Latest / Clean Power Hour / Whole Home Backup; Battery Storage for Every Home

Transcript

Whole Home Backup; Battery Storage for Every Home · Clean Power Hour

• 0:50
  James Showalter (EG4 Electronics): Less than 1% of homes in America have a battery on them. We think that's going to change, and it's going to be it'll reach a majority in my lifetime. So we want to be a part of that. And we particularly want to go after some areas where batteries still don't make sense, and we want to build solutions that that really make make that possible.
• 1:09
  intro: So are you speeding the energy transition. Here at the Clean Power Hour, our host, Tim Montague, bring you the best in solar, batteries and clean technologies every week. Want to go deeper into decarbonization.
• 1:20
  intro: We do too. We're here to help you understand and command the commercial, residential and utility, solar, wind and storage industries. So let's get to it together. We can speed the energy transition
• 1:36
  Tim Montague: today on the Clean Power Hour Whole Home backup. My guest today is James Showalter.
• 1:40
  Tim Montague: He is the founder and CEO of EG4, the solar and battery company, and they also own Outback power signature, solar and solar 76 so it's a family of companies in the solar industry.
• 1:52
  Tim Montague: Welcome to the show, James, thanks for having me. Tim, great to finally meet you. I've watched many interviews with you, James, you are quite famous in the residential home backup space, and I'm very excited to bring you on to the Clean Power Hour. You know, as I was saying, most of my clients work in both residential and commercial. I am a C&I solar expert myself, and I help my companies, my clients go on that journey into large C&I with the tech stack. But today we want to really geek out on where are we at with Whole Home backup? If you're a homeowner and you want resiliency, when the grid goes down, it's not a question of if it's when the grid is eventually going to go down. We're very lucky here in the US. We have a very reliable grid, generally speaking. But if you're in a in in a storm prone area, or in a fire prone or high wind or whatever, right? You see these things, and the grid goes down. So James, before we get into the EG4 story, tell us a little bit about your background and how you got interested in the solar industry.
• 3:08
  James Showalter (EG4 Electronics): Yeah, Tim, I'm actually pretty young guy. Just turned 29 but I've been building solar systems since I was 15. Took my family off grid with a whole home solution that used BP solar panels back in 2012 and, you know, just done just enough research to be dangerous, and so I built my own off grid system.
• 3:31
  James Showalter (EG4 Electronics): I ran a contracting business in my hometown of sulfur springs, Texas, doing ranch services.
• 3:40
  James Showalter (EG4 Electronics): Kind of got drafted into the solar install business back in the 2015 era, with, you know, with ranchers, I was kind of the kid that had taken my family off grid in the county. And so, you know, we ended up pivoting into installs in rural Northeast Texas. Ran that for about five years, and then decided to, you know, that really, the energy storage hardware was going to be the problem that needed to be solved for the viability of the industry out in places like where I lived, and I decided to get involved in hardware distribution and ultimately hardware creation, to solve that issue back in 2019, 2020, timeframe. So that started me going from being an installer, which I left him, I left the install operation with my brother, and going into building hardware that was just designed around, kind of the core job site, functional economic needs that we had seen out in the field in East Texas. Yeah.
• 4:43
  Tim Montague: And what is it that customers want in your mind, like, just paint us a picture. Do they want to be able to operate for a week off of grid, or a month? Or inevitably?
• 4:57
  James Showalter (EG4 Electronics): Yeah, I think you cross a threshold when you get a pat, when you get get past more than 12 hours reserve, right? That that 12 to 20 hours of reserve, you cross a threshold where, if tied with the with the solar system, you can go indefinitely. And so I think homeowners would would prefer to be back in a position where they can connect to the grid if necessary, right, and in an invaluable way, but they want to be in a position to where they could make their own energy. I think you know the point you're making about backup, when to start its conversation. It's, you know, our luck with having a reliable grid is something, is some, some evaporating luck as of right now. You know, with the AI surge, you're having the Department of Energy come out and say, Hey, we're looking at, you know, over 100 hours of power outages on average.
• 5:49
  James Showalter (EG4 Electronics): Average for Americans within the next five years, up to 800 hours, is their high level prediction. So homeowners want, if they're going to invest in an energy system, I think universally, they would like to have indefinite peace of mind on their power. And it's a hardware challenge of how do you create a hardware solution that does that and delivers enough enough power to do it? And then, you know, the other economic targets that I think batteries are central to solving?
• 6:23
  Tim Montague: Yeah, I mean, everybody wants a battery. The question is, how much battery can you afford? Really, one rule of thumb I learned is to have a resilient home, and it depends on how big the home is, but we're talking something like a 30 kilowatt hour battery, and it probably at least a seven kW, maybe a 10 KW solar array. Of course, it depends on what climate you're in. Are you in Northern Illinois or in southern Texas, the amount of solar radiation hitting those two spots on Earth is quite different, and the more solar radiation you get, the less solar you need to capture all those photons and convert them to electrons to store in your battery. But that question of affordability comes up very quickly. How do you tackle that?
• 7:13
  James Showalter (EG4 Electronics): Yeah, yeah. I think, I think it's a, you know, if you talk about starting at a at a 30 kilowatt hour target for real resiliency, you've got it. You got to define your system differently. You got to build hardware that's optimized for your 30 plus kilowatt hour size. And I think ultimately, the hardware design in the industry right now is focused somewhere between 10 to 30, instead of 30 to 60, which is what you need for medium to large size homes. And so you have to define what your target job is, and then you have to build your hardware around those definitions. So I think there's actually opportunity there to wrap, you know, 30, 40% cost advantages. You know, if you're for instance, in our original ESS we had this year, it's DC.
• 8:00
  James Showalter (EG4 Electronics): First, the cost per kilowatt hour for the DC battery, a pure DC battery is very, very low.
• 8:08
  James Showalter (EG4 Electronics): And then the whole home inverter EMS solution is a separate cost that, you know, plays really well when you get to that 30 plus kilowatt hour size. But you know, isn't, you know, terribly more advantageous in the 13 to 20 kilowatt hour range. So it's really just like in any other kind of engineering. I think your outcome is only as competitive as as you spec the application. So I think we start with that 30 to 60 target and in terms of understanding how we can provide value.
• 8:41
  Tim Montague: So let's, let's step back for a second. You grew from being an installer to now being an equipment manufacturer and seller, what is exactly, EG4, and what are you bringing to the American consumer?
• 8:59
  James Showalter (EG4 Electronics): So we're, we're a battery OEM. And you know, the platform company you talked about, energy X innovations, also owns a factory. So we manufacture for the factory, manufacturers for, EG4 out of Texas. And also we have some international resources that, you know, we're working with over the as compliance targets become necessary, but we're a hardware OEM, what's unique about us is exactly what, what I was saying is that we're going after a different kind of customer than, I think, with different set of priorities than the solar industry has been going after, right? We're going after customers that are burning, you know, over 1200 kilowatt hours a month that want real energy independence. I mean, up to three or 4000 kilowatt hours a month. And we're building solutions that that really embrace that. I think that the battery market saturated with the focus on the smaller energy usage. Customers that don't, aren't as serious about wanting Whole Home backup and that that that sector, the markets already, you know, very, very heavily served. And it's not really our target area, yeah.
• 10:02
  Tim Montague: So you're referring to, for example, the Tesla power wall, you know, I think that's a 13 kWh product.
• 10:09
  Tim Montague: And, you know, batteries are very useful. There is a stack that they provide, which we've covered extensively on the show.
• 10:15
  Tim Montague: I won't repeat all of that here, but, you know, they come in units, right? So you can, let's just say you have a 10k w, H, building block. You can, you can, you can install, you know, many of those, up to, you know, 610, of them, maybe, so you can get as much storage as you want.
• 10:33
  Tim Montague: In theory, it's, it's a matter of working out what, what will the grid operator allow if it's grid connected, and then what is practical from a financial perspective? But what else, I guess, should pro. Consumers and installers be thinking about when in this whole home space, what, what am I? What am I missing?
• 11:00
  James Showalter (EG4 Electronics): Well, I mean, it depends on the particular market, right? Um, but I think, I think covering the there's, there's a general ratio of kilowatts of solar, if you're a solar customer and you're looking at what's the right battery system stack, the kilowatt hours of storage versus kilowatts of solar ratio, I don't think people really start hitting their, you know, economic and experience targets on backup and on net metering until they're somewhere in the neighborhood of three plus kilowatt hours per kilowatt, right? Which is, I think, you know, a really, a really driving high number that you see for your 1214, 15 kilowatt homeowners, especially, which, as the solar industry is going into the south, people are encountering a lot more and so that that's, that's just kind of a step one the others, the other phase that we're dealing with in the short term is virtual power plant. And virtual power plant is monetizing your your value of price per kilo of kilowatt hours every month, feeding the grid where you're back, they're basically renting your battery.
• 12:07
  James Showalter (EG4 Electronics): So job economic strategies that put more kilowatt hours on on the table for the same price will create a higher virtual power plant monthly revenue opportunity, which can help you reduce the cost of the system, and you even in a privately held system with the pre in the previously 20 5d market. I think virtual power plant has the monetary potential at a 60 kilowatt hour range, 40 to 60 kilowatt hour range, where the VPP could literally replace the whole value provided by the 20 5d tax credit, if used properly.
• 12:38
  James Showalter (EG4 Electronics): And then, you know, I think thirdly, you're looking at, you're looking at the domestic content compliance for your, you know, your lease and PPA vehicles that could be set up in a way that's a value add to the customer, right? So, so there's going to be some some restrictions and specific needs for hardware that's not using Chinese IP, not using Chinese hardware at, you know, as as prescribed by new government guidelines. So you know what is going to be out there in the next several years that can qualify for those domestic content demands and China content restrictions. You know, what is the right sales and formulation strategy to create the best value for your homeowners on VPP? And how do you tie that into finance? And then also from an experience standpoint, how do you make sure there's enough kilowatt hours on this system to actually give you a backup experience. I think if homeowners are sold systems that include home home backup, I think they would be really well served to after the system is installed, to flip off the main power switch and try to live off that whole home backup and see if it lasts eight hours, you know, or if it really wasn't well thought out with things like smart load management, right? I mean, if somebody's just putting a power wall on your house and a meter collar, that's wonderful, but if you know you have any kind of heavy loads that could trip that inverter, then you're not going to effectively have a backup system for more than 15 minutes in that case, right?
• 14:13
  Tim Montague: Devil, the devil is in the details, when the grid goes down, right? Okay, let's just walk through that. So you've got solar and batteries, and then you have a transfer switch, so when the grid goes down, the switch isolates your system from the grid, which keeps the grid safe, so to speak. And then you you're islanded and but you have to have a system that can withstand the loads that your home is putting on the hardware, then right on the battery, right it's drawing. All of your loads are drawing on the battery. And what you're talking about is, do you have dynamic load shedding in the form of a smart panel? For example, oftentimes there would just be a separate panel for backup, or you can do a smart panel which gives you dynamic capabilities. What is EG4's approach there? Yeah.
• 15:08
  James Showalter (EG4 Electronics): I mean, kind of reverse order. You know, the original approach in this industry was a separate panel. And the problem with that was that by the time that you've paid an electrician to go and reroute a bunch of, you know, partial backup loads and installed a separate panel, you spent 1000s of dollars, and you've actually potentially made it made a worse backup situation in the first place. So that strategy has become really unpopular, and our approach is okay. What's the other? The other? On the other end of the extreme, you could be taking your whole breaker panel out and trying to install an entire smart panel for, you know, 32 breakers that are smart, controlled. A span you could do that. But that is another I mean, I mean either, either approach, partial backup, or Whole Home smart panel. You're not walking out of there for less than six grand all in, right? And so the approach that we tried to take was, okay, we built an all in. We built a gateway device that does the Automatic Transfer Switch and load management, but it has four load managers in it. And we try to say is, if we really look at these jobs, there's about two to four no go loads that are either capable of draining your batteries fast and you don't want to utilize you want to deprioritize them in a backup situation where you're only supporting them if the batteries are above a certain volume, or they use so much kilowatt power that you need to consider shedding them as well, you know.
• 16:43
  James Showalter (EG4 Electronics): So for instance, if you've got a heat pump, air conditioner, you probably have backups heat front strips, those are 10 to 20 kilowatts. If you have a, you know, a 10 or 20 kilowatt load that can turn on randomly, you're going to need a lot more inverter power to make that make sense, not to mention it will eat the batteries lunch. And, you know, in the course of an hour or less, you have tankless water heaters as another problem, right? That you could, that you could run into, where you've got 1725, kilowatts of electric tankless water heater solution that that you'd have to watch for. And so you have situations like that where people are wanting to be able to deprioritize one or two loads in the case of an emergency, maybe a pool pump, for instance, is a good example. Or they've just got ones that it's just like, ultimately, you know, these are no go loads. So when I was first installing off grid systems in 2015 I would have, you know, I remember consulting on this, and the homeowners wanted just a standard automatic transfer switch to back up the whole house. And they said, Don't worry, we'll go cut off the furnace. I ended up having to go put in smart load management because they forgot that they were going to cut the furnace off and and they felt like they just had a broken system that broke every, every time it tried to go in a backup when an ice storm came. So, so that was, you know, one of the things that that people, people lived with.
• 18:13
  James Showalter (EG4 Electronics): And you know, the smart load approach on EG4 side is, let's, let's put, let's not make it a$5,000 ordeal, but let's give you enough smart loads to do something with that you can actually provide a good experience. And they are average contractors using 3.3 smart breakers out of four. So that's, that's essentially what it's worked out to where, okay, we might reroute two to four smart loads, maybe an EV, if it's not already, you know, smart linked into the inverter, EV charger, or something like that, that lets you deprioritize that load is needed.
• 18:46
  Tim Montague: And what about the combination of solar battery plus a gas generator. Do you also work in that space?
• 18:54
  James Showalter (EG4 Electronics): Yeah, that was what one of the things that that we tried to integrate with our gateway. So we have, you know, dedicated generator input, and we we've got also DC Direct generator integrations for the smaller generators. So I think we can, we can work of some pretty dirty power generators, if the grid, if we're off grid, and clean that up. So clean up the bad sine wave. So we thought, you know, our customers very interested in generator integration. So that was, that was one of the things in the application spec we have to deliver on.
• 19:28
  Tim Montague: The Clean Power Hour is brought to you by CPS America, maker of North America's number one three phase string inverter with over 10 gigawatts shipped in the US. The CPS product lineup includes string inverters ranging from 25 kW to 350 kW, their flagship inverter, the CPS 350 KW is designed to work with solar plants ranging from two megawatts to two gigawatts. CPS is the world's most bankable inverter brand, and is America's number one choice for solar plants now offering solutions for commercial utility ESS and balance of system requirements go to Chintpowersystems.com or call 855-584-7168, to find out more. And in terms of, I mean, the the array of products on your website is a little overwhelming. Honestly, check it out at eg4electronics.com and the sister company, being signature solar, just like it sounds. But you know, for this, for this target of off grid operation, you know, let's just say continuous off grid operation, we've agreed you need 30 kWh as a starting point. May.
• 20:49
  Tim Montague: To be as much as 60 kWh, and then you divide that by three to arrive at your solar PV figure in your jurisdiction, it sounds like is that the simple math that you do
• 21:04
  James Showalter (EG4 Electronics): typically, typically, it's a good rule of thumb to check right? I mean, solar gets a lot more complicated when you got to sell a backup experience unless, if you're unless you're kind of over building the kilowatt hours. And the good news is that the the virtual power plants kind of creating the incentive for people to to overbuild the kilowatt hours.
• 21:23
  Tim Montague: And how many markets in the US, and I know this is a moving target. We just got VPP legislation here in Illinois. It's not enacted yet, but it's, it's on its way so, but how many markets have good VPP legislation in the US, as far as you know?
• 21:41
  James Showalter (EG4 Electronics): So you're seeing some, some really strong ones in the Northeast Colorado, Texas and California and Puerto Rico. Those are kind of kind of ground one Duke Energy is playing in the Carolinas, I think they're trying to open up a little more.
• 21:52
  James Showalter (EG4 Electronics): So that's another market that we're seeing some traction in.
• 21:56
  James Showalter (EG4 Electronics): And then, like you said, Illinois, we knew about them opening up a VPP structure as well. But I mean, honestly, if you look at this industry, we're not installing that many battery systems every year. When you really think about it relative to the Latin demand, I think we got an industry that's probably doing not much above 200,000 battery systems a year.
• 22:21
  Tim Montague: And I'm not sure what your point is there, though, with the volume,
• 22:24
  James Showalter (EG4 Electronics): well, VPP programs can dominate even small regional programs can dominate the sales strategy of an OEM, right? Because of you've got any, any one of those areas, you got millions of people, you got you got millions of homes and and so you can go after virtual power plant adoption and totally absorb all of your company's capacity. And this particular, so you're seeing, I think, some particular plays, even even players TPOs we're seeing that are kind of saddling up and moving to particular regions where there's a VPP solution that that makes sense to where they can add in their TPO margin, etc. So we've seen some of these residential PPAs go in and kind of kind of lock in with a T VPP region and just go focus, push their volume all there, yeah.
• 23:13
  Tim Montague: And so let's say I'm participating in a VPP program, so my battery is is being monetized by a third party. Let's just say the utility for to keep it simple, and that helps me afford the system. Okay? And that's great.
• 23:32
  Tim Montague: We want, we want affordability, but then there's also the risk that my battery is going to somehow be drained when the storm hits. So how do you, how do you work around that dynamic?
• 23:45
  James Showalter (EG4 Electronics): Absolutely, good question. Tim, so you don't let your battery go to zero. You don't make that amount of storage available to your PPP program. I think it's another, it's going to be another consumer protection opportunity for people to mess things up where they're going to go and put the whole battery capacity on there. So I think you need to reserve at least 20% of the battery storage with, you know, on site generation like solar, and potentially, you know, a cheap backup generator if you want a third party, a third level of concern in that particular case, of support for those issues. So Don't, don't put your whole don't let the VPP get your whole battery
• 25:17
  Tim Montague: and do but let's say the utility knows that. You know, okay, in 24 hours, there's going to be a big ice storm, and there's likely going to be outages, will they, like, take proactive action? Is that a requirement in terms of allowing consumers to hold on to more of the energy than in the batteries? Yeah?
• 25:44
  James Showalter (EG4 Electronics): Yeah.
• 25:44
  James Showalter (EG4 Electronics): So, you know, that's a that's a good question as to, you know, how you're going to go about this. I think one of the things to put in perspective as well with these virtual power plant programs is that each of these homes is going to be making everything we're passing this point a little too fast. Each of the home is going to be making their grid more reliable, right?
• 26:01
  James Showalter (EG4 Electronics): So you're the reason why your your battery contributes to the grid is to help make the grid less likely to fail, yeah. So, so you're a part of reducing the risk of outages in the first place. And so, I mean, at the end of the day, will the homeowner have the right to, you know, to pull, you know, keep, keep a higher reserve in a particular time, most programs are allowing homeowners to do that and then do a, do a, you know, a weather based charge, charging on the battery. It's going to come down to a region by region program for sure.
• 26:36
  James Showalter (EG4 Electronics): Yeah.
• 26:40
  Tim Montague: So let's switch gears a little bit. There's. A big push going on for domestic content. The federal government is trying to really mess with the solar industry, creating a lot of turmoil and confusion, and it's sometimes difficult to see through that noise, no doubt, okay, if you're listening, just know that there is a great future for renewable energy in the United States. The turmoil is just surficial, and the fact that photons are super abundant and free, and we now have affordable technology to capture and store those photons in electrons, means that the future is bright with clean energy. But as far as domestic content goes, what is your strategy?
• 27:31
  James Showalter (EG4 Electronics): Well, we announced a partnership with LG Electronics and LG, I'm sorry, LG energy solutions in Michigan, they have production of battery cells here in the US BMS is BMS hardware, case hardware. You know, they're the foremost domestic content battery supplier next year, and we're coming in the position of being their residential battery partner for the industry, for the residential sector, as they focus mostly on seeing on utility scale, okay? And that is one of the things that we were able to put together after about a couple years of deep relationship building and planning with them. So this is something that's been a long time in the making, and it just kind of came to fruition right in time for the changes that we were seeing in feoc and in domestic content requirements.
• 28:24
  James Showalter (EG4 Electronics): So strategy there is try to get a hyper compliant unit that's not dependent on Chinese IP, and we don't have to source directly from Chinese companies. So that you'll see, you'll see us execute on next year. But actually the other half of the strategy is us releasing a next generation Fiat battery, cash battery that works with our same energy management system for the most cost effective cash and loan system that we can develop, right? And so we want to kind of go both ways, where we have a common EMS inverter and energy management system, and we have either a domestic battery you can put on it, to be it make a domestic compliant system, or you have a, you know, an imported Chinese battery that you can put on it that's a lot more cost effective, but ultimately it's no tax credit on the entire job, right?
• 29:20
  Tim Montague: Yeah, and it's always a complex calculation. Do you take the cheaper foreign made materials or work with a more expensive American made that has better tax incentives?
• 29:34
  Tim Montague: There's no easy answer. It's good to have options. Everybody wants to start with a domestic content solution, maybe, but you might find out through that process that you're better off just going with a Chinese battery. So stay tuned and keep your options open. Should we talk more about some of the other things you're you're working on a factory in Texas, or you have propped up a factory in Texas.
• 30:04
  James Showalter (EG4 Electronics): We propped one up. We started producing earlier on this year, back in, back in March. So we've been, we've been producing batteries ever since,
• 30:14
  Tim Montague: and but, but it's, it's batteries and smart panels and hybrid inverters.
• 30:21
  James Showalter (EG4 Electronics): It's hybrid inverters. We start with the hybrid inverters. The battery production is actually we were waiting for American cell supply that's not going to hit until q1 of next year. So we'll be making batteries out of the unit, out of the factory later on, next year. So that's our expectation. Is American made batteries by early q2 that goes with the inverter solution, which is already coming out of taxes.
• 30:48
  Tim Montague: Got it. Got it.
• 30:48
  Tim Montague: Well, what else should our listeners know about? EG4 signature solar and anything else related to whole home?
• 31:02
  James Showalter (EG4 Electronics): I mean, just, just who we are.
• 31:04
  James Showalter (EG4 Electronics): We're an American owned company with no foreign ownership. We are, we've, we've started here and have always been controlled here. And we're out to to really expand the boundaries of where solar makes sense. We think it's been too much focused in in urban areas with smaller systems, and we know that there's an independence minded American homeowner everywhere that just wants cost effective hardware that cuts through the noise and makes it cheaper for them to make their own power, regardless of what their environmental motivation is. And I think that's something that we see every day. We're building products that go. After that problem better and better every day. So this is a journey we're on to make solar more accessible to people in the United States.
• 31:49
  James Showalter (EG4 Electronics): That we think that the real coming majority is going to be 99% of an industry we maybe penetrate less than 1% less than 1% of homes in America have a battery on them. We think that's going to change, and it's going to be it'll reach a majority in my lifetime. So we want to be a part of that. And we particularly want to go after some areas where batteries still don't make sense, and we want to build solutions that that really make make that possible. So it's who we are. We kind of are focused on that mission as a company, and we're building and growing and learning as we do, but this is something we're absolutely committed to being better and better at and being the partner that installers and homeowners need to get the job done in areas where solar just hasn't made sense before.
• 32:41
  Tim Montague: Hey, guys, are you a residential solar installer doing light commercial but wanting to scale into large C&I solar? I'm Tim Montague. I've developed over 150 megawatts of commercial solar, and I've solved the problem that you're having. You don't know what tools and technologies you need in order to successfully close 100 KW to megawatt scale projects. I've developed a commercial solar accelerator to help installers exactly like you. Just go to cleanpowerhour.com click on strategy and book a call today.
• 33:15
  Tim Montague: It's totally free with no obligation. Thanks for being a listener. I really appreciate you listening to the pod, and I'm Tim Montague, let's grow solar and storage. Go to clean power hour and click strategy today. Thanks so much. Check out all of our content at cleanpowerhour.com. Please tell a friend about the show. That's the best thing you can do to help others find this content on YouTube. Spotify, Apple and all of that can be found at Clean Power Hour. COMM, please reach out to me on LinkedIn. I love hearing from my listeners, and with that, James, how can our listeners find you?
• 33:55
  James Showalter (EG4 Electronics): Yeah, reach out to me on LinkedIn, or send me a reach out to eg for electronics and work with business development team that we have there. And I tend to be at the at the trade shows, listening to people in person.
• 34:11
  James Showalter (EG4 Electronics): So come and see us, you know, at your RE pluses and inner solars and and we'll be seeing you guys around.
• 34:18
  Tim Montague: I want to thank James Showalter with EG4 for coming on the show with that, let's grow hold home storage.
• 34:25
  Tim Montague: I'm Tim Montague, take care.
• 34:25
  Tim Montague: Thanks, Tim. You.