Arushi Sharma Frank was working for Tesla in 2021 when winter storm Uri hit Texas, causing more than 240 deaths and triggering massive grid outages. It was the costliest winter storm in U.S. history, and Frank says it put the importance of a clean, resilient, electric grid front and center for Texans.
“The storm created that motivation for leadership in…various places of power and authority to pay attention,” she said on the With Great Power podcast. “And I took complete advantage of that.”
In 2020 Frank was part of Tesla’s U.S. energy policy team working on wholesale and retail energy market design strategy. At the time, Tesla was petitioning the Electric Reliability Council of Texas (ERCOT) to allow it to interconnect Tesla megapacks to the Texas grid. A few months after winter storm Uri hit, the company did just that – connecting its first 100-megawatt battery to the grid.
“Often opportunity can be driven by a moment of crisis,” Frank said. “And the storm was one of those [moments]. It created massive awareness inside the Texas legislature about the importance of … energy reliability and making sure we have a diversified strategy.”
From there, Tesla sought and received approval to launch an aggregated distributed energy resource, or ADER, pilot in 2022. The pilot, launched in 2023, allows consumers to sell excess energy generated from solar panels and stored in powerwall battery packs to the ERCOT grid via virtual power plants in Houston and Dallas. Now in its second phase, the pilot has shown the value of aggregating residential energy storage to address grid demand, though not without some challenges. More broadly, reports indicate that energy storage is helping ERCOT meet growing demand.
The big (un)easy
This past spring, after four years at Tesla, Frank launched her own consultancy Luminary Strategies, where she began work on a grid resiliency project in New Orleans – another city battered by extreme weather events.
Partnering with two community organizations, Frank crafted a proposal for a microgrid and VPP that the city council green-lit in October. If the full plan is approved, it will use $32M from a settlement fund that the utility Entergy agreed to pay the city council over complaints of mismanagement. That money – together with the conviction of many consumers who testified in support of the plan – helped move the proposal forward, Frank said. Texas residents even called in testimony to advocate for the plan.
“We had retirees who described the perfect residential virtual power plant program design in a few sentences,” she said, noting that when she started petitioning for VPPs on Tesla’s behalf in 2020, regulators she spoke to struggled to describe the technology clearly.
The proposal builds on the success of microgrids that New Orleans deployed after previous natural disasters. “I’m not even going as far back as Katrina,” she said. “More recent events have resulted in loss of life.”
Those experiences and the tightness of the community are driving resiliency efforts, she said.
”You have a city council made of people who live there — same zip codes — as opposed to a state commission [that] is trying to establish a program for multiple utilities at the same time. That definitely brings both speed and scale.”
But even in much larger jurisdictions like Texas, Frank said stakeholders are compelled to accelerate grid resiliency projects that could protect their communities from long power outages.
“It doesn’t matter if you’re the utility, you’re the tech provider, you’re the regulator, you’re the politician, it really doesn’t matter. If you go through that experience of being in an environment where your family members are helpless,… you rally.”
For the full conversation with Arushi Sharma Frank, listen to her interview on season 4 of With Great Power.
This is partner content, brought to you by GridX. It borrows from an interview that appeared on With Great Power, a Latitude Studios partner podcast.
With Great Power is a show about the people building the future grid, today. It’s a co-production of GridX and Latitude Studios. Subscribe on Apple, Spotify, or anywhere you get your shows.
Transcript
Brad Langley: Winter storm Uri was the costliest winter storm in US history. It arrived in Texas on Valentine’s Day, 2021.
News clip: February 2021, Texans will never forget. Residents trapped in their homes without heat, feeling helpless, others without drinking water, some as broken pipes flooded their homes.
Brad Langley: The storm caused at least 246 deaths in the Lone Star state and triggered massive grid outages. All told, four and a half million Texans lost power, some for up to four days. Arushi Sharma Frank was working for Tesla’s energy policy team at the time.
Arushi Sharma Frank: Where I was in charge of bringing wholesale and retail energy market design strategy to Tesla in the U.S.
Brad Langley: Following the storm, she pitched the Texas Public Utility Commission on an aggregated distributed energy resources pilot, the goal of which was to show how these DERs could reduce outages in future weather events.
Arushi Sharma Frank: The storm created that motivation for leadership in these various places of power and authority to pay attention, and I took complete advantage of that, as I should.
Brad Langley: The resulting pilot, which launched in 2022, included two virtual power plants. They supply dispatchable power from residential energy storage and EV chargers to the Texas electric grid operated by ERCOT, which is the Electric Reliability Council of Texas. But it all started with a small demo involving 60 Tesla Powerwall customers.
Arushi Sharma Frank: We published those demo results publicly with ERCOT and did a workshop with them and explained, right now, we have thousands of customers with batteries and solar who could have supported the grid during Uri. You could have known about who they are, and you have to fix that now.
Brad Langley: This past spring, Arushi left Tesla and launched Luminary Strategies, a consulting firm focused on supporting grid hardening and resiliency projects. One of those projects is a proposed $32M microgrid and VPP for the city of New Orleans. She worked with community groups to draft a proposal. It builds on the success of microgrids already deployed in the city. Arushi was blown away by community members who advocated for their proposal at a city council hearing.
Arushi Sharma Frank: We had retirees who described a perfect residential virtual power plant program design in a few sentences, the kind of thing that when I started working on these programs at Tesla in 2020, most regulators I spoke to could not describe a VPP.
Brad Langley: Consumers are quick to see the value of this type of grid resilience project, and Arushi believes that that’s also causing industry attitudes to evolve.
Arushi Sharma Frank:I have seen the timelines for acceptance shorten pretty dramatically, pretty quickly, and that’s more true in markets where existing tools for reliability resilience have started to fail en masse.
Brad Langley: The New Orleans project is a great example of condensed timelines. The proposal was quickly accepted and is now moving through the city’s design and approval process. Arushi says that’s due in part to the city’s long history with natural disasters.
Arushi Sharma Frank: Doesn’t matter if you have the utility, you’re the tech provider, you’re the regulator, you’re the politician. It really doesn’t matter. If you go through that experience of being in an environment where your family members are helpless, you rally.
Brad Langley: This is With Great Power, a show about the people building the future grid today. I’m Brad Langley. Some people say utilities are slow to change, that they don’t innovate fast enough. And while it might not always seem like the most cutting-edge industry, there are lots of really smart people working really hard to make the grid cleaner, more reliable and customer-centric.
Today, my guest is Arushi Sharma Frank, founder and principal of Luminary Strategies. We talk about the value of lost load and why it’s such an important metric for communities to calculate. We also dig into the design of successful virtual power plants and why technology is no longer a barrier to VPP deployments.
But first I wanted to learn about the proposal she helped develop for two local organizations in New Orleans – Together New Orleans and Alliance for Affordable Energy – and specifically how that project got green-lit so quickly.
Arushi Sharma Frank: So the first piece of virtual power plant program design is always, Is there money? And if not, where should it come from. One of the helpful motivators is that there was already a resilience fund established through a FERC case with Entergy New Orleans that reverted a certain amount of ratepayer money into a fund. That is a hop, skip, and jump, huge step, of course, over what we conventionally have to do if you’re going into a rate case to build a certain type of program of this kind.
Brad Langley: Then, one Saturday Arushi got a call from those local organizations.
Arushi Sharma Frank: And they said, “We have this money, it suddenly showed up. We want to make sure it gets used for all of these incredibly important resiliency tools.” And people already get it here. They know that when the lights go out, distributed energy is the solution. They already know. “Can you help us write it?” And we developed this program designed over three days and took it to the first council approval the following week, and we got the testimony and support in essentially 24 hours. There’s no program yet. The item that got the approval is the program proposal itself, and the proposal has two parts. One is building more microgrids for various different customer types inside New Orleans and the other is enabling a very large residential, customer-driven, solar battery-driven virtual power plant incentive structure.
The microgrid side of it is resilience as a service, which just means two things. One, it means various types of companies or providers can work with various types of community welfare, assisted living, as examples, organizations to enable those organizations to have enough power to do what they need to do, which is critical services of various kinds. Maybe normally your space does activity X, but during an outage or a hurricane event, it’s activity Y and that’s the service that the microgrid facility is providing. So the piece that comes next is important because the program designed itself, like setting up what the criteria for participation are, what the incentives are, will be under City Council’s purview to run it. But the amount of time that this could take to build is no longer going to be years because it exists already, a version of it exists in New Orleans. All the other places where these things exist, they’ve been proved. So technology is not a barrier anymore. It’s about accepting the technology.
Brad Langley: What is it that made New Orleans such a great first point of entry for a program like this?
Arushi Sharma Frank: So the program is riding on the back of identified success of what microgrids have already done for the community. And so New Orleans is unique because it’s actually generally a small space as compared to, of course, a whole state or a whole island. But within that small space, boy, is it urban dense. And so you should be able to, very quickly, make this program very effective just based on people per square footage. If resilience is a target, if survival is a target, you can get there really quickly with building out this type of program. So there’s a very cathartic, personal, accessible feeling for the people in the city already from these projects existing and having helped people. And the same is true, of course, with anyone in local politics. It doesn’t matter what party you’re from, you live in this city and you know that all of this stuff works and it’s visual, it’s in your line of sight. You can touch and feel and experience it for yourself.
That really makes New Orleans a very unique and important use case because in addition to the loss of life that they’ve experienced already in major events, and I’m not even going as far back as Katrina, just more recent events have resulted in loss of life. So all of these things fit together, plus the fact that you have a City Council made of people who live there, same zip codes, as opposed to a State Commission who is trying to establish a program for multiple utilities at the same time. That definitely brings both speed and scale. And there are other pockets of the country where that type of authority and autonomy and proximity to the issues that the people in power are also the people who live there has made a big difference. I’ve seen quick movement happen in both conventional vertical utility models. I’ve seen it happen in cities like New Orleans. I’ve also seen it though in islands like Puerto Rico and in places like Texas. So it’s interesting. Unique factors, but I can’t say that they’re the only things that motivate rapid expansion. But when they’re there and you see all of those things together, you can kind of check the boxes and say like, “All right, distributed energy is coming, one way or another.”
Brad Langley: So amazing progress to date. What’s next for the program and what do you think is going to take the most work from the city, community groups, and local utility to further this effort?
Arushi Sharma Frank: There are a lot of different types of stakeholders, whether it is nursing homes, whether it is more churches or community facilities. One of the fun challenges will be City Council trying to figure out the criteria, the baseline for, “Okay, what do we need in our city?” That’s one side of it. The other that’s coming is residential virtual power plant design. It is taking work that Entergy New Orleans has already done and creating more scale and a bigger value stack so that more customers in the city can adopt solar and batteries. And if you already have it, an incentive design that motivates additional capacity on your home, so you can earn more from selling back to the grid. You have to scope and figure out what you need and who is available to help give you what you need, whether it’s the microgrid side or the VPP residential side.
After scoping comes the entity who has authority, setting up technical briefing, and getting comments on what practically the value proposition is and in some cases deciding for the first time what the value proposition should be. A lot of places in the country, Brad, don’t have very accurate value of lost load studies. That’s a very complex concept, but I’ll explain it in 10 seconds to you. It means what you’re willing to pay to not lose power. In every single moment of our life, where we spend money is not just a function of what we think the immediate value of that money spending is, it is what is a bigger risk I avoid by spending that money. So in these program designs, every utility, every regulator, every constituency needs to come up with a general value of what that program will do for you.
Our defining moments come from communities, business owners, individuals having moments where they realize there’s a mismatch between their expectation and their actual VoLL, their value of loss load. They realize, “Oh gee, I would actually be willing to pay 18,000 more dollars to be able to have power continuously for four days instead of having no power for those four days, even if those four days only happen to me once every three years.” And if you look at VoLL studies done, you’ll see there’s also a new trend where small businesses are more likely right now to report higher values of lost load. They are more likely to be willing to spend more money for microgrids and backup power than they were even five months ago. They’re suddenly worried about or they’ve already had the experience of losing power and the economic value of that loss is significant.
Every time a city, a utility commission, a utility itself comes up with that VoLL and that number around what DERs are worth, we are able to use it in other communities and in other programs very, very quickly because once the work is done, it can be taken to other markets and then used as a tool and their baseline so that the next group of people who have to come up with these programs, they can use it. And that’s going to happen in New Orleans, too. You’re going to have all sorts of great commentary experience and datasets, and you’ll get to give an anecdotal experience if you are involved as a community member, not necessarily as a subject matter expert who builds microgrids, right?
Brad Langley: Taking a bit of a step back, we’re seeing a lot of publicity and a lot of promise around VPPs, it’s a very hot topic. And you’ve done a lot of foundational work on ERCOT policy and market design frameworks, specifically on residential battery VPPs. I’m curious what are the policy permitting or technical challenges that ERCOT and other parties need to overcome to really proliferate the adoption of residential battery VPPs?
Arushi Sharma Frank: The biggest challenge is that VPPs are a maverick and very unconventional because they present value to the systems as both poles and wires and as generation. A transmission tower does not do that. It transmits power, right? It’s the punching bag that moves high-voltage power further along the line. Single point usages of anything in electricity infrastructure define how we pay for them. And the complete opposite is true with anything in the virtual power plant world. Along with that, there’s the other side of the challenge, which is that people use the native architectured infrastructure inside a VPP program very, very differently depending on what the device or devices are.
By that I mean if you have an EV, your primary use of the EV is what? It is driving it somewhere else, it’s not keeping it at the house. So a program for VPP, for EVs does not look like a program for residential thermostat control. The thermostat doesn’t leave, the poor thing’s stuck. It’s very bored I’m sure all day. It would like to be an EV, it can’t. It’s just there on the wall. However, thermostat control is a risky proposition for some companies. Why? Because the other side of controlling a thermostat is that people get hot. If your home isn’t properly insulated, you will get hot faster and that’s a variable. It’s an externality, a negative externality for thermostat-based VPPs. Solar and batteries is almost, not almost, it is, it’s a breath of fresh air for both of those problems I described. Because the primary use of solar and battery indeed is, of course, to facilitate a sort of clean energy consumption and resiliency behavior, but on top of that, the customer does not have to feel, on a day-to-day basis, the immediate direct impact of their device being used for something else.
So the idea of load control and selling power back to the grid with solar and battery is very much hopefully dependent on how the customer uses those existing devices and using the extra on top of that. When I mentioned earlier the New Orleans customer talking about backup reserve, that’s what I mean, is that in VPP programs with batteries, customers can toggle or their program provider will tell them that we plan on reserving X percent of your battery, which is tied to your solar for all the time and if there’s a storm event, we will say none of the time and your battery will actually charge before the storm event and during the storm, we will make sure that your capacity reserve, you’re given a notice about it. They’re like, “Hey, you now have 13 hours of backup power left.” So that’s a service too, by the way, because one of the things that derives residential VoLL in this scenario is how much duration of notice a customer has that they’re going to be in outage. Notice is a huge part of it.
A commercial facility, a gigafactory, a toilet paper manufacturing company, they can lose power for 13 seconds and they didn’t have notice, they are going to lose it and didn’t have a chance to invest in their alternatives, that can cost them half a billion dollars. So it’s different with virtual power plant residential programs. That is a key piece of it is that there is a lot of ability to incorporate notice for both the provider that’s administering your program and for the customer to figure out what would happen and what their preference is for how much they’ll participate in that kind of program. It’ll be based on the average outage, what’s actually happening to them in real life, and then each subsequent event that they’re in, if they want to opt out of it or change their participation, they can.
And that’s of course not the same with thermostat programs in the sense that there’s a lot more externality to have to handle and that even when you handle that, there’s this need that the customer constantly has and that need is probably going to get reflected in them tapping the thermostat and moving it regardless of what they told their provider they would or wouldn’t do. And those are all very real, real things. And so solving for that is a big challenge with scale for VPP. It means so many different things and that meaning is defined by the assets and the usage of that assets that drives the customer’s value proposition.
Brad Langley: So last question for you, and if you’ve listened to the show, which it sounds like you have, you should see this one coming. But we call this show With Great Power, which is a nod to the power industry. It’s also a famous Spider-Man quote, “With great power comes great responsibility.” So what superpower do you bring to the energy transition?
Arushi Sharma Frank: Whether you are a utility executive, a climate tech firm, a VC, a grad student, I am more likely than others to know what you don’t know.
Brad Langley: Very good. Well, Arushi, thank you so much for the time. I really do appreciate your time here and enjoyed the conversation.
Arushi Sharma Frank: Thank you so much, Brad.
Brad Langley: Arushi Sharma Frank is the Founder and Principal of Luminary Strategies. With Great Power is produced by GridX in partnership with Latitude Studios. Delivering on our clean energy future is complex. GridX exists to simplify the journey. GridX is the enterprise rate platform that modern utilities rely on to usher in our clean energy future. We design and implement emerging rate structures and we increase consumer investment in clean energy, all while managing the complex billing needs of a distributed grid.
Our production team includes Erin Hardick and Mary Catherine O’Connor. Anne Bailey is our senior editor. Stephen Lacey is our executive editor. Sean Marquand composed the original theme song and mixed the show. The GridX production team includes Jenny Barber, Samantha McCabe, and me, Brad Langley. If this show is providing value for you and we really hope it is, we’d love it if you could please help us spread the word. You can rate and review us at Apple and Spotify, or you can share a link with a friend, colleague or the energy nerd in your life.
As always, thanks for listening. I’m Brad Langley.
