Startup Series: Antora Energy
Today's guest is Andrew Ponec, Co-Founder & CEO of Antora Energy.
Antora Energy's technology stores electricity as heat in extremely inexpensive raw materials and uses a novel thermophotovoltaic heat engine to convert that heat back to electricity when consumers need it, hours, days, or weeks later. The startup's technological breakthrough opens up numerous other applications ranging from industrial waste heat recovery to flexible carbon capture, utilization, and storage.
Andrew co-founded Antora in 2018 and has been CEO since then. Before Antora, Andrew was a vising scholar at Stanford University. He was co-founder & CEO at Dragonfly Systems and an Engineer at SunPower Corporation after SunPower acquired DragonFly Systems. He holds a BS in Energy Systems Engineering from Stanford Energy. He also was named Forbes 30 under 30 in 2014.
In this episode, Andrew walks me through Antora Energy's approach and vision for long-duration storage, how thermal energy storage works, and scaling the startup's solution. We also discuss bringing a solution from the lab to the private sector, how Antora is bridging the intermittency gap, and how far into a clean future we can get without long-duration storage. This is a great episode if you're interested in understanding how we successfully move towards clean and sustainable energy sources.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded November 12th, 2021
In Today's episode, we cover:
An overview of Antora Energy
The origin story of the company and how Andrew came the found the startup
The process of leaving the lab and forming Antora Energy
The initial steps to build Antora and the successes/failures in the early days of the company
Bridging the intermittency gap of renewable energy and where lithium-ion falls short
The initial cost problems with long-duration storage and the existing landscape before Antora
Explanation of thermal energy storage and how the process works
The gaps in the current thermal energy landscape and the ways Antora fills those gaps
How to bring thermal energy storage solutions to market and the key steps along the way to deployment
Typical clients and customers that Antora works with
Antora's capital and the various models Antora has tested to fund their solution at scale
Antora's current project slate
If it's possible to transition into a clean energy future without long-duration storage successfully
The importance of carbon pricing
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Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education but they were longing for a peer group as well so we set up a Slack community for those people that's now mushroomed into more than 1300 members.
There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for, determination to tackle a problem of climate change ambition to on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying and a collaborative spirit. Beyond that, the more diversity, the better. There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members and some open source projects that are getting actively worked on that hatched in there as well.
At any rate, if you wanna learn more, you can go to myclimatejourney.co, the website and click the become a member tab at the top. Enjoy the show. Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Andrew Ponec, co-founder and CEO of Antora Energy.
Antora Energy is building a low cost thermal battery for grid scale energy storage. By combining inexpensive thermal storage media at high temperatures with high efficiency, thermal voltaic energy conversion, they will support the widespread integration of renewable resources on the electricity grid. I was excited for this one because Andrew was actually one of the first people I met when heading out on My Climate Journey three years ago. I met him in Berkeley for pizza through... along ago at Activate or Cyclotron Road's introduction, Andrew was a fellow there and we had a super great discussion.
I knew so little about storage and the grid and the world that Andrew and Antora were living in. And at any rate, three years later, I still only know a little more, but I realized that it's a super important area. And Andrew is an inspiring, deep tech entrepreneur. He's also a multiple time entrepreneur although he's still a young guy. We cover a lot in this episode, including what led him to founding Antora, the twists and turns that him and his co-founder went through as they evaluated different ideas before they landed on the Antora approach. We talk about how they capitalize the company, some of the initial R&D that they did, their progress to date, what's coming next, the long vision.
And we also talk about the landscape, how far lithium ion can take us for example, where long duration storage fits in to different approaches to long duration storage and the prospects and the risks and the potential. And of course, we dig in through the Antora approach as well and we talk about the next phases that they're going through, how they plan on capitalizing the company, what keeps Andrew up at night, and if they're successful, what they will have achieved. Andrew, welcome to the show.
Andrew Ponec: Thank you. It's a pleasure to be here.
Jason Jacobs: Great to have you. And I think... I mean, you must have been, if not the first, definitely one of the first entrepreneurs that I met with that was doing climate stuff as I was starting to make the rounds about three years ago now. So that feels like decades ago, but also feels like not that long ago and thrilled to all the progress you've been making and thrilled to have you on the show.
Andrew Ponec: Awesome. I definitely remember our- our meeting. We were just starting out at that time as well and it was really fun to kind of bounce ideas back and forth and, you know, to follow your journey over the last few years, definitely a- a fan of the show.
Jason Jacobs: I think it was pizza in Berkeley if I remember.
Andrew Ponec: That is correct, that is correct.
Jason Jacobs: Well, great. Well, what is Antora Energy?
Andrew Ponec: Yeah, Antora is decarbonizing industrial power and heat with a new type of thermal energy storage.
Jason Jacobs: And how did Antora Energy come about? What's the origin story or even further back, what's- what's the origin story for you in terms of the journey that led you to doing the work that you do today?
Andrew Ponec: Yeah, maybe just first on my origin story, definitely, you know, have been on my climate journey for a while now and it's been really a lovely time. And going all the way back I would say to, you know, when I was growing up in Oregon, you know, spent some time middle school and high school really reading about climate change and knew that's what I wanted to work on. And after that, went to Stanford for my undergrad, you know, started a company with a few wonderful people called Dragonfly Systems that was in power electronics for solar.
That company was acquired by SunPower, worked for SunPower for a few years as part of the earn out of that and really got to see in the middle of the last decade, the power of solar and the declining cost of variable renewable energy and it was pretty clear at that time to me and a- and a lot of other people in the industry that energy storage was the next big thing to work on. So that's kind of how I came to want to work on energy storage and least for- for my journey where Antora came from.
Jason Jacobs: Great. And so once you came out of the last one and thought that storage was where you wanted to focus, what was the process between coming to that conclusion and actually coming up with the idea that led to the forming of the company?
Andrew Ponec: Yeah. Well, the first step in that process was to go back to school to finish my degree. I- I hadn't finished my undergrad degree and I had promised a lot of people, not at least at which were my parents, that I would eventually go back and finish that. So I had a really, really wonderful time going back, finishing my degree. It was, you know, kind of a perfect time to be thinking about what came next, meeting wonderful people, talking to, you know, some of the most knowledgeable people in energy, you know, in the extended Stanford community. And that's also where I really got to know one of my two co-founders Justin Briggs and where we started talking about some of the earliest ideas that eventually turned into Antora.
Jason Jacobs: Great. And when you started talking with Justin, how did you go about it? Did you dig into the problem first? Did you have a specific that you had stumbled upon? Maybe talk a bit about some of the twists and turns and- and what some of the initial steps were that got the snowball moving down the mountain?
Andrew Ponec: Yeah. One of the things I- I really loved about those early discussions with Justin that have kind of continued throughout the company's history has been, you know, starting from a really broad perspective first and then narrowing down. And- and so we actually started all the way as broad as it can go, you know, what's the purpose of what we're going to build here and the core of that was really about improving human lives.
And we even tried as best we could, even though we were energy people to think about like, was there something that we thought we could do in the world that would be more impactful outside of energy in energy? That was a pretty quick process. I think based on our background, the resources we had, the communities we were part of, it was pretty clear that was the right way to go.
You know, we narrowed that down within energy to the problem of energy storage, which again was a hypothesis going in but we wanted to really investigate every step of the way and be really thoughtful about it. And, you know, kind of the- the further, you know, narrowing of that focus toward especially kind of molty day storage and how to connect variable renewables to all sorts of energy uses in society, you know, came through a long- a long process. We actually, one of our early hypotheses was that lithium ion batteries were going to solve all of the problems in energy storage and it was from a technology perspective and it was all about finding ways to accelerate the deployment, you know, new business models, new ways to apply that new tool.
And it was only slowly over time in conversations with a lot of people that we determined that we didn't think that was going to be sufficient in all the cases. And you know, I know this is pretty well accepted now within the community, but in order to have a renewables based energy economy, you need something to bridge these multi-day gaps where you don't have a lot of sun and wind. And so that was something that was kind of early on in- in our journey that we came to and- and that's what kind of narrowed the focus to this, you know, very long duration or- or multi-day type energy storage.
Jason Jacobs: And when you look at that multi-day gap that you referenced, where does lithium ion fall short?
Andrew Ponec: Yeah. So mostly in cost. One of the things that's kind of interesting about the terminology people often talk about, "Oh, we don't have good long duration energy storage." And of course, you can take any shorter duration storage like a lithium mine battery and just discharge it really slowly and it will discharge over a long period of time. So there's nothing fundamental about discharging slowly that is hard to do.
When people talk about long duration energy storage being a difficult problem, what they're really talking about is cost. They're saying can you have something that can discharge for a hundred plus hours but that still has a cost per kilowatt, a cost per power capacity that is competitive with other types of power capacity on the grid? And so, you know, that was sort of a- a fundamental thing, you know, for us to look at and really, I think speaks a little bit to a focus of our company which has been techno economics.
You know, we started out from the very beginning of this process in a technology agnostic position, you know, not with one idea of how this was gonna work, but really wanted to make sure that we were looking at how a solution like this would fit in to the larger system. In large part because we didn't want to go off for, you know, years and develop a great technology and then find out at the end of the day we were solving the wrong problems. So we were very, very, I- I would say slow in some ways in the beginning of the company to make sure we understood the technoeconomic problems and make sure the solution we were gonna develop could address those.
Jason Jacobs: So when you looked at, with your mind, you saw that it was off the mark from a cost competitive standpoint, how far off the mark was it and what else did you look at and how far off were those from a cost standpoint? And I guess the more concise question is what did the landscape look like at that time?
Andrew Ponec: Yeah, so the landscape at that time, which was kind of 2016 into 2017, was pretty different than it is today as far as longer duration storage or what wasn't a lot out there. Lithium ion, you know, we determined was off the mark by maybe a factor of 10, 20, or so, as far as where we thought future costs were gonna be off the mark, of course, you know, you always wanna be looking 5, 10 years down the line. So, you know, we saw there was a necessity for energy storage in the long duration range that was also in the 10 to $20 per kilowatt hour range on a per energy cost basis.
And that's kind of a full system in- installed cost. And, you know, lithium ion, we're pretty bullish on lithium ion and we think that lithium ion is gonna do really well in all of the shorter duration applications, but we still saw that it was gonna be hard for lithium ion to get below, you know, 75 or a hundred dollars a kilowatt hour installed system cost, which would correspond to, you know, sell and pack costs of $50 per kilowat hour and below.
So we still were seeing this kind of order of magnitude problem even if you look pretty far in the future for lithium ion cost. As far as some of the other, you know, solutions that were out there, obviously the- the elephant in the room is- is pumped hydro. You know, we did, as I think probably everybody else who's looked at this problem, you know, tried to, you know, convince ourselves whether or not you could build enough pumped hydro to solve the problem because pumped hydro is a pretty decent solution for this.
And like many others, we determined that the constraints of geography just meant it was not scalable to what we needed to solve this problem. And so, yeah, we started looking at all the kind of farther out solutions, you know, hydrogen. I spent a lot of time on hydrogen, some time on compressed air, different gravitational energy storage methods, bunch of different types of flow batteries. And one thing I want to mention though, we looked at this in one perspective based on our knowledge.
There are wonderful companies with wonderful people involved who pursuing a lot of these other approaches and we are absolutely cheerleading for their success as well. You know, we definitely have a feeling that we're all on the same team here trying to solve the climate problem. But you know, what we saw as some of the drawbacks for those other, you know, systems were largely around either the cost still not getting to where it needed to be, or in many cases, the energy density not being very high.
And a lot of people, you know, kind of overlook, I would say, energy density in stationary storage applications because hey, you know, if you're not putting it on a vehicle, like what does it matter how big it is? And one of the- the lessons that I- I feel like I learned during my time in solar was how important balance of system or balance of plant costs are to new energy technologies.
And so every time we saw a low energy density solution, if you start actually, you know, going deep into the analysis of what the additional land and concrete and steel and other systems are gonna cost, we think that you can pretty quickly swamp the cost advantages you have with low energy density systems. So that was what we saw as- as sort of some of the problems out there with a lot of other systems and- and the one that we really loved was thermal because it had the potential as yet, I would say unrealized to have both low cost and very high energy densities.
Jason Jacobs: And so maybe talk a bit about what thermal is and how it works.
Andrew Ponec: Yeah. So, I mean, at its most fundamental level, thermal energy storage means you're gonna take your input electricity. And by the way, we're always talking in our mind about the original energy input being electricity. And the- the reason for that is because we think there is going to be an abundance of variable renewable electricity from solar and wind out there in the future. So the input energy being electricity goes to heat up some material, and that's actually usually the easy part
It's pretty easy to turn electricity into heat. And then the- the harder part is to take that stored heat and convert it to some other useful purpose. And that useful purpose could be something like processed heat for industry. You know, you need to put heat at the right temperature, at the right process conditions into an industrial process or it could be to get that heat back out in the form of electricity again, which is obviously very useful if you can do that at a different time than when you had the excess electricity.
Jason Jacobs: Great. So when you looked at the thermal landscape, what gaps did you see and what role did you think that Antora could play?
Andrew Ponec: Yeah. So we did kind of a tour of people who had been in thermal energy storage one way or another. It was pretty clear that almost all of the thermal energy storage work that had been done in the community was around concentrating solar power. And, you know, that industry had pretty much focused on molten salt as the thermal storage medium and on steam turbines as the heat engine, as the conversion process to take that storaged heat and convert it back into a useful form, in- in that case electricity.
And almost unanimously everyone we talked to who had been in that industry said, "Don't do molten salt and don't do steam if you can possibly avoid it." And the problems were just that, you know, dealing with that molten medium, you know, had a lot of complexity that got added in, you know, pumps, pipes, valves, you know, you had freezing and corrosion problems. And then steam, you steam is- is how we generate a huge portion of our electricity from thermal power plants of various source nuclear power plants but it really doesn't work at small scales.
And so it becomes a very challenging scale up process and a- a very challenging technology to fit into a distributed energy paradigm. So you can't really get a one megawatt steam turbine that has decent costs or decent efficiency. So that was kind of where- where we started. And we said, "Okay, you know, if that's not the right way to go, where do we go?" And I think the starting point for that thought process was to say what's different? What's different about what we're doing than what people had in the past? What are the different constraints?
And the first thing that was most obvious was we're talking about taking an input energy that's electricity, whereas the concentrating solar was taking concentrated sunlight as the input energy source. And the key difference there is that if you have the input energy as electricity, you have a lot of flexibility in temperature range. So concentrating solar is limited by how much you're concentrating the light, whereas electricity, you can... it's very low entropy energy, you can turn it into basically whatever temperature you want by running it through a resistor.
So the first step was extend the temperature range to give yourself maximum flexibility in the choices for the rest of the system. You know, once you extend that temperature range, you pretty quickly see one of the best materials is going to be carbon, solid carbon on the form of, for example, graphite. Carbon is very cheap, very, very stable from a thermal perspective and has a very high energy density, much higher, for example, than that of molten salt. And one of the things that really helps with that energy density too, is once you have a large temperature range to work with, you have a larger delta T in your equation than you do when you have a lower temperature system.
So- so you're starting with a solid storage material, and then we sort of work through the rest of the system. You know, what kind of cascading changes does that have? One of the next steps is you have to choose kind of what is your heat transfer mechanism within the system. And in a molten salt case, it's pretty simple. You just pump the liquid storage medium around. In the case of a solid storage medium like carbon, you still have to figure out how are you gonna move heat within the system?
One way you could do it is to add a liquid to the system, add some heat transfer fluid that gets flown through pipes or- or voids within the carbon and- and gets taken somewhere else. But the really interesting thing, and I think one of the, you know, the cores of what we're doing right now is the use of thermal radiation as a heat transfer mechanism. So when you get to high temperatures, things are glowing and, you know, they're emitting light, they're incandescent.
And that heat transfer mechanism has a temperature to the fourth power dependence. So if you double the temperature, you get 16 times as much thermal radiation. So once you start getting to very high temperatures, this is a really powerful way to move heat around within a system. So what we found is that actually just by kind of geometric designs, you know, thinking carefully out where to place the carbon and where to place any void spaces within the system, we could channel the heat effectively out of a very large system to some sort of heat extraction at the edges while still taking advantage of all of the cost and stability advantages of having a solid thermal storage medium.
So the two we have there is we have solid carbon as a new choice for- for medium... Well, thermal radiation is a new choice for heat transfer. The last thing is conversion back to a useful form of energy. So once you have thermal radiation as your heat transfer mechanism, you have a lot of flexibility on where to go from there. So for example, you could put a steam tube or some other thermal receiver in the way of the light, in the way of the thermal radiation coming off of the system and use it to heat up, you know, process fluid for some industrial process, you know, that's really great.
But the one that's kind of unique is that if you're, again, moving heat through your system in the form of light, the last step conversion to electricity can use a new type of heat engine rather than a steam turbine, you can use photo voltaic cells. So photo voltaic cells usually convert photons from the sun into electrons, you can just as well convert photons from a glowing hot object here on earth into electrons. And so that last step is one of the really key ones because it gives you access to a heat engine that very inexpensive, solid state, no moving parts and scalable.
It can be a kilowatt a, megawatt, a gigawatt, it doesn't matter. You're scaling by numbers just the same way that solar PV does rather than building, you know, essentially a steam power plant next to your thermal energy storage. So those are the- the sort of three pillars of what Antora is doing and- and how it's different from conventional thermal energy storage.
Jason Jacobs: And now maybe talk a bit about the go to market. So how does one go about taking a thermal storage solution to market and what are the key steps and milestones along the way?
Andrew Ponec: Yeah. The market right now is really emergent for multi-day storage in a lot of ways and so the key is to find the areas where it makes sense as a no-brainer right now. And our first hypothesis was really that we would go to utility scale, you know, big, long duration storage plants on the grid. You know, this is probably the most obvious market for something like this. It's a very attractive market and one that we think that we will pursue in the future, you know, putting a- a huge, a thermal energy storage system at a important grid node or replacing dispatchable generation with a combination of variable renewables plus our system, which again, you- you can do pretty effectively if you have that kind of a hundred plus hours of storage.
It can be truly firm, not just, you know, firm as long as it's relatively sunny and windy. But where we found kind of a- a more critical need was actually in the industrial sector and a couple of aspects of that. The first is we have sort of the unique ability to provide processed heat at a variety of different temperatures and electricity from the same system and in a varying proportion. So, you know, right now there's actually a fair amount of combined heat and power used in industry where you have a single unit that is producing both.
One of the big challenges with that has been that you get both at the same time kind of by definition. And what we found is that there are some pretty big economic advantages to be able to put a single unit at a site and then provide variable dispatchable, you know, on demand electricity and dispatchable heat, both of which that are coming from clean electricity. So this really big realization for us that came from a lot of conversations kind of across the energy ecosystem.
And it also fits really well with some of the other aspects of our technology, for example, the high energy density of the system, which makes it very citable. You can easily go on to an industrial site and put the system there because the energy density of this system is similar to that of lithium ion batteries, in fact, often has a footprint smaller per energy than a lithium ion battery installation. So that's kind of the- at the broadest level where we think this has a- a really unique place in the market.
You know, getting a little bit narrower there, we- we found that there are a number of industrial facilities especially in places like the wind belt where you can take advantage of either very low electricity prices that are kind of being driven by over generation of wind or in some cases, co-locating a system like ours with solar in a sunny place like California. And so, you know, maybe not surprisingly the earliest markets for us are industrial facilities in places that have high renewables generation or high renewables generation potential.
Jason Jacobs: Great. And in terms of the types of clients that have industrial processes that are most relevant, what do those clients look like and how are they dealing with this problem today in a world without Antora Energy?
Andrew Ponec: Yeah. So I'll give a couple of examples. You know, I would say a good chunk of the potential customers we're working with are in food processing or in fuels, for example, ethanol. So those are- are two pretty big categories, there is a number of others as well. But just to take those as a quick example, especially again because we're often look first at the wind belt, you know, these customers are often very sophisticated about their energy.
You know, energy is a very large part of their- their operating expense. You know, many of them have- have located in areas with low energy prices for exactly that reason, but they are limited by the options they have for electricity and heat. So they are either buying electricity from the grid to power electrical loads at their system and natural gas separately, or in some cases, they are doing combined heat and power units where they're taking natural gas, burning it, producing some electricity and using the waste heat from that process to generate processed heat for the system.
And there are a number of- of sort of factors that are pushing away from that combined power based on natural gas towards something like what I think Antora can provide here and one is increasing prices of natural gas and combined with carbon pricing in one way or another. So this could be for example, a plant that operates in the low carbon fuel standards market in California, you know, which puts it pretty a high effective price on carbon.
But really the more powerful lever is just the abundance of very low cost, renewable electricity. So, you know, many of these plants are in areas where if you look at the- the nearest grid node, you have negative energy price, 20 or 30% of the time. So even in a- in an area where natural gas is relatively cheap, you can often still have a very compelling case for turning some of that electricity into heat, especially, you know, if you're able to dispatch that heat at different times from when it's available through storage.
Jason Jacobs: And in terms of the decision to switch, what does that look like in terms of switching costs? And then if they were to implement an Antora a solution, what is it that they're actually implementing? Is it hardware? Is it a services model? You know, how hard is it to put in? Maybe just give a little color on any or all of that.
Andrew Ponec: Yeah, absolutely. So as far as the model, just first, you know, we are looking at a- at a few different models and different customers have different models that they would prefer. The real, I would say core question is who's providing the capital for the unit and the capital there is in some cases to purchase a thermal energy storage system, the Antora's product that allows you to turn variable renewable electricity into dispatchable electricity and heat.
In some cases, especially given the capital environment we're in right now, you have plants that would like to purchase these systems outright. They look at the attractive economics and they would like to own it. In other cases, folks who don't have access to the same level of financing are looking for something like a key purchase agreement, steam purchase agreement that would go along with this unit. So we're looking at both as far as model. As far as the actual implementation here, there's two versions or flavors of- of how this would go.
One is where you're installing a thermal energy storage unit and you are hooking it up to the grid or to a nearby wind plant and so you're taking sort of existing electricity generation. The other is where you're actually building some sort of onsite electricity generation, often a solar plant nearby in order to provide that input energy. And, you know, sort of the- the size of the project depends on whether you're installing new generation. If it's all grid based, it can be a- a pretty quick and fairly low capital project to install this.
Obviously, if you're installing a, you know, tens of megawatt solar plant, it's gonna take a little bit longer and require a little bit more capital, but of course, then the energy is paid for through that plant over the long term. So it's a pretty light touch compared to some other types of deep carbonization solutions but it still obviously requires very close coordination with the plant, with the local utilities, with local landowners and that's something that we're working hard on right now.
Jason Jacobs: And when it comes to getting these projects financed, what are the typical sources of capital for that? And also, I guess part of this you already answered, I was gonna ask who takes on the risk and you- you said it depends. And I guess my question there is, are these early phases about experimenting with different models to find one to standardize on or do you anticipate that there'll be a portfolio of different business models as you scale?
Andrew Ponec: Yeah. We believe that long term the model that's gonna make the most sense is for Antora's relationship with the end customer to be in the form of a heat purchase or a power purchase agreement or both. Long term, you know, a lot of these customers are- are not gonna be wanting to put up the capital for these systems themselves, may not want to take on the risk of these systems themselves.
And we believe that, you know, a lot of the partner ships and backers that we have will give us access to a lot of that capital and folks who understand the risk of this system better than if we had to kind of make that pitch every time to the customer. That said, again, we're in a- a pretty unusual environment here where there's a lot of cash floating around. And so we've been, I would say, surprised in many cases that people want to take on a lot more or risk with these early projects in order to see the upside of even relatively early installations.
Jason Jacobs: So are you using equity capital to fund these early projects?
Andrew Ponec: No. Beyond maybe some very early pilot units, which may have to be either partly or fully financed by combination of equity capital and grants, we have seen pretty clear pathways to debt financing or just straight customer ownership of these assets
Jason Jacobs: And in a world where, as you said, it does move to PPAs or HBAs, if that's a word, [laughs], the heat power agreements, the capital that you would use for the project financing at that point, do you anticipate that that would be debt?
Andrew Ponec: Yeah, we- we think primarily debt and certainly that's our target.
Jason Jacobs: Uh- huh [affirmative]. And do you anticipate that the sources of the project finance will evolve over time? And if so, in what way?
Andrew Ponec: Yeah, that's a fascinating question. I- I think, you know, the field of project finance, especially for energy technology in the last few years as I'm sure, you know, has been a pretty wild ride, there's a lot of new models coming out. I certainly wouldn't say that- that we think we know how it's all gonna evolve, but I think from the activity that we've seen, I think there are a number of people or a number of organizations that are going to be the right partners for that debt finance that are becoming more and more sophisticated about energy and really see that as the place that they're gonna find returns.
Some of those are even organizations that we've tried to bring in as backers or partners to Antora early on so that they can sort of get that early look and get a foot in the door and some of them are I'm sure folks that we haven't met yet. So it'll be a diversity, but certainly a real- really exciting movie to watch play out in the finance area.
Jason Jacobs: And it- it sounds like industrial processes are your beach head market. How far do you think that market will take you when and how will you look to expand and in- into what other markets do you think would be at the top of your priority list?
Andrew Ponec: Yeah, so you know, I think if you look at the size of industrial energy markets, they are massive. You know, probably a quarter to a third of all global emissions are coming from industrial heat and industrial power. So certainly we don't see the industrial use case as sort of a stepping stone to something else. This is a very attractive, long term market for the company. That said, we do think that in the future we will probably also be branching out into sort of pure play grid and sort of utility type sales.
You know, we- we- we've had a lot of really great interest from the utility sector especially in the last 12 months or so. It's kind of... it's been really, really fun to see sort of the shift and sort of mindset throughout the community a- about the need for multi-day storage to enable very high penetration renewables on the grid and- and replace dispatchable fossil assets. That said, we think that that market is going to be a little slower to develop and it is in some ways less attractive early on than the industrial markets
Jason Jacobs: Who do you compete with most directly? And you can either answer that with specific companies or just, what are you trying to unseat, if anything when you're going in pitching these projects?
Andrew Ponec: Yeah. The direct competition in almost all cases is natural gas in the form of combined heat and power or a combination of natural gas for heat and grid electricity for the electricity. You know, there aren't a lot of other solutions. You know, if you go into one of these meetings, you don't hear questions like, well, you know, should I get a lithium ion battery instead. It's a totally different use case. You're talking about both electricity and heat, not just electricity and you're really talking about providing something that's a complete solution.
So I think the key there is, you know, we're competing against conventional energy sources, not so much other new technologies. That said, there are a number of companies that are providing... or that are developing what could be very attractive solutions for at least parts of this market. Certainly, as I sort of alluded to earlier, there are a number of wonderful companies working on, you know, very long or- or multi-day storage and many of them, we- we know well, and again, are- are cheerleaders for as well.
Those are often not addressing the thermal aspects of the industrial energy problem as well. And then on the flip side, there are a number of companies that are, you know, developing solutions to cover the thermal side of industrial energy. But typically, they have sort of a limitation in their ability to help provide electricity, help bridge variable renewables to stable electricity for the plant. So, you know, there's definitely competition from new technologies sort of on both sides of the equation. There's maybe a little bit less that are trying to- to kind of attack both power and heat, but you know, far and above our main focus is how do we displace natural gas in the US and actually international often call for some of these industrial sites as well.
Jason Jacobs: And when you are talking to customers about potentially evaluating an Antora solution, what are some of the objections that you have heard?
Andrew Ponec: Yeah, the first thing I'll say is we went in thinking that perhaps naively, that the objections were going to be, you know, can you beat natural gas at sort of the cheapest natural gas has been. In the US, you know, wholesale prices for natural gas have been floating around $3 in MBtu for a decade. And so we thought that was gonna be the largest objection. What we found is that we're actually able to be very competitive on price and that most of the objections are on the softer aspects of- of integration.
I think maybe the most important one to mention is the integration challenge. You know, if you're going to an industrial facility, they have a process that they're running. That's what makes them money day in and day out and anything that can disrupt that process is something that needs to be looked at really carefully. And so, you know, we work very hard to minimize the amount of disruption that would happen at the site in order to switch over say their source of processed heat from a natural gas boiler to our system.
But that said, it's a trust building exercise to show the plant manager that you really understand how important downtime is, that you really understand your own system and how can achieve the type of uptime that they're gonna expect out of the system. So I would say the biggest challenge is mostly about building trust over time to show that you're not going to be the reason that they get a call in the middle of the night saying the plants down, we're no longer producing.
Jason Jacobs: And where are you in terms of technology development and how many of these projects at this point do you have under your belt?
Andrew Ponec: Yeah. Well, we are still at a very early stage. So our sort of workhorse prototype system right now is a few hundred kilowatt hours, which is much smaller than we expect future commercial systems to be. And we are working hard right now on a hundred megawatt hour pilot system that is slated to go in with a partner, Wellhead Electric here in California, funded partly by the California Energy Commission. And past that, most of these projects that are again in the future are larger kind of multi megawatt or tens megawatt projects at industrial sites and again, most of which have both a- a thermal and a- and a power component.
Jason Jacobs: And if you're wildly successful with Antora beyond your wildest dreams, what have you achieved?
Andrew Ponec: Absolutely the top priority for us is decarbonizing industry. So the vision that we really see is that when you go to an industrial facility, whether that's anything from a mine to a big agricultural crossing plant, to a chemical facility that you're seeing an Antora unit out there next to the plant that is providing the process heat that would've been otherwise coming from fossil fuel sources, and that is allowing them to have a reliable electricity supply every hour of every year that is entirely sourced from variable renewables like solar and wind. That's absolutely far and above the vision for what we want I see.
Jason Jacobs: Mm-hmm [affirmative]. And I know you don't have a crystal ball, but if for some reason, Antora doesn't make it, looking from the future backwards, why do you think that was? What went wrong?
Andrew Ponec: I love this question. And actually slight diversion, this is something that we see as a really important part of our culture. We do a lot of work to try to, you know, poke holes in our own ideas. We actually fairly recently did an exercise where we tried to write the headlines that would be written about Antora if we were to fail as a way to sort of spur our brain to answer exactly the question you just posed then. If it goes wrong, wh- what likely did go wrong?
You know, so certainly, you know, the kind of... the top categories, you know, of course the maybe less interesting version is like, we fail to execute internally. We fail to- to build the right team, we fail to bring in the right partners. That for any company is a possibility and something that you have to protect against. But I think, you know, if you look at sort of the larger market and the larger factors, I think the real question is around the larger energy picture, is there a price on carbon?
You know, are the industrial customers that right now are talking a lot about decarbonization? Does that continue or does that peter out? Do natural gas and energy prices across the board stay elevated or do they come crashing down to really low levels? I think those are some of the things that we're always thinking about, you know, how to protect against the downside risk and make sure our company can keep growing through whatever lulls in this energy transition there may be in the future.
It's been really exciting to see the acceleration of the energy transition over the- over the past 12 and 24 months, but we always wanna be prepared that it can stall out a little bit. And from our own personal experience, you know, I was raising money for my first company in 2013, 2014, you know, it was a much different environment back then. It was really challenging, there was a smaller talent pool, smaller investor pool, and you wanna be able to thrive in a situation like that and in a situation like we have today where there's a lot of capital and wonderful talent available to help build big things.
Jason Jacobs: One of the things that I've heard debate around is how far lithium ion can take us. And I- I know you talked at the beginning that it can't get us all the way there. But I guess my question is how far can we get without the long duration storage problem addressed?
Andrew Ponec: Yeah, that's something we think about all the time and it was one that sort of the earliest questions we really tried to think about in the formation of- of Antora. The first thing is- is I want to say again, like we really believe in lithium ion batteries. We think that for the- the sort of shorter duration they are going to be dominant. But let- let's talk about, you know, how far does it get us?
I think one of the things that is a little bit of a- a misconception is that if you look at certain types of analyses, you can see, oh, lithium ion plus solar and wind might get us to 80% renewables penetration, and that's, you know, 20 years off, or choose your number, and so we don't need to worry so much about the other aspects right now. And I- I the think the- and that kind of falls apart in a- in a couple of ways.
The first is that there's a really inhomogenous transition toward renewables. Again, as I was mentioning in the windmill, you have places that are completely saturated with wind energy or solar energy even in certain areas in the United States. So that 70, 80, or whatever per- percent that you think you can get to without new solutions has already been blown by in- in a lot of places and is really limiting the deployment of- of new renewables.
So I think the inhomogenous aspect of that transition is there. And then I think the other aspect is the retirement of firm generation. You don't want to have to keep around a ton of coal fire power plants while you build up that lithium-ion battery bank basically on- on the grid and then hope that long duration ration storage or multi-day storage can come in at the end and fix the problem for you. You know, if you're going to be retiring a coal plant now because you're thinking about these decisions over a 20 or 30 year timeline, that means you need to find a solution now to provide the type of- of resiliency and firmness that that coal plant may have been providing you before.
So I think the anhydrous transition and a misunderstanding of the timelines of these assets leads people to sometimes think, hey, maybe we can just kind of wait for a while and ride lithium ion. Again, we think lithium-ion is going to be installed really, really rapidly. But the last thing is lithium-ion batteries don't solve the industrial heat problem. You know, that's not how you generate steam, that's not how you, you know, do calcination ad so you really do need something else that can provide industrial processes heat at a range of temperatures from, you know, a few hundred C to 1500 C. And that's something that is pretty unique about what Antora can provide alongside the electricity multi-day storage that we think is a reason why we want to get out there and deploy it as- as fast as possible.
Jason Jacobs: If you could change one thing outside of the scope of your control that would most accelerate the progress of Antora and long duration storage in general, what would you change and how would you change it?
Andrew Ponec: The obvious answer to us is carbon pricing. I think it- it aligns pretty well with what we've been talking about here. Our company is very focused on techno economics. You know, we really believe in the simplicity of carbon pricing as a way to push the market toward cleaner solutions. And so yeah, that would be my of- my one thing to change. I imagine it's the one thing that a lot of- a lot of folks would change, but certainly, you know, I- I would say that over and over again is the biggest single factor for not just Antora's success, but the success of wonderful companies aiming to decarbonize all across the energy economy.
Jason Jacobs: So given that, is that an area that you resource to at all from an advocacy standpoint?
Andrew Ponec: In the past, we haven't had the resources to really put a lot into that, but based on the- the networks that we're now becoming part of, absolutely something that we are pushing wherever and- and whenever we can. I'm not an expert on, you know, US national politics so I can't speak to, you know, what are the- the best ways to try to push that forward here, but I'll just give anecdotally.
As you know, there's a carbon price in Canada that has recently been passed and that's going to step up over time. And we have seen a really marked shift in the interest we've seen from Canadian industry based on that carbon price. It changed their thinking. It really did go straight into the economic models that they have for the future of their business and led them to start saying, you know, we need to decarbonize, we need to decarbonize fast. And so, you know, I think we've been able to see firsthand the really powerful effect that a carbon price, even one that's low now but that will likely increase in the future can have on how these decisions get made and we would be just overjoyed if something like that could happen in the United States as well.
Jason Jacobs: Andrew, where do you need help? For anyone listening that is intrigued by what you're doing, who do you want to hear from?
Andrew Ponec: We would love to hear from everyone. I'm an energy nerd for sure. I love thinking about solutions all across the landscape. So would love to have interesting conversations about almost any subject, but what's most, most, most important to us right now is to find the right team to build this company. So if anyone out there is listening is- is intrigued by what we're doing, we would love to talk to them. You know, our hiring email is hiring@antura.energy, a little plug there. And we have a great team now, we're growing fast and we'd love to hear from anyone who knows that this is the mission that they want to be working on, this is what they want to do with their life and how they want to make an impact.
Jason Jacobs: Any specific rules to call out?
Andrew Ponec: We have roles across the organization that we're looking for, you know, from engineering to business development, to finance. So I would say there's very few sectors that a talented, energetic and mission focused person would not be able to find home at Antora right now. So we would love to hear from everyone.
Jason Jacobs: Andrew, anything I didn't ask that I should have, or any parting words for listeners?
Andrew Ponec: I don't think so. This was a really wonderful time. It was so good to chat with you again here. And yeah, we're- we're fired up and ready to go. Can't wait to see what happens in the next few years. We're very optimistic. It's a huge challenge, obviously, a lot of work to be done, but just being part of this community and seeing the number of really talented people who are working hard on this, gives me- it gives me hope everyday.
Jason Jacobs: Look at you. You said you didn't have any parting words and then you delivered some great ones. [Laughs].
Andrew Ponec: [Laughs].
Jason Jacobs: Thanks so much, Andrew, for coming on the show and best of luck to you and the Antora Energy team.
Andrew Ponec: Thank you, Jason. Happy to be here. Thanks so much for taking the time.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co, Note, that is .co not .com. Someday we'll get the.com, but right now, .co. Yyou can also find me on Twitter @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers may be say that. Thank you.
