Transcription

• Speaker #0

  Welcome to the SOSV Climate Tech Summit podcast series. I am the AI voice of Ben Joffe, a partner at SOSV and co-curator of the Climate Tech Summit. This talk involves Matteo Jaramillo, CEO and co-founder of FormEnergy, interviewed by Ben Joffe, partner at SOSV. The focus is on FormEnergy's advancements in energy storage. Jaramillo detailed the company's shift from R&D to manufacturing, emphasizing their unique ion-air battery technology designed for multi-day energy storage, which is more cost-effective and durable than traditional lithium-ion batteries. This technology supports the integration of renewable energy sources into the grid, enhancing reliability and reducing costs. Form Energy, which has raised close to a billion dollars, is preparing for large-scale production and deployment, with plans to expand into European markets by 2026. The conversation also touched on the broader impact of the Inflation Reduction Act and the potential of such technologies to significantly contribute to global energy transitions. All right. Hello, everyone. Happy Earth Day. Today is another of our SOSD sessions taking place this week around climate tech. And I'm very glad to have for today's session, Matteo Jaramillo, CEO and co-founder of FormEnergy. Matteo, hello. Glad to have you again.

• Speaker #1

  Hi, Ben. Great to see you on this Earth Day and nice to be here again.

• Speaker #0

  Yes, so I'll do a very quick intro about SOSB for those of you not familiar with our fund. So we are a deep tech fund focused on climate and health tech. We call it Planetary on Human Health. We just closed a new fund actually of $306 million that will help us invest in a slew of new startups in the coming years. We've done over 100 investments in climate tech and we're very active across the entire category. But beyond that, we also know and see that... solving problems of decarbonization is really a team effort. We need not only thousands of shots on goal, but we need to play team. And that's why we organize those events. We organize also a climate summit in October every year. Last year, we had about 10,000 participants registered and we covered a lot of topics ranging from energy to food and ag, industry, and many more. And we also run matchmaking events for startups and investors, which we have one running this week and on the next three events as well. where startups can meet investors to get funded and find opportunities. All right, so now moving on to our topic. So, Matteo, it's great to have you again. You were actually part of the Climate Summit about two-plus years ago. And at that time, already, your firm was one of the very interesting companies in the space, particularly in the domain of energy storage. We had a great conversation then. And it looks like your company has made a lot of progress in the past two years, and the world has also changed quite a bit. So we're going to try to cover some of those changes and some of the recent achievements and the future plans of FormEnergy. But maybe to get started, if you can give us a sense of what FormEnergy is doing in the domain of energy storage and what differentiates it from what people are familiar with, which is maybe lithium-ion batteries on their cell phones.

• Speaker #1

  Yeah, of course. So we started Form Energy seven years ago now to pursue what was originally called long duration storage, in which we have refined a little bit to be multi-day duration storage. And that's just to be a little bit more precise than that term long duration, because it tends to be used to cover a very wide range, so wide, in fact, as to be maybe a little bit unhelpful. And so covering everything long duration from six hours of lithium ion to a thousand hours of hydrogen, well, You know, that's a very wide range of possible technical and economic solutions. So what Forum is pursuing is what we call multi-day duration storage. And that gap that we're plugging in the market specifically falls out of analytic understanding for what needs to happen on the grid. Functionally, what is required on the energy system to really drive this energy acceleration all over the place. Thank you. we have decarbonization, we have load growth, we have reliability challenges, and we have new types of generation resources that have multi-day duration gaps in them, like weather-driven generation, wind and solar, and so on. And so the type of asset that you need in this really dynamic electric system is more than just a couple of hours duration storage. And so exactly which hours and exactly with which specifications, exactly which cost. that is not a finger in the air exercise. Again, it's a very deeply quantitative exercise. And so out of that, which we did at the very beginning of the company, going back seven years now, fell out this 100-hour duration and therefore roughly $20 per kilowatt hour, because duration and costs go hand in hand, type of energy storage. And so that's really the part of the market that we're going after. That's how it's different from lithium-ion, which is short duration, cost entitled to be short duration, essentially. six hours, maybe going to 10 or 12 hours, something like that. And it's a very big market. So this is a multi-trillion dollar market, if we get this correct, which we believe we have a great chance to do here. And the chemistry that we're using is iron-air as a chemistry. And this is a battery chemistry, which has been known for some time, but never commercialized. But it is entitled to be exactly what I was describing, roughly. $20 per kilowatt hour, and therefore 100 hours duration or even longer. And that means that we are reversibly rusting iron as a battery. So we start with a metallic anode, iron anode, and we rust it, and that's the discharge process. And then the charge process is we return that oxide anode back to its metallic state. So we're using very abundant and low-cost materials, which is why the technology is so entitled, and it's why we like it a lot. And on top of that... humans know a lot about iron in general. And so we get to stand on the shoulders of a huge body of human knowledge about the material in particular and corrosion science on top of that, which is, of course, the science of rusting. And if you're trying to deal with rusting, what you're trying to do is unrust it in some ways. And so we get to bring that really deep body of knowledge to the field of electrochemistry for grid storage, which is sort of a new combination of these kinds of things. So that's what FORM is doing. and we'll get into exactly where we are against that goal and what sits in front of us. But that's setting the table a bit.

• Speaker #0

  Excellent. Well, you already covered a lot of ground. So to kind of summarize a little bit, The big picture is that basically there's new ways to generate energy at scale, particularly with renewable systems. Wind and solar, there's needs on the grid to have multi-day storage for your, let's say, your average polar vortex or something like that.

• Speaker #1

  Or heat dome or hurricane or whatever it might be.

• Speaker #0

  And the current systems are not set for that. And another element you mentioned is the price, the $20 gold per kilowatt hour. On the one hand, yes, that's an extra cost for the levelized cost of electricity. It means electricity that you can get at any time. So converting something that's intermittent, like wind and solar, into something reliable, kind of base load, a virtual base load. And that's an extra cost. But if the extra cost is reasonable, then that makes it, as a system, much more affordable than firing up whatever other system. or looking at alternative forms of energy storage. So maybe we'll just take a quick sidestep to talk about your choice of chemistry. So you mentioned iron is very attractive because it's a very well-known material in material science. It's very abundant. The chemistry is well-known. But as kind of a reminder for the many who might have not seen the session we had two years ago, um, Why is it that nobody did that before? If that's so well known and so abundant, why is it possible now?

• Speaker #1

  Yeah, well, the grid today is different than it was 10 or 20 years ago. And keep in mind that Lithium Mine was commercialized almost 40 years ago for an entirely different application, camcorders, right? The little portable, where we had the phones, portable cameras that would record your child's baseball game or a wedding or something like that. And four hours duration was about what you had, maybe two hours, out of your camcorder batteries. If you want to think about it in a maybe overly simplistic way, lithium ion batteries are following the same pattern that they've been, they have usage that they've been following for a very long time, a few hours at a time, and then you need to recharge them. Lithium ion is fantastic at doing that a lot. I've been in batteries now about 20 years and for most of the time before starting Form Energy, I was working on those first applications for lithium ion on the grid. And lithium-ion is a fantastic chemistry, very high round-trip efficiency, cycles a lot, very dense, but it is too costly. And what became clear after I left Tesla, where I was before, and was working on an idea that ultimately became part of FormEnergy was, well, what other kinds of storage would you want? Do you need in the grid? And every battery chemistry has some. downsides, or it has some attributes that you would rather not have. So in the case of lithium ion, it's cost. It's quite costly. If you can make it one-tenth its cost or one-twentieth its cost, well, you would use it for a lot more of the things like what we're doing with the ion-air batteries. But that simply wasn't possible. That's simply not in the roadmap for lithium ion in terms of a cost perspective. You can see a floor. It will continue to get very, very cheap, to be clear. But we need something that's even cheaper from a CapEx perspective. to solve some of these multi-day duration storage challenges that we see emergent on the grid. And so when I sort of saw that pattern and realized that lithium-ion was not going to solve for it, well, then of course you say, well, what other options might be out there? And iron-air was known, as I said, there was a seminal study done on it in the 1970s by Westinghouse for the U.S. Department of Energy. And there was a Swedish National Lab report that was done around the same time. but never commercialized. And the reason for that is, you know, that, like all chemistries, it has some trade-offs. No chemistry is perfect. And so in the case of iron air, it is not particularly energy dense. You cannot, you would not want to put a car or a phone or a laptop.

• Speaker #0

  Your heavy phone.

• Speaker #1

  Very heavy phone that you never take anywhere. And so it just was not applicable for consumer electronics devices. And the consumer electronics world was what drove energy storage technology forward for four decades, roughly. And so it just sort of sat on the shelf and didn't have an applicable market. And then we saw an explosion of renewable energy on the grid. So renewable energy generation on the grid in particular. And in fact, so much new renewable generation came on the grid that a lot of it started to get curtailed and we had negative energy prices. And the main takeaway from that is not that you're going to have a battery that only charges off of negative prices. In other words, you're paid to charge that. that well certainly would never be the case those kinds of things go away very quickly um but what was clear is that we should think about efficiency a little bit differently. In other words, the marginal fuel cost that was cheapest came from the renewable resources. And when you have very, very low cost fuel, so to speak, then you care a little bit less about efficiency. So why did we use coal in the first place to power our electric system is because the input fuel was so cheap. And why do we have so much natural gas today? It's because it's so cheap as an input. And... And so the same thinking applies to finally to the stage when we have very low cost, in fact, the lowest marginal cost electricity coming from wind and solar, which are intermittent. And so it means you can think about efficiency a little bit differently. And so that means that I should drive towards a form of storage, which is very, very low CapEx cost, and think about giving away the right amount of efficiency to pursue that very, very low CapEx cost. And so those conditions on the grid where all that picture sort of becomes clear. weren't really present until about 10 years ago. And even then really not until about five years ago and four made a bet a little bit early seven years ago that, that this, that that trajectory was going to accelerate and that we would want to have done the work ahead of time to sort of meet, meet where the market was going. And I think if, you know, when you make a decision to start a startup, if you could pick one thing to be right about, it's about timing, maybe for the market that you're going for timing of the technology readiness. And I think that that was one thing that we absolutely got right. The market, you know, it looked too early when we started it. And of course, now our customers are asking us why we can't go faster, which means we probably got to. but it was really that moment when we saw, because me and my co-founders have been in this industry for a long time, we saw those conditions setting up that said, go do something a little bit different from lithium-ion, pick a type of technology that nobody has tried to commercialize before because the sets of conditions have never been present before, and you're solved for a different equation. So that's why we ended up going for a type of chemistry that looks quite different from lithium-ion and led us to Iron Air.

• Speaker #0

  Excellent. Well, yeah, I mean, definitely, I think that's always the challenge for startups, figuring out whether it's the right time. And almost by definition, if you're doing something something innovative, you're going to be early. The question is, if you're too early, you're going to die because nobody's going to find you. But if you're just a little bit early, then you end up in situations like yours. That's the best place to be.

• Speaker #1

  I guess on that point, if it's obvious to everybody, you're too late. If it's obvious to you as the founder and it's not obvious to everybody else, then that's probably the right mix to go with. assuming you can sort of forecast correctly where, like how quickly you think it'll come into play. And I, you know, one thing that we kept in mind, you know, by deciding to start the company was, I think it was Bill Gates who likes to say that, you know, people underestimate, or they overestimate how much they can get done in three years and they underestimate how much they can get done in 10 years. And, you know, sort of that, the ability to sort of see through the next couple of years to the eight to 10 years to really understand just how much. you can get done over that time period is what gave us a lot of confidence to just go forward.

• Speaker #0

  So, yeah. It's great also what you mentioned about the macro environment evolving toward what you had somehow forecasted. But I'd like to now turn to some other topics. First, to get a sense of what has been accomplished so far, because form energy has raised in various forms of capital close to a billion dollars now. So it's a very significant amount of capital. But you've been very busy also doing some kind of pilots and deployments, and now you have all kinds of contracts. So can you tell us a bit more about what the situation is in terms of deployments?

• Speaker #1

  Yeah, so we are, as you said, we've raised a good amount of venture capital, and we are a venture. We're not quite a business. We'll get there within the year, roughly. But uh we're so we're 700 people now working on really building the manufacturing function of the company what we started as was an r&d company so research and development and you know a core team of scientists out of boston we sort of made it successfully through that phase over the course of the first three roughly years three four years of the company and we added a engineering function to the company so how do you take that science that that we know works and turn it into a device that can be made at high volumes and low cost and still retain the performance and the entitled cost and that kind of thing. So we added that function on in California. And over the last roughly year and a half, we have been very quickly adding on to the manufacturing function of the company. And so that's where the dominant area of focus is right now for us as an organization is really to become a manufacturing company. And that means not just building a building, which we are actively doing in West Virginia, where we're... starting our manufacturing operations, but also the equipment sets and the operations of the operators that are inside the factory and the material supply and the supply chain and everything that goes into it. And so that's really where the focus is right now. We're going to be turning on production basically for the rest of this year. It's a very continuous step-by-step process. We could say there's a certain start of production date, but that belies the subtleties of just how challenging it is to... really turn on production. You know, you don't go from zero to a hundred miles an hour. There's a process that you go. So we're actually in production trials now on the cell assembly and the module assembly and the enclosure assembly. And we'll be doing, and we're doing electrodes, but at a smaller volume and we'll ramp those up. And so it all comes together over the course of the next few months. And that's the phase that we're at. We deployed our first battery out into the world, connected to the grid, charging, discharging, you know, controlled remotely, that kind of thing. about a year ago, and we have been building on that ever since. We, of course, continue to do a lot of testing, both internally and externally, and so that's sort of forming the basis for all the knowledge that we have that's going into designing the... product and the process and the scale-up operation that we have going on here. But we're really sort of at the precipice of really getting this machine turned on. That factory that I mentioned, it's 500,000 square feet. It'll be a million square feet before it's all said and done. And we already have close to 100 people, former employees working there. And we're actively finishing the building. So there's hundreds of contractors there every day. It's a very active area, just with a lot of different kinds of things going on. but as I said, we're already in the cell production phase of the company or at least the production trials, I should say. And then we'll be ramping up from here through the end of the year to ultimately make the first deliveries to our customers early next year. And those utilities that we deliver to, and I could talk about that a little bit more in a moment, but that gives you a chance to sort of get a sense for where we are as a company and the stage that we're at after. so many years of buildup and time and effort and not seeing anything tangible spring up from the ground the way that we're seeing it right now.

• Speaker #0

  Yeah, it's great to get that sense of the transitions between the R&D, science-y phase to engineering, and now into manufacturing and then deployment. So I think in terms of manufacturing, you have a couple of facilities. One is a smaller facility in Pennsylvania. And I read in an article that it was designed to iron out the kinks. I thought that was a pretty funny pun. And then you have another facility that's probably the one you're talking about, West Virginia. So this is for production of the energy storage cells, or I don't know how you prefer to call them. And now the question is also about what are the first clients you're thinking of in terms of deployment? Who has the most appetite for the type of solution you're providing?

• Speaker #1

  Yeah. So on your first point there, absolutely. We have a pilot manufacturing facility in Pennsylvania, which is where I'm talking to you today. It's in a town called 84. That's the number 84. That's the name of the town. And so we've been here for a few years. And this is where we make the electrodes. So the iron electrode and the charge and discharge cathode. And those are made at a pilot scale, but it is continuous. So for example, when you start to make something first you started with a batch process, you know, one thing at a time, one person at a time doing one operation at a time. And then you scale it up from there because it becomes a continuous, but low volume and then continuous and higher volume and then, you know, and so on. And so we're, we've, we've gone through the continuous relatively low volume steps and that's what we've done here in 84. And the factory in West Virginia will be the continuous high volume steps, but fundamentally the same processes, just larger equipment sets. And importantly, making the same scale device in all steps. So we don't need to go make something bigger. It's not like we make data that's one-tenth the size, and now we need to 10X it, and that's the real production intent. No, we've been doing the same size for the last roughly year and a half and just scaling up the process. But the size intent, the production intent size, has remained the same for a few years now.

• Speaker #0

  What made you decide for those locations, for setting up your production facilities?

• Speaker #1

  Good question. Really, speed to scale. When we started to think about the manufacturing phase of the company, the whole point is scale. And so if you cannot scale quickly, you're going to be in a dead end as far as picketification. And so this area, it's around Pittsburgh that we're in. We're in western Pennsylvania. And this area knows industry, knows heavy industry. And it's familiar with sort of what scaled industry requires. And so that's why we started here. We knew we could sort of get permitting fast. We knew we could get a workforce that knows how to deal with these kinds of things. And ultimately, we're a little bit lucky that we found a great site about 45 minutes away from the Pennsylvania location in West Virginia. And we received a significant amount of support from the state as well. The state of West Virginia is putting in almost $300 million to the land and to the building. and then we will receive that benefit once we hit the jobs numbers, which is about 750 jobs for that location. So it's a well-structured program there. The state of West Virginia is not like a big handout. They're tough negotiators, and they make sure that the state is well protected. And for us to see the benefit, we have to succeed. And so I think everybody is very happy with the way that it has gone, but it is also doing a lot of economic revitalization for where we're going. We're actually going and we're building the site. at an old steel mill location. So there was a steel mill called Weirden Steel for about 100 years and was one of the largest steel mills in the country. And it closed about 20 years ago, and they lost 14,000 jobs. And so the state really wanted us to go help revitalize that. It's a huge amount of responsibility, but also an honor to be able to go back in there and bring some jobs back to a region that's great, and we're happy to be there.

• Speaker #0

  So if I summarize what you said about the picking of the location, it's a mix of availability of talent, industrial talent pool, regulatory environments that was more open-minded and faster. Partly also the access to some particular infrastructure and local subsidies. So it's a kind of a mixed package of all that.

• Speaker #1

  Yeah, that's right. Absolutely. But none of it works without having the core fundamentals of the site itself, which is a phenomenal piece of physical infrastructure. It's being a steel mill, they built it on a flat piece of land right by a river. And so there's, it's right on the Ohio River, there's barge access, which of course connects to the Mississippi River. There's two rail lines that one comes into the site itself, another which is just across the river, and then a phenomenal interconnectivity through the highway system as well. So. Dr. Andy Roark So for just the raw infrastructure, it is an amazing, frankly, jewel of industry in the region, and it was laying fallow. And so to be able to revitalize this piece of infrastructure is what sort of makes all the other stuff worthwhile. You could have a phenomenal incentive from the state, and if the site is no good, it doesn't really matter. or if you can't get the labor, it doesn't really matter. So it takes all of that to come together. And it was that site that we found that had the best characteristics that we ended up settling on.

• Speaker #0

  It's interesting also that the jobs you're creating on kind of old industrial infrastructure repurpose now become climate jobs. And I remember the previous conversation mentioning like these days, people tend to say that every job will be a climate job, whether you know it or not. And- In a way, that's already what you're bringing there.

• Speaker #1

  Yeah. And it's interesting, of course, for many people, they could care less that it is a climate job or that it might be a climate job. They want a good job. They want a good, stable job that's safe, that pays well, that gives them dignity in their work. And that's primarily what we're providing. And I think the other thing, too, though, is that it's an energy job, which they're also very familiar with in the region. A huge focus on energy and energy for a very long time, of course, originally was coal here. but more recently natural gas. And so it's a new technology, but participating in the energy sector. And that's also a place where a lot of people sort of intersect with the company and that's perfectly fine.

• Speaker #0

  So I have a few questions in order to be able to also take audience questions. So audience can post questions in the Q&A on the chat. Let's try to have kind of short answers to those questions if we can. So let's first get started. So you mentioned all the work that's been done so far and you're looking at... Deploying now your technology with utilities. So what are the deployments you have in the pipeline in the coming 12 to 24 months?

• Speaker #1

  Yeah, so we've signed contracts with a handful of utilities. These are investor-owned utilities, primarily, and they are regulated utilities, primarily. That means that they are a regulated monopoly in the states in which they operate, and they are essentially governed by a commission at the state level, which approves their monopoly and gives them a guaranteed rate of return in exchange for low rates, reliability, and serving everybody. And so those are generally our customers. And these are Xcel Energy and Dominion and Georgia Power, part of the Southern companies, PG&E in California. And we've signed over 50 megawatts, about five and a half gigawatt hours worth of contracts with these entities. And we will start delivery of those early next year. So these are relatively small projects as far as a utility goes in terms of megawatts, but very large projects in terms of megawatt hours because batteries. generally don't have a lot of energy in them today. They're more power function on the grid than they are energy function. And our batteries are very much energy function, as I said, multi-day duration here. So relatively small power, let's say 10 or 15 megawatts each as far as the project goes, relatively large energy, 1,000 or 1,500 megawatt hours of energy. And the largest battery projects are creeping into 1,000, maybe 2,000 megawatt hours these days. already out of the gates will be some of the largest batteries that have ever been connected to the grid from an energy basis. But the intention, of course, is that they get even larger, much larger, in fact. And so we see a very clear path to projects with these same entities and entities like them that are in the tens of gigawatt hours per project, which is right now a little bit unheard of. But that's really the scale that we've already modeled with them, that we understand the value in, and we know we have a pretty good sense for where they will go through the end of the decade. So we expect to continue to do. business with those kinds of entities, these regulated, integrated utilities, because they see a lot of value in their portfolio by having this new kind of asset help them solve all these challenges that they have related to decarbonization and reliability and load growth and you name it. But it's a new tool that they have. And so there's a lot of value there. And we expect to do a lot more with those kinds of entities.

• Speaker #0

  Okay. I was wondering also, so these days a lot of people talk about AI and AI is great for applications, but they're also now draining a lot of energy from the grid. Are those potential customers for you, AI companies, data centers? How would that interconnect with what Formagent Energy is doing?

• Speaker #1

  Yeah, absolutely. They are.

• Speaker #0

  We are working with all of them. But I would put even the AI load growth, which is sort of a new idea for a lot of people. The tech industry has not historically thought about energy, and so their eyes have been opened to the criticality of energy and energy supply. But I also don't want to over-index. It's not just the AI folks who are asking for a lot of new energy, it's a lot of industry, frankly. Electrification is driving this, of course, and that's electrification. everything from transportation, personal transportation, like cars, we now have electric vehicles, at material amounts of demand showing up on the grid, so you have that. And then you have industrial decarbonization efforts, which are driving to electrification of heating, for example, or other industrial processes, also driving load up very, very quickly. And so you add on top of that, you know, demand for data centers. for AI and that kind of thing. And it all adds up to a condition on the grid that we haven't seen for 60 years, probably. These rates of growth, you know, four or 5% annually, which is for the electric industry is sort of staggering when you think about how much capital is involved to meet that kind of demand. Again, these are not consumer electronics. You can't just sort of turn on another factory in Asia and get your supply here. So. tens, if not hundreds of billions of dollars that are being invested over the very near term to meet that demand. And part of the reason why we work with these regulated entities is because it's their job to meet, from a portfolio perspective, the needs of all their customers. And the grid truly is best optimized at a portfolio level. If you're only sort of taking a really narrow view and saying, I'm just going to serve this customer with this one thing and this other customer with something else, then... that will not be the least cost way. And one of the things that the regulators look to is, are you doing things in a least cost way? In other words, are you not burdening your customers? Because electricity is basically right at this point. Yes, we have to pay for it, but you're essentially guaranteed your access to it through the structure of the industry that we have today. And so it has to be done in a least cost way and optimized as a portfolio. right, for these very dynamic conditions that we're in, being the load growth and the intermittency and everything else. And so our solution helps optimize and get to the least cost mix for those, not just the system operator, the utilities, but also for the off-takers, for the AI companies, as well as for the industrial companies, as well as for the Joe homeowner who wants to charge his car at a low cost. the multi-day duration, cost-effective multi-day duration storage just makes solving those challenges that much easier. And so we see that in the mix and we see that coming through our customers who are saying, here's our challenge, which is these guys at AI who we haven't thought about too much before and here they are new, but it's part of a much bigger problem that we know we need to co-address.

• Speaker #1

  Okay, let's turn to the funding environment. So you mentioned that when you started, it wasn't clear at all whether you'd be able to fund the company through its years of development. Because at the time, very few VCs and other corporates were putting capital at work in those categories. So today, you've raised about a billion worth of capital under different instruments. So how have you seen the funding landscape evolve and what were for you the sources of capital for each stage?

• Speaker #0

  Yeah, so we... You're absolutely right. We did not see the full capital stack just sitting out there waiting for us when we founded the company. There was a big hangover in the market from Cleantech 1.0, and a lot of capital went away, frankly, from Cleantech. And I had multiple investors tell me, I will never invest in a battery company again. I had good prior experiences. I believe some of them did indeed invest in a battery company again, Form Energy, once they realized that we were doing things a little bit differently from Cleantech. what they had seen the first time through. But we were fortunate that there was a strong enough base early on, so this was 2017, of the early stage Cleantech 2.0 investors. So among them are Breakthrough Energy and Prelude, The Engine, and we had others. Saudi Aramco actually was an investor in the Series A. So there certainly was capital there to get us going and capital that wanted to take a big bet. you know, bet on a good founding team. And so we were fortunate to get that. And then I think what we have seen over the subsequent sort of six years, you know, after that first year that we did the fundraise is, is one, the market sort of moving towards us, right? The, the acceleration of of climate funding and, and of load growth and, you know, all these mega trends, uh, really, uh, are becoming deeply recognized as exactly that, right? They are not going away. In fact, they're only accelerating. And so, subsequently, capital is showing up at different stages to meet the market, right? There's people that want to invest at every single stage. And we're now seeing, I would say, the final stage being put in place, which is that growth stage or maybe starting to tip into that infrastructure stage of capital there for those very first companies that were founded six or seven years ago as part of the second wave of lean tech. now ready to hit that very final stage there. So we do see a very robust landscape. I could be more excited for people who are starting companies in the space today because there's a lot of capital that's looking for great companies. And I think the opportunity is great. Hopefully anybody listening here is thinking about it. It doesn't think that all the great ideas are taken or that there's nothing. Far from it. We need all the innovation possible coming into the space here. and the capital stack, I would say, is quite robust for every single stage from seed or series A all the way through now growth capital for these same kinds of firms. That said, it is really important to have offtake, right? You can't just say, here's a big TAM and I'm going to go, I mean, just let me go build a company to meet that, especially at the stage where you're putting material amounts of dollars to work against a factory or that kind of thing. you really do have to have that offtake. And I think that that's been one of the main differentiators for us in the market is that we've got very solid offtake. It's hundreds of millions of dollars of very high quality revenue from very high quality offtakers. And that gives investors confidence to say, yeah, we can put in the growth capital because we see exactly how the business is going to work from here on out.

• Speaker #1

  Yeah, in climate tech, a lot of people mentioned that the IRA, the Inflation Reduction Act, had a very positive impact on various... sectors, particularly within energy, didn't have any direct or indirect impact on form energy?

• Speaker #0

  Well, the impact, which I think is felt by everybody, is just the accepted reality that it is accelerating just about everything that's happening in the space. So two years ago when the IRA got passed, of course, nobody was talking about AI demand for load on the electric system. And now, how is that load growth going to be met? Well, it's going to be met through the acceleration that was put in place initially through the Inflation Reduction Act. So, you know, it's... we sort of see some of these dots being connected in ways that were not originally contemplated. But the IRA sort of gave the entire industry a jolt to go do things faster at a larger scale than what it had been thinking about previously. And I think that it was still probably not fast enough given how fast the AI industry wants to move, but better than where we would have been, certainly. And so it's just been an accelerant in general, the IRA has. And especially for domestic manufacturers, it's industrial policy for manufacturing in many ways. So we see that as a manufacturer, we see the benefit there too. But it's good for the industry overall and not just industry. Maybe back to your earlier point, every job will be in climate. And in many ways, it's not just about the things that form energy is working on or in battery industry or even the clean tech industry. It really is truly the underpinnings of the entire economy, which are energy. that's what our economy is based on, is low-cost, abundant energy. And that will continue to be the case, to be clear. We're going to need a lot from every single sector contributing. And I think that the sectors that stand to benefit are every single one, frankly.

• Speaker #1

  I'd like to ask you now, and we're reading in a couple of questions from the audience, about how it was to grow the company. So it was... So we talked about the funding aspect, but there's also many other aspects such as recruiting, management, organization. So what did you find was hard and what did you find was maybe surprisingly easy through the growth of the company and its evolution through various stages?

• Speaker #0

  Yeah. Well. growing something is always much easier when you're starting from a great base, right? If you're growing something, you don't know you're on quicksand, that's much more trickier. And so we have built the company, I think, fairly well over the last seven years, in large part because my co-founders and I agree on exactly what this company is and how we should go do that. So there are five co-founders, which is more than typical, I would say, but we're all like-minded co-founders who have complimentary skills and strengths. And we've all been through this before. So none of us was sort of naive about what it would take or didn't know what starting a company meant or even a battery company. And so we had a lot of alignment from the very beginning. And now it's just been such a joy to work with my co-founders and Ted, Marco, Yed, and Billy. They're just such phenomenal people and company builders that... that now having five co-founders is a huge advantage that we have, you know, a 700 person company with five co-founders. I, I sort of can't imagine what it would be to be a single co-founder, you know, with, with a company sort of going to a thousand people here, here pretty quickly. And, you know, that founder burden being placed entirely on one person. So it's, it's, it's been a true pleasure to have the co-founders I have. But, but also we've been very clear about what we're trying to do and we've, we haven't pivoted. We haven't, you know. had to rethink what we're doing. And that's because from the very beginning, we were so intentional about the tee up to what it is that we were aiming for. We didn't pick a technology and then try and figure out where it was going to fit best. We looked at a problem that we saw, sort of a structural problem in the market, and we went to solve that with the best possible option. And it turns out that Iron Air has had all of the entitlement that we thought it would. And so that's what's allowed us to sort of build the company the way that we have, is we started with a... phenomenal base and a great scaffolding. And we sort of, you know, added onto that as we went. But we also try to be really intentional or very early on, right? Every person that you add early on is a meaningful percentage of the people in your company. And so you just have to be really, really thoughtful about keeping a really high bar for talent and for addition, additiveness to your team from a personality standpoint, from a diversity standpoint, from a... you know, all the important metrics. And so we put a lot of thought and care upfront into what that was. And, you know, things change as you go. Of course, a 700 person company is not a 70 person company and you need to update and advance as you go. But I think we started from a great base and that's what's helped us.

• Speaker #1

  Do you find it easy to recruit, considering that not only you have a high bar, but you're also competing with a lot of other tech companies on a lot of distractions? So before, some talented people maybe went to do blockchain Web3 companies. Maybe now everybody wants to do some AI things or go into, I don't know, consulting, investment banking, and all kinds of other things that tend to draw a lot of talent. So what has been your experience in attracting talent?

• Speaker #0

  Well, we compete for talent with other companies who are doing hard things that matter. So that's sort of how I put our competitors for talent there. We don't compete with the banks to be perfect as our consultants. That kind of person is not the kind of person that we're looking for, frankly. We're looking for people who, I mean, one, we are a deeply technical organization. So the vast majority of our staff are engineers or scientists. And those folks, you know. we want the ones who want to work on the hardest problems. We want the ones who want to have the biggest impact. And so we're competing with other companies that are offering that kind of experience. It's not a lifestyle company. You don't come to the forum to work four days a week, home two days a week, that kind of thing. but we can promise you exciting, hard things to work on. And if that's what really is animating, then this is a great place for you. I like to work hard. I've always worked hard. I worked at Tesla for seven years and that was a phenomenal experience. That was also enough for me, but that was a phenomenal experience. And Tesla is a great example where if you shine a light for people to come work really hard on a compelling mission, then you get great talent. In fact, you get the best talent. And so, you know, in some ways that's been our approach too, is to say, you know, nobody has solved this problem before. That's going to be us. If you want to be part of the journey and, you know, come really, you know, put your shoulder to the grindstone and have a big impact, then this is the place. You know, importantly, however, it's also a place where people are nice to each other. And we, you know, there's one of our values is humanity. And so, you know, we try and make sure that we always see the person who's doing the job. it isn't, you know, sort of a cold clinical place either. You know, we can be humane to each other while we are working hard and, you know, having fun doing so.

• Speaker #1

  Excellent. Well, that sounds like a great place to be. And actually, when you were, before you started talking about Tesla, I was already having some echoes of the Tesla level of passion. about the mission you're on. And I think everyone in the audience can really feel that in the way you talk about what you're doing and about your team and the problem we intend to solve. So a few other questions I'd like to cover in the few minutes we have left. You mentioned that there's pools of capital assembling now, and the capital stack is more complete than ever. How far do you feel the form energy is from becoming an investable asset class? like having the predictable metrics that the very large amounts of capital like, you know, with very little downside, predictable upside, year after year revenue, where they can basically deploy billions and billions.

• Speaker #0

  Yeah. Well, the threshold for us as a company for commercializing a product is not that we have a battery that works or that we even have sold a battery to a customer, but rather that it's a bankable asset. In other words, you pass the bankability threshold. where you can get low-cost third-party capital to fund a project, right? That's the ultimate threshold for us as a company, for any hardware company, frankly, working in the infrastructure space. And so the... And that being the animating factor, we've designed the product, we've scaled the manufacturing, we've built the systems, we've built the supply chain, we've built the data repositories to be all in service of having a bankable asset. And so we are, right now, it's of course utility capital that's going into it, and they're getting a rate of return on that. So it's sort of passing their threshold. But broadly speaking, the market... is not sort of fully addressed until you, until you can have a third party capital showing up and, and sitting behind it. In other words, project finance. And so we are, we're still probably, I would say a year or two of deployments away from that, you know, that type of capital takes basically no tech risk, like zero tech risk. They take market risk, but not tech risk. And so we need to sort of fully take that, that element of risk to zero. And the only way we can do that is by deploying the scaled projects that we already have in the pipeline. So we'll do that. There's plenty of business to do in the meantime with these regulated entities. And by the way, it will also be dramatically reduced as far as tech risk goes. But it'll take probably a year or two. So I would say by 26, 27 is when we'll see those types of projects get done for us as a company with that kind of capital. And in many ways. That would be our mark of success is that we have created a new asset class that can pull in tens of billions of dollars of investment, which after all is how this industry turns. Infrastructure capital is very, very large dollars. And the industry frankly needs new asset classes to deploy all the capital that's required to make this energy transition that is in flight and will happen for the next 40 years by some estimates. over $100 trillion for the next 40 years, 100, 150. So we think that this kind of multi-day storage can play a meaningful role in that and really allow a lot of capital to go against it to scale up to meet all these challenges that we've been talking about.

• Speaker #1

  So do you feel that there's also some... potential beyond US borders for your company? And I'm asking that because as far as the global investor, we've done investments also in Europe. And as you know, there's also a major conflict going on in Europe that made everybody wake up to the problem of energy supply, supply chains as well. So two questions here. So first... how robust do you feel your supply chain is considering you're using a very common element? Do you feel you have exposure to potential disruptions due to international events? And is there a limiting factor to your deployment in the US based on your existing supply chain?

• Speaker #0

  Yeah, so we feel great about the robustness of our supply chain in every market where we would manufacture. In other words, that we can supply... just about everything domestically in North America. Likewise, in Europe, you could have a completely... sort of European-based supply chain. Now, the exception to all this is chips, chipsets, because largely the entire world depends on Asia for the production of that. But for the raw materials, certainly, and for the manufacturing, and for the basic components that are going into the batteries, we've done the assessments for supply chain, and Europe can support it entirely. Sweden has a phenomenal resource of iron, for example. 90% of the iron made in Europe comes from, or steel made in Europe comes from iron, which is coming from Sweden. So that's just one example. The same is true for every continent. There's just phenomenal abundance of iron everywhere. And indeed we see these markets moving very, very quickly. So I expect our first non-US projects will be in Europe in 2026. I'm not going to say just yet what those are, but- But we're very far along in terms of developing those and they will start out roughly the same size projects that we're doing in the US to start, but that's to really jumpstart the market and to really get the ball rolling to meet a demand that we see is surging very, very quickly in the European context as well. And then beyond that, Asia and Africa.

• Speaker #1

  Yeah, well, that's actually quite surprising that you'd be already moving into Europe in 2026. So is that, I mean, I suppose it's partly tied to this energy crisis happening there.

• Speaker #0

  In part, certainly that has opened a lot of eyes in Europe just on the energy matrix and the need to have domestic resources funding things. Of course, wind is all domestic, right? Solar is all domestic. And so there's a lot of desire to use as much of that as you possibly can. The other thing is just... The interconnectivity is challenging, so it is not perfectly interconnected from a transmission standpoint. And increasingly, there is a lot of desire to use the wind as a resource, which is very low cost and intermittent in a way that pairs up very nicely with this multi-day duration storage that we have. And so we're getting pulled into very specific, especially wind heavy markets to start where they feel they need the strongest.

• Speaker #1

  I sort of get the sense of which geographies you might be working with. Okay, so we're nearing the end of our session. I think we covered already some of the questions that the audience asked. I think a question from Nicholas, we covered Henry Dahl and Siddharth Malanagari. Maybe... I'll give a few minutes of extra time for the audience if they want to ask a couple more questions. And maybe just to kind of wrap up also our conversation. What would be your ideas about beyond energy storage, what you see happening in the whole climate tech ecosystem and how it's extending? And also, maybe you want to mention some projects that particularly caught your eye that are adjacent or possibly entirely different from what you're doing.

• Speaker #0

  Well, I think that the broader ecosystem is under a period of just creative explosion. And we're seeing... so many new companies come up and companies that were started a few years ago now start to finally get into the market, which of course is the whole point. But being hardware, it does take years, right, to sort of get there. And so, you know, I'm hugely encouraged when I see, you know, my friends over at Fervo Energy start to operate their geothermal units for the first time and seeing phenomenal results out of the wells that they've done, that they've drilled so far. So, I think, you know, it really is an all of the above approach that's going to be required to to meet this challenge that we have. And I'm really encouraged to see the flowering that's going on from a lot of different sectors outside of storage and, you know, across the world, frankly.

• Speaker #1

  I just have a question also from Siddharth Malanagari. He's asking whether you're looking also at emerging economies for potential deployments, such as India, whether coal-based energy implementations are a huge risk to global emission targets.

• Speaker #0

  Yeah, absolutely. And India, yes, it has a lot of coal in it, but also growing very, very quickly on the renewable side of things, again, because of cost, right? It's very, very low cost. And at the same time, the country has put a lot of emphasis into building out its infrastructure for transmission better. So right now, the system is not very well interconnected. And so connecting over any large geographic area, north, south, east, west, helps to really drive down cost ultimately. and drive up reliability when you're sort of... relying on weather-based generation resources. So we absolutely see a huge amount of opportunity in India. India also is one of the largest steel producers. So the huge amounts of iron that are also available there, back to the earlier comment. And so a lot of knowledge there as well that goes into the resources that are very similar to what we would require. So we absolutely expect to be in Southeast Asia. over a relevant time period and see big growth just as we do for all the markets.

• Speaker #1

  Excellent. Before we wrap up, I'll take this last question from Josh Graham. When you think about your utilities customers, is the idea that eventually you're replacing low-capacity use picker plants, or are you performing some other sort of service for them?

• Speaker #0

  it's really that you're able to create a new kind of fully dispatchable deterministic resource through the portfolio. So it's never quite as simple as like a one-for-one replacement at the portfolio level. But what we're bringing to the table for utilities is that they're able to take, let's say their renewable portfolio. And whereas before it could sometimes be a liability goes away for a few days on end, now it's no longer that. it's an active contributor to the stability and the reliability, the resilience of the system. And so in some ways, that's probably the best way to think about what we're doing is we're adding this level of reliability into the portfolio, no matter what it is, no matter what the balances of all the resources that previously they just couldn't get through the options that are currently on the table, like lithium ion or something that's short duration storage overall. When you have this multi-day duration cost-effective storage, then you can truly take those intermittent weather-driven resources and make them as reliable, as deterministic, as dispatchable at the same cost, if not cheaper, than the other resources that you typically rely on for that reliability function.

• Speaker #1

  I have one last question before wrapping up. In terms of the size of deployments, what is the smallest and the largest type of installation you're envisioning in the near future?

• Speaker #0

  Yeah, so the largest deployment that we're doing over the next year and a half, or I guess two years now, but it's about five megawatts, so 500 megawatt hours. And that's, you know, a few hundred of our enclosures that we have. And that's sort of the minimum size, you know, any smaller than that, and you lose the efficiencies of the EPC function, right, the civil works and electrical works and that kind of thing. And also, you know, we want projects to... be able to show up meaningfully on the grid. And five megawatts, you know, really it's 10, but between five and 10, that's sort of the minimum amount that an operator really cares about. Less than that, it doesn't really show up on there. You know, it doesn't impact things one way or another. And so, you know, that's sort of the minimum threshold that we have. And that's where we are with, you know, with these projects that we've signed so far. And then it really just scales from there. So hundreds of megawatts, even into thousands of megawatts, right? There's nuclear plants or coal plants that are even now wind plant. you know, collected wind farms that are in the thousands of megawatts. And there's no reason to think that, you know, this kind of battery project would not also be in that same size scale.

• Speaker #1

  That's very, very large scale. Okay. I see one last question, so we're going to take it. It's from Mohamed Shob Ali. What is the percentage of renewable penetration with the long duration energy storage when it becomes mainstream, thanks to companies like FormEnergy? What do you think we can reach?

• Speaker #0

  Well, every market that has hit 50% renewable penetration by volume is already seeing the conditions where multi-day duration storage can provide a compelling value into it. And so it really just depends. You have to really zoom in and understand the dynamics of any given grid. And you do not require 80%, 90% penetration in order for us to have a meaningful impact in terms of value. Again, it comes down to cost and value. And so... Georgia Power does not have a 90% renewable energy-driven grid, and yet they are seeing a lot of value in the type of asset that we're bringing into their system. So it isn't so much that there's a required threshold for renewable penetration before our kind of storage becomes compelling from a value perspective. It really is dependent on a bunch of other conditions for when and at what scale Forms Battery provides a lot of value to the system. And credit to our... analytics team, we've gone and found that value in places where it's maybe not so obvious.

• Speaker #1

  And in that context as well, do you think that systems like FormEnergy can help potentially electrify almost 100% geography from sources like solar and wind only. Does that sound like a viable option?

• Speaker #0

  Certainly. And what we see in the modeling is that if that's what you're driving to, you can get there at a very small cost premium, if any at all, frankly. And so it's not just that you enable deep decarbonization, but the question is at which cost. And without cost-effective multi-duration storage, what you end up seeing is that the last 10% to 20% is just not cost-effective and therefore will never happen. And again, based on this. supremely insightful modeling, capable modeling tools that the team has built, we see that this kind of asset, when it shows up, it just flattens out the cost curve for that last 20% or the last 30%. And that's why we wouldn't build it in the first place. We saw that in the results and we said, ah, if you have this kind of technology at this cost point, then you can really drive that kind of activity through the system.

• Speaker #1

  Amazing. So we covered a lot of ground and we're pretty much at time. So I'll just ask you if you have any parting thoughts or message for this audience.

• Speaker #0

  Yeah, just maybe some parting words of encouragement. It's easy to have tunnel vision on the thing you're working on day in, day out, and that's appropriate for us as a company. But I know the ecosystem is so much broader, and it's great to see. I'm encouraged by the entrepreneurs that I come across all the time coming to the space and working on it for a while or showed up yesterday. It doesn't really matter. As I said, the ecosystem is really flowering now. So thanks to all the other entrepreneurs who are out there doing the same thing.

• Speaker #1

  Matteo, thank you very much for this very inspiring conversation and for the great work you're doing with FormEnergy.

• Speaker #0

  Okay. And I should say thanks to the investors as well. Thanks, Ben. You too.

• Speaker #1

  Thanks.

• Speaker #0

  Cheers. Cheers.