Back in July we announced new funding to back WattCarbon’s growth into the system of record for demand-side energy markets. It’s been a busy three months, culminating in a whirlwind NYC Climate Week. Let’s get caught up.
To begin, it’s worth looking back a little farther at the WattCarbon trajectory over the past few years. We started out trying to figure out how to quantify emissions impacts from demand-side energy resources. This drew on our previous experience at Recurve building measurement and verification tools for utility programs. We knew that hourly attribution was really important and wanted to bring together supply-side carbon accounting with demand-side energy flexibility.
We ran into headwinds from multiple directions. To begin with, the carbon-offset industrial complex was more formidable than expected. The overwhelming opposition to considering decarbonization (it has to be a carbon “removal”) as a plausible pathway to net zero and the variety of arbitrary and self-serving obstacles placed in the way of companies trying to get recognized for their impacts ruled out any headway on that front.
As an alternative approach, we tried to get organizations like the WRI (author of the GHG Protocols) and newer entities like EnergyTag to recognize demand flexibility as a clean energy resource. But these groups insisted that only energy generation would qualify as a Scope 2 offsetting energy credit. The debates between 24/7 energy matching and “emissionality” camps have grown increasingly disconnected from the realities on the ground.
While we were proud of our work to launch the first demand-side energy EAC market last year - and even today you can see in the WEATS Registry that these projects are yielding carbon reductions - we took a step back in December to build out our measurement and verification stack. In April, we launched Aristotle AI, our next-generation M&V platform that provided automated, hourly demand-side energy savings calculations.
We haven’t given up on decarbonization - in fact, it’s more of an imperative than ever before. But the reality is that the constructs that we have used in the past - carbon offsets, net-zero, environmental attributes, etc., - are now much less influential in driving investments into clean energy resources.
AI and Energy
The dominant theme of this year’s NYC Climate Week was AI and Energy. The consensus seems to be that around 100 GW of new data center load will arrive on our grids over the next 5-10 years. “Load growth” has breathed new life into the energy sector and is intersecting with resilience and lingering (if somewhat tenuous) commitments to lowering carbon emissions from the sector.
Secular load growth is manageable for utilities - but the ferocity of new interconnection requests has induced panic amongst utility executives facing the twin challenges of rising prices and cascading infrastructure failures. Something has to give.
Enter demand flexibility. The story goes something like this. Our current energy systems are sized to be able to provide power on the hottest day of the year. Adding a data center pushes the system beyond its limits (requiring both new generation and larger wires). Before a data center interconnection agreement can be approved, new generation must be constructed and upgrades to the system to carry the power to the data center must be completed. If these costs are passed along to ratepayers, bills will continue to rise.
The thing is, outside of really hot days, the current grid is actually underutilized. We actually have plenty of spare capacity most of the time. What we really need is to figure out how to shift current peak load to non-peak times of the day.
As it turns out, there are plenty of solutions lining up to provide this flexibility capacity. Batteries, EV chargers, smart thermostats, Bitcoin miners, and many other technologies are available to perform this service. And for those times of the year where demand is consistently high, there are energy efficiency measures like replacing old space heaters with modern heat pumps that stand to permanently reduce load during these peak periods.
Interestingly, the challenge of accounting for a demand-side energy resource is no different if you are trying to determine its carbon impact versus its energy impact. The same measurement and verification and system of record is required for both. Perhaps ironically, the very infrastructure that we had built at WattCarbon to bring carbon transparency to demand-side energy resources is also core to unlocking the value of these same resources to solve the problem of load growth.
Why this is all exciting
Over the past three months, we have been deploying our Aristotle AI platform across the entire energy sector for the purposes of providing measurement and verification for demand flexibility and energy efficiency. In addition to previously announced customers like Prologis and Rewiring America (check out their new report here), we are excited to be working with companies like Siemens, R-Zero, Peachtree Infrastructure, Elevate Energy, PowderWatts, Northern Pacific Power, and more to provide settlement-grade M&V via our platform.
Even more exciting is work that with organizations like NYSERDA and BayREN to develop transactional demand-side energy markets that is now extending across utilities and hyperscalers to unlock what we have been calling PPAs for VPPs. Once we make demand-side energy resources procurable - again, the basic construct is the same, the EAC just quantifies capacity in this case in addition to carbon - we will unlock what will likely become the largest energy market on the planet.
So as we take stock of NYC climate week, a couple of things are clearer than ever before. First, the pace and scope of decarbonization is increasing, not because of the moral imperative, but rather because of the economic imperative. The value of clean energy will now be unlocked through conventional markets, rather than driven by the value of the environmental attribute itself. That is, we will see the energy transaction be the primary driver of value with the environmental benefit as a secondary, though still relevant attribute of the transaction, rather than the other way around.
Second, demand-side energy markets are still mostly organized around the prerogatives of regulatory bodies, and need to substantially evolve if they are going to rise to the challenge. Without load growth, energy efficiency and demand response are performative. But in an era where falling short means triggering a blackout, “good enough” can no longer be good enough. Settlement-grade M&V is required for markets and systems of record like WEATS will be critical to ensuring that no double counting happens.
Collectively, these shifts mean that these are exciting times for us at WattCarbon. It’s been quite the journey from the earliest days of figuring out how to think about hourly carbon accounting as it relates to demand response to the realization that the underlying technology that we have built will be instrumental to the growth of a giant new clean energy market.
I’ll conclude here by noting that amidst everything else last week, ACEEE released a great report on how demand side energy resources can be part of a decarbonization strategy. Check it out and get in touch with us if this is something you’ve been thinking about as well.
This is very exciting and amazing. Thank you professor Young for explaining it to us in understandable language. You are getting better and better at that.
I’m ok if the environmental benefits reside in a secondary space. In a way, it’s better. When smaller minds of powerful decision makers can be focused on the aspects they care about, there will be less push-back from them.
Excellent news!