Solar Plus Storage Company Seeks to Disrupt the Status Quo — Episode 105 of Local Energy Rules Podcast

Anne Hoskins

You know, there are a lot of values that can be drawn from investing in solar and batteries. And that’s part of our challenge, you know, at Sunrun and in the industry is to be in those conversations so that people who are looking at alternatives and ways to protect themselves and be, you know, add to their security during outages, will consider, you know, solar and batteries.

John Farrell

How is the country’s largest residential solar company adapting to COVID-19? And how is battery storage becoming a bigger part of the business? Anne Hoskins is the chief policy officer at Sunrun and she joined me for a conversation in early May, 2020. We discussed the importance of battery storage, the impacts of COVID-19, and the policies that state regulators of the electricity grid need to keep in mind to capture the full value of distributed solar. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy.

Welcome to another episode of local energy rules, a podcast telling powerful stories about local renewable energy. This week, we’re talking about solar and energy storage in an era of coronavirus. And with me is Anne Hoskins, chief policy officer at Sunrun, the nation’s largest residential solar installer. Anne, welcome to the program.

Anne Hoskins

Hi, thanks for having me.

John Farrell

So I wanted to start off by just giving you a chance to maybe give an introduction to your, some of your background. You don’t just do policy for the nation’s largest residential solar installer, but you have a lot of history and expertise in terms of energy policy and I was hoping you could just share with us a little bit of kind of where you came from, uh, in getting to this position as chief policy officer.

Anne Hoskins

Sure. So I, I have had a pretty long career really in the regulatory sphere. I started out of law school, working on telecom policy, where I worked for Verizon and Verizon wireless, as that was sort of becoming a more competitive industry, particularly on the wireless side, during the 2000 decade. And from there, I transferred over to the energy world and worked to lead the policy and sustainability work of a large utility in a middle Atlantic public service enterprise group. And it was a very interesting time there as well, because energy companies like PSEG, like Exelon and others, were really pushing the importance of competitive markets as we had had restructuring that had happened in some of the States across the country. And I learned a lot from that experience. And after seven years, I left for a year. I spent a year as a visiting research scholar at Princeton. All right, then my graduate work and had really looked at issues relating to distributed energy and the questions of valuation of distributed energy at a time when, this was around 2012, 2013, or, you know, questions starting to arise around metering and around the burgeoning growth of distributed resources.

And from there, I was offered the opportunity to serve on the Maryland Public Service Commission as a commissioner. And that was really an incredible experience. I filled out an open term for three years. And during that time I saw a range of really important issues relating to investments by utilities and reliability, some of the challenges related to upgrading a very old, natural gas distribution type systems, as well as a major, a merger case, the Exelon merger. And so through that experience, I learned a lot about, you know, how regulatory advocacy works before commissions. What I thought was effective, what I thought I needed more resources and really came away with a pretty strong feeling that there wasn’t a level playing field for participants in regulatory process, particularly for new entrance, or newer entrance that didn’t have the benefit, a group of rate payers paying for them, it’s pretty expensive. And the certainly I certainly saw this in some of those larger rate cases and merger proceedings. And so it made me think about, you know, where, where can I go next after that to help, you know, advance clean energy as well as a more competitive and distributed energy system, which, you know, I really have come to believe through some of the cases that I participated in and my earlier experience – all the way back to when I worked on wireless telecommunications – of the importance of having of competitive alternative that can push for improved technological solutions and also pushing towards, you know, bringing resources closer to the people that are going to use those resources. So fortunately as I was ending my term or after I ended my term at the Maryland commission and the opening came up at Sunrun, and Sunrun is the largest residential, solar and storage company in the country.

I had been on the East coast my entire career. And so it’s been big for me to move West to the headquarters out in California to work for Sunrun, but it’s been a really incredible experience over the last almost four years now, because again, I’m here at a time of tremendous change and I’ve been really fortunate in my career to be at important organizations during times of change. We’ve seen in the residential solar industry and what that has meant for changing the service that we’re able to provide to customers and also changing the ability of so our customers to provide additional value to the grid and be part of a larger energy system. So it’s been kind of a long journey to get here, but it’s all really okay, I mean, valuable experience that I, I draw on all the time as I try to think about how we can continue to expand access to these resources.

John Farrell

Well, I’m super glad that you mentioned that Sunrun is a solar and storage company in kind of your background, because I wanted to ask you about a recent offering that Sunrun is doing right now, which is, you know, the first six months of your solar and storage installation, you only pay a dollar a month. And I just think it’s really interesting to learn more about, you know, are a lot of customers going for storage right now, is it kind of a California thing, or do you have customers everywhere thinking about storage? What role is that playing in the solar business?

Anne Hoskins

Sure. So, you know, as I mentioned earlier, the last couple of years, we’ve seen a very significant change in residential solar because of the ability now to combine solar with batteries where someone can, you know, have a battery in their garage or on the side of their house. And with that battery, they’re able to get a number of different values depending on, on the sort of regulations in the States that they’re in. They can get backup power, right, by being able to separate from the grid when there’s an outage, such as the power shutoffs that we faced in California last fall, or just a regular outage. That was also a big driver of value in Puerto Rico where we offer services as well. You know, they’ve had a series of real tragedies starting with Maria and continuing on through earthquakes, et cetera. And so having that battery has turned out to be a critical benefit to customers because having solar alone doesn’t allow you to continue operating when the grid is down. So the battery and advanced inverters were able to separate from the grid and customers can continue to have access to electricity. That’s been what you might consider a game changer in terms of the value proposition for customers who have solar, that they can have backup when they have a battery, but there’s other values that have also driven adoption of batteries. Time of use rates in California, where customers, solar customers now receive a much smaller payment for energy that they send back in the middle of the day to the grid, because there’s just a lot more solar energy and a lot more electricity available then. So by having a battery, they’re able to store that energy and use it later in the day when electricity is more expensive or send it back to the grid later in the day when it’s more valuable. So time of use management has become a very important benefit to customers in California.

And then we have another value of places like in Hawaii, where it was really the first state to have a significant uptick of storage demand. And that was because they had, their regulators had changed on net metering quite drastically a few years ago, such that it limited the amount of energy that customers could share back to the grid. And as a result that gave customers incentive to store the power and use it for themselves. And so, you know, fortunately Hawaii has revised some of those rules so that more of that valuable energy can be shared with the grid, but it was an example of where technology stepped in to ensure customers could get value from their solar by adding a battery. And then the fourth kind of value that we’re seeing right now is what we’re referring to as grid services, where we’re working with utilities with CCAs in California, with the utility in Hawaii as well, to propose ways that we can aggregate hundreds or thousands of batteries and solar systems, and use that power to either replace the need for a generation source, such as a dirty peaking plant, or use it to, you know, provide reliability resources that utilities are required to purchase or use it just as a source of sort of demand response and reduction of stress on the grid, right?

So there’s a lot of different types of grid services that we’re finding can be provided by having a controllable resource, which is what batteries are doing, right. They’re allowing us to take a resource that, you know, historically had been viewed as, you know, you have to use it as soon as it’s generated to something that can be stored and controlled and a used when it’s maximum maximized value. So that’s been really significant changes in a short period of time. And in the States where we’re seeing that happen, again, very much are driven on those factors like where those, either the rate structure or where there have been serious environmental impacts from climate change, you know, related impacts we believe. And those would be, you know, California, where we saw very significant demand for this last fall, in the wake of the power shutoffs, as I said Hawaii, Puerto Rico and Massachusetts is another leading state. You know, in Massachusetts, they have a generous incentive program through their SMART program. So, you know, generally our sense is that for storage to take off, you need to consider the rate structures, but you also need some type of incentive, unless they’re just in a very kind of drastic situation such as they had in Puerto Rico, right, where customers really didn’t have access to power for months and months. And customers realized that this was, you know, essential for them to invest in a battery as well.

John Farrell

Speaking of being in this like transformational time with storage, we’re obviously in a very odd time here with coronavirus, and I’m sure that that’s changed the business an awful lot. I was hopeful that you could give maybe one or two examples of how you’ve had to adapt in trying to sell solar to customers in this environment.

Anne Hoskins

The coronavirus took everyone by surprise, I would say, and, you know, has been, you know, raising very significant challenges for people’s health and wellbeing, most importantly, and also the economy, but also for how all sorts of different types of companies and service providers are able to continue to provide services to their customers. And so early on in this, you know, we recognize it again, you know, being headquartered in San Francisco, we were early, I guess, to seeing this issue. We closed our offices before it was required. We were, you know, concerned to set up systems and processes so that we could have the folks who work in offices, work from home, and then also looked at our operations. And for the most part, we had to close down all of our in-person sales across the country. A lot of the ways that we typically have sold solar and batteries have been in person, either in stores and retail stores like Costco or Home Depot or door to door, or, you know, in other ways of, of reaching people. And then, you know, when you get the interest from people, we would go to their homes and sit at their kitchen table and, you know, show them a picture of what we could do. And so that really had to change. And we changed very quickly. We adapted and took everything online and digitally, so that we were able to reach out to customers. We did have the advantage that customers are all at home right now. So most customers are, so we, we have seen that a great deal of interest and support from customers to participate remotely with us and to use the tools that we’ve created and to be part of the process, you know, perhaps customers will take pictures and share us know, share the pictures with us versus us sending somebody out to take the pictures. And so in some ways, you know, we have been seeing that customers have a little more time and, and are engaged in this process.

So we’ve been really pleased about the ability for us to reach customers. And also we’ve seen that because of the virus and the, the need for customers to shelter in place, I think customers are realizing, people are realizing how critical access to energy in their homes is. And so one of the things that I’m really concerned about in California as we approach wildfire season is that it will be quite devastating for people who are sheltering in place. Their electricity needs to be shut off in these PSPS events this summer, or this fall. If you can imagine folks who have run out and they purchased lots of frozen food and filled their freezers with it. And then they’re out of electricity for 24 hours or people who have medicine that needs to be kept refrigerated. All of those issues that we saw and we dealt with last fall, you know, it was customers were trying to find alternatives and you know, what we saw as some customers were coming for solar and batteries, but a lot of people I think still were not aware of the opportunity and then other customers were going out and buying these fossil generators, right? Which is very unfortunate. And we’re, we’re trying to get ahead of it and educate customers and work with utilities to make sure that when they’re sending information out to their customers, who are our customers as well or potential customers, but they include solar and batteries as an option because it is cleaner. And it’s, you know, it’s an option that, as I mentioned earlier, provides more benefits than just the backup. I mean, the backup will be very valuable when there is a power outage, but when there isn’t a power outage, it can use it for time of use. You can use it for grid services. You know, there are a lot of values that can be drawn from investing in solar and batteries. And that’s part of our challenge, you know, at Sunrun and in the industry is to be in those conversations so that people who are looking at alternatives and ways to protect themselves and be, you know, add to their security during outages, will consider, you know, solar and batteries.

John Farrell

You know, it’s interesting that you mentioned, you know, people buying diesel generators, because I think one of the lessons from places that you work, like Puerto Rico, was having a diesel generator wasn’t necessarily a good backup after hurricane Maria because they had to import all the fuel. And that’s something I think people forget is that, you know, diesel fuel is delivered to a gas station by a truck that has to be able to get there and it’s pumped the pumps run on electricity. And so there can be a lot of other barriers if you don’t actually have all of the resource in one place like you do a solar and storage.

Anne Hoskins

Yeah. It’s a really good point. When I was living in New Jersey and working at PSE&G we had Superstorm Sandy, we had a few other, I think hurricane Irene, a few other, very significant outages in the course of a couple of years. And I recall my own house being out for over a week and, you know, having to try to go to, you know, go into work and to deal with that. And, you know, my neighbor had a generator, it was incredibly noisy and made it hard to sleep, living next to them, but it also, you know, ran out of gas and we had many stories of lines of gas stations of folks trying to get this fuel. And, you know, that’s the, you know, one of the beauties about solar and batteries is that, you know, you use your solar during the day, you charge your battery, use the battery, you know, in the latter part of the day and evening. And then in the morning, the sun comes back up and you’ve got another source of energy, both for the battery and for your use. And it truly is renewable and rechargeable. And that is really different than what you face with these generators. And it also, you just have to step back again and ask, you know, what is the cause of these outages that we’re having? And the, you know, the climate challenges and, you know, spewing fossil fuel, you know, into the air is not helpful, you know, during this time. And, you know, I firmly believe that we really need to find more sustainable sources of energy and we have them and we have the technology now. And I think it’s an issue of us continuing to drive down the cost of solar and batteries working with forward-thinking regulators like we have, and, you know, California and Massachusetts and Hawaii to put together effective incentive programs. And then, you know, working with the public to understand that they have options.

John Farrell

So I want to take advantage of the fact that I have a chief policy officer here and ask you some policy questions and not just some market questions. You know, I got a couple of questions for you and going kind of flip the order here. I think just because in this conversation that you just brought up about, like how regulators can help us get to take advantage of these sustainable options, kind of circling back to this notion about the, all these values of solar that you were talking about. So, you know, we have the individual benefit of having backup, but you have these grid services, you have the ability to shift your use and, you know, provide demand response, you know, and avoid maybe those expensive peaking power plants. And I was just thinking about, you know, one of the struggles they think we have in this is that we’re so used to doing electricity in a certain way, right. A grid where we build these centralized power plants and all the power flows go one way down to the customer. And so it’s really, it’s been a real struggle. So, I mean, it sounds like you’ve been in it for a decade, right? Thinking about this value of distributed energy, I guess I’m kind of curious, you have not only been in the industry, but you’ve been a regulator. What do you see as some of the most like frustrating, you know, misunderstandings or mistakes that regulatory commissioners make when they think about the role of distributed generation or distributed solar? I mean, just as an example, I was at a gathering of regulatory commissioners a couple of years ago. And I remember them saying between meetings or between presentations, there was this conversation about how, Oh, well, we’ve got all this wind down in Texas, but we going, you know, we obviously need gas to back it all up all the time. And I’m just curious, are there other things like that where you see, you know, this challenge of kind of adapting to this new world?

Anne Hoskins

Where we have these technologies that work so differently, but so effectively from the bottom up, I think there are a lot of challenges because it goes back a little to what I mentioned in my intro that, you know, regulators, for the most part, our setup is quasi-judicial, right? Where a lot of the proceedings are very set up as rate cases and, you know, in an adversarial type situation, which can be useful in some cases to test dollar figures in a rate case, okay. They don’t necessarily enable bringing forth the most recent information or creative ideas of, you know, what are other alternatives are out there for how you might be operating the status, you know, operating electric system. It’s very reactive really in that way, you know, you’ll have utilities who have already made their decisions and made investments in a network to reinforce the network that they have to meet their reliability obligations. And, you know, to really step back and say, is there a different way to do this? is a big effort. And it requires participation of a lot of different voices than folks who are usually in those meeting rooms. And, you know, I think we’ve seen certainly places around the country that have tried to do this, whether it’s in New York, where they tried the rev proceeding with, you know, in California, where they had integrated planning initiatives, Hawaii is trying to do incentive regulation, but they’re complicated. And they take a lot of resources. And this is where I have a concern because I think it’s very difficult for competitive companies, clean energy companies, energy efficiency companies to have, you know, the resources to participate in 50 different state proceedings. If they’re, you know, we’re in 22 States. So let’s say even 22 state proceedings and to do it in a way with the experts who can provide sort of maybe a counter voice or an alternative view to what the status quo is, you know, because if you look at the, the role of utilities for the most part, when I, you know, I was a regulator in Maryland, we were very concerned about reliability. There had been the duration show in the mid Atlantic. There had been some serious outages. And so we were pushing hard for improvements in reliability and the traditional way of measuring them through things like safety and safety and the, you know, frequency of outages, the duration of outages. And the answer was generally, well, we’re just going to reinforce the system. We’re going to do more tree trimming, and we’re going to get some exercise sensors, and we’re going to make our existing system stronger, which, you know, as a regulator, who’s responsible at that time and you don’t want to see another outage, you think, yeah, that’s really the answer we got to kind of be like, you know, a doctor fix the broken bones, right. But what we really need to be able to do at the same time and say, okay, maybe we need to make sure do no harm, right, with our existing system, but how can we make the investment? Because there probably some better way, right. You know, these systems were created over a hundred years ago, they’re getting really old. They’re very expensive to fix and to replace, I mean, to, you know, just replace a transmission line or, or even extend some of the transmission lines. And I think what we’re seeing now is because of the severity of some of the recent hurricanes and, you know, in Puerto Rico and the fires in California, I think people are starting to see that this old system, this hundred year old system really does need a re-look. And particularly because in 2012, 2013, 2014, the technology wasn’t there yet, right? We didn’t have batteries. Solar was still significantly more expensive, but those cost curves are all coming down. And that’s, what’s been interesting to see if you look at the studies that are being done by the analysts out there, the cost curves for solar and batteries, the projections are they continue to fall, but the cost for maintaining and upgrading the traditional centralized system, those curves are going up. And so we really are getting to the point where it’s cost effective to do it differently, but it’s, it’s gonna take planning. It’s going to take collaboration between the utilities and it’s going to take an effort to make sure that regulators can have the bandwidth, the staffing as well, to be able to sort of do both at the same time, maintain safety of the system, but also look to the future for how we can have a less expensive and more resilient energy system.

John Farrell

We’re going to take a short break. When we come back, I ask Anne about the implications of a petition to end net metering and rooftop solar from a dark money group in New England, what win-win options there are for utilities and companies like Sunrun, and what policies are most needed to advance distributed solar.

John Farrell

MIDWAY PITCH

John Farrell

You mentioned in that some level of coordination of the different parties there, and obviously utilities play such an important role in the system. They’ve got a lot of the resources they control a lot of, and they do because you know, many of them have a monopoly or they’re over the distribution system or in a lot of States over generation and transmission as well. And it seems like one of the struggles we have in the policy realm is that we’re not always looking at going in the same direction and we, we have different interests. And so I wanted to bring up this one kind of recent event here. You know, so-called dark money group in New England has just petitioned federal regulators to essentially end net metering. And it would end in every state by kind of reclassifying how those electrons are accounted for, you know, in this net metering is this obviously this key accounting policy that allows solar to reduce their energy bills with rooftop solar, why are we getting proposals to end net metering? Like why, why is that a ballot? It seems odd to have a policy proposal that would try to slow down the growth of rooftop solar when it seems to have so many different benefits.

Anne Hoskins

Well, exactly. I think that’s a really good question. You know, first I have to say that the name of the group, that filed that petition is incredibly misleading. You know, we don’t believe they represent rate payers. There are, no, it is a dark money organization that will not release the names of who their supporters are. So that’s a really great concern, you know, particularly because there’s, there’s such an important role for rate payer advocates, right? I mean, those are typically public servants or nonprofits that are out there thinking about consumer interests and, uh, often environmental interests. And it’s very disconcerting on the face of it to see a group give itself a name that is, does not seem to be related to who’s really funding it. So we’re concerned about that, but I think also, you know, we are concerned about, you know, in the middle of a pandemic that we see this type of petition put into FERC at a time when there’s just so many other challenges for everybody to be dealing with, you know, this petition really strikes at the heart of jurisdiction for state commissions across the country. You know, as I just mentioned, state commissions have a lot on their plate and it’s such an important time for those commissions to be thinking about one maintaining reliability, but also trying to take that step forward to look at how can we, you know, have a regulatory process that’s going to embrace these new technologies that offer so much and that we know the public is demanding. So the timing of this is really unfortunate. And at this point, you know, we’ve looked at that petition. We don’t think that it has very much legal validity. It’s been over 20 years that there have been FERC decisions, in court decisions, that have upheld the, the role of States in setting rate designs and, you know, managing the distribution grid. You know, as I mentioned earlier, we’re not just talking, um, with net-metering about, I mean, let me use just one example, right? That could be affected by this because you know, they’re saying under net metering generation is sent back out into the utility system and then across interstate lines, I suppose, is their theory. But you know, there’s so much now that’s happening behind the grid, right? That is going to impact the opportunities for States to make a more efficient energy system and a less expensive energy system. And so coming in at this point, when States are just trying to get their arms around this and questioning, they should be able to have a role in setting the compensation that customers who are going to make those investments could receive, I think, is quite dangerous because it really potentially challenges the critical role that state commissions play. And, you know, as a former state commissioner, I know, you know, state commissions have the ability to dig in more to local situations, right? Whether, you know, to understand what’s really valuable to the citizens of that state in terms of whether it is reliability, or is it clean energy or is it, you know, economic issues? And that’s something that FERC is not well positioned to do, you know, or well positioned to, to look at the bulk power system, uh, to look at reliability and a much aggregated level, but to actually putting in place regulations that are going to hopefully encourage customers to save energy, encourage customers to share energy, encourage them to make investments so that the overall ratepayer base doesn’t have to, those are all really functions that I think, you know, firmly belong at the state level. And so, you know, we’re hopeful that when FERC reviews this, they will recognize that they have a lot on their plate already. It’s a situation set up under the federal power act, yeah, defines where jurisdiction, uh, is most appropriate. And I think that we’ve known for over two decades that this issue really belongs with the States.

John Farrell

Well, I certainly agree and hope that FERC comes down on the right side of this one. You know, I feel like this is, you know, we don’t know because this is a dark money group that’s putting this forward, but I, you know, I suspect there might be one or two utilities out there who look at the way that distributed solar can compete with them in the market model we have now, where a lot of times, you know, they make their money by spending their own capital on the things like peaker plants. Like we talked about earlier, that things like solar and storage can replace. I guess, one of the things I’m curious to ask you is that, you know, given your background as a regulator, but also, you know, working at utilities and now at Sunrun, do you feel like there are a lot of, kind of like win-win opportunities in today’s policy environment where, you know, distributed solar works for utilities? What are some of the things that we should look to as we move forward that could get utilities to, you know, whether they’re behind this particular petition, there have been lots of fights about net metering and the value of solar. What are the win-wins out there we can look for?

Anne Hoskins

I think there are some, I mean, obviously we’re a competitor and I think there’s, that certainly played a role in some of the different, you know, net metering or other rate design challenges that we faced with utilities across the country. But at the same time, at the core responsibility for these utilities, you know, they’ve been granted franchises, right. They are really supposed to be serving the public. It’s certainly a core part of their mission. And I do believe that utilities, you know, for the most part are intending to do that, they just see that the way they’ve done it for a hundred years has worked pretty well, right? I mean, it really has for quite a long time, you know, very good reliability, command and control essentially. But what we’re seeing is that it’s not working as well so much anymore and there’s other alternatives.

So similar to how I felt I experienced when I was working in the beginnings of the wireless telecommunications growth, you know, it’s hard for incumbents to see that there could be another alternative, right. You know, it’s hard for, you know, there was once just, you know, a couple of long distance carriers now, wireline long distance that wasn’t that long ago, right? Now, none of us do that. I don’t even have a landline phone to plug in to talk to you right now. So if you think about that, you know, it’s not unusual that incumbents who have been granted a monopoly would be resistant, but at the same time, I do think that they are at the heart of it trying to serve their customers as well. And that’s really what we have to try to focus on together, is to realize we have joint customers and that their customers are looking for a way to supplement their source of electricity. And where I see we have common interest is that as these costs continue to go down for us and their cost curves continue to go up, that what you don’t want to do is get to a point where customers say, you know what, I’m just going to separate from the grid altogether, and that’s not that far away. And so what we are trying to do is to reach out to utilities and say, let’s please look at us as another source of generation, particularly, you know, we have, you know, restructured States where this should work, right? Look at us as another source of this, where you are really, you know, instead of thinking that you have to go and invest in a new gas peaking plant, that is probably going to be stranded in a decade, instead of doing that, let’s see what, you know, what kind of economic situation really could work here. And I think a lot of it’s going to come down to grid services because they are, you know, utilities are going to be facing the need to have to strengthen their grid. And they’re going to be facing questions from regulators about why they need to go and do it the way they’ve always done it before, when we have new technologies. So, you know, I think instead of kind of fighting that out through litigated proceedings, we should get together in a room and figure out, you know, what the options are. So for instance, we just put out sort of a concept paper called the neighborhood grid, where we saw an opportunity where we could work with utilities that would, you know, they would control the substation and some sorts of kind of Blackstar energy at that substation. You know, we could work to sell solar and batteries to a third of the residents in that neighborhood area. And that once you hit a certain percentage of, uh, essentially coverage of residents, that can be all the aggregated and provide a source of essentially, you know, an alternative source of energy to help serve that entire neighborhood. And that’s our concept. It’s not quite what you would call a micro grid, but it’s recognizing that, you know, we may be able to separate off portions of the grid and aggregate resources from customers in that area. So if you look at that example, you know, the utilities could make capital investments in the substation in, you know, maybe a larger battery connected to that substation or a small generation source. And we make investments with our customers in solar and batteries, and then, you know, we aggregate and manage those, but we’re available as a resource to the utility so that you could see by working together, that we could find a way where the utility is compensated for being that black start source and maintaining the substation and also managing the overall utility grid, which we’re going to continue to need.

I mean, there’s, unless, like I said, things get so contentious or so many fees are loaded on to sell our customers that it just makes more sense for customers to say, I’ll just support myself. That would just be so unfortunate because then you’re not optimizing those resources. So long answer, but I remain optimistic that there’s ways we can work together, but it’ll work a lot better if we don’t have these kind of in the dark of the night proposals to try to upend everything we’ve done, you know, but instead to come together and say, what can we do together to improve the grid and improve the energy system?

John Farrell

Yeah. I’ll have to put a link in the show notes about Naomi Klein’s disaster capitalism, as one theory about why this proposal is coming at this particular time around net metering. So I guess I want to just ask you one quick question, one follow up on this neighborhood grid concept. And I will definitely share the paper as a link on the show page. You know, if you’re envisioning Sunrun and other distributed solar installers, potentially serving a third of customers in a neighborhood region and, you know, and doing that in lots of different neighborhoods, which makes perfect sense. You know, we have sunny rooftops, that is where the power demand is on the grid is where these solar installations happen. So it’s very efficient from that standpoint, in terms of resource use. Somebody that would have otherwise built something bigger and centralized, you know, of the a hundred year old style of the grid, is not going to build something. So it seems to me that we have to at least acknowledge as a necessity here, somebody is to make a little less money than they did before, unless we’re going to pay them a much larger rate of return on a smaller amount of capital. Is that right?

Anne Hoskins

Well, I think also, you know, maybe utilities have to transition into other areas that they’re working in. You know, I mean, you’ve got utilities that are, have created competitive affiliates to do solar. They could create competitive affiliates to work on electric vehicles. I mean, in the history of our country, I heard a story once about, you know, we used to have, to have refrigeration, you would pay to have blocks of ice from Alaska brought down, right? To ice boxes, which is why they got the name. Right. Well, we don’t have those people doing that anymore. We created new approaches that were more efficient. So I’ve always been concerned about this kind of going in hypothesis, that the only way we’re going to be able to allow distributed resources or competitive solutions to grow is to maintain the status quo for utilities to make sure they’re kept whole, right? I don’t think that that’s a wise way to approach this because then it’s probably going to be more expensive, right? Like if you have to start with the idea that they have to make all the same amount they made before, and then we’re going to add this on, yes, it’s going to be more expensive. If you could approach it instead is let’s look and see what, what is the service utilities can best provide? And what is the service that we need utilities to provide recall? You know, the reason that we have regulated monopolies is because there were market failures and there were economies of scale, right. By having, you know, and utility with its own franchise. And I think the issue now with technology and it was the same issue that mob bell faced, right. Is, you know, is there still a need for that? Or are there opportunities where you can allow alternatives to come into the market, drive down prices, bring new technology and improve the social welfare. And that’s an important role for regulatory commissions to think about. And that’s an important issue for legislators to think about, right? Who created the regulatory structures, but, you know, I don’t think you have to append all of that.

But I do think that it’s really important that we ask those questions of, you know, where do utilities have the comparative advantage, right? And I think where they do in my mind right now is that we do need a distribution network. And if you envision a future where, you know, five years from now, again, like I said, look at the growth already and batteries, you know, a few years from now, we have hundreds of thousands of batteries around the country from all these different providers. And that’s a huge resource. There are questions about how do you actually manage that, right? How do you use those resources and the process of doing that when you have, you know, it’s not just going to be Sunrun, you know, I’d love it if it was, but it won’t be, right? There’s going to be a lot of different providers of this and customers are going to have different kinds of systems. So you’re going to need essentially a distribution system operator, like we have RTOs and ISOs, right. And so that’s an important role. And that’s one that, you know, it was an easier job to do when they controlled all the resources, right? But they, they’re not going to control it all. So that to me is something that will bring value and they will be particularly well situated to do. And then, you know, again, you are still going to, you know, likely going to need some centralized generation. We’re going to have transmission lines to go out to, I’m not saying the whole future is just distributed, right? We have lots of great opportunities with offshore wind with, you know, onshore wind, solar, those prices continue to fall as well. So operating that and that interaction between the distribution system and the larger grid. There’s plenty to do, I guess is my point.

I just think we need to approach it as, you know, how do we have a goal? Like what are our goals as society? And this is where I think incentive rate making makes a lot of different, important role too. What are we trying to achieve here? You know, we need affordability, need reliability, we need cleaner energy. And if you look at the, if you go on the websites and our leading utilities, they pretty much, I’ll say that that’s what they’re aiming to do. Right? They want to have clean, affordable, reliable energy. And we say, we want to have clean, affordable, reliable energy. So let’s figure out how to do that together and, and really focus on how we can optimize where you can get that solution, you know, the best.

John Farrell

So, and just one last question, which is, let’s say the dozens, hopefully hundreds, maybe thousands of listeners to this podcast are all just hankering to go out there and write a letter to a legislator or a public utilities commissioner, or a utility executive about what we need to change, what policy we need to adopt. What would you say? Like, what’s, what’s the thing kind of front of mind for you right now, in terms of how do we change the rules to make this system work more like we want it to, to reach those goals?

Anne Hoskins

Well, I say two things. One is this issue of access. I think it’s really important that regulators recognize that there are increasing numbers of people who care about this. And traditionally, you know, a decade ago you would have the same parties showing up all the time. The same lawyers showing up all the time when I was at the Maryland commission was the time when Uber and Lyft were seeking to get approvals. And we saw, you know, a lot of individual customers are interested, you know, people sending in thousands of emails. And I remember, you know, folks thinking like, well, you know, how are we managing is a little different than the typical response that you might get at a rate case and people showing up at a hearing. And I think that, that the truth is there’s going to be more of that as you get a more informed public and the is going to be, how can we enable these voices to be heard, but also how can we get the technical resources into them? The hearing’s like, you know, you want the people to be heard so that their interest in this is recognized. And hopefully the consumer advocates play a big role in that and environmental organizations and other groups. But one of the things that I think is really necessary is that if we’re going to try to recreate this grid or improve it, then we definitely need the voice of the experts at the utilities because they know the current grid, but we also need to make sure that there are alternative voices there of experts. And that may mean, you know, there are excellent groups out there. IREC is one, RAP is another, RMI. I mean, some of these nonprofits have made investments in trying to understand the economics and the technical elements of a changing grid. And I think those groups need to be encouraged. I think foundations should be funding them, DOE should be funding them, because you really need to have alternative views presented and additional information presented to rate to regulators so they can make informed decisions.

So that’s number one. And then I think on the, on the substantive policy side, I think there’s so much potential in batteries and we’re just at the beginning and we’ve seen some States, you know, California, where the SGA program, you know, Massachusetts, you know, with their incentive, SMART incentive program. These are really important to bring down the cost of batteries and help expedite that, move down the cost curve, which is going to then, you know, expand demand, continue to move the cost down, the cost curve and get it so that there’s more and more people you can have access to this resource because batteries have really enabled us to draw so much more value from the sun and from those solar panels that we can put on people’s roofs. So I think that a big push in the coming year should be for advocates to help share the information of the potential of batteries to regulators and policymakers around the country. You know, I’m heartened that I know there are some proceedings I think about to start in Connecticut, in New Jersey. These are States that I know from, you know, living in the Northeast, you know, most of my, in Mid Atlantic most of my life, been really fortunate in the last few years, not to have those big hurricanes, but when that happens, we’re going to see a repeat of what we’ve seen out here in California, the wildfires where customers are going to say, you know, I really wish I had my own source that I could, I could rely on when the larger grid doesn’t work. So that’s what I think will be really important and exciting for advocates to learn about and engage in, in the coming year.

John Farrell

Well, Anne, thank you again so much for taking the time to answer some very detailed questions about grid, policy and regulation, and your role at Sunrun. Thanks again.

Anne Hoskins

Yeah. Thanks for having me.

John Farrell

This is John Farrell, director of ILSR’s Energy Democracy initiative. I was speaking with Anne Hoskins, chief policy officer for Sunrun, the country’s largest residential solar installer. We were discussing how electricity markets can better capture the benefits of distributed solar, the role of state regulators, and the questionable timing of a petition aimed at ending net metering. You can learn more about Sunrun and its community backup concept in its recent report called Smart Clean Neighborhood Grids. We are at our website reviewing this and other resources. You can also find more than 100 past episodes of the Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.