How to make small hydro more like solar

In this episode, Emily Morris of startup Emrgy discusses the
promise of small-scale hydropower and the opportunities it could
provide for both power infrastructure and water management.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


Hello Volts listeners! I thought I would start this episode with
what I suppose is a disclaimer of sorts. I suspect most of you
already understand what I’m about to say, but I think it’s
worthwhile being clear.


Every so often on this show, like today, I interview a
representative from a particular company, often a startup
operating in a dynamic, emerging market. It should go without
saying that my choice of an interviewee does not amount to an
endorsement of their company, a prediction of its future success,
or, God forbid, investment advice. If you are coming to me for
investment advice, you have serious problems. I make no
predictions, provide no warranties.


The fact is, in dynamic emerging markets, failure is the norm,
not the exception. My entire career is littered with the corpses
of startups that I thought had clever, promising products — many
of whom I interviewed and enthused about! Business is hard. In
most of these markets, a few big winners will emerge, but it will
take time, and in the process most promising startups will die.
Such is the creative destruction of capitalism. I'm not dumb
enough to try to predict any of it.


More broadly, I am not a business reporter. I do not have much
interest in funding rounds, the new VP, or the latest earnings
report. (Please, PR people, quit pitching me business stories.) I
do not know or particularly care exactly which companies will end
up on top. I am interested in clever ideas and innovations and
the smart, driven individuals trying to drag them into the real
world. I am interested in people trying to solve problems, not
business as such.


Anyway, enough about that.


Today I bring you one of those clever ideas, in the form of a
company called Emrgy, which plops small hydropower generators
down into canals.


Now I can hear you saying, Dave, plopping generators into canals
does not seem all that clever or exciting, but there’s a lot more
to the idea than appears at first blush. For one thing, there are
lots more canals than you probably think there are, and they are
a lot closer to electrical loads than you think.


So I’m geeked to talk to Emily Morris, founder and CEO of Emrgy,
about the promise of small-scale hydropower, the economics of
distributed energy, the ways that small-scale hydro can replicate
the modularity and scalability of solar PV, and ways that smart
power infrastructure can help enable smarter water management.


Alright, then, with no further ado, Emily Morris of Emrgy.
Welcome to Volts. Thank you so much for coming.


Emily Morris


Thank you for having me. It's exciting to be here.


David Roberts


You know, I did a pod a couple of weeks ago about hydro and sort
of the state of hydro in the world these days. And one of the
things we sort of touched on briefly in that pod is kind of
small-scale, distributed hydro, but we didn't have time to really
get into it. And I'm really fascinated by that subject in
general. So it was fortuitous a mere week or two later to sort of
run across you and your company and what you're doing. Your sort
of model answers a lot of the questions I had about small-scale
hydro.


Some of the problems I saw in small-scale hydro, just because it
just seems to me so at once small, but also kind of bespoke and
fiddly. And your model sort of squarely gets at that. So anyway,
all of which is just to say I'm excited to talk to you about a
model of small-scale hydro that makes sense to me and some of the
ins and outs of it.


Emily Morris


Yeah, absolutely. And I'm thrilled to be here. I'm thrilled to
tell you more about our model. And I love that you called
small-scale hydro bespoke because I was talking with one of the
larger IOUs a few weeks back and they referred to hydro as
artisanal energy. And I got such a kick out of that because it is
in so many ways, hydro can often be a homeowner's pet project
that has a ranch or something like that. And bringing hydro into
a world in which solar panels are taking over distributed
generation and utility scale, and doing it in such a
standardized, modular, repeatable format, bringing that
architecture into water, is something that hasn't yet really been
done successfully. And what we're trying to do here at Emrgy.


David Roberts


it is kind of like a lot of this echoes solar. It's sort of an
attempt to sort of replicate a lot of what's going on with solar.
But we're getting ahead of ourselves. Let's start the business
model is, to put it as simply as possible, is you make generators
and you plop them down into canals. So let's start then with
canals, because I suspect I am not alone in saying that I've gone
almost all my life without thinking twice about canals. I know
almost nothing about them. Like, what are they? Where are they?
How many are there?


This water infrastructure kind of surrounds us is almost
invisible. So just talk about canals a little bit. What are they
used for and where are they and how many are there? What's the
sort of potential out there?


Emily Morris


Yes, canals are almost invisible, but my goal is that after this
podcast, you'll never look at a canal the same way you'll look at
it, as a source of energy. That, man, we should be tapping that
energy and using it. Canals are our main target market. They're
really our only target market right now. We get asked all the
time, well, couldn't you do this in a river? And couldn't you do
this in tides? And the answer is yes. If you're focused on the
engineering but as a commercial founder at Emrgy, I'm focused on
the market and where can we install projects today that can be
immediately delivering economic benefit and environmental
benefit.


And so canals are that market. A canal is an open channel of
water conveyance that's moving water from one place to another
for a specific purpose. That purpose might be because it's raw
water that's being delivered into the city to be treated for
drinking water. It could be that it's an agricultural channel
taking water from a river out to farmland. It could be an
industrial flow of water that's coming from a large brewery or a
large factory and delivering that into either a river or another
piece of water conveyance. But canals are seemingly invisible.
I'll be honest, when I started Emrgy, I thought that the
technology would first thrive in a water treatment environment.


There's 30,000 water treatment plants in the US. And many tens of
thousands all around the world. And that water is running 24
hours a day, seven days a week, 365. And man, the ability to take
something modular that looks and feels like solar in terms of its
ability to seamlessly integrate into the surrounding
infrastructure, but deliver power in a baseload format was
something that immediately, I thought, water treatment. Yet when
I was really early in my entrepreneurial journey, we did our
first pilot at the city of atlanta's largest water treatment
plant. And I went out to Los Angeles and gave a white paper on it
at LADWP.


And when I was there, the city of Denver had two representatives
there. And they came up to me after my presentation, and they
said, we think you're thinking about this all wrong. You got to
come to denver and see what we've got in terms of water
infrastructure. And when I went out to Denver that next couple of
weeks, I spent three days touring probably 500 or 600 miles all
around the Denver metro area of canals that are transporting
water. You may not know that the water you drink in denver
actually comes from the other side of the continental divide, and
they bring it into the city of denver through a series of canals
and storage reservoirs that allow for the appropriate amount of
treated and stored water for the city.


And so when I was there, I thought about, okay, as a business
model, being able to deliver one to ten of these modules at
30,000 water treatment plants sounds like I need a big sales
force. And then looking at the Denver infrastructure and seeing
hundreds of miles of uniform canal that's transporting water
where thousands or tens of thousands of these generators could be
deployed with one partner just made a ton of sense. And so then I
started peeling back the curtain on that.


David Roberts


You say one partner. So are most of these two of the sort of
features of canals? That came as somewhat of a surprise to me,
and I'm sure you're familiar with this response is, first, when I
thought of canals, the first thing I thought of was agriculture.
I assumed they were mostly out in farmland. But what you have
discovered is that they are laced throughout urban
infrastructure, they are in cities.


Emily Morris


Oh, absolutely. It's both. It's certainly both. Our project we
have a project with the city of Denver that overlooks the Denver
skyline right there near the city. And if you overlay a map of
Phoenix roadways with map of Phoenix waterways, you can see two
highly sophisticated transport systems all throughout the
metropolitan area. Not just Phoenix, think of Houston 22 canals
and bayou's flow all throughout the urban metro area that are
both a source of water or even an attraction for the city, but
also have an inherent energy, sometimes too much energy during
hurricane season and whatnot to be able to harvest and hopefully
deliver value from as well.


David Roberts


Yeah, and so the other feature is they're not privately owned for
the most part. Most of these canals are operated by a city
municipal water district.


Is that sort of the standard?


Emily Morris


Yeah, that's correct. Typically there is an organization that
manages the water infrastructure, the canal infrastructure. It is
often public. It can be a political subdivision, like a
municipality or a local not for profit organization or co-op. It
also can be a private canal company, although those typically
remain nonprofits. They're typically a public service for the
good of the recipients of the water.


David Roberts


But the point is, you are not having to track down a bunch of
individual owners of individual canals. You can get at a bunch of
canals through one partner.


Emily Morris


That's absolutely the case. And it's all public record the
managers of water infrastructure and their contact information.
You're not going and knocking on someone's home asking if you can
put something in the backyard or something like that. This is an
operated and often, from their contractual perspective, they're
typically buying water from an entity and selling water to a
series of entities, buying water from the US Government and
selling it to farmers, something like that. And so the reporting
aspects about that water that flows through, they tend to be
detailed. They tend to be long running. And so as you think about
developing a resource assessment of how much energy is inherent
in that water that you can produce electricity from, it's not
necessarily like needing to go build a MET station and understand
exactly what resources there.


They're typically well organized, well operated, and well
documented.


David Roberts


A well characterized resource.


Emily Morris


Absolutely.


David Roberts


Okay, so you go to these canals. You make a deal with the owners
of these canals, and then you go plop down energy generators into
the canals. Let's talk about the generators, try to give the
listeners kind of a sense of how big one of these things is and
kind of what it looks like. What are you plopping down into the
canal?


Emily Morris


In terms of physical size. Our generators are an eight foot cube,
and they have their own precast concrete structure that holds
them together. So you can think of sort of half of a precast
concrete culvert, if you are familiar with the construction
world, that is an eight foot cube. We do that strategically, they
are easy to lift and handle.


They're easy to transport by trucking or other means. You can
even containerize them if you need to. And we place those into
the channels without doing any construction, any modification,
any impounding of the channels, which is a really important part
of the canals, because, as I mentioned before, that water is
going to a destination for a purpose. And so going in and saying,
yeah, we're just going to build a dam right here in the middle of
your canal doesn't seem to resonate so well. And so being able to
bring something in that's fully self supported can be placed into
the channel and held there by its own weight.


And it only weighs about seven tons, so it's not a super heavy
lift, but it's hydrostatically, designed to not shift or slide or
overturn once the water hits it. And inside of that culvert or
the concrete structure, there is a vertical axis turbine that
looks probably very similar to vertical axis wind turbines that
many of the listeners will be familiar with. And so they take
advantage of the kinetic energy in the flow using the swept area
of the turbine and the speed of the water, and generate torque
and speed around the shaft up to the power takeoff and the
generator. And so physically, they're eight foot cubes.


But from a power perspective, our smallest turbine that we sell
is a 5 kilowatt turbine. And it's the same physical footprint
that the 8 by 8 cube, but it can generate mechanically and
electrically up to 25 kilowatts per turbine based on the depth
and the speed of the water.


David Roberts


I was going to ask whether the sizes vary. So the generator, the
eight foot cube is standard. All the generators come in these
eight foot cubes, but the generators themselves vary in size
based on the water flow.


Emily Morris


Yeah, that's exactly right. We do have a deeper water platform
that goes up to about 18ft of water, and then we're working on an
even deeper platform in conjunction with the DOE. But right now,
our main platform is the eight foot cube. And the beauty of water
is that the power is exponential by the speed of the water. And
so we can place a turbine in and it can generate 5 kilowatts at
say a shallower, slower speed. Or that very same equipment can
put out five times the power output if placed in a different
location. And so as we think about coming down the cost curve,
growing to scale, we can immediately find higher density
resources that make sense today, even as a young company that
hasn't quite gotten fully to the quantities that other adjacent
industries like solar and wind have.


David Roberts


Right. So I have a bunch of questions about that. But just this
question about size brings up the question about canal size. If
you have a standard sized module, I'm assuming that canals
themselves are relatively standardized in size. With this eight
foot cube, can you confidently say, we can go to more or less any
canal and it'll work? Or do canals also vary?


Emily Morris


Canals vary, but not substantially. There are standard sizes, and
our eight foot cube does cover a wide envelope of canals in the
US. And abroad. We do see, though, that this is the array
planning and array specification, which is how we deploy these.
We never deploy them as single turbines, but really as arrays,
just like solar and wind, that with the arrays. It's a very
similar planning method to solar is you look at your total square
footage across the canal, you look at the gradient of fall along
the canal, and you plan out the optimized number of turbine
modules that make sense for that canal.


So sometimes if you have a canal that's 18 feet wide, rather than
build two 9 foot cubes, all of a sudden, you do two 8 foot cubes,
right. And you standardize and you optimize for cost even if
you're not squeezing every single ounce of power out of that
flow. And I think that's one big thing that differentiates energy
and distributed hydro from traditional sort of small-scale hydro
is we're optimizing for cost and scale rather than for utmost
efficiency, which is typically where hydro really focuses.


David Roberts


Right. And Volts listeners are very well educated on the fact
that the modularity, the small-scale and modularity of solar
panels are a huge piece of why they have proven so adaptable and
grown so fast. Like the advantages you get from standardization
and modularity vastly outweigh whatever sort of marginal gains
you could get on either side in a particular canal.


Emily Morris


Absolutely. We're big believers in that, our smallest module is
an order of magnitude larger than a solar module. But you should
think of it absolutely in that same way. We do have people,
especially the folks that are really focused in hydro, they say
to us, "Oh, your modules are so small, 5 kilowatts or 25
kilowatts, that's so small." And I say to them, "No one ever goes
to the solar field and say, 'Hey, your panels are so small.'"
It's a totally different mindset that you have to be thinking of
the module as the panel, as the individual generator that
ultimately goes into the array. And yes, our arrays will likely
continue to be on the distribution scale rather than on the
utility scale or the large transmission scale. But no question
the aggregation of modules is how power grows, this generation of
renewables.


David Roberts


Well, let's try to get a sense of just how big they are power
wise. So, 5 kilowatts to 25 kilowatts, what's a typical array,
and then what's the output of a typical array, and then maybe
just to help the listeners kind of get their head around it, how
does that sort of compare to an array of solar panels? Like, if
I'm the owner of a canal or a network of canals, and I'm trying
to decide, do I want to put a bunch of these in there or do I
want to say cover the canals with solar panels? What's the scale
comparison there?


Emily Morris


Well, if you're asking me which one you should do, I would
absolutely say both. The answer is both. One does not preclude
the other, because this is a great real estate segment to be able
to convert to renewables of all types. But when you think about
our systems at 25 module, let's say that's 40 turbines to be a
megawatt. And some canals are on the smaller side that we look at
maybe enough for two or three modules across, some of them maybe
ten modules across, just depending on the width of the canal. And
so you could place 40 modules as close as, say, half a mile away
across those four rows of ten, or it could be spread a much
longer distance, it could be a mile or 2 miles for that.


And really we're optimizing for spacing. Obviously, you don't
want to run cable to the point of interconnect any further than
you have to. We're optimizing for hydraulics. You want the energy
to recover after being taken out by our turbines as it flows
downhill. And then ultimately, we want to co-locate these with
the offtake and whether that's directly into the grid or behind
the meter with a particular industrial or municipal client. Those
are typically how we think about this. But when you think about
covering a canal in solar panels, I don't have the specific
statistics on how many linear feet equates to a megawatt or
things like that, necessarily, but you're going to see, most
importantly, that you need three times the power output or
potentially more to overcome the differences in capacity factors.
So with our system, they're typically operating 24 hours a day.


David Roberts


So in these canals that water flows through, water is constantly
going through there 24 hours a day. I would think some of it at
least would be sort of like scheduled or go in one direction and
then another direction. Are they all steady 24 hours flows?


Emily Morris


Not everything is consistent, of course, but I would say that in
the water space, the capacity factor is determined by seasonality
and or maintenance schedules, but less by intermittency. It's
actually pretty bad for a canal to be turned on, turned off,
turned on, turned off, because you end up having other
maintenance challenges, things that break issues in the canal.


David Roberts


So they want to run them?


Emily Morris


They want to run them continuously. Yes. And so depending on what
the water is being used for, whether it's a certain area of
cropland and therefore there's a seasonality to the flow that's
fairly common, or if it's municipal, it may be a year round flow.
Or depending on your region in the arid Southwest, you'll see
perennial flows a lot more frequently than you will, let's say in
Montana or Idaho, where there's obviously quite harsh winters.


And so in our case, we target canals that can be the most
predictable in their flow and the most continuous. Yet if you
have a site that is only running six months out of the year,
getting to that 40% to 50% capacity factor because let's say it
runs constantly through that six months of the year can still
lead to an incredibly exciting impactful project overall with
good returns, even though it's not on every day. Right? It's a
different mindset.


David Roberts


Right.


Emily Morris


I have definitely had water districts say. "Well, what do I do in
November, December, January if we're not flowing water?" And I
said, "You may not think about it, but every night when you go to
sleep, your solar panels also aren't working." It's just a
different mindset of something not working every day for 90 days
rather than not producing every night. And so doing that
educational piece to where projects in terms of their output and
their economic value can be highly competitive even at the
shorter seasons with canals.


David Roberts


Right. So the basic point here is that while these generators may
not crank out as much power as a solar panel while they're
generating, they are generating much more often. They're
generating around the clock. And so you have to have kind of
three times the power output from a solar panel to end up
matching the total power output.


Emily Morris


That's right.


David Roberts


They have the advantage of being base-loady, basically.


Emily Morris


Exactly. That's typically what we see is that for canals that are
running the majority of the time, you'll ultimately need if you
want the equivalent amount of annual energy, you'll need a power
capacity on your solar that would be about three times larger
than what you would need on the hydro side.


David Roberts


Interesting. Okay, so you go to a water district, you say, "Hey,
we want to generate some power from your canals." You do an
analysis of the sort of optimal kind of spacing and placing and
then what, a truck comes in or a crane comes in and just sort of
like drops these things one by one in the canal. It sounds like
installation would be pretty straightforward and pretty low
footprint, is that true?


Emily Morris


That's absolutely true. It sounds too simple to say in some ways,
but yet simply lifting the turbines and placing them into the
channel, making sure that they're level, making sure they're not
sitting on top of debris, or boulders or something like that,
that may have fallen in the canal is important. But placing them
in the canal correctly is the most important aspect of the
installation. That's unique to Emrgy.


David Roberts


So they're not connected in any way it's just the weight of the
thing holding it in place. It's not literally not connected to
anything. There's no screwing or attaching or bracketing.


Emily Morris


That's correct. There is nothing that is physically attaching it
to the canal.


David Roberts


So easy to take out.


Emily Morris


Owners love this. Yes. Because they can take it out if they
needed to ...


David Roberts


Or move it


Emily Morris


... often. Because these are operated channels they often will,
once every five years or on some periodic schedule, drive up and
down the canal or drive a bulldozer down and make sure that all
the debris is out or something like that. So they love the
flexibility. We tend to see that canal owners like the
flexibility of being able to take them out. Now onshore each
turbine, or each cross section, I should say, has a power
conversion system that has both the control system as well as the
power conditioning. And that is something we deliver as well. And
it sits on a concrete pad on the side of the channel. But then as
you connect those together electrically and then connect them to
the grid, there's no innovation from Emrgy there. It's just
optimization based on the appropriate electrical balance of
system design.


And so as we think about partnerships with other types of
developers, other renewable developers, there isn't a special
skill set that installers would need to have to be able to
install our system. The balance of system is essentially exactly
the same as distributed solar. And all you would need to do is be
able to place the turbines in the canals correctly.


David Roberts


Interesting. Yeah, I like simple and dumb. That's resilient and
that's what can spread fast.


Emily Morris


And maybe I'll just mention that when I first started this
business, I thought it was too simple. I assumed that somebody
had already done this before, that it seemed pretty obvious. And
as I looked deeper into it, I learned really the two things that
I believe have held this space back that now are no longer
barriers. One of them is regulatory. And that gets a little bit
back to why we focus on canals in general, is that up until 2015,
I believe it was all water in the US was permitted for power in
the same way. So to place our system in a canal would have been
permitted and regulated the same way it would in a river. And in
2015, FERC enacted the qualifying conduit exemption which stated
that electric projects within water conduits or conveyance
systems were exempt from FERC licensing up to 40 megawatts per
project.


David Roberts


Interesting.


Emily Morris


And so now our projects are fully exempt from FERC licensing. And
it's a 30-day notice of intent to FERC requesting that exemption,
which is lightning fast compared to other projects.


David Roberts


Yes. So you're not dealing with permitting issues, NIMBY issues,
all the sort of like land issues, all the stuff that's
bedevilling wind and solar right now you're sort of doing an end
run around that stuff.


Emily Morris


We'd like to think so. I mean, projects are always controversial
to some extent, and every neighbor may have an idea of what
they'd like to see in the canals. But in terms of general
regulatory approvals and project buy in, we tend to see this
being much lower barriers than many of the other types of land
based systems. The other thing that was a major barrier that has
since been lifted is the growing ability to use solar designed or
solar inspired smart inverters for technologies and generators
other than solar.


David Roberts


Let's talk about that first. Maybe, I don't want to assume first,
maybe just tell listeners what does an inverter do and what does
it mean for it to be smart? And maybe tell us about how those
were developed in solar.


Emily Morris


Sure. So the generation of the power from the water or from the
sun typically has been done over many decades and even centuries
in terms of hydro, very successfully. The physics of getting
energy out of a resource is something that is fairly
straightforward. Now, the modern scalability of being able to
replicate that in thousands of locations all around the world,
conveniently into our modern electricity grid, is something that
I would say has been hugely influenced through the development,
industrialization and scalability of the smart inverter. And what
I mean by that is actually readying the power, conditioning the
power, making it grid compliant and ready for delivery into the
grid, has received billions of dollars of industrial development
in the solar industry to take it down in size and form factor as
well as in efficiency.


And if that was not available to us, and Emrgy had to build out
an industry much like solar to drive industrial development of
power conversion and power delivery, to be able to install it
globally, we would be on a 20- to 30-year timeline. We would need
billions of dollars and or it would just be really slow. If we
had to do all custom power equipment, then every utility would
have to come in and do a full engineering review of what we were
building, whether it would cause problems to the grid. And what
we have been able to take amazing advantage of is the ability to
utilize a smart inverter that was originally designed for solar
and largely used in solar, and be able to use that to control our
hydro-generator without invalidating its utility certifications.


You have to know quite a bit about power systems, perhaps, to
know that controlling the power curve in a hydro-turbine and
controlling the power curve in a solar panel is very different, a
lot trickier than one might think. And being able to manage the
torque and speed, to be able to manage and optimize a power point
along the curve is tricky when you're trying to use a device that
was made for a different industry. And so one of the biggest
areas of Emrgy's technology, development and innovation is not
necessarily in the. Physics in the water of how we're getting
energy out of the water.


It's really how are we delivering that electricity now to the
grid in the most cost effective, high efficiency and streamlined
way. And being able to use the same inverters that the solar
industry is using helps put us on a much closer playing field to
be able to deploy these projects in an apples to apples way. And
even, as you mentioned, do you do solar or hydro and canals? It's
great to do both and potentially even put them right into the
same inverter. And that's the beauty of where distributed
generation, I believe, is going, is to a flexible environment
where you can have that base load, have your peaking load, have
your energy storage and share as much of the cost along the
system as you can.


David Roberts


So you can just use smart inverters that are designed for solar
off the shelf. There's no engineering or tweaking or fiddling you
have to do.


Emily Morris


So we're prohibited from doing a ton of tweaking inside the
inverter because obviously they go through quite a level of
utility compliance and we can't necessarily change that. However,
what we have is a power controls unit. It's a NEMA panel that
looks like a standard electrical panel that sits right next to
the inverter and that contains all of our fairly sophisticated
controls and mechanisms to allow us to control our system and
have it communicate with the solar inverter in a language that
the solar inverter understands most of our innovation. And IP in
that area sits in that power controls unit rather than in the
inverter itself.


David Roberts


Got it. And so what do we mean when we say smart inverter? I've
always kind of wondered, do people just say that because it's
like sophisticated? Or is there a clear distinction between a
dumb inverter and a smart inverter?


Emily Morris


I'm probably not best equipped to handle that question, but I can
say that from our perspective, using the inverters that we do use
enables us to have both the smart capabilities as it relates to
grid following, ensuring the grid islanding or other types of
issues are matched. But also for us, having the data aspect of
what's collected in that inverter and the amount of information
that we can pull off of it is very helpful for us. I mean, we
collect data in a number of ways and using the solar inverter or
the smart inverter helps us to triangulate and calibrate that
data to ensure its accuracy. So, for example, the inverter will
give us power output, real time data in that regard, while we
also have sensors off board the system in the water that reads
flow information, speed information.


And so we know if there's a change in power, is that related to a
change in flow and we can calibrate that via the sensors, or is
it related to an issue in the system? And using both the data off
the inverter as well as off of our other data collection systems,
helps us to diagnose and monitor device health as well as to
especially as we continue to innovate, predict and alert water
infrastructure owners of decisions they may need to make.


David Roberts


The obvious service you're providing to a water district is we're
going to give you some power, some economical power. But I'm
wondering about, if you're collecting so much information about
water flow, is that information helpful to the canal owners? In
other words, are you able to improve the actual operation of the
water infrastructure itself?


Emily Morris


We are, and I believe that this will continue to evolve as the
industry continues to evolve as well. But right now the water
management, especially out in the field, is managed by an aging
population. I think the last figure I saw that the average what
they call a ditch tender or ditch rider, someone that is
monitoring the health of the water conveyance system, the average
age of that title is 56 years old.


David Roberts


A familiar story in so many of these areas.


Emily Morris


Yeah. So recruiting young talent, recruiting the right type of
personnel is tough and so being able to provide data that can
integrate back into a SCADA system or otherwise be able to inform
those that are not in the field things that may be happening in
the canal is definitely valuable. Now over time as well. The
canals have been operated for mainly one purpose for many decades
now, which is to deliver water and earn revenues off of
delivering that water. They're selling the water now as they will
be running water and earning revenues from generating power along
the way.


Working with water districts to optimize their irrigation
schedules or their deliveries, to be able to take advantage ...


David Roberts


So they could change the way they do things to optimize power
delivery too?


Emily Morris


Yes, I mean, this is one of the very few generation types,
particularly on the distribution grid, that is a controllable
feedstock. And so to the extent that a water district can
generate double the revenue by flowing water during specific
times, there are incentives to do so.


David Roberts


Interesting.


Emily Morris


And we can provide those. And so aligning incentives between the
water district Emrgy and the farmers that they serve to be able
to really bring a powerful force of renewable energy onto the
grid at the right times of day or the right times of year is
something that we believe distributed hydro has a unique ability
to do.


David Roberts


So I'm guessing that this is in early days, this idea of a water
district sort of co-optimizing water usage and power output. I
would guess that there's a lot of running room there to find
efficiencies and find better ways of doing things.


Emily Morris


That's right there is it's early days. I mean, we are working one
of our municipal clients, the canal that we're installed within,
its only job is to manage water levels between two reservoirs. So
there is a ton of operational flexibility within that section and
being able to work with them on optimization of the water flows
to drive power is something very straightforward. Now, there are
other districts that have been doing things the same way for 50
years. And perhaps they're going to be more of the districts
where you have to put the incentive out there first, let them
start to see how it changes their income with a change in flow
and guide them on that, and we'll see it over time.


But this is one thing that we talk about a lot at Emrgy, is how
to adequately predict future behaviors with water as a function
of how this partnership can work together and provide them both
the data, the revenues and other services that are helpful.


David Roberts


You could even imagine water districts with an array of these
turbines installed maybe playing a role in demand response type
things. In other words, they might have the ability to sort of
turn it up and down on demand as a source of value.


Emily Morris


Absolutely, and they can do it both on the water side as well as
somewhat on the power side as well. If you're familiar with the
energy water nexus, the concept that it takes quite a bit of
electricity to move water, move and treat water, a lot of these
water districts are huge electricity consumers. And so one thing
we often talk about with districts is what are their highest
consumers of electricity? Is it a particular groundwater well? Is
it a particular pumping plant? Is it a particular water treatment
facility? How can we both utilize the water to drive demand
response and to drive smart operation of water and therefore
power?


As well as should we cluster these systems around some of those
highest consumers even in some ways behind the meter or along
with energy storage to where they're able to keep that demand
down into a whole different echelon from what they've been
operating at?


David Roberts


Right. Well, this raises the question of in your installations so
far, who's buying this power? Who's the modal kind of consumer?
Is it the water districts themselves? I mean, they're big
electricity consumers. You can see this as kind of a self
contained loop kind of thing where they're sort of generating the
power that they're using or are you selling it into the grid? Are
you selling it to particular off takers or is there a standard
model yet?


Emily Morris


There's not a standard model yet. I would say the most common
models are power purchase agreements directly with the water
district so buying power from us rather than from the grid. And
in many cases, if we're in states that have advantageous net
metering, which I know are becoming fewer and fewer each year,
but able to use that type of arrangement where essentially
they're receiving a bill credit and then remitting those savings
onto Emrgy


David Roberts


And net metering works the same here as it does for solar panels?


Emily Morris


Yeah, exactly the same. Exactly the same. Down to the same form
you fill out from the utility, all the same. And then there are
certain states that have advantageous hydro avoided cost
contracts where we can just pull directly on a standard offer
from the IOU in the area that can allow for a bit of a
streamlined contract negotiation. Then when you're meeting with
the district, you're only talking about how much we're going to
be paying the district to host the system and share those
revenues with the IOU rather than contracting with them on power
purchase directly.


David Roberts


Right. A little easier for them. And that sort of raised my next
question, which is, is the business model that you go to a water
district and sell it these turbines and then it operates these
turbines, or is this a power as a service type of arrangement
where you own the turbines and operate them and just sell the
power to the districts?


Emily Morris


Yeah, Emrgy has always been organized with a goal toward power as
a service. We're currently doing that, although in our first
reference projects, we needed to sell the turbines just to get
equipment out there, get people familiar with it, which we were
successful in doing. Now we're focused primarily on a power as a
service model. Although water does tend to be an industry with a
high value on ownership. And so many of the districts we work
with, they're either interested in being a part owner, they're
interested in a future buyout option or transfer of ownership
option, just because it's quite common that the manager of the
water district grew up at the water district, had maybe a father
or grandfather that worked there.


And so they focus on generational outcomes. They want to see long
lasting systems. They don't want to see us come in, plop
something in and then blaze off. They want to know that we're
going to be there for the long haul, which with water power that
is one of the other benefits is that this is an electromechanical
system that if properly maintained, will last for many decades.
It doesn't have that inherent chemical degradation.


David Roberts


Right, solar panels are I think the official is 20 years, or in
practice they last a little longer than but I think they're like
generally certified for 20 years of operation. What's one of your
turbines? Is there a specific fixed time period that you
guarantee or how long will these last?


Emily Morris


Yeah, well, we market 30 years. We seek out 30-year contracting
arrangements on both site hosting and power production and sales.
But truly there's nothing that drives that 30 years aside from
that's what our clients are used to seeing from solar or wind or
other types. For us, if these systems continue to be maintained,
well, we do do an overhaul every 15 years and make sure that all
the equipment is well maintained. But ultimately I was just in
Idaho, a few weeks ago and there was a hydro-plant there that had
similar materials, similar bearings, similar turbine blades,
generators.


It was 113 years old. And I won't live long enough to know if one
of our turbines can last that long, but there isn't anything
inherent of the system that just breaks down and ultimately
causes it not to function.


David Roberts


Right. So another question is which these days I find myself
asking every guest, which is what is IRA doing for you? Is the
Inflation Reduction Act helping you in some specific way either
in manufacturing these things and by the way, they're
manufactured here in the US?


Emily Morris


They are.


David Roberts


So that's domestic content, what's your relationship with the
IRA?


Emily Morris


While we are still early in how the IRA is being implemented and
transacted against within our projects, the understanding of how
the IRA will provide advantage to the projects is massive for us.
You're spot on. Our systems qualify for both the production tax
credit and the investment tax credit. And by both, I mean either
we can use either one. We meet the requirements for the domestic
content requirement, and many of our projects that we're seeking
are in energy communities as well.


David Roberts


Oh, right.


Emily Morris


And so the opportunity for quite a substantial tax benefit as a
function of these projects. And I'll say, in addition, some of
the other major IRA programs or BIL programs that funded both the
Department of Energy's Office of Clean Energy Demonstrations,
OCED, or the USDA's Rural Energy for America program, the REAP
program, are also incredibly advantageous to our projects. A
substantial amount of our project pipeline right now is in USDA
REAP eligible census tracts, which means that they qualify for
either loan guarantees, which provides for commercial lenders to
be able to offer lower interest lending to the project, or grant
programs for renewable energy systems up to a million dollars
each. And so these can provide, especially given that these are
not exclusive, so we can bring in both REAP loan guarantees as
well as the IRA tax benefits into the same project, making them
incredibly attractive even in an earlier stage of a company where
we haven't yet optimized cost and whatnot.


David Roberts


Interesting, so you're already in a position where you can go to
a water district and offer them a pretty sweet deal, very low
upfront costs, a new revenue stream, fairly minimal maintenance.
A couple of final questions. First off, you talk about sort of
scale and reducing costs. These are pretty simple, as I said
before, as one of the benefits. Sort of simple. You have a
concrete bracket, there's a vertical turbine, there's some wires
and some power control stuff. Where is the room here for
technological advancement or is there room for a lot of tech
advancement or are you going to get more cost reductions out of
scale?


Or are you, do you think, pretty close already to this being as
cheap as it can get?


Emily Morris


Yeah, I mean, in terms of tech advancement. I often describe our
systems as sort of like when you drive past a wind farm and you
can just tell that it was built in wind 1.0 all the turbines are
sort of facing the same direction and they're sort of spaced in a
finite manner. And then you drive by a newer wind facility and
you can tell they're taking advantage of all of the wake of all
the different turbines and they're all oriented differently and
they're spaced differently. I call our system still a bit of like
that 1.0 feel right?


We're designing systems and optimizing them for the canals, but
there's things that we just can't simulate in any fluid dynamic
software until we've got hundreds or thousands of these turbines
out there operating.


David Roberts


So learning some learning by doing here.


Emily Morris


Oh, absolutely. I mean, there are times we've seen in practice
where the turbines are all generating and then let's say the
water district starts to they lower their flow and the turbines
are no longer fully submerged in the water. And we found that if
you ease off of one of the turbines in terms of its electrical
loading and it starts to spin faster in freewheel, then it can
ultimately push water levels up and the turbines upstream push
into their optimal generating capacity. And that gets a little
technical. Maybe folks listening want to call me a nerd out about
that sometime, I'd love to ...


David Roberts


About hydraulics.


Emily Morris


But nonetheless, we are definitely at the tip of the iceberg in
terms of understanding all the different wake effects and how to
create an array that is more than the sum of its parts. So I'd
say that's a big area for tech advancement. We are currently
funded by ARPA-E in advancing that what we call the term we use
is called dynamic tuning, tuning the systems as things
dynamically change around them. Another area for advancement is
certainly around hybrids and micro grids. So you made the comment
earlier about solar or this and we really believe that to really
become carbon free at the distribution level, it's going to be
many different technologies, not one silver bullet.


And so there's no reason why you shouldn't combine either
floating solar or ground mounted or spanning solar together with
our system, share as much of the balance of system as possible,
drive LCOE down and have a hybrid. Adding in energy storage or
even adding in renewable fuels production is absolutely something
that you could use our system with. And we're actually, we're
funded with DOE on another one of these projects looking at
micro-grids for resiliency, because a lot of times that
resiliency piece in a micro-grid is diesel, right? When all else
fails, you have your diesel.


And so how can we create something where hydro can be that
resiliency piece as something that we're currently working on as
well for tech advancement?


David Roberts


Interesting.


Emily Morris


And I think you'll see a lot of we see Emrgy as sort of the base
platform, the distributed hydro as the base platform. But
ultimately we're interested in pursuing how water infrastructure,
which spans, as we already talked about, both rural and urban
environments, can ultimately become a key facilitator of the
energy transition, not just something that's invisible.


David Roberts


Would you Emrgy get into designing and installing hybrid systems
or would this be like a partnership with a solar company? Or is
it too early to know?


Emily Morris


We already are into designing and specifying hybrid systems and
really more so on creating, for lack of a better term, sort of
the universal plug right, where you could plug our system and
solar and other things into our overall power architecture. And
so we're not necessarily out there innovating on the solar side
or on the energy storage side, but creating a way that whether
it's with a codevelopment partnership or whether it's something
that we can source from a manufacturer, the same way that other
developers do, with a very flexible and universal application for
combining generation and storage types.


David Roberts


Yeah, because if there are efficiencies available in optimizing
one of your systems, I can just imagine once you get into
optimizing systems that are small hydro turbines and solar panels
and batteries, the more pieces you have, the more sort of room
for optimization and efficiency you have, and the more sort of
runway there is to bring down costs for the total system.


Emily Morris


And the more controllability you can add, then the more
ultimately this becomes meaningful. At the distribution scale, I
think we need more controllability and dispatchability at the
distributed scale and providing that baseload resource is one of
the key pieces to getting there. And so we don't claim to be
experts in microgrid controls or anything like that and
definitely seek partnerships in that regard. But I definitely see
this as an important piece to the puzzle in how we get to be a
more resilient set of carbon-free communities.


David Roberts


Maybe just say a word or two about why you think, because there's
a long running argument in the clean energy world where you see
this, especially in solar, where people say, well, the industrial
size, utility scale solar, you get cheaper per kilowatt hour
output, which I don't think is controversial. Like if you're just
measuring on a per kilowatt hour basis, you're going to get
cheaper power out of giant fields of solar than by scattered
multiple installations. So what do you see as kind of the
advantage of doing all this work in a distributed way rather than
just say, like adding some big new dam or some big turbine to
some big river somewhere? What do you see as sort of the
advantages of power generation being distributed through urban
and rural areas in water infrastructure like this?


Emily Morris


I wouldn't call myself an expert on the math, but while I think
you're right that at the field the cost per kilowatt hour of a
large solar farm is less. Although I don't know that that math
holds. If it's the cost of that kilowatt hour to your home, and
if you calculated the per kilowatt hour cost to your home for
utility or transmission level solar versus local distributed
energy, whether that's solar or Emrgy or anything else, I think
the number is probably a lot closer and maybe surprising. I'm
sure people have done the math. I personally don't know it, but I
believe that as we start looking and staring down the barrel,
truly, of what it's going to cost our grid, our transmission
grid, to maintain modernization and resiliency, if all we do is
keep building large utility scale solar farms, the price of
delivery to the house is no question going to become higher and
higher.


And if we can successfully generate local energy, then it should
be lower cost because you're not going to have those massive grid
upgrades. It should be more resilient so that if there's a
wildfire halfway across the state, it doesn't affect you.


David Roberts


The micro-gridding and ability to island is huge, especially if
you imagine it sort of multiplied out to every place with a
series of canals, which is more or less every city of any size.


Emily Morris


No question. And so we're big believers in the distributed scale,
but again, large hydro and large solar provides such a huge
benefit. I think we often take strong stances without realizing
all the benefits we enjoy from all the various types of assets
that are on the grid. And so I think there's a need for all of
it. But I absolutely think that there is a better way to becoming
net zero than just covering all of our remote fields in solar and
all the batteries that are needed to get there. So being able to
bring that more locally in a more continuous format is one
solution of, I think, all the many that we'll need to truly
become net zero.


David Roberts


So, final question is a question that, as you say, you get asked
a lot. Do you have an eye on other kinds of distributed water
infrastructure or is this like a canal play more or less
exclusively? Or are there other like, I didn't even really know
about canals, so are there other hidden water infrastructure that
I don't know about hiding around? Or can you imagine something
this simple and modular and low footprint working in natural
water features, streams or rivers or something? What's the sort
of next step beyond this?


Emily Morris


Yeah, I mean, we get asked for all sorts of applications that
would probably not be on your radar. Whether we can hang these
off of oil rigs out in the Gulf, or can we take advantage of the
intercoastal waterways on the barrier islands in Florida, or
could we use these in tidal environments in Australia or in LNG
plants in Singapore? I mean, you name it, we definitely get asked
about anytime someone either is driving in their car, looks out
the window and sees a flow of water, and they think, "Oh, we
should be able to tap into that energy."


David Roberts


Right, there's energy in all of it.


Emily Morris


They're absolutely right from a physics perspective, but Emrgy is
super focused on what we can do and bring value today. Because
for me, a clean kilowatt hour generated today is far more
valuable than a clean kilowatt hour that I have to plan for and
engineer for and design for that can be generated in 2028. And so
we're focused on what are near real term opportunities. I would
say that we're coming full circle back around to some of the
water treatment applications.


David Roberts


Yeah, I was going to ask, what if there's stuff in the water? I
meant to ask this much earlier. Are most of these canals carrying
clean water? And if it's not clean, if there's stuff in it, does
that muck with your turbines?


Emily Morris


Certainly. If there's undesirables in the water, it's going right
through our turbines. We design the turbines to avoid as much as
that as possible with some fluid mechanic designs, but we have an
operating mode that essentially will flush the turbines if
needed. If they're stuck, if there's debris or algae or something
on there, that's a very similar mechanism to what you find in a
pump to flush it and get rid of any alien items. But nonetheless,
I would say that in terms of water treatment, we'd be focused on
effluent channels of already treated water that's returning out
to a different water source.


As I mentioned before, we are doing some R&D work related to
riverine and tidal resources. When I started Emrgy, I said, "Hey,
we're going to pick a market that we can really master. And if we
can master the product and master the base platform that can
scale, amending it for a specific environment is much easier than
trying to create a product in lots of different environments at
the same time." So over time, perhaps you'll see us in rivers or
you'll see us in tides. I don't think it'll be anytime soon. The
UN Food and Agriculture Organization estimates that there's 2
million linear miles of surface water infrastructure in the world
over the globe.


And so we'll be pretty busy in the canal market for a long time.
And I think building a really impactful technology for this space
along the way. But certainly we'd be open to collaborations or
exploring other markets as those become, I believe, more
accessible and developable.


David Roberts


It's exciting to me because this is sort of, as we said, modular
and repeatable in the way that solar was, but at the very, very
beginning of that journey that we've seen solar go through, which
is scale expands, it gets cheaper. You find your ways into new
niches. You find your way into applications you didn't even know
you were going to get near. Just sort of like it's a self
reinforcing cycle of sort of scale and cheapness and then
spreading to new applications. That's been fascinating to watch
in solar, and it's sort of just at the outset here in
small-hydro.


Emily Morris


Absolutely. We hope we can leapfrog some of that, having learned
from all the things that they've done and being able to actually
adopt many of their innovations like the inverters and whatnot.
But no question, this is an emerging asset class. There's still
tons to learn. And as we scale, I'll like to look back on this
podcast a few years from now and see how many of my predictions
help.


David Roberts


Yeah, we'll have to have you back on. Alright, Emily Morris of
Emrgy, thanks so much for coming on this really intriguing and
exciting new area here, so I appreciate you sharing with us.


Emily Morris


This was great, thanks for having me.


David Roberts


Thank you for listening to the Volts podcast. It is ad-free,
powered entirely by listeners like you. If you value
conversations like this, please consider becoming a paid Volts
subscriber at volts.wtf. Yes, that's volts.wtf, so that I can
continue doing this work. Thank you so much, and I'll see you
next time.


This is a public episode. If you'd like to discuss this with other
subscribers or get access to bonus episodes, visit
www.volts.wtf/subscribe