Texas Leads Renewable Energy Revolution In More Ways Than One — CleanTechnica Interview

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It may seem strange that America’s leading fossil fuel state is now the nation’s renewable energy standard bearer, but so it goes in this crazy mixed-up world of ours. Texas staked its claim to the pole position in the US wind industry early on, and it is gaining ground in solar power and energy storage, too — and you ain’t seen nothing yet, if all goes according to the plans of a UK startup with the unlikely name of Octopus.

UK’s Octopus Flexes Renewable Energy Muscles In USA

Octopus sailed onto the CleanTechnica radar for the first time earlier this week, when it dropped an embargoed press release into the email hopper that mentioned “shake up the US energy market” and “starting in Texas” within the first two paragraphs. I know, right?

Whether or not the self-professed tech unicorn is on to something remains to be seen, but the basic approach does knock down a massive barrier that separates individual electricity ratepayers from renewable energy, namely, understanding what a kilowatt is or, for that matter, understanding what a kilowatt-hour is.

Don’t just take our word for it. The Octopus press release details the company’s newly announced 100% acquisition of the US renewable energy startup Evolve Energy, and CleanTechnica was fortunate enough to catch up with Evolve founder Michael Lee over the phone. He pretty much summed up the potential impact of Octopus in 11 words:

“People have a hard time understanding kilowatts but they understand cash.”

Do they ever!

Wait, What Is Going On Here?

The basic idea is that today’s connectivity and smart grid technology — such as that developed by Evolve Energy — can provide individual ratepayers with access to the same information about energy markets that large scale electricity customers and other insiders have been enjoying all this time.

So, for example, a household with an electric vehicle would know when to charge up their sporty sustainable ride with the most renewable energy at the lowest available cost. Running the dishwasher and other household appliances also factor in.

The real magic happens when the system works in reverse. Households that have rooftop solar panels and/or energy storage capacity — including their EV battery — would also know when they can sell unused kilowatts back to the grid at the best available price.

If that sounds like it could motivate property owners to install rooftop solar panels — and where possible, to install more solar panels than they can use  — you win.

“Right now our current product is a wholesale, real time product that is traditionally only offered to industrial customers but now is offered to individual customers,” explained Lee. “It signals them to use electricity when prices are low [or even negative]. When the grid is constrained our customers can sell back to grid and become market participants.”

“They can see benefits of getting rooftop solar and selling back to grid, [and that] is becoming a significant factor in motivating solar installations and bigger installations,” he added.

A Renewable Energy Revolution In Every Pot

If all this talk of selling rooftop solar kilowatts back to the grid is beginning to sound familiar, you win more. Despite the fossil fuel fanboy currently occupying 1600 Pennsylvania Avenue, the US Department of Energy has continued to promote the idea that the widespread availability of rooftop solar has transformed individual ratepayers into energy “prosumers” who can actively influence energy markets by strategically deploying their ownership of solar assets, instead of passively sucking up kilowatt-hours.

The Energy Department is also eyeballing small and mid-sized wind power with a similar aim, though for now the main area of activity is rooftop solar.

If this is beginning to sound like the idea that distributed energy resources will dominate the sparkling green grid of the future, you win even more.

The technology is at hand, so the only question now is one of accelerating scale.

That seems to be what Octopus has in mind. Having already established a foothold in the UK and other markets, the firm’s $5 million acquisition of Evolve Energy is the first move in a planned $100 million commitment to put more renewable energy bargaining power in the hands of individual ratepayers in the US.

If America’s Oil Patch Can Do It, So Can Anybody (Maybe)

Circling back around to this thing about Texas leading the way from fossil fuels into renewable energy, at first blush it may seem like a case of why can’t everybody do this.

However, there are a couple of things about the Texas energy market that have paved the way for renewables to replace fossils, even under the legacy imprint of fossil fuel stakeholders.

One is the state’s unique status as the only state in the contiguous US that designed its grid to operate independently from elsewhere. That can lead to some unique challenges, but it also leads to unique solutions.

Aside from that little thing about trading electricity with Mexico (lol so much for building the wall amirite?), one early solution was to build a major new transmission line aimed at bringing clean wind energy kilowatts from western parts of the state over to population and industry centers in the east.

Another factor motivating innovation in both renewable energy and energy storage is the stubborn existence of an “electricity island” in the state, cut off from access to both the Mexican and US grids.

Add a Texas-style hands-off environment of regulation, and the stage is set for new green technology to wriggle its way into the grid.

“If you look at the interconnection, Texas has almost 100 gigawatts of assets trying to connect, and 99% are renewables and energy storage. The market structure of Texas has enabled renewables to flourish purely for economic reasons,” said Lee.

“Also, Texas is a hotbed of entrepreneurship all around. Having a deregulated environment allows third party companies like ourselves to connect with customers,” he continued. “At the same time there’s not the same market structure as other markets like PJM. Capacity markets are engineered to be favorable to fossil fuels and existing power plants. They favor what’s already built. Texas just focuses on economically efficient assets.”

For those of you new to the topic of capacity markets, that can get rather deep into the weeds, but the basic idea goes back to the roots of fossil fuel management. You build a certain power plant that has a certain capacity and that capacity is available all the time, need it or not.

“Capacity markets made a lot of sense before smart meters, controllable devices, and dynamically changing supply,” Lee explained. “Now the supply side is becoming less and less controllable and the demand side is becoming much more flexible.”

Adding Electric Vehicles The Renewable Energy Mix

The Evolve Energy acquisition is not the only notch on the Octopus belt in recent days.

Back across the pond in the UK, last week Volkswagen announced that owners of its electric cars could score a credit on their energy bills worth up to 8,000 miles of driving through Octopus.

The credit is available to EV owners who have an existing dual fuel supply with Octopus, or who switch to one.

“All of its tariffs use 100% green electricity — and claim not to be more expensive than competitor non-green tariffs,” enthused Volkswagen. “Customers can also offset their gas if they want to minimise their environmental impact even further. Also, Octopus offers fair and transparent prices, won’t lock customers into a contract and aims to make everything as easy possible.”

Interesting! If you’re an Octopus customer in the UK, drop us a note in the comment thread and let us know how it’s going.

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Image (cropped): Renewable energy and energy prosumers via US Department of Energy.