Pushkin.
So Jenny Chase, who's arguably the foremost solar analyst in the world, recently said, by twenty thirty, in the middle of the day, essentially everywhere in the world, unless it's a cloudy day, electricity is free.
She told me that at nine am today. I interviewed her five hours ago.
Seven hours All right, great, So now that we live in that world like people don't get how profound a transformation that is.
I'm Jacob Goldstein, and this is what's your problem. I hope you listened to last week's episode where I did, in fact talk to solar expert Jenny Chase about how solar energy got so cheap. That was the first of three shows we're doing on the triumph of solar power. Today and next week, I'm going to be talking to people who have very big plans for what to do with that very cheap or even free, intermittent solar energy.
My guest today is John O'Donnell. He wants to use cheap solar and wind energy to solve one of the biggest unsolved problems in the energy transition heat industrial heat, delivering the reliable, intense heat that companies around the world need to make everything from steel beams.
To t shirts.
Today, company's burn fossil fuel to generate that heat. John is the co founder of Rondo Energy, a company that John thinks has figured out an economical way to turn intermittent electricity into industrial heat. John has started companies before, and at the beginning of our conversation he told me one of the most important and really kind of surprising lessons that he learned from those earlier.
Companies innovate as little as you can. If the technology is going to make a difference, one of the important questions is not just how quickly can I develop it and make a first unit, but how quickly can I make it bankable? How quickly can I make it suitable for billion dollar infrastructure investments. And it is a very high standard to be able to prove reliability, durability, certainty
of deployability. And there are lots of material science research groups, folks who are trying to work on innovations at an individual cell level, who don't really necessarily understand the challenge that customers by systems, bankers by infrastructure that we know will last for thirty years. And it was with that rigorous focus of what is the simplest, most proven thing that we could do that led us down the path that we're that we chose because we found a path
that others had opened two hundred years ago. That you know, we found a way to reuse a technology from the eighteen fifties with a physics insight that let us use these proven materials in this new way to solve this challenge.
I love the idea that innovation is not your friend. Like that's such a it's such a flip, right, it's like the OCAM's razor of starting an energy transition company or something.
Well, that's right, And you know, we saw this go back to clean tech one point. Oh, go back to two thousand and five, where there were companies that were going to make PV out of anything but silicon because we knew silicon was expensive.
PV meaning photovo takes photos solar solar panels.
Yeah, and everybody knew that. Everybody quote unquote knew that the simple dumb thing that we've been doing for a long time, silicon wasn't going to get cheap enough. And then China put capital into reducing the cost of making polysilicon, just build more production. The cost of polysilicon fell seventy percent in one year. And today, just because of Right's law, just because of learning curve, the simplest technology became the
dominant one. Today we see dozens of alternate battery chemistries in electrochemical.
Batteries, alternatives to lithium ion, alternative lif yest, that's.
Right, which are facing that same Okay, how fast can lithium ion improve? And it continues to improve better than anyone forecasts. And again in our case, we are doing the absolute simplest thing and it is a solution that we know for sure works.
So you mentioned you came up with this idea that is a version of a two hundred year old idea. What's the big idea? What's that idea?
Up until about ten years ago, most of the energy storage in the world was at blast furnaces. In the eighteen fifties, there was an innovation that reduced coal use at a blast furnace by building a tower with a thousand tons of brick within it with air passages. The exhaust from the blast furnace blows through that tower, heats the brick to fifteen hundred C. Then things are switched around.
The exhaust is being passed through another tower, and the tower full of hot brick air is being sucked through that tower and preheated to twelve hundred cea into the furnace to save coal.
So basically, when they burn coal to make iron, they take the exhaust heat that comes out of the furnace, they use that to heat up bricks, and then later they feed that heat from the bricks back into the furnace and it makes the plant essentially run more efficiently.
That's right, And we had a physics insight that if we built a particular structure we could use the same technology that is in your toaster. A very small amount of heating elements are delivering heat by radiation, thermal radiation and heating in the whole surface of the bread uniformly.
If we built the right structure, we could embed electrical heating elements in a structure of brick with air passages and heat that brick rapidly and uniformly to very high temperatures and then pull heat out of it, just the way the blast furnace units do. Cool air in superheated air out, and with superheated air we can drive a cement kiln, or we can drive a boiler and make steam for making everything from baby food to chemicals, and that unlocked using this abundant you know, brick is basically
made from dirt, certain kinds of clay. Yeah, no critical minerals, and an unrefined material. I mean, that's one of the things about Tesla wrote a report last year they're so called master Plan three, their forecast for stationary storage. Their assessment was the world is going to have twice as much heat battery as electrochemical battery storage, but that this is categlorically so much lower cost because it's using raw materials, not refined materials, because it's not doing any chemistry of
any kind. It's the same technologies.
Just making stuff hot. It's just eating.
Bricks, so you can use raw materials exactly.
So okay, So just to kind of summarize, there's a big problem in the world. Industries burn fossil fuel for heat to make almost everything, steal, cement, clothes, whatever. You have, This idea the kind of solution to the problem. We can use intermittent, cheap, renewable electricity to heat up bricks and use those bricks essentially to provide that heat. What do you have to do, to industrialize it, to commercialize it, to make it a thing in the world.
So step by step. One of our engineering team members and his last job was working on mocks six hypersonic missiles. He now does computational fluid simulations on air moving at about four miles an hour, and the challenge is just as high. We could not do what we're doing without modern computer systems that let us do detailed simulations of
the structure and behavior. But step by step it was really identifying, okay, which materials, which manufacturing processes, what geometry, And we built a series of things that fit on a desktop, to things that look like an industrial refrigerator, to things that are just multiplied by about ten x. And right now we're doing the fifty x step as we go from the first commercial pilot unit to the first series manufacturing of the commercial models. There are plenty
of different steps along the way this thing. As I said earlier, how do we innovate as little as possible, as much as necessary, but as little as possible, And how do we pick subsystems and partners so that we are certain we can go to massive scale Because like speed is the most important thing, one of the studies of this cal as of heat batteries. Their finding was, Yeah, this is going to eliminate about twenty percent of total
world CO two when it gets to scale. Okay, twenty percent is a lot, and it's going to reduce the cost of manufacturing all the commodities that we use. So let's get to it. How do we get there as fast as possible?
In a way, for something to scale that fast, it has to be cheaper, right. The only way something can grow that fast is if it's just cheaper and simple, right. It has to be those things. Otherwise it won't grow fast.
As long as there is some sort of premium or higher cost, it will go as slowly as possible. If you're in a razor thin margin commodity business, the last thing you want is to increase your cost of production. Your customers may go elsewhere. But if there is no emission solution that will reduce your cost of production.
Yeah, markets, huge flows of private capital will drive it to scale. It's if it's ready, if it really does meet what it says it does, if it's safe.
I mean, there are lots of things that we and as I said earlier, that is it proven enough that infrastructure capital can apply, which is just.
As most sort of conservative, cautious capital or they want to make sure not just that it works, but that'll work every day for thirty years.
That's right. And of course we saw the solar industry as each technology became bankable, enormous explosion and growth as financial engineers joined you know, manufacturing engineers and built an industry that meets everybody's you know. And that is the opportunity we have right now, this new class of supplying the energy for industrial heat. If you just do a units conversion, it's about seven thousand gigawatts. It's many times more renewables that exist in the world today that will
be needed in this new market segment. And grid researchers, notably Jesse Jenkins at Princeton, have identified that when these technologies are connected to the grid, they help the grid, they make it more robust, they help more renewables connect because it's a new special class of load. So there's a virtuous cycle.
Well, and it's optimized to want to use energy at a time when there's too much energy, right, Like, that's the whole point, right.
And in order for that to really work, because lots of people say they're going to do that, but in order for that to really work, you really have to be something that can take energy only a few hours a day. You have to be able to operate at low capacity factor to have a low cost per kilo loot. And I think, as I think I mentioned, the technology we use for capturing electricity is the same one that is in your toaster. It is literally a hot wire and it is difficult to get cheaper than a hot wire.
So the bricks, Yeah, these play a unique role in being kind of a bottom feeder that's taking electricity that nobody else wants. That as a result, eliminating curtailment, making renewables that are serving the grid more profitable because they can sell all their energy. This new kind of load is going to transform the grids it's connected to.
So curtailment is like turning off solar panels in the middle of the day because there's not enough demand. Basically, that's what curtailment is.
Yes, England threw away fifty five percent of the wind power available at the Scotland border last year.
You got to put some bricks over there, man, You got to put some hot bricks on the Scotland border. Yeah, so tell me about the pilot plant that you have, right, that's you have built a pilot plant, is that correct.
Yeah. We built a first small unit for a customer who is an innovator in producing low carbon biofuels. The goal is a couple of large units that eliminate all the combustion at the refinery, and they said show us. We were keen to work with them in the longer term, and we were also on a journey. We were preparing to build a first commercial unit for another customer that holds one hundred magawatt hours. We had built things in the lab that hold two hundred kilowat hours, and that's too big a step.
Right, That's like about a thousandfold leap of five hundredfold.
Only five hundred, Yeah, exactly. Yeah, so let's build something in between. And in particular, the work that we had been doing in the lab, we had recognized, Okay, we have the geometry, we have the materials, but we aren't making the thing the way that it's going to be
easy to construct. We want to make the core a different way and we want to actually test build something of the full commercial implementation before we go to build a big one, and that was the genesis that said, why we want to do this project, and they over the last year and a half a little more than that.
Now we've learned a ton from operating there, from going through catastrophic rainstorms that flooded the site and flooded the substation, and you know, a variety of things that were unpredictable that have been valuable learning experiences as well.
So what's it? Just what's it look like?
This thing is a It's a box that contains ten tons of brick, storing two megawatt hours of energy. Each brick is about a one meter cube in terms of its size. That has open chambers that in which light moves heat around, and fine slots in the brick through which air passages. It's a complicated looking object, but it's about a meter cube and it weighs about a ton. So I'm sorry about half a ton.
Yeah, each each brick, you're saying, each brick.
Yeah, A single a single brick.
Yeah.
So the part of the journey was learning how to make big ones so that the assembly at sight would be very quick. Inside that structure of brick are electrical heaters that are passing through passages. Inside that brick array, it's surrounded by an insulated box which is surrounded by an insulated kind of shed, and it looks like a small all industrial building on the outside. It's got water pipes and steam pipes on one side and an electrical connection at the other.
In a minute, John talks about building plants around the world right now. So you have this pilot plant, it's running. What are you worried about? What are you still trying to figure out?
Well, today we are in contract and in construction in on two, three, four, five countries on projects making cement, polyester, whiskey, beer, polycarbonate, plastic, and biofuels. We are struggling to grow the company rapidly. We're about one hundred and fifty people in seven countries right now, establishing construction relationships with you know, construction companies for in all of those five countries. There are plenty of things at this point of you know, stretching at
the seams. We've just only just a few months ago concluded establishment of a European subsidiary with financing from the European Investment Bank and Breakthrough Energies Project finance team that have created an enormous financial, engineering capability and legal capability inside our company that almost killed us.
We uh that bricks are easy finance and legal.
Yeah, well, it depends on where you are, but at the moment, yes, that's right, because it was about a year ago that we established a giant manufacturing capacity with one of our early investors, who is a diversified producer of many things, including this refractory brick, doing business in sixty countries. So part of it has been establishing proving the initial that the thing works, then establishing manufacturing capacity,
establishing delivery capacity, the ability of finance projects. There's more than one answer to your question depending on what perspective that you look, and right now we're engaged in all of them.
So it's execution risk. If I were to reduce what you're saying, it's like you figured out how to do the thing, but doing it is hard, doing it in five countries, and I mean presumably also like the thing, like you have to spend a lot of money now in order to get sort of steady returns over twenty years. Right, that's your model. You're building these things and then you're selling the heat over the life of the thing is that the way it works for.
About half of our projects, that is the way it works.
OK.
But you're right, we're spending a lot of money now and part of what we're doing, of course, these early projects are proving the technology in that place, in that application with that construction partner. So we're setting the grounds for hypergrowth and establishing that bankability criterion that I mentioned earlier. And it takes a lot of work to get the first one done. But if we've done that right with that partner in that country, you know we will step
and repeat. And there are these giant markets where we are in the money and there are a lot of people who want to be customer number two or three. But to your point, for some of our projects, we are a technology provider where we are building something and turning the keys over to the customer, and in others we are the owner operator and we are selling energy services, not energy equipment.
Basically, you own the bricks or they own the bricks. I mean, are those the two models you're describing.
More or less? Yeah, So there are several ways that customers will bring these things in and in some cases it's because look, the heat battery is in the middle of their petrochemical complex. They want to own everything in that square mile factory facility. In other cases, no, we're going to establish something that's right next door and sell steam over the fence. That's just the nature of this business. And we're standing ourselves up to do business the way that the market needs us to.
You use the phrase in the money. Does that mean it's cheaper for them to buy heat from you than to use fossil fuel to generate heat? Is that what in the money means in that context?
Yes, that's true every single project, and that is yes exactly.
Is regulation a problem for you at all? Is it a benefit to you? Like, how does regulation fit with your business?
We're using a new fuel, We're using electricity in a fundamentally new way, right, and the rules that the world has around electricity networks need update, you know. And we hear an awful lot about the challenges of connecting renewable generation to electricity grids and the delays, and you know, the sort of structural conflict between we want a least cost electricity network, but we need one that operates with
these fundamentally new sources of generation. What's gone on so far with lithium ion batteries in particular, has begun to address the matter of how do we connect these intermittent loads, how do we connect loads that benefit the electricity grid? And this matter is a very big deal country by country. Netherlands just made a rules change, Denmark made a rules change in April last year. We had a project contracted in October. Germany and England have just made rules changes.
In some places, the rules like in Urkat in Texas already work. I'm speaking to you from California, where decarbonization is both mandatory and forbidden. The grid rules in California make it impossible to connect projects like ours, and we're building our next California project with no connection at all at all to the electricity grid.
For that reason, basically just because they wouldn't let you if you wanted to.
Well, and it was going to take seven years to get a connection, and the price would the price of the grid service alone exceeds the cost of fuel, so that even if the solar energy were free, the economics could not work. So yeah, there are places where the rules matter, and it is mostly a matter of sort of modernizing the rules to sort of deal with today's these fundamentally new technologies that were not conceived when today's
rules were established. Steve chu who was Obama's Energy secretary after he won the Nobel Prize, you know, he used to go around giving a talk saying, the United States does electricity today the way we did roads in nineteen thirty nine. And he's right about interstate transmission and all sorts of things. But these things are being worked at the same time as our technology and others are coming
to the fore. Because look, five ten years from now, I think it'll be widely understood that all of industry is going to be repowered on electricity, electrify everything is the way we make this transition to a lower cost
world that is zero emission. And I'm very encouraged that that process is underway and a bunch of places, and there are different pieces to get out of the way and to enable that transition on that journey, and I'm delighted that, you know, there are other folks building heat batteries and heat pumps and electoralizers and all sorts of things that collection, as well as electrochemical batteries that collection.
Those technologies, the winners will find their way to scale, but these regulatory matters need to be adjusted for any of them to deploy.
We'll be back in a minute with the lighting ground. Are tandem bicycles overrated or underrated?
I have three in my backyard. Tandem bicycles are fantastic.
Why has the world not come to their bicycles? What do you know that nobody else knows.
Most of my rides have been with my kids, especially when my kids were younger. It was a way of doing centuries when you know they weren't willing to ride love liscences.
You peddled one hundred miles and they coasted.
It wasn't like that, but there were allegations of that at different times. Who sat him back? My kids? But you know, my wife isn't as excited about tandem bicycles as I am, so I understand there's a diversity of opinions on this topic. I've read that.
You're also a pilot, and I saw a quote from someone who once flew with you, and they called flying with you. You know what I'm going to say. They called it one of the scariest and most exhilarating flights I've ever had. And I just want to give you a chance a comment on that.
Yeah, we were on our way to a particular site where to a meeting where we're going to go testify against the construction action of a coal plant in a particular spot, and we chose a route that went fairly close to a peak on our way there in Nevada.
And because it was a straight line, you were just like, well, let's go on a street.
Were just level. We were, I don't know, a mile away, but we were level with the peak. And he liked that, or he both got excited and terrified.
Yeah.
So you worked on nuclear fusion long ago and people are still working on nuclear fusion. Do you think it'll ever work in a meaningful way? You think the economics of it will ever make sense? Even if we figure out the science.
There are people who know much more about it than I do. That you should ask that question. I was building computer systems for the instrumentation group. But every problem that existed, every single one of the horrific material science challenges, whatevers. There are very smart folks working on those things. But you ask the right question, is there a chance that it will be economical? Given what's going on in energy storage? Right that the world has consistently underpredicted how fast that
would come down in cost. That we have consistently underpredicted how fast wind and solar come down in cost. It's very difficult to see how fusion will compete with free and of course baseload technologies that can deliver us energy all the time are super attractive, but you have to look at the whole system. And again there are people who know much more about that than I do.
What's one thing about energy at any level could be on the level of basic physics or not that you wish everybody knew.
We can have this energy transition that we talk about right now, and it is the greatest business opportunity of our lifetime, and we have the technologies to do about eighty percent of what we need to do, and the technologies basically are at hand. You know, we have the
tools to drive through this transition. And ten and twenty years ago, there was this belief that the green transition, for example, the energy transition, was going to make us all poorer, that it was going to be a burden to those in developing countries, that it was going to
you know, take away wealth. And we are now at this moment where the thing I wish people knew was that, look, these technologies are cheaper and we can go faster, and there are spectacular opportunities to drive change and go faster than the world needs to to achieve Paris and a safer client And most people don't know that. There is a sense I hear often kind of a sense of hopelessness. There's nothing we can do. It's going to take longer than we want. And it's like, guys, we just put
our heads together. We have the tools to do this. It's profitable to do this. Let's get to it.
John O'Donnell is the co founder of Rondo Energy. Next week i'll talk with Raffi Garabedian, co founder of Electric Hydrogen. Raffi's company has raised hundreds of millions of dollars and it's trying to turn all of that cheap intermittent energy from solar and wind power into hydrogen. That hydrogen could be used for everything from making fertilizer to powering container ships. Today's show was produced by Gabriel Hunter Chang. It was edited by Lydia gene Kott and engineer by Sarah Bruguer.
You can email us at Problem at Pushkin dot Fm, I'm Jacob Bothstein and we'll be back next week with another episode of What's Your Problem.