Balto Energy Has A Plan To Move The Electrify Everything Agenda Forward
Balto Energy wants to help us electrify everything — the mantra preached by committed climate activists like Tony Seba and Mark Z. Jacobson. It also wants to make money doing it. Balto Energy is a business, after all. Its CEO, James Quazi, was a Solar City executive who later became the head of Dandelion Energy, the Alphabet spin-off that promoted geothermal systems for residential customers. He was in semi-retirement until the California PUC decided to upend the world of rooftop solar with new rules that reduced the amount of money that homeowners with rooftop solar can earn, stretching out the payback period by several years.
The new NEM 3.0 rules incentivize homeowners to install residential storage batteries to supplement their rooftop solar systems, but Quazi believes doing so opens up a whole new area — converting homes to all-electric systems such as heat pumps for heating and cooling, heat pump water heaters, induction stoves, and chargers for electric vehicles. To Quazi, the companies that used to be solar installers now have an opportunity to offer those upgrades as well. The problem is they know how to sell rooftop solar, but are not so good at selling those ancillary systems.
Sales, reduced to its core principles, involves identifying what customers need, then presenting them with the best options available to meet those needs. It makes no sense, in other words, to show someone who needs a minivan a bright red sports car that only seats two. Price does not become important until the buyers see an option that appeals to both their needs and their wants. Rooftop solar companies have an opportunity to include all those other pieces of the electrify everything puzzle, but they don’t know how to show customers what those options are or how much they would cost. They also don’t have the expertise to manage the installation of heat pumps, water heaters, EV chargers, and the like.
Balto Energy Simplifies Home Electrification
That is where Quazi thinks Balto Energy fits in. For their customers who want to “electrify everything,” companies have to be willing to serve as general contractors and envision each job as a part of a system. “We still don’t have a great tool that coaches homeowners through what that experience would be. There isn’t a holistic view of it,” Quazi told TechCrunch recently. Balto has developed a tool it believes will simplify the process so that solar installers and homeowners can identify needs and solutions that benefit both.
The Balto Energy tool functions as a decision tree for homeowners to help them decide where they want to start, which projects they want to address, and when. Are they only interested in saving money? Then a relatively simple solar plus battery installation with an EV charger might be the answer. Or maybe they want resiliency during extreme weather or natural disasters? In that case, they also might want to electrify more of their home with heat pump equipment. “You have to help people understand what the options are and what’s the best one for them,” Quasi said. To provide recommendations that make sense, Balto models energy usage for a home using utility data provided by its customers. “You have to help people understand what the options are and what’s the best one for them,” Quasi said.
All those projects, though, can be expensive propositions. Solar panels alone tend to cost tens of thousands of dollars. The same is true for heat pumps. An all-in electrification plan would be far more. The total can be a hefty amount that most homeowners don’t have. Current interest rates make borrowing money to pay for a full electrification program a daunting proposition. Quazi thinks he can ease the burden by offering a form of financing that he said is not a loan. “For a residential project that’s financed through a loan, a lot of benefits actually fall on the ground. There’s a bunch of trailing things that we think we can monetize,” including depreciation and renewable energy credits that it sells to other companies.
Because Balto would own the solar assets for a period of time, it would benefit from any available credits. Some of its revenue would come from those credits and it would direct another portion of it toward reducing the interest rate on the financial instrument it offers customers. “You might take out a loan today [for solar], and if that loan is 20 years, the interest rate could be 12%. We’re looking at half that or less,” Quazi said.
Accurate Data Is Key
“More and more accuracy is becoming more and more important, but we want to do that with as little work as possible,” said Jeff Friesen, CTO and co-founder of Radiant Labs, a startup that makes modeling software being used by Balto Energy. “That’s where utility bills come in.” Quazi said that for the level of accuracy that Balto Energy is after, “utility bills are a requirement.” With utility billing data in hand, “we can calibrate that model of the house to what’s actually happening, taking into account weather and the characteristics of the house and occupant behavior, and then show you what’s going to happen when you put in a heat pump. Post-install, there are a lot of things we can do with smart charging for EVs, controls, and feedback from heat pumps — you can calibrate and control the differential accuracy over time, and start to drive to the outcome you want,” Quasi said.
Not every household will find that the combination of solar and electrification will pencil out, but Balto Energy has some preliminary data indicating its approach can work for many of them. Doing the work to determine what combination of investments now will yield the optimal long term benefits later is much more complicated than the calculations that most solar installers and HVAC contractors do today, Friesen said. “But that kind of analysis is needed if we’re going to be able to hit a significant number of homes and get them electrified,” he said. Today, of the roughly 115 million US homes that must switch from fossil fuels to electric heating and appliances to meet national emissions reductions goals, fewer than 1% are undertaking those retrofits every year. “Our goal is 10 million a year.”
More certainty into the future value of solar electrification could give lenders the confidence to invest in home electrification projects or bring down the cost of loans. Balto plans to build financing into its business model, Quazi said. “Verifying the savings — and verifying the accuracy — is the important next step,” he said. Instead of homeowners arranging their own financing on a case by case basis, the certainty that Balto makes possible can attract larger institutional investors, lowering costs for everyone.
Quazi is a firm believer in the “electrify everything” movement. He hopes that in the foreseeable future, “infrastructure that pumps combustible gases in the people’s homes” will fall out of favor. “It’s one of the things we’ll look back and be like, ‘That was crazy. We shouldn’t have done that.’”
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