The Exchanges

Q the state of affairs? If I want to, if I want to plug one of these little batteries in, in my house, uh, maybe I'm using it as backup for my fridge or whatever it might be. Um, what is the lay of the land in terms of what requirements it needs to meet? What permissions I do need? Is it murky? Is it defined? Like, where are we there?

A It is murky. I think what really matters is the thing we focus on a lot is safety. So there are plenty of UL certified products that, that adhere to the NEC, uh, saying you can plug this in in the following manner and it's safe, uh, to do so. And so there may be jurisdictional like AHAs or DOBs or fire departments that have an opinion on what should go in a given location, how big of a battery or something like that. But at the sort of electrical code level, these are, this is already allowed under the current guidance, and there are many products that support that. So from that lens, you could say in most places you can go out and buy these things and, and plug them in in whatever state you're in. Um, a lot of the attention that's happened recently around regulations is specifically there's bills now introduced in I think it's up to 30 states, or sorry, 24 states with maybe 30 soon, um, Introducing bills where you can actually export to the grid through these devices. And so we think of that as an extremely important distinction where a lot of that regulation that's being passed is focused on really what is an interconnection agreement? What permission do I need from there for the utility? Whereas I understand the utility's concern is, hey, if you just start exporting and the grid goes down and our line workers out there, they don't actually know a line is, is energized and, a…

AI assessment note: “It is murky. I think what really matters is the thing we focus on”

Q And they're super cheap and easy because, in part, you don't need, there's no design, there's no There's no engineer, there's no electrician, there's no, and so, it's presumably, but it is smaller, so you get less economies of scale. Like, how much cheaper do you think it can be relative to a power wall or something like that, like a larger home battery?

A Yeah, so, I mean, an easy rule of thumb is that soft costs are typically 50% or more of a residential install. Permissionless can effectively Put that to zero. Um, because two of the big components there are three of the big components are permitting labor and CAC. And so think about a buy online motion where a consumer is just going to Amazon and buying one of these and plugging them in themselves. That totally removes CAC and soft costs. Uh, and then also, uh, based on all the, the regulation that's being worked on now is the permitting side of things, uh, you know, can go away as well. So, half of the cost in a residential install you could think of as basically being gone. Uh, so, obviously, they're, they're smaller systems. You could say maybe there's marginally more expensive, uh, just the size of the unit. Maybe there's some efficiencies, say, in, like, a Powerwall or how you set up the inverter there versus, like, an all-in-one system. Um, but I think the, what, what matters there is that that's a marginal difference, and, The real plummeting costs are still in the hardware side of things. So solar and storage continue to get cheaper. If that were to continue to be the case, these soft costs aren't going anywhere in traditional installs. And so if you're going to remove that, it basically means that in permissionless, your floor, your floor is like all the way down to j…

AI assessment note: “soft costs are typically 50% or more of a residential install. Permissionless can effectively Put that to zero.”

Q like a very small home battery. And so in that category, there are products available today, right? Like you can, anybody can go buy a bunch of different batteries. So it seems to have emerged as a category. I don't know, it's been around because stuff like EcoFlow, I think has been around for a while, but like, There's a, there's a little bit of a mini explosion here, right?

A A hundred percent, and yeah, I think, you know, us wonks love our, our ever-multiplying, uh, acronyms and definitions and stuff. I think of what you, I think of what you just described as plug-in, because specifically, it's just very intuitive. You think about plugging a DER or something with a battery or solar. I actually think Balcony Solar is part of this and is very relevant in the U.S. today, that, that is plug-in Solar or plug-in batteries. Uh, I just think that makes a lot more sense intuitively, and that it's a subcategory of a broader permissionless space that, when we think of permissionless, we think of really big stuff, too. That's, that's, that's how I think about it. Um, but yeah, so for today, like, I actually think plug-in is the right idea to think about.

AI assessment note: “A hundred percent, and yeah... I think of what you just described as plug-in”

Q value proposition for putting a battery in a home or a business that's, you know, very small, if it's, say, it's sub-one .2 kilowatts, Um, is the value proposition resiliency? Like, are you plugging it into a load and saying this is backup for this particular appliance? Or are you thinking of it as, like, this is savings on your electric bill, or is it some combination of the two?

A I think what's really excited about permissionless and plug-in is that it is about affordability. That's what we saw, sort of, why it got adopted so quickly in Germany. It's not about resilience. That said, I do think in these early applications, and this actually gets back to what's allowed, what certainly does seem to be allowed, no matter what, is if you just plug a battery into a wall and then a device into that battery, you're not pushing power back into the circuit at all. You're just removing loads from the grid. That doesn't seem to need an interconnection agreement or is allowed, you know, as long as that product is certified. So I do think a big focus right now is on the appliance level and Given that, there's a resilience angle to it. So some of the companies out there are talking about resilience and self-reliance, and it's, that's important. You can put a battery, uh, connected to your fridge at home, and it'll back that up. However, I think the big story and the really exciting one is what this really does to what we think about install and the costs of, the costs and accessibility of these systems. It's going to drive them Much, much lower than we've seen in the past, and that means that for the first time, maybe our industry can really focus on affordability being the be-all and end-all in DERs and not resilience, because I think over the last decade, it's been …

AI assessment note: “I think what's really excited about permissionless and plug-in is that it is about affordability.”

Q business is, is relevant. So this is sort of small commercial also, um, Is relevant here as well. Um, at the micro level, at the macro level, the question is, can you get, because these things are small, can you get enough of them deployed that it starts to matter? Can we get to hundreds of megawatts, gigawatts of this stuff? And like, what does that have to look like?

A Yes. A hundred percent. And yeah, I heard you, um, the, is, is the time now for DER's, uh, episode with Andy, I think recently I listened to, um, and you made this great point where you're like, it's all about removing friction basically. Right. And if you think about affordability and scale, it ties back to friction. How much friction is there in the buying motion, the deployment, the installs, et cetera. And Again, if you look to Germany, like, doing a gigawatt in a handful of years in what is a much smaller, you know, country than, than ours, it wouldn't shock me to see tens of gigawatts deployed in the next five to 10 years in the US, um, where that's actually making a meaningful dent, not just in the whole DER space, but in the, the sort of gap, the, the capacity shortfall that we're seeing with, with load growth in the US. And so, Um, when I think of how these things act in the aggregate, I think in the, in tens of gigawatts would not shock me in, in the near future.

AI assessment note: “it wouldn't shock me to see tens of gigawatts deployed in the next five”

Q Are these typically multi-hour duration systems? Are they, like, one hour? Like, does it matter? If it's 1.2 kilowatts, how many kilowatt hours is it?

A They're often sized, like, basically one-to-one, but that doesn't mean you're using the full 1.2 kilowatt, especially if you're plugging into an appliance. Like, the appliance may be 400 watts or something, so that's basically a three-hour battery. Um, But the other thing I'd say is, like, in Texas, for example, demand charges are volumetric, and a lot of people add batteries to their solar systems in the traditional way to avoid consumption because they're getting billed for delivery, and so if you do have solar and storage together, you can avoid delivery charges. Storage alone isn't going to do that, but there are things you can get out of storage alone, even in residential and even more so in commercial.

AI assessment note: “They're often sized, like, basically one-to-one”

Q zero. So like, if there's a Yes, the customer proactively goes online and buys the thing sales motion, then that does mean customer acquisition cost is effectively zero, but you are offering a somewhat complicated value proposition with energy bill savings and all that kind of stuff. So, like, how do you, how do you sell this without blowing out the cost because of the, because of that soft cost?

A Right. Well, I, that's definitely right. Obviously, there is, there's an online, you know, digital channel CAC and stuff like that. Um, I do think it's very different for, say, a third party wanting to offer this to customers and use it for as a VPP or stuff like that versus, say, an OEM that's just, like, listing it on a website that is maybe much more actively bought by the consumer. So I think more about the, the, Ladder case, where, yeah, if someone's just going and buying, you know, it's, it's just Think about that compared to door knocking, right? Which is still like a big, a big, uh, it's, it's exponentially cheaper. And so if not zero, I still think it's going to be, um, you know, a very small part of the overall costs for the, for the customer.

AI assessment note: “Think about that compared to door knocking, right? Which is still... exponentially cheaper.”