Bringing Green Energy to the Grid—Former President of California Utilities Commission Talks EVs, Digital Solutions and Climbing Telephone Poles

An interview with Michael Picker, former President of the California Public Utilities Commission and currently Partner at Caliber Strategies
By Bo Yang, Senior Director and Head of the Energy Solutions Lab at Hitachi America R&D

“If we can define the problems, the opportunities and the interdependencies, the digital solutions are going to be more and more critical,” says Michael Picker, former President of the California Utilities Commission and currently a partner at public affairs firm Caliber Strategies, in my interview with him. As Senior Energy Advisor to Governors Arnold Schwarzenegger and Jerry Brown, Picker has played a key role in shaping the energy policies of the fifth largest economy in the world with arguably the most ambitious clean energy goals in the country. I was fascinated to hear about his heartfelt vision for a greener California and was impressed with his in-depth knowledge of ground-level issues—not to mention his unyielding candor.

Here at Hitachi America R&D, we believe that communication and co-creation with an array of stakeholders are essential to innovation and digital transformation. Picker, too, believes that collaboration and getting out in the field are critical to developing and implementing sustainable solutions to reduce carbon emissions. Hear more about his pursuit of a greener California below.

Disclosure: The development of Hitachi America R&D’s energy solution GLOW—an intuitive cloud-based application designed for utilities to accommodate DERs to the grid—was funded by the California Public Utilities Commission from 2018 to 2023.

This interview has been edited for clarity.

Bo: The latest data from the California Energy Commission says that over 37% of the state’s electricity comes from renewable energy sources like solar and wind. This was an increase of 3% over 2020. This sounds like we are making progress, slowly but surely.

Picker: We certainly are, across a number of sectors. For example, three years ago, anybody I talked to about the electrification of transportation was only talking about residential and retail, maybe a little bit of fleet. Now we’re talking about electrifying heavy goods movement, a new state policy enacted with the Clean Fleets Rule adopted by the state Air Resources Board earlier this year. So yes, we're definitely making progress towards our carbon goals and developing the policies we need.

We need to keep in mind, though, that as the cost of technologies such as rooftop solar have come down, power generation requiring two-way flows of energy has spiked everywhere. This is problematic because, as you know, the grid was designed only for one-way flows.

You add in EV charging and electric transportation—whether for personal EVs or the electric cargo vehicles that serve California ports —and there's going to be a lot of two-way activity in infrastructure that was designed to support “dumb” one-way flows from large, centralized substations. This bidirectional use of vehicle batteries is key, because transportation comprises 40% of California's transmitted carbon emissions and while EVs will reduce carbon emissions, they will challenge local as well as system-wide grid reliability.

I’m talking to trucking companies that have ordered thirty trucks, arriving within the year. But unfortunately, they’re building their charging facilities in places whose weaker, low-voltage distribution systems were never equipped to have that many large loads, so the utilities won’t be able to guarantee the availability of an augmented infrastructure that could support that kind of load until long after the trucks have shown up.

I talked with a large parts company in California a couple of years ago and they were actively building new EV charging stations because the state told them to. But if all these EVs decide to charge at once, will the utility grid be able to accommodate those charging loads? How can we coordinate them? Is there a way to have automatic control?

We have an industrial policy called the Renewable Portfolio Standard to jumpstart bulk, clean power needs, but we need to address the finer details. We need a more integrated strategy. We need systems thinking. We’re coming up with great ideas but we’re not developing them evenly.

Bo: How do we upgrade an outdated grid so it can better accommodate the shift to renewables? My team at Hitachi America R&D has worked with major utilities in California, and we are making great progress. But how do we move faster? How do we make a bigger impact?

Picker: Well, first, I’d love to see humble policy decision makers who spend more time asking questions than telling us they know what the answer is.

Everybody is only seeing one facet of the problem. It's like that old moral fable about the ten blind philosophers and the elephant. If you're holding the trunk, you think it's a snake. If you're holding the foot, you think it's a tree.

In other words, never trust anybody who is only talking about one technology as the solution. This is part of a whole set of new trends, and we’ve got to understand the best way to integrate those trends as well as the individual technologies within them.

What we have here is a heterogeneous and ill-defined problem domain. If we can define the problems, the opportunities and the interdependencies better, the digital solutions are going to be more and more critical.

When I was going around talking to college campuses about the challenges of renewable energy, I noticed that many young people wanted to go and work in policy. They wanted to be advocates or legislative staff and to have high-level positions at regulatory agencies.

I’d just look at them and say: Doesn’t anybody want to climb telephone poles? That's what gets it done. People going to meetings are lucky to make $60,000 to $80,000 a year. An electrical worker will make $120,000 to $140,000 after five years.

There aren’t enough people out there who have a C10 electrical worker license to expand the meter box to handle renewable energy sources that people are advocating for. Nor are there enough utility power flow engineers who can model our future requirements.

The key to integration is really the ability to go out and put two wires together correctly, to put two people together in the right meeting to come up with the solution, to get large agencies to coordinate and support the developers in a timely fashion.

This is the less glamorous set of tasks that we need to learn to value. These are high-level blue-collar tasks, and in our world, where people tend to want to work from home, people haven’t gone for these kinds of jobs, unfortunately.

Bo: So there seems to be a lack of human resources and brainpower to model the complexities that are introduced by EV and other Distributed Energy Resources, or DERs. We’ve developed an AI-enabled digital solution that can model certain scenarios and automate certain tasks, improving the efficiency of the existing workforce and empowering them to accomplish more.

Picker: The time has come to design a truly active and responsive grid, one that’s less centralized and which gives customers a significant amount of control.

This is an opportunity for digital technologies to really create value. Of course, they’ll have to enable the grid to respond to demand within milliseconds. We can’t have somebody reading meters in a control room and pressing buttons, or a central computer doing all the monitoring. A lot of this has to be distributed. We need to build these solutions into the panel in residences to avoid the time and cost of upgrades.

This distribution challenge is across the board. In California, 50% of the housing was built before 1978, so we don’t have the benefit of energy efficiency. All of those houses were built around a range of old assumptions. They probably have a 30-amp meter board. Now you’re seeing 200 amps! That means that we’ve got roughly seven to twelve million residential facilities that need fundamental rewiring. This system was never designed for the future that we’re quickly innovating into.

If we want to turn AI loose on this question, we could ask: How do you manage loads flexibly? How do you couple that with tariffs that incentivize people to use electricity when we have plentiful solar, but to avoid using as much when we have an air conditioning peak? I think there are plenty of opportunities for AI to create value, but these are very complex machine learning tasks we’re facing.

Bo: I’m very interested in hearing your opinion about the shift to decentralized power supply and control. What role will utilities play? Will we see the emergence of Distributed Service Platforms, or DSPs? And how can digital solution providers like Hitachi future-proof their solutions?

Picker: Well, that was the strategy in New York a few years ago. But their DSP policies really didn’t work because there wasn’t enough customer uptake at the time. Maybe it was just too early.

I think that we’re just going to have to wrestle with this far more. Recently, an independent system operator calculated their ten-year plan for transmission to ensure energy reliability in California, and the cost they came up with was about $7- $10 billion. An IT consultant for the California Public Utilities Commission looked at the cost of preparing our distribution system for EV charging and they came up with a cost of $50 billion over the next ten years. A ratepayer advocate says it’s only $30 billion.

Whatever the cost may be, just keep in mind our need to upgrade the distribution system to deal with all these decentralized and consumer-driven loads that are almost 3-5 times what a centrally planned system can handle.

We have to really start to think again about the electric industry as we move into displacing fossil fuels with clean electric fuels. We’re going to have to look at how this fits into all the other policy frameworks. Everyone loves the promise of technology.

Bo: These days, cars are much better at gathering data than utility companies. But there's no regulation requiring car vendors to share their information with utilities, so these two big stakeholders aren’t talking to each other. When we design digital solutions, we make sure they have features that lower the barriers for cross-organizational collaboration. What more can we do to enable collaboration?

Picker: EVs and the utilities come from different periods in America. The electric utilities, the gas utilities and even the phone companies are all about 120 to 130 years old.

The thinking behind early utilities was that if you gave them a monopoly franchise that could buy a lot of rails, a lot of locomotives, and connect them quickly, that could help build a lot of power plants and transmission and get power to consumers. They didn't have competition. These days, they’ve got competition from outside of that structure.

How do you build across these fundamentally different kinds of entities?

That’s not an easy challenge to address. There’s not a lot of sharing of findings between EV leaders and solar companies like Blue Horizon. It’s not going to be easy to fix that.

Is there a role for the government to create data brokers, or to be a data broker?

Having been in a large state agency that had lots of IT problems, I'm not sure that the state is the right entity to be the data broker. But is there some way to create that data utility that can be the interface between all these folks and provide the cybersecurity to protect customers? Possibly.

Bo: It sounds like a classic case of the innovator’s dilemma. Utilities have existing infrastructure that they can't pivot away from easily. But based on what you’ve shared with us, the industry has good policies and smart, well-meaning people. They know where they want to go. It comes down to collaboration and execution. Who, then, are the innovators? Who’s getting it done?

Picker: One is Portland General Electric, which created a test bed to look at how to use more distributed intelligence and machine learning and apply that to the growth of these DER's. They’re still really early on this.

Southern Cal Edison has gone deeper. They have a whole lab facility that's pursuing a lot of pilots. They even offer a voluntary flexible rate that’s designed to reward consumers who opt to use electricity at low-demand times of day, and they also offer customers who install solar panels to export excess electricity their panels produce back to the grid at an hourly rate.

There are other folks out there like Holy Cross Energy in Colorado, and the strongest innovators tend to be pure-play electric companies because they see the future in a more focused way.

Once these companies truly harness the power of renewables, they’ll be able to take market share away from the gas companies. And that, combined with outfitting California homes with updated wiring to support these new flows, will help usher in a much greener era.