The Grid's TCP/IP Moment

In 1962, a researcher at the RAND Corporation named Paul Baran looked at AT&T’s telephone network and saw something that the people running it could not see. The system worked. It carried every voice call in America. But it was structurally wasteful. Circuit-switched networks reserved entire connections for conversations that used less than 10 percent of available bandwidth. Baran’s idea was to break data into small packets, route them independently, and reassemble them at the other end. He called it packet switching.

He presented this to AT&T’s engineers multiple times throughout the mid-1960s. They told him he did not understand how voice telecommunications worked.

They were not stupid people. They were reasoning from the wrong model. They saw analog signals on dedicated lines. Baran saw data that could flow through any available path. The gap was not intelligence. It was architecture.

I keep coming back to this story because we are living through the same moment in energy. And most of the people running the current system cannot see it.

The numbers that should change how you think

In the first half of 2025, the world installed 380 gigawatts of solar. That is 64 percent more than the same period in 2024. To put it bluntly, we deployed more solar in six months than existed on the entire planet as recently as 2017. Eight years of cumulative build-out, compressed into half a year.

In the US, solar plus storage accounted for 79 percent of all new generating capacity. Not 79 percent of renewables. All capacity.

Solar panels now cost roughly ten cents per watt. Stationary battery pack prices hit $70 per kilowatt-hour in 2025, a 45 percent drop in a single year. The lowest commercial cell prices are $36/kWh. These are not lab numbers. These are prices at scale.

The hardware problem is solved. Panels are close to free compared to a decade ago. Batteries are following the same curve with a few years of delay. Deployment keeps outrunning every forecast the IEA publishes. This is not a story about scarcity. This is a story about abundance.

But here is the part nobody wants to say out loud: we are wasting enormous amounts of this perfectly good electricity.

Abundance without coordination is just waste

California curtailed 3.4 million megawatt-hours of renewable energy in 2024. Ninety-three percent of that was solar. Germany set a new record of 1,750 GWh curtailed in 2025, with 575 hours where the wholesale price went negative. Generators paying someone to take their electricity.

Spain’s solar capture prices collapsed from €61/MWh to under €17. The Netherlands posted 584 hours of negative prices, the most in Europe. Australia curtailed over 7 TWh. In South Australia, 38 percent of all utility-scale solar generation was thrown away.

Across Europe, managing these surpluses cost utilities an estimated €4.3 billion in 2024. Globally, curtailment hit 72 TWh. That is roughly Austria’s entire annual electricity consumption. Gone.

We spent billions deploying all this capacity. Then we pay people not to use the electricity it produces. That is not a generation problem. That is a coordination problem. And it is getting worse every month as more solar comes online.

The pattern that keeps repeating

The Baran story is not unique. The same structural shift has played out in shipping and in software platforms.

In 1956, Malcolm McLean loaded 58 aluminum truck bodies onto a converted tanker ship in Newark. The shipping container was born. Loading costs dropped from $6 per ton to 16 cents. A 36x reduction. But the container itself was just a steel box. The revolution was the standardization: the standard size, locking mechanisms, and handling equipment. The coordination protocol that let any container from any shipper load onto any ship and transfer to any truck. A longshoremen’s union official watching McLean’s first container ship depart reportedly said he would like to sink that son of a b***h. The incumbents always react the same way.

Apple launched the App Store in July 2008 with 500 apps. It hit 10 million downloads in 72 hours. Within a few years it was facilitating over a trillion dollars in commerce. Apple did not build the apps. They built the platform layer: the APIs, the SDKs, the payment infrastructure, the discovery mechanism that turned millions of individual devices into a coordinated ecosystem.

The meta-pattern is always the same. A distributed resource exists but is uncoordinated. Incumbents dismiss it. A standardized coordination layer emerges. The economics flip. And an outsider, not an industry insider, drives the change.

TCP/IP captured more value than any individual computer. The App Store captured more value than any individual app. The ISO container standard transformed more wealth than any individual shipping company.

The coordination layer always wins.

Virtual power plants are not a pilot anymore

During California’s July 2025 grid stress test, over 100,000 home batteries delivered an average of 535 megawatts to the grid during the evening peak. The Brattle Group verified the results and concluded that the output was indistinguishable from dispatching a gas peaker plant. Grid operators could not tell the difference between 100,000 batteries coordinated by software and a single gas turbine.

EnergyHub has introduced what they call the Huels Test, essentially a Turing Test for energy. Can a grid operator distinguish a VPP dispatch signal from a gas peaker? In trials with Arizona Public Service, Duke Energy, and National Grid, virtual power plants passed. Level 3. Automated and indistinguishable.

The scale is already real. North American VPP capacity reached 37.5 GW in mid-2025. Octopus Energy’s Kraken platform manages 2 GW from over 500,000 connected devices. Kraken spun out as an independent company at a €7.3 billion valuation. Tesla’s Autobidder orchestrates over 3 GW across energy, capacity, and ancillary service markets. Base Power, a Texas startup, raised $1 billion and is installing 20 MW per month, targeting 100 MW per month by mid-2026.

A 400 MW virtual power plant costs $43 per kilowatt-year. A gas peaker costs $99. Less than half. The DOE verified those numbers.

Meanwhile, the United States has 2,600 GW of clean energy stuck in interconnection queues. That is more than twice total installed US generating capacity. Just waiting. Only 14 percent of solar projects that enter those queues ever get built. The average wait time in PJM is eight years.

Eight years to connect a solar farm to the grid. Versus three years to build a 700 MW virtual power plant from home batteries. The distributed path does not compete with the centralized path. It laps it.

The physics gap

The classic grid was built for central control of big generators. Now we have millions of distributed devices at the edge. An inverter speaks Modbus RTU. An EV charger uses OCPP. A heat pump might use Modbus TCP or some proprietary protocol. A smart meter outputs a P1 port stream. Different devices, different languages, no common protocol.

And the control requirements are brutal. Grid services like frequency response and voltage regulation need feedback on 100-millisecond to one-second timescales. Existing cloud-based interfaces have latencies of two to thirty seconds. There is no execution layer between cloud platforms and physical devices. The gap between what the cloud can do and what the grid actually needs is not a software bug. It is physics.

Generation is no longer the bottleneck. Control is. We have the energy. We have the devices. What we do not have is the real-time, protocol-agnostic, edge-native intelligence layer that makes them work together at grid speed.

Why we build from the Nordics

Sourceful Energy is based in Kalmar, a small city on Sweden’s southeast coast. Not exactly famous for sunshine. But the Nordics have some of the most modern electricity grids in the world. Norway has 93 percent of residential contracts on dynamic tariffs. Finland is at 30 percent. Denmark has approved vehicle-to-grid aggregators for frequency reserves, with trial accuracy exceeding 95 percent. Sweden has had deregulated electricity markets since the 1990s.

If you want to build coordination software that works everywhere, you start where the market is most advanced. Where the infrastructure expects intelligence. Where a small team with the right architecture can punch above its weight. You do not wait for the world to be ready. You build for where it is going.

The Jevons flywheel

I did my PhD at Linnaeus University in Kalmar, using machine learning to optimize energy efficiency for ships. One pattern kept showing up: every time you make energy use more efficient, total consumption goes up, not down. William Stanley Jevons documented this in 1865. Efficiency does not reduce demand. It unlocks it.

That insight rewired how I think about the energy transition. The conventional narrative of consuming less and restraining ourselves is backwards. Making energy cheaper and more abundant is the most powerful force for human progress there is.

And it creates a flywheel. Cheaper solar drives more deployment. More deployment drives more consumption, because when energy is cheap you electrify everything: transport, heating, industrial processes, computing, direct air capture. US data center power demand alone is projected to nearly triple by 2030, to 134 GW. Europe aims for 30 million EVs by 2030, each carrying 50-75 kWh of battery. Thousands of gigawatt-hours of mobile storage, every vehicle a potential grid asset if you have the coordination layer to use it.

More consumption creates more intermittency and grid stress. More grid stress creates more demand for coordination. More demand for coordination makes the orchestration layer more valuable. Which attracts more devices. Which enables even more solar. The flywheel does not slow down. It accelerates.

Being honest about the challenges

The most serious technical objection to a solar-powered future is the Dunkelflaute. It is a German word meaning dark doldrums. Periods where both solar and wind output collapse. Germany experiences roughly two per year, where output drops below 10 percent of capacity for 48 hours or more. In January 2017, a 10-day Dunkelflaute left Germany’s 91 GW of installed wind plus solar producing less than 5 percent capacity while demand sat at 63 GW. Wholesale prices spiked above €900/MWh.

Current batteries cannot economically bridge multi-day gaps. That is a real limitation. Grid stability is another legitimate concern. Traditional synchronous generators provide rotational inertia that buffers frequency deviations. Inverter-based renewables do not have spinning mass. Supply chain concentration is real too. China controls 60 to 90 percent of critical mineral processing.

I do not dismiss any of this. But notice something about every single one of these objections. The Dunkelflaute requires cross-border grid coordination and long-duration storage. Both are software orchestration problems. Grid stability requires grid-forming inverters and synthetic inertia, which is a software function running on existing hardware. Supply chain diversification requires demand aggregation and flexible procurement, which is again coordination.

The critiques do not weaken the thesis. They reinforce it. The missing piece is not more panels or cheaper batteries. It is the intelligence layer that integrates them.

A gigawatt of baseload solar

The Masdar Round The Clock project broke ground in Abu Dhabi in October 2025. The goal: demonstrate that solar plus storage can deliver continuous baseload power. 5.2 GW of solar PV paired with 19 GWh of battery storage, spread across 90 square kilometers. Designed to deliver a flat 1 GW production profile, 24 hours a day, 365 days a year. Six billion dollars of investment, target completion 2027, with agreements already signed to replicate the design in Kazakhstan.

If this works, and the physics says it should, it breaks the last argument against solar as a baseload source. And the project is designed to function as a virtual power plant, providing grid services. Not just generation. Coordination.

The bet

The hardware revolution created the substrate. Solar at ten cents a watt. Batteries at $70 per kilowatt-hour. These are not projections. These are today’s prices.

What is missing is the protocol layer. The coordination intelligence. The software that turns millions of cheap, intermittent, distributed devices into dispatchable, grid-reliable, market-participating capacity.

Paul Baran described the distributed network he envisioned as having no center, growing from the edges, and being impossible to control from any single point. That is the grid’s future. Not a centralized system managed by a handful of giant utilities. A distributed system where millions of devices at the edge coordinate through software to deliver reliable, abundant energy.

The incumbents will react the same way AT&T reacted to Baran. They will say we do not understand how the power system works. And they will be wrong. For the same reason AT&T was wrong. Not because they lack intelligence. But because they are reasoning from the wrong model. They are thinking in circuits when the world has moved to packets.

That is what we are building at Sourceful. That is the bet. And I have never been more convinced it is right.

Fredrik Ahlgren is the CEO and co-founder of Sourceful Energy. This post accompanies Episode 073 of the Coordinated with Fredrik podcast. Subscribe wherever you get your podcasts, or read more at sourceful.energy.

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