Category: Electrification of Everything

Great to chat with John Powers, Founder and CEO of Extensible Energy! Extensible Energy creates advanced demand management software to help commercial building owners to intelligently use electricity and reduce their demand and time-of-use charges! We discussed how a startup is a series of tested hypotheses, the four “C”s of good building energy management systems, predicting energy fluctuations and more! 

https://carbotnic.com/extensibleenergy

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James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with John Powers founder and Ceo at extensible energy welcome to podcast John great to start. Could you tell us a little bit about extensible energy.

John Powers

Thanks a lot James looking forward to it. Sure yeah, we make a lightweight building energy control solution for smalltom medium commercial customers that helps them ah control what we call the four c’s basically ah cost and control comfort and carbon. So. If you’re managing a building for energy benefit. You have to address all of those concerns and you know we work with whatever is already in the building and you know we’re a software first company. We do put some hardware in the building but we’re a software first company. Ah, in the energy control space.

James McWalter

And what drove the initial decision to starch extensible. Okay.

John Powers

Oh boy. Yeah, so I’ve been an energy nerd for all my life and I’ve been about none my career as a consultant and half as a software entrepreneur so company before this was software for. Um, utilities to deliver information to their customers and that included commercial and industrial customers showing them what their buildings were doing so it was an information service. Basically that company was called energy interactive. It had a big impact on. Demand response market and some other markets but basically the product was there to say your building made a mistake yesterday. Maybe you can do better next time and the new prop company is there to say your buildings going to make a mistake in 2 hours but don’t worry. We’ve already fixed it for you. So it’s much more about actual automated print. Addictive autonomous energy control of buildings than any of the work I’ve done in the past.

James McWalter

And so I guess taking that kind of previous experience saying. Okay, we want I want to you know, solve this problem in a in a different way in this kind of new way. Um, from that that initial kind of decision to move in that direction. What were the I guess None None to twelve months like in terms of like what. This product and early team should look like and.

John Powers

Yeah, so um, we were very fortunate in that we got ah some support from the Us department of energy through a small business innovation research Grant as B I R Grant and and so.

John Powers

Yeah, okay, and an Sbi R Grant is non-dilutive financing with guidance from some of the best experts in the field so we had had some ideas around this um prior to that.

John Powers

So when we applied for that grant. We had some ideas about how we would do this and they give it to you in 2 phases. The none phase is sort of a proof of concept that just is ah um, we did it all as a simulation model that showed what it would be like if you could control all the flexible loads in the building in a way that reacted to. Um, any flexible, any flexibility in batteries car chargers behind the meter and especially hvac given that that’s the largest flexible load in each building so we did that and they liked it and so then they give you more money to go and build a working prototype and get it working in the field in. Ah, real building and so my my co-founder Ari and I um were able to then go out and and start to put together a team to to commercialize the product and so that’s that’s really we all all praised the the. Taxpayers of this country for helping to get this off the ground the sbir program I can’t recommend it highly enough for for other entrepreneurs in this space.

James McWalter

Yeah, yeah, it’s interesting I’ve had a quick look at it for some of the projects I’ve also worked on and it’s definitely something I think is like an underutilized resource. You know I often talk to entrepreneurs and I actually think you might be the None person and you know about None folks who who’ve actually mentioned it and that’s. You know I guess that’s surprising when you know it’s such ah such a powerful source of financing for your company.

John Powers

Well, it’s hard tech right? It’s really something that um, traditional angels or vcs won’t touch until you’ve de-risked um the technology bit so having what amounted to 2 years of funding to um. Build out all the core technology under nondilutive financing from the department of energy made us a much more attractive investment for follow on from the ventured community. So um, you know again, a startup is just ah, a set of hypotheses in search of. You know? Ah, ah you try that one again I can’t remember where I heard this. But I think Steve Blank says a startup is just a set of hypotheses that you’re testing and we’re always looking to test a combination of what’s the.

John Powers

Um, what’s what’s the initial viable product. The minimum viable product. What technical problems are people willing to pay for you to solve in what ways so being able to do the None bit of that all through um, solving some really hard mathematical and technical. And control problems through the sbir project was really helpful because then yeah, we knew what we were doing by the time we were asking anybody else for money. Yeah.

James McWalter

And you mentioned this building right? This None building. Um, what was that building because I feel you know right now climate related and these forces you mentioned like these are top of top of mind for many building owners and and people running companies around the world. But yeah. Years ago when you were kind of first starting this. It. It probably was less top of mind especially around the kind of climate carbon piece and so Yeah’d I’d love to hear the details of ah of the building itself. So.

John Powers

Yeah, the none building was an office building in downtown Berkeley within 3 blocks of our little space we we were in a wework space at the time in downtown Berkeley and I wanted it to be something we could walk to and fix if we had done something bad, right? so. Um, it was the David Brower Center which is ah a building in downtown Berkeley that has multiple sort of climate um mission nonprofits in it. So it was great because they understood what we were trying to do and trying to prove. We got great. Um. Help from the ah upper management down to the facilities managers in that building. So it was a really good experience and we anticipated that office buildings would be a big target for us and it’s turned out that really other commercial buildings have been been more attracted to what we’re doing. So we can handle anything where there are a lot of um, flexible loads that are dominated by hvac so office retail church school conditioned warehouse municipal building but the um you know the folks in in retail and schools and I’d say you know. Houses of worship and event centers sort of these places that have event driven schedules have been much more interested in in our solution than a lot of the office buildings. We thought we’d be targeting. We’ve done a few but most of them have been outside the office sector.

James McWalter

And yeah, it’s so interesting I mean to go back to your point earlier about you know startup is just putting out hypotheses testing them and then you know trying to wind your path. Um, you know you had this hypothessis around the office building being that maybe core early. Yeah Beachhead client and customer and.

James McWalter

Yeah, as you said it’s still part of what you’re expanding into but it was not as core and so I guess what are the attributes of the the kinds of you know retail or how a worship and so on that are different to office buildings that I I guess were ah you know new information as you’re kind of working through that hypotheses building. Piece of the of the founding and.

John Powers

A number of decision makers that is the biggest impediment in a lot of office buildings because with multiple tenants all it with multiple control of their own zones underneath the landlord who has the. Ownership of the assets whereas the control of the assets falls to folks who manage the building and the occupants in all the different spaces. It’s much more straightforward with a school district that might own dozens of buildings. And have exactly None control point for who you have to convince. So um, definitely the non-residential small to medium non-residential space is always hard for every kind of product and service. But. Um, in our case, the fact that you can go to a single decision maker at a lot of owner occupied retail for example or we’ve done a bunch of car dealerships I’ll just say I didn’t know there were over 20000 new car dealerships in the United States but there are and so we’ve become you know a. Provider of load flexibility services to um, energy- consciouss car dealers that’s been great. Um school districts the same way. There’s a lot of them that have already gone solar. The product is designed from the beginning to work well with solar or without but with solar it gives even greater savings. So. There’s a lot of folks outside of the office building space that we’ve but had a lot of success with. We’re starting to get some traction with the um sort of asset managers in the office space and that I think is a is a good path for us. But we’ll see.

James McWalter

It yeah’s it’s so interesting I I think a lot of founders when they’re you know trying to approach particular problem. You know they’re like okay this is a clear problem but often kind of struggle to identify the end buyer right? and also kind of. Struggle to often kind of combine that with what is the sales cycle here because if you a product where your sales cycle is like nine months and it’s a $700 end and result like that’s a bad business. But if it’s nine nine minutes that’s a great business or if it’s nine months and it’s $7000000. That’s also great in business and so I think figuring out exactly. Ah you know.

John Powers

Yes.

James McWalter

Who the endbuer is who actually has the problem because often the person buying the product may not have the problem you’re trying to solve and kind of combine this and so I love this idea of where are their decision Makers who are aggregating a lot of buildings right? So the person who’s running the school district you know, even in the office space. You know I would imagine a cowork like we work with might be more interesting then.

John Powers

I That’s right.

James McWalter

And because even though they have lots of tenants tenants don’t really have probably a lot of choice in terms of electrification of the building and so you know identifying those aggregation points as part of your sales cycle sounds like it was very important to the trajectory of the company.

John Powers

It absolutely was and it affected some of the decisions we made in product design too. There’s a feedback loop there. So We we very quickly realized that especially in places like office or shared Retail. We needed to make the product. So simple. And um, low upfront cost that it would work for tenants as well as for landlords so we don’t need this to be a big um you know a change in equipment in the facility. Um, the most we ever end up. Changing is Thermostats basically go from Dumb Thermostats to Smart Thermostats and the tenants have the right to do that. So The payback time is so quick often under a year That um, even tenants with short to medium term leases find this super appealing. It’s just finding the person who’s responsible for the electricity bill we can help whoever that turns out to be in in pretty much any commercial facility that I was just listing off there.

James McWalter

So yeah, so let’s then go into yeah where the kind of product is today in inr detail so you kind of spoke a little bit there about the implementation and I guess once it’s implemented like what is the kind of experience like for all the various kind of stakeholders and.

John Powers

Sure so the the trick is to identify upfront what the flexible loads are and we have certainly controlled batteries. We’re getting our none car charging workplace car charging solutions going. Ah, but in every building we’re also controlling hvac because that’s the biggest flexible load in most of the buildings in the country and so you you need to get buy in around the idea that you control within a range now. Everybody’s controlling within a range already in most buildings. There’s either. You know most buildings under one hundred Thousand Square feet I think 87% of them have nothing but dumb thermostats as their control system. So the the comfort is dedicated or is determined by the last person who walked by the thermostat right? So that’s not a good energy management system. So um.

James McWalter

Right.

John Powers

In those facilities you can rip and replace dumb thermostats with smart thermostats with a one day installation and you can have ah energy. Um and demand savings by keeping the temperature within a range if you like at None we can keep it anywhere between 70 and 76 most of the time we run it right down the middle nobody even notices when they’re you’re getting close to your peak. We might pre-cool the building before the peak and then let the temperature go up a little bit. It turns out to be a huge amount of energy that can be moved from minute to minute and hour to hour and the experience with the customer is they notice nothing. As the fans keep running everybody’s still comfortable. You know if we’re doing our jobs right? Nobody knows we’re there. So the the improvement comes from the facility management side where somebody who owns a portfolio of these buildings. And is getting hotch and cold complaints or getting other kinds of complaints. They can manage all of those centrally they don’t have to send out a human in a van to go and check just to do the diagnostics as to why somebody is cold. Did they misuse the thermostat did they is there a malfunctioning unit. You can figure out all of that before you get out to the site. You can see it all in front of you on a dashboard and then the the only site visit is for actual repair so you know that’s where the benefit to the end customer comes in is in you know, improved comfort but then also in improved economics. Economics for maintenance and economics for your electricity bill. So so my none job out of college was actually in the rates department of an electric utility. So I I know how all of the tricks are done by utilities to get more out of commercial customers. So you you and I just pay for kilowatt hours on our bill at home right? So ah, certainly a commercial customer pays for kilowatt hours too but they pay up to the 70% 30% to 70% of their electricity bill is based on when they use energy not just how much they use.

James McWalter

Right.

John Powers

A lot of that is in a demand charge the highest 15 minutes of usage for the entire month can cost up to None your bill and some of it is in time of use charges where expensive times a day cost 3 or 4 times as much for the same Kilowatt hour as cheap times a day so we can shift energy.

John Powers

Without anybody noticing from expensive to cheap from dirty to clean times a day and save on cost and carbon that way too. Yeah.

James McWalter

And so you mentioned these four c’s earlier and you were kind of touching upon these are the the elements that customers find compelling if you have to stack rank them from the customer’s perspective. You know, which which which see is like number 1 number 2 number 3 number 4 Yeah interesting.

John Powers

Comfort top. You have to be able to handle. Um, all of the you know, ah occupants are worth much more than electricity right? So so comfort is number 1 control and especially in a facilities management environment where.

John Powers

I’ve never met a facility manager who was not undersourced right. Facility management is ah given a None priorities and they can only attend to their top 3 right? And so if you don’t make the if you don’t take work off their plate with a solution instead of putting it on.

John Powers

If I just built us a bit of software that sends you a None alarms a day to say all the things that are going wrong or is yeah, you’re welcome I so no, it’s like this is a way to reduce your list of things to do and manage it not increase them. It’s a way to keep the.

James McWalter

I right? it was like thank you so much? yes.

John Powers

Ah, comfort and convenience of your customers. Um, you know under better control while reducing your your cost. So I we usually say comfort control cost and carbon and that’s not you know that’s based on. Kind of a consensus experiment experience. Certainly some have a much higher priority on carbon. There’s folks who have yeah esg goals that um Trump any savings on their electricity bills pretty much um and ah. But but comfort is non-negotiable. You have to keep folks comfortable and control is the you know is the underappreciated part. It’s like if you really have a building that has dumb thermostats locked in looseite cases. We can help you.

James McWalter

So right.

John Powers

If that’s the way you’re trying to control the occupants right now. My favorites are the ones that we find where the looseite cases have unbent paper clips that people are using to jab inside to adjust the temperatures. Anyway, we definitely can provide a better energy management experience than that.

35:53.96

James McWalter

I Think it’s so interesting that stack rank because yeah, again as I think through and I’ve talked to a lot of folks who are tackling similar problems or even pretty, you know pretty much the same problem and I think generally there is such a focus on like selling on. We’re going to save you money.

John Powers

Yeah.

36:30.80

James McWalter

But it’s it’s such a well-made point that like they make money to tenants and the tenants like you know, getting 17 complaints right? and and you’re probably getting those anyways even with the perfect control because you know we all have our different temperatures. You know my my wife likes a way warmer home than I do right? like these are just the the natural kind of state of things.

John Powers

Of course.

James McWalter

And and you know you always have disagreements about certain things but like giving that as the the priority. Um it you know changes everything because like it also as more as other aspects of building electrification become cheaper and more ubiquitous. You already have the control system in place to take advantage of that. And so it’s basically building this beachhead on the basis of comfort and control while also enabling you know, but right now but also much more in the future this idea around the cost and most importantly, the carbon piece I Guess from the context of of this podcast.

John Powers

I’m so glad you brought up the dynamics of a building right? because a building is not a static entity and what’s coming in the next few years is bigger changes than have happened to most buildings in the last several decades when when we talk about. Um, replacing when we talk about decarbonizing we we work a lot in California but we work all over the country and states are making these claims that they’re going to decarbonize everything and to decarbonize energy use in buildings. You have to replace gas heat with electric heat gas water heat. With electric water heat. This is a huge change in infrastructure and in the economics of building operations and if you put in and I’ll just use heat pumps as an example, but if you put in heat pumps where packaging units are today that currently are using gas. You’re you’re going to have ah a massive increase in demand charges in the winter that no one knows where they came from unless you accompany it with better control now we we actually do a great job with electric heat. We’ve done some studies that show we can. Keep the demand charges as low as they were before with the even with electric heat because you can flatten that out over the course of the day but again uncontrolled electric heat just sets this huge spike none thing in the morning and nobody understands what that does to their electricity bills. So the changes in. Infrastructure and building car chargers behind the meter is another huge one so we deal with I mentioned earlier? Um, ah some car dealers. Um, they’re all being told they have to install the the oems are telling them. They have to install car chargers in order to be entitled to any. Um, allocation of electric vehicles to sell well they don’t know what that does to their demand charges. They don’t know which brand to get which how you control any of them you plug in and suddenly your load goes crazy. Um, you know the ability to integrate management of all flexible loads in a building is. You know is just becoming more valuable as buildings change as the electric equipment in them changes and grows.

James McWalter

Yeah I was actually talking to the head of analytics at a Massachusetts based utility. Um, kind of four or five months ago and he was like we’re full time you know I have a staff of 8 data folk and we’re full time trying to predict. You know the year. Basically the peak load in the northeast swaps from summer base to winter base because of the adoption massocra heat pumps basic are like if we get that wrong if we’re like a year off like you’re going to have similar more things to what happened in Texas like year and a half ago when obviously horrific things in terms of like some loss of life and so on.

John Powers

Yeah, yeah.

John Powers

No, my.

James McWalter

Also had these you know $28000 for None inutes of energy. Ah you know bills that were occurring and a lot of those were kind of systematic like issues that happened as well. But you know these are all the kind of canaries you know in the coal mine to a certain extent for how different things are coming and and as we have extreme weather events they’re showing us what. Like basically the default response is going to have to be in five to ten years

John Powers

There’s there’s no question that the grid needs the kinds of controls. We’re talking about the grid needs to be able to communicate buildings in the grid are one system not to and the the buildings have lots of built-in flexibility. Once you get a building under better control. You can respond to any signal whether it’s from the customer s own meter based on their own fixed tariff or whether it’s a price signal or load control signal from the grid so you can you can turn your building into a revenue generator. Once you have it under better control utilities will pay for load flexibility in None form or another exactly the way your your contact in Massachusetts was talking about the cheapest form of storage on the grid is smarter control of of building loads period hands down. And you know I’ve I’ve lived in that market before I know the demand response market very well. Um, you know built one of the first web-based demand response tools available and the the getting a product that works for the customer none getting it to work. For the building manager first that opens up all these opportunities to turn it into revenue when you negotiate with the utility.

James McWalter

You know that that makes sense and then just on that I guess because you see we talked about kind of predicting a little bit So what kind of information are you going and like into to predict are we talking you know the day ahead. Energy markets. Are you pulling in you know, lots of different disparate datasets to try to say okay.

John Powers

Yeah.

John Powers

Um, within.

James McWalter

You know we really should charge up this this battery storage or whatever it may be because if we did it an hour later it’s going to be way more expensive.

John Powers

Yeah, so um, we can take a price signal in most markets don’t have that operating um yet. But we’re doing pilot projects in California British Columbia um None in California 1 in British Columbia to to look at day ahead pricing from the. Wholesale markets. But mostly what we take in is a prediction of what the uncontrolled loads in your building will be doing so the stuff we’re not controlling lights and plugs and other other end-use technologies that we’re not controlling.

John Powers

And then a prediction of weather in terms of what the temperatures or exterior temperatures are going to be and if you have solar then a prediction of what your own solar Um Pv system is going to be generating and so we take those and put them into an optimizer and then. That tells us when to run the flexible loads in a way that keeps you comfortable and yet minimizes your spend on electricity or maximizes your gain if there’s a you know program from the utility in effect.

James McWalter

Yeah I think whenever there’s kind of recommenders or predictive modeling. That’s occurring. It’s always nice to be able to get you know somewhat immediate feedback right? And so in this model you are every single day. It’s like did we do a good job with combining weather data and understanding that look.

John Powers

Um, yes, yeah.

James McWalter

The lights get turned off a little bit later certain times of the year versus others and like pulling in all those factors and then it’s like okay you know our perfect predicted curve like fit the actual data you know was it 92% or was it 97% or 99.9 percent and then and then tomorrow you get to do the whole thing ever. You know over again and so.

John Powers

Um, if.

James McWalter

Every day I would imagine you’re you’re kind of improving and and you know trying to hit your own internal metrics around like how close are you hitting that predictive curve The actual fact. Yeah.

John Powers

Yeah, this this is the beauty of modern machine learning this really is something that while you know I have a background in economics and statistics I’ve done plenty of modeling myself. But I have to say the ability to have the system. Learn autonomously and get better over time is really exciting to watch because the buildings get dialed in better and better as um, you know, ah hardware starts degrading on day. None software gets better the longer it runs so we’re controlling our our buildings better. Every. Every day.

James McWalter

And then as we have these you know step change you know items added in right? The things we kind of touched upon like Ev charging and you know more battery storage and ubiquitous heat pumps and so on um, like there’s ever more data to to kind of sort through and so you know like. Like even in company I’m working on and and whenever I’m advising on startups. It’s like if you are in a world where you’re trying to build models based on data like the more data the better and the more complex the data the better because that’s where you’re kind of bringing to bear expertise like in a world where there was just a single variable like there wouldn’t really be a business for you right.

John Powers

We We have a slide in our pitch deck that says the more complicated the better because as you add things to the building. You just are making it harder for yourself to manage and building a more compelling case for software to do much much of the autonomous management. Because you you just can’t be everywhere at once you can’t be adjusting every thermostat watching who’s plugged into your card chargers looking to see what the state of charge on the battery is none of this stuff is well suited for humans. This is a case where artificial intelligence is. Replacing jobs that aren’t being done at all. So We all worry about Ai replacing jobs this is doing jobs that nobody is doing right now. So we’re making sure that it’s possible to have the.

James McWalter

Right.

John Powers

Learning We just talked about continue even as you add more complications to the system.

James McWalter

And so what are the kind of goals for the next you know 12 to 18 months for the company. So.

John Powers

So we are um in the process of getting ready to fundraise so we raised a seed round last may and we’ll be raising a series a later this year. We are um, staffing up both the. Product and the sales side of the house and you know we’ve been doing pilot projects for multi multi-building owners so that could be chain accounts or school districts or what have you. And the real goal is to pivot from sort of the pilot projects to now that we have proof that those succeeded more massive deployment through those chains. So now that there’s a school district and. California that we’ve been working with and we’ve demonstrated all the things I just said that the control keeps people comfortable that the savings grow over time through the course of the pilot at the schools that we were doing and now we’re going to be talking to them about rolling it out to you know, 5 or None times as many schools. So the the you know we’re at that inflection point towards scale rather than invention. So this is the most exciting time for me as an entrepreneur because you get to see it not just work which I knew it was going to work but see it work at scale. And so that’s this is our year to sort of roll things out to um more and more more and more buildings in more and more sectors. So we’ve we’ve done bunch in schools. We’ve done a bunch in car dealerships. We’ve done a bunch and ah other. Houses of worship and like all of those lead to None building leads to many more buildings. Not None building is just another fight to go get None more right? So yeah.

James McWalter

Yet having a go- to market that is additive like that where you know a single sale is not a silo that ah nobody else knows about but it like makes the next you know part of the next sale the next building additive and and more more easy like um is something that.

James McWalter

I Think in general series a investors like to see so that’s that’s a positive.

John Powers

Well right? and you have to right because we we certainly had to earn our way there. We certainly had to go hand to hand into a single church a single car deal or a single school before we earn the right to go say we’ve proven this works. Ah, you know drop. Drop a dollar in the top and ten bucks comes out the bottom you know? So ah now we’re to that stage the the proof is there. The case studies are there. The referenceable accounts are there the you know now now things start rolling. So.

James McWalter

And absolutely and kind of take like ah I guess ah a broader perspective. You know there’s been ah I call it a tapestry of different incentives and disincentives as you know, various kind of public entities. Whether it’s federal state governments or you know other entities who are trying to add. Different ways to nudge ah different parts of the economy into more climate-. Friendly yeah situations and so you know you even have things which was us on the climate side but things like lead certification previously which is still ah you know ubiquitous What is the kind of policy and regulatory environment like.

John Powers

You know.

John Powers

Sure.

James McWalter

You know where are would you like to see areas where you know we’re actually having too much regulation. That’s slowing things down versus these are areas that would be great to see more incentives to speed up some of the transition.

John Powers

So A lot of the incentives that I’ve seen are all around hardware and physical assets so you can get.. It’s much easier to get an incentive to replace an Hvac system than to make it work better and that seems upside down to me I’d like to see more incentives around. Measures that can be implemented without huge capital expenditure because the um you know the adoption is not just based on expense adoption is based on education and you know a little bit of endorsement and Momentum. So I’d like to see more incentive to. If you’re going to keep your old stuff at least run it properly or if you’re going to get new stuff at least run it properly. So I think I think that incentives are skewed at the moment towards capital heavy stuff whereas software is delightfully asset light and you can. Make a bigger step change faster by updating the control of what you already have than by scheduling some multi-year engineering project with massive capital costs to take out perfectly. Good equipment to replace it with slightly better Equipment. So I think the the. Yeah I’d I’d say you know software is conquering the whole rest of the world and it’s you know, clearly going to conquer this part of the world but a lot of the incentives seem to be aligned around around hardware replacement.

James McWalter

It Yeah’s it’s this tricky thing like I think a lot of that is due to the flexibility of software and I think it’s very hard to design programs that take that into account right? and so you would have to have it So in some way outcome-based So it’s like okay this is the status quo from a.

James McWalter

Yeah, energy efficiency or emissions point of view and then this is the improvement and and incentive based on that I I do think that. Um, how do I think about this so another are like sort programs. Um I’m familiar with to try to like fund innovation Actually probably it’s so somewhat similar to the you know the kind of.

John Powers

For sure.

James McWalter

Granted investment from ah the voe where depending on exactly how these things are set up if they’re too structured. Yeah, one of the things we just talked about with software is that it’s so flexible right? Like you know you you have these ability to kind of like explore these areas because it’s such a malleable piece of technology to solve problems with. I Think there’s always going to be this tension between ah policy and incentives when apply to software specifically. Because yeah, if you put too much of a structure on software then maybe like the the best software and unless as you say you do have an entirely outcome based criteria.

James McWalter

And then you could have like a None different shots of goal and lots of people trying different things to kind of hit that particular outcome.

John Powers

Sure and and you could do it more simply too. You could say if you’re going to install make it come with the hardware right? You could say if you’re going to get an incentive to install heat pumps instead of gas ah heaters. You have to you. You could just use the heavy hand approach and say you have to have some kind of intelligent control software that goes with it. You know and it doesn’t have to be ours of course but it could you know just like it doesn’t have to be None company’s heat pump either. But just saying we’re we’re. Um, we’re installing a None heat pumps and we don’t care what happens to the grid as a result I think is setting ourselves up for some trouble and the same with car chargers having you know there’s there’s. No end of folks who talk about smart charging but we rarely see it right? Chargers start charging as soon as somebody plugs in and that’s that’s their version of smart charging because that’s what they think the car drivers want and they’re probably right? But if that happens everywhere with no. Ah, thoughts of consequences to the grid or consequences to carbon or the rest of it. That’s a missed opportunity. You know evs all by themselves will either. Ah um, save or wreck the grid just in the next few years the numbers that I’ve seen. So yeah.

James McWalter

I yeah I’ve I’ve mentioned to a few folks working on yeah in the ev space on on the podcast about this. Ah this theoretical you know, None of July weekend where in ah in a dense city with 30% ev penetration where we’re just going to be out of chargers when everybody tries to charge up and.

James McWalter

Yeah, you’ll have something so more chaotic and and I guess the lack of kind of over our controls um is a real issue. Um, but then I yeah I guess like kind of thinking about you specifically and your your background you know in we touch upon it ah like lot of kind of different kind of approaches to solving various problems. You know we worked at a utility and then you you know you’re an entrepreneur you know in multiple kind of chapters if you work I suppose to kind of give a message to you know the next generation analog of yeah what you’ve done somebody is coming On. You know, maybe in their late teens early 20 s who you know want to kind of have a kind of similar impact on the world. Sort of pick our advice you give that person.

John Powers

Yeah, so I mean work on something worthwhile. It’s it’s kind of trite advice but find a find a hard problem that you want to see solved and then go solve it because um, you know there’s there’s plenty of stuff that I’ve i’ve. Worked on in my career. But really the thing I’m proudest of is that I’ve probably participated in giving between None and None folks their none jobs in energy. Um, you know if if your early career looking for guidance and energy hit me up because I have to say. Um I I can connect you with any of the entrepreneurs who aren’t me who are also trying to solve all these hard problems. Um, we need more and better iq points on the big problems of the world. You don’t have to go to Facebook and figure out how to make somebody. Stay on a cat video for four more seconds right you should be applying those skills to ah something that will make a real difference for yourself and for the world.

James McWalter

That Yeah, and thankfully we’re starting to see a bit of a shift like there’s been this probably from the beginning of the pandemic but this kind of flourishing of lots of lots of folks who are starting online communities and and that are all kind of you know climate. Ah you know, focus and trying to. Get people to divert. Ah from yeah, the the kind of big tech like role or or similar into something that has that impact.

John Powers

Yeah, yeah, we we um before the pandemic we were big participants in local um hackathons and the like to try and pull people from tech tech into clean tech because the skills are are. Um, you know, fantastic in tech tech but the project needs are um, just bottomless in in clean tech right now there’s there’s None new innovations that need to come along in the next decade that are going to make a real difference in the world. So. Of. There’s plenty of opportunity here. Yeah.

James McWalter

And and it’s this isnt my own start of it literally every day I like talk to folks. It’s like the data insights from the financial software that we were building ten years ago are like that are just you know old school nobody uses them anymore in the financial space are just like cutting edge for people working on.

James McWalter

And the energy space and so it is. There’s just massive opportunity and um, yeah, hopefully we’ll have more and more people kind of joining. Um, but John it’s been actually great chatting. Um, before we finish off is there anything I should have asked you about but did not.

0John Powers

Um, and just give me a second. Well.

01:18:54.32

James McWalter

So to go for and this is your opportunity to give a call to action. Yeah.

John Powers

Well I think we covered the landscape pretty well I would say that um, we’d like to have folks hit us up on our Linkedin page where we talk about load flexibility and the value both to buildings and the grid pretty often. So um, extensible energies Linkedin Page is good None my own Linkedin page I’m just John powers on linked john t powers I think on Linkedin you can find me easily there. But if you if you own a building and want to see what our software can do for you just hit our homepage. There’s ah ah, a place for you to enter some very basic data and see if our solution. We’ll make a difference for you and we’d be happy to run the numbers with you and see what we can do to make you more comfortable and save you some money.

James McWalter

So fantastic and we’ll include those links in the show notes and I will also send an email to ah the person who runs our building where my own offices and and see if we can get some some some kind of juice from that. Thank you John.

John Powers

Okay, thanks so much James.

Great to chat with Matthew Plante, President and Co-Founder at Voltus! Voltus is a distributed energy platform that accelerates the energy transition! We discussed bringing renewables online to prevent massive blackouts and reduce energy consumption, wholesale trade energy markets, opportunities for startups in the energy space, the importance of building a world class team and more!

https://carbotnic.com/voltus

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

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The unedited podcast transcript is below

James McWalter:  Hello today we’re speaking with Matt Plante president and co-founder at Voltus welcome to podcast Matt, brilliant I suppose to start with. Could you tell us a little bit about Voltus?

Matt Plante: Thanks for having me.

Matt Plante: Voltus is a distributed energy resources platform. Our job is to help make electric grids modernized which means they’re decarbonized. They’re reliable and they’re cost-effective and we do that by. Bringing to the electric grid resources typically customers who reduce their consumption of electricity when the grid needs them to.

James McWalter:  And what are some examples of those distributed energy resources.

Matt Plante: We help monetize resources everything from a smart thermostat to an electrical vehicle charging station to a wastewater treatment plant to a big industrial Factory Steel Mill. For example, a paper Mill For example.

James McWalter:  That fascinating and we can use the term the Er So just for the audience. The ers are kind of distributed energy resources. We’ll probably use that phrase as we go along and it’s basically just the kind of items that matches outlined and I guess kind of going back to the beginning. You know what drove the initial decision to start Voltus.

Matt Plante: My cofounder and I spent ten years together building Enerno which was sort of a version 1 point zero in the demand response space 10 years later the need for distributed energy resources has grown considerably. The market. Has grown considerably. You can monetize these resources in many more ways than you could ten years ago and so the market was growing at a time when we felt like the competition wasn’t doing exactly what we thought they should be doing and so that was the perfect combination starter business. Growing market and no 1 taking advantage of it.

James McWalter:  And so you already had that kind of existing relationship with your kind of cofounder. You know you decided this is the big problem to kind of tackle for the next decade or multi-decades. What are the kind of first like six months those early days look like.

Matt Plante: We got really lucky so partly because of the work that we had done in a similar space for a long time when we hung up our shingle a week later we were reached out to by an entity that needed our help and so right off the bat.

James McWalter:  So.

Matt Plante: We had a four hundred thousand dollars contract that we did not expect we said holy cow this is really really nice apart from that you know you’re hustling your we had spent time with customers making sure that our solution was 1 that they wanted and needed.

Matt Plante: But you’re hustling you know you’re doing everything you can to get the business up as running as soon as possible and we were determined from day 1 to get to profitability as quickly as possible I think there have been I used to pay attention to an event call that. National town meeting on Demand response. It isn’t since merged with a solar meeting but it’s still held in this was in 16 when we started the business if you looked at all the companies that had presented at the national town meeting on Demand response. 80 percent of them were no longer in business so you had these companies with great ideas. But who never found the right business model to allow them to survive to allow them to actually deliver on what they were trying to deliver on so from day 1 We were very very determined to make the business model work straight away. And so most of our early efforts were around making sure that we could do that as quickly as possible.

James McWalter:  And so those other 80 percent. You know what are the number 1 or number 2 things that like stops people getting up and running I know from my own research having looked and you know, starting at the early stages of looking at yeah, clean energy startup on my own side. It is could be a very difficult industry to break into. Um, they’re you know the graves of many many companies. Many startups are kind of strewn about um but it’s such a big massive industry. The opportunities are so large the shift in energy consumption is so large so there’s yeah lots of dollars there. Um, you know I Guess how do you think those companies could have kind of pivoted or you know made a better ch. Yeah, had better odds of success.

Matt Plante: I Think it is paying attention to the business side and creating a long-term sustainable competitive advantage that’ll allow you to be a healthy financial business and the good of our industry is that there are so many mission- driven people. We’re trying to solve climate change which as far as I’m concerned is the challenge of our time we’re trying to solve this big meaty Problem. So The wonderful part about that is that our industry is full of mission driven people that doesn’t always equate to people who are hardcore capitalists.

James McWalter:  Sure.

Matt Plante: And Greg and I are hardcore capitalists. We understand that our business won’t be able to attract the investment we need unless we create a very financially sound business. That’s going to make our investors a lot of money.

James McWalter:  And so you have on the business side. You know that that kind of core focus in terms of the product side. You know what are the earliest version of that product look like and what are the kind of pivots that you kind of went through to get to where you are now.

Matt Plante: I Think the question is can I rephrase your question.

James McWalter:  Please.

Matt Plante: When we when this industry first started largely as a result of the northeast blackout of 2003 we were asking commercial and industrial customers to reduce their consumption of electricity in order to prevent the next big Blackout. We had a peak demand problem fifteen years later than that the need for distributed energy resource was was entirely different. We’re no longer simply preventing Blackouts from happening though that certainly is a part of our business with whether it’s. Wildfired driven Blackouts in California or ice storm-d driven blackouts in texas or polar vortex driven Blackouts in Michigan that’s still a part of our business but increasingly our resources are used by grid operators to balance the grid. Having to do with bringing renewables online and so when that’s the case we’re no longer used 1 or 2 times every year to prevent a blackout rather we are called upon dozens and dozens and dozens of times a year to reduce our energy consumption oftentimes for very quick periods of time to help balance the grid when a power plant both thermal and renewable trip offline and so in connection with that change. You need to move the. Industry from largely manual based asking people to shut things down to a much more automated process where we are paid to quickly bring resources offline to keep the grid balanced and so now we saw these changes coming and. Invested in day 1 in a lot of product. There hadn’t been a company in the space where product was the competitive advantage previous I think to voltus it was largely marketing and sales and sometimes first mover advantage that created a competitive advantage. But. Said look when we want to think long term and here’s what is coming down the road here’s what we’re going to actually get paid for product needs to be the competitive advantage.

James McWalter:  And so that product just how is your product. You know that kind of next step on picking the kind of demand response space I Guess you mentioned there is this kind of ah you know low-tech you know, pen and paper type approach. How does Volt How is voltus kind of virtually different.

Matt Plante: In 2 big ways. The first way is that we wanted to be able to provide these resources across all markets. Lots of people had entered pgm in a manual way we wanted to enter not just pgm but.

James McWalter:  Okay.

Matt Plante: Each of the other 8 wholesale markets in North america that hadn’t been done before no 1 had entered the southwest power pool. No 1 had entered myso which is the second largest electric grid in North america and so we actually started there. Started in peoria illinois to bring resources to myso for the first time so that was 1 big way and the second way was being able to integrate with and automate lots and lots and lots of. Types of loads so that the types of loads we support and bring into these markets is very different than what was done 10 years ago we can support smaller loads via integrating with a ah building automation system. We can support residential loads through integrating with. Partners who manufacture Smart thermotats for example. Ah.

James McWalter:  And and so I suppose in practice. Let’s say you know I’m managing a ah you know, kind of a commercial building. Um, and I’ve you know, signed up for voltus. You know what? what is that kind of I suppose process like and what are the benefits to me as that building owner or building operator.

Matt Plante: The benefit to you is cash. That’s an easy question. The answer we are paying our customers for the right to help them reduce their electricity consumption a certain number of times per year the process is we. We understand what assets that commercial real estate owner has that will allow us to affect its consumption of electricity and by learning about that building. We can say aha here’s how we’ll monetize it. So we may go to Manhattan in 1 building they have the ability to reduce their energy consumption for several hours at a time great then we can monetize that in a certain program in New York city the building across the Street. Doesn’t have the ability to reduce consumption for hours at a time but can reduce energy consumption very quickly dozens of times a year great we’ll monetize that in a different way. So we learn about the building’s capabilities and then we say how do we optimize the amount of money that the customer can earn by taking a certain action. And then we put those practices into place.

James McWalter:  And so then I suppose the money then for you that comes from basically these kind of wholesale traded energy markets of various types who are the other players in those markets.

Matt Plante: Ah, so yes, that’s correct and the other players in those markets we compete sometimes with other curtailment services Providers. So Annell X C power. Sometimes there are regional players Texas has. Regional players California has regional players those are main competitors.

James McWalter:  And so you mentioned a little bit earlier that you know 1015 years ago there were actually more limited ways to monetize these types of resources I guess what changed like was it regulation was it. The tech has improved combination something else.

Matt Plante: The tech has definitely Improved. We’re able to serve smaller loads than we were a dozen years Ago. Regulation has changed dramatically and that’s been a big theme throughout my career is that there’s always. Lots and lots of money to be made in advance of or right on the heels of regulatory changes and so part of these ferc certainly has been involved in helping accelerate. The ability of companies like ours to participate in Wholesale markets to bring demand side resources to wholesale markets and have those resources be paid similar to how supply side resources are paid. That was a big regulatory change. Ferc recently issued an order call but that we call 2 by four ferc 2 2 2 2 which is almost a final barrier to unlock distributed energy resources. It’ll allow ders of all types to participate in all Wholesale Markets. And that’s going to unleash the resources we need in order to fully transition the electric grid to renewable energy to create the electric grid we want which again is is decarbonized resilience and cost.

James McWalter:  Yeah, ferc is this kind of fascinating organization which I just kind of got to know in the last few months you know this is the kind of federal energy regulatory commission I actually reached out to a few of their economists who worked on 44 I managed to give 1 of them on the phone.

Matt Plante: Active.

James McWalter:  And I straight up was like what are the kind of opportunities for startups in the space. What is the opportunity like basically what do you want to see happen. Um, and what he said to me was we you know have obviously goals like we want to completely have these things open up in ways that you know a thousand new companies are started um but he also was like. May well just be that it’s a kind of a nationalized version of what’s happening in California you know some states that are already kind of moved along to this kind of more giving the ers a little bit more access to wholesale markets I guess yeah when you yeah and I guess the book because they have to be written. But how do you think? just because the regulation I guess has started to move in that direction. Um, how it’s actually executed across these regions I guess a so little open question. So how are you thinking about that?

Matt Plante: 1 of the statistics that we pay a lot of attention to is the fact that most electric grids in the United States haven’t seen load growth for a very long time. But if you look at projections. We expect to add about forty percent. The total demand of this country over the next 30 years and there are four big drivers of that. It’s electric vehicles number 1 it’s the electrification of the home number 2 as heralded by organizations such as rewiring America it’s vertical farms. Number 3 and then its data centers connected to everything from google to bitcoin and so when you consider what everyone expects to be a huge growth. For the demand of electricity. We’ve got to figure out how to get supply to match that demand the combined capacity from all lithium-ion batteries. That will exist in electric vehicles by the year twenty thirty is forecast even by the most conservative forecasts for ev penetration to be 2 times that of existing power plants currently in the United States so take every nuclear plant. Every gas plant every coal plant every central power plant multiply that by 2 and that’s the estimate for the combined capacity of batteries driving around in electric vehicles. You have to figure out then how do we use these. Evs to help be a supply resource to the grid. It’s going to be a huge challenge. Everyone talks about the energy transition. It will not be smooth all the time there will certainly be bumps in this energy transition.

James McWalter:  No, that’s fascinating I guess you know 1 of the aspects of the energy system which you only really getting a sense of in the last little while is this kind of you know, big gap that sometimes called the duck curve between net load in the middle of the day when there was a ton of solar and you know the reasonable amount of wind. And then kind of early afternoon or sorry late afternoon early evening when everybody goes home turns on their air conditioners and so on and the sun isn’t shining it in the evening and definitely not shining at night and so you have this massive kind of dropoff and so that dropoff I guess to the listener is the reason why we have to keep. Dirty. You know gas and coal power stations longer than we would like right because you know building kind of solar and solar but solar doesn’t replace the type of energy we need at that point and batteries I guess are this kind of fascinating potential alternative. Um. But you have I guess 2 directions you could go with a theboan Batteries. You could have what they call utility scale where you’re building. You know, kind of shipping containers worth of batteries in the yeah, the desert somewhere and that’s your kind of way to balance the grid at that time of the day or the evs which which you mentioned and I guess if you think about evs you know there’s certain parts of. Country is still figuring out even to allow what they call ev to grid is it even going to be Allowed. How do you think about like that that transition you mentioned it’s going to be bumpy but I guess like what are the first steps you’re going you see as kind of emergent as we make that transition.

Matt Plante: Um, reliability has to be job number 1 and that’s not lost on us and I and I think sometimes it’s easy to ah to excoriate the. The coal miners and the coal plants I think it’s helpful instead to understand that our economy and our way of life was built on the backs of those coal miners and that we have the luxuries we have today. Because of fossil fuels and I think it’s a really helpful framing. We do need to transition to a fully decarbonized grid. We can’t sacrifice reliability to do that. So when we think about how to get there 1 ah. 1 thing we look at is Australia fifteen years ago Australia had a very peaky electrical grid system and it slowly began to bring on new resources and it slowly began to decarbonize its grid and it slowly began to add renewables and renewables and renewables and. Now the problems in Australia are not so much peak demand related but they’re intermittent related and so they’re 1 step ahead of the United States in terms of integrating renewal resources and figuring out how to not compromise reliability while you do that and batteries are certainly part of the solution. There. Distributed energy resources will be a big big part of the solution here.

James McWalter:  And so what the other kind of implications of of this shift is you know we have these physical assets out there batteries you mentioned or we talked about you know Smart thermostats and all those kind of things you know, solar plus a battery you know something like a powerwall maybe in the home and so. When you have all these different types of distributed resources. There’s different ways you could aggregate them right to have these positive effects in the grid and and also to make money of course and in theory things like fork twenty Two twenty 2 you know offers people the chance to make money off these things in new ways. Um I guess 1 question I think about in terms of like. What the landscape looks like from an innovation point of view is you know? will there be kind of mom and pop. Yeah know the er aggregators who can actually you know engage in the wholesale markets or are we going to see you know a dozen you know vol deceptures 1 but. The dozen or so kind of fairly large vertically integrated companies who kind of dominate in the space.

Matt Plante: Probably the latter but it’ll be fun to say you know there are certainly economies of of scale. Ah, and I think there aren’t many barriers to entry but there are barriers to scale and so I think that.

James McWalter:  Now.

Matt Plante: It’s likely that ah there will be a few large winners in the space.

James McWalter:  Yeah I actually agree and yeah you start with 20 then there’s some m and a activity and that’s a and then we have those 30 years going ahead.

Matt Plante: Her You do part of the benefit of being an aggregator is exactly that the more resources that you have as an aggregator. The.

James McWalter:  Five here.

Matt Plante: Larger the value to the grid from that aggregation. The risk of your portfolio sort of mathematically decreases as you add 1 more resource. Ah so that lends itself to a few large players winning.

James McWalter:  So when you mentioned the barriers for entry are not that high I Guess again as a outsider looking in I’ve actually talked to a ton of you know, smart software people Typical Silicon Valley type starter startup kind of person and a lot of them looked at clean energy and they like oh like there is a lot of opportunity here.

Matt Plante: We’ll see.

James McWalter:  And we’ll do a deep dive for a month or so and then a lot will just kind of turn away because when you start digging in to all the different regulation in particular but also um, yeah, some of the kind of challenges we were talked about it can be quite difficult and so how do you think about that piece. You know what are the I guess as a general question like what are the opportunities that. You know, smart people either within or outside the industry should be kind of taking advantage of over the next few years

Matt Plante: I think 1 of the particularities of the energy grid is that there is no standard market design across the wholesale markets that exist in the United States for example, the rules that pertain to the Texas energy market and. How you participate in that market are very different than the rules that pertain to the new England energy market we call them Balkan eyes but there’s no so 1 standard market design. So for voltis our software has to act and look. Differently depending upon which market we’re talking about that’s a cost a real cost to us and so that is a barrier of entry in a way because you can’t simply build software that works for. 1 sort of code that works everywhere for all programs for all customers. But it allows for really deep specialization and I think if I am a software engineer or a company getting off the ground. There is an opportunity to focus on a particular niche and do that niche very very very well and that’s going to have value to somebody.

James McWalter:  That fascinating. So you know there’s a ev charging ah battery management for school buses right? something relatively niche that that might be something that somebody could tackle and actually I think there’s a company called proterra that’s doing something similar. Ah, excellent and.

Matt Plante: I Think that’s a good example.

James McWalter:  Believe you had a reasonably large raise earlier in the year and you know that I guess always when I’ve or I’ve been involved in in those kind of processes. It always like that very much kind of concentrates the mind on like the kind of near future and the the kind of medium term milestones. Are we thinking about you know what? Volt like the next steps revolt is.

Matt Plante: We spent the first five years really building the foundation and that means a couple of things it means creating a product advantage. So we we say internally that it’s technology to make your life easier but there are. Very concrete ways in which our technology helps our customers do things they couldn’t do before and can’t do with others and the second foundational piece to us was existing in each and every market so that when we approach a national account. We are the ones who can serve them across North america that foundation is now set and so now it’s about really pouring fuel on the fire and so much of our rays is dedicated to growing the. Go-to-market team and allowing us to bring on many many more customers than than we than we have currentlyle in an effort to scale. So we’re looking forward to that. It’s a huge part of what we’re doing the second part of what we’re doing is accelerating our product roadma roadmap with regard to international efforts.

James McWalter:  And that’s kind of secondary piece. Ah yeah, in the same way that the us has a dozen different ways or more of um, you know selling and buying electricity depending on on where you are. I’m from ireland originally ireland has a very different structure to the United kingdom which has a different 1 to france and and so on around the world. Um, how are you thinking about that internationalization piece and I guess what have you learned from the you know navigating so many different jurisdictions in the us that kind of gives. A insight into how to expand internationally.

Matt Plante: It’s a good question. It’s not entering a place like Ireland or the uk or Japan or Korea or or south africa isn’t that different than how we think about entering Ontario or California. There may be a language difference obviously but the market works differently. In fact, the market in Japan may resemble texas more closely than the market in California resembles texas so in some ways we’re very prepared to enter these markets because we’re used to them being different I think. That with international expansion. There’s always the question of how do you do it right? Do we acquire local talent to help us grow. Do. We replicate the success we had here and and move those teams somewhere else to do it all over again and that answer will probably. Look different depending upon where we’re talking about.

James McWalter:  And fascinating and you mentioned earlier. Yeah, these kind of the need or the how the energy grid itself is going to I think you said something like forty percent over the next Decade or so um through the kind of different aspects. You mentioned you mentioned vertical farming you mentioned some other aspects and then there’s also the. Ones that you didn’t mention which I Also think you know are more maybe kind of moonshots but things like direct our capture. Um, you know, carbon sequestration The cost of that is very much a function of cheap electricity things like long duration storage in the form of hydrogen through electrolysis or some other kind of processes are also very dependent on. Ubiquitous, clean electricity and so I guess you know 1 of the tensions in the energy space is a lot of these things have to get energy to such a level of cheapness to enable these other aspects and so near your but definition that’s squeezing margins elsewhere. How do you think about the business model and business case for the need for these, you know this kind of ubiquitous cheap electricity but also potentially squeezing margins for the actual energy managers aggregators and producers and.

Matt Plante: I’m not sure that it affects my business but it certainly affects the ecosystem writ large 1 of the reasons we started voltage and that 1 of the reasons we do what we do is because we can have. Impact now we have in 1 of our markets 1 percent of system peak enrolled in a quick response program where we are called to reduce our energy consumption when. Thermal power plants trip offline that has removed the need for 2 peaking power plants in the region. It has helped make the grid cleaner while suppressing prices that are. Passed on to a commercial industrial customer so it makes the whole region more cost competitiveive. There’s no subsidies involved. There’s no need for the cost drivers down that business exists right now today and so that’s why we chose voltta when when we think about the ecosystem. If you look at wind batteries solar all these costs have come down much more than was anticipated ten years ago and so there is a sort of a learning curve. Before you can get to the point where those costs come down but they are coming down dramatically you know there is a reason that 80 percent of all new capacity in the united states last year was renewable. It has nothing to do with subsidies. It has everything to do with the fact that the economics of wind and solar are better than the economics of thermal generation right now and so you know ultimately, it’s going to be. This is an economic driven decision. We’re going to get to a 100 percent renewable energy ecosystem not because of regulation but because that’s the cost effective way to build a grid.

James McWalter:  It right? and it’s really just you know is it a like 25 year project or 50 year project right? You know regulation can help at the margin sometimes it will often hinder at the margin. But yeah I mean when ah ah we I think we both seen the same charts where you know, very smart people. Predicted lithyyon. Ion battery prices or solar pat prices and they were way off in terms of how much cheaper they got like by a factor of tanoff I was 1 of the aspects that kind of underly this and you mentioned at the beginning as ah, kind of very core to the missionion of voltus is a.

Matt Plante: That’s right.

James McWalter:  You know, zero carbon the carbonized grid. How do you kind of look at that or track that internally are you having a sense. You know you mentioned 2 specific peaker plants. But you have a sense of like you dont have to give specific numbers but you do you have a sense of the amount of carbon that’s being saved by Voltus yeah voltus expanding out.

3

Matt Plante: Of course so that figure is important to our our teammates. It’s important to our investors who whose mandates are to invest in decarbonizing solutions and increasingly it’s important to our customers. Who fact of the Matt Plante:er have larger esg goals than they had 10 years ago. So it’s a really important metric for us to track for those 3 reasons.

James McWalter:  And for you I Just personally you know you you’ve been in the industry a while um I guess you know that now Voltis and and the kind of Eu success that Voltus is having what is the kind of biggest thing you’ve learned at voltus that was kind of new to you relative to your kind of previous experience.

Matt Plante: Everyone ah I think I’ve known for a long time that the importance of team and to surround yourself with great people. But I think that message has been hammered home and voltage more so than anywhere else I’ve been where. We are a more ambitious company today than when we started 5 years ago and that’s not because greg and I suddenly found drive that we didn’t have but it’s because our teammates have delivered. Think more than we thought we were capable of doing in a short period of time and they have lifted up the ambitions ah of the company. They’ve shown us that we can do more than we were capable of they act with an urgency in order to solve climate change that’s inspiring to everybody. And as we continue to hire and bring people onto the team who feel this way. It becomes a force multiplier and so I I didn’t anticipate that happening but it’s probably the most wonderful feeling I’ve had in in business.

James McWalter:  Yeah I Really do think that this kind of talent issue is going to become ever harder for you. Just even non. You know, not dirty, not clean, but just kind of in the middle type industries or companies people. Yeah the best talent want to. You know, wake up feel very very proud of what they’re doing every day. Um, you know we all we all deceive ourselves to a certain extent right? But ah, it’s very easy if you have like a big number on the dashboard up there with yeah carbon prevented or carbon sucked out of the atmosphere. Whatever it may be you I guess have more of a skip to your step kind of going in. And you’re more likely to tell your friends who are also you know potentially very very talented additions to the team as well.

Matt Plante: Absolutely we most of our folks are hired actually from referrals and it’s easier for us to hire now than it was 2 years ago partly that’s because of the network effect and so each of our. Teammates now has a network that they can call on part of it’s due to this fact that we’re having some success but most of it is due to the fact that increasingly everyone and maybe it’s this pandemic. But. Everyone wants to feel a great connection to their work. Everyone wants to have great purpose. So we’re seeing a lot of flight from traditional tech companies into voltus and we would have had a hard time attracting that talent.

James McWalter:  And and absolutely.

Matt Plante: Just even a couple of years ago.

James McWalter:  And it’s fascinating even when I talk to you know people the fang and like the big tech companies. Those tech companies are now starting to have you know climate-related perks to try to keep those people and you know they’re potentially you know installing Smart thermostats at at their at their employees’ homes. Ah, in a way which you know is also like a ne net net positive for the lexa voltas.

Matt Plante: I Would tell those people there’s a more direct way to to work on that.

James McWalter:  I no absolutely um and let’s say I was you know a young person I’m yeah, 20 year old maybe I went to college. Maybe I didn’t and I’m wanting to have a big effect. You know what kind of advice would you give to that person to try to get involved. Ah. You know in the kind kind of climate in a positive way.

Matt Plante: Couple things come to mind jump in. However, you can. And develop some deep subject Matter Expertise I Think because of because there are so many niches it’s easy in a sense for it’s it’s possible in a sense through hard work to develop. Skills and know how that that aren’t common.

James McWalter:  And yeah, I definitely can echo that I think especially when we have so many emergent new industries right? and so ev charging infrastructure. There’s absolutely to too many you know, maybe a couple thousand single digit thousand experts on that in the world today. There’ll be 1 hundred thousand of those right in the next five to 10 years but you could kind of be you know a top ten percent in the world person just by dint of there’s ah not that many people pretty quickly in some of these spaces and so there was a friend of mine came up with this idea of um, you know, climate madlibs. You know come up with a emergent industry. Like a region of the world and a basic concept of making money and just like read aton talk to a ton of people and in six months you’re kind of a world expert not not in everything but in a lot of these areas. There is that potential.

Matt Plante: I subscribe to that thinking very much so traditionally the way of hiring is yeah who has done this job before and has the person demonstrated the ability to do do the Job. We don’t hire that way at All. We hire for potential. Partly because we’re in an industry that’t hasn’t existed before. So No 1 has had this Expertise. No 1 has actually done this job before and so we don’t look for experience doing the job we look for what we call break reading good and there are sub bullets that under pin those words. But it’s not experience that is going to move the needle here.

James McWalter:  So yeah, I’d love to hear a little bit more about that phrase you? What are the kind of some of those bullet points that you look out for.

Matt Plante: We look for people who are nimble and creative. We look for people with intellectual curiosity I think when I think about our engineering team I’ve been on very talented engineering teams but the. This 1 is different because our engineering team they see the forest for the trees. They understand how what they do contributes to why we win they’re connected to our our mission very much. So. And that’s due to their intellectual curiosity to understand the space to understand our position in that space again to understand how we win. Ah we look for folks who are man eyefully self-initiated. We look for people who like to win as a team who are Supportive. Who are loving in an effort to at the end of the day create an atmosphere that allows people to do their best to do their best work.

James McWalter:  No Absolutely and I think those are just you know, phenomenal ways to kind of build a team. You know the best teams are those greater than some of their parts where everybody is not just kind of pulling together but like they feel great right? and I guess 1 thing that I think a lot about when have managed teams that. Like I’ve been incredibly proud of you know, like just they’re they’re surprising every day right? They’re just bringing something.. It’s like oh I would have done it something way different, but what they bring bring to you is like way better than what you ever could have come up with yourself.

Matt Plante: So I think that’s the absolute best part about being a founder because in the early days right? going back to the early days where you asked me about you had a say in every single decision. The color of your logo to what market you entered right? There was nothing that escaped you.

James McWalter:  And.

Matt Plante: And then over time you sort of seed some things and then when you start to have some success. There are things that happen that you had absolutely nothing to do with and that’s the best failing in the world.

James McWalter:  Yeah, yeah, and absolutely will echo that Matt this has been really great. You know I really enjoyed the conversation I suppose before you finish up is there anything I should have asked you about but did not.

Matt Plante: You know we didn’t talk I’ll say 2 things. The first is that it we do feel an increased urgency to act. Um, partly because. Of real world events like the wildfires in California like increased hurricanes like what happens in new orleans and so that makes us want to move very very quickly to solve some of these things but the other. What else is happening is that we have bipartisan support to actually act and do things that’s rare. We have corporations with esg girlss who also are thinking about their company’s resilience. And so we have right now an incredible amount of tailwind that isn’t always the case in business. In fact, you’re often swimming upstream but when the opposite happens which is happening right now. That’s when you have to go you got a poor fuel on the fire you have to take advantage of that and so that’s what we’re looking to do it. And volt is in connection with that we are hiring across all functions and so we certainly would love people who are committed to our cause to join us.

James McWalter:  You and we include your careers page in the show notes and absolutely I think that’s phenomenal kind of I think like this is a you know once in a lifetime opportunity and obviously like a massive problem that like we all have to pull together to solve and but the opportunity level. It’s like you know it’s a trillion dollar. Ah, you know opportunity to solve across all the different parts of of industry. Sorry but ah, but across all the different parts of society because climate affects everything and so yeah I guess I’m always encouraging people I’m always envangelizing with people get involved in some ways as you’ve kind of said yourself.

Matt Plante: Thank you James! Thank you very much I enjoy this.

James McWalter:  Great. Thank you so much for that.

Great to chat with Tony Pan, CEO of Modern Electron, a sustainable heat and power technology company that helps buildings and homeowners save money, reduce carbon emissions, and increase resiliency during power outages! We discussed energy efficiency, technology that converts heat into electricity, the carbon footprint associated with heating systems, decarbonizing buildings and more!

Can your boiler generate electricity for your house? – E69

Download Podcast Here: https://plinkhq.com/i/1518148418

Remember, If you want to support the podcast there are two amazing ways!

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter:        Hello today we’re speaking with Tony Pan: CEO at Modern electron welcome to podcast Tony.                                                                            

Tony Pan:       Hello everybody.                                                                                                                      

 James McWalter:        I suppose to start with. Can you tell us a little bit about Modern electron.                                                                                                

Tony Pan:       We are an energy technology company based in Seattle USA and we work at an interface of sustainable heat and power.                                                                                                       

James McWalter:         And and what drove that initial decision to start Modern electron.                                                                                                                

Tony Pan:       So I’m trained as a physicist and it’s been very clear with that kind of educational background that energy is a single best predictor of quality of life and was really the driver of human civilization that was what the whole industrial revolution was about and so yeah” as you can. Literally plots a quality of life with energy and as the quality of life increases. Basically, the difference between us and our ancestors in the time of ah Queen Elizabeth is that we now use a Hundred times more energy per person and yet we’re. Toasting the planet and so we need to find a way to use pretty much the same amounts of energy for everybody on the planet to enjoy the same quality of life and somehow do that in a way that does that doesn’t destroy the environment so that was the founding goal right about specifically how the company got started was. I worked with a deep tech incubator I was very interested in energy in Seattle and we decided to look together at the problem of heat into electricity conversion.

James McWalter:         So that that point about the link between energy and the prediction of kind of quality of life. ” this is like a kind of fascinating topic. It was why the west won book that ah kind of has these incredible charts about the amount of energy that the average human being used 2000 years ago 1000 years ago ah ten years ago etc and how that kind of exponential curve occurred and you also sometimes see people kind of have these quizzes. would you go back 500 years ago and be the Queen of England or whatever may be versus ah like a middle-class person in the west today or a middle class person and developed country today and. Very few people want to go back because for 1 thing you didn’t even have hot running water I was just like ah  the center living which is so so different even for the very very wealthy and so that kind of great equalizer that yeah know more ubiquitous energy as brash is this kind of fascinating kind of aspect of Underer society. So that makes a ton of sense. Did you mention the? Ah yeah this kind of deep tech piece. Yeah so I suppose  what is the kind of core science that you were working on and when you started in the lab. So.                          

Tony Pan:       So we actually started with the problem statement first which is 80 percent of all electricity generated on the planet is generated from heat when you think about some fancy part plant whether it’s ah old coal-fired power plant. There’s also gas ones and even if when you think about something advanced like nuclear and there are lots of nuclear fission power plants around the world today and people are working on nuclear fusion which is supposed to be 1 of the holy grails so wides span of different technologies some using the most advanced tech that humanity has right like nuclear fusion. People trying to make that work at the end of the day. All they’re doing is generating heat from their fuel source and then what happens in a park plant is then you use that heat to boil water to generate steam and that steam ah basically pushes on a big fan and spins a big magnet. And that part of the technology is a steam engine which you are probably familiar with from the all the history books on the industrial revolution. well the steam engine is alive and well today the modern example is called a steam turbine which was invented 1 hundred and 30 years ago and the steam. Turbine alone generate eighty percent of all electricity on the planet. So that’s that’s why we decided to look into this and say hey is there any new technology that would work better in several attributes because anything that does that would be a civilizational skill contribution to humanity.”                                                                                                         

James McWalter:         And every single 1 of those steps that you mentioned like the efficiency issues are massive right? So you start with ”          ? let’s say a pure energy ah in the form of Electron ah like as potential energy and by the time you get to the end this conversion to heat and back and forth heat to steam to all these kind of things. How much efficiency is left at the end like how much energy is actually still retained at the end of that entire process and.                                                                                          

Tony Pan:       On average the power plants efficiency is about One third so you put 3 units of fuel in you get 1 unit of fuel so energy out as electricity. The remainder 2 thirds escapes as heat up the smokestack. Of the power plant. But here’s the irony and this will get into what modern electrons specifically does. But so when we do this conversion right? We produce both heat and electricity at a part plant. We actually use a lot of heat in our civilization you use heat to heat your homes in winter. You use heat in your industrial plants fifty percent of final energy demand as heat and yet we’re throwing all this heat away apart plant 2 two-thirds of the energy. We just throw it away. Why is that because heat cannot be transported long distance so we built these large central park plants. But we throw away all the heat and then in our homes and buildings. We still burn additional fuel such as gas would to generate that heat again. So we’re doubling up because of all this efficiency loss.”                                                                                                           

James McWalter:         Yeah” and people suppose want to have a picture in their mind of   an example of this massive heat Loss.      a lot of people think about nuclear power plants as having these big kind of Chimneys with things kind of spearing out but the entire purpose of those Chimneys is just to dissipate dissipate the excess heat. Basically right. And so we have  any major power plant.. There’s just a ton of ah mechanisms set up a machinery setup just to dissipate the heat and get the heat basically into the atmosphere where can   just not be utilized by anybody at all. So yeah   and absolutely this is a kind of a massive problem.     and so how  you kind of zoomed in on that core problem.    what were the initial kind of  initial ways you sought to solve that problem.

Tony Pan:       So we surveyed a bunch of existing technologies out in the world. They’re generally called heat engines. But basically things that converts heat into useful work or useful electricity and in particular we look at technologies that what people consider solid a state. So not the mechanical engines that were first invented in the industrial revolution but things that are closer to material science. Ah semiconductor technology that directly converted heat into electricity without any moving parts without any motion. So not like a mechanical engine. We looked at a bunch and then eventually ah chose 1 that seemed right for our. Write for a breakthrough that was the thermonic converter which is this actually pretty old technology 50 years old and it used to be used in satellites in space. They used to par defense satellites because they had this magical attribute that they can produce a lot of power. From a very very small vole so it fits very well with satellites that needed to be small but somehow needed a law of electricity. So they’re the most par dense heat to electricity converter known to mankind. Plus they never require any maintenance because they have no moving parts.”                                                                                                          

James McWalter:         And so that so that that kind of core piece of technology.   what were your kind of initial experiments around that to potentially build a product out of.                                                                                            

Tony Pan:       Yeah” so if you can crack heats into electricity. This can be used in so many applications not just part plants right? but actually 1 of the things that we were most focused on is we don’t believe the future is going to be power plants a centralized park plant. Whenever you do that necessarily It’s inefficient because there is no local user of the energy. So. That’s why you first have to build a trillion dollar transmission grid to get electricity where it needs to go right? We have I think 6 million miles of transmission and distribution lines in a usa alone and also because you’re not next to the end user. You have to throw away your heat even though the heat is valuable because there is no way to transport heat. So we believe the future is going to be distributed generation which means you want a lot of small mini power plants where people already are and so some of the key things that we had innovate is to make sure that this technology. Would be able to integrate with the fuel sources that are already ubiquitous in our buildings where people will live and work like we spend ninety percent of our time of the time we are alive within buildings and in particular for example         most of us already have a half a par plant where we live. Especially if you’re in a ah    cool or cold climate in winter you have half of our part plants because you have a boiler a hot water heater or a furnace. You have the fuel coming in oftentime. It’s natural gas some people use ah fuel or wood but you already have the fuel. You’re already burning it. Ah you have already half of the park plant infrastructure. There. All you need is a way to convert heat into electricity locally and so a lot of the work. We’ve done with the technology is figure out how we can be compatible with those existing ah heating appliances and those heat sources from these fuels.                                                                

James McWalter:         And okay”       this this is fascinating so  let’s say I’ve ah  I have a boiler  I have ah my own home.  I have like a boiler so  ah I’m the only person you really have to kind of I guess deal with and I am like my electricity bill is way too high and        especially in in different times a year and I am using  wooden coal I have a wood burning fireplace I have a boiler. Whatever may what? what would be the process. What would be the I guess the onboarding to get kind of get the let’s just talk with the boiler piece but what would the onboarding to kind of get the most use out of a modern electron. Yeah.                                                                             

Tony Pan:       Yeah” so there’s the business model side and there’s the technology side. Let me just cover the business model first to give us yeah simpler contact because the tech gets into nitty grity details. But long story short we are working with the major heating appliance companies in the world. So we have partnerships already underway with major furnace makers and boilermakers to integrate our technology within their appliance. So think this is like an intel inside model. Ah they will incorporate our technology sitting completely inside your furness and boiler. So that as a home user there is nothing new from the outside. It takes the same footprint There’s no additional maintenance. There’s no additional install. And basically whenever you replace your future fer a boiler the next generation that comes in it just behaves like a normal furnace and boiler from your standpoint except for the fact that whenever you turn it on ah produces you bonus electricity and that means you no longer need to buy as much electricity from the grid this saves you money. And because it’s more efficient it lowers the seal to 2 footprint plus you have but you have some energy independence now right? since you’re producing a bit of your own power. This gives you some blackout proof capabilities and in fact  this is pretty important in the usa in particular because our grid is not. Super stable. You’ve probably seen this other news nine million homes in the last winter season lost par for more than a day straight and the irony is even though as you mentioned right? You run most of your heat from these fuels whether it’s wood or natural gas but for a lot of these heating appliances especially natural gas furnaces. That’s the. That’s by far the most common appliance even though the gas is still there if you have a blackout you lose your heat because the the furnessce right? It’s ah it’s still of appliance like all our players at home. It needs electricity to run too. So when you lose your electricity you lose your heat. A hundred people died in texas if you remember the last winter season they froze to death when the electricity grid wents out just just this last winter and ah even if you that’s very tragic. But even when that doesn’t happen way way more homes have massive damage right? like where water pipes freeze they burst. And then that’s ten thousand dollars in Damages so our tech can prevent all that and that’s sort of how we’re bringing the technology to market by basically working with the furnace and Boiler makers. So that our techs already inside whenever you go and buy a new 1.                                                                      

James McWalter:         Understood and in terms of I suppose let’s get into technical bit and then I have a few questions but there was this model but I think I think learning a bit but the technical bit would be helpful and so ”      how does it I guess then gets the convert yeah electron electricity in a way that  .                                                                                  

Tony Pan:       Yeah” yeah.                                                                                             

James McWalter:         My my home could actually benefit from so.”                                                                                                         

Tony Pan:       Yeah” so what’s really going on is that we are converting the high grade heats. That’s currently being wasted within your furnace and boiler today into electricity and then ah we come that conversion results in some. Lower temperature heat but our lower temperature heat is still hot enough to be completely transferred into your home and still hot enough to heat the rest of your home. So what’s really going on is if you look inside your furnace. Ah there is some fuel being burned and let’s say it’s a natural gas furnace. Ah that fuel is burning at a flame temperature of think 1400 to 1500 celsius it’s this incredibly hot. It’s what ah people in thermal engineering called high grade heat. This is the heats that normally in a park plants would be used. To drive our steam engine to to move things and learn to generate useful electricity. That’s high quality energy right? there the real big problem we face in our civilization today. The real big waste is that that flame is. Very hot right? but actually infernace is a boiler today lay let that high grade heat degrade and lose most of its useful energy content by cooling down until it’s much below 1 hundred celsius before it goes around to heat your air and hot water. That temperatures drop is typically what’s using in power plant to generate electricity but you can’t shrink a steam turbine in a power plant down to the size of something that fits inside your furnace and Boiler this is why we’re letting that high- grade heat going to waste today. It’s not some kind of conspiracy is because we don’t have tech. To puts a power plant inside your furnace but the magical thing about the thermonic converter is we make it we can make it work even when it’s small james can’t see me although you on the videoca but I’m holding 1 of our prototypes james can see this but it literally fits into the palm of my hand this is something that is. Very small can generates a lot of power from a small device and that’s really 1 of the magics of this new technology. The fact that it’s small. That’s why we can enable this when no 1 else has tried. This has been a holy grail for like a century but we basically just put this right next to the flame inside your furnace. Absorbs a high temperature heat and converts some of that into electricity and then the rest goes into lower temperature heat. But ah        we’re still rejecting heat at about several hundred celsius so over Heats is still useful enough to heat your home heat your water.                                                                

Tony Pan:       And therefore the combined efficiency is a hundred percent.”                                                                                                      

James McWalter:         Its”     Fascinating and I can confirm for the listener that yes it definitely fit in Tony’s palm of his hand.         it was kind of the size of like a like a snickers bar or something that was coming along those lines.      okay  that’s that’s fascinating and and then so it’s it’s kind of it’s taking in that heat. It’s.  you’re going from thousands of degrees to hundreds of degrees So you’re still getting that benefit for your home and that differentiator is being converted or some portion of that differentiation is being converted into electrons and electricity and how did that electricity then get into my actual home and do I need a smart thermostat or what is that kind of Mechanism. So.                                           

Tony Pan:       So we are intentionally targeting electricity generation below a baseload electricity meaning that we’re trying to stay below the the the usual ah bottom curve of your electricity demand. And that means we are not selling electricity back into the grid and that’s very important because that means your your furness already has an electrical plug usually going into the electrical main panel. So we can actually just use the same war and feed electricity back at your home through that circuit. Because we don’t need to sell electricity back into the grid we’re trying trying very hard not to ah first of all”     you don’t get paid a lot to do that nowadays. What is called feed-in tariffs the the price you can charge your utility by sending electricity back in the grid that used to be very high when folks were subsidizing solar all that has dropped by a factor of 10 so we. We’re not goingnna monetize that we’re just going to shave off to the man you need to buy from a grid and because we don’t need to do that. You don’t need to install what is’s called a 2 wo-way meter anymore. Ah your panel and so this greatly simplified install. So think your furness usually already has like a wire that goes into the circuit. And we’re just shipping electricity to reverse direction back into your home.                                                                                              

James McWalter:         And so in that moment Let’s say I turn on my toaster.  and my energy usage in the home just slightly bps up a small amount.  are the electrons that are coming back from the boiler through your device are those potentially being used by the the toaster in that moment or.”                                                                                                             

Tony Pan:       Yeah” potentially     let me clarify a few things. So definitely any energy you produce in your own home is going to be used first. Ah        that’s the electricity that’s used first. Ah by the home this is the same for solar panels.                                                           

James McWalter:         Ah”    yeah I guess I’m so a little bit unclear about that. Yeah.                                                                                    

Tony Pan:       Ah”    to our technology combined heat and power furnaces and it’s that ah happens almost automatically it’s it’s like a water flow analogy where I think the power plant is let’s say it’s water as a very tall dam and then we’re much closer to you and we’re like a water reservoir much closer to you. And so whenever you turn on your tab. You’re going to draw watchher from like us ah us at any closer source first and anything that we don’t fill. Ah it’s going to come from the power plants the Dam a higher energy potential. So that that that process happens automatically. I do want to clarify due to the fact that modern electron we are targeting to serve and shape off your bas old electricity generation. We can keep your heat running. We can keep your lights on your refrigerator running. Ah the the things that occur all the time right. We’re probably not. We’re intentionally probably not going to help when you plug in your hair dryer your vacu cleaner. We’re not serving the Peaks so that’s still coming from the grid or if you have a home battery with some solar. Maybe it’s coming from that.                                                                     

James McWalter:         And so in that’s an scenario you outlined earlier where you actually had a local power outage. You could basically just have a situation where  Maybe you’re not using your hair dryer but you can ? still                    use your laptop. You can solve the lights on .                                                                

Tony Pan:       Yeah” from what we understand the nber 1 thing people need is heat because that’s life threatening and then apparently second is like wifi on your laptop which of course like we can do a land and then fridge right? and some lights.                                                                                                 

James McWalter:         That kind of thing.”                                                                                                                  

James McWalter:         So there. We go. I on just and said and you mentioned yeah the kind of current go to Markete is and business strategy is to have these installed in new furnaces and boilers and so on.”                                                                                                                

Tony Pan:       That’s we we keep we keep you alive.”                                                                                                           

James McWalter:         What about retrofitting have you looked at that at at all up from the existing kind of build out of these devices right.”                                                                                                          

Tony Pan:       Technologically it’s possible but we decided that was it was more elegant as a startup for us to work with these big companies and have them installed in ah and into their new products that they’re manufacturing and it just comes down to the fact that. Ah” we were go to door to door down your neighborhood right? The furnace you might have a furnace that’s 5 years ago your neighbor might have ah firmness that’s ten years ago and the insides will look a little bit different and as a startup now we have to carry a bunch of different skews to fit into all these different furnaces and that just going to increase the complexity. And early cost. So it’s much more elegant for us to make this as part of new heating appliances and by the way 85 percent of heating appliances roughly speaking go into. Ah what is called the retrofits of the home. So. It’s not going so it’s going to existing homes to replace. Old appliances that have stopped working and you need to buy a new appliance that’s the majority of all heating appliance sales so that’s really what we’re targeting existing buildings that are replacing their heating appliance.                                                                                               

James McWalter:         And what about. How do you think about some of the other kind of emergent technology in the kind of home heating space things like heat pps that are kind of much more ah well are fully kind of electricity-driven.   for those who aren’t familiar with it. It’s kind of like ah”          an inverse air conditioner that ah can blow blow boat cold and hot.            with varying kind of degrees of efficiency. But that’s kind of basic principle. How How do you think about those types of touch technologies compared to yours.                                                                                    

Tony Pan:       Oh they’re great. We basically see that the market’s going to bifurcate so this is a topic I’m pretty passionate about because we had to think a lot about this and our go-to market strategy and of course this is also a top of mind of or our partners so our partners there they h fact of plans makers they make both but basically this is what’s going on if you have both heat a reasonable like look basically your winters are not cold and your smers are hot and you need to buy our air conditioner anyways”      then a heats pp technology. Especially the modern kind that is bi-directional which means in smer it can cool and the same appliance can reverse direction and do heating in the winter then you get 2 birds with 1 stone and if you’re in a warm climate. This is pretty awesome. You should get that the retrofit costs can be a bit expensive. But if you’re arizona and you can stomach the payback period it works out great. Also if you’re frankly     if you’re in a new building. So if you can build a new building with a lot more electricity going into the panel.             and it’s a modern building built with modernulation which reduces your overall cooling and heating needs because it’s better insulated. Ah and ah       you can just because it’s a new building. You can be to build it just for heat pps. So there’s no extra retrofit cost then the math also works out great. So so that’s awesome and we should do a lot of that. But here’s a fun stat. So there’s there’s a sort of ah another holy grail which is we should use more heat pps as well and 1 day when our grid is very clean. We will fuel the heat pps with green electricity and that will help us decarbonize so europe europe is usually 15 years ahead of the usa in terms of regulation. They’ve been pushing that for 15 years and they’ve kind of given up and are starting additional approaches. So the statistic is that say germany germany if you remember energy gang wind. They were ahead of the entire world and pushing green energy technology. And after all those subsidies for 10 years for heat pps. They have reached the awesome milestone that fifty percent of new buildings now are installing heat pps. However       ah as I mentioned earlier right? like most heating appliances get sold into existing buildings. In fact. 80 percent of all buildings that are going to be here in 2050 have already been built existing buildings is the elephant in the room and even after all subsidies heat pps have reached about 5 percent of existing buildings and that means there’s ah  there’s a few challenges.                       

Tony Pan:       1 of course is the retrofits cost of heat pp technology into existing building also because existing buildings have poor and so ah”  poor insulation. Ah generally speaking heat pps can’t can’t like they can’t deliver enough heating during the coldest times of the year which is that it’s it’s. It’s most useless when you need need heat the most it’s an unfortunate fact of the intrinsic physics of the heat pub technology that it reaches highest efficiency with the temperature gradients between inside and house site is low and it reaches its lowest efficiency. But the temperature gradient between inside and outside is high so and so that’s sort of the issue that folks have realized and that’s why places in europe they’re trying hydrogen they’re trying of course our technology with combined heat and power they’re doing also district heating. They know they need a lot of extra solutions. Ah     this is why heating is 1 of the hardest areas to decarbonize.                                                                                

James McWalter:         And so if we think about  then let’s say this kind of 2030 year time horizon and that we’re looking to get to  net net net zero in a lot of different areas including kind of residential heating and so on ”   as is how how kind of much how much more carbon efficient I guess is.  the kind of boilers would your technology engage versus the status quo type of boiler when it’s deployed. So.                                                                                                 

Tony Pan:       Yeah” roughly speaking a wheel shave off about a third of the carbon footprint that is present associated with your heating system the nber varies because it depends on the climate right? Like if you use a lot more heat. We’ll use a lot more electricity will generate a lot more electricity and so forth. And it depends on how clean your electricity is and your grid because we’re essentially we’re we’re generating electricity out of energy. That’s already wasted. So overall the power plants need to generate less electricity. So we’re shaving carbon. Basically that way. Ah           but ah. Ah      the way europe is going is that there’s going to be also Hydrogen now introduced and mixed into a lot of the gas grids. So as a fuel gets cleaner. This is a way to also get to start getting to zero for the overall system and frankly our technology is actually fuel agnostic where heats into a electricity converter. So whether it’s a dirty fuel or a clean fuel. We make it more efficient. Yeah.                                                          

James McWalter:         I And said I mean I haven’t looked into this space at all Indep but is there kind of work being done on residential cited Hydrogen boilers or is it. Yeah”         there is very explosive.                                                                                    

Tony Pan:       Yes”   yeah so ah it’s very ambitious and frankly  it’s ah yeah   ah      a lot of things have have to go right for that to happen but ah major players in europe already pilot testing this There’s like Hydrogen mini towns in europe already. It goes back to the. The system up the question of how do you decarbonize building heating so bluntly speaking. Ah this might be a bit real politic but building heating is not going to be decarbonized by 2030 this is 1 of the ah like like we’re going to get ah or vehicles 1 hundred percent electricity before this happens. It’s 1 of the. Hardest to decarbonized sectors along with things like agriculture or long distance planes to could you another sense of scale right? The why is electrification failing so we’re both in a usa when we half of us homes use gas for heating in their homes. And it reaches its peak energy right? of course in winter at night when the sun has set and it’s getting cold and that’s also when people return home from school and work when that happens the peak power from all that gas just in homes exceeds 1 terawatt which is greater than all electricity generated. From the entire us electricity grid from every single source so all electricity we have which we’re already using right? That’s not for homes not for home heating yet all that doesn’t even match out to just gas used in homes and only ten percent of our grid is ah solar and wid so. We don’t have enough generation. We also don’t have enough transmission and distribution grid right? if we had to fully electrify all of that our current grid can’t handle it and it takes about 100 years to build this our grid. Ah and so it’s a massive challenge. This is why modern electron is emphasizing efficiency. And this is why europe which is trying to build the stuff they need in 2050 is even doing things like hydrogen because you’ll need additional fuel carriers in addition to electricity.   

James McWalter:         Yeah I guess  in terms of timelines.  I would I’d say yeah electrification of all like the  the all griffiths type approach from right wiring America and and similar approaches which is  basically because once it’s in Electron form. It’s just more efficient than moving in and out of of heat and so on. Think as you as you mentioned earlier you fully agree with but it’s like if the heat already exists in some context. Let’s just Adopt. Let’s just grab as much energy out of that heat that we can and convert to electricity. ”   so I agree with that I mean absolutely .                                                                                     

Tony Pan:       Yeah” the electrons way more valuable than the heat right on average I think is four times more valuable.                                                                                                       

James McWalter:         Absolutely and so it’s so that I suppose I’m completely kind of align on that I guess from my perspective  for any sort of ”    1 point five to 1 point 8 degree warming trajectory like basically the U s grade will triple in size from ah like electric generation point of view I think to your point earlier about  this more distributed. Like energy resource these the Er type type situations or  mini power plants. distributed much more kind of widely I think that’s definitely going to be a large piece of the picture I’d say potentially 55 percent of total energy generation will be very very localized and that does dramatically cut down in transmission. . I Also think that we’ll probably overbuild quote unquote from ah        a purely technical point of view things like solar and wind unlike a 20 year time Horizon but like that over build will will be so cheap relative to the status quo of building so wind.  I think it’ll still allow us to get to yeah like a 3 X grid probably in yeah or 2021  20 years I’d say well. But 3 times the size the electricity grid some current kind of curves.                                                  

Tony Pan:       I agree with generation I don’t agree with transmission and distribution I think yeah we can build generation plants with solar wind cheaply and it’s got to get even cheaper. But ah”    you need to get an energy where it needs to go and that’s the elephant in the room.                                                                                                     

James McWalter:         Yeah” no     that’s I suppose.         ah I was a deeper kind of conversation I agree like when I talk to utilities and and kind of some of the projects I work on they are building a ton.     but they’re still not building to the capacity that’s needed and interterminment mission across different states and and regions is quite difficult.                                                         

Tony Pan:       Yeah” yeah yeah it’s hard right? It’s crazy if you look at it electricity costs that it’s builtills into what we’re paying in homes today. It’s funny right? Have you seen your utility bill go down I’ve talked to many people I don’t think this has happened and the reason.                                                          

Tony Pan:       And that’s weird because we have cheap renewables now. So generations should be cheaper right? So why isn’t electricity cost going down. Well ah Ford I think forty 3 percent of your electricity bill is now generation. Ah sorry”   not generation. But it’s transmission and distribution and it’s only gonna get higher.                                                                                          

James McWalter:         Yeah” and and just just for for the kind of layperson. Basically the amount of wires that are built to get energy from 1 place to another.      those’s big kind of high voltage power lines that people drive by sometimes     basically they can only carry so much electricity and at a given points of the day they’re basically just full.                                                                  

Tony Pan:       So yeah.”                                                                                                                     

James McWalter:         It’s imagine like a water pipe full of water and you just basically can’t get the water. You can’t put add anymore water to a water pipe as’s similar to energy like if  a city like Seattle needs a ton of energy. ”  there may be a ton of energy being generated like outside the state all ready to go but the transmission lines. Are fully full and so that you just can’t get anymore into the City. We need to vote a ah hundred percent and you couldn’t mentioned this and I think this kind of goes into both the transmission piece as well as  different types of how the home is affected.  you mentioned some of these kind of european efforts.                                                                                   

Tony Pan:       Yeah” we we need to build a lot more and we just start now.                                                                                      

James McWalter:         What is the kind of regulatory and the  permitting process looks like in the United States  I I know there are some states do have kinds of programs around energy and efficiency in the home and so on. ”  what are you seeing? What are you kind of excited about from the regulatory picture and.                                                                                         

Tony Pan:       Oh so this is kind of funny in europe when you do when you do this kind of waste energy capture to code generates heat and power. Ah our our products right? boilers with our technology inside. Will be rated at above a hundred percent efficiency and of course of the I’m a trained as a physicist right? like ah so I’m like that’s stupid. That’s impossible. Nothing can be above 100 ah hundred percent efficiency. But this is the way the math is written in the books.”                                                                                                                                                                                                                                 

Tony Pan:       Because everybody recognizes electricity is more valuable than heat. Not just from an economic value standpoint. But because if you produce electricity locally. It’s a lot more efficient. Ah because you don’t have their transmission and you don’t have the one third average power plant efficiency. You don’t have to deal with that anymore. So they multiply the electricity by. Factor of 2 point five before it they added to also the heat generated within your boiler so because of the way that math works ah boilers with our technology will be rated above 100 percent efficient which is kind of cool and of course that makes us happy but it’s just again as a former physicist. But I I sort of roll my eyes out that but just take my blessings.”                                                                                                                        

James McWalter:         Absolutely and and then in terms of like the other ah  standards I know new york has some pretty strong. ”   new building standards.           I think it’s the ny c and ninety seven law which is affecting  greenhouse gas emissions. Although I think that’s more for like larger scale than like single-family homes. .  how do you think about?  the importance of regulation.  you’re already talking to a lot of the boilermakers or you’re already have partnerships with a lot of those   are they like do they need a continued push right either from the regulation side or maybe more on the conser side or do you think  just the pure economics of. Technology like yours makes sense for them right now.                                                                                  

Tony Pan:       Bluntly It’s the pure economics and value prop of the technology. Ah Usa regulation ah is not the same as Europe to put them milly. So the major Usa companies are working with us. They’re relying on the fact that they think people are going to love this right.”                                                                                                                      

James McWalter:         Sure I.”                                                                                                          

Tony Pan:       If you first of all”           even if you didn’t care about energy savings. Ah if you’re living in a blackout pro blackout prone area. This is 1 of the best things that has ever happened to heating appliances. It can basically give you backup power. And make make your life a lot easier save you save you pain save you tens of thousands of dollars in damages and your only other alternative is like a fifteen thousand dollars generator installed outside of your home taking extra extra real states and additional maintenance.                                                                                                    

James McWalter:         Or or a similar like cost for a ” solar plus battery array. If if you have the space for that as well. Right? like  you’re right.                                                                                               

Tony Pan:       Oh yeah”         like a solar plus battery array would be even more expensive right? But that that 1 has energy savings unlike a generator generator so that that’s good           but ah  the issue is wintertime right? The the winter time Blackout. You don’t have enough solar. And a battery will run out. It will not last you through like the multi-day multi-day blackhouse that you saw ah in this winter season whereas we have a generation technology. It will never run out during the blackout or just keep going so they’re they’re seeing this primarily just from an intrinsic value propp standpoint in the us.                                                                      

James McWalter:         So right.”                                                                                                                      

Tony Pan:       But I actually would love to see more governmental action here. It’s it’s a little bit absurd. Ah what we have in a us aid regulations are quite behind where I think they should be to give you a sense. Ah. Let’s set aside modern electron right? like ignore our technology exists there are there was a technology called condensing technology within heating appliances I won’t go into how it works but basically condensing technology is mandated has been mandated in europe for . 15 years now because it raises the heating appliance efficiency from about 80 percent to ninety plus not big change but enough to be significant and it was invented like 40 years ago so 20 years ago you’re pretty mandated it ah in the usa it has never. Been really mandated. Ah”  despite the efficiency improvements and so today seventy percent of the usa markets is still the previous generation technology from like the nineteen seventy s and 80 s it’s crazy. Ah.                                                                                             

James McWalter:         Right? And so the massive opportunity to like skip skip ahead to the kind of level that of what what you’re building. ”  that’s super fascinating.  I suppose just before we kind of finish you up here?      I was like looking into your background and I believe you’ve grown up in  combined Taiwan Scotland Korea and now you’re       living in seattle.                                                          

Tony Pan:       Yeah.”                                                                                                            

James McWalter:         What is the kind of moving between those kind of quick culturally different places kind of impacted how you build a startup.”                                                                                                                 

Tony Pan:       Well I think it impacted the mission. So first of all I moved around. Ah fortunately because my dad was in the navy right? So ah”          what’s better than you join the navy yourself as your your parents join the Navy you see the world and they do the work.                                                                                               

James McWalter:         All right? sure.”                                                                                                         

Tony Pan:       Ah”    but ah  it was the taiwanese navy I’m ah I was born in taiwan and ah I think how would I put this I have a little bit of ah allergy to some of the Silicon valley approaches which I like to say it as akin to let them eat cake which is come up with a fancy and expensive solutions. And I think that comes from the fact that I didn’t to be clear I grew up very privileged I grew up in a middle class family in Taiwan which is a pretty developed country but it’s not the United states. It’s just not especially when I was growing up I was just not that rich. And I’m I’m like 1 generation from poverty like real poverty not like and this sounds kind of brutal but like I there’s real poverty in the usa as well. But it’s not the real real poverty and and out there in the rest of the world right? Ah to give you a statistic right? like.                                                                                    

James McWalter:         Like like like dollar ten dollars a day type poverty. .”                                                                                                           

Tony Pan:       Yeah” like my mom. My mom was the fourth child to be born in her family. She was the first to survive past age of 2 right? and I’ve  I’ve she grew up in like sls I that’s still like my grandparents home but or that they pass away very early because you also don’t live very long but like I visited those places right? it’s.                                                                                               

James McWalter:         Or yep.”                                                                                                                       

James McWalter:         Sure sure.”                                                                                                                  

Tony Pan:       It’s horrible. This is what most of the world live like right? So I just can’t I can’t ah I think our company founding mission was to make energy both cleaner and cheaper I sorts of intrinsically refused to just say hey climate change is important so work. No matter what we should just use green technology even if it’s super expensive. I just don’t believe that and I think that has a little bit to do with my background I don’t think that’s fair. So that’s sort of why we take the we’ve spent ah many tens of millions of dollars doing breakthrough technology at Modern electron because of the intrinsic belief that frankly”     a technological miracle is probably. Not only like morally the right thing to do. But I think it’s necessary because we think to get to scale a lot of the world like this has got to be like purely superior to then than current tech right? like the better greener solution has to be superior to the current solution. From an economic standpoint and all these other things. Even if you didn’t care about c o 2 because that’s what a lot of people on the planets are going to be like because they they’re not as fortunate as us.                                                                                            

James McWalter:         I think there” there’s a huge amount of kind of value in that and that perspective  I think we’ve done collectively as people in the climate space either technology or policy a pretty bad job of painting like this incredibly exciting future that the the tech we’re all working on is actually going to produce like it’s a cleaner. You turn not just from a c o 2 point of view but  a smog in the air.          yeah I’ve spent a ton of time in the developing world over the last  11 years and in some of the countries you mentioned and and countries like yeah earlier and I suppose the development kind of cycle and  just just breathing is just very very difficult in a lot of places and we kind of as we introduce like. Technologies that through either electrification or the reabsorption of heat in the way that  modern electrons working on those all those kind of things.    that’s like a net good but it also has to have price parody right along all the way through that kind of value chain.  because  it’s all very well I guess for developed countries to ah decate certain things.                                                              

Tony Pan:       ”          yeah.                                                                                             

James McWalter:         ”          from a particular kind of advantage in terms of like living standards.  like I’m I’m a few more generations ireland’s a little bit further behind the the us than than yeah other developed countries.    but but not not to the same level as your and  there was yeah my I guess I’m like a. Grandparent away from like not having tvs and refrigerators and all this kind of thing I mean be a four generation away from the kind of level of Poverty. You’re talking about but like it’s still I guess something that irish people are obsessed with is this idea that  I want to have ah a sense of safety in the home. A sense of like these these products have to.                                                                            

Tony Pan:       Yeah” yeah.                                                                                             

James McWalter:         Give safety around heat safety that I can eat safety around those kind of things before you get the nice Tv and all those kind of additional add-ons.”                                                                                                              

Tony Pan:       Yeah that’s exactly right right? I think ah there is real suffering in the world and before you ask folks to save the planet. It’s a lot easier to ask them hey use this new product because it’s gonna make your life better and it’s cheaper and incidentally it’s better. For your environment and I think that’s got to be the way that the real big solutions will happen across a planet if we really want to move the needle because yeah I mean  this right? most of the growth in c o 2 emissions is not going to happen in ah in the developed world anymore. It’s going to be the developing world that’s going to have the Fastest. Ah c o 2 contributions and if if we don’t things that work there. It’s sort of at moot points even if europe and usa gets to zero.”                                                                                                                 

James McWalter:         Oh absolutely And and ah all all the charts that I looked at recently like showed that very well.  Tony this has been great. ”      but really kind of enjoyed chatting is there anything I should have asked you about but did not.                                                                                                 

Tony Pan:       Oh yeah.”                                                                                                                    

I’d say sort of the nber 1 thing. We’re pretty proud of with our solution is it’s a drop-in solution right? because of this intel inside model. You’d be able to adopt this new appliance. That’s more efficient. It will save you money. It will reduce your overall climate footprint at like no extra hassle. This is just this is almost invisible sitting inside these heating appliances that just makes them better and therefore we think this is a way to go to scale quickly and yeah” so when it comes out in the Market. Ah consider that and also by the way model electron is growing like crazy. So we  we we have a wonderful team there I’m the spokesperson at this point our our our team we have like 14 page ds 14 masters doing deep tech cool work. Great culture and they’re the people that make the magic happen. And so we’d love for folks to join us in in the climate fight.                                                                              

James McWalter:         So very good. Yeah”   and I’ll include link links to your career page I think you’re doing a ton of hiring at the moment.          thank you Tony It’s been great.                                                                          

Tony Pan:       Okay” thank you keep up the good fight.