40 min read

🎧 #082: Demand flexibility in the Long Tail of small buildings with Extensible Energy

“I like to say 'Use what your mama gave you.' Your building is already a battery. Every building is a battery."


—Deepa Lounsbury

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Episode 82 is a conversation with John Powers and Deepa Lounsbury of Extensible Energy.

Summary

We talked about the history of demand response solutions and how that is transitioning to load flexibility and where we are on that spectrum today. As John said, we're seeing more change in the last 24 months than the last 24 years.

Then we took a bit of a deep dive into DemandEx, Extensible Energy's product, and how it's especially suited for the small buildings market below 100,000 square feet in area, which is about 98% of the buildings in the US but is mostly untapped from a tech standpoint today.

Without further ado, please enjoy the Nexus podcast with extensible energy.

  1. Extensible Energy (1:26)
  2. 🎧 #064: James McGinniss on DER Technology and the Future of Electricity Consumption (9:00)
  3. 🎧 #066: Cara Carmichael on Our Roadmap to Zero Carbon Buildings (14:41)
  4. California Load Flexibility Research and Deployment Hub (17:34)
  5. The Untapped 87%: Simplifying Controls Technology for Small Buildings (59:02)

You can find John and Deepa on LinkedIn.

Enjoy!

Highlights

  • History of Extensible Energy (7:07)
  • History of demand management → load flexibility (9:14)
  • Why the focus on the typically ignored, 100k square foot and under buildings? (24:24)
  • Case studies / real-life examples (50:51)

Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.

Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

James Dice: hello friends, welcome to the nexus podcast. I'm your host James dice each week. I fire questions that the leaders of the smart buildings industry to try to figure out where we're headed and how we can get there faster without all the marketing fluff. I'm pushing my learning to the limit. And I'm so glad to have you here following along.

James Dice: This episode is a conversation with John Powers and Deepa Lounsbury of extensible energy. We talked about the history at demand response solutions and how that demand response piece is transitioning to a new term load flexibility and where we are on that spectrum today. As John said, we're seeing more change in the last 24 months than we saw in the last 24 years. Then we took a bit of a deep dive into demand, ex extensible energies product, and how it's especially suited for the small [00:01:00] buildings market below a hundred thousand square feet in area, which is about 98% of the buildings in the U S but it's mostly untapped today from a technology standpoint. So without further ado, please enjoy the nexus with extensible energy. All right. Hello, John and depo. Welcome to the show. Let's start with you, John. Can you introduce yourself?

John Powers: Yeah, thanks for having us. I'm really happy to be here. I'm John Powers, I'm the co-founder and CEO of extensible energy and then energy nerd, all my life. Been in energy for more than 30 years.

About half that time as a consultant, half that time as a software entrepreneur I've worked in demand response and energy efficiency and renewables for pretty much that whole time. And I'd say the thing that excites me most about, you know, talking about what we're doing now. So the industry has changed more in the last 24 months than it has in the last 24 [00:02:00] years.

And, you know, it's, it's a slow moving industry, but things are really starting to happen. And it's an exciting time to be talking. Well, the flexibility and the rest. So looking forward to it. Cool. Yeah. And we're

James Dice: going to dig into your company, extensible energy. Let's go over to you Depot first and your introduce yourself.

Deepa Lounsbury: Yeah. Thanks James. I really, really appreciate being on your podcast. I've learned a lot from past episodes and appreciate how you're bringing the whole industry together. My role here at extensible energy is I'm the director of. I started here about three and a half years ago.

Before that, you know, I started off my career in sort of traditional finance as an investment banker. And then 15 years ago, I started off on sort of the investment side of climate technologies. So I worked at a small venture capital firm called Angelina group investing in [00:03:00] all the different technologies that were really supposed to save the planet.

And from that moment I really got hooked on the industry because I got to explore, you know, biofuels, recycling technologies, solar wind, and realize that there is enough here to keep me very intellectually stimulated for the rest of my life, with another billion people. Um, And then I went to Thailand that a short stint there have, you know, brought back a Thai dog to sitting right next to me right now.

And, you know, during my, my time as a, as a venture capitalist, I realized that you know, it seemed like all the entrepreneurs are having the fun in terms of actually commercializing the technologies. So I wanted to be on the product innovation technology commercialization, side of things. So got my master's degree in energy resources from.

Got to [00:04:00] fill in some of the technical gaps. I felt like I had and then started at end phase working on a residential energy storage product. Um, I also worked at GE on their distributed energy platform. Spend a little bit of time on the on the, the grantmaking side of things, spending early stage clean technology entrepreneurs.

And yeah, now I'm here helping make load flexibility. The big thing that it should be

James Dice: all right. My friend has a Japanese cat, so he's in the air force, went to Japan and came back with a cat and this cat is the coolest cat. And so I tell my cat that she, she wants to be like, Kay, Bob, when she grows up, she's an American

John Powers: cat, you know, not that cool tied dog.

That's funny.

James Dice: So John, I'd love to go back to you. So 30 years in the industry it sounds like on the utility side, mostly, but also building sites as well. And now since blue energy [00:05:00] sits in between those two, can you talk a little bit more about the things that you've done in the industry before for founding sense of blender

John Powers: energy?

Sure. Yeah. Before founding extensible. My first job out of college was in the rates department of an electric utility Portland, general electric up in Portland, Oregon. So I learned how utilities make rates. I'm an economist by training. And so I understand utility pricing and electricity pricing.

What, Christie's funny stuff. It's hard to price because. Virtually impossible to store. It's not like wheat or other things. So I know a lot about wholesale and retail, utility electricity pricing. I went to quantum consulting, which was a startup consulting company. Helped grow that from three people up to 150 working on load research DSM program evaluation, you know, demand side management, program evaluation demand response [00:06:00] programs.

And always in the background, we had a little bit of software going on at that time too. And we saw some real opportunities for the software. So I, I led a spin. From quantum to a company called energy interactive, where I was the CEO and co-founder of a software business that helped utilities to engage with their customers.

Put some of the first really interesting online applications behind utility websites. So they could engage with their customers better residential, commercial, industrial, the whole nine yards. And we sold that company on favorable terms to ABB. So I worked for ABB for a few years as their director of retail software.

And then I figured out that I'm not really a large European conglomerate kind of guy, and it was, you know, starting to get the itch again, to do my own thing. And here we are. So that's a [00:07:00] perhaps incomplete, but a pretty representative sample where I've been over there. Yeah.

James Dice: All right, well, let's bring this full circle then.

When did you start extensible?

John Powers: Y so I started extensible energy as just a one person, LLC, for me to do some consulting with my old utility contacts. But in 2016, we got a grant from the us department of energy to work on a software problem that I've been interested for a long time. So we got what's called department of energy, small business innovation research grant, SBI, our grant.

And that kind of started us down the software path again. And they give you the money in two trenches. They give you a grant to do a proof of concept, which was basically Nothing more than a simulation model of what we wanted to do. And then they gave us a lot more money to [00:08:00] go build a working prototype and get it working in real building.

And that's the core technology that became demand X, which is the product we're commercializing now. Okay. And when was this? I was late 2016. Okay. So we've been working on this for about five years and the, the core technology has been vetted by the us department of energy and a bunch of other folks as S a big innovation in how buildings are controlled and how it can help to integrate more renewables into buildings and into the grid.

Cool. And depo, you joined a little bit after

James Dice: that?

Deepa Lounsbury: Yeah, just three and a half years ago. It's pretty much.

James Dice: Okay. And I came across you guys when I was at an REL. And I've been treated by the idea and obviously on the podcast, we've been kind of exploring this topic of love, flexibility for a lot of 20 21.

So this podcast will go [00:09:00] live in 2022, but so last year we did. Several episodes that we'll put in the show notes around demand, flexibility that this is kind of going to build on. I'd love to look at this. I don't think I've done this from a historical perspective yet. So, John, I'm probably looking to you here, but you you've done all this in demand management.

And that, from my perception, I mean, when I started out in energy management, there were demand management programs, right. The ability to get a signal from a utility and curtail something. Right. And sometimes that was automated, sometimes it wasn't. But that sort of paradigm has now shifted into load flexibility.

Could you talk about what. Means and why that has

John Powers: happened. Yeah, for sure. I mean the initial demand response products or programs of boy 30 years ago, or more were really designed as a way to help utilities, not have to build more and more capacity for [00:10:00] the very, very highest peak of the year. So you would get these programs where customers were paid to curtail their loads, you know, three or four times a year on the hottest day of the year.

And that would help the utility not have to build a new peaker plant that was turned off most of the time and in rate base all the time. So those programs were extremely manual tended to be they featured mostly industrial customers. Although there were some. Reach down into residential and commercial, they were mostly industrial, mostly manual, mostly pick up the phone, call the shift manager and say, could you send the next shift home at the rock crusher or other big industrial facility we'll pay, we'll pay you for all that electricity you're not going to use.

And that was demand response. So as time has progressed, There has been a lot more automation. So you could now [00:11:00] have millions of residential customers participate in what is essentially that same program three or four times a year. Could we please shut off or reduce the usage of your air conditioner?

Could we please raise the temperature in your house? Just a few degrees so that we can avoid building another power plant three or four times a year. So yes, the progress towards automation has continued, but the innovation in what the application is really used for is only happening now, which is once you get a building under better control, you can respond to anything.

It can be a local signal or a signal, and now buildings and the grid are moving towards being one truly connected electrical grid system. So that any minute of the day you're building your house, your industrial facility. Facility can look at the price signals coming from the grid or the control signals coming from the [00:12:00] grid and make changes to how your equipment is behaving.

And you'd never even know it. You can just put that all in the background and the grid adjusts to its needs. Seamlessly that's the path we're on. That's where I want to end up is a truly multi-way interactive grid instead of this sort of one way command and control grid.

James Dice: Totally. And where are we at?

Like if we look at the United States, for instance, this is a very, probably impossible question to answer, but maybe you can summarize, like, what are the current trends here? Like where, where are we at today on that transition to a

John Powers: fully flexible grid? So this is why I said what I did at the beginning is in the last 24 months, things have changed more than the last 24 years is really up until a couple of years ago.

I'd have said we were somewhere between stage one and stage two of those of that [00:13:00] development. Either guys being called on the phone to shut off rock crushers, or maybe in some places, some automated control thermostats a few times a year, but over the last 24 months, The whole, whole energy community. And increasingly the building community is waking up to the idea that to accommodate all the wind and solar that we have already committed to on the grid, the load side, the demand side of the grid has to become much more flexible.

And so the the combination of driving need on the renewable side and big technological trends, IOT frameworks, cloud computing, cheaper sensors, and networks, all these things are pointing in the direction of it's getting easier and easier to make buildings react in ways that are favorable to the grid.

So there's, there's a long way to go, but we are. [00:14:00] W we have just started down the exciting third phase path.

Deepa Lounsbury: Yeah. And I might add that, you know, I feel like there's old school versus new school, you know, demand response or demand side flexibility. Old school is as John described, pick up the phone, maybe, maybe they'll respond.

Maybe not. Don't ask too much. New school is really integrating buildings into what the grid really needs, dynamic signals and more real time stuff and parallel related to new school, old school versus new school de-carbonization as well. Right. You know, you had Kara Carmichael talk about 24 7 zero carbon building.

So matching the building with the renewable energy on the grid. All of these things are absolutely connected and it's the more intermittent renewables we get on the grid, the more responsive our [00:15:00] buildings and our demand side need to be to that.

James Dice: Yeah. If we just kind of frame this and why should building owners care, right.

It's the first they're going to be able to monetize that flexibility. So it's not just, it's not just let's altruistically, help the grid out, right? It's it's

John Powers: monetizing. Yes, that's exactly right. Because I mean, you can monetize now against demand charges, time of use rates, any of the fixed tariffs that are out there today.

That's not demand response. This is irrespective of what the utility or grid operator is asking. There's a published book that says what your price of using too much power at any one moment is that's a demand charge. So you and I pay for kilowatt hours at home. Right. But a commercial building pays up to half of its total electricity bill based on the highest 15 minutes of use during the entire [00:16:00] month.

That's called a demand charge. And that's kind of a, if it's a tax on bad controls is how we see it. It's if you're not aware of what your usage is, minute by minute, you can't control your 15 minute demand for the month. So that that's where the initial monetization for everybody. But certainly for us is coming from is the ability to control demand charges.

Because once you get a building under better control, you can respond to signals that are more sophisticated, like real-time pricing or other grid signals. But right now we're definitely saving our customers a bunch of money just off of demand, demand charge, man. And the ability to

James Dice: monetize is only going to get better as it moves from demand management to flexibility.

Is that

John Powers: how to think about it? So you can think about it one of two ways, right? It's going to be [00:17:00] more expensive to ignore. This problem has to be more, right. So the utility. And the, the grid that we are building now is going to have greater time differentiated pricing than it does. Now. There's going to be more difference between the times that are cheapest and the times that are most expensive than is true today, we already have that in wholesale electricity markets.

And one of the projects I'm really, really excited to be working on is this thing called the California load flexibility research and deployment hub, which is such a mouthful that they just came up with calflexhub.org. And that's how they talk about it. Now is they're going to be bringing. Real-time price signals from the wholesale market, into the retail market, with a whole series of technology improvements and [00:18:00] then demonstration projects to actually push this out into the market.

And this isn't a 2030 project. This is happening this year and next and the year after. So, this stuff is coming at customers much faster than they think. And, you know, that's, and that's the tip of the iceberg because yes, you'll be having. Your tariffs or the rates you're paying change quickly, but your building is changing too.

We all have w we all live in states where renewable portfolio standards are way up decarbonisation goals are extremely ambitious. If your building is heated with gas and will soon be heated with heat pumps, electric heat pumps. If your building right now has a parking lot for gas cars, but it's about to have electric vehicle chargers all over the place.

If you're building heats, it's hot water with, with gas today and electricity tomorrow, [00:19:00] all these are huge changes and how your building uses energy and how you should be making energy related decisions.

Deepa Lounsbury: Yeah. And James, another way of answering your question, why should a building owner care a quote from a property manager, a CVRE looking at my electricity bill is so complicated. I know that my year over year increase in electricity is 26%, but I have no idea why, so why are those rates complicated?

You know, are they so hard to decipher? Why have they been going up? Those are the things that demand flexibility can

John Powers: answer. Well, and I think

James Dice: about adding like the, another layer here, which is if I'm an organization and.

Either a tenant or landlord or whatever type of building you're talking about here. If my organization has carbon targets, then I have to figure out at some point, maybe it's maybe this isn't the low-hanging fruit. Maybe it's further down the line. I have to figure out at some point how to match my demand with renewable supply.[00:20:00]

John Powers: That's something.

Deepa Lounsbury: Absolutely. Yeah. We have a lot of time that gives real time carbon intensity metrics for every, for kilowatt hours, you use at specific times of day. And so you can choose to just use cleaner kilowatt hours with your flexible. So for folks that want to optimize for emissions intensity reduction.

That's another benefit .

James Dice: Well, let's talk about the product. So demand X is the product. Can you talk about what it is first without, without getting into this without jargon? Can we get, can we explain it in this most simple way possible?

John Powers: Well, let me give it a try. And when I get to jargony, basically it's an energy management control system that controls all of the flexible loads in a commercial building.

Flexible loads. Usually we think of as heating ventilation and cooling is the biggest one. And most [00:21:00] buildings today, the ones I talked about that are coming down the road electric vehicle charging and certainly water heat and stationary batteries in some cases, which are not big and small to medium commercial buildings today, but could become bigger.

So we control those resources that are flexible. Those loads that are flexible to minimize your electricity bill and potentially to maximize your benefit from a demand response or other market opportunities. So you can reduce costs, increase revenue from participating in utility or other electricity markets.

How we do it is we watch the demand all the time. We watch the one minute usage of your building. Minute by minute, 24 hours a day, 365 days a [00:22:00] year. Demand charge management is hard. You can't blow it even once one 15 minute interval in the whole month will ruin your entire savings. So we watch everything carefully.

We have a forecast of what the whole building load is going to be a forecast. If there is solar of what the solar is going to be, put all that into an optimizer and we control all the loads to keep your demand charges low. Okay.

James Dice: So when in the nexus world, we call this advanced supervisor control, which is.

And acronym that I think I've made up, but I often there's so many acronyms that I don't know which ones I made it up or which ones came from others. So maybe I did, maybe I didn't, it doesn't matter. But the point is that there are existing systems in an existing building that this system sits on top of.

Right. And it does something in a supervisory way. That's in addition to what the existing

John Powers: control systems are doing, that is a perfect way to describe it. But I'm going to steal that [00:23:00] because, because the beauty of demand X is that it is not a replacement for any of the things you've already put in your building.

We try to not require any type of retro. Beyond the very minimum. You don't have to change the HPAC equipment. You not have to change the lights or the battery or anything else. It'll work with existing building energy management systems. If there is one. And if there isn't one, it's a simple sort of rip and replace of dumb thermostats with smart, wireless communicating thermostats.

And that's it. One day installation for the ability to control basically all the flexible loads in the building. That was key to us because this is a product, not a project. So we target the small to medium commercial space because it's because everybody else targets the Salesforce tower or this year Sears tower or something, right.[00:24:00]

That's project economics. That's fine business for somebody else. Product economics is we've got 665,000 buildings in the United States that we have to get this into the, you know, small to medium commercial buildings that are big enough to need something like this. And small enough not to require just ridiculous levels of precious little snowflake engineering.

So we're, we're all about making this as easy to drop into a building as possible. Cool. And I'd love to know.

James Dice: Was the focus on smaller buildings because of the original DOE grant or was that a focus area that you were like, we need to focus on this literally, like you just said because

John Powers: no one else's.

Yeah. Well, I mean, I, I wouldn't say no one else is, but I think too many people are focused on the giant, you know, sort of marquee projects because they look better on your website to say the Salesforce tower than [00:25:00] it does to say, you know, a car dealership in Colorado or a church in the central valley, California.

But you know, we saw a huge unmet need for those buildings to have a simpler, lighter touch way to manage their energy and demand. So I think it had more to do with. Being able to encapsulate it into a product instead of something that is, you know, you send all the PhD graduate students to scoot around a big building for a couple of years, and then you've got a beautifully controlled project.

You can write a thesis about why it just didn't interest me. I want to make a product that could be rolled out to the, you know, hundreds of thousands of buildings without, without all that fuss.

Deepa Lounsbury: And I'll just add that you see vacs estimate estimates that 97.7% of buildings are a [00:26:00] hundred thousand square feet or smaller.

And so not only do those buildings deserve many of the benefits that come with supervisory control It's also just really necessary from a climate change perspective to address those 97% of the 6 million holdings commercial buildings in the United States.

James Dice: Yeah. So the latest version of CBX has not come out yet and will probably not have come out by the time this gets published.

I don't think, I think it's in the spring, but the last version said that this, so I've studied the, by the time this comes out, there will be a white paper that we produced on buildings under 50,000 square feet. And those buildings are like 5.9 million out of the six, something like that. Right. In the U S and they use 44% of the energy consumption.

There are about 49% of the square footage. So yeah, it's a [00:27:00] massive, massive opportunity. It's and it's fascinating too. It's an extremely complex, really, really complex problem. Which is I'll point people to our white paper to, to, again,

John Powers: to,

Deepa Lounsbury: We want to democratize energy management. Now we think everybody, every building should have it.

James Dice: Cool. And while we're on this topic, what are the unique dynamics of the smart building space from your guys' perspective that maybe don't apply to

John Powers: bigger buildings? Yeah, so I mean the ability to put something in without having a dedicated facilities manager is really important. A lot of these places have property management firms, which means remote management.

In most cases, somebody comes by. When absolutely needed or to check up among the other dozen dozens of buildings they're checking on. So it CA it has to be simple. It has to [00:28:00] be understandable by folks who are not facilities professionals, and, you know, it has to work seamlessly. It has to work behind the scenes without generating so much fuss that you can't stick to your business.

So we, we target office retail, church, school, conditioned, warehouse, municipal, building anything in that sort of 25,000 to a couple hundred thousand square feet. And the folks running a retail store, the folks running a car dealership, a church, a school are not thinking about energy unless something has gone wrong.

So this has to be very seamless at work in the backend. Absolutely.

Deepa Lounsbury: Yeah. And the two things I'll add often for the smaller buildings, the building owner where the pastor or someone who's not energy expert [00:29:00] will be the one who's in charge of energy. And, you know, a lot of them are just exhausted by trying to figure this all out, trying to decipher their utility bill, trying to figure out if I turn stuff on or off.

Who do I trust? Can I trust my employees to manage this for me? So, so to take off some of that exhaustion and say, we're a bunch of energy now. Let's manage, manage this for you. You know, something unique about smaller buildings that don't have the capacity, the luxury of having an energy manager.

And the other piece is that often the smaller buildings are a little, not always, but, but can be closer to the financial edge. So they have time to search for new technologies, adopt them, but would benefit most from smarter energy consults.

James Dice: Got it. Something that can pay back quicker and be less of a financial investment.

John Powers: [00:30:00] Well, right. And this is, you know, this is a one year or less payback investment in all the buildings that we're at. So it's a very simple economic decision for the customer to once they see that it's it works and is as easy as we're saying. So the, the. Yeah, I'll leave it there.

James Dice: Hey guys, just another quick note from our sponsor Nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.

This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview

Cool. So you guys mentioned that you start with [00:31:00] HVAC, you know, this where this is headed is starting to control everything.

Can you talk about how the HVAC works and let me set the stage here? So when, when I studied this market, you have all of the single zone packaged, really simple HVAC systems that, you know, drive around in a small town. You see little tiny carrier rooftop units everywhere. Right? Those are single zone systems, traditionally not controlled very well.

There's like standalone thermostat and then standalone program while thermostat. And now we have this wave of internet connected thermostats, but then you have in that space that you guys talked about, it starts to get into that more complex sort of commercial, multi zone, VAV, centralized systems space.

So can you talk about, like, where do you guys play? Do you play across that whole spectrum? Or how does that.

John Powers: Yeah, we have to play across the whole spectrum because we have to control whatever it is that we find in the HVAC systems, in the buildings.

[00:32:00] So we work with VAVs and VRF, and the most common is still sort of a one-to-one mapping between thermostats and packaged units, but many of them in one facility. So the, the trick there is of course, to make sure they're not all coming on at once, because that would set a demand peak. The trick is to make sure that everybody is comfortable even while.

Sort of modulating some of the usage in some zones and ramping it up and others. So yes, we have to work across that spectrum. And usually the one-to-one to one thermostat to zone to rooftop unit are the ones where we have to do a rip and replace because there's, you know, there whoever the energy management system there is, whoever had the biggest thumb, the last time they walked by the thermostat that that's your energy control system and we can help those guys a lot.

So we love finding those [00:33:00] buildings. The ones we like best hands down are the ones where you find the locked plastic box over the thermostat. And the very, very cream of the crop is when you find. Lock plastic box with the bent paperclip on top for somebody who's going in any way and making changes to the system.

So that means that the building is poorly controlled. There's conflict about comfort, there's conflict about energy usage. There's all this sort of, you know, bandaid on bandaid systems that we can in a single day, turn into something much more simple to control. And again, it's not always, we think of all the fancy modeling and all our fancy predictions as being our value add.

But sometimes our customers just say what deepest said, which is I was exhausted from worrying about. I noticed that my, my employees would leave the air conditioning on, on Saturday when we're closed on Sunday. And the thing would be on all weekend, but now I know [00:34:00] better. And you can say, well, that's just scheduling.

The scheduling interfaces on most thermostats are like the VCRs of the last century, which is nobody ever does program this because they're programmable doesn't mean anybody's programming them. You have to have a central system where you can look at them all, make sure they're all off at the right time and, you know, control it from a familiar web interface instead of worrying about, you know, who, who touched it last.

I'll vouch for

James Dice: that. I just moved to a new house and it has a programmable thermostat and I'm six weeks in. And I haven't programmed it yet because I don't want to feel like figuring out how to do it. Uh I'm like, I'm like the energy management system every day. I have my schedule that's in my head and I just feel

John Powers: mess with the setpoint.

I'm

James Dice: not ashamed of saying that because like you're saying the user interface is so terrible, it would take me way too long to figure out how to actually schedule [00:35:00] it.

John Powers: You'd have to redo it every season and then you'd have to redo it within the season. Every time there was a change to daylight savings time and all the rest of it.

Right. So it's just not built for, for the real world anymore.

James Dice: Exactly. So deep, let's hear about this from a product standpoint. I think John said fancy predictions. Can you, can you talk about how this actually works behind the scenes?

Deepa Lounsbury: Yeah. At its core. What we're doing is changing one flexible loads in buildings use electricity. Right. And so the simplest way of saying it is we're learning from the past, which means that we're learning about, the thermal dynamics of that building, the usage patterns, the equipment, you know, is it a new HVAC system or is it 30 years old?

All of these things are really important to figure out how to controllable this. And how to ensure that the occupants are comfortable and are following the scheduled. We [00:36:00] also do the prediction and the forecasting, right. To understand, you know, what is the rate structure that's that that we're, we're about to enter into what is going to be the weather?

Are we going to need the HVAC system? What's the solar production, if there's solar and in many cases, what's the carbon intensity. So we take all of these things in as input and then send a control signal to, you know, the HVAC units by changing set points on the thermostat.

So we send signals to the HVAC units or other flexible loads in the building to optimize for all of those things. Schedules, rates, all of those.

James Dice: Okay. So what should a given set point in a given room or on a given system be at right now? What's the optimal point

John Powers: given all of these inputs? I

Deepa Lounsbury: mean, that is very, very [00:37:00] subjective, right?

At the time of implementation, we, we sit with the customer and we figure out what is their desired temperature range for each zone. And it can be very different for sanctuary and office building a showroom for a car dealership. But we do operate within ranges and we find that, you know, compared to prior to installation, usually we're staying closer to their desired set point than they were before.

But we do operate with

John Powers: them. Okay. Cool.

James Dice: And so when I looked on your guys' website, I came across this like pre-cooling virtual battery concept. Can you talk about how that piece works? A lot of people will think, oh, I can't do a lot of flexibility because I don't have a battery that is this concept four.

Deepa Lounsbury: So, I mean, I like to say. Use what your mama gave you. [00:38:00] Your building is a battery,

James Dice: right?

Deepa Lounsbury: Yeah. Your building is a battery. It like every building is a battery. Your wall that thermal massive wellbeing is a one to five hour battery. And so everyone has the opportunity to utilize that. You know, you're gonna, you're gonna keep heat in for a little while, even if you turn off your HVAC, some of your HVAC units for a little while.

So I, I do want to say yes, we do help that building plan ahead by pre-cooling that's one of the things that we do and I look at load profile. Every day see that a lot of buildings with building energy management systems often do set their peaks in the morning. You know, it's 7:00 AM, like all the tracking it's turn on, but that's only one control strategy, right?

There are many, many different control strategies. For example, there's sort of the [00:39:00] noticing that you're about to set a demand. That's going to cost your building thousands of dollars in one minute and still having 14 minutes to correct for the, and so that rapid response responsiveness to reality is also another element of it.

And how do you

James Dice: guys make this concept scalable? Right? You've talked about churches. The car dealerships. We have a lot of those in the U S

if you're listening to this surround side of the U S we have a lot of churches and we have a lot of car dealerships, there's a lot of those. So how do you guys make this to where I don't like as an energy engineer working on your team have to look at every building to make the decision on what that control sequence is.

John Powers: So, yeah, so the, the, the thing we were talking about earlier is that the learning through looking at usage patterns, and that's not us, that's our machine [00:40:00] learning algorithms that are looking at those usage patterns. We, we have automated the ability to tell what zone has, what kind of thermal. Capacity, what can be sort of, you know, when you turn off one zone, temperature might increased very quickly.

Another zone. It might increase, increase very slowly. All that stuff is modeled out without having to do that manually. So the machine learning is, you know, it's a fancy, fancy word, but it's critical to our business. We are learning the thermal parameters, the uncontrolled loads. So we need to have a good prediction of what the loads we're not in control of are going to do so that we can control around them.

And then in the case of solar, we also have a machine learning algorithm. Does the predictions for what the solar is going to be, because one cloud can wreck your whole month of savings too. Right? So it it's, [00:41:00] it's the automation that makes this scalable for sure. And this is an, and you know, everybody talks about artificial intelligence, replacing jobs.

This is replacing jobs that aren't being done. So our artificial intelligence is watching every minute what's going on in every zone, every temperature load of the whole building out of the solar. If you have it and making calculations out multiple hours into the future as to what your best usage right now is to keep your demand low for the whole day.

Again, humans. Except, no, they can't because again, humans have jobs and humans would have to dedicate their entire day to watching a bunch of data that they don't usually have much access to. It's much better to put that up in a brain in the cloud and let that handle all the decisions for the building for you.

And if there's a change in schedule or an override that says you have to have this one room cooler right now, [00:42:00] you can override anything we're doing no problem, but you don't want to spend your, you want to spend your day managing by exception, not managing every little decision. Yeah.

Deepa Lounsbury: Yeah. And the other thing to that is uh, designing this product for a radically simple installation and implementation is in our DNA.

Right. You know, we've all seen tons of. Academic projects, where they installed tons and tons of sensors and make every building perfect. It we've simplified the installation, so there's basically, we just need minute level, energy monitoring and a gateway which means that it's low cap CapEx. And then the fact that we don't need a million sensors and that much stuff installed in the building and that it's accessible for a bigger audience, including tenants by the way means [00:43:00] that it it's.

We tried to design for scalability

James Dice: and PR. So pretend I'm your pastor. You're talking to me on the phone. I just purchased off your website and you're about to send me your thing. What do I have to do to set this up?

Deepa Lounsbury: that's a good question. We've done this a few times. You're right now, other faster you know, we, we still do have a field operations team because we do need a minute level energy monitoring device that does need to be installed by an electrician.

But we basically scheduled installation. It could be, you know, next week and we need to put in the energy monitoring device and then potentially a gateway. And and it's, it's a very small church that has the thumb controlled thermostats that John was referring to earlier. Then we replaced those thermostats with smart compatible [00:44:00] thermostats.

Then we learned. A month. And then after that we start making the, and we start actually taking control actions to make your building smarter, more efficient, more dynamic and more more

John Powers: comfortable. Okay. We already have some partners who can do this themselves, so it's not like we're having to, you know, build a huge.

Force of people in trucks to go do all of this. So we're working nationwide. We have probably about as many customers outside of California is in, and a bunch of them are in Colorado because we've got a great partner in Colorado who could do a lot of this work themselves. And every time we do a site, we improve the documentation and the process try and everybody's job is to knock another step out of the process.

So simplify, simplify, simplify to get it to the point where we, we haven't got it to the [00:45:00] point where you can do a self-install in most buildings because. Skilled electricians in most buildings yet. But you know, if your, if your facility has an electrician, you can just call that person in and we can document the whole process and they can do it same with the HVAC technician that you're using, that person can put the thermostats in.

No problem. If they're required at all. And the, you know, the integration between our gateway and the existing building management system is 10 minutes. It's basically reading. Backnet over IP in most cases. So reading and writing back over IP, which is super simple to plug in all the work is being done in the cloud and by our own engineers.

So the onsite work is, is simpler. Every time we do it. And one day install is, is just the beginning. We want to have a half day install, and then we want to have a two hour install. [00:46:00] Then we want to have a one hour install and so forth. So we're, we're cranking away to make this simpler every time. So when you say your

James Dice: partners, you're talking about like a local contractor that offers this as one of their products that they

John Powers: yeah, so, yeah, so we, we work with partners because it increases the spread that we can cover Mo very easily.

So, our first partners were in the solar industry because this fits very well with solar. Solar is great at saving energy, but not demand. So we have some partners in the solar industry. We have partners in the HPAC and controls industry because it's a perfect compliment to the to the products and services they're already providing.

And then we're working with some it folks who are interested as well. Cool. So.

James Dice: Let's talk about the, the savings aspect of this, right? So the old paradigm, right? It's that I saved money on my van charge on my utility bill. Then we're moving into [00:47:00] more, like you talked about with like getting paid. Right.

So how do you guys kind of capture the revenue streams that could come out of this? Or how does that work?

John Powers: We try and leave plenty on the table, right? We w we want it to be an easy decision for the customer. So we provide the service as a fixed upfront fee and a fixed monthly fee, depending on the size of the building.

So it's a very simple. Simple to understand, simple, to approve and buy a system. So we're not doing shared savings. We're not doing a calculation based on, you know, every little difference between your building and the rest. There's one price for small, medium, large, extra large buildings within our categories.

We talked about earlier, and then there are some ad-ons based on the additional complexity of things like solar battery, car chargers, things that are major changes add some number of dollars per month, [00:48:00] but the basic basic ideas, you know, a small number of thousands of dollars upfront and a small number of hundreds of dollars per month.

James Dice: And the savings would come from the bill through the

John Powers: utility direct. Yeah, the customer at the moment saves exclusively through their utility. You know, their utility bill, but that's just the economic side, right. We really have heard from our customers that they value four things, not one. So the four CS we're, we're calling them basically it's comfort because all energy management systems have to maintain comfort in the building, or if there's no point comfort control.

Because as I said before, a lot of these folks seem like they, they feel like they're out of control both of the operation of their systems and of the costs of those systems. Costs for sure. And then Carmen, as, as Deepa said, helping a lot of these businesses [00:49:00] hit their sustainability goals is a very important priority for them too.

So if you, if you can help the business with four problems at once, instead of just one the, the offering is much stickier. You know, people don't cancel after they start saving money and feeling better comfort and control. They are, you know, just going to stick with the product.

James Dice: And then where does the.

I'm going to sell this building's flexibility aspect come into this, is that a future capability?

John Powers: That's a near future capability. So we're going through the process of integrating some of the demand response protocols that are already in the market, into our software. That's a next quarter thing. And we're working with providers of demand response you know, to add that capability to to our customers and, and theirs.

Right? So [00:50:00] the Full-on loaded flexibility markets are probably still a year or two away. So I, I talk about demand. Response is kind of the, in the intermediate version we talked about in the middle there, but the full-on load flexibility as a service that provides money to the building in California.

It's no more than a year or two away the rest of the country a year or two behind that. I think California will show the whole country through Cal flex hub and other initiatives that are going on that this is not as futuristic as people think this can, this can be done now. Interesting. All right.

James Dice: I'm excited about that.

John Powers: Yeah. So me too, you know what? I've been waiting most of my career a long time. Yeah.

James Dice: So I love to, before we close out, talk about a couple of compelling case studies stories from these types of [00:51:00] customers. So I think this audience, the fact that we talked about the small buildings market earlier could be a little bit of a surprise to them, but let's talk about like what you've actually seen in some of these and some success stories from doing this and, and their buildings.

So do you have any, any, any great stories

to

John Powers: start with?

Deepa Lounsbury: Yeah, I'll start with a couple and you know, these two are kind of on the opposite ends of the spectrum in terms of what equipment exists in them or existed in them before implementation. The first one's really simple side, right? So, we and symbols not supposed to be negative, but You know, there's a church in the central valley that was installed two years ago.

That building, if a small church in a very modest income area they have no facility [00:52:00] manager, no building energy management system. It's basically the pastor and a few volunteers that are managing energy. Also didn't have smart thermostats. But they did get solar. And so they got solar and they were surprised after the solar was installed, that their bill was still so high.

And so, we looked at their building they were considering a battery but that battery would have. A hundred thousand dollars. and they were looking for mainly the economic value proposition rather than no backup power. And so we noticed that their pizza being set by event driven, HVAC loads you know, like many churches, they have their piece on they have events on sending mornings evenings, and then the, you know, preschool and then the one-off weddings and funerals church.

So, there, we took out the old thermostats put in new [00:53:00] ones and you know, basically started, started control. You know, we have the gateway, the, the Minute level energy monitoring. And we've made that a demand X, the cook building. We saved that building 30% on their demand charges, which ends up being, you know, $75,000 over 10 years.

Which, you know, they're investing, they're investing in their local community, you know, at their food banks and their, their soup kitchen. And also the pastor can focus on his congregation. Right. And then on sort of the opposite end of the spectrum in terms of complexity of existing equipment.

One of our customers is a school district in the central valley and they're, they have a building energy management system, they have a publican thermostats, they have a controls contractor. And all of these systems are working together and, you know, the, the, the [00:54:00] school is satisfied with the ability to interact with how they interact with them today.

But they're still paying a ton of money in, you know, demand, charges, and time of use charges because the best a controls company can do today is set static timers, and maybe change them every season. So we've installed and wear a layer on top of that existing equipment and those existing contractors to optimize their energy use dynamically and with the predictive controls.

And so, yeah, I mean, in terms of, in terms of reality, it's not totally straightforward to enter someone else's territory and start singing kumbaya. But as, as James likes to call it change management um,

James Dice: stakeholder change.

Deepa Lounsbury: Exactly. So we explained that we are, we are going to make the school even happier together.

[00:55:00] Right. You know, they like setting their schedules through, through this program. They like pushing the thermostats on, on this brand to thermostat the teachers like this brand of thermostats and pushing the up and down button there. And they also want saving schools are public schools, especially in this country are always looking for ways to.

Save money on energy and spend more money on books. And so we enable that.

John Powers: Absolutely cool.

James Dice: I'd love to hear just a little bit about how you guys message that To the existing stakeholders that are sort of responsible for those controls. So in the school district, you said controls contractor, but then there's also probably a facility staff on like at the, at the church.

So how do you sort of say, this is the way that we're going to do things. And kumbaya,

John Powers: uh, the benefits of our software are [00:56:00] additive to any of the strategies that are already in place. We're not taking, anybody's work away from them. It's a little bit of an educational sale because load flexibility is a new concept to a lot of these folks, but they're really smart about HPAC systems and about the notions that are behind controls.

You know, so far when we've had these interactions, we've found a new partner in most cases because the, the folks who are already in school districts are a good example. If they're in one, they're in several, within the state of California or elsewhere, and they're on the hook to deliver savings to their.

Client, right? So w we look at it as an opportunity to educate more of the market and work together to bring sort of these additive benefits to, you know, we're never going to put an outsourced facility manager from [00:57:00] extensible energy onsite at a school district, but that's the business model of some of these other folks.

So it's a, it's a complimentary offering. Once you get the education piece taken care of, and we're working again to make sure that gets communicated more clearly every time.

Deepa Lounsbury: Well, I wanted to, I mean, I'm really glad you asked that question, James, because you know, there is a whole ecosystem around buildings and it's just a controls contractor.

It's not any single person that we need to please. Right. Well, while we are demands, I have flexibility at its core. Nobody wants to buy a demand side flexibility. We have to package that in a way that is appealing to all the different people in that, in that ecosystem and solve real pain points. You know, in the case of the control contractor, they don't want to be changing schedules every day, you [00:58:00] know, that's that's not a good economic value proposition for them either.

And so, so, you know, they're happy to let us do that, but I mean, I'll, I'll just say, you know, when you're thinking about the ecosystem, right? There's, there's the building owners, there's the property manager, the facility manager, the tenants, the financier, and, and, you know, we really have to speak to all of them and their, their pain points and the things that they care about. You know, that's, that's sort of how we have to speak to all the different people in the ecosystem.

How all of us, like all of us in the industry have to speak to those people to,

James Dice: especially as we scale down to the small building, right? Because like you said, you could have five people doing all those things. Then you could have one person doing, doing all five.

John Powers: Cool. All right. Well,

James Dice: I love, I love the sin.

I'm going to call it the simplicity, quests that you [00:59:00] guys are on for smaller buildings. The white paper that would have come out last month. It's it, it unpacks the complexity stack for small buildings. So these are all the ways in which controls are too complex right now. And then. Proposes a simplicity stack.

So we'll put the link to that in the show notes. People can check that out. It sounds like you guys are already on the right track as far as like let's remove all the complexity we possibly can. I'd love to hear what you guys have as we close out what you guys are excited about for this coming year.

John Powers: Well, I'll just say this is, this is just. Based on my earlier comment about what's changing in the industry, this is just a breakout year for us. 2022 is we finally, at the end of 2021 are seeing the market moving in the direction that we've been working towards. So timing seems just amazingly right at [01:00:00] the moment.

And I think that the greater attention of the market on these critical problems is, is dovetailing with our technical and staffing progress in, in a way that I was really you know, delighted to see in this last quarter. So I think it's a breakout year for load flexibility and hopefully for us as well.

Awesome. All right. How about you depo?

Deepa Lounsbury: Yeah, I mean, as John said, love that demand side flexibility is leaving the walls of the DOE and RMR and coming into the role world and happy to happy to be part of that wave. I'm also just excited about you know, as I mentioned before, just democratizing energy management.

I really think, that every little building deserve the benefits of, you know, better control of their building remote control. And the last thing I'm really excited [01:01:00] about is working with all the really passionate people in the space who are.

Working on their own little wedge of the solution, right. I mean, working on just one of them, but all of them are important to make our buildings more sustainable and healthier places for us to, to live and work in. So

James Dice: that's a great mindset to close things out with.

Deepa Lounsbury: John did prepare two tutes and alive, you're still doing

James Dice: w we don't typically do that when there's two. Cause I don't, I wouldn't want to hear him from him and not from you. All right. Let's hear it.

John Powers: Well, I went back to my 30 year history in the business and went over some of the things that I've done, that I'm not going to say I'm proud of, but I think they're weird, weird enough to stump the [01:02:00] audience.

All right. While he was mayor of Oakland, I once lectured Jerry Brown on the future of energy in California. Okay. I led the team that put the first load shape on the internet once went to Amory, Lovins his house with a bunch of coal plant operators. Wow. That was tough. Two of those are true.

James Dice: My guts. The load shape one is false.

It had the least amount

John Powers: of information. So no, actually that one I believe to be true. It's hard to prove, but I'm pretty sure that's true. I did meet Jerry Brown, but believe me, if you've ever met Jack Jerry Brown, he lectured me on the future of energy, not the other way around,

James Dice: That would be as a non-California and that would be a piece of information that I could have used that I didn't

John Powers: didn't have.

Okay. All [01:03:00] right. Awesome. Well, thanks so much again, you can use that or not.

James Dice: Thanks for both of

John Powers: you for coming on.

Well, thanks for having us, James. This was really interesting. Good discussion. Looking forward to engaging with your audience.

James Dice: All right friends, thanks for listening to this episode of the Nexus Podcast. For more episodes like this and to get the weekly Nexus Newsletter, which by the way, readers have said is the best way to stay up to date on the future of the smart building industry, please subscribe at nexuslabs.online. You can find the show notes for this conversation there as well. Have a great day.