New Year’s Resolution – Double Your DR $s with Voltus – Guaranteed!

Posted on by greggdixon@voltus.co

Our experts want to help you with a single new year’s resolution: double your dollars in demand response in 2020 with these five tips:

  1. Jon Wellinghoff, former Chairman of the Federal Energy Regulatory Commission and “Father of Demand Response”: “In New York City, Texas, and all of PJM, you’ll want to ‘stack’ multiple demand response programs. If you’re only in one program, you’re missing out on many new programs. I’m aware of up to six programs being stacked at a single facility in Pennsylvania!”

  2. Ed Sayers, Vice President of Energy at Simon Property Group: “Optimize your enrolled kW. DR works off of a simple formula: kW x $’s = earnings. Squeeze every kW you can by reevaluating your operational flexibility and enrollment levels. As you invest in energy controls or new equipment you’ll often find that you can enable more kW, with quicker response times. That’s more cash.”

  3. Alex Laskey, founder and former President of Opower: “For American businesses, transmission capacity charges are increasing significantly. Too few companies manage these, but doing so will help you double the value you’ll get from curtailing loads. For Canadian businesses, spend a little money to reduce your Global Adjustment charges. Those fees are simply too large to manage without expert advice.”

  4. Dennis Quinn, General Manager of CashGen at Voltus: “Get back your backup generator. The opportunity to use your generator in demand response programs has returned. These resources are the highest quality power for your facility and a high quality type of demand response.”

  5. Phil Giudice, former Commissioner of the Massachusetts Department of Energy Resources and CEO of Ambri: “Demand response continues to grow, so understand every program available to your facility. For example, the Southwest Power Pool now offers demand response. Illinois customers have access to a lucrative, quick response demand response program. And customers in Ohio have more demand response choice than ever before.”

Are you resolved to double your dollars in demand response in 2020? Email us for a detailed review of your portfolio (info@voltus.co – not .com) and we’ll show you all the options to guarantee you hit that New Year’s resolution.

Crush Global Adjustment Charges While Banking Toonies!

Posted on by greggdixon@voltus.co

If you’re like most commercial and industrial energy consumers in Ontario then you’re well aware of the expense of global adjustment charges on your electricity bill. You’re probably also aware that you can reduce these expenses if you’re able to predict when these charges are allocated on your bill. The expected annual expense for global adjustment charges is now over $600,000 per MW per year of peak demand, which is the average of your electricity demand during the five highest IESO system peak hours. That amounts to the highest capacity prices in the world . . . all the more reason to do everything you can to mitigate those expenses. If you’re interested in, and operationally able to, reduce demand to avoid these expenses then you’re also a perfect candidate to layer on additional value from IESO’s demand response program where you’re paid to be part of the energy market that procures capacity to satisfy Ontario power needs.

This webinar will focus on state-of-the-art methods, technologies, and secrets to crushing your global adjustment charges while hauling in as many toonies as you can through IESO’s demand response program! Sign up below and we’ll send you early January webinar dates and times for you to choose from.

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Only 10% of Passengers Allowed to Uber in Michigan

Posted on by greggdixon@voltus.co

Imagine reading that headline as you land in Detroit Metro an hour before a big meeting in Ann Arbor. Your heart sinks knowing you might need to wait in line for a taxi and likely be late for your meeting. Why would Michigan decide to limit your access to an innovation that you’ve become universally accustomed to using every time you arrive in any airport around the country? Ridesharing saves significant time and money and gives you peace of mind that travel will go smoothly, without having to experience the universally terrible service of the outdated taxi. And how the heck are they supposed to enforce the 10% cap fairly?!?

You would be understandably gobsmacked if you experienced this hypothetical situation. Yet, that’s exactly what the Michigan Public Service Commission (MPSC) has decided is right for its customers . . . whoops, I mean ratepayers . . . as it relates to one of the most innovative energy sources lying fallow in Michigan, namely demand response, a resource that would save Michigan customers more than $260 million per year immediately. The same 10% cap that the MPSC has imposed on customers choosing an alternative energy supplier is arbitrarily imposed on those who would like to deliver to Michigan the very local resource that the MPSC has stated is desperately needed to address Michigan’s electricity needs. Demand response offers the promise to deliver more than 2,700 MWs of Michigan’s local resource requirement to meet peak electricity demand. These MWs are the least expensive, most reliable on-peak, and undeniably cleanest local resource available to Michigan today.

Let’s look at the dollars and sense:
  • Michigan currently pays an MPSC-approved, weighted average of $105,241 per MW per year for capacity to its regulated utilities. Michigan peak demand is approximately 20,828 MWs of which 90% is delivered through regulated utilities. Again, the MPSC allows 10% of customers to choose an alternative energy supplier that offers competitive prices for capacity which have historically been far less expensive than the cost of regulated utility capacity.
  • Yet, Michigan has chosen to be part of a federally-regulated wholesale electricity market called MISO (the Midcontinent Independent System Operator) that delivers the shared economic and reliability benefits of an interconnected transmission system serving 15 states. This was a very wise choice by the MPSC because it provides Michigan with access to some of the least expensive and most reliable power in the world. Unfortunately, Michigan isn’t taking full advantage of it because of the limitations the MPSC imposes on access to innovations like demand response.
  • The Michigan zone of MISO attracts capacity into its market at a rate of $8,870 per MW per year. That’s a savings of nearly $100,000 per MW per year, or nearly $2 billion per year in total, for Michigan customers if Michigan were to rely on MISO entirely for its capacity. Opponents of this viewpoint will interject here and say, “Wait, the auction run by MISO is a residual market, so if Michigan relied entirely on MISO to meet its capacity needs then that price would be much higher,” to which we would retort . . . you’re right. But there’s 2,700 MWs of local capacity in the form of demand response that Michigan can and should allow to meet its capacity needs and the immediate savings unlocked from doing this would equate to 2,700 MWs x ($105,241 – $8,870) = $260 million per year in savings to customers or $68.73 per Michigan household.
  • What’s more, the Michigan commercial and industrial customers who would deliver the 2,700 MWs of on-peak capacity, locally, would receive those payments, further stoking the fire of the Michigan economy. In fact, every Michigan competitive choice customer can and should take advantage of this opportunity right now, but 90% of Michigan customers cannot. So, who wouldn’t want these benefits?

Michigan utilities say no to these benefits and the MPSC goes right along with them. Michigan regulated utilities oppose demand response being fully unlocked in the state of Michigan unless they’re the ones being paid for it. The most galling part of this ruse is that the utilities are paid the MPSC-regulated rate for capacity for their demand response MWs while paying a fraction of it to their customers. In the case of Consumers Energy their demand response program pays $25,000 per MW per year to their customers (while passing through unnecessarily onerous penalties and operational requirements) . . . and the MPSC allows them to pocket the difference. Perhaps most stunning of all is that when Michigan regulated utility demand response is asked to actually deliver its capacity it performs at about 60% (put differently, the regulated price of capacity being paid to utility demand response is actually $105,241/60% = $175,402, which is the highest price paid by a state for capacity in the country).

Yet, to its credit the MPSC has taken up the challenge of unlocking the benefits of demand response. It has made progress. But the progress is slow and bogged down in politics while Michigan customers await their taxi in a long line, likely missing the meeting that they came to Michigan for in the first place. The MPSC can and should immediately lift the 10% cap on demand response, treating it differently than competitive retail supply, and deliver $260 million in annual savings to customers. Dozens of other states have done just that while unlocking billions of dollars in proven annual savings to customers, improving grid reliability, and ensuring a cleaner energy future for their communities.

Let’s go!

Speaking Truth to Power

Posted on by Voltus

“Can you give me an example of when you’ve ‘spoken truth to power’ either in your professional or personal life and what that experience was like?” That’s the final question Matt and I ask any candidate wanting to be part of the Voltus team. If you’re asked that question, you’re an incredibly strong candidate. Answer it well and you receive an offer. Answer it poorly and – despite whatever other credentials you have – we are forced to pass.

Why is it so important to us? There are four reasons:

  1. We want to hire people who are more bright, more gritty, and more good than us. That’s really hard to know unless they’re the kind of person willing to tell the CEO and President what they’re really thinking: about our good ideas, our half-baked ideas, or our bad ideas. And, boy, can we come up with some bad ideas! Those willing to speak truth to power are bright – they bring a solution and not just a problem – they are gritty – they have an inner drive to champion a better way – and they are good – they speak truth to power (understanding that we must all bring out each other’s best) especially to those with a responsibility to lead.
     
  2. The only way we get better as a team is by coaching each other constantly and bringing a better solution to the table every day. We built a company around a strong vision, a strong set of values, and a strong offer for customers. Yet, we know all of it is flawed, much like an artist might cringe at their painting despite countless hours toiling over the final brush strokes of its completion. At the risk of parodying ourselves a la this week’s episode of “Silicon Valley,” we embrace the concept of radical candor (challenging directly, caring personally) because it is consistent with our values of love and compassion. When you meet a person who is willing to put their own neck on the line to help you be better, that’s a special someone.
     
  3. Our product, demand response, is a product that speaks truth to power. It is the demand side of a supply/demand market equation that has traditionally and heavily favored supply resources – large central power plants (e.g., nuclear, coal) that also have an outsized voice in energy markets and regulatory arenas. These forces run deep at regional transmission operator (RTO) forums, within state PUCs/PSCs, and at the federal level where incumbent resources are often propped up despite being obsolete. We are the folks who spearheaded and won the FERC 745 battle at the Supreme Court of the United States. The grit and determination, the willingness to speak truth to power, that it took to wage a battle with odds of winning being less than 1% (knowing it was the right battle to fight) is what we look for in a Voltan.
     
  4. Our prospective customers are generally of two types: never heard of demand response or they’ve been doing it for years. Those who have never heard of it require us to be vocal proponents of doing something differently that delivers cash to their bottom line. Those who have been doing it for years often think they’re getting the most dollars from their participation. In both instances, we need our team to stick their toe in the door to evangelize why that customer should work with Voltus before that door is shut in their face. People who shy away from rejection or conflict don’t last long in that environment. They’re willing to challenge conventional thinking or experiences.

If you want to be a Voltan, you need to be really good at speaking truth to power. You need to be a vocal champion for ideas worth spreading. You need to stand up for those who can’t stand up for themselves. You need to be the kind of person willing to punch a bully in the nose. You see your role in the world as an agent of positive change and you’re ready to get into the arena and go to battle for it.

Please share your experiences speaking truth to power in the comments below or send us an email with your thoughts on the topic.

Gregg and Matt

When $10 Million Shows Up in Your Bank Account . . .

Posted on by Voltus

Today, Voltus got a little pocket money (PR Newswire). It’s creating quite a bit of buzz in the industry (Greentech Media) and we’re grateful for the attention it’s getting.

The back story is pretty simple: a few of us put our nose to the grindstone for a year, built a great technology, signed up a bunch of customers, generated profits, and attracted the interest of investors who really liked the focused business model we developed to attack a huge, underpenetrated market where the competition wasn’t innovating or fully serving customers.

But what’s the secret to our success and how do we plan to extend this success with $10 million in the bank? First, our success to date is simply a matter of attracting bright, gritty, and good people who are passionate about solving energy challenges. Second, our vision is simple: deliver more demand response dollars to the bottom line for our customers than anyone in the industry . . . less energy, more cash. Put the people and the vision together and get out of the way!

This simple model has us doing three things: we build product, we sell product, and we deliver cash to customers. This aligns with how we differentiate: we have a best-in-class technology platform that unlocks every possible revenue stream for our customers, we have a transparent, no-cost, no-risk, single page commercial agreement that makes it easy for our customers to do business with us, and we are world leaders in understanding energy markets and demand response which allows us to more than double the value customers get from what they’ve been doing in the past.

So, for our part, Matt and I sell. We evangelize. That’s us at the Crowne Plaza in Springfield, Illinois last week in the midst of a Monday morning through Friday evening road trip. We crossed paths in Springfield, signed our funding documents, snapped a pic with the front desk attendant, and went our separate ways, Matt to Peoria, I to Champaign-Urbana. We’ll sign up a dozen or so new customers from that trip.

We’re pretty sure that our competition’s CEO and President don’t do this. We’re pretty sure they don’t commit to delivering 100 MW individual sales quotas each year. Because selling is hard, yet it’s the single most valuable thing a company does in a growing market. And Matt and I love to do it . . . we love to meet our customers . . . at their steel plants, their wastewater treatment plants, their grocery stores, their data centers . . . we love to see the pride they take in their work . . . we love to forge new friendships . . . we love to learn about their unique challenges . . . we love to tell the Voltus story . . . and we love to pay our customers to use our product to help them make their businesses stronger.

Our team has a clear plan on how to turn that $10 million into $100 million in short order by delivering exceptional value to customers. You can be sure that Matt and I will be on the road doing our part to help our team get the cash to the customers.

Giddy up!

Choose Savings Over Software

Posted on by Voltus

How the success of demand response helps us unlock the much larger value of energy efficiency for industrial, commercial, and institutional customers
 

Imagine this: you’re the president of a large manufacturer with dozens of plants. You get a phone call from a salesperson who says, “My product can save you 2% each year on the cost of janitorial supplies, which amount to 3% of your total cost of doing business. All you have to do is buy my software, hire a janitorial supplies expert to use that software, and you’ll be able to find those savings.” In your mind you chuckle, thinking you’ve heard the most unique sales pitch of all time, right before you say, “No thank you,” and politely hang up the phone.

Now, consider this sales pitch, “You spend a lot on janitorial supplies each year. I have a rebate check for you today in the amount of $20,000 that I will pay you each year for allowing my company to manage that spend for you. It won’t cost you anything to use my services, we take all the work off your hands, and there is no risk in taking advantage of this offer.” In your mind you chuckle, thinking you’ve heard the most unique sales pitch of all time, right before you ask, “Why wouldn’t I do this?”

This analogy highlights what works and what doesn’t in energy management, and how we can solve the broader challenge of unlocking billions of dollars in savings that lie fallow because of a broken value proposition, specifically as it relates to energy efficiency. Two facts contrast the success of demand response, one of three major energy management tools, and the failure of energy efficiency in the context of this sales pitch:

  • Fact 1: The commercial and industrial-focused (C&I) demand response industry saves its average customer 2% on their total electric bill and a typical electric bill amounts to 3% of the total cost of doing business for that customer (e.g., commercial office, university, retailer). Yet customers have signed up by the tens of thousands because we, the industry, made the value proposition a no-cost, no-risk, simple way to generate cash while eliminating any need on behalf of customers to be energy experts. It’s estimated that the C&I-focused demand response industry potential is $5 billion annually and is about 40% penetrated in the US. We coined the phrase, “Selling five dollar bills for three dollars,” because it’s what we did. Unlocking demand response value was due to a commercial, not a technological, innovation.
     
  • Fact 2: Energy efficiency savings, for these same types of customers, represent on average 10% net savings after paying for the investments required to get those savings. These savings include no-cost (e.g., turning lights off at night), low-cost (e.g., investing in metering to more closely monitor energy spend and tighten operational parameters like start-up and shut-down), and capex savings (e.g., lighting retrofit with a less than two year payback). It’s estimated that the C&I-focused energy efficiency industry potential is $24 billion annually and about 1% penetrated in the US. Yet, dozens of companies have come and gone trying to sell customers on the notion that they should buy their software and services, hire energy experts, and treasure hunt for the savings that justify the investment. Despite the value to customers being 500% that offered through demand response, the industry has been an abject failure for customers and investors alike.

Demand response has brought to market more than 30,000 of the least expensive, most reliable, and cleanest MW’s in the US in the past 10 years, delivering not only savings to those who participate in these markets but tens of billions of dollars in electric bill savings to all customers. Additionally, grid operators and utilities gained a tool to bolster grid reliability, preventing blackouts that would have had devastating impacts on our economy, health, and environment. Again, the reason is simple: we sold “five dollar bills for three dollars” by innovating a commercial value proposition that customers couldn’t say no to. And this all happened by delivering 2% net savings to customers on 3% of their total cost of doing business.

“Energy efficiency delivers 500% the value of demand response to a C&I customer, yet less than 1% of C&I customers use software to find energy efficiency savings.”

The energy intelligence software industry, on the other hand, has completely failed. Vendors ask the customer to purchase software-as-a-service on a recurring monthly basis by persuading the customer that by using their software they will find savings to justify the expense . . . and if they don’t have an energy expert on staff they should hire one, or more, to use the software to find the savings (or rent a very expensive one from the energy intelligence software (services?) company. Some of these so-called software companies claim that it’s not about just savings, it’s about “value” by which they mean some combination of risk management, compliance fulfillment, team productivity improvements, carbon reduction, general do-goodery, etc. And it’s true that good energy management software can and should provide these types of value. But those are trumped up value props, smoke and mirrors, to bolster what amounts to a complex, costly, risky value proposition that saves a relatively small amount off of the total cost structure for the typical customer. 

Yet, there are truly significant savings associated with more intelligent energy management. You don’t have to look far for third-party research (e.g., McKinsey, ACEEE, EPRI) that shows most large C&I end-users waste between 10% and 40% of the energy they pay for. Here’s the rub: these savings are not easy to come by like the savings provided by the demand response value proposition. To get energy efficiency savings you need to be an energy expert, you need effective software analytics, you need the right data (e.g., real-time metering, energy bills, weather data), and you need an internal business case that justifies the investment in dollars, time, and staff . . . or you run the risk of souring your organization on the virtues of energy management. 

“Energy intelligence software companies have all failed to succeed because they put cost, risk, and complexity on a customer who has a business to run. They fail to bring the right commercial value proposition to a customer who will gladly accept the value, but not the cost, risk, and complexity of the unknown.”

Voltus turns the value proposition of capturing energy efficiency savings on its head just like we did in the demand response industry (which in February of 2016 was secured by the Supreme Court of the United States in its decision relating to FERC 745). We don’t ask customers to buy software and services, hire energy experts, and take the risk of hunting for treasure in the dark. We do that work for them, just like we do in demand response.

We recognize that there is tremendous value in finding ways to use less energy to maintain and grow business productivity. We put our customer’s needs first in delivering that value by installing and using our own technology, at our expense, to uncover no-cost, low-cost, and capex energy savings opportunities. We’re energy experts and we want to align our interests around the value we find and share. When a customer decides to implement what we’ve found, we get a piece of that value stream . . . but only if the customer decides to implement it. No implementation, no sharing of value. Voltus incurs 100% of the cost, takes 100% of the risk, and eliminates the complexity of capturing the value.

You may think, “Well, isn’t this a performance contract?” No, not at all! Performance contracts put very tight controls on what a customer is required to do when the energy services provider recommends savings measures. Performance contracts are long-term, 30+ page legal headaches for customers that more often than not pit the customer against the provider in proving the validity of achieved savings. Just like with demand response, Voltus doesn’t require a customer to act, so to speak. We simply expect that you will because if you don’t then you lose the value of the savings. It’s a carrot (and more importantly, a purpose), not a stick.

If you’ve wanted to reap the benefits of energy efficiency for your business but you’ve been challenged by internal barriers to purchasing energy-related metering, software, services, or the like, then connect with us (info@voltus.co). The only question you need to answer is, “Why wouldn’t I do this?”