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ENB #116 Tim Hade, Co-Founder & Chief Development Officer for Scale Microgrids, and we cover critical electrical grid information for the future.

ENB #116 Tim Hade, Co-Founder & Chief Development Officer for Scale Microgrids, and we cover critical electrical grid information for the future.

Source: ENB

In this wild energy market, it is big fun talking to industry experts. It’s even more fun when we talk about the critical infrastructure, solutions and how to get to the lowest cost kWh to the consumers with the least impact on the environment.

The grid is one huge problem looming in the shadows in the energy transition and is not funded, or given the proper attention. Industry experts like Tim are essential for the transition, and sustainable energy.

Please reach out to Tim on his LinkedIn here:

Scale Microgrids website HERE:



00:00 – Intro

01:03 – As a Co-Founder how did Tim Hade Get started in Micro Grids and who are his partners

01:48 – What is Co-Generation or CHP?

02:53 – Knowing More on What Tim Hade do and the History of Scale Micro Grids

05:11 – Talks about Scale Microgrids to Build Clean Energy System with the Soboba Band of Luiseño Indians

06:43 – Talks about Tribal Lands from an energy infrastructure perspective

10:19 – How can the integration of renewable energy sources like solar power with energy storage systems and natural gas standby generators be optimized to create a cost-effective micro-grid solution that balances sustainability with reliability?

14:38 – Talks about the Best Business Cases for Microgrids

16:06 – Talks about Electricity Economics, Differentiating Whole Sale and Retail Prices

19:48 – Talks about Distributed Energy Resources Community in the Microgrid Space/ FERC 22-22 / Energy Cost

23:47 – Talks about Supply Chain on Microgrids and the Supply Storage

27:34 – The topic discusses the status of utility grids in certain areas and the potential for microgrids to address issues of poor, unreliable, and expensive energy services in rural and isolated communities, with a particular focus on island nations and states.

29:37 – Talks about Microgrids with Distributed Energy / ERCOT/ Transmission

32:22 – Talks about Small Modular Reactors (SMR)

34:06 – Talks about The Infrastructure Bill and the Inflation Reduction Act

38:47 – Talks about the Department of Energy (DOE) and what they were able to do

40:14 – Talks about Permitting and What do we do with existing Nuclear Reactors

42:24 – Talks about Small Modular Reactors and the importance of it being maintained

43:48 – What is coming around the corner for his grid and what’s coming around the corner for Tim

45:59 – Outro

Automatic Video Transcription may be edited for grammar. We disavow any errors unless they make us look better or smarter. – Check out the YouTube or podcast for the actual language. (I am from Texas and Oklahoma, so I talk funny).

Stuart Turley [00:00:07] Hello, everybody. Welcome, Today is just not a great day it’s a fantastic day because I get to do what I like doing that is talking on the Energy News Me podcast. My name’s Stu Turley, president and CEO of the Sandstone Group. I’ve got a really cool guest coming by the podcast today. I’ve got Tim Hay. He is the chief development officer and co-founder of Let’s See Scale Micro-grids. And I’m I’m looking forward to this discussion. We’ve had a great chit chat right before we got here.

Tim Hade [00:00:39] Hey, Stuart, thanks so much for having me I’m looking forward to it as well.

Stuart Turley [00:00:42] Okay. As a Co-founder, what prompted you to go get into scale micro-grids? Let’s talk about what they are. Micro-grids, I love micro-grids because, you know, you take a look at the grid and it’s going to have some problems looming we’re going to go down that road. And then if you take a look at how did you get started and who’s your partner?

Tim Hade [00:01:03] Yeah. So, you know, the genesis story for us, I think really started at a previous company. So all three of the co-founders of the company previously worked at a Cogeneration. So I was then by the name of Energy Route OX. It was based out in New Jersey.

Tim Hade [00:01:20] And starting in 2010 when I joined, we were really focused on building Cogen Project specifically for CNI customers in the Northeast. And I think the value proposition of Cogen made made a lot of sense to us, right, both from a sustainability standpoint, but also an economic standpoint, A resilience standpoint.

Stuart Turley [00:01:42] Cogent. Cogent. Yeah, I may know what it is, but I’d love for you for our podcast listeners. Cogent.

Tim Hade [00:01:48] Sure. So co-generation and also sometimes called combined heat and power is essentially using typically a fossil gas asset to generate both electricity and heat simultaneously. I think about how we typically use natural gas in the electricity you know, you’re generating at about 40 to 50% electrical efficiency and then the waste heat in a combined cycle plan is reused in the typical peaker plant. It’s not. But that efficiency loss is, you know, potential energy that’s not being used on the system.

Tim Hade [00:02:22] And so co-generation actually sort of flips that on its head by capturing the waste heat and using it for some sort of useful function that can be heating, it can be cooling, it can be dehumidification in different applications. But that’s really the basics of, you know, co-generation or CHP.

Stuart Turley [00:02:40] In the in the industries. But, you know, in the energy space, there’s so many acronyms going around. And I got blasted a lot on some of my earlier pocket. What was that? So thanks. Keep on going. Sorry, I didn’t mean to interrupt. Yeah.

Tim Hade [00:02:53] So, you know, we were pretty laser focused on on co-generation, but then also very, very closely watching, you know, developing markets and developing technologies. And I think the things we are most interested in back in those days was really battery storage. Right? What’s the story with battery storage? What’s the technology for? How quickly is this going to become a commercially viable product that we can use in the power generation space.

Tim Hade [00:03:19] And so we are kind of doing that. We’re kind of at all, you know, R&D work going on. And then Hurricane Sandy happened. And I think for us, Hurricane Sandy was really kind of a light switch event. As I mentioned, we were based in northern New Jersey, so we were kind of at the eye of the mess that Hurricane Sandy caused and saw the impact that had on the local community that we were a part of, but also sort of the region in general.

Tim Hade [00:03:44] And I think the conclusion that came to us was that we got to go a lot faster with this stuff. You know, our infrastructure today really isn’t ready for extreme weather events during a time when, you know, having reliable electricity is becoming increasingly more important to society on almost a daily basis.

Tim Hade [00:04:04] And so, you know, that was kind of the event that made us step back and think about kind of the direction we were headed, how drastic we were, and things like that. And ultimately what that led to is the three of us breaking off and starting to scale in 2015.

Tim Hade [00:04:19] Since then we’ve really been building micro-grids that use solar and storage is kind of the hub of the systems we build, but we also still use a lot of dispatchable generators. We still do some CHP projects for messing around with all sorts of new energy storage technologies and chemistries.

Tim Hade [00:04:38] And so it’s really become a distributed energy resources focused business. You know, we kind of have our specific menu of technologies that we like, but we’re branching out pretty quickly.

Stuart Turley [00:04:48] Nice. Hey, Ray, before we started, I mean, 40 minutes ago, this is hot off the press. I saw your release on their scale microgrids to build clean energy system with the sobba brand. Luiseño .  Indians I hope I said that right. I didn’t want to barbecue anything there.

Tim Hade [00:05:08] It’s close enough.

Stuart Turley [00:05:09] Okay, cool.

Tim Hade [00:05:11] Yeah. So this is a project that, you know, we’re really excited about. And I think, you know, maybe to take a step back. You know, one of the things that that we as a company have been thinking a lot about for a long time is the issue of environmental justice. And so, you know, one of the downsides or potential downsides of distributed energy is that it sort of puts the buying power of quality electricity in the hands of the consumer.

Tim Hade [00:05:37] And if that consumer is always a Fortune 500 company, what the end result of sort of this energy transition will be a very inequitable solution, right? Where certain portions of society will have access to a higher quality of electricity service than other parts of society, which is a preventable outcome. But we have to work to prevent it.

Tim Hade [00:06:02] And so, you know, out of that sort of awareness, we started looking at different projects that we could work with in low income communities. One of the things that jumped right on our radar kind of early in that was some of the issues that are happening on tribal lands across Niger. And, you know, one of the crazy statistic, you know, to sort of put this in perspective is less than 1% of the United States population lives on tribal lands. 95% of on electrified facilities in the United States are on tribal land. And so.

Stuart Turley [00:06:36] No way.

Tim Hade [00:06:37] That so so for centuries really.

Stuart Turley [00:06:39] Again, that so.

Tim Hade [00:06:41] Less than 1% of the US population lives on tribal lands, more than 95% of on electrified facilities in the country are on tribal. So, yeah, you know, it really creates a situation where, you know, for centuries, from an energy infrastructure perspective, tribes haven’t gotten a fair shake and unfortunately have been put in a lot of terrible situations as a result of that.

Tim Hade [00:07:08] And so, you know, one of the things that decentralized, distributed energy does is it allows people to acquire cheaper, cleaner and more resilient kilowatt hours without having to go through a very bureaucratic process typically associated with, you know, dealing with utility, you know, where your power is coming from, all that kind of stuff.

Tim Hade [00:07:29] So we started engaging with tribal lands, different counterparties in the tribal lands space, maybe two and a half, three years ago. And there is definitely a learning curve for us, both from a technical standpoint, but also from a cultural standpoint as we kind of learned, you know, how to transact with with a tribal entity.

Tim Hade [00:07:46] A huge partner for us in these endeavors has been the US federal government. The Department of Energy has been has been a great partner and has really been looking at this issue and has, you know, made grant funding available and sort of changed some of the rules around tax equity to make some of these projects more feasible to execute.

Tim Hade [00:08:06] And so, you know, through a combination of those, we just announced our first Tribal Lands project, which, as you noted, is at a suburban resort in Southern California. Really, really excited about the project. I think it’s going to you know.

Tim Hade [00:08:18] The net result is going to be we’re going to save the tribe money we’re going to clean out their kilowatt-hour mix from a sustainability standpoint, and the system’s going to have the ability to island in the event of a grid outage, which means that they can continue to run their operations. So we think it’s a great value proposition and we’re really excited to, you know, get still on the ground and start building this thing.

Stuart Turley [00:08:39] I think, okay, I’ve got about 9000 questions.

Tim Hade [00:08:42] Yeah, Yeah. Go for it

Stuart Turley [00:08:43] Okay. We got the California grid is old. Yeah, it’s got problems. In fact, I interviewed an author last year and it was she was a New York Times author, researcher, author. And she it was California Burning was the name.

Tim Hade [00:09:01] Of the book. And I think it was Katherine Blunt, right?

Stuart Turley [00:09:05] Yes, that was it. And she was very, very smart. I love reading that book. Fact. It’s yeah, I’m here and I’ve got yellow tabs all over it and everything. But the grid being isolated off the grid in this is phenomenal.

Stuart Turley [00:09:20] The disproportionately impacted communities have always, as I say, got it in the drive-through with it when it become when it comes to getting lousy or energy projects to them. I mean, it’s like it seems like that group of people is always not getting it.

Tim Hade [00:09:41] Yeah,

Stuart Turley [00:09:42] I am so excited that you’re going this round with the smaller grids. From a technical question now on, all of the folks that I’ve talked to, you put renewable and then you put solar on there and then you’re going to have to put storage on there. You had mentioned that you have natural. Gas is a standby microgrid. How does all that fit together in a cost effective solution? Does that make sense? and I’m hoping I’m not giving you a headache because.

Tim Hade [00:10:14] No, no, no. It’s no, it’s an excellent question. Right. So. So, look, I think the first thing that you have to think about from a distributed energy standpoint when you’re looking at different market is the cost of the status quo. Right. And so for anyone who’s read California Burning or any of Kathryn’s reporting that she did at The Wall Street Journal, she and her colleague Russell Gold, did a fantastic series of pieces on KGTV in the wake of the Camp fire.

Tim Hade [00:10:44] What sort of the outcome of that is, is that California has the most expensive, least reliable electricity in the country. Right. And so that’s not a good combination. And so when you start off talking about how do you make the economics of distributed energy systems work, the first point is you go to the places where the grid is the worst, right? The least reliable and the most expensive.

Tim Hade [00:11:07] In the in the continental United States California is up there. And we could talk a lot about sort of how California got in this situation. Some of it is bad work and some of it is bad management over decades of time but the reality of the situation is the California grid is a mess.

Tim Hade [00:11:26] And so, you know, as a general rule of thumb, the problem that the California grid has right now isn’t so much on the generation side, but is on the transmission and distribution side. So generally, how the California grid was built is all the generation resources are on the east side of the state and pretty much all the load is on the west coast of the state.

Tim Hade [00:11:46] And in order to get from where the electricity is generated to where it’s used, you have to run a series of transmission wires over forests that have been in the midst of a thousand year drought. So that is not a recipe for success, Right? When the wind blows, power lines fall over. When power lines fall over in areas with hundreds of millions of dead trees, fire start because of the way the legal structure works in California, utilities are liable for 100% of the cost associated with starting those fires.

Tim Hade [00:12:16] And so what that means is the utilities are going to have to invest billions of dollars to harden their transmission and distribution system. Those billions of dollars are mostly going to be rate based, which has a direct impact on customers bills. So customer bills are going to continue to go up in the short and medium term as the utilities do all this work.

Tim Hade [00:12:36] And then it also means that reliability is likely to go down because at the end of the day, the only foolproof mechanism that utilities have for not starting major fires is turning the power off. That’s a construct called public safety Power Shutoffs California, which I think most Californians today are aware of. But it’s actually when it’s too humid and the wind’s blowing too fast, utility shuts the power off to make sure that they don’t start fires.

Tim Hade [00:13:01] And so once you start pricing in the economic losses of those types of outages, making the economic case for a distributed energy system becomes a lot a lot easier to do. So generally speaking, right, we will build a system that sort of has an equivalent cost of about $0.20 a kilowatt hour. That’s using solar storage and in a lot of cases, dispatchable standby generators to backup that system.

Tim Hade [00:13:29] And retail prices right now for a lot of people in California or north of $0.25. And so that’s really the economic case right there now, especially if the cost of retail electricity continues to grow at the pace it’s been growing in the next five, ten years. I think that’s where people really believe that California is going to become kind of the first major economy in the world to move towards a more distributed electricity grid. And that’s one of the reasons where it’s a major market and we’re out here trying to help make that happen.

Stuart Turley [00:14:00] Tim Great discussion here now,in a discussion point when you’re sitting here. Let’s take Hawaii as an example. And if cannot, get natural gas or oil, coal or anything. Renewables do make sense and they’re basically on a microgrid anyway, you know, on each

Tim Hade [00:14:18] 100%. Yeah.

Stuart Turley [00:14:19] For that kind of a thing. So when we drop in a microgrid and go to that distributed system, I love that. That’s a lot easier to get funding in each grid area and focus on those and then tie those in. Is that I understand that correctly?

Tim Hade [00:14:37] Yeah, No, absolutely. I mean, I think, you know, when you started thinking about the best business cases for microgrids, rural and isolated applications to include island nations and island states are very high on the list. Right? It makes it makes a lot of sense to deploy these systems in places that have traditionally. Poor, unreliable, expensive utility grids. And there tends to be a very high correlation between the worst utility grids and islands. So, yes, that’s a good place to start.

Stuart Turley [00:15:14] Okay. So if you’re sitting here and you’ve got a kilowatt per hour, Don Dears Book he went through I love visiting with authors and stuff. Clean energy crisis here on the lists of kilowatt hour. And I work with some of the Bitcoin mining guys on stranded gas there in the $0.03. You know they’re there. They’re getting down in there.

Stuart Turley [00:15:41] If you’re in the $0.20 per kilowatt hour that’s under you’ve got a trapped grid price that you’ve got to pay in order, you know, to go through that. But if you everybody else is paying $0.25 and you understand you’re paying for extra resiliency, that makes a little more sense and paying for that resiliency. Is that a fair For sure.

Tim Hade [00:16:05] I mean, look, I think I think when we talk about, you know, electricity economics specifically, right. It’s really important to differentiate between the difference between wholesale prices and retail prices. Right?

Tim Hade [00:16:17] And, you know, when you talk about, you know, $0.03 a kilowatt hour for natural gas or, you know, three sides of kilowatt hour for solar or whatever the case might be. Traditionally, when people talk about that, they’re talking about the cost of generating electricity.

Tim Hade [00:16:31] And for people worried about electricity economics, the focal point really shouldn’t be on the cost of generation. Right. That’s headed down and has been heading down for decades and fluctuates a little with by chain issues and, you know, natural gas, commodity prices and things like that but generally speaking, I think the trend on the generation side is really clear.

Tim Hade [00:16:53] The problem we have from an electrical infrastructure standpoint is how do we get the kilowatt hours from where they’re made to where they’re used. And that’s typically what you see on your utility bills show up as transmission and distribution charge.

Tim Hade [00:17:06] And in a state like California, roughly 70% of the average consumer’s bill is T and chargers. It has nothing to do with the cost of generating electricity. It has everything to do with the cost of delivering electricity from where it’s generated, where it’s used.

Tim Hade [00:17:21] So like the analogy people sometimes talk about is like the cost of generating is like what you pay for your car. The cost of transmitting and distributing is what you pay to drive on the highway. And in in the case of electricity, the cost of driving on the highway is a lot more expensive than the cost of the car.

Tim Hade [00:17:39] And so that that’s sort of a trend that’s starting to really materialize and some of these, you know, sort of fringe cases. Right? California being, I think, the sort of poster child for this. Right. But it’s it’s a trend that we expect to really continue to happen nationally.

Tim Hade [00:17:57] And when that’s the case, and you’re talking about beating retail prices, not beating wholesale prices, that’s where the case for a distributed energy resources is. An asset class really start to become very attractive when you’re thinking about it from a retail perspective or from a wholesale perspective, rather. There’s still big economies of scale.

Tim Hade [00:18:17] So it’s cheaper to generate, you know, a solar kilowatt hour as part of a 200 megawatt solar field in the desert than it is to generate that kilowatt hour on your roof. But when you price in the cost of transmission and distribution, it’s oftentimes cheaper to generate it on your roof, if that makes sense.

Stuart Turley [00:18:33] It does. Now, in the United States, there’s if I understand correctly, there’s three main sections. Then you have the balancing authorities by the power from each area. And then you have power stations that are being paid when they’re on standby and they’ll use that.

Stuart Turley [00:18:53] How does a microgrid fit into a balancing authority when you’re trying to? Because they’re going to pay you for stand by a power.

Tim Hade [00:19:02] Yeah.

Stuart Turley [00:19:02] And if you’ve got storage or you because that goes back into the economics of that storage on the grid. And solar and wind can’t do that because a balancing authority can only pay them when the wind is blowing or the sun is shining. Right? Did I get all that right?

Tim Hade [00:19:20] Yeah. Yeah, for the most part, absolutely.

Stuart Turley [00:19:22] Okay. For the most part, that’s a compliment and I’ll take it.

Tim Hade [00:19:27] I mean, I mean, just for. For those of you who are listening. I mean, what Stu just described in 2 minutes is one of the most complicated systems in the history of mankind. And so it’s impossible to give, like, an accurate summation. 2 minutes but that’s about as good as you can do.

Stuart Turley [00:19:43] Okay. Well, thank I will bless you. I will take that because.

Tim Hade [00:19:48] I think I think to your question right, how we have traditionally done this is we’ve just circumvented the process. Right. So what we’ve said as as distributed energy resources community is it at least in a microgrid space and this is a little bit different in the residential space.

Tim Hade [00:20:04] But in the microgrid space, our general approach to it has been we’re just going to take a load off the grid. Right? So we’re going to provide our customer or let’s say our customer has a peak demand of one megawatt working. We’re going to provide them with 500 kilowatts of steady state power. That’s going to come from a combination of resources, but it’s always going to be 500 kilowatt. kilowatts and so therefore you only need to get 500 kilowatts from the grid now. Right?

Tim Hade [00:20:28] Now that’s a very inefficient way to design these systems at scale and a few years ago, FERC, which is kind of the governing body for the system that Stu just described, issued an order called 22-22.

Tim Hade [00:20:42] So FERC 22-22, which basically ordered those independent system operators to come up with plans for how do you incorporate these distributed energy resources into the broader grid. Again, that’s a vast oversimplification, but for the purposes of today’s conversation that we can kind of leave it there.

Tim Hade [00:21:01] But yes, exactly what you’re talking about happening is now happening where we’re having conversations with different balancing authorities, utilities, independent system operators to talk about, okay, you know, if we have some extra capacity in our microgrid and the grid needs capacity, how do we deploy that capacity to the grid, lower the cost for everyone, and how do we get compensated for that as a distributed energy resource provider.

Tim Hade [00:21:29] And there’s starting to be some progress. You know, I think that, you know, one of the challenges with the electricity system in general is it’s incredibly bureaucratic and everything takes a long time to happen. Right.

Tim Hade [00:21:42] And so I think, you know, that order was issued in 2020 not as much progress has happened in terms of actually having meaningful change happen over the past three years, as we would like to have seen. It’s kind of been a slow moving process. There’s been a lot of pushback in a lot of different areas from regulators, utilities, you name it as well, as well as our industry as we’ve been kind of trying to weigh in on this stuff as well but we’re starting to see progress.

Tim Hade [00:22:12] And so, you know, at this point in time, CAISO, which is the California independent system operator New York ISO, have made real progress on these issues. ISO New England, PJM organizations like that aren’t far behind.

Tim Hade [00:22:27] And so I think we’re starting to get to a point where aggregated distributed energy resources, which is kind of the buzzword the asset class have a path to providing real value when the grid needs it. And that’s a, you know, a market ecosystem that I think is going to continue to evolve over the coming decades.

Tim Hade [00:22:45] But, you know, the good news is that technically it’s 100% viable to do. It’s really just a conversation about economics and how we’re going to compensate independent power producers like myself for providing those services to the grid when the grid needs it. And so, you know, it’s a long conversation there’s a lot of moving parts, but I’m very optimistic that we’re going to find a resolution and continue to build on that over the years to come.

Stuart Turley [00:23:10] I got more questions down here. Brilliant, because I love you. I’m sitting here thinking in my old head, I keep thinking of all these questions. Maybe one day I’ll get a crayon and start right now. But when we when we sit down and take a look, you’ve got a question coming up on supply chain, because you may have a deal.

Stuart Turley [00:23:31] How are you going to get transformers or how are you going to get things? Let’s start with that question first. Let’s say that a tribe or a disparate, disproportionately impacted community, says Tim go aint there are supply shortage come all this stuff?

Tim Hade [00:23:47] Yeah, 100 100%. So look I think you know this is not specific to distributed energy resources though our industry has absolutely been impacted by this supply chain. The global supply chain right now is a mess. And, you know, regardless of what you’re talking about, whether it’s transformers or switch gear, solar modules, gas generators, alternators, whatever you can kind of think of, we’ve seen weird times double or triple over the past 18 months. So, you know, pieces of equipment that we used to get in 20 weeks are now 60 to 80 weeks of lead time.  it’s a very, very tough environment.

Tim Hade [00:24:26] Now. I think, you know, as I when I think about like sort of energy markets in the energy transition, I try to think about things over a long time horizon. Right. And so, you know, I think that, you know, over the next 20, 25, 30 years, there’s a very compelling case to make that, you know, distributed energy resources are going to grow at at a really unprecedented clip and are really going to be sort of the backbone of the 21st-century electricity system.


Tim Hade [00:24:57] If you think about that, over a three, four or five year time frame. I think it’s going to go a lot slower than people anticipate because of a lot of the suppl chain issues that you brought up. And so there are a lot of good things happening. Right. So the Inflation Reduction Act, as an example, allocated billions of dollars to standing up domestic manufacturing capabilities to deal with a lot of the critical CapEx, what we’re talking about today, those plants are going to be built and they’re going to come online. But it takes time to build a factory, it takes time to commission a factory, it gets takes time to get it working. Right. And so, you know, whether that happens in 2025 or 2020.

Stuart Turley [00:25:38] To get it permitted.

Tim Hade [00:25:38] Yeah, you know, that that kind of that kind of stuff is is very much up in the air. And so, yeah, look, I think at the end of the day, right. There’s a lot there’s a lot of movement throughout the industry to correct this problem.

Tim Hade [00:25:52] I don’t think it’s easily correctable problem, I think it’s going to take time. And so I do think there’s a lot of reason to be concerned about the deployment of these types of assets over like a 3 to 5 year time frame, if you think about it over sort of a longer term, right? I think the trend is a lot more stable.

Stuart Turley [00:26:12] And that’s a great answer because my head hurts when I think about trying to get this stuff. You know, a nuclear reactor cannot be even. It’s been they’ve been 15, 20 years just to even get permitted. And then this weekend we had to power plants go bankrupt back up east because of the fines that they got fined in December because they didn’t have enough power in order do. I mean, we’re talking some serious problems here.

Stuart Turley [00:26:43] I interviewed Adriene Latto she was the as the be the grid security with the American public power. It just went out just here and they were saying that it could be two years for some transformers if we had a big enough problem go out.

Tim Hade [00:27:00] Yeah. You know, it’s it’s it’s one it’s one of the things that I think not a lot of people appreciate. And I think part of this is human nature. But you know, the Electric Grid that we rely on today is very fragile, a lot more fragile than I think people would like to admit. If you care to learn more about this, my favorite book on the topic is a book called Lights Out that was written by Ted Koppel, the old Nightline anchor.

Stuart Turley [00:27:26] Oh, yeah!

Tim Hade [00:27:27] Yeah. So he he wrote a great book about this called The Lights Out, and it definitely kept me up for a few weeks. You know, I think I think ultimately, you know when you look at, you know, a lot of the critical infrastructure on which our grid is reliant, there aren’t ample spares. Right? And so if we have a problem or whether it’s a physical attack or a cyberattack or a natural disaster, there are certain critical junctures borrow your grid that if they’re damaged, it could take months to fix. Right?

Tim Hade [00:27:57] I mean, we saw that with the winter storm Uri in Texas a few years ago, right where the grid was like right on the edge of basically blowing up and it could have taken months to repair. That would have been a humanitarian disaster of fairly unprecedented scale.

Tim Hade [00:28:15] And so, you know, I think ultimately, you know, part of the challenge when we talk about the energy transition is, you know, how do we price risk like that into our economic decision? You know, typically when you talk about, you know, public utility commissions and ratepayer advocates and folks like that, they get very, very focused on cost per kilowatt hour as a metric,. Assuming that cost per kilowatt hours, prices in all these extra now but it doesn’t.

Tim Hade [00:28:43] And so, you know, you can make a very compelling argument that definitely in certain areas of the country, people should be willing to pay a premium per kilowatt hours that deliver a more reliable and resilient power.

Tim Hade [00:28:56] That mechanism mathematically doesn’t exist in cases today and it’s one of the reasons that I think personally that a lot of public service commissions make mistakes in terms of how they procure energy. But, you know, again, that’s a that’s a conversation that’s happening at sort of the highest levels of the regulatory environment and, you know, hopefully there will be some evolution.

Stuart Turley [00:29:22] Economics In ERCOT. We have a Brazilian that’s a technical term. I went to Oklahoma State University, so a Bazzillion is actually a fifth member.

Tim Hade [00:29:32] Boone Pickens.

Stuart Turley [00:29:33]  I love you, love Teboon and boy, he’s been nice, though. As you know, all these wind farms are out in West Texas the transmission lines were several billion dollars to get those transmission lines back. So a microgrid is distributed distribution line.

Tim Hade [00:29:53] Yeah.

Stuart Turley [00:29:53] Thank you. Is getting that piece of the puzzle out And then they are power sources are closer. And that makes it easier for cutting the costs down for that microgrid depending on how the budget is put in.

Tim Hade [00:30:10] That’s exactly right. I mean, one of one of the reasons that, you know, people are bullish about microgrids with distributed energy more broadly is that we are not reliant on transmission lines and transmission. So, you know, if you think about sort of the energy transition, it’s pretty clear that the biggest bottleneck right now is the ability to expand our transmission system, build out transmission lines.

Tim Hade [00:30:35] Interestingly enough, one of the reasons that that happened in Texas is because ERCOT is unique, right?

Stuart Turley [00:30:41] Right.

Tim Hade [00:30:42] And so you can build a transmission line from West Texas to Houston with on a relative basis, very little bureaucracy.

Stuart Turley [00:30:50] Right.

Tim Hade [00:30:50] If you try to build that same line from Oklahoma to Memphis, it’s a problem, right? because of eminent domain issues and a lot of other sort of political things that go into it. And so, you know, that’s the situation we’re in right now where there is a queue of clean energy projects that are trying to come online but are unable to because they don’t have access to the transmission system.

Tim Hade [00:31:14] The only way to solve that problem is to expand, expand the transmission system. And expanding the transmission system is one of the hardest things to do in the infrastructure world, right?

Tim Hade [00:31:25] And so, again, there’s progress being made on that this has been a focal issue for the Biden administration. Secretary Granholm has been working on this. You know, the folks at the DOE, the folks at FERC are working on this, but there hasn’t really been a resolution.

Tim Hade [00:31:40] And so, you know, ultimately, I think that, you know, in some ways, distributed energy represents a hedge against what happens if we can’t do everything with the transmission system that some of these, like very fancy academic models say we need to do to transition to, you know, 80, 90, 100% clean energy.

Tim Hade [00:32:01] And I think, again, you know, that’s that’s one of the reasons that we’re fairly bullish on the asset class is because, you know, we’ve talked to a lot of people who have tried to build transmission systems and it’s not an easy endeavor.

Stuart Turley [00:32:13] Now, modular nukes really make a lot of sense to drop into micro-grids. I mean, wouldn’t that make sense?

Tim Hade [00:32:22] Yeah, I mean, you know, it’s it’s it’s, I guess, somewhat of a controversial topic. And to be perfectly honest with you, I don’t have my mind made up on it. Right. I mean, I think I guess the first thing to say about SMRs, you know, we only really look at technologies that are commercially available today. Right?

Stuart Turley [00:32:43] Right.

Tim Hade [00:32:43] And so I don’t spend a lot of time thinking about SMRs because there’s no vendor I can go out and buy and smart for. That’s even got a chance of being permitted. Right. And so I think, you know, like we talk about with traditional reactors, the the question for the smaller community is how are you going to get around the permitting issue? Right?

Tim Hade [00:33:05] I typically, in order to make money, need to be able to build and commission a project in 24 to 36 months. And so if there is a five year permitting window on the front end of that, that I have to, you know, navigate in order to get an asset more commission like it’s kind of a deal breaker for for us from an economic standpoint.

Stuart Turley [00:33:25] You can’t do it

Tim Hade [00:33:26] Look, I think when you think about it from a technology standpoint, from, you know, the baseload properties that it provides to an energy system, then the fact that it is, you know, carbon free, sustainable electricity. I’m a huge proponent of like the idea of SMR. The question is how practical is it?

Tim Hade [00:33:45] And that’s something that, you know, I don’t really have a view on other than to say I’m rooting for it to happen. But, you know, when it happens and how people in that industry are going to be able to navigate that bureaucracy is I don’t really have a clear view on. So that’s kind of where I think the barriers today in the market.

Stuart Turley [00:34:04] The okay, the infrastructure bill and the Inflation Reduction Act, you and I are talking about the single biggest problem in the United States and nobody is really talking about it, and that is the grid and both of those there’s only $36 million in there for grid replacement or upgrades.

Tim Hade [00:34:30] Yeah.

Stuart Turley [00:34:31] I mean, how do we get I mean, we’re printing money like you wouldn’t believe, which is increasing inflation, but there’s zero backbone money in how to get that grid fixed. Does that make sense?

Tim Hade [00:34:45] Yeah. So, look, I mean, I was pretty involved in both the IIJA and the IRA. I followed it closely. I tried to provide input where I was able to provide input. And I think, look, I think that at the end of the day, right. What you’re saying is fundamentally correct. Right. Which is in some ways, both the IIJA and the I.R.A. are kind of like bringing a knife to a gunfight. Right. Use kind of that analogy. Right?

Tim Hade [00:35:13] You know, I think if you really understand what’s happening globally when it comes to the intersection of energy, infrastructure and climate change, this is, in my opinion, the biggest problem the human race has ever faced. Right? And I think in a lot of ways, our ability to continue to flourish and leave a better world to our kids than we inherited is fully dependent on our ability to respond to the energy transition.

Tim Hade [00:35:40] And so, yeah, my view is that there’s not enough money in this for anything. You know, you think about sort of the even the roughly $400 billion that was allocated to this type of stuff in the IRA, which, you know, on one hand is the biggest investment a government has ever made in sort of a climate bill globally. Right? So it’s it’s, you know, number one, in terms of the most important things that government has ever done to sort of combat climate change and facilitate the energy transition It’s still not enough.

Tim Hade [00:36:14] And I and I think there are a lot of people making that argument throughout the process. You know, work. I think ultimately what this came down to is that, you know, the way the federal government was, you know, represented at the time, there were senators who needed to vote on this, who were very, very concerned about the inflation issues that you raised earlier. And I that is not my area of expertise and I think they’re right to be concerned about that. I don’t know how much on a relative basis.

Tim Hade [00:36:44] But that was ultimately the tradeoff. Right? I think there were you know, there were people advocating for this to be a multitrillion dollar package, which in my mind would have been more commensurate with the scope of the problem. But, you know, we took what we could get. And, you know, I think some is better than nothing. And so there’s reason for optimism on that front.

Tim Hade [00:37:05] And then, yeah, look, I think, you know, the optimist in me says that, you know, a lot of these new technologies that are coming out of the grid, we’re pretty close to economic parity prior to the IRA and the IIJA and maybe those are just kind of the nudge that pushed them over the edge,.

Stuart Turley [00:37:22] Right?


Tim Hade [00:37:23] But yeah, I wish I wish it was more money and I think especially in terms of grid reliability and grid infrastructure, that’s probably one area that, you know, most underperformed in terms of, you know, the legislative focus on that and the amount of money that was allocated to.

Stuart Turley [00:37:39] I think the education process on this just quickly, going back to the small multiyear nuclear reactors, I visited with Thomas Jam, He was the co-founder of Copenhagen ATOMICS out of Copenhagen.

Stuart Turley [00:37:54]  super neat product that they have coming out. They’ve already got it running and that’s a reactor. And they’re going to be able to build starting next year, 360 a year small modular nuclear reactors.

Stuart Turley [00:38:11] So, Tim, if we can get that permitting things done two weeks ago, the DOE we put out and said 80% of the coal plants that are shutting down would be eligible for a small new nuclear reactor. So the DOE is already kind of primed we got these coming around the corner.

Stuart Turley [00:38:33] Boy, How do you help get that permitting rascal animal if the drdo is already you know, Department of Energy’s already got that rascal. Almost. cooked, it seems like you’re almost there to really blow the microgrid. Oh, look, I.

Tim Hade [00:38:47]  I think. I think one of the things that has been one of the most pleasant surprises over the last few years has been the performance of DOE since the administration changed over. So, I mean, I guess just to put this out there, like I’m not a partizan person, I came from the military. I don’t really talk about politics very much so I try to be like very objective about this stuff.

Tim Hade [00:39:12] But look, I think like the team that Secretary Granholm’s put together is staffed with some of the best leaders in the energy industry, people who really understand like the real world impacts and how this stuff actually works in practice and they’re doing some remarkable things right,.

Tim Hade [00:39:30] One of which is I think they are the most forward leaning government organization in the world when it comes to the proliferation of nuclear energy. And that is maybe not something that’s on the headlines of all the papers. Right. But if you actually, like, go and look at what they’ve been doing in the nuclear sector on the DOE Lunch Program Office is the reason that we just commissioned our first nuclear reactor in 30 years. I think it actually started producing electricity for the first time like last week there.

Tim Hade [00:39:59] I think being very aggressive on the SMR front there are doing a lot to build up our workforce in terms of the ability to build nuclear reactors at a predictable cost. There’s a lot of exciting things happening in the market.

Stuart Turley [00:40:12] Right.

Tim Hade [00:40:13] And again. Right. The room rate, the question remains like how are you going to deal with this permanent stop? Because to this day, if you want to build a nuclear reactor on pretty much anywhere in this country, you’re typically looking at a multi-decade fight with the local community, all the different stakeholders that are involved. And until that process changes, I think it’s going to be very, very difficult to make an economic case for new nuclear.

Tim Hade [00:40:41] Now, you know, the other side of this argument, right, is what do we do with existing nuclear? And I think that is a very obvious answer, which is we need to keep it running as long as humanly possible.

Tim Hade [00:40:52] And so where I do sort of get annoyed about this is when people talk about decommissioning existing nuclear reactors, that’s just like a loss for everyone and no one should talk about that. We shouldn’t focus on it. But look, I do think when it comes to, you know, talking about building new nuclear and the role it plays in the energy transition, we have to figure out how to get the permitting process to be more reasonable.

Tim Hade [00:41:15] And until we do that, there aren’t a lot of private sector businesses or investors who are going to take a chance on it. Right. That’s just kind of where it’s at. And so, you know, hopefully that’s a fixable problem. I know there are a lot of smart people working on it.

Stuart Turley [00:41:28] There you go. I’ll tell you, you know, it’s kind of like Diablo Canyon in California got extended. It’s roughly, what, 10% of the power in California. And then you sit back and take a look at some of the things brands we have to keep TIM you nailed a big point brand we have 90 some odd 92, whatever the reactors are. France has 50.

Stuart Turley [00:41:54] 25 of those are off line because they put any maintenance money in them. Oh, you got to pay maintenance on these things. And it is a cheaper kilowatt per hour because it’s steady. Now, the modular reactors and I love Thomas, so maybe we could hook you guys up because that would be amazing seeing your microgrid and theirs. It would be a marriage made in heaven. So.

Tim Hade [00:42:24] Yeah. No, look, I think again, you know, it’s it’s real it really exciting technical developments on that front. And again, it’s just a matter of how practical is it from a deployment standpoint. Right. And, you know, look, I think I think those are the questions people are asking in the market today. Right? There’s no doubt in the world that you can build a small modular reactor.

Tim Hade [00:42:46] Look, I think there are questions about the economic price point that you can build it at. Right. But it’s a it’s a known technology, Right. I mean, I think for those who doubt that. Right, like half of the U.S. Navy’s fleet runs on small modular reactors. Right. And and has been for 45, 50 years.

Tim Hade [00:43:05] And so, you know, it’s not a question of does this stuff work? It’s a question of how long is it going to take to get one of these sited in whatever community you’re trying to power. And, you know, unfortunately, in today’s market environment, it’s too long. And so that that’s essentially the problem that has to be fixed and again, you know, I think I think having conversations about it is is what we need to be doing at the highest levels of government and grid plan.

Stuart Turley [00:43:31] I’ll tell you what, Tim, I thoroughly enjoyed our conversation. I just love visiting about all sides of the energy aspect. We got about two more minutes. What is coming around the corner for your grid and then what’s coming around the corner for Tim?

Tim Hade [00:43:47] Yeah. So. So look, I think the thing I’m really excited about right now and the thing I’ve been spending a lot of time working on is the concept of what’s called the virtual power plant, which we kind of touched on when we were talking about sort of how do we aggregate microgrids together to provide grid services.

Tim Hade [00:44:07] But, you know, the one minute version of this is that, you know, if you build 50 microgrids in the same community, the value of interconnecting those together and operating them as one asset makes the sum greater than the part. Right.

Tim Hade [00:44:26] And so that’s that’s kind of that’s kind of the general concept of a virtual power plant is how you take a bunch of distributed energy resources, network them together and operate them. So they look to the grid like a standard central power plant.

Tim Hade [00:44:41] And so, you know, I think that’s the next iteration of distributed energy resources. And that’s what I’m really excited about and spending a lot of time on right now. It’s very tricky. Again, like a lot of the conversations, not as tricky from a technical standpoint as it is from a regulatory and a market operations standpoint, which, by the way, I think is a common. Right. A lot of the barriers to doing this stuff are business problems they’re not engineering problems.

Tim Hade [00:45:04] But, you know, that’s what I’m working on right now, trying to get over some of the humps on the business side of things to make these things work and be able to send them out into the wild. And so really excited about that. And I think it’ll be the next sort of big thing that comes out with our business. But we got a lot going on and, you know, it’s an exciting time to be part of this market and it’s so, so much fun talking about it and I really appreciate the chance to do so with your audience, too.

Stuart Turley [00:45:29] Okay. What’s the website for everybody?

Tim Hade [00:45:33] If you want to learn more.

Stuart Turley [00:45:35] Okay and I’m going to have your LinkedIn contact in there and we got people to reach out to you with any questions and everything else. I just truly enjoyed our conversation. Thank you for stopping by.

Tim Hade [00:45:49] Likewise, Stuart. Thanks for having me.



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