 Everyone, this is Guillermo Salvatier, Senior Director of International Services for HSI and the host of your show here at Things Like Hawaii, Perspectives on Energy. Today we have Hugh McDermott, Senior VP of Development and Sales for ESS, which is one of the leaders in Iron Flow Chemistry Technology. And we look forward to hearing and we're excited about what he has to share. I had the pleasure of actually seeing their tech demonstrated once at one of those webinars I went to and it was really, really interesting and I'm really glad he was available to join us today. So Hugh, thank you for coming. Yeah, no pleasure to be here. Really looking forward to this actually. So thank you, Guillermo. Well, first of all, let me just sort of set the stage and what's the problem that we're solving and why we think what we're doing is important. When we look at the grid today, there's three or four sort of fundamental macro trends, global trends, mega trends, you might say. We've got these climate change that's happening that now where a few years ago people were still maybe in doubt as to whether it was a real phenomenon, those once in a generation, once in a century kind of climate events seem to be happening now almost annually. We've got wildfires in the West. We've got hurricanes with increasing frequency and ferocity. The second big mega trend is electrification of everything, right? So we're talking about displacing gas in residential homes, electrifying transportation. That's going to drive a massive amount of need for electrical energy around the world. And then you look at the infrastructure that's got to carry this, and I know that this hits home for Hawaii listeners, you've got AG infrastructure that's, it's apparent, right? You're having outages, it can't keep up with the amount of loads and the change that's coming on the grid. And then last, you've got renewable energy that continues to drop in costs and now to the point where solar energy is cheaper than any fossil fired option that might be out there or at least certainly natural gas fired, which had been the kind of the go-to for new generation. So you've got all these mega trends happening and it puts a tremendous amount of stress on the ability to deliver electrical energy to consumers and industries around the world. If you want to slip to the next slide, just kind of illustrate that point. Slide five, what that does to the grid is you basically got a ever increasing challenge to deliver the energy successfully. You've got a ramp that was you put more and more renewables on the grid. You've got a challenge of maintaining reliability. Obviously the sun doesn't shine it dark, the wind doesn't blow around the clock. So you need ever longer duration storage. And so our solution to this is the iron flow battery, a battery that can last for, you know, a long period of time and sort of our, I'll say sweet spot of what we're trying to solve is longer than four hours and less than say a day to enable around the clock renewable energy to be a real possibility. That's basically the problem we're trying to solve. And what we have found, and I know this is particularly true in Hawaii, is that when you get above around 20 to 25% renewable generation on a grid, four hours of energy storage no longer cuts it. Right, and so if you've got states, countries, regions, whole continents that now want to go carbon free electricity by the end of the decade in some cases, certainly by 2050 over the mid range, you can't get there without long duration energy storage and that's that four to 24 hour kind of range. So that's the problem we're solving and that's why we're here today. Our technology is an iron flow battery chemistry. And if you want to slip and I promise this will be my last slide unless someone really presses me on a question, the technology is basically, the electrochemistry is iron saturated in salt water. And so it flows through what we call a battery module. This is a sandwich type construction. 50 layers of a sandwich or battery module is what we make today. We'll be shifting that to 100 layer stack, the second half of this year. What's happening is in each of those layers, we've got a carbon plate. And this iron saturated salt water flows past that carbon. Each of those plates are separated by a membrane. And during the charge cycle, the iron is plating onto the negative side of that plate. So we're just building up a layer of iron, pure iron. And what we solved because we didn't invent this process, what we saw was a way to make that repeatable and electrochemically, it's repeatable infinitely because of the way we manage the electrochemistry. So essentially kind of inert the materials from corrosion, from degradation of any kind. And so the theory is you've got then a fundamental way to have a battery that you can cycle unlimited number of times and without losing performance with every cycle, unlike most other electrochemical batteries. But that wasn't enough to make it a product. That's a neat parlor trick if you can show that. And this is true of every electrochemical battery is that when you're charging the battery, there's always a set of side reactions. And those side reactions affect the electrolyte. And that's degradation. So loss of ability to store energy, loss of the amount of power that you can output from that. We're no different. But what we did solve to turn this parlor trick, as I call it, into a product was an ability to continuously renew or reverse those side reactions continuously in a closed loop fashion so that the battery can do this charging and discharging unlimited times and the electrolyte never degrades. And thus, we have a battery that can go for literally thousands and thousands of cycles without losing performance. And so that's the that's the fundamental technology and the products that we make are trying to address both industrial and commercial type applications for resiliency and energy, reducing energy costs for integrating their renewables, say solar on the roof, but also at utility scale. And so where we're moving the company now in terms of the product development is to be able to solve large scale, deliver large scale solutions that utility that the size of utilities and large IPPs would require them. No, that's and that is great because that's one of the reasons one of the things I first saw when I first saw the when I first saw your product and ESS on a webinar that really caught my attention. And specifically with like either customers like specifically the Hawaiian islands, where they have these unique challenges where other places like the Canary Islands, for example, or other islands in the Pacific, they have no issues, for example, laying down a submarine cable and then interconnecting islands, forming a network and relying on the resources and the reliability of being interconnected, whereas on an island like Hawaii, they've had their obstacles with actually installing that. And the other issues they're having is they're still mostly bunkers, diesel-generated fired generation, so that that poses a definite problem. So for them, however, at the same time, dealing with other renewable and the viability again has another impact. So these batteries will really, really be helpful. So next question I'm going to have in this case, which is usually a barrier of entry for either smaller utilities, munis or cooperatives is the cost. How do these compare to the conventional technology of lithium-based or what they're using now to these care batteries? Sure. So for the applications that we that we're targeting to serve, which is these longer duration, where either multi-cycling or long duration or resiliency is really a chief driver, we're at par or cheaper than any of the other commercially available options today. You won't get that kind of life, obviously, out of lithium ion. So when you think about the repowering cost and replacement cycle and factor all those in and your annual upgrades to maintain the level performance with lithium ion batteries on that levelized cost or life cycle cost basis, we're somewhere for a eight or a 10 hour battery. We're going to be somewhere about half the cost of a lithium ion battery when you operate over over that kind of scenario. So so what's the charge? So so cost wise, that would translate by our our modeling. That would be somewhere around two to three cents per kilowatt hour of usable energy as a throughput from our batteries over a 25 year period of time. Contrast that for lithium ion, even with the most aggressive sort of price assumptions where lithium might be throughout this decade, we would see it coming in around five cents, five to six cents somewhere in that range. Right. And and you have a limited number of cycles, which usually with lithium, yeah, which usually has that impact. And I and I worked for the for I worked for a large integrated facility for 29 years and towards the last five years that they were trying to implement this energy storage first as a pilot. And then this had the best application at this time they would could use it for was for a black star resource. So so that that was a really interesting and creative use of energy storage. But but it's still using the same, you know, and it got relegated to that use because it's something you're hardly ever going to need. But, you know, when you say, well, it's a giant, it becomes a giant UPS, a giant UPS, exactly. And then it becomes a generator. But then at the same time, it becomes load, you know, which is great, you know. And so I just imagine with your particular batteries, you know, this is something that, you know, is dispatchable every day. But it's there during an emergency as you need it, right, especially during a blackout and restoration. And the fact that it becomes low, right, as you're as you're bringing in other spinning generation online, this battery becomes low, right. And then it's almost like cheating, you know, because you think about it. It's one of the hardest things is balancing generation and load during that initial blackout restoration process. So exciting. Yeah, well, so I mean, you you've hit on all the kind of the salient points. I did not realize you had that background in the utility sector, but you're exactly right. I mean, the in terms of we like to think of it as it's the great big shock absorber, right, that for the grid and that unlike, say, lithium ion batteries where every cycle counts, because every cycle costs you in degradation. You get a limited number of cycles. You get one per day. You've got to rest the battery after you've done it. And we've got time out, you've got you've got a lot of you get a rule book on how you're allowed to use that. And if you go outside of those rules, you avoid the warranty or worse. You have potential calamity structure. In our case, we there's no rulebook, so use it as you see fit. That's the beauty of it. But it's also kind of the conundrum for the industry right now is they don't know how to get their head around and model that and understand how to I'll say from the commercial sector and the private sector, how do you monetize all that value because it's not easily transactable to a utility. It's in they they want to inherently understand that. And that's why the utilities are buying them. But when you're trying to do it from a developer's perspective and trying to get the full value, I'll give you an example. One of our one of our one of our customers is a utility in Southern California. And they're putting in a microgrid. It's it's similar to Hawaii because the microgrid is at the end of a radio line. Very similar to the transmission distribution architecture of Hawaii. So kind of like an island network where out in the end of this line is this community and it's prone to power outages. Increasingly in the last few years, because the utility will will intentionally cut the power to avoid sparking a fire during high, windy, dry conditions. So primary mission number one is when that condition arises, they want a microgrid that can keep critical needs customers online. So medical center, petrol stations, one or two food facilities that the community can still function. People, if they need to evacuate, can get out of town, that type of thing. That's his primary function, but that's a function that kind of like that UPS. Yeah, I hope you never have to call on that's an expensive insurance policy. In our case, they chose the battery, chose us to be the battery for that project, because not only is it a water based battery. So it's not going to start a fire. Right. And it's not going to blow up in a fire. If it were in one of those wildfire events, God forbid. But more importantly, that for the other for all 8,760 hours in a year, they can be using that battery to provide grid support services to maintain the quality of power for those customers out at the end of that end of that line as conditions are going to continue to new renewable energy sources come on that line. And second, if they're not needing it for that, they can sell it into the open market. Right. And so they can get two bites at the apple without ever compromising its primary mission in life, which is when I need you, be ready for that micro grid outage event. Well, now there's a market for dispatch availability. So now's the third bite of the apple, so to speak. So so so there's a few companies now here, you know, in the mainland where they're they're coming up with a DER term. So the distributed energy resource management system. And right now they're trying to come up with a good protocol to be able to do that at the residential distribution level. So so eventually, you know, that somebody has an EV in the house as a solar panels, well, that becomes also what I'm using for a Pico grade, you know, to where they're they're going to have the ability to be dispatched or be available for dispatch, right. So that solves a problem for the utilities. But the other thing as well is it's now there they can provide voltage support. They can provide power factor correction. They can provide frequency support as well. And you've got these situations where like a company has there a region has a reserve sharing group. They lose a they lose a plant. Now they have to call for operating reserves. So this is yet another resource, you know, that that can be easily dispatchable within seconds. And it's this response way better than the spinning generators at some point, right, I think. So it's really, really enlightening to see this technology developing. And especially when when it's something that's going to be within reach, right, for a lot of the utilities that have their economics are are different than when these larger investor owned, you know, and to take it one step further, you're exactly right on all those that if you think about the social compact that utilities have with their communities, you know, it's become an issue of equity and underserved communities. So communities that are experiencing maybe higher than normal outages or poor quality power. You know, we've got a technology that's safe for people, safe for the planet that you're not going to have stakeholder concerns about is this thing going to blow up in my backyard? I don't want that battery located next to my my children's playground that that's, you know, so we've got a resource that helps address both the technical requirements, but also kind of a social justice and underserved communities option. And that that that at the end, right, it has a. Has an application, not just for emergency management, right, but just I mean, it's everyday applications when it comes right. And especially as we keep moving more towards these D.E.R.s and distributed energy resources and we're moving towards this whole peer to peer energy marketing where we're at some point, you know, it's going to be neighbors are going to be selling power to each other, right? And they'll be engaging in those transactions at the secondary bus level at a distributional circuit. Now, this, of course, opens up this whole other challenge. And that's kind of a word we're looking at from our perspective, right, which is the modeling of that, the next day studies. And then and then directly what we're doing is a training of the dispatchers and operators, right? So you've got the operational support personnel that have to not contend with modeling these resources. And finally, I think the industries at a state where they're modeling them correctly as a as a power source, a generator, it's a static generator, right? So they're they're producing megawatts, but then they're also producing bars and control controlling frequency, depending on the equipment. They're they're they're operating behind, which is great. And then now the next stage is really training operators using the correct simulation tools to really find to the dispatch ability, the operation and then the emergency use of these resources. Yeah. And and you hit on a kind of, you know, one of our challenges in the industry as we go to market is really helping that that I'll call it the education of, you know, because the whole energy storage industry, I mean, it's been the holy grail for the electric utility business for a century. Only in the last 10 years did we kind of get to a point where technology was cheap enough and could perform well enough that we could actually start getting the first few applications out. And it started with UPS started with 15 minute, then 30 minute. And four or five years ago, we kind of got to about the four hour limit, which is kind of fundamentally the the outer envelope, if you will, of lithium ion technology. So if you want to go longer duration, you just add more batteries and and derate the battery, you can get there. But it's not it doesn't scale economically beyond that four hour. And so in our case, adding additional capacity, we're just up to at least the design stage of where we are today. It's just adding more liquid. The cost of us adding liquid is pennies on the dollar, comparatively speaking. So this this would be really exciting to I mean, once you get to the point where you're you're you're you're able to scale this down to a point to a individual residential level, right? And this would just be another module that that a that a homeowner has in their garage or in their backyard or, you know, or next an additional wall that's right next to their meter, right? So it would sort of become that. It becomes a community resource type of thing, right? Which which makes a lot of sense today. I mean, you know, let's talk about maybe some of the drawbacks of, you know, our technology compared to others. I think that was one of the areas that maybe the listeners would be interested in. So it sounds too good to be true. Well, so we take up a little more footprint than lithium ion probably on your order, depending on the application and how we configure, we're going to be anywhere from two to four times more space requirement, right? That's understand, you know, and so it's it's a water based battery. You can't compress water necessarily, but we can get it down into packages that basically what we're offering today is tractor trailer sized configuration. So think a trailer container shipping container sized shipping container that can can serve anywhere from 10 to 30 homes and provide some outage coverage for several hours, right? With the amount of energy we put in there. So you could see community level kind of deployments and or substations and kind of something else that's unique when you stop to think about that it doesn't wear out, at least you've got decades of use in that containerized format. You can put it out there for five years, let's say, and then needs change. And I want to I want to go use it somewhere else. You would never you would never do that with a lithium ion battery, right? Right? And so you have that flexibility, not only in your operating, how you're going to operate your grid, but in terms of your assets and where you're going to put them and as needs change. So maybe you need additional capacity to maybe you need to upgrade a distribution system. But that's maybe three, four, five years away because of permitting, stakeholder meetings and and so forth, these months. Yep. But you've got to have a solution now because people are adding rooftop solar is playing havoc with the power quality on the end of that line. And electric cars are coming every other week and plug it in. You could stick, you know, a battery like ours in those kind of community at the community level, it's part of your DER program to alleviate that stress while you're working through the easements and working through the upgrades. And then when you're there, move that battery somewhere else. Right, exactly. And and two points that are that are funny really, because it's it's the first one is like, like, well, we always train blackout restoration. One of the things that you worry about is the every substation has a limit on their station batteries. Eight hours, maybe it's all you're going to get, right? In most cases, best case scenario, if you end up with one of these like devices at every substation, now you're looking at something that has a lot more capacity and greater greatly augments, not just that station capability, but the entire grid for that particular region, right? Yeah, that's one great application. And the other one, of course, is and it was funny, because like, there was an HOA meeting where I live. And one of the things they brought up, of course, was that they want to get on this into this market of distributed resources. And they do one, they want to look at putting up some panels on the common areas, and they want to do storage solution in, you know, for the community. I mean, but of course, for them, there is the potential of studying dispatchability. So they're definitely looking at it and it's an investment and it'll generate revenue at some point. So it's kind of the things that they look at. Now, when it comes to Hawaii, for example, that's something that will bridge the gap, so to speak, between their existing resources, getting away from these fossil fuels that that are really expensive. I mean, they're there. I think one of the most expensive facilities per kilowatt hour in the US. I think that's right. From what I understand of why, you know, you're definitely more expensive than California, which is one of the most expensive on the continental US. Right. I think they're almost at around 40 cents a kilowatt hour, 30 or 40 cents a kilowatt hour. So it's up there. And then, of course, they're always dealing with right now, the gas supply chain issues with fuel because of what's happening in Ukraine. So as you can imagine, that has definitely had an impact on what they're doing. And then eventually it's going to have an impact on their electric bills. So this technology could really be something that could help them get to where they want to be when it comes to 100% renewable goals. And I believe it's 2030, is where they're shooting for. So this could definitely meet the mark or help them meet that mark when it comes to that. So exciting. Really exciting. Yeah. So we had a few questions in the chat here. Let's see if anybody had anything else. We actually pretty much answered all these questions. Lifespan for a long time. Are they readily dispatchable? Some of the things we were asking about when it comes to system operations, for example, from a transmission. Yep. So in terms of all those functions that you were talking about batteries having been used in the past, technically, fundamentally, this flow battery like ours can serve every single one of those functions. There's no one battery application that it cannot do. Of course, there's going to be some that it's more economically suited for, which is the longer duration, multi cycling type of applications. But once it's installed, you know, once you've got to justify its base case for how you can justify that investment, do you want to do frequency response, fast response type applications? It can absolutely do those. Voter support? Voter support, yeah. Right. Well, Florida has that issue too as well. I mean, I live in Florida and I work for the utilities in Florida and during those milder months, they had issues with, you know, with the valley where it's like they could not cycle units because, you know, you've got restrictions on the emissions, the number of starts, these combined cycle plans, but the other is that you cannot bring it back on in time to meet your morning peak. Right. So, so, so either you shut down plants to be able to meet your valley or you have somewhere to put that, put that power and there are times where you can't send the money, can't send that power anywhere. So these batteries will also be really used for resource. If you plant them ahead correctly, right, when it comes to this. And that's accurate. That's that morning peak as the solar comes on stream, you can't throttle down your fossil fired plants. You can't go below the minimum that nuclear's need to operate at. Right. And so you need a big, you need a big sponge to soak up all that excess generation because the load hasn't caught up with the generation. And then you have the reverse in the evening as the peak shift later, later into the evening. And so a battery that can do double duty is really what's called for there. And that again comes back to that no, no limits cycling, no degradation. That is really the, and that's really I think the that in combination with the cost comparison. It's just, I think this would be a pretty good home run when it comes to both utility scale batteries and when you scale them down to smaller applications, that this will really, really, really meet that need, I think. Yeah. Yeah. And we think so too. So, I mean, thank you so much for being a part of today's show. And this is generally your tech has generated a great deal of interest. Not just I think that Hawaii, but across the industry. And I've had a chance to speak to some of my old colleagues at the different utilities in Florida. And given the fact that Florida is so prone to storms and disasters, you know, that becomes a really important resource. So, I'm sure we'll definitely be reaching out to you as well. And talking more about that. And then of course, you know, we're really interested in helping deliver training that has to do with the application of these batteries. And we're working on that. So definitely we'll be hearing more about this coming and happy to come back on stage, so to speak, and updates on progress in future episodes. Outstanding. So, we look forward to having you here again. And I have a feeling we're going to there's going to be a lot more conversations about the ESS and how your battery solutions can help not only Hawaii, but pretty much any utility around the world when it comes to these issues when beating with these gaps and renewable energies. Thank you. It was a pleasure to be on the show today. Thank you for the opportunity, Guillermo. A real pleasure to have you. A real pleasure to finally get to meet your face to face, virtually anyway. So, hopefully we'll meet in person someday soon. So, thank you so much, everybody. All right. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter, and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.