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“The reason why less than 10% of the commercial building market actually use building automation can be summarized by just one factor. I could show you 20 images of every building control software or fault diagnostic software out there and it's exactly the same story.
Whether it's a small IOT or big medicine, it's a product designed by college-educated building engineering who really think that there's somebody in a button-down Oxford in an air conditioned office doing nothing but driving those controls."
—Tanya Barham
Welcome to Nexus, a newsletter and podcast for smart people applying smart building technology—hosted by James Dice. If you’re new to Nexus, you might want to start here.
The Nexus podcast (Apple | Spotify | YouTube | Other apps) is our chance to explore and learn with the brightest in our industry—together. The project is directly funded by listeners like you who have joined the Nexus Pro membership community.
You can join Nexus Pro to get a weekly-ish deep dive, access to the Nexus Vendor Landscape, and invites to exclusive events with a community of smart buildings nerds.
Episode 105 is a conversation with Tanya Barham, founder of Community Energy Labs, a startup out of Portland.
If you like smart building founder stories, this one is for you. Tanya takes us through the many stops on her career journey from the utility industry, intro wellness, back to utilities, and now into buildings.
Community Energy Labs sits at the intersection of a lot of topics we’ve covered on the show before: advanced supervisory controls, grid-interactive buildings, and small buildings. We’ll throw in public entities for good measure.
Tanya’s a ball of energy and this conversation gave me a lot of motivation to keep pushing for change in our industry. We can do it together.
Without further ado, please enjoy Nexus Podcast episode 95.
You can find Tanya on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
[00:00:03] James Dice: hello friends, welcome to the nexus podcast. I'm your host James dice each week. I fire questions that the leaders of the smart buildings industry to try to figure out where we're headed and how we can get there faster without all the marketing fluff. I'm pushing my learning to the limit. And I'm so glad to have you here following along.
[00:00:31] James Dice: This week's podcast is a conversation with Tanya Barra, founder of community energy labs, but startup out of Portland. If you'd like smart building founder stories, this one's definitely for you. Tonya takes us through the mini stops on our career journey from the utility industry. Into the wellness industry back to utilities and now into buildings, community energy labs sits at the intersection of a lot of topics we've covered on the show before.
Advanced supervisor controls, grid, interactive buildings and the [00:01:00] small buildings, smart market. We'll throw in public entities for good measure. Those are their own unique animal. Tanya is a ball of energy. And this conversation gave me a lot of motivation to keep pushing for change in our industry because we can do it together. So without further ado, please enjoy the nexus podcast with Tanya Barra. Hello, Tonya. Welcome to the podcast. Can you introduce yourself?
[00:01:22] Tanya Barham: Hi James. I'd be happy to introduce myself. My name is Tanya Beram. I'm the CEO of community energy labs. And we say that in the same way that Tesla galvanized consumers around a vision for clean all electric self-driving cars, our technology enables clean all electric self-driving buildings.
So CEL has built a software as a service control platform. That's powered by machine learning for building operators who find it complex, frustrating, and very expensive to meet new building energy goals and time of use utility prices.
[00:01:56] James Dice: Cool. Well, I want to get into the [00:02:00] details of that as I normally would.
I want to hear about your background first. So can you take me through your career path? How did you get here?
[00:02:12] Tanya Barham: Well, I think like a lot of us in this industry, probably no one at age seven was like, ah, I really want to port can build in controls or electrical utilities. However, you know, I do remember my journal from when I was a kid.
Cause like my mom kept it and every year it would ask, what do you want to be when you grow up? And I was really fairly consistent. Actually. I was always like, Scientists artists, scientists both of them. I want it to be both. And so I do feel like being an entrepreneur in stem is a little bit of an art and a science.
So you get to do a little bit of both. It's very creative, you're sort of creatively trying to use technology to solve problems. And so I think just what's really driven me is a lot of curiosity. So I have, I have a pretty long track record. I would say guiding transformative [00:03:00] energy technologies through the valley of death to commercial success.
So I started my career in software more or less by accident. I was in college. I was studying geographic information systems. Of course I like most people, my age was in chat rooms and listservs, and very had my email. And, you know, and I think a lot of adults are like, what's this email stuff good for anyway.
And we're probably still asking that question, but that got me super interested in that, but I was also interested in ISO. I've always been kind of a process nerd. So I was interested in the ISO 14,001 standard, which was new and emerging at the time. And How you could use geographic information systems to manage ISO 14,001 for geographically distributed organizations.
Okay. So as it turns out, this was in 1999. I was a fellow through a reciprocal research program in Iceland. And my research project was to study the application of ISO 14,001 [00:04:00] to the aluminum smelting. And to see whether, you know, so when isolate, you've got all these big tides and currents, and my thesis was that when you apply a prescriptive standard, like they have in the EU at time parts per million parts per billion um, that it's not going to work in an environment like that because of course the solution to pollution is dilution.
So my thesis was if they could voluntarily adopt a self-reported standard, that that might be a more effective way to actually manage environmental impacts in that industry. So, what I did not understand, so was that Esau, the company that I was trying to study was going through a hostile takeover on their board.
So at some point I got called into the office of some random middle manager who accused me of corporate SBA dosh and kicked me out of the building because they thought I was trying to find their environmental impacts in order to drive down this year. No, I wasn't aware that any of [00:05:00] that was happening after the fact.
Right. So, you know, lots of people are like, you should put corporate espionage on your resume. So one of my professors took pity on me and he was starting a startup that did sort of GIS. So I just became a GIS tech for this startup that was doing some sort of low level visual, basic coding working with really early versions of Esri products, like, arc GIS and arc info.
And they sort of said, Hey, we want to be we want to. Come up with a product that we can sell. We don't just want to be a services company. Does anyone have a product? And I said, Hey, I've got this idea to combine GIS with ISO 14,001. They were like, cool, I'll go work on it. You know, they paid me, I think 45,000 bucks.
And I had a little tiny team and I did my own little coding and then they sold it to, I want to say shell petroleum or something like that for like a million bucks. so I was I'm in Iceland and I decided I want to go back home to the states. And so I'm looking for jobs and At the time I had been learning Java script, w [00:06:00] w we would have been working on web based applications using GIS. So just kind of like all this stuff on the internet was early too. And the company, the management consulting company, they worked for work on uptime planning and scheduling, predictive preventive maintenance, and power plants during the Western energy crisis.
And they were mostly sort of older guys management consultants. And so they were kind of. Hey kid, do you know anything about computers? And I'm like, I do know something about the computer and they were like, great, you're hired, you know, it's so these guys are like, I was in Colorado Springs utilities where you are, and they're like, here you go.
Just have at this multimillion dollar computerized maintenance management system, like, let's see if you can get it. I was like, wow. You know? So that was pretty neat. And I got pretty hooked on the energy industry because it was just such a huge, you know, it was during deregulation. And this was before people knew that the markets were being manipulated.
I mean, I think there were people who had their [00:07:00] suspicions. What
[00:07:00] James Dice: do you mean manipulate.
[00:07:01] Tanya Barham: So when we looked at like what's going on with Enron and the sort of manipulation of the transmission system and, you know, power trading in order to Jack up prices. And so people were selling energy at extremely high prices into the California, the deregulated markets.
So all of the plants that I was working with were at the time it become independent power producers. Some of them, almost all of them were selling into the California market. Okay. So one story that I like to tell is, you know, so you'd have all these folks with these like really aging peaker plants, like literally in Colorado, there was some peaker that was built in like the turn of the century.
It's just been like one guy named Wolof and his goat, you know, often is later hose with his goat up there. And like once a year, they fire up this peaker in like, You know, Paducah, Colorado, and that's what it's you it's supposed to be used for, but during the Western energy crisis, like that thing, if it were running 24 7 could just be selling into this [00:08:00] very high price of energy.
And so suddenly all of these utilities wanted us consultants getting their heat rates down and just chug it out, you know, send some, some, some energy through the grid. And so, you know, these places, they want the, you want that guy in the layer hose and in the goat, like bolts are flying everywhere. Seems coming off that thing, you know, the goat's like bleeding, its head off.
And so that was pretty fun. I mean, it was pretty crazy but it was pretty exciting. So I got hooked at that point on energy. I'm like, wow, is it always as fun? And then of course Enron happened. And at the time though, I had already been thinking like, I want to get out of coal and gas. Cause I, I mean, those plants are awesome.
I also worked at Navajo generating station, which was just a massive, massive plant you're out in the middle of nowhere and I loved Navajo culture. And I really thought, wow, these coal-fired plants are a feat, you know, just all the things that need to come together to make this thing work. They're so complex.
But I wanted to work on [00:09:00] renewables and at the time, you know, they were still pretty fringe. And so I moved to Portland, Oregon, and I started networking and Eventually a bondable environmental foundation was like, Hey, Mead, like to see more of a proliferation or professionalization of grid type solar photovoltaics.
And we've got these cool green tags that we'll sell off of these TVs. What do you think about coming up with a program that would sort of commercialize these red tide solar systems? And there was so much resistance. This was like 2002. I think there was so much resistance, like. The utility lineman unions were like, you're going to electrocute every lineman in America because these systems are going to feed back out onto the grid.
You know, building inspectors didn't know how to inspect them. When we were looking at solar installers, it was all just like literally a bunch of dudes with like ponytails who've been doing like off the grid systems for their commune. Cause there was so there was no professional workforce, you know, nobody knew really about solar [00:10:00] in any kind of a broad commercial.
So we just had so many challenges and being the kind of person that I am. I was like, oh yeah, that sounds great. I'd love to do that. So just kind of like dove right into it. And now that program, so what we did was we built a solar for our schools program that really leveraged schools as a way to both educate consumers and students about clean, renewable energy.
We use the installations at the schools as an opportunity to educate labor unions and professional workers in the solar installers industry on job opportunities. We use the installations to educate building code officials on safety and protocols. And we would give feedback back to manufacturers like inverter manufacturers.
So it was you know, when you're bringing in a new technology like that, it's such a. Ecosystem play. You really have to spend so much time educating people about the technology. But now I like to think that, you know, 20 years, hence like so many of the students that we educated about the power of renewable energy are probably the same people that are buying gigawatts worth of solar for at [00:11:00] grid scale.
So.
[00:11:02] James Dice: Cool. Very cool. Do you feel like, so this is fast forwarding in our conversation a little bit. Do you feel like that experience kind of introducing a new technology into the ecosystem? That's helpful for you now that you're working on building controls?
[00:11:16] Tanya Barham: Yeah. I mean, I do think that it's sort of, It's poisoned my mind in a way, because I'm just like, I can do anything.
I can take something that doesn't work at all and, you know, make it work and make people love it. So, you know, it was funny because after that solar first schools, I went to PCI Portland energy conservation aid, which is the nation's first energy conservation plan. It was a nonprofit that turned into a revenue based nonprofit.
So they would manage these energy efficiency programs for utilities. And prior to going there, I. You know, I had a sort of power systems and it background. So I was just kinda like energy efficiency. Isn't that like, somebody's imaginary friend. Like I'm not going to do that. Of all the energy efficiency people are gonna like leave.
You're going [00:12:00] to see the statistics on your podcast. But like,
[00:12:03] James Dice: I know they're the type that probably piqued their interest. Oh, okay,
[00:12:07] Tanya Barham: good. They're ready to put up their Dukes. Yeah. So I was pretty skeptical on energy efficiency in LA, but I was interested because PTC, I had the software idea. So they had an engineer, an HVAC engineer, mechanical engineer who had come up with this idea for a diagnostic software that you could use.
So you would train field technicians, how to use it. They would go up, they would flip this software to a rooftop unit. It would, you know, do what software does it would take in some readings, perform some diagnostics and give them a list of You know, but it was basically like a fault detection and diagnostics for single detached rooftop units.
And PECI was a really savvy implementer and they managed to sell this program to a utility for, I think like this idea for like 7 million bucks. And, and they were like, we're going to do 6,000 [00:13:00] of these diagnostic retrofits. And you know, and they were like, we'd like you to do this problem. So they sort of poached me from BGF and they said, you know, we'd like you to run this program.
If you could, in the field kind of operated, I wasn't the salesperson. I was like gonna operate it. And I'm like, cool. Show me the database. And they're like, what? And I'm like, wait, that's not even, you didn't have a budget. And they're like, no. And I'm like, how are you going to get the data from the PalmPilot to the utility system?
And they're just like, that's a great question. And then I'm like, all right, well show me the software. And they're like, oh, we don't have software, but we've got these like 30, 11 by 17. And I'm like, oh, okay, cool. Well, tell me about your trade allies and your, you know, your sort of installer network. And they're just like, Well, I mean, you, we figured you were probably going to let us do that.
And I'm like, okay, like we need to get this all done in a year. And we freaking did it. Like we, somehow we did it and I almost killed myself doing it. So I felt like that was really my first startup experience. And that was a lot like building [00:14:00] energy technology too. I mean, so it was like I said, like solar first schools made me feel like I can do anything.
And then air care plus was like even more complicated because it was all being rolled out to small commercial customers. So like Arco, AMT McDonald's it was wireless data transmission over wifi, which was super new at the time. And really unreliable. The software programming was on Palm pilots.
Literally the data was being stored in an access database. I could do that. Like it was, we had a totally virtual team. This was 2004. So we re it was like the first year that GoTo meeting even started offering software. So if you think it's bad now, like it was so much worse than, and. We killed ourselves, but we did it like the program became very, very successful and very profitable.
You know, customer saw the value because they were spending so much on HVAC in California, especially these places that had, you know, like a McDonald's or an Arco AMTM where you've got hundreds of locations. And you can [00:15:00] aggregate those up in your portfolio. The mechanical contractors that were our trade allies loved it because it was this way to talk to their customers more regularly, rather than just having someone call them when something was broken.
You know, I think that's the benefit of like fault diagnostics. And the utilities loved it because often they don't have a really good way to talk to their commercial customers, especially small commercial. So I think for me, I burnt myself out, but I got really hooked on. Bringing new technology to commercial customers energy technologies in particular it's such an underserved market, but I really just love the mechanics of how, just the combination of like people's stuff, business stuff.
Tech stuff. And then like tree hugging, environmentalist stuff, all in one beautiful, complicated package, you know?
[00:15:52] James Dice: Yeah. I like that. Gray tree hugger techie.
[00:15:56] Tanya Barham: Tree-huggers
[00:15:58] James Dice: a Venn diagram [00:16:00] for buildings.
[00:16:03] Tanya Barham: Yeah. I think that should be in your next newsletter. I give you, I give you a creative comments, rights to that.
You don't
[00:16:10] James Dice: want to sit and draw that out. Yeah. So what's the status of that. How does
[00:16:17] Tanya Barham: that kick in look up? So they licensed that program. I mean, PECI has sold it to anybody who would buy it. I think, I mean, I know I'm on the record. People from PCI are going to come out of the woodwork and be like, Hey I was so burned out after that year.
I mean, I'm still in contact with so many of the people that worked in that program. It was a great experience, right. It was truly like a startup, but I was just like, whoa. So I started a wellness company, but that program just kept chugging along after that. And once you've done the hard work of building the product, they just kept selling it and selling it.
And because it was software, it had great margins. So, you know, if you look up Aircare plus you can still see it licensed white labeled all over the country. I think now it's owned by clear result because in 2014 [00:17:00] CLEAResult acquired PCs assets. And then yeah, I was running my wellness company.
And then in 2016, I sold that company and PCI asked me to come back to ECI 2.0 and work on their grid edge. And.
[00:17:11] James Dice: All right. So what brought you back into the buildings?
[00:17:15] Tanya Barham: Well, PCI can had been, I I'll admit, like I kept in touch with a lot of folks from PCI and Phil welfare, the executive director over the years, we'd always have lunch and Phil called me and was like, Hey. What are you doing right now? Would you want to help us do what you did with their care plus again, at PCI?
And I'm like, oh, side-eye, I'm like, I'll come on as a consultant. And then of course they just got me flipped. Like I got in there, we started working with the national labs. We were looking at micro grids. It was the early days of community choice aggregators. So we were looking at that trend. We started talking to like 94 different communities across the us about energy democracy and democratization of revenues from energy infrastructure investments, et cetera.
We started looking at microgrids virtual power plants, [00:18:00] like in 2016, this was considered very fringe. Like I would tell people that we were doing this and I'm like, what are you even talking about? And so now it makes me laugh when those same people are like, we're doing a virtual power plant and I'm like, Okay.
All right. Well, don't want to say,
[00:18:14] James Dice: Can you explain it for the buildings folks, the non-energy buildings, folks, what some of those terms mean? Because we've done, we've done episodes on virtual power plants. I don't know that I've done anything at all on community choice. Aggregators. Can you talk about what that means?
[00:18:29] Tanya Barham: Okay. Yeah. So, you know, there's this idea, most of us, most people were served by a utility are served by an incumbent investor owned utility. So a for-profit company that is granted a government regulated monopoly. So utilities got into this compact with regulators where they're basically allowed to make a profit on any capital investments that they make into serving the public electric.
And so if you're in a [00:19:00] community the utility can represent to you in many ways, like a vacuum that just takes money out of your community for what you pay on energy and gives it to shareholders completely outside of your community, which just as people were recovering from the wealth destruction that happened in the last recession.
So many of these communities lost revenue you know, people lost housing and wealth was destroyed and they were just like, wait, In the meantime, these utilities are allowed to make profit on us and we don't get any returns back into our community. Like that's messed up, man. So, they started using, and then also they didn't feel that utilities, there were many communities that we talked to that had passed at the time, a hundred percent ready for 100, 100% renewable energy commitments, which have since transitioned to, you know, people have realized that maybe it's not so much renewable energy as emissions reduction, you know, things that drive climate change.
And they were frustrated because these small communities had no way to push their incumbent utilities into de-carbonizing [00:20:00] their electrical fleets. So these communities both had to give their money away to utilities by law. Those utilities serve the whole state. So a lot of times a community with, you know, a few thousand people, even 20, 30,000 people to bounce, like whatever who cares like in town is a bigger customer than your community.
So we don't care. Or at least that's how they were perceived. I will say by the communities within those utilities, you have lovely human beings who, you know, don't think about it that way, but at least that was what the perception was. And, and, and in fact that's what it looks like. You know, they're trying to make a profit off of what they've already invested in, which is coal and gas.
So, Anyhow community choice aggregation in some states allows a municipality to aggregate all of the residential, small commercial loads in its territory and purchase energy on their behalf. So they now become a much larger customer. The poles and the wires are still often provided by that incumbent utility, but energy, which is probably the most profitable portion of a lot of utilities, sort of value stack could now be owned by that community.
And [00:21:00] it gave that community a way to keep the profits made on the sale of energy local. So we saw that brand and said, this is very interesting. You know, what does this tell us about how we can keep more economic activity local, whether it's through local jobs, whether it's through something like CCA, whether it's through capital projects that are funded by energy infrastructure dollars, what are the levers that communities have.
To either reduce energy burdens, so save money or generate wealth and keep the assets, keep some of the benefits from the assets that they're paying for local. Instead of paying for a portion of that asset that serves their community, the utility, getting a return on it. And then the distribution of that return goes to shareholders that might live in Paducah, Iowa.
You know, so that's CCA, which was fighting.
[00:21:50] James Dice: I got it. Can you also explain what a virtual pod
[00:21:53] Tanya Barham: plan is? Absolutely. So everybody knows what a power plant is. So virtual power plant, you know, [00:22:00] micro grids are getting so popular at the time. Because again, I think the real, when we think about what's the stimulus for a micro grid, it's not necessarily that people want to own utility infrastructure, but that's the valuable part, right?
That's the part that utilities are allowed to get a return on. So what people want is they want that economic benefit locally and resilience to, you know, they want a more resilient grid. And as we were seeing our traditional grid starting to fail, especially rural communities at the end of.
Infrastructure we're, you know, like, Hey man, we don't even have reliable power and we're paying, you know, sorry. So microgrid seemed cool, but there are a lot of problems with micro grids in terms of part of the reason the grid is so fascinating. Our big grid is that all that redundancy and all that interconnection that we have makes it so much more reliable.
And that really level of reliability is much harder to accomplish the smaller, you know, the smaller, the grid that you're working with, whether that's a building, et cetera. I think also at the time when this idea was [00:23:00] emerging, you didn't have as much smartness and you still don't in many ways. So in order to make good decisions about, you know, obviously electricity needs to be consumed at the moment that it's generating.
Because storage at least chemical storage or battery storage is just, I know there are going to be tons of battery people who are going to come after me after I say this, but it's just not that cost effective in many circumstances. So, you know, when you look at that on a micro grid, it was very difficult with just on the economics of a micro grid to make that pencil, even when you factor in reliability.
But now when you factor in also just the legal hurdles. So every state utility is regulated by a state regulatory commission, which all kind of set their own rules. And then there are different you know, additional sort of federal levels of regulation. And then each community has sort of franchises and charters that they've already signed with these utilities to allow them to operate.
And just the political complexity of doing a microgrid, as well as the technical complexity [00:24:00] made it a lot less appealing. So we started looking at virtual power plants because they were operating in Europe, using it infrastructure to treat a number of sort of physically disconnected devices as though they were a single device.
Now in practice, VPPs are a total nightmare. Like I'm not gonna lie. I w I had a brief stint as the virtual power plant it manager at Portland, general electric. And that's just like a hard job because you need to have far more standardization and sort of data and control than we currently have. But I think it's getting there and we're looking at, you know, people have been talking about this increasing needs per standards and interoperability at that level, you know, open ADR 20, 30 dot five and other standards, but virtual power plants basically allow a series of disconnected distributed.
Energy resources and sometimes not even distributed to act just like a generator does on the grid. So, you know, a generator will sort of look at the grid. It will try to sync itself with the grid. It'll participate in markets and these virtual [00:25:00] power plants that are aggregated behind some sort of it layer, which serves as a translator, let's say, or middleware between the grid operator and the devices themselves.
Now, there are plenty of problems with virtual power plants in practice, but it's a cool idea. And I think those problems are being worked out in places like Germany, Australia, and increasingly, obviously there's interest in the United States for how to use um, Instead of building a power plant. I mean, it's the same thing.
We did energy efficiency. Like we've got all this stuff deployed out there. We're deploying all the solar, all these batteries. Why not knit those resources together and use them more efficiently or in a more coordinated fashion. It's like grid 2.0, you know, so, and the
[00:25:42] James Dice: software that they use for VPPs sometimes it's called distributed energy resource management system.
Derms. Is
[00:25:48] Tanya Barham: that right? I, I tend to think of derms. I mean, and that's the thing I, when I was at PGE, it was so funny. Cause people would be like, look at this article about a VPP and I'm like me, like a [00:26:00] VPP, that's just like 250 batteries in an apartment building. So it was like, okay, cool. You know, VPP Durham's I'm like, it's almost like saying what is love.
It there's really no standard definition. It's sort of just feels like on one side, there are a bunch of things that either can flexibly consumer produce energy. And on the other side, There's a signal like a pricing signal or a capacity signal or something, and DPP and derms is essentially either that VPP is like the aggregation of things with some sort of an intelligence layer of the derms is to me, I think of it more as the utility side.
And I question whether derms is scalable again, and like I'm saying all these things, oh my God, I'm going to get so much hate, hate mail after this. But I questioned whether derms is really scalable in terms of, you know, when we were looking at advanced distribution management systems. So that's also what the sort of utility side AMS from an operational perspective, A, when [00:27:00] you have private individuals who own these distributed energy resources, are they really going to want you to have visibility and control into their devices?
Whether you can already figure that out or not? Because if you have AMI advanced metering infrastructure or, you know, real-time meters on the utility side, you probably are going to be able to figure out if you want it, if you really want it to which, by the way, I think they do, but are they capable of doing.
Not quite sure. If you have AMI, you should be able to, you'd be able to figure out what somebody was doing probably anyway. If you were to apply AI to that, now that said having been at a utility as well. I do know that that 15 minute interval data is just moldering and a massive database somewhere, and then they average it all monthly and send you a bill.
And I'm like, well, that was a good use of real-time data.
But in theory, if they wanted to there's they could, you know, see what was going on. That said, I just, you know, being behind the scenes in terms of what's really necessary. And I think the biggest issue is just, you [00:28:00] know, all data scientists will feel this in their bones. It's just that these are not data-driven organizations.
You know, a lot of times like their GIS data is totally garbage. So, you know, GIS, you want to use a data-driven system for your germs or your AVMs GIS says that the transformer is here and it's really like 200 miles to the west. That's not, that's not even like a hypothetical situation. That's a very common situation for a dirty data.
And so part of it, you know, I think part of it, it's good that we're talking about AMS and derms, because if you bring that stuff to light, the only way things get better is if you see them happening. But I just, what I really experienced the utilities and why I went to the building side. So now, like what we've spent, you know, half an hour talking and I'm just like getting to this, but on the utility side, what I really saw was I'm like, I think this is the, you know, what utilities are good at is saying like, here's what we need for grid stability.
And they can come up with a price or a value for the [00:29:00] flexibility to the grid. And if they could issue that as a price, I really don't think that they should be the ones managing on behalf of customers. The customers are gonna want it B they're not good at handling all that data in a way that makes sense for customers.
And just see it's too massive. When utility started, they were micro grids and they were crappy. Like if you not the Pearl street, well, Pearl street was probably pretty crappy, but like, if you look at the first micro grid outside of Pearl street, I think it was in Appleton Wisconsin. And it was like a hydro and I drove just, you know, you couldn't keep the frequency stable enough.
So the thing was just like, it was like a joke, you know, it was for like two rich people in Appleton Wisconsin. And like, sometimes the lights would be on and sometimes they wouldn't and then he'd blow up the lights. And I mean, these grits were terrible. And I just think that we're more accustomed to a more stable type of electricity.
And, but that is how you. At that level one grid at a [00:30:00] time of what I saw at the utilities, this, these are massive organizations managing a complex product. And you know, when I was doing DPP, I kind of had to talk to everybody. I'm talking to people in programs, I'm talking to transmission distribution, I'm talking to our strategic asset management team and the GIS team I'm talking to the operators and what they want.
And what I realized is that often you've got these really siloed teams and like each team has tried to solve the this disruption problem from distributed energy resources using their own discipline, whatever that might be. And because it's a multidisciplinary problem. Each solution gets like 80% of the way there.
And none of them will talk to each other or relinquish control. And I almost felt like you need a microgrid. You need to pluck one person from T&D one person for data science, one person from this go down to the local community level or the building level or the block level, put one person from each of those disciplines in and create their own little company.
Thats's how the innovation is going to happen. So I really, I saw that first. And then later when I started talking to customers, I'm like, if you could [00:31:00] create a VPP from the bottom up first All you need. The utility to do then is to sell you a real, send you a realtime price that tells you what they need.
And as long as you can respond to that, while also solving the customer's problem. Well, now you've got a growing concern and this is how to do something innovative because I just think that utilities are so stuck and the problem is so massive. It's so overwhelming at that scale to try to solve these problems.
It's just like, it's good to have these incubators where these ideas are getting cooked up and we can try them before, you know, once you start piloting these programs, I mean, it's just such, it's a huge cost and it's it's public money, you know, it's rate payer money. So, yeah, that's my, my philosophy on derms and VPP.
I just think that communities are, that's why I got it's called a community energy labs. That's why PCI was very focused on communities. Community is maybe the biggest possible scale. Maybe the block, maybe the building are the sort of best, you know, the most atomized place to really look at how to solve.
Problems inherent in the [00:32:00] energy transition, but I think VPP is in the red is moving in the right direction, you know?
[00:32:04] James Dice: Got it. Okay. And so then you're a PCI. And then can you talk about the transition from PCI to starting community energy labs?
[00:32:12] Tanya Barham: Yeah, I mean, it was a, it was a funky little transition. We so between 2016 and 20 19 20 16, it was just sorta pec.
I was like, go out there and, you know, figure out something cool to do with community energy democracy. You know? So, like I said, I talked to the lab, national labs, talk to the universities microgrid researchers, talk to the communities and lots of them and then invested in some technology companies that were innovating in the space just to sort of see what they were learning.
And then we formed the thesis where like here are four areas where there are gaps. And what I found was, you know, sometimes it's, it's. Harder to have money and find a problem to solve than it is to have a solution to a problem and find money. And actually now that I've been on both sides of the table, that's absolutely true.
Like it's way easier to be [00:33:00] an entrepreneur who knows that there is a problem for sure. And has an idea about how to solve it. And then to articulate that to other people and have them be like, good idea. Here's my money than it is to start out with like millions of dollars cash. I'd be like, whoa, what problems should we solve?
So we, we developed, you know, a lot, like any incubator. We developed a thesis on four problems, four gaps that we saw in the market. And because we were a nonprofit you know, sort of a revenue based nonprofit at the time, it really spanned the gamut. Like one was like a pure non-profit play, just doing Policy work on carbon.
Another was technical advising for communities that were trying to either municipalize or they were trying to create microgrids or other virtual power plants, or ways to decarbonize faster than what their utility would allow them to do and helping them. So it was like a project. It was like a virtual power plant project.
Advising and consulting professional services and project development, then there was a controls. So [00:34:00] a supervisory controls idea that we had called leap and the last one was some kind of market transformation consulting. So we put about 150,000 on each of those ideas over the course of a year.
And what I said to the board was whatever ideas take off, those are the ones we're going to double down on and turn into the next generation of PCI. I think the board was just like, we just want to work on Oregon climate policy and that's all we want to do. And so I said look, we've got like, you know, 30 people in our ecosystem.
We've got all these contracts, you know, I'll take the people and the intellectual property and the contracts, if you guys want to just keep the money that we have in the bank and work on the policy stuff. And I, you know, and some of the board members were pretty new too. So they were just kinda like, let us figure it all out first.
And so I just sort of felt like it wasn't really gonna happen. You know, we had been negotiated that was 2019. So I took this job. I took this job at Portland, general electric, and I think just inside of a utility, you can probably already get the sense for me. Like a, not like [00:35:00] an, I love working with utilities on the outside.
It's a lot of hierarchy I'll be inside. And like I said, I think that the scope of the problem is too big on the inside, but on the outside you could just tack a little pieces. Right. So I went to Portland, general electric in the meantime, and then, you know, I think just PCI finally got their feet underneath them.
They realized they just wanted to do policy. And they came back to me and said, Hey, we're ready to talk about transferring this intellectual property to you. It was a year later, but that was the, you know, that was the Genesis of community energy labs. Yeah.
[00:35:30] James Dice: So catch us up on from, from then to now. It sounds like what I know about you guys is you. Doing all these education events and you've been growing your customer base, but we've also been fundraising.
So can you talk about the road to get here from, since you started the company?
[00:35:48] Tanya Barham: Yeah. Well, wow. Where to even start, I mean, you know, listen, I having managed like VPPs or energy efficiency programs or technology programs, I've [00:36:00] sort of seen it all when it comes to energy management pitches. And I think a lot of investors have to, there are a lot of companies out there that do great stuff.
Where I'm happy to see that they're raising lots of money now because they were probably a little too early onto the scene, you know, but communities worldwide now are pushing buildings to convert to electricity from, you know, gas heating and cooling. And in the meantime, they want them to use half as much electricity.
And by the way, consume power when renewables are making it. So, you know, in addition to passing these tough building performance laws, and I think you probably just saw that the white house is working with 30 communities to try to increase those buildings standards. Nationwide, there are more than a hundred million Americans and half of us utilities that have also introduced time of use rates and demand charges.
That can be like four to 10 times more costly and complicated for, especially. Commercial customers to manage. So I got really interested in talking to those commercial customers on how they were dealing with that. And then just other, you know, I'm always really curious about like, well, [00:37:00] how do you just run your organization?
Like, tell me about that. So we talked to like in 2020, then I was, you know, I was planning to do this controls spinoff, or the policy thing for PCI. I knew I couldn't do it all because I didn't have all the money PCI had and 30 people. But I started talking to anybody who would talk to me. So schools, cities ESCOs so energy service companies like utilities, and just talking to them about what's happening to your organization, either one, you know, kind of generally saying what either one of these types of projects is product development or whatever work.
And one thing that just kept coming up was that these. Like municipalities and school districts. We're usually the first ones to embrace these all electric building codes and that they would then mandate that their own facilities meet these objectives. Now, at the same time, you have these processes that are [00:38:00] really put there to make good decisions with public money.
I know people get really annoyed by public procurement processes, but it's really there to make sure that as taxpayers we're getting the best deal for our money, however, it creates the situation where, you know, more than half of us schools need HVAC upgrades. For example, Why don't they do it? You know, you've got kids in there and we found her in.
COVID like, oh, gross. You know, like, what does our indoor air quality look like? There? All these reasons we should be updating HVAC. Well, why is it happening? Why? Because hearing your, you know, from interview after interview, after interview is like, okay, I might be spending $3 million a year on energy.
Right. But if I want like building automation, that's, you know, an upgrades that are gonna help me improve my air quality and my energy efficiency. I'm going to have to do a big retrofit. It's going to cost millions of dollars upfront. It requires that I pass a bond measure, which is like, especially in rural and purple communities, like increasingly hard to pass.
But even if you're in an urban community, you're going to trigger a [00:39:00] purchasing the procurement process, which requires that you have at least three other bids. It goes through multiple different states. It's like, it's a pain in the ass for vendors. And it's actually a pain in the ass for the customer to right.
And then by the way, that disruptive install is going to, like, it's going to take up your, your, your time, your limited staff time and your buildings, ability to provide services to the public. Like a lot of schools that are title one schools, they're providing maybe the only warm meals that these kids are getting that day.
So I started to see like, whoa, like forcing everything into the CapEx budget for particularly Publix municipals and people with like long procurement processes is really, really. It's the reason that they have such a huge deferred maintenance backlog, right? And so I started looking at how could these controls be used as a way to help them meet some of these carbon and electricity objectives, but that really is going to pay for itself very, very [00:40:00] quickly and will be easy to purchase through, say an O and M budget, which is also a very small budget, but we'll have a quick ROI and payback time so that they're not going to have to like justify it to a million different people.
And, you know, so that was really what led me to wanting to do a controls technology. So an IOT and software as a service technology that helps reduce operator complexity. For energy management. It has a very, very quick one day install, time as a very low price. And then it can be paid for either out of that ONM budget or through cap ex if there is already a project on the slate.
But I think know the important thing that I really saw was, oh my God, I love building technology and software. I love working in this market where commercial customers are our customers, but then we're also working with mechanical contractors, system integrators and utilities. Like I'm just like Erica.
Plus I love working with schools because they use the data and they really want to educate and they really want to learn about why. And so they're great teachers to the public about new technology as well as users. And also there's just like this public benefit that I [00:41:00] love, like the nation's K through 12 school districts spend more than 6 billion annually on energy, like more than they spend on computers and textbooks combined.
And a lot of the research shows that if they just had decent controls, as much as 30% of their total energy is totally inefficiently and unnecessarily used. Like if they could manage that in a way that worked for their operation and wasn't cumbersome and time-consuming, there'd be so much benefit to those kids.
You know, they could put that back into improving their physical plant and their air quality. And so, yeah, that just got me, like, as you can see, it just got me super fired up.
[00:41:32] James Dice: So can you talk about the, the actual, like, you're a big fan of our white paper, small buildings on small building controls, obviously it's while you're working on schools, like you just said, are some of those smaller buildings that have less resources.
Can you talk about some of the research you've done and like what that market needs and how you've kind of positioned the product to be kind of what they need.
[00:41:55] Tanya Barham: A hundred percent by the way, I read that from start to finish, it was [00:42:00] well-written and very, very, very interesting. I think the problem is right now, if I had to summarize it to just one thing, I could show you 20 images of every building control software or fault diagnostic software out there.
And it's exactly the same story, whether it's a small IOT or a big like Medisis it's a product designed by college-educated building engineers For college educated building engineers who really think that there's somebody in a button-down Oxford in an air conditioned office doing nothing but driving those controls.
And that's maybe why less than 10% of the commercial building market actually uses building automation. In most of the commercial market, the people who are running buildings are not college engineers. They have many responsibilities. The solutions available are just, they're too expensive. They're too complex.
They create nearly as many problems as they solve. I mean, I literally have gone to schools where that automation system must be behind a local firewall. So it's sitting [00:43:00] on like a 20 year old desktop computer covered in dust, in a maintenance closet. This person is in a school, two miles away. They get an alarm and they're supposed to drive over there, sit in the maintenance closet and fix it.
And a lot of times it's just addressing comfort issues, right. And so then they'll override the system and it's almost as good as not having it at all. So, you know, I, 45% of end users have a high school diploma and no more than 20% are English as a second language speakers. I think the main thing to learn is to really think about what the customer's life is like.
And what are the salient things that you can do to help them save time and have the biggest impact on the things that drive their behavior? You know? Got it.
[00:43:45] James Dice: Okay. So how does your product work? I know there's model predictive control involved, but can you talk about just how, how, what, what it does?
[00:43:54] Tanya Barham: Yeah.
So your listeners probably know a lot about model predictive control, basically building a model [00:44:00] of the thermal dynamics of a building and its energy use in order to optimize the control of that building and the operational sequences to better balance occupant, comfort, energy use, and other building operations objectives.
Model predictive control is super awesome because you can optimize for multiple requirements in the building. However, to get to model predictive control, you have to build a model that can require gathering anywhere from 400 to a thousand inputs per building. So you're looking at maybe all told a 10 to $50,000 cost per building.
So that's kind of a lot, unless you've got a huge savings for that. And so it's a big upfront cost and it's very time consuming. So we have a department of energy funded grant that looks at scraping that what we're basically doing is, you know, we did it the baseline way. So we collected all of the inputs that an energy modeler would need to model.
I think we, now we have 14, [00:45:00] maybe 20, somewhere between 14 and 24 public K through 12 buildings of various sizes in a different climate zones. And we collected all the data from one of their books. The regular way. And then we've done a bunch of collection using automation techniques, estimation techniques in order to build just a very low order use that metadata to build a very low order model much more quickly, and then use black box reinforcement learning machine learning techniques on the backend to correct for some of the things that those low order models usually get wrong, like disturbances.
So like infiltration. So what that does is it allows us to do better than nothing control. Now this might not be like the most perfectly tuned building by. Much better than the amount of control that the building has right now with much less input and costs to operators. And so that's really, our innovation is driving down the collection costs [00:46:00] and the model set up time, as well as using machine learning techniques to correct some of the problems with low order models, using time series data through either API, APIs, thermostats, or other, other sources of data in the building or the.
[00:46:13] James Dice: Hey guys, just another quick note from our sponsor Nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.
This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview fascinating.
So that really helps me understand how the product kind of creates a model and then it helps control the building better. Can you talk about what types of buildings you're then applying this [00:47:00] model?
What are the attributes of those types of.
[00:47:03] Tanya Barham: Yeah, why don't I talk, if you don't mind a little bit about what is the problem or the pain point that we solve, because it may not be so specific. There are some specific building types that we're really starting out with in our go to market. But I'll tell you a little bit about the problem and what kind of building operators it really will attach to.
So if you think about. You know, I've been in the energy industry for 20 years now started out at power plants, you know, moved on to distributed solar rooftop maintenance software, and energy conservation. And now, you know, kind of on this weird wacky wild side of sort of, Building controls, building controls the interface with the grid and time of use prices.
So why now? Well, if you look at the rate of the ramp rate on the number of climate laws that are being adopted or commitments made by states you know, some of the most populous cities in the United States 65 electric [00:48:00] utilities. You're seeing this world where regulators and utilities are pushing building operators to address greenhouse gas, emissions, or energy surpluses, or the duck curve there.
And they're passing, you know, tough building codes on one hand. So if you look at like all electric building code for commercial and Washington or HB 1257 in Washington, more and more states are considering, you know, adopting codes that push for electrification. And in addition, you know, governments are looking at the, the Biden administration just said, Hey, let's look at local building codes and see how we can get these local municipalities to adopt more aggressive energy codes for their building performance.
So more than a hundred million Americans, and more than half of us utilities have also entered. He knows. Well, that's on the building side, on the utility side, these time of use rates and demand charges, which mostly are going to impact customers that have a peak coincidence demand of about a hundred KW.
So that's not going to be like a really tiny customer unless they happen to have an aggregation [00:49:00] of a bunch of, you know, small little. But those are that's somebody who is really Peaky loads. And increasingly as you electrify fleet, and as you electrify heating and cooling, you might see some of those higher peaks.
So let's say a hundred KW. So if you, if you sort of jump over that threshold, you may now be facing demand charges in addition to some very complex commercial rates. So I would say that those are our customers. They're people who are facing more complexity in their building operations, because they are going to electrify.
Either because of their own commitments their boards have made, or their operators have made as well as changing commitments from their municipalities in terms of how a building codes and building operations, as well as new utility tariffs. Like you're seeing in places like Illinois Ohio, California, all over.
In fact, the IPC recommends that utilities worldwide adopt more time varying rates, as one means to address. Climate change. So [00:50:00] when you take a look at, so we serve primarily K-12 right now, but also municipals. Here's why, you know, Kim, let's say this woman is Kim, she's a superintendent for a K through 12 school district in California.
They're spending $3 million per year on energy, even with solar panels everywhere. Her utility just changed their prices. So Kim has to manage time of use rates. And even though she has eliminated a lot of her energy costs with. She still has to pay demand charges. And they're significant. There are anywhere from 30 to 80% of her bill, even in the Pacific Northwest, which has very cheap energy.
Even if you don't have solar, it's still about 10% of a district's energy bill and districts spend over $6 billion nationwide on energy, more than they spend on computers and books. So she could be looking at a 40% increase in already one of her largest bills. And what's more her school board.
Palliative care mandated that their facilities be carbon neutral by let's say 2030. So what are her options? Well, if she goes to the building automation route, most building [00:51:00] automation options are really costly. They're really complex. They're typically bundled with multimillion dollar upgrades. Kim has to pass a bond measure or navigate this lengthy procurement process to pay for the upgrades.
Those actions. Installs disruptor ability to use that space, to feed kids two hot meals a day and provide services to the public. And then she's got this really tiny scrappy crew. It could be janitors that are doing the routine maintenance on that equipment. And mostly they're running around, putting out fires like sweeping up vomit or raking mulch or fixing broken old HVAC.
And they don't have time to sit down and drive this building automation. So what most of these folks do is they just skip automation. Kim is literally tracking their energy costs in a monthly spreadsheet. I loved, I re posted your article so many times about death to spreadsheets. This is Kim. This is what they're doing.
They're managing their facility profile, using the spreadsheet. And then they send, you know, this crew out to manually program hundreds of devices and respond to comfort calls. Even if they have a wireless interface for that. They're still going to have to program every single [00:52:00] zone. Right. And you don't know if that programming is actually going to have an impact.
So let's say you're trying to avoid the NAND charges and you cycle one quarter of your machines on at one time, another quarter at another time, another quarter at another time. You're not going to find out if it worked until next month's bill. And in the meantime, when you do that, it's fairly arbitrary.
You're going to end up having comfort calls. So, you know, it's just a, it's a nightmare for these folks. And so it's probably why less than 10% of commercial building market actually uses automation. The solutions are too expensive. They're too complex. And they create nearly as many problems as they solve.
So we wanted to, you know, we applied to the department of energy and other folks too. Come up with something far simpler. A lot of people offer IOT and software as a service control platforms, but we really wanted to put our smarts into those machine learning models that I talked to you about that would orchestrate that equipment in real time, in a way that balances two main objectives, one, some kind of a real time signal.
So that could be carbon. That can be one of [00:53:00] these real-time or time of use prices will be starting a real-time rates, pilot. Southern California next month with several schools. And then on the other side, you have occupant comfort and these algorithms are looking at using the information from that IOT to balance those two objectives so that you're not constantly getting overrides in response to this real time or time varying rate.
Or in response to managing in order to reduce demand charges that might come from electrification. So I talked a little bit about, you know, how that works technically, but how that works from a business perspective is it's just, you know, I mean, it's just like your cell phone or your cable modem. We either connect with the buyer directly.
We're referred through a utility program or a channel partner. The customer chooses to install one of three packages based on the underlying systems in their building and the building characteristics. They might have a wireless thermostats that we can communicate with through an API. They might already have a building automation system that speaks back net or they might require those sensors and that gateway [00:54:00] device either way, there's a.
Costs to implement each both in terms of labor and the off the shelf equipment, but that typical install, whether it's trying to find all the points on there, you know, BAS and sorting through that bowl of spaghetti or whether it's connecting through their API. It's you know, costs around $10,000 for a typical one-time one day installed set up at that site.
So once installed, we then charge a fee to monitor, predict, and control energy using the machine learning algorithms. And what we're seeing is with an average savings of five to 25%, that school would pay back its investment in two to four months pre COVID and under a year in COVID conditions. So, you know, our price point was.
We developed it specifically for a segment of buyers, like municipals who have difficulty doing these big omnibus type solutions quickly, but they need a quick response to some of these performance goals. That are coming online for them. So we made sure that we were able to, [00:55:00] you know, address their need for a very low price point for a budget that could fit within a really lean maintenance and operations organization and for an interface and product that we're really eliminating a lot of the hassle from these very leanly staff maintenance operations.
[00:55:16] James Dice: Got it. Got it. So what are some of the ways that you have looked at the product from that simple lens? Like, do you have an example of maybe something that you changed from the BAS world or changed from like the IOT world or something that like made it, made the implementation of this for that janitor type of person?
[00:55:39] Tanya Barham: Simpler. Yeah, that's a great question. I'm kind of amazed at how few products out there seem to have been co-developed with the actual end users and customers. So these are typically multi-stakeholder organizations before we ever wrote a line of code. We spent more [00:56:00] than 60 hours with one-on-one and in groups with maintenance and operations directors, energy managers, end users like HVAC techs and facilities, managers control professionals who would be using the equipment to learn.
About what their lives were like. And we had multiple stages of that. So some of these were paid for, by, for example, the electric power research Institute, somebody see some of understanding how to structure those in-depth user experience. Workshops came from my experience working both on the building side when I did solar PV and rooftop unit software.
And on the utility side, managing virtual power. The demand response programs. So knowing, you know, that those two sides of the bridge often don't meet very comfortably. We set up several questions, a series of questions. So a series of workshops about 12 hours worth of workshops, six, two hour workshops.
And we worked through those with end users and, and, you know, with input from the utilities too, which were basically. Walking them through the [00:57:00] energy transition, how that interacts with HVAC or building technologies, what they know about how that interacts with prices and then just what drives your.
Daily routine, like your operational reality. And what you saw was that the way that these utility programs are built and these prices are built, it, they assume that this person has the cap capacity to create controls, to meet even the simple objective, like critical peak pricing. And they do not. Or if they have a BAS, there are certain things around the BAS for example, like security considerations, where typically these are set up during a big.
Procurement. Right. So when they do a big HVAC upgrade, they'll put in the BAS at the same time, they set it up and then maybe they never changed the programming again or tune it. And so you have these very rigid central controls. And what we found is there were a lot of issues with occupants. Teachers' unions.
And these rigid controls really became like a [00:58:00] millstone around the neck of very tightly staffed maintenance organizations. So we then started working through like, okay, here are their nightmare scenarios there. The things that happened to them every day, I mean, comfort calls were a big one. And then of course, demand charges were a big one.
And just finding a way to have the capacity to do both. And we sort of working through the interfaces, some mock-ups and saying, well, what if we did this? What if we did that? Would this be easier? Would that be easier? And a lot of times what we saw was that actually a couple of things that were really transformational in how we built our system are using data in a very smart way.
So on the backend, when we do our data collection, and then when we start to Hoover up all the time series data, it's in a brick compliant database. And so brick uses graph DB, and I'm not, you know, the technical lead at my company, but as best as I can understand it, the cool thing about graph DB is it allows you to see relationships between different elements within the building.
So we started to find some [00:59:00] very time-saving ways to query our data. Where you could immediately see relationships between certain types of data, characteristics, or building characteristics and outcomes. And so things like that allow us to continue to simplify and tune the interfaces so that we're giving more default values to users and we're serving up information much more quickly rather than them having to search for it.
We also, you know, because we don't have that sunk cost that. Legacy building automation has. I mean, that's just an unfair advantage. I mean, ask my space, ask Friendster, you know, sometimes you lose because you're too early or you have a lot of sunk costs is that innovator's dilemma. And you know, when we go out and we see even the new, like Johnson, Medicis, you know, some of the big brands out there, you know, they've made some innovations, but smaller customers, you know what I mean?
They're not going to. Dump it all. And start again. I mean, I think we saw like Honeywell has put out a, a dashboard for small to mid-size customers, but you [01:00:00] know, a lot of them are really coming from this world of just focusing on all the things that need to be done in the building. And what we found is like full diagnostics and alarming.
Yeah. There, when you start to put sensors and you start to measure and look at stuff that has never been measured and looked at before. I mean, everything's broken in these schools. I don't know what to tell you, you know? And so we kind of have had to say like, well, we're focusing on the future. We're focusing on the newer equipment, the electric, the all electric stuff, when we're solving a problem that will be bigger and bigger in the future.
As many of these schools get funding to upgrade this stuff, because otherwise, you know, you're just like this unit is not working. They actually don't have time to fix that unit. So you do have to ask yourself within the operational constraints of the users is fault diagnostics useful? No, they're not going to respond to that.
They can barely keep up with their PMs. They run stuff to failure and then they replace it. They run it until it breaks. And then, I mean, then I know that that's not even. Well,
[01:00:55] James Dice: this is why I like to say that like the buildings industry is not this homogenous blob, [01:01:00] right? There are these different types of buildings because I think fault diagnostics, as we've talked about ad nauseum on this podcast is useful for a certain person that can use the fault results.
Right. Yep. If
[01:01:12] Tanya Barham: you have, if you have a professional building engineer and facilities team that is capable of putting in work orders, tracking work orders, planning, and scheduling, and following preventative and predictive maintenance best practices, you should be doing fall diagnostic. A hundred percent, if you have a chronically underfunded, and if you can recover those costs in your physical plant, through increasing rents or, you know, refinancing because you're a private entity and that's available to you then.
Great. If your only option. Is to fund this through a bond measure or this huge complex public procurement process, you know, in municipals like operations and maintenance is not like the marquee item to spend money on. So I think there's gotta be yet. We've picked a [01:02:00] segment world where like they have some very specific needs.
And so, you know, we really built our tech stack. We don't have that legacy investment. We could really reinvent. This particular group and what we saw too, was we're like, how come people can't do this wirelessly, you know, everybody loves Pelican because they can just access that web interface. Right.
So let's make it wireless. Let's make powerful search. I can go to Ikea on my phone and buy and search all this stuff. And so we've got this backend database that can kind of atomize all the pieces they need and they can, instead of navigating through some like 10 levels of waterfalls, Menus on a PC in a dusty broom closet, not a joke, not an exaggeration.
Why not have something that they can access securely on their phone and navigate using queries. And that mimics much more what they're used to an e-commerce. And I think part of that is just, you know, we were able to sort of deconstruct and reinvent the whole thing because we didn't have a big investment in some kind of [01:03:00] technology stack.
[01:03:02] James Dice: Yeah. Can you talk about the, is my, one of my last questions product. The procurement process. So earlier in the conversation, you sort of unpacked what procurement, like why procurement is unique in this space? How have you made the procurement of this product? Simple for an organization like this? So you mentioned going out for bonds and things like that.
[01:03:24] Tanya Barham: Well, that is, that's a, that's a big issue. We have so far avoided that. I mean, we're also small and we don't have, you know, I mean, one of our partners is Schneider and we're working with them on a micro grid with a school district in a utility up in Washington. And, you know, it's really tough for them to want to roll out of bed for less than a few million bucks in the.
Yeah, so we don't care. We'll go in and sell something that we get a $2,000 a year software subscription on. So I think there's just, you know, right off the bat, we make it easier because like a lot of startups, you know, initially [01:04:00] were willing to take less to do the same thing. And, you know, we've found a way to build a stack that will still give us a decent enough.
You know, in a ways that typically you do, you have a freemium model you're on a basic model. That's pretty brass tacks. It solves one pretty simple problem. And if people want to get fancier, they have to buy a support package, et cetera. And we'll see, you know what I mean? We're not at the scale yet where we'll see how sustainable that is and whether we need to flex our model.
I think. Startups do, but so far we've seen that there are buyers that are willing to pay for that. Like just save our texts the 20% of time that they're spending, responding to comfort calls, you know, or fits in with our BAS. And we're just like, okay, well, we've got to keep that cheap. So we think our low price point.
Right now is very attractive. Obviously the fact that we're willing to have conversations that can come out of just that maintenance and operations budget, that's already been approved. Like we can fit within that. We're not so big that we're going to blow up an already very small budget. And also I [01:05:00] think the short payback time is really critical.
[01:05:02] James Dice: Okay. So you guys know this market really well. You have a product I'm assuming you're fundraising. How's the fundraising process going?
[01:05:11] Tanya Barham: Yeah, well, we were pretty good about funding. Most of our product development using non-dilutive. So government grants, contracts, and pilots, but that comes with its own risks.
And we really saw the infrastructure bill came and wanted to like fundraise fast so we could hire up and capture that opportunity and not just test our technology, but our go-to-market strategy. So we're almost done. The market's pretty hot right now, which I think worked in our favor. But you know, I will say that this is. Sticky weird place. Like a lot of people are scared of municipals. They're scared of buildings. They're scared of the tech and it's this weird combination of like, you're either a prop tech person or you're an energy person, but you're rarely both.
And then we also pick this segment that everybody just hates, but we love them. So government, university, and schools, we, we love them. Gus give Gus a big hug. But yeah, it's, it [01:06:00] was, I think it's a space that people have a lot of scar tissue in, so going okay. But I would say like, I can't wait to prove the people that said no wrong.
[01:06:10] James Dice: Love it love it. Founder's attitude Very cool. I love hearing this journey from all these different, different perspectives, and now you're in the buildings into the right customer for you.
[01:06:25] Tanya Barham: This is awesome. Like I love working with building operators, right?
Yeah. Isn't it such
[01:06:29] James Dice: a fascinating problem to solve? It's amazing problem to solve
let's finish with carve-outs. I'll go first. So my carve-out is I just saw the movie dune and this is going to bring out this is going to bring out the nerds in the audience, but I've read dude.
And it was just the first time I saw the movie and I could not recommend it enough. I loved it. I thought they made every part that I loved about the book. They put it into the movie, which you got to love when that happens. And I cannot wait for like a year and a [01:07:00] half from now. And the
[01:07:01] Tanya Barham: second part is going to come here.
There's another one coming. Well, I mean the books, like what? 700 pages, there'll be 10 more of these at least. Yeah. So
[01:07:07] James Dice: the movie is just the first half of the first book. So I highly recommend those of you
[01:07:12] Tanya Barham: that hadn't seen. And now I need to see that I need to see it. Yeah. Best quote from the movie. Is it a quotable kind of a movie or more just beautiful movie? Oh,
[01:07:21] James Dice: I think the, this doesn't in the book, I don't know why they put it in the movie, but not in the book, but literally the first scene is, and this is going to expose my nerdery, but voice sidecar is like the, you know, the, the emperors warriors, the emperor soldiers, they read this thing at the beginning.
It's like dreams are messages from the deep and that quote is just so, so, so good. I love it so much. So I've been thinking about it all week, actually dreams or messages from the.
[01:07:55] Tanya Barham: I want to say this in a spot where you can edit it out if you want. But [01:08:00] speaking of that, I'm like, there's a side of James dice.
I learned about it as I was researching for this. I read your poem tenderness online. I'm like, oh, James was, James was practicing a little Buddhism, I think. Yeah, it was on your blog. So anyway after having read that, I'm not surprised that you just picked that quote. Inspiration from the movie,
[01:08:20] James Dice: but the other, the other good co-fund movie is at the end, but I won't spoil it.
So I didn't spoil it. The first quote, what's your carve out?
[01:08:29] Tanya Barham: Oh, what's my out. Oh my gosh. Well, I had a different one cause I had just, like I said, watch the big short the other night. And that was really interesting. But now that you're talking about doing like the blade. The original and the remake or two of my favorite movies.
And, you know, I know a lot of people couldn't get into this, like very French, very like, artsy-fartsy I loved it. Like second blade runner. I was a hundred percent all in on it. I found it really good. So
[01:08:56] James Dice: we're going to go down a deep rabbit hole here. I didn't mean to do this, but [01:09:00] that's and director there they're the same director, Dennis Illinois, but yeah.
And you can tell when you watch it,
[01:09:05] Tanya Barham: for sure. That was kind of the sense that I got when I saw the previous. And as you were talking about it, I'm like, I wonder if it's the same director as blade runner, because I loved that.
[01:09:13] James Dice: And if you love blade runner and you love doing, you have to watch his other movie, which is arrival, which is like my.
[01:09:23] Tanya Barham: I will watch that. Hey, have you watched delicatessen? That's one of my favorite movies of all time. It's so cute. Okay. You got to watch it.
[01:09:31] James Dice: Dune, arrival and blade runner 2049 or yeah, those are amazing, amazing movies. Thank you for sharing
[01:09:37] Tanya Barham: that one. Oh, totally. Thanks James.
[01:09:44] James Dice: All right friends, thanks for listening to this episode of the Nexus Podcast. For more episodes like this and to get the weekly Nexus Newsletter, which by the way, readers have said is the best way to stay up to date on the future of the smart building industry, please subscribe at nexuslabs.online.[01:10:00] You can find the show notes for this conversation there as well. Have a great day.
“The reason why less than 10% of the commercial building market actually use building automation can be summarized by just one factor. I could show you 20 images of every building control software or fault diagnostic software out there and it's exactly the same story.
Whether it's a small IOT or big medicine, it's a product designed by college-educated building engineering who really think that there's somebody in a button-down Oxford in an air conditioned office doing nothing but driving those controls."
—Tanya Barham
Welcome to Nexus, a newsletter and podcast for smart people applying smart building technology—hosted by James Dice. If you’re new to Nexus, you might want to start here.
The Nexus podcast (Apple | Spotify | YouTube | Other apps) is our chance to explore and learn with the brightest in our industry—together. The project is directly funded by listeners like you who have joined the Nexus Pro membership community.
You can join Nexus Pro to get a weekly-ish deep dive, access to the Nexus Vendor Landscape, and invites to exclusive events with a community of smart buildings nerds.
Episode 105 is a conversation with Tanya Barham, founder of Community Energy Labs, a startup out of Portland.
If you like smart building founder stories, this one is for you. Tanya takes us through the many stops on her career journey from the utility industry, intro wellness, back to utilities, and now into buildings.
Community Energy Labs sits at the intersection of a lot of topics we’ve covered on the show before: advanced supervisory controls, grid-interactive buildings, and small buildings. We’ll throw in public entities for good measure.
Tanya’s a ball of energy and this conversation gave me a lot of motivation to keep pushing for change in our industry. We can do it together.
Without further ado, please enjoy Nexus Podcast episode 95.
You can find Tanya on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
[00:00:03] James Dice: hello friends, welcome to the nexus podcast. I'm your host James dice each week. I fire questions that the leaders of the smart buildings industry to try to figure out where we're headed and how we can get there faster without all the marketing fluff. I'm pushing my learning to the limit. And I'm so glad to have you here following along.
[00:00:31] James Dice: This week's podcast is a conversation with Tanya Barra, founder of community energy labs, but startup out of Portland. If you'd like smart building founder stories, this one's definitely for you. Tonya takes us through the mini stops on our career journey from the utility industry. Into the wellness industry back to utilities and now into buildings, community energy labs sits at the intersection of a lot of topics we've covered on the show before.
Advanced supervisor controls, grid, interactive buildings and the [00:01:00] small buildings, smart market. We'll throw in public entities for good measure. Those are their own unique animal. Tanya is a ball of energy. And this conversation gave me a lot of motivation to keep pushing for change in our industry because we can do it together. So without further ado, please enjoy the nexus podcast with Tanya Barra. Hello, Tonya. Welcome to the podcast. Can you introduce yourself?
[00:01:22] Tanya Barham: Hi James. I'd be happy to introduce myself. My name is Tanya Beram. I'm the CEO of community energy labs. And we say that in the same way that Tesla galvanized consumers around a vision for clean all electric self-driving cars, our technology enables clean all electric self-driving buildings.
So CEL has built a software as a service control platform. That's powered by machine learning for building operators who find it complex, frustrating, and very expensive to meet new building energy goals and time of use utility prices.
[00:01:56] James Dice: Cool. Well, I want to get into the [00:02:00] details of that as I normally would.
I want to hear about your background first. So can you take me through your career path? How did you get here?
[00:02:12] Tanya Barham: Well, I think like a lot of us in this industry, probably no one at age seven was like, ah, I really want to port can build in controls or electrical utilities. However, you know, I do remember my journal from when I was a kid.
Cause like my mom kept it and every year it would ask, what do you want to be when you grow up? And I was really fairly consistent. Actually. I was always like, Scientists artists, scientists both of them. I want it to be both. And so I do feel like being an entrepreneur in stem is a little bit of an art and a science.
So you get to do a little bit of both. It's very creative, you're sort of creatively trying to use technology to solve problems. And so I think just what's really driven me is a lot of curiosity. So I have, I have a pretty long track record. I would say guiding transformative [00:03:00] energy technologies through the valley of death to commercial success.
So I started my career in software more or less by accident. I was in college. I was studying geographic information systems. Of course I like most people, my age was in chat rooms and listservs, and very had my email. And, you know, and I think a lot of adults are like, what's this email stuff good for anyway.
And we're probably still asking that question, but that got me super interested in that, but I was also interested in ISO. I've always been kind of a process nerd. So I was interested in the ISO 14,001 standard, which was new and emerging at the time. And How you could use geographic information systems to manage ISO 14,001 for geographically distributed organizations.
Okay. So as it turns out, this was in 1999. I was a fellow through a reciprocal research program in Iceland. And my research project was to study the application of ISO 14,001 [00:04:00] to the aluminum smelting. And to see whether, you know, so when isolate, you've got all these big tides and currents, and my thesis was that when you apply a prescriptive standard, like they have in the EU at time parts per million parts per billion um, that it's not going to work in an environment like that because of course the solution to pollution is dilution.
So my thesis was if they could voluntarily adopt a self-reported standard, that that might be a more effective way to actually manage environmental impacts in that industry. So, what I did not understand, so was that Esau, the company that I was trying to study was going through a hostile takeover on their board.
So at some point I got called into the office of some random middle manager who accused me of corporate SBA dosh and kicked me out of the building because they thought I was trying to find their environmental impacts in order to drive down this year. No, I wasn't aware that any of [00:05:00] that was happening after the fact.
Right. So, you know, lots of people are like, you should put corporate espionage on your resume. So one of my professors took pity on me and he was starting a startup that did sort of GIS. So I just became a GIS tech for this startup that was doing some sort of low level visual, basic coding working with really early versions of Esri products, like, arc GIS and arc info.
And they sort of said, Hey, we want to be we want to. Come up with a product that we can sell. We don't just want to be a services company. Does anyone have a product? And I said, Hey, I've got this idea to combine GIS with ISO 14,001. They were like, cool, I'll go work on it. You know, they paid me, I think 45,000 bucks.
And I had a little tiny team and I did my own little coding and then they sold it to, I want to say shell petroleum or something like that for like a million bucks. so I was I'm in Iceland and I decided I want to go back home to the states. And so I'm looking for jobs and At the time I had been learning Java script, w [00:06:00] w we would have been working on web based applications using GIS. So just kind of like all this stuff on the internet was early too. And the company, the management consulting company, they worked for work on uptime planning and scheduling, predictive preventive maintenance, and power plants during the Western energy crisis.
And they were mostly sort of older guys management consultants. And so they were kind of. Hey kid, do you know anything about computers? And I'm like, I do know something about the computer and they were like, great, you're hired, you know, it's so these guys are like, I was in Colorado Springs utilities where you are, and they're like, here you go.
Just have at this multimillion dollar computerized maintenance management system, like, let's see if you can get it. I was like, wow. You know? So that was pretty neat. And I got pretty hooked on the energy industry because it was just such a huge, you know, it was during deregulation. And this was before people knew that the markets were being manipulated.
I mean, I think there were people who had their [00:07:00] suspicions. What
[00:07:00] James Dice: do you mean manipulate.
[00:07:01] Tanya Barham: So when we looked at like what's going on with Enron and the sort of manipulation of the transmission system and, you know, power trading in order to Jack up prices. And so people were selling energy at extremely high prices into the California, the deregulated markets.
So all of the plants that I was working with were at the time it become independent power producers. Some of them, almost all of them were selling into the California market. Okay. So one story that I like to tell is, you know, so you'd have all these folks with these like really aging peaker plants, like literally in Colorado, there was some peaker that was built in like the turn of the century.
It's just been like one guy named Wolof and his goat, you know, often is later hose with his goat up there. And like once a year, they fire up this peaker in like, You know, Paducah, Colorado, and that's what it's you it's supposed to be used for, but during the Western energy crisis, like that thing, if it were running 24 7 could just be selling into this [00:08:00] very high price of energy.
And so suddenly all of these utilities wanted us consultants getting their heat rates down and just chug it out, you know, send some, some, some energy through the grid. And so, you know, these places, they want the, you want that guy in the layer hose and in the goat, like bolts are flying everywhere. Seems coming off that thing, you know, the goat's like bleeding, its head off.
And so that was pretty fun. I mean, it was pretty crazy but it was pretty exciting. So I got hooked at that point on energy. I'm like, wow, is it always as fun? And then of course Enron happened. And at the time though, I had already been thinking like, I want to get out of coal and gas. Cause I, I mean, those plants are awesome.
I also worked at Navajo generating station, which was just a massive, massive plant you're out in the middle of nowhere and I loved Navajo culture. And I really thought, wow, these coal-fired plants are a feat, you know, just all the things that need to come together to make this thing work. They're so complex.
But I wanted to work on [00:09:00] renewables and at the time, you know, they were still pretty fringe. And so I moved to Portland, Oregon, and I started networking and Eventually a bondable environmental foundation was like, Hey, Mead, like to see more of a proliferation or professionalization of grid type solar photovoltaics.
And we've got these cool green tags that we'll sell off of these TVs. What do you think about coming up with a program that would sort of commercialize these red tide solar systems? And there was so much resistance. This was like 2002. I think there was so much resistance, like. The utility lineman unions were like, you're going to electrocute every lineman in America because these systems are going to feed back out onto the grid.
You know, building inspectors didn't know how to inspect them. When we were looking at solar installers, it was all just like literally a bunch of dudes with like ponytails who've been doing like off the grid systems for their commune. Cause there was so there was no professional workforce, you know, nobody knew really about solar [00:10:00] in any kind of a broad commercial.
So we just had so many challenges and being the kind of person that I am. I was like, oh yeah, that sounds great. I'd love to do that. So just kind of like dove right into it. And now that program, so what we did was we built a solar for our schools program that really leveraged schools as a way to both educate consumers and students about clean, renewable energy.
We use the installations at the schools as an opportunity to educate labor unions and professional workers in the solar installers industry on job opportunities. We use the installations to educate building code officials on safety and protocols. And we would give feedback back to manufacturers like inverter manufacturers.
So it was you know, when you're bringing in a new technology like that, it's such a. Ecosystem play. You really have to spend so much time educating people about the technology. But now I like to think that, you know, 20 years, hence like so many of the students that we educated about the power of renewable energy are probably the same people that are buying gigawatts worth of solar for at [00:11:00] grid scale.
So.
[00:11:02] James Dice: Cool. Very cool. Do you feel like, so this is fast forwarding in our conversation a little bit. Do you feel like that experience kind of introducing a new technology into the ecosystem? That's helpful for you now that you're working on building controls?
[00:11:16] Tanya Barham: Yeah. I mean, I do think that it's sort of, It's poisoned my mind in a way, because I'm just like, I can do anything.
I can take something that doesn't work at all and, you know, make it work and make people love it. So, you know, it was funny because after that solar first schools, I went to PCI Portland energy conservation aid, which is the nation's first energy conservation plan. It was a nonprofit that turned into a revenue based nonprofit.
So they would manage these energy efficiency programs for utilities. And prior to going there, I. You know, I had a sort of power systems and it background. So I was just kinda like energy efficiency. Isn't that like, somebody's imaginary friend. Like I'm not going to do that. Of all the energy efficiency people are gonna like leave.
You're going [00:12:00] to see the statistics on your podcast. But like,
[00:12:03] James Dice: I know they're the type that probably piqued their interest. Oh, okay,
[00:12:07] Tanya Barham: good. They're ready to put up their Dukes. Yeah. So I was pretty skeptical on energy efficiency in LA, but I was interested because PTC, I had the software idea. So they had an engineer, an HVAC engineer, mechanical engineer who had come up with this idea for a diagnostic software that you could use.
So you would train field technicians, how to use it. They would go up, they would flip this software to a rooftop unit. It would, you know, do what software does it would take in some readings, perform some diagnostics and give them a list of You know, but it was basically like a fault detection and diagnostics for single detached rooftop units.
And PECI was a really savvy implementer and they managed to sell this program to a utility for, I think like this idea for like 7 million bucks. And, and they were like, we're going to do 6,000 [00:13:00] of these diagnostic retrofits. And you know, and they were like, we'd like you to do this problem. So they sort of poached me from BGF and they said, you know, we'd like you to run this program.
If you could, in the field kind of operated, I wasn't the salesperson. I was like gonna operate it. And I'm like, cool. Show me the database. And they're like, what? And I'm like, wait, that's not even, you didn't have a budget. And they're like, no. And I'm like, how are you going to get the data from the PalmPilot to the utility system?
And they're just like, that's a great question. And then I'm like, all right, well show me the software. And they're like, oh, we don't have software, but we've got these like 30, 11 by 17. And I'm like, oh, okay, cool. Well, tell me about your trade allies and your, you know, your sort of installer network. And they're just like, Well, I mean, you, we figured you were probably going to let us do that.
And I'm like, okay, like we need to get this all done in a year. And we freaking did it. Like we, somehow we did it and I almost killed myself doing it. So I felt like that was really my first startup experience. And that was a lot like building [00:14:00] energy technology too. I mean, so it was like I said, like solar first schools made me feel like I can do anything.
And then air care plus was like even more complicated because it was all being rolled out to small commercial customers. So like Arco, AMT McDonald's it was wireless data transmission over wifi, which was super new at the time. And really unreliable. The software programming was on Palm pilots.
Literally the data was being stored in an access database. I could do that. Like it was, we had a totally virtual team. This was 2004. So we re it was like the first year that GoTo meeting even started offering software. So if you think it's bad now, like it was so much worse than, and. We killed ourselves, but we did it like the program became very, very successful and very profitable.
You know, customer saw the value because they were spending so much on HVAC in California, especially these places that had, you know, like a McDonald's or an Arco AMTM where you've got hundreds of locations. And you can [00:15:00] aggregate those up in your portfolio. The mechanical contractors that were our trade allies loved it because it was this way to talk to their customers more regularly, rather than just having someone call them when something was broken.
You know, I think that's the benefit of like fault diagnostics. And the utilities loved it because often they don't have a really good way to talk to their commercial customers, especially small commercial. So I think for me, I burnt myself out, but I got really hooked on. Bringing new technology to commercial customers energy technologies in particular it's such an underserved market, but I really just love the mechanics of how, just the combination of like people's stuff, business stuff.
Tech stuff. And then like tree hugging, environmentalist stuff, all in one beautiful, complicated package, you know?
[00:15:52] James Dice: Yeah. I like that. Gray tree hugger techie.
[00:15:56] Tanya Barham: Tree-huggers
[00:15:58] James Dice: a Venn diagram [00:16:00] for buildings.
[00:16:03] Tanya Barham: Yeah. I think that should be in your next newsletter. I give you, I give you a creative comments, rights to that.
You don't
[00:16:10] James Dice: want to sit and draw that out. Yeah. So what's the status of that. How does
[00:16:17] Tanya Barham: that kick in look up? So they licensed that program. I mean, PECI has sold it to anybody who would buy it. I think, I mean, I know I'm on the record. People from PCI are going to come out of the woodwork and be like, Hey I was so burned out after that year.
I mean, I'm still in contact with so many of the people that worked in that program. It was a great experience, right. It was truly like a startup, but I was just like, whoa. So I started a wellness company, but that program just kept chugging along after that. And once you've done the hard work of building the product, they just kept selling it and selling it.
And because it was software, it had great margins. So, you know, if you look up Aircare plus you can still see it licensed white labeled all over the country. I think now it's owned by clear result because in 2014 [00:17:00] CLEAResult acquired PCs assets. And then yeah, I was running my wellness company.
And then in 2016, I sold that company and PCI asked me to come back to ECI 2.0 and work on their grid edge. And.
[00:17:11] James Dice: All right. So what brought you back into the buildings?
[00:17:15] Tanya Barham: Well, PCI can had been, I I'll admit, like I kept in touch with a lot of folks from PCI and Phil welfare, the executive director over the years, we'd always have lunch and Phil called me and was like, Hey. What are you doing right now? Would you want to help us do what you did with their care plus again, at PCI?
And I'm like, oh, side-eye, I'm like, I'll come on as a consultant. And then of course they just got me flipped. Like I got in there, we started working with the national labs. We were looking at micro grids. It was the early days of community choice aggregators. So we were looking at that trend. We started talking to like 94 different communities across the us about energy democracy and democratization of revenues from energy infrastructure investments, et cetera.
We started looking at microgrids virtual power plants, [00:18:00] like in 2016, this was considered very fringe. Like I would tell people that we were doing this and I'm like, what are you even talking about? And so now it makes me laugh when those same people are like, we're doing a virtual power plant and I'm like, Okay.
All right. Well, don't want to say,
[00:18:14] James Dice: Can you explain it for the buildings folks, the non-energy buildings, folks, what some of those terms mean? Because we've done, we've done episodes on virtual power plants. I don't know that I've done anything at all on community choice. Aggregators. Can you talk about what that means?
[00:18:29] Tanya Barham: Okay. Yeah. So, you know, there's this idea, most of us, most people were served by a utility are served by an incumbent investor owned utility. So a for-profit company that is granted a government regulated monopoly. So utilities got into this compact with regulators where they're basically allowed to make a profit on any capital investments that they make into serving the public electric.
And so if you're in a [00:19:00] community the utility can represent to you in many ways, like a vacuum that just takes money out of your community for what you pay on energy and gives it to shareholders completely outside of your community, which just as people were recovering from the wealth destruction that happened in the last recession.
So many of these communities lost revenue you know, people lost housing and wealth was destroyed and they were just like, wait, In the meantime, these utilities are allowed to make profit on us and we don't get any returns back into our community. Like that's messed up, man. So, they started using, and then also they didn't feel that utilities, there were many communities that we talked to that had passed at the time, a hundred percent ready for 100, 100% renewable energy commitments, which have since transitioned to, you know, people have realized that maybe it's not so much renewable energy as emissions reduction, you know, things that drive climate change.
And they were frustrated because these small communities had no way to push their incumbent utilities into de-carbonizing [00:20:00] their electrical fleets. So these communities both had to give their money away to utilities by law. Those utilities serve the whole state. So a lot of times a community with, you know, a few thousand people, even 20, 30,000 people to bounce, like whatever who cares like in town is a bigger customer than your community.
So we don't care. Or at least that's how they were perceived. I will say by the communities within those utilities, you have lovely human beings who, you know, don't think about it that way, but at least that was what the perception was. And, and, and in fact that's what it looks like. You know, they're trying to make a profit off of what they've already invested in, which is coal and gas.
So, Anyhow community choice aggregation in some states allows a municipality to aggregate all of the residential, small commercial loads in its territory and purchase energy on their behalf. So they now become a much larger customer. The poles and the wires are still often provided by that incumbent utility, but energy, which is probably the most profitable portion of a lot of utilities, sort of value stack could now be owned by that community.
And [00:21:00] it gave that community a way to keep the profits made on the sale of energy local. So we saw that brand and said, this is very interesting. You know, what does this tell us about how we can keep more economic activity local, whether it's through local jobs, whether it's through something like CCA, whether it's through capital projects that are funded by energy infrastructure dollars, what are the levers that communities have.
To either reduce energy burdens, so save money or generate wealth and keep the assets, keep some of the benefits from the assets that they're paying for local. Instead of paying for a portion of that asset that serves their community, the utility, getting a return on it. And then the distribution of that return goes to shareholders that might live in Paducah, Iowa.
You know, so that's CCA, which was fighting.
[00:21:50] James Dice: I got it. Can you also explain what a virtual pod
[00:21:53] Tanya Barham: plan is? Absolutely. So everybody knows what a power plant is. So virtual power plant, you know, [00:22:00] micro grids are getting so popular at the time. Because again, I think the real, when we think about what's the stimulus for a micro grid, it's not necessarily that people want to own utility infrastructure, but that's the valuable part, right?
That's the part that utilities are allowed to get a return on. So what people want is they want that economic benefit locally and resilience to, you know, they want a more resilient grid. And as we were seeing our traditional grid starting to fail, especially rural communities at the end of.
Infrastructure we're, you know, like, Hey man, we don't even have reliable power and we're paying, you know, sorry. So microgrid seemed cool, but there are a lot of problems with micro grids in terms of part of the reason the grid is so fascinating. Our big grid is that all that redundancy and all that interconnection that we have makes it so much more reliable.
And that really level of reliability is much harder to accomplish the smaller, you know, the smaller, the grid that you're working with, whether that's a building, et cetera. I think also at the time when this idea was [00:23:00] emerging, you didn't have as much smartness and you still don't in many ways. So in order to make good decisions about, you know, obviously electricity needs to be consumed at the moment that it's generating.
Because storage at least chemical storage or battery storage is just, I know there are going to be tons of battery people who are going to come after me after I say this, but it's just not that cost effective in many circumstances. So, you know, when you look at that on a micro grid, it was very difficult with just on the economics of a micro grid to make that pencil, even when you factor in reliability.
But now when you factor in also just the legal hurdles. So every state utility is regulated by a state regulatory commission, which all kind of set their own rules. And then there are different you know, additional sort of federal levels of regulation. And then each community has sort of franchises and charters that they've already signed with these utilities to allow them to operate.
And just the political complexity of doing a microgrid, as well as the technical complexity [00:24:00] made it a lot less appealing. So we started looking at virtual power plants because they were operating in Europe, using it infrastructure to treat a number of sort of physically disconnected devices as though they were a single device.
Now in practice, VPPs are a total nightmare. Like I'm not gonna lie. I w I had a brief stint as the virtual power plant it manager at Portland, general electric. And that's just like a hard job because you need to have far more standardization and sort of data and control than we currently have. But I think it's getting there and we're looking at, you know, people have been talking about this increasing needs per standards and interoperability at that level, you know, open ADR 20, 30 dot five and other standards, but virtual power plants basically allow a series of disconnected distributed.
Energy resources and sometimes not even distributed to act just like a generator does on the grid. So, you know, a generator will sort of look at the grid. It will try to sync itself with the grid. It'll participate in markets and these virtual [00:25:00] power plants that are aggregated behind some sort of it layer, which serves as a translator, let's say, or middleware between the grid operator and the devices themselves.
Now, there are plenty of problems with virtual power plants in practice, but it's a cool idea. And I think those problems are being worked out in places like Germany, Australia, and increasingly, obviously there's interest in the United States for how to use um, Instead of building a power plant. I mean, it's the same thing.
We did energy efficiency. Like we've got all this stuff deployed out there. We're deploying all the solar, all these batteries. Why not knit those resources together and use them more efficiently or in a more coordinated fashion. It's like grid 2.0, you know, so, and the
[00:25:42] James Dice: software that they use for VPPs sometimes it's called distributed energy resource management system.
Derms. Is
[00:25:48] Tanya Barham: that right? I, I tend to think of derms. I mean, and that's the thing I, when I was at PGE, it was so funny. Cause people would be like, look at this article about a VPP and I'm like me, like a [00:26:00] VPP, that's just like 250 batteries in an apartment building. So it was like, okay, cool. You know, VPP Durham's I'm like, it's almost like saying what is love.
It there's really no standard definition. It's sort of just feels like on one side, there are a bunch of things that either can flexibly consumer produce energy. And on the other side, There's a signal like a pricing signal or a capacity signal or something, and DPP and derms is essentially either that VPP is like the aggregation of things with some sort of an intelligence layer of the derms is to me, I think of it more as the utility side.
And I question whether derms is scalable again, and like I'm saying all these things, oh my God, I'm going to get so much hate, hate mail after this. But I questioned whether derms is really scalable in terms of, you know, when we were looking at advanced distribution management systems. So that's also what the sort of utility side AMS from an operational perspective, A, when [00:27:00] you have private individuals who own these distributed energy resources, are they really going to want you to have visibility and control into their devices?
Whether you can already figure that out or not? Because if you have AMI advanced metering infrastructure or, you know, real-time meters on the utility side, you probably are going to be able to figure out if you want it, if you really want it to which, by the way, I think they do, but are they capable of doing.
Not quite sure. If you have AMI, you should be able to, you'd be able to figure out what somebody was doing probably anyway. If you were to apply AI to that, now that said having been at a utility as well. I do know that that 15 minute interval data is just moldering and a massive database somewhere, and then they average it all monthly and send you a bill.
And I'm like, well, that was a good use of real-time data.
But in theory, if they wanted to there's they could, you know, see what was going on. That said, I just, you know, being behind the scenes in terms of what's really necessary. And I think the biggest issue is just, you [00:28:00] know, all data scientists will feel this in their bones. It's just that these are not data-driven organizations.
You know, a lot of times like their GIS data is totally garbage. So, you know, GIS, you want to use a data-driven system for your germs or your AVMs GIS says that the transformer is here and it's really like 200 miles to the west. That's not, that's not even like a hypothetical situation. That's a very common situation for a dirty data.
And so part of it, you know, I think part of it, it's good that we're talking about AMS and derms, because if you bring that stuff to light, the only way things get better is if you see them happening. But I just, what I really experienced the utilities and why I went to the building side. So now, like what we've spent, you know, half an hour talking and I'm just like getting to this, but on the utility side, what I really saw was I'm like, I think this is the, you know, what utilities are good at is saying like, here's what we need for grid stability.
And they can come up with a price or a value for the [00:29:00] flexibility to the grid. And if they could issue that as a price, I really don't think that they should be the ones managing on behalf of customers. The customers are gonna want it B they're not good at handling all that data in a way that makes sense for customers.
And just see it's too massive. When utility started, they were micro grids and they were crappy. Like if you not the Pearl street, well, Pearl street was probably pretty crappy, but like, if you look at the first micro grid outside of Pearl street, I think it was in Appleton Wisconsin. And it was like a hydro and I drove just, you know, you couldn't keep the frequency stable enough.
So the thing was just like, it was like a joke, you know, it was for like two rich people in Appleton Wisconsin. And like, sometimes the lights would be on and sometimes they wouldn't and then he'd blow up the lights. And I mean, these grits were terrible. And I just think that we're more accustomed to a more stable type of electricity.
And, but that is how you. At that level one grid at a [00:30:00] time of what I saw at the utilities, this, these are massive organizations managing a complex product. And you know, when I was doing DPP, I kind of had to talk to everybody. I'm talking to people in programs, I'm talking to transmission distribution, I'm talking to our strategic asset management team and the GIS team I'm talking to the operators and what they want.
And what I realized is that often you've got these really siloed teams and like each team has tried to solve the this disruption problem from distributed energy resources using their own discipline, whatever that might be. And because it's a multidisciplinary problem. Each solution gets like 80% of the way there.
And none of them will talk to each other or relinquish control. And I almost felt like you need a microgrid. You need to pluck one person from T&D one person for data science, one person from this go down to the local community level or the building level or the block level, put one person from each of those disciplines in and create their own little company.
Thats's how the innovation is going to happen. So I really, I saw that first. And then later when I started talking to customers, I'm like, if you could [00:31:00] create a VPP from the bottom up first All you need. The utility to do then is to sell you a real, send you a realtime price that tells you what they need.
And as long as you can respond to that, while also solving the customer's problem. Well, now you've got a growing concern and this is how to do something innovative because I just think that utilities are so stuck and the problem is so massive. It's so overwhelming at that scale to try to solve these problems.
It's just like, it's good to have these incubators where these ideas are getting cooked up and we can try them before, you know, once you start piloting these programs, I mean, it's just such, it's a huge cost and it's it's public money, you know, it's rate payer money. So, yeah, that's my, my philosophy on derms and VPP.
I just think that communities are, that's why I got it's called a community energy labs. That's why PCI was very focused on communities. Community is maybe the biggest possible scale. Maybe the block, maybe the building are the sort of best, you know, the most atomized place to really look at how to solve.
Problems inherent in the [00:32:00] energy transition, but I think VPP is in the red is moving in the right direction, you know?
[00:32:04] James Dice: Got it. Okay. And so then you're a PCI. And then can you talk about the transition from PCI to starting community energy labs?
[00:32:12] Tanya Barham: Yeah, I mean, it was a, it was a funky little transition. We so between 2016 and 20 19 20 16, it was just sorta pec.
I was like, go out there and, you know, figure out something cool to do with community energy democracy. You know? So, like I said, I talked to the lab, national labs, talk to the universities microgrid researchers, talk to the communities and lots of them and then invested in some technology companies that were innovating in the space just to sort of see what they were learning.
And then we formed the thesis where like here are four areas where there are gaps. And what I found was, you know, sometimes it's, it's. Harder to have money and find a problem to solve than it is to have a solution to a problem and find money. And actually now that I've been on both sides of the table, that's absolutely true.
Like it's way easier to be [00:33:00] an entrepreneur who knows that there is a problem for sure. And has an idea about how to solve it. And then to articulate that to other people and have them be like, good idea. Here's my money than it is to start out with like millions of dollars cash. I'd be like, whoa, what problems should we solve?
So we, we developed, you know, a lot, like any incubator. We developed a thesis on four problems, four gaps that we saw in the market. And because we were a nonprofit you know, sort of a revenue based nonprofit at the time, it really spanned the gamut. Like one was like a pure non-profit play, just doing Policy work on carbon.
Another was technical advising for communities that were trying to either municipalize or they were trying to create microgrids or other virtual power plants, or ways to decarbonize faster than what their utility would allow them to do and helping them. So it was like a project. It was like a virtual power plant project.
Advising and consulting professional services and project development, then there was a controls. So [00:34:00] a supervisory controls idea that we had called leap and the last one was some kind of market transformation consulting. So we put about 150,000 on each of those ideas over the course of a year.
And what I said to the board was whatever ideas take off, those are the ones we're going to double down on and turn into the next generation of PCI. I think the board was just like, we just want to work on Oregon climate policy and that's all we want to do. And so I said look, we've got like, you know, 30 people in our ecosystem.
We've got all these contracts, you know, I'll take the people and the intellectual property and the contracts, if you guys want to just keep the money that we have in the bank and work on the policy stuff. And I, you know, and some of the board members were pretty new too. So they were just kinda like, let us figure it all out first.
And so I just sort of felt like it wasn't really gonna happen. You know, we had been negotiated that was 2019. So I took this job. I took this job at Portland, general electric, and I think just inside of a utility, you can probably already get the sense for me. Like a, not like [00:35:00] an, I love working with utilities on the outside.
It's a lot of hierarchy I'll be inside. And like I said, I think that the scope of the problem is too big on the inside, but on the outside you could just tack a little pieces. Right. So I went to Portland, general electric in the meantime, and then, you know, I think just PCI finally got their feet underneath them.
They realized they just wanted to do policy. And they came back to me and said, Hey, we're ready to talk about transferring this intellectual property to you. It was a year later, but that was the, you know, that was the Genesis of community energy labs. Yeah.
[00:35:30] James Dice: So catch us up on from, from then to now. It sounds like what I know about you guys is you. Doing all these education events and you've been growing your customer base, but we've also been fundraising.
So can you talk about the road to get here from, since you started the company?
[00:35:48] Tanya Barham: Yeah. Well, wow. Where to even start, I mean, you know, listen, I having managed like VPPs or energy efficiency programs or technology programs, I've [00:36:00] sort of seen it all when it comes to energy management pitches. And I think a lot of investors have to, there are a lot of companies out there that do great stuff.
Where I'm happy to see that they're raising lots of money now because they were probably a little too early onto the scene, you know, but communities worldwide now are pushing buildings to convert to electricity from, you know, gas heating and cooling. And in the meantime, they want them to use half as much electricity.
And by the way, consume power when renewables are making it. So, you know, in addition to passing these tough building performance laws, and I think you probably just saw that the white house is working with 30 communities to try to increase those buildings standards. Nationwide, there are more than a hundred million Americans and half of us utilities that have also introduced time of use rates and demand charges.
That can be like four to 10 times more costly and complicated for, especially. Commercial customers to manage. So I got really interested in talking to those commercial customers on how they were dealing with that. And then just other, you know, I'm always really curious about like, well, [00:37:00] how do you just run your organization?
Like, tell me about that. So we talked to like in 2020, then I was, you know, I was planning to do this controls spinoff, or the policy thing for PCI. I knew I couldn't do it all because I didn't have all the money PCI had and 30 people. But I started talking to anybody who would talk to me. So schools, cities ESCOs so energy service companies like utilities, and just talking to them about what's happening to your organization, either one, you know, kind of generally saying what either one of these types of projects is product development or whatever work.
And one thing that just kept coming up was that these. Like municipalities and school districts. We're usually the first ones to embrace these all electric building codes and that they would then mandate that their own facilities meet these objectives. Now, at the same time, you have these processes that are [00:38:00] really put there to make good decisions with public money.
I know people get really annoyed by public procurement processes, but it's really there to make sure that as taxpayers we're getting the best deal for our money, however, it creates the situation where, you know, more than half of us schools need HVAC upgrades. For example, Why don't they do it? You know, you've got kids in there and we found her in.
COVID like, oh, gross. You know, like, what does our indoor air quality look like? There? All these reasons we should be updating HVAC. Well, why is it happening? Why? Because hearing your, you know, from interview after interview, after interview is like, okay, I might be spending $3 million a year on energy.
Right. But if I want like building automation, that's, you know, an upgrades that are gonna help me improve my air quality and my energy efficiency. I'm going to have to do a big retrofit. It's going to cost millions of dollars upfront. It requires that I pass a bond measure, which is like, especially in rural and purple communities, like increasingly hard to pass.
But even if you're in an urban community, you're going to trigger a [00:39:00] purchasing the procurement process, which requires that you have at least three other bids. It goes through multiple different states. It's like, it's a pain in the ass for vendors. And it's actually a pain in the ass for the customer to right.
And then by the way, that disruptive install is going to, like, it's going to take up your, your, your time, your limited staff time and your buildings, ability to provide services to the public. Like a lot of schools that are title one schools, they're providing maybe the only warm meals that these kids are getting that day.
So I started to see like, whoa, like forcing everything into the CapEx budget for particularly Publix municipals and people with like long procurement processes is really, really. It's the reason that they have such a huge deferred maintenance backlog, right? And so I started looking at how could these controls be used as a way to help them meet some of these carbon and electricity objectives, but that really is going to pay for itself very, very [00:40:00] quickly and will be easy to purchase through, say an O and M budget, which is also a very small budget, but we'll have a quick ROI and payback time so that they're not going to have to like justify it to a million different people.
And, you know, so that was really what led me to wanting to do a controls technology. So an IOT and software as a service technology that helps reduce operator complexity. For energy management. It has a very, very quick one day install, time as a very low price. And then it can be paid for either out of that ONM budget or through cap ex if there is already a project on the slate.
But I think know the important thing that I really saw was, oh my God, I love building technology and software. I love working in this market where commercial customers are our customers, but then we're also working with mechanical contractors, system integrators and utilities. Like I'm just like Erica.
Plus I love working with schools because they use the data and they really want to educate and they really want to learn about why. And so they're great teachers to the public about new technology as well as users. And also there's just like this public benefit that I [00:41:00] love, like the nation's K through 12 school districts spend more than 6 billion annually on energy, like more than they spend on computers and textbooks combined.
And a lot of the research shows that if they just had decent controls, as much as 30% of their total energy is totally inefficiently and unnecessarily used. Like if they could manage that in a way that worked for their operation and wasn't cumbersome and time-consuming, there'd be so much benefit to those kids.
You know, they could put that back into improving their physical plant and their air quality. And so, yeah, that just got me, like, as you can see, it just got me super fired up.
[00:41:32] James Dice: So can you talk about the, the actual, like, you're a big fan of our white paper, small buildings on small building controls, obviously it's while you're working on schools, like you just said, are some of those smaller buildings that have less resources.
Can you talk about some of the research you've done and like what that market needs and how you've kind of positioned the product to be kind of what they need.
[00:41:55] Tanya Barham: A hundred percent by the way, I read that from start to finish, it was [00:42:00] well-written and very, very, very interesting. I think the problem is right now, if I had to summarize it to just one thing, I could show you 20 images of every building control software or fault diagnostic software out there.
And it's exactly the same story, whether it's a small IOT or a big like Medisis it's a product designed by college-educated building engineers For college educated building engineers who really think that there's somebody in a button-down Oxford in an air conditioned office doing nothing but driving those controls.
And that's maybe why less than 10% of the commercial building market actually uses building automation. In most of the commercial market, the people who are running buildings are not college engineers. They have many responsibilities. The solutions available are just, they're too expensive. They're too complex.
They create nearly as many problems as they solve. I mean, I literally have gone to schools where that automation system must be behind a local firewall. So it's sitting [00:43:00] on like a 20 year old desktop computer covered in dust, in a maintenance closet. This person is in a school, two miles away. They get an alarm and they're supposed to drive over there, sit in the maintenance closet and fix it.
And a lot of times it's just addressing comfort issues, right. And so then they'll override the system and it's almost as good as not having it at all. So, you know, I, 45% of end users have a high school diploma and no more than 20% are English as a second language speakers. I think the main thing to learn is to really think about what the customer's life is like.
And what are the salient things that you can do to help them save time and have the biggest impact on the things that drive their behavior? You know? Got it.
[00:43:45] James Dice: Okay. So how does your product work? I know there's model predictive control involved, but can you talk about just how, how, what, what it does?
[00:43:54] Tanya Barham: Yeah.
So your listeners probably know a lot about model predictive control, basically building a model [00:44:00] of the thermal dynamics of a building and its energy use in order to optimize the control of that building and the operational sequences to better balance occupant, comfort, energy use, and other building operations objectives.
Model predictive control is super awesome because you can optimize for multiple requirements in the building. However, to get to model predictive control, you have to build a model that can require gathering anywhere from 400 to a thousand inputs per building. So you're looking at maybe all told a 10 to $50,000 cost per building.
So that's kind of a lot, unless you've got a huge savings for that. And so it's a big upfront cost and it's very time consuming. So we have a department of energy funded grant that looks at scraping that what we're basically doing is, you know, we did it the baseline way. So we collected all of the inputs that an energy modeler would need to model.
I think we, now we have 14, [00:45:00] maybe 20, somewhere between 14 and 24 public K through 12 buildings of various sizes in a different climate zones. And we collected all the data from one of their books. The regular way. And then we've done a bunch of collection using automation techniques, estimation techniques in order to build just a very low order use that metadata to build a very low order model much more quickly, and then use black box reinforcement learning machine learning techniques on the backend to correct for some of the things that those low order models usually get wrong, like disturbances.
So like infiltration. So what that does is it allows us to do better than nothing control. Now this might not be like the most perfectly tuned building by. Much better than the amount of control that the building has right now with much less input and costs to operators. And so that's really, our innovation is driving down the collection costs [00:46:00] and the model set up time, as well as using machine learning techniques to correct some of the problems with low order models, using time series data through either API, APIs, thermostats, or other, other sources of data in the building or the.
[00:46:13] James Dice: Hey guys, just another quick note from our sponsor Nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.
This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview fascinating.
So that really helps me understand how the product kind of creates a model and then it helps control the building better. Can you talk about what types of buildings you're then applying this [00:47:00] model?
What are the attributes of those types of.
[00:47:03] Tanya Barham: Yeah, why don't I talk, if you don't mind a little bit about what is the problem or the pain point that we solve, because it may not be so specific. There are some specific building types that we're really starting out with in our go to market. But I'll tell you a little bit about the problem and what kind of building operators it really will attach to.
So if you think about. You know, I've been in the energy industry for 20 years now started out at power plants, you know, moved on to distributed solar rooftop maintenance software, and energy conservation. And now, you know, kind of on this weird wacky wild side of sort of, Building controls, building controls the interface with the grid and time of use prices.
So why now? Well, if you look at the rate of the ramp rate on the number of climate laws that are being adopted or commitments made by states you know, some of the most populous cities in the United States 65 electric [00:48:00] utilities. You're seeing this world where regulators and utilities are pushing building operators to address greenhouse gas, emissions, or energy surpluses, or the duck curve there.
And they're passing, you know, tough building codes on one hand. So if you look at like all electric building code for commercial and Washington or HB 1257 in Washington, more and more states are considering, you know, adopting codes that push for electrification. And in addition, you know, governments are looking at the, the Biden administration just said, Hey, let's look at local building codes and see how we can get these local municipalities to adopt more aggressive energy codes for their building performance.
So more than a hundred million Americans, and more than half of us utilities have also entered. He knows. Well, that's on the building side, on the utility side, these time of use rates and demand charges, which mostly are going to impact customers that have a peak coincidence demand of about a hundred KW.
So that's not going to be like a really tiny customer unless they happen to have an aggregation [00:49:00] of a bunch of, you know, small little. But those are that's somebody who is really Peaky loads. And increasingly as you electrify fleet, and as you electrify heating and cooling, you might see some of those higher peaks.
So let's say a hundred KW. So if you, if you sort of jump over that threshold, you may now be facing demand charges in addition to some very complex commercial rates. So I would say that those are our customers. They're people who are facing more complexity in their building operations, because they are going to electrify.
Either because of their own commitments their boards have made, or their operators have made as well as changing commitments from their municipalities in terms of how a building codes and building operations, as well as new utility tariffs. Like you're seeing in places like Illinois Ohio, California, all over.
In fact, the IPC recommends that utilities worldwide adopt more time varying rates, as one means to address. Climate change. So [00:50:00] when you take a look at, so we serve primarily K-12 right now, but also municipals. Here's why, you know, Kim, let's say this woman is Kim, she's a superintendent for a K through 12 school district in California.
They're spending $3 million per year on energy, even with solar panels everywhere. Her utility just changed their prices. So Kim has to manage time of use rates. And even though she has eliminated a lot of her energy costs with. She still has to pay demand charges. And they're significant. There are anywhere from 30 to 80% of her bill, even in the Pacific Northwest, which has very cheap energy.
Even if you don't have solar, it's still about 10% of a district's energy bill and districts spend over $6 billion nationwide on energy, more than they spend on computers and books. So she could be looking at a 40% increase in already one of her largest bills. And what's more her school board.
Palliative care mandated that their facilities be carbon neutral by let's say 2030. So what are her options? Well, if she goes to the building automation route, most building [00:51:00] automation options are really costly. They're really complex. They're typically bundled with multimillion dollar upgrades. Kim has to pass a bond measure or navigate this lengthy procurement process to pay for the upgrades.
Those actions. Installs disruptor ability to use that space, to feed kids two hot meals a day and provide services to the public. And then she's got this really tiny scrappy crew. It could be janitors that are doing the routine maintenance on that equipment. And mostly they're running around, putting out fires like sweeping up vomit or raking mulch or fixing broken old HVAC.
And they don't have time to sit down and drive this building automation. So what most of these folks do is they just skip automation. Kim is literally tracking their energy costs in a monthly spreadsheet. I loved, I re posted your article so many times about death to spreadsheets. This is Kim. This is what they're doing.
They're managing their facility profile, using the spreadsheet. And then they send, you know, this crew out to manually program hundreds of devices and respond to comfort calls. Even if they have a wireless interface for that. They're still going to have to program every single [00:52:00] zone. Right. And you don't know if that programming is actually going to have an impact.
So let's say you're trying to avoid the NAND charges and you cycle one quarter of your machines on at one time, another quarter at another time, another quarter at another time. You're not going to find out if it worked until next month's bill. And in the meantime, when you do that, it's fairly arbitrary.
You're going to end up having comfort calls. So, you know, it's just a, it's a nightmare for these folks. And so it's probably why less than 10% of commercial building market actually uses automation. The solutions are too expensive. They're too complex. And they create nearly as many problems as they solve.
So we wanted to, you know, we applied to the department of energy and other folks too. Come up with something far simpler. A lot of people offer IOT and software as a service control platforms, but we really wanted to put our smarts into those machine learning models that I talked to you about that would orchestrate that equipment in real time, in a way that balances two main objectives, one, some kind of a real time signal.
So that could be carbon. That can be one of [00:53:00] these real-time or time of use prices will be starting a real-time rates, pilot. Southern California next month with several schools. And then on the other side, you have occupant comfort and these algorithms are looking at using the information from that IOT to balance those two objectives so that you're not constantly getting overrides in response to this real time or time varying rate.
Or in response to managing in order to reduce demand charges that might come from electrification. So I talked a little bit about, you know, how that works technically, but how that works from a business perspective is it's just, you know, I mean, it's just like your cell phone or your cable modem. We either connect with the buyer directly.
We're referred through a utility program or a channel partner. The customer chooses to install one of three packages based on the underlying systems in their building and the building characteristics. They might have a wireless thermostats that we can communicate with through an API. They might already have a building automation system that speaks back net or they might require those sensors and that gateway [00:54:00] device either way, there's a.
Costs to implement each both in terms of labor and the off the shelf equipment, but that typical install, whether it's trying to find all the points on there, you know, BAS and sorting through that bowl of spaghetti or whether it's connecting through their API. It's you know, costs around $10,000 for a typical one-time one day installed set up at that site.
So once installed, we then charge a fee to monitor, predict, and control energy using the machine learning algorithms. And what we're seeing is with an average savings of five to 25%, that school would pay back its investment in two to four months pre COVID and under a year in COVID conditions. So, you know, our price point was.
We developed it specifically for a segment of buyers, like municipals who have difficulty doing these big omnibus type solutions quickly, but they need a quick response to some of these performance goals. That are coming online for them. So we made sure that we were able to, [00:55:00] you know, address their need for a very low price point for a budget that could fit within a really lean maintenance and operations organization and for an interface and product that we're really eliminating a lot of the hassle from these very leanly staff maintenance operations.
[00:55:16] James Dice: Got it. Got it. So what are some of the ways that you have looked at the product from that simple lens? Like, do you have an example of maybe something that you changed from the BAS world or changed from like the IOT world or something that like made it, made the implementation of this for that janitor type of person?
[00:55:39] Tanya Barham: Simpler. Yeah, that's a great question. I'm kind of amazed at how few products out there seem to have been co-developed with the actual end users and customers. So these are typically multi-stakeholder organizations before we ever wrote a line of code. We spent more [00:56:00] than 60 hours with one-on-one and in groups with maintenance and operations directors, energy managers, end users like HVAC techs and facilities, managers control professionals who would be using the equipment to learn.
About what their lives were like. And we had multiple stages of that. So some of these were paid for, by, for example, the electric power research Institute, somebody see some of understanding how to structure those in-depth user experience. Workshops came from my experience working both on the building side when I did solar PV and rooftop unit software.
And on the utility side, managing virtual power. The demand response programs. So knowing, you know, that those two sides of the bridge often don't meet very comfortably. We set up several questions, a series of questions. So a series of workshops about 12 hours worth of workshops, six, two hour workshops.
And we worked through those with end users and, and, you know, with input from the utilities too, which were basically. Walking them through the [00:57:00] energy transition, how that interacts with HVAC or building technologies, what they know about how that interacts with prices and then just what drives your.
Daily routine, like your operational reality. And what you saw was that the way that these utility programs are built and these prices are built, it, they assume that this person has the cap capacity to create controls, to meet even the simple objective, like critical peak pricing. And they do not. Or if they have a BAS, there are certain things around the BAS for example, like security considerations, where typically these are set up during a big.
Procurement. Right. So when they do a big HVAC upgrade, they'll put in the BAS at the same time, they set it up and then maybe they never changed the programming again or tune it. And so you have these very rigid central controls. And what we found is there were a lot of issues with occupants. Teachers' unions.
And these rigid controls really became like a [00:58:00] millstone around the neck of very tightly staffed maintenance organizations. So we then started working through like, okay, here are their nightmare scenarios there. The things that happened to them every day, I mean, comfort calls were a big one. And then of course, demand charges were a big one.
And just finding a way to have the capacity to do both. And we sort of working through the interfaces, some mock-ups and saying, well, what if we did this? What if we did that? Would this be easier? Would that be easier? And a lot of times what we saw was that actually a couple of things that were really transformational in how we built our system are using data in a very smart way.
So on the backend, when we do our data collection, and then when we start to Hoover up all the time series data, it's in a brick compliant database. And so brick uses graph DB, and I'm not, you know, the technical lead at my company, but as best as I can understand it, the cool thing about graph DB is it allows you to see relationships between different elements within the building.
So we started to find some [00:59:00] very time-saving ways to query our data. Where you could immediately see relationships between certain types of data, characteristics, or building characteristics and outcomes. And so things like that allow us to continue to simplify and tune the interfaces so that we're giving more default values to users and we're serving up information much more quickly rather than them having to search for it.
We also, you know, because we don't have that sunk cost that. Legacy building automation has. I mean, that's just an unfair advantage. I mean, ask my space, ask Friendster, you know, sometimes you lose because you're too early or you have a lot of sunk costs is that innovator's dilemma. And you know, when we go out and we see even the new, like Johnson, Medicis, you know, some of the big brands out there, you know, they've made some innovations, but smaller customers, you know what I mean?
They're not going to. Dump it all. And start again. I mean, I think we saw like Honeywell has put out a, a dashboard for small to mid-size customers, but you [01:00:00] know, a lot of them are really coming from this world of just focusing on all the things that need to be done in the building. And what we found is like full diagnostics and alarming.
Yeah. There, when you start to put sensors and you start to measure and look at stuff that has never been measured and looked at before. I mean, everything's broken in these schools. I don't know what to tell you, you know? And so we kind of have had to say like, well, we're focusing on the future. We're focusing on the newer equipment, the electric, the all electric stuff, when we're solving a problem that will be bigger and bigger in the future.
As many of these schools get funding to upgrade this stuff, because otherwise, you know, you're just like this unit is not working. They actually don't have time to fix that unit. So you do have to ask yourself within the operational constraints of the users is fault diagnostics useful? No, they're not going to respond to that.
They can barely keep up with their PMs. They run stuff to failure and then they replace it. They run it until it breaks. And then, I mean, then I know that that's not even. Well,
[01:00:55] James Dice: this is why I like to say that like the buildings industry is not this homogenous blob, [01:01:00] right? There are these different types of buildings because I think fault diagnostics, as we've talked about ad nauseum on this podcast is useful for a certain person that can use the fault results.
Right. Yep. If
[01:01:12] Tanya Barham: you have, if you have a professional building engineer and facilities team that is capable of putting in work orders, tracking work orders, planning, and scheduling, and following preventative and predictive maintenance best practices, you should be doing fall diagnostic. A hundred percent, if you have a chronically underfunded, and if you can recover those costs in your physical plant, through increasing rents or, you know, refinancing because you're a private entity and that's available to you then.
Great. If your only option. Is to fund this through a bond measure or this huge complex public procurement process, you know, in municipals like operations and maintenance is not like the marquee item to spend money on. So I think there's gotta be yet. We've picked a [01:02:00] segment world where like they have some very specific needs.
And so, you know, we really built our tech stack. We don't have that legacy investment. We could really reinvent. This particular group and what we saw too, was we're like, how come people can't do this wirelessly, you know, everybody loves Pelican because they can just access that web interface. Right.
So let's make it wireless. Let's make powerful search. I can go to Ikea on my phone and buy and search all this stuff. And so we've got this backend database that can kind of atomize all the pieces they need and they can, instead of navigating through some like 10 levels of waterfalls, Menus on a PC in a dusty broom closet, not a joke, not an exaggeration.
Why not have something that they can access securely on their phone and navigate using queries. And that mimics much more what they're used to an e-commerce. And I think part of that is just, you know, we were able to sort of deconstruct and reinvent the whole thing because we didn't have a big investment in some kind of [01:03:00] technology stack.
[01:03:02] James Dice: Yeah. Can you talk about the, is my, one of my last questions product. The procurement process. So earlier in the conversation, you sort of unpacked what procurement, like why procurement is unique in this space? How have you made the procurement of this product? Simple for an organization like this? So you mentioned going out for bonds and things like that.
[01:03:24] Tanya Barham: Well, that is, that's a, that's a big issue. We have so far avoided that. I mean, we're also small and we don't have, you know, I mean, one of our partners is Schneider and we're working with them on a micro grid with a school district in a utility up in Washington. And, you know, it's really tough for them to want to roll out of bed for less than a few million bucks in the.
Yeah, so we don't care. We'll go in and sell something that we get a $2,000 a year software subscription on. So I think there's just, you know, right off the bat, we make it easier because like a lot of startups, you know, initially [01:04:00] were willing to take less to do the same thing. And, you know, we've found a way to build a stack that will still give us a decent enough.
You know, in a ways that typically you do, you have a freemium model you're on a basic model. That's pretty brass tacks. It solves one pretty simple problem. And if people want to get fancier, they have to buy a support package, et cetera. And we'll see, you know what I mean? We're not at the scale yet where we'll see how sustainable that is and whether we need to flex our model.
I think. Startups do, but so far we've seen that there are buyers that are willing to pay for that. Like just save our texts the 20% of time that they're spending, responding to comfort calls, you know, or fits in with our BAS. And we're just like, okay, well, we've got to keep that cheap. So we think our low price point.
Right now is very attractive. Obviously the fact that we're willing to have conversations that can come out of just that maintenance and operations budget, that's already been approved. Like we can fit within that. We're not so big that we're going to blow up an already very small budget. And also I [01:05:00] think the short payback time is really critical.
[01:05:02] James Dice: Okay. So you guys know this market really well. You have a product I'm assuming you're fundraising. How's the fundraising process going?
[01:05:11] Tanya Barham: Yeah, well, we were pretty good about funding. Most of our product development using non-dilutive. So government grants, contracts, and pilots, but that comes with its own risks.
And we really saw the infrastructure bill came and wanted to like fundraise fast so we could hire up and capture that opportunity and not just test our technology, but our go-to-market strategy. So we're almost done. The market's pretty hot right now, which I think worked in our favor. But you know, I will say that this is. Sticky weird place. Like a lot of people are scared of municipals. They're scared of buildings. They're scared of the tech and it's this weird combination of like, you're either a prop tech person or you're an energy person, but you're rarely both.
And then we also pick this segment that everybody just hates, but we love them. So government, university, and schools, we, we love them. Gus give Gus a big hug. But yeah, it's, it [01:06:00] was, I think it's a space that people have a lot of scar tissue in, so going okay. But I would say like, I can't wait to prove the people that said no wrong.
[01:06:10] James Dice: Love it love it. Founder's attitude Very cool. I love hearing this journey from all these different, different perspectives, and now you're in the buildings into the right customer for you.
[01:06:25] Tanya Barham: This is awesome. Like I love working with building operators, right?
Yeah. Isn't it such
[01:06:29] James Dice: a fascinating problem to solve? It's amazing problem to solve
let's finish with carve-outs. I'll go first. So my carve-out is I just saw the movie dune and this is going to bring out this is going to bring out the nerds in the audience, but I've read dude.
And it was just the first time I saw the movie and I could not recommend it enough. I loved it. I thought they made every part that I loved about the book. They put it into the movie, which you got to love when that happens. And I cannot wait for like a year and a [01:07:00] half from now. And the
[01:07:01] Tanya Barham: second part is going to come here.
There's another one coming. Well, I mean the books, like what? 700 pages, there'll be 10 more of these at least. Yeah. So
[01:07:07] James Dice: the movie is just the first half of the first book. So I highly recommend those of you
[01:07:12] Tanya Barham: that hadn't seen. And now I need to see that I need to see it. Yeah. Best quote from the movie. Is it a quotable kind of a movie or more just beautiful movie? Oh,
[01:07:21] James Dice: I think the, this doesn't in the book, I don't know why they put it in the movie, but not in the book, but literally the first scene is, and this is going to expose my nerdery, but voice sidecar is like the, you know, the, the emperors warriors, the emperor soldiers, they read this thing at the beginning.
It's like dreams are messages from the deep and that quote is just so, so, so good. I love it so much. So I've been thinking about it all week, actually dreams or messages from the.
[01:07:55] Tanya Barham: I want to say this in a spot where you can edit it out if you want. But [01:08:00] speaking of that, I'm like, there's a side of James dice.
I learned about it as I was researching for this. I read your poem tenderness online. I'm like, oh, James was, James was practicing a little Buddhism, I think. Yeah, it was on your blog. So anyway after having read that, I'm not surprised that you just picked that quote. Inspiration from the movie,
[01:08:20] James Dice: but the other, the other good co-fund movie is at the end, but I won't spoil it.
So I didn't spoil it. The first quote, what's your carve out?
[01:08:29] Tanya Barham: Oh, what's my out. Oh my gosh. Well, I had a different one cause I had just, like I said, watch the big short the other night. And that was really interesting. But now that you're talking about doing like the blade. The original and the remake or two of my favorite movies.
And, you know, I know a lot of people couldn't get into this, like very French, very like, artsy-fartsy I loved it. Like second blade runner. I was a hundred percent all in on it. I found it really good. So
[01:08:56] James Dice: we're going to go down a deep rabbit hole here. I didn't mean to do this, but [01:09:00] that's and director there they're the same director, Dennis Illinois, but yeah.
And you can tell when you watch it,
[01:09:05] Tanya Barham: for sure. That was kind of the sense that I got when I saw the previous. And as you were talking about it, I'm like, I wonder if it's the same director as blade runner, because I loved that.
[01:09:13] James Dice: And if you love blade runner and you love doing, you have to watch his other movie, which is arrival, which is like my.
[01:09:23] Tanya Barham: I will watch that. Hey, have you watched delicatessen? That's one of my favorite movies of all time. It's so cute. Okay. You got to watch it.
[01:09:31] James Dice: Dune, arrival and blade runner 2049 or yeah, those are amazing, amazing movies. Thank you for sharing
[01:09:37] Tanya Barham: that one. Oh, totally. Thanks James.
[01:09:44] James Dice: All right friends, thanks for listening to this episode of the Nexus Podcast. For more episodes like this and to get the weekly Nexus Newsletter, which by the way, readers have said is the best way to stay up to date on the future of the smart building industry, please subscribe at nexuslabs.online.[01:10:00] You can find the show notes for this conversation there as well. Have a great day.
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