Today’s guest is Gregg Dixon, the CEO . of Voltus, Inc.
Gregg connects customers, investors, teammates, and the world with Voltus value, ensuring that the vision for the company, and its culture, is meeting their expectations. Gregg is a world-renowned expert in commercial and industrial energy management and has pioneered many of today’s innovations that unlock the economic and environmental benefits of “intelligent energy.”
Prior to co-founding Voltus, Gregg was the Senior Vice President of Marketing and Sales and a founding executive at EnerNOC, a leading provider of demand response, energy procurement, and energy intelligence software, where he led all facets of marketing, sales, product, and professional services. Gregg developed and executed EnerNOC’s award winning go-to-market strategy that took EnerNOC from $0 to nearly $500 million in revenue over the course of 10 years. Among his proudest achievements, he created more than 350 jobs, brought to market more than 10,000 MW’s of demand response around the world, delivered more than $1 billion in cash savings to customers, opened more than two dozen markets for the very first time to demand side resources, architected the company’s product strategy, and, before he left, led EnerNOC’s Supreme Court of the United States case on FERC Order 745, which was decided in favor of EnerNOC, ensuring that the demand response industry can continue to grow.
Prior to joining EnerNOC, Gregg was Vice President of Marketing and Sales for Hess Microgen, the leading provider of commercial on-site co-generation systems and services in the United States, where he pioneered efforts to bring more than 100 co-generation systems to leading grocery, hospitality, commercial property, and manufacturing customers. Gregg was also a Partner at Mercer Management Consulting, where he advised Fortune 1000 companies on customer and product strategy, economic analysis, and new business development.
Gregg has been the keynote and contributing speaker at hundreds of energy conferences, and his work in the industry has been cited broadly in the media, including The Wall St. Journal, The Economist, USA Today, Wired Magazine, and The Boston Globe, among others. Gregg graduated from Boston College with bachelor’s degrees in Business Administration and Information Systems and he is a Certified Energy Manager, Certified Demand Side Management Professional, and Certified Sustainable Development Professional with the Association of Energy Engineers with whom he was also recognized as a “Lifetime Legend in Energy.” Gregg was also voted one of Boston’s “40 Under 40” by Boston Business Journal as recognition for having established himself as a leader to be watched in the field of technology and energy.
In this episode we discuss:
Links to topics discussed in this episode:
You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Enjoy the show!
Jason Jacobs: Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests, to better understand and make sense of the formidable problem of climate change, and to try to figure out how people like you and I can help.
Jason Jacobs: Hey, everyone, Jason here. Today's guest is Gregg Dixon, the Co-Founder and CEO of Voltus. Voltus is a demand response solution that can deliver substantial electricity bill savings, and cash earnings that drive energy costs down. They work with big commercial and industrial partners to take their unused power capacity, and sell it back to the grid during periods of peak demand. Which is good for the grid, because it gets the much needed capacity when they need it the most, and good for the customers, because it gets them significant cost savings. I thought that this discussion was super interesting, because Gregg is a longtime energy entrepreneur and executive, as well as specifically a leader in demand response, both during his time at Voltus, and prior to that while he was at EnerNOC. We had a lot to talk about in terms of the climate fight, how demand response fits into the climate fight, how that impact is measured day-in day-out when you're building a company like Voltus, and also just the difficult choices that come with trying to make a living, and also trying to do the best thing for the planet.
Jason Jacobs: But Gregg said it best when he said, when he's gauging whether he's making the right choices or not, he just needs to ask himself what message it sends his kids. I learned a lot from this episode, and I hope you do as well. Gregg Dixon, welcome to the show.
Gregg Dixon: Thanks for having me, appreciate it.
Jason Jacobs: Thanks for coming. Your reputation precedes you.
Gregg Dixon: Uh-oh.
Jason Jacobs: We share a friend in common, my Head of Finance at RunKeeper is your Head of Finance at Voltus, and he's also a very good friend, Doug.
Gregg Dixon: Good guy.
Jason Jacobs: Yeah, he talked you up quite a bit, so we'll see if you live up to the hype.
Gregg Dixon: Okay.
Jason Jacobs: I'm not just excited because we have a friend in common, I'm also excited because you are a longtime energy guy, and you've been operating at a pretty high strategic level. You've had a fair bit of success with EnerNOC, and now with Voltus. Energy is something I'm still trying to unpack, because on the one hand, it's a big driver of emissions, and so clean energy is a big way to help reduce those emissions. But a lot of the people I talk to in energy seem like they certainly aren't necessarily coming at it from an environmentalist perspective, it's more an industry and a business that just happens to touch on this area of carbon. So anyways, I feel like there's a lot to talk about.
Gregg Dixon: No doubt, and it's the perfect time to talk about it.
Jason Jacobs: Why is that?
Gregg Dixon: Well, energy is essential to everything we do, and more and more. Whether it's the penetration of air conditioning, more and more in third-world countries, that's driving electricity demand, or it's the fact that we're constantly plugged into the internet, which requires massive data farms to serve the bits and the digital information that we consume. Energy and reliability, resilient energy, cost-effective energy, is becoming more and more important to everything. Yet, it's easier and easier to take for granted what produces that energy.
Gregg Dixon: We're constantly on the go, we are bombarded with things that take our attention. So it's easy to take for granted the energy that's underpinning everything, yet when it isn't there, we feel it very painfully.
Jason Jacobs: It's like Slack.
Gregg Dixon: I don't now what we would do without Slack at Voltus.
Jason Jacobs: If I had to choose one, I think energy's more important.
Gregg Dixon: No doubt, no doubt.
Jason Jacobs: So there's a lot of thorny topics we could jump into, but before we get too far, what is Voltus?
Gregg Dixon: Voltus is a provider of demand response technology and services for commercial and industrial customers.
Jason Jacobs: What is demand response?
Gregg Dixon: Demand response is making use of the operational flexibility, or assets behind a meter at, in our case, a commercial or industrial facility, to satisfy some need of an energy market. In a practical sense, what that means is asking customers, these commercial and industrial customers to reduce their consumption of electricity when the grid needs them to. In a more traditional model, the grid would turn on a peaking power plant for instance, that sits idle 99% of the hours of the year.
Jason Jacobs: And when it turns on, it's coal, right?
Gregg Dixon: Typically natural gas, actually. Simple cycle natural gas units are typically providing the peak power on the grid, but as I mentioned, they're sitting idle 99% of the time. That's because the top 10 percentage points of electricity demand last less than 1% of the hours of the year. So when it's really hot out in the summer, typically in the afternoon, the sun is shining, our air conditioners are cranked up, business is in full effect, we have these peaks that last for a very short period of time. Because of the physics of electricity, you have to supply electricity when it is demanded in real time, and the traditional model is of course to run to these peaking power plants to satisfy that peak demand.
Gregg Dixon: What demand response is, is we basically employ a networking model where we curtail small amounts of electricity across thousands and thousands of facilities to act as a virtual power plant. These are now as negawatts, not megawatts of power. With technology, we can measure that power reduction in real time, very precisely, and do it in aggregate, giving a grid operator a different tool than turning on a power plant. They simply need to reduce load by using our platform.
Jason Jacobs: The source of that excess capacity is the end customers themselves?
Gregg Dixon: That's right, so let me give you some examples. Air conditioning load, or what we would call thermal loads have thermal inertia. Think of an ice rink, where you freeze that ice, if you turn off the chiller, typically an ammonia based chiller that creates that frozen water, that ice is going to remain frozen for some period of time. It has thermal inertia, and that's true with a cold storage facility. So if you let that ice thaw a little bit, maybe it takes four hours for it to thaw a little, now during that four hours, you're consuming less electricity. So we can take the thermal inertia that exists in that ice rink or in a cold storage facility, or even in an office building like we're in now, we've conditioned this space, we've cooled this air.
Jason Jacobs: It feels very conditioned.
Gregg Dixon: Yeah, right? We're sitting here in short sleeves, and it feels maybe a little too cool.
Jason Jacobs: Thank you, since this is audio, you're not calling out that I'm wearing shorts, I appreciate that.
Gregg Dixon: We're wearing nothing.
Jason Jacobs: We're taking videos as well, but ...
Gregg Dixon: So there's a tremendous amount of thermal inertia in these facilities, so those are thermal loads. Now if you're talking about manufacturing, manufacturers produce product that goes into inventory typically, and they'll keep a certain amount of inventory. Maybe it's a day, maybe it's two weeks, maybe it's 30 days of inventory of their product, to fulfill orders. So when we ask them to curtail production, that's a form of demand response. They fulfill their orders from inventory, and they make use of their operational flexibility to deliver a product to the grid that the grid pays them for.
Jason Jacobs: Got it. So if I'm hearing right, and I guess caveat-caveat is that I, and by the way, a lot of our listeners too, don't know anything about this stuff. So I'm just going to put that out there now, but you've got the grid or the generation entity on one side of the utility, then on the other side you've got these customers that tend to be heavier energy consumers, but that also means that when they have breaks, they have heavier excess capacity to work with. You're essentially the middleman or woman that is brokering that transaction to get that excess capacity to the grid, that gives them more buffer than they would otherwise have access to.
Gregg Dixon: You're spot on, it's that simple.
Jason Jacobs: Am I hired?
Gregg Dixon: If you need a job, absolutely, we'd love to have you on the team. We're growing very quickly, I've heard a lot of good things from Doug about you, so yes, you're hired.
Jason Jacobs: Wherever Doug goes, is where I want to be.
Gregg Dixon: It's always a fun place to be.
Jason Jacobs: So from a mechanic standpoint, is that actually delivered inside the walls of utility, is the utility in control of that, and you're giving them tools? Or are you actually doing this somewhere in between the utility and the end customer? What are the mechanics of it, how does it work?
Gregg Dixon: It's pretty simple, it's really no different than any kind of market that's matching supply and demand in the information technology, the software, the hardware that goes into extracting data, presenting data, and providing the tools to make choices that a utility or a grid operator might need, where they would otherwise turn on a power plant. Otherwise known as dispatching. So the way that the grid works is there's typically a control room, and the resources, typically generation, is scheduled a day ahead, also in real time, and utilities and grid operators are sending signals to those resources to turn on or to turn up their power production.
Gregg Dixon: We provide them the same type of technology that they would use to dispatch, or turn on a gas fired peaker. They see our virtual power plant no differently, they see its capability in real time, and like clicking a button to dispatch a gas fired power plant, they do the same to dispatch our virtual power plant. Our technology then communicates with those end-use loads to reduce that power consumption, which we aggregate, calculate in real time, and show to the utility or grid operator that we're actually delivering what they need.
Jason Jacobs: Got it. So is there a DIY option for these utilities? Are there some that do it themselves, and some that work with you guys? What aspect are you doing that they can't do on their own?
Gregg Dixon: I like to say that every utility that we've ever worked with has a do-it-yourself option as well. In fact, I can't think of a utility that doesn't have their own demand response program that we've worked with to deliver an additional demand response program. It's not an either/or in a lot of situations, or in probably every situation. Utilities have the ability to effectively do demand response on their own, but in order to maximize the value of demand response, they really need third parties like us.
Jason Jacobs: It's a weird analogy to think of, but I'm an analogy thinker, and when I was running a consumer software company, we had a whole big technical team in-house, but we still worked with third party consulting firms that's we'd pull in on a project basis for projects that they were either better equipped to do, or for an extension of bandwidth, or things that we could carve out cleanly that they could go and do without impacting our core business. Is it similar?
Gregg Dixon: It's very similar. Utilities are uniquely capable of addressing certain customer needs, and then oddly enough, they're hamstrung in other ways of being entrepreneurial and innovative, and bringing a complete solution to very sophisticated customers.
Jason Jacobs: You've been in demand response a long time, EnerNOC was one of the pioneers. So you mentioned to me, when we were chatting a bit before this interview, that in many ways Voltus is a continuation of the work that you did for so long at EnerNOC. Can you talk a bit about that?
Gregg Dixon: Yeah. So the work that was done at EnerNOC was amazing, and the team of folks, the talent in that organization, the innovation that occurred was tremendous. Along the way, as is true in all aspects of the energy industry, we ran into some real regulatory headwinds. In the most extreme case, the big earth-ending asteroid of the industry was known as FERC 745, the Federal Energy Regulatory Commission's Order 745, which in essence was an order that said the negawatts of demand response should be valued exactly the same as a megawatt of traditional power plant production.
Gregg Dixon: So the FERC created this order, and then an organization that represents the generation community, what's known as EPSA, Electric Power Supply Association, they sued FERC. And to everybody's shock, including EPSA's frankly, they won. What that did was it actually vacated FERC's jurisdiction to invoke demand response that sits behind a retail meter, into these wholesale markets that represented the vast majority of revenue for EnerNOC, and all demand response companies. So that necessitated a pivot away from demand response in many ways by EnerNOC.
Jason Jacobs: What year was that?
Gregg Dixon: That was in ... The FERC Order 745 came out in 2011, it was contested in 2013, it was overturned by the DC Circuit Court of Appeals. On the heels of that, these wholesale markets that represented the majority of revenue for demand response companies, including EnerNOC, these wholesale markets began ripping demand response out of the market. We contested that, we took the case to the Supreme Court of the United States, I actually led that effort, it was the last thing I did at EnerNOC. We put the case together, we hired the most experienced, and frankly most expensive attorney in Washington DC, Sidley Austin, and an amazing Supreme Court trial attorney, Carter Phillips, to lead our case.
Gregg Dixon: In early 2016, after a couple of years of working hard on that, the Supreme Court ruled on FERC 745, and it overturned the lower court's decision. At that time, the demand response industry-
Jason Jacobs: So that was basically a battle that wasn't an EnerNOC battle, that was a battle that you were doing with your EnerNOC hat on, but on behalf of all the demand response world.
Gregg Dixon: That's right. What a lot of people don't understand-
Jason Jacobs: Was there collaboration, were there other companies in the demand response world that were standing shoulder to shoulder, or were you guys on your own?
Gregg Dixon: No, there weren't. There were associations for demand response that filed petitions in support of that Supreme Court case, but we were really on our own. The reason for that is because wholesale markets began ripping demand response out of their markets, and it was the death knell of the industry, frankly. Most demand response companies either went out of business, they sold to larger companies, or were in various states of shamble because of the financial outcome of this court decision.
Gregg Dixon: In fact, EnerNOC ended up selling to Enel for really financial reasons. It was looking at having to pay $120-million dollar note that was coming due, without a clear path to profitability. So this earth-ending asteroid of the 745 regulatory process was very challenging for the industry, and really the last man standing if you will, was EnerNOC.
Jason Jacobs: Just one point of clarification, and then get into the fast-forward that you were just going to do. But the clarification is just that the rest of the demand response industry, they weren't shoulder to shoulder with you, but it wasn't because they weren't united in spirit, it was because the industry got decimated. And as one of the biggest, or the biggest, even if you guys took a beating, you still had the resources to fight the legal battle, where others were in even worse shape and did not.
Gregg Dixon: That's correct. And furthermore, it is safe to say that most of these providers of demand response didn't believe we could win with the Supreme Court. In fact, there were many people, most people within the walls of EnerNOC that didn't believe we would actually get our day in court, at the Supreme Court. So we invested, and we got our day in court, and in early 2016, the Supreme Court ruled and we won.
Gregg Dixon: Now at that time, A, the industry was decimated, most of the competitive playing field had been wiped clean, and B, we now had demand response vindicated. Forevermore cemented within the jurisdiction of FERC to invoke into wholesale markets. So on the heels of that, it became clear like, "Geez, we've got to get the band back together, and reinvigorate innovation in demand response." Because through that process, EnerNOC was really still in the beginning innings of developing this industry. There was a lot more work to be done, and there were a lot of people really passionate about unlocking the virtues, the value of demand response. So on the heels of that Supreme Court verdict in July of 2016, we launched Voltus.
Jason Jacobs: Got it. So is it really just a straight continuation of the work you were doing pre-pivot at EnerNOC, or are there any key differences to the model?
Gregg Dixon: Sure. So the simple answer to that is it's a lot of the same, it's taking the lessons that we learned, and continuous improvement on the product that worked so well in the market. It was focusing exclusively on demand response, and being the absolute best in the world at delivering a demand response platform to these commercial and industrial customers. It was extending the technology platform in recognition of how the market had evolved in its need for demand response resources.
Gregg Dixon: What I mean by that is, as an example, as intermittent renewable energy has grown so rapidly, wind and solar, the need for a balancing resource, i.e., demand response, has grown tremendously. The challenge with intermittent renewables is that, well, they're intermittent. The sun doesn't always shine, the wind doesn't always blow, and like any weather forecast, there's error in that forecast. So as these resources have become more prevalent, they're also harder to predict in terms of what they're going to deliver in terms of energy. So demand response offers this very unique ramping characteristic for these resources, that's the ideal dancing partner for solar and wind. But those resources, demand response for ramping purposes, are needed very rapidly and often in unexpected ways, but only for short durations.
Gregg Dixon: That's a very different paradigm than our fathers demand response, if you will. 10 years ago, demand response was primarily used to prevent blackouts, and as an emergency-only resource. Today, a much more prevalent use of demand response, and where the real value is, is deploying demand response very quickly, 10 minutes or less. One second or less, but only for 15, maybe 30 minutes at a time, to help balance the grid in real time. So 10 years ago, demand response might have been needed to prevent a blackout, you got a two-hour advance notice, the need to curtail that power could last from four to eight hours. Now, you need those resources very quickly, but for short durations.
Jason Jacobs: And are you just pulling whatever energy type is available from these customers? Or are there specific ones that you work with or favor?
Gregg Dixon: We serve about 30 different vertical markets across the commercial and industrial categories. So everything from supermarkets to hotels, to steel plants, chemical plants, widget manufacturers, you name it, office buildings. Every facility has demand response potential, and we manage all of that in real time. So our technology understands in real time, any time of the day, what capability that facility has to deliver its demand response to an energy market. That's the power of the technology, the software, the platform. Understanding what happens behind the meter, what that facility is capable of, and what the energy market needs at any point in time.
Jason Jacobs: Do you distinguish between clean energy and dirty energy?
Gregg Dixon: That's a great question. We don't.
Jason Jacobs: Like 20 minutes in, before I got a great question. I've got to do better.
Gregg Dixon: We don't. By its very nature, demand response, it's the cleanest energy, the kilowatt hour never used is the cleanest obviously. The kilowatt never built is the cleanest capacity, so by its very nature it is clean. We don't distinguish, because our business is about delivering cash to these customers, to monetize that operational flexibility. We don't approach customers and say, "Do the right thing by Mother Earth." Because the fact of the matter is, as many customers as not, don't care. That's really a reflection of the political views of the electorate really.
Jason Jacobs: But I guess by extension then, Voltus doesn't care.
Gregg Dixon: No, not at all. We're very mission driven. Our team cares deeply about sustainability. We built this business for that purpose, but that doesn't mean we have to shove it down our customer's throats. We do well by doing good, and we love that aspect of our business. Simultaneously, we know that the lowest common denominator, what everybody can agree on is a good bargain, a good economic decision. So when we approach our customers, it's about the cash. Less energy, more cash, that's our motto. Everybody can agree to that.
Gregg Dixon: Now, it just so happens that there are tremendous sustainability benefits from demand response. You might like that, you might not care, but when we approach customers, we're indifferent. Now, by unlocking demand response and all of its virtues, we can feel great about the sustainability benefits, but that's really for our team, and not something that we push on our customers.
Jason Jacobs: And so I think when the costs line up that doing good means doing well from a dollars and cents standpoint, I think that's great, and that totally makes sense. But aren't there situations where the right answer, if you're just looking from a cost and profitability standpoint, is not actually the cleanest one available?
Gregg Dixon: I'm not sure how to answer that, maybe you could tease that out a little bit more.
Jason Jacobs: You said that the team's driven by, and motivated by sustainability, but you're running a business, you have investors, you have a fiduciary responsibility to maximize profit. So if you don't distinguish between clean energy and dirty energy, then the most profitable one is the one presumably that's going to win, the most profitable for you and the most profitable for your customer. What happens when the most profitable one is not actually the one that is doing good?
Gregg Dixon: Frankly, we wouldn't be in this industry if two things didn't exist. One that it's always the cleanest decision, the cleanest decision to deliver on peak capacity, which is what demand response is. It's served when the grid needs most, when it's peaking, or it needs a balancing resource. By its very nature, it's clean. So that ticks the box on our mission, but that's not the only mission. Doing well by doing good means that we are capitalists, but we also care about sustainability. We believe they go hand in glove.
Gregg Dixon: There's never actually a situation where we are delivering against our sustainability mission, where it's not A, the most sustainable choice, and B, the most economical choice. The cheapest form of energy is energy efficiency. In the United States, on average, it costs two-to-three-cents a kilowatt hour. By far the cheapest form of energy, and that's true for demand response capacity. So we operate in a business model that allows us to do both simultaneously in every situation.
Jason Jacobs: Okay. I'd love to dig into that a bit more, but before we do, I'd love to just take a few steps back and look at climate change on a whole, just so we can calibrate. Because I want to share about how I think about it, but I also want to understand how you think about it, and then let's come back around and talk about Voltus, if that's okay. So to me, I see what seems like an existential crisis that threatens the future of life on this planet, and I see the carbon budget, and how we have a finite amount of time, and how every day that we are falling further and further behind means not only a steeper and steeper hill to climb out of, but more dire effects. Like droughts, and extreme weather, and wildfires, and forced migration of hundreds-of-millions of people.
Jason Jacobs: All these things that are on the horizon in the decades to come, essentially no matter what we do at this point, because the carbon that's already up in the atmosphere takes hundreds of years to dissipate. Meaning even if we drastically reduce new emissions, it's still on top of all the carbon that's already there. So the next several decades are set pretty much no matter what we do. Let me just stop there, can you weigh in? Do you agree, disagree? What's your take on that?
Gregg Dixon: I agree with you. We've set in motion, like the thermal inertia I was referring to earlier, we've set in motion the inertia of atmospheric carbonization, and it's a serious problem, as you mentioned. Right is right, we should be making the right decisions now, knowing that. So whether we have an impact 10 years, 20 years, or 30 years from now, we know what the problem is, and we need to be doing everything we can to make a potentially awful situation better. If that's all we do, is we reduce the catastrophic impacts, well, that's better than having a worse situation.
Jason Jacobs: There's no judgment one way or another, but I'm just trying to understand how much is that a driver, if at all, for the work that you're doing day to day?
Gregg Dixon: It's everything. Fact of the matter is, for me personally, and I can speak for the team as well, we care deeply about this stuff personally. I want to leave the world a better place for my family, my friends, and for all humanity. I have the ability to make good decisions to do that, I think that's in the job description of being a human being. I'm deeply committed to it, I know my team is deeply committed to it, for all of the right reasons. That is one of the reasons why we started Voltus, we also started Voltus because we're capitalists, and we believe in capitalism. And the power of capitalism to solve some of these problems.
Gregg Dixon: Again, we think it goes hand in glove. We think that the solutions that are going to have the biggest positive impact on climate change are the ones that make economic sense to the masses. Because the fact of the matter is, something like 50% of Americans don't actually believe that we're creating the problem of global warming. Well, you and I can yell at those people and tell them they're wrong, and they will not change their stripes whatsoever. But if I give them a better bargain, if I give them an opportunity to buy electricity less expensively, or to make a better economic decision, they're going to love that. They might not know or care that it also has sustainability benefits, and I don't need them to care, and I certainly don't need to waive it in their face, but we can take advantage of the power of capitalism to solve these problems.
Jason Jacobs: So I think that's great that you said it's everything, and that the team cares so much about the mission. So I have a sense of what success looks like from a financial standpoint, what does success look like from a non-financial standpoint in terms of that mission that's everything?
Gregg Dixon: 320,000 megawatts of demand response deployed worldwide.
Jason Jacobs: I'm not a megawatt expert, so what does that mean?
Gregg Dixon: So we think of demand response as a resource that's largely defined by its ability to deliver capacity in the form of a virtual power plant, these negawatts, on peak, or when peak demand happens. As an example, in the United States, we have a peak demand of about 800,000 megawatts. Demand response can deliver about 10% of that. So going back to what I had said before, 10 percentage points of all peak demand lasts less than one percent of the hours of the year. That 10%, or in this case, 80,000 megawatts of the 800,000 megawatts of peak demand in the United States, should be delivered through demand response.
Gregg Dixon: We know that, we know the capability of demand response. Now, the United States also consumes about 25% of the world's electricity, so you do the math, the world peak demand is 3200 gigawatts, or 3.2-million megawatts. 10% of that is the 320,000 megawatts that demand response can deliver. That displaces the need to build 320,000 megawatts of primarily fossil fuel generation, whether it's coal, or it's gas, or traditional power supply that would typically provide that peak demand.
Jason Jacobs: What you're saying is that even though you don't distinguish between clean and dirty, you are distinguishing between new and existing and underutilized.
Gregg Dixon: That's right.
Jason Jacobs: Okay, that makes sense to me. I guess that 320,000 megawatts ... Is that right?
Gregg Dixon: That's right.
Jason Jacobs: So what does that mean from a carbon standpoint? Do you know that math? If you don't, it's okay, I don't.
Gregg Dixon: I do. The environmental impact delivered from 320,000 megawatts of demand response relative to what we would traditionally do is staggering. 320,000 megawatts would require somewhere between 300 and 700 coal plants, and the land that it would take to build those plants would be the size of the state of Connecticut. Furthermore, the economic benefits of 320,000 megawatts of demand response is about $200-billion dollars a year of savings to rate payers globally. That's $50-billion dollars a year just in the United States.
Gregg Dixon: So not only do we get all of the environmental benefits of not having to build these power plants, not having to site them and clear land and build gas pipelines and dig coal mines, and the associated damage, but we deliver a huge economic impact by eliminating the need for those power plants.
Jason Jacobs: I think that definitely helps put things in perspective, and I get what you're saying how, if successful, it's not going to get us all the way there, but it can have a sizeable impact on the problem. What would the skeptics say?
Gregg Dixon: The skeptics have one argument, and it's a legal or regulatory argument, and it's what FERC ruled on, and the Supreme Court ruled on. The FERC Order 745 case was contested on jurisdictional grounds. The fact of the matter is, demand response has been called the killer app of the smart grid, for all of the reasons we've been talking about. You can't refute its benefits, whether it's economic or sustainability, or resilience and reliability of the grid. It has tremendous benefits across the board. Those that seek to not unlock the full potential of demand response are ones that don't benefit from unlocking it. That tends to be the traditional generation supply side of the equation.
Gregg Dixon: Demand response suppresses market prices. Demand response lowers capacity prices, lowers energy prices on peak, and of course, that takes profit away from traditional generators.
Jason Jacobs: You just gave me the pitch for demand response, so those traditional generators are the skeptics, but what do they say?
Gregg Dixon: They say that demand response should not be allowed in these wholesale markets, because it sits behind a retail meter, and that's the state's jurisdiction.
Jason Jacobs: Got it. So it's more like, it's not that demand response is bad, it's more like catching somebody on a technicality basically.
Gregg Dixon: It's like the taxi industry saying, "We don't like Uber."
Jason Jacobs: But the consumer is saying, "Hey, we actually love Uber."
Gregg Dixon: Exactly.
Jason Jacobs: So typically we save Twitter questions for the end, but since I saw that we got one that looked pretty relevant, I'd love to just ask it before we move on from this topic, since I think it's a good one. That is, let's see, it's from @JakeDouglas, and he said most demand response companies that he's learned about so far are targeting consumers, he'd like to hear how DR for C&I customers, commercial and industrial customers, I don't know the lingo, compares logistically the scale of opportunities, et cetera. How is it different than consumer?
Gregg Dixon: Sure. So what's interesting about that question is that the predominant source of demand response is actually C&I, commercial and industrial.
Jason Jacobs: Now I know, C&I.
Gregg Dixon: Sure, sure. You're in the know, you're an insider now. The residential demand response is probably better known by the average citizen, because we're now using more and more smart thermostats, for example. So I have Nests in my home, I'm sure you have a smart thermostat.
Jason Jacobs: Matt Rogers, one of the co-founders of Nest, came on as a guest.
Gregg Dixon: Awesome. So a lot of consumers are learning, whether they know about the concept of demand response or not, they're learning about demand response by having these devices in their homes, and the ability to choose to be part of this new paradigm. In fact, all of my Nests are part of the Rush Hour Rewards program. So Nest, which has done an amazing job of basically providing an Apple-esque product for regulating the temperature in your home, has also integrated these types of services that energy markets value.
Gregg Dixon: So consumers are learning about the concept of demand response, whether they know it or not, because they're signing up to something called a Rush Hour Rewards program that incentivizes them to be part of the solution. But the fact of the matter is, the predominance of demand response really exists in the C&I industry.
Jason Jacobs: Then from an economic standpoint, you talked about the overall cost savings potential, but what about for a specific client? What's the pitch to one of these big C&I customers?
Gregg Dixon: What's interesting is that the energy industry has transformed tremendously over the past 20 years. 20 years ago, the demand portion of an electricity bill might have represented 10% of that bill, whereas the energy portion of the bill was 90%. Without going into the technical details, think of it this way, energy are kilowatt hours, and demand is the kilowatt, or the peak of what your power consumption might be. In the middle of the day, when you're running your air conditioner at home, you're consuming power on peak, and that's measured in kilowatts. But the kilowatt hours are measured across the day, every hour, how many of those units you consume.
Gregg Dixon: In the United States, in fact, over the past 20 years, we've consumed fewer kilowatt hours for the production of GDP. So we're actually getting more and more efficient as a country, as a society, and that's true globally. We're consuming fewer kilowatt hours to produce a unit of GDP, but our peaks are growing. So we're seeing these extreme weather events that produce longer and more extreme heat waves, we're using more air conditioning, we have more plug load. All of those things contribute to a higher peak demand. Now, today, our demand portion of our bill is 30%, 40% in Ontario, in many cases 60% of our bill is driven by our consumption on peak, which is a perfect fit for demand response.
Gregg Dixon: When we get a customer involved in demand response, for very few hours of the year, we can reduce that 30%, 40% of their bill by half. That's a huge savings. So for a large industrial, a large commercial customer, 5%, 10%, 20% savings on their bill can result through making no investment. They don't spend money to get involved in demand response program. They have to do very little, maybe 20, 40 hours of actual response per year. That's an incredible economic return for every one of these customers.
Jason Jacobs: Coming back around, when I was running a company for 10 years, I just didn't have the cycles to think about much else besides that, and it was very one-track, so some of the big picture bird's eye view thinking that I get to do now, I just didn't have the cycles to do then. You mentioned that climate change is everything in terms of a motivator for you and for the team, and you're taking on what sounds like a meaningful slice of that with the work that you're doing. How much do you think about the rest of the pie? Is that something that you find yourself thinking about a lot in terms of collectively how we get ourselves out of this problem, in more ways than just the Voltus piece?
Gregg Dixon: Sure. Personally, I do. I have an electric car, I have Nest Thermostats, I live my values in every way. But demand response is such a passion, and there's so much more to do, I've taken the approach of focusing all of my energy on that one concept, because I know I can have a meaningful impact. At times when I try to think about the broader implications of all that we do, it actually can be depressing sometimes. Right? Because it's daunting, it's a really daunting challenge when you think of all that needs to be done to make a meaningful impact. So I like to actually keep my nose to the grindstone, on demand response, knowing that I'm going to have a big impact.
Jason Jacobs: Yeah, I wrestle with that one personally, because I think the depressing piece is when you look at the big picture, and the math, and how fucked we are. We checked the box on the thing that I can say that. Then I guess to tunnel-vision on your piece and do the best you can, I wish I could get there honestly, because if I could get there, it's certainly a hard place to be, but I think it's an easier place to be from a depression standpoint, because you're just an optimist every day trying to make your piece reach its fullest extent possible. But I have gotten sucked into the vortex I guess of looking at the big picture, so I don't want to put blinders on, and I don't really know what to do about that.
Jason Jacobs: Because I think that at the end of the day, if all you do is look at it, but you're not actually taking on any big piece, then it's an academic exercise, and you're not actually helping. But if you take on a piece that is in the grand scheme of things, not going to make a big enough dent to collectively help us get out of this jam, well then ... Anyways, I'm rambling, but this journey is a quest to figure that out. One of the ways I'm doing so is talking to people in the trenches, like you. It's like sitting on a shrink's couch, thank you.
Gregg Dixon: Yeah. I want to address that, because I found a way to keep myself motivated.
Jason Jacobs: Show me the light. Show me the light, Gregg.
Gregg Dixon: I'm a dad, and my kids mean everything to me, and I want to leave the world a better place for them. It's very meaningful, I'm very connected to that. It's really important that I teach them about these things, about sustainability, about being a really productive and good citizen. So at times, when you and I might think, "Wow, we're fucked." I use simple analogies, like pick your sport, basketball, you're in the fourth quarter, you're down by 20, do you give up? The likelihood that you're going to win is slim to none, but of course you don't.
Jason Jacobs: You bring on the third-stringer, so that your first-stringers don't get hurt for the real game.
Gregg Dixon: Right. I don't play NBA style basketball, you leave it all on the field. That's the example you set for your children. You know what? We may just win. So I filter all the decisions that I make in this context through, how would I explain it to my kids? How would I explain my decision making, what I focus on, to my kids? That prevents me from making bad decisions, and it prevents me from inaction. Because you can easily convince yourself that we're fucked, and nothing I do is going to help, but that's definitely not what you would say to your kids.
Jason Jacobs: That's a good point, and honestly, the way I'm approaching it is that whether we're fucked or not, I don't actually know, but I know that, to use your sports analogy, I'm going to leave it all on the field. So I'm not going to get spun up in circles debating that, and I'm just going to do everything in my power to give us our best possible chance to not be. At the end of the day, that's the best I can do. If we all die a slow painful gory death, well then, at least I left it all on the field and did the best I could in the short time I was here.
Gregg Dixon: Right, right. Agreed.
Jason Jacobs: Woo-hoo, that is motivating and mobilizing. So my last question, I think we spent more time on demand response and Voltus than I usually do with company founders, but I actually think that's good, because honestly I just knew less about this area, and I think it's an important one. Hopefully, for our listeners that find themselves in a similar camp, that this was a worthy exercise that we just went through. It was for me, thank you. If you had a big pot of money, $100-billion dollars let's say, I just made up a number, but it's the one I've been using, so I'll stay consistent, you could allocate it towards anything to maximize its impact on climate change, where would it go? How would you allocate it?
Gregg Dixon: It's simple, I would hire as many people in the industries that are becoming obsolete in energy, and I would employ them in industries like mine, in demand response. So I'm a big believer that it's important that we make really good decisions to make the best use of natural resources, and we employ innovations like demand response, but they have impact in other areas that we have relied upon for decades, like coal. So demand response impacts coal in a negative way, that's not okay. We want to take those workers that suffer in coal mines, and we want to reemploy them in industries like demand response, and give them career opportunities that are better and brighter for them.
Gregg Dixon: So if I had $100-billion dollars, I'd pull all those folks out of coal mines. I'd pull them out of the Powder River Basin, and I would give them jobs that are better for them.
Jason Jacobs: Are the skills transferable?
Gregg Dixon: Absolutely. They're human beings that are smart and want to feed their families, and that's meaningful to them. If we can give them a better opportunity, I'm absolutely certain they'd want that opportunity.
Jason Jacobs: Gregg, for anyone out there who's listening, I know there's a bunch of them who care about climate change, and they're trying to just, they're going through what you and I were just discussing, it's like they're overwhelmed by the scale of the problem, they don't really understand it, and they want to help, but they don't know how or where to start. Speak to them for a moment, what advice to you have for them?
Gregg Dixon: I think it just starts with personal decision making, and I think the most helpful way to think about it is how do you explain the decisions that you make to you kids? We see the impact of climate change all around us in a negative way, if we open our eyes, and we need to act locally. If people act locally, it will have a global impact. It's really just practical things. President Obama was panned for saying, "Hey, if we could do one thing relating to global warming ..." It was something to the effect of, "I'd have people properly inflate their car tires." That's really important it turns out.
Jason Jacobs: Out of Jimmy Carter, "Wear your sweater."
Gregg Dixon: Wear your sweater, these are practical things that have really big global impacts that you can do right now. You don't have to be a tree-hugger to do it.
Jason Jacobs: You talked about wanting to employ the coal miners as a longer term vision, in the short term, I know you are doing a bunch of hiring, are there any specific roles you want to call out? Or some place you want to send people that maybe get inspired listening to the episode, and want to learn more about the company?
Gregg Dixon: Visit our website, Voltus.co, we are hiring across the board. That includes everything from software engineers to site techs that install our equipment at customer locations, sales people, folks in our back office. Our company is exploding in growth, and so we need talented people who are passionate about making an impact.
Jason Jacobs: I think you mentioned you're fully distributed at this point, right? No official office?
Gregg Dixon: Yeah, by design, we're virtual.
Jason Jacobs: So when people see job postings on your website, can they apply from any geography?
Gregg Dixon: Yeah, we have people working in Australia, China, Nepal, the UK, Canada, all over the US.
Jason Jacobs: I feel like we could do another whole episode just on that, because that probably keeps a lot of people off of planes, and opens up labor opportunities in a more equitable way. Wherever you are, not just in the major cities.
Gregg Dixon: We do our best to live the values.
Jason Jacobs: Anything I didn't ask, or any parting words for listeners? I've asked you a lot.
Gregg Dixon: Geez, I should have prepared for that one. Any parting words? Geez.
Jason Jacobs: If that's the hardest question you got in the whole episode, then I was too easy on you.
Gregg Dixon: Yeah, wow. I should have been better prepared for that. It's terrible. Eat your Wheaties.
Jason Jacobs: You already gave parting words a few times, so we'll let you off the hook this time. But Gregg, thanks so much. You've been a great guest, you've been a good sport, and it's awesome what you're doing.
Gregg Dixon: Thank you very much.
Jason Jacobs: Thank you, best of luck to you.
Gregg Dixon: Take care.
Jason Jacobs: Hey, everyone, Jason here. Thanks again for joining me on My Climate Journey. If you would like to learn more about the journey, you can visit us at MyClimateJourney.co, note that is .co, not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter at @JJacobs22, where I would encourage you to share your feedback on the episode, or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.