How Colorado Electric Customers Are Leading a Co-op’s Clean Energy Journey — Episode 159 of Local Energy Rules

Bryan Hannegan:

But my experience here at Holy Cross is like, it’s a whole other thing when you’re out there and you’re not only investing in technology innovation, but you’re thinking about regulatory innovation. You’re thinking about business model innovation. You’re thinking about customer service innovation. You’re thinking about the workforce innovation. You’re thinking about innovation across the entire dimension of who we are, and you don’t really get a chance to understand what those challenges are until they’re actually right in front of you. So let’s go ahead and do the 70%, the 80% that we know now. And let’s get to a point where we actually do have to really work on that last 10 or 20, and then all the great minds, all the great tools, everything we can throw at it. Gosh, aren’t we in a better space with respect to climate action if we’ve gotten to that point, instead of being paralyzed at present?

John Farrell:

When he attends electric utility conferences, Holy Cross Energy President and Chief Executive Officer Bryan Hannegan starts pulling out his hair when he hears utility folks describe their work as doing what they did yesterday. In our wide ranging conversation, he explains how cultural change was the catalyst setting this rural electric cooperative on a path toward renewable energy, a path that’s been so successful they recently accelerated their goal from 70% renewable energy by 2030 to 100% renewable. Brian joined me in June, 2022 to explain how the cooperative has been able to move twice as fast at half the cost on many of its clean energy initiatives. I’m John Farrell, Director of the Energy Democracy Initiative at the Institute for Local Self-Reliance and this is Local Energy Rules, a biweekly podcast sharing powerful stories about local, renewable energy. Brian, welcome to Local Energy Rules.

Bryan Hannegan:

Hi John. Thanks for having me.

John Farrell:

Well, I was hoping you could start out by just sharing a little bit about your path leading to Holy Cross. You know, how did you get into the position of leading a rural electric cooperative?

Bryan Hannegan:

You know, it’s a little bit of a random walk. John, I’m actually a weatherman and climate scientist by training and started off my career really focused on the natural science related to weather and climate and everything around us. Along the way I got distracted by the politics and the science and how they were intersecting. And I had an opportunity to finish my PhD and then go work on Capitol Hill as one of my first jobs as a staff member on the Senate Energy and Natural Resources Committee. I was handed a portfolio of energy efficiency, renewables, R and D oversight – a lot of things that really got me off in the direction that I’m in today with my career. That translated into a stint at the White House, at the council on environmental quality looking at environmental review of energy and transportation projects, but also energy policy more broadly during the George W. Bush administration.

I happened to be there at a time where we were starting to make the first significant federal investments in solar PV and wind and biofuels, and even exploring things like carbon capture and storage. So it was a really great time to kind of kick off a lot of things that are now really massively a part of the federal climate agenda. And that was great. But as you well know, you can serve in politics and policy, and it’s a really intensive sport. And when it came time for my wife and I to start a family, we said, hey, let’s find something else to do. I was fortunate to land with the electric power research Institute, with EPRI, had a nice seven year stint there in a variety of different roles, fossil energy, renewable energy, energy analysis, environmental science, and, and that got me into the utility industry.

About 2013, I was given a really great opportunity to move to the National Renewable Energy Lab and start up their grid modernization practice. We had a facility called the energy systems integration facility that was sort of a distribution grid in a box. And we were invited to plug all sorts of things into it, right? Solar panels and batteries and electric vehicles and hydrogen electrolyzers and, you know, kind of make it dance and sing like any grid under any condition, anywhere in the world. And it was super cool. Partnerships were a key there. And along the way, we began to partner with a number of utilities, including the one that I lead today, Holy Cross Energy. And that led into a conversation of, hey, you know, all this research is really great, but how about we do this on the operational side? And so in 2017, I made the jump to operations and it’s been fast forward ever since.

John Farrell:

That’s so great. So you come to this with really an incredible depth, both on the policy side and then the like practical and engineering side. That’s a, that’s an amazing pedigree to come into to running a small energy utility. Could you describe a little bit for folks, what’s the community like that Holy Cross serves?

Bryan Hannegan:

We are a kind of a, a slice of America. If you look at our demographics, we’ve got a significant population of income qualified and service economy workers that are supporting the local communities here on the Western slope of Colorado, about two hours west of Denver, along the I70 corridor, we serve from the town of Vale to Glenwood Springs, the town of Glenwood Springs to Aspen, and then some areas of Colorado south of I70 between Glenwood Springs and Grand Junction to kind of give you a sense of where we’re at. And so, yeah, we have the resort communities, the ski towns, the hotels, all of that. But we also have everybody that supports that. We have the teachers and the community activists and the moms and pops and kids, and what have you. So it’s a really eclectic mix. We’re about 50% residential, 50% commercial and industrial in terms of our sales. We’re about 3% the size of Colorado’s largest utility: Public Service of Colorado, Xcel Energy. Uh, and we’re about one 100th the size of the largest investor in utilities in the country. So when we do something, we sort of scale it up by a hundred in our minds to say, what would the equivalent be in a California or Florida or a Texas? Even though it’s small, it makes us feel better. <laugh> We serve, we serve about 60,000 delivery points about 46,000 people or companies together. And we’re the third largest cooperative of 22 in the state of Colorado.

John Farrell:

Just had to say that I appreciate you using the phrase delivery points instead of meters, you clearly have learned how to speak plain English to folks that are not in the industry. You know, one of the things I think is great about the story about Holy Cross’s work on renewable energy and, and true of so many of the co-ops that we’ve ended up featuring on our podcast like Kauai Island Co-op, I’ve actually got an upcoming interview with Delta Montrose, is the way in which a co-op, because it’s owned by its members can really involve them so much more or traditionally do involve them so much more in those efforts, in those kind of big strategic thinking and planning things. Could you talk a little bit about what it means to be a cooperative as a utility and how members have been involved in some of the strategic planning around the renewable energy goals that you have?

Bryan Hannegan:

Our thesis, our tagline is, you know, Holy Cross is your community. It’s your cooperative and it’s your choice. And within the cooperative, we want to offer a variety of choices to our member owners. I mean, they’re more than just customers. They’re more than just rate payers. They’re more than just meters, to your point earlier. They actually own us. They have an ownership stake in this. They receive a dividend payment every year for the capital that they invest in the cooperative, through the payment of their bills. They get, you know, credits on their bills or refund whenever that capital is no longer necessary. And we pay that back. It’s in the form of a patronage capital credit. They elect our governance, our regulators, they vote, they can stand for office and they can get involved themselves if they don’t like the direction, the way things are going.

In fact, that’s how I got here. You know, prior to my arrival, there was a large community effort that said, hey, look, we are interested in climate action as a region. And we know that every study out there, including some that I helped author way back when, starts with electrification and cleaning up the electricity supply as a means to decarbonizing the other sectors of the economy. And so unless we decarbonize electricity, we can’t go the rest of the way to taking climate action and getting to a more sustainable future. And so there was a concerted effort on the part of the community to put directors on the board that were focused on decarbonizing our electricity supply and those directors, when they have the opportunity to do so, hired me and charged me with a responsibility of making that happen. And their, their choice of me was deliberate based on, I think my history in working in low carbon technologies and electricity grids, to be able to have that support from the community, from the regulator, from the customer base, I think is key to having the kinds of transformation that we’ve been able to obtain in just a few short years.

John Farrell:

You, speaking of the transformation, the goal of the co-op was initially to do 70% renewable energy by 2030, and now it’s been increased to a hundred percent. What made that possible? And are there trade offs in being able to move so quickly to more renewable sources of electricity?

Bryan Hannegan:

You know, it’s really funny, John, yesterday we had our monthly board meeting and at the conclusion of the board meeting, we’ve got some, some news that will be coming that is related to our clean energy plans. Uh, my comment to the, to the board members was every time we set a goal, we seem to figure out a way to do it twice as fast with half the cost. And that was certainly the case. When we set our initial goals for 70% clean energy content by 2030, we were sort of in the mid thirties. And we were just starting down our journey to 100 now as we call it. And I think we, we knew we saw a line of sight with some changes in our wholesale power supply and some project development on our own footprint. We knew that we could get to 70, but after that, it was really sort of fuzzy.

And what happened was, is as we started to firm up those first steps of the journey, the rest of the journey in the direction became clear or clearer. And we said, Hey, you know, not only can we get to 70 and, and keep our power costs largely consistent with what we were planning to pay. Anyway, we actually think we can beat those power supply costs in our baseline. And we actually think we can go further and bring in more clean energy, given the prices of solar dropping by 80 plus percent over the last decade, the prices of wind and, and batteries doing the same thing over the last decade, sort of 70 to 80%. There’s an opportunity to do all of this in a way where it gets better the further that you go. So we kinda rolled up our sleeves and sharpened our pencil again and said, okay, we know we have a path to 70, but now we think we can actually get to a hundred percent.

Like a lot of utilities out there, that last 10% of decarbonization is gonna be really tough. And while we don’t know exactly how we’re going to approach that, we have a bunch of different ideas and I’ll be happy to, to chat more with you about those as they come about here in the next few minutes. But we really think that you shouldn’t let that last 10% be the enemy of the first 90, right? It’s like when we go on a hike, which we do a lot here in Western Colorado, we don’t look at the top of the summit and go, my gosh, it’s really steep. And then that’s why we stay in the car, right. We actually go on the hike and we get to a point where we either progress to the summit and get to where we want to go, or for whatever reason, we, we pause at a vista, take in the sites and then, you know, satisfy ourselves that accomplishment. I think with our community and the ethos that we’ve created here, we’re pushing on to the summit. And we’d actually like to be the first ones to get to the top.

John Farrell:

I love that analogy. I think it’s so helpful, especially cuz living in some of the social media spaces around clean energy, there are some folks that are really intently focused on that last 10% and like the technical issues. And it’s, while I really appreciate the people out there who are thinking about it, it really can paralyze you in terms of what you wanna do in the near term.

Bryan Hannegan:

Yeah. And, and our thought is let’s get to the point where those are problems or where they’re starting to come into focus because then you know, what I’ve learned over the years is that people learn best when there’s a direct relevance for them doing so. Right. We can talk about all these things in the abstract and what our models say and what we’ve seen in the lab and all of that. But my experience here at Holy Cross is like, it’s a whole nother thing when you’re out there and you’re not only investing in technology innovation, but you’re thinking about regulatory innovation. You’re thinking about business model innovation. You’re thinking about customer service innovation. You’re thinking about the workforce innovation. You’re thinking about innovation across the entire dimension of who we are and you don’t really get a chance to understand what those challenges are until they’re actually right in front of you. So let’s go ahead and do the 70%, the 80% that we know now. And let’s get to a point where we actually do have to really work on that last 10 or 20 and then all the great minds, all the great tools, everything we can throw at it. Gosh, aren’t we in a better space with respect to climate action if we’ve gotten to that point instead of being paralyzed at present?

John Farrell:

Oh man, I wish there were more utility executives that approached it from this perspective. I feel like so many of them are a more hesitant. I wanna follow up on one thing that you talked about in terms of like being able to shift your vision. You talked a little bit about having some clarity about like your wholesale power supply. And this is I think an interesting element we’ve seen across several conversations with cooperatives. So your wholesale supplier is Xcel Energy. When we did a report about eight years ago on rural electric cooperatives, we found that most of them are tied up in fairly long term contracts. Sometimes it’s sort of the co-op of co-op models, the generation of transmission co-ops. Tri-state in Colorado is actually sort of famously at this point involved in a lot of conflicts with some of its members around that supply. Have you had more flexibility than other co-ops and you know, has the, has your relationship with Xcel helped or hindered your progress toward clean energy?

Bryan Hannegan:

You know, John, that’s a, a great, a great observation. And even for those of us that are wholesale electric customers of an investor-owned utility or another aggregator, we can often find ourselves in these full requirements contracts where we have no other options but to buy the power at wholesale. And, and what that does is that exposes us to market risk, that we ultimately then have to pass on to our consumers and our member owners in the form of bills. And so I think a real imperative for all of us is that the relationship between wholesale and retail that we’ve had for the last century where all of our investments were in the form of these long lived centralized assets that were built because of an economy of scale. And they were primarily thermal and primarily fossil, right? The full requirements construct made sense at that point because you relied on your parent to protect you, to provide resource adequacy, to make sure that you had backstop energy and all of that stuff.

Holy Cross was fortunate enough, we were once a part of a now bankrupt wholesale electric cooperative G&T called Colorado U. It was a predecessor to Tri-state in many ways. A lot of the members of Colorado U, when it went bankrupt in the early nineties, went over to Tri-state and took on full requirements contracts. There, we took on a wholesale power supply agreement with Xcel. Four of us in the state did that at that time, but among the four of us, Holy Cross was the only one to negotiate the ability to purchase just raw wholesale energy from others at any point that it suited our interests. So we had the ability to buy it all from Xcel Energy, but we also had a contract provision that allowed us to buy it from a third party, a Black Hills, or as we see today, a wholesale market. And that turned out to be very fortunate, because what that allows us to do is to enter into purchase power agreements with independent power producers, where we purchase all of that energy from that project. So if, you know, for example, we’re looking at contracting for a wind energy project in Eastern Colorado that will be delivered on the Xcel transmission system. It will replace the requirements, contract purchases from Xcel and given the formula rate that they have at Xcel and the PPA contract, we actually turn out to have a lower overall cost by going with this wind energy PPA. And you can imagine how, if we do that over and over and over again, we can have a mix of utility grid connected resources, local clean energy resources in our footprint, like our solar plus storage projects that we have coming on this year, as well as market purchases and our relationship with PSCO – with public service Colorado.

So it’s, it’s a really neat way of hedging different sets of resources with different costs, with different load shapes. So we can take advantage of geographic diversity. We can take advantage of financial diversity and it’s paid a lot of dividends and, and my guidance to anyone that’s out there that’s a retail electric provider is that they should be trying to negotiate a similar sort of relationship with their wholesale supplier and wholesale supplier should be open to these kinds of relationships because if done right, they can benefit both the parent and the kiddo. We have done things together with Xcel Energy on our respective transmission systems, where we’ve worked together to improve the reliability of our respective grids. We’ve coordinated on distribution upgrades. Our distribution systems are intertwined and we support each other and feed each other energy, which we couldn’t do if we were in a rigid set of, you know, standard agreements. So I think it’s actually worked out really well. And now that they’re moving to clean energy, we’re moving to clean energy, we’re doing it together in a lot of different ways. They do innovations and programs. We pick it up and vice versa. To me, that’s what the modern compact between wholesale and retail needs to start to look like.

John Farrell:

How about that? You already brought up some of the local projects that you’re thinking about. I think on your website, it said that local renewable energy generation is about 13% of your supply right now. And then you had this document called a travel guide to your one hundred percent by 2030 goal. And you’ve already got a couple more like local solar projects, a goal about some more distributed solar. I think we already covered my initial question, which was, do you have flexibility to keep investing locally? It sounds like you do. Can you talk a little bit more, first of all, about just sort of like, what are some of these local projects that are in your utility footprint? You know, how do they fit in with the mix of other sources that you have and are you planning to continue to like ratchet up the amount of electricity that you generate locally as part of your overall goal?

Bryan Hannegan:

We absolutely are John and, and in fact, um, it manifests in one of two ways. One is more distribution-connected projects that are sort of five to 15 megawatts of capacity in size. We have a number of those existing projects already on the system, and we’re adding three more in the solar plus storage where they’re coupled together and we’re bringing those on over the next 12 months, including one just around the corner from me here in Glenwood Springs at a community college campus, Colorado Mountain College campus, where it’s four and a half megawatts of solar, 15 megawatt hours of battery coupled together behind the DC inverter. So that in effect it’s one power plant, but it has the ability to sort of throttle and break, right? We can push solar and battery onto the system. We can push just solar onto the system. We can push the solar into the battery and keep anything from coming on the system. And it’s a wonderful replacement for the gas turbine peakers that you, that you see out there that are sort of managing that last 10%.

I have to give credit where credit is due. You mentioned you’re talking with the Kauai Island utility cooperative, David and his team, the manager, David, and his team out there were kind enough to show me their solar plus storage projects at the end of 2019. And I, I literally came back saying we need those. They were able to make those units ramp up as the rooftop solar on their system ramped down. And you could just sit there in the control room and watch them. And it was just this beautiful thing. And I said, Ooh, I gotta get me one of those. Uh, so we actually have three projects, the CMC one, and then two 10 megawatt, 20 megawatt hour projects, that’ll deploy next year, one in Rifle and the other one at Parachute. So strategically located on our system. And I expect that we’ll do more of those.

Those add to a 12 megawatt biomass plant in the town of Gypsum, about 10 megawatts or so of distribution connected hydro resources, and then a three megawatt coal mine methane recovery plant, where we’re taking methane gas that would be leaking from an old closed coal mine. Obviously methane has a huge greenhouse warming potential. So to mitigate that, we’re actually taking the methane that would otherwise vent to the atmosphere. We’re capturing it, running it through a combustion turbine, standard gas turbine, creating three megawatts of energy. The resulting carbon dioxide has a lower greenhouse warming potential. It ain’t zero, but it’s certainly better than the methane. And one of the things that we’d like to do is to figure out, okay, how do we, how do we maybe capture that carbon and reinject it back into the mine at some point, we’ve got that project and we’ve got potentially one other like it in our service territory, near the town of Redstone, uh, which is along a long stringy distribution feeder that, you know, one false tree fall and a few hundred people are out. So wouldn’t it be great to co-locate this clean energy resource in a way that provides reliability and resilience as well.

And those projects are just the utility scale ones. We then have a number of other programs where we’re fostering, uh, investments in rooftop solar, and more distributed community-based solar working with our towns and our schools and our critical infrastructures. And then our individual members. We have a goal of establishing at least four megawatts of additional rooftop solar PV every year as part of our resource plan.

John Farrell:

I’d love to ask you about that just because at least famously in the energy community, you’ve got California right now talking about net metering policies. How do you compensate rooftop solar folks? There’s this, I’m not quite sure of the right way to contextualize it. There’s, there’s a, a robust argument about whether or not these are, these users are sort of a net positive to the system, or if they have costs associated with people putting solar on their homes. I will avoid editorializing too much my own perspective here. But I’m curious, like, how do you think about, how does Holy Cross think about having customers put solar on their rooftops? How do you think about those resources as they come on? What kind of compensation do you have in place for people who do solar?

Bryan Hannegan:

We, we just basically said, hey, you know, we recognize that our member owners want an option to put solar on their rooftops and on their schools and in their communities. And that in many ways, them doing so provides a useful plan B for providing electric service when our plan A of the distribution system isn’t available. And in three out of the last five years, no relation to my tenure, three out of the last five years, we’ve had significant wildfires that have affected parts of our transmission and distribution system to the point where we were actually worried about maintaining electric service to a large chunk of our population. And so it makes much more sense to engage our community and our members and say, look, let’s think thoughtfully about how we can continue to provide electric service using the infrastructure that’s already in place, but also augmenting it with strategically directed resources, both at a megawatt scale, but then also at a kilowatt scale and give people the option of choosing in investing in energy resilience, using rooftop solar using behind the meter battery storage, using smart electrification of the end use loads so that on the black sky days, when everything’s going to heck, they have the ability to stay safe and stay warm and protect their family, maybe even help their neighbors. But then on a blue sky day, they can participate in helping us manage the grid and get paid for it. Right?

Because at that point they’re operating similar to an independent power producer that’s providing services to us, the utility. And so our point of view is let’s have that transaction, let’s contract for that, whether it’s a, a certain tariff, whether it’s a capacity credit for the use of a resource, whether it’s, you know, something that’s based on what we think the value of solar will be. Obviously there are delivery charges associated with moving the energy from point A to point B that even the net metered rooftop solar customer needs to be part of compensating for. And we’re right in the middle of having that discussion right now with our board of directors about how our financial model needs to innovate in order to meet the innovation that we’re seeing on how we’re delivering and, and what our role is.

I think John, this, the heart of this is utilities have always fancied themselves as we are providers of electricity as a commodity. We’re selling kilowatt hours. And the reality is, as you know from your work, consumers have options other than us to get kilowatt hours. Retail competition, community choice, and now technology. What’s to prevent a Holy Cross member from going to the Lowe’s or the Home Depot and generating their own electricity? Nothing. So we need to look to that and say, how do we turn that challenge into an opportunity and allow them to help us provide reliable, resilient, electric service with the resources that they’re willing to bring to the table. And then a piece of this is for those that can’t invest their own resources in it, those that are low or moderate income, how do we, as a utility in our society, partners, put together the resources so that they’re not denied equitable access to the benefits of clean energy. Can we provide them other options? Can we provide no money down, 0% financing? Can we provide them with a package of incentives and rebates and programs that make it all worthwhile or that work in a multifamily housing environment? And so these are the challenges that when we look at our energy programs that we’re excited to take on.

John Farrell:

We’re going take a short break. When we come back, we talk about the role of economic development in the cooperative’s plans, electrification and equity, and why culture change might be the most important step in the journey toward clean energy. You’re listening to a Local Energy Rules podcast with Brian Hannigan, president and CEO of Holy Cross Energy, about its path to 100% renewable energy by 2030.

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John Farrell:

One of the things I wanted to ask you about was from the trail map document, it talks about economic development as one of the drivers behind your renewable energy efforts. Could you talk a little bit about why that matters to you as an electric utility?

Bryan Hannegan:

Well, I think it’s one of our core cooperative principles, right? Cooperatives were, were started by farmers and ranchers and residents that lived in places where the, you know, investor owned utility didn’t have economy of scale to get to. And part of the reason for electrifying was so that we could bring economic development to our region. That’s why TVA was built. It’s why the rural electrification act was enacted as part of the New Deal. And, and I think that ethos is still very, very valuable today because if we can provide not just reliable and affordable, but increasingly sustainable electric service, then companies and citizens who are motivated by environmental performance find us a preferential way to live and to play.

And so I think that as part of this, our mission is to try to figure out a way that we can help create an economic development opportunity for the regions that we serve so that, you know, to be blunt, if they’re consuming more electricity and we’re moving more electricity across the same size system, more or less, than the costs per unit of delivery go down. And if we’re work working on the wholesale power side to bring our costs down on the costs of the electricity that we’re procuring, and we’re looking to reduce the costs of our delivery through these economies of scale, then we’re keeping our bills low and affordable for the people that we serve. And that’s, that’s making it easier to decarbonize, which is for me, at least, the the ultimate goal.

The last thing I’ll say on this topic is we’re gonna be into a situation at very high levels of renewables where we got too much wind in the overnight, and we got too much sun in the midday. And so why wouldn’t we sit there, instead of paying a penalty for curtailing it, why wouldn’t we pay somebody an incentive to use it? And so, if I was an industry that was in the process of making something that I could just optimize my manufacturing runs, or my water treatment, as we’re doing currently with Eagle River Water and Sanitation District, if you can move some things around to take advantage of that low cost clean energy, and we can help you do it, then maybe you can upsize your facility. You can create new jobs, you can help the family stay here in this high cost area who would otherwise have to move out. And that’s a good thing.

John Farrell:

Yes. Feeds really right into what I was talking, interested in talking about around electrification, speaking of, kind of growth in demand on the grid. What do you see that looking like in terms of, you know, you, you kind of harken back to this very early in the conversation about electrification is key to climate goals. You know, for example, you know, we got electric cars, we’ve got electric services for buildings instead of, you know, things like natural gas for heating, but does it make it harder to reach your renewable energy goals if you have more electricity use?

Bryan Hannegan:

Not necessarily. I used the term earlier in the podcast called smart electrification. Dumb electrification would be if we allow all of our EV cars that are rapidly growing here in Western Colorado, we allow all those cars to plug in at five o’clock on the system peak and charge and make that peak peakier, right? Better would be to invest in workplace charging, working in partnership with our major employers so that those cars are actually charging during the day when they’re parked at the person’s, the owner’s place of work. And they’re soaking up all that excess solar that we’ve got during the midday solar peak for free maybe, or for a low cost, right. Better for the consumer, better for the grid, better for the environment. What’s not to like, right? Being able to run our water treatment, runs our hot water heaters overnight when we’re a wash and wind, you know, why not do that?

So I think electrification done correctly can actually help us optimize the use of the distribution infrastructure. It can help us move loads around and help us manage the imbalances that we’re naturally going to see from the inherent variability of the wind and solar resources that we’re relying on. It’s a question of how do you, how do you incentivize, how do you create those technology opportunities? How do you get consumers to adopt them with as minimal friction as possible? One click Amazon simple, you know, in my view. I punch it and I order it and it shows up and I plug it in and it works and it automatically communicates. And the next thing I know my bill goes down, right? That’s the kind of thing that I think we need to be innovating towards. If what we want is a participatory energy system where consumers have the opportunity to participate in operating their own energy systems and contributing to the energy system around them.

I say the opportunity because not all of us are gonna wanna do it. Some of us, you and me, we’ve got 14 apps. We love to manage those things. But, you know, for the single mom or dad with two kids in tow and dance schedules and soccer practice to go to, they just wanna set it and forget it, low cost. Keep my air conditioner on between 68 and 72, charge up my vehicle, use a hundred percent clean energy and keep my bill under a hundred bucks a month. Algorithms, you do it right. So we have to accommodate. And that’s the other thing that I really love about this industry is that we used to say rate payer, right? We used to say meter and everybody was the same. They’re not, they all want different things from us. And as I like to say to my own staff, as many times as they’ll bear to listen to it, if we don’t give our members what they want, somebody else will. So we better, we better start doing it, right? Because we want them to stay our members. We want them to, we want to continue to enjoy the right, to serve this community and do what we do.

John Farrell:

You kind of talked about this before, and you’ve certainly mentioned it a number of times in our conversation, this concern about equity. We talked about it when it, when you’re talking about solar, for example, the access, you know, I’m able to have solar on my roof, cuz I could afford that. And I know other people can’t. Could you talk a little bit about how equity is incorporated into the cooperative’s vision? I was really interested, one of the projects I read about was your Basalt Vista project, for example.

Bryan Hannegan:

No, that that’s a great example at Basalt Vista. It was a, a project on the part of the community to provide for some affordable housing for our teachers and our service economy. Workforce Basalt is a, I hate to use this phrase. They may bristle at it, but it’s sort of a bedroom community of Aspen. And the average home prices there have skyrocketed over the last several years to the point where it’s now $750,000 to buy an average, you know, single family home of decent size. And the teachers get paid 55 grand a year. So there’s no way, even with two teacher incomes, that they would be able to afford to buy a house there. So we get these great teachers, they come for a year and they’re like, oh, I can’t find a place to live. And then they’re off. Right? And, and our kids suffer as a result.

So the community said, hey look, affordable housing, big deal. Let’s see what we can do here. The school district had some land. The county contributed the improvements. Our local Habitat for Humanity chapter contributed the builders and the building materials and the sweat equity. And the owners got involved and holy cross employees went out and volunteered. And it was all going pretty well until the town said, hey, you know, I know you guys have put in a permit to extend a gas line to this facility. It’s not gonna happen. It’s gotta be all electric. And the folks turned to us and we’re like, what do we do? And I said, hey, we’ve got this really interesting opportunity. We had been doing some research with my old group at NREL looking at what a high DER future would look like. And just coincidentally, the area that we were studying was Basalt. And so we had been modeling our distribution system with PV batteries, electric vehicle charging, heat, pump, water heater, air source, heat pump. We’d been modeling homes in the lab. The devices were on the lab floor. We kind of were making it all work with controllers and algorithms and whatnot. And we thought, boy, this is a really awesome opportunity. If we donate all of these, you know, really expensive DERs we could potentially engage the teachers in a learning laboratory to help us understand how these things really operate in the real world. And the teachers were game, the partners were game.

And so the first four of the 27 houses at the Basalt Vista were all electric, eight kilowatts of PV, battery storage, blue ion lithium iron phosphate battery storage in the utility closet, the home heat pump water heater, air source heat pump, level two EV charger. Some of the teachers didn’t even have electric cars. Some of ’em didn’t even have cars, but because they had an EV charger and it was powered by their solar, they’re like, I’m gonna go get one. Right? One of ’em even named their cat Tesla. They were so inspired by the project <laugh> so, so we were able to gain a lot of insight into how to run our grid that warranted the donation value.

And what that’s taught us is how to structure programs for affordability. We learned that a rebate doesn’t really work if you don’t have the money to invest in the first place. So can Holy Cross invest that money as capital, a different kind of capital investment? And can we recover that over the course of a longer period of time on the electric bill, right? Can we provide battery storage as a service by saying, Hey, here’s the battery. We’re gonna install it. We’re gonna maintain it. We’re gonna warranty it for a, you know, 10 year period. You’ll make payments for that service on a monthly basis. And at the end of the 10 year period, you get the battery free and clear, right? So this is how you make it available, right? Similar to how we’ve invested in community solar. For those that don’t have rooftops, right? If you live in a multi-family dwelling or if you’re in a, you know, mobile home park or someplace where solar’s just not gonna work out, maybe, maybe we have a aggregated set of consumers and we build something nearby.

It’s actually what we’ve done in a place in the Eagleville Valley called point zero, where we’ve gone in and done deep electric retrofits of mobile homes that are occupied primarily by income qualified folks. And instead of each giving them one panel and saying, good luck, we’re actually looking at the land adjacent to the mobile home park for potential development of a true community solar project. And working with a company called PowerField that specializes in ground mount solar. We can actually engage the mobile home residents in going out there and installing the solar themselves that will actually power where they live and it’s right there and they can see it and potentially they could even own it in the future.

John Farrell:

That’s so cool. There’s so many different things in what you were describing there that are interesting. The one about the financing, I think is fascinating. We’ve been working for years now with some folks in Minneapolis to try to get the utilities here, to do that kind of on the bill financing for things. And especially I think the way that you’re perceiving it as these improvements as a resource to the system, like a battery, I think Green Mountain Power in Vermont is also doing something similar. This idea that, you know, the battery is much more than just like a backup for the customer. It can serve all these other purposes for the utility and still supply backup power to the customer. Just really intriguing the way that you’re thinking about that.

I’m kind of curious, I just want to throw something at you that I’ve been thinking about. I, a few months ago, folks from the nonprofit called HEAT out in Massachusetts were on a couple podcasts to talk about this idea of geothermal micro districts as a way to provide all-electric heating and cooling to homes. I suppose I would also supply water heaters. For example, what’s interesting about it, of course, is that it’s a very, you have to be very systematic about it. You have to, you know, go a whole neighborhood at a time. It doesn’t really make sense to just do one off. Is that something, do you think electric utilities ought to be looking at like getting into that business of sort of providing home heating and cool? I mean, you already provide the cooling, right? You provide electricity to power someone’s air conditioner, you power an air source heat pump for someone. Is that kind of thing, would it ever make sense for Holy Cross or another utility to look into?

Bryan Hannegan:

Well, I, I think John, if you look at the Northeast and you look at the European utilities in Denmark and Finland and Norway, there, there, there actually are thermal utilities that are very much like what we are as an electric utility and in our service territory where we are, you know, winter peaking and heating is a significant source of greenhouse gas emissions. There is a lot of interest in our communities about ways to electrify heat that go beyond simply a boiler swap. And here’s where some of my NREL experience comes to play. I ran the division that was called is called energy systems integration. We didn’t just call it grid integration because we were not just limited to looking at the electric dimension of energy. We also wanted to look at thermal. We wanted to look at fuel with hydrogen. We wanted to look at water and waste water. And more importantly, we wanted to look at the links between them.

So one of the things that we have been exploring for a while, and I think we’re getting close to doing some work on is how we can create a thermal version of a smart grid where the heat pumps and potentially heat storage. You know, we have a large ice rink for example, that rejects a lot of heat. Why are we throwing that into the atmosphere? Why can’t we capture that, put it in a pipe somewhere and, you know, downtown, Denver’s got district heating systems that Xcel Energy’s looking at saying, Hey, you know what, maybe instead of being a pain in the backside to maintain, maybe that’s a critical infrastructure that will help us provide heating services across large districts, similar to what you described.

The fun part here is if you come up with a way to store energy as thermal, then remember that wind that I have in the overnight hours, right.  That I don’t know what to do with, I can heat up a whole lot of hot water and store it for a few hours. And then when everybody gets up in the morning and takes their shower or starts to run their washing and, you know, dishwashers and whatnot, that hot water is waiting for them without that draw on the electric system. And so that helps me reduce some of the times of day where I’m in deficit, right? And so you can see this synergy between a smart electric grid and a smart thermal grid just as we do today, between a smart electric grid and a smart water grid with some of our water utilities, it’s out there for the taking. The question is how are we gonna build the business case? How are we gonna invest in the capital? Are the technologies ready? And those are discussions that are underway right now. And we’ve got a couple of communities that burn natural gas to heat their sidewalks and their public spaces to melt snow. And I’m like, okay, there’s gotta be a better way. So we’re working on that.

John Farrell:

I love that you brought up the water heaters as an example. I think it’s Great River Energy, which is a co-op, a G and T co-op in Minnesota has something like, I think they call it a gigawatt of connected water heaters. You know, they, they’re not necessarily storing the energy. They’re just sort of shifting the load. They’re saying, okay, we’re gonna have people preheat their water overnight when we have cheap wind. So it’s intriguing that that’s already happening, you know, and I don’t even know, this is probably even predating the smart grid. Right. It was just radio control.

Bryan Hannegan:

It’s amazing. It’s just amazing. It’s just on and off, right? Yeah. And now with modern controls, we can get a much, much higher fidelity, right. Zero to a hundred percent as opposed to all on or off. And when you multiply that now over millions of devices, you get a tremendous amount of flexibility in operating the demand for energy. And I guess that’s, that’s the, the big thing that animates me, remember I started as a meteorologist. So it’s a skillset that you know, fortunately for me, has now come back to haunt me, because I know how hard it is to forecast wind and solar. I know how hard it is to forecast the weather. And yet, wind and solar are the fuel that we’re using to run the system. And so instead of dispatching our supply side to meet this fixed demand, we’ve actually flipped the paradigm on its head, we’re going to be dispatching our demand to meet the available supply coming from the wind and the sun in a high renewables future. And that means we, as grid operators have to have a ton more flexibility across a spectrum of sizes; from watts to megawatts, from seconds to hours and days; and we need to outfit our grids of the future, both electric and beyond, with that capability if we are going to be successful.

John Farrell:

That’s a great transition to my last question for you which is you mentioned Kauai Island, David Bissell, I’m thinking about Kit Carson which recently got enough solar on their system to provide 100 percent of their daytime electricity. They’ve been leaders in renewable energy. What advice to you have for other cooperatives, for other utilities, about their clean energy pursuits?

Bryan Hannegan:

You know John, the thing that I’ve learned here with five years in the saddle is that the technologies are available, the business case is available, even in a lot of places the regulatory and the stakeholder support, the community support, is available. The thing that I did not expect when I came here, but I should have, is that when you are in an industry that has been doing the same thing for the same way for the last hundred years, the culture of the organization starts off from a place that’s resistant to change. And so if you’re a new leader or even an existing leader that wants to make the change, invest hard in changing the culture of your organization. Invest hard in developing a playbook that everyone, every employee can agree to. That can see their role in. That can get excited about. Diffuse some of the fear of the unknown, reassure that you’re not going to move any faster than you can without sacrificing the holy trinity of electric utility: safe, affordable reliable. To me, those are table stakes before you can even start to talk about sustainable, right? And if some point you start to see those wobble, okay, hang on, hang on, pull back. It’s about building trust, it’s about creating the culture, and it’s about making this an exciting industry rather than a boring one. I felt so fortunate that in the last three or four years we’ve brought on so many talented people coming from outside our immediate area. And when you ask them, why Holy Cross? You could work anywhere in the world! These talented engineers and customer reps and whatnot, they say I just love what you guys are trying to do and I want to be part of it. And as an employer and a leader, it doesn’t get any better than that.

John Farrell:

I love that. I think it’s so funny too because it makes me think of some of the stuff about banking regulation and the financial crisis, you know, banks, I actually want to be boring. But electric utilities in this time and this age, we really do want to be exciting because there’s so much exciting happening. And as you said before, and I just really love this, if you don’t offer your members a service that they could get somewhere else, someone else is going to do it. And so you have to be exciting. And so that idea of cultural change just seems so central to what you’re trying to do.

Bryan Hannegan:

And that’s the other piece, is be customer focused. Go and solve problems. Give your teams license to go figure stuff out. Somebody wants to put a large solar system on their roof because they can, and your regulations don’t allow for it, look at your regulations. Figure out how, right? And maybe you’re willing to take that larger system if it comes along with a sign up for the battery storage program that you’re offering that combines rebates and incentives and time of use pricing and now this thing becomes a grid asset rather than a grid liability. Just go and solve the problem because that’s what’s gonna make people happy and that’s what’s gonna get them investing in the climate action that we need today and in the future.

John Farrell:

Well Brian, thank you so much for taking the time to talk with me. It’s exciting to see the work you’re doing there at Holy Cross and to be able to share it with other folks who might not have been aware of all the exciting things going on. I hope that many many people will pick up the phone and call you after this to ask you more about what you’ve done, whether its from culture change or just technological stuff that you’re working on, or even that example of the affordable housing. I just, so many great things that folks can learn from in the work that you’re doing.

Bryan Hannegan:

Thank you John. We are intentional in doing things that we hope other people will ask us about, because when they ask, we also get the opportunity to learn from them and some of the great things that are also going out there. So all of us need to work together, it’s more than enough for any one utility to try to take on.

John Farrell:

Thank you so much for listening to this episode of Local Energy Rules, where I explored the success of Holy Cross Energy’s transition to renewable energy with President and CEO Bryan J. Hannegan. On the show page, look for links to the utility’s 100×30 Travel Guide and strategic plan, as well as some of its innovative program offerings like a utility-financed battery. We’ll also link back to ILSR’s 2014 report on rural electric cooperatives and several interviews with cooperative leaders, including Kauai Island cooperative CEO David Bissell, Kit Carson’s general manager Luis Reyes, and more. Local Energy Rules is produced by myself and Maria McCoy, with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear more powerful stories of communities taking on concentrated power to transform the energy system. Until next time, keep your energy local, and thanks for listening.