Latest / Clean Power Hour / How Do You Get 20 MW When the Utility Offers 7? #368

Transcript

How Do You Get 20 MW When the Utility Offers 7? #368 · Clean Power Hour

• 0:50
  Bala Ramamurthy: There are two industrial facilities in California. They have approximately five to seven megawatts of utility power that's available. Right, what the customers need at those sites is actually more along the lines of 20 megawatts. Right, the interesting thing is because the customer is willing to operate on shifts. They're not consuming for manufacturing all that power all the time, right?
• 1:14
  Bala Ramamurthy: So what that allows you to do is put battery energy storage, use a microgrid controller. At critical loop, we call it Cygnus. That basically can you know take in import and export limits from the utility.
• 1:29
  intro: The clean energy industry is moving fast. The deals are getting bigger. The technology is evolving, and the stakes have never been higher. Welcome to the Clean Power Hour, the podcast for solar, storage, and microgrid professionals who want to stay ahead of it all. Each week, your host Tim Montague, industry advisor and president of Clean Power Consulting Group brings you unfiltered conversations with the leaders actually building the energy transition. Now, here's your host, Tim Montague.
• 2:04
  Tim Montague: Today on the Clean Power Hour, speed to power: How to bring megawatts of new renewable generation online fast for industrial facilities and data centers. My guest is Balarama Murthy, founder and CEO of Critical Loop, a modular microgrid company based in California. Before this, Bala spent 12 years at SpaceX, including as chief engineer on the first human spaceflight mission. Now he's applying that same systems thinking to the grid. Welcome to the show, Bala.
• 2:35
  Bala Ramamurthy: Tim, thanks for having me on.
• 2:37
  Tim Montague: So, Bala, you have a background at SpaceX. That's quite interesting. What is your background academically, and then what did you do at SpaceX, and then why did you start Critical Loop?
• 2:51
  Bala Ramamurthy: Great question, Tim. Yeah, my background academically, I have some background in physics and math, but then shifted into engineering. I was mechanical engineer by training. I ended up throughout my career. I've actually worked at different factories. I interned at a train factory in India, interned at Larson and Tubro, and then I ended up at NASA Ames Research Center, and then found myself down at SpaceX in early in 2011, and I was there for 12 years at SpaceX. I had a variety of roles. I think it could be best described as sort of a systems engineer, I pulled together complex systems to make important missions work. I served as sort of the program technical and operations lead for Falcon Nine from the perspective of launching human beings to space. So I, yeah, I was the chief engineer for the first human spaceflight mission there. So that that's probably the thing I'm most proud of having accomplished there.
• 3:55
  Tim Montague: The Clean Power Hour is brought to you by SDE Sinclair Designs and Engineering, fixed tilt and carport racking, design, engineering, permitting, and manufacturing all under one roof in Michigan. No outside vendors, no waiting in someone else's queue, just fast turn around and steal that ships when you need it. Ask Ag Energy Co. in Illinois or Sunrise Solar in the Mid-Atlantic; they'll tell you what it's like to work with the Sinclair team. SDE, everything in house. Visit Sinclair-Designs.com. So you're a real rocket scientist, but got interested in distributed generation somehow. How did that happen?
• 4:38
  Bala Ramamurthy: So I've always been fascinated with energy in all of its forms, right? Like the control of energy in different forms. Rockets are one form of that. I've always been fascinated with how power is generated and distributed, and you know, sort of the background at SpaceX working on high reliability systems, like how do you take a complex set of parts and make them really reliable in really constrained circumstances, right? Because you have mass limits and and so on when you're building a rocket. And I was thinking of the analogous problem for the electricity grid, right, where you have some aging infrastructure, you have modern technologies, you have this non-homogeneous like sort of system, and yeah, how do you make that work better? How do you make you know how do you absorb more solar power into the grid? Kind of all of that thinking led to thinking about energy storage and how that might be more tactically deployed, and that's kind of how I ended up where we did as a company with Critical Loop. But but yeah, I wanted to found a company, met my co-founders, we did a deep dive into the energy industry because that seemed. To be the most interesting, impactful area we could work on, and and then industrial customers kind of came up as like you know this historically thorny set of customers who like you know have very important high reliability needs, but are difficult to acquire. And then it turned out like we aligned with the time when there was actually super high demand for power from both, like sort of the manufacturing sector, and then recently it's been you know data centers and other folks too. But generally, there is a trend to consume more power at at in areas where historically there had been a lull, and so that is resulting in rethinking how the distribution grid works, and then in doing so, I'm kind of like, you know, how do you do that in a more reliable fashion?
• 6:39
  Bala Ramamurthy: People have talked about. I mean, you're a veteran in this industry, so you know that you know DERs, VPPs, all these things have been around for a while in different incarnations, and so it's a really interesting time now to bring to it modern computing, modern mission control practices, modern hardware development practices, and seeing you know how those might apply. So there's actually some good transferability of some of the lessons I learned doing spacecraft and rockets to what what the energy industry is doing right now.
• 7:09
  Tim Montague: How long have you been working in energy now?
• 7:12
  Bala Ramamurthy: Well, three years. Okay, so yeah, so total of three years. Yeah, so a
• 7:17
  Tim Montague: welcome is appropriate. Welcome to to the energy space. I think that's fantastic. We need a smarter grid, and of course, if you're building a new facility, whether that's a factory or a data center, you need power, and getting an interconnection from the utility sometimes takes several years, and so you could build the factory and power it with a microgrid in the short term and get it running right before you have a solid grid interconnection. Is that part of your playbook?
• 7:50
  Bala Ramamurthy: Yeah, exactly.
• 7:50
  Bala Ramamurthy: Like, what is the bridge solution, and what's like a bridge solution that that works from a you know financial perspective, etc. Relating back to that point you made about like the top three expenses typically of a manufacturing facility or a facility industrial facility of any kind, one important element of that too is like well, power is an expense, but in addition to it, in order to enable hiring the right people, say, and you know other logistical expenses, you want to be able to site your facilities in locations that often have power constraints, right? Like we look at the greater Los Angeles area, or the Bay Area, or you know some parts of Texas. Like you have all these areas where there's like a lot of busy. You'd want to put put your factory there because there are people and talent available, but you have this utility constraint. And then, so how do you solve that? Right?
• 8:43
  Bala Ramamurthy: Like, can you use a microgrid to solve that? Then it comes down to like, can you also build an economical microgrid? And that you know what critical loop has taken as an approach is to make it really grid interactive. So like pull, I mean your most economical way of getting power is going to be pulling power from the grid, right? So have as much grid power as possible, but then use battery energy storage and supplemental generation to fulfill the gap, and then we do it through this really simple energy service agreement model, where people are effectively leasing capacity for like the bridge period, right? For the first three years, or you know, two to three years, when the utility can't deliver the power there, and then over time, the expectation is that you get more permanent power there, but the nice thing about things like batteries is that you could probably use them in perpetuity at the site, right? Because there are other needs that they can fulfill, like you know, supplementing, you know, to you know, for resilience, for cost reduction, etc. So it is a really compelling concept of site batteries, and so a couple
• 10:43
  Tim Montague: things come to mind, but let's first tackle a case study, if we could, just to illustrate the value proposition of critical loop, if you would.
• 10:55
  Bala Ramamurthy: Yeah, for sure.
• 10:55
  Bala Ramamurthy: A few come to mind. There are two industrial facilities in California. I can't tell you exactly where they are, but let's say they they have approximately five to seven megawatts of utility power that's available, right? Like that's kind of what the utility can commit to for the first two to three years of operation.
• 11:18
  Bala Ramamurthy: What the customers need at those sites is actually more along the lines of 20 megawatts, right? So you got like seven megawatts from the utility. You want 20 megawatts. Now the interesting thing is because the customer is willing to operate on shifts.
• 11:32
  Bala Ramamurthy: They're not consuming for manufacturing all that power all the time, right? So what that allows you to do is put battery energy storage. Use a microgrid controller. A critical loop we call it Cygnus. It's a grid interactive controller that basically can you know take in import and export limits from the utility. Like basically saying like, here's the hours during the year where you can't pull power from the grid and enforcing that at the you know switchgear for the customers.
• 12:04
  Bala Ramamurthy: Meaning, like, if the customer attempts to pull too much power at that time, we would shut off the power from the grid, and likewise make sure that we don't export power unnecessarily, so we can maintain the sort of behind the meter nature. And so the that that controller orchestrates these, you know, let's call it like 60 megawatt hours of battery energy storage, right, at a given site, and it allows you to bank the power in the batteries. And then during those times of peak need, where the extra supplemental power to cover that gap between seven megawatts and 20 megawatts needs to be achieved, these batteries can dispatch power to effectively cover that gap, and so that's kind of a case study, right? You have the batteries at the industrial facility, basically, and then yeah, you're charging them when power is available and discharging them.
• 12:56
  Bala Ramamurthy: Now, if there's like local sources of generation, like solar, we can preferentially charge from that as well.
• 13:02
  Tim Montague: And your business model is explicitly about temporary solutions, or is it a both end? You'll provide facilities on wheels, so to speak, but also permanent.
• 13:15
  Bala Ramamurthy: Yeah, great question. The answer is like, yeah, we provide that. We have both models, right? We have, I'd say, the majority of our customers pursue the temporary bridge model, where you know they have a lease for a few years for these assets, and then we've designed everything to be relocated. We can move those assets off to the next job, effectively, which is cool because you know modern technology allows that. Like batteries are designed to be moved now, right? And so the yeah so that's like a majority of our customers. However, we have customers where effectively they end up owning the assets, and we have a long-term service agreement, which might you know be range from five years to 15 years, and we're basically providing sort of doing all the controls for effectively controlling the battery in the same way, but doing all the O and M and all the other aspects related to keeping them functional and operational for the long haul. Those tend to those customers tend to be like utilities or like critical infrastructure facilities. You know, people who are who have more permanent need for these assets, but effectively the same control stack is able to address both problems, and you know sometimes industrial customers might seek to buy these assets too because you know they might have a bridge need, but they may want to transfer that into like sort of UPS capability or something of a resilience capability in the long term. So we allow for both business models.
• 14:43
  Tim Montague: Now, you know when I think about this, the build out that's happening. This is industrial facilities, AI infrastructure like data centers. It's also you know charging stations, both for consumer vehicles and commercial vehicles. So there's a there's this explosion in load growth happening. What is it that gives critical loop access to the batteries and the generators that are needed for these facilities? Because the facility owner themselves is looking at the landscape and going to the wartsillas and the Teslas of the world, and saying, "Hey, we need batteries or we need generators.
• 15:30
  Tim Montague: We want to buy them. Aren't you competing in some way for that?
• 15:36
  Tim Montague: For those for those goods as well?
• 15:40
  Bala Ramamurthy: That's a great question. The reality is like, okay, if I'm a real estate owner, right? Let's say I'm a real estate landlord, right? And I want to. My job would be to, you know, I borrowed some money from a big bank, and I have this facility, and I needed to start paying me rent, and not to take on liquidated damages or any, you know, anything that tenants might have for the non-delivery of like power, right? And so we, so as the landlord, my goal would be like, hey, I need power. I I could take two approaches. I could have like an internal like dry utilities consultant like go try to seek out and you know purchase and acquire and like manage and install all these assets. Or because I mean I would contend that because it requires a fair amount of specific technical knowledge to install and maintain and operate these assets seamlessly, and also certifications that are related to how the interaction with the utility goes, and so on. It's not; it is easier to actually just hire Critical Loop to come.
• 16:42
  Bala Ramamurthy: Help do that. I think also if you're yeah go yeah
• 16:46
  Tim Montague: so you are you are effectively critical power infrastructure as a service is that yeah is that is that a proper way of framing it
• 16:56
  Bala Ramamurthy: yeah it's kind of in the name yeah the the other aspect to it is like your point about supply chain is a super relevant one right if I'm trying to say procure like 60 megawatt hours of batteries and the corresponding inverters to help solve this problem for a specific site, that volume is actually a small volume when I'm like a big battery manufacturer or you know inverter manufacturer, and having multiple projects, I think the ability for Critical Loop to aggregate multiple projects and then create that demand that is comparable to some of the bigger developers that they would encounter allows us to source that supply chain.
• 17:37
  Tim Montague: So that's the origin story. Now let's talk numbers. How fast Critical Loop is actually growing? Yeah,
• 17:43
  Bala Ramamurthy: we closed a Series A earlier this year, $26 million Series A. We we've been deploying. I mean, what's kind of unique about Critical Loop is we've sort of managed to be able to deploy to customers almost from the outset, and we've been pretty resourceful in sourcing that supply chain, especially of U.S. made equipment, and yeah, we we early adopters kind of included yeah. Our first deployment was this ADU manufacturer called Cover, and they had effectively nearly a year of need, where basically we used 4.5 megawatt hours of batteries and a 170 kilowatt generator to serve all of their power because they had no access to power from the utility. The
• 18:32
  Tim Montague: 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 U.S.
• 18:43
  Tim Montague: 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 2 megawatts to 2 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.
• 19:11
  Tim Montague: Go to chintpowersystems.com or call 855-584-7168 to find out more. Have been flying consistently to San Diego a couple of times a year, and the thing that I notice is that that airport is continuously under construction. So why why do they need critical infrastructure loop though? Like if I'm the San Diego airport, like I have major influence and authority and the ability to, if anybody can get a quick interconnection agreement or whatever with with SDG&E, it's it's the airport. Why do they need critical loop?
• 19:54
  Bala Ramamurthy: Well, I think the simple answer in the case of the airport, you might think of the airport case that we're doing is almost like, okay, what happens after the interconnection happens, and you still have the storage, and what are the continued benefits of having that asset on the site as well as as well as solar, and because while you have the interconnection, you get charged a lot of money. There are demand charges, right, which are you know multiples of like the you know bulk power cost, right? So, what we effectively orchestrate is that ability to peak shave. I mean, it's a tried and true concept of peak shaving to you know optimize the use of the battery and the solar to to minimize what the utility expenses, and we get paid proportionately to that. So that's that's that's kind of why they need this. I mean, and then I think the other why is like conceptually it's all well and good, and I know Tim, you know this quite well, right? Like it's like okay, it's great.
• 21:01
  Bala Ramamurthy: Yeah, we can make this drawing, single line drawing, put all these assets at the site, wire it up. But then it's like to actually maintain, and I think this is something that everybody in the industry maybe is like not enough people are talking about, which is the operations and maintenance required to you know give whatever performance you need, like be that that extra power or the cost savings, or the voltage stability or what have you, with these batteries assets requires that you have a system that is really optimized for maintenance and operations without blowing out the cost.
• 21:39
  Bala Ramamurthy: Right. That means what critical loop investment. Is like our ability to do a lot of automation and you know minimize. It's not like we have a dedicated person sitting and watching San Diego Airport at all times, right? Like we have a pretty sophisticated alerting system and you know a lot of autonomous controls that are in place. And I think that sort of capability is going to be needed, especially. I mean, even for something as small as like 11 megawatt site, which is roughly what the San Diego Airport is, right? And scaling up for sure. So,
• 22:13
  Tim Montague: before we get into vendors and supply chain, I wanted Bala to walk me through the San Diego Airport project in more detail, because it's a great real world case study of what critical loop actually does on site.
• 22:27
  Bala Ramamurthy: Oh, okay. The San Diego Airport was an interesting case study. This was probably the first project we won in an open bid, competing with industry leaders, right?
• 22:40
  Bala Ramamurthy: And what was interesting was like this was a project where the solar and batteries had been developed by somebody else in the past, and had effectively then been that company went had ceased their U.S. operations, and therefore there was basically the idle batteries and solar sitting around at the site. I think I think it was a really cool exercise in the versatility of the platform we built because you know we built it on other battery vendors and you know solar providers, but it's you know as long as it can talk Modbus or Canvas or any of the standard protocols, we can talk and control systems, and so we were able to go in, install our controller and take control of like there's like four megawatts of solar and four megawatt hours of batteries and two megawatts of inverter output that's spread across 17 batteries. The solar is distributed across the campus.
• 23:35
  Bala Ramamurthy: It's actually a pretty interesting problem from the perspective of a campus as well because it's the assets are somewhat distributed across the campus. This means that they all have to be coordinated in in you know so that all the signals and and the power consumption with different meters is tracked appropriately. So yeah, the and by the way, like if we screw up, we can take out power to the airport, which we do not want to do, right? So, if we accidentally try to export or something, right? Yeah. So, so going back, so it was developed by somebody else. In that case, we didn't. They already had the batteries and solar. That's not the model for most of our projects going forward. We're actually doing the. We're deploying the batteries and often working with partners on the solar or, or generation or hydro or what what have you for the site. But in this particular case, we basically installed our control system, sort of re-integrated all these assets together, made sure they work, and yeah, they're working as we speak, right? So you're the you're
• 24:45
  Tim Montague: the hardware and software brains for this project, exactly,
• 24:49
  Bala Ramamurthy: exactly. And
• 24:50
  Tim Montague: can you speak to how much money that project is saving San Diego or the the airport?
• 24:57
  Bala Ramamurthy: I I I'll give you the ballpark because I don't think I'm allowed to give you the exact figure, but it's millions of dollars, or it's million, it's literally millions of dollars over the term of the contract, which is like five years.
• 25:07
  Tim Montague: Just playing devil's advocate on this on this this piece about access to equipment. Who are your preferred vendors when it comes to batteries and inverters and other necessary hardware?
• 25:24
  Bala Ramamurthy: Work with a range of providers, and we find it important to actually maintain a pretty diverse supply chain, and you know, such that we can deploy assets that are suitable to the customer site.
• 25:36
  Tim Montague: One of my thoughts is, who are your customers?
• 25:40
  Tim Montague: Like, are you working with developers and EPCs, and and hosts like that full spectrum, or yeah, who tell us a little bit about who ultimately you want to knock on your door?
• 25:54
  Bala Ramamurthy: Yeah, yeah. So I'd say like the people knocking, maybe it's best evidenced by the people who are are knocking on our door today, and we want more to talk to more of those folks. Real estate developers are certainly one of them. We we get a lot of inbound references from the major brokers, right? Real estate brokers are trying to establish tenants and facilities, and and and so so we get a lot of inbound from that as well. But but yeah, real estate developers are really big one. We also work with some major EPCs. You probably know many of them, but but but but yeah, we partner with all all those sort of sort of entities. I'd say the biggest customer set is probably the.
• 26:40
  Bala Ramamurthy: Real estate landlords who, to them, it's like you know they've financed and they want to start renting out this property, and and the important thing is to make it attractive by having sufficient power to get you know like a high value industry to locate there, and now it's beginning to be the case that you know like people even want to cite like data centers on the distribution site, like for inference, right? Like smaller data centers. So, so yeah, I'd say like those are some interesting parties we're talking to, and and yeah, beginning to talk to some data center developers as well. In my mind, I don't make that distinction. They're like to me, it's a continuum of industries.
• 27:21
  Bala Ramamurthy: It's just how many megawatts they're using. So yeah,
• 27:24
  Tim Montague: and in a perfect world, how many megawatts will you deploy and control in a good year, like at your current clip, and then in the near future?
• 27:34
  Tim Montague: Tell us a little bit about the scale of of what you've got moving.
• 27:39
  Bala Ramamurthy: Well, by by the beginning of next year, I'm hoping to have finished deploying 100 megawatt hours of like just going by megawatt hour scales because that might be a simpler one to grapple with at the moment. Okay, and yeah, so and then you know I'd like by the end of next year to have contracted like 500 megawatt hours, and then the year after a gigawatt hour, right? So that that that's that's sort of like kind of our scale and ambition that we're shooting for at the moment, and yeah,
• 28:10
  Tim Montague: okay. I have to say, you you have a very sunny disposition, and I mean, I love your optimism, but are there are there things that are keeping you up at night. I mean, I have to. I have to also say the energy industry in the U.S. is kind of freaking out right now.
• 28:28
  Tim Montague: Like the the amount of load growth is is really mind boggling. There's at least two and a half times as much load growth as is going to get built, and so that's a that's a very big pain point. That is, of course, an opportunity for companies like Critical Loop. I think, but what is it that keeps you up at night?
• 28:51
  Bala Ramamurthy: I mean, you talked about a few things like supply chain, finding enough electricians to work on our team. Like, yeah, I'd say like there's a lot of opportunity.
• 29:01
  Bala Ramamurthy: The supply chain piece, we have solutions for. I think the talent piece is a really important one too. Like you know, finding the people with the right set of transferable expertise to manage some of the.
• 29:10
  Bala Ramamurthy: I mean, the cool thing about introducing new technology is that well, you can, but then it's like, well, we got to get people trained to operate, manage, and install these assets, and I'd say like that's kind of the thing that I'm spending a lot of time in the last month or two is like you know making sure we have the right staff to to go to go execute on some of these really cool projects. The
• 29:35
  Tim Montague: Clean Power Hour is brought to you by SDE Sinclair Designs and Engineering, fixed tilt and carport racking, Design, engineering, permitting, and manufacturing all under one roof in Michigan. No outside vendors, no waiting in someone else's queue. Just fast turn around and steal that ships when you need it. Ask Ag Energy Co. in Illinois or Sunrise Solar in the Mid-Atlantic. They'll tell you what it's like to work with the Sinclair team, SDE everything in house. Visit Sinclair-Designs.com. This is fantastic. I'm thrilled to know about Critical Loop, and I certainly will be doing my darndest to get the word out about your company and your solution. But what else should our listeners know?
• 30:26
  Bala Ramamurthy: Yeah, no, thanks for this opportunity, and I'd love I could nerd out a little bit with you on some of these aspects. But I'd say I'd say like, yeah, if you have a megawatt scale power need, very interested to talk to you. We might have a solution. We're deploying projects in California and beginning to work on other states like New York and Wyoming and so on, but the yeah we are right bring us your toughest energy problem or toughest power problems, and we are excited to take on a challenge. So, and of course, if you want to come work for us, do let me know. We are always looking for great electrical engineers, electricians, and so on. So I'd end with that.
• 31:09
  Tim Montague: Great. Well, I want to thank Balarama Murthy with Critical Loop for coming on the show. Check out all of our content at CleanPowerHour.com.
• 31:15
  Tim Montague: Tell a friend about the show.
• 31:19
  Tim Montague: That's the single best thing you can do to help others find this content. We're all in this together. We're growing the energy transition one podcast at a time, and we need more people to realize that this is a golden opportunity for the next 2030, years. With that, Bala, how can our listeners find you?
• 31:38
  Bala Ramamurthy: Well, you can you can find us on our website, or you can find me on LinkedIn.
• 31:41
  Bala Ramamurthy: And or Twitter at rocket underscore balla,
• 31:47
  Tim Montague: rocket balla. I love it. Okay, I'm Tim Montague.
• 31:51
  Tim Montague: Let's grow solar and storage.
• 31:51
  Tim Montague: Take care, everybody.
• 31:54
  Bala Ramamurthy: Cheers. Bye.