward to them going away. I look forward to having a simpler business model and I look forward to not ever having to talk about tax equity again.
Sam:
We always try and close out these podcasts with what we call rapid fire questions. A lot of times when we’re talking with non-industry folks, they really are surprised by some of the things that the clean energy business brings to the table. Share something that you think those folks might find most surprising about One Energy’s business.
Jereme:
More than half of our company is women. Our head of construction is a woman, our head of development is a woman, our head of regulatory affairs is a woman, and they make up the majority of the staff of the company. When you look at their staff, it’s an equal playing field and it’s fun to see the number of women that we have kicking ass on what they do.
Sam:
So let me ask you this. If you could wave a magic wand and see one thing changed on the transition to clean renewable energy, what would it be?
Jereme:
I think it would be very interesting to see utilities have to price all of their future projects and all their future bills and all their contracts based on 20 year flat fixed rates. Because we believe the price of power should go down with time. If nothing else, it should stay level. But we believe that customers have a right to know the price of power in 20 years. And that’s when you really see the true cost of all these great quote-unquote low cost technologies that aren’t really low cost and are very high risk.
Jereme:
So I think it’d be fun to see utilities have to price everything from a coal plant to a nuke plant, to a new wind farm, to natural gas, all on a 20 year flat fixed rate. And that gets back to actually putting a real number on the risk and understanding what the real future is. Because right now, utilities have no incentive to think longterm. And whenever you start thinking longterm, renewables win every day of the week because free and infinite fuel beats a, we’ll see what the market looks like or what war is going on where, price every day of the week.
Sam:
Jereme, what do you think will be the single most important change in how we generate electricity in say the next five years?
Jereme:
I think that you’re going to see more and more customers saying they want to be in charge. I think you’re going to see more and more utilities getting terrified that customers are taking control and realizing they can do it as well or better than they are. We can deliver power on site better, faster, cheaper, and safer than the utility companies can. I think the customers are going to drive that and customers are going to drive, be in control of generation going forward.
Sam:
Thank you for joining us today. You have been listening to The Freeing Energy Podcast, personal stories from the clean energy movement. Visit freeingenergy.com to learn more about clean local energy.
Sam:
I’m seeing Sam Easterby. Bill Nussey as my co-host and the founder of The Freeing Energy Project. The Freeing Energy Podcast is made in partnership with Frequency Media. Peter Lopinto is our associate producer. Subscribe to The Freeing Energy Podcast on Apple Podcasts, Spotify, Google Podcasts, and anywhere podcasts are found. Make sure more people learn about clean local energy by rating and reviewing the show on Apple Podcasts.
