International Business Machines Corporation (IBM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Rima Oueid. I am a commercialization executive at the U.S. Department of Energy in the Office of Technology Transitions, also known as OTT. I have a wonderful panel today. Our first panelist is David Slutzky, he's CEO of Fermata. Our second panelist is Graham Turk. He is the innovation strategist in the Innovation Development Group within Green Mountain Power. By the way, congrats on your B2G program announcements. And last but not least, Mahesh Sudhakaran, Chief Digital Officer with IBM in their Energy & Utilities Group. So before I set the stage for our discussion, I want to briefly introduce you to OTT. Our office was created in 2015 by Congress, and our mandate is to expand the commercial impact of the department's R&D portfolio to advance the economic energy and national security interest of the United States. We help work on developing pathways to commercializing innovative technologies, such as the ones you're going to hear about today. We work with 20 national labs and plants across the country, and our labs also helped license 40,000 different types of applications and patents that are available through our loan -- or rather our lab partnering service website. So do check that out at the booth later today. So with that, next slide, please. I want to take you back in time. It's Easter morning, 1900, Fifth Avenue, New York City. Can you spot the automobile in the sea of horses? There's a hint with the little red circle. Next slide, please. Again, Easter morning, this time, 1913, Fifth Avenue, New York City. Can you now spot the horse amongst the sea of automobiles? In 1884, there are 150,000 horses in New York City. By 1908, there are 100,000 cars and 100,000 horses. The first practical gasoline automobile using the auto engine we use today was invented in 1886. But the first crude electric vehicle was built in 1832. It isn't until the 1870s that electric cars became practical, and yet, we are still trying to commercialize them today. So was the internal combustion engine a disruptive innovation or was it something else? The Ford assembly line, for example, or the convergence of cheaper cars, pavement and steep cobble streets and affordable gasoline thanks to drilling innovation. In business theory, a disruptive innovation is an innovation that creates a new market and value network. It eventually disrupts existing markets and value networks, displaying existing leading firms, products and alliances, but history doesn't have to repeat itself. And clearly, not all innovations are disruptive. Early automobiles were expensive until the Ford Model T. Let's talk about innovation for just a minute. Next slide, please. I love this quote by Henry Ford. He said, "If I had asked people what they wanted, they would have said faster horses." Next slide, please. So for the next hour, let's think about innovation and let's think like innovators. Is an electric vehicle both a mobility asset and an energy asset? You heard a little bit about that today earlier in the panel around noon, but we're going to dig a little deeper into it and talk about the mechanics. Is there an innovative business case for EVs and EV charging infrastructure? Are bidirectional EVs a disruptive innovation? The IEA's estimates conservatively put 130 million EVs globally by 2030. These EVs could contain 10x the amount of energy storage needed by the grid. The IEA's most aggressive estimate puts 250 million EVs on the road, which would mean 6% of the batteries in the automotive fleet to beat all of the grid's energy storage needs. But who's going to supply those EVs? China is ahead in the race right now. But there is a convergence of innovations occurring that could help the U.S. catch up. And if energy and transportation systems could share batteries, this would reduce demand on rare or critical materials and could provide more sustainability, which is another one of the goals that we all want to achieve. My goal today is to inspire you to think about bidirectional EVs and their complementary innovation in things like artificial intelligence, blockchain and digitization as part of a holistic story about how, with the right policies and business models, an EV industry could flourish in the U.S. and also help modernize the grid at the same time. Next slide, please. So this slide captures the potential for a dynamic bidirectional energy ecosystem where bidirectional EVs can connect to the grid or to buildings via chargers to deliver energy or other services. Obviously, these other innovations are also required, which we will also cover today, to help with all the transaction and transaction services needed. Next slide, please. This analysis was done by Argonne National Lab, utilizing a test system combining data from multiple sources to run the simulation. The simulation showed impacts to the transmission and distribution system across different scenarios of EV adoption. Note this work shows the potential impact of EV penetration with no bidirectional capability and assuming nothing else is done. The impact to the transmission system, additional investments in conventional units may be needed and high penetration of plug-in vehicles, electric vehicles requires a system to have additional ramping capability. Meanwhile, the distribution system performs best with low levels of EVs, which indicates an upgrade need to improve grid efficiency. Next slide, please. Something else to keep in mind: EVs may be coming sooner than we think. All S curves, which represent technology [ absorption ] rates are accelerating. Did you know that it took 56 years for Alexander Graham Bell's telephone to reach half of U.S. households? By comparison, smartphones took just 7 years to hit that rate. Next slide, please. Next slide, please. Thank you. So is there an energy and transportation tipping point coming sooner than we think? Battery prices have gone down almost 90% since 2010. Can you go back to Slide 9, please? Thank you. In some places, rooftop solar is cheaper than distribution and transmission, and a 200-mile EV has enough power to provide energy for a typical single-family home for 2 days. Next slide, please. Thank you, Melissa. So a convergence of technologies and innovations may be a game changer. And the ones listed here are just what we've been thinking about, and there's a lot more that could happen. The bidirectional electric vehicles and charging infrastructure, AI, blockchain, digitization, autonomous vehicles that could introduce completely different paradigms of how we view transportation as a service potentially. And then there's also the potential for more renewables in DER and how is all that going to come together. Next slide, please. So metaphorically, how do EVs compare to the evolution of the telephone? The difference is the technology already exists. What we really are talking about is optimization to make the business case and solve problems that would otherwise occur. Will there be potentially -- will there be a disruptive innovation that accelerates EV adoption in the U.S.? Or is it China that's going to scale EVs like they ended up scaling solar? And what will be the disruptive innovation, the technology, policy or business model innovation for all the above? Next slide, please. And let's not forget the U.S. infrastructure needs. Bidirectional EVs and EV charging infrastructure, along with their complementary technologies to enable them, could be a catalyst to help modernize the electric grid and create much needed domestic jobs. Next slide, please. With that, I'd like to hand the baton over to David to talk a little bit about Fermata and what they're doing and also to save a little one-on-one on bidirectional electric vehicles and BOG. Thank you.

Thank you very much, Rima. I appreciate it. First of all, welcome to everyone. And for those of you who might, as Rima referenced, heard an earlier panel today where the topic of vehicle to grid did come up, we're going to have a very different focus. So you don't need to scurry off. Please stay with us. So my role is to try and give you guys vehicle-to-grid 101, if you will, just to make sure everyone in the audience knows exactly what we mean when we talk about it. If you think about traditional vehicles, think of them as a single-use asset. People bought a car so they could drive themselves around. That was it. Most of the time, however, they kept their cars parked. Highly underutilized asset, fairly expensive, but it was used for one purpose. If you throw a battery in there and make it an electric vehicle, now all of a sudden, there are -- that vehicle asset is a reservoir of uses. It has multiple value streams that can be extracted to the benefit of different parties, including the person who wants to be driven around, but also including the building where the vehicle is parked. It also includes utilities. It also includes the grid itself. So if you think of vehicle-to-grid as the technology that liberates those many values inherent in an electric vehicle, that's what vehicle-to-grid is. Why that's relevant is 2 things. One, because of the liberation of those value streams from an electric vehicle that are made possible by bidirectional activity, the total cost of ownership of an EV suddenly becomes more compelling than an internal combustion engine vehicle. So if your goal is to accelerate the adoption of EVs, it's essential that you enable lots of vehicle-to-grid so that you can have access to those value streams from the vehicle. The second benefit, and I think this is just as important, is the biggest challenge to scaling renewables on the grid is that renewables have -- they generate their electrons when the wind's blowing and the sun's shining, if you will. So you need to have massive energy storage design into the grid to be able to hold those electrons until customers need them. And as Rima was describing very well earlier, electric vehicles are the solution to our energy storage problem. And what's nice about the batteries in the car is that they're paid for by the logistics duty cycle of the vehicle. So those are pretty inexpensive storage units when you think about it. So what do you need to do vehicle-to-grid? Well, you need 3 fundamental things. You need, first, a bidirectionally enabled vehicle. Now today, in the U.S., that is, on the passenger car side, that's the Nissan Leaf. I believe the Mitsubishi Outlander is also bidirectional, but it is a hybrid with a very small pack. The Nissan Leaf has been bidirectional for almost 10 years in the U.S. But there are multiple other car manufacturers who will be bringing bidirectional electric vehicles to the U.S. market literally at the beginning of next year. So there are plenty of choices, but today, there are plenty of Leafs out there. So you can do vehicle-to-grid today. What I mean by vehicle-to-grid-enabled is that the car manufacturer has to have decided to let their batteries be used for both charging and discharging. So they have to become comfortable with that. Nissan has achieved that and others are doing that as well. So vehicle-to-grid-enabled vehicles are going to be everywhere fairly soon. But what else do you need? You need to have a bidirectional charger. Ideally, at this point in time, it will be an offboard DC charger. There are a lot of reasons why I say that. Some people think onboard AC. But at least for the near term, the next several years, offboard DC is probably the scalable solution for vehicle-to-grid. And there are many chargers that will be available. At the moment, there's 1 UL-approved bidirectional charger in the U.S., there's a picture of it on the screen right now. But there are a whole bunch of chargers that are in the process of getting certified, and there are some bidirectional chargers that are UL-certified that can work with school buses and other assets, not just passenger vehicles. So available bidirectional cars, there are some now, and there will be more later. Available bidirectional chargers, there's at least one for passenger vehicles and some others for school buses now and a whole bunch more coming next year. And then finally, the third thing you need to do vehicle-to-grid is you need software. Because you're going to -- somebody's going to have to work to communicate between the car and the charger and the building where that car is parked and the utility, if there's a grid -- a utility program that the car wants to participate in, and the grid itself, if there's a grid market for the car to participate in. So you're going to have to work through a vehicle-to-grid service as provider. And there are a number of companies; Fermata is one of them. But there are several others out there right now in the U.S. and in Europe that are doing vehicle-to-grid services, and I think there will be certainly more versions of that functionality in the coming years. So today, vehicle-to-grid is an available option. You can do it commercially, you can do it today. What is important about vehicle-to-grid is not just the technology because the technology creates the setup, if you will, for vehicle-to-grid to actually work. But you need to have specific market solutions that enable the liberation of those value streams that I mentioned. So some of the things you can do with -- actually, if you could scroll ahead, Rima, I forgot, I wasn't controlling my slides. The next one, please? Next one. Next one. All right. That is the car. You can see this a bidirectional car. Next one. Next slide. That's a bidirectional charger. Next slide. All right. That's a picture of -- on the right is a picture of kind of the software operating on a car. But if you can scroll it, that's the one I was looking for. That's a really important slide. On the left, for those of you who are able to see this on your screen, on the left is a stack of different colors that represent different types of storage assets deployed in the U.S., but the whole stack is the entire stationary storage industry as deployed between 2012 and 2019. The stack on the right, which is a taller stack, is just the batteries inside Nissan Leafs sold in the United States during those same 7 years. It's a taller stack. And while the Leaf is a popular electric vehicle, it's nowhere near as popular as the Sentra or some of the gas guzzlers out there. But yet -- and some of those batteries from that 7-year period are much smaller battery packs than what's available today. The earlier ones were 24-kilowatt hour packs, and now they're 62. So the point of this slide is that, as Rima already set up, the energy storage that we need to satisfy these different grid applications exists today in the existing electric vehicles on the roads. And as we have more and more electric vehicles, there's going to be more and more options for participating. If you can go to the next slide, I might need a couple more. No, next one after that. Well, actually, let's stop there. So right there, what are some of the things that you can do -- I'll go back one, I -- I'm sending you in circles here. Sorry, Melissa, back 1 slide. Yes, that's the one. So there are many things that you can do with vehicles today. Resilience is an important value stream that can be unlocked from an electric vehicle. There are going to be bidirectional chargers for residential applications next year that will have the ability for a homeowner to provide backup power with their electric vehicle if they have one of those bidirectional chargers. You can do bidirectional today in commercial applications behind an existing generator and supplement it. In addition to the resilience value stream, as I mentioned, there are different grid-facing value streams and different utility-facing value streams. And you'll hear a little bit more about the utility side in a minute from Graham. But vehicle-to-grid today can earn, if you go -- let's go 2 slides up, I think, if you will. Next one. One more, sorry. I need to shrink down my deck since I'm not using most of these slides. Just 1 more there. There. One more after that. I'm looking for a particular slide shows money because that's what really this is all about. No. Keep going until you see a bunch of dollars sliding up on the screen. So there are multiple things you can do. There we go. And a vehicle-to-grid service provider will be able to optimize what that vehicle can be used for and participate that vehicle in different value streams. There was a case study that was published by E Source, who is an adviser to the utility industry, about 6 or 8 weeks ago that did -- evaluated a demonstration project that Fermata Energy did, where that basically documented that somebody could earn $9,000 a year under certain circumstances with a Nissan Leaf and a single bidirectional charger. And that's from doing just 1 thing. In that case, it was behind-the-meter demand charge management, for the geeks in the room. But suffice to say that there are multiple other programs that the vehicle can participate in at the utility level and at the grid level. And vehicle-to-grid services providers will identify which ones are appropriate at what time, optimizing the revenue and managing the operation. So I want to make sure everybody understands that as we start to deploy electric vehicles, it's important to not just be deploying single directional chargers. It's imperative that we pay attention to the need for bidirectional chargers because only bidirectional chargers can provide the value of vehicle-to-grid. And so that's kind of my big takeaway that I'd ask you to consider today, which is as this country embarks on a mission over the next few years to really expand our adoption of EVs by putting chargers out there, it's important that most of or at least a lot of those chargers have bidirectional capability or you will not have access to that stored energy in the vehicle battery. So that's my thoughts for the day, and I thank you for letting me share them.

Thank you, David. Next up, we have Graham. Graham, take it away.

Thank you. The Zoom [ moves ] these slides pretty quick, so we have plenty of time for Q&A afterwards. Just going to present. And Rima, I rely on you to tell me when people can see these.

We can see them. You're good.

Perfect. Awesome. So yes, David hit really well on the kind of potential for a complete change in total cost of ownership, if you're able to take advantage of some of these value streams. I'm going to touch a little bit on some of the programs we've already run in residential storage and how we see that being analogous in the B2G space tapping into a lot of the same value streams, even though there are some key differences, especially in how the vehicle views compared to the stationary storage assets. So real quick, why storage is important for us in Vermont, has a lot of benefits. Resilience is one. Customers can stay up and running with a clean backup source. Affordability. We're able to dispatch these assets in a virtual power plant to help bring costs down for all customers. And the picture on the right is of all of our distribution circuits. Vermont is pretty unique in that we're actually -- we've been in low decline for about 15 years. And we have the second highest solar-deployed capacity as a percentage of peak load right behind Hawaii. We're much less sunny and so there's a lot of circuits that can't take any more solar. And so building more daytime load with charging specifically EVs and also electrifying heating is key. And so we see this as a key resource to help unlock some more potential for local renewables by soaking up some of that daytime load. Real quick, peak shaving 101. This is too basic. I'll trust you all throw virtual tomatoes at me. We dispatch our storage assets to clip peak. So to reduce our system-wide peak load as those hours drive a big percentage of our power supply cost. So being able to knock down that peak means direct savings for customers. This is on top, picture of our overall load. And on the bottom, the picture of what it looks like when we dispatch some of our storage assets in aggregate -- 4 megawatts with a residential battery fleet. That's now much higher, which you'll see later. Our first program that kind of embarked on this model of sharing access with customer battery storage and providing them upfront incentive with an energy storage lease, we offered a Tesla Powerwall for $15 a month over 10 years. And we're able to aggregate all of those resources during peak times. Which I think 4 or 5 times a month, typically, depending on how extreme the weather is to bring down costs for everyone while the customer got the benefit of backup power as a service for that low price of $15 a month. How we're doing with this? So 2 summers ago, we had the peak [ square ] on, say, $500,000 in a single hour. This past October -- or sorry, October before that, there was a big Halloween storm that knocked out about 100,000 customers in the state. 1,100 of them had back up battery power and were able to stay up and running for most of it. And then this past summer, with our full fleet of 13 megawatts, which is comprised of about 1,700 customer homes, we're able to save $1 million by hitting the ISO New England peak, which is just a single hour of demand. A big bang for your buck, if you forecast that correctly. And then on the resilience side, it's just as important as the peak savings. We've seen awesome stories where customers have been able to stay up and running for a long time. In this case, the customer was not exactly being very stingy with electrical use. We might not have recommended powering the electric snowblower, but was able to power through that outage. You see a little bit of a bump down here, he did have solar. And so they were able to stay up and running, continue to charge the battery once the grid was down. And this is a picture from that storm. Thankfully, I'm not in that bucket. I was inside answering a lot of outage calls. Do not trust me on a bucket truck, but those guys are doing miracle work. Probably my favorite picture of all time, Very Vermont on the left and on the right, a slightly different storage system, so on, that I hope is doing some sort of the unification for the line. Shifting a little bit to EVs. So this is data from our fleet of residential chargers. We have about 500 of them just showing different days of the week, what the load shape looks like. I think this is key for kind of the usability of bidirectional charging at home because this ramp-up is the 6 7 ATM area is when people are plugging in. Typically, they're not -- their batteries aren't drained when they're doing that. They're only charging it a little bit, but it means that, that's when they're home. And that's when we peak as well. So you have a really good coincidence of the time customers are at home with their vehicles plugged in and the times that we need to clip the peak. And so I'll skip this slide just for time real quick. But this is an example of how we call those events for EV charging. So on the bottom, a non-event day, we didn't call an event. It wasn't a peak risk. At the top there was, and we curtail all the chargers. Customers don't really notice it and charging gets shifted later into the evening. Real quick, the slow spike. We have a time of use rate, and it showed up pretty clearly in the data, where 9 p.m. is when that period starts. And a pretty noticeable spike, although total volume of vehicles, it's not really a risk yet. But when it becomes one, we can definitely manage that by having access to these charges. I think this kind of sums it up, how we look at the potential for B2G. This is a stationary battery on top. This is how our program works today, soaking up daytime solar load, dispatching it to the grid. Well, in many ways, an EV is just a battery on wheels. And if you don't believe me, this is literally a picture of the drivetrain of an EV that kind of looks like a skateboard. And the great thing is we have done this. We have one of the chargers that David spoke about. There's a picture on the bottom left a bit at our office with one of our fleet Leaf. Leafs -- I don't know what the plural for Leaf is. Anyway, this last past month, in November, we dispatched this Leaf that had been driven earlier in the day at our monthly peak, and it hit it square on. So you could see kind of needed the vehicle is being driven during the day for our needs, plugged in right around 3 p.m., charged up before the peak even. Hit the peak hour square on and was able to charge up later in the evening to be ready. This was not intentional, but I noticed that it is basically our logo in reverse, which I think is a good element. And hopefully, more dispatches like this. And with that, I will kick it over to Mahesh. This is a real place in Vermont. I love this picture. And excited to the Q&A that comes next.

Okay. Hello, everyone. I'm Mahesh Sudhakaran. I'm looking forward to being on this panel. I'm going to take off from where David and Graham took us, right? So -- and my perspective here is going to be about how do we combine what David said and what Graham showed from his experience. And how do you make it real, right? And this is something that we -- as IBM have been doing for a while. So let's go to the second slide. So in terms of what we do, right, so we are trying to work on enabling technologies to make this energy transition, which is that this is a broad topic that all of us are talking about, in a reliable and an affordable way. Both Graham and Rima and David talked about some of the trends, which on the left-hand side. But the trend -- the one thing to take away is we are moving from a world that was predictable to a world that is becoming unpredictable. Because as you inject more renewable, it's more intermittent and everything that comes with it. So predictable to unpredictable. And that is leading to some of the challenges that we discussed, right? A lot of the times when we discuss solutions for these challenges, we tend to talk about the generation side about how do you have inject more renewables, where you inject them. But I think the solution is also about combining what Graham has shown on the demand side. So it's about orchestrating the demand, the supply side in an intelligent manner. And today, it is possible because when you move from a predictable system to an unpredictable system, we are moving to a system that is more probabilistic. And this is a great place for AI to be applied. And this is something that I want to talk about. So let's go the next slide. So yes. So if you look at a cityscape, right? On the right-hand side, you see an electric vehicle, which is the most ideal load because it's something that's a source and a sync at the same time. So it has a great potential for flexibility. But electric vehicles are just one of the flexible sources, right? There are so many other flexible sources that are there in a city, the HVACs, battery storage, electronics, electric motors, keeping pooling freezing. And the idea is if you have to get this to scale, it is not just about electric vehicles. It's also a combination of creating a portfolio of flexibility that we can work together. And you can start small by just deciding when to start and stop them. That is basics. But to get to the resiliency that Graham talked about in case of an outage, the bidirectional element becomes very, very important. And the key to achieve this is to aggregate this smartly and optimize it in such a way that when you aggregate enough load, it becomes meaningful to trade. Let's go to the next slide. So what matters is the continuum, right? So first thing we have to do is we have to connect all of these flexible sources. And to do that, the IoT technology today is viable to do this and to do this at scale. And once we're able to connect to all of these flexible sources, how do we aggregate some of these sources in a meaningful manner? And to do that, we can use AI, and we have started doing that. An example is if I roughly connect 80 electric vehicles, it references 1 megawatt of load at any point in time. And that is something that we can trade in the ancillary markets. So what is also important is how do you connect this aggregated load to a market mechanism so that it can be traded and cleared. And once you're able to trade and clear it, you need to settle the discussion or settle the transaction. And for that, we use blockchain. So what you see here is there's a continuum that you need to go from electric vehicles to portfolio flexibility, smart aggregation, and finally, markets. So I always call this -- we have to orchestrate not only electrons, that is electricity. We have to orchestrate data, and we have to orchestrate dollars for all of this to work together, right? And this is something that we call an intelligent market platform. And let's go to the next slide. And this is already happening, right, especially in Europe, where -- so where if you look at the transmission system operators, that's TenneT in Germany and Netherlands, Swissgrid and Terna in Italy, they have come together to create a cloud balancing platform, where on one hand, they are using electric vehicles and battery storage and they're aggregating electric vehicles and battery storage, and they are using the market mechanism created in the ancillary services market. And this is already happening at scale. And the thing is the numbers speak for themselves. This is working because it is beneficial not only for the utilities to solve the ancillary services problem. It is also benefiting customers who own electric vehicles when they opt in. Because an average customer makes between EUR 100 to EUR 500 a month. And that means technically, a customer who option is driving for free right. And the benefit of that Graham mentioned is the additional benefit of it's bidirectional is the resiliency aspect that they have a backup source in case of an outage. That is extremely powerful. And this means that a lot of the home storage and the electric vehicle manufacturers are coming into this discussion because it makes business sense. So you see the Nissans and the BMWs of the world, [ Sonera ] is an example that Graham brought up. So this entire activity is scaling. This is something that started off with the transmission operation domain. But now what is happening is your leading cities such as the city of Copenhagen, which is trying to aggregate all of its buildings to solve one such ancillary services problem. And this is something that I see repeating all around the world. And one example of one chart that I think David brought up with Nissan offering the kind of flexibility that it does. I foresee now the electric vehicle manufacturers, potentially American electric vehicle manufacturer, being a large virtual power plant operator, given the amount of flexibility that they have. And all of these things are possible today. So I just want to like summarize that to do this, you have to combine technology with a market mechanism. So that means you have to orchestrate electrons that data and also dollars to make this work. And I'm happy to like speak more about this. Rima, over to you.

Thank you, Mahesh. I really appreciate that. So does anybody want to make any comments before we jump into questions? Or I could just jump to questions right away.

So first question, how does B2G or B2B differ from stationary storage? Graham, do you want to take that?

Yes. I'll probably being on David here. I -- the big difference is in one case, the first can get up and leave and do other things like transport people and goods so being mindful and kind of overlaying the battery cycle with the vehicle duty cycle is the real key. In our case, for our fleet vehicle, our fleets are typically active between 7 in the morning and 3 p.m., which aligns really nicely with returning, charging up into the later solar hours and then being available for peak event. I think in other areas where batteries might get called on during other times of day, there might be some challenges where the vehicle could be out and about at the times that you might need it. But I think with evening and early morning peak, it does line up pretty nicely, at least, in the case how we're using it today. But I know David probably has a lot more use cases in mind that would have a different answer for us.

If I can hop in. I mean Graham, you're right, from the utility perspective, it actually is pretty easy to work with vehicle-to-grid, fleet level participation straightforward. But as vehicle-to-grid scales up and you end up having residential customers and workplace chargers all having bidirectional chargers, it becomes easier for the vehicle-to-grid services provider to honor the logistics duty cycle requirements of the vehicle. That is what paid for the vehicle. So at the end of the day, we always have to let the car be driven. And we also have to make sure the car has enough electricity in the tank, so to speak, for the customer to drive when they want to drive it. So there has to be some iterative, some back-and-forth dialogue between the vehicle operator and the vehicle-to-grid operator to make that work. But at the end of the day, once we have a scaling of EVs in a particular area, I don't need to know which car is going to be plugged in between 3 and 4 o'clock. I just need to know that on average, there's going to be 86% of EV vehicles available at that time. And I can just bid, let's say, 75% of the vehicle capacity into whatever market I want. And then as cars get plugged in or come offline or the vehicle owner says, "Hey, preserve my electricities because I'm getting ready to go on a trip," you can just adjust for it and the thing goes seamlessly. So I think that's the -- one of the important points of having to have a vehicle-to-grid services provider for this to work. But I think it will be very easy to accommodate the logistics duty cycle requirements of an electric vehicle, that being the main difference between electric vehicle storage and stationary storage. The other obvious difference is the stationary storage, you have to pay for the batteries. And with the electric vehicle, they kind of come with the car. So it's a -- the vehicle-to-grid provides much more cost-effective access to that storage, but you do have to work around the vehicle logistics duty cycle.

Yes. And Rima, if I could add, right, to the point of digitization across all of these categories, like today, for me, when I look at an electric vehicle, it's a smart computer. Like if you look at Tesla, it's got a great, amazing operating system on its own. Similarly, Sonera, their battery systems are completely instrumented and also connected to the Internet from a very secure way. So there's a lot of stream of value you can actually get by connecting to some of these devices directly. The biggest value I see from vehicle-to-grid is the resiliency aspect. Because when you connect to the -- any of these devices directly, which is not linked to the grid, you're just doing start and stop, right, which is just one level of control. But the fact that you can feed the grid back and potentially feed your own home in case of an exigency, that adds to the resiliency of the grid. And that, I think, is an extremely important thing.

Great. Another question. So what are the barriers to widespread bidirectional charging?

Well, there's one big one and that's people don't understand it, and they don't know about it. And that's a constant challenge. I think the number of times I've gotten into a conversation with someone who either misunderstood it because they just don't know about it or they have this preconceived notion that it's 5 or 10 years off, the technology doesn't exist today. There's no cars, there's no charge. It's just an information gap as much as anything. I think very quickly, as people are starting to talk about vehicle grid and understand what's possible today and what might be even more available for it in the future, I think there's quite a bit of buzz and enthusiasm for. But I think, personally, that's the biggest obstacle is just the world hasn't caught up with the technology.

Yes. Rima, if I could -- if I could add to that, right? Because as we're getting to more of a sustainable world and as all of us want more sustainable products, right, like starting off in sustainable electricity and transport, the amount of electric vehicles that we tend to use will go up. By any projection it's going up, right. So the addition to B2G to that would be potential business cases that are emerging, right. If a large part of the population could see B2G as an incentive mechanism because of some of the numbers that David showed and also some of the numbers that we have seen in our projects, there's a lot of business sense to do this. And as people come to know more about it and as we move to more sustainable ways of getting electricity and also getting to sustainable transport, this spend will accelerate. Also, there's a certain aspect of technology catching up and all of this system being seamless. So that as the end of the day, for our consumers, they are looking at a clean product, and they're looking at value. And everything else, all of these things happen in the background. When these 2 things are able to be articulated clearly and there's a clear business proposition, I think these will take off.

So speaking of value -- so I think you touched on -- you touched on this earlier, but is there a potential for new revenue streams to reduce total cost of EV ownership even before -- yes.

Absolutely. I'm like -- I just gave an example that we are doing in Europe, right, where we're working with the transmission system operator, that's TenneT, within the electricity retailer that is in Netherlands and also with the fleet operator that -- who operate the fleet of Tesla cars, which are not necessarily ready to book yet. But even with that combination, we are -- just because they are able to decide when to offer -- first thing, the fleet operator opts into the system. And because of that, we are able to optimize the entire system, just like David said, right? Roughly 100 Teslas equals 1 megawatt of load, which can be traded. And as an incentive mechanism, the fleet operator gets between EUR 100 to EUR 500 a month, right? And that is substation incentive enough for folks to come in. And the proof of the pudding is not about just the consumers. It's the electric vehicle manufacturers are starting to participate. So notably, the home storage players, so [ solan ] are participating. Because this is not just about technology. This makes business sense to do it.

So what about the battery? How -- what are some of the concerns with respect to manufacturers allowing their batteries to be used for this purpose and the additional strain on the duty cycle?

Curiously, that's pretty much always the first question that we get when we're sitting down and explaining vehicle-to-grid to people. They say, "What about my battery? I don't want to have the thing go bad." Well, first of all, the vehicle manufacturers are not going to allow you to do vehicle-to-grid with their vehicles without voiding the warranty unless they became comfortable with the technology. And it's a little tricky for the OEMs because they can have an 8-year, 100,000 mile warranty, and they can look at their watch and track the year and they can look at the odometer and track the miles. But if the car is just sitting there and it's doing vehicle-to-grid things, there isn't an easy way for that to be tracked. Well, a vehicle-to-grid services provider can track it. So I think what you'll find ultimately is the vehicle-to-grid services providers will end up working with the OEMs and both contractually obligating themselves to provide information on a per-vehicle basis for what they did with that vehicle. But also the OEMS, depending upon their specific electrochemistry and that particular model of vehicle, can tell the vehicle-to-grid service provider, "Well, this battery can't handle this thing but it can handle these other things." And so we can tailor what a vehicle is allowed to do based on what the OEMs tell us. In general, though, in broad strokes, there's actually a scholarly study that showed that a properly managed ecosystem of vehicle-to-grid will extend battery life. And the reason for that is batteries just degrade over time. And they are often, if not always, kept by vehicle owners at 100% state of charge because everyone wants to have the maximum range when they decide to drive it next. A vehicle-to-grid services operator will keep it maybe at the 70% to 80% state of charge as sort of its balance point. And so that's actually healthier for the battery and it can extend its life. So I think you'll find this battery degradation concern is -- it's a logical concern, but not an actual concern.

Yes. And Rima, I'll add to that, right? I'm like at the end of the day, going back to what David just said, this is going to be not solved necessarily by a perception issue, right? The perception can be solved by the complete logical way of looking at it and some of the data points that David mentioned. But also, the way you address it as a business model is going to fundamentally change from that of automobiles today. And it's an ecosystem that's going to come together. There's going to be someone who manages the vehicle, because end of the day, it's a resource that needs to be conserved, and that will lead to very different value streams, right, and very different kinds of businesses coming together. One of the things I see as we get to this phase wherein more and more sustainable electrification happens, with more and more electrification being part of the portfolio, it's going to be a fundamentally different ecosystem that's going to address it. And utilities are going to be part of that. So this is not a conventional -- you can't -- going back to what one of my colleagues says this very well. It's like you can't -- it's an old process. And if you combine it with new technology and you don't change the old process, then you get a very expensive old process, right? So we have to find ways to rethink how this model works. And from a pure science and technology aspect, and especially for good resilient and reliability, this is an important part of the portfolio.

Rima, if I could just follow-up, Mahesh raised a really important point, which is the current ownership model of vehicles, for the most part, is an individual car. It's owned by an individual household, if you will. But you're going to see, now that the vehicle has more than just one use value to provide to more -- and it's to more than 1 customer, you'll see different ownership models. You'll see a lot more share to automobiles. You may see at some point utilities, when they can, owning vehicles and/or chargers. You're going to see a lot of disruptive business models responding to the market conditions of vehicle-to-grid. One last thought, and I think it's important, vehicle batteries, if they are utilized so heavily with vehicle-to-grid activities such that they degrade a little bit, that's a wonderful thing. Because right now, they're just sitting parked most of the time not being used at all. So optimizing the utilization of that is a good thing for the economic system. And I don't think that there's going to be any problem for the OEMs or anyone else to adjust to that.

Yes. And just to add to that, the early adopters for this and what I see are going to be fleet operators, right, not just -- not getting into the homes directly, but there's a large chunk of fleet that is electrifying and for very good sustainable reasons. And it's them who are going to be operating. And they operate it as a business, and they're going to optimize it as a business, right? And I think the value extraction is going to happen there first. So large truck fleets, the large fleets and also especially the -- Ubers of the world and the Lyfts of the world, it will start off with them, and then it's going to scale as a business model emerge.

Well, and that kind of touches on the point about business innovation and this whole concept of transportation as a service which is being thrown around. And we've already sort of done our first look into that potential just through Uber and Lyft and what that has been -- what that has done to the taxi industry, let alone. So before we jump into some of the questions from the chat, what are -- are there any equity issues that we should consider? This is something that's come up in previous conversations, I think, throughout this conference, and I've heard in some other conferences. But how can we mitigate equity issues? Or could this -- these technologies be a solution to some equity issues?

There absolutely is an energy equity challenge, but we're working with a project developer in the Northeast, and we're going to be deploying electric vehicles, fleets in this case, with Fermata chargers in this case, at a low moderate income housing project. And what the building owners are going to do is offer a small fleet of vehicles to their residents as a building amenity where the residents can sign the cars out and drive them around. They can't necessarily afford to have a car themselves or certainly not a second car. But while the vehicles are parked, they're going to be used for grid services. And in this particular case, for building load management to reduce the building's electric bill. So I think you're going to find business models come out of vehicle-to-grid technology that will accelerate energy equity opportunities.

Yes. And Rima, just to add to that, right, for me, going back to my comment about vehicle-to-grid with vehicle being one of the portfolio elements, and going back to buildings, like what about buildings to grid with all the home storage attached to it, right? So all of these things, as they come on board, they will fundamentally change the price points on how some of these activities are managed. The price lines tend to come down. And some are also aligned to the topic of equity, it's also the topic of sustainability, right? Because end of the day, all of the -- because end of the day, moving to electric vehicles, moving to battery storage, that means we are going to electrify a lot more of things that did not use electricity before. So -- and if you're able to do that with clean electrification, we need the portfolio of electric vehicles and home storage and all of those things to make the grid more stable, right? So it's an aspect of sustainability that goes along with the entire discussion of equity and electrification.

Yes. I think I'd just add to that. To the extent that total cost of ownership changes and there are innovative models like transportation as a service, where you're able to buy down upfront cost of the vehicle because of the expected savings you get over time. That is exactly what we need to help get electric vehicles to everyone, make them accessible to everyone. We know that over the life of the vehicle, they save money because of lower total cost of ownership. Typically, low and moderate income customers in our territory are spending a lot more on their transportation now because of high fuel and maintenance. And so I see anything that helps reach that parity, and B2G is a huge piece of that, being a major driver of bringing everyone on board for the energy transition, especially in transportation.

There's also going to be an access to charging challenge for both rural America, but also for urban centers where you have dense populations, and you don't have the benefit of a garage you can put your charger in. So there's going to need to be workplace charging, inside of the street parking and charging ecosystems developed before we truly get energy equity from electric vehicles. But that becomes very reasonable when all of those assets are bidirectional and they can feed up into the utility in the grid and provide services. Again, if there's enough critical mass of deployed bidirectional vehicle assets, it doesn't matter which one is plugged in when as long as there's enough. And from the metrics you shared at the beginning, Rima, we're going to very quickly reach the point where there's quite an adequate amount of storage to solve the grid's problems.

So how willing are auto and battery makers -- how willing are they to pursue these new use cases? Because it sounds like there's a potential use case where someone who can't afford a car but maybe for a percentage of the car and be able to allow their car to be used more often for energy purposes. And you only need it for this little window of time to get to work or to get home and then -- I mean you can see that sort of unlocking access to transportation to people who are lower moderate-income that otherwise wouldn't have been able to afford that vehicle. Because they live in an urban center and they can't afford the parking spot in the building, for example, where -- but a building owner might be willing to bring them in, in order to avoid the demand charges. And so there are these new models. They're a little more complex than what we are used to today, but we have the technology, it sounds like, to be able to deploy some of these ideas. It's just a matter of hurting some folks to think about these solutions in a very holistic way where we can solve all these problems. With that, I want to jump into some of the questions that I saw and I know that David and Graham and Mahesh, you guys have been answering some of that. But just for those folks who aren't following the chat, one of the questions that came up was it seems like there is a force critical need for B2G building infrastructure. Isn't it an expensive proposition to reconfigure building electrical panel systems to accept power vehicles? Someone want to take that?

Well, Graham, you're the utility, I mean do you see any challenge to your existing infrastructure by equitably, evenly deployed bidirectional charging at lower power?

No. In fact, quite the opposite where it would help alleviate a lot of our constraints due to congested feeders from a lot of distributed generation. There's definitely -- there are going to be buildings that it might be a challenge because they don't have available panel slots or they don't have 3 phase power for units that require that. But I think, as David mentioned, it's similar in the infrastructure needs to what you need to deploy regular charging, unidirectional. And so David, maybe you can supplement that. Is there any specifics beyond that, that would make it more of a challenge than putting in a regular charger?

No. Graham's exactly right. And in fact, the vehicle-to-grid technology alleviates the need for deployment of expanded infrastructure. As you -- if you think of a world where there's a whole bunch of people buying electric vehicles, expensive though they are, but that are single directional, they are going to have increased load implications for some elements of the grid. Some places like Green Mountain Power are ahead of that. So they've managed that already themselves. But in a lot of places, there's going to be extra pressure to deploy more infrastructure to provide what those vehicles need. But if they're in a managed ecosystem of those vehicles, if they're with vehicle-to-grid chargers, bidirectional vehicles with bidirectional chargers, now you can kind of soften the peaks of demand from the vehicles themselves and you can discharge into the grid where other load on the grid is peaking, and so you can soften that peak. And that's really where the demand response programs that many utilities already have where they ask customers to turn on their HVAC, so to speak, or have their hot water heaters not go so -- quite so strong or people bid solar in, a vehicle-to-grid is absolutely at the center of that load management conversation. And so it will have ultimately the effect of reducing the infrastructure burden on the utilities and on the grid versus extending it.

Yes. Rima, just to add to that, right, I would talk about all of this from a point of resiliency, right. Having more optionality in terms of vehicle-to-grid makes the grid more resilient because you'll be able to respond to changes that come in because of intermittency of renewables, right? So that is one. And it will also offset a lot of the ancillary costs that you'll have to do anyway, right? So there are places and value streams that they have will get realigned. So we also need to look at those aspects. This makes the grid more resilient. Yes, there's an overhead about managing and orchestrating the grid that comes in. But I think there's technology today, and there are examples, certainly in utilities, but in other industries that we can adopt.

Rima, if I can add 1 more thought. I think this is important for this particular panel to get out there. There's a lot of V1G in the conversation. Formata's been dealing with that out in California where we've been pushing for vehicle-to-grid integration. V1G conceptually is where you manage when vehicles charge so that you don't do as much harm to the grid by having a concentration of electric vehicles all at once charging off of the grid. So it's doing less harm is what smart charging or V1G accomplishes. V2G is a completely different world. It can do everything, everything that V1G can do. But in addition, it can dispatch power into the grid, and it can, in fact, provide other services. Our chargers are what's called four-quadrant power. So we can provide services to the grid in terms of power quality when the car isn't even plugged in. So there are multiple value streams that go back towards the grid from V2G versus V1G, but V2G can do everything that V1G can do, which is, again, smart charging.

And I think it's also important to note that even between V1G, and V2G, there's V2B, right? There's vehicles to buildings. And there is a really important role here that buildings play as a broker and as a catalyst as well as -- a stepping stone, essentially. There's an in-between set for some folks that -- where we don't need regulation to make that happen as long as codes are being met, existing codes.

My slide deck always calls it V2X for a reason because the takeoff customers for this functionality are the building, which is what V2B is, and the utility, for example, in demand response programs and the grid operators, for example, wholesale ancillary services markets like frequency regulation, which we participated in. So those are 3 categories of value that can be unlocked to different customers, the building owner, the utility operator and the grid operator, not to mention the resilience play that Mahesh has spoken about so much. It's the most valuable second use of the vehicle -- of the charger other than driving around. And that applies to the home or the building where the car is parked.

Yes. And for me, well, Rima just to add to that, right? It's -- all of this leads to an uptake in electrification. There a lot of electricity that is going to be required, that's going to go up because of all of this. And what I'm really excited about is we have an opportunity to make that industry green and that -- and to make the industry green, we immediately need B2G because you have to balance the grid, orchestrate the grid again. So this is a 2-sided discussion that need to be had together. So I think sustainability, resiliency, vehicle-to-grid. I think these are all conversations that need to be had together.

And Graham, any final thoughts? I mean have you guys done any connections to buildings with electric vehicles?

Yes. As David showed -- yes. It is hooked up behind a transformer at our office. But yes, I think it's -- I see them as very similar values because either you're reducing the building's load or you're injecting back into the grid kind of the same impact in terms of when we think about peaks. I love Evan's comment on the chat about electric school bus fleet being a great example. I think in terms of logistics cycle, it's ideal. They're parked all during the middle of the day when they can charge off local solar energy. And also for the resilience played in schools can be a great place as a shelter during a long duration outage. If you have people in the community, they might not have storage at their homes. But come to a central location that has reliable power, especially in Vermont, where we were pretty rural and have some areas that are pretty far. Not literally off the grid, but figuratively off the grid, along a dirt road for a couple miles. So I think buses could be a great play to meet a couple of those aims. And also help with air quality issues, which for students is key.

Yes. If I can add to Graham's comment, I think the vehicle to school bus deployments are interesting. They're very popular right now, and they have a lot of value. It gives economically disadvantaged communities experiencing electric vehicles. Clearly, it's best to not have kids breathing diesel fuel fumes. And the operational duty cycle, the vehicle does nicely align with a number of vehicle-to-grid activities. And they're big enough batteries that they can be helpful for resilience plays. But keep in mind, as a cost effective solution, if you want to have a school bus deployed, the difference between a diesel school bus and an electric school bus, kind of the baseline bus, is over $200,000 typically. And for that, you maybe get access to 155-kilowatt hour of dispatchable capacity, 3 Nissan Leafs gives you 186. It's even more than a school bus and they're way cheaper than $200,000. So my point is there's absolutely value, strategic value and other value for the school buses. But I think the scalable opportunity is still with fleet vehicles and then passenger vehicles.

Okay. So with that, I think we should probably wrap up. it's 3 o'clock, when it sounds like what we've heard is, look, people are going to buy EVs. It's happening, might as well leverage somebody else's investment and use it as an asset if we can. Let's be smart about it. Let's plan ahead. And this might help us integrate renewables, might help us provide more resiliency. And even the car owners themselves will benefit from that. And there's money to be made here. It doesn't have to be a 0 sum game. Thank you, gentlemen. Wonderful session. Looking forward to finding you on the path to making this happen. Bye-bye.

Thank you for inviting us, Rima. Take care, everyone.

Thank you.

Thank you.