WEBVTT - Could Home Batteries Save the Grid? 0:00:15.356 --> 0:00:24.116 Pushkin. The demand for electricity is rising fast because of AI, 0:00:24.796 --> 0:00:27.796 because of the shift toward electric vehicles and electric heat 0:00:27.916 --> 0:00:32.196 and electric everything else. And it's relatively easy to install 0:00:32.356 --> 0:00:34.836 new solar panels and in a pinch to build more 0:00:34.916 --> 0:00:38.356 gas power plants. But plugging them in, hooking them up 0:00:38.396 --> 0:00:42.116 to the grid, that part is hard. The grid has 0:00:42.156 --> 0:00:45.396 to be big enough to reliably carry all the electric 0:00:45.436 --> 0:00:49.036 power that people will want at the moment of peak demand, 0:00:49.516 --> 0:00:51.756 you know, at five PM on a hot summer day, 0:00:51.796 --> 0:00:54.076 when everybody gets home from work and turns up the 0:00:54.116 --> 0:00:57.596 air conditioner and plugs in the EV and expanding the 0:00:57.636 --> 0:01:01.436 grid to accommodate those higher and higher peaks that is 0:01:01.516 --> 0:01:05.316 really expensive. On top of that, in a lot of places, 0:01:05.436 --> 0:01:08.196 expense is not the only problem. Even if you want 0:01:08.236 --> 0:01:10.116 to add more power to the you have to wait 0:01:10.116 --> 0:01:12.676 in line until the company that builds the poles and 0:01:12.716 --> 0:01:15.756 the wires can get to you. And so people have 0:01:15.836 --> 0:01:18.156 started to think, what if we could figure out how 0:01:18.196 --> 0:01:21.436 to get more energy to more people without having to 0:01:21.476 --> 0:01:30.796 expand the grid so much. I'm Jacob Goldstein, and this 0:01:30.836 --> 0:01:32.836 is What's Your Problem? The show where I talk to 0:01:32.836 --> 0:01:36.396 people who are trying to make technological progress. My guest 0:01:36.396 --> 0:01:40.396 today is Justin Lowpos. Justin is the co founder and 0:01:40.476 --> 0:01:44.716 chief operating officer at Base Power. On one level, Base 0:01:44.756 --> 0:01:48.076 Power does something really simple. They install big batteries at 0:01:48.076 --> 0:01:51.756 people's homes in Texas, and the batteries provide backup power 0:01:51.876 --> 0:01:56.636 during blackouts. But Bass's business is actually much more interesting 0:01:56.676 --> 0:02:00.236 than that. In a lot of places, Base actually owns 0:02:00.276 --> 0:02:03.196 the batteries that they install at people's houses, and the 0:02:03.236 --> 0:02:06.276 company acts as the homeowner's electric provider. They send them 0:02:06.316 --> 0:02:09.516 a bill every month, and this is the really interesting part. 0:02:10.276 --> 0:02:14.116 Having those batteries installed on thousands of houses has huge 0:02:14.196 --> 0:02:18.516 implications for the grid because the batteries can charge whenever. 0:02:18.756 --> 0:02:22.236 In particular, they can charge when the grid is underused, 0:02:22.476 --> 0:02:24.916 say in the middle of the day when solar panels 0:02:24.956 --> 0:02:29.156 are cranking out power. Then at that moment when everybody 0:02:29.156 --> 0:02:32.156 gets home and cranks up the AC the batteries can 0:02:32.236 --> 0:02:36.796 discharge that power. That means less energy traveling over the 0:02:36.836 --> 0:02:41.756 grid at moments of peak demand. So at the micro level, 0:02:42.076 --> 0:02:45.116 Base is a battery company, but at the macro level 0:02:45.276 --> 0:02:48.436 they're a utility. But instead of having a few giant 0:02:48.436 --> 0:02:51.596 power plants, they have all those batteries, which are essentially 0:02:51.836 --> 0:02:55.276 thousands of tiny power plants stash next to people's houses. 0:02:56.756 --> 0:02:58.996 I asked Justin to explain how all this works from 0:02:58.996 --> 0:03:00.596 the point of view of a customer. 0:03:01.116 --> 0:03:03.596 Let's say you have a house in Houston and your 0:03:03.636 --> 0:03:06.396 single family homeowner. You first of all, you have to 0:03:06.436 --> 0:03:08.556 choose who you buy a power from. You can't buy 0:03:08.596 --> 0:03:11.076 it from the utiel in this case, Center Point Energy 0:03:11.116 --> 0:03:13.556 is the Polls and myyers on our they don't sell power, 0:03:13.796 --> 0:03:15.596 not on their menu, so you got to go to 0:03:15.636 --> 0:03:17.556 someone else. We are one of the options with it. 0:03:17.676 --> 0:03:21.316 You can buy your power and we offer a rate today. 0:03:21.356 --> 0:03:23.796 That rate is on our website, and that rate is 0:03:23.916 --> 0:03:27.556 quite competitive in comparison to the other power providers. And 0:03:28.116 --> 0:03:30.836 like we like to say, there's no sexy electron, uh huh, sure, 0:03:31.196 --> 0:03:33.476 Our electrons are the same as every other retailer's. 0:03:33.676 --> 0:03:36.556 Classic commodity doesn't get more commodified than electrons. 0:03:36.676 --> 0:03:41.716 That's right, Because it's a commodity. The fundamental value is 0:03:41.716 --> 0:03:44.196 in the price and in its reliability. And that's what 0:03:44.236 --> 0:03:48.796 we offer. Cheaper, more affordable, more reliable power. Because when 0:03:48.796 --> 0:03:51.396 you sign up with Base Power, we charge you our 0:03:51.836 --> 0:03:55.156 relatively comparably cheap rate, and we then put a battery 0:03:55.156 --> 0:03:58.636 on your home that we own and operate. So typically, 0:03:59.076 --> 0:04:01.876 if you're a homeowner and you want a battery, you 0:04:01.916 --> 0:04:04.596 can chop around from online. There's a handful of manufacturers 0:04:04.596 --> 0:04:07.916 of them. You're typically paying upwards of fifteen to twenty 0:04:07.956 --> 0:04:09.996 thousand dollars for Actually, for battery of our size is 0:04:09.996 --> 0:04:11.716 typically twenty five thirty thousand dollars. 0:04:11.916 --> 0:04:14.036 And why would I be buying that battery if I 0:04:14.076 --> 0:04:15.156 was a homeowner. 0:04:15.476 --> 0:04:18.076 Without company like us. That's really your only option if 0:04:18.116 --> 0:04:19.996 you want a battery in your home to provide you 0:04:20.036 --> 0:04:20.716 back up power. 0:04:20.956 --> 0:04:23.036 So the battery, it's like instead of a generator the 0:04:23.076 --> 0:04:24.956 way people used to buy a generator, now they might 0:04:24.956 --> 0:04:27.996 buy a battery instead. That's right, But from you, I'm 0:04:28.036 --> 0:04:30.516 not buying the battery, I'm what am I doing? I'm 0:04:30.556 --> 0:04:32.956 just paying you to install it, but you own it. 0:04:32.996 --> 0:04:33.756 Is that what's going on? 0:04:34.796 --> 0:04:37.076 Yeah, So we have compared to the costs of the 0:04:37.276 --> 0:04:39.316 unit with a very small upfront fee. Today it's on 0:04:39.356 --> 0:04:40.756 the order of five or six hundred dollars. 0:04:41.156 --> 0:04:43.236 So for five hundred bucks you install the battery. How 0:04:43.316 --> 0:04:45.076 much cheaper is the power, by the way, than the 0:04:45.436 --> 0:04:46.596 median power price. 0:04:47.076 --> 0:04:49.756 We typically save folks ten to twenty percent on their 0:04:49.756 --> 0:04:52.276 power and that gap is widening over time as our 0:04:52.436 --> 0:04:56.316 costs to serve customers and put batteries on homes go down. 0:04:56.356 --> 0:04:57.956 And that's kind of the whole and we'll talk about 0:04:57.996 --> 0:04:59.716 this more later, but the whole sort of vertical integration 0:05:00.036 --> 0:05:03.476 concept for the company continues to drive prices down for homeowners. 0:05:03.516 --> 0:05:06.196 And then so that's basically it for me, and how 0:05:06.276 --> 0:05:09.196 long can the battery power my house if the power goes. 0:05:09.516 --> 0:05:11.556 So it just like you know, how often you use 0:05:11.596 --> 0:05:12.996 your cell phone throughout a day. It depends on it 0:05:13.076 --> 0:05:15.356 depends on your usage. Typically what we say is on 0:05:15.396 --> 0:05:19.076 the order of a day for an average Texas home longer. 0:05:19.116 --> 0:05:21.596 If you curtail your usage, you reduce your usage in 0:05:21.636 --> 0:05:21.956 some way. 0:05:22.476 --> 0:05:24.556 Great. Okay, so that's the basic model. 0:05:25.116 --> 0:05:28.756 How's it going quite well? Actually, So we're a little 0:05:28.756 --> 0:05:31.196 over two years into the company now. So we're based 0:05:31.196 --> 0:05:33.236 here in Austin in the headquarters where I'm at now, 0:05:33.716 --> 0:05:36.756 and we have operations in San Antonio, Dallas, Houston, and 0:05:36.836 --> 0:05:40.476 here in Austin where we do tens of batteries a day. 0:05:41.076 --> 0:05:43.956 We've got several thousand on the grid. We're going quite quickly. 0:05:44.836 --> 0:05:50.196 Our ability to install the batteries is far out surpassed 0:05:50.276 --> 0:05:52.396 by our demand for batteries. 0:05:52.636 --> 0:05:55.236 It does seem labor intensive, right, having to go one 0:05:55.236 --> 0:05:58.876 house at a time, seems like the hard, expensive part 0:05:58.996 --> 0:06:00.076 of your approach. 0:06:00.556 --> 0:06:02.076 Yeah, I see, there's a lot of hard parts. But 0:06:02.316 --> 0:06:04.836 bidding them into the wholesale markets and financing and all that. 0:06:05.036 --> 0:06:07.356 Yeah, fair, fair people always say that. When I say 0:06:07.356 --> 0:06:09.076 that seems like the hard part. People like a hard 0:06:09.196 --> 0:06:09.996 part of your approach. 0:06:10.116 --> 0:06:12.756 It is a hard part, that's very right. This concept 0:06:12.796 --> 0:06:16.356 we call the deployment factory. So my backgrounds of manufacturing, 0:06:16.356 --> 0:06:18.076 what I was doing prior to starting the company here 0:06:18.156 --> 0:06:21.636 was in manufacturing and assembly, and one of the things 0:06:21.676 --> 0:06:26.236 you learn is that manufacturing and construction are very different things. 0:06:26.236 --> 0:06:31.796 Construction is a one off, project managed sort of like individualized, custom, 0:06:32.116 --> 0:06:33.716 non repeatable process. 0:06:33.436 --> 0:06:35.356 You're using where it's that make things sound like it 0:06:35.396 --> 0:06:37.796 take a long time and always go over a budget. 0:06:38.356 --> 0:06:39.676 Yeah, and are expensive, that's right. 0:06:39.756 --> 0:06:40.236 Yeah. 0:06:40.276 --> 0:06:43.676 With manufacturing, you know, there's literature we didn't make up, 0:06:43.676 --> 0:06:46.356 like what good manufacturing process looks like. But you know, 0:06:46.396 --> 0:06:48.956 Henry Ford pioneered this in the early nineteen hundreds with 0:06:49.036 --> 0:06:52.756 division of labor and moving assembly line Toyota. You sort 0:06:52.796 --> 0:06:55.156 of perfected it with the Toyota production system in the 0:06:55.156 --> 0:06:57.996 seventies and eighties, and these concepts were applying to what 0:06:58.076 --> 0:07:00.956 is traditionally construction project So if you get a battery 0:07:01.036 --> 0:07:03.316 or generator or solar and sold in your home, you'll 0:07:03.356 --> 0:07:05.996 typically have a project manager. They will custom design it 0:07:06.036 --> 0:07:08.236 for the home, and they will sort of take a 0:07:08.356 --> 0:07:12.236 very construction focused approach. We're taking a very manufacturing focused approach. 0:07:12.476 --> 0:07:17.276 So we've developed software that auto generates our engineering drawings 0:07:17.276 --> 0:07:18.916 that we need to submit to the cities for permitting 0:07:19.076 --> 0:07:22.556 and to the utilities. We have a piece of software 0:07:22.556 --> 0:07:24.956 also that commissions the system, meaning when you turn it 0:07:24.996 --> 0:07:27.036 on and make sure it works, it automatically checks itself 0:07:27.076 --> 0:07:30.356 to make sure that you installed it correctly. And very interestingly, also, 0:07:30.756 --> 0:07:34.516 we are beginning to design and manufacture the hardware, like 0:07:34.556 --> 0:07:38.396 the literal battery and power electronics themselves, that are very 0:07:38.436 --> 0:07:41.996 easy to install in comparison to what's available on the market. 0:07:41.996 --> 0:07:43.916 If you just went and bought a battery for the home. 0:07:44.036 --> 0:07:47.156 Uh huh, because you don't want some like high skill 0:07:47.356 --> 0:07:50.196 sort of artisanal process where you need some guy who's 0:07:50.236 --> 0:07:52.476 really good at installing batteries to do it. Right, that's 0:07:52.516 --> 0:07:55.236 got to be that's right. That's the enemy of scale 0:07:55.276 --> 0:07:56.316 at some level. 0:07:56.316 --> 0:07:59.676 That's right. So reducing the skill set and training required. 0:07:59.876 --> 0:08:04.116 Yeah, that's very Industrial revolution automation, right, de skilling. 0:08:04.476 --> 0:08:07.876 Yeah, the concept is not like, the fundamental concept is 0:08:07.876 --> 0:08:10.876 not new. The application to this use case is new 0:08:10.916 --> 0:08:12.836 and is unique for what we're building. 0:08:12.956 --> 0:08:16.236 Well, and even more generally, the application to putting it 0:08:16.276 --> 0:08:18.436 house by house, right, Like, the whole point of the 0:08:18.436 --> 0:08:23.356 factory is it's this incredibly sort of predictable, you know, homogeneous, 0:08:23.436 --> 0:08:26.476 uniform environment that you can create for your optimization needs. 0:08:26.556 --> 0:08:28.876 And a house is the opposite of that. It's just 0:08:28.916 --> 0:08:31.556 some house, and like to some extent, every house is 0:08:31.556 --> 0:08:33.756 different than every other house, right, Like that seems like 0:08:34.236 --> 0:08:36.316 a thing that you are up against in trying to 0:08:36.556 --> 0:08:38.716 quasi automate this process totally. 0:08:38.756 --> 0:08:40.156 You have the nail on the head and this is 0:08:40.236 --> 0:08:42.716 one of the fundamental hard parts. And this is frankly 0:08:42.756 --> 0:08:45.756 a lot of the reason why we're designing the hardware itself. 0:08:45.916 --> 0:08:49.476 Uh huh, the hardware meaning the battery pack. 0:08:50.876 --> 0:08:53.756 Yeah, So the reason we're designing it ourselves is because 0:08:53.756 --> 0:08:55.676 we're trying to abstract a way as much of the 0:08:55.716 --> 0:08:58.476 difference of the homes as possible. So take this really 0:08:58.556 --> 0:09:02.156 really simple example. Many batteries in the market today are 0:09:02.196 --> 0:09:04.596 mounted to a wall because they're a little bit you know, 0:09:04.716 --> 0:09:07.676 people at least think they're a little bit more aesthetically pleasing, 0:09:07.836 --> 0:09:09.116 and I don't know, it's just kind of the way 0:09:09.196 --> 0:09:11.836 it's been done, so to speak. The problem with that 0:09:11.996 --> 0:09:15.076 is that you have to know what the side of 0:09:15.076 --> 0:09:17.356 the house is made out of. Yeah, if it's a 0:09:17.356 --> 0:09:19.156 stud wall, you have to go find the studs. You 0:09:19.196 --> 0:09:21.596 have to bring all of the different fasteners that you 0:09:21.716 --> 0:09:24.356 might need for a brick versus stone, versus stuck oversus 0:09:24.396 --> 0:09:26.796 siding house, and then you have to train all of 0:09:26.836 --> 0:09:28.796 your crews on how to adapt to all of that. 0:09:28.876 --> 0:09:30.916 And so the hardware that we've designed is ground mounted. 0:09:31.076 --> 0:09:33.196 It looks like an air conditioning unit. It's not mounted 0:09:33.236 --> 0:09:37.236 to the wall. Again, it's a somewhat simple change that 0:09:37.276 --> 0:09:40.676 makes a big difference in the supply chain, availability, labor 0:09:41.156 --> 0:09:44.276 training and availability, the skill sets required, and the time 0:09:44.316 --> 0:09:47.636 to install. That's one example. There's like fifty other examples 0:09:47.676 --> 0:09:50.516 of things that we've done with our hardware that is 0:09:50.556 --> 0:09:53.076 different from what's on the market today. That makes this 0:09:53.276 --> 0:09:57.036 home by home installation motion far more efficient and easier. 0:09:57.116 --> 0:09:59.556 Give me one other example. I like that example. 0:09:59.796 --> 0:10:04.876 Another is the way we have made the battery modular. Oftentimes, 0:10:04.956 --> 0:10:07.276 batteries that you buy are like one big brick that 0:10:07.316 --> 0:10:09.516 weighs several hundred pounds and it takes a few people 0:10:09.556 --> 0:10:11.316 to like either lift on the wall or place and 0:10:11.356 --> 0:10:14.916 move move around. We've modular azed our system so that 0:10:15.036 --> 0:10:18.996 it's much lighter weight and you can quick connect it 0:10:19.036 --> 0:10:22.156 into the others. So instead of having to run conduit 0:10:22.196 --> 0:10:25.036 and wire, which means like fasten the condo to the wall, 0:10:25.436 --> 0:10:28.556 the fish tape through, pull the wire through, terminate the ends, 0:10:28.796 --> 0:10:31.076 make sure you've connected it right. It's a harness. It's 0:10:31.156 --> 0:10:33.516 like literally like you know your laptop into its charger. 0:10:33.756 --> 0:10:36.676 It's a quick connect mechanism. So now you don't need 0:10:36.756 --> 0:10:38.956 to know how far to strip back the installation on 0:10:39.036 --> 0:10:40.996 the wire. Yeah, make sure you don't nick one of 0:10:40.996 --> 0:10:41.796 the copper strands. 0:10:41.836 --> 0:10:44.036 It's de skilling. It's if you can plug a thing in, 0:10:44.156 --> 0:10:44.716 you can do this. 0:10:44.916 --> 0:10:47.796 Yeah, exactly. That's another thing that we've custom developed, a 0:10:47.836 --> 0:10:51.556 custom connector that makes it easy to transfer both data 0:10:51.836 --> 0:10:54.436 and power and high power together. This is not today 0:10:54.436 --> 0:10:55.676 that's available on the market today. 0:10:55.836 --> 0:10:58.396 So what are your metrics like how many people it 0:10:58.476 --> 0:11:00.876 takes and how long? Like you have some core metric 0:11:01.036 --> 0:11:05.716 for installation? Is it people in time? Is it money 0:11:05.716 --> 0:11:07.316 you have? Where are you at? Where were you what 0:11:07.356 --> 0:11:08.516 are you at? Where are you trying to get to? 0:11:08.796 --> 0:11:10.756 Yeah, So at the very top level of the company, 0:11:10.796 --> 0:11:13.996 we track two major metrics that sort of check us 0:11:14.036 --> 0:11:16.036 on how good we are doing, so to speak. One 0:11:16.356 --> 0:11:20.316 is the dollars per killo odd hour deployed kill awd 0:11:20.316 --> 0:11:23.356 hour is like a unit of energy, and so how 0:11:23.356 --> 0:11:25.636 many dollars does it take to plug one unit of 0:11:25.716 --> 0:11:27.396 energy into the grid essentially. 0:11:27.276 --> 0:11:31.076 And that's including the materials and the labe's that's everything. 0:11:31.156 --> 0:11:33.676 It's everything, Okay, that's the bill of materials for us 0:11:33.676 --> 0:11:36.476 to manufacture at the manufacturing costs that we do our 0:11:36.516 --> 0:11:39.276 own last mile logistics, we deliver it to the home, 0:11:39.356 --> 0:11:41.516 that cost the install costs, all that, okay. So that's 0:11:41.556 --> 0:11:45.156 metric number one, and metric number two is how fast 0:11:45.156 --> 0:11:48.196 are we going? How many killo odd hours or megawatt 0:11:48.236 --> 0:11:50.516 hours are we deploying each month. 0:11:50.796 --> 0:11:54.636 So what is your cost per whatever killo odd hour, 0:11:54.676 --> 0:11:56.356 whatever unit you want? 0:11:56.556 --> 0:11:59.556 So are the dollars per kill a OT hour? We 0:11:59.676 --> 0:12:03.116 are comparable to grid scale today and our next gen 0:12:03.156 --> 0:12:05.716 hardware will be far far lower than that. We're already 0:12:05.996 --> 0:12:10.396 the fastest deploying battery developer here in Texas. We're fashion 0:12:10.436 --> 0:12:13.276 than anyone else on a megawatt hours per unit time 0:12:13.316 --> 0:12:14.156 per month basis. 0:12:14.396 --> 0:12:17.436 And so you're racing not against other people doing what 0:12:17.476 --> 0:12:20.996 you're doing, but against people doing giant batteries and fields. 0:12:21.036 --> 0:12:25.796 And you're saying you're doing more total battery storage deployed 0:12:25.916 --> 0:12:26.676 per year. 0:12:27.236 --> 0:12:29.316 That's right, that's the case there. And then on cost, 0:12:29.356 --> 0:12:31.996 we're comparable to that today. In our next generation hardware 0:12:32.076 --> 0:12:33.676 will make us meaningfully more competitive. 0:12:33.996 --> 0:12:36.716 So the demand side is really clear. Right, you're a homeowner, 0:12:36.756 --> 0:12:41.116 you get power, you get a backup. Tell me about you, like, 0:12:41.196 --> 0:12:43.876 are you selling back to the grid, Like obviously you're 0:12:43.876 --> 0:12:47.196 buying from the grid in some fashion. You're buying power 0:12:47.196 --> 0:12:50.836 from somebody, right and then selling it to the consumer 0:12:50.876 --> 0:12:54.516 because you're not generating it on net. Tell me about 0:12:54.556 --> 0:12:56.436 your business as a seller of power. 0:12:56.836 --> 0:13:00.436 So in the deregulated parts of Texas. This gets a 0:13:00.476 --> 0:13:01.036 little nuance. 0:13:01.196 --> 0:13:03.796 I didn't know there were regulated parts of Texas as 0:13:03.796 --> 0:13:04.916 a naive New Yorker. 0:13:05.116 --> 0:13:08.156 Deregulation's a bit of a misnomer actually, So all that 0:13:08.196 --> 0:13:10.676 really means in this con text is that you can 0:13:11.036 --> 0:13:14.796 sell power. So actually here in Austin is a regulated area, 0:13:15.196 --> 0:13:17.716 and if you live in the city of Austin, you 0:13:17.876 --> 0:13:21.996 have to pay Austin Energy, which is the municipally owned utility. 0:13:22.316 --> 0:13:24.116 But if you live in round Rock, which is like 0:13:24.116 --> 0:13:26.636 one of the suburbs north of here, you have to 0:13:26.716 --> 0:13:28.196 choose who you buy or power from. Were one of 0:13:28.196 --> 0:13:32.436 those options. Okay, So in terms of selling electricity to homeowners, 0:13:32.596 --> 0:13:35.436 that business is quite good. But again it's honestly because 0:13:35.436 --> 0:13:39.156 of the battery because as a retailer the financial model, 0:13:39.476 --> 0:13:41.316 if you don't have any batteries, you're just a regular 0:13:41.356 --> 0:13:45.836 old rep retail electric provider. You are buying energy typically 0:13:45.916 --> 0:13:48.076 at the wholesale price, and then you're selling it at 0:13:48.076 --> 0:13:50.036 a retail price that is higher, and that difference is 0:13:50.076 --> 0:13:52.876 the margin that you're making. Most of the time that 0:13:52.876 --> 0:13:56.516 margin is pretty good, and then oftentimes, like in August 0:13:56.556 --> 0:13:58.836 and hot like it is now in the evenings and 0:13:58.836 --> 0:14:00.716 everyone comes home plugs and their ev turn on their oven, 0:14:00.756 --> 0:14:03.916 et cetera. Prices go above what you're selling your energy 0:14:03.916 --> 0:14:04.396 to your. 0:14:04.396 --> 0:14:06.796 The wholesale price is higher than the retail price at 0:14:06.796 --> 0:14:07.436 certain moments. 0:14:07.516 --> 0:14:10.356 Yeah, and so the retailer is losing money in that moment. 0:14:10.116 --> 0:14:12.476 And that's when the business gets blown out, because like 0:14:12.516 --> 0:14:14.836 sometimes those are crazy swings. Right, it's not like a 0:14:14.836 --> 0:14:17.076 little bit above, it's like they are these wild whatever 0:14:17.156 --> 0:14:18.236 tenex swings or something. 0:14:18.316 --> 0:14:20.756 Right, that's right. So here in Texas, just put some 0:14:20.836 --> 0:14:23.956 numbers to it. Typically, prices are between kind of ten 0:14:24.036 --> 0:14:27.236 and fifty, ten and eighty bucks a megawat hour. 0:14:27.356 --> 0:14:27.716 Okay. 0:14:28.076 --> 0:14:31.996 The highest price that the grid operator ORCOT allows in 0:14:31.996 --> 0:14:33.676 the wholesale market is five thousand dollars. 0:14:33.876 --> 0:14:34.236 Wow. 0:14:34.276 --> 0:14:36.396 And this happens not super often, but it will go 0:14:36.636 --> 0:14:37.796 certainly above one hundred bikes. 0:14:37.796 --> 0:14:40.276 So that's one hundred x more or less from fifty 0:14:40.356 --> 0:14:42.476 to five thousand. It's one hundred x swing. 0:14:42.596 --> 0:14:45.436 Yeah. And so if you're just a regular old rep, 0:14:45.916 --> 0:14:48.716 you're hurting pretty badly when prices are five thousand dollars 0:14:48.716 --> 0:14:50.836 even for fifteen minutes or thirty minutes, forty five minutes 0:14:51.316 --> 0:14:54.276 or even you know, one thousand or or five hundred bucks, 0:14:54.996 --> 0:14:57.796 because we have the battery. When prices are that high, 0:14:58.276 --> 0:15:00.396 we're able to basically turn off the home from the 0:15:00.436 --> 0:15:03.676 grid and instead support that battery or support that homeowner 0:15:03.836 --> 0:15:07.076 with the battery. And so now from a retail perspective, 0:15:07.116 --> 0:15:10.996 we're not losing money simply during those periods of times. 0:15:11.036 --> 0:15:12.996 Right, because you don't have to pay the wholesale prices 0:15:12.996 --> 0:15:14.156 when they go crazy. 0:15:13.836 --> 0:15:17.036 That's right. And we can actually spin the meter backwards, 0:15:17.116 --> 0:15:18.916 so to speak. We can go sell that power. 0:15:19.036 --> 0:15:22.116 So can you sell at when it's five thousand dollars? 0:15:22.156 --> 0:15:23.116 Can you be a seller? 0:15:23.556 --> 0:15:27.116 We can't. In fact, that is the market signal begging 0:15:27.116 --> 0:15:30.356 the market to put more supply into the system. 0:15:30.876 --> 0:15:36.676 That is surge pricing. Yes, yeah, we'll be back in 0:15:36.756 --> 0:15:39.116 just a minute. 0:15:47.636 --> 0:15:51.876 Interestingly, also, prices are not the same everywhere on the grid. Ah, 0:15:52.116 --> 0:15:54.236 So it's not like all of Texas electricity in any 0:15:54.236 --> 0:15:57.116 given moments is the same. There's different prices throughout the grid. 0:15:57.476 --> 0:15:59.676 That is a function of the congestion on the lines, 0:16:00.356 --> 0:16:02.836 and so in an area where there's a lot of congestion, 0:16:02.876 --> 0:16:05.236 there's typically higher pricing. At the end of that congestion 0:16:05.676 --> 0:16:10.076 to incentivize more supply local to that point to relieve 0:16:10.116 --> 0:16:14.556 the congestion. And so our batteries are operating differently. Our 0:16:14.596 --> 0:16:17.356 batteries in Houston are operating different than our batteries in Dallas, 0:16:17.796 --> 0:16:19.636 different than our batteries in San Antonio, different than our 0:16:19.676 --> 0:16:20.356 batteries in Austin. 0:16:20.556 --> 0:16:25.356 And presumably you built I mean, is that AI Is 0:16:25.356 --> 0:16:28.076 it just an algorithm? I mean, presumably that is automated 0:16:28.116 --> 0:16:29.036 to some high degree. 0:16:29.356 --> 0:16:31.836 Yeah, it's automated. Yeah, And this is a big part 0:16:31.876 --> 0:16:35.036 of the software tech. And we also got a energy 0:16:35.076 --> 0:16:40.356 markets software team that's developed algorithms and direct interface with Urcott. 0:16:40.436 --> 0:16:44.396 In the case of Texas to go trade energy basically 0:16:44.436 --> 0:16:44.876 through Arcot. 0:16:45.796 --> 0:16:48.236 So you mentioned Arcot and like as, I understand that 0:16:48.276 --> 0:16:52.756 they're in a broadway sort of three grids in America, West, East, 0:16:52.836 --> 0:16:55.436 and Texas, which is kind of awesomely Texas, right, it 0:16:55.436 --> 0:16:59.476 seems very and my understanding is that Texas grid is 0:16:59.476 --> 0:17:02.196 is less regulated. Right. Part of the reason is Texas 0:17:02.756 --> 0:17:05.316 didn't want to be subject to federal regulation, so they 0:17:05.356 --> 0:17:07.356 had their own grid. I know that's something of a simplification, 0:17:07.396 --> 0:17:10.956 but it's it's basically right, Yeah, and so I'm curious, like, 0:17:11.516 --> 0:17:14.996 is that why you're in Texas in part? And are 0:17:15.036 --> 0:17:17.996 there regulatory barriers that would or will make it hard 0:17:17.996 --> 0:17:19.676 for you to expand outside of Texas. 0:17:20.836 --> 0:17:23.236 So the first party question is why Texas eat the 0:17:23.276 --> 0:17:25.316 nail on the head. Part of it is because of 0:17:25.356 --> 0:17:28.716 the regulatory environment where you can become this concept of 0:17:28.756 --> 0:17:32.276 a wrap retail actric provider. The other is this fundamentally 0:17:32.356 --> 0:17:35.156 separated grid. To your point, it's not connected for the 0:17:35.156 --> 0:17:39.276 most part to the Western Nation interconnection, and that drives volatility, 0:17:39.596 --> 0:17:42.916 which means that batteries typically can can add a lot 0:17:42.916 --> 0:17:45.076 of value, can make a good amount of revenue. 0:17:45.956 --> 0:17:49.396 It drives volatility just because there's a smaller area to 0:17:49.756 --> 0:17:51.796 move power around, Like because if you have a big 0:17:51.836 --> 0:17:53.796 grid and there's sort of more demand in one place, 0:17:53.836 --> 0:17:56.716 you can pulse apply from one thousand miles away or something, 0:17:56.756 --> 0:17:58.996 and you can't do that in Texas because it's not connected. 0:17:59.196 --> 0:18:01.916 Yeah, said simply you can borrow from your neighbors in 0:18:01.956 --> 0:18:04.196 other areas, you can't. There's no neighbors to borrow from 0:18:04.236 --> 0:18:04.716 in Texas. 0:18:04.716 --> 0:18:08.636 In Texas, interest, right, and volatility is good for your business, right. 0:18:08.836 --> 0:18:11.916 That's it's a narbatrage business. At some level, you want 0:18:11.916 --> 0:18:14.956 there to be the swings in price. That's your margin 0:18:14.996 --> 0:18:15.556 to some extent. 0:18:15.636 --> 0:18:19.116 Right, that's right. In the deregulated markets where we're directly 0:18:19.116 --> 0:18:22.756 interfacing with the whole sal markets, volatility generally drives returns 0:18:22.796 --> 0:18:25.396 on the business. So outside of Texas, the way that 0:18:25.436 --> 0:18:29.116 this works is that you get a partnership with the utility. 0:18:29.196 --> 0:18:32.596 So it's the same operations and the same technology, but 0:18:32.676 --> 0:18:35.676 a different business model. So in these cases, we go 0:18:36.156 --> 0:18:38.556 acquire customer, say hey, customer, you want a battery, and 0:18:38.556 --> 0:18:42.356 they're like, yep, we do. We go design, manufacture, and 0:18:42.396 --> 0:18:45.116 deploy our own battery onto their home and then we 0:18:45.116 --> 0:18:47.796 give the keys to that battery to the utility and 0:18:47.876 --> 0:18:50.076 they control it and they pay us for that. And 0:18:50.156 --> 0:18:52.196 the reason that they want that is because they need 0:18:52.236 --> 0:18:56.076 capacity to offset their demand. They import energy from the 0:18:56.116 --> 0:18:58.796 rest of the Texas grid into their service territory. They 0:18:58.796 --> 0:19:03.036 pay costs for that, and they have other costs like 0:19:03.516 --> 0:19:05.996 the cost of upgrading transformers that are at the end 0:19:05.996 --> 0:19:07.996 of their life and other things that you can offset. 0:19:08.156 --> 0:19:09.956 Right, it's still the same problems. 0:19:10.236 --> 0:19:13.756 It's the same problem. Yeah, I say, in those cases though, 0:19:13.796 --> 0:19:16.516 we're not directly interfacing with the wholesale markets. Now we 0:19:16.556 --> 0:19:19.716 give them access to our software stack that allows them 0:19:19.716 --> 0:19:22.156 to do that on their own behalf. But that's the model. 0:19:22.516 --> 0:19:25.276 So you're basically you're providing the battery on the software 0:19:25.356 --> 0:19:26.036 in that setting. 0:19:26.316 --> 0:19:28.236 Yeah, it's the way we say it is. It's megawats 0:19:28.236 --> 0:19:30.316 as a service. You as a utility are looking for 0:19:30.396 --> 0:19:34.836 megawatts and you're bidding grid scale batteries natural gas peaker plants. 0:19:35.156 --> 0:19:38.076 Here's another option that is faster to deploy or cost 0:19:38.076 --> 0:19:41.516