Ep360: Turning EVs Into a Grid Resource

Speaker A: Foreign welcome to Currents A ah, Norton Rose Fulbright podcast. I am your host, Jim Berger. Today we are joined by Joseph Vallone, CEO of Chargescape. Founded in 2014 as the open vehicle grid integration platform, Chargescape builds on over a decade of experience connecting EV automakers and power utilities in North America. Thanks for joining us today, Joseph.

Speaker B: Thanks for having me, Jim.

Speaker A: Great to be here. So I want to get into a little bit about kind of the way Chargescape works and works with utilities and automakers. Chargescape is unusual in that it's not a third party vendor. It's uh, actually a JV owned by the automakers themselves. And you work directly with the utilities. Automakers and utilities haven't always moved at the same speed or had aligned incentives. So can you tell us a little bit about what does automaker ownership change, about how you bring those stakeholders together and why does the quote, industry owned shareholder infrastructure model matter for automakers?

Speaker B: Yeah, so as you mentioned, ChargeGape is a joint venture of uh, BMW, Ford, Honda and Nissan. Uh, so four competing automakers that have come together to build a shared platform. And Targetscape exists because no single automaker was ever going to build this kind of platform alone. What Chartgate offers is a software platform that means one integration, uh, for an automaker into energy markets across North America, and similarly one integration for utility to a range of automakers across leading EV brands. And look, the fact of the matter is, uh, automakers are shipping millions of EVs a year. Uh, the battery has become one of the most valuable assets in this country's energy transition. And so owning this battery management layer means that automakers can ensure that they capture the value for their customers, uh, instead of ceding it to middlemen. I've been working in this industry for a while and I've seen utilities spending the good part of this past decade, uh, running managed charging pilots with third party vendors that have been kind of bolted onto the side. And what Chargecape offers is really different. We offer direct authorized access to electric vehicle telematics and at the source with the automaker's full commitment behind it. That means high fidelity, reliable energy management for utilities, uh, to deliver on their specific power needs.

Speaker A: So this makes me think of years ago when we started seeing EVs being introduced. The idea that we could have these tons of distributed batteries that could be used when maybe uh, the grid is at max capacity. That sounds kind of like what you're doing, is that correct?

Speaker B: That's exactly right. What we're looking to do is build a virtual power plant that connects millions of EVs across America, all of the megawatt hours of capacity and energy in their batteries, uh, to deliver flexibility back to the grid and to make sure that the driver is paid for that flexibility. And ultimately that's a win. Win. It's a win for the power grid and uh, it's a win for the EV driver, uh, in terms of the fuel savings that they enjoy.

Speaker A: Okay, great. In just a couple years, Charscape has grown from launch to working with 15 utilities across North America. And you've inked major partnerships with automakers including Tesla, Rivian and Stellantis. What has allowed you to grow so quickly?

Speaker B: Yeah, so I think a couple of uh, factors. Um, you know, first, it's no secret, utilities are under a lot of pressure right now. Uh, load growth is back for the first time in 20 years and utilities need flexible load now. They don't have time to wait five plus years to build out a new power plant. Uh, and utilities have become, I think, quite attracted to the charge gate model because it allows a utility, uh, to sign with charge gate, but they get access to, as you said, Tesla, Rivian, Stellantis, BMW, Ford, Honda, Nissan and a few other coming brands of EVs all in one contract, which collapses years of procurement into months on the utility side. Uh, and I think the best thing is that we don't actually have to convince the automakers to participate. They are already at the table as the owners and that's the difference that charge gate brings.

Speaker A: Okay, and have you seen any difference in demand or desire for utility to want to uh, join your network based on, you know, the, their increase in demand? Like a, uh, utility that has more uh, data centers going in their territory, for example, are they more likely to want to be part of your network than a utility that has very few data centers?

Speaker B: Absolutely. I think there is a real correlation between data center build out and uh, utility demand for any form of flexible capacity. I uh, think a great example is a, uh, partnership that we inked last year with Silicon Valley Power. So Silicon Valley, no secret, is one of the world's data center hotspots. Uh, they uh, came to Chargescape actually looking for um, megawatts of flexible capacity to help meet the increased demand coming from data centers that are being built in their service territory. And we were actually able to bring a fleet of Nissan Leaf EVs with uh, bidirectional export capability, uh, very quickly get them interconnected and online and exporting power to Silicon Valley Power, uh, and their, their grid to help actually meet the increased demand, uh, that they are seeing from data centers. So I think that's just one example of, uh, a number of utilities that are looking to all forms of flexible capacity, uh, including EVs that already provide many, many megawatts of flexible capacity in areas across the country.

Speaker A: And when you're talking with utilities, is it more important that you have sort of a huge fleet of EVs in their service territory? Or, or is it, hey, we want to offer this to EVs. Which comes first, the EVs or the utility joining the network?

Speaker B: Well, the fact of the matter is we work with automakers, uh, that cover about 70% of the light duty EVs on the road in America today. So when a utility's talking to chargegate, they're already talking to an entity that's able to cover about 70% of the flexible capacity in their service territory. Uh, so I think that always helps. But I think, uh, you know, then certainly when, uh, they start to see kind of the added benefits of working with Chargescape, including the automaker's role in actually doing a lot of the marketing and customer recruitment due to the very unique and direct relationship that an automaker has with their customer and uh, the eyeballs, the customer eyeballs that are on the automaker's mobile app, uh, using, using that every day to charge, uh, and using that as like a very easy enrollment tool, uh, within a couple of clicks, uh, to enroll a vehicle, uh, in a managed charging or a virtual power plant program. Uh, then I think certainly, uh, it becomes like a pretty obvious and uh, compelling solution for the utility.

Speaker A: So you recently announced that Rivian, which is bringing some of the largest batteries on the road, is joining the platform. You know, you already have BMW, Ford, Honda, Nissan, Tesla, Stellantis and others. And you just mentioned that you already cover 70%. So how important is it to get from that 70% to 100 or close to 100% of EVs if they're going to function as a meaningful grid resource.

Speaker B: Yeah, so glad you brought up Rivian. We're really excited about Rivian joining our platform, uh, because they actually bring some of the largest batteries on the road in America today. So just for example, an R1S can hold about four to five days worth of a typical home's electricity. Um, so that's not a typical vehicle. That's actually like a power plant with wheels. Uh, and Rivian joining the platform is really just another step towards the automotive industry converging on a common standard and kind of what we call Shared Rails at chargegate. And while there may be competitors, uh, in the dealership lot, right, you know, Rivian and Tesla and maybe Ford, the fact of the matter is our automakers do kind of operate as partners, you know, when it comes to the grid. Uh, and I think there's broad acknowledgement, uh, that there needs to be common, uh, standards in the way that these vehicles connect with the grid, um, supply flexible capacity and also inject energy into the grid. There have not really been many standards, uh, in this field before. And so part of Charge Group's role is to coalesce the world's largest automakers onto a common platform with common standards that also work on the utility side. And look, you know, we've got coverage today, uh, as I said, about 70% of America's light duty fleet, which means that utilities can plan real programs around us and the direction of travel is clear with the industry converging on one platform. And, uh, within the next few years we will get to 100%.

Speaker A: Okay, so we've talked a lot about the benefits to the utilities of your platform. I want to talk a little bit about the benefits to the consumers because ultimately they have to also enroll in this. Your free EV miles program that you have with TXU Energy and Ford, I believe, gives drivers essentially free at home charging during off peak hours. And, and it sounds like customers are saving $1,000 a year on their at home charging costs. So can you talk a little bit about what has this program taught you about consumer behavior? And also could competitive retail markets like Texas become the proving ground for flexible EV load nationally?

Speaker B: Yeah, we're really proud of our program with TXU Energy. Uh, I think it's really the only one in the country right now that offers, uh, EV drivers unlimited free at home EV charging, which when you think about the combustion engine equivalent of like, you know, buying a gasoline powered vehicle and being told at the dealership, uh, you get free gas for life, uh, is incredibly compelling. And so we've seen a lot of consumer interest, uh, in signing up for this program in Texas. I think what we've learned through, uh, this program together with our partners at Ford and TXU Energy, is that consumers don't really want to think about kilowatt hours. Uh, they just want a simple promise which is that they can plug in at home and they'll drive for free. And when the value proposition is that clear enrollment and retention take care of themselves. I think the other important learning from this program is that we've got drivers as you mentioned saving over $1,000 a year on their EV charging. And they didn't have to restructure their lives, they just plugged in at home and they let chargegate do the work in the background. This kind of set it and forget it solution is really what has enabled the program to scale and, and when it comes to Texas as a proving ground, I think it's a great proving ground because there is retail competition in Texas, uh, and that forces innovation and ERCOT's price volatility makes flexibility genuinely valuable. And we're starting to see that now in other markets like PJM and kaiso. Again with increasing data center load combined with demand from heat waves, uh, and other kind of seasonal factors. And chargescape's theory is that what works in Texas can be replicated in other markets. Um, I think we're seeing that other companies that are also Austin based, uh, like Basepower, they have the same theory, build it out in Texas and scale it out to the rest of the country. And that's certainly what we're trying to do here at Charski.

Speaker A: And I've read a lot about how EV batteries are holding up much better than people anticipated. Maybe a decade ago or 15 years ago, have you seen any reluctance among consumers to allow their batteries to, you know, be used by the utilities as a grid resource? Because that's obviously putting a little more strain on them than just using it for uh, the vehicle to get around.

Speaker B: Yeah, look ultimately it uh, it's a financial decision for a consumer, uh, and there's a trade off between uh, providing a little bit of flexibility and the financial compensation that you would get. Uh, for some consumers the money just like it's not really a factor in the equation and uh, they're not necessarily going to sign up for these programs. But I think what's really interesting is that as EVs really become more of a mass market thing and we're kind of past the phase of early adopters I think, who skew quite wealthy and maybe less motivated to do these kinds of things. We're now in the mass market phase of EV adoption. And uh, the majority of Americans are very financially, uh, incentivized and financially motivated. And so uh, we're definitely seeing increasing levels of enrollment and participation in these programs. As a matter of fact, Chargegate boasts the highest conversion rates in the industry, uh, four to five times uh, what our competitors offer. And that's number one because automakers are putting this directly in front of their customers in the dealership or in the mobile app that the customer is using to manage their vehicle. And number two, we offer some of the most financially compelling programs across the country, whether it's in Texas, California or New York.

Speaker A: So as bidirectional charging is moving from pilot to practice, you know you recently launched Washington State's first vehicle to home demonstration with Puget Sound Energy. Uh, I think you're using Ford and Kia vehicles to power homes during outages. When you sit between utilities, automakers and consumers, where do you see the biggest commercial opportunity in V2H and V2G over the next few years?

Speaker B: Yeah, so I think the way that we think about vehicle to home, and I speak for Chargegate and also the automakers, is that this is kind of the first step. Right. Um, resilience to power outages is something that American families understand very viscerally. Right. Your truck keeps the lights on during a storm, uh, and that's what gets bidirectional hardware into the home. And I think we've seen automakers like Ford and Kia and GM and others start to prove that out. But really what we see is like the durable long term business case, uh, is in vehicle to grid. So, right. Once you've got that, that battery interconnected with the power grid, it can do more than just power your home. It can actually earn money 365 days a year. Uh, and so that transforms your car from a cost center into actually like a revenue generating asset. Uh, and so where we see kind of the, the biggest near term commercial opportunity is in capacity. Right. Utilities paying for dependable peak load reduction and energy injection, uh, during high price hours. And according to S and P, uh, sales data, today there are over 1 million light duty EVs on the road in America that are capable of bi directional charging. So that represents about 10 gigawatts of nameplate capacity, which is the equivalent of about 10 large nuclear reactors. So we've actually got 10 large nuclear reactors already on American soil today that doesn't need to be built out, uh, and will help the grid in the next phase of its transition without needing to build a single new power plant.

Speaker A: All right, I want to just shift focus for a moment to I guess your story and you know, you spent years building EV charging programs across North America. Take us to the beginning. And what convinced you that automakers needed to own, um, this layer of the ecosystem themselves and what made you want to lead it?

Speaker B: Yeah, uh, I've been an EV nerd, uh, for most of my life. Uh, before Tesla even sort of came about. I've always just found electric Vehicles as a really interesting and promising means uh, of clean transportation. It's been absolutely thrilling to actually see the concept take off first with Tesla, now with all other automakers and see millions and millions of electric vehicles, uh, on roads across America in all 50 states. And I've been working, as you mentioned, on EV charging programs for years and years of building these out with utilities always led to the same outcome, which is a great pilot, but no path to scale because third parties were sitting between the car and the grid. Um, and I kept watching these really promising pilots die at the scaling stage and realized the missing piece was, wasn't necessarily the technology, um, it was alignment. Automakers had to be involved in the solution. I don't believe you can have vehicle grid integration at scale without the automaker's involvement. And so really what made me want to lead chargegape is what I saw as a unique right to win in this market. Chargecape is the only venture that brings automakers directly to the table with utilities to unlock savings for their joint customer, which is the EV driver. Uh, and so vehicle grid integration, as I said, it just, it can't scale without the automakers. Um, and that's really the challenge that only Charge Group can solve. And we're seeing this today now, um, as ChargeGrip scales up really large, uh, utility programs with major utilities like Con Edison in New York, Southern California Edison in California, Puget Sound Energy in Washington, TXU Energy in Texas, uh, and others. Actually getting the automakers involved and at the table early on, um, and having them work collaboratively with utilities to solve a problem for the grid, but also come up with a value proposition for their joint customer, uh, is ultimately, I think, going to be the winning formula.

Speaker A: Okay. And I think, uh, a lot of our listeners are probably listening in a professional capacity, but they'll also probably be interested personally. So. So for those listeners who are EV drivers thinking about enrolling in one of your programs, can you walk us through what actually happens? What do they do? What is their car due overnight? What shows up on their bill at the end of the month?

Speaker B: Yeah, absolutely. So, uh, enrollment happens in less than two minutes. Uh, it could be at the dealership when you're picking up your car and the dealer's kind of helping you get enrolled, or you maybe you've already got your car delivered, and, um, you're just in your automaker's mobile app. You'll, uh, be presented with the opportunity to save money. You click on a couple buttons, uh, to enroll your vehicle, consent to the terms and Conditions. And that's it, you're enrolled. No hardware, no electrician, nothing else really. To install, we work through the vehicle's onboard telematics, right, which is just the little Internet connection that most vehicles have now, so no extra equipment really required. And then with that telematics connection, chargescape actually opens up a dialogue between the car and the grid. Um, it'll charge the car when power is cheapest and cleanest. And we always, we work with the automaker to make sure that the car is fully charged by the time that the driver has set their departure. So you never wake up to a car that isn't charged by the time you need it. And that's it, It's a set and forget solution. And at the end of the month, uh, you will either see a credit on your utility bill, um, or in some cases you'll actually get a payment directly into your Venmo or PayPal account. And you've done nothing differently. Uh, which is, which is the whole point. Uh, drivers shouldn't have to do anything differently. They said it and forget it. They save money and ultimately that's what keeps a driver enrolled in the program. And that's also what helps it keep a driver in their EV and going back to, um, get another electric vehicle as their next car purchase release.

Speaker A: And if they are in the program where it's the bi directional and the utility can call on it, I assume additional equipment has to be installed. Is that right?

Speaker B: Yeah, certainly. If you're doing bi directional power export from your vehicle, uh, you will need, um, a uh, special charger, uh, that can handle the bi directional, uh, discharge of power. And you'll also need an interconnection to the grid, which is really the same as anyone who's got solar. So there is some additional equipment or install required. If you're doing bidirectional charging, same thing as solar. And um, we are seeing quite a lot of customers sign up for this, particularly with, uh, some pretty generous, uh, utility rebates that are being offered on the equipment and installation. Uh, again really as an incentive to get more megawatts onto the grid and lower the barriers to customer participation.

Speaker A: Okay, and if a customer needed that equipment installed, would they do that through Chargescape or through the utility?

Speaker B: Uh, they would actually, they would probably do it through a third party. Uh, they would use a local electrician. Um, automakers typically have their preferred, uh, installer partners that they can recommend. They'll sell the equipment. Every automaker's got their own bi directional equipment that is either branded or sort of in a partnership with a, uh, manufacturer. And they've typically got, uh, their own local, local installer network that they can work with to get that equipment installed.

Speaker A: All right, last question. You know, paint us a picture of a few years in the future, say 2030, if Chartscape executes on its vision. What is the relationship between the EV fleet in the US and the power grid look like? And what does that mean for the average household, whether they have an EV or not?

Speaker B: Well, my vision for 2030 is that the American EV fleet becomes the largest distributed battery on Earth. So tens of millions of vehicles with hundreds of gigawatt hours of capacity parked and plugged in 95% of the time. And so for the millions of EV drivers across America, that would mean fuel costs close to zero. So costing almost nothing to run and maintain your electric vehicle. And even for a household that doesn't drive an ev, that means that their neighbor's car is helping keep their electricity rates down and their lights off. Because every EV soaking up, uh, cheap overnight power and discharging energy back at peak means that we will need fewer new power plants to be built out and less infrastructure to be built out for the grid. And that's something that everyone has to pay for through their electricity rates, whether you drive an EV or not. And I think, look, you know, the, the interesting thing is that, uh, you know, a few years ago, everyone was predicting that EVs would become part of the, a problem for the power grid, that they were posing a big threat, uh, to power grid reliability. And chargescape really has kind of flipped that on its head. Our, uh, thesis is that electric vehicles are actually part of the solution and that they are the cheapest, fastest growing grid asset that America has.

Speaker A: Great. Very interesting. Joseph, thank you for joining us today.

Speaker B: My pleasure.

Speaker A: You can find us online at www.projectfinance law or or send us an email at currentsordonrosefullbright.com Please rate, review and subscribe on Apple Podcasts, Spotify or your preferred podcast app. Our, uh, show today was produced by Emily Rogers.

Speaker B: Stay ahead of the Currents.