Robert Piconi, Energy Vault
Today's guest is Robert Piconi, CEO and co-founder at Energy Vault, which develops and deploys utility-scale energy storage solutions.
The company's offerings include proprietary gravity, battery, and green hydrogen energy storage hardware technologies supported by a technology-agnostic energy management system software layer. They can deliver short- and long-duration energy storage with the goal of helping carbon-free energy be as cost-effective as possible at all times of the day and night.
Robert and Cody have a great conversation about why energy storage matters, the different types of energy storage today, and some unique insights from Bill Gross at Idealab that led to the earliest version of Energy Vault. They talk about the rapid iterations Energy Vault has done on its gravity storage model, and how they've raised capital. Energy Vault went public via SPAC one year and one day before Rob and Cody had this conversation. It's incredible to see such an infrastructure-heavy company grow and iterate so quickly. Enjoy the show!
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Cody Simms
Robert Piconi / Energy Vault
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Episode recorded on February 15, 2023.
In this episode, we cover:
[2:41] Robert's background and interest in the energy sector
[6:55] Challenges of energy storage
[10:19] Energy Vault's history as a company and exponential growth
[15:16] The energy storage space broadly and its shortcomings
[19:09] How Energy Vault landed on its solution and a description of its tech
[26:17] Feedback from customers and the evolution of the company's tech
[29:04] An overview of the company's EVX platform
[30:55] Differences between long vs short storage
[34:36] Energy Vault's latest project announcements
[42:25] Tailwinds from the Inflation Reduction Act
[45:45] The 24/7 carbon-free energy market
[49:40] Talent and partner opportunities with Energy Vault
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Jason Jacobs (00:01):
Hello, everyone. This is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
Welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms (00:40):
Today's guest is Robert Piconi, CEO and co-founder at Energy Vault, which develops and deploys utility scale energy storage solutions. The company's offerings include proprietary gravity, battery and green hydrogen energy storage hardware technologies supported by a technology-agnostic energy management system software layer. They can deliver short and long duration energy storage with the goal of helping carbon-free energy be as cost-effective as possible at all times of the day and night. Robert and I have a great conversation about why energy storage matters, the different types of energy storage today, and the unique insight from Bill Gross at Idealab that led to the earliest version of Energy Vault.
(01:27):
We talk about the rapid iterations that Energy Vault has done on its gravity storage model, and we talk about how they've raised capital from and/or partnered with some of the world's leading industrial companies along the way. Energy Vault went public via SPAC one year and one day prior to the day that Rob and I had this conversation. It's pretty incredible to see such an infrastructure-heavy company be able to grow and iterate so quickly. I hope you enjoy learning about energy storage. I definitely did. Robert, welcome to the show.
Robert Piconi (01:57):
Hey, thank you Cody. Great to be here.
Cody Simms (01:59):
So Robert, I am incredibly excited to learn more about Energy Vault. When I was first starting my own climate journey, which was not long ago in 2020, I came across a video that Bill Gross from Idealab, which is I know where Energy Vault got its start presented at Upfront Summit, which is this large gathering of VCs and entrepreneurs and folks in Los Angeles where you and I both reside. In that, he introduced the concept of physics being a dominant force in climate innovation in the 21st century. Basically, the 20th century was about chemistry, was about burning things. The 21st century is about physics.
(02:41):
In that, he introduced all these concepts around storage and how when we think about renewables, we need to think about the cost of producing the renewable and the cost of storage together to really get a holistic picture of how renewable energy is going to be used and deployed. So with that background, I hadn't fully followed the Energy Vault story. Then next thing I know, you showed up on my radar. You're now a public company and are launching mega projects around the world. Honestly, my jaw dropped a little bit about the speed of execution through which the company has now been. I wanted to start, A, you should introduce yourself, but take us through the journey of Energy Vault from the inkling of idea in Idealab to where you are today.
Robert Piconi (03:26):
Maybe I'll start with myself, maybe a brief introduction. I started my career in oil and gas actually in more I guess, quote, unquote, "fossil fuel" with Amoco and British Petroleum. So this was back in the '90s and I was actually as a part of that, part of the largest industrial merger to date, 70 billion when Amoco merged with Petroleum. So started my career there. That followed, I had done an internship my third year of university in London with Mobile Oil. So that piqued my interest in energy, which is then and remains, I think, the largest GDP sector in the world. So I was fascinated about that and really starting a career there and getting a lot of global experience. So back in the '90s being international and global wasn't so common. Companies were expanding, and then shifted my career late in the '90s as this thing called the internet started to take off and technology really blossomed. I was just fascinated by software and networking in particular and how software itself as a platform could transform business models and businesses themselves.
(04:36):
So I actually jumped in, I did some graduate work at Northwestern Kellogg's MBA program there in Chicago and then shifted and went in technology with Bell Labs actually in Lucent Technologies, which at the time was one of the largest network infrastructure players. It was just fascinating, I guess, that learning through and really was some of my first roles running global businesses as well as understanding networking and then evolving into running companies post that. So post another transatlantic merger Alcatel and Lucent, so had two in a row, then started running businesses and companies, did work in healthcare diagnostic imaging, so another very interesting sector in industry. Really, during that time, that's when I met Bill Gross. I actually met him because he was recruiting someone for CEO of a company called East Solar at the time, so we met. That timing didn't work out 'cause I was just about to go to Switzerland, doing some work for Berkshire.
(05:33):
But that's when Bill rekindled my interest, not only in energy, of course, but in renewable energy as a sector, and I think really opening my eyes to the problem that needed to be solved and the urgency secondarily, just the urgency of getting it solved. Bill who you know and just a great innovator and really ahead of the curve saw the issues with storage that was coming. So that introduced me to a collaboration with Bill over the next seven to eight years while I was still doing things in my career iterated with Bill on different ideas and eventually, led to this concept he had of solving the energy storage problem in a more non-traditional way with an innovative idea. Not a lot of people know this, but we can actually generate electricity very cheaply with wind and solar today now, in fact, much cheaper, 75% cheaper than the cheapest fossil fuel at one to two cents a kilowatt-hour. But the problem is storing those same electrons is very, very expensive, let alone difficult to do sustainably.
Cody Simms (06:36):
We almost take for granted, Robert, that oil is counted in barrels, right? That's the unit of economic for oil and that naturally connotes portability and storage in its name, whereas with renewables, it's not necessarily inherently built into the solution set.
Robert Piconi (06:55):
Exactly, and that's where I would say, and you mentioned barrels of oil. I remember back in the day when I was at Amoco and British Petroleum, they used to say there's no problem that $20 a barrel couldn't solve. Look where we are now, just a billions and billions of dollars being made with the energy crisis we've had with the Russia and the Ukraine. Again, now countries really understanding they really need independence. They really need energy independence so they aren't trapped in a sense for what's so important for our everyday lives. Really, for me personally, just to share, Cody, with this aspect around having, as you build your life, and for those of us that have families, I have eight children, so I have a large family all from the same woman, you have to say that these days, and as you think about your life, the evolution and legacy and you, it really became very evident and important for me from just a pure purpose perspective to help the planet get healthy and especially understanding where the trajectory of the world was on.
(07:57):
As you get into understanding solar and wind generation and understanding, "Okay, why if it's so cheap today, why aren't we just deploying it everywhere?" Well, it's intermittent and it is that equation that you've referenced, Cody, before about you need to add the cost of the generation of renewable plus the storage. Unfortunately today, storage is costing a factor of 10 to 15 times the cost of the generation to actually store electrons, so massive problem to solve. That's when Bill reached out about this new concept he had combining, of course, software. So if you know anything about what Bill's done and his innovations that he creates, software is always fundamental. Utilizing software to automate a process that utilizes gravity for what is today the largest form of energy storage, which are these pumped hydroelectric dams, essentially, that store energy and the potential energy of water at height that then will traverse down and turn a motor and discharge electricity and then get pumped back to the top. So today, that's the predominant way that we store terawatts of energy.
Cody Simms (09:05):
We'll come back, and I'm going to unpack the current storage landscape before we fully get into even how Energy Vault has innovated on top of that. But just to give a sense of timeframe, first of all, thank you for giving your background. I love hearing entrepreneurs working in the climate space, the energy space who have such a diverse background as you because I believe that that cross-functional thinking and interdisciplinary thinking is what helps unlock new solutions.
(09:33):
So the fact that you've worked in telecom, that you've worked in internet, that you've worked in healthcare, that you've worked in energy a long time ago, all presumably have informed your ability to think about new ways of solving the storage problem. But it seems like the company is really only five or six-years-old. You started in maybe 2017 or so in Idealab and you went on a financing tear from incredibly large global companies, SIMEX Ventures, SoftBank Vision Fund, Saudi Aramco, and then ultimately were part of the wave of companies that found themselves public through a SPAC. Maybe walk us through the iteration history of the company, then we're going to get into the meat of the subject matter.
Robert Piconi (10:19):
It has moved extremely quickly and having been about 31, 32 years out in the market in my professional life, I have not seen anything move this quickly and innovate this fast, but also is so important for the world. It's so important that we accelerated. So we did start in mid-2017 just with the concept and iterated that a bit toward the end of the year before forming the company. So we actually officially formed the company in November 2017 and really started in earnest with few of us as you do in 2018 and built right away up the concept of ... It's amazing iterations we went through of what started as even a what looks like trays of water, like a parking garage of trays of water that would traverse down. Actually, that's where the concept was when I started with it, and then to looking at steel cylinders to concrete cylinders.
(11:15):
So again, with this concept of gravity and got it to a point which ended up with a tower crane. Enough there economically, we felt like, wow, this is something that we believe with the integration of software taking a different approach in material science on what were concrete blocks and actually composites and the use of gravity and some sophisticated structural engineering, we decided to create the company and started with a one quarter scale prototype to prove the basics and then went right away to commercial scale. That's where SoftBank entered in our Series B, and that was the beginning of '19 is when a discussion started, and we closed that in July 2019, which at the time was the largest energy storage commitment, I think, made 110 million for a Series B.
Cody Simms (12:04):
This is serious. I don't know if it's steel on the ground, I presume steel on the ground with your cranes like real physicality to what you're building a year-and-a-half in, which is to me, just pretty incredible progress.
Robert Piconi (12:15):
I'd say our CTO is super experienced, great compliment to Bill, because he is been out building things. Not only is he innovative himself, his name's Andrea Pedretti and he's very unique. I've worked across three major industries, and I think uniquely he brought a breadth of domain but also depth in those domains and everything across the material science spectrum. He was trained as a structural civil engineer out of ETH Zurich, which is one of the best universities from a science perspective in Europe and also knew very well cost of materials just by heart. So making decisions on which solutions would work, which ones were cost-effective, it was just amazing. Him and Bill iterating things moved lightning quick, so that definitely helped. I think if we looked at the magnitude, 'cause people asked us, "Wow, why so much money at this stage?" But if you look at the problem we're solving and how massive the market is and the potential, you could argue that wasn't even enough, that we could have even taken more.
(13:20):
I think that was appropriate for us to get started, get the commercial scale prototype. So we went this five megawatt utility scale. If you really want to convince a public utility to invest in your solution, you better have something that's proven, meaning interconnected to a live grid. So that's the other thing we did is we didn't just build it and power and discharge on a microgrid or our own off-grid, we actually interconnected to the grid. That's important for a lot of reasons, both technically and operationally that we wanted to prove out, and so we did that. When that system was up and running, we had also in that process iterated the design to a new form factor, and that brought us forward to 2020 with the entry of Saudi Aramco. So we announced this new form factor called EVX, which is more looks like a standard building and can be built out in a modular way, raised the Series C. So we added another 105 million essentially on the balance sheet while having-
Cody Simms (14:18):
Saudi Aramco is the biggest energy company in the world, I believe. Is that correct?
Robert Piconi (14:22):
Right, we had the entrance of following the SoftBank, also BHP, which is the largest mining company, and going into the IPO, then Korea Zinc, which is the largest non-ferrous metals producer, the world, so zinc, silver, indium, which is a rare soft metal and lead, they're the largest in the world and they have their operations in Australia. So having those strategics that invested because they also have to make their own energy transition and address the need for, in their case, longer term storage, they also invested in the IPO. So that essentially in four years, Cody, we went to market to the New York Stock Exchange at a valuation north of a billion dollars, so it did move quickly. It was been an amazing journey and what an amazing first year. By the way, yesterday was our one-year anniversary-
Cody Simms (15:08):
Oh, congrats.
Robert Piconi (15:09):
So February 14th, Valentine's Day was actually our IPO date. So it's great having this discussion right now.
Cody Simms (15:16):
Congrats on that, obviously. I think we have now fully established your credibility and credentials to have this conversation for our listeners. So let's dive in to understanding the root of the problem here. So unpack for us the energy storage space broadly. As I understand it, energy can be stored chemically through batteries. It can be stored thermally, which is the whole heat pump concept of hot or cold storage is essentially an energy battery, or it can be stored mechanically, which is how most storage, I think at grid scale, utility scale today is done through essentially pumped hydro or moving water up and down a giant mountain. What are you seeing in each of those that you all thought, "Hey, I don't know that any of them are ever going to get to the point where that solution plus the cost of generation combined are going to be lower than the cost of fossil fuels." What were the limitations in the existing storage systems that are out there?
Robert Piconi (16:17):
It's a great question. If I go back to 2017, when you looked at the landscape, there was pumped hydro out there mostly and people were just beginning to deploy a lithium ion for example. So let me start chemically. Let's talk about chemically, we looked at that technology and could have invested in some longer term roadmaps for different solutions that were alternatives. One of the main issues you have with lithium ion, of course, is it degrades over time, so that's tough on economics. Also, it's appropriate for short duration but not long duration because again, for the same issue it degrades, and it's not a technology that's suited for the longer duration. Also, environmental was an important fact for us, so actually having a system that would be sustainable. So we went into this with having not only great innovation, but it better be economical even without subsidies, have something that people would invest in because it makes sense economically, so that's fundamental.
(17:16):
Then it had to be sustainable for us as well. So with those three main criteria and I'd say added to that time to market, so we didn't want to put something in a five-year or 10-year roadmap that would need to be proven and have a lot of risk 'cause we really believe then and even more now as we've seen with these severe weather events that this is a critical problem to solve now. So if you think about that criteria, the chemical batteries, lithium really didn't meet that, and it was very focused on short duration and there weren't any other real chemistries out there. There was a lot of ideas and things that needed to be proven, and the time aspect was a problem for us. Let's go to the thermodynamic processes you mentioned or compressed air, liquid air, things that compress and expand and therefore, store and discharge electricity.
(18:03):
The main issue there were economics were cost, but also efficiency, meaning you hear the term roundtrip efficient, meaning for every unit that you store, how much do you actually discharge? Whereas, chemical batteries actually have a high efficiency between 85 to 90%, so about 86, 87%,compressed air, liquid air, these thermodynamic processes have a roundtrip efficiency of between 50 and 60%, so meaning you have that loss. You have anywhere from 40 to 50% loss for every unit that you store. So that was a problem both economically and for different applications. Pumped hydro, fascinating if you have the mountains, if you have the water, and most all the good places have already been built, but again, you're using a lot of concrete, so that's not good for the environment. They disrupt wildlife ecosystems. So we-
Cody Simms (18:51):
The concept of pumped hydro, just 'cause it is, I think, the largest legacy storage system out there, if I understand it, the concept is when you have excess energy, you pump the water to the top of a mountain and so that then when you need to release that storage, you release the water and you have turbines that the water runs through and helps generate energy. Is that correct?
Robert Piconi (19:09):
Exactly. It's important to understand that because that became the basis of what we chose to go to market with. Essentially, as we looked at that landscape, we believe that as more renewables we'll get deployed on the grid, there was going to be stronger demand for longer duration storage of renewables. Lithium ion clearly was going to serve the near-term short duration. So we chose a solution and Bill was fascinated, I think, looking at just the physics of pumped hydro, and there's a lot of good there, because it's essentially it's unlimited storage potential. It's all there when you need it, don't have to use it for three months and it's still there, it doesn't degrade. But issues to solve with it that I mentioned in terms of high cost, concrete disruptive wildlife ecosystems, Bill looked at this and said, "What if we could leverage gravity?" Which is not a new idea, it's the law.
(20:00):
So we aren't creating something new, that's the basis of most of the storage and have an ability to essentially build it anywhere or anywhere you could build with some height. So obviously you need a minimum of about 20 stories to make it economical while addressing the economics of it and avoiding concrete, so we used material signs to avoid for our composite blocks, the use of concrete we can use soil and waste materials, even better, coal ash and other things to make these blocks. There's a very interesting both economics and sustainability aspect there and essentially, come up with a way with a system that of lifting and lowering these blocks in a structure that can store energy and for long durations at very good economics. So that's what we came up with is we looked at the landscape and be able to move because of existing tech, we're leveraging tech that exists today, motors and inverters, gravity building a structure, and most of that's local.
(20:53):
You can do most of that local. One of the problems with lithium ion is these things come from three or four countries in the world and look at what happened with Ukraine and Russia, and they were feeding most of Europe with power. When that got disrupted, what do you do? And it's mission critical. So that's why we ended up where we did also in the urgency of moving quickly and getting to market, initially with obviously that's a software platform that would orchestrate all of this autonomously. So that's the other economic factor and using that software. Of course, since then, we've leveraged that software platform to do a lot with energy that I know we'll talk about here. But that's how we came up with the idea and went to market given the set of technologies that were out there today and really addressing this very near term and urgent need that we saw.
Cody Simms (21:37):
I know the form factor has changed, but referencing the initial insight that if people want to go back and watch, and I totally recommend you watch this 2020 Upfront Summit video that Bill Gross gave on his background and energy, the form factor that he shows there basically looks like cranes sitting in the middle of a bunch of towers of Jenga blocks, and basically building these towers up and down based on whether you add blocks to the tower when you have excess energy. Then when you need to leverage that energy, the crane grabs a block and drops it down to the bottom, which helps-
Robert Piconi (22:10):
Yes.
Cody Simms (22:11):
... presumably it creates friction that generates electricity. Is that the general concept?
Robert Piconi (22:16):
That's exactly it. That was our EV1 tower before we went to the more modular building, but essentially it was like building and deconstructing a building every day. So we would take that excess energy, stack these blocks in a very specific way, and then the crane, it was fascinating. It was a six-arm crane, almost looked like one of the transformers, something from the future, and it would lower those blocks. We built that in Switzerland, connected it to the grid and proving that out and having the software orchestrate all that capability at scale really excited a lot of our customers and investors to take this further.
Cody Simms (22:52):
To your point, cranes, blocks, cables, pulleys, these aren't hard tech, it's the insight to build it in this way. Then I think the real technology comes into play. Sure I'm discounting the amount of tech involved in the initial hardware setup, but the real technology comes into play from a software perspective in terms of how to optimize the build and release of these towers according to energy supply and demand. Is that accurate?
Robert Piconi (23:18):
Yeah, Cody, and we get the questions and we got it even frequently as we were preparing for the IPO from investment groups that want to test on, "Hey, what's the IP here and is it protected? What's the IP mote?" Was the term they used, and we got the question all the time, "Why didn't somebody think about this before?" I want to leverage something you said earlier. You mentioned about entrepreneurs and especially ones that come from diverse backgrounds and they think about solving problems differently because of that experience from different sectors. Exactly was the case here where you have an integration of multiple technologies to solve a problem that if it was easy, believe me, it would've been solved earlier. But to address both the economics, do it sustainably and the integration of what is very sophisticated civil and structural engineering especially, we have a video on our website of the system, the new system EVX, and we're building it outside Shanghai.
(24:13):
The very first one in the world will actually be, Cody, the first long duration energy storage at that scale of anywhere in the world except pumped hydro. But if you think about the integration of the engineering side, the material science that allows us to use waste materials or just dirt instead of concrete and combined with the software in which automates that entire process, which also obviously saves a lot of money, it's pretty amazing how that came together. By the way, if it was remotely easy to do, there'd be more than one company doing it and did you know that there's four to five other gravity energy storage companies out there and none of them have progressed past government or seed funding? You know 'cause you're in the business. To get something to scale where you aren't reliant on an existing mine in the ground, for example 200 meters, et cetera, to be able to make that investment and have something that's scalable and hit economics, it's a tough equation to solve for. So it is not an easy thing to solve.
Cody Simms (25:08):
We're going to take a short break right now so our partner, Yin, can share more about the MCJ Membership option.
Yin Lu (25:15):
Hey, folks. Yin here, a partner at MCJ Collective. Want to take a quick minute to tell you about our MCJ Membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have since then grown to 2000 members globally. Each week, we're inspired by people who join with different backgrounds and perspectives. While those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change.
(25:44):
Some awesome initiatives have come out of the community. A number of founding teams have met, nonprofits have been established, a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. So whether you've been in climate for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Cody Simms (26:17):
All right, back to the show. Maybe walk us through how you went from this first prototype instantiation, these Jenga towers, for lack of a better term to the current EVX model, which really looks more like, I think, a building with a bunch of elevators on it from what I've seen.
Robert Piconi (26:34):
This came about because of feedback from our customers that were looking at this system and it's so important it's fundamental. In our company, we have a chief commercial and product officer, Marco Terruzzin who joined us after just an amazing career in China with companies like NG, like STEM, like E.ON, the largest German utility. So just tremendous experience and just very focused on the customer and that we're being a customer-driven organization, and not just thinking our ideas are great because we think we're great, but actually having the customers determine what we actually develop and deliver. So people loved that tower, that Jenga block building tower. For a lot of reasons, they liked the sustainability aspect. They liked the cost aspects of it. They liked the fact that it could be built locally and it was very scalable, but they gave us two areas of feedback that were important.
(27:25):
One was around, it's an external facing environmentally-exposed tower and it's a crane, it's a six-arm crane and while we think it looks cool, we don't necessarily want that in our backyard or we may have issues on permitting with that. So they asked us, "Could you make it shorter?" We have limitations on height in a lot of places. So we took that to heart and came up with something that was just essentially shorter and a more modular type of building. So we were able to reduce the height about 40% required to achieve the economics. The second feedback they gave us was, "Look, we're being forced to deploy lithium ion batteries. Could you make your system instead of just being built for long duration and have that limitation, could you make it more modular where decoupling energy and power?"
(28:11):
Meaning giving us the ability to determine, "Here's the power we want to discharge and here's the storage capacity or over how many hours we want to discharge it and you can just design it to that." So that led to us coming up with the EVX platform, which now a customer can tell us in China what we're building 25 megawatts over four hours they want to discharge, that's 100 megawatt hour, or they might want to build something that's 100 megawatts over 10 hours, so for a full 1000 megawatt hours or a full gigawatt hour of storage capacity and we can just design that and build that out in the system. We took those two areas of feedback and that's what led to the EVX platform and now getting built in China, which is an important market, and also in Texas with Enel Green Power, which is the largest global independent power player in the world.
Cody Simms (29:00):
Can you describe the form factor of the new EVX platform?
Robert Piconi (29:04):
Sure. It's essentially built like a building, and depending on the power and the energy storage capacity, those two factors is what determines the footprint of the building. So if you want a longer duration storage, that will mean it'll be built down one axis of the building and longer. If you want a high power component, it will be built down the other access, think about a square or a rectangle. Essentially, we have something that achieves an energy density, of course, much better than wind or solar in terms of density, but not quite as dense as like a lithium ion battery installation. So it's essentially building a structure that has a lifting system. So think about a vertical freight elevator that's moving these blocks up and down through the building. Then when the blocks get to the top, there's trolleys that move them left to right. So it's a system of lifting systems and trolleys that are moving along essentially rails that will move those blocks side to side. So that's how the system functions, of course, all with fully automated, so no human intervention, so all automated with software.
Cody Simms (30:11):
You said it in a much nicer way than I'm about to say it, but getting some NIMBY feedback on your initial design could have been a blocker for the company, but again, figuring out how to innovate and take that, "Not in my backyard," feedback and build a new form factor that it sounds like not only accomplishes the line of site physicality concerns for local populace, but also broadens what you're able to accomplish from a long duration and short duration storage perspective has ended up actually forcing you to innovate in a positive way. Let's talk about the difference between long and short duration storage briefly. You've mentioned it a few times, but we haven't fully defined it for anybody who's listening and may not understand what that means.
Robert Piconi (30:55):
A lot of the initial need for storage was built out. In some of the more progressive in areas like in the United States, California was a leading market in Texas because of the presence of the sun and the push by local governments to shift to renewables. The initial need was to solve for these peak demand or peak consumption periods. For example, when the sun would be going down, people return home from work in the evening and they start consuming electricity, right? You're washing clothes, your dishwashers are running. You're making dinner, so all this, the lights are on 'cause you have people home. Essentially, the first storage and short duration was in this two to four-hour window in the morning and also in the evening, and a lot of it was really time shifting. There was a merchant market that even shift for one-hour quick storage that was looked at for just high-demand peak areas when it couldn't be met by the existing power generation.
(31:51):
So that's short duration and that is, by the way, what's getting deployed in earnest today. Self included and our company included, we had thought long duration might get here a little sooner, but the intensity right now on this two to four hour market remains very strong. Of course, things like the IRA, the Inflation Reduction Act and the incentives are accelerating people's investment there. As you get into longer duration, what's the use case? What's the applications? What are the applications there? Generally as the grid gets more saturated with intermittent renewables, so wind or solar year by definition going to need longer duration storage. But the use cases there are, for example, if you want to power industrial processes that require 24/7 power, think about a desalination plant that makes critical drinking water for large, large populations, they run 24/7 and they need to run 24/7 also to be efficient.
(32:45):
So to do that, you need power through the night and the sun goes down, wind will go better at night, but it's unpredictable, so you need that storage, so any type of industrial process. Also, green hydrogen, so which is very topical now, hydrogen as a storage medium is interesting and can fit certain applications like what we announced, I know we'll talk about it with PG&E in California. To make green hydrogen, you can take solar and run electrolysis, so you buy an electrolyzer. But to keep that running, you need longer duration at least eight and probably between eight and closer to 12 hours of storage. You can also make green ammonia the same way. So given the demand and the potential applications for hydrogen, that's another important use of long duration storage. Same to make sustainable aviation fuel, so you've heard the term SAF, the sun's amazing, 'cause the sun can power our planet over 1000 times for the world's need.
(33:43):
The problem is it doesn't shine everywhere and you have to store it. A lot of time it's producing in the mid-part of the day is not when the highest demand is, so again, hence the need for storage. But to make sustainable aviation fuel, you can make it from the sun through concentrated solar power processes. You can also make it through a biomass waste to energy that can be fueled, for example, by green hydrogen or other renewable sources. So there's applications for long duration. Then you get into ultra long duration for multi-day storage that can be, for example, what in California some of the utilities have to plan for if there's a fire, for example, and they have to shut things down, they're called plan safety power outages. Some of them are unplanned, of course, when a fire comes up or if there's a storm and you may need 48 hours or even up to 96 hour, and that's where other forms of technology can come into play.
Cody Simms (34:36):
You mentioned hydrogen, let's talk about some of the recent projects that you all have announced. I've seen just press release after press release of multi 100 million megawatt hour partnerships that you either have inked or are in MMoU on, some of them battery storage combinations with your system, some of which are large pure gravity systems, some of which have a hydrogen component to them. Maybe walk us through how you think about these different technologies. Give us some of the examples of some of those projects that you are pursuing and how you prioritize accordingly.
Robert Piconi (35:12):
I'm going to start with the last question you made, which, how do we prioritize? How do we think? 'Cause that's driven our strategy and what you've seen in the announcements. So it all starts with us listening to the customers. So for the same reason that we shifted from our EV1 tower, which is pretty cool looking, the six-arm crane, to the EVX platform, more, quote, unquote, "boring looking," but much more efficient and economical, for those same reasons as how we've evolved the utilization of our software platform. That starts with solving actual problems customers have. To do that, what's interesting is, is we've had discussions with customers with gravity because that was the first thing that we were building with our software. Uniformly, those same customers had different needs and different durations.
(35:55):
So as we understood these needs from them and they loved what we were doing in software, and it became very clear to us that to really be a partner to these, whether it be utilities or independent power players, in listening to them, we wanted to leverage this software platform to do more to solve their problems, which we took actions to ensure we could meet. That started with not only ensuring our platform was being developed to manage the gravity system, but could also manage the coexistence of different storage mediums and different generation, so whether wind or solar, and even fossil. So we had that in mind from the very beginning. The other accelerator we did is in October 2021, a lot of people didn't really take so much note of this, but we hired a very experienced team that was probably one of the top integrators of storage from 2010 to 2017 before they were acquired by Wärtsilä. The company was Greensmith Energy, and we hired some folks that were in senior levels there and part of the founders.
(37:03):
They joined us to help us accelerate the development of that software and really so we could be more valuable partners to our customers, also so we could be more valuable as a company, meaning to be able to address different segments of the market, meaning it increases your total addressable market, that's got to be a good thing in a market that's growing at double-digit keggers compounded annual growth rates. So what that led to then is us not only at the beginning of the year post our IPO, exactly one year ago, on Valentine's Day, we announced our initial gravity system, so starting in China, by the way, so the first EVX 25 megawatt four hours in China. Why did we start even there as one of the initial locations? China has what's called their 30-60 plan, which means that they're going to be increasing greenhouse gases until 2030 and not be able to get to net carbon new neutral until 2060.
(37:57):
Remember, there's no walls around in these countries. Those greenhouse gases pollute the entire planet and heat up the planet causing the issues we're having. China produces over 12,000 tons of greenhouse gases a year. That's more than double the next country, which by the way, is the United States. China's bigger than the next seven countries combined. So if we aren't addressing it there, the world's going to be in some trouble if we can't get storage in renewables. So we're building outside of Shanghai. Since then, they've announced up to six gigawatt hours of gravity storage projects that they're going to be doing, these are in combination with some of the public sector there, the SOEs, the stayed on enterprises and other even outside groups like Singapore Energy for example, that invest in China. So that's how we got started with gravity. We also announced with Enel Green Power, a gravity system in Texas. Then through the year, and this I think cut people by surprise, to your point, is we started announcing large shorter duration systems with lithium ion.
(38:57):
People were like, "Wow, Energy Vault, we didn't know you had the capability. We all know you for your gravity." We like to speak about our strategy, Cody, through our customers, meaning it's great for companies to come out because energy storage is so new, to come out and say, "We're going to go do this." Or, "Here's what we think and we're going to go develop this system and eventually, it's going to be operational by 2025." But to have us speak about our strategy through our customers and announcing deals with some of the largest players in the world, we announced with Jupiter Power, which is the largest player in ERCOT in Texas. They're owned by BlackRock now. Nevada Energy, one of the largest western utilities, we announced 440 megawatt hour with them. Wellhead, which is in California, another shorter duration project, 270 megawatt hour and some things in Australia, even 500 megawatt hour with Meadow Creek there.
(39:48):
People saw this and it's like, "Wow, we're actually doing both short and long duration. There's no other energy storage company doing that, that's actually working in both realms." Then I culminate this with in January what we announced, we actually announced two things. We started announcing Pacific Gas & Electrics for the largest California utility with a hybrid system and their application, what they were trying to solve for. They had three RFPs through a cycle because they only had fossil fuel solutions to solve for it, is they wanted 48 hour multi-day storage as a backup in case there were wildfires, or if they had to do a shutdown of the grid for any reason that they would have a backup. What we brought to the table and they had an immediate what's called grid forming and black start capability need that we combined a small portion of lithium ion with a long duration green hydrogen system that included a fuel cell and a tank.
(40:44):
We have the expertise. We have some former people from SpaceX, for example, that had to deal with this in what they were doing. So we have a tremendous engineering team that designed this system for them. So they have an integrated lithium ion green hydrogen and will be doing 48 hour up to 96 hours. So 700 megawatt hour of storage in design capacity in Calistoga up in the Napa area where they got really hit hard from the fires before, and it's the largest green hydrogen project announced in the United States. It's not way out there. It's got to be up and operational in 2024. If you think about it, we announced long duration, short duration, and then this ultra-long duration using green hydrogen all with our software platform. Then, of course, we were forced to announce in January the uptick in revenue for Q4 well above almost 3X in Q4 what we had been guiding the market as a public company. So it's been just a tremendous first year for the company.
Cody Simms (41:45):
Rob, hearing the work that you're doing with PG&E helps me with my startup investor hat on. We run a venture firm at MCJ Collective. It helps me to realize how easy it is to put something in a box, but in how in reality most things blur the lines of those boxes. In particular, the box I would put Energy Vault in is it's a climate mitigation company. It's helping to create storage to increase the growth and demand of renewables. But you just outlined an incredible use case of how it's also an adaptation resiliency play to help our world be more resilient in the face of wildfires by continuing to provide energy when the grid is otherwise faltering.
(42:25):
It's a good reminder, I think, to all of us that real life doesn't sit in boxes as much as we try to put labels on things. I have a couple of more questions for you. One, in addition to all the progress you just laid out, the other big thing that fell in front of you in the last six months is the Inflation Reduction Act, which I presume has a ton of tailwinds for you, whether it's in lithium ion batteries, whether it's in hydrogen, and I'm sure there are other parts of grid resiliency in there that I may not even be fully aware of just 'cause I don't tend to work at the heavy infrastructure level as much. Maybe lay out for us how you expect that piece of legislation to impact the business to the extent you can talk about it.
Robert Piconi (43:05):
I will start by saying it is a critical accelerator, I think, for the market. It was designed, of course, to encourage the investment and it's having exactly that impact, and I think the rest of the world is looking at that as a framework potentially, I know in Europe. So it has a few different ways I think it's going to really help support the acceleration of renewable deployment. First of all, one of the things it's addressing is the reliance on imported storage mediums, okay, so lithium ion. It encourages domestic manufacturing through various, both ITC, so investment tax credit incentives, but as well as advanced manufacturing credits for organizations. So what that's resulting in is an acceleration of development and build out for local battery manufacturing. That's not just for, by the way, storage, but for electric vehicles and things where before we were relying on things that come primarily from China actually for that.
(44:01):
So there's a tremendous incentive there and it's up to 40% of benefit that you can have both in terms of tax subsidies and actually investment credits, and so that's one aspect. The other one is it encourages the development of non-lithium-based technologies because for the downsides of lithium ion that we know in terms of, it degrades and there can be safety issues if it's not managed properly. So it encourages that for energy storage, absolutely. But it also has incentives to encourage not only local jobs, but in any economically-distressed communities. So you'll hear the term energy communities. If you qualify as a energy community, you'll get another 10% benefit. If you have a certain amount of local domestic content, there's another benefit. So it has benefits across the board and for us, if we're going to own systems and sign long-term power purchase agreements, PPAs or tolling agreements, we have tremendous benefits.
(44:57):
Even if we're providing, for example, a gravity system that can be done 70 to 75% with local materials, that has a benefit and it's non-lithium, so there's benefits there as well. Most of the owners of the projects are the primary beneficiaries, but even though what Energy Vault is doing is not only taking advantage of what I just said, but if you look at domestic battery manufacturing, we're not only going to be a beneficiary because we can buy locally, so as a customer of them as a supplier, meaning battery manufacturing, but we're also participating. So meaning we aren't standing back and say, "Okay, we're going to just buy these batteries cheaper and locally when they're ready." We're actually a part of the ecosystem and there'll be more coming out publicly on this how we're thinking strategically about that area and it's development and participating in it.
Cody Simms (45:45):
Thanks, Rob. Just incredible to hear all the different potential impacts. You set up my last question, which is you mentioned the power purchase agreements you're entering into. As I understand it, power purchase agreements are typically annual contracts around certain megawatt hours of renewable energy. We're seeing requests from organizations like Google to start to have access to energy that's 24/7 carbon-free energy. As I understand it, a big part of that, which is often unspoken is the fact that if you're leveraging grid-scale energy you know when you're pulling from renewables, but is the energy that you're using when it was stored energy also stored from a renewable source versus stored from a fossil fuel source? I'm curious how you see that side of the market evolving and how you see purchase contracts potentially evolving in the coming years as that awareness continues to take hold with people.
Robert Piconi (46:44):
Look, it is an important distinction and even I think the SEC's even getting involved, in what companies are saying and qualifying around their ability to develop their own sustainability and carbon footprint and where they are in that journey. So absolutely to qualify, it can't just be stored energy, even if it's stored in a sustainable way, those electrons have to be generated from a renewable source. I think anything we're doing to shut down fossil fuels, I'm a firm believer too with the technology development, I don't think fossil fuels go away. I think technology allows us to make them so they don't hurt the environment as much, meaning they don't emit as much greenhouse gases in their production. So what I'd say is there's going to be, I think, that development and that criteria that's quite formal 'cause even some of the biggest companies in the world, to your point, are announcing what they're going to be investing in to have their supply chain, for example, carbon-free or at least carbon-neutral, let's say.
(47:43):
So I think that will continue to be an important factor in how companies are going to evolve and invest and ensure that when we're solving one problem of storage and renewable energy that we aren't creating any other liabilities. You really have to do a, it's called an LCA, it's a lifecycle analysis to do that 'cause even when we make our gravity system, we're creating GHGs. We're transporting things to the site. Some of the production, we do use a portion of concrete. On the other side, we're looking at ways and developing in some of the most sophisticated material science ways to actually have our concrete actually absorb CO2. What's important is that net number in the end, 'cause that's what's defining what's actually going to be creating the atmospheric temperature, and even look at sustainable aviation fuels a great example where we can make green jet fuel, but at the end, it's going to be burned by the aircraft. I think there's enough awareness, Cody, I'd say, and just leave it with this, that there's enough awareness in the world now about that that's getting very, very formal.
(48:45):
As I mentioned, the SEC is getting involved in regulating and validating what people are saying about what they're doing. Actually, the end consumers are deciding, meaning in the end it's about the customers and society and they are choosing and voting with their pocketbook of, "I'm going to buy products from X company because I know they're committed to being more sustainable." This is how I think both combining the grounds up movement with you mentioned the IRA, this is a great discussion 'cause you've hit on all the points in terms of how are we addressing getting the net carbon-neutral as a world in a lot of different facets, some of the largest companies, the governments are putting in place the incentives. So this is one of the reasons with technology development as well that I know of being associated with Idealab and being in the space of what's happening, I'm actually quite optimistic that we're going to solve this and even solve it ahead of plan.
Cody Simms (49:40):
At MCJ, we live under a spirit of optimism, realism, but optimism that we all can work together and create solutions here. So I appreciate you coming on and sharing your optimism and sharing the solutions that you're building at Energy Vault. Anything that anyone who's motivated to help today that is listening can do? Any particular assistance you're looking for right now in terms of key hiring, key partnerships, key relationships, big priorities that sit in front of you today?
Robert Piconi (50:09):
Well, first of all, I think mentioning one of the items we're growing as a company quite aggressively. I think we went from about 70 people in 2021 to 175 at the end of 2022, and are continuing our growth ramp. We're always interested in talent and people that share our mission as a company and that are really committed to decarbonizing the planet. With that purpose as a company, it's great 'cause people don't come here unless they're really passionate about that. So for people that share that passion and have that mission and even like to pursue it, we're open. We have an info@energyvault, people can get in touch. I think as far as partnerships and any enterprises that are looking at their sustainability strategies as a solution provider and with what we've developed and evolved, we have a lot of different ways to solve different use cases and problems. Software is core to that for us, and we can bring really any technology that's viable to the table to solve a problem. We aren't about shoving our own proprietary stuff down a customer's throat.
(51:12):
We look at solving their problem that typically we'll start with at a minimum how we integrate capabilities as we've announced in all the deals we've announced this last year. So we're definitely open there. Then the last thing I'd say is for anything you buy every day, just think about your personal index of sustainability. All the companies and all the products you're buying, each of those companies have a strategy that should include sustainable products. What that means is that these are companies that are investing in making even the production of their products, they may not be making energy, but they're consuming it, which means that they have choices from whom they consume. They can make those decisions, again, this gets with their pocketbook, can drive the right behaviors and investments that ensure we're going to continue on this path toward a more sustainable future as a planet. I'd ask just generally people to think about that and what they're purchasing every day because we have a lot of power as a society and as a buying group.
Cody Simms (52:09):
Well, Rob, that's a great reminder for all of us, and I want to thank you for coming on. I want to thank you for being an example that even infrastructure-heavy projects can move fast, can grow quickly, can make a difference quickly. I appreciate you taking the time to share your story and experience with us at MCJ today.
Robert Piconi (52:27):
Cody, thank you very much. It's a pleasure. Congratulations also to you all and what you've done in creating both the awareness but also the capabilities to help accelerate these solutions coming to market through your venture capital fund. So congrats to you all, and thanks for having me on.
Cody Simms (52:42):
Thanks, Rob.
Jason Jacobs (52:44):
Thanks again for joining us on the My Climate Journey Podcast.
Cody Simms (52:47):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem-solving capacity. To do this, we focus on three main pillars, content like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change and our member community to bring people together as Yin described earlier.
Jason Jacobs (53:09):
If you'd like to learn more about MCJ Collective, visit us at www.mcjcollective.com. If you have guest suggestions, feel free to let us know on Twitter @MCJPod.
Cody Simms (53:24):
Thanks, and see you next episode.
