Episode 173: Cisco DeVries, OhmConnect
Today's guest is Cisco DeVries, CEO of OhmConnect.
OhmConnect provides home energy management solutions via smart meter analytics and energy market integration. OhmConnect's platform enables residential users to sell their energy reductions directly into energy markets.
Before OhmConnect, Cisco co-founded Renew Financial, which became one of the largest dedicated clean energy finance companies in the U.S. As CEO of Renew, he raised over $2 billion in private capital that financed energy efficiency and clean energy projects in nearly 100,000 homes. Previously, Cisco spent five years as the Chief of Staff to Berkeley Mayor Tom Bates. In 1996, President Clinton appointed him to serve as an aide to the U.S. Secretary of Energy, where he held roles at the White House and the U.S. Department of Transportation. Cisco has over 20 years of experience in public policy and energy efficiency. He also holds a B.A. in political science from UCSD and a Master's of Public Policy from UC Berkeley.
In this episode, Cisco explains what OhmConnect does, how their platform works, and what led him to serve as CEO. He also touches on the relationship between OhmConnect and CA utilities and barriers to large-scale deployment. Plus, we have a lively discussion on pricing carbon and other policies that would address climate change. It was great to have Cisco join me this week, and I'm excited for listeners to learn more about OhmConnect.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded August 13th, 2021
In Today's episode we cover:
Overview of OhmConnect
Cisco's climate journey and what led him to OhmConnect
Cisco's time working as the Chief of Staff to the mayor of Berkeley, CA and what working on climate looks like at the local level
The biggest blockers to deploying existing climate technology
How OhmConnect pays you to be more efficient and is helping prevent blackouts across California
Laws in place that affect the electricity market
How much consumers can make and the amount of work customers have to do to save
What motivates users to sign up for OhmConnect
The barriers OhmConnect faces to large-scale deployment
The relationship between OhmConnect and the CA utilities
A discussion on pricing carbon
Government policies and mandates that would address climate change and benefit OhmConnect
Links to topics discussed in this episode:
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Jason Jacobs: Hey, everyone. Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey, or MCJ, as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack community for those people. That's now mushroomed into more than 1,300 members. There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for: determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit. Beyond that, the more diversity, the better.
There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members and some open source projects that are getting actively worked on that hatched in there as well. At any rate, if you want to learn more, you can go to MyClimateJourney.co, the website, and click the Become a Member tab at the top. Enjoy the show.
Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests, to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help.
Today's guest is Cisco DeVries, CEO of OhmConnect. OhmConnect is a startup that pays you to reduce your energy consumption at critical times for free. OhmConnect is not what I was expecting. It is a combination of essentially an energy startup and a virtual power plant and a game. It enables consumers to, at different times during the day when there's peak demand, dial back their usage and get paid. And that usage getting dialed back is the equivalent of purchasing new energy. So the energy providers can actually procure this demand reduction in the same way that they would procure new supply.
We have a great discussion in this episode about the OhmConnect model, how it came to be, Cisco's path and what led him to taking the helm at OhmConnect. We talk about incentives and consumer behavior change and its role in the clean energy transition. And we also talk about other levers that can bring about this change and what you and I can do to help.
Cisco, welcome to the show.
Cisco DeVries: Thanks for having me. It's great to be with you.
Jason Jacobs: Thanks for coming. Well, you've got such a cool story before OhmConnect, and then you're doing such cool things at OhmConnect. So I have so many things I want to ask you and learn from you about, which probably means that there's a bunch of listeners who agree. I feel so fortunate to have you on here. Thanks for making the time.
Cisco DeVries: Oh, I was honored to be asked, and I think it's a, really exciting, the conversations that you're putting out there into podcast land. And it's, it's really helpful, I think, to hear the stories that people have about how they got into this. I know I'm not unique now in, in having kind of a weird journey and then having, as it sounds like you have as well, like, a moment of clarity around this stuff and just dedicating time and energy after that.
Jason Jacobs: Well, the funny thing is that, I mean, I've said this before on the show, but this didn't set out to be a podcast. It set out to just be informational meetings with the smartest people I could find to help me get my brain around the problem and the best ways to address it and maybe eventually where my skills could fit. And then the journey just kind of became the destination, and we started recording because these conversations were so great and they were just stopping with me and they weren't getting shared. So we just started recording to build a knowledge repository for others that could hopefully benefit from as close to being in the real discussion as they could get.
Cisco DeVries: It comes across. It's great. We can talk about, like, for me, too. Like, you just keep putting one foot in front of the other. It's, like, your, there's a problem you want to solve and you keep working on it, and then one day you look back and it's been a long journey. [Laughs]. So it's exciting to hear these stories, and I'm excited to share mine.
Jason Jacobs: Awesome. Well, for starters, maybe just introduce OhmConnect. What is it? How did it come to be?
Cisco DeVries: Great. So OhmConnect is a seven year-old technology company. Essentially, we are a newfangled energy company. The simplest way to describe what we do is that we help our customers save energy, and then we pay them for saving energy. And that seems a little bit bonkers to people, because not only do they save energy and their bills go down on their utility bills, but they're a-, we're also paying them. And people can make hundreds of dollars a year. So it can be a meaningful amount of money. The whole purpose of OhmConnect is really to make the grid responsive. A bunch of years ago, seven years ago, we were really lucky that a couple of amazing people came together to start the company that had a background in energy trading and energy markets and a background in social gaming and building technology for the whole world.
Jason Jacobs: Very common co-founder story, right?
Cisco DeVries: Yeah [laughs] [crosstalk 00:05:33].
Jason Jacobs: ... ener-, energy trader and a social gaming person.
Cisco DeVries: So I joined the company a couple years ago when they recruited me in to help us kind of take what they'd figured out up to scale. I'm just as everyday astounded that they won, had the foresight. Long before I saw this opportunity, they saw it and actually dedicated their time and energy to it for years when it seemed kind of impossible, this idea that we could get hundreds of thousands of individual people to reduce their energy use just a little bit at a time, but do it all together, bundle it all together, and actually have that be something that's meaningful megawatts that really helps reduce stress on the grid and reduce carbon.
That was not an idea that was well [laughs], that was well understood. It's still not well understood. And seven years ago, it was a crazy notion. I'm very thankful that they had the foresight and they were able to stick with it through a lot of challenging times.
Jason Jacobs: So what about your journey? So what were you doing before OhmConnect, and then at what point and why did you and the OhmConnect journeys or did yours and OhmConnect journeys intersect?
Cisco DeVries: So my first true love in energy was the refrigerator. I was actually, worked for the US Department of Energy back in, uh, mid to late '90s. I was an appointee of President Clinton. And I didn't know anything about energy, and I was in this agency that I knew almost nothing about. And one of my first jobs was to help figure out how to announce and do a bunch of work related to some refrigerator standards. And I could not have been more disappointed in my lot in life [laughs] coming in, thinking I was hot stuff and in the, you know, appointed to the administration, and then I'm dealing with refrigerators.
Jason Jacobs: Well, refrigerators are awesome, but the only thing awesome, more awesome than refrigerators are refrigerator standards.
Cisco DeVries: And it turns out one of the greatest untold, you know, stories of our time is how much refrigerator standards have changed everything about refrigerators for the better. Refrigerators are cheaper and they're bigger and they use way less energy. And, like, everything about a refrigerator is better. And it's because 20 years ago, 30 years ago, people started putting standards in place. California was the first, it, or one of the first, anyway, and they became national standards. And people figured out how to build better refrigerators that were more efficient. It is an incredible story. And most people don't have any idea that happened, because the refrigerator is just fine. And I think we need people to understand that as part of this climate journey we're all on, because that's what we need a lot of. We need a lot of those stories, a lot of things to work like that. And I started off with a refrigerator. I got really interested in it and, over the years, became more and more focused on how we're going to deal with using energy efficiently and how we're going to decarbonize.
The big turning point for me, and this is so almost trite or ridiculous to say [laughs], was Al Gore's movie The Inconvenient Truth. And that really made me focus. At the time, I was Chief of Staff to the mayor of Berkeley, California. I and the mayor were like, "Let's just see what we can do. Berkeley's crazy in lots of good and bad ways. Let's try and make this one of the good ways. Let's try and do something meaningful on climate at the local level." And I started working on it. That was the big pivot from just energy and to really focused on climate and climate change as the defining challenge of my generation and certainly of my life.
Jason Jacobs: What did working on climate at the local level mean? How did that manifest in those days? And also, just from a timeframe standpoint, what days are we referring to?
Cisco DeVries: So this was 2006, 2007, right in there. The problem with, with anything at the local level or at any governmental level, I should say, is that the first thing people want to do is study stuff. Let's do reports and studies. And, and that's important, 'cause we need to learn a bunch of stuff. But it tends to take place instead of action. And one of the things that I and, and my boss, the mayor at the time, really wanted to do was like, "Yeah, okay. We're going to need to do some studying and researching and figuring out. But also, let's put some boots on the ground. Let's figure out something we can do." The nice thing about local government is that the boots are on the ground, right? That's who actually fills the potholes. So you actually can do things that affect people in real life. And from there is where I got kind of focused on this notion that we should start financing solar and efficiency projects. People couldn't afford it, but you could save money and save energy if you did. But they're expensive upfront costs. And that became a problem I just couldn't shake when I was at the city. Ended up creating what's called PACE financing, property assessed clean energy, started the first program there, and then realized that there was going to have to be some sort of public/private partnerships and left the city after five years and, and ended up starting the company. Just trying to solve a problem one step after another. You don't really realize exactly all the steps. You're just like, "Well, now I need to solve the next problem," and then you get there and you're like, "Well, there's another one," and you just keep going.
Jason Jacobs: And that company was Renew Financial?
Cisco DeVries: That was Renew Financial. So I co-founded Renew Financial in 2008, and I ran it for about 10 years. We ended up financing about 1.5 billion dollars on homes and businesses around the country and in 15 states using PACE financing as well as on-bill financing and unsecured loans. And we tried lots of different things and, and attacked it from different angles. But all along, it was, "How do we democratize access to clean energy? How do we make sure everybody can participate?"
So if you say, like, "Rich people don't need the help. They're going to be fine in a whole variety of ways," and the reality is that most people can't afford even today that $20,000, $30,000 upfront to make their home efficient or clean or resilient now. And we wanted to try and solve that so everybody could do it. We had some good success. There's still a lot of work to do, but that was the premise of PACE in Berkeley. That was the premise of Renew Financial. And after 10 years and about 100,000 homes, it was time for me to turn over the reins to someone else. I was done and ready to take on the next challenge. But it was still a really important thing to try and tackle.
Jason Jacobs: You hear all the time that we needed long duration storage and we need advanced nuclear and we need to get fusion to work, and you hear about all these either breakthrough innovations or deploying what we've got or ... But it's all kind of technology focused. But in this case, it sounds like it was more business model or f-, financial innovation. So what are some key learnings coming out of that experience?
Cisco DeVries: Jason, I love that question because this is such an import- ... Everybody wants the shiny object, and I love shiny objects [laughs]. What's the new, cool thing? Long duration storage or, like, yeah, we're going, I'm going to have fusion in my bathtub and that's going to do it. For the most, we have two really important things we got to get our heads around. The first is we don't have time to take a brand new technology to scale and have it be meaningful in solving the crisis in front of us right now. We just don't. And the second thing is we don't need it, because we actually know how to do the stuff we need to do. We don't need a lot of new technology. There's lots of good advances we can have, and I'm glad people are still inventing and working on stuff. But ultimately, so much of what we have to do to solve the climate crisis is about deploying it at scale. It's about getting it out there.
We'll talk about OhmConnect stuff later, but talk about Renew Financial and the things now. It's like, well, the things that we're doing is, like, so much of this is getting people to electrify their homes now, switching to heat pumps, away from gas furnaces. There's no technology you need to do that. That's not that complicated. We've known heat pump [laughs] is not a new technology. It's getting better, but we need a hundred million of them installed in the next 10 years. And that is really hard. But that isn't a science problem. That is an under-the-hood problem. That is like, "Okay. How do I figure out how to incentivize and pay for all these people to do these things?" And there's a combination of governmental action and financial action and advertising and business models that we need. But none of that involves cold fusion in the bathtub. And I think people in our industry often lose sight of how much we actually know how to do and focus on the shiny thing that will save everything, when we actually know most of the stuff we need to do for the next 10 years, we have in front of us, we know how to do it. It's not complicated technology at this point. It is complicated to get people to actually take action or deploy it or use it. And that has been a huge part of what I've been focused on now for 20 years.
Jason Jacobs: Well, usually, in the flow of these episodes, we talked a bit about the origin story of the company, the origin story of you and your journey, and then we kind of dig into the company, and then come back around to the market. But given just where we started this discussion, I have to ask, so if we need to deploy what we've got and we already know what to do and there are these blockers that are standing in the way, what are the biggest blockers as you see it?
Cisco DeVries: A lot of the big blockers are inertia and finance and willingness to push. And I'll give you a couple of really easy examples. Right now, about three percent of people in their homes replace their air conditioning or furnace every year, just as a natural occurrence. If we could just get those to change over so that those, that three percent were changing over correctly to something that was climate efficient, that would be a start. It doesn't solve everything, but it's a huge start.
Jason Jacobs: So every year, three percent of the owners of these swap out. It's not that three percent are replacing them every single year [laughs].
Cisco DeVries: Yeah.
Jason Jacobs: It's not the same three percent. It's not the same three percent [crosstalk 00:14:56].
Cisco DeVries: Yeah. Well [crosstalk 00:14:57].
Jason Jacobs: That's right [laughs].
Cisco DeVries: No, it's a different three every year, hopefully, I guess. Yeah, that would be it. Jason, you, if you put in a new furnace this year, you are not replacing it for 20 years. That moment is gone. It doesn't really matter what new technology you come up with or what new kind of cool furnace you have that could replace that in five years. It's irrelevant. If you don't do it now, you're not going to do it. So how do you get people to do it now? And one of the ways you can do it is to finance it. One of the ways is that you could have codes require it. One of the ways is you can just make it cooler and awesome and display it so your neighbors are jealous. There's lots of tools. Those aren't the sexy things that lots of venture capitalists necessarily want to pay for.
I think every day that goes by, we're missing that opportunity. I spent so time, like, what I call on the boring, under-the-hood problems, which is not, "Where is the storage?" Batteries are great. Everyone loves storage. And I hope we have lots more storage. But ultimately, when you start looking at it, we don't have time to get a sto-, batteries on every single home. We just can't do it yet. We can do a lot of other things that are just as helpful, like changing over people's furnaces and everything else. But we're all focused on batteries.
Jason Jacobs: I've come across another problem that you don't name, and that's just that it's, like, familiarity and relationships in the trades. So for example, our general contractor's excellent, does super high quality work. We did a bunch of work when we bought our home before we moved in. But meat and potatoes to them and to all the subs that they work with are the old way. And these new shiny, unproven things are higher risk, and, like, nobody ever gets fired for recommending IBM.
And so whether it's the architect, the general contractor, the plumber, the electrician, anybody that touches the home, I go and it's like I'm bringing the shiny doodad. And they're like, "Oh, great," like, "Another homeowner that's experimental in this unproven stuff, and we're just going to have to come back to service it and we're not going to know who to call to service this thing and, or how to service it. And it's not going to be reliable. It's going to cause us more headaches. We're going to want to just move on. We're going to wish we never took this project on." That's not a law. That's not a policy. That's not a technology. That's not a cost. That's not a financing. It's, I don't even know what you call it. It's, it's, like, expertise.
Cisco DeVries: Absolutely. I mean, I have definitely spent a decade of my life figuring out that we have essentially bet our ability [laughs] to solve the climate crisis on about a million small mom and pop home contracting jobs [laughs]. And they are not up to it. And it's not their fault.
Jason Jacobs: Maybe that's where we need to nationalize, nationalize home and commercial contracting.
Cisco DeVries: Actually, this conversation came up in a different way yesterday, talking about some of this, which is how do you solve it? I mean, so I would go back again when I financing tens of thousands of projects on people's homes. And that vast majority, we're talking 99%, came out really well. But occasionally, stuff goes wrong in home construction and home contracting. I'm sure you had some of that yourself. And I'd go out in public. I'd say, "All right. How many of you own a home?" And people, you know, be like a finance group, and people all raise their hands. "So those of you who raised your hands, how many of you have done a home contracting project, had a contractor come to your house to do a project of some kind?" And most people who have owned a home have had that experience, so most hands would stay up in the air. And I'd say, "For how many of you did that go awesome?" Everybody's hands goes down. Maybe there's one or two.
Jason Jacobs: My hand is actually still up. Awesome. It's awesome in every way except clean. But I didn't know what I was doing. They use old trusty. But otherwise, we got really, really, really lucky. But we still didn't do the pushing the envelope stuff that's going to help set the pace for everyone else to follow.
Cisco DeVries: Therein lies the rope. You had one of the great experiences with a home contractor, and I've had some with both, right? I've had some good ones. Even when they go well, it's not like it's fun to be out of your house or out of your kitchen. That group isn't necessarily... they're not aligned to save the world. They're aligned to do exactly what you said, which is, "How do I get this sale? How do I do this project on time and on budget?"
We have decided to have the fate of our planet, to some degree, depend on that changing. And so when everyone's talking about all the technologies and the batteries and everything else and I'm like, "Have you looked at who's doing the work? Why do you think the Tesla home roofs aren't working very well?" Roofing is one of the single worst businesses in the world.
Jason Jacobs: Well, I'm glad to hear this, 'cause I've been looking at those and I can't find anyone to give me an honest, objective opinion or, like, help me navigate whether it makes sense or not.
Cisco DeVries: My whole thing with the roof is, like, roofers, it's a brutal job. And water finds the cracks. And that's true of a roof. And so it now adds solar integrator, and even if it's not Tesla's fault, you're going to have lots of things that go wrong, just 'cause roofs are weird. Their number one job is to keep the water out and number two is to keep you warm. And then if you add on, I have solar on my roof, but it's not integrative. It's just the standard rack process. And so all these folks out there are like, "I'm going to wait to get solar, 'cause I want that cool solar roof." I'm like, "You're going to probably wait a long time. I am not sure that is really ever going to work."
Jason Jacobs: This is a good example of food brands and things like that advertising, like, climate friendly. I feel like that's a mistake because, like Tesla roofs, they're greener. But if it's greener and it's less efficient and my energy bills requires more energy because it's not keeping the heat in and it lets all kinds of water in, which causes me flooding and things like that, maybe it's got better emissions footprint, but if it, like, ruins my life and that of my family, then it doesn't matter how green it is. I'm just not doing it.
Cisco DeVries: That's the thing. It's like, "Oh, well, Tesla doesn't know how to make a roof." I'm like, "I'm sure that they do. But you still," getting back to the thing we're talking about, "you need a roofer to do it, and it's hard and people make mistakes." And so now, you've tied two things together that can't be tied. Now, we do know how to put solar on roofs using the old fashioned thing. And, and hopefully, Tesla will figure it out. But you're right.
And then it gets worse, because a lot of people are like, "Oh, I'm going to wait to get solar because I want that cool thing that's being advertised." But in fact, just getting a roof with solar at the same time is the way to go. It's much cheaper. It totally works. I'm sorry it's not quite as pretty, but we can live with it. This is a perfect example of the challenge we have of going from the concept and the technology to the reality of widespread of deployment. There's a minefield of these things out there.
Jason Jacobs: So coming back around to OhmConnect, I'm really interested to dive in, because we started, you were talking about refrigerators and standards and how so much of this needs to happen under the covers. But then when you gave the brief description of Ohm Connect and in, in some of the prep that I did, the visual that comes to mind, and I know it doesn't work this way, is that essentially it's like an army of Jimmy Carter wear your sweater, right? It's like [crosstalk 00:21:10].
Cisco DeVries: [Laughs].
Jason Jacobs: "Okay." You know? Like, on the count of three, if you're ... and we're ... But I thought we just said it's going to be standards under the hood and that we're not going to be pushing consumers to change their behavior, because that's not going to move the needle. But yet you're making a business out of, in your words, this symphony of consumers changing their behavior. So it would be great ... Maybe that's a good segue to talk about the model, how it works, what it is, what it isn't. Take that anywhere you want. But let's switch gears and talk about OhmConnect.
Cisco DeVries: It's definitely not going to be our slogan is, like, "Put on your-
Jason Jacobs: [Laughs].
Cisco DeVries: "... put on your sweater."
Jason Jacobs: Wear your sweater at scale. [Laughs].
Cisco DeVries: Getting started, even today, people are like ... You brought up ... I don't know about you, but I'm closing in on 50. Growing up, it was like, "Well, what's efficiency? Well, it's turning off the lights when you leave a room. That's the thing."
Jason Jacobs: I checked. I'm three years younger than you.
Cisco DeVries: Right. [Laughs]. I don't know that ... Maybe you guys are past this then. But I was always reminded to turn off the lights when I left the room. So people join OhmConnect, we say, "Look, reduce your energy use during this hour when the grid is really stressed and we'll pay you some money, but only based on the amount of kilowatts you reduce from your usual use."
Jason Jacobs: Do you have to be home?
Cisco DeVries: You don't have to be home. You just have to use ... You can go to the movies. You can do whatever you want. But you just have to use less than you normally do.
Jason Jacobs: But you have to be home to make the changes. Like, what kind of changes are you asking people to do?
Cisco DeVries: Initially, what happens is people are like, "Oh, I'm going to turn on all the lights," and then they leave their dishwasher running and their laundry running and their oven and their w-, all the other things going. And then they, they're like, "I didn't save any energy. What the hell?" And they're like, "Well, I was sitting in the dark."
And so we actually had this slogan that was initially, it was like, "If you're sitting in the dark, you're doing it wrong." The whole point of OhmConnect here is you're using energy in your homes in a bunch of ways that doesn't help you. All we're trying to do is get you to move it around a little bit. So let me give you two examples of things. One is behavioral. That is just easy. And the other, increasingly where we're focused is on the controls and how this can be automated without you even noticing or knowing. So the first is one of the biggest things we say to folks if they sign up and they're just, they get a text message from us, "Hey, reduce your energy for the next hour. We'll pay you."
Jason Jacobs: It's not a phone call like, "Hey, this is Mack from OhmConnect. Turn off the lights, buddy." [Laughs].
Cisco DeVries: That's right. No. It's you get an email. And we have fun game. So the whole thing is a fun game. It's like frequent flyer miles in a game. So we're like, "Hey, now's your moment to play the game and make some money." And all we're saying is, "You have permission to put off your chores for an hour. Don't do your laundry for an hour. Like, if you were going to throw stuff into the laundry, don't. Just wait for an hour." There's a button on your dishwasher. It says delay start. Nobody knows why. That's the craziest button. Like, people see that. They're like, "Why in the world would I ever push a button?" I think it's mandated to be there. It's, like, on every dishwasher. And it says, "How many hours do I want to delay start?" And most people are like, "Why in the world would I do that?" 'Cause I'll pay you to. So partly, what we're saying is there's really easy, small things you can do that save energy at really key times, 'cause the whole premise here with OhmConnect is efficiency is changing. It's not about how much less you use. We're talking right now on a nice sunny day in California. It's the middle of the day. Use more power right now. We are rolling in solar. At 8:00 tonight, use less. So it's just about being efficient all the time. That's great. Make your home more efficient. It is now about when you use that power, because when you use it is determining our ability to use renewable power to power the grid. So all we're saying is use it in a little bit of a different time. And because I can pay you to do that, it's easy.
Now, that's the behavioral side. That's how you start. Then we get in there with the plugs. Then we get in there with the other stuff. And this is, again, where there's a lot of great technology people are talking about. And I swear what we're going to do so much, we have done so much with a smart plug, a five dollar plug that I will send anybody in California for free. And what I'll do is that plug, you plug it into your wall and you plug your refrigerator into it, or you plug your fan into it or your air purifier or whatever it is. And all we're going to do is turn it off for 15 minutes at a time when the grids really needs it. And we're going to pay you to do it. And you're not going to notice. You might open the fridge and realize the light's off, and that will be the extent of it. Your fridge is fine. It can go hours. It's so efficient. We talked about it at the beginning. See how fridges come all the way around s-, full circle here? A great refrigerator will just sit there. It'll be cool. It'll lose a couple of degrees. But that easy, simple solution, one plug, which is easily available and very inexpensive, allows us to turn tens of thousands of refrigerators into tens of megawatts of reducible load on demand, instantly, across the state of California, across Australia, soon in Texas, now in Texas. And that means that we don't have to turn on a power plant, a dirty power plant. It means we don't have to do all kinds of things we would have to do to build out and maintain fossil fuel infrastructure. And we're doing it with a plug on something and we're making changes that you and your house don't even know is happening.
Jason Jacobs: I heard you on an-, on another show and you were saying that there's a federal law that's been on the books for a while that basically, the utilities are required to pay the same for energy usage averted as they would for new energy that comes from natural gas or another supplier, correct?
Cisco DeVries: That's right. So a megawatt is a megawatt. And this has been since 2011. Federal law has said, in the electricity market, in the country, under federal jurisdiction, which is most of the country, must accept a megawatt of energy reduction and pay for it the same way that it accepts and pays for a megawatt of production from a power plant, which means OhmConnect in California, despite the fact that we have no infrastructure and generate no power, because we can reduce 150 megawatts of power at a time predictably and reliably, we are a power plant. We're a virtual power plant. We are rated as a power plant by the state regulators, and we are paid by the state energy markets exactly as if we burned a natural gas and pumped electrons into the grid. That's why we can pay people. That's where the payment comes from. That's why we're paying you to do that, pay you as a person or pay any customer to do it.
Jason Jacobs: So the refrigerator one, I get, because that's you making the changes. What percentage of the changes that are being made are things that you guys are doing in an automated way and visible to the consumer versus self reported today? And directionally, where do you aspire to be?
Cisco DeVries: In the end, all that matters is what happens at your meter. This is all based on meter readings. So reducing your refrigerator 'cause it's always on is a great way to know our dropped load. But obviously, if you have your dishwasher going at the same time, it's going to net it out. So we've spent years doing now close to 50 million tests to be predictive to the megawatt of exactly what's available, when with all of our users operating in different ways and components. So it's really sophisticated work on that side. To the person in the home, it's pretty straightforward. You put a couple plugs in the wall. You, we'll give you a smart thermostat now. We might change your temperature a couple degrees for 15 minutes or an hour. You probably won't notice.
Right now, we can get about half of our total available megawatts near instantaneously through devices. We've been given permission from our users. We have 160,000 appliances and devices in California, and we can control them near instantaneously as the, to respond to the grid's needs and to avoid power plants having to turn on. The other half of what's available to us comes because when we need more, and there's a little more warning and we'll send you text messages and emails. And we'll say, "Look, if you can reduce the amount of energy you're going to use over this period of time for, say, an hour, we'll pay you. And here's how much you can get paid. There's your opportunity." They can go in and do it, and the next day, they'll see the credits deposited in their account.
Jason Jacobs: So how much can I make realistically and how much work do I have to do? And if you want to use an example of, say, "Well, if you were an apartment renter in this much square footage," or something like that, just to kind of give a reference point.
Cisco DeVries: The cool part here is it's renters can do, people who live in trailer homes can do it. As long as you pay an electric bill, you can participate. It's a really good open way for anybody to participate in the clean energy transition. And how much you make depends on what you do. People are always like, "Oh, what does it cost to get a kilowatt of reduction?" Well, it doesn't quite work that way, 'cause what matters is how much and how consistently will you do that and how much can I count on it. So we have lots of status and streaks and other things that go into it. But our best users, our diamond users, they'll make $400 to $500 last year on average.
Jason Jacobs: You get levels ... So the more efficient you are, not just efficient, but, like, efficient in the ways that you need people to be efficient, then the higher the level that you climb. Is that just for my own viewing pleasure, or is there a community and any status within the [crosstalk 00:29:52]?
Cisco DeVries: Oh yeah. No, everyone likes the status. We have people who have streaks where they have reduced the amount over 100 times in a row when we've requested it. And maybe, like, they, it was a mistake, uh, that they made or they were out of town or they, in laws were in the house or something and they blew through it. And we will get tearful phone calls from people wanting to give them dispensation on that streak, because what matters, if you're a grid operator, it's not ... Just the fact that you reduced one time by a couple of kilowatts is great. But you can't really rely on that. I can't rely on that.
What I rely on is what do you do consistently. And then what do you do consistently compared to everybody else that I can model together? And I know that sometimes you'll miss and sometimes I'll miss. But together, a law of large numbers says I can be incredibly predictable. I can say exactly how many megawatts I'm going to produce, where, and when, when needed. And that's essentially because I have trained all of our users to be more reliable. We've given them incentives and status and additional money and prizes if they not just reduce more on an individual event, which is important, but also consistently show up. And that's where the devices and appliances come in, right? Because if your refrigerator, which is always on, can be turned off for 15 minutes or an hour, that becomes a very reliable resource. And it's worth a lot of money to the grid because it's consistent.
Jason Jacobs: I know it depends on the customer or the consumer or I don't even ... or a user. I'm not even sure what you call your, the people that play this game. But in general, what motivates them to do this? Is it cost? Is it status? Is it perks? And also, how do you segment these or base, given that I'm sure there's different personas that you serve?
Cisco DeVries: When OhmConnect started, the idea was all these people are going to want to do right by the climate. And the problem is it's not true. People say they want to do right by the climate, but they don't actually do it for that reason. They can feel guilty about it, but they're not doing it. And this is one of the hard things to learn as we go through this process of adjusting, is that, as much as people say that they'll be good, they think they're better than their neighbors, and they're not going to do more, at least not consistently. So what you have to do is connect the economic incentive, because if it's just like, "Hey, this is the right thing to do. Let me put this plug on your refrigerator," people won't do it. But if you say, "Look, your refrigerator should buy you beer," be like, "Oh, that's cool."
And so what's happened is we've actually moved from trying to find the sort of first adopters environmentalist folks. And now, we've actually figured out that the, where we're actually having the most success, where our customers are coming from tend to be low income, moderate income, middle class families who could really use an extra hundred dollars. They can use an extra $200. For most people, that is a meaningful amount of money for back to school shopping or a dentist appointment they didn't expect. And so they're doing it for the economic reasons, but then they're proud of it because of the environmental benefit. And that's one of the reasons they tell their friends and family about it. So referrals turns out to be our biggest source of new users. And most of those come from people who are having a good experience. And yeah, they're making some money, but they're proud of it. It is the environmental benefit that is secondary. You have to start with the economics.
Jason Jacobs: This is such a weird and fascinating mashup. The analogy that comes to my head, and I'm curious if you've ever heard this before, is it's, it's almost like if MLM and demand response had a baby. I'm curious, one, if anyone's ever compared you to MLM before and, two, if you've ever experimented with MLM type of incentives, for example, giving people a cut of the savings of the people that they bring in or the top tier, the silver or platinum or whatever you call them, getting them an electric car or a month's free rent or tickets to a VIP concert or things that they're getting based on status that don't necessarily r-, reflect, beyond just cost savings.
Cisco DeVries: We've been pushing referrals right now and giving people lots of boosts and ability to get paid more for referrals, 'cause it's the summer and we're trying to help prevent blackouts. And so we're doing this big push to try and get more customers up and online right now. And, and we're paying a pretty penny for that in referral bonuses and things.
And somebody was like, "Wait a minute. Is this like Amway?" [Laughs]. So it was this notion of people realizing that really we are trying to create a community. We are trying to get you to get your friends and neighbors into it. And that tends to be the single most effectively thing. From a traditional sort of multi market, I can't tell anybody what somebody else's energy use is. It's like Fort Knox around the energy data. So I can't say ... If you referred your friend to join OhmConnect, once they've signed up and connected, I can give you a bonus. And I do that. But I can't tell you how they did. And so that's actually been kind of a challenge.
Jason Jacobs: You could probably give them 10% of how they did, though.
Cisco DeVries: I can't have anything at the moment that smacks of you being able to tell what their energy use is for privacy reasons. It's really been interesting. We've been very careful with that for obviously good reason. But there is a lot that could be done by trying to connect all those dots and have how much your community of referrals is saving and just how great that would be.
We're still working through it, but we want to be very thoughtful about that. We do do a lot of prizes. We do a lot of game kind of tools, where you can spin the wheel and use your credits to either cash out or enter into a contest. We give away ... sometimes, we've given away $100,000 prizes. We've given away cars. We've given away new washer/dryers. And so we do a lot of the stuff that really gets to the behavioral economics here, which is it's not just a dollar in for a kilowatt. It is much more engaged than that. It is much more complicated than that. But it's also a lot more fun than that.
Jason Jacobs: Where do I access this? Is there an app?
Cisco DeVries: Yeah. So, well, you just go online to OhmConnect.com. You can use it on your computer, on the phone, whatever it is. Well, you have an app for your plug controllers and stuff like that. If you're in California, it takes a minute to sign up. It's really quite easy. And we'll send you a bunch of free stuff. The biggest problem I have is that I'm a free service that gives you free things and then pays you. So people think it's a scam. And so we have a lot of problems getting people over the trust hurdle, and that's why referrals and things are so important, 'cause if you type in, "Is OhmConnect" into Google, it will populate a bunch of [laughs], a bunch of scary questions like, "Is it legit? Is it a scam?" And so we're working a lot on how to break through so people feel like they can trust this. The best way that we found to do that is to have somebody you know refer you.
Jason Jacobs: Does it require an in-person visit or some type of consultation with a human? And also, am I given any guidance as a homeowner or apartment dweller or whatever about the highest ... Like, do you tell me what my highest levers are to earn the most?
Cisco DeVries: It's iterative. So it's part of, again, part of almost playing the game. I had mentioned one of the founders, our chief technology officer, he was the chief technology officer for Zynga, which is the big game maker that really pioneered a lot of the social gaming stuff on the Words with Friends and all of that. And so a lot of what we've done is how to, like, get people to engage for just a couple of minutes here and there, but to learn something so they get better at the game. There's a lot of game psychology that goes into it. So a lot of what we've done is, when people sign up, we'll say, "Look, here's the energy use. Here's what you do. Here's what you think you could reduce. Here's some good ideas for what you could reduce in your home."
And then generally, people will have an event, they'll reduce for an hour, they won't necessarily have a great exper-... they won't reduce that much and be like, "Huh." And we'll send a followup and say, "Hey, looks like you could do more. Here's some ideas from what we can tell that might work for you." And then they can do it again and then it gets a little bit better. And they're like, "Huh. That's good." So then you've ... Now, all of a sudden, you're in the game. Now, you're figuring out. And the nice thing about the game is it's fun, it's easy, but also we're paying you. The better you get at the game, the more money you make or the more prizes you can get and the more stuff you can get. So it's a nice way of combining sort of a little bit of social gaming and gaming with essentially making some money or getting, like, frequent flyer miles, which you can earn over time and then use for something fun.
Jason Jacobs: What do the utilities think of OhmConnect, and does it require a formal partnership with you and them individually in order to offer your services in the region that they support?
Cisco DeVries: So we work with utilities, but not in the way people normally think. So we're not, we don't provide a program for utilities. We're not contracted with utilities to provide this service. We actually operate as an independent power plant. And what happens is we sell our megawatts to the utilities, like any other power plant. We have contracts with them on the supply side. So we say, "Hey, look." They're like, "We need 10 megawatts during the peak periods in July." We're like, "Great. I will sell you 10 megawatts peak periods in July for the summer months or the whole year or whatever it is." So they're buying it from us, but they're just like they were going to Calpine or Constellation or any other entity that owns generation and buying from them. So it's a really interesting flipping on its head, where literally they're buying power from their own customers during these peak periods instead of buying it from a traditional generator.
Jason Jacobs: If you look at the different stakeholders that you serve and you look at some of the, the friction that you've mentioned, where do the biggest blockers that are inhibiting your ability to move faster? And when I say move faster, eh, I mean serve more customers, get them to reduce more energy, avert more fossil fuel or dirty energies that's on, on the grid, keep better reliability, et cetera. What are the biggest blockers that stand out and how might they be addressed, either from things that you could do or outside of the scope of your control?
Cisco DeVries: One of the biggest issues I've mentioned earlier is that people, it's hard to get people to understand how we can pay them to save energy, because nobody understands the electricity market. Who wants to? It's a complicated thing and there's very few people that really know it. The flip side of that is it's actually really hard to get the folks who've been in utilities and power for decades and made their careers. They don't trust this either. They really are nervous that this is real. So we spend a lot of time on the policy side just showing what is possible and being very forthright with our data so people can understand how it's actually working and begin to trust it. And we're breaking through, but that is a huge issue. The other issue is we're not paid nearly enough for our users. We can't pay our users enough. We want to pay them more. And they should be paid more, because right now, we are bidding every single day. Like, literally, we're coming up on the hour. In five minutes, we will be bidding in our entire fleet to the real time market in California. We do it 10,000 times a day. Every 15 minutes, it's happening.
And during that, we are bidding against, generally speaking, out-of-state fossil fuel resources that would be imported instead of us. That's what we're up against. And we often win. We get dispatched a lot. But you can imagine if we actually got the benefit financially for the transmission and distribution benefits of being local and not having to use that transmission and distribution facility. If we got the benefit, we're paid for the fact that we're zero carbon. We're not. We get no benefit from that. The social benefits of paying families who could really use the money rather than burning fossil fuels in their neighborhoods, like, all of those things are not valued yet.
I'm glad we can win as much as we can. We're playing by the fossil fuel generator rules. Ultimately, we need the California, we need the rest of the country to figure out what the value of these clean distributed megawatts are and actually pay out effectively. And it's probably, you know, at least double what we're getting paid. So I'd like them to understand what's possible and believe it. And they need to be able to value those megawatts effectively. And those are the two big things that we're still working through.
Jason Jacobs: And so the understanding part, it sounds like that's more of just education and, and understanding, uh, since you've got the goods. But it's just might be different than meets the eye for them, and so requires you walking them through it and holding their hand. On the pricing side, so is what you're asking for really just a price on carbon?
Cisco DeVries: That would be a part of it. Actually, a bigger part of it would be the price and the fact that we don't need to use the lines and wires and transmission facilities. And imagine now as people add electric vehicles to the mix and we have neighborhoods that everybody gets home and plugs in their electric car and just lights up the local substation and transformers. And the utilities are looking at the national system. We're looking at a four trillion dollar bill to modernize our transmission and distribution and system in this country.
Well, we're a much cheaper way to do that, because we can manage the grid load way at the end. And the value there, not just the carbon value [laughs] of not burning fossil fuels, but the value of not having to go in and underground all these lines and do all these other things is really large, too. So it's think it's, that those are the two. I'd love to get the value of carbon. That would help us. It's why carbon should be a lot higher. But the big one I actually think is this, the hyper-local nature of what we're doing.
Jason Jacobs: What could the government do to actually factor that in? Is there a certain policy that you have in mind or a certain incentive that they could put in place? Like, if they came to you and said, "Okay. Philosophically, we agree with you, Cisco. But tactically, what should we do?," what would you tell them?
Cisco DeVries: Well, the first is they're going to have to, because FERC, to their enormous credit, the Federal Energy Regulatory Commission, just last year came out with what they call FERC 2222. And they're going to require all these markets to start doing more of this. So we see ... The writing's on the wall. This is happening. This is going to happen. Now, ultimately, what needs to happen in, say, California or places is the value of ... Again, it's the tr-... Can we really be confident that instead of having to invest in this substation or these transformers, instead we can pay for this localized demand reduction on demand?
And the value in that is actually, it needs complicated math people to figure out. But you know what the cost of the upgrades is. The question is do you believe whether or not we can really offset that for real? And that's what we are proving, essentially every day now, that you can. But I actually don't think the math is that hard. And we've seen ... What, the Department of Energy's done studies and they've said, "Look, we think the value of a home, a kilowatt, say, a home that are, are flexible," they've put numbers on it. They've shown what that is on average. And we're getting paid a fraction of that today. So I actually think it's really just implementing the existing new regulations and taking the work that's already been done about the value and saying, "All right. We're going to pay for this in one way or the other. We might as well pay for it by paying our customers to be thoughtful consumers of energy."
Jason Jacobs: For anyone listening that's inspired by what you're up to, where do you need help? Who do you want to hear from?
Cisco DeVries: Oh, everybody, right? We got to do this as fast as possible. We are going to try and build, over the next several years, across the United States to become the largest power plant in North America. So we want to build gigawatts of capacity across the United States in the just next few years. So that means we're going to need to hear from folks who are working in these markets in other parts of the country, which we're working on getting to. But a lot of this is also folks that are software people who want to put their software and technology skills to good work. We have such an interesting, great team. We're working on such interesting, difficult problems. We have so much data and analytics. This is a great place for technology, entrepreneurs, and others to come spend some time. So we could use the help across the board. But if, if I could d-, ask for one thing, I'd say the policymakers to pay attention and talk to us and the technology folks who are tired of working on a game or some app, come help us out.
Jason Jacobs: Anything I didn't ask that I should have or any parting words for listeners?
Cisco DeVries: If we don't learn to flex demand, like we're talking about, for electricity, we're going to blow up the grid and we're going to blow up the grid long before we get to zero carbon. So for everybody out, this is really important. It is the long pole in the tent. We are quickly getting to the place where renewable energy, both local on people's roofs and also wind and solar and utility scale, is cheaper by far than any other alternative. The problem is it's intermittent at night or it's intermittent when the wind doesn't blow, and we have to get the grid to flex when the demand shifts. The way we deal with that now is burning natural gas. We have to stop burning natural gas. So there's really between us, what we're doing in flexible demand, and battery storage. We have to be able to flex this demand.
And we're on the forefront of this. So this is ... For folks interested in climate, I honestly think there's nothing that's happening that's more important than flexing demand for electricity so we can add to the renewable portfolio on the grid.
Jason Jacobs: You've given us a lot to think about here, Cisco. Thank you so much again for coming on the show and for everything that you're doing at OhmConnect.
Cisco DeVries: Hey, it's been a pleasure talking with you. Thanks for having me.
Jason Jacobs: Hey, everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at MyClimateJourney.co. Note, that is dot co, not dot com. Some day, we'll get the dot com. But right now, dot co.
You can also find me on Twitter at JJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.
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