A full quarter of global energy use goes toward heat that powers industrial processes. To provide clean industrial heat but avoid the variability often associated with renewable energy, a company called Rondo makes a thermal battery, storing renewable-energy heat in bricks. In this episode, Rondo CEO John O’Donnell talks about this breakthrough technology and the opportunities that thermal storage promises to open.

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David Roberts

Electricity gets the bulk of the attention in clean-energy discourse (this newsletter is, after all, called Volts) but half of global final energy consumption comes in the form not of electricity, but of heat. When it comes to reaching net zero emissions, heat is half the problem.

Roughly half of heat is used for space and water heating, which I have covered on other pods. The other half — a quarter of all energy humans use — is found in high-temperature industrial processes, everything from manufacturing dog food to making steel or cement.

The vast bulk of industrial heat today is provided by fossil fuels, usually natural gas or specialized forms of coal. Conventional wisdom has had it that these sectors are “difficult to decarbonize” because alternatives are either more expensive or nowhere to be found. Indeed, when I covered an exhaustive report on industrial heat back in 2019, the conclusion was that the cheapest decarbonization option was probably CCS, capturing carbon post-combustion and burying it.

A lot has changed in the last few years. Most notably, renewable energy has gotten extremely cheap, which makes it an attractive source of heat. However, it is variable, while industrial processes cannot afford to start and stop. Enter the thermal battery, a way to store clean electricity as heat until it is needed.

A new class of battery — “rocks in a box” — stores renewable energy as heat in a variety of different materials from sand to graphite, delivering a steady supply to various end uses. One of the more promising companies in this area is Rondo, which makes a battery that stores heat in bricks.

I talked with Rondo CEO John O'Donnell about the importance of heat in the clean-energy discussion, the technological changes that have made thermal storage viable, and the enormous future opportunities for clean heat and a renewables-based grid to grow together.

All right, John O'Donnell of Rondo. Welcome to Volts. Thank you for coming.

John O'Donnell

Thank you. It's a great pleasure.

David Roberts

I am so excited to talk to you. I've been geeking out about thermal storage for over a year now, just wanting to do something on it, and there's so much there. And I find that unlike a lot of electricity topics which I cover, there's just not a lot of baseline familiarity out there among, let's say, normal people. So there's a ton to cover from the ground up. So I want to start at the highest possible level, which is to say, let's just talk about heat. Like in the clean energy world, electrical power gets a lot of attention, a lot of discussion, a lot of technological development.

Everybody's got their favorites, everybody knows what's going on. But then there's also heat, which is the sort of weirdly ignored not so much anymore, but up till pretty recently ignored. So maybe just start with an explanation of why heat is important if you care about clean energy, why you should care about heat?

John O'Donnell

Thank you. Sure. That's a great question. And that context you just provided is, of course, dead on. There's a really simple answer. Heat. Industrial heat is 26% of total world final energy consumption. Whether you are making baby food, or fuel, or cement, or steel, the manufacturing processes vastly predominantly use energy in the form of heat, not electricity. Globally, it's three quarters of all the energy used by industry is in the form of heat. Again, whether you're pasteurizing milk or melting steel. And the DOE has just created a new office focused on this topic. We're thrilled about it.

Their assessment is that industrial heat is 11%, I think, of all total US CO2 I'm in California. Here in California, we burn more natural gas for industrial process heat than we do for electric power generation. And to a first approximation, as you just mentioned, no one knows that.

David Roberts

Right. So heat is a huge portion of final energy consumption. It's a huge portion of global CO2 emissions. So maybe give a sense of like, what percentage of total heat final consumption is industry, like how's the total heat-pie divided up.

John O'Donnell

So when I said 26% of world — that's industrial heat, right. So that's not buildings, that's not other heating sources.

David Roberts

Right. Heat is a bigger category than that.

John O'Donnell

I mean, if you take actually heat for buildings and heat for industry, together they're like 60% of all the natural gas used in Europe. But within industrial heat, people sort it out by a couple of different things. One of them is the temperature. There's a lot of heat in cooking processes. That's around 150°C in the form of steam all the way up to the highest temperature heat in making cement, that's around 1800°C. About 95% of total heat is used in processes that need it below 1500°C, about maybe half to two thirds of industrial heat is below about 400°C.

There's a fairly steep curve. About half of all industrial heat, something like that, is delivered as steam.

David Roberts

Right. Steam is the lower end of the temperature spectrum. I recall looking at these charts of sort of what industries use, what levels of heat. Up at the super high heat, you have pretty singular industries, like steel's up there and concrete's up there. But down in the lower heat registers, where you're using just steam, there's a bunch of little industries clustered up there. Most of the industries are using that.

John O'Donnell

That's right. All of these have been things that people say are hard to decarbonize because across many of these industries, they're making commodities, whether it's steel or tomato paste that are relatively low margin and for which the cost of heat is a very significant portion of the total cost of production. So this is a sector where all these processes use heat in somewhat different ways. The cost of that energy is really critical to the competitiveness of that industry and what commodities cost consumers. And there have not been great solutions until recently that could provide decarbonized heat at the same or lower cost.

David Roberts

So the situation is there's a huge chunk of our energy that goes toward heat, a huge chunk of that goes toward industrial heat. And there's been comparatively little work on finding zero carbon versions of that heat. That's the problem we discussed the last time we talked, probably three or four, five years ago. Everything pre-pandemic is a haze. But I think it was around five years ago I covered this big comprehensive report on industrial heat options, like, what can we do about industrial heat? And it went through the options, and basically the conclusion was that continuing to do it with fossil fuels and just capturing the emissions post combustion was the cheapest option for a lot of these heat uses.

And I dutifully reported that. But I didn't like it. I didn't like the idea that that's the best we can do is create these Rube Goldberg machines where we're digging up carbon, burning it, capturing the carbon, burying the carbon again, et cetera. I was like, surely that's not the best we could do. But things have changed a lot, since then. So maybe just run through what are the low carbon heat alternatives and which ones have emerged recently, and what has changed that has helped them emerge?

John O'Donnell

Yeah. Thank you. You said for a long time there hasn't been much work on this. I would say partly there hasn't been so much success on it. I've been working on for 15 years.

David Roberts

No offense, John.

John O'Donnell

And in two previous solar companies we wound — who are a lot of the team here at Rondo worked with me there — we wound up delivering more than half of all the solar industrial heat that's running worldwide right now. But to say that's a drop in the bucket is oversizing a drop you asked exactly the right question. What are the options? Because the world has really changed.

There has always been the option of burning biomass, which is more or less sustainable, but very high cost, high air pollution, and very, very limited availability. Other kinds of biofuels, like renewable natural gas, if we take it to a giant scale, it might power as much as 1% of our industrial heat. And it's easy to laugh about, but it's true. The thing that has profoundly changed is what the wind and solar PV industries have accomplished over the last 15 years. The 95% reduction in cost means that intermittent electricity is becoming — has become — the cheapest form of energy that humans have ever known.

And it's now cheaper than burning stuff as a source of heat, but it's intermittent. So how do we take that intermittent electricity and use it to deliver the continuous heat? I mean, you turn on a smelter or a factory or even a tomato paste plant, you run it for months or a year on end, it has to have continuous heat or it will be damaged.

David Roberts

It's worth just pausing to emphasize this. The vast majority of industrial processes are continuous. They cannot run intermittently. They cannot stop and start with the sun and the wind. It just would be wildly uneconomic.

John O'Donnell

That's a beautiful and concise way of saying it. Like there are processes where if they get a half second interruption in their energy supply, it takes a week to restart the process. Reliability is a very big deal. So what are the tools we have for that? Intermittent electricity, which is becoming plentiful. And in places right now, you can have essentially unlimited amounts briefly every day at prices far below fuel prices. We have hydrogen, electrolytic hydrogen, make hydrogen, compress it, store it, and then combust it. That works. Although electrolyzers are today expensive, they're coming down in cost.

But the laws of physics bite you in that you get about one unit of heat for every two units of electricity because of the chemical steps involved.

David Roberts

Right. All the conversions.

John O'Donnell

Yes.

David Roberts

But can you just dump hydrogen into existing boilers and kilns? Like, is existing equipment hydrogen ready, as they say?

John O'Donnell

Not exactly. It's hydrogen ready for a few percentage of hydrogen. But when you look at a boiler, 95% of its lifetime cost is the fuel, not the boiler. So upgrading boilers to run that other fuel, that's something that you would do if the economics of that fuel were sensible.

David Roberts

Got it.

John O'Donnell

Right? Now at taxpayer expense. We're creating a period where hydrogen, electrolytic hydrogen is going to get down to the same cost as fossil fuel in the US with tax credits. But again, intermittent electricity by itself today is cheaper than fossil fuel. Doesn't need tax credits to get it to that point. And now there is this emerging class of electric thermal energy storage systems that don't do chemistry. They just convert electricity to heat directly and then store the heat. Because heat storage, another thing you could do I skipped over is you could, of course, store electricity in a battery.

Right.

Which would be the most expensive thing.

But if you have a coffee thermos on your desk, it's storing energy as it happens. The energy stored in your coffee thermos is more energy than the energy stored in your laptop battery, and it's a bit cheaper than your laptop battery. Storing heat is cheap right now in the thermos. What do you have? You have hot water, which stores a lot of energy per degree, and an insulation thing around it, depending on how good the insulation is, that'll tell you how long that thing will store energy. All those things have been around for a long time, and suddenly, okay, how are we going to heat these things electrically?

How are we going to use simple technology? Because most people who are working on electric thermal storage are doing simple things. There are some exotic things using conductive materials, liquid metal things, but there are simple things that people are doing also.

David Roberts

You're hitting directly on something. That is why I love this area so much, why it sort of kind of caught my imagination so much. Like, you really have a situation here where electricity was just more expensive than fossil fuels for these purposes up until like five minutes ago.

John O'Donnell

Exactly.

David Roberts

In terms of looking for opportunities for just storing. Now that electricity is cheap, we're looking for ways to store it and use it as heat in a lot of ways for the first time. And what that means is there's like, very simple low hanging fruit all over the place. The way I think about it is, like, my generation maybe like younger people than me, when we think of technology or advanced technology, we generally think digital, and that generally means opaque. Like, we don't know what's going on in there. Even cars these days. Like, so little of it is mechanical anymore and so much of it is digital and computerized.

It just seems opaque to us. And these technologies of storing electricity as heat are so delightfully simple. Like, you're literally just heating up a rock and that's, like, you might say that heating up a rock is literally the oldest energy transfer mechanism that humans have available to them. It's probably the very first way we moved energy ever, literally. So it's just fun to me in that it's almost like a childlike sense of discovery to it. Anyway, that's just my that's completely off topic, but ...

John O'Donnell

One of the electric thermal energy storage technologies actually uses rock. And on the outside of the pilot it says, welcome to the new Stone Age. And there's a mastodon as the mascot. So, yes, it's a well understood thing.

David Roberts

So just to sort of summarize where we've been so far, you need all this heat. Up until very recently, it was overwhelmingly cheaper to do it by combusting fossil fuels. A lot of the alternatives to fossil fuels are more expensive than fossil fuels. But now recently, along comes renewable wind and solar electricity, which are cheaper than anything. So now the challenge is, well, how do you get the heat from the wind and solar electricity? As you say, the applications are running around the clock. Wind and solar come and go. So in between the wind and solar and the applications, you need something that's going to store that wind and solar that can release it in a steady flow.

John O'Donnell

Exactly.

David Roberts

So that's the new thermal storage technologies that are emerging now are sitting right in that space, including Rondo. So if you're talking about something sitting in that space, what do you need out of it? What are the sort of metrics by which you judge the performance of that thing that's sitting in between the renewables and the application?

John O'Donnell

Great question. So obviously you need safety, efficiency, cost, temperature at which the heat can be delivered.

Right.

Some other things as well. One of them is the faster that you can charge the system and deliver energy continuously. If you can charge it, if it takes you typical batteries, they charge and discharge at the same rate. But here we'd like to charge perhaps during the solar day in six or 8 hours and deliver for 24 hours continuous. If you could charge in about 4 hours, we find that's even more valuable. The periods of curtailment and the periods of zero and negative electricity prices in electricity grids are short.

So the ideal thermal storage can charge very rapidly. You can control its charging like other batteries, it could participate in providing grid services and it can run continuously, shut it down once a year for inspection and when the factory that it's connected to is shut down and just sit there and require low O and M, operating and maintenance, costs.

David Roberts

Yeah, and I presume low losses too.

John O'Donnell

Yeah, that's right.

David Roberts

But I want to pause and just emphasize the first point you made just so people get it. We have these wind and solar all come online at the same time because they're all using the same wind and sun. So what you have are these periods of oversupply. I think people are familiar with this. You get oversupply more than the grid can use and today that just goes to waste. It's curtailed. That energy is not used. And so what you're doing is proposing to come along and use it. But if that's your economic sweet spot, those couple of hours of curtailed energy, you need your battery to charge as much as possible during those couple of hours.

In other words, charge really quickly because the amount of energy available in those curtailed hours, especially in coming years, is going to be potentially huge. Right. So you need to stuff a lot of energy in your heat battery really quickly.

John O'Donnell

That's right. Now the early deployments of heat batteries will use what is curtailed today. One of the things that we see that's uniquely pretty cool about this class of electric thermal storage is the total amount of energy that industrial heat needs is really large for scale. I think we had a 52 gigawatt system peak in California not long ago. We've got about 20 gigawatts of PV in the state. Just repowering the boilers and furnaces that we have right now in California needs 100 gigawatts of new generation to replace those fuel BTUs, about 40 of those gigawatts can actually be built without any connection to an electricity grid.

One of the things that's great about ETES powering industry is we're headed for a world where industrial electrification is not creating more problems for the grid, but we'll get there. But this matter of fast charging rate means that new generation projects that are serving the grid, the best ones, the cheapest ones, will be built selling part of their power to thermal storage. Like during the peak and curtailed hours and then delivering those broader shoulder renewable power to the electricity grid. And we're seeing again and again that that's a formula for low energy prices for the industrial and for lower prices to the grid.

There's an interesting synergy.

David Roberts

Yeah, we're going to get into that synergy in just a second, but I want to focus on how we're evaluating the heat battery. So we want it to absorb a bunch of energy quickly.

John O'Donnell

Fast, charge. Yeah.

David Roberts

And then we want it to hold that energy with very little losses. And this is the other fact about thermal storage that blew my mind that I do not think is widely appreciated, which is the incredibly low losses here. People are accustomed to, I think if you want to store energy in hydrogen, you're losing about 50% of your energy through all the convergence. Like a 50% efficiency ish yes, batteries, lithium-ion, depending, you're getting up to don't know what the standard average is, but just heating up a rock, you get 90% to 95% of that heat back out of that rock.

That is wild to me.

John O'Donnell

That's right. Yeah. The least efficient of the thermal energy storage systems are around 90%. We happen to be 98%.

David Roberts

That's just crazy. So the heat just sits there in the rock and doesn't go anywhere?

John O'Donnell

Well, fill up your thermos with hot coffee, take the thermos and wrap it in a couple of blankets, open it up, three days later the coffee is still hot. It's not like a chemical system where there's self discharge or something. The only place energy can go is either lost to the environment through insulation or delivered to the target. So it's a lot easier than it sounds. A lot of people think, "Oh, this efficiency couldn't be possibly the case." It really is almost embarrassingly simple.

David Roberts

And now my question though is when we say 95-98%, what are the time horizons of that? Like if I fully charge your thermal battery and we're going to get into the guts of your thermal battery here in a second, but if I fully charge a Rondo battery and then just don't do anything to it, how long would it take for all that heat to be lost? Like what is the time horizons we're discussing here?

John O'Donnell

Again, the use case that we're considering that we're targeting, is it's discharging continuously?

David Roberts

Right. It doesn't need to hold it that long. Theoretically, I'm wondering.

John O'Donnell

Theoretically that's right, because the one place where you are holding energy, we've got a food factory that runs shift work. They operate one shift five days a week. So yeah, you're storing some energy and you got more energy on Monday than you did on Friday afternoon. The short answer is we lose about 2%, 2.5% per day. So if you were holding energy multiple days, there would be self discharge. But that's because we were designing for a particular use case. Again, you could decide the rate at which your thermos loses heat by if you wrap it in a blanket ... you could make it store energy for months on end.

Then the question is, is that valuable? If you really want to store energy for months on end? If you want to move energy from July to January, chemical storage is a great thing because it doesn't have self discharge.

David Roberts

Right.

John O'Donnell

If you are in a place where you can have a salt cavern and you can make hydrogen in July and pull out in January, okay, that's great.

David Roberts

Right? Because the hydrogen you pull out in January contains the exact same amount of energy ...

John O'Donnell

Exactly.

David Roberts

... as you put in the hydrogen.

John O'Donnell

As long as it didn't leak out. But yes.

David Roberts

So in the hours today's, maybe multiple days, rarely a week time horizon that you're working in, you're getting 98% efficiency. 98% of the energy that goes in comes back out to the application.

John O'Donnell

Yes. In that use case. That's right.

David Roberts

I think now that we're focused in here on the heat battery, let's just discuss what the Rondo heat battery is, and maybe while you're telling us, tell us what some of the other options in this space are. I know people are heating up. You're heating up bricks. Some people are heating up giant chunks of graphite. I think sand is on the table. I don't even know what all the options are. But what are people trying in that space?

John O'Donnell

The one technology that's been at scale for quite a while, that's been used by the solar industry since the 1980s is using nitrate salts, which melt at around 250 degrees. Salts? That's right. They're stable up to about 600°C. And so you can have a big tank of cold salt, which is something like 600 degrees Fahrenheit. It looks like a transparent liquid, but stay away from it. And a tank of hot salt, and you heat by pumping from one to the other and pull the heat out going the other way. I built my first molten salt test facility back in 2008 at a national lab.

David Roberts

I remember there was a hype cycle around molten salts that has kind of faded. Why has it faded? Like, why are rocks preferable?

John O'Donnell

The more you know about it, the less you like it. It's one thing to use it in a solar power station where there's nothing in there for a mile away except for the turbine. It's quite another thing for an energy storage facility to be put inside a factory where people are working. When I mentioned safety first, you don't want a system that can catch fire or spill a superheated liquid that would burn everybody or release toxic gases. I'm not aware of any molten salt projects that haven't sent at least one person to the hospital. So there's the molten salt systems.

And again, they work. They're proven but they have proven challenges.

David Roberts

They just require a lot of engineering to contain.

John O'Donnell

Well, and that's another matter that you've talked about previously, which technologies get cheap, right? Molten salt systems are a lot like they have the nuclear reactor characteristic that everyone is bespoke, those tanks at that site with that engineering and there has not been much learning capable to drive cost out. The modular approach, the factory manufactured approach, eludes that technology. Now there are a lot of people exploring how do we do modular factory manage. And one of the things that you first do if you want to store heat is, okay, what's it cheap to store heat in?

As you mentioned stone, crushed rock, various kinds of rocks in a box or sand in a cylinder where you build an industrial strength hairdryer. You blow superheated air through the rock or the sand bed. And then when you want heat, you push cool air the other way through the sand or the rock bed. That works. There are people taking it to scale. It has temperature and cost challenges. What you find in every one of these cases, the rock is cheap, but the box costs a lot.

David Roberts

And the fans, I assume like the fans and that kind of engineering adds to the ...

John O'Donnell

That's right. And remember now that your fan has to blow at your peak charging rate. And there's an example of a technology that leads you to it's more expensive to charge fast. But the big problem with those unstructured materials is when they heat up, they expand and you have to have a container strong enough and then when they cool, they shrink and settle and then the next day they expand again and they slowly turn into dust over at a rate. So the material looks really cheap, but the system turns out to be not so cheap.

Right then you mentioned there are a lot of interesting science experiments with new materials that have never been used this way before. When we started Rondo, we did a really careful look at everything that's out there. There are people using liquid silicon. It melts at 14° Celsius stores a lot of heat. Just like ice melting in a glass absorbs a lot of heat melting and releasing silicon. Freezing silicon is a really good thing for high temperature heat. But what do you make the glass that's holding that silicon-ice? How do you keep it like there are a lot of challenges that companies have been working on for years and it's probably going to take another decade before that technology is at the point that an ordinary project finance guy will say, yes, that's as low risk as PV. I'll invest in that at the same finance rate. And that time to bank ability is one of the biggest issues. If you want a technology to go big fast, everybody's got to agree it's boring and low risk and that's a challenge with new materials. Graphite is another material that's interesting. It has higher heat capacity than rock or brick, especially when it gets hot, but it catches fire at 560°C. So you want to store energy at 1500° or 2000°.

You've got to keep it in some atmosphere so that it can't catch fire for 30 years and it's conductive electrically, which could be great. But anyway, there are interesting engineering challenges and there are at least four companies working on that. One of them is also looking at using that graphite not for electricity to heat, but electricity to heat to electricity. Using PV cells to capture the light from the graphite.

David Roberts

Is that Indora?

John O'Donnell

Antora.

David Roberts

Antora. Yeah, I talked to them, too. And in terms of like science-fiction geeky fun, that one is just a great one. They heat the graphite up, it gets so hot that the energy comes back out as light.

John O'Donnell

Light.

David Roberts

So they have it covered in shutters that they can open incrementally. And the light can either shine on tubes full of fluid if you want heat, or these special PV modules that they built especially for it. If you want electricity, like the whole conceptually, that's very satisfying.

John O'Donnell

It's super cool. My first job was infusion power, where you have a reactor that wants 100 million degree plasma right next to a superconducting magnet that has to be five degrees. The Antora PV challenge when they solve that that technology is cool for electricity to electricity because it could turn out to be long duration, no moving parts storage. It's hard for us to see that. That's an example of we're going to do something deeply innovative. How long will it take to prove that it's bankable and what we're doing is much more boring? The back to electricity is their superpower is back to electricity.

David Roberts

Yeah, I want to discuss that. Like the ability to go back to electricity and what, you'll come to that. We'll get to that. But you guys have settled on rather than any of these materials science fun time experiments. Bricks.

John O'Donnell

Yeah. Okay. Somebody told me this the other day. How many gigawatts of batteries are there in the world right now, do you know?

David Roberts

I don't.

John O'Donnell

Somebody told me there are about three gigawatts of batteries in the world right now.

David Roberts

Lithium-ion batteries, you mean?

John O'Donnell

Yeah. So how much heat storage is running in the world right now? As we speak, there's about 30 gigawatts of heat storage running right now. In 1828 was the first patent for a thing called a cowper stove, which is a tower with a thousand tons of brick in it that has air passages that on a 1 hour cycle. The still combusting exhaust of the blast furnace is blown down through that tower and heats all the brick to about 1500°C. And then for about 20 minutes, fresh air is drawn up through the tower and it's providing the inlet air to the furnace and it's delivering 115 megawatts heat for about 20 minutes.

David Roberts

Crazy.

John O'Donnell

And then it's heated again. These. Things are heated and cooled 24 times a day. They last 30 years. There's a million tons of that brick in service right now at the blast furnaces around the world.

David Roberts

And these are just ordinary brick-bricks that people are familiar with. Like, what are bricks made of?

John O'Donnell

What, are they the term they use? Yeah, there are a bunch of different materials, but two of the most abundant elements in Earth's crust are silicon and aluminum. Silica, silicon dioxide, alumina, aluminum oxide are two of the most important minerals. Different bricks are made of different mixtures of silica and alumina. And there are other kinds of bricks as well that are even higher temperature, but they call it aluminosilicate brick. It's higher temperature brick than in your fireplace. Looks a lot like it. And it's what is in every if you have a ceramics kiln, that's what's in your ceramics kiln liner.

It's in a cement kiln, and it's again, used in all kinds of areas. People have been making brick like this for thousands of years. Brick is made from dirt. I mean, certain kinds of dirt. You mix it up, you put a little binder, you throw it in a kiln, and you've got your brick.

David Roberts

So if I'm looking inside a Rondo box, am I literally just looking at a stack of bricks?

John O'Donnell

Pretty much. The one thing that's different ... our breakthrough. So the brick, as you know about brick, it's brittle. If you drop a brick, it'll break.

David Roberts

Right.

John O'Donnell

You also know that brick is not a good heat conductor. That's why we make fireplaces out of it. So if we want to heat it fast, we have to heat it uniformly. If you stuck a brick and you had, like, one side in a bucket of water and the other side in a fire, the brick might fracture. But if you put the brick in the middle of the fire, it'll heat up rapidly to the temperature of the fire. It's one of those ideas that once you see it, it's obvious. But it only took 80 design revisions.

If you look inside a Rondo unit, what you'll see is a brick stack that's full of these open chambers. It's a checkerboard of open boxes surrounded by brick, and brick surrounded by these open boxes. And electrical heaters are embedded directly in the stack, and they provide radiant heat within those open boxes. And because thermal radiation of every object in the universe goes as the fourth power of its temperature in degrees Kelvin, as I know you remember.

David Roberts

Of course.

John O'Donnell

Things that can see each other get to become the same temperature by exchanging heat. So the result of this was we found a way to directly, rapidly heat the brick.

David Roberts

And this is an alternative to blowing hot air over the bricks.

John O'Donnell

That's right.

David Roberts

Which, a. would require more engineering and more money, but b. also might not heat them uniformly, like might heat one side before the other side or something like that.

John O'Donnell

Hot air. You can heat them uniformly, like the blast furnaces do that. But in that case, you have the same electrical heater that's in something like a hairdryer. And inside a hairdryer, the heaters are mostly radiating to the metal plates, which in turn are heating the air, which in turn would in this case, heat the brick. There'd be a couple of hundred degrees difference between the final temperature of the brick and the temperature of the wire. In our case, that's about five degrees.

David Roberts

So instead of using the wire to heat the air, to heat the brick, you're just sticking the wire in the brick, and the wire is heating the brick directly.

John O'Donnell

That's right. So we just last week, we announced the world's highest temperature thermal energy storage system running. That's not because we use different heating materials than others. It's because of that physics insight that led to that structure. That's right.

David Roberts

Got it. Okay, just quickly, what are some of the engineering challenges here? Do the bricks expand and contract when they are heated, or do they degrade over time? What sort of things are you dealing with here with bricks that you had to overcome?

John O'Donnell

Yeah, there were lots of things because what we're talking about is kind of at some level obvious, and people have done really good work on this previously. But the challenge is you have to think about, yes, the bricks expand and contract, so build your structure. But the nice thing is they're freestanding. They don't need a container to hold them in. So if you build your structure properly, it can freely expand and contract.

David Roberts

So there are like spaces between the bricks in which they can ...

Where they're touching when they're hot and spaces open up when it's cold. Exactly. Other big challenges consider if you have a storage system and one area has some airflow blockage so that during discharge, it's not getting as cool as another area the next day when you put heat in, it's going to wind up hotter than another area. And the day after that, even hotter thermal runaway that would cause failure because one part was too hot. If you have that possibility, you have to run the whole thing cooler. So it turns out one of the hard problems, one of the hard engineering problems is making sure that the temperature inside the material is uniform.

John O'Donnell

And it's uniform not just when the unit is new, but when it's 30 years old.

David Roberts

Your promise here is that this Rondo battery has the same capacity and the same performance characteristics in 30 years that it does today. Is that the idea?

John O'Donnell

That's exactly right, yeah.

David Roberts

And no other battery? There's no other battery that can say that.

John O'Donnell

I think that's true. But here, there's a million tons of this material running in the world, and those guys have much higher mechanical force on it. They build 30 meters tall things. We build eight meter tall things. They heat and cool it 24 times a day. We heat and cool it once a day. Lasts 30 years for them. Pretty clear it's going to last longer than that for us. Yeah.

David Roberts

And let me ask about getting the heat out to where it needs to go, because as I have been reading about, I did a thing on a company a while back that was using concentrating solar to superheat a fluid. And they could get to these levels of heat that are germane to concrete and whatever the higher end, the higher temperature applications, but only at a particular spot. Right. It's got to be right where the sun is and where everything's coming together in that one spot. And then, of course, you face the challenge of how do I get that heat to where it needs to be without losing a bunch of the heat?

And this is sort of, obviously the other half of the thermal energy challenge. And there's sort of two challenges. One is making it into steam right. For all these lower temperature applications, and then, I don't know, making it into what, for the steel or the super high energy. I don't even know how you transfer that high version of heat. So what are you using on the back end?

John O'Donnell

Yeah. So every combined cycle power station in the world has a jet engine that's generating electric power. Its exhaust is around 605 C. That exhaust is passed through a boiler, a heat recovery steam generator that drives a steam turbine that makes extra electric power. So the world knows how to build those boilers that run on about 600 C air.

David Roberts

Got it.

John O'Donnell

The Rondo storage is much hotter temperature than that we mix down. And for the systems that are delivering steam, we work with leaders who build conventional boilers and we've engineered the heat battery to include that boiler. So the basic heat battery models are exact drop in replacements for particular models of industrial boilers. They're just about the same size. Stick us next to your existing one, hook us up to the pipe.

David Roberts

You're replacing a fossil fuel run boiler with a heat battery and a boiler in the same space.

John O'Donnell

Yeah. We think of the heat battery as from the substation to the steam flange in that case. So it is a like for like drop in replacement. The less work the customer has to do, the better off we are.

David Roberts

Yeah, I was going to ask it. We might as well discuss this now, because this is obviously one of the this is something you run into with battery chemistries all the time. Right. Which is just like there's so much existing infrastructure that even if you have something clever and fancy and new that's super cheap, if it requires all the facilities to update themselves, you're just starting way, way behind the eight ball.

John O'Donnell

That's right.

David Roberts

So to what extent is the sort of Rondo heat battery plug and play like in a low temperature steam application and like a steel plant, can you wander into any of these and just switch out with no pause.

John O'Donnell

All of the energy. So the top four categories in the United States, the Doe just gave a talk recently and the top four categories in descending order of industrial heat use are chemicals, food and beverage, paper products (That includes everything from toilet paper to cardboard,) then cement, and then steel. So for chemicals, about a third to 50% of all the heat is steam. For food and bev and paper products, it's all steam. And for cement and steel, none of it is steam. So we are simultaneously, we're delivering drop in boilers today and simultaneously with our investors and partners building and developing the calciners, the ethylene crackers, the kilns, to drive particular industrial processes.

Because you made this point about the solar tower. Yeah, you have a spot that's 100 meters up in the air where you can have your heat. But what we want, the heat is in some process unit. And look, we have 200 years of designing industrial process units that are powered by fuel. Which of those can we retrofit? Where will we need to design new things? We were given a grant by the Danish government. We have a project underway to design and pilot a true-zero cement process, intermittent electricity to zero-emission cement. Most of the work in that project is the design of a calciner that instead of internal combustion, runs on superheated air or superheated CO2.

So it doesn't all happen all at once, but it does all happen, but some of it will. The high temperature things will take more work to integrate because industrial plants today were designed with magnificent engineering and heat balance and efficiency burning fuel. And so, as it happens, everything that runs on steam, easy drop in all the high temperature processes. We have work underway now and hope to have results over the next couple of years that use the same thermal storage platform.

David Roberts

But this first commercial battery that you've deployed now, which by the way was just last week, I think, what application is that or what temperature level is that?

John O'Donnell

Yeah, that's targeting steam, steam, steam, steam and steam. The particular installation is at a fuel producer and it's at a biofuel producer. Whether you're making renewable diesel from soybeans or animal fat or ethanol from corn, about half the total carbon intensity of that fuel is fossil fuel that was burned to produce that biofuel. And we can set that to zero. So we can produce biofuels that are about half the carbon intensity of what they are today. Interesting, our customer is really a visionary that's going to zero because the other thing that's been talked about a lot with biofuels is combining carbon capture of the biogenic CO2 in those facilities.

As it happens, using Rondo for the heat eliminates about half the total carbon intensity using carbon capture, eliminates about the other half and together you get about essentially a zero-CI, zero-carbon-intensity fuel. That little unit we just started up is the pilot for deployment of a series of larger ones to do exactly that, to produce zero carbon biofuel.

David Roberts

Very interesting. So let's pull the lens back a little bit, maybe talk about business model. Is the idea long term that if I'm say I'm a manufacturing facility and I'm making I don't know what baby food, is the idea that I buy a Rondo unit and install it in my factory? Or is the idea that Rondo comes in, sets things up and sells me heat as a service? In other words, am I buying the equipment or am I buying the heat? Or some of both.

John O'Donnell

Yeah. Over time, there are as many answers to that question as there are to how conventional gas turbines and steam turbines are sold. Right. Sometimes people own their own cogeneration plant. Sometimes they contract with someone else to provide them electricity or heat as a service. The renewable heat as a service business will develop the same way. In the United States today, there's a huge community of developers who know how to shave a few pennies off solar and wind electrons, but have never really looked at these industrial facilities. In Europe, actually, there are already renewable developers who are out there originating renewable industrial heat projects.

So, first of all, Rondo is offering, on four continents, commissioned, guaranteed installed heat batteries. That's the foundation. We are also originating and financing heat as a service, principally in North America.

Interesting.

Because, again, whether you make baby food, as you said, or steel, you don't drill gas wells to get the fuel to run your process. You buy energy as a service, your capital dollars, most folks want to spend it on their own processes. And this class, this thermal energy storage class, is arguably creating one of the great business opportunities of our time for the development community, because we all know wind and solar deployment is slowing down, not because of reduced demand, but because of congestion.

And I think the interconnection queue time in England is now 13 years.

David Roberts

Yes, there's like a terawatt now, I think, waiting in the queues.

John O'Donnell

Right. Rondo heat batteries. Our basic unit, the RHB 300, needs 70 megawatts of generation. Typical installations may have two to ten at a single site. These are utility scale energy demand and they can be built with no grid connection.

David Roberts

Right. So the idea is you go build a solar farm or a wind farm that is just attached to these batteries.

John O'Donnell

That's right.

David Roberts

And then you're selling the heat from the batteries. So at no point do you need the electricity grid. You're not waiting for the interconnection or anything else, that these are a coupled unit. Wind and solar being so cheap, the implications are endless and often counterintuitive. Like when I hear I could either buy heat from a conventional boiler or I could buy heat from someone who had to go out and build an entire utility scale renewable energy installation and a couple of heat batteries. Intuitively, that just sounds more expensive. But are wind and solar so cheap now that that's competitive?

John O'Donnell

Yes, absolutely. And it depends, right, because one of the things that's exactly the right matter that you just raised someone is making an investment that's going to provide 40 years of energy to your facility. They're going to sell it to you on a contract, they're going to care about your credit worthiness and your willingness to sign that contract. That's one of the things that's unique here. It's different than selling electricity to a utility. On the other hand, from your standpoint, someone is saying you can get off the fossil fuel price roller coaster. Not surprisingly, there are a lot of people in Europe who ... and we've seen that in US.

Prices have been fourteen, they've been two, they're ten. And they are also in places that have carbon prices. You can have a permanent. This lack of volatility and exposure to regulatory matters also is a strategic advantage. A friend of mine said, why were all the factories in England built on the coast? Because where it was cheap to bring the coal, low cost, reliable energy supplies are the foundation for industrial investment.

David Roberts

So you're free from fluctuations in fossil fuel prices and you're free from any worry about escalating carbon prices or other carbon related regulations. Basically, like two huge worries because as you say, for a lot of these facilities, the cost of energy is the bulk of the costs. And to have the bulk of your costs fluctuating 500x back and forth over the course of a couple of years is just an insane way to try to run an industrial facility.

John O'Donnell

That's right. This matter of what kind of risks do we take? People say, oh, it's risky to work with this new technology, but look at the risks that we just were used to taking. And we're entering this new world where we're not talking about a green premium, we're talking about the same or lower energy cost with these reduced risks. And then, of course, depending on what the commodity is, low carbon aluminum trades at a price premium on the London Metals Exchange. Low carbon fuels trade at much higher prices in California and Germany. And for consumer facing brands, there are buyers, coops of producers who are seeking low cost effective renewable heat sources so they can offer to the market low carbon commodities.

David Roberts

Yeah, I mean, it seems like there ought to be a bunch of market actors that are just ready to embrace this. Like, for one thing, as you say, just on a quantity basis. If you take all that energy that we're using for heat and transfer that to electricity, you need a lot of new electricity and a lot of new clean electricity. So it seems to me like renewable energy developers ought to be over the moon about this, like beating down your door. Are they lining up to be proponents for renewable heat in the industry generally or have they not caught on yet?

John O'Donnell

In some places the answer is yes. As I mentioned, Europe is very aggressively moving in this direction and a number of folks over the last few years have said "this Rondo thing sounds too good to be true. Come back to me when you're operating something commercial." We're now operating something commercial. So the short answer to your question is yes, because again, these projects offer this mix of speed and certainty that we're not tied up in a grid queue. Scale, utility scale, there's a lot of commercial industrial C&I Solar, where people are building 2 MW here, 2 MW there.

It takes the same amount of brain power and lawyer time to do the two megawatt project versus the 400 megawatt project that the same facility would use for heat, and returns now that we're in an era where that's the coolest thing is that the numbers work for the heat user, they work for the financier, they work for the builders of the solar fields and they work for us. And that's a new world and economic tailwinds driving it. It will keep going faster and faster. The size you mentioned, I think at the end of 2021, there was about 1000 gigawatts of wind and 1000 gigawatts of solar each in the world.

The IEA did an assessment of industrial heat and their number is it's about 9000 gigawatts of new generation that's going to be required to replace the oil, coal and natural gas now being burned.

David Roberts

Good grief.

John O'Donnell

That's worldwide, right? And so it's only, what is it, 20% of that in the US. Yeah, that's right. It's only a few thousand gigawatts in the US.

David Roberts

An enormous opportunity to build more renewable energy.

John O'Donnell

Yeah.

David Roberts

A similar question is, and I have always had this question about electric vehicles too, which is electric utilities are sort of notoriously stressed, worried about this death spiral, they're worried about grid defection. And you represent potentially just a wild new load, a new responsibility for them. Something that natural gas utilities were doing, were handling, is now all going to transfer and be their responsibility, which is just a way for them to grow and invest and just a wild new opportunity for them. Why aren't they at the front of the line beating down the door, trying to make this happen faster?

John O'Donnell

That's a great question, and they are. One of our investors is Energy Impact Partners, whose backers are the North American electric power industry. And for sure the lowest cost way that we're going to decarbonize all of civilization is electrification. And for sure the electric industry is at the heart of that. One of the things that's really profound about what we're doing for them is that electrification, you install an electric furnace. That furnace is now running on wind power 30% of the hours of the year. And the other 70%, it's a new load on gas fired or coal fired power stations until the grid has fully decarbonized.

David Roberts

Right.

John O'Donnell

These thermal storage systems, these things can be dispatched by the utility the same way they dispatch generation. The deal is not that I want a megawatt continuously, the deal is I want 24 megawatt hours today. You deliver them when it's convenient. These things become an asset in the electricity grid and a solution to these problems of variability and over generation and balancing.

David Roberts

Right. In the same way that sort of any controllable load helps grid stability. These are controllable.

John O'Donnell

Yeah, but people talk about controllable load, demand response, for example, is a load that you expect to run all the time, but you can turn it off during emergencies. That's not this, this is something that no, no, you're going to dispatch it so that it never takes a single megawatt hour of spinning reserve or gas fired power generation. You're going to dispatch it so that it never raises the peak demand on your transmission or distribution system. You can manage it with telemetry from the grid operator. It's different than anything that's come before. It's like lithium-ion batteries in that sense, but at a tiny fraction of the cost.

And we're not trying to solve from moving electric power from noon to 07:00 p.m.

David Roberts

Right.

John O'Donnell

We are taking that electric power and replacing gas combustion principally in North America, and oil and coal combustion. We're opening an entirely new segment to renewable deployment. So, yeah, the electric utilities are getting engaged now. They face all kinds of issues with the regulatory frame that we have for electricity. Of course, they're already facing those matters as renewables deploy. And there are some new challenges, but there are people actively working that issue and we're thrilled to be working with them.

David Roberts

So if I'm, I've got this manufacturing facility, I've got a big Rondo battery and I'm trying to decide between two options. One is I could build my own off-grid behind the meter generation, solar and wind. I could put my own solar and wind up, or I could just get on the grid and time my charging so that I'm chasing the clean energy on the grid so that I'm only charging when there's clean energy on the grid. Do we have any sense of which of those will be more economic or why you'd want to go one way rather than the other?

I'm just wondering how many of these sort of self contained, off-grid, purpose built renewable energy installations there are going to be, it seems to me intuitively like that ought to be more expensive and what you ought to prefer is just for the grid itself to clean up so you have more, so it's easier. But what are the choices there?

John O'Donnell

These questions are right at the heart of the matter. You're dead on. And I'll give you the long answer. The short answer is it depends. And it depends primarily on where you are. Pre-war economics, one project in Europe, large operation, that wanted to replace a 250 megawatt gas boiler. They could install a 250 megawatt electric boiler and eliminate their scope one. Their actual scope one, plus scope two would go up because they're in an area that's about 40% wind. And now, if 60% of the energy is coming from a coal plant, you were worse off.

But from an economic standpoint, they were paying $35 a megawatt hour for gas fired heat. The electricity price annually would have been about €68 sorry. Per megawatt hour. But upon a study, given the presence of offshore wind in that area, their expected energy price on a long term buying in the cheapest 4 hours a day was under €10 a megawatt hour. So that's an example where the grid connected thing is exactly right, and it will only take four years to get the grid upgrade done, of which about three months is construction. So in a lot of places, the grid connection for grid projects is a matter.

Oklahoma last year had 2000 hours of negative wholesale prices. If you put a project in Kansas or Oklahoma, you have energy prices that are slightly negative on an annual basis. If you can charge very rapidly, if you are allowed to participate in the wholesale market, there are regulatory obstacles.

David Roberts

But in theory, in Oklahoma, during a time of negative wholesale prices, your facility that's running off a Rondo heat battery could be paid to charge itself.

John O'Donnell

That's right.

David Roberts

Is that how that works? Is that what negative prices means?

John O'Donnell

That's what negative prices means.

David Roberts

That's so mind-blowing.

John O'Donnell

Well, again, and we have lots more of that coming. I know you've spoken to folks about the IRA. The production tax credit coming to solar is going to broaden the areas of the country where we see intermittent negative prices. Because, of course, if I'm getting $20 megawatt hour for tax credit, I'm perfectly happy to generate when prices are negative $19, right?

David Roberts

Yeah. That's just crazy.

John O'Donnell

Technologies like this that can absorb those periods are going to lift the price floor. They're going to benefit all the generators, especially the generators that can't turn off. And we're pretty excited. But again, it's can we connect to the grid? Can we capture those prices?

David Roberts

Because if you can, there's enough heat to absorb all the curtailed power in the US, times a gazillion. Theoretically, if you could hook up all heat to electricity, you'd never curtail again, or at least not for decades. Probably.

John O'Donnell

Of course, subject to where is the heat-load versus where is the curtailment? Some curtailment is regional associated with total generation. You know, some of it is transmission constrained. But to a first approximation of the answer yet, that was correct, yes?

David Roberts

Yeah, that again, seems just a crazy business opportunity for everyone involved.

John O'Donnell

Yeah, we agree.

David Roberts

But you do expect to see these off grid, custom built renewable energy installations, purely powering heat batteries in areas, say, where the grid is congested, or the grid is dirty or the interconnection queue is unusually long. You do expect to see those pop up?

John O'Donnell

Well, as I mentioned earlier, and just for scale, California has on the order of 20 gigawatts today. We need 100 gigawatts of new PV just to replace the BTUs of fuel now being burned for industrial heat. About 40 of those gigawatts, because of where the things are cited, could be built with no grid connection at all. And most of them will need some kind of grid connection. We see again and again that the new renewable project development model is going to be building a project that part of its electricity goes to industrial heat, into a heat battery, and part of it goes to the grid.

And that, that's the sweet spot that delivers lower cost electricity to the grid. And we're absorbing what would have been curtailed power from that new purpose built thing to get all the power we need for the factory or the cement kiln or whatever.

David Roberts

Right. Yeah, if I'm a renewable developer and I catch wind, that there's this whole category of renewable projects that don't require this unholy paperwork nightmare that they all go through. Now again, I just can't imagine that they're not going to be stampeding in this direction. I mean, I hear them complain about this constantly.

John O'Donnell

What are the required conditions? Obviously the financial community we have to get our minds around. Okay, how are we structuring these projects where most of the energy is going to a single factory rather than to the utility? Let me think about the credit worthiness of that. And then for the moment, how long will it take to retire the Rondo technology risk? How do we backstop that? And we're busy building systems and projects that this first one of course, is the first step at commercial scale to build the track record. But again, there's a reason why we chose these century proven materials specifically, so that once you turn one of these things on and operate for six months, there's nothing left to prove.

We know it works and we already know everything is durable.

David Roberts

The brick heats up, the brick cools down. It's not again, it's so simple.

And exact ... but that exact material, there's a million tons of doing that around the world. Doing that right now in much more severe service. But yes, it's simple. That's right.

And I would imagine also that this space is going to see a lot more entrance competition. Of course, once it's kind of uncorked and it becomes clear what the opportunity is.

John O'Donnell

Look, trillion dollar markets don't happen without lots of people trying to enter them and nothing could be better, right? That's what we urgently need.

David Roberts

Right. One other question about industry, about location matters. You mentioned industry clustering along a coast where the coal is available. As more and more of our industrial activity in general and civilization gets hooked up to cheap renewable energy. Do you see something like over the course of I mean, I guess this will take years and decades, but do you imagine areas of intense renewable capacity like with lots of sun and lots of wind becoming new attractors to industry? Do you see global industry starting to migrate to renewable energy? Is it that much of a chunk of the cost of an industrial facility that it might be worth someday literally moving to it?

John O'Donnell

The short answer to your question is yes. Just look at what happened with the shale gas revolution in the US. Vast investments in petrochemical and other manufacturing immediately shifted to where huge employment growth shifted to where that low cost energy was. And there's a question of how fast these transitions happen. Vasila Smill likes to talk about, "oh, it takes a really long time," but there are lots of examples where that is not true. Just, again, when the rules changed and combined cycle gas fired power generation was allowed in the US. We saw giant capital flows and giant rates of transformation.

Now, that took awareness. It took enough experience that investors could say, oh yeah, I'll build that giga project because I know it's going to work. It took awareness of the kind that you are building that these opportunities exist, but the long term. Yes, absolutely. That's right.

David Roberts

That'll be such an interesting geopolitical like of all the forces in the last 50 years or whatever that have moved industry around the globe, this will be just a completely new version of that. It's going to scramble all the previous alliances.

John O'Donnell

Yeah, but there is one example that's even faster, which is not just the long term, but the right now. A couple of weeks ago, I spoke at the Munich Security Conference in a session with a number of industry CEOs and Ursula von der Leyen, the European Commission president and president. Wevine said, look, there are three wars underway. There's the ground war, there's the energy war. He thought he would bring us to our knees. And there's a clean energy war, mostly with China. And a huge challenge before us today is how do we get off gas? But we need to get off gas without deindustrializing.

There have already been giant plant shutdowns and layoffs because of the unavailability of gas right now and the forecast unavailability of gas longer term. Europe's bullets in the energy war are clean electrons, domestically produced, stable, low cost sources of energy. And again, we and all the other electric thermal storage technologies because we save twice as much gas per kilowatt hour as hydrogen. We're an important part of speeding up that transition there and preserving an existing industrial base. I think the same thing is true in the US as well as carbon prices come into the world. As gas prices rise, the competitiveness of US manufacturing on the world stage is going to be affected by how fast can we make this transition to renewables.

And it doesn't happen all at once. But there are beyond the climate drivers, beyond the huge business response that we've just seen in the last five years, to the climate drivers, the pledges, and not just pledges, but action that we're seeing across all kinds of industrial producers. We are really at an amazing moment. I kind of wish we had gotten started with what we're doing here at Rondo five years ago. But five years ago what we were doing was stupid, right?

I mean, go back ten. What we're doing somebody could have figured out earlier.

David Roberts

I said it at the outset, I'll say it again, I say it over and over again. Wind and solar being as much cheaper now as they were five to ten years ago is just like it's not an incremental change, it's a phase change. It's a flip to a different system. All we're doing now is just like sort of one at a time here and there in different industries, in different places, kind of opening our eyes to like, oh, this is a completely different landscape, like completely new opportunities. It's a different world now. It's going to take a while just to absorb the implications of super cheap renewables.

John O'Donnell

Yes. And the thing we know for sure is that every year somehow those cost reductions will continue, right? We have some short term supply chain things, but somehow, I mean, I worked in the electronics industry for decades and everybody every year said, oh, Moore's Law is over, it can't keep getting better.

David Roberts

They say it every year for wind and solar too, right?

John O'Donnell

Yeah, exactly. And you look back over every five year period, every year's forecast was wrong, it fell faster than that. It's reasonable to assume we're going to continue to be in that, so that this era that we're entering, it keeps getting better and better. Our storage technology and the other storage technologies will cost reduce as they come down. But the storage technology is only 20% of the cost of the total project. The fact that the wind and solar are coming down so steeply, this cost advantage is going to continue to open for the people who have made this transition onto renewables.

David Roberts

It's really interesting watching people in industry try to sort of skate to where the puck is going to be, as they say, sort of like start off on something that might not be economic when you first start developing it, but you're going to meet that cost curve, right, in five years, and then your business model will become viable. It's a real tricky timing there. There's a lot of people trying to sort of coordinate that dance just right.

John O'Donnell

Yes, but my point is we're already at that point where we're at break even or better, we're not waiting five years. That's one of the big difference of this class versus there are a lot of things that are just as you said, we're investing now because we're hope it's going to be cheaper in the future.

David Roberts

We're already at that point, right, so a final question. I wanted to ask you a little bit more about this, but maybe we can try to do it quick, which is just you've got these things that store electricity as heat, fairly cheaply for a long time, with very low losses. The applications you're overwhelmingly focused on are industrial, because as we've discussed, industrial heat is huge, difficult to decarbonize, giant market opportunity. But I'm just wondering, it seems like there are probably other uses that we could think of for boxes of heat. Are you actively pursuing any or alternatively, like, do you see any out there over the horizon that you might get to eventually?

What else could we do with heat batteries?

John O'Donnell

There are two big things we've been pulled into that. If you'd asked me a couple of years ago, I would have said, oh, that's going to happen much later. One of them is industrial Cogeneration. PURPA back in the 1980s established special tariffs for Cogens because it's the most thermodynamically efficient way of delivering electric power and heat. Repowering Cogens with renewable heat makes them more efficient. A unit that delivers industrial steam and electric power is 95% efficient. It's more efficient than any lithium-ion battery, although it's only delivering about 20 or 25% of its energy as electricity, and the rest is heat.

Almost every industrial Cogen, the industrial needs so much heat that that Cogen is exporting power to the grid as a side effect of delivering all that steam. So, renewable cogeneration, or they also call it combined heat and power, is an area that we see distributed generation. 20 MW here, 50 there, ten there. That is decarbonizing small industries, but providing baseload distributed high value generation to the grid.

David Roberts

Briefly, what does that look like, though? What is a cogen? Because cogen, just for listeners maybe, who aren't familiar, you're using a turbine to generate electricity and then you use the excess heat from the turbine ...

John O'Donnell

That's right.

David Roberts

For whatever you need. So what does it look like in this case?

John O'Donnell

You said it exactly right. Instead of throwing the heat away into a condenser, you are using that heat as medium pressure steam, making tomato paste or paper or chemicals or any of the things. And so you have a facility that the heat battery, or today, a natural gas boiler makes high pressure steam, goes through a turbine, medium pressure steam goes to the factory and electricity comes out from the turbine. Exactly the same thing. Now you've got a heat battery making high pressure steam and driving combined heat and power. So really it's 95% efficient. Electricity in to heat and electricity out and you are exporting back to the grid.

So that's one. The other has been a surprise. Again, it's something I would have said we wouldn't be engaged in. I think just today there was the announcement that the latest EPA rule is going to cause another 15 gigawatts of coal retirements. Coal-fired power stations people think of as about 40% efficient. That's about right. But that's about an 85% efficient boiler, times a 47% efficient turbine, minus the loads associated with air pollution cleanup.

David Roberts

Right. All the filters and whatnot.

Keep the turbine, knock down the boiler, make that a giant long duration electricity storage. That's now in one of those places where there was negative prices, you have anchors for development. We have several projects where developers are looking at these conversions as enabling the construction of a huge renewables cluster, sometimes an offshore wind landing point, or onshore wind development. And right there, reusing one of those things.

So this would look like, say, a bunch of offshore wind turbines generate electricity. They generate excess. The excess is stored in a heat battery, and then that heat battery is used to run an existing turbine.

John O'Donnell

That's right.

David Roberts

Like at a coal plant to produce power. It would just be a dispatchable. It would be like a peaker plant.

John O'Donnell

However you want to use it. That's right. Whether you want to use that to take intermittent and now get to base load underneath the intermittent. But it's an electricity storage approach that reuses all the infrastructure, including the turbine. It is lower efficiency than electrochemical batteries. It's far lower cost. Those are large projects. I'd say that's the other one that's a little longer term out the cogeneration, though, the combined heat and power is more efficient than any other electricity storage technology. Right. More efficient. So I think those things will happen first, and we'll see about both of them.

David Roberts

If I'm repowering a coal plant turbine, that electricity to heat to electricity conversion is lower efficiency than what I would get from electricity to lithium-ion battery to electricity.

John O'Donnell

That's right. But the coal turbine provides other services, like inertia that are needed to make the grid work.

David Roberts

And it's already there.

John O'Donnell

It's already there. It's already operating. There's. The first of these conversions using molten salt. That's underway right now in Chile.

David Roberts

Interesting.

John O'Donnell

AES announced a project recently that had been in development for a long time. We're very interested to see how fast that sector moves. And all of our focus is on the industrial side. But as I said, we've been pulled into some of these projects.

David Roberts

Yeah, that's interesting. There's a lot of talk from a lot of different directions about repowering these turbines, these existing turbines that exist. I know the geothermal people are big into that idea, but it just does make intuitive sense. Like, you have all these quite sophisticated and expensive turbines built all over the place. Why not just go take out boilers and use renewable heat instead? To power them and then sort of like open your eyes, you're like, oh, we're like we're surrounded with turbines.

John O'Donnell

Yes. But this brings us back to one of the little laws of physics about temperature. The higher the temperature of heat, the more efficiently it can be converted to electricity. Those coal plants use burning coal. Geothermal systems make heat at lower temperatures. They can't directly because we're the highest temperature storage. We're the only one today that can repower those coal plants at higher than their original efficiency.

David Roberts

Is that, no limit?

John O'Donnell

No, it's removing the losses from the boiler and removing the losses from the station load. So basically, it's getting the net power efficiency much closer to the gross and leaving the gross unchanged.

David Roberts

Interesting.

John O'Donnell

Pardon me, diving in too deep. But there's very interesting synergy with other lower temperature heat, with waste heat recapture and with geothermal heat, where some of our customers are showing us stuff, where they're combining high temperature heat from storage and recapturing some lower temperature heat. And it's going to be very interesting to see how that develops.

In terms of innovation for Rondo itself. And I promise this really will be the last question. I'm just wondering, brick is simple and the whole system is simple. As we've been saying, that's part of the that's part of the delight of it. But I'm wondering, where are opportunities for big innovation? Do you have materials science? Is it within reach to heat bricks up hotter than you've got them to get up to the full, whatever 1500°C or whatever insane super hot? What's the innovation horizon for you?

Well, the driver for us, first of all, is speed, speed and speed to scale.

David Roberts

Right?

John O'Donnell

We're manufacturing in two locations now. A lot of our material science will be driven by qualifying other sources of materials. We've produced now on three continents, little pilot scale things. So one chunk of material science is about just getting this 2 million ton a year scale. The company formal goals are 1% of world CO2 in a decade and 15% in 15 years. And there are no material blockers to doing that. It's okay. Did we execute properly? Did we find the finance and developer partners? But to your point, the pieces today we're using the most expensive brick materials, the highest temperature, highest strength there will be innovations in simply reducing cost by the system is way overdesigned for reliability as we gain experience.

All kinds of cost reductions come from that. But as I mentioned, we have two international cement manufacturers today as investors. We have this project with some Danish universities and a cement plant builder. We're working on high temperature applications where most of the development is the process equipment that will need the heat. And then we'll be taking this core technology and connecting it to those other things. But speed, scale, cost and then temperature and serving these other industries are the priorities.

David Roberts

Thank you so much. For spending all this time with me. As you can tell, I find this particular area so interesting and fascinating. And it will be interesting to come back and talk again. Maybe in two or three years, who knows?

John O'Donnell

Thank you, Dave. It's a real privilege to speak with you. I'm just delighted. Thanks so much.

David Roberts

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