The Negawatt Is Cheaper Than the Megawatt: Electrification & Infrastructure

0:00Welcome to Did You Know, the ESCO HVAC podcast, the show where we explore the cool, the hot, and the everything in between of the HVACR industry. Each week, we dig into the innovations, the insights, and the inspiring stories that power our trade from the classroom to the job site and beyond. This episode is brought to you by this week's amazing sponsors. We dig in comfort technology, perfecting the air since 1924. Lincoln Tech put your potential to work. NayVAC, professional tools and equipment for HVACR technicians, amatrol trainers, globally impactful, personally empowering, as well as a gas together we can. Whether you're just getting started or you've been turning wrenches for decades like myself, there's always something new for us to learn. I'm Clifton Beck, and this is Did You Know, the ESCO HVAC podcast.

1:04Let's dive in. Hello, everyone. Thank you so much for joining us on Did You Know, the ESCO HVAC podcast. We spend so much time talking about the transitions that we're seeing in technology, innovations that are coming to our industry, and whether we call it degasification, electrification, it really comes down to being better stewards of the energy resources that we have available to us. Now, we get a lot of questions here at ESCO, particularly from our educators, as well as our contractors, if we make these transitions, if we make these electrification movements that we're focusing on in every aspect of the country, is it sustainable? Can we make these transitions with our current infrastructure? What type of maintenance is involved with our current infrastructure? And are there improvements? Is there funding? Are there things that are happening that are aiding in that? So today, we're spending some time with Jordan Blurner, Vice President of the West Region for Schneider Electric. How are you? I'm good.

2:05Thank you. You know, I'm very glad you're joining us. Yeah, no, thank you for having me. I'm really looking forward to this conversation. Yeah, I think it brings another perspective, especially to the HVAC, the refrigeration side. Besides being in HVACR, I actually went back to school later in life, got a master electrician license, spent a fair amount of time studying just so that I could be dual certified in two different trades, because they go hand in hand. And we don't always bring enough of the electrical side, especially from like the utility side, from the infrastructure maintenance side, and we really should, because we're all partners in this transition, this global effort for reducing energy consumption, or at least managing our energy resources and consumption. And Schneider has always been at the forefront of technological transitions and understanding energy management. So where are we when we start talking about our infrastructure and maintenance and looking

3:07at like forecasting ways to improve our electrical infrastructure? Yeah, electrical is certainly important in everything we do in the efficiency movement. You know, we start with looking at lighting and how efficient is that, and then move into the HVAC systems, of course, throughout California, for example, there's been a big movement to electrify the HVAC equipment. That has massive impacts on the electrical infrastructure. You know, when you design a system that was designed for natural gas and you move to electricity, often the capacity of the switch gear, the switchboards, even the distribution wiring isn't ready for that. So you have to look at the total costs to understand, like what is the ROI for this? You know, yes, there are some mandates, but you also have to understand, how do you pay for those mandates? Even things like we're doing a lot of projects these days with the electrification of fleets.

4:08And those often require a whole new service entrance to facilities to be able to handle, you know, a pretty significant load when you're talking about like heavy duty equipment or bus fleets or things like that. Yeah, I mean, it's one thing to come up with a, you know, a long haul over the road rig that can be ran on battery, but where does it recharge? And how much power does it take to recharge that? And then if I have a fleet of them, you know, do I need an electrical service just for that particular project? Yeah, we're working with a school district in the Central Valley of California right now. And one of their big challenges in electrifying their bus fleet was working with their local utility. In this case, it's a small irrigation district, you know, a municipal utility for, for lack of a better term. And understanding what the power needs are going to be for electrifying a fleet of 20 buses, it required an entirely new service entrance.

5:09And one of the values we provide is being able with our deep knowledge of electrical systems to be able to negotiate with those utilities on what and when because that's really critical to electrify these, these fleets. Yeah, it's one thing to come up with a new, you know, worthy project, a new mission that is, you know, good for the environment that is good for, you know, for the long term investment, but then we also have to think, wait, is it feasible? Can we do this? Can we get the electrical service to that area? And in California is a prime example of having initiatives for looking long term, you know, we work very closely with Pacific Gas and Electric, actually, just did some heat pump training courses with them, you know, they had did an entire series of consumer education as well as contractor education around high efficiency lighting. You'd mention lighting while you know, right, and so they did an entire campaign for years and then they, they reached out to us and said, you know, that campaign was very successful.

6:12So now we're going to move on to a new one that's going to be heat pumps because the state of California is, they're looking at doing 8 million heat pumps by 2030, right? That's the goal. That's a, that's a lofty goal. And there's a lot of training and even contractor funds available through things like Tech Clean California that is providing contractor training on, you know, heat pump installations and high performance installations, but at the same time, you know, if I have an area that is going to have a significant growth in heat pump technology that maybe was a, like you said, a gas-fired heating source with an air conditioning, you know, it's primarily electable load was previously in the summer. And that could be shifting. And a lot of municipalities are like, well, what do we do or are there, are there groups out there? Well, yeah. There is. Yeah. I'll chime. Yeah. And when we do these projects, we look at time of day, time of use, you know, as well as all the other factors involved in trying to fund these projects, we've done a lot of

7:15work with PG&E also on, like, on bill financing. That's been a great way to pay for lighting for, you know, most, almost all of my teams, clients are, are public sector clients, Schneider, of course, we work with a lot of private sector clients as well, but, but that on bill financing is a terrific tool, particularly for public sector clients that are, that are challenged with funding. So we've done a bunch of projects where you take the lighting piece of it and you fund it through on bill financing and then you take the mechanical and solar and other pieces of these efficiency improvements and fund them through other means. So one of the things we really try to do is bring a bunch of different sources of funding to these projects. We've got a number of projects where we're bringing on bill financing. We're bringing some, maybe some grants for EV through one of the, the air resources boards. There's been a lot of money through the San Joaquin Air Resources Board that has funded

8:17a lot of bus and fleet transformation throughout California and so, you know, and then, then you figure out where, where are their inefficiencies in your operational spend, you know, where can we, by changing these systems, how do we reduce on M cost that we can then use to fund these? And of course, the utility savings that are usually central to all of these energy efficiency design bill projects that we do. Yeah, I like the idea of utilizing that for, you know, those upfront investments for the consumers. You know, because some of these projects are fairly costly, you know, if you take things like even solar installations, sometimes even the EV charging installations, let alone things like, you know, heat pumps, you know, for many of our consumers, the upfront cost is not feasible, which is one of the reasons they don't opt in for those options. But if we, if we work with funding, if we look at our, our energy providers and we find

9:20those solutions for the consumers, whether they're residential or even commercial consumers, then we give them those purchasing options. It really opens up that opportunity for a wider scale adoption of some of these improvements. Yeah. For sure. Funding is always the number one obstacle. I mean, you know, there's other obstacles in these projects, for sure. But funding is the number one obstacle. And, you know, we went through a time frame when we had federal and state funds that offset some of the costs, you know, that during COVID, for example, there was a lot of money through the ESR funding that helped in indoor air quality improvement, fantastic program because it made lasting improvements to, you know, particularly to school learning environments through, you know, funding and discounts from the federal government. California Air Resources Board has stood up and provided funding for a lot of electric

10:21vehicle infrastructure. There's been programs for other air quality improvements. And we just try to bring all of, for other people's money first, and then you then use your own money. Yeah. No, it completely makes sense. You know, it seems like I'm always picking on California just because they're, you know, they're very much at the forefront of energy efficiency, efficiency initiatives. They always have been. But it's not just California. It's the entire country. I mean, we've got places like take, for instance, Colorado, right? You would not think of a place like Colorado is having initiatives for, you know, banning gas connections on new installations, wanting entire electrical residential light and light commercial new construction or even like New York that is pushing really quick on electrification movements in the commercial sector. So Schneider, I assume work with a lot of energy utilities, especially things like New York and the Colorado to even look at these structures to identify the feasibility of electrification.

11:24Yeah, for sure, you know, me and my team work in Colorado and there's been a big transition in the energy mix in Colorado from years and years and years of using, you know, inexpensive Wyoming coal as the primary point and natural gas to pushes for electrification were, were in the middle of a project building a couple of significant size solar arrays for a state agency in Colorado. And we've had to deal with multiple utilities on their interconnection requirements and how they accept that power on there. That loaded. Yeah. Exactly. Doing all that with the, with the same time of going through these facilities and reducing their demand. I mean, it doesn't do any good. Well, it doesn't do as much good to go build generation when you haven't got your base load minimized, right? So going in and, and, and doing lighting retrofits and HVAC retrofits and I know you've got

12:29a big background in building automation, in building automation fits to go, you know, the negawatt is always cheaper than the megawatt, right? That's an old long term thing. And we really try to, you know, what we try to do is we combine that energy reduction strategies and then add generation on top of that. Okay. I have to take a minute and write this down because I've not heard that before. That's the name of this podcast. The, the negawatt is cheaper than the megawatt because it's so true. Yeah. So let's look at that reduction and when you look at these, are you seeing them lighting and HVAC as the, as some of the prime opportunities for electoral and energy reduction? Yeah. For sure. I mean, lighting is the number one. And then, you know, it's not just the mechanical systems themselves, as, as you know, from your background, right? You bring in a new generation of mechanical equipment and it's 15% or 20% more efficient,

13:30if it's not 200% more efficient, like, like lighting went, when we went to LEDs, they became hundreds of percent more efficient than old, you know, T-12 and T-Biting. We don't have quite that level of improvement on mechanical. And so we work hard to create projects that have a combination of efficiency measures, you know, mechanical retrofits are deep energy retrofits, right? If you go replace a mechanical system, it's not going to pay for itself in the energy savings. Now, when you combine energy, operation, capital cost of widens and these other lower hanging fruits of energy conservation, and then you add solar on there, the mix of these projects is what helps these clients go fund these where you could say, well, you used to spend $500,000 in the utility and operation or cost for these systems.

14:35Now you're going to spend $350,000, you can use that $150,000 of savings to offset the capital costs of these new systems. Yeah, very intriguing. So when we see the growth of solar, you know, I'm here in the Midwest, I'm just outside of Indianapolis, Indiana, yeah, I'm a big advocate for solar, I'm actually doing some off-grid installation at our farm using solar and using battery storage, you know, looking at ways that I, you know, as an individual, I can benefit from these of them. Are you seeing that as a significant growth in the utility grid in the United States? I know it's really popular in other countries, I don't know from an outsider, I feel like we're just starting to grasp that here in the US. Yeah, I mean, obviously our coast in particular, you know, California and the Northeast have driven a lot of solar investment because their energy costs are so high that the paybacks

15:39are there, you know, without incentives. In other parts of the country, some of their utility costs are so low from burning, you know, inexpensive resources that it hasn't made as much financial sense. The federal government and some state governments have provided grants and funding that helped lower that cost. But also, we've seen radical changes in the solar industry, which is the cost of equipment going down over the last eight to 10 years significantly to where projects can make sense in the Midwest. We did a large solar installation, I don't know, maybe six years ago or so, in Indiana, they're actually in the port, Indiana, oh yeah. And so we are seeing more and more of these happen in the Midwest because it's not just about economics. It's a lot about resiliency, you know, it's a lot about knowing I have the power when I need the power. So when you take batteries and solar and combine them with maybe you've got some backup

16:42generation for emergency loads, you can really off grid because we're just seeing power outages are happening more and more, some of it from weather, some of it from limitations in the transmission and distribution systems. And so we're seeing a lot of our clients moving towards these resiliency offers just because one, it provides certainty of having the power, two, it provides some certainty of the cost of that power. We can budget for something we know how much it's going to cost. It's hard to budget for things that we don't know and a lot of utilities have had pretty significant rate increases over the last five years because of the demands on the grid. I mean, we're seeing data centers take up demands on the grid. We're seeing just a lot more, you know, everybody plugs everything in now. And so there's just, you know, you've got cars at your homes and cars at your businesses. So reducing the load and finding other ways of generation, you know, and solar is a pretty

17:47simple, pretty cost effective way to do that generation. Yeah, that resiliency that you've mentioned, that's been the most important. I don't know why I'm actually recording here from the office today, except that I had like two meetings before this. I should have been out of my studio. So we just finished building a mobile studio, so a full broadcast production studio. That's got 12, 280 watt panels. It's got 800 amp hour, 100 amp hour lithium batteries. It's got, you know, twin inverters. It was the whole point of building resiliency and redundancy. And so the mobile studio is completely off grid. And that was what we looked at. We fact in, well, what would it cost for us to rent a production facility? What would utilities cost? Do we have any long-term projections on utility cost and, you know, what's, where's it going to change? Because we've got data centers coming into this area that's going to affect our cost of electricity. And it's hard to forecast that.

18:48So we looked at the option and decided, well, you know, what we are, we're going to go solar on this. And it's worked out phenomenal. And I think a lot of people are relooking at that and realizing that there's a lot of resiliency that goes into investing into your, your own energy and the impact that it has on your neighbors. Yeah. Yeah. No, I think that's, I'm good for you. That's fantastic. I mean, I love when we're, when I'm getting to talk to folks that are taking their own personal decisions about this, because it is, you know, it gives you the resiliency to be able to do your podcast whenever you want, wherever you want. So yeah, it's, it's, it's amazing. I mean, we're seeing this through like cities as they're planning for emergency operations. We, we get, we hook, we moderated a panel at a recent California cities, California League of Cities conference. And it was about some of the fires that happened in Malibu and we're currently working in that

19:50community. And they were talking about their emergency operations center, the city manager at the time was talking about when, when they, when those fires broke out, of course, staff reports to city hall to manage it as an emergency operation center. Within 15 minutes of getting city, to city hall, the city manager had to, had to demobilize from city hall to a, to a secondary emergency operation center because of where the fire was. That, that secondary emergency operation center didn't hold very long either. And then they were, they were in another city trying to manage their operations. And so we're starting to see even cities look at mobile emergency operation centers because you know, you can see this. You've seen like, I don't remember whether it's Verizon or T-Mobile, one of these companies, you know, they're, they're able to provide these cell towers as mobile systems. And I think you start combining communication and generation and computer power to be able

20:53to, to operate in these outages. Look, we, we live in a world where there are more and more disruptions to our electrical distribution systems. And you got to get, you know, cities, school districts, private entities, they got to get out ahead of maintaining their critical operations during these power outages. And it's one thing to say, well, I'm in my house, I've got a gas heater, I can hunker down for five days. If you're a business or a school district, you, you can't do that. Yeah. Right. It takes a lot of engineering, a lot of thought going into what are these additional sources that we can work with. You know, it's interesting that you brought that up at the mobile command center. That was actually the inspiration for the studio was I had seen some mobile command centers that were running fully, you know, remote and they were doing all of their broadcasting through Starlink. And so that's what we end up doing. We ordered a 20 foot mobile command center and retrofitted it and with all of our solar and battery and Starlink so that it could be mobile and in the event that, you know,

21:56we had natural disasters that were going to drive a little distance, you know, we could, we could provide some services, we could provide charging stations for our schools, you know, we can have some basic communications. And so it opens up the human aspect of providing for, you know, for your community. And when we look at what all of the different energy solutions are, we do have energy solutions. And I think that's where Schneider really comes into play as they look at what those energy solutions are and not just saying, okay, everything is going to have to be this grid line. Well, let's think about what your options are. Let's see what the management is. And then we start talking about things like, well, are we starting to see artificial intelligence aiding in the load management of our grid? I've been wondering that myself. I am not a grid expert, so I can't answer any questions related to what's happening

22:57on the grid, but I certainly can understand that, you know, like we do a lot of work for these resiliency solutions and we have, you know, energy command centers for some of these. And they are very sophisticated learning, you know, in cases learning devices that can understand which loads need to come on and off depending on how complex a micro grid that you install is. And I think like everything that is happening with machine learning and AI, all that stuff is going to get better the more the more it gets put into use, but it's remarkable how little steps that are still human can be done. So we do a lot of, a lot of our projects have like building automation systems improvements, right? Retro commissioning, recommissioning, or putting in new building automation systems because when you get back to that nega lot, it's really important to turn things off when they don't

23:57need to be on. And what we find in so many of our clients is even clients that might have building automation systems. You go in on a Saturday evening and a school might be running full bore and it's maybe because they had a basketball game in the morning and the ability is a person went, you know, on Friday night to turn it on so they could have heating and cooling and power for that basketball game. But maybe you're only using it for three hours, but because it was turned on on a Friday night, it now runs all weekend where you could turn that off. And so with sophisticated building automation systems, or even right, frankly, some fairly simple building automation systems, you can, you know, from the palm of your hand be able to turn things on and off. And some of those things can certainly be, you know, managed, you know, eventually through

24:59machine learning and high, you know, tight installations. But just even getting to the basics of turning things off when they don't need to be running, there's a massive amount of energy savings in most facilities. So a lot of what we do at Schneider Electric is we go and really analyze these facilities. We talk to everything from, you know, we talk about like from the boiler plant to the board room, right? We talk to the technicians all the way to the executives of these organizations to understand what their goals and missions are, but also what, how do they really operate their facilities? How do they maintain their facilities? What are they capable of maintaining so that when we design new solutions for them to, we're not putting in systems they can't maintain. They're too complex for their staff or they're too complex for the systems, you know, we've all, many of us have been through phases with cogeneration systems and those are really finicky when they're too small when you get a big, you know, megawatt, two megawatts of

26:04cogeneration, they can run pretty efficiently. But when you're at 100 or 200 KW, they're often more trouble to operate. And so what we find is we go into these facilities and we find systems that have been turned from automatic to manual because it's easier. And they want to avoid hot and cold calls. But we're going to have to get to a point where we're letting our automation systems whether they're fully computerized or AI enabled to make some of these decisions on turning things off because we have a ton of capacity in our grid if we would just turn things off. Yeah. When they don't need to be on. It makes so much sense and I'm glad you bring that point up because so many people are just afraid, you know, hey, we're going to outgrow our grid. And I personally, I feel like it's a management scenario that we're focusing on right now. And using technology to aid in that, I just finished doing an installation for a heat pump

27:06water heater. And I was even fascinated at its automation capabilities. You could actually set it so that it would monitor its own energy use through the day and based on location and based on utility, I could actually have that running at periods when my energy cost was the lowest. Yeah. And so little things like that will add up when we all start thinking about those solutions. So maybe that increase from a standard water heater into a heat pump water heater which Minivis are going to end up doing, especially once we get closer to 2028 and our current regulations stay with water heaters. A lot of us are going to be installing heat pump water heaters. Even though there's that upfront cost at as higher, the management and the energy savings, the utility savings that comes from that adds up when a few million of us all do that at the same time. Yeah. And then you're just looking for places in the grid that are gridlocked because of, you

28:06know, just natural transmission and distribution, but not everywhere. Right. Yeah. Fantastic. Man, this is a great conversation. We're going to have to do this again and I'll be broadcasting from the studio because I don't know why. Have an intellectual conversation sitting in the office and not out in my pride and joy. And I will try to do it from a better device where I have a better Wi-Fi and a schniterized background. But I'll be feeling. Yeah. Yeah. You're probably seeing the edge of my elliptical. So we got to keep moving too, right? Our electrical systems need to move and our bodies need to move. But I think these resiliency solutions are essential and, you know, we've come through a time too, and where you are in the country, maybe the terms sustainability or green or, you know, isn't appropriate in today's economy or in today's politics, but resiliency works for everybody. I mean, we have to be resilient facilities.

29:08Heck, we have to be resilient in humans, but we have to, we have to have resiliency built into all of our decisions so that our operations are sustainable. And that's, you know, I think it's important to use the right language. And I know you talk to and work with a lot of technicians and installers and MNO folks. And it's really important that they embrace these changes. And, you know, one of the things we do in all of our projects too is we do a lot of teaching, you know, a friend of mine once told me you train animals and you teach humans. And so we do a lot of teaching because it's in our interest for our projects to go well and the installation to go well and the long-term efficacy of them to be good. And so it's important that the maintenance and operation staff really understands kind of the why of doing these and ask questions and that we teach them really how to optimize

30:10and operate these systems. So we do a lot of long-term service with a lot of our clients so that they can feel comfortable when staff changes or when they haven't had to do something, you know, but once a year. And then we also try to make sure they have good preventative maintenance programs so that they're changing filters, you know, an HVAC system in a commercial or large facility is going to have challenges if you're never changing your filters. And that is always important. So we try to build in systems that are easy to maintain and provide the teaching necessary to maintain those regularly. I love it. Great conversations. Jordan Lerner, Vice President of the West Region for Schneider Electric. I really appreciate your time. I appreciate Schneider Electric allowing you to join us. And I hope we have some more conversations. This is a lot of fun. Yeah, I would absolutely love to, Cliffs. And have a terrific day and don't hesitate to reach out to me if I can be of any help to you. Okay. Where can we learn more about Schneider Electric before we hop off here?

31:14Yeah. That's a good question. I mean, you could certainly reach out to me directly. I'm just Jordan.Lerner at SE.com. We obviously have a full contingent of websites at Schneider Electric.com or SE.com. And you know, look for our sometimes it's called performance contracting or design build contracting. Strangely enough, our industry is called ESCO Energy Services Contracting. So we're aligned with you perfectly. Fantastic stuff. Well, we thank you so much and we will see you all again on the next episode of Did You Know the ESCO InjVac Podcast by everybody. Thank you.