May 23, 2024 · 41m · catalyst
Could VPPs save rooftop solar?
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Catalyst, host Shayle Kann and DOE Loan Programs Office Director Jigar Shah examine the downturn in residential rooftop solar, arguing that evolving distributed assets into coordinated virtual power plants is essential to manage surging electricity demand and stabilize rising retail rates.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 30.1% of the talking time here. How this is scored →
Shayle as informed peer 6.6 Guest teaching 4.9 Guest disagreement 2.9 Shayle pushing back 3.1
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 38:50 Shah condemns ISO transmission rules for queue batteries
Shah forcefully rejects the premise that new load requires massive system peak transmission builds, calling ISO dedicated transmission assumptions for batteries crazy talk.
Hardest push from Shayle ▶ 18:07 Kann challenges the requirement for rooftop generationKann directly challenges Shah's core framing around rooftop solar, asking whether standalone batteries without generation solve the entire grid flexibility problem.
Biggest teaching moment ▶ 30:15 Shah reframes device aggregation around zero backfeedShah simplifies a complex control question from Kann by showing how avoiding backfeed into the grid eliminates utility permission hurdles entirely.
Shayle holds their own ▶ 9:40 Kann cites SGIP history to explain incentive misalignmentKann demonstrates expert command of regulatory history by citing California's SGIP program to prove how behind-the-meter incentives frequently optimize customer peak rather than system peak.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| Diagnosing the Decline of Net Metering and NEM 3.0 | 7 | 3 | 2 | 2 | Kann articulates the exact market dynamics in California where the combination of NEM 3.0 and interest rate spikes cratered installation volumes while driving battery attachment. Shah agrees with Kann's diagnosis and adds context regarding net metering penetration thresholds. | |
| Grid Needs Versus Rooftop Self-Consumption Incentives | 8 | 4 | 2 | 3 | Kann demonstrates deep domain familiarity by drawing a direct historical analogy to California's SGIP program, showing how customer peak incentives diverge from system peak needs. Shah concurs and shares insights from negotiations in North Carolina. | |
| Evolving from 'Dumb Solar' to Virtual Power Plants | 6 | 5 | 3 | 2 | Kann notes the commercial friction rooftop installers face when presenting complex VPP programs at the kitchen table. Shah explains why the traditional loan-securitization model for simple solar has an expiring shelf life. | |
| Sponsor Message: Bloom Energy Fast and Clean Power | 7 | 4 | 3 | 6 | Kann presses Shah on whether distributed generation is even necessary if standalone batteries can provide the needed grid flexibility. Shah responds with distribution circuit asset utilization and commercial warehouse solar economics. | |
| Overcoming Utility and Regulatory Barriers to VPP Scale | 5 | 6 | 3 | 2 | Kann asks what structural steps are required to transition from bespoke pilots to standard utility VPP deployments. Shah explains the regulatory and software barriers, citing an estimated 35 million dollar software integration cost per utility. | |
| Control Architecture and Zero-Backfeed Simplification | 6 | 6 | 2 | 2 | Kann asks how complex multi-device behind-the-meter loads will interface with utilities. Shah offers an architecture simplification by proposing zero-backfeed setups that avoid triggering onerous utility interconnection approvals. | |
| Rising Retail Rates, Data Center Load, and Grid Efficiency | 7 | 6 | 5 | 5 | Kann challenges the sufficiency of interruptible industrial loads when dealing with continuous daily peak demand from data centers. Shah passionately counters that grid capacity utilization and battery queues can handle growth through 2035 if ISO rules are modernized. |
Statements from this episode (14)
Shah: Electric utilities value dispatchable home batteries over rooftop solar generation
“I think we're just at a point now where people recognize that what's really of value to the electric utility company is dispatchability. Right? It's not the generation of power on rooftops. It's the battery that's actually in the home.”
Shah: Net metering's value declines past 5% solar penetration
“I think we've always known that net metering has declining value beyond sort of five percent penetration, and, but when you get to five percent penetration, the solar industry has so much political power that they're able to keep things going.”
Shah: California's NEM 3.0 lacks a transparent battery compensation mechanism
“They did the NEMM three point O piece, but there's no transparent way of getting paid for your battery piece.”
Shah: US electricity load growth is rising from 0.4% to 2.5% annually
“We are sitting in a moment right now where we are being told, and the data is suggesting that it's true, that we're going from 0.4% load growth a year to two to 2.5% load growth per year.”
Shah: Residential solar loan securitization model has a short shelf life
“The game of just putting dumb solar in people's houses, you know, providing them a loan, right? Making money on that loan, right? And it's a securitization story, right? So you get debt from Wall Street, and then you own the equity slice, and then you try real…”
Shah: Rocky Mountain Power pays battery rebates for 10-year dispatch rights
“Rocky Mountain Power has made it very clear that they view these behind-the-meter batteries as a certain value, and they're willing to pay you up front for it, and so they'll say, here's a big rebate, And now we get to do whatever we want within this service l…”
Shah: Electricity distribution circuits are down to 20% asset utilization
“For many of us, because our distribution circuits have been upgraded so substantially, you're down to 20% asset utilization, right? So, like, so 20% of the total capacity of that circuit is being utilized, right?”
Shah: Large warehouses have 200 TWh of cost-effective solar potential
“And when you look at, particularly for commercial distribution circuits you're talking about something on the order of 200 terawatt hours, right? Of cost-effective solar that can be put on warehouses that are four acres or larger in size, right?”
Shah: Warehouse rooftop solar may be cheaper net-net than utility-scale solar
“And so, and when you look at, you know, interconnection cues from utility-scale solar and that kind of stuff, it may actually end up being net-net cheaper to put solar on these four-acre warehouse rooftops than to put it in the middle of a field.”
Shah: Full VPP software integration costs roughly $35 million per utility
“Our estimates is that this would cost roughly thirty-five million dollars per utility to put all the software layers in place from the venture-backed companies that have created them to be able to, you know, actually fully integrate this whole suite, right?”
Shah: Backfeeding distributed power into the grid requires expensive infrastructure
“It is most certainly the case that if you want to backfeed power into the grid, then you will need a much more robust and expensive structure.”
Shah: Zero-backfeed VPPs bypass utility permission hurdles by only offsetting load
“And so if you make a simplifying assumption, which is that no one is backfeeding anything into the grid. Right? Right? That the batteries you know, basically use case here is to make your home go off grid. Right? Sort of an energy efficiency play. So your home…”
Shah: 400,000 MW of batteries are in US interconnection queues
“We have 400,000 megawatts of batteries in interconnection queues.”
Shah: Existing grid capacity can handle load growth through 2034–2035
“The amount of load growth that we can handle, within the actual system that we've already paid for is gargantuan. It can easily take us through probably 2034, 20 35, right? Which, by which time we think nuclear will be more cost effective, enhanced geothermal …”