Nico Johnson  00:00

Hey, welcome back, Solar Warriors! If you were with us on our previous journey with Barry Cinnamon, you heard part one, where Barry, founder and CEO of Cinnamon Energy Systems, laid out why Australia installs solar and storage for only $2 a watt, and we in the United States pay closer to 550 a watt, and if you missed it, make sure to queue it up. It's linked in the show notes. It's definitely one worth visiting today. Barry stops diagnosing and starts prescribing, and his prescription is this: What if we make data centers pay for rooftop solar? How? What would that look like? Stay with me on this. Data centers want enormous amounts of power, and they want it fast. They're also willing to pay gobsmack amounts of money per megawatt for the privilege. Utilities will build it for them slowly and expensively, and ratepayers absorb the difference, which is exactly why data centers are picking up a whole lot of nimbyism in every state they walk into, not in my backyard, you say. Meanwhile, there's a way to add capacity that we already know works, that we've already done at scale, and that can be built with less than two years time ramp. It's sitting on our rooftops. Barry's concept is a behind-the-meter feed-in tariff where the data centers write the checks and homes and businesses get paid to host it. He explains it with a mason jar, some walnuts, and a bag of peanuts, which is either the best or worst possible demonstration for a podcast. So bear with us, and you can always go watch the whole interview on our YouTube channel if you haven't subscribed there. Toward the end, we get into plug-and-play solar as well, which we've covered a lot more recently here on the podcast, and that's actually a faster route to the same outcome. All right, let's get into it with Barry Cinnamon on how data centers can help pay for your home solar system.

Barry Cinnamon  01:57

This is the other thing I want to talk about, and it's this is more of a concept. It's not a real product. It's just something that that is really going to solve some of the big problems we have. But it's the concept is basically finding ways to make data centers pay for rooftop solar and storage, so they can actually get the power they need. And it's a zero sum game. Electricity costs are a zero sum game. Yeah. If if the the rates are high, the utilities win. The utilities don't want low rates. They want to make the profits. They want to build as much infrastructure as possible. And there's a tug of war. And now we've got a third party, which is pretty brutal, which is the data centers, and they're saying we want a lot of power. Utilities say we'll give it to you, and the the ratepayers are like we're just going to get screwed. So I had a way of getting around this. But just this slide shows basically how power goes from long distance transmission to to homes, businesses, and data centers. Very rough. We all know about this.

Nico Johnson  02:48

Yes,

Barry Cinnamon  02:48

but the utilities do this very slowly. It's very expensive, and now the data centers are saying, "Shit, you know, hell, we just don't want to pay for all this. We're not going to be able to get our data centers in. So the nice thing about our industry, the rooftop solar industry, is they've done a good job of providing that power. This is a graph that shows what what the trend line was for demand of of you know on the grid in

Nico Johnson  03:11

California

Barry Cinnamon  03:12

in California, and then what actually happened yeah, and what actually happened fascinating.

Barry Cinnamon  03:15

15 gigawatts. We we we somehow found 15 gigawatts of extra solar, and that came from rooftop solar, so it shows that

Nico Johnson  03:23

entirely rooftop solar.

Barry Cinnamon  03:24

Well, that's that's my understanding. So entirely rooftop solar, where and you know the demand kind of spiked coming down. So basically, what happened is that extra capacity was filled in. Yeah, not big power plants, but just came filled in. So let's do through DG. So let's kind of look at an example of this. So let's pretend this this jar over here is the the capacity of the grid, and you know hold that for me because I'm going to hold it. I'm going to fill this up with. I'm

Nico Johnson  03:47

going to hold the jar. I'm not going to hold these.

Barry Cinnamon  03:49

And these walnuts are power plants. And now the grid is full. This is all we can fit. No more power.

Nico Johnson  03:56

Yep. Now we can't generate any more electricity.

Barry Cinnamon  03:58

Yeah. And and what are you going to do? Can't cram more in. Well, there is a way. The way is if you have lots of little power plants that that literally cause peanuts. Here, shake that up. Shake that up a little little bit for me.

Nico Johnson  04:11

There we go. Get it in there. Get it in there. Glad I had lunch. You'd be making me hungry.

Barry Cinnamon  04:15

All right.

Nico Johnson  04:16

Oh,

Barry Cinnamon  04:16

we lost. Just like

Nico Johnson  04:18

just like real life, a few power plants didn't make it.

Barry Cinnamon  04:20

All right, we've doubled the capacity of the grid.

Nico Johnson  04:24

That's magical.

Barry Cinnamon  04:25

Just with peanuts with small power plants. So now let's take that same concept with real power plants, nuts, and rooftop solar and storage. Right. And let's use that. And so the concept here is to have the data centers pay for the peanuts. Yes. The peanuts payments go directly to the homes and businesses that want solar, and that's going to provide all that extra extra power they want. You got to remember, data centers are just like, who do I write a check to to get this to happen? Yeah,

Barry Cinnamon  04:52

and if they're able to write checks through the the utility billing system, probably with CCAs, this thing can happen. So that's the concept. I'm not going to go through all the other details. It's set up so that the residential customers get a fast payback, less than five years. Right. Commercial customers even faster.

Nico Johnson  05:09

3.8

Barry Cinnamon  05:10

positive cash flow because they're getting money from the data centers and plus they save.

Nico Johnson  05:15

Explain to me. Explain to me how the money transaction works, though.

Barry Cinnamon  05:18

That's the tricky thing. That's why this. That's that's why this hasn't happened. So the way this transaction is going to work is the data centers will pay behind the meter feeder behind the meter feed and tariff

Nico Johnson  05:28

tariff. Okay,

Barry Cinnamon  05:29

and they're going to pay that to the owners of businesses.

Nico Johnson  05:33

Okay, and what is the incentive to the data center to pay the behind the meter feed and tariff?

Barry Cinnamon  05:38

The incentive is there's two, there's three. There's actually three incentives. First, they're able to get that power and capacity for $1. Oh, because they're

Nico Johnson  05:46

buying it.

Barry Cinnamon  05:47

Yeah, they get they get it for $1 a watt instead of if they were to go through its standard power plant process, it's $5 a watt. They get it in two years, two years because these things these these nuts go in fast. Yeah,

Nico Johnson  05:59

but it this has it's it has to be controllable load.

Barry Cinnamon  06:02

Yes.

Nico Johnson  06:03

Okay. So VPP.

Barry Cinnamon  06:04

Yep. Right. It would be dispatchable power from the battery.

Nico Johnson  06:08

This will work in Texas. Yep.

Barry Cinnamon  06:10

And then the third thing is they solve the affordability crisis. So there's there's pushback, NIMBY issues with power with data centers all over the country, right? Because they just don't want the power to go up, and then you know the costs to go up. This reduces customer costs.

Nico Johnson  06:24

I like this idea. Have you socialized it in any in any of the circles and powers to be? Yeah. Ah.

Barry Cinnamon  06:31

And we're looking at doing this with the CCA initially. They're interested. We're starting. We're we're next step is to talk to the data centers.

Nico Johnson  06:39

Fascinating. Probably

Barry Cinnamon  06:40

do this in Silicon Valley because there's a few companies there. Like, why do they call

Nico Johnson  06:43

Nick Chazzett up and see what he would think of this? Call Nick. Call Nick. Yeah, yeah.

Barry Cinnamon  06:46

This this is an octopus opportunity.

Nico Johnson  06:49

Oh yeah, it would be absolutely. This is something that I mean, it's a lot of companies' opportunity. But yeah, octopus. Not only that, but obviously he understands the business model of the CCA.

Barry Cinnamon  06:57

Yeah.

Nico Johnson  07:00

Fascinating. Okay, I'm so glad that you explained this because when you sent me this deck, I was clueless. I was trying to figure, wrap my head around what does this mean. Let's

Barry Cinnamon  07:06

just go to the last slide just to kind of cap it off. The data centers will like this because it gets them fast power, cheap power, and they don't have the pushback because of affordability. Yeah, it's kind of a it's a win for the data centers. It's a win for ratepayers, and we're going to get some pushback from that other party at the table, the utilities. But we'll have to deal with that. Inevitable.

Nico Johnson  07:25

Yep. Yeah, we have to win the PUC though.

Barry Cinnamon  07:27

We're both PUC. We might need legislation. You know, we're working with Calsa on this, so we'll see who it goes.

Nico Johnson  07:32

Well, the good news is there's some examples across the nation of technology modifications that have worked in other countries and that are working now here. I think Vermont, Utah. I think Virginia has it on the docket. Hopefully, my state of North Carolina will have it on the docket. This whole concept of balcony or plug-and-play solar. Why don't you talk a bit about your exploration into plug-and-play and how that technology might serve? Might might have a faster path to market than behind the meter feed-in tariff.

Barry Cinnamon  08:06

So it's it's a fascinating concept. Anybody with a micro inverter and plug it in, yeah, you can plug up plug the panel and it's great. It's taken off in Germany.

Nico Johnson  08:14

Yeah,

Barry Cinnamon  08:14

there's a they basically have

Nico Johnson  08:16

gigawatts, right? It's a huge absurd. Yeah,

Barry Cinnamon  08:18

and and they they've made it legal in Germany, and they also have a electrical system that's based on 240 volts instead of 120. Yeah, so it works out. So I've been talking to all the early companies working with Kalsa, working with Bernadette on this, and there's legislation that's that's proposed in California, in addition to Utah, and I think there's like a dozen other countries that cities a dozen other cities are doing it. I

Nico Johnson  08:42

mean, Vermont just voted unanimously. Right.

Barry Cinnamon  08:45

So, so it makes total sense from in theory.

Nico Johnson  08:48

Yeah.

Barry Cinnamon  08:49

There will be pushback from the utilities because basically the utilities in California and elsewhere are basically saying you can't send back one single watt hour apart, or you

Nico Johnson  08:58

become a utility,

Barry Cinnamon  08:59

or you and and but we'll let you do that if you go through the interconnection process, and that's turning out to be really really difficult, right? And and you know for for somebody just plugging something in and then spending $2,000 to get a building permit, no, it's just not going to

Nico Johnson  09:11

work. And so are you saying that's still a hurdle in places like Utah?

Barry Cinnamon  09:14

Yes, no, Utah solved it. Okay, how did they solve it? They just plugged it in with a they they solved it with a very similar law to to what we're proposing in California, there's another. But the real issue that we have to overcome is that there's some national electric code safety issues, UL issues. That

Nico Johnson  09:30

makes sense.

Barry Cinnamon  09:30

So Utah. Well, hang

Nico Johnson  09:32

on. Why would there be issues with UL here? And Germany has figured it out. I mean, Germany is famously very high on safety and engineering. What are

Barry Cinnamon  09:42

that's that's a good question, but they're they're allowing it.

Nico Johnson  09:45

Okay, they're they're. I see.

Barry Cinnamon  09:46

They have one reason is that they have 240 volts on their circuits. Okay, so if you plug in one panel, you're not going to create an overload as easily. That makes sense. But there there there's apparently not as much pushback from utilities. But here in the U.S. you're not. Allowed to do that unless once we solve the UL listing issues, which we're working on, then this thing's going to fly. So the expectation is we'll get this passed. What's

Nico Johnson  10:10

your prognosis then on timeline of like major states like California?

Barry Cinnamon  10:15

There's no reason why I can't get done this year. Wow, this

Nico Johnson  10:18

this legislative session. This

Barry Cinnamon  10:19

legislative session is being pushed very hard. Affordability is huge. So it used to be that the legislators in California would push back and say, "Oh, you know, it's not that big a deal. Now it's it's the top of everybody's list. Affordability. This is the

Nico Johnson  10:30

answer. And people say, "What business would you build if you weren't doing SunCast? It would be a balcony solar company here in the United States. I just think it's so fascinating.

Barry Cinnamon  10:40

It's. I look at it. I'm in the rooftop solar business. I install 20 solar panels in and 20 kilowatt bags. It just feels too small. It it's great for apartments. It's great for little you know tiny little houses. It's great for running an extension cord out. Think about the

Nico Johnson  10:52

aggregation possibility.

Barry Cinnamon  10:53

It it it's it's it's there. Yeah. I I consider it a gateway drug to rooftop solar. Sure. And and and it would be terrific once we're able to overcome the utility objection to backfeeding 1,200 watts. Yeah, maybe because of the affordability of sugar, we can get 10,000. But it's not a

Nico Johnson  11:09

gateway drug to the kinds of clients that are buying balcony solar and mass in in in the Philippines in in Germany. Where's the other? There's a country. Pakistan. In Pakistan, where it's literally like they're hanging it out on balconies of apartment buildings, Barry. When

Barry Cinnamon  11:25

this is in Costco for you know 500 bucks, then so your point is everywhere.

Nico Johnson  11:30

So your point is how how are you going to start a business that where Costco is your competitor?

Barry Cinnamon  11:34

Where Costco is going to be your retailer?

Nico Johnson  11:36

Yeah, of course.

Barry Cinnamon  11:37

So it's got to be a manufacturer and Amazon. Yeah, yeah. I don't know if it's going to be Amazon because you got to move the solar panel, but once the solar panel's in a box, Amazon could do it. They could. You

Nico Johnson  11:46

got to move the solar panel. They're shipping kettlebells. What are you talking about? They're shipping. They're shipping. They're shipping jacuzzis.

Barry Cinnamon  11:51

All right, all right. They can do it. They can do it. It used to be really hard when you have a broken solar panel. Like, how do you fix it for a customer? Cost 500 bucks. Fair. They. That's a tremendous amount of potential, and it and it's going to. It's kind of like letting the camel's nose under the tent.

Nico Johnson  12:05

I think I love it. I think the better question that folks are asking, and to your point, you're doing you know 2050, 100 panel systems. Is how does this? How does it scale? How does it matter? There's such there's such small systems. It's two panels, three panels. May as well be selling. It's it's similar to selling, you know, systems in the Caribbean, right?

Barry Cinnamon  12:25

For for apart for a one or two bedroom apartment that can put you know 800 watts of solar panels out there. What does it offset? It could offset 20%

Nico Johnson  12:33

20% Yeah, interesting. So we did an analysis about a year ago on the podcast with Karen Baran, and he it was it was fascinating. If the state of California would invest into this, and you might you might want to talk about to care about this, it would be the equivalent of $1,000 stimulus check to the family that receives the product every year for the lifetime of the product. Isn't that fascinating?

Barry Cinnamon  12:55

It's it's a good deal. Yeah,

Nico Johnson  12:56

it's an it's a fantastic deal. All right, that's a wrap on this episode with Barry Cinnamon, I hope you caught the first one where we talked about why Australia is winning the dollar per watt race, well under $2 a watt. If you didn't, we'll link to it again in the episode notes. You should go check that out. Make sure you subscribe to the podcast because that's how you'll know every time we drop episodes just like this. Hit the bell so you'll be notified as well. Of course, this conversation we just had with Barry is a serious conversation. The walnuts are a gimmick. The point underneath it is not. Our grid has a fixed amount of room in it, and we have spent decades assuming that the only way to add capacity is to add more big things: central electrical generation. Barry's argument is that the space between the big things is enormous, and distributed generation, namely solar and storage, is the only asset class that can get in there and fill it in in under two years. California proved that, sort of by accident, 15 gigawatts that nobody really even planned for. Whether the money can actually move the way he describes is an open question. Through a CCA, through the utility billing system, past a public utility commission that has every reason to say no. Barry knows that. It's why he's starting with the CCAs in Kalsa rather than picking a fight that we can't win yet. But I'd point out that the affordability argument is doing a lot of the work here, and affordability is the one thing that every legislator in this country is nervous about right now. That's leverage we haven't had before. I don't think our industry has fully worked out how we use it, but I do have some conversations in the podcast feed if you haven't seen them yet that attempt to get at it and answer it. If you missed part one of Barry's conversation, please go tune into it. If you missed the conversation I had with Molly and Jamie Nolan at the Chesa Energize Summit, where we do touch on how solar and storage can help in the affordability conversation, and hope go listen to that as well. As I mentioned, Barry is the founder of Cinnamon Energy Systems, and we'll link to Barry and how you can listen to his podcast or connect with him and his company in the show notes as well. Remember, you are what you listen to. Thanks again for showing up, Solar Warrior. It's half the battle.

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