[00:00:03.090] - Jon
Hello and welcome to the episode. Today we're looking at the intersection of electricity distribution networks, energy storage, and electric vehicle charging infrastructure, and looking at that intersection in North America, particularly the Eastern Coast in the New York, New Jersey area. I'm joined today by Dr. Shihab Kuran, founder and CEO of Power Edison, as well as Executive Chairman of their sister company, EV Edison, to discuss his work with energy storage, both stationary storage and mobile storage, together with EV charging infrastructure. Hello, Shihab.
[00:00:41.140] - Shihab
[00:00:43.090] - Jon
Welcome to the podcast. Thanks for joining. Shihab, can you start by giving our listeners elevator pitches for EV Edison and Power Edison? They may not have heard of them yet.
[00:00:56.060] - Shihab
Sure. And thank you, Jon, for having us on the podcast today.
[00:00:59.250] - Jon
[00:00:59.920] - Shihab
Power Edison is a developer and provider of energy storage solutions and primarily what we call mobile energy storage solutions at utility scale. Mobility can be batteries on trucks, it can be batteries on rail, or can be batteries on water. And EV Edison is also a developer and provider of EV charging infrastructure. And we have a unique set of offerings we are happy to discuss today where we combine the two to create solutions that, frankly are needed by the market today.
[00:01:34.870] - Jon
Okay, thanks Shihab. Can you give our listeners a feel for the two companies in terms of metrics? When you were established, are you young, old, scale of activity?
[00:01:47.220] - Shihab
Sure. So, Power Edison is a company we started in March of 2016. So it's about six and a half years old. Power Edison has a team of engineers and developers who have experience in renewables in the grid. Our claim to fame for Power Edison is that we got contracted and we built the world's largest mobile fleet of batteries on trucks for a US utility. And then EV Edison is more recent. EV Edison is just under a year old. We have transferred products and IP and pipeline from Power Edison that we've been working on for six or seven years. And EV Edison today, again, our claim to fame with EV Edison is that we're developing the US largest EV charging super hub that happens to be just outside of New York City.
[00:02:46.240] - Jon
Okay, thanks. Let's start with mobile energy storage, because I think that will be a relatively new concept for some of our listeners who are based here in Europe. And the context of that, I guess the nature of the distribution network in North America or where you are in the US and Europe is quite different. My understanding is Europe's distribution networks probably built out I don't know if I should use the word better. That's probably the wrong word, but reliability is a bit higher, whereas in North America, brownouts blackouts are a bit more common. There's been maybe less investment for various reasons than the distribution network. So is my broad characterization true that there's probably a slightly weaker grid where you are in the US than in Europe.
[00:03:40.840] - Shihab
You know, Jon, your characterization is correct. Your characterization is correct. However, when you look at energy storage, there are about 20 applications on the grid. And the motivation for mobile storage is that when you look at the economics associated with any of those 20 applications, we find that they are not firm and they're not economical for the life of the battery storage system. So assume a battery storage life of 20 years, but when you look at, let's say wholesale applications, you might have a view for three years of say, frequency regulation or capacity or any of those. When you look at behind the metre applications, someone might need renewable integration, someone might need backup power, but that entity or that business might move might scale up. And why have a stranded storage behind the metre that sits stranded for 20 years when the business had kind of moved on? Having said that, your point about the grid is accurate. We find that the most economical application is associated with what we call distribution deferral applications. That's where the electric, utility or distribution company needs to upgrade the grid for a reliability issue that might show up for a few weeks out of the year.
[00:05:05.910] - Shihab
Why spend significant capital when you can address that issue with a storage asset and primarily a mobile storage asset?
[00:05:13.800] - Jon
So would that mean that you would potentially move those storage assets around? So point A might have a problem for three weeks in the year, maybe winter peaking. Point B might have a summer peaking problem in one month of the year at a different time of the year. So are you shuffling around your storage assets?
[00:05:33.560] - Shihab
That is correct. We tend to see that grid challenges tend to be seasonal. The summer might be impacted by, say, air conditioning load. Fall might be impacted by intermittent wind that picks up in the fall. Winter might challenge yet another circuit due to electric heating and spring might challenge yet a fourth circuit where you have too much of solar generation because the weather is nice and cool and you've got sunny days but you don't have air conditioning load. So now you have back feed issues due to solar. So now you've got four seasonal deployments with the same asset.
[00:06:16.470] - Jon
Okay, I don't know if that's a metric you track in terms of how often you're moving your assets about. In some ways you probably want to have them in one place to get the utilisation, in the other way, the advantage of being mobile is to get the flexibility. So can you give us a feel for how often you are moving them about?
[00:06:37.320] - Shihab
Yes. So I just mentioned four high level applications. So that's a seasonal movement. Having said that, we definitely from day one, we wake up in the morning and we think about how do we stack revenues based on time and spatial applications. So we have developed very deep IP programmes that scan the web and scan energy information. We create a heat wave with predictable set of economics or where the asset needs to move. It's fairly sophisticated. It's driven by economics but also driven by reliability. But on top of that, Jon, we have not only uncovered, we have developed a set of applications where daily movement is feasible and viable. And that is the reason we formed EV Edison. And so think about it, that someone electrifies a fleet but at the 11th hour, and that's typically the case, they look at the grid and they find out that the grid is not there for the fleet for three to five years to come. What do you do? And I can talk in more detail about the economics associated and the drivers associated with fleet electrification and how mobility on a daily basis or otherwise can come to the rescue.
[00:08:02.400] - Jon
Okay, so then you would be moving the battery, what, daily, to take it to a location where it can charge and then move it to a location where the fleet needs to be charged?
[00:08:14.010] - Shihab
That is correct. And you can do that for arguably until the permanent grid shows up. And a permanent grid, as we know, doesn't show up overnight. It can be years. However, having said that, we have cases where we might remain in that mode in perpetuity. You would not be surprised to find out that many of the fleet operators, we have a change of weather. Okay? So in regard to the deployment of mobile storage associated with EV charging, you would not be surprised to find that many fleet operators don't own the depot or the site where they park, many of them rent. And that parking spot today is not an expensive or fancy parking spot or parking location with the proper infrastructure. And you run into an issue where the fleet operator would only want to invest their capital in equipment, their equipment to move goods or move people, and they're not interested in a massive large, expensive infrastructure build out. The same thing for the landlord who might have a lot that they might have a plan to build a building or something else in the future. They have no interest in spending millions of dollars of infrastructure EV infrastructure build up.
[00:09:52.630] - Shihab
So that disconnect exists and frankly can exist for many, many years to come. So you need mobile storage not just for the time, until the grid is built out. The grid might never be planned to be built out at that location.
[00:10:08.290] - Jon
Presumably you offer it as a service. So part of your role is either yourself or with a partner to finance all those assets and then provide that as a service to fleet, a distribution network, whoever needs that service.
[00:10:26.740] - Shihab
That is correct. Jon, again, we use the word, we have no ego. If someone wants to buy the equipment, we can sell them the equipment. If someone wants the energy as a service, we do have financing partners from a private equity perspective, infrastructure investors, where we will finance the fleet of charging infrastructure and provide that in the form of energy as a service. It tends to be a little bit more difficult because obviously financing partners need to see almost contracted revenues for the life of the asset. So we get into a stacking overtime of revenues.
[00:11:07.380] - Jon
Yeah. Okay, so you're offering both. But I guess over time you'll get more confidence from your financing partners that you will get the utilisation of that asset. At the moment, it might be quite hard to demonstrate that utilisation for a 20 year period.
[00:11:22.990] - Shihab
That is true. This is a space. You know, it, we see it. We have never seen the power sector be so dynamic like nowadays. I mean, 10, 20, 30, 50 years ago, you can build the power plants, you can build a grid, and you have predictability and visibility for 10, 20 years.
[00:11:45.330] - Jon
[00:11:45.700] - Shihab
Nowadays, we don't know really that five years from today what the charging capacity is a vehicle is going to be and will vehicles be able to charge, say, 2 MW? If vehicles are going to be able to charge a two megawatt, then you can argue we're not going to need office charges and home charges. You'll do what you do today, stop at a gas station, at an electric station and set up in minutes. But the vehicle has to accept, say, 2 MW of power at a power rate that doesn't exist today.
[00:12:21.570] - Jon
Yeah. So what you're providing is enabling, optionality, and deferral. I'm interested in space. So is that ever a constraint or do you have to work hard sometimes to find the space to deploy mobile storage?
[00:12:44.590] - Shihab
That's a great question. So space is always an issue. And it's funny because people might say, well, space is not an issue, say in the desert, but also in the desert. Space an issue. Space issue always. However, we want to be close to where the load is.
[00:13:04.610] - Jon
Yes. I've got pictures of New York City in my head.
[00:13:11.210] - Shihab
If anyone visits our website, they'll notice pictures of barges with storage on barges. So in New York City, land is expensive. You can take our word for that. And the opportunity or the ability to bring large sea container sized, batteries, put them on land for the next 20 years, makes it a very expensive proposition. So we came up with the idea of moving those assets onto the water, and now we have a large fleet under development of barge based storage in the New York metropolitan area.
[00:13:51.570] - Jon
Yeah. Okay. So space is always a challenge, but you've got to get creative. And I imagine in some cases it will be hard to find a solution, but in other cases, if you get creative, then you can work out ways.
[00:14:05.360] - Shihab
Yeah. Energy storage, as we know, I'll say chemical battery storage does not have the energy density of liquid fuels. So by definition, you have a significantly larger asset for the same amount of energy you store. I think that's getting better with time, but as it gets more compact and more dense, safety becomes an issue because now you have a lot of energy in a small space and thermal runaways and so on. It's something you have to keep an eye on, especially in urban areas.
[00:14:35.290] - Jon
Are you in competition with diesel generators? Because wind back 20 years ago, if you need more power in a built up environment, you put in diesel generators. But permitting for your storage, is that a genuine competitor for you or is it two different markets? Is there one market where people can and will put diesel generators in and another market where they can't?
[00:15:01.840] - Shihab
I think you can definitely argue from a technical perspective and a business perspective that they do compete. However, from a strategy approach to both, you can argue that they are perfect for each other, effectively bringing a battery to work hand in hand with a diesel generator, especially a mobile battery. A lot of generators tend to be mobile as well. They bring benefits to each other. The battery needs to be charged, and a generator can help with that. At the same time, a generator suffers from what we call run hours, or runtime. They don't have the reliability of electronics and chemistry, and fuel is expensive. I think we don't need to remind anyone in Europe that fuel is expensive. So pairing a battery with a diesel generator creates a hybrid solution not too different than a Toyota Prius that's been on the road for over ten years and brings efficiency and reliability to the vehicle. Same thing with the genset. So we have strong partnerships in place. We actually are developing some world leading solutions in partnership with world leading genset providers, which we look to make public, hopefully in the next six months or so.
[00:16:26.010] - Jon
Okay, so it widens your toolkit in terms of the solutions that you can deploy? Yes.
[00:16:33.700] - Shihab
A battery would reduce the cost of the generator, which reduce the need to shuttle fuel. The battery would enhance the uptime of the combination, the battery would help with environmental footprint, reducing greenhouse gases, and the battery would help with noise pollution as well.
[00:16:53.080] - Jon
Yeah, I might come back to value stacking, because in Europe, particularly UK as an example, value stacking is where the battery business is at, and optimising battery revenue streams against different services that they can provide is becoming a part of a very distinct part of the energy sector. But I don't want to run out of time to talk about EV charging infrastructure. So tell us a bit more about this charging hub that you're building just outside New York. Give us a picture of the scale of it.
[00:17:37.240] - Shihab
Yes. So we have a partner, a company called Hugo New Realty. They own an 130 acre site. It's fairly large. It's an industrial/commercial site that happens to be only ten minutes outside of New York City, Manhattan specifically, and ten minutes from Port Newark and Port Elizabeth, which is the largest seaport on the east coast of the United States, and ten minutes from Newark Airport, a very well known and busy airport. And effectively it's in the heart of metropolitan New York. This 130 acre site is a site where we created a joint venture with the owner to bring large scale EV charging infrastructure there. That scale is up to 200 MW, possibly larger beyond. And at 200 MW, it's probably five, maybe ten times larger than anything else we've seen in the US. Now that's been announced or planned. And frankly, it's driven by the fact that we are at a location where we have about 140,000 vehicles and many of them are medium and heavy duty vehicles that go by the site every day. And it is an area that's constrained. So you can't say like, well, I have 130 acres, there's another 130 acres next door. No, it's a very congested geography.
[00:19:14.850] - Shihab
You can imagine New York City and so the confluence of land, availability of power nearby, we have a grid that has that capacity of 200 plus we already have ten to 15 MW to get started with immediately is a great jump start.
[00:19:42.520] - Jon
So how quickly will you build out 200 MW? Just doing back of the envelope calculations, that's 180 350/300 kilowatt charges. So that's one big EV charging.
[00:19:58.240] - Shihab
True. I would say it is driven. It's a chicken and the egg. True. Because fleet operators in the neighbourhood want the certainty of charging before they commit to buying electric trucks and vice versa. We need to see fleets that are electrified to make such a large investment. I would expect that to be in the order of maybe four to five years.
[00:20:24.840] - Jon
Okay. And I imagine there isn't 200MW connection capacity on the grid.
[00:20:31.990] - Shihab
The connection is actually double of that because it would be at an N minus one reliability. So to maintain a 200, you need to bring 400.
[00:20:41.510] - Jon
So you mentioned you got 10 to 15 MW at the moment to get started. So how will you get from 10 to 15 MW in 4-5 years?
[00:20:56.140] - Shihab
So, luckily we have the space and we have a very close planning and design and collaboration relationship with the utility. The utility is called PSENG. It's a local utility in New Jersey. So we work with them hand in hand and we work with the governor's team, we work with the Governor's team, we work with the local officials. So we are in constant coordination and work with planning officials. Getting up to that level is a process through line of sight to how many electric trucks, electric light duty vehicles and medium vehicles are coming to the state of New Jersey and primarily to the area. So you don't want to get too far ahead in the build out. That would be a waste of capital. And at the same time, you don't want to be too far behind. It is really a collaborative process with fleet operators and the officials that are responsible for the grid.
[00:21:55.560] - Jon
Yeah. Is the grid connection able to be upgraded or will you need on site generation? Will you need to take care of that capacity requirement yourself? Or what's your thinking about where the megawatts will come from?
[00:22:12.340] - Shihab
We do need to upgrade the grid, but it's not a significant upgrade because the utility had made recent investments, when I say recent, over the last ten to 15 years since Hurricane Sandy, where the grid has been made much stronger, much more resilient. So we do need to bring it from a couple of miles away, but the capacity does exist for 200 MW.
[00:22:42.040] - Jon
With your mobile storage, then you can build out that capacity smoothly, potentially, while you're extending the grid connection to the area you need it.
[00:22:55.780] - Shihab
That is correct. The site has two barge slips, effectively inlets where you can bring a barge, and there are power plants in the vicinity, but there are large substations as well. So if we feel that there's a need to upgrade quickly and sooner than a grid upgrade, we can shuttle those through barges.
[00:23:20.960] - Jon
How quickly you see the heavy goods vehicles, how quickly do you think they will electrify? So the interest you're getting from the fleets, from the heavy goods vehicles, companies themselves, is this something they see coming or is this something you expect them to move really quickly on, or do you think it will take time? Interested in the mood that you're getting from the industry?
[00:23:46.900] - Shihab
Yeah, so I think we and this is public information. We saw companies like Tesla and companies like Nikola just started to ship what we call Tesla semis or the electric semis. And we see Volvo, we see others that are just starting to ship electric trucks. So there was an issue with the supply chain. Basically, even if you wanted to purchase, they were not available. So now that's happening, there's a very clear economic payback. When you electrify a diesel truck, especially class six, class seven, class eight, that runs six or eight or 12 hours a day, there's a very nice and clear payback. Obviously you have to pay more upfront for the capex, but there's an established industry on the financial side that's willing to step in and finance that upfront for you, just like with solar and wind and to make the payback maybe a three to five year payback. So I think now there is certainty of supply, although it's still small, and we need to provide certainty of infrastructure. And with those two, I think the market would open up in a big way.
[00:25:06.580] - Jon
Yeah, okay, that's very exciting. We've seen in the UK a proposal for a big hydrogen, electrolysis green hydrogen plant near one of our ports. So there's I don't know if vassal is the right word there's the solutions of hydrogen and electric vehicles for the heavy goods vehicles industry being developed. Do you see that same debate tension between hydrogen electrification in the US?
[00:25:39.260] - Shihab
We do. I attended an expo called ACT Expo Advance Clean Transportation Expo in Long Beach, California, earlier this year. And when you go to the exposition floor, it's almost split half and half heavy duty vehicles that are electrified or that are hydrogen based and frankly the same companies. I think company like Nikola will offer you a fuel cell truck or a battery based truck. If you ask Elon Musk, it's battery. We frankly are agnostic. So we are prepared to be in the business of hydrogen transport. And our site in Kearney, New Jersey, that charging super hub is suited for hydrogen generation as well.
[00:26:33.910] - Jon
Okay, you can follow the market.
[00:26:36.490] - Shihab
We can follow the market and let the market tell us where they need to go.
[00:26:40.210] - Jon
So Shihab, have we're getting to the time of the podcast now where we need we'll bring out the Talking New Energy Crystal Ball. I'm going to set the dial to just three years ahead to 2025 because I'm interested in how quickly mobile storage will grow in the US. Now, if I can ask you what sorts of numbers of utilities you are seeing engaging with mobile storage today and how that number will change in the next three years. So you might want to be specific or general or proportions in your response. So I'll leave that to you. But how quickly do you think utilities will be adopting mobile storage in your part of the US.
[00:29:41.030] - Shihab
For the last few years, there was a lot of education in sitting down with utilities about mobile storage and we're seeing a major shift nowadays. The fact that we built mobile storage systems for utilities and their customers, whether EV customers or frankly fires out in the west, are triggering the need for mobile storage. So we're seeing the call it adoption rate go from 20% to 25% to over 80% in three years. A major influx of requests of clarifications of proposals coming our way. We're seeing that on a weekly basis and because we're able to build mobile storage, frankly for almost the same cost of stationary storage and once you redeploy at once you're ahead of the game in terms of benefit cost ratio. So I can say when it comes to utilities, almost every utility in the US has a case for having mobile storage as part of their fleet.
[00:30:44.260] - Jon
And what do you think? Well, maybe speaking for your company, but for the I'm sure you won't be the only ones developing mobile storage. What's the biggest challenge in making mobile storage for success or developing mobile storage so that it can solve the problems that we've talked about today, whether for your company or the sector in general?
[00:31:05.040] - Shihab
True, as a sector storage tends to lack the density of liquid fuel. Battery storage, I should say chemical storage lacks the density of liquid fuel. So the issue we run into is that they tend to be heavy and bulky for the amount of electrons you move from point A to point B. If you contrast that to hydrogen, you can move a lot more energy on a truck from point A to point B. But the downside is the fuel cell is much more expensive and much heavier and bigger at the destination. So we deal with this comparison all the time. We say, okay, should we transport hydrogen or should we transport electrons in chemistry? And we're always looking at the comparison molecules versus electrons. Yeah, molecules versus thank you.
[00:31:57.380] - Jon
Okay, that's been absolutely fascinating both learning and hearing about your business, the sector you are involved in and for most of our listeners in Europe to understand the differences in your part of the US and the problems that you're solving. As I introduced at the beginning, I think the distribution network is going to become a more and more interesting place. The energy transition spotlight is going to shine stronger and stronger on that part of the industry so it needs every solution it can get. And great to hear about what you're doing and good luck in the next years.
[00:32:35.480] - Shihab
Thank you. Thank you Jon for having us today.
[00:32:38.250] - Jon
And as always, thanks to everyone for listening. We hope you enjoyed this episode, learned something new as always and look forward to welcoming you back to next week's talking new energy. Thanks and goodbye.