We're staring down the barrel of 400 gigawatts of load growth from data centers, EVs, and electrification. My guest today argues the answer isn't only more generation; it's orchestration. Michael Grasso is the CEO and founder of Gridrails. He helped deploy the first residential storage batteries at Sunrun. He ran the largest residential storage virtual power plant in Puerto Rico at Sonova, and now he's building the software layer that gets your battery, your car, and your water heater working for the grid, and gets you paid in real time for it. Tim Montague. This is the Clean Power Hour.

intro:
1:32

The clean energy industry is moving fast. The deals are getting bigger. The technology is evolving, and the stakes have never been higher. Welcome to the Clean Power Hour, the podcast for solar, storage, and microgrid professionals who want to stay ahead of it all. Each week, your host Tim Montague, industry advisor and president of Clean Power Consulting Group, brings you unfiltered conversations with the leaders actually building the energy transition. Now, here's your host Tim Montague.

Tim Montague:
2:07

My guest today is Michael Grasso. He is the CEO and founder of Grid rails. Welcome to the Clean Power Hour, Michael. Hey,

Michael Grasso:
2:14

Tim. Good afternoon. Great to be here.

Tim Montague:
2:16

Before we get into grid rails, Michael, give our listeners a little background on yourself.

Michael Grasso:
2:21

Thanks, Tim. I've been in the power industry now for about 17 years. Second half of my career, first half was in telecommunications and building services across this country, in the entity that's now known as AT and T, but in the 17 years that I've been in power, I've I've really focused on all parts of the stack. So, starting off with the company that is now Vistra, working in their retail energy brand, moving on to be part of Sunrun and growing that business, and then over to Sonova and growing that business. And in all of these businesses, I've gotten to see firsthand what it takes to deploy distributed resources, manage those distributed resources, help customers understand the benefits of the energy that they are producing and consuming, and work around all different types of rate plans, regulatory environments, and most importantly, virtual power plant structures, in order to help stabilize the grid with all those resources that we are bringing to it.

Tim Montague:
3:24

When you were at Sunrun and Sonova, what was your experience with customer-owned resources and BPPs, and how that experience, or I guess, what was it in that experience that led you to found Gridrails?

Michael Grasso:
3:40

So, if you think about the Sunrun model when I was there, we were just a solar company, and it was working with my team in those days that we actually deployed the first residential storage batteries. We worked first on an LG Chem solution, and then we grew that into a Tesla solution. And then we had multiple different markets and products that were available. And through that technology, the ability to actually now store and release power when it was most needed, we were able to start to participate into the first virtual power plants that we had in California, so at that time it was PG&E Southern California Edison were experimenting with different program constructs that started to pay participation of that energy into their local networks. In the growth into Sunova, we had a much broader footprint. We were active in 55 states and territories, and that gave us exposure to some of them, some some broader markets, if you will. Specifically in Puerto Rico, where we ran the largest residential storage virtual power plant to support Luma, the local grid in Puerto Rico. We also have programs in the Northeast, in the West, across all the all the markets that we were active in at the time, that had some type of a program we could participate batteries into. Those experiences, plus what I had at TXU Energy, led me down the path to found Grid Rails, and it was really the experience that we didn't have enough capability in any of the commercially available software platforms that were in the market at those times. This was both the ability to control multiple different types of energy devices to operate them and orchestrate them in real time, and to draw the consumer in to want to be participatory in the programs that we were working with the local utilities to execute on, so grid rails really came out of the concept that we needed more control, more consumer benefit, and we needed to be able to support activities that really help. To stabilize and utilize more grid energy when it was most important,

Tim Montague:
5:57

there are now 34 states with some form of demand response or virtual power plant program on the books. Bring your own device, bring your own battery, pick your flavor, and yet by Michael's numbers, only about 20% of eligible devices are actually enrolled, so the question isn't whether your program exists. It's why so few of us are saying yes.

Michael Grasso:
6:19

I mean, let's think about ourselves as consumers. If if we don't understand the value of something, it's really hard for us to get interested or excited about participating. And I think for so long, the virtual power plant space has been one of set it and forget it. We we've tried to distort what is actually happening from the consumer because you don't want your thermostat to be cycled because you're afraid it's going to get too hot, or you're afraid that if I take if something takes energy out of my battery and I need that battery later for some type of an outage or some other benefit that it's not going to be available for me, so we've all operated around different principles of how to work through those consumer challenges. But the truth is, if we worked with consumers and we explained to them what the value was, and that value is very real in dollars and cents, then I think consumers have more reason to participate. They're not going to just opt out. Historically, programs in the virtual power plant space have been such that the consumer is devices engage in some activity, and it may not be for months or longer that they actually find that benefit, that they're actually compensated, and it might come in the form of a gift card or a bill credit, but it's hidden away, and it's not something that gets the customer excited. In today's world, where we have 10s of millions of device opportunities that could be participating in improving grid utilization, so that I mean taking more power from the grid when we have excess power and putting less strain on the grid when we don't have enough power. So, doing a better job of balancing the electric grids and utilizing power when it's generated, we did a better job of that. There's a lot of benefit that comes from it. That benefit needs to be shared with consumers. And so, what grid rails is doing is it's allowing you to put all of your devices actively into the market, so that if you have an electric vehicle or two, if you have smart thermostats, if you had a smart water heater, if you have battery storage, all of those devices can now be participating, and we can incentivize the consumer in real time to both stay opted into programs or to take actions that allow their devices to be participating in real time, and this real time benefit we see is important because we all like gamification, we all like instant gratification, and the ability to get paid for my action engages me as a consumer, so that I want to actually do more to support the grid. It becomes real time, and real time is a nature that this you know generation operates in.

Tim Montague:
8:57

You're suggesting though that this delay in time between when my let's just say battery provides a service and when I get compensated for it is a real problem. I kind of think, and I don't have a battery yet. I'm looking forward to getting a battery soon because we are unlocking BPP with the surge of legislation that we have in Illinois. But you know, you you you opt into a program, right? You or somebody tweak some settings, and away you go, right? And the battery is doing its thing, providing a value stack, doing arbitrage. You know, charging when energy is cheap, discharging when energy is expensive, helping the grid operate grid operator balance the grid in real time, instantaneously. Like the battery is super valuable to the grid operator, and do I really care if my compensation is delayed several months? Because once that train is rolling, then yeah, I will start to see some some discounts coming in. I don't know exactly how I will get credit. I assume it's just a credit on my bill, but and and I get the the real time thing and the gamification and but do I really want to be getting alerts on a daily basis about my battery and you know hey Tim there's an opportunity to do something and tweak something and I'm like I don't know I already get enough notifications, and I'm a little leery of also then having to pay attention to the battery or whatever device is on the VPP.

Michael Grasso:
10:42

Right? Yeah. No, I don't think you need to be notified all the time. This isn't about having to bring the consumer into every decision-making point, but there are. In many situations that we saw working with virtual power plants, where consumers get notified that their device is participating, in the case of a battery, and they would opt out, and we had no tools to bring them back in to that program. So, what Gridrez was able to solve is if a consumer does actively opt out of a program, we can explain to them in real time what the incentive and the value of them participating is, and you can transfer that value to them. And this isn't only about the engagement of that battery, but this is also about bringing other devices into participating. We have more smart devices in our homes now that can be controlled on the power side than ever before, and it one of the largest opportunities in the country is electric vehicles. And it's great if your electric vehicle is plugged in, but if your electric vehicle isn't plugged in or it's not the right tim of day for it, you really have an opportunity to get that consumer to take an action to participate. You also, you know have to get that customer's permission to change the way that their devices behave, and so in your battery situation, you know if that device is connected, you can also charge that battery when there's excess power on the grid. It may be set to charge at a later point in the day, but grid rails can help that battery charge sooner to take more energy off the grid, and in some cases, if it made sense, there could be an incentive that we provide because again, some of these situations are such that there's a tariffed rate or there's another rate that that battery would be charging under. We can provide the difference between that tariff rate and the incentive rate that the utility wants to give them because they're using power that's actually cheaper and would go to waste. We can provide that directly to the consumer on the grid rails platform. So the settlement layer for us has multiple moving parts. It's not just about taking metered endpoints and doing the measurement and verification and providing the value, but it's also about helping to circumnavigate certain challenges you have with, you know, more of a legacy billing environment, or where you don't have resources or flexibility to offer different types of products and services that the consumer would benefit from with the settlement layer that we have on grid rails.

Tim Montague:
13:08

And will the consumer be aware that grid rails is in the picture, or is it that they're still just interacting with the Tesla app or whatever the app is that came with the battery or device?

Michael Grasso:
13:20

So it's it's going to be the choice of the program administrator. So our customers are energy suppliers. So these are different utilities in the market, whether that's one of the investor-owned utilities, or if it's for a municipal utility or a cooperative, you know we're empowering them with a software as a service platform that gives them tremendous flexibility and capability in order for them to construct programs that allow them to better control their energy books. If they need to improve the way that the energy is being consumed from their customers at any point of the day or the night, if they want to take price signals or supply signals and manage those into the book, we're giving them that flexibility. And our application that goes to their end customer is device agnostic, so it works across multiple OEMs, multiple device types, and it gives them the ability for their consumer to visualize what's happening in their household if they want to provide that as a service layer. Also, so it's really a comprehensive software stack, both at the fleet operator level and the consumer level, that brings an entire suite of capabilities that they can leverage to both manage the energy flows and manage the payments when those make sense.

Tim Montague:
15:33

Let's talk about the problem a little more. This issue of grid utilization. You know, here we are in 2026, and everybody's freaking out about load growth, right? My own energy rate went up 25% just this in the last couple of weeks. Is there potential for DERs to save the day?

Michael Grasso:
16:02

So you you're asking a great question here, and if you think about what's happening in our country, which these are all very positive trends in electrification, we're seeing yes this demand from data centers. That's a huge growth area for electric usage, but we're also seeing continued growth in electric vehicles. We're seeing continued demand for heating and ventilation and air conditioning because we're getting warmer and we're looking for more comfort. We're also just seeing a continued expansion in new homes, and we're seeing other technologies that are drawing more electricity. Like battery storage, which is replacing sandby gas generators and other forms of backup power, all of these devices right consume more power, and they're they're adding to this demand growth that is outpacing supply. We're expecting as a country to add about 50% more demand growth, so about 400 gigawatts of additional energy need over the next couple of decades. But if you take a step back and you look at all of these devices that I just referenced, inside of those those devices that are actually requiring the energy is a tremendous amount of capacity. So it's in in that capacity is almost 2x what the demand growth is. So if we could manage when those devices hold power from the grid, we can actually circumnavigate the challenge with the peak growth, right? So the the solution is in the problem, but we don't have strong orchestration. We don't have software, and this is where GridWrails comes in to put all that together. We need to get these devices, these electric vehicles, these batteries, these smart thermostats, and water heater controls, and other energy-consuming devices like data centers, and we need to put them in a situation where they can be orchestrated. So orchestration just means turn them on, turn them off, in order to balance when they're all pulling power. So an example would be if everybody on my street has an electric vehicle and we all plug it in at the same time and try to charge it to full, we've got a problem. But if we throttled one and accepted the other, or managed around when they all charged, then we can alleviate the problem, or at least significantly reduce it, which would reduce the capital required to build more generation to supply the energy that we need. So this orchestration layer is what grid rails excels at. It excels at being able to provide both the consumer incentive to change the behavior, as well as the software technology to manage devices, and it puts it together in a way that allows an energy supplier or a grid operator to balance their system.

Tim Montague:
18:54

So, you mentioned this statistic of 400 gigawatts of load growth in the coming decades. How much of that do you think can be alleviated by robust, better VPP software?

Michael Grasso:
19:12

Well, the capacity, by our estimates, is 2x of the peak capacity. So the solution again is in is is in the problem, if if you do a better job managing devices, then you can significantly curtail that demand. But this isn't about trying to get to 100% solution. This is trying to solve 10% which is that last 10% is always the most challenging part of peak energy usage. So how do we shave the how do we shave the top off, right? And you can't do this in one's place in the in the country. You need to do this across all of the grids that are operating in the country. That's why the distributed energy solution needs to have a distributed solution. We need to bring all these distributed endpoints together to solve the problem.

Tim Montague:
20:03

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Michael Grasso:
21:23

So, if you think about the electric grid today, and you realize that a lot of the power we put on the grid, 40% plus or minus, is wasted. It's just not utilized. You have to take a step back and ask yourself why. Like, why is it not utilized? And I mean, the simple answer is well, there's no. Okay, well, why is there no demand for it when we have all of this technology that's now consuming energy? What can we do to consume the energy when it's available?

Tim Montague:
21:53

But wait, you're referring to like thermal losses, right, in transmission?

Michael Grasso:
21:58

Just overall grid utilization. I mean, some of it is some of it is uncontrollable, like a thermal loss, but some of it is really just about the fact that we have to have maintain minimum energy flows across the grids for stabilization, and we can't always predict perfectly when consumption is going to happen. So it's going to roll off, and it's going to have to be sold off in some cases, or it's going to just roll off in other cases, but with more solar coming online, also you also have more duck curves swarming. So California was the first. Now you have Texas, and you have other markets that are seeing production spike at times when they may not have consumption for it. So it gets you have loss on it. You can use that power. We can all use that power if we do a better job managing it. But think about what is going on in the background too. You have all these different rate structures, time of use plans. We've conditioned consumers around certain behaviors, and the the flex in the power collides with the behavior that we train people on. I've been told in PG&E not to use power between four and 9p.m. Like, don't do it. So all my devices get shut off. But are you telling me that there's not a single day of the week when we have excess power between four and nine that I could be using? So today the peak temperature here is 72 degrees. It's a little bit cooler than it probably would be on a typical july 1. So we're going to have excess power that's going to get sold Arizona at a discount. Why wouldn't you tell me to put that power into my vehicle and I at least pay the tariff rate or give me a discount on that power to charge my vehicle during four and nine today, or why don't I recharge my battery between four and nine if it's not fully charged? Or why don't I, you know, if I'm getting ready for a cooler night and you think I should start warming my house, I should start warming my house. Like there are ways for us to use this energy more efficiently, but the construct that brings together real-time power supply and real-time price signal and the flexibility to move the energy, so the electrons with the economics doesn't did not exist before grid wells. That's that's why we built this solution because it orchestrates that. It can, as an energy supplier, you can make a real-time decision to say my consumers should get a discount because I've got too much power, and I'd like them to take the power off at this rate, which is economically better than losing the power or selling it at a massive discount to someone else.

Tim Montague:
24:39

All right, this is where I push. I've spent a decade in clean energy, and the lesson that keeps repeating is that money talks. A homeowner does not buy a battery for grid stability; they buy it for the number on the bill. So I asked Michael to put $1 figure on this for the utility and for the customer.

Michael Grasso:
24:58

Right. So take take an example where I just use like if I'm going to lose the power, if I have no no utility for that electricity, 100% loss. If I have an offtake and I can sell that power and I can sell it at a 25 or 30% discount, still a massive write-down. We're talking about helping consumers use power better. So first layer for us is just consume the power, and you already have a tariff rate in place for that, but you have to turn things on in order to consume the power. So first is turn it on for oversupply. Second is in a price signaling environment. So take an ERCOT or a competitive market, and it doesn't even have to be a competitive market, but anywhere where you don't have perfect cost balance back to your supply, if any type of a price signal could cause you as that energy provider to want to change the way that your book is consuming, if I have to go to the spot market and buy power, and that power is going to be 5x, 10x, 15x what I would typically pay if I bought that as block power in advance, I have an incentive to change the way that my consumers are using power. So you ask, like, what's the what's what's the value to a utility? I mean, this is a massive opportunity because it's an order of magnitude difference. If y'all in ERCOT buying power at $50 a megawatt in the Ford market, and I have to go to the spot market and buy for $5,000 a megawatt hour. There's a lot of value there that can be captured, and that's why programs have jumped up. But I I would argue that those programs are still too static, and real time market programs make more sense where I can trade with the consumer in real time in order to incentivize them to change behavior versus. Having some kind of a structure that says I'm only going to do this at this point in time at this dollar amount, we want to provide more flexibility. We want to see the market be more dynamic in real time.

Tim Montague:
26:54

I believe you, but I also want to quantify it. I will not buy a battery if I don't know how it's going to ROI for me in in some even if it's you know vague terms and of course the battery could provide me resiliency which is very hard to put a number on I think especially when blackouts are very rare now. If I was in a market where I had regular blackouts, that's a different story. I'm not in one of those markets. Luckily, I can't remember the last time we had more than like a flicker or a 20 minute outage, and I I I see this VPP program coming down the pike, I have dollar signs in my eyes, but I don't know if I'm kidding myself.

Michael Grasso:
27:48

Got it. Yeah, no. Look, it's going to vary by market. So we talked about the fact earlier in the show that 34 states now have a program. Those programs have prices all over the board. Typically, those prices are going to be indicative of what the underlying retail energy rates are going to be, but a simple application for a consumer can easily save them $500 a year. You have consumers and markets that are making that are saving 1000s of dollars a year, and I would argue that there's upside if we get this to a more dynamic market for the utility and the consumer to both save significantly more money, there's a lot more cash on the table if we can do a better job of being dynamic. This is, you know, this is a multi-billion-dollar opportunity in a six to 700 billion-dollar revenue category this year in the U.S. If you think about the total energy that's billed for in the U.S. I mean, if we have to grow that by 50% we all know that this is already expected to be 600 billion plus capital investment up into the trillions to get the grid where it would have to go if we don't have supply-demand balancing in the U.S. and this is also a global issue, not just a U.S. issue, but just in the U.S. market. There's a tremendous amount of capital that has to flow in that's going to be hard to justify. And and if it came in, it would all have to be rate-based, which means our rates aren't going to go up five to 7% a year anymore, and your example at 25% I mean, with PG&E, I've seen it double. So you know you're going to have a lot more headwind on rates, and the best way to balance this is use power when it's generated, find ways to use less power, and the best way to get power to be better used is to bring the consumer into the equation to help give them incentives. Because if we bring the consumer into the equation, whether they're commercial, industrial, or residential, then they're going to help us solve the problem if they're excited about the solution. And the solution that you know is moving markets is the economics of it. You'll try to save on your bill. You'll get discounts on your bill. And if I can realize that in more real time, we believe more consumers participate.

Tim Montague:
30:17

Yeah, that real time settlement thing. Let's let's put a pin in that. How important is that to the utilities? And I assume that it is primarily the utilities that are your end customer, like they're buying the the software as a service. If they're not buying grid rails, what are they buying, and how is grid rails different than the other solutions in the market?

Michael Grasso:
30:41

Well, the research would tell you that only 20% of all eligible devices are participating today. So that points out a very clear issue that across the U.S. you don't have the right technologies in play to motivate consumers to participate. So the opportunity continues to be bigger than than any of the solutions combined. the The other part of the question I think that you were asking was, you know, like what what's going to motivate the utility? I think that's going to motivate the utility is that they need a solution. So they're either being told through a regulatory form that they have to come up with a solution, or they're looking at their own backyard and understanding the dynamics of their market and saying, "I I need to figure this out, or I'm going to start to have blackouts. There there have been some headlines over last week about the largest utility in the U.S. saying expect blackouts in 2027, right? So I think. We've got these factors that you you as a consumer in the U.S. expect your power to be available seven by 24, by 365. You share Tim like you you never even typically see a flicker. We know weather events are starting to cause more challenges, but more so we know that congestion on the network is going to cause you know if not brownouts, blackouts in different parts of the country, and we need to get ahead of that. And I think that's really what we're we're

talking about here:
32:09

is let's get consumers off the sidelines, let's get them to participate, let's give them the right motivation and incentives to participate. Utility operators need to buy time, even if they're going to build more infrastructure, because we know that demand is outpacing supply, so the best way to do that is to create an orchestration layer and get utilization up on the grid.

Tim Montague:
32:35

And the real-time settlement that your platform provides-what is the what is the value of that, like how do, how do, what are they comparing that to when they see your option? It sounds good to me. Real time settlement is better than a delayed settlement, right? People don't like it when people don't like delayed gratification in general. So real time sounds great. What is the value? What is the import of that in the greater scheme of things?

Michael Grasso:
33:10

Yeah. So our real time settlement operates on a couple of levels. So one is we've talked about the this incentive. So you know, receiving cash in real time for taking a behavior or an action that's that's requested of you, so that's really easy, you know. And and why I like that is, if you told me as a consumer that if I took an action, I would have cash in my wallet and I can go do something with that cash later in the day. Like that's that's motivating, right? That that makes me lean forward and and be interested. But the real time nature of our platform also enables a few other aspects. One is any two points can settle in real time. So, if you're a generator and you want to settle with your you know local supplier in in the market or your local consumer in the market, like you can do that in real time, which helps with collateral. It helps with the cost of capital. It helps with bad debt challenges. It helps you come up with new productizations, right? So the opportunity for you to say,"Hey, I want to give my consumer a prepaid solution for their vehicle, or I want to give unlimited charging for their EV. We're allowed our platform with the settlement capability allows us to look past just the utility meter. So for utilities, now they can start to look at devices in the home, and start to set structures around those devices, not just to understand them and understand their load against the utility's infrastructure, but also to allow those devices to potentially have different rate plans against them, or to have different structures against them, so that I could say as a consumer, hey, would you set up a plan for me that allows me to charge my car unlimited for, you know, a certain flat rate, and we can implement that for them, or would you allow me to just set a budget? I just want to set a budget for something in my home. Like I, I only want my air conditioner to run to be 20% of my power bill, or I only want my EV to be, you know, charged up to $15 a week or $20 a week. Like it gives you all types of flexibility because now I've got real time control with real time settlement, and that allows me to manage around budgets and other financial measures.

Tim Montague:
35:22

In our last couple of minutes, Michael, you know, controlling all these disparate devices you mentioned-EV chargers, smart thermostats, batteries, smart water heaters-what are you? What What is the secret sauce, so to speak, in your platform, and what is the importance of artificial intelligence in in all of this?

Michael Grasso:
35:53

So we're not going to go too deep on our secret sauce, but but suffice it to say that we've built a very fast transaction platform that allows us to take any metered endpoint into our environment and put a bunch of attributes on it, so that it can be utilized in different ways. Whether it's just visualization of the device, its energy behaviors, its capacity, its telemetry, all of the things that you'd want to know, so you can just see it, and you can record it in your network, and you can aggregate it through the control stack and then to the settlement stack. As far as the AI influence, what we're excited by on that front is that in our environment, with as many data points as. Bringing together, and those data points being both the technology data points, like the endpoints I've talked about on the metering side, but also consumer behavior, we're able to make a lot of decisioning happen that we can utilize to drive program participation, program growth, and program performance over time, and we all again in a in a batch world that we are living in today, there's a lot of human intervention, and we have to go press buttons and design programs and figure out incentives. But in an automated real time world, which again is how our grid operates, the electrons electrons flow in real time. They're either used or they're not. Some of these markets try to trade in five to 15 minutes, but true real time is understanding what's happening and decisions being made to orchestrate and drive better utilization. All happening in real time, and that's going to be influenced by supply and demand signals, and those demand signals are going to be influenced by behavioral signals, and that behavior is going to be influenced by economics. And as we get to a real-time energy market on the consumer side, this all has to come together in a way that gets everybody participating and wanting to be part of a solution versus just being challenged in how they are thinking about the evolution of the grid.

Tim Montague:
38:09

Many thanks to Michael Grasso, CEO and founder of Grid Rails. You can find them at gridrails AI or reach out to hello at gridrails AI. If this episode made you think differently about the devices already sitting in your house, do me a favor and tell one person about the show. That is genuinely the best thing you can do to help others find this content. All of our episodes are at cleanpowerhour.com, and I love connecting with listeners on LinkedIn. Come see me at RE Plus Midwest or the big one in Vegas, and we'll grab a coffee or a beer. With that, let's grow solar and storage. I'm Tim Montague. Have a great day.