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Show Notes
How can the US make it easier, faster, and cheaper for homeowners to install rooftop solar? In this episode, Sunrun CEO Mary Powell shares her vision for boosting not only residential solar, but other forms of residential electrification too.
Text transcript:
David Roberts
In Australia, one out of three households has solar panels on the roof. In the US, it’s one out of 25. That probably has something to do with the fact that in the US, rooftop solar is twice as expensive, twice the hassle, and takes twice as long to get installed.
Why is the process so broken? And what could be done to make it smoother and faster?
To discuss these and related matters, I went to the source: Mary Powell, the CEO of Sunrun, the nation’s largest residential rooftop solar company — or more accurately, the nation’s largest residential electrification company.
Before taking the top spot at Sunrun, Powell spent more than 20 years in leadership at Green Mountain Power, Vermont’s largest power utility and a nationally recognized pioneer in clean energy. Sunrun brought her on to help the company move into products — batteries, EV chargers, virtual power plants — that were once thought the province of utilities.
I talked with her about how to speed up the rooftop solar interconnection process, the role of net metering, Sunrun’s move into vehicle charging and VPPs, and the future of distributed energy.
All right, then, with no further ado, Mary Powell of Sunrun. Welcome to Volts. Thank you so much for coming.
Mary Powell
Oh, my pleasure. I was looking forward to chatting with you.
David Roberts
Mary, I'm looking at my notes here and I have — let me just count real quick — one million questions to ask you. So, we're going to have to move quick here because I've got so much. But just by way of framing, I was in Australia recently and was listening to them talk about their rooftop solar success story there, the sort of rooftop solar miracle. So the US is at, I think, something like 4% rooftop solar penetration. And Australia is up around 30%, 35%, something like that. One out of every three households, mainly because it is two to three times less expensive and way, way, way faster to get on your roof there.
Most of what I want to talk about are in different forms. How can the US process be made cheaper and faster? That's kind of, I think, the theme of our discussion here today. But before we get to the reality of why things take so long, let's talk a little bit about perception. So I guess Sunrun is now the biggest residential solar company in the world — I know, in the US.
Mary Powell
Yeah, certainly in the US. Yeah, we're the largest, not just residential solar company, but we are the largest in the combination of solar-plus-storage. So we really see ourselves as a clean energy lifestyle company, and we're really well positioned to meet customers wherever they are on their clean energy journey and help them transform their lives to something that's more affordable, certainly something that's cleaner. So we have solar, we have storage, we have sophisticated electric panels, we have EV chargers, and of course, we have that amazing partnership with Ford on the F-150 that you can use to back up your home.
David Roberts
Going to get into all that later.
Mary Powell
Good.
David Roberts
But I assume as part of what you do, you do a lot of consumer research, a lot of talking to homeowners. So the first thing I'm interested in really is what do US homeowners say they want when they come to you? Why are they now installing rooftop solar and batteries? Why are they doing it? Or perhaps even more to the point, what do they say about why they're not doing it? What are the sort of pain points you hear about from customers?
Mary Powell
So the reason customers are going solar, and increasingly, as I said, solar-plus-storage in California now we're up to probably about an 80% attachment rate. So customers that are going solar really want the benefits of storing their energy as well and having the resilience and the comfort and the peace of mind that comes with that. Back to what I'm hearing from customers: It's so interesting. I would say for so many years, largely it was an industry where customers were enticed to go solar to save money, so they knew they could save money off of what they were paying their utility.
And Dave, that's still true. I mean, in every market that we sell in, the cost per kilowatt hour that you generate on your roof is lower than the cost you're paying your utility. So many customers still find the value of savings to be very appealing, but it really has evolved over time where so many customers, I talk to customers every single week as well as I've worked in our stores and I've been in customers homes. And increasingly what you're hearing is that they just want stability. I mean, I've heard so many customers have said to me, "Mary, like, it's fine if I save money, but honestly, I just want greater independence and I want stability.
I want to know that the price isn't going to go up of the energy that I'm getting." And of course, you also have so many customers that want solar energy because of the clean energy attributes. But so many customers now are really enticed around the energy independence we can provide. And then, as customers increasingly adopt electric vehicles, that makes them painfully aware of what they're paying on the kilowatt hour basis with their utility. So that also then entices them to really want to go solar.
David Roberts
So what do they say is stopping them then, the ones who are not pulling the trigger?
Mary Powell
I would say back to your opening. We don't make things easy, not Sunrun, but in the country, we don't make it an easy process for customers. And then I think for many customers, I've heard many customers who come back to us later because they say, well, it just feels like such a big decision and a big project, and then when they realize, "Oh, actually, I don't have to put any money down, it gets installed in a day." In many cases, we now can install up to two homes in a day. So they're starting to see it's not a big infrastructure project.
But I think for many customers, they initially maybe feel that it does. But also to your point that you started our conversation with, there's a lot, particularly in some parts of the country, it's a very onerous process and a long process, and some customers just drop out along the way.
David Roberts
I think because there's only 4% penetration in the US, it's still somewhat of a novelty to most people, I think. Most people probably don't have a really good sense of what's involved. So maybe just walk through what is the process of getting solar on your roof and what are those pain points? What are the points that are difficult and take a long time?
Mary Powell
It's not uniform, so it's different all over the country. It really depends on the state that you live in and the utility that you're served by, as well as then sometimes also local regulations and restrictions. But let me talk it through in sort of the easier and then the maybe more challenging state. So in the sort of more straightforward geographies, you could have a conversation with your salesperson, you could have a quote. Within days, you make a decision.
David Roberts
So, nobody needs to come to your roof now to figure out your suitability anymore. Is all that done by satellite and whatever now?
Mary Powell
Yes, there's a lot of advanced technology that we can use to understand whether a customer is suitable. In the process we do have somebody, actually, we do have photos that we have to get and we obviously want to verify everything. And so you start with that initial consultation, you get an initial design and then, yes, we go through the steps of finalizing that design, making sure it's the absolute right design. Once we understand the nuances of your home, once we understand the electrical infrastructure, the roof, the design of the roof, the age of the roof, the layout, and then that moves into full design.
And then you have to obviously work through interconnection with the utility and any permitting that needs to happen.
David Roberts
When does that happen, though? Does that happen as I'm planning my system? Or do I build my system and then contact the utility and say "Hey, I've got the system, I want to connect" ?
Mary Powell
Well, first of all, at Sunrun, what we do is we want to make that easy for all of you. And I first went solar 14 years ago, bought the system outright in Vermont with a local company, and then since then have gone with solar storage and EV charging with Sunrun twice and once before I became CEO. And they make it very easy. So they made it a very easy process. So they basically just keep you updated. But Sunrun is the one that shepherds through all of those process steps that we then make the customer aware. I mean, obviously for the customer, it may entail that somebody has to stop by the home if there's local inspection that needs to happen, but we basically shepherd that for the customer.
But you have to work on interconnection. So again, in some jurisdictions interconnection is actually very straightforward. Vermont's a great example of a very solar friendly state where the utilities make the interconnection process very easy. There's some states where it's very time consuming with months of delay for studies or paperwork. There's many states where the utility interconnection for home solar and battery systems, the costs can range from one hundred dollars to ten thousand dollars depending on study costs or required upgrades. Yes. And then there's some where there's just solar is prohibited.
David Roberts
Yeah, there's more and more areas now where they're just saying "No more." Right. Like you're cut off. Which seems kind of crazy.
Mary Powell
Yeah, it does to me, too, particularly as a former utility CEO, because even if I were facing what they like to call a solar-saturated circuit, it's an amazing opportunity just to put some storage, some power packs or utilizing some other storage technology at the substation and basically just soak up all that energy and use it exactly when it's best suited for the grid. So there's many, many solutions that we could absolutely see.
David Roberts
It occurs to me that if the customer is just interfacing with Sunrun and Sunrun is hashing through these difficult and extended interconnection processes, it seems like a business risk for Sunrun, basically is the customer aware that it's not Sunrun's fault basically that it's taking so long? Are those tricky discussions?
Mary Powell
I'm a firm believer in really setting expectations appropriately up front. So we've done a lot of work on that, on our customer obsession and customer experience to really make sure that right up front it's all laid out so that they understand the steps of the process, but they don't have to necessarily be exposed to having to deal with all the steps. So again, in many cases when you lay it all out and you tell a customer "So in your jurisdiction it's going to take six months, and these are all the reasons why," most customers are okay with that. But to your point, when things increasingly become more complicated through that process, there's obviously a risk of losing some of those customers and they don't end up going all the way through the whole process.
David Roberts
Right. Well, let's talk then about interconnection process. As you say, it's not ideal that it differs so radically from one utility to the next. And it's not ideal that it can take three to six months. It's not ideal that it's impossible now in some areas. So what are some reforms? Like what are some steps to take to make that whole process smoother and more predictable and more uniform. And who needs to take those steps?
Mary Powell
Right. And back to your example of Australia. Again, the differences are exactly what you're talking about. The differences are that it's very standardized there. So those are the kinds of solutions that we're seeing that could help reduce costs and speed up deployment of home solar and batteries. So it's really having standardized costs for residential interconnection so that there are no surprises or unequal costs that will make a project too expensive for a family. For example, in Illinois, through the Climate Equitable Jobs Act enacted, they enacted a $200 interconnection fee so there are no surprises with upgrade costs, and it remains affordable for all households.
So there's great examples all over the country. I think it's really about how do we make those more standardized, faster and more affordable interconnection with online and standardized interconnection technical requirements, such as allowing meter collars. I don't know how much you've spent time looking at meter collars, but meter collar adapters, they avoid main panel upgrades, so they save time and costs. So dozens of utilities allow for customer owned meter collars, but the majority still continue to block their use. So again, a really simple change. Utilities could easily allow third party certified electricians to approve main panel upgrades, also avoiding increasing and unnecessary utility delays.
Those are a couple of examples. There's also ensuring interconnection access with smart inverter functionality. A few states have enacted fast and open interconnection rules that leverage smart inverters. For example, Hawaii now uses a combination of a voltvar function and a volt watt function to avoid the need for distribution, circuit hosting capacity, and customer service upgrades.
David Roberts
Explain it at my grandma level. What is the significance of a smart inverter? What does that get you? What does that do for you?
Mary Powell
I think the easiest way to explain it to grandma or anybody is really, when you think about it, the design of the utility system is literally like the same fundamental design as 100 years ago. So when I use these names and these technologies, it's really simply saying, moving towards putting technology on the grid that makes it smarter and more effective so that it's more flexible to allow additional solar energy on the circuit. So it kind of gets back to what I was saying about the example of where we have utilities that are saying no more solar in XYZ territory. They could solve that through some of these kinds of technologies.
They could also solve that through just, again, putting storage in substations along those circuits so it allows them to then utilize that energy. So even on clogged circuits, customers can interconnect solar and batteries to the grid and they can avoid high upgrade costs.
David Roberts
And what is SolarAPP? Tell us a little bit about that initiative.
Mary Powell
Yeah, SolarAPP was launched by NREL in 2021 to basically address the permitting times and to cut down on permitting.
David Roberts
Which is different than interconnection.
Mary Powell
Yes.
David Roberts
Permitting comes before or after interconnection or it's all at the same time?
Mary Powell
To me, that's all at the same time. I am sure there's a linear process to it that I'm not aware of. But at the same time as you're having to get things ready for interconnection, you're having to work through the permitting process.
David Roberts
Who is permitting? Who is the permit coming from? Is it the city?
Mary Powell
Yes, the local AHJ. So it's the local jurisdiction that you're dealing with. So that is one of the reasons that the development of the SolarAPP was so powerful. Because you're dealing with so many different jurisdictions that in many cases were using an intensely manual process and they also had just nuances that weren't necessarily meaningful, but they were historic. Do you know what I mean? They were just in place. So what was really cool about the work that Sunrun did with NREL and others was launching SolarAPP. And again, it has helped. It was launched in 2021 to cut down on permitting times.
David Roberts
It's just to standardize that process, that's what the app is meant to do?
Mary Powell
Yeah, it's to automate it, but it obviously takes time to get the local offices using the technology. But to date, we have more than 24,000 permits that have been issued via SolarAPP across the country. So that's very powerful because it took what was a weeks to months long process and made it instant. So it ends up saving consumers, installers, and local governments time and money.
David Roberts
Yeah, I would think the local governments would want that, right? I mean, I think it would be desirable for them. I can't imagine them resisting why they would resist such a thing.
Mary Powell
Well, I mean, human behavior, right? Don't we all —
David Roberts
Yeah, I often can't imagine why people would resist things. And yet there they are resisting them all over the place.
Mary Powell
Exactly. No, I had the same reaction way back in 2007 when I launched an incentive as a utility for our customers to go solar, I had the same reaction. I was like, why would anybody resist this? This is just the future, right?
David Roberts
Yes, turns out people can come up with all kinds of reasons to resist.
Mary Powell
Exactly.
David Roberts
So that's interconnection, which is a utility thing that needs to be standardized, and then there's permitting, which is a local jurisdiction thing, which also needs to be and is being standardized. Are there other soft costs? Because this is the thing, right? Like, we're buying the same cheap panels here that they're buying in Australia, so it's not hardware, it's all these soft costs that are making ours take longer. Are there other soft costs?
Mary Powell
That's why we should be able to deal with it because the biggies are exactly that: The interconnection and the permitting. And again, one of the things I was really thrilled with was just about a year ago, California did adopt a mandate requiring cities with populations over 50,000 and counties with populations over 150,000 to adopt an online automated permitting platform like SolarAPP. So we are seeing Colorado also recently adopted legislation which established a million-dollar grant program to implement SolarAPP because there is cost to implementing it. So back to your question of like, why wouldn't they use it? You know, it's still converting a manual process to an automated one.
And we've also seen work in Maryland as well where the Maryland Energy Administration requested money from DOE to support SolarAPP efforts. So I do see on the permitting side, I definitely see some progress happening. And on the soft cost on the interconnection, again, there are some bright lights, but a lot more work could be done to bring down the cost significantly for consumers.
David Roberts
I feel like every pod I record at some point we come to the problem of "utilities being utilities" being the main issue. Okay, let's jump to a few other subjects then, which may or may not be slowing things down and I'd like to get your read on. I hear a lot in the clean energy world generally about labor, labor shortages, sort of shortages in the trades, a shortage of trained electricians and everything else. Is that something you're struggling with right now? Like are you having trouble finding people to do the work or is that —
Mary Powell
No, we really aren't. I mean, it's really interesting to me leading Sunrun, it's so powerful the kind of work we do. We are a highly attractive employer and in fact, I'm out and about on a regular basis talking to installers and electricians and the story I hear over and over again is that they are really thrilled to have the opportunity to work at a company like Sunrun. I mean, we treat people well, they get good benefits, they get compensated well, and the attraction of working in clean energy.
David Roberts
I've heard, though, that I think, one of the sort of traditional dings on the whole notion of a just transition, which you often hear is that the old jobs in fossil fuels are unionized and really well paid and et cetera, et cetera. And the shifting to jobs like solar installers, which are less well paid, more often gig work, et cetera, et cetera. So you don't think that's true?
Mary Powell
No, I mean, in fact, really, again, where we're pulling people from the most on the installing side are people that have been working in the construction business. And in fact, just with electricians that I was meeting with when I was down visiting some of the branches in Massachusetts, were telling me how, again, it's not just the pay and the benefits, it's also the stability, and frankly, the way they're treated at Sunrun. So no, what I'm hearing is it's providing a lot of really good opportunity — I mean, honestly I was a bit surprised just because we have all talked about there's going to be a real challenge with electricians in particular.
And so I continue to be pleasantly surprised that we have a really good amount of applicants. Yeah, we haven't had any challenges in saying "Oh my gosh, we can't meet the demand in XYZ Market because we can't find the people that we need."
David Roberts
Let's talk a little bit then about supply chains. There was a lot of hubbub in the last couple of years. Lithium got expensive, there were shortages of materials, there was panel shortages, silicon shortages for a while, panel shortages. I haven't kept it all straight in my head, but there's a lot of difficulties with the supply chain. So I have a couple of different questions about that. One is just where does that stand? Are you currently able to get what you need at a reasonable price? Are the supply chain problems being smoothed out?
Mary Powell
Yeah, they are. There were a lot of things going on at the same time in the last couple of years with COVID. So, yes, there were some real challenges. We've been at this now for 16 years, so we've always been a leader in ensuring that our suppliers meet the highest standards in the context of all the existing rules and regulations, but also really then shooting for the highest standards possible. So we've always had that in place. So, when there were different federal challenges that needed to be met, we knew it was a matter of time until we met those with our suppliers.
The real challenge was the COVID-related challenges, and that impacted, as you know, panels, it impacted storage. Now the pendulum has swung, and what we're finding is that as we look out to the end of this year and into next year, we actually see declining costs.
David Roberts
Yeah, I saw lithium has started nudging back down again already.
Mary Powell
Yes, exactly. So, as we look out, we're actually seeing declining costs in our inventory. Right now, we're absorbing just a lot of the inventory that we built up candidly because of some of the challenges, and we wanted to make sure that it didn't slow us down. But no, so, I would say right now we're feeling pretty good.
David Roberts
And this is a broader question and I don't really know how freely you'll be able to speak about this. But one of the sort of philosophical things, animating IRA, the Inflation Reduction Act and all the Biden legislation is this notion that it is a threat, a national security threat and an economic threat for China to dominate supply chains in all these technologies. That means processing of raw materials straight up through anodes and cathodes batteries, panels, the whole nine yards. And there's a big effort in IRA to onshore and or friendshore, as they say, supply chains. What's your general take on this at kind of a philosophical level?
Do you agree that it is smart for the US to try to move supply chains on shore, even perhaps at the expense of slightly more expensive panels? And there's the whole tariffs issue too, tariffs on Chinese panels, et cetera. Do you agree with that general push or do you think it's better just to buy all the cheap panels you can get and accelerate deployment?
Mary Powell
Candidly, one of the things we're pleased about is that the Inflation Reduction Act is encouraging US manufacturing, you know, and the domestic content adders are real. Do I think that will have a positive impact on the US economy? Yeah, absolutely. Do I think that's going to have a positive impact for Sunrun? Absolutely, actually. I mean, from a broader perspective —
David Roberts
What do you get out of it to have US-manufactured panels?
Mary Powell
Just more choices of more vendors and companies to work with, more competition. I don't think there's anybody that is launching an effort in the US that is saying, "Well, I'm going to launch it, but I'm just going to be a lot more expensive, and everyone's going to buy it." So I think that the desire is to have competitive manufacturing. It'll take time to see how that plays out. But yes, we've already used US sources wherever we can and so the idea of having more available to us is of course attractive.
David Roberts
One question, I got to know, I threw it out on Twitter that I was going to talk to you and one thing a lot of people are interested in is whether higher interest rates are affecting your business right now. This is a big subject in the clean energy world that recent interest rate hikes are doing damage, say to the offshore wind industry, for instance. Are you seeing that how's that playing out in your business?
Mary Powell
Yeah, for sure. I mean, higher interest rates have affected, I mean, they're going to affect utilities and utility rates in a significant way and they have absolutely affected, I think, every fabric of business and society in some way. And for sure for Sunrun because really a lot of what we do is we finance for customers. So we give customers the opportunity to buy through a third party ownership model, which again so many customers love, and allows us to have a really wonderful long relationship where then we can sell them additional products in the future. But yes, so a lot of what we do is financing, and we have absolutely had to absorb the higher costs in the market.
We had flexibility to do that because honestly, in so many jurisdictions in the country, we were selling at like 30% below the utility. Again, utility prices went up dramatically over the last few years. So that gave us headroom to deal with those price increases that were coming through not just in that, but also because of the supply chain challenges that you and I just talked about. We had to absorb some of the costs associated with that over the last couple of years. But really what we found is we had significant headroom in the markets that we were in because of how high the utility rates were.
So we were still able to provide in all the markets. We do business in a value proposition which is below what customers are generally paying the prevailing utility rate.
David Roberts
And you think that you could weather that for an extended period of time, do you worry about this in the long term?
Mary Powell
Like everyone. The interest rates continuing to elevate, just continue to make some aspects of business tighter. But yes, I feel very confident in what we do in the value proposition we provide customers and the flexibility that we have to create other value streams that help offset that increase in rates. Like for instance, one in particular this year, it's really, really powerful now that I would say all across the country, but particularly like in a really important market like California, we're no longer just selling one product. So for years we were basically monetizing — every customer was worth the value of one product, we were selling them.
And now across the country, but particularly in some of our most important markets, we're selling every single customer two significant products. So that really helps offset some of the other cost pressures from rising rates.
David Roberts
And here's a question that might seem kind of dumb and obvious, but I still would be curious what you think is IRA helping? I mean, obviously IRA is helping. What impact have you seen in the year since IRA was passed on your business?
Mary Powell
I mean, the most significant impact on us was just the extension of the federal tax credit. So that was effective right away and having not just having it extended, but having the stability of saying it was over a very long period of time was very, very powerful. The other incentives are going through the process to make their way to the market. So energy communities is one where, again, if you're helping customers in fossil fuel based energy communities go solar, there's additional incentives in those communities. Sunrun was already selling in a lot of those communities, but they didn't really get identified until about this summer.
The other incentive that we're really excited about is the low and modern income incentive because despite what people think, the majority of households installing solar are low and modern income households in the United States. So the fact that we're going to be able to help more of those customers go solar and have storage and have energy independence and feel more safe and secure in their own homes, it's very, very powerful. So that is one that we're really looking forward to. And then back to your earlier question, the domestic content adder. I think it is encouraging some domestic manufacturing, but it also is something that is going to have an impact on making our packages for customers more affordable because some of our partners will be able to take advantage of that domestic content adder along with us.
David Roberts
On to another very hot topic, which is net metering. For those listeners of Volts who are not familiar with net metering, I can't imagine who they are at this point. But this just means if you put solar on your roof and you generate more than you use, you can sell it back to the utility. Net metering sort of determines how much the utility pays you for that power. Let's start here. California has been wrestling with this and wrestling with this, and wrestling with this because the critique of net metering is, from its critics: They say if you wipe out the bills of residential solar homeowners, then all the fixed costs of maintaining the grid get lumped onto who remains.
Basically, prices rise for those people who can't afford solar, and then the solar people — This is a long, endless debate, but anyway, California has been wrestling with it, finally came out with its new version of net metering, and then got roundly beat up in public, went back to the drawing board, and I think have come out with the new, new net metering. So I guess my first question is just have those revisions downward in what California is paying affected your business?
And just more generally, what's your take on net metering? How much of your business relies on net metering?
Mary Powell
So what my takes is, going back to initially how you described it, and again as a utility leader, I saw solar and distributed energy and then storage — we were the first to partner with Tesla on their Powerwall way back in 2015 — I saw all of those things as obvious, necessary evolutions of a 100-year-old way of thinking about providing energy to homes and businesses and to refashioning the grid. So I've always felt that when you take a lens of "How do I make this a valuable asset in the future?" you get two very different answers than when you take the lens of "How am I going to deal with this disruption and this new technology that I'm feeling threatened by?"
So, from a big picture perspective, I think the most significant thing that has been missed in this is the question of how should the utilities leverage this transformation versus resist it? So to put a point on that, and again, the argument about, "Well, they're not using as much yet, they still need the grid" — we've pushed energy efficiency as a society for decades, right? And so a customer that's made a ton of energy-efficient investments and has gotten their bill down to a very low amount, should they be penalized for that? Back on the philosophical thing, I think that's a very interesting question.
But what is more important, from my perspective on this topic, is that what you actually will find, if you look at the data of what's happened over the last seven years, is that solar customers tend to be the first customers that then want an electric vehicle, that then decide they want a heat pump, that then decide they're going to go with the induction stove — like a lot of customers. What we found, and now I'm talking from a utility perspective, but we see this as well at Sunrun, what we found is actually in many cases, we ended up supporting more load at that home than we did before because they were the leaders of electrification. The really cool thing, if you think about it from a "How do I leverage this transformation" versus resistant perspective, is it gets really cool when you start thinking about, well then how if that home has solar-plus-storage plus a smarter panel like we put in homes now, we've started partnering on that. Right.
What you in essence do is you create for the utility an amazing capacity to have smart controllable load all over the grid. So I can't answer the question, it's like, why are we staring at the blade of grass instead of the lawn? Because that was for me, the sort of challenging part of dropping into California right as this was all happening. I kept saying, "Geez, I think the biggest problem is this whole thing is based on a look-back study." We need to be looking forward. We need to be thinking about how do we radically collaborate and actually create a world where we're helping by having all of this smart controllable load which will then make the grid more affordable for everybody.
So that was always the orientation I took, Dave. I mean, I never took the orientation of, "Oh geez, you're generating your own and now you want me to buy it and you're using less." I took the orientation of "Where are we going with this, this could be really powerful and it could be a really powerful way to save money as a grid operator." That was the way I looked at it.
David Roberts
I think some of the smarter net metering critics approach it from basically that perspective, saying like, this is a relatively old school, kind of primitive way of compensating for this. It's not sensitive to time of use, it's not sensitive to geography and grid conditions. That's because households are getting more sophisticated and because the ways grid managers are interacting with households is getting more sophisticated. We need to basically evolve beyond net metering to something more smarter and more nuanced. Do you buy that or do you think that net metering is good enough?
Mary Powell
I've always been bullish on the notion of solar and storage in every place. I mean, we're actually going to be offering storage only to customers by the end of the year, going into next year. So, again, I think storage alone is a great standalone product in the energy transition. But for customers who've gone solar like to have storage, we feel like that's really powerful and that's been where we've been headed for years. The only reason we don't have more of it on the system is really back to your earlier question on the supply chain challenges, right?
So storage just wasn't readily available for a couple of years and I think that slowed things down. So policies and approaches that encourage more storage on the system, I think that's a very forward way of approaching the energy transition. But back to my earlier point though, and the way I looked at it from a grid perspective, and in fact we did, we attracted, we actually held like a forum in a part of the state where we knew we could really leverage having a lot more solar energy capacity online. So we made it super easy. We brought solar installers into town, we showed them the areas where it would be great if they could install more.
So I think there's ways to do it that way and there's also ways to do it in the context of so then just put some storage on some of those circuits. When I look at the speed at which we need to all be moving in the context of the energy transition, my view is we should all be working with the lens of coming at it from a place of abundance, of how do we get more. I mean, again, we're scaling at a gigawatt pace.
David Roberts
Yeah, that's wild.
Mary Powell
As a utility executive, I know how hard it is to bring on a gigawatt, right? So why wouldn't we want to leverage homeowners? They're the ones paying for these generation assets to go on their roofs, right? So why wouldn't we want to continue to encourage it and then just get smarter and better at how we capture that in a way that is useful from a grid perspective? And there are many ways to do it. Again, you know, having all of that smart controllable load that you could have through companies like Sunrun is really incredibly powerful.
David Roberts
Do you see any — you know because California is not the only state that is contemplating reducing their net metering rates or imposing fixed fines or costs on solar homeowners? Basically, the generosity I think is declining in a lot of places. Do you see any appetite for going off-grid? Do you see that in the future, more people wanting to go off-grid? And is that any part of your business yet? Are you helping anybody go off-grid yet?
Mary Powell
There are customers that are interested in it. Even as a utility, I offered customers the opportunity to go off-grid years ago. So I think for some customers that is what they want to do. But I think for your mass market, I think for your average American, being interconnected makes a world of sense. And leveraging these technologies can dramatically reduce outages, can dramatically reduce challenges that we're having with the grid. In 2022, more than 140,000,000 people in 40 states dealt with blackouts or calls to conserve power due to extreme weather. So that's a great example. In California, we real-time dispatched back to the grid that stored solar power that then helped every other person on the grid.
For me, it is so much like what we really need to do is reframe and be thinking about how do we radically collaborate? Because again, the grid let's go back to the grid. The grid is like 40% economically efficient. It's not built for economic efficiency. It's built for the worst minute of the worst day that happens every ten years and then 20% some, right? So one of my big drivers in really embracing distributed technology was that. Because I was so tired of the old thinking of beat the peak: "Oh, we got to chase the peak," and then you had all these peakers, right?
David Roberts
Yes. Overbuilding.
Mary Powell
Right. Why don't we focus on flattening and crushing the peak? Why don't we focus on eliminating? The way to do that is to get to a grid that is as — I used to like to think of it, where you become like the symphony conductor of an orchestra of a ton of instruments. You have EV technology that you can use now to support the grid. So it's really how we could make the entire grid more affordable by embracing distributed smart controllable load and being able to store it and dispatch it. So this year alone, we're installing a nuclear power plant's worth of solar just this year.
And when you think of that attached to storage, it is it's mind-blowing.
David Roberts
Another excellent segue to my next question, which is about, speaking of being a conductor of an orchestra, is about virtual power plants. These are also a hot new thing in the energy world. And for those who don't know, a virtual power plant is just a bunch of distributed energy resources. Panels, batteries, cars, smart panels, water heaters, what have you, coordinated by a single entity in such a way that they act like a big — well, it's kind of misleading to call them virtual power plants, actually. This is one of those things. It's dumb terminology because they're not just producing power.
Right. You can also coordinate them to store power. So it's like virtual power plant plus storage, virtual generation plus storage.
Mary Powell
Well, it's a power plant. Like, how I think of it is there's nothing virtual about it. It's a power plant.
David Roberts
But also a big battery.
Mary Powell
Yeah, well, that's my point. It's actually a distributed, flexible, amazing power plant. Like, again, as somebody who ran a utility —
David Roberts
It's the coolest power plant.
Mary Powell
It's the coolest power plant you could have. Just seriously, from a utility perspective, we had a bunch of peakers, right? And you have to run tests, you have to make sure they're running for like that one hour of that one day a year that you're going to need them. And then guess what? Sometimes that big hunk of metal, it doesn't turn on and then you're out of luck. Right. When you have a distributed power plant and you have all these devices you're pulling from, guess what? If a few of them you don't pull from, you still have 99% or 95%, right.
That's not true. With a fossil-based peaker planner, it's either working or it's not. And I can tell you when it's not. It's painful, as we all know.
David Roberts
Yeah. This is one of the dumb things I always hear because you always hear critics being like, variable power has to have 100% backup. And I'm just like, that's ridiculous.
Mary Powell
Right.
David Roberts
A natural gas power plant, you need 100% backup because if it doesn't come on, then the whole thing doesn't come on. But as you say, there's not one single failure — point of failure in a virtual power plant. It "degrades gracefully" is, I think, the system architecture term for it.
Mary Powell
Yeah.
David Roberts
So I didn't actually know until very recently that Sunrun had gotten into the virtual power plant business, the aggregation business. Just tell me a little bit about what that looks like, where you're doing that, and kind of like how's it going so far?
Mary Powell
Yeah, actually, one of the reasons Sunrun got on my radar and I think I got on Sunrun's radar so many years ago, was because I think we were the first on the utility side to do a virtual power plant, and Sunrun was the first on the solar storage side to do a virtual power plant.
David Roberts
When you say "we" just for listeners benefit, you were in Vermont at —
Mary Powell
Green Mountain Power. Yes.
David Roberts
— at Green Mountain Power.
Mary Powell
Yeah. So that was one of the reasons that Lynn and I got — Lynn, who was the co-founder and former CEO of Sunrun — Lynn and I got on each other's radar was because of our work and our work both seeing that, "Oh, my gosh, like, through collaboration, we can modernize the grid and make it more affordable for everybody." So Sunrun's had many different programs. I would say one of the ones that I think is most exciting, to tell you the truth, is the most recent one because we've learned as we've gone along and we did a project with Patty at PG&E where our customers in California were able to participate in a three-month program.
PG&E compensated our customers. So these are existing Sunrun solar-plus-storage customers that we've had in many cases for years.
David Roberts
How many were involved in this? I just mean, like, scale, roughly scale wise, hundreds of thousands? I have no idea how big these things —
Mary Powell
We're in the tens of thousands with PG&E. So what's really cool about that program is, again, it's to help with summer reliability. And again, back to what we were talking about. You can have big peakers you can rely on, or you can have these distributed resources. And so, again, what PG&E wanted to do was leverage these distributed resources. So the customers received a notice that they could get paid $750, which is real money to households. Right, $750 —
David Roberts
Is that per year or just a flat fee?
Mary Powell
It was just a flat fee for these three months. So it was for three months they were getting paid and with no impact on their use of the storage. So it was also done in a way to make sure that if there's an outage, they would still have the storage and still be able to use it for resilience, which so many customers want. So I think it's a great example of the kind of program that really can scale.
David Roberts
So you're not doing the thing where you call these people and say, "Hey, can we take some of your storage?" This is all automated. Sunrun is controlling all these things centrally. And you're not interfacing with homeowners about it.
Mary Powell
Our whole vision is to make life easier for customers. One of the things that I was never a fan of was energy policy that was about making lives harder for customers. I think most Americans have enough things to worry about when they come home. So we want to make their lives easier.
Yeah, tell it to Texan ratepayers.
Exactly right. So if they have time of use rates or — we want to make all of that easy for them so that it all just happens behind the curtain, if you will, and they get the best optimized value for their home and they don't have to worry about anything. They can just live their lives and use energy when they need to.
David Roberts
So do you see the virtual power plant thing evolving where — because just a flat upfront fee seems like for a test project is fine, but do you think these things will evolve where compensation for the homeowners involved will be more sort of scaled to the amount of use you're getting or scaled to — you know what I mean? Sort of like variable, the compensation for homeowners, is that going to evolve or do you think just writing them a check upfront is the best way to do it?
Mary Powell
I think undoubtedly it will evolve just because this is still a relatively new space. So when you look at any evolving system, you're going to see different mechanisms. You're also going to see because we don't have every state is