How to build a battery that replaces a coal plant

solar power, but it's so expensive. Today's episode is about a company trying to change that. Farm Energy started with the goal of making a really cheap battery, one that could replace a coal plant for a battery obsessive, it's an exciting question forms only limitations or the laws of science and money, and the startup seems to have found a battery that can be that cheap. I saw it,

and the battery doesn't look like much. Matteo Haremio, the CEO, and one of the five co founders, showed us different prototypes and as we went down the line, the battery's got cheaper and cheaper. Looking at that, well, I mean when we're working on something that needs to be as low cost as this battery needs to be. You can put it to the eye test. Right, does it look expensive? Right? Does it look expensive to produce the parts? Does it look expensive to deploy? We are passing the eye test.

This does not look expensive and it works. I should not have laughed, but it was shocking. While lithium ion battery facilities, which is the battery that goes into smartphones and electric cars, requires you to wear a hairnet and a clean suit, this form battery was out in the open and it just looked like bubbling in a plastic milk pottery. From the side, you'll see oxygen bubbles fizzing up from the bottom and accumulating, and then they're eventually

sort of just removed from the sound. That's Billy Woodford, the chief technology officer, describing the iron air battery. What I was seeing was rusting inaction form energies big innovation. Rusting is a sign of iron slowly aging. It's iron combining with oxygen and becoming iron oxide. It's not a desirable reaction and it happens passively, but the chemical reaction is actually releasing energy. Vary slowly. Form Energy has found a way to speed up the reaction in a controlled

way and draw out the energy as electrons. When I visited FORM, I went on a tour with two of the co founders, Matteo, who you heard defending the battery's appearance, and Billy Woodford, who's the chief technology officer. Then we sat down to talk about the scale of the problem that Form Energy is trying to solve, challenges of new battery chemistry, and what goes into starting a company that has attracted nearly nine hundred million dollars in investments. Matteo,

Welcome to Zero. Thanks at great to be here. And so Matteo, this is not your first battery company, what is your story coming here? This is my third battery company. And I've been in batteries almost twenty years now, and I saw the impact that batteries could have and I hoped one day would have when I first started working on them in two thousand and four. So I can't really explain it other than they've just captured my imagination and I seem to have a wealth of curiosity about

batteries that I don't have for much else. But just before FORM I was at Tessa for a number of years and I started what became the Tessa Energy Effort there, so the grid storage component of that business. And I left, I started thinking about what does come next for energy

storage on the grid. The energy transition was very much upon us then, and I felt like I could see the direction that things were going to be going, and it was clear that there was a whole an opportunity, frankly in the broader space for the multi day type storage, because that's what you need to be able to in the end replace and retire all of the thermal generation on the grid that coal in natural gas. And from the beginning the goal was what kind of battery lets

you replace a coal plant. That's as simple as we could sort of state the mission. What Matteo say is about multi day storage is really about money. In principle, you can use any battery to store any amount of electricity you want, but it is currently uneconomical to use lithiumine batteries to store any more than a few hours

worth of electricity. Form Energy's battery uses iron and air, and that means it can be one seventh the price of today's lithiumine batteries that would make it cheap enough to build a huge trees for storing multiple days worth of solar and wind power, which could eliminate the use of most fossil fuel power plots. We did not start with iron air as the chemistry. We were looking at

other options simultaneously to that one. It was one of the earliest contenders that we could think of, but we really started with that problem statement, not with the technology in hand that we were sure would We were sort of force fit into the market. And the other major bet that we made was that this would become relevant in a timeframe that was near enough. Right, So, what

was the timeframe that you had in mind? You, given you've worked in a couple of battery companies before this, you know when it came to form, how long did you think it's going to take to build this iron air battery? Well, my assumption was ten years. That's how long any hardware takes to really make an impact at scale. And we are doing this because of impact, not because we want to be able to show you prove that

the chemistry works. That's quite trivial. In fact, an impacts of course that we manufacture at scale and that we deploy at scale, So that was a time scale that we approached. I will say, however, that the market moved faster than I think any of us anticipated. We thought it would be relevant in a ten year time scale, but looking at just how fast it's moved over the first five years of our existence has been validating and

it's only accelerating. And how are you doing on a ten year timeline of making the battery a commercial product? We are on schedule. In fact, if anything, we're a bit ahead of schedule. We have been lucky. There's always a certain amount of luck anytime you're trying something brand new, and we have been fortunate to turn over a couple of cards that have come up the way that we hoped that it would. On the other hand, you make your own luck and doesn't happen by accident that you

make a lot of linear progress. But the other reason that we're able to do that is on the market side of things, we understood what success looked like. We didn't wonder if a certain combination of specifications would succeed in the market, and that's because of the investment that we made very early on in the analytics, and this

is thanks to our co founder Marco Ferrara. The functionality that he built in the models allowed us to really understand those trade offs and be very precise about how to make them, so that when billion team are in the lab working with the chemistry, they know how one dollar of capex trades off and the curve on which it lies with one point of round trip efficiency. That's a lot of jargon. What Mattheo is saying is that whether a battery succeeds commercially or not depends on its

upfront cost, also known as capital expenditure or capex. It's why Marco puts so much care into spreadsheets that model how changes that form makes to its battery affect its price. Another factor that plays a role in the battery's success is so called round trip efficiency, which is simply how much electricity you get back from the battery for every

unit of energy you put in. You may think that you should get all of it back one hundred percent round trip efficiency, but the laws of physics and chemistry do not allow that. There will always be some losses. If the losses are like twenty five percent, then the cost of running the battery increases quite a lot. If the losses are less than ten percent, then it's a

much more manageable situation. Okay, So let's look at the Form battery, which is a weird battery because of what we know of batteries as these highly specialized chemicals doing very specific things like hurdling an electric car at one hundred miles per hour. The form battery cannot do that. To be clear, it could, it would be a very

poor choice. All batteries have trade offs, and the trick is to pick for a given chemistry the right application that doesn't care about the things that it's not good at, right, and so iron air batteries are not particularly suited. In fact, they're not at all suited for motive applications moving things around, but they are very well suited to this multi day intermittency problem on the grid that we're solving. All right,

So describe this battery. So Form is commercializing an iron air battery, and it is very much what it sounds like. We are rusting and unrusting iron in a battery. Humans are very familiar with the fact that iron rusts. Right. We had a whole age named after a period where humans were working with iron about three thousand years ago, and so we've learned a lot about how iron rusts, and that is the whole world of corrosion science, right,

how do we prevent iron from rusting? How do we make sure that those bridges stay up for a long time, And what we are commercializing is that reaction and then also in reverse, So how do we control that reaction and how do we get it to perform in a battery to the highest possible level of performance at the lowest possible cost. So that's really the task that we have been working on for the last five years. A

reversible rust battery. I'd assume you have a pressure piece of fine you leave it out in the open, It's going to take months before it becomes rust, or at least gets a layer of rust outside which stops the rest of the iron underneath it from becoming rust. Your battery will do that much much faster. That's correct, And the idea of the rusting happening on the surface is one of the interesting things that we have figured out

how to deal with. It does take a long time if you just let it happen on its own as a reaction. It's a very actively driven reaction that we have within the cell, so we know how to drive that reaction under the conditions that we are providing to get the speed of this reaction both on charge and discharge, so that it's suitable for this multi day application. We do not have months to wait for that oxidization to just sort of happen naturally, so it's very much a

controlled reaction that we're driving. When people think of iron rusting, they don't really think about energy. So where is energy coming into all of this. Yeah, so when we talk about energy, we are talking about electrons. Right, this is

a battery. After all, people know something about batteries. They probably have heard of lithium ion batteries, and indeed that is the name because there is an ion of lithium that in fact is going back and forth from the anode to the cathode, and that is what provides that charge. Right when electron is either given up or it's given back, the lithium ion is the one that is conveying that charge for us. There's no iron ion that's going back

and forth. It's a hydroxide. So this is a combination between hydrogen and oxygen, and that is the molecule that is doing the work of either accepting or giving up the electron. So you're right, iron in the wild gives up it's electron for free. Essentially it goes somewhere else, right, And the trick is that we capture that electron in this liquid environment where this hydroxide ion can do the

work that we needed to do. So it's sort of what just happened, is Matteo, after finishing the explanation, looked Billy to confirm that he got it right. But of course I always check with Billy. So, Billy, you're the chief technology officer here at form Energy, there's a different way to explain this specific reaction. What is your best explanation? Sure? So the analogy here is the rusting reaction, and that

reaction is actually practiced intentionally in handwarmers. So these small pocket held devices that you use when it's very cold outside you want to keep your blood circulating into your fingertips, and those are actually full of fine iron powder that is rusting and it's rusting very slowly and that's generating heat. And so the energy of the rusting reaction in that case is going into heat in our battery because we separate that and drive it electrochemically rather than just chemically.

We can capture that energy has electricity. And I know that because in the very early days of form some of the very first iron powders that we tested I sourced by buying a bunch of handwarmers and cutting them open. That's I mean, that's how you build a billion dollar battery company. It starts with a single step. As an example of that, when they were first figuring out how to move around direct reduced iron, which is what's used for electric arc for and steel production, and they didn't

realize just how quickly this would oxize. There was a ship that had four hundred thousand tons roughly of DRI and then started to heat up because it's a giant handwarmer. And once that started to heat up, there was no stopping it and they had to sink the ship. The reaction is exacerbated by saltwater. So you know that if you have salty roads, that causes a cart to rust more rapidly. The same thing is true, so the salt in ocean water caused the rusting reaction to be accelerated.

This took place in two thousand and three in the Indian Ocean, just east of Madagascar. The ship heated up to three hundred degrees celsius, and understandably, the structures began to fail. Everyone who was on the ship was evacuated and got off. Okay, Billy, how did you get to be doing this? I know the handwarmers were involved, but I assume there's more that you had to put in to get this job. So I grew up in northern Pennsylvania.

I studied material science at Penn State. As an undergraduate, I had an opportunity to do an internship where I worked on the development of a battery component, and that was really where I first got excited and interested in batteries. I came for the science and I stayed for the mission. So I got interested in batteries because of the technical problems inside of them, and then through my PhD, I really came to realize how impactful batteries could be on

climate and on energy. What are the technical challenges that have kept you going? Yeah, so it's a simple reaction in principle, but of course the devil is always in the details. Many of the challenges relate to controlling that reaction, so making it be mechanically stable, you know, if you of a car rust that can mechanically detach. That has been one of the challenges and one of the puzzles that we've had to sort through. How do you design

that to be robust and durable and reproducible. Others are the efficiency of the cell, So how do you have a good high fraction of the energy that you put into the battery come back out when you discharge it? And it's one thing to make an iron air battery that cycles, and it's another one entirely to design the cell that is a scalable and low cost and that is a critical and essential piece of the challenge. It is fairly easy to make a terrible iron air battery.

It is very hard to make that chemistry perform at its highest possible level at the lowest possible cost. And you can only do it when you have people the caliber of Billy and the team that we built here. After the break, how the Inflation Reduction Act helps form and when you might be able to drive by some form batteries yourself. What specifically does the Inflation Reduction Act do for you as a company. Well, it's a seven hundred page document, so it's hard to say that there's

one thing that it does. However, from a broad perspective, the best thing that it probably does for us as an individual company is it it very clearly identifies the role that energy storage can, and to take a normative stance, should have in this broader energy transition to a decarbonized system, and in particular a decarbonized electric grid. And so there are for example, take the investment tax credit for standalone storage. This is something that the industry has been working on

for years to try and get past. This was a benefit that was already there for solar and and the storage industry wanted a storage to qualify for that same credit, and so very unambiguously it's in the bill there. And so that's a very clear signal that that storage is intended to be very much alongside these other large scale infrastructure type technologies being deployed in large volumes on the grid.

If it's possible, can you walk through how a tax credit meant for storage would apply for a commercial project that you will be building. Sure, So, the baseline of the investment tax credit is a thirty percent tax credit on the capex value of a project, and there are certain adders on top of that ten percent adders that come in for domestic content or for the location of that asset if it's in a disadvantage community or economic

development community for example. There's also adders for the owners in the case that they are a nonprofit for example. So it takes the effective cost to the buyer down by as much as two thirds potentially. That's amazing. Yeah, it is industrial policy written into the tax code for sure. When will you build your first commercial project? Our first commercial projects will start to be deployed with our partners towards the end of twenty twenty four. And that's also

the pace at which this industry moves. You can't turn large volumes of infrastructure on overnight. In December, FORM announced that it will build a seven hundred and sixty million dollar factory in West Virginia to make its batteries. That site will start manufacturing the batteries in twenty twenty four. This is a critical step informs ten year timeline of making the battery affordable for its customers. Power companies looking

to eliminate the use of coal and gas. So our relationships with utilities go back to even before we've formally founded the company, when we were just talking about ideas and talking about that kind of storage it could replace a coal plant, and really working on on what that could mean with the utilities so that this is not something new to them, that we understood, the value, that we understood the key drivers for their participation in the

energy transition and storage within that. Now, let's talk about the battery and its application on the grid. What would it look like when you do put one of these on the grid, Like, somebody's driving past one of the farm energy battery application, what is it going to look like to them? It will look like shipping containers sitting in a field. That's really what it will look like.

Not exactly. Sort of a charismatic megafauna power project, if you will, But in order to get to the cost targets that we're going after, it sort of can't afford to look like much. Now most people know of Tesla as an electric car company. Why did you move away from company that does that to something that is working to help the grid? Well, I was never a car guy in the beginning. I'm not somebody who turns wrenches

underhoods in my off time. In fact, I think we should try and do with fewer cars in the world, if I'm allowed to say that out loud. Now, Tesla is a wonderful place and I really enjoyed my time there, But the car was not why I went there. The power train was why I went to Tesla. That was what was compelling to me. Tesla at the time was the only company that I could find that had all the pieces that were necessary to succeed putting lithium ion

on the grid. And I had already been working in the grid entergy storage business for about five years at that point, and very clearly the next wave would be lithium I and this was two thousand and nine. That was as clear as day to me. But to be successful, you can't just buy a lithium ion cell and slap it on the grid. That simply not how it works. You do need to make a safe, controllable, robust system, and Tesla, because of the cars, of course, had already

designed one. Now it happened to be in a mobile application, but it wasn't hard for me, and it wasn't hard for JB. Stravel, one of the co founders my boss CTO at Tesla at the time, to see that same thing. And that was essentially my night job for the first four years that I was at the company. For five years I was at the company, but it was in many ways my passion. That's that's why I was there at Tesla. You had a pretty good job, you left

that and came to Form. Probably have a better job now, But it's more complicated than that, right, Yeah, Actually you sound a little bit like my parents. I left a perfectly good job. Why would I do that. I was fortunate that I was able to leave that job. For me, that was long enough, seven and a half years of Tesla. I was ready for a new challenge. The company changed a lot while I was there, so did I. Of course.

We went from three hundred people to about thirty thousand people over that time period, and that's just a very different place. And I really like working on the earlier stage stuff, and so that was sort of the main reason why why for me, it was it was a good time to leave Kendallly. There are people who were going to be better at the job that I was going to have to do going forward that I was too, but going through the moment of transition the place that

I did that was a very fertile place. And that was or now it's called Activate, it used to be called Sycotron Road. My good friend Alan Ger was the founder executive director there, and he basically invited me to sort of hang out at Cyclajohn Road up there at Lawrence Berkeley National Lad. I think officially I was an entrepreneur in residence there. You be a part of that

community there. There's just a lot of great innovative thinking that's happening there, and so it was sort of an easy community to tap into and just give me sort of a place to do that. And my pathway to becoming part of the founding team at Forms started as a thought experiment where I thought I would end up discarding the notion that you could replace a coal plant with a battery. I thought I was going to disprove

a thought rather than improve one. But somewhat to my surprise and I guess happy outcome, that turned not not to be the case. It's very rare that you hire a chief executive officer of a startup who wants to prove that the startups idea is not going to work. Well, I think it's a good way to go about it. Frankly, you might as well try and prove that it's a terrible idea first, rather than finding it out later on.

And I think that's part of the reason why the founding team is To me it was so compelling, is we all had that same mindset. None of us wanted to work on something that we thought would not scale for some fundamental reason, and we really kicked the ideas around as hard as we possibly could. And you know, that's how good science has done frankly right, You're trying disprove the hypothesis. That's the scientific method. And so we

took that same approach. Since Mateo has been at three different battery companies of very different sizes, I wanted to know did he have any entrepreneurial advice? Do I have an entrepreneurial advice? Be a part of a great founding team. It's all about the people, it really is. And the other is make sure that you are working on a problem that matters. And one thing that we talk about here at FORM is that we have built a great team of problem solvers. But before we solve problems, we

have to be great problem finders. And I would say that at Form we have found a great problem to work on to solve, and that unlocks a lot of things beyond it. And what I mean by that in part, if you find the right problem to solve, it attracts the right people and solving multi day storage. Coming up with that battery that does allow you to replace our coal plant is a big enough, hard enough compelling enough problem that you get the best people who want to

work on that. That was a fascinating conversation. Thanks for giving us the tour. Thanks very much, Thank you, Thanks for coming in today. It's great to meet you. If you want to learn more about form energy and especially the story of those handwarmers, you can check out a link in the show notes to a feature story I wrote. Thank you so much for listening to Zero. If you enjoyed this episode, please take a moment to rate and review us on Apple Podcasts or Spotify, Share it with

a friend or someone who has very cold hands. If you've got a comment or question, send us an email at Zeropod at Bloomberg dot net. You can also tweet at me I am at Akshatrati. Zero's producer is Oscar Boyd and senior producer is Christine Risco. Art music is composed by Wonderley Special thanks to Ki up in the room. I'm Akshatrati back next week.