Creating a Distributed Battery Network with Zach Dell

For this episode, I had the pleasure of interviewing Zach Dell, who recently launched Base Power Company, the first and only retail electric provider in Texas to offer customers a home battery, monthly energy service, and installation all in one package.

This episode demonstrates one of the things I most love about Texas’ competitive energy market. It has its flaws for sure, but we are seeing a lot of innovative offerings. And in that category, Base Power stands out.

The goal of Base Power is to essentially operate as a Virtual Power Plant (VPP). When the grid is up and running, the batteries installed in participating homes will improve grid stability and lower costs. And when the grid goes down, these batteries will provide customers with backup power, avoiding outages or, in the case of a major outage like Winter Storm Uri, shortening their magnitude and duration.

Just yesterday, ERCOT proposed generation hubs in far flung parts of the state. We should have storage hubs throughout population centers of the state. And the private market, with the right policy and regulatory framework, can drive the investment instead of government. People often forget that with the prominent exception of Winter Storm Uri, the vast majority of outages, over 90%, happened at the distribution level.

When increasingly dangerous storms, hurricanes, wildfires hit the distribution grid, no amount of large central station generation will keep the power on; that will take distributed resources located at homes and buildings. Increasingly, homes and buildings will become part of the grid and part of our resource mix. 

During the interview, Zach and I discussed Base Power and its business model, what Base is offering consumers and how their home battery program works. We spoke about the challenges of entering a highly competitive market and how BASE is unique in its goal to build a distributed network of residential batteries. We also talked about the potential benefits of AI to deploy the batteries, BASE's software for managing the batteries, how current incentives and system costs impact companies working to develop distributed energy resources, the possibilities for reforming or a cut to be more conducive to dispatchable distributed batteries, and much more.

If you like the episode, please don’t forget to recommend, like, and share on Substack, Apple Podcasts, Spotify, or wherever you listen. 

I look forward to hearing your thoughts. Thank you for listening and for being a subscriber! Transcript, show notes, and timestamps are below.

Timestamps

2:47 - About Base and its battery program

6:26 - Why launch a retail electric provider (REP) business in the ERCOT market?

8:56 - Initial areas Base serves and status of their rollout 

11:26 - The batteries Base uses and their capacity

13:19 - How does Base Power’s battery offering compare to other options for home reliability and backup power

17:56 - Engaging customers in a competitive market, potential for working with small municipal utilities and co-ops

23:42 - Building a distributed network with residential batteries, working in ancillary markets, and reaching low-income households

27:59 - Blackouts and batteries

31:34 - Challenges encountered in launching Base

33:38 - AI’s potential benefits to the grid

35:47 - Zach vision for the grid in 5 to 10 years

38:28 - How regulatory structures and market incentives impact DER companies

42:25 - Possible regulatory and pricing changes that would benefit DER owners

46:06 - Impact of the IRA

46:44 - Energy addition rather than transition; rethinking categorizing batteries as supply

Show Notes

Base Power Website

Base’s Twitter and LinkedIn

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Doug Lewin

Zach Dell, welcome to the Energy Capital Podcast.

Zach Dell

Thanks Doug, I'm excited to be on.

Doug Lewin

So excited for this conversation, really excited to learn more about the company. This episode is a little different than most I've done because you're CEO of a startup, a true startup, a few months in, and I'm really intrigued by the company and by your vision. Can you explain for our audience a little bit what Base Power is and how you think it's going to drive change both to the power grid and the power industry and to consumers' experience?

Zach Dell

Well, I'm excited to join you on the podcast, Doug. Thanks for having me. Base is an electricity provider and battery developer in Texas. We started the company to get more storage on the grid faster. When Texans switched to Base, we install a free battery to protect their home from power outages. We own and operate that battery and use it to support the grid when it's up. And when the grid goes down, you get to use the battery to power your home.

So really we're bringing home storage to those who can't afford or don't want to pay $20,000 plus for a traditional battery and generator setup. So we charge a $2,000 install fee roughly 10 to 20 times less than a traditional equivalent power home battery or generator. 

Really from the perspective of the grid as a system, we started Base to be the scalable storage solution for consumers and the grid. So I think we can all agree or many of us at least agree that the grid needs more batteries. And current instantiations of battery storage are a very good start, but really are limited by interconnect queues as been widely documented, and you've talked about in the podcast, and transmission constraints. So our strategy really is installing batteries where grid interconnection exists to avoid those long interconnection queues co-located with the power load to avoid issues with transmission and reliability. So we're able to get storage on the grid in a matter of weeks versus years for the traditional storage developers.

Doug Lewin

Amazing. And of course, it's distributed storage, which I think has a particular value, right? Because that's, not that the large storage, you know, wherever it's located, it all has value. But having that closer to where the demand is, where the demand is closer to the customer has extra value, correct?

Zach Dell 

Yeah, exactly. So storage lowers the cost of transmission by increasing load factor on the distribution grid. So the closer storage is to load, the higher the load factor of the lines between generation and load. So the lower the load factor, the higher the cost of the system. So distributed batteries, we think, are really the unlock to the energy transition.

Doug Lewin

Yeah, totally. And I think, you know, I always like to back up and kind of explain these terms, because I always want this podcast to be accessible to folks that aren't doing this kind of stuff every day. But there's so many people interested in the power grid these days. And we talk about load factor, really, we're talking about there's the vast majority of the hours out of the year, there's abundant, cheap power, we have a lot of extra power. And so storage, you can think of it as yes, it's providing power, when there's scarcity, it's actually also soaking it up when there's a lot of it. So it actually improves the economics of solar, wind, nuclear. I mean, anything that is, I mean, really it  improves the economics of all forms of power, right? But particularly those that are variable in their output, like wind and solar.

Zach Dell

Yeah, that's right. Batteries are particularly complementary to high cap-ex, low op-ex forms of power generation. So, marginal, low marginal cost forms of power like wind, like solar, like nuclear as well.

Doug Lewin

So back to Base Power you have set up the company as a retail electric provider. Can you tell me why and explain to our audience why you decided there's a lot of different ways you could go to market, as a storage owner, operator, developer, marketer, all kinds of different things. But you chose the route of a retail electric provider. Can you talk about why?

Zach Dell

Yeah, there's really two reasons. And I'd say to zoom out, we are a retailer. We are a retail electric provider, but we're really a retailer and a battery developer combined. And the retail part of the business is how we bid our behind the meter assets into the wholesale markets. And so at the core of this is the technology, the hardware, and the software to deploy distributed batteries and to aggregate them and bid them into the markets to support the power grid in times of need. And the retailer is how we do that behind the meter. The behind the meter aspect obviously is what allows us to deploy batteries on the order of weeks as opposed to years when it comes to the interconnect process. So that's reason number one. 

And then reason number two is really to build a relationship with the customer. If you live in Texas the last couple of years, unfortunately your power has become less affordable and less reliable. And we need to reverse that trend. And so that is really what we are focused on doing for ou