Speaker 1: Pushkin. The demand for electricity is rising fast because of AI,
Speaker 1: because of the shift toward electric vehicles and electric heat
Speaker 1: and electric everything else. And it's relatively easy to install
Speaker 1: new solar panels and in a pinch to build more
Speaker 1: gas power plants. But plugging them in, hooking them up
Speaker 1: to the grid, that part is hard. The grid has
Speaker 1: to be big enough to reliably carry all the electric
Speaker 1: power that people will want at the moment of peak demand,
Speaker 1: you know, at five PM on a hot summer day,
Speaker 1: when everybody gets home from work and turns up the
Speaker 1: air conditioner and plugs in the EV and expanding the
Speaker 1: grid to accommodate those higher and higher peaks that is
Speaker 1: really expensive. On top of that, in a lot of places,
Speaker 1: expense is not the only problem. Even if you want
Speaker 1: to add more power to the you have to wait
Speaker 1: in line until the company that builds the poles and
Speaker 1: the wires can get to you. And so people have
Speaker 1: started to think, what if we could figure out how
Speaker 1: to get more energy to more people without having to
Speaker 1: expand the grid so much. I'm Jacob Goldstein, and this
Speaker 1: is What's Your Problem? The show where I talk to
Speaker 1: people who are trying to make technological progress. My guest
Speaker 1: today is Justin Lowpos. Justin is the co founder and
Speaker 1: chief operating officer at Base Power. On one level, Base
Speaker 1: Power does something really simple. They install big batteries at
Speaker 1: people's homes in Texas, and the batteries provide backup power
Speaker 1: during blackouts. But Bass's business is actually much more interesting
Speaker 1: than that. In a lot of places, Base actually owns
Speaker 1: the batteries that they install at people's houses, and the
Speaker 1: company acts as the homeowner's electric provider. They send them
Speaker 1: a bill every month, and this is the really interesting part.
Speaker 1: Having those batteries installed on thousands of houses has huge
Speaker 1: implications for the grid because the batteries can charge whenever.
Speaker 1: In particular, they can charge when the grid is underused,
Speaker 1: say in the middle of the day when solar panels
Speaker 1: are cranking out power. Then at that moment when everybody
Speaker 1: gets home and cranks up the AC the batteries can
Speaker 1: discharge that power. That means less energy traveling over the
Speaker 1: grid at moments of peak demand. So at the micro level,
Speaker 1: Base is a battery company, but at the macro level
Speaker 1: they're a utility. But instead of having a few giant
Speaker 1: power plants, they have all those batteries, which are essentially
Speaker 1: thousands of tiny power plants stash next to people's houses.
Speaker 1: I asked Justin to explain how all this works from
Speaker 1: the point of view of a customer.
Speaker 2: Let's say you have a house in Houston and your
Speaker 2: single family homeowner. You first of all, you have to
Speaker 2: choose who you buy a power from. You can't buy
Speaker 2: it from the utiel in this case, Center Point Energy
Speaker 2: is the Polls and myyers on our they don't sell power,
Speaker 2: not on their menu, so you got to go to
Speaker 2: someone else. We are one of the options with it.
Speaker 2: You can buy your power and we offer a rate today.
Speaker 2: That rate is on our website, and that rate is
Speaker 2: quite competitive in comparison to the other power providers. And
Speaker 2: like we like to say, there's no sexy electron, uh huh, sure,
Speaker 2: Our electrons are the same as every other retailer's.
Speaker 1: Classic commodity doesn't get more commodified than electrons.
Speaker 2: That's right, Because it's a commodity. The fundamental value is
Speaker 2: in the price and in its reliability. And that's what
Speaker 2: we offer. Cheaper, more affordable, more reliable power. Because when
Speaker 2: you sign up with Base Power, we charge you our
Speaker 2: relatively comparably cheap rate, and we then put a battery
Speaker 2: on your home that we own and operate. So typically,
Speaker 2: if you're a homeowner and you want a battery, you
Speaker 2: can chop around from online. There's a handful of manufacturers
Speaker 2: of them. You're typically paying upwards of fifteen to twenty
Speaker 2: thousand dollars for Actually, for battery of our size is
Speaker 2: typically twenty five thirty thousand dollars.
Speaker 1: And why would I be buying that battery if I
Speaker 1: was a homeowner.
Speaker 2: Without company like us. That's really your only option if
Speaker 2: you want a battery in your home to provide you
Speaker 2: back up power.
Speaker 1: So the battery, it's like instead of a generator the
Speaker 1: way people used to buy a generator, now they might
Speaker 1: buy a battery instead. That's right, But from you, I'm
Speaker 1: not buying the battery, I'm what am I doing? I'm
Speaker 1: just paying you to install it, but you own it.
Speaker 1: Is that what's going on?
Speaker 2: Yeah, So we have compared to the costs of the
Speaker 2: unit with a very small upfront fee. Today it's on
Speaker 2: the order of five or six hundred dollars.
Speaker 1: So for five hundred bucks you install the battery. How
Speaker 1: much cheaper is the power, by the way, than the
Speaker 1: median power price.
Speaker 2: We typically save folks ten to twenty percent on their
Speaker 2: power and that gap is widening over time as our
Speaker 2: costs to serve customers and put batteries on homes go down.
Speaker 2: And that's kind of the whole and we'll talk about
Speaker 2: this more later, but the whole sort of vertical integration
Speaker 2: concept for the company continues to drive prices down for homeowners.
Speaker 1: And then so that's basically it for me, and how
Speaker 1: long can the battery power my house if the power goes.
Speaker 2: So it just like you know, how often you use
Speaker 2: your cell phone throughout a day. It depends on it
Speaker 2: depends on your usage. Typically what we say is on
Speaker 2: the order of a day for an average Texas home longer.
Speaker 2: If you curtail your usage, you reduce your usage in
Speaker 2: some way.
Speaker 1: Great. Okay, so that's the basic model.
Speaker 2: How's it going quite well? Actually, So we're a little
Speaker 2: over two years into the company now. So we're based
Speaker 2: here in Austin in the headquarters where I'm at now,
Speaker 2: and we have operations in San Antonio, Dallas, Houston, and
Speaker 2: here in Austin where we do tens of batteries a day.
Speaker 2: We've got several thousand on the grid. We're going quite quickly.
Speaker 2: Our ability to install the batteries is far out surpassed
Speaker 2: by our demand for batteries.
Speaker 1: It does seem labor intensive, right, having to go one
Speaker 1: house at a time, seems like the hard, expensive part
Speaker 1: of your approach.
Speaker 2: Yeah, I see, there's a lot of hard parts. But
Speaker 2: bidding them into the wholesale markets and financing and all that.
Speaker 1: Yeah, fair, fair people always say that. When I say
Speaker 1: that seems like the hard part. People like a hard
Speaker 1: part of your approach.
Speaker 2: It is a hard part, that's very right. This concept
Speaker 2: we call the deployment factory. So my backgrounds of manufacturing,
Speaker 2: what I was doing prior to starting the company here
Speaker 2: was in manufacturing and assembly, and one of the things
Speaker 2: you learn is that manufacturing and construction are very different things.
Speaker 2: Construction is a one off, project managed sort of like individualized, custom,
Speaker 2: non repeatable process.
Speaker 1: You're using where it's that make things sound like it
Speaker 1: take a long time and always go over a budget.
Speaker 2: Yeah, and are expensive, that's right.
Speaker 1: Yeah.
Speaker 2: With manufacturing, you know, there's literature we didn't make up,
Speaker 2: like what good manufacturing process looks like. But you know,
Speaker 2: Henry Ford pioneered this in the early nineteen hundreds with
Speaker 2: division of labor and moving assembly line Toyota. You sort
Speaker 2: of perfected it with the Toyota production system in the
Speaker 2: seventies and eighties, and these concepts were applying to what
Speaker 2: is traditionally construction project So if you get a battery
Speaker 2: or generator or solar and sold in your home, you'll
Speaker 2: typically have a project manager. They will custom design it
Speaker 2: for the home, and they will sort of take a
Speaker 2: very construction focused approach. We're taking a very manufacturing focused approach.
Speaker 2: So we've developed software that auto generates our engineering drawings
Speaker 2: that we need to submit to the cities for permitting
Speaker 2: and to the utilities. We have a piece of software
Speaker 2: also that commissions the system, meaning when you turn it
Speaker 2: on and make sure it works, it automatically checks itself
Speaker 2: to make sure that you installed it correctly. And very interestingly, also,
Speaker 2: we are beginning to design and manufacture the hardware, like
Speaker 2: the literal battery and power electronics themselves, that are very
Speaker 2: easy to install in comparison to what's available on the market.
Speaker 2: If you just went and bought a battery for the home.
Speaker 1: Uh huh, because you don't want some like high skill
Speaker 1: sort of artisanal process where you need some guy who's
Speaker 1: really good at installing batteries to do it. Right, that's
Speaker 1: got to be that's right. That's the enemy of scale
Speaker 1: at some level.
Speaker 2: That's right. So reducing the skill set and training required.
Speaker 1: Yeah, that's very Industrial revolution automation, right, de skilling.
Speaker 2: Yeah, the concept is not like, the fundamental concept is
Speaker 2: not new. The application to this use case is new
Speaker 2: and is unique for what we're building.
Speaker 1: Well, and even more generally, the application to putting it
Speaker 1: house by house, right, Like, the whole point of the
Speaker 1: factory is it's this incredibly sort of predictable, you know, homogeneous,
Speaker 1: uniform environment that you can create for your optimization needs.
Speaker 1: And a house is the opposite of that. It's just
Speaker 1: some house, and like to some extent, every house is
Speaker 1: different than every other house, right, Like that seems like
Speaker 1: a thing that you are up against in trying to
Speaker 1: quasi automate this process totally.
Speaker 2: You have the nail on the head and this is
Speaker 2: one of the fundamental hard parts. And this is frankly
Speaker 2: a lot of the reason why we're designing the hardware itself.
Speaker 1: Uh huh, the hardware meaning the battery pack.
Speaker 2: Yeah, So the reason we're designing it ourselves is because
Speaker 2: we're trying to abstract a way as much of the
Speaker 2: difference of the homes as possible. So take this really
Speaker 2: really simple example. Many batteries in the market today are
Speaker 2: mounted to a wall because they're a little bit you know,
Speaker 2: people at least think they're a little bit more aesthetically pleasing,
Speaker 2: and I don't know, it's just kind of the way
Speaker 2: it's been done, so to speak. The problem with that
Speaker 2: is that you have to know what the side of
Speaker 2: the house is made out of. Yeah, if it's a
Speaker 2: stud wall, you have to go find the studs. You
Speaker 2: have to bring all of the different fasteners that you
Speaker 2: might need for a brick versus stone, versus stuck oversus
Speaker 2: siding house, and then you have to train all of
Speaker 2: your crews on how to adapt to all of that.
Speaker 2: And so the hardware that we've designed is ground mounted.
Speaker 2: It looks like an air conditioning unit. It's not mounted
Speaker 2: to the wall. Again, it's a somewhat simple change that
Speaker 2: makes a big difference in the supply chain, availability, labor
Speaker 2: training and availability, the skill sets required, and the time
Speaker 2: to install. That's one example. There's like fifty other examples
Speaker 2: of things that we've done with our hardware that is
Speaker 2: different from what's on the market today. That makes this
Speaker 2: home by home installation motion far more efficient and easier.
Speaker 1: Give me one other example. I like that example.
Speaker 2: Another is the way we have made the battery modular. Oftentimes,
Speaker 2: batteries that you buy are like one big brick that
Speaker 2: weighs several hundred pounds and it takes a few people
Speaker 2: to like either lift on the wall or place and
Speaker 2: move move around. We've modular azed our system so that
Speaker 2: it's much lighter weight and you can quick connect it
Speaker 2: into the others. So instead of having to run conduit
Speaker 2: and wire, which means like fasten the condo to the wall,
Speaker 2: the fish tape through, pull the wire through, terminate the ends,
Speaker 2: make sure you've connected it right. It's a harness. It's
Speaker 2: like literally like you know your laptop into its charger.
Speaker 2: It's a quick connect mechanism. So now you don't need
Speaker 2: to know how far to strip back the installation on
Speaker 2: the wire. Yeah, make sure you don't nick one of
Speaker 2: the copper strands.
Speaker 1: It's de skilling. It's if you can plug a thing in,
Speaker 1: you can do this.
Speaker 2: Yeah, exactly. That's another thing that we've custom developed, a
Speaker 2: custom connector that makes it easy to transfer both data
Speaker 2: and power and high power together. This is not today
Speaker 2: that's available on the market today.
Speaker 1: So what are your metrics like how many people it
Speaker 1: takes and how long? Like you have some core metric
Speaker 1: for installation? Is it people in time? Is it money
Speaker 1: you have? Where are you at? Where were you what
Speaker 1: are you at? Where are you trying to get to?
Speaker 2: Yeah, So at the very top level of the company,
Speaker 2: we track two major metrics that sort of check us
Speaker 2: on how good we are doing, so to speak. One
Speaker 2: is the dollars per killo odd hour deployed kill awd
Speaker 2: hour is like a unit of energy, and so how
Speaker 2: many dollars does it take to plug one unit of
Speaker 2: energy into the grid essentially.
Speaker 1: And that's including the materials and the labe's that's everything.
Speaker 2: It's everything, Okay, that's the bill of materials for us
Speaker 2: to manufacture at the manufacturing costs that we do our
Speaker 2: own last mile logistics, we deliver it to the home,
Speaker 2: that cost the install costs, all that, okay. So that's
Speaker 2: metric number one, and metric number two is how fast
Speaker 2: are we going? How many killo odd hours or megawatt
Speaker 2: hours are we deploying each month.
Speaker 1: So what is your cost per whatever killo odd hour,
Speaker 1: whatever unit you want?
Speaker 2: So are the dollars per kill a OT hour? We
Speaker 2: are comparable to grid scale today and our next gen
Speaker 2: hardware will be far far lower than that. We're already
Speaker 2: the fastest deploying battery developer here in Texas. We're fashion
Speaker 2: than anyone else on a megawatt hours per unit time
Speaker 2: per month basis.
Speaker 1: And so you're racing not against other people doing what
Speaker 1: you're doing, but against people doing giant batteries and fields.
Speaker 1: And you're saying you're doing more total battery storage deployed
Speaker 1: per year.
Speaker 2: That's right, that's the case there. And then on cost,
Speaker 2: we're comparable to that today. In our next generation hardware
Speaker 2: will make us meaningfully more competitive.
Speaker 1: So the demand side is really clear. Right, you're a homeowner,
Speaker 1: you get power, you get a backup. Tell me about you, like,
Speaker 1: are you selling back to the grid, Like obviously you're
Speaker 1: buying from the grid in some fashion. You're buying power
Speaker 1: from somebody, right and then selling it to the consumer
Speaker 1: because you're not generating it on net. Tell me about
Speaker 1: your business as a seller of power.
Speaker 2: So in the deregulated parts of Texas. This gets a
Speaker 2: little nuance.
Speaker 1: I didn't know there were regulated parts of Texas as
Speaker 1: a naive New Yorker.
Speaker 2: Deregulation's a bit of a misnomer actually, So all that
Speaker 2: really means in this con text is that you can
Speaker 2: sell power. So actually here in Austin is a regulated area,
Speaker 2: and if you live in the city of Austin, you
Speaker 2: have to pay Austin Energy, which is the municipally owned utility.
Speaker 2: But if you live in round Rock, which is like
Speaker 2: one of the suburbs north of here, you have to
Speaker 2: choose who you buy or power from. Were one of
Speaker 2: those options. Okay, So in terms of selling electricity to homeowners,
Speaker 2: that business is quite good. But again it's honestly because
Speaker 2: of the battery because as a retailer the financial model,
Speaker 2: if you don't have any batteries, you're just a regular
Speaker 2: old rep retail electric provider. You are buying energy typically
Speaker 2: at the wholesale price, and then you're selling it at
Speaker 2: a retail price that is higher, and that difference is
Speaker 2: the margin that you're making. Most of the time that
Speaker 2: margin is pretty good, and then oftentimes, like in August
Speaker 2: and hot like it is now in the evenings and
Speaker 2: everyone comes home plugs and their ev turn on their oven,
Speaker 2: et cetera. Prices go above what you're selling your energy
Speaker 2: to your.
Speaker 1: The wholesale price is higher than the retail price at
Speaker 1: certain moments.
Speaker 2: Yeah, and so the retailer is losing money in that moment.
Speaker 1: And that's when the business gets blown out, because like
Speaker 1: sometimes those are crazy swings. Right, it's not like a
Speaker 1: little bit above, it's like they are these wild whatever
Speaker 1: tenex swings or something.
Speaker 2: Right, that's right. So here in Texas, just put some
Speaker 2: numbers to it. Typically, prices are between kind of ten
Speaker 2: and fifty, ten and eighty bucks a megawat hour.
Speaker 1: Okay.
Speaker 2: The highest price that the grid operator ORCOT allows in
Speaker 2: the wholesale market is five thousand dollars.
Speaker 1: Wow.
Speaker 2: And this happens not super often, but it will go
Speaker 2: certainly above one hundred bikes.
Speaker 1: So that's one hundred x more or less from fifty
Speaker 1: to five thousand. It's one hundred x swing.
Speaker 2: Yeah. And so if you're just a regular old rep,
Speaker 2: you're hurting pretty badly when prices are five thousand dollars
Speaker 2: even for fifteen minutes or thirty minutes, forty five minutes
Speaker 2: or even you know, one thousand or or five hundred bucks,
Speaker 2: because we have the battery. When prices are that high,
Speaker 2: we're able to basically turn off the home from the
Speaker 2: grid and instead support that battery or support that homeowner
Speaker 2: with the battery. And so now from a retail perspective,
Speaker 2: we're not losing money simply during those periods of times.
Speaker 1: Right, because you don't have to pay the wholesale prices
Speaker 1: when they go crazy.
Speaker 2: That's right. And we can actually spin the meter backwards,
Speaker 2: so to speak. We can go sell that power.
Speaker 1: So can you sell at when it's five thousand dollars?
Speaker 1: Can you be a seller?
Speaker 2: We can't. In fact, that is the market signal begging
Speaker 2: the market to put more supply into the system.
Speaker 1: That is surge pricing. Yes, yeah, we'll be back in
Speaker 1: just a minute.
Speaker 2: Interestingly, also, prices are not the same everywhere on the grid. Ah,
Speaker 2: So it's not like all of Texas electricity in any
Speaker 2: given moments is the same. There's different prices throughout the grid.
Speaker 2: That is a function of the congestion on the lines,
Speaker 2: and so in an area where there's a lot of congestion,
Speaker 2: there's typically higher pricing. At the end of that congestion
Speaker 2: to incentivize more supply local to that point to relieve
Speaker 2: the congestion. And so our batteries are operating differently. Our
Speaker 2: batteries in Houston are operating different than our batteries in Dallas,
Speaker 2: different than our batteries in San Antonio, different than our
Speaker 2: batteries in Austin.
Speaker 1: And presumably you built I mean, is that AI Is
Speaker 1: it just an algorithm? I mean, presumably that is automated
Speaker 1: to some high degree.
Speaker 2: Yeah, it's automated. Yeah, And this is a big part
Speaker 2: of the software tech. And we also got a energy
Speaker 2: markets software team that's developed algorithms and direct interface with Urcott.
Speaker 2: In the case of Texas to go trade energy basically
Speaker 2: through Arcot.
Speaker 1: So you mentioned Arcot and like as, I understand that
Speaker 1: they're in a broadway sort of three grids in America, West, East,
Speaker 1: and Texas, which is kind of awesomely Texas, right, it
Speaker 1: seems very and my understanding is that Texas grid is
Speaker 1: is less regulated. Right. Part of the reason is Texas
Speaker 1: didn't want to be subject to federal regulation, so they
Speaker 1: had their own grid. I know that's something of a simplification,
Speaker 1: but it's it's basically right, Yeah, and so I'm curious, like,
Speaker 1: is that why you're in Texas in part? And are
Speaker 1: there regulatory barriers that would or will make it hard
Speaker 1: for you to expand outside of Texas.
Speaker 2: So the first party question is why Texas eat the
Speaker 2: nail on the head. Part of it is because of
Speaker 2: the regulatory environment where you can become this concept of
Speaker 2: a wrap retail actric provider. The other is this fundamentally
Speaker 2: separated grid. To your point, it's not connected for the
Speaker 2: most part to the Western Nation interconnection, and that drives volatility,
Speaker 2: which means that batteries typically can can add a lot
Speaker 2: of value, can make a good amount of revenue.
Speaker 1: It drives volatility just because there's a smaller area to
Speaker 1: move power around, Like because if you have a big
Speaker 1: grid and there's sort of more demand in one place,
Speaker 1: you can pulse apply from one thousand miles away or something,
Speaker 1: and you can't do that in Texas because it's not connected.
Speaker 2: Yeah, said simply you can borrow from your neighbors in
Speaker 2: other areas, you can't. There's no neighbors to borrow from
Speaker 2: in Texas.
Speaker 1: In Texas, interest, right, and volatility is good for your business, right.
Speaker 1: That's it's a narbatrage business. At some level, you want
Speaker 1: there to be the swings in price. That's your margin
Speaker 1: to some extent.
Speaker 2: Right, that's right. In the deregulated markets where we're directly
Speaker 2: interfacing with the whole sal markets, volatility generally drives returns
Speaker 2: on the business. So outside of Texas, the way that
Speaker 2: this works is that you get a partnership with the utility.
Speaker 2: So it's the same operations and the same technology, but
Speaker 2: a different business model. So in these cases, we go
Speaker 2: acquire customer, say hey, customer, you want a battery, and
Speaker 2: they're like, yep, we do. We go design, manufacture, and
Speaker 2: deploy our own battery onto their home and then we
Speaker 2: give the keys to that battery to the utility and
Speaker 2: they control it and they pay us for that. And
Speaker 2: the reason that they want that is because they need
Speaker 2: capacity to offset their demand. They import energy from the
Speaker 2: rest of the Texas grid into their service territory. They
Speaker 2: pay costs for that, and they have other costs like
Speaker 2: the cost of upgrading transformers that are at the end
Speaker 2: of their life and other things that you can offset.
Speaker 1: Right, it's still the same problems.
Speaker 2: It's the same problem. Yeah, I say, in those cases though,
Speaker 2: we're not directly interfacing with the wholesale markets. Now we
Speaker 2: give them access to our software stack that allows them
Speaker 2: to do that on their own behalf. But that's the model.
Speaker 1: So you're basically you're providing the battery on the software
Speaker 1: in that setting.
Speaker 2: Yeah, it's the way we say it is. It's megawats
Speaker 2: as a service. You as a utility are looking for
Speaker 2: megawatts and you're bidding grid scale batteries natural gas peaker plants.
Speaker 2: Here's another option that is faster to deploy or cost
Speaker 2: effective and adds value in ways that centralized assets can't.
Speaker 1: So you're competing with like a natural gas power plant
Speaker 1: in that setting, Like instead of adding a natural gas
Speaker 1: peaker plant, they can just deplay on what's the order
Speaker 1: of magnitude one thousand batteries and people's houses a thousand houses.
Speaker 2: Yeah, a little more than a thousand, but yeah, yeah,
Speaker 2: like between a thousand and ten thousand compared to something
Speaker 2: like that. That's right, depending on the size of the
Speaker 2: natural gas plant. This is how we expand outside of Texas,
Speaker 2: and we're actively pursuing opportunities frankly across the US outside
Speaker 2: of text in the same business model.
Speaker 1: Again, how is that going so are you doing that
Speaker 1: outside of Texas at this time?
Speaker 2: We do not today have live deployments outside of Texas.
Speaker 2: We are working on a handful of deals that are
Speaker 2: in the pipeline, so to speak. I'll say for a
Speaker 2: few different opportunities outside of Texas. We have a few,
Speaker 2: as I said, regulated utility deals inside of Texas, and
Speaker 2: the goal is to be deploying batteries outside of Texas
Speaker 2: next year.
Speaker 1: What's something that's hard that you haven't figured out yet? Like,
Speaker 1: what do you try to figure out now? But that's
Speaker 1: not working? We haven't.
Speaker 2: You know, we figured out some level of scale, but
Speaker 2: you know, thirty or forty a day is very different
Speaker 2: from hundreds a day, right, and hundreds a day outside
Speaker 2: of Texas. So I'll say that like kind of this
Speaker 2: deployment factory concept is good from the standpoint of well,
Speaker 2: you know, if we've been a company for about a
Speaker 2: little over two years now, but not nearly the maturity
Speaker 2: where we need to be. We need to be much
Speaker 2: much at a much larger scale. We need to have
Speaker 2: hundreds of thousands of electricians in the field across fifty states.
Speaker 2: Like this is a very different thing than what we're
Speaker 2: doing today. The other thing that we're starting to do
Speaker 2: now is manufacturing. So the battery itself, the major components
Speaker 2: called eighty percent of it, we haven't manufactured ourselves today.
Speaker 2: We've been using a contract manufacturer for that. And manufacturing
Speaker 2: is no joke. This is like a hard thing to
Speaker 2: get right, as you likely know, we're already starting to
Speaker 2: do it now. We're building a factory across the street
Speaker 2: here actually in Austin and building out a team of
Speaker 2: what i'd like to think are some of the top
Speaker 2: people in manufacturing, in battery design, in facility construction in
Speaker 2: the world.
Speaker 1: So you're building a factory, I mean you're also charging
Speaker 1: people five hundred dollars for installation, which I imagine is
Speaker 1: less than the battery costs you installed. No, that's right,
Speaker 1: and presumably because it pays you back over years, right,
Speaker 1: many years. Yeah, So it's a super capital intensive business.
Speaker 1: You have to spend lots and lots of money now
Speaker 1: to get paid back over a long time in the future,
Speaker 1: which is the way utilities work. Right. You build a
Speaker 1: gas power plan and it's going to run for whatever
Speaker 1: fifty So, like, how do you finance that?
Speaker 2: Yeah, it's a great question. So to date, we have
Speaker 2: been blessed with large amount of support from the venture
Speaker 2: capital markets. We recently raised a Series C and so
Speaker 2: that will continue to accelerate our growth and give us
Speaker 2: the capital to continue to build all the things that
Speaker 2: we just talked about.
Speaker 1: How big is it? How much money did you raise?
Speaker 2: So it's a relatively large Series C. So we actually
Speaker 2: are closing out over the next few days here on
Speaker 2: a billion dollar Series C inequity funding.
Speaker 1: That's a lot of batteries.
Speaker 2: It's a lot of batteries.
Speaker 1: But I guess is it the factory. Is that money
Speaker 1: going to build the factory, to build the batteries? Is
Speaker 1: that what that is?
Speaker 2: Yep? It will allow us to grow the team, build
Speaker 2: the factory, build the batteries, continue to live out the
Speaker 2: mission of putting more and more distributed batteries on the grid.
Speaker 2: We hope to have a battery on every home or
Speaker 2: most homes over the lifetime of the company. And this
Speaker 2: is not a short lived company that ends up selling
Speaker 2: or whatever else.
Speaker 1: Like.
Speaker 2: The idea is to make a dent in the universe
Speaker 2: and to really have a meaningful impact. We will know
Speaker 2: that we have sort of achieved at least part of
Speaker 2: our mission when we see the curve of cost of
Speaker 2: delivered electricity to homeowners meaningfully go down, and we can
Speaker 2: attribute some of the work that we've done to that.
Speaker 2: That's why we're all here. That's the mission of the company.
Speaker 2: That's why we've got all the people that have joined
Speaker 2: us on this mission, and that's what we're here to do.
Speaker 1: When I think about what you're doing, I think about
Speaker 1: electrification of the economy, whatever, of our power supply, and
Speaker 1: you don't talk about it that way.
Speaker 2: Why you know, I think it's somewhat unfortunate that energy
Speaker 2: gets politicized. It's like literally science and engineering, and it
Speaker 2: shouldn't be, but it is. And I can tell you,
Speaker 2: as a not native but now adopted Texan and spending
Speaker 2: a lot of time with a lot of right leaning
Speaker 2: politicians and individuals here in Texas, that batteries and solar
Speaker 2: and renewable energy is not a like, it's not a
Speaker 2: left or right thing. It's just an economic thing. It's
Speaker 2: just a technological thing. And so we try to avoid
Speaker 2: sort of any verbiage or sort of like insinuation of
Speaker 2: politicization because it's just.
Speaker 1: Not It is notable that Texas is the leader in
Speaker 1: solar and wind power, Like I think an underappreciated and
Speaker 1: extremely interesting fact in the context of what you're describing.
Speaker 2: Right, Yeah, totally right. And I think a lot of
Speaker 2: it is because there's free market principles, which yeah, sometimes
Speaker 2: you can get you can have sort of right or
Speaker 2: left coded or whatever, but like generally.
Speaker 1: Yes, well that is right coded, and it gives you
Speaker 1: more renewable energy, which is left coded. Right, That is
Speaker 1: why it is a delightful fact pattern.
Speaker 2: Yeah, yeah, And it's like there's free market principles that
Speaker 2: allow for the cheapest marginal megawad of electricity to be generated.
Speaker 1: Which happens to be solar power in Texas, right.
Speaker 2: Yeah, but the company is not. We don't consider ourselves
Speaker 2: a green technology company a climate company. Like happy to
Speaker 2: be in that crowd too, But so anyways, we try
Speaker 2: to avoid that. That's why.
Speaker 1: We'll be back in a minute with the lightning round. Okay,
Speaker 1: we're gonna finish with the lightning round. What's one thing
Speaker 1: that your dad taught you about being an engineer?
Speaker 2: Oh? Interesting, I think to never to never sort of
Speaker 2: take the existing solution for granted. It's very easy to
Speaker 2: sort of color your solution to a problem with what
Speaker 2: has already been done, and sometimes the way in which
Speaker 2: humanity has solved the problem is the best way, because
Speaker 2: it's sort of like the wisdom of the crowd, you know.
Speaker 2: But oftentimes, in particular in sort of old school industries
Speaker 2: like energy, there's a lot of existing solutions that are
Speaker 2: not the best, especially with new technology.
Speaker 1: Next question might have the same answer, but I'm gonna
Speaker 1: ask it anyway. Okay, what's one thing Elon Musk taught
Speaker 1: you about being an engineer?
Speaker 2: Well, that's definitely a piece of it. I actually think
Speaker 2: that the thing that I learned from Elon the most
Speaker 2: is how much you can get done in a relatively
Speaker 2: short period of time if you work both hard and efficiently. Oftentimes,
Speaker 2: what I've said sort of the first part of that
Speaker 2: sentence is like, oh, you just spend more hours in
Speaker 2: work all night, and like, yeah, that's a part of it,
Speaker 2: but there's only somebody like you can only work twenty
Speaker 2: four hours in a day, and realistically you can't even
Speaker 2: do that, not for long, not for long. But the
Speaker 2: importance of speed and the ability to reduce what he
Speaker 2: would say is delete the part or delete the process
Speaker 2: is extremely valuable to solving any problem, whether it's designing
Speaker 2: a car like he and the team does at Tesla,
Speaker 2: or a battery like we're doing here, or something operational
Speaker 2: with how we're acquiring customers. Always ask yourself why that
Speaker 2: thing or that process needs to exist, and frankly, like,
Speaker 2: at least half of the time it doesn't. Just don't
Speaker 2: do it, delete it, move on to the next thing,
Speaker 2: and oftentimes it's okay. The ability to design a simple
Speaker 2: part of process is much much harder than the design
Speaker 2: of complex one. It's very counterintuitive, but simple engineering is
Speaker 2: very hard to do.
Speaker 1: Right. Deleting the key thing is just get rid of
Speaker 1: everything you can get rid of.
Speaker 2: Yeah, you may have seen online there's like this sort
Speaker 2: of the Starship's engine, the Raptor engine went from like
Speaker 2: very complex to very simple, and it's like it was
Speaker 2: actually hard to get to the simple thing. Yeah, because
Speaker 2: as an engineer and as a problem solver, you sort
Speaker 2: of start with the complex thing by design, and you
Speaker 2: have to continuously ask yourself why something needs to exist,
Speaker 2: why that system or that part needs to exist, or.
Speaker 1: Is there a way we could make it work without
Speaker 1: that thing?
Speaker 2: That's right.
Speaker 1: Yeah, what's one thing you learned about manufacturing from building
Speaker 1: a car from a kit.
Speaker 2: Oh you've dug You've dug into my past. I like it.
Speaker 1: I mean it's a public we don't know any secrets here,
Speaker 1: just on the internet.
Speaker 2: Yeah, I love it. So the kit card belt was
Speaker 2: a lot of fun. Actually it was based on a
Speaker 2: most of meat. And it's like this tube frame orange
Speaker 2: thing I've seen when you were pre before this recording stocking.
Speaker 1: Me and we call it doing research. But no, I
Speaker 1: like that.
Speaker 2: I know this is great, well researched. What I learn
Speaker 2: about manufacturing, the ability to service basically like repair something
Speaker 2: after it has been assembled is an additional hard portion
Speaker 2: of the engineering problem. And you also need to determine
Speaker 2: whether or not you even need to do that. So
Speaker 2: when you're taking a part of MOUs and be ad
Speaker 2: to put it together, like the ability to assemble and disassemble,
Speaker 2: and it's like does the screw have access to come
Speaker 2: out and need some like weird angled wrench, Like oftentimes
Speaker 2: that's sort of an afterthought.
Speaker 1: Like that thing wasn't built to be taken apart by
Speaker 1: a guy with the wrench.
Speaker 2: Yeah, right, And like actually sometimes that's okay. Sometimes it's
Speaker 2: the one way door and it's like look, if it's broken,
Speaker 2: just replace that whole module. Yeah, we take that approach
Speaker 2: to some of our hardware. But actually building something that
Speaker 2: is easy to service and take apart and reassemble and
Speaker 2: modify is very hard to do it, and you sort
Speaker 2: of need to consciously make that decision as you're designing it,
Speaker 2: and it's not something that everyone does.
Speaker 1: What's one DIY project you regret taking on?
Speaker 2: So you used to living in southern California. We my
Speaker 2: wife and I actually like flipped a house there and
Speaker 2: we lived in it, well we while we flipped it.
Speaker 2: That was the first mistake was doing the live in
Speaker 2: and for at the same time piece. The second was
Speaker 2: I am very bad at drywall, like extremely bad. I'm
Speaker 2: not like I think I'm like okay at carpentry and
Speaker 2: plumbing and you know, I think i'd say decent and
Speaker 2: electrical at this point, really bad at drywall, very hard
Speaker 2: to make it look right, the like finesse and artisanal
Speaker 2: nature of like mud on drywall impossible to get right.
Speaker 2: I look up to people that can do it. I
Speaker 2: messed it up big time.
Speaker 1: How'd you do on the house?
Speaker 2: The house was okay, the drywall there's I've now learned
Speaker 2: why people put texture on walls. It's like to hide
Speaker 2: a lot of that kind of thing. Uh, and that's
Speaker 2: what I ended up doing, So ended up being like okay,
Speaker 2: sort of but.
Speaker 1: Some kind of like la groovy deco stuff. It's like, no, no,
Speaker 1: it's lady's right, stop.
Speaker 2: Exactly.
Speaker 1: Justin Lopas is the co founder and COO of Base Power.
Speaker 1: Please email us at problem at pushkin dot fm. We
Speaker 1: are always looking for new guests for the show. Today's
Speaker 1: show was produced by Trinamanino and Gabriel Hunter Chang, who
Speaker 1: was edited by Alexander Garretson and engineered by Sarah Bruguerrett.
Speaker 1: I'm Jacob Goldstein, and we'll be back next week with
Speaker 1: another episode of What's Your Problem.