Hi, I'm Michael Silverton,
co-head of Macquarie Capital.
I'm joined today by Mateo Jaramillo
Co-Founder and CEO of Form Energy,
which is pioneering low cost
multiday battery storage technology
with a vision of enabling a reliable
and fully renewable electric grid year round.
Prior to founding Form,
Mateo held a number of key roles at Tesla,
including leading the energy storage programme.
And before that,
as a member of the founding team,
a distributed energy storage firm,
Gaia Power Technologies.
This experience, along with an
AB in Economics from Harvard,
gives him a unique perspective
of both the economic
and technological challenges of this industry.
Mateo, thanks so much for joining us today.
Thanks, Michael. It’s a pleasure to be here.
So Mateo,
in some of the other segments today,
we're hearing about the commitments
that our clients and partners
are making to net zero.
Or as it Form,
your goal is to deliver the technologies
to help make that ambition a reality.
Can you tell us more about Form Energy and its history?
Yeah, of course.
Form’s now about
four and a half years old or so.
Around 2017,
there are five co-foundersm,
I'm one of them
got together and said,
well, what kind of energy storage
would it take to allow us
to have 100 percent renewable grid?
And so a little bit differently,
you know, very candidly,
what kind of battery allows you
to replace a coal plant?
That's sort of the simplest way
that we could think of to put it.
And and when we did the maths on it
and we sort of figured out what
what it would take,
it implies a battery
that's never been commercialised before.
It has to be cost
effective over hundreds of hours
at least.
And it's got to be able to scale
in a massive scale.
This is, we're talking
about a trillion dollar
CapEx opportunity to go after.
And so that's the kind of battery
that we started out pursuing.
And that really is
the market that we're going after, you know,
that trillion dollar market
for all of the thermal generation
that's out there.
And that's because the
renewables are so cheap
and they're so abundant
and so cost effective.
But they are limited
if you cannot address
these longer periods of intermittencies.
So that's what Form Energy set out to do.
And the battery, as I mentioned, is unlike anything
that's been commercialised to date,
primarily because we're
pursuing such low cost
that it ends up having to look
almost by definition
much different from anything else that's out there today.
Yeah.
And to that point,
how important is multiday storage
in helping society move towards
a completely renewable grid?
Yeah, well, we've come
up the curve incredibly quickly,
starting out with, you know,
10 percent, 20 percent
now in many grids are
50-60 percent renewables
as a percentage of kilowatt hours.
And but we're now starting
to get into the tricky territory.
So when you when you pass
that 50 percent threshold,
you do see a lot of curtailment
and you do see a lot of congestion.
And increasingly,
what you see is that you still need
all of the thermal resources as backup.
Right.
Because you can't fully get rid of them.
They are displaced
in the market many hours. Right.
Like I said, about
half the hours of the year.
They're getting displaced.
But then there are critical stretches,
you know, days, weeks,
even sort of extended periods
where they are stepping in
and performing a very important
reliability function.
We can't just ignore that
in the system overall.
And and so if you want to be able
to replace them and allow
the wind, water and solar
to replace those thermal assets,
you have to be able to bridge
those multiple day gaps that are there
Form invested very heavily
from the very beginning in our history
in deep analytics,
so really deeply understanding,
you know, what does the maths say
about exactly how long
those durations have to be?
And what are the trade-offs to get there?
And what we found
is that the main problem
that you're solving
is not necessarily
taking an extra kilowatt hour from summer
and moving into winter.
That's not really the challenge.
The challenge is running
for the weeks,
charging up in the week
before the storm,
through the storm, discharging
and then recharging afterwards.
And usually those those are covering,
you know, maybe a week
in some parts of the world.
Maybe that's two weeks.
You know, we're seeing that happen
right now in the U.K.
with very low winds.
So I say storm, but really
it just means intermittent period.
And so that's that's where we start
to really focus on it.
And that's the role of multiday storage,
because that's the main function
that you're trying to replace in the system.
And you can see that
through their dispatch profiles
of, let's say, big gas plants.
That's exactly what they're
doing in the system.
And so
cost-effective multi-discharge
has to be able to perform
exactly that function
if we want to get to really high
penetration with renewables.
And so in July, Mateo, you
you revealed the technology
behind the battery,
and I know for some years
we've been trying to understand it
and you finally revealed it
to be an iron-air battery.
And we wanted to understand it.
You said good luck,
but I'll explain it to you
as reversible rusting.
Can you explain the technology
and why do you think
this might succeed where
so many other technologies have failed?
And what are some of the real obstacles
you see to being successful at scale?
Yeah, well, that's right.
We just talked publicly
for the first time
about what that chemistry is.
And that wasn’t out of,
you know, some desire
to just intentionally be stealthy there.
It's really just because
we wanted to be sure that
that we had made enough progress
where it was meaningful to talk about right.
The battery industry,
which I've been in for a long time
has gone through
so many hype cycles and,
you know it’s sort of nauseating
to think about another hype cycle
with the battery company.
And so we wanted to be sure
that we were on stable ground,
that we had made enough
technical progress
that we could really start talking about,
OK, how do we get this in the market
as soon as possible?
So we hit that inflexion point
and then, of course, talked about it.
Now, why iron in the first place?
Those things I was talking about in the beginning
are very low cost, very high abundance.
Well, obviously, iron ticks that, both of those boxes.
You don't have to squint too
hard to see that the earth is basically
just a ball of iron
and molten iron at the core.
And as a result,
it's a phenomenally crustily abundant material.
At a mind boggling scale.
And and if we can figure out a way
to do that, to use it as as a key
input to the battery,
well then you have an entitlement
to go tackle, really
the scale of the market
that we're talking about, again,
terawatt scale systems.
So that's why iron in the first place.
Now, it has to be embodied in a battery.
You got to figure out
how to actually put it into a battery.
And as as you said,
it's an iron-air battery.
So all batteries have an anode
and a cathode
and something in between.
And so for us, the iron is that anode
and the air cathode is
is the the other side of the battery,
the positive side of the battery.
But really what it is,
is it's a membrane that allows oxygen
to pass from the air
into the liquid electrolyte
and then to rust that the iron there.
Everybody knows that
if you leave iron out, it gets oxidised.
That's sort of
a fundamental process of
of the Earth these days.
And we've all experienced
rust happening in ways
that we would prefer
that it did not happen.
And a lot of human sort of minds,
mind share has gone
to figure out how to deal with corrosion.
Think about the Iron Age and everything since then,
lots of humans
have been thinking about this for a long time.
The trick is getting it to go
the other direction.
How do I put electricity in
and get back to that metallic iron?
But that is exactly what we're doing.
And one thing that we realise is
that we could use a version of iron
that's already being produced
in massive scale for
for the steel industry today.
So we don't have to go
make that iron ourselves,
another industry
makes it for us in many ways.
The steel industry
is the largest producer of battery
anode material in the world.
They just happen to use it
for steel as opposed to for battery.
But what we figured out,
one of the major advances was that
we could use exactly
that thing that they are making
and put it into the battery.
And so that rust process
happens in this liquid
and this electrolyte,
and it happens in a way
where you don't get that
sloughing off,
if you sort of have a piece of metal
and rusted, that you can sort of
brush off the rusted part.
But but the design of the anode itself,
again, a by-product of the way
that the steel industry prepares
this material
is that that process can happen
without that that side effect.
So it's a it's a porous material.
And so
that's that's really all that it is.
It sounds very simple,
but but that's how you get to
very low cost, you know
low tens ultimately
to low ones of dollars per kilowatt hour.
That's that's where you have to be
to to be able to tackle
those multiple days
of cost effective storage.
And the key obstacles that you now.
Yeah, well, we're not short on obstacles.
That's that's for sure.
We've got a long way in the four years
since we started.
But, you know,
we're not in the market yet.
But but the challenges
are fundamentally different today
than what we started with.
So when we started,
there was a lot of questions about
does the universe work
the way that we hope it does
type questions like
the science questions.
And we turned over enough of those cards
that that came up in our favour,
that we're now to the
engineering questions.
And we're saying,
OK, well, now it's a very, it's a not
simple engineering problem,
but it is an engineering problem.
And with fantastic engineers,
you're solving engineering problems.
And so that's really
the phase that we're in,
designing the product
and getting it into the market.
So challenge one is.
Finishing really the
design of the product,
we're building out
relevant scale down today,
so in our labs today,
we're building meter scale batteries.
Imagine a battery
the size of a washing machine.
That's what we're building today.
And that's the repeat unit.
So all of the technical performance
and risk exists at that level.
And we're building and testing
at that scale today.
And so we need to to finish that process,
at least as important
from a challenge perspective is
getting everybody on board
who will be a offtaker of the battery
now so that we can linearly scale
from the very first projects
that we're putting in the ground.
In other words, we have to establish
bankability of this asset
as quickly as possible.
It's critically important
that the people putting the money
behind the projects,
which I know you know a lot about,
have a lot of faith
in the product itself. Right.
And and, of course,
the way for doing
that, the process of doing it
today is very different
from even 10 or 15 years ago
when you know that
the broader environment
was just different.
You know, the appetite for risk,
the need for change.
These things are very different
from what they were.
And so what we look for
is very close partnerships
to help bring this newer technology in
and scale as linearly as possible.
From a business perspective,
we can't afford to deploy
our first pilot project in two years
and then sit on our hands
and watch it for 10 years.
That simply doesn't work.
And I don't think
that works for the broader
industry either, unfortunately.
So we have a very close partnership
with offtakers to
make sure that we are scaling
commercially as quickly
as we possibly can.
And if you think about
the adoption curve and
you've got the engineering
and now the bankability,
I mean, how significant a contribution
could this make to fighting climate change and
over what sort of time frame
and what could it do
to the cost of carbon free energy for consumers?
Well,
I'll be a little bit
immodest for a second.
I think that we can
cut off 10 to 15 years off the back end
of the decarbonisation process.
That's the impact that I think of it
that this kind of technology can have,
because it can hit the relevant scale
for the for the globe really.
That's why this is compelling.
And so the work that we have to do over
the next two to five years,
pretty much no matter what
there's a path
we have to go through.
We've got to establish
this bankability as bankable.
We've got to get the right
commercial contracts in place.
Obviously, the technology needs to work
and hit the cost point
and everything else.
But if we're able to get through that,
which I firmly believe that we can,
then the impact is that
we can bring forward those goals.
You know, at the back end, you know,
and then what we're talking about is,
you know, not a scenario
that is coming to fruition
in 2045 or 2050 for decarbonisation,
but rather that we're heading in and 2035
or maybe 2040 or even earlier than that.
So that's really how we think about it.
And that's why we're doing all the work
that we're doing today
with the partners
that we're working with.
You know, this is about scale, right?
It's about time and scale.
And and it requires the efforts
across the spectrum. Right.
Not just
the technology companies
going it alone,
that doesn't really work here,
that that's not the point.
We're building broad partnerships
across the industry, and
really across the globe.
And it sounds like you're optimistic
about about the Paris
targets and incredible
if you can shave 10
to 15 years off that and
we're clearly a believer,
but what else is out there
that that excites you?
What other technologies that
are going to be needed
to make that happen?
Yeah, it would scare me a great deal
if we were the only
reason to be optimistic here.
So I see lots of, lots of promise
across the spectrum.
You know, there's the power industry.
It likes a diversity of assets.
There's no silver bullet out there.
It is really a combination of
a lots of different kinds of approaches
that I think will succeed.
It's everything from,
you know, building more transmission,
deploying solar and wind
at ever increasing scales
in all territories across the globe.
Two things like smart policy
and an implementation of
of newer techniques
for managing the grid, being smart about it. Right.
Efficiency and
and software controls
and everything else.
I think it takes
every tool at our disposal to succeed
at that Paris goal.
It's not so much that,
you know, Form is going to show up
on a white horse
by any stretch of the imagination
I think we have a role to play,
hopefully an important role to play
that will lead to success
for us, as well as for broader society.
But there's there's
lots of different technologies
that can and I think will come
come to the fore here.
So I'm I'm optimistic
for a lot of reasons,
primarily because there's so many people
getting involved
in ways that they were not
getting involved before.
And I mean that across the board,
you know, talented people
from other industries
who want to work on climate now
and just getting that, you know,
that that brainpower
and horsepower is part of it,
but also the right policies,
I think a lot of governments
are now leaning in.
I mean, in the United States, of course,
we have recently that this proposed bill
out of the U.S.
federal government, which is,
you know, if they pass it, it will be
it'll be a landmark bill.
And I think that's just extending
to all basically relevant
stakeholder governments
that are out there.
And, of course, the role
that companies have to play as well.
You know, the social licence
to operate in society
basically is that
there's a response there
to the climate crisis.
And we're seeing that across the board.
So it isn't so much that we have
all the technologies in hand today
that they're proven
that they're bankable.
But that the movement
is there to go
identify and implement all the solutions.
And it'll be a you know,
all of the above approach.
I think that leads us to success.
So it's really exciting to see things
getting real for Form Energy
and your vision coming together.
And you've got a really impressive
array of investors,
whether Bill Gates Breakthrough
or Temasek and TPG rise,
so, you know
we're delighted to be involved.
But now you have,
you've announced the contract with the
Minnesota utility,
Great River Energy
to pilot the technology.
And you mentioned
the partnership with
ArcelorMittel before.
When will we start to see
an actual project
break ground?
What's that sort of timeframe
you think it will be
before we can see the technology deployed.
So you mentioned the project
with Great River Energy there in the U.S.
state of Minnesota.
That'll be deployed at the end of 2023.
So about two years from
from when we're talking
and then we have projects in the pipeline
for 2024 tens of megawatts
and then 2025, you know,
maybe hundreds of megawatts scale
and then go from there.
So I think
we'll see a pretty linear
path from there.
You know, there's a
with the reveal of the chemistry
and some of the press
that we got out of
The Wall Street Journal there
and a lot of great follow on press,
the inbound interest has been,
frankly, overwhelming.
And so we don't have
any shortage of counter parties
that we're talking to right now for
for those projects
to follow the one that
we've announced in 2023.
So it'll be as quickly as
we can possibly do it
right after that one.
And that will be focussed on the U.S. to start.
Of course, we intend for this
to be a global market.
And so what we're figuring out
now as well is not just
what does the scale look like,
process look like
for the United States, but also
what's it look like in Europe?
What's it look like in Australia?
What's it look like in Japan?
You know, all the
all the relevant markets,
India, Africa, you name it.
Again, we intend this
to be a global market.
So when we think about that scale
and we think about the process, we're
also thinking about for every market,
because because we think it's relevant.
Great. Well Mateo, you certainly
raised our ambition
and we're proud to be involved
with you and Form Energy in a small way.
And congrats.
Congratulations on all
your success to date.
And we look forward
to being supportive going forward.
Thanks very much for your time.
Thanks, Michael.
It's been great to have you
and the team participate in our path
from the very beginning.
And, you know, being committed to
seeing an outlandish vision,
hopefully come to
fruition here, so.
It's been fantastic.
And thank you very much.