Listen inListen in as host Bill Nussey talks with Bryan Hannegan, President and CEO of Holy Cross Energy, the Electric Membership Cooperative serving Western Colorado, including the famous ski resorts of Vail and Aspen. Holy Cross Energy is well on its way to achieving an aggressive goal of 100% clean energy by 2030. And, Bryan shares how Holy Cross is making local energy a central part of its strategy and dramatically reimagining its relationship with its customers.
Here are some of the highlights from their discussion…
“So the engineering and the business problems now become one of how do we take everything that we see the consumers doing and use that as, and embrace that as part of our business going forward.”
“It’s (EMCs) democracy at its finest. And I think it’s a really great way for us to show what can be done when a community rallies around this notion of clean and local energy and says, “Hey, I want my utility to do this,” and puts the right leadership in place.”
“… I think the modern utility needs to reimagine its contract, its agreement, its relationship with its consumers. And it’s not an option because increasingly today’s consumers are able to install a solar panel on their rooftop or they’re able to plug an electric vehicle into their garage. Or they’re able to go down to the Home Depot and get a Genset or a battery or smart thermostat and the utility can’t say or do anything about it.”
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Check out these links to learn more
National Rural Electric Cooperative Association
NREL Energy Systems Integration Facility
Full Transcript
Bill Nussey:
Well, hello and welcome to everybody in the freeing energy world. We are always so grateful for your time and attention, and we’ve spent the last couple of years exploring the world of local energy. Generating electricity, close to where it’s being used and what that can mean for new business models, entrepreneurs, and particularly for the communities and individual families and homes that can benefit from this.
Bill Nussey:
And a core part of the over the last couple of years has been that local energy is sort of in this arm wrestling war with the utilities. Consumers love it, entrepreneurs love it. But in many cases, most cases, the utilities are trying to fight it both directly and indirectly, but that’s not always the case. And I am super delighted to have as our guest, the president and CEO of one of the oldest electric member co-ops or EMC as it’s called in the industry, that’s providing electricity to 46,000 customers in Western Colorado.
Bill Nussey:
And if you look on a map, this includes some pretty well known places like the Vail and Aspen ski resorts and the communities that support them. And our guest today, Bryan Hannegan is a meteorologist, a mechanical engineer, and he has a PhD in earth sciences. Early in his career, Bryan health, senior leadership roles at the Electric Power Research Institute, or EPRI, again, everyone likes to call it and the White House Council on Environmental Quality and the US Senate Committee on Energy and Natural Resources. That is a mouthful. And I am so excited to have you on the podcast. Welcome Bryan.
Bryan Hannegan:
Thanks Bill. It’s great to be with you and hello to everybody out there in podcast land.
Bill Nussey:
So how does a scientist and a weather person get to the US Senate and the white house and then go on to sort of being a business mogul, running an electric utility. Can you kind of give us a quick snapshot of this pretty amazing journey?
Bryan Hannegan:
Well Bill, I think it’s less of a planned journey and more of a random walk through. I was always interested in the weather and in particularly in natural disasters. Growing up in Southern California, we had wildfires and we had floods and we had all sorts of things that somehow captivated me as a kid. And so when it came time to go to college, that was my chosen area of expertise.
Bryan Hannegan:
And I was fortunate enough to go to one of the best programs in the country, even then, and now at the University of Oklahoma. And kind of along the way, migrated my interests naturally being from Southern California into all things related to air pollution and air pollution chemistry that brought me back home from my graduate work to the University of California, Irvine, where I worked on turbulent reacting flows and modeling the chemistry of those well.
Bill Nussey:
One of the things that we were reading about in your background that really caught my interest was the energy systems integration facility you spearheaded at NREL, a distribution grid in a box. So I think I understand what that is, but take me through it. What is that? And what motivated you to do it and what’s come of the creation of that group.
Bryan Hannegan:
Well, it, the energy systems integration facility or ESIF as we called it at, at NREL, it’s a fantastic facility and it sort of lies at the intersection of research and operations for not just the electric power system, but for the energy system as a whole, hence the name. We basically had the opportunity following the ARRA, the first stimulus bill, NREL received a whole slug of money for then what was really a conceptual idea to create this distribution grid or distribution energy system in a box, as I like call it.
Bryan Hannegan:
So it was a single physical facility. It had electric distribution, gas distribution, water, waste, all the communications of a modern communication system, a high performance computer, visualization rooms. So it had like all the raw materials. And when I was recruited to join a NREL from, from EPRI from the Electric Power Research Institute, I was recruited to build a team and bring in industry partners that could work in a facility that looked and felt as much like a real working utility without actually being a real working utility.
Bryan Hannegan:
And the reason for that was this, when I was at EPRI, I was constantly reaching out to utility partners and saying, “Hey, can we work with entrepreneurs? Can we work with universities? Can they come and try something on your utility grid?” And of course, I understand that now, personally, but back then, I was like, “Why don’t you ever let us run experiments?” Well, because we need to keep the lights on. And so there was this need for a place where the utilities could come, where it was familiar to them, but the entrepreneurs could also come in and work in a way that was pushing the boundary. And that ESIF facility is one of many now at the national lab system that allow us to do that and has really advanced technologies related to integrating renewables into the grid.
Bill Nussey:
Well, I love it for several reasons. First of all, you’re intentionally bringing together different stakeholders, which is sometimes they talk about stuff, but so rarely do they do anything. And I love it because so much of the discussion that I hear… I’m not in the industry that you’re in, are only peripheral to the actual management of the grid, but so much of the discussion centers around the transmission side of it and sort of the really high voltage stuff. And I’m assuming that you guys were handling a lot of the distribution grid side of it in your facility there, which I think bears a tremendous amount of innovation. And it’s great to know that I’m not crazy to think that’s everything worthy to do. It’s exciting.
Bryan Hannegan:
Yeah, that’s absolutely right. So the focus at ESIF was around the distribution system. It was distribution voltages, both AC and DC. The system was sized to have a… The building was sized to have a capacity of around one to two megawatts on each of the distribution circuits that we’re running within. So it was really focused on that, because that was a niche that wasn’t well served within the national lab system.
Bryan Hannegan:
We have transmission level facilities at the Idaho National Lab, a lot of work on the transmission side at the Pacific Northwest national lab, but there was really a niche at the distribution level. And because NREL had deep expertise in the renewable technologies, we were seeing those now advancing to the point of, well, these are cost effective. Why aren’t they being integrated into the grid? And it was because they were so different than what distribution utilities were used to working with that we needed to give them a place to sort of touch and feel and kind of demystify this. And I’m delighted to say the work that we did and continue to do at NREL really is laying the foundation for a lot of the more progressive things that you’re seeing all of us in the utility space now do.
Bill Nussey:
And just to make sure it doesn’t go, unsaid the kinds of challenges that the grid operators are dealing with could, at least a large portion of them be called, we talk about here at local energy and how do these smaller scale systems live on the grid without disrupting it. And that’s exactly what ESIF sounds like you were… One of the things ESIF was helping.
Bryan Hannegan:
Yeah. In fact, one of our signature early on at ESIF was helping the Hawaii Electric Company figure out how to manage the onslaught of the solar rooftop systems that it was seeing. You may recall. There was a time where they closed the interconnection queue and said, “No mas, no mas solar.”
Bryan Hannegan:
And obviously that wasn’t politically or even economically sustainable. So we were able to model some of the Hawaii electric grids in the most compacted areas and help them understand how with advanced inverter functions, which are now standard throughout the industry, but weren’t five years ago, 10 years ago, these advanced inverter functionalities could really allow them to go beyond the standard sort of 15% penetration rule and get into more of questions of managing minimum daytime load and shifting from real to reactive power at certain times where you had too much of one and not enough of the other.
Bryan Hannegan:
So we were able to give them a path forward where they eventually took our research, went to the PUC and said, “We think we can open up the interconnection queue provided that you make these advanced inverters standard on all new installations going forward.” And now we see Hawaii a leader in solar penetration on distribution systems.
Bill Nussey:
Yeah, I refer to, and we’re going to talk about Holy Cross as a postcard from the future. But in my book I have a section called Hawaii, the postcard from the future grid. To see the connections with your past and my favorite state from a utility point of view is great to know. And I also think there’s a really important message in here, Bryan, that you’ve got a lot of ideological first folks on all sides of this argument. You’ve got the renewable folks saying, “Hey, just throw the renewables on the grid and we’ll figure it out.” And we’ve got the other folks saying, “Hey, we’re in charge of the grid and it’s actually pretty hard. So if we just throw it on there, you’re not going to like what’s going to happen. Even if we try our hardest.”
Bill Nussey:
And what I love about your message is yes, but we can actually get together. We can take a hard look at this arm and arm and we can figure out answers as you did for Hawaii on how to move forward. It’s not a one or the other as it so often devolves into discussions. So I didn’t actually know that. And I’m so glad it came up today. Thanks for all that great work you were doing, and for all the outcomes there or yet to come.
Bill Nussey:
So let’s switch to another time in your career in the early 2000s, you were on the US Senate energy committee staff, when a big story broke that Exxon Mobil was trying to squash the Senate lecture series on climate science, shortly after president Bush took office. And you were caught up in this… Really, you were ringside seats in this crazy discussion. One of the earliest ones where people are starting to take sides. I’m just curious, what was it like to watch this up close as we were all reading about it in the papers?
Bryan Hannegan:
Well, let’s flash back to me exiting graduate school as a card carrying PhD, climate scientist. I had an opportunity to continue my research with a very well known east coast Ivy league university. But I have always kind of been involved and interested also in politics and the political science of things. And I recognized that was something that personally I wanted to pursue.
Bryan Hannegan:
So I had applied for a congressional science fellowship through one of my professional societies. And ultimately because of some of my past work in graduate and professional student advocacy, leading GSAs and all that sort of thing, the association chose me as their science fellow for the year. I landed with that fellowship, basically I was paid staff. I landed on the Republican staff of the Senate Energy and Natural Resources Committee. I was one of the few degreed scientists amongst the staff in the Senate, or even in the Congress at that point. And we’re talking late 90s, early 2000s.
Bill Nussey:
Were you allowed to live in Washington DC if you had a PhD with science? I mean, did they let people like you live there,
Bryan Hannegan:
You had to hide in an English basement and that was convenient, because that was all I could really afford. And it wasn’t even that. But it was… We were prized commodities because we were people that were technically trained and our goal was to bring the scientific information into the public policy process.
Bryan Hannegan:
When I arrived on the scene, a lot of my collaborators from the scientific community became aware of me being there. And I became a conduit for bringing sign to both Democrats and Republicans alike working with the Bush administration and the folks down there. And one of the things that I did was serve as kind of the staff sponsor of the US global change research program’s regular series, where we brought in scientists to brief on what was the latest with climate science. And it wasn’t like a come in and advocate for your position or anything.
Bryan Hannegan:
It was just a, here’s something really, really cool and something you should know and it’s raising general awareness and information. It wasn’t built around advocacy. And I think that’s where a lot of the misunderstanding came. I worked really hard to make sure that those were bipartisan briefings, that they were informational, that people had an opportunity to ask questions in a safe space and really learn from one another.
Bryan Hannegan:
And so when it sort of popped out that, hey, we want to shut this down because we think it’s pushing an agenda. I actually kind of bucked a few in my leadership team and said, “Look, this is really valuable and it’s informing the public policy process. And the moment that we start squashing information gathering is the moment that our policy process isn’t as robust it should be.” And that’s something that when I then ultimately moved down to the White House and took up a role at the council on environmental quality, working with the federal agencies and the global change research program from my perch as someone who did research and read the literature and understand how to communicate that in an effective way. That was something that I continued when I moved down to that end of Pennsylvania avenue.
Bill Nussey:
That’s really an amazing journey, especially the entirety of it, all the way up to what you’re doing now, which we’re going to talk about in a second. But I also want to take a moment to tell our listeners something that is all too forgotten and the politicization of climate science today, that it was just 2008 when the Republican party platform specifically said that the climate is changing. We need to unleash the scientific know-how, competitive markets and new technologies of American industry to take it on.
Bill Nussey:
And what happened in the couple of years after that, is that for a variety of reasons it became much more politicized and now it’s polarized, unfortunately. And I’m optimistic that the work that you’re doing and lots of smart people out there leading us through it will get us back on the same path. But it’s certainly been a rough ride. And the great thing is that you are showing the world with your job here at Holy Cross, what is actually possible on every level, including the local energy level, which is why we are so honored to have you today.
Bryan Hannegan:
Yeah. And Bill, just to add to that. So while I was at the white house council and environmental quality, and certainly my last year when I also worked at the National Economic Council as sort of the pseudo specials assistant to the president on energy matters, 2003 to 2006, we saw a lot of change in the Bush administration’s agenda. The focus on growing dependence on foreign sources of oil, much as we see today led to a lot of investments in early stage research and development in biofuels and hydrogen. Gosh, Hydrogen coming back around now. We had the president’s hydrogen fuel initiative, which I was pleased to help develop. We had the advanced energy initiative, which was a order of magnitude, greater federal investment in research and development on solar materials, on wind turbine technologies, on electric vehicles and electric vehicle infrastructure.
Bryan Hannegan:
If you go back and look at the state of the union address, we’re addicted to oil. We’re going to invest in biomass and switch grass. We’re going to do a whole bunch of things related to the first reform to the CAFE fuel economy standards program in nearly a generation. Since the 1970s. So there was a lot of foundational progress in made for the things that have followed on. And as much as the rhetoric has gotten politicized, if you look at the actual developments in policy, in energy policy, in this country, they’re remarkably constant and similar across the Bush administration, the Obama administration, even the Trump administration for all the rhetoric. There was a lot of work being done there. And now we’re seeing that picked up in the Biden administration as well. So I feel positive and optimistic given this long term trajectory that we’re on a path to decarbonizing the economy in a way that creates jobs and keeps America strong.
Bill Nussey:
So let’s talk about putting all the ESIF and the work in Capitol hill and the White House and putting that to work. Holy Cross, as we said earlier, is an electric membership co-cooperative or often called EMCs or called co-ops. And there’s 900 or 1,000 in the United States?
Bryan Hannegan:
Yeah. Approximately 900 or so if you consider distribution, as well as the generation and transmission cooperatives that operate at kind of the higher scale of aggregation.
Bill Nussey:
And just tell us, I think a lot of people know what it is, but just give us a quick 101 on what an EMC does and why it’s not like Georgia Power, or PG&E or ConEd.
Bryan Hannegan:
Well, first of all, we are a real utility and you’d be surprised at how many people don’t automatically know that. We keep the lights on. We keep the rates low. We keep everybody happy. That’s the goal. We keep everybody safe. We share a lot of commonalities with the larger investor owned utilities. So you’ve got electric cooperatives that are owned by the members that we serve. So when you pay a Holy Cross bill, you are actually part owner in the electric cooperative.
Bryan Hannegan:
We stem from the New Deal days when the investor owned utilities were focused on electrification in the dense urban areas where you had obviously better economies of scale, and you could make more money by serving more people in a dense environment. We wanted electrification out in the countryside as well. So the farmers and the ranchers at the time got together and put together their own cooperative.
Bryan Hannegan:
And through the Rural Electrification Act were able to get funding from the federal government to invest in the infrastructure, the polls, the wires, the power plants, et cetera, to set that up. And so since 1939, we’ve been providing reliable, affordable, and safe electricity to the folks here in the west side of Colorado, about two hours west of Denver.
Bryan Hannegan:
And it’s a fantastic organization. We’re governed by a seven member board of directors that are elected from within the people that we serve. So you live here, you pay a bill, you don’t like what you’re getting. You run for the board and you can change things. You can hire and fire the CEO. You can set the strategic agenda. You can vote the rates up or down. It’s democracy at its finest. And I think it’s a really great way for us to show what can be done when a community rallies around this notion of clean and local energy and says, “Hey, I want my utility to do this,” and puts the right leadership in place.
Speaker 1:
Bryan puts it well when he tells us that EMCs are real utilities, they keep the lights on, they keep the rates low and they keep people safe. What makes EMCs or co-ops as they are often called different is that they are owned and governed by the very customers who buy their electricity. Profits are shared with customers and decisions are made by local boards, elected by customers. It’s as local as local energy can get.
Speaker 1:
Did you know that EMCs serve 56% of the land mass in the US. Or that unlike the rest of the electric sector, the nearly 900 EMCs in the United States sell the majority of their power to households rather than businesses. Co-ops power over 20 million homes, schools, and farms and businesses in 48 states. And in 2019, America’s electric co-ops returned more than 1.3 billion in capital credits to their consumer members.
Speaker 1:
If you’d like to learn more about EMCs our friends at their National Rural Electric Cooperative Association, have some amazing stories and information on their website. Take a look at www.electric.coop if you want to learn more, we’ve included the link in this episode’s show notes over on freeingenergy.com. And if you’re enjoying this episode, don’t forget to like, and subscribe to the Freeing Energy Podcast on your favorite podcast platform. Now let’s get back to Bryan and bill for more amazing insights into how Holy Cross Energy is helping us all get to a clean energy future faster.
Bill Nussey:
So you guys started primarily as a distribution service and today you’re adding generation, which is something that’s a little uncommon for EMCs. And particularly you’re focusing on renewables. So what’s been in that journey? How have you shifted from the traditional electricity distribution service to also being able to distribute and generate today? Give me some color on why everyone else isn’t doing it.
Bryan Hannegan:
So a lot of distribution cooperatives like Holy Cross they’re distributors of electricity. In other words, they purchase electricity at wholesale, either from a larger investor owned utility. In our case, we purchase some of our supply from Xcel Energy here in Colorado, or they band together and create a sort of a purchasing group called GMT or a generation and transmission cooperative that acts as the wholesaler that serves those distribution members.
Bryan Hannegan:
So 18 of the 22 here in Colorado, the distribution members are members of something called Tri-State G&T association, which is their wholesaler. And that’s kind of the easy thing. A lot of these wholesale or G&T type agreements are what we call full requirements, meaning that you’re kind of contracted in to get all of your requirements for power from one source. Just like you wouldn’t buy gasoline from one gas station or tomatoes from one grocery store it does pay to shop around.
Bryan Hannegan:
And fortunately we’ve had some contractual ability to do that since the 1990s, where we’re able to not only shop around to other providers within the confines of our contract with Xcel, but also to be able to develop our projects, small scale, at least initially renewables and clean energy projects, qualifying facilities to use the PURPA vernacular for those of you that are in the know. But we’re also able to purchase economy energy, just raw energy without any of the capacity and the firmness that you would want.
Bryan Hannegan:
We can just get energy whenever it’s available you would in a marketplace. And we can do that to also bring in additional renewable energy resources. Around about the time that I got here we saw the power costs increasing in our underlying wholesale contract at a rate where they were going to start to cross over pretty quickly with the power costs that we could get from our own projects. Even in areas like Aspen, where the property values are expensive.
Bryan Hannegan:
When you added in all the benefits, it started to make sense to do some local projects, especially when we took into account the value that they would bring from an energy resilience standpoint. And so since, since about 2017, we’ve been investing in local solar, local biomass, geothermal coal mine, methane capture from some of the defunct coal mines in our area. We’ve got some hydro projects. And we’re also developing in Colorado, other solar and wind projects of larger scale where the resources are better on the Eastern side of the state. All of that will take us to where we think we will be approximately 85 or so percent carbon free in our power supply. Hopefully by the end of next year, there may some delays-
Bill Nussey:
Wait a minute. Whoa, say that one more time. Say that one more time.
Bryan Hannegan:
So presently today we are 48% carbon free. And that’s up from the low 30s, just about five years ago. And with some new wind and some new solar projects, including three solar plus storage projects that will come online directly connected to our system this year, we look to be 85% or so by the end of next year or at the latest by the end of 2025. And I say that because of just wind developments and the PTC and lots of other things that we can go into, but certainly well before our goal of becoming carbon free as a utility by the end of the decade.
Bill Nussey:
I mean, and you’re doing it. It’s amazing. And I hope everyone hears that is… You’re doing something that most people say is impossible to do within decades, and you’re doing it within a decade. And you have some flexibility. You’re not as tied as tightly to the traditional contracts. I think our very first podcast guest, when I had no idea how to interview somebody for this, I was interviewed Louis Reyes, who is in the midst of a big battle with the same G&T Tri-State. And they were quite the bad boys and they’ve cleaned up their act from what I can tell since, but they were definitely taking the bad boy position at the time. And it was salacious reading for people outside the industry. But I’m glad to see that you guys have a little bit of flexibility and are using it to its fullest.
Bryan Hannegan:
Yeah, I think this is the defining challenge for electricity markets as we go forward, because we used to get these full requirements. Contracts used to be, you locked in for something for 10 or 20 or 30 years, because that was the tenor of the asset, the coal plant, the gas plant, the nuclear plant that you were using. And so to get these big, large central station assets financeable, you had to have a customer base that was locked in for the length of that loan. And now as we shift to more shorter duration, smaller scale, more localized projects that link in the contracts is breaking down. Nobody wants to be on a 30 year contract anymore because so much will change over the next three decades. If technology trends today are any guide. So I think there’s a effort and Kit Carson was the first, but there’s an effort afoot to rethink this wholesale retail relationship going forward.
Bryan Hannegan:
And the one that we occupy right now certainly has a lot of benefits. We’ve been able to save several million dollars on our power supply costs over the last several years, compared to what we would’ve paid otherwise money has gone into investments in cyber security, investments in grid modernization, investments in wildfire, risk mitigation here in a increasingly dry west. Those are all things that we couldn’t have done without a rate increase, except for finding ways to save on the raw materials, the power that we’re acquiring or generating at wholesale,
Bill Nussey:
I’ve been a business exec my whole life and what you just said captures, I think how business people think, which is that I’ve got this set of commitments and I’ve got this set of deliverables. And if I can get really creative, I can find ways to move things around and accomplish more goals than maybe someone else less creatively sitting in the same seat could do. So I’m glad you’re at the helm of this. And it’s exciting to hear what you’re talking about.
Bill Nussey:
And I think one of the… Colorado has been beset with some of the impacts of climate change with these wildfires. And I think in the last couple of years, some small number of people are realizing… Maybe a large number, but not nearly large enough or realizing that we’re always going to have crazy weather, but it’s a little crazier than it should be. And so I think folks in Colorado have maybe seen, at least in the context of recent climate change concerns, seen some weather, and I know it’s affected and it makes some very hard decisions for the communities. So how has the wildfires, the last couple of years, this year shaped the thinking of your leadership team and of your customers?
Bryan Hannegan:
I’d say we now add energy resilience as a design principle to everything that we do. Whereas maybe five years ago, we didn’t do that. And in part that’s because we’ve had three major wildfires directly affect our service territory in the last four years. So you could almost say, hey, it’s a new normal around July or August of every year there’s going to be a wildfire blazing somewhere, affecting some portion of the Holy Cross. And frankly, we’re not that big of a system. So that makes it all the more remarkable. We need to start looking at energy resilience as the design principle and working with our communities to help them understand what is absolutely critical to keep on. What is something that can be set aside if there’s not enough power, or if we’re down a transmission line or two, or if there’s a wildfire in the area and we need to move people out. What do we have to have working?
Bryan Hannegan:
I’ll go back to sort of the first major fire that we had, which was the Lake Christine Fire here in 2018. It star in the Hills above the town of Basalt, which is about halfway up the valley, up the Roaring Fork Valley towards Aspen. And to give you a sense, our transmission system, it’s not even a loop. It’s two sides of a transmission line running on the same pole, all the way up to Aspen and back. And Aspen is where all the people and all the electric demand is. And the other end is where all the electric supply is. So if that line gets cut, that’s a bad day. And we were during the Lake Christine fire on July 4th of 2018, we were one burning pole away from losing that entire transmission line for probably anywhere it from five to seven days. Now, mind you, July 4th in Aspen is one of the most economically large days of the year.
Bryan Hannegan:
People have reservations to eat, to hike, to do whatever. And they’ve had it for over a year. We had restaurants turning people away because they weren’t sure that they could keep the power on, keep the food refrigerated. So it was a big deal. We did a bit of a postmortem. Thankfully, an Xcel line worker came along and happened to be at the right place at the right time and kept that pole standing. But if I were to show you a picture, you’d be like, how did that thing even stay up? And that’s about a third of our population that would’ve been in the dark for a week in July. So that was a bit of a wake up call. And we got together and did a postmortem with the help of RMI. Then the Rocky Mountain Institute now RMI. And we did a tabletop exercise that said, okay, what would’ve happened had that pole gone down?
Bryan Hannegan:
And we had the first responders, we had the civic leadership, we had a whole bunch of people and there was a collective “Oh…” Word I can’t say on the podcast reaction. Because we realized that the gas stations didn’t have a backup to keep the gas pumps running. We realized that the batteries were going to run out on the cell towers within a matter of hours. We realized that the water in the wastewater treatment facility would be inoperable. We realized that a bunch of people would be stuck up a mountain valley would no way to get out because the buses couldn’t get them anywhere.
Bryan Hannegan:
I mean, it was like eye opening, amazing. And to make a long story short, everything that we have done since then, whether it’s a system upgrade, whether it’s a new five megawatt solar farm, that is just on the final approach to Pitkin County Airport, whether it’s a microgrid project that we’ve now received some state funding for, and we’re looking for federal support to build the rest where we’re preserving function to the airport operations. Because by the way, the FAA wouldn’t allow you to land airplanes without power.
Bryan Hannegan:
And if you don’t have airplanes, you can’t get people out. You can’t get stuff in. I mean, these are things that you don’t think about until they’re brought right to your face. But now that we’re thinking about designing for resilience, we’re looking around to other portions of our service territory and saying, okay, how do we have the same conversation about building a more resilient electricity system and maybe paying a little bit more than you would for a resource. So buildings solar in Aspen is not cheap, but we’ll be really glad that we did it on a day where it’s the only thing that’s keeping critical functions up and running.
Bill Nussey:
Given all the things that you’ve learned and the vision that you’ve cast what does the modern or the future utility look like?
Bryan Hannegan:
Well, I think the modern utility needs to reimagine its compact its agreement, its relationship with its consumers. And it’s not an option because increasingly today’s consumers are able to install a solar panel on their rooftop or they’re able to plug an electric vehicle into their garage. Or they’re able to go down to the Home Depot and get a Genset or a battery or smart thermostat and the utility can’t say or do anything about it.
Bryan Hannegan:
And so I want to try to get us to reframe that challenge the following way. If I know that consumers are going to be engaging in these kinds of activities, how do I take them from being a detriment to the utility business model and the utility grid and how do I flip that around and change the narrative where they’re now able to actually support the rest of the others in the community by providing energy services.
Bryan Hannegan:
And if you think about it, that narrative flip goes to the very heart of what it means to be an electric cooperative. It’s neighbors helping neighbors. 1939 when somebody was a little short on sugar and they were making that apple pie, they walk next door and say, “Hey, neighbor, can I borrow a cup of sugar?” Nowadays if I’m having a big party and my neighbor’s not home, but my neighbor’s got a battery and a set of solar panels. Maybe if I need that electricity, I can go next door to my neighbors so to speak and borrow a couple of electrons because I’ve got to higher than normal use. The parallelism there, it’s there for the taking. And so in everything that we’re doing with our programs our approach to distribution grid, planning and operation. It’s how do we gather… And I’ll go back to the resilience.
Bryan Hannegan:
If we’re building microgrids for the black sky days, when all heck is breaking loose and the fire is upon you and so on. That’s one day, if we’re lucky one day in 10, one day in five years, what do we do with the rest of the time? Can we use those same resources, instead of keeping them sitting idle, can we use them to reduce our demand for power at wholesale to balance the voltage and the frequency and the power quality locally, to provide lower cost energy in place of another resource someplace else, to make it clean.
Bryan Hannegan:
So the engineering and the business problems now become one of how do we take everything that we see the consumers doing and use that as, and embrace that as part of our business going forward. And that’s everything that we’re doing. We’re handing out level two EV chargers to anybody who wants one. We’re helping people finance on a lease to own basis with zero money down and 0% financing batteries for their homes or their businesses.
Bryan Hannegan:
The provision is, Hey, we’ll help you do that with super cheap capital and no money out of pocket. But you’re also going to allow us to use that battery on the blue sky days to help us run a better grid. And if we use it, we’ll pay you for it. We’ll give you a bill credit. That’ll make your loan payments, not $40 a month. It’ll make it $30 a month as a thanks for allowing us to use your battery to run our grid.
Bryan Hannegan:
Same thing with managed EV charging, same thing with solar PV systems. You can imagine how now all these resources can be ways in which we can fine tune the demands for electricity just as we’ve traditionally fine tuned the supply. And I think Bill that’s the biggest paradigm shift is we used to take demand as kind of whatever it was. It was like, well, whatever the consumers want, we give it to them. And we would manage our supply resources. We would turn on the gas, turn off the gas, dispatch this, turn off that. We now have to flip that because the fuel that we’re using, the wind and the solar is inherently variable. It has some predictability. Meteorologist comes home to roost. We have some predictability to it, but there’s some error associated with it. So now what we’ve got to do is flex our demand to meet the available supply, not the other way around.
Bill Nussey:
But you still have the conundrum of there’s a lot of assets to be maintained in order to be a utility. It’s a very, very asset intensive industry. How do you think about that?
Bryan Hannegan:
Well, there are obviously a lot of assets involved. There’s the poles, the wires, the crews, the trucks, the generators, et cetera. But increasingly what we’re seeing is a lot of those assets are being bought and paid and installed at consumer premises by the consumers themselves. There’s no reason to duplicate that with a set of utility based investments. Yet that’s exactly what our incentive structure presently does.
Bryan Hannegan:
I can’t count on the consumer’s participation in demand response. So I need to engage in something that I uniquely can control. And I think that that’s not a failure of execution. It’s maybe a failure of program design and imagination. If you’re going to pay me for the right to charge or manage the rate of charging of my vehicle, my Tesla sitting here in the lot. Sure. It’s sitting here. I’m not going anywhere.
Bryan Hannegan:
I’m at work right now. So if you want to do it for a peak time event here for an hour, from 2:00 to 3:00, be my guest and I’ll look forward to seeing the bill credit on my bill. I think that’s where we run into trouble is we try to get these things for free as utilities. When in fact consumers like me are just rational actors. If you’re going to use our stuff, we want to get paid for it. So how do you design that program in a way that’s very simple to sign up for that uses modern technology, that uses all the communication that’s out there. That happens in a way that’s transparent to me, because for every one of us, that’s a energy Twitter member or a grid geek, that has 14 apps for all of our different devices. There’s 99 other people out there that are in the set it and forget it crowd.
Bryan Hannegan:
They just want to know that their house is between 68 and 72, their vehicle’s at least a quarter charged at all times, they’re using as much clean energy as possible and their bills under $100 a month, they say algorithms, AI, smart devices, other people y’all take care of that. I got things to do. I got to get the kids to school. I got to go to work. I’m going to go play golf or whatever my favorite pastime is, ski around here.
Bryan Hannegan:
So how do we design programs that make it super almost one click, simple to participate in. That’s when you get the scale. And to me, without that kind of flexibility, there’s no way for us to get from 85% clean to 100% clean. Because if you look at the utility profile, that last 15%, you could go and build a big new asset. But now you’re creating all this oversupply in times where you’re already pushing the limit. You only need to fill in these little peaks and valleys. And really you’re talking about moving a peak into the valley and you’re doing that on an hour or two or a megawatt or two or 10 here and there. So you need these smaller scale assets. And since the consumers are already buying them, what am I missing?
Bill Nussey:
I got the religion and wrote a book on it. You’re certainly preaching. I agree with you, man. I’m thinking I need to move out to Western Colorado and get these free battery or this low cost battery financing. It’s exciting. It’s very exciting.
Bryan Hannegan:
Yeah. I mean, it’s a 10 year lease to own program. It’s a Tesla power wall set up. Most of the installations are going in with monthly payments in the $40 to $50 per month and they get a $10 per month bill credit for allowing us to use it. I mean, we’ve only really been at it about eight months or so now. And we’re rapidly approaching close to megawatt in reservations. Which if you told me I could have a megawatt of batteries that are at my beck and call on 150 megawatt peak summer system, man that’s pretty cool.
Bill Nussey:
That is amazing. And obviously you make it sound easy. I know it’s hard, but it’s borne out.. Everything you’ve described is born out of a vision of what’s possible, born out of having studied it academically through the business lens and to have the faith that it’s possible and you’re making it real. It’s great and kudos to you and your team and everybody in Western Colorado, that’s kind of delivering the future. So we’re out of time, but I really do want to spend just a minute on the lightning round questions, which we like to get these quick perspectives from visionaries and leaders. And I’ll just jump right in on the first one. What excites you the most about being in the clean energy business?
Bryan Hannegan:
We have the opportunity to do something that defines generations to come. That has massive impact. The way that the world uses, produces, transmits, delivers energy is at the very core of who we are. And if we can change that in a way to make it sustainable for good, I mean, there’s no higher calling than that is there.
Bill Nussey:
If you had a magic wand and can make one single change in the world in which you operate and work, what would that be?
Bryan Hannegan:
I would love for electric utilities and by extension all the other utilities that are out there, gas, water, and so on to be more open to change and innovation, to be able to feel comfortable taking a little bit more risk. Not unsafe risk or unnecessary risk, but to try something new. I would like to banish the phrase, “Well, we’ve always done it that way.” That’s what I would love to do.
Bill Nussey:
That’s great. Banish the “We’ve always done it that way.” Oh, I’ve got some stories on that. Anyhow so what do you think will be the single most important change in how we generate, store and distribute electricity in the near term, five years?
Bryan Hannegan:
I think in the next five years, we’re going to have the information technologies and the power electronics and controls that will take our hub and spoke, centrally generated grid and turn it into a true network, a la the internet. And I think that’s going to unlock a whole host of value and opportunity that many of us can’t even conceive of today. And I think it’s only five years away, really. I think somebody somewhere within the next five years will demonstrate a self-driving grid.
Bill Nussey:
I love it. And one of our guests, I’m sure Dr. Deepak Divan, he’s been on a podcast a year or so ago. And they’re doing some great work on autonomous grid forming down at Georgia Tech, super nerdy stuff. But you run into traditional utility planners and executive, and they’ll tell you that you can’t control the system. And I point to them say, it’s difficult for sure. And I certainly can’t pretend to understand what constraints they’re dealing with. But there are other models of fully distributed systems and you can get more nines, 99.999, more nines out of a Google cloud than you can of a mainframe. And I think the metaphor will prove true in electricity as well. Especially if you consider each node in the cloud to have value for its own independent ability to stay running.
Bryan Hannegan:
Yeah. And Bill, if I can take that one step further. So as we talked at the open, I’m a meteorologist and weather forecasts come out of mathematical models. You ingest asked all the observations of temperature, pressure, wind direction, you name it. You put that into a set of known mathematical formulas, Navier-Stokes equations, you crank the computer forward and you get a prediction of the state of the atmosphere at some point T equals whatever in the future. That prediction then gives you some sense of how to manage your day.
Bryan Hannegan:
I put a jacket on, I take an umbrella, it’s going to be really hot. So I stay out of the sun. It allows us to take action as humans. Take that now and port that methodology to the electric grid. If we have the right amounts of sensing of the grid state, and this is back to DOE grid modernization initiative. If we can sense the grid state, the voltage, the frequency, the power flow, the real power, reactive power, you name it. Those grid states.
Bryan Hannegan:
If we can measure that with enough fidelity at a time and space, we know what those electric equations are. We know what the sources and the sinks are. Especially if we can predict the output of the wind farm or the solar panels, and we can manage and control the batteries. My point is we can predict grid state with some skill. At some point in the future, we can use that to set a price in a market. We can use that to send a signal to a device that says, “Hey, battery, I’m going to need you between the hours of 4:15 and 5:00 today. So be ready to discharge because we’re going to need you to help balance the frequency on this portion of the transmission grid.”
Bryan Hannegan:
We can start to do that in a way where all of this doesn’t need a human. So I don’t think we’re that far away from what a self-driving grid could be. And Deepak and his colleagues at Georgia Tech, Ben Kroposki and his colleagues at NREL. There are a bunch of really smart people, much smarter than me that are working on this.
Bill Nussey:
Final question for you, Bryan, a lot of people are… Students, people earlier in their careers, people that want to change the work they do every day is consumers or as professional towards the something that matters, that’s bigger than themselves. And so many people find climate and clean energy, one of those north stars, and I’m sure you get far more than I even do. But when people say, how do I get involved? What could I do as an individual? What do you like to tell people? What would you tell our audience? So many of whom are interested in this space and, or thinking about it, but not necessarily in it.
Bryan Hannegan:
Yeah. I mean, there are obvious things. You can get involved yourself as a consumer that’s producing clean energy in your home or in your workplace. But I would go beyond that and I would say, think about how you can bring your talents to the business of clean energy. If you’re in accountant, how do you get into clean energy accounting? If you’re somebody that’s really good at project management in the healthcare space, how do you port those skills over to project management in the clean energy space? Because the folks that inhabit roles here at utilities, they just happen to be at a utility. There’s no like utility specific… I mean, look, my first utility job is this one.
Bryan Hannegan:
It’s this one. I got my first utility job at age 47. Now, granted I was working in and around utilities, but I was a research guy. I was doing a lot of consulting work. I was doing R&D. But what I realized in doing that was that somebody needed to be pulling on this from the operational side, because with all the great stuff in the toolbox, if it wasn’t getting deployed, we weren’t going anywhere. So how do you make that kind of transition and bring your talents to this industry? And the last thing I would say is don’t be surprised to find out that behind every stodgy utility is a ton of amazing innovation, entrepreneurship, and desire on the part of its employees, just waiting to be unlocked and unleashed. So call your local utility, ask them how you can get involved.
Bill Nussey:
That’s fantastic, Bryan, thank you. Thank you, thank you for all the work that you and your team are doing for this great vision. I think a lot of folks who’ve listened to this for a year or two are going to be amazed that this vision cast from utility executive and feel more emboldened to go, as you say, press on their own providers and their own regulators and say, listen, there’s this stuff’s possible. Let’s have the conversation. Listen to this guy, Bryan Hannegan.
Bryan Hannegan:
I certainly hope so. Not just me, the entire team here. But I hope that our example can inspire others to act because we need everybody and we need them yesterday if we’re going to address the challenge of climate. And if folks are ever in Western Colorado in the Vail, Eagle, Glenwood Springs, Aspen area, along the I-70 corridor step in, we’ll be glad to show you some of the cool things that we’re working on.
