For James McGinniss, installing a bigger distributed energy resource — a Tesla Powerwall, for example — can be invasive. He likens it to performing open heart surgery on a building’s electrical system, given the electrical upgrades that generally need to happen.
Meanwhile, he argues that connecting a much smaller plug-in DER should be as simple as putting on a t-shirt — and that that ease should translate to savings.
McGinniss is the CEO and co-founder of David Energy. The retail energy provider offers customers software that integrates any power sources that plug into a bi-directional 120 or 240 volt outlet — solar panels, EVs, batteries, even cook tops — and effectively turns them into a DER. It also allows these power sources to operate as part of a VPP.
Beyond their residential applications, McGinniss sees the rise of these “permissionless” plug-in DERs as a boon for small businesses’ bottom line because they can lower soft costs and shave peak demand.
“The big story is what this does to install costs and accessibility,” McGinniss told Shayle Kann in a recent episode of the Catalyst podcast. “This is coming one way or another. It is a bottoms-up, economically driven motion.”
For more on David Energy’s permissionless DERs, listen to James McGinniss’ interview on Catalyst.
Small businesses often have to navigate razor-thin margins. And the soft costs for a traditional DER — getting a permit, hiring an electrician to install it, as well as passed-through customer acquisition costs — can often account for more than half of the total price. The price tag can often put the technology out of reach and makes the ROI a distant aspiration.
Instead, McGinniss is convinced that going permissionless is the way: “What we’ve seen in the commercial application is installed costs of less than 10% of system costs. When you go to residential now, it is closer to zero because all those soft costs are gone.”
Unlike residential customers, small businesses are exposed to demand charges, which are fees based on their monthly peaks, in addition to the soft costs. Some common culprits are HVAC systems, walk-in coolers, or electric ovens — all things that are essential to the bottom line of small businesses like bodegas and cafes. McGinniss argues that a business can save about $50 per month for every kilowatt of peak demand that they shave.
“To a small business [that] actually can mean a lot, especially if they own ten locations,” said McGinniss in his conversation with Kann. “If you are doing a couple of kilowatts, that can be pretty meaningful.”
That said, plug-in DERs are not without their drawbacks. They are hobbled by stringent regulatory and safety standards that prioritize grid stability, and are limited by a lack of standardized interconnection protocols across thousands of utility jurisdictions. As a result, the market is fragmented.
While McGinniss acknowledges that the burgeoning plug-in DER landscape is beholden to what he characterizes as “murky” regulation, he maintains that these DIY power sources have a green-light in terms of electrical code, and that they are safe to use. “There may be jurisdictional authorities or fire departments that have an opinion on what should go in a given location, but at the electrical code level, this is already allowed under current guidance,” he said.
And if plug-in DERs can scale, he added, they can operate as a VPP. McGinniss pointed to Germany’s exploding rooftop solar industry as a model for what can happen when barriers to DER adoption are lifted. Of course, the U.S. — with dramatically higher soft costs and additional regulation — is a more complicated place to scale. But McGinniss still has faith that permissionless DER has the potential to rise to an “infrastructure-grade asset.”
“Companies are focused on…building things to be networked at scale so you may be running gigawatt-sized VPPs with all these little plug-in batteries,” he said. “There is going to be a lot of innovation.”
