The $400B Energy Unbundling
While Everyone's Watching AI, Energy Unbundling is The Real Disruption
Bob Krause | Spark Communities Initiative
Microgrid & Off-Grid Innovation Forum | Austin 2025
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The Electric Slide
1000x improvement in $/kWh delivered since 1975
Source: NREL Technology Cost Database, BloombergNEF 2025
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Meanwhile: The Demand Tsunami
- Each ChatGPT query = 10x Google search
- One data center = One small city
- Microsoft buying nuclear plants
- Amazon contracting direct power
The grid can't just double that quickly. Something has to give.
Source: Goldman Sachs AI Power Report 2024, IEA Electricity 2025 Report
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Who Would You Rather Serve?
Load Profile
Flat 24/7
Volatile peaks
Infrastructure
Single connection
Millions of poles
IOUs make rational business decisions.
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The Grid's New Reality: Who Gets Priority?
Grid Power Consumption (TWh/year) - Excluding All Solar Generation
By 2033: Data centers & heavy industry consume more grid power than all other users combined
Source: Goldman Sachs 2024, CAISO 2024 Projections
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Same Movie, Different Industry
Telecom 1995
Catalyst: Internet explosion
Demand for anywhere connectivity
Incumbent: AT&T monopoly
"Infrastructure can't be duplicated"
Solution: Cellular networks
Parallel infrastructure emerged
Result: Complete unbundling
Landlines → enterprise only
Energy 2025
Catalyst: AI explosion
Demand doubling grid capacity
Incumbent: IOU monopoly
"Grid is a natural monopoly"
Solution: Distributed energy
Parallel infrastructure emerging
Result: Unbundling underway
Grid → industrial only?
The internet made AT&T's model obsolete.
AI is doing the same to IOUs.
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The Unbundling is Already Visible
Four Distinct Groups Emerging
Industrial Groups
- Microsoft: Three Mile Island restart
- Amazon: Direct nuclear contracts
- Google: Small modular reactors
Aggregation Groups
- Tesla: 100MW VPP in Texas
- Sunrun: 90MW in California
- Growing 20% annually
Municipal Groups
- Ann Arbor: 79% vote for choice
- 200+ CCAs nationwide
- 500+ operational multi-property microgrids
Individual Groups
- 200K+ homes can island today
- 2.1M solar rooftops in CA
- Growing 15-20% annually
- 500K+ considering defection
Each group solving energy differently based on their unique needs and capabilities
Sources: Tesla Electric enrollment data, SEIA Solar Market Insight Q2 2025, DOE Microgrid Database
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The $380B Residential & SMB Market
Not a Priority for Utility Investment
- 130M US households
- 30M small businesses
- $380B annual spend
- Lower margins than industrial & compute
Too Complex for Individuals
- Financing barriers
- Technical complexity
- Maintenance burden
- No aggregation benefits
$38B near-term serviceable market at 10% penetration
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Spark Community Utility
Modern Public Power
Not Fighting IOUs
Serving lower priority IOU customers who opt-in
Platform First
Start with BTM DERs, may add EnergyNet infrastructure
Market Validated
79% voter approval in Ann Arbor
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How It Works
Municipal Authorization
City creates SCU entity (like water utility)
Customer Opt-In
Residents choose SCU services (like Netflix)
Behind-the-Meter Start
Solar + storage + fuel switching, new distribution wires optional
Platform Services
Financing, installation, maintenance, optimization
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Future Infrastructure: EnergyNet
As-Available, As-Needed Energy Distribution
Technical Architecture
- Quantum power delivery model
- Bidirectional flow control
- Real-time price discovery
- Maintains IOU/SCU firewall
Operational Benefits
- 47% efficiency gains in Sweden
- No power mixing between grids
- Regulatory compliance built-in
- Optional SCU evolution path
SCUs can evolve from BTM services to independent distribution networks
IOU power stays on IOU wires. SCU power stays on EnergyNet wires.
Source: EnergyNet Task Force 2024, Swedish Energy Agency pilot results
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Unit Economics That Scale
Municipal bonds at 3.5% enable $0.28/kWh to customers
While maintaining 15-20% margins for partners
Based on 750 kWh/month average usage. PG&E rate: $0.45/kWh
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Investment Returns Analysis
Market Penetration
5%
10%
20%
Customer Payback
12 years
10 years
8 years
Muni Bond Yield
3.5%
3.5%
3.5%
Sensitivity Drivers: Hardware costs (-2%/yr), Installation efficiency (+3%/yr), Scale effects
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Ann Arbor: Product-Market Fit
79%
Voter Approval
Not just environmentalists. That's everyone.
- Bipartisan support in purple state
- Opt-in model reduces opposition
- Immediate service launch 2026
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Platform Architecture
Customer Layer
Mobile Apps, Web Portal, Smart Home Integration
GET /consumption
POST /preferences
Platform Services
Billing, Optimization, Maintenance Scheduling
POST /optimize
GET /analytics
Integration Layer
Partner APIs, Grid Services, EnergyNet Protocol
POST /dispatch
GET /pricing
Hardware Abstraction
Any Solar, Any Battery, Any Inverter
MQTT
Modbus
Open protocols enable vendor independence
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Comparative Positioning
SCALE POTENTIAL →
COMPLEXITY →
Traditional Solar
Individual installs
No aggregation
VPPs
Software only
Grid dependent
Traditional Microgrids
High CapEx
Single site
SCU Model
Municipal scale
Platform economics
3.5% capital cost
Each approach has its strengths - SCUs find the sweet spot for communities
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Why This Can't Be Copied
Structural Advantages
- Municipal bonds: 3.5% cost of capital
- Public trust: Cities manage critical infrastructure
- Regulatory: Self-authorization
- No profit mandate: Can serve all segments
Network Effects
- Data advantage: Consumption patterns
- Scale economics: Bulk purchasing
- Lock-in: 20-year service agreements
- First-mover: Each city is winner-take-all
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The IOU-SCU Relationship
Complementary, Not Combative
IOU Benefits:
- Preserve relationship w/ratepayers
- Retain T&D ownership
- Focus on industrial customers
- Continue grid billing
SCU Provides:
- Behind-the-meter services
- Local generation & storage
- Efficiency improvements
- Optional grid services
IOUs focus on their priorities. SCUs serve the rest.
IOU subsidiaries can even participate as SCU vendors
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The Path to Scale
750 customers Year 1 per city, growing to 15,000 customers/city by Year 10
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Momentum Building
From Concept to Reality
✓
Ann Arbor
Committed & Building
79% voter approval
⚡
California Cities
Active Discussions
5-7 exploring
🚀
Q3 2026
First Deployment
Systems live
Michigan proved the model •
California scales it •
Partners profit from it
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Risk Mitigation Framework
Regulatory Risk
Utility pushback, state preemption
Mitigation: Municipal self-authorization, opt-in model, complementary positioning
Execution Risk
Complex multi-city rollout
Mitigation: Phased deployment, proven Ann Arbor template, partner ecosystem
Technology Risk
Hardware dependencies, integration challenges
Mitigation: Open standards, multiple vendors, platform abstraction layer
Market Risk
Customer adoption rates
Mitigation: 79% validation, compelling economics, opt-in reduces friction
Capital Risk
Funding availability
Mitigation: Municipal bonds proven, IRA incentives, partner capital
Competition Risk
VPPs, direct solar, IOUs
Mitigation: First-mover advantage, structural moats, city partnerships
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Building the Ecosystem
Current Phase: Infrastructure Development
What's Working
- Ann Arbor model validated
- Municipal interest growing
- Technology stack proven
- Economics pencil out
What's Building
- Vendor networks
- Billing systems
- Service protocols
- EnergyNet integration
Opportunity to shape the future of municipal energy
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Do Your Own Analysis
The Data Points Are All Public:
Market Signals
- IOU rate increases (regulatory filing)
- Solar + battery costs (NREL/BNEF)
- Grid reliability metrics (EIA data)
- Data center growth (Goldman Sachs)
Validation Points
- Ann Arbor 79% vote (public record)
- 200K+ islanding homes (Wood Mac)
- Big tech energy deals (SEC filings)
- CA muni rates vs IOUs (CPUC)
Download the SCU Roadmap at sparkcommunities.org
What you're seeing isn't a prediction – it's an observation.
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If utilities are the mainframe computers of energy:
Essential for big enterprises.
Perpetually unresponsive to other stakeholders.
We're building the PC.
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