Welcome to another episode of the Solar Podcast. Today, Dave is joined by Ravi Mangani, director of Strategy and Market Analytics at LS Energy Solutions. Join us as Ravi shares insights on the evolution of battery technology, discusses the myths surrounding batteries, and gives us some bold predictions for the future. It all starts now on the Solar Podcast.
00:34 Dave Anderson Well, everyone, welcome back to the Solar Podcast. I'm Dave Anderson, your host. I'm thrilled to be joined by Ravi Mungani today. Ravi is actually coming to us. He's the head of Strategy and Markets at LS Energy currently, but he's spent LS Energy Solutions, I should say, but he's spent significant amount of time in the Solar and specifically in the battery space. And that's something that's been really contemporary, something we've talked a lot about on the podcast. Thrilled to have Ravi on with us today. We're certainly going to dive into that. But you've also spent some time as an educator helping others understand the impact of climate policy and the importance of understanding new energy policies that are affecting climate change. So we're definitely going to want to talk about that as well. Robbie, thanks so much for coming on and I'd love for our guests to learn a couple of things about you that I certainly didn't mention.
01:18 Ravi Manghani Awesome. I appreciate the introduction, Dave. So, as you said, I currently work at LS Energy Solutions, which has been my 8th or the 9th stop in my career, but who's counting, right? Currently, I work as the head of Strategy and Markets at LS. My role is basically, as my CEO likes to call it, sort of I'm the headlight in the dark for the company, so making sure that we are moving in the direction where we want to go and compete in the market, whether that's on the market side or on the product side as well. But been in the energy storage and solar space on and off for about 15 OD years, clean energy space for a bit longer than that. For the first five, seven years, I was on the fuel cell side of the things. That's how I got introduced into the clean tech space, primarily as an academic researcher, did my master's, focused on solid oxide fuel cells research, got excited about what was happening in the fuel cells arena.
02:22 Ravi Manghani This was a couple of decades ago, but somewhere along the line got sort of a bit jaded with academic research, so decided to take a break and get into sort of teaching full time. At that point, I was already, in fact, teaching a number of courses at University of Washington. So took a pause, took a break, went into full time teaching at community college in the greater Seattle area. And that's where I got more closely sort of attached to sort of the world of energy policy and business. Right. Because the courses that I was teaching there at the college were more focused on how do we create sort of a new crop of environmentalists and energy leaders. So it was a very interactive, interdisciplinary course where we would go out into the communities and help solve their genuine sort of real world energy and environmental problems.
03:22 Ravi Manghani And as a result of sort of working in that field for a couple of years, I realized that while I had two engineering degrees by then, I think I still wasn't equipped to actually solve the real world problems that existed and still exist in the market today. So I decided to go back to school, equip myself with a business and a policy background, did my Master of International Business at the Fretcher School at Tufts University, and so rejoined the industry, this time on the energy market research side, worked for a couple of different shops along the way. Most of that time was with what used to be called as Green Tech Media, or GTM research. And then it was eventually acquired by Wood McKenzie. So at GTM, I was the founding member and the first sort of full time analyst focus on the energy storage market.
04:17 Ravi Manghani This was circa 2014, before energy storage was it was always believed to be the next big thing, but it was still in its early days. And I like to sort of think about the energy storage landscape as somewhere around 2015, 2016 time frame when Tesla came out with this big power wall sort of release. So I think about the energy storage market as sort of pre powerwall and post powerwall. And I'm glad to have been unfortunate, I should say been involved in the energy storage space both in the pre powerwall days and ever since. But like, you know, after spending several years in market research and consulting, decided to sort of switch gears or as some people might like to call know, move to the dark side, joined the industry and have been with Lsng Solutions for a couple of years now. That's great. Yeah.
05:11 Dave Anderson And you're coming to us, obviously with a strong engineering background, but you've spent some significant time and you said you reinvented yourself or felt like you weren't fully equipped to solve all of the world's problems as just an engineer. And so you went back, got your MBA as well. But I am curious, what was the initial draw? So as an engineer, you can work in almost any industry, really, but as an engineer, what really drew you to clean technologies? Was it an accident? Was it a labor of love? Was it a passion? What brought you to clean technology?
05:37 Ravi Manghani Yeah, I mean, it was definitely a passion, right? Even this was back when I was an undergrad back india, I did my first research paper on artificial photosynthesis. This was back in 98, 99 time frame, and just got excited about what possibilities existed in the clean energy world as a result of that work and just got drawn to the clean energy space, even from the pursuit of my master's research. But I think some of it, of course, is the fact that we live in a world where energy is such an important piece of everything we do look around and we are actively and passively consuming energy every single instant. So to be in a position where we can make or I can make even a little bit of an impact to move towards cleaner resources, I think that worth the calling.
06:36 Dave Anderson Yeah, no, that's fantastic. Obviously, we're very bullish on the solar podcast, talking about solar, but renewable energy generally, I think any move toward cleaner technologies is a good move. So I'm curious about your time that you spent doing fuel cell. We haven't talked much about fuel cell technology at all, really, on the podcast. I'd love to have you, given the amount of time that you spent there, maybe help our viewers really understand what is fuel cell technology and why is it important? Is it something that is important? Is it something that we should be trying to keep up with? And where do you see its place in the overall energy landscape?
07:12 Ravi Manghani Yeah, and a great question. So I'll start with sort of the inside joke, right. I'm sure some of the audience members have already heard it. If you ask any fuel cell professional, when are we going to see fuel cells in the market? The answer is five years from today. That was the answer that I got back in 2001. That's the answer. Not to the same extent, although we're certainly seeing sort of a renaissance of fuel cells today because of how versatile technology it is. Right. Particularly as we think about renewable natural gas or green hydrogen and all the other different ways by which we can create non carbon producing fuels. Right. Which brings us to what, exactly? The fuel cell. Right. So again, as a chemical engineer, the simplest way of sort of describing a fuel cell, it's nothing other than just a battery, it's just a different looking battery.
08:16 Ravi Manghani And again, trying not to go too much into the jargon here, but thermodynamically speaking right, a battery and a fuel cell are almost similar. We just call batteries as closed systems and fuel cells are open systems. What I mean by that is, in a battery, the electrolyte, the electrodes, all sit in the same compact sort of structure, whereas in a fuel cell, your fuel is cycling from outside. Right. Although certainly there are redox flow batteries, which are quote unquote, batteries, but in that sense are open systems and behave and act similar to what you see in the fuel cells. Right. But in short, I think a fuel cell is, again, a technology that can convert any energy containing fuel, whether that's just pure hydrogen or some form of hydrocarbon, into electricity. And it does that by the similar principles of electrolysis sorry, similar principles of electrochemistry that goes into batteries as well.
09:23 Dave Anderson Yeah. Even simpler explanation for our listeners is it's a gigantic box the size of a car that you run a fuel source through that generates a lot of power.
09:33
Ravi Manghani Exactly. Yeah, exactly. So fuel in, power out. Yeah.
09:38 Dave Anderson So there's been a handful of fuel cell companies that I think have made a splash. When I first got into Solar, which was actually 2010, 2009, when I first started actually looking at solar in 2010, there was a company called Bloom Energy. And Bloom made a pretty big splash. They were starting to get fairly large contracts with large retailers, with Amazon, with few others. They were going to put these Bloom devices or these Bloom boxes that were close to a million dollars at the time, I think that would be able to power entire campuses. And mostly they were using natural gas as the fuel source, I think, at the time. But I think to your point, hydrogen and there are other non carbon based fuels that could be used as part of this process. So now let's move into the next question, which is five years from today.
10:24 Dave Anderson Is fuel cell technology, is this an important part of the energy landscape in the future as you see it?
10:31 Ravi Manghani Yeah, I certainly see a role for fuel cells. Right. And I think the second sort of chance, or I shouldn't say second, it's probably sort of the fourth chance that fuel cells are getting to be an important part of the energy mix is because what we are seeing with green hydrogen today, right now, while green hydrogen sort of immediate impact would be more on the industrial and the manufacturing side. But if there is any opportunity for green hydrogen to be used for electricity production or generation, I think that would happen through fuel cells or could happen to fuel cells in addition to actually directly using turbines too. Right. But generally speaking, I think there is certainly we are living in an era, right, where we, I think as an industry or a group of industries have figured out how to decarbonize ourselves up to maybe 70 or 80% with solar, with wind, with today's battery storage technologies.
11:31 Ravi Manghani But I think the last 20% to 30% would need other tools in the toolkit. Right. And I certainly see fuel cells as being one of those tools, particularly in combination with green hydrogen.
11:46 Dave Anderson And maybe just to kind of put a period at the end of this. Why is it that fuel cells aren't more prevalent? I could have tried to finish the story, although I'm certainly going to be light on some of the details, but in the case of Bloom, ultimately its demise was it couldn't run a profitable business. But part of the reasons that it couldn't run a profitable businesses were things like many of the devices, these really expensive devices were starting on fire. So that was the problem.
12:13 Ravi Manghani I hope we don't use the fire as a segue to talk about batteries. But to answer your question, no, to answer your question though, right, I think it's a complex system, let's be honest, right. We are talking about highly flammable fuels. The reason why it's called a fuel cell is because they're using it with fuel. And fuel by nature can catch fire, right? They are inflammable because that's how we produce energy, first of all, right? By burning the fuel in traditional sense, but doing it electrochemically in fuel cells, right? But whenever we are dealing with fuels, certainly there are inherent risks. But to answer your question, I think it was not necessarily the fires that have led to a slower adoption of fuel cells. And we should all admit that blue energy still exists and still is selling their solution to different markets. But I think where fuel cells haven't been able to sort of be profitable yet is the underlying reaction is still not very efficient.
13:26 Ravi Manghani And as a result of that, there are a lot of losses. And even the materials that we end up using in making those fuel cells, especially the electrodes, they are not cheap. We're typically talking about very expensive metals. On top of that, in spite of these expensive materials that are used in making fuel cells, typically a fuel cell doesn't last for more than a few hundred cycles, right? So now you're not only talking about an expensive capex proposition, but you're also looking at potentially having to replace these technology or replace these devices on a more frequent cadence compared to your traditional or even solar or wind assets for that matter. Right? And then lastly, I think the other major disadvantage where I think, again, the green hydrogen holds promise is we don't yet have the right kind of infrastructure to be able to have these fuel cells in a centralized or even distributed manner, right?
14:31 Ravi Manghani Because end of the day, you still need to get the fuel from its source to the final load center where these fuel cells might be used and store them. Which of course, again, we have propane tanks, we know how to handle fuels in that sense. But to be able to do that to the same extent as what's needed to have a critical sort of rollout of fuel cells, I think that's been a challenge as well. Furthermore on the endotransportation side than on the stationary side.
15:04 Dave Anderson Yeah. So just to sort of simplify that or distill it down, it's really a matter of one, it's chasing efficiency relative to other competitive renewable energies like solar and traditional batteries, for example. It's also the issue of reliability, long term durable reliability and replacement costs and financing, those sorts of things. Those are some of the hurdles. Not to mention the infrastructure that needs to be built to sustain that technology. Those sort of things are sort of like the real challenges to the fuel cell industry right now. Is that oversimplifying it or is that's.
15:41 Ravi Manghani Pretty much all the three points. Right. Although, again, I think if you read some of the research reports from the last couple of three years, we're certainly seeing a renaissance of certain types of fuel shelves, particularly in coming out of China today.
15:56 Dave Anderson I did see a report of sort of the incumbent fuel cell companies and their pursuit to chase profit not that long ago. And there's some smaller scrappy companies that are maybe getting closer to profitability that are looking like they might be able to make a run at increasing the overall adoption of fuel cell. And I think, generally speaking, anything that's a clean, renewable energy source is a good thing. Obviously, again, we're very bullish on solar. And that being said, I think it's a nice time to segue. For as long as I've been doing solar, there's been a conversation with people about batteries and about storage. And that's obviously always been one of the knocks with solar, is like, okay, great. They're called solar panels, not lunar panels, which means they produce electricity when the sun's out, but what do I do when the sun goes down?
16:48 Dave Anderson Now we're starting to see, for a different reason, not just to be able to provide power in the evening time, it's a different reason, which is that there's an energy surplus during the day that's created by solar and that extra energy actually is no longer just being supplementing your neighbor's power and the other businesses power. It now needs to go somewhere so that it can be used later, otherwise it would just be wasted. Storage is actually serving. And the reason that solar storage is being adopted more today has less to do with the fact that people are trying to go off the grid and more to do with the fact that solar is starting to generate more power than it ever has. And as the adoption continues to go up, we need to be able to store that to spread out the use of the solar.
17:36 Dave Anderson So it's not just in the middle of the day when we're producing an incredible amount of power through solar. So maybe a little bit of a transition. So certainly you spent time on fuel cells. How did you make the transition over to kind of what I would call more standard storage or battery solutions?
17:52 Ravi Manghani Yeah, great question, and I think this is where I was just fortunate to stumble upon a really great opportunity while I was back doing my business degree. Back in 2000 and 910, we had an energy entrepreneurship class for which we had to sort of work with a startup. I decided to choose a battery startup called Ecolt. This was a lead carbon technology that was developed in CSIRO in Australia, and E Cold had their license for the technology and they were trying to commercialize that solution not just in Australia, but also in the US market. Given that this was 2010, ara funding had just started to roll out to support some storage opportunities. Fork had issued an order to allow for energy storage to participate in balancing the frequency in the wholesale market. So I think it was just the storage was just about coming to attention of the industry folks.
19:04 Ravi Manghani And so working with ECOL, that was sort of my first breakthrough into the energy storage, the battery storage business so to speak, and was fortunate to work with Eco for a couple of years after my graduation. And then eventually they got acquired by another battery company based in the US. And decided to part ways from them. But anyway, so that got me into the battery storage business. And right after that I ended up working at a boutique market research and consulting shop that had been doing solar market research and consulting for about half a decade by then, Photon Consulting, that's the name of the firm. And they were looking to start battery storage market research as well and thought that I would be a good fit to initiate their battery storage research program. Since then I've been at three different market research shops in every one of them, ended up being the founding member of the battery storage research practice in those shops and got a chance to learn about the industry along the way and see the industry grow.
20:21 Dave Anderson We should definitely talk about that. So your time as analyst, so Green Tech Media, obviously they were the sort of like, I would call it, major media outlet for the solar market for a long so your time there I think is really awesome for our viewers to hear about. So you were specifically focused on the storage piece of it. So maybe you can give us a little bit of the time that you joined from 2014 through 2019 and even through today. What has been the evolution of storage, specifically on the battery front that you've seen as your time as analyst? Because as analyst you kind of get a look at everything or said differently, you're obligated to look at everything to really understand the landscape. So maybe you can kind of give us an idea just in that short period of time from when you joined in 2014.
21:08 Dave Anderson If you need to go back a little further, that's fine as well. But from that period of 2014 through 2019 and then even through today, the evolution of storage.
21:17 Ravi Manghani Yeah, that's a great question. Right, and I think if I can synthesize it in just one single word, it's cost. Right, but obviously there are a lot of other factors that led us to this point here. Right, but if you think about where the battery costs, I'm not talking about an integrated energy storage system quite yet, just the battery cost. Back when I entered the world of battery storage back in 2010, were looking at about $1300 to $1,500 per kilowatt hour battery cost, which of course was prohibitive to make any kind of economic sense in any application, any sort of, I should say grid related application. Obviously battery still had a big role to play in consumer electronics and some other advanced niche technologies. But in the electricity space, 13 $14 was just not going to cut it. But that's where the Ara funding comes in.
22:18 Ravi Manghani Ara funding did promote a few different storage projects, what back then would call grid scale storage projects. Today we look back in the rare view were talking about 100 or 200 kilowatt systems back then and today we think about utility scale storage in hundreds of megawatt hours, if not gigawatt hours. Right, but anyway, so that's how big or small the market was back then. I think the writing was still not on the wall in terms of which technology was going to become the incumbent. Although lithiumion had certainly advantages because of the consumer electronics market that it had become popular in. But right around 2014 2015 time frame we started to see lithiumion cost get to a point where a lot of these storage projects started to become economically viable even without any kind of incentives, right? There are several sort of policy levers that played a role for this to happen.
23:24 Ravi Manghani Needless to say, the California's Self Generation Incentive program was one of the biggest drivers for distributed storage in and when a technology makes it in California, needless to say that it's going to become an important contributor in other markets too. But California happens to be sort of a clean tech leader in not just storage but other technologies as well, including solar for that matter. Right, so anyhow, the SGIP or Self generation incentive program led to a lot of storage adoption for residential and commercial purposes, typically for backup, but also in some instances for helping with electricity bill management. On the grid side of things. This was when PJM or the mid Atlantic ISO that serves about 13 states and DC in the mid Atlantic region, have started to see a lot of storage deployments to support the frequency regulation market, which is one type. Of ancillary services.
24:36 Ravi Manghani And ancillary services are nothing but your services that are needed for second scale or a few minutes scale of balancing of the grid. Right, because the grid is never sort of well not never. Grid has to be balanced in real time any given instant. Right. The supply has to match the demand every single instant and it's never the case that you know exactly how much supply you're going to have or exactly how much demand you're going to have. So you're always left with tools such as the Anthem services to balance the grid on a second and a minute interval scale. So PGM was the forefront of adopting energy storage to support these frequency regulation applications and other ISO swallowed too, right? Other system operators followed too, new York ISO being the second biggest back then or even the ISO New England that covers the New England states, although the other system operators, including the California ISO, did not have significant frequency regulation appetite back then.
25:46 Ravi Manghani But obviously California did pass AB 20 514 mandate around this time. And AB 20 514 for your viewers, was the first ever storage mandate passed by any entity which basically required the three major investor owned utilities to go out and procure energy storage as a condition. Now, AB 20 514 did sort of lead to a lot of improvements in how utilities started to look at energy storage. We are still talking about the major three California utilities, but again, like I said earlier, whenever California starts doing something, everyone else follows, right? So AB 20 414 sort of set the rules for how should utilities think about energy storage, what are some of the procurement best practices that they should follow. So they sort of started to build a rulebook which was then obviously revised over a period of time, but eventually adopted by several other utilities in the country and elsewhere.
26:54 Ravi Manghani Now, one other sort of event which happened right around 2018, if I'm not wrong, was the Alissa Canyon gas facility leakage. Right? And as a result of the Alicer Canyon gas leakage, the state of California was in dire, immediate sort of need for getting firm or reliable resources to replace the gas shortfall. And that's where I think this is where, again, I think it gives me faith that when policymakers, the industry and regulators all come together to come up with a solution, it usually means an efficient execution. And I think that's what we saw with sort of the Alicer Canyon related energy storage procurements that happened in a matter of months, which is unheard of, or at least was unheard of, that a utility or several utilities. Could come in, get the approval from the CPUC, put those projects in the California Isoq, go out and seek out RFPs and seek out bits through those RFPs for energy storage products, and be in a position to install and bring those projects online in a matter of months.
28:20 Ravi Manghani So I think that was certainly one of the fastest sort of execution of any RFP I have seen and probably even factor today's environment as it relates.
28:33 Dave Anderson To your current day job with solutions. I mean, what are the typical customers that are coming to you for battery and storage solutions? What's their typical use case and what's the problem you're trying to solve for?
28:46 Ravi Manghani Great question. So the way we think about different use cases at LS Energy Solutions is we sort of first bucket them into two major categories. We have what we call as a power series product, which typically is used for 1 hour or sub 1 hour applications. So this is where you could be using these for providing frequency regulation for Blackstar application for microgrid kind of applications. And then the other variety or other flavor is the energy series, which are two plus hour applications. Right. So we're talking about some peak shaving. You're talking about energy time shifting, whether that's along with a solar asset or just as a standalone storage asset on the grid that can shift your excess generation during middle of the day or during low demand hours and push it out to evening, which are typically the peak demand hours. We're seeing that even in today, right.
29:43 Ravi Manghani With activity in ERCOT. I was just reading right before jumping on this podcast recording, is ERCOT had a record breaking demand, sort of peak demand yesterday. And we are still talking about, in spite of getting 83 or 84 gigawatts of peak demand yesterday, the prices still stayed relatively low. And the reason for that, of course, is we've been fortunate that both the wind and solar generation has been keeping up with the middle of the day demand, but then also battery storage technologies coming in and providing the support during the shoulder hours when the solar production starts to go down. But the wind generation hasn't quite picked up yet. Yeah. Wow.
30:31 Dave Anderson It's incredible. So going back a little bit to the batteries piece of it. So there are a few different things. So from your time as analyst starting in 2000 and 414, you said first and foremost, it's a cost thing, but there really are a couple of components.
30:44 Ravi Manghani Right?
30:44 Dave Anderson So it's the cost. And then the next thing as it relates to batteries is technology and chemistry. You'd mentioned and I want to come back to the cost one, but the technologies and the chemistry, you said were still trying to solve for that. When we say lithiumion. Lithiumion, it's really a catch, all right? There's lots of different chemistries and different people, different companies, different battery manufacturers are using different chemistries. For the layperson like myself, I would lock myself into that category. We say lithiumion and we sort of like paint with broad brush there. But it's really many different kinds of chemistry, and there are different battery companies that are trying to come up with more efficient, more effective battery storage solutions. When you said that we're still trying to standardize around a certain battery, I think you'd mentioned lithium iron as well. How much opportunity from an engineering perspective exists in terms of battery improvement?
31:37 Dave Anderson Do we have a sort of like, lab optimal that we're all starting to drive toward, or is it really unknown?
31:44 Ravi Manghani No, there's certainly a lot of opportunities today. Right. And again, I don't have the numbers in front of me, but from a theoretical standpoint, if you think about as an engineer, you always are trying to match up theoretical limit. And I think theoretical limit for, again, the catch all lithiumion based technologies is, I believe, 400 plus watt hours per litter. Don't quote me on that. Well, you're quoting me on that, but the point is that today's technologies are in the range, right. So what that means is, again, from a theoretical can sort of engineering standpoint, we are only halfway there in terms of achieving the efficiencies that we can with lithium ion technologies. Now, of course, needless to say that we call it theoretical because we can only sort of strive to get there, but we may not ever get to that point. But even if we get three quarters of the way there, we are still talking about solutions that are 50% more efficient than the most efficient lithium solution out in the market today, for instance.
32:52 Ravi Manghani Right. But then beyond that, of course, we can think about there are well, let me back up a bit. This is just today's lithiumion technology, where we are talking about today's generation of liquid electrolytes, today's generation of cathodes, which typically have a mix of different metals. Whether we're talking about and pardon me if I'm using some acronyms, but I'll try to spell this out NMC, which stands for nickel, magnesium, cobalt is one of the most popular cathode material we have. NCA, which is nickel, cobalt, aluminum, which was the solution that was made most popular is made most popular by Tesla. That was the first solution that they started to sort of roll out with. But then there are some others as well. We use titanium to make LTOs. We use other forms of sort of metals right on the cathode side, on the anode side, typically the go to sort of solution on the anode side has been graphite, although we are starting to see some other elements being used on the anode side as well.
34:01 Ravi Manghani In particular, silicon has gained momentum. Although we haven't seen 100% silicon based anodes, we certainly started to see silicon being added to graphite to get a blended graphite silicon anode. And that helps improve the efficiencies as well. So that's sort of staying well within the technologies that are already commercial today. The next generation of lithium technologies which hold a lot of promise but are at least half a decade or maybe more out from commercialization are where we start to use solid state electrolyte, we start to use lithium metal itself as anode and getting rid of graphite or silicon altogether. So there are certainly these promising sort of solutions or technological innovation that are still going to happen that will help us to bring the cost down further. Would also improve on the specifications of these batteries, whether that's in form of being able to charge and discharge these batteries in a much more faster I'm going to switch gears and talk about our HSN electric vehicle market for just a second.
35:21 Ravi Manghani But one of the biggest sort of roadblocks for the further EV adoption is range anxiety, which is tied to how much batteries, how many kilowatt hours can you pack in a vehicle? And then related to that, how long would it take to charge those batteries? Right? So the solid state chemistry that I talked about, or even, let's say metal on the anode side, or even silicon for that matter, on the anode side, will help improve on those aspects. These solutions can make these batteries much lighter and more compact, as a result of which we can essentially pack more kilowatt hours or pack the same amount of kilowatt hours without having to make these cars that are super heavy. Right, and then lastly, being able to charge from zero to 1000 miles, for instance, in ten to 15 minutes instead of today's solutions, which take about even with fast chargers, can take up to 30 to 40 minutes to go from zero to 300 or 350 miles.
36:20 Dave Anderson I'm an electric vehicle user, so I don't experience the range anxiety for the use case that I use my electric car for my truck. I don't experience that. We're not back. So it was the Leafs, really, and we've actually talked a lot about this on the podcast. But back when you had 70 or 80 miles on a leaf and you had a 70 or 80 miles commute, if you showed up at work and all the chargers overtaken, that was a problem. It was like, how am I going to figure out how to get home now? Yeah, but let's talk a little bit about if we could going back to the cost. So $13 to $1,500 when you first started taking a look at this, was that in the 2014 timeline?
36:56 Ravi Manghani This was right around 2010, 2011 time frame. By 2014, when I was at GDM, if I remember correctly, the first battery ECAs survey I'd done, I think the battery prices back then were about $800. So we'd already seen a drop from 1300 to around 800 in a matter of four years from 2010 to 2014.
37:16 Dave Anderson Yeah, on the residential side with battery solutions. So I was at Re Plus just this last September and you saw some very not named brand, actually, large companies, most of them Chinese companies, but people that you wouldn't necessarily recognize the names of. The companies here in the united states, but huge, large businesses from out in china or government owned, government invested entities out from china that were pricing maybe in the $300 for their battery solutions up to 1000 or even one $200. So the $13 to $1,500 on the resi side, on the residential solar side with batteries, that's not actually going to shock anyone. That's the retail price that people are actually still paying for some of the more name brand battery solutions that exist.
37:57 Ravi Manghani Well, I should add though, right, the cost that I'm referring to, I'm just talking about just the battery pack of the battery rack, right? But the cost that we are talking about in the sense of residential customers cost to install batteries, there are other hardware components. We are talking about inverters, we are talking about management system. We're of course, even including some of the installation cost in that too. Right? So it's a combination of both the hardware or the hard cost, but also some of the soft cost. But here, certainly the reason we still only have low single digit adoption of batteries in the residential space is because the cost still don't make sense. Now, an example here is I call myself a storage veteran. I do have solar panels on my roof, I do have an electric vehicle, but I still don't have a battery in my garage.
38:53 Ravi Manghani The reason for that, it still doesn't make sense to me. Right. From a pure economic standpoint, in spite of the fact that living here in Massachusetts, we certainly have very high retail electricity rates, I do get power outages due to weather every couple of times a year. We have a pretty lucrative demand response kind of a program through the electric utilities called Connected Solutions, where I think you get a few thousand dollars over a life of the battery to participate in this demand response program for a few times in a year. Right. So the point there being that there are all these incentives in addition to, of course, the storage ITC or even the ITC, the previous form of ITC that still would have applied to residential storage if paired with solar. All being said, with all these incentives, with demand response participation revenues, with the fact that I still get an outage where having a battery or having some form of generation would make sense, I still haven't installed a storage asset or storage system in my garage.
40:06 Ravi Manghani Because even factoring all these benefits, it still doesn't make any economic sense to a residential customer.
40:12 Dave Anderson Yeah, Ravi, it's interesting you're talking about it really from the perspective of a consumer as well. It's sort of like for most of us that are in the residential space or are in the renewable space, it's kind of like the hair club for men. We're not know working in the industry, but we're also customers of the industry as well. And everyone is using energy. Energy impacts everyone. So it's just a matter of like, where do you get your energy from and these sorts of things. And so obviously for you, Robbie, the transition that you've made is that you have solar on your house, you drive an electric vehicle. I have solar on my house, drive an electric vehicle. For many people though, that ask me about batteries, my answer has often been to them it's like listen, it might be a not yet in terms of just a pure financial background, or if you're looking at it from a pure financial perspective, it's difficult to, unlike with Solar, directly show a customer what their return on investment is for the cost.
41:02 Dave Anderson That being said, battery storage means a lot more to a lot of people. So, for example, if energy reliability is something that's important to you, so people that are on medical devices like oxygen or sleep with a CPAP, even at nighttime and disruptions to energy can actually be life threatening for customers like that. Batteries and solar make so much sense. Additionally, if you just don't want to be bothered by the if you work from home and you don't want to be bothered by the inconveniences of power outages or disadvantaged by power outages, then just solar alone isn't enough. You need solar plus the storage. There's things like that are considerations outside of just the return on investment. So as there's been a transition like in California, where it's obligatory almost not completely, but almost obligatory to add batteries to a solar solution, in Hawaii, it's absolutely obligatory.
41:53 Dave Anderson On the residential side, it's no longer just a conversation about return on investment. It's really know there are other components, whether it's just energy backup, whether it's just peace of mind knowing that you have the power. Now, if you're talking about it from just a return on investment perspective, there is that load management, the ability to store power when the power costs are low and sell it back when the utility company is in need of higher cost, of more power. You can sell it back at higher rates in certain places, like in the East Coast. And you talked about that, the ability to sell your power back actually through a contract to the utility companies and residential solar customers are now being able to participate in those sorts of contracts, the demand response contracts, which is something that's new to the space and still being figured out.
42:41 Dave Anderson These are exciting things and are helping to drive the adoption of solar batteries. I would love to ask you, Ravi, since you're in the space, what are some of the myths that exist that you frequently hear about batteries that you like to sort of dispel or that you could kind of talk to our listeners about?
42:58 Ravi Manghani Yeah, absolutely. So for answering this question, first of all, I'll take off my consumer hat and put back my industry hat again and start right off the bat saying that we cannot talk about return on investment in the twist of sense when you talk about batteries because you're never going to get return on investment. It's a cost. Let's be honest, it's a cost. And I think the way we need to sort of paraphrase or change the discussion is not so much talk in terms of return on investment, but talk in terms of cost parity. Right. Because what we're trying to replace again, purely for the residential market right now is trying to replace your genset. Right? And typically those gen sets cost anywhere from a few hundred dollars at the very low end, the portable ones, to maybe 10,000 on the high end for the standby generators that several people I know in my neighborhood have.
43:53 Ravi Manghani Right. So I think the answer here is what are today's battery cost after factoring in the ITC after factoring in the demand response revenues that you can get and all the other sort of benefits that you have is it at cost parity with your genset. And until we get to that point, you certainly won't see significant amount of adoption of residential storage. Now, switching gears and talking about this question more broadly, right, about the myths that exist in the battery storage world, or rather myths that exist in the industry around battery storage, I think the biggest myth is that it's still expensive, right? And the number of times we hear that from electric utilities in particular, those are one of the customers that we serve, is they don't think the costs are at a point where they can make the economics work out. But I think that again is a bit sort of a half picked answer because there are certainly when we think about battery storage and again, pardon me for using this age old cliched term of it being a Swiss army knife it is a Swiss army knife, right.
45:10 Ravi Manghani Because you cannot just think about battery storage as something that is used for only one single set of application or use case. But you can certainly have a same battery storage system provide multiple use cases. Some of the projects that we currently working on, our customers are using our battery storage for the same storage product is being used to provide peak shaving to the electric utility as part of their contract. But then they're using the storage asset to participate in ancillary services market when they're not obliged to participate or not obliged to provide peak shaving service to the electric utility that they currently have contract with. One other application where we are working with a customer, this asset is going to be deployed at a military base and it's going to help the local utility save some cost by reducing their peak shaving cost. But then this battery asset in the future could also participate in providing micro grid application and in providing backup services to the military base, right?
46:16 Ravi Manghani So when we sort of step back and think about use cases and try to stack these use cases together, I think the cost certainly becomes less relevant, I won't say irrelevant for the economics to work out. So I think certainly cost is one of the things that is a common myth here. The other common myth is around the lifetime, right? Yes. Battery storage is a bit unique compared to, let's say, solar or wind because if you went to a solar developer or wind developer and asked them a 25 or a 30 year PPA, they can immediately write it off and hand it to you. When we talk about storage PPAs or storage contracts, you have to sit across the table from a customer and try to understand the use cases first. Right, because if you're going to be using this battery storage only, let's say ten times a year to provide peak shaving and it's going to be just sitting idle for the rest of the 355 days.
47:13 Ravi Manghani Sure we can give you sort of a contract that would guarantee the product for 20 years. But now if you're going to turn back and say, I'm just giving an extreme case here, we can certainly cycle up to one cycle per day, for instance, and still get a guaranteed product for 20 years. But now if the use case was different, now if you're going to tell me that it's going to be cycling two times a day and the rest of the time it's going to be providing anthropology services, now you're running the battery to the ground much faster right now. Effectively it's the same as when you're driving a car. If you're driving a car at the speed limit all year round and only driving at let's say, 5000 miles per year, certainly that car would last you ten to 15 years at least. But now if you switched it and you are a rough driver, you are always going to be challenging the speed limit.
48:02 Ravi Manghani You're going to be driving at 120 mph. Don't do that people, please. And then driving 25,000 miles per year, you're not going to get the same ten or 15 year lice on that car. The same applies to battery storage. So I think while battery storage technology is not quite there yet to provide a 25 or a 30 year contract, we certainly are at a point where we can provide a 20 year contract for most of the use cases that are not going to be punching the battery to the ground more rapidly.
48:36 Dave Anderson Yeah, on the residential side, you still are seeing 20 year PPAs, but the truth is that most of those PPA providers are amortizing in some replacement at some point. And so you might have a contract, but there's additional costs that get amortized in for replacement and there's assumptions that go into that amortization, like how much is the battery going to cost in, let's say, twelve years, which is typical replacement amortization schedule for a residential battery. If it's twelve years out, it's going to be a quarter of as much or something like that.
49:09 Ravi Manghani Exactly. And when we are selling to again for a utility scale application, we would again go about it in a couple of different ways, right? First of all, not thanks to the IRA and the standalone storage. ITC, it certainly helps to oversize a system because you could oversize a system by 25, 30, 40%, and get the 30% tax rate right off the bat. So a lot of the developers are oversizing these systems and then not using it to the 100% of the oversized capacity and thus being able to use it for much longer. The other approach which we see just as prevalent is through augmentation. So what that means is you are sizing the storage asset just about to the level that you need it for the first three to five years or some instances even the first couple of years, and then adding one or two containers at a time for the life of the asset and hence being able to sort of keep the capacity roughly to the level that you are contracted for.
50:13 Dave Anderson Yeah. When I asked you about myths, it's interesting, I still see and shockingly, some people still believe, like in the case of solar on our social media site, just last week I saw a customer controversially come on our site and leave a comment saying solar panels only last five years and they're filling up our landfills. Which to be honest with you, that sort of ignorant type of a comment I just sort of chuckle at and don't respond to because most people at this point know that's not a true statement. But what are some of the things that you're seeing that get oftentimes spewed either in social media or in news outlets or other places in terms of some of these myths about batteries that either just kind of make you chuckle or actually make you frustrated?
51:00 Ravi Manghani Yeah. So I think there are some of these, I don't want to necessarily label them as pure myths because certainly there is some element of truth and again, us in the industry have to be good citizens and behave responsibly, right? But some of the issues that get blown out of proportion and pardon my pun here, but the whole fire issues that we see with batteries certainly is a myth that people think that batteries are not as safe as they actually are. The second myth is you mentioned filling the landfills, right. That sort of ties into supply chain. And while again, the battery supply chain, while it's not as guilt free of some environmental and social concerns, particularly around mining of these raw materials, I think the industry is definitely getting more aware about what needs to happen to go past these issues. And like I said, be good citizens of this world, right?
52:17 Ravi Manghani So on that second point in particular, we have seen a significant amount of sort of emphasis around circular economy or sort of end of life based or end of life based business opportunities, right? Whether that's for reusing these batteries for second life application or recycling in order to sort of extract out all the economically, economic, sort of value out of those used spend batteries and then obviously dumping into landfill as being the last resort. And hopefully in the next few years we will probably get as close to recycling most of the batteries. And again, there's a precedent for that, right. Lead acid batteries, which are the oldest roll of batteries that we know of, about 98% of lead acid batteries get recycled globally, right? So certainly lithiumion has a lot to catch up in terms of getting recycled and reused, but we're certainly seeing a lot of companies come up with different, both technological as well as logistics based solution to be able to recycle all the critical materials that go into making batteries.
53:39 Dave Anderson Yeah, I guess I shouldn't be overly dismissive of some of these myths that are oftentimes based in, even if just anecdote, some truth. You did hit one thing that were we given more time? I'd love to talk more about the sort of social costs of our industry. Right. So it's not just when we talk about renewable and sustainable, it's not just about clean energy and carbon emissions. It's really making sure that we're developing and building and working with an industry that provides the same level of moral approach to all the social issues that are tied with the industry. I mean, solar a year and a half ago was hit with a controversy where the panels weren't allowed to come into the country because the glass was coming from a part of China where it was known that much of the glass was coming as a result of slave or child labor and forced labor.
54:33 Dave Anderson And so that was obviously a black eye for the industry. And I think most of us were happy to see, frankly, changes. And I would also say that most of us probably were pretty ignorant to the fact that a lot of these things existed. But to turn a blind eye to them isn't appropriate either. So I don't want to be completely dismissive of some of these rumors or even myths that exist, but certainly we have a responsibility to try to do what we can to be both socially aware as well as just environmentally aware.
55:05 Ravi Manghani Yeah, I do want to sort of do come back to the myth element of it. Right. I think I've seen some charts in social media especially, where people would again extrapolate the amount of emissions that are created in the manufacturing process of these batteries, but then obviously miss out on the fact that once you pass the manufacturing process, when they are operating for 15, 2030 years, you are not creating any emissions at all. If anything, you're helping reduce the emissions by using the extra solar generation or by keeping some of the dirty fuels off the grid during those peak hours. Right. The quote unquote peaker plant replacement use case that storage has been a major contributor to. But in any case, I think when we think about emissions or when we think about, again, the entire environmental impact, we got to sort of do from sort of cradle to grave approach towards even cradle to cradle approach of looking at the impact.
56:13 Dave Anderson Yeah, exactly. Well, with the little bit of time we have left here, I'd love to ask or try to get from you, Ravi, what's one bold prediction as it relates to energy storage that you can give to our listeners?
56:24 Ravi Manghani Oh, geez. If you'd have asked me this question pre Pandemic era, I would know blindly said that costs will keep going down. But obviously the Pandemic has changed our view of the market. But I think if I can provide one bold sort of prediction, it will be that we will start to see other forms of storage, not just lithiumion based technologies, but other forms of energy storage in the market lot sooner than what a lot of people are predicting. We typically think about long duration storage as something that would be relevant only in the have a feeling that we will see long duration storage projects, commercially viable long duration storage projects in the.
57:17 Dave Anderson Ravi, I appreciate it. Thanks so much for coming on again. Ravi Mungani has been my guest today and it's been great to get someone that has such an intense both engineering but also a business background as it relates to storage. And again, I think this is the first segment that we've featured on our podcast, talking as much as we have about fuel cells as well. So it's been great for our listeners to learn about that as well. Robbie, absolute pleasure to visit with you today. I'm really excited for the feedback and comments we're certainly going to get that I expect to get as it relates to the content we've been able to share and produce today. And thanks so much for coming on today.
57:54 Ravi Manghani Likewise, Dave. Really nice talking to you.
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