Bill Nussey
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What If I told you we could dramatically accelerate the shift away from fossil fuels towards clean energy - (Cheering) Yeah! - (Applause) and at the same time cut our future electricity bills by literally hundreds of billions of dollars. And I need a clicker! (Laughter) We are going to literally cut our future electricity bills by hundreds of billions of dollars. I have an idea I'd like to share with all of you today, but before I jump into it, let me give you a little background on the electricity industry. Now - (Laughter) Now, most people take this for granted, but electricity has slowly become one of the foundations of our modern society. It powers everything: our lights and computers and refrigerators and air conditioners. It powers our offices and factories and schools and hospitals. And, before we know it, electricity will be powering our cars as well. It's so pervasive and so easy we don't give it a second thought. But beneath the surface sits one of the most amazing and sophisticated systems ever created: the electricity grid. The National Society of Engineering calls electrification the single greatest engineering achievement of the century. And at two trillion USD a year in revenue, electricity is arguably the largest business on Earth. But despite its amazing impact on society, this 100-year-old industry is starting to face some challenges. Now, you can think of the grid like this old mainframe that my dad worked on. When this thing was invented, man, it was revolutionary and it went on to change the world! But the inevitable march of technology pushed forward, and over time, this mainframe became outdated. And, like that old mainframe, the grid has become somewhat outdated as well, and it's overdue for an upgrade. Let me give you an example. The US Government data tells us today that the clean energy power is only about 7 percent of the grid, but much more concerning is that they predict over the next 25 years, clean energy will only power about 14 percent of the grid. In my opinion, this is unacceptably slow. I believe that accelerating the shift to clean energy is one of the greatest challenges of our generation. It's so important, in fact, that I've decided to step away from my 30-year career as a software CEO to do my small part to help push this forward. And after a year of intensive research and interviewing over 100 of the smartest people in the industry, I have come to believe that there is a faster path. A simple idea that can accelerate the shift to clean energy potentially decades sooner than the path we're on now. This idea is called ... local energy. So, if the grid is like that old mainframe, then local energy is like a smartphone or a laptop: it's cheaper, it's smaller, and it's a lot smarter. Local energy is about generating electricity in the same place that it's used. You can think about local energy just like the farm-to-table movement, where food is grown locally. People have more choices, the food is healthier, and it creates local jobs. Local energy is just like farm-to-table, except for electricity instead of food. Now, the most exciting part for me is that local energy is starting to happen now. You can see it! For example, one of the most common places we'll see early local energy is residential solar. But not everybody has a rooftop, so community-shared solar is an increasingly viable alternative. Forward-thinking companies like IKEA are starting to generate their own electricity. And during hurricane Harvey, Texas grocery store chain H-E-B was able to keep the refrigerators and lights operating 24/7 thanks to their own local energy solution. In fact, it worked so well that local responders used it as a base of operations. And this idea continues to grow. Municipal buildings like schools and hospitals and fire stations are turning to local energy so that they're available all the time for their citizens, particularly during disasters and emergencies. Local energy is the single best way to get electricity outside the reach of the grid. The military uses it to power remote bases. But believe it or not, one billion people, today, have no electricity at all. Local energy is this best way to bring electricity to these low income, rural communities. And islands, like this beautiful one in the American Samoa. It's entirely powered by solar panels and batteries from Tesla, which replace dirty, expensive diesel. Now, local energy is the best, fastest path to clean energy, but local energy is also solving a more important and immediate need. As I said earlier, the current grid is facing some serious challenges, and it turns out that local energy is one of the best ways to address them. And I'd like to tell you about three of them today. The first one is that local energy is more secure. The grid is frighteningly vulnerable. Outages are on the rise as extreme weather events increase and its equipment starts to age. I'll give you an example: The 2000 large substation transformers that make up the backbone of the US grid were designed to last 20 years. Their average age today is 38 years old. And it's not just age. Hackers and foreign enemies are starting to look at the US grid as a prime target for cyberattacks. In this incredibly chilling memo that was leaked from the Federal Agency that oversees the US grid: 'Destroy nine interconnection substations and one transformer manufacturer, and the entire Unites States grid will be down for 18 months, probably longer.' You've got to think about that! I mean, a one-hour outage is annoying. A one-week outage makes national news. A multi-month outage has no precedent in modern history and risks dragging the US back into the 1800s. Now, local energy can help. It can help make the current grid more secure and reliable. How will this work? Well, imagine a wall with several large balloons. Metaphorically, this is what the grid looks like to a hacker or to a powerful storm. You take out just one of these balloons and a big chunk of the grid goes with it. And tragically, this is exactly what we're seeing play out in Puerto Rico and the Virgin Islands. Hurricanes have ripped through there and taken out their grids. But we can envision a better, more advanced energy future. Imagine that same wall with dozens of little balloons. Even if you take out several of these, the interconnected local energy grid continues to operate. And this idea isn't new. This redundant, distributed design has actually been proving itself for decades. Go all the way back to 1969, in the middle of the Cold War, and the US Government needed a way to make their data networks more resilient against nuclear attacks. The idea that they came up with was so successful it went on to change the world. That idea today is called: 'the Internet'. The second way that local energy is better is that it's actually cleaner. Now, I could do an entire talk about how the grid is poisoning the planet, but for today, I want to focus on the one area of my research that shocked me more than anything else. I'm going to show you a video of a small town in Tennessee that's been overrun by coal slurry. When I started my research, I had never heard of coal slurry, but I've learned that coal plants generate over 770 million tons of toxic ash a year. This stuff is full of mercury, arsenic, and lead, and to keep this nasty stuff out of the atmosphere, coal companies mix it with water and dump it in nearby ponds. There are over 1400 of these largely unregulated, toxic coal slurry ash ponds scattered across the US. Ladies and gentlemen, we need to do so much better than this! And the great news is we have options. Wind turbines and solar panels generate no waste. They produce no greenhouse gases or dangerous radiation. Once installed, they just sit there for decades, cranking out electricity costing virtually nothing. The problem is that the existing infrastructure, the existing coal and nuclear plants, all have mortgages. And some of those mortgages extend into the future for decades. And until those plants and mortgages are paid down and those plants are decommissioned, the companies that own them have very limited incentives to install any new kind of energy, let alone clean energy. But this is where local energy can help break the law jam. Individuals, communities, and businesses can install their own clean energy systems. Not only can they help the environment, but they can actually start saving money because the third benefit of local energy is that it's cheaper. Believe it or not, it's actually getting more expensive to operate the grid, not less. Let me show you how crazy this is; let me bring back my dad's old mainframe. In the 50 years since that mainframe was created, the cost of computing has dropped over 100 million times. In the last 50 years, a tremendous number of things have dropped in price: cars, airlines, and appliances, just to name one of hundreds of products that have dropped in price. But somehow, electricity has remained stuck. It hasn't gone anywhere. It's price has remained largely the same. What's going on here? Let me show you. About 3/5 of your electricity bill goes to pay for power plants. Most of those power plants today are coal and nuclear, and according to US Government data, the cost of operating these coal and nuclear plants continues to rise year after year. Even natural gas, which has recently become very inexpensive, will eventually rise again, just like any finite natural resource. But now, let's look at your electricity bill as if it were coming from local energy. First, the sources of local energy, solar, wind, and batteries, the prices of these sources have been dropping, dropping for decades, and will continue to drop for years to come. And second, local energy doesn't need miles of power lines, so the other 2/5 of your electricity bill will drop dramatically as well. But how is it that some kinds of power are getting more expensive, while others are getting less? Well, I'll tell you a secret. Solar, wind, and batteries are technologies, not fuels. This is really important, so I'll say it another time. Solar, wind and batteries are technologies, not fuels. Coal, natural gas, and nuclear are fuels. Their costs are governed by things like digging and drilling, refining and transporting. There's only a finite amount of these fuels, so as we dig them up, their prices will continue to rise. But the thing that concerns me the most is that when you take a chunk of that fuel and you burn it to create electricity, it's done forever; all that you have left is waste. If you actually want more electricity, you have to get rid of that waste and go dig up more fuel. Now, compare that to technologies like solar, wind, and batteries. These technologies have a lot in common with other technologies like computers and microchips. Years and years of innovations have allowed these technologies to continue to drop in price. The best part: if you install a solar or wind farm, it just sits there. The only fuel that it needs is sunshine and wind. It will operate for decades, practically for free. Now, if you're still skeptical that local energy can actually be cheaper, take a look at Minster, Ohio. In 2015, this community decided they wanted to power part of their electricity needs with clean energy. So they built their own local energy plant nearby, with solar and batteries. And thanks to some very clever applications of their batteries, they're actually spending less money for the electricity from their own local energy than they do when they buy it over the grid. It's amazing, and it's the kind of thing that can be replicated and copied across the world. So I hope I've gotten you a little bit excited about local energy. The question is, how do we get it moving? Well, there's two things that we can do. The first is local electricity markets; we need to create local electricity markets. Going back to mainframes again: Imagine back when they were first invented, and imagine if the Government granted an exclusive monopoly to mainframe manufacturers such that it was illegal for any other company to make a computer of any kind. Without any competition, do you think mainframe manufacturers would have invented the Internet? Or smartphones? Or laptops? (Laughs) I seriously doubt it. But that is exactly how the utility industry works today. Governments grant exclusive monopolies to utilities. They do this for a very good reason: utilities make a very important promise to governments. They promise to provide affordable electricity, reliable electricity, to every single person. And for the most part, this important bargain works, but it has come at a very large cost. The lack of competition has slowed grid innovation to a snail's pace. Now, regulators understand this, but they really struggle to find a way to balance control with competition. But when superstorm Sandy came barrelling through the NE in 2013 and half a million people were without electricity for over a week, New York got really creative. The State of New York has since brought forth some of the most ambitious and innovation-focused regulation in the industry. One of my favourite examples from that is the Brooklyn Microgrid. Dozens of homeowners and small businesses have formed a local energy community. They're buying and selling electricity from each other, all day long. It's like a farmers market, but for electricity. Now, if you're outside the industry, you're thinking, 'Yeah, sure. What's the big deal about that?' But I'm telling you, from the power industry's perspective, where the world's been designed for 100 years for central generation and distribution, this is a radical idea. And for me, I think this is just a great example of what the future of energy will look like for all of us. The second way we can get local energy moving ... is ... you. You see, solar and batteries are governed by something called Swanson's Law, which tells us that the more you manufacture of something, the cheaper it gets. So if we want to unleash an economic juggernaut to drive clean energy forward, all we need to do is make more and more and more solar panels and batteries. And this is where you come in, because for the first time in energy history, each of us can play a role in creating the future. Install solar panels, or buy an electric vehicle. Join a community solar programme, or do business with companies that are powered by clean local energy. Every little bit you do adds up. Volumes increase, and prices come down. And as prices go down, the shift towards clean energy just accelerates faster. I urge all of you to join me on this journey because together we can start the local energy movement. Thank you. (Applause)