In this week’s Fireside Chat, we take the “X” out of Xpert. With their guest, Ross Williams of HES Solar, David Kruidhof and Dr. Bill Cardoso focus the conversation on solar radiation, and of course, how it is changing energy use for all of us.
Having just completed our solar installation at Creative Electron headquarters in San Marcos, CA, Ross was the perfect guest to address all the questions we have regarding solar power. Its an informative conversation including discussions of energy storage, electric cars, and electric cars as energy storage. If you don’t know how batteries are going to smooth the duck curve, listen in and get the answer here. Register for upcoming Fireside Chats with the Xperts and view our archives here.
All right, welcome back for another Fireside Chat with the Xperts. Today, I have Dr. Bill Cardoso with me again, and our special guests, Ross Williams, the CEO of HES Solar. Welcome gentlemen.
Good to have you guys here. So today we have a very interesting topic, very near and dear to us here at Creative Electron now. So the reason we have HES Solar here with us, after doing a lot of research and whatnot, looking into it, and different benefits and all that good stuff. We recently had solar installed on our building with the goal of basically providing electricity that we need to run our business. So HES was able to provide us with that. Pretty awesome. We’ll get into more specifics on that in a minute. So obviously, solar has been around a little while but there’s a lot of new technology in it, reasons that it’s the right time to be doing it and going forward. So we thought it’d be a good topic for us today with this Fireside Chat. So without further ado, Ross, why don’t you give us a quick introduction of your company, your history with the company, and we’ll go from there.
Awesome. Thank you, David. Yeah, so we are HES Solar. We’re actually celebrating our 20th anniversary this year.
So founder of the company opened it in 2000 or 2001, and actually in response to the Enron crisis and the energy crisis that whole vacuum created. And just the visionary solar was, if it’s small now, it was tiny back then. And he started it, he thought that this was the future of energy and built it ever since, and then I started in 2010, so I’m going on just past my 11 year anniversary. I’m pretty excited about that. And founder wanted to retire, so he sold the company to me in 2015. So I’ve owned it now for almost six years and I’ve been feverishly building it ever since. I’m just really excited about the future of solar and really renewable energy in general in this energy revolution that we’re currently in.
Then I read that you recently got some accolades, right? Was it last week or two weeks ago? What’s that about?
Yeah, so we are a partner of SunPower. They make the most efficient panels, and really the best panels on the market. They have a dealer conference every year and they’re national company. They have over 400 dealers across the nation. And every year, they select the best of the best, and they awarded us with the national dealer of the year for commercial.
That means of those 400 dealers, we are the best commercial dealer. So I was totally surprised and just humbled by this, and it’s pretty awesome, really amazing award for us. So we’re celebrating our 20th anniversary, and then that comes along in this super exciting times.
That’s pretty cool. Yeah, and like David said, I mean, there were several reasons why we went with HES and one of the things that really attracted us through HES was the integration you guys have, to where you can do service, you have everything in house, right?
You don’t have those subcontractors that at the end of the day, no one is to blame for anything. I need to ask about, of course, we are hopefully at the end of this pandemic, who knows how many more months it’s going to last, but how has COVID and the way that companies are, people are working from home and have fewer people in the offices now, how has that changed this blend of residential commercial solar installations for you guys?
Yeah, it was really interesting that the market in Q2 of last year kind of tanked, I mean, on the residential side, it just stopped, but it bounced back almost immediately. I mean, almost immediately. A lot of people were I think shocked and kind of like what do we do? And then realize that this wasn’t going to end their lives or anything. The people that maintain their jobs realized that their jobs are going to be there. So it bounced back super fast. And the residential market was actually stronger by the end of the year than it was in the beginning of the year, which is really interesting. So it came back feverishly. I think a lot of people to the point, they’ll spend a lot of time at their house and are doing multiple projects, not just solar, and couple of that with the fact that they’re home all the time, their kids are home all the time being homeschooled, they’re using more energy.
So that their bills went up and so they’re looking for ways to curb those expenses. The opposite is kind of true the commercial side, it’s a much longer life cycle. So, we actually had enough backlog to work right through the kind of depth that we’re tanked on the commercial side. The interesting thing though, because of that long life cycle, the gap is actually kind of hitting us now, businesses are unable to evaluate how they’re going to get out of this pandemic and whether or not they’re going to bring people back to the office permanently, whether they’re going to keep this remote style workforce going. And then for a standard office building, that’s kind of the issue, which is probably, I don’t know, 10% of our commercial business. On the manufacturing side, some people are just like, we can’t produce whatever widgets fast enough and so they’re just go, go, go, go, go. So those entities are still spending in there. They actually have more cash in their pocket than they did before. So there’s a couple of those that we’re dealing with as well.
Yeah, and also it helps, you don’t have as many people in the office, when you have construction going on and you have fewer cars in the parking lots, it makes it a little easier.
So I read something about the duck curve, what is that?
Okay. So the duck curve is an interesting phenomenon. So it has to do with the amount of demand and really net demand that’s on the grid. So even today, the curve of demand is kind of bell-shaped. So people wake up, they turn off their coffee pots, they’re turning the lights, turn their air conditioner, whatever, go to the office, turn all of those things. So demand goes up and energy is consumed up here. Without solar, that demand curve peaked at noon. Okay?
So, and then as the evening approaches, the demand goes down. That’s on the grid, and then people go to bed and that goes back to basically base load. So with solar, what happens is that because of the energy production is so high in the middle of the day, the net demand after solar is actually pretty low in the middle of the day, but then as more solar resources added to the grid as evening approaches and the sun goes down, that actual demand is increased.
So the challenge is making up for the amount of energy that the solar is producing as the sun go down and as more and more of solar resources are added to the grid, that’s exacerbated. And the really smart people that operate the grid, they saw this coming for the last about 15 years. They know that. Because this net demand issue, they have to have something like 20 gigawatts of energy resource that they can ramp in under an hour in the evening time.
So that’s just a huge, massive shift in how they produce energy and maintain the grid and make sure energy is available. So it’s been interesting. And one of the biggest solutions for that, the issue with solar is, it’s dumb, right? If the sun’s up, it’s producing energy. You can’t control it. There’s no way to turn it off or on. You can turn it completely off, but then what’s the point of having it?
It’s either on or off, it’s like a light switch. With the addition of energy storage, which the main function or the main option is currently batteries, lithium-ion batteries, the energy, instead of being a dumb resource, it can be stored in a battery and then deployed and charged as needed. So it’s more controllable and that’s kind of the next revolution in the solar energy world is making that energy dispatchable. And we’ve been working on that for a while, and it’s kind of one of those solutions to get us to what they call smoothing, the duck curve making it so it’s not 20 gigawatts in an hour.
And is that a distributed solution? Meaning that houses and business they’re going to have batteries and they smooth out that transition between of the peak consumption or is SDG&E and SCE and other comp, are they buying massive amount of batteries so they can quickly deploy for that hour?
Yeah, it’s both. It’s both distributed and utility scale.
So the utilities will buy massive battery. In fact, the largest one at the time in the world was just installed in Escondido, on SDG&Es grid.
Yeah, it’s massive. I forget the numbers, but yeah, I think they just got it operational in the last six months or so. And that’s probably been eclipsed by now, but yeah, so the utilities are installing massive amounts of batteries to help with this, but then also it’s distributed as well. Homes and businesses are installing these batteries, and you’re kind of naturally incentivized because the peak rate, the rate that you pay the most for energy is 4:00 to 9:00 PM. So instead of consuming that energy from the grid, you put batteries on your house, you provide that energy for your home from your batteries that you charged during the day, and so you’re not paying those high rates, and that function helps to smooth the duck curve as well.
Yeah. And that’s something that’s fascinating to me is that the pricing of energy, and how that’s changing with this new technology we’re putting on the grid, right?
So solar is already changed that equation, right? And then the other thing that I find interesting is, okay, I got home and then now I’m going to charge my car, right?
Where we can have two cars charging, I mean, three cars charging, and now their consumption, they used peak. In the middle of the day, is it now peaking in the middle of the night? Is the kilowatts going to be expensive at three o’clock in the morning now and not at noon? How is that changing with the way that we are at California, right? By 2035, I think is every new car in California is going to be electric. I mean, where’s all this power coming from?
Yeah, interesting. So you’ve talked a little bit about the pricing of energy. There’s currently three tiers in most the utilities, the major utilities. There’s off-peak, semi-peak and on-peak. In all those utilities, the on-peak rate is 4:00 to 9:00 PM currently. When I was talking about before all the solar resource got put on the grid, that was 11:00 AM to 6:00 PM because that’s when the real demand is not the net demand.
So 11:00 AM to 6:00 PM is when still today we’re using the most energy. It’s just there’s so much solar resource. So the pricing, it’s cheap during the day. The pricing is more expensive in the evening time. As I mentioned, as the sun goes down, the solar resource goes away and then you have to pick up all that load. So I anticipate that pricing to be divvied up even more. Currently, with the amount of EVs on the road, they actually incentivize you to charge at night. They give you massive discounts to charge midnight to 6:00 AM because energy is extremely cheap right now at that time.
But to your point as more EVs get put on the grid, they’re all going to be incentivized to charge midnight to 6:00 AM, and those prices will increase over time. There are some utilities, in fact, SCE has a really cool tariff that I actually love that has real time pricing. And so it actually has real-time pricing. And so instead of those three tiers, there’s no tiers. It just whatever the cost of electricity is at that time, the price will adjust automatically. And something that’s really cool with the solar plus energy storage solution is you can just what I call chase the peak. And wherever the pricing is the highest, build that algorithm into the battery, and it’s going to deploy energy as much as it possibly can during the high price period, by the time it gets over 30 cents discharge, discharge.
Is that something that’s available right now?
Because I know you guys provide you see all the Tesla batteries, the Powerwalls. And so is that something that the algorithm is already deployable?
It is, but it’s kind of experimental. It’s only available in SCE right now. SDG&E is working on one, but there’s a lot of rules and regulations around what you can, what you have to do to get on that tariff. So it’s not as I just described per se, that’s kind of how it wants to be in the future.
We’ll get there very soon.
Look, those listening, so SCE is Southern California Edison, SDG&E is San Diego Gas and Electric. So those two companies here in the Southern California. Now, I have so many questions. So if let’s say I have an electric car, right? So I have a massive amount of batteries on four wheels, right? So eight kilowatts what a Tesla has. So 80 kilowatts, that’s quite a bit of battery capacity, right, that on driving?
So let’s say next generation of EVs, you’re going to have 160, 200 kilowatts, right?
Yep, the Hummer has 250 kilowatt hours, the new Hummer is 250 kilowatt hours.
Yeah, but with the battery, you know it’s a Hummer, so it’ll last about five minutes. It’s insane. But anyway, so that battery capacity that I have, is it going to be a point where we change the model where the car itself will become this small mobile energy storage unit that I can charge in the office, where I can spend a day in the office, peak solar. So I’m charging my car all day long, then actually take this car home and I use that power to power my house at night. Right?
So is that something that you think it’s going to become reality at some point?
Yeah, I think so. This issue is mostly around politics. The technology is there. In fact, all Teslas, I think from 2018 till now on board have the ability to do that, other manufacturers as well. The technology already exists in the cars. The utilities for the politics comes in, they would need to agree to tariffs to accept the energy to be able to power their grid. But yeah, I mean, there’s a huge resource. For example, a Powerwall, a single Powerwall stores 13 kilowatt hours of energy. But to your point is a regular Tesla is 80 kilowatt hours.
So instead of putting five Powerwalls in your garage or something like that, you can use the energy from your car. Obviously, that’s your gas tank, so you didn’t want to deplete that entirely, but there’s still probably a 40 kilowatt hour margin that you can use, make sure you get your commute or run your errands, whatever you need to do.
Yeah. Well, at least I think it’d be interesting, even if it’s not fully powering the house at night, at least what might help smooth out this peak consumption curves we have, right? So you can distribute that capacity.
But we’re talking about real-time pricing that Southern California Edison has, right? And I’ll be remiss if we don’t bring up Texas, right? And all the sad things that happening now, right?
We don’t have to get into the politics of it because I don’t think it’s a rational debate if we go into the politics, it’s not worth it. But I know you are a student and an experts in the California grid and how green energy has been deployed in California, and what kind of adoption and penetration green energy has? And when I say green, I’m talking about the wind and solar. First of all, something like what happened in Texas, right. Can that happen here in Southern California?
Yeah. I mean, it’s possible. In fact, it happened just recently in the fall with the rolling brownouts that we experienced pretty much across massive swaths of the state, also weather related, whether it is wreaking havoc on our society, and it’s something that is pretty similar to what happened in Texas. I think the biggest difference is that the brownouts or the rolling brownouts were not as in California affect the major metropolitan areas as dramatically as in Texas. I mean, there’s cities like Austin, it’s completely black right now. They’re just down. So, that’s the biggest difference. The distributed resources though, can tremendously help this. You mentioned the politics, it’s funny they’re kind of blaming some of that on wind. That’s really not part of the issue. The issue is just the resources in general were limited, classic supply, demand supply of energy is very low, demands went through the roof.
So everybody’s 50 degrees colder than normal, whatever the delta is, and so it’s a supply and demand issue. When that happens, they can’t supply everybody with the energy they need. So they cut the resources. Very similar to what happened here in California, except here, it was more risk to turn. They were trying to, they cut resources, they cut the grid out when wind is high, or temperatures are too high because they’re worried about wildfires. But a distributed resource like solar plus storage. If the individual on their house has solar and storage, even if the grid is down, they can safely have energy and use energy on their property.
So this is a solution to the problem, not an issue. And it certainly having the resources on the grid don’t cause issues like this, they help them. So it’s interesting to see that happened. And I mean, if somebody had solar plus storage on their house in Texas right now, they’re probably pretty happy, not experiencing this outage. The amount of resource that the solar provides from distributed standpoint is relatively small in Texas. It’s relatively large here in San Diego specifically. The penetration here is pretty, it’s over 10%. Texas, I imagine on the distributed side, it’s probably less than one or two.
So there’s a penetration of function of incentives?
What drives penetration to be so different between here in Texas? Or is overall price of energy that, what’s in that equation that drives the decision making process for a homeowner, right? Or a business to invest in solar or not?
Yeah, it’s a lot about the incentives. Those are federal incentive that everybody gets regardless of your state. And that’s the bulk of it now. So that would apply to any business or homeowner that wants to go solar. And that’s a pretty good, that’s 26% and that’s a tax credit, dollar for dollar credit you get against your taxes. That comes right off the top of the price of the solar. So that applies in Texas or here, but California state is very bullish on renewables. The policy here for net metering is very strong, and I think that’s something that is driving that resource. So our energy costs here are high. They’ve always been higher than the national average. In some cases, double. In fact, I think we’re about double what Texas is.
So when you can offset that cost with solar, the return in the investment looks a lot better because you’re offsetting a higher cost. And so couple that with the tax credit here, I think the incentive to go solar here is a lot higher than other parts.
So is that the incentive, the 26%, that’s something was going to expire last year, or it’s going to change? How does that work?
Yeah, the investment tax credit is a federal policy, and it’s something that back in 2016, sorry, 2018, they created a sunsetting program. So it used to be 30%.
And then last year, 2020, it dip from 30% down to 26%, and then 2020 to 2021 is supposed to drop to 22%. But then one of the spending bills that was just passed in December, they kicked that out another two years. So it’s going to be 26% 2021, 26% 2022, and then it’ll drop to 22%. I anticipate with this new administration that’ll get kicked out even further. I imagine that might even go back up to 30% and stay there for a period of five or 10 years. I anticipate that to happen.
Yeah. What’s net metering?
Yeah, net metering is an interesting one. So net metering, it’s a state policy that allows, it basically drives the function of you’re producing energy and sending it to the grid, and it does two things. It allows you to interconnect with the grid. So the utility has to accept the energy that you’re providing. And then it also sets the way that they compensate you for that energy that you’re providing to the grid. And so here in California, the policy is very strongly, give you retail value for those kilowatt hours that you produce. And so if the cost of a kilowatt hour is 30 cents, they credit you 30 cents if you send that energy to the grid. That is just a fundamental policy that really drives the adoption here. Other parts of the state that aren’t in one of the investor on utilities don’t have policy like that. The utility will say, yeah, whatever energy you send to us, we’re going to get pay you five cents, four cents, something like that, and that just really eliminates the ability to make that return on investment as attractive.
So that’s how the whole utility and the state can actually drive adoption is by playing with the return on investment, right, curve?
They can make it more attractive for a homeowner to make that investment. So, I mean, what’s the future going to look like? I mean, we mentioned Northern California is trying to by 2035, well, I mean, that’s the mandate right now. At 2035, all cars are going to be electric, right?
It’s a lot of outlets, right? It’s a lot of plans out there. I mean, we’re talking about 15 years, right? 14 years.
It’s quick considering where we are with renewable energies, how we’re going to supply that much power to all these electric cars? Are we rely on a revolutionary discovering battery that will allow us to charge 200 kilowatts in five minutes? I mean, what are the pieces to make that 2035 deadline a reality?
Yeah, it’s huge. I think the biggest thing is infrastructure. I just actually took a road trip first time in my Model Y this past weekend, we went to Sedona and I’d never done that before, but we had to stop and charge twice each way, and I was worried about how long that will take and how disruptive that would be. But I mean, the car would drive for roughly three hours on a full charge, then you have to stop for 15 minutes, and you would do that anyway after three hours, especially with two little kids. They got to go to the bathroom and whatnot.
I’m surprised you’re able to go for three hours without stopping.
No, and no iPads. That’s the really impressive work
Wow, that’s very impressive.
Yeah, so now infrastructure is the answer, and Tesla has that infrastructure in place in most parts of the country now on the highways, but other manufacturers need to adopt that. So, if the car would charge at about 120 kilowatts, so it would get about 300 miles of range in an hour. Obviously, you don’t want to sit there for an hour waiting for your car to charge. So I think, having the infrastructure, just like gas stations now, there’s gas station on every corner, having a charger on every corner is what that needs to do it, but also increase the amount of charge the battery take in a short amount of time. So I think the holy grail out there is basically, what a fill up is with gas, right?
If you could fill your car up 80% range in five, maybe 10 minutes, I think that’s kind of where it needs to be for that massive adoption. That is a massive undertaking and that’s not even talking about the resources that the generation capacity that the grid needs to provide to be able to do that to provide that amount of energy. So it’s really interesting, but it is being worked on feverishly by companies like Tesla and Ford and GM. I know a few. So GM just announced, they’re going to be a 100% electric in roughly that same timeframe.
Right. Yeah, some companies, they fought California in the beginning. They said, how going to happen? We’re not going to buy them.
It’s like, we’ll do it. Well, if you say so, we’ll do it.
Yeah, it’s funny because once you have an electric car, especially when you power it with the sun, with solar, it’s wow, you won’t do anything else. It makes so much sense. It just feels right. And they’re so fast and there’s 10% or 15% of the amount of moving parts in an electric car, there’s so much simpler maintenances, insanely easy. You basically just have to rotate the tires and there’s so many benefits. And I think that the status quo is really the competition here and it makes it challenging.
Yeah. So I have to ask you, it seems that this energy production, distribution, equation has the generation parts with solar is fairly well understood and it’s moving along. The storage, it seems to be right now we have batteries, we hear about flywheels, we hear all the types of energy storage solutions. In your mind, you think batteries is the way to go for the future? Or do you see other storage technologies with some abilities to gain some penetration in the future? And I’m talking about house for the homeowner, right? I’m not talking about for the company that has a different set of investment criteria. Right?
And I’m talking about the homeowner, the business owner who wants some storage in their home or a business.
Yeah, I think…
I hope it’s a yes or no answer, Bill. It’s 10:30.
Yeah, the answer is yes. I’ll try to be under a minute or two on this. But I think the answer is batteries. But today’s technology is maybe not the correct answer, not the best we can do. I’ve read a lot about solid-state batteries and I think those are something that I know Tesla and other companies are working on that can take a charge really, really fast and they are super light relative to the lithium-ion batteries of today. What’s interesting about batteries is, for the first, they were invented sometime in the early 1900s, or late 18 or something like that. They didn’t change until 10 years ago. And now there’s just so much research and technology being invested in them. It’s really interesting to see how rapidly they’re changing. So I think the answer is batteries, but not today’s exact chemistry.
Yeah. Cool. See, right on time, David.
Right on time.
Nothing is , Bill.
All right, Ross. Well, thank you very much for joining us. A very interesting conversation.
I really enjoyed it.
Yeah, it was great. I really appreciated you guys. I mean, this is awesome.
Thanks for talking to us. Thanks man.
Yeah, and Bill, it always a pleasure to have you as well.
Well, thank you.
I have to say it this week. You got offended last week.