Electricity prices are rising, data centers are struggling to connect, and consumers are feeling the pinch — yet utilities keep reporting record earnings. What’s going wrong, and how do we fix it? In this episode, I speak with Michael Lee, former CEO of Octopus Energy US and founder of Distributed Grid, about the structural flaw at the heart of the American utility model: an incentive system that rewards building infrastructure regardless of whether it is needed.
Lee argues that this cost-of-service model — largely unchanged for a century — is driving an inflationary spiral in electricity rates and blocking the distributed energy resources that could make the grid more affordable and resilient. But his argument is not simply that utilities are bad actors. It is that utilities are rational actors operating under the wrong rules. Change the rules — and the business model — and utilities could earn more revenue by coordinating a decentralized grid than by building poles and wires.
Lee lays out a detailed roadmap: from reframing utilities as “network coordinators” to paying them for outcomes (reliability, affordability, speed to power) rather than capital deployed. He also confronts the political and social complexities — utility shareholders who depend on dividends, governors who fear blackouts, and a public that has never had to think about how electricity works. The conversation is both an indictment of the status quo and a genuine blueprint for a better grid.
Guest Biography
Michael Lee
Founder, Distributed Grid | Former CEO, Octopus Energy US
Michael Lee is the founder of Distributed Grid, a consultancy and Substack publication focused on transforming the utility business model for the decentralized energy era. He previously served as CEO of Octopus Energy US, the American subsidiary of the UK-based clean energy retailer, which he joined through the acquisition of Evolve Energy — a Texas-based retail electricity company he co-founded in 2018. Evolve pioneered consumer-centric smart rate structures and AI-driven demand optimization before being acquired by Octopus Energy in 2020.
Earlier in his career, Lee spent nearly a decade in project finance in the independent power producer (IPP) sector, working on some of the first utility-scale battery storage, wind, and solar projects. He also held a role at SunEdison, where he helped pioneer the use of Green Button data and utility APIs to streamline distributed solar deployments for commercial customers — an experience that first exposed him to the structural misalignment between utility incentives and market innovation.
Lee holds an MBA from Harvard Business School. He writes and publishes the Distributed Grid series on Substack, where he lays out a ten-part framework for reimagining the investor-owned utility. He is an active voice on LinkedIn, where Elisa Wood has encouraged listeners to follow his feed for ongoing commentary on grid economics and policy.
Resource Links
Energy Changemakers Weekly Newsletter. Subscribe free
Energy Changemakers Media Platform
Distributed Grid — Michael Lee’s Substack series on utility transformation (10-part framework):
Michael Lee on LinkedIn
FERC Order 2222 (enabling DER aggregation in wholesale markets)
Clayton Christensen, The Innovator’s Dilemma (Harvard Business Review Press, 1997) — Referenced by Michael Lee in his discussion of incumbent utilities and disruptive change.
