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- [00:03]
Latitude Media
Latitude Media covering the new frontiers of the energy transition.
- [00:08]
Shayel Khan
I'm Shel Khan and this is Catalyst.
- [00:12]
Landon Mossberg
We can see pretty clearly for the next two years because we have quotes from both from raw material suppliers and from cell suppliers that the price is falling by about $20 per kilowatt hour over the next 2ish years. Two to three years coming up.
- [00:27]
Shayel Khan
Watch your blood pressure. We're talking Sodium Ion.
- [00:38]
Energy Hub
Imagine a world where connected devices like EVs, home batteries and smart thermostats work together to support a more efficient, reliable and affordable power grid. Energy Hub is making this vision a reality today. With Energy Hub's edgederms platform, you can Utilities can create virtual power plants through customer centric flexibility programs, making it easy to manage distributed resources and balance the grid. Unlock grid flexibility and reliability through cross der management with Energy hub, the trusted edgederms leader. Visit energyhub.com to learn more. Catalyst is brought to you by Antenna Group, the communications and marketing partner for mission driven organizations developing and adopting climate solutions. Their team of experts help businesses like yours identify, refine and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. Get started today@antennagroup.com need to accelerate procurement.
- [01:36]
Latitude Media
For an upcoming solar or storage project. ANSA is your best source of intel to stay on top of current policy, tariff, domestic content and supply chain issues. ANSA's team of experts is available to help you adjust procurement strategies, secure safe harbor products and find existing inventory in the US as policy continues to evolve. Learn more about ANSA subscription and service options to help you navigate an uncertain market@go.anzarenewables.com Latitude.
- [02:09]
Shayel Khan
I'm Shayel Khan. I invest in early stage companies at Energy Impact Partners. Welcome. All right, so a while back we had our first conversation on this pod about sodium ion batteries, in that case with Adrian Yao from Stanford. Sodium ion has garnered a fair bit of attention as a potential future chemistry that sort of continues the trend we've seen historically within lithium ion from NMC to lfp, which is to say a chemistry with potentially lower capex, lower energy density, but some other characteristics that make it better for certain applications, lower range vehicles and then particularly for stationary storage on the grid. Sodium in addition to that has a bunch of other potential advantages from a very different supply chain that could be more domestic and the US at least to potentially drop in manufacturing capability to different safety characteristics. There's a bunch of Things that are. That are pretty interesting about it in principle that need to be proven out still in reality, I would say that that conversation that we had with Adrian about sodium ion was fairly sober and I think reflected a fairly steep hill that the chemistry would need to climb in order to compete. So I thought it'd be worthwhile to present a more bullish view from somebody who's on the ground starting to deploy sodium ion systems. Land Mossberg is the CEO and co founder of Peak Energy, which is commercializing sodium ion batteries specifically for stationary energy storage applications. As you can imagine, he's very optimistic about it. So let's see why. I will say this gets pretty wonky. So if you either aren't already in battery chemistry world, don't know about sodium ion, or just need some of these terms defined, go back to that episode with Adrian Yao. We'll link to it in the show notes and that'll be a good primer for you. In the meantime, here's Landon. Landon, welcome.
- [03:57]
Landon Mossberg
Thanks. I'm glad to be here.
- [03:59]
Shayel Khan
Let's talk about sodium ion. I want to start with you kind of walking me through from a global perspective, like where we are in sodium ion technology, manufacturing, deployment, et cetera. So start with the big picture. How would you characterize, like, today's state of affairs in sodium ion batteries?
- [04:17]
Landon Mossberg
Yeah, it's been an interesting, an interesting past couple years for sodium ion, for batteries in general. I think we started Peak Energy about two years ago, and around that time, the promise and a lot of the interest going into sodium ion, frankly, one of the reasons we were interested in it was it was sort of like, okay, well, this is going to be fundamentally cheaper at the cost of atoms than lfp.
- [04:46]
Shayel Khan
I've always described it as like, it's a different thing. But people, I think, generally appreciate the NMC to LFP transition that went on over time where, like lfp, fundamentally lower cost, lower energy density. That was a trade that turned out to be worth making in a bunch of contexts, both stationary and mobile batteries. And so if you think about the promise as you're describing it a couple of years ago of sodium ion, it was sort of like an extension of that. It was like, okay, this is the next level. Even cheaper, fundamentally, potentially, even lower energy density. Fundamentally, potentially. Now we have to prove one of those things is true.
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Landon Mossberg
That's right.
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Shayel Khan
Worth it.
- [05:19]
Landon Mossberg
That's right. Yeah. And by the way, I think that's still like the trajectory that is possible. Whether it, like whether that's the ultimate landing spot is still, I think Very much dependent on how much traction it gets in different applications and things like that. But I think with enough with similar levels of investment that LFP saw, you would see a similar, you'll see a similar sort of transition there. But I think two years ago LFP was twice as, almost twice as expensive as it is today. And so at that point it just felt like, okay, well the mark to get a cheaper sell with sodium ion is easier, right? It's a easier bar to clear. And lo and behold, sort of over starting two years ago and really over the next year, the price just kind of fell very, very quickly, which is a very interesting time to be starting a sodium ion based energy storage company. And I'd love to say we were smart enough to sort of see where we were going to end up at the application layer, but I think there was a good blend of being far enough along with the work that we were doing to realize that there were some other application level benefits that still kept this very, very interesting despite the fact that the bar had gotten harder to meet on or to beat it on a full cost of add ons basis. But maybe I'll back up and we can go into those benefits later. To answer your original question about where it is right now, you know, there's somewhere probably between. It's hard to know exactly because a lot of this capacity is actually existing lithium ion capacity that's that can be repurposed or has been repurposed for sodium ion. But I think you be pretty safe in saying there's at least 30 gigawatt hours, probably as much as 100 gigawatt hours of sodium ion capacity worldwide for all different variants. And sodium ion is similar to lithium ion. It's not a monolithic cell. You have mostly differentiated by the cathode that's that you're using. And we're using sodium pyrophosphate in fpp, which until very recently didn't get much attention at all outside of China. And even in China it was, is, was the second fiddle to higher energy density layered oxides.
- [07:36]
Shayel Khan
So 30 gigawatt hours to maybe 100 gigawatt hours of capacity globally. You made a good point there that like the numbers are squishy because people can and in some cases have repurposed LFP lines to make sodium ions. So the numbers are not as easy as they are in other cases. But let's assume it's something in that range. I assume 95% of that, 99% of that is in China. How much of that is in China.
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Landon Mossberg
Almost all of it's in China. There's, there's some sort of token projects and stuff elsewhere, but almost all of it's in China.
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Shayel Khan
Interestingly, that implies that the large Korean battery Companies like the LGs and SKs and Samsungs are not yet big players in sodium ion world. Is that true?
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Landon Mossberg
Yeah, I think the large Korean players are. They saw the writing on the wall with LFP a few years ago and decided to go straight at that. And I think they're pretty, they got their hands full with that. That's a really tough thing to try to catch up to the Chinese on that pathway. We're starting to see some interest there from smaller players in Korea, but also from some of the bigger ones. But I think it's going to be a journey for them. They're already kind of pot committed on LFP to a large extent and they're going to have to go through that process.
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Shayel Khan
Okay, so then most of this manufacturing capacity in China. One thing we've learned over the years is that manufacturing capacity does not equate to installations, particularly when it is in China. What do we know about where, if and where these batteries are getting deployed from the Chinese manufacturers really depends on.
- [09:09]
Landon Mossberg
The again sort of type of sodium ion you're talking about. But there seems to be a decent like a large portion of this market's going towards like smaller applications. So think of like 12 volt battery replacement stuff, scooters, you know, smaller packs for other kind of scooter like applications.
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Shayel Khan
Because that's interesting because I would think that energy density matters a lot in a scooter type application. Maybe I'm wrong about that.
- [09:36]
Landon Mossberg
I mean I think that so you can approach LFP energy density, get really close and even some cases there's some claims of matching it with layered oxides. Now that's a higher cost than sodium because you have some sort of transition metal in it, right? Like a nickel or something like that. Copper. We're not doing that. And the layered oxides are also sort of similar to the layered oxides in lithium ion world where cyclability is not as good. The safety profile is a little tougher to design for and things like that. But they are higher energy density, higher voltages, so that's where they play.
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Shayel Khan
Right. But I guess it raises the question like why? So if you're going to put a sodium ion battery in a scooter, what is the benefit that you're seeking there? You're getting maybe the same energy density at a cost. That means that you probably aren't getting a cheaper battery or vice versa. So you're getting a cheaper battery that has lower energy density. So what is the. Do you know what the. I know this is not the application you're going after, but I'm just curious what the thinking is there.
- [10:38]
Landon Mossberg
There are some performance benefits. So sodium ion in general, like again, it's very chemistry specific, but in general you have much higher ionic conductivity, which translates to higher power. So you can get more power out of these things. Especially with layered oxide architectures, they can have really nice cold weather performance. So scooters, this can be super interesting. I think some of this is just momentum too, especially in the layered oxide side that, you know, two years ago when they were starting to sign these contracts and stuff like that, LFP was expensive and they could beat the price. Now they're probably close to the price of lfp, probably not cheaper. But you know, these are as you know, like battery projects take a while to get going. And these, you design a pack and then you have to kind of make a guess about where you're gonna end up on the price. We from very early days looked at layered oxide and then decided it's not the chemistry, at least for the current product set that we're building on the energy storage side. And that's actually, I mean, I think there are really interesting applications. Catl has been very vocal about their hybrid pack technology where they're using, I think it's a layered oxide based sodium ion, but they basically have some portion of a vehicle pack that is sodium primarily for power and for cold weather performance, and then the rest is lfp. And you're also hearing BYD push out their first sort of sodium ion packs. So I think there's a broad consensus that this is trending in the direction. And we see the same thing, I mean from the quotes and what we're hearing from the suppliers, not just cells, but also materials, we see a really low risk pathway to the crossover point on price with LFP coming somewhere between 2028 and 2030 out of China. So I think that's broadly why you see people investing here because you have these performance benefits on the layered oxide side plus a trajectory to get to that level of cost. Sodium ions, a different or energy stores, different picture, which is what we're really excited about. But that's where we see the other ones.
- [12:47]
Shayel Khan
Right, so then that leads to deployment question on the energy storage side. So for stationary energy storage, are we seeing within China deployments at, you know, at 100 megawatt scale, 10 megawatt scale. Megawatt scale. Like what do we see so far?
- [13:03]
Landon Mossberg
You saw the first announcements kind of late last year, early this year with first sort of demonstrator projects and those are in the like tens of megawatt hour scale. And we know there are multiple other in the pipeline. Some of this is driven by some policy in China that provided projects that do non lithium storage with some preference in interconnect queue speed and stuff like that or the equivalent of whatever the interconnect queue is in China. And so you're starting to see that get deployed there. There's also some safety benefits on the NFPP side which I can talk about where they're like if you're looking at deploying energy storage for fast charging at gas stations, the safety requirements really high there. So they're having an easier time getting those permitted. Interestingly I think where we see the benefit and where we're really excited about the product trajectory on our first system is really on non capex cost and we don't see a ton of focus on that yet in China. I expect there will be as we're getting traction and they're seeing what we're doing. But mostly what you're seeing right now is like either some sort of policy driven measures or things that are, that are due to like safety characteristics of the systems that they're deploying there.
- [14:20]
Shayel Khan
I should know the answer to this question, but I'll ask it to you anyway. I asked you in megawatts, you answered in megawatt hours. And it made me realize I don't actually know. Does cost scale with duration with sodium ion similar to how it does with lithium ion?
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Landon Mossberg
Yes, yeah, yeah, it's, it's. And that's, you know, that's one of the benefits of the technology in general. Right. Like there are a lot of really interesting energy storage technologies out there that, that have promise but the problem is that they're really, really like, they're very different than what is the, the mass like the, the thing that's gotten adoption which is lithium ion based systems. So if you look at like flow batteries or compressed air storage or you know, things like that, they're just like new and there's a lot of unknown unknowns about how you deploy them at mass scale. For, for sodium ion though, like it's so similar, it's similar in enough ways to lithium ion that like operators know how to use it. The risks are largely well understood. You know, you can, you can apply a Huge amount of the supply chain and scale and, and, and de risking and capital and all those structures against it. So that just means that you can get to scale much, much faster with much less risk. And so if you have a technology that actually fits better, it just means the market's, the addressable market is much immediately larger.
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Shayel Khan
Okay, so if I could step back and just characterize how you describe this sort of state of affairs today. There is manufacturing capacity that is at meaningful scale. I mean, not compared to LFP or whatever, but tens of gigawatt hours, basically all in China deployments are starting to happen. It seems more initially in the mobility world than in stationary storage, but they're initially as well, but we're very early innings. Like this is just the past year or two this is happening. Is that right?
- [16:10]
Landon Mossberg
You know, Exactly. And I think go back a year ago, you saw when we were over in China, I mean, you heard a little bit about NFPP and energy storage for sodium, but it was usually like almost everybody was doing it as a side project against layered oxide and higher energy density sodium ion. Today we're starting to see that flip. There's increasing interest in NFPP as an energy storage, like a really great technology for energy storage. And you're seeing even, I mean, even some of the other applications are getting interested into this because we can go into the benefits. But it's got a lot of system level goodness that just make, especially in energy storage, a better product that's easier to make and easier to de risk, but they probably translate to other spaces as well. I think we're early innings on sodium ion, but we're even earlier endings on the scale up of nfpp. And I think we're going to see a lot more of that soon.
- [17:14]
Shayel Khan
That sort of gets to my final question on the state of affairs before we go into a deep dive. Comparison between sodium ion and NLFP for grid storage, which is the supply chain. I mean, people are familiar with sort of the supply chain for lithium ion generally. Where do you get the lithium. Where do you get the cathode materials? Where do you do the. Where do you make CAM or p cam? How do you turn it? Where do you turn into cells and how. And packs and all that? What does that look like in the early days of sodium ion? Is it an entire, at least in the initial construct, Is it like an entirely internal China supply chain? Because I know one thing that's different is that they're the resource. The, the base resource is differentiated versus lithium ion.
- [17:58]
Landon Mossberg
Yeah, yeah. So, so I think if you take the bomb for lithium ion, you take the bomb for sodium ion. With a few small caveats. They are exactly. Well, like you can use the exact same supply chain for sodium ion that you can use for lithium ion, except for active material. So cathode active material and anode active material obviously salts for, for electrolyte. And then as you get to more specialized architectures, we see a lot of opportunity to customize stuff like separators and solvents and stuff like that, which we are doing. But in general that's like one of the really nice characteristics of this is that you have a scaled supply chain that you can already draw on for most of the bomb. Now for the active materials on the. Let's talk about cathode first. What we're doing is nfpp and that's pretty simple. It's very similar to lfp. And the lithium carbonate sort of equivalent for NFPP is sodium bicarbonate. So and you know you can make that synthetically. It's, it's like relatively cheap to make synthetically. You can also mine it from Trona reserves. The US has the world's largest natural naturally exploitable proven to reserves. We have like 92% of proven reserves, but you can also make it synthetically and a lot of countries do that. So it's really not constrained resource in the same way that like high quality lithium carbonate sources are. That's not going to be the thing that drives the drives any bottlenecks in the process. In fact, I think mostly it's about getting processing of that up. I think on that if you look at the way people make NFPP cathodes now, I think layer oxides are going to be similar in some ways, but I'm not as expert on that. NFPP can use very, very similar process steps as lithium ion cathodes. Interestingly, you can do kind of, you can adopt processes that take from LFP type cathode manufacturing or from layered oxide type cathode manufacturing on the. So you have some choices there and I think there's ongoing optimization around that. That's part of what's going to continue to drive cost optimization on the cathode side. Of course most of the processing capability for that today is in China. But I think if you talk about the scale of the challenge to bring up like non Chinese supplies of active material, it's much easier for sodium ion because you have much less incumbent scale benefit in China to compete with on that technology. So if we wait for four or five years to get into this game. We're going to be in a similar place that we are today on lfp. But today at least you're not. You're not facing such a huge economy of scale challenge. Active material's a really interesting thing too, which we can talk about as well if you're interested in that. But yeah, hard carbons on the anode active side.
- [21:05]
Energy Hub
Catalyst is brought to you by Energy Hub Energy Hub helps utilities build next generation virtual power plants that unlock reliable flexibility at every level of the grid. The Energy Hub platform takes the guesswork out of balancing energy supply and demand. It uses machine learning to control customer owned distributed energy resources like EVs, home batteries and smart thermostats to precisely shape load profiles for grid flexibility and reliability. As the industry leader, EnergyHub helps more than 80 utilities manage 1.7 million devices, more than any other edge derms on the market. Click the link in the show notes to learn more or go to energyhub.com Catalyst is brought to you by Antenna Group, the OGs of PR and marketing for climate tech. Is your brand a leader or challenger? Are you looking to win the hearts and minds of customers partners? If you're a startup investor, enterprise or innovation ecosystem that's helping drive climate's age of adoption, Antenna Group is ready to power your impact. Visit antennagroup.com to learn more.
- [22:04]
Latitude Media
Do you have questions about how potential policy changes or tariff adjustments could impact development and procurement plans? ANSA can help companies move fast, stay informed and make better procurement decisions. With in depth supplier relationships and 20 plus years of industry experience, ANSA's team can help buyers rapidly execute procurement strategies that hedge against trade and policy risk. ANSA offers the industry's most comprehensive platform for supplier product pricing and availability data, plus several gigawatts of US Inventory ready for purchase. Whether you are looking to evaluate risk exposure, move quickly on inventory, or simply gain better visibility into market options, ANSA is here to help. Learn more@go.anzarenewables.com Latitude.
- [22:51]
Shayel Khan
Okay, so what you're focused on is stationary storage using nfpp as you said. And I know that your your view is that a an appropriate comparison. Obviously the thing you need to do to win is to go take down lfp or at least take down, you know, a chunk of lfp, right to go penetrate that market substantially because that market is dominated by lfp. So I think your view is that an appropriate comparison between sodium ion and LFP for grid storage purposes is a holistic view of a bunch of different characteristics. So what I kind of want to do is run through a bunch of different characteristics for you and have you walk me through how you view the comparison between kind of sodium ion, let's say over the next couple of years, not 10 years from now and not today. But what you see is realistic in the sort of, you know, if somebody's developing a project, if they're developing a greenfield project today, what is that going to look like? And then you can tell me sort of how these, how these stack up against each other.
- [23:55]
Landon Mossberg
Yeah, happy to do. And I think maybe to reframe kind of like a little bit about how to think about peak energy. I mean, we are building our first technology on sodium ion. But I would not necessarily think of us as a sodium ion company. We're a vertically integrated energy storage company. We want to work from the cell up to the system and pick the best technology there. So it's not necessarily that we want to beat lfp. We want to just pick the right technology for this application. And if that's, we think that's in fpp, hard carbon sodium ion. Right now there are some really interesting things that might be interesting to talk about later with lfp, high temperature LFP and stuff like that that we are working on. But we're not dogmatic about LFP versus sodium ion. We just want the right technology there.
- [24:40]
Shayel Khan
Good. So that means you'll be less biased in the answers that you'll give in a moment as we compare the time. Okay, so I want to start with the sort of obvious one which is, which is capex. Talk me through capex. And how they compare to each other, I think at the cell level and then at the system level, which is always important not to forget.
- [24:58]
Landon Mossberg
Yeah, yeah. So, so, and that's where this gets really interesting. So at the cell level, it doesn't really make any sense to talk about cost per cell. Right. Because what you actually care about is how much energy is in the cell. So cost per kilowatt hour is the thing to care about. And on a right off the bat, nfpp, the primary challenge for the chemistry is that it's less energy dense than lfp. Substantially less. It's getting better, but that gap is pretty wide. And so the material inside the cell is dirt cheap. Even though it's substantially less energy dense. You're less, you make up a lot of that cost because your materials are really cheap. But we're still, today we are depending on which LFP you're comparing to the cells that we're Working on are somewhere between 15 to $30 per kilowatt hour more expensive than equivalent LFP on a cost per kilowatt hour basis. And this is like, you know, looking at a LFP cell in China, that's anywhere between like 50 to $60 per kilowatt hour. So that's kind of where it is today.
- [26:07]
Shayel Khan
So you got a premium at the cell level, which I think folks appreciate. And we can debate till the cows come home whether that premium sustains into the future or not. Sort of irrelevant for the conversation right.
- [26:19]
Landon Mossberg
Now, but like yeah, and we can see pretty clearly for the next two years because we have quotes from both from raw material suppliers and from cell suppliers that take the price is falling by about $20 per kilowatt hour over the next 2ish years. Two to three years.
- [26:35]
Shayel Khan
Okay, so your view is that that premium erodes?
- [26:38]
Landon Mossberg
Yeah, not entirely. I think we'll still be about a ten dollar per kilowatt hour more expensive as you talk like 20, 28.
- [26:43]
Shayel Khan
Okay, so then let's talk about the system level because I think there's things pushing in both directions here. Right? On one hand, your lower energy density and lower energy density effectively means more of all the other stuff. It's the same reason that people care about efficiency for SOL channels. Right. Like the less efficient you are, the only reason you really care is that your balance of system scales up more because you need more stuff. Wiring and more steel and more. Right, all that kind of stuff. But on the other hand, there's also some things in the full system that I think you can spend less on. And sodium ion, right?
- [27:13]
Landon Mossberg
Yes. Yeah, yeah. So that's.
- [27:14]
Shayel Khan
So walk me through that trade.
- [27:15]
Landon Mossberg
So like now it's probably the way to explain this is to maybe back up and tell you a little bit about our system because otherwise these traits don't really make sense. So NFPP hard carbon has a couple properties that make it really interesting for energy storage. The most important property here is that it is much more comfortable at higher temperatures than lfp. So we're talking like, like temperatures in a range between 45 degrees Celsius and 60 degrees Celsius, where the cell is pretty comfortable and shows similar degradation performance at those temperatures that LFP does at 25 degrees C. This is really important in an energy storage context and it hasn't historically gotten that much attention because mostly in things like vehicles, you don't care about this because it's easy to cool a pack. You have to do that anyway. And what they care more about is Cold weather because the car's off and then it's going to get cold. Right. So everyone's focused down there. For energy storage, though, it's really much more important at the high end of the range because managing heat becomes one of the hardest things you have to do with these technologies. You're just pushing so much, so much power in and out of the pack. That's one piece. The other is partially because of lower energy density. So that's part of this, to be clear, but partially because of chemistry benefits. The cell has much easier safety profile to design for. So it, it starts to self heat at a lower temperature than LFP and it gets, when it goes into thermal runaway, it burns colder than lfp, so much easier to prevent propagation. And then when it does start to vent, the gas that the cells vent is substantially less explosive. So there's less hydrogen in that gas than we see about 50% today. And opportunity to 50% less than LFP and opportunity percent opportunity to get that even maybe down below a threshold where you could light it with an open flame, which is a really interesting property. So yeah, sorry, go ahead.
- [29:26]
Shayel Khan
So just to boil those down then. So what you're saying is where your savings come in here at the system level are one, thermal management and two, safety. What you need to install in a lithium ion battery for safety purposes, you should be able to spend less, at least have less safety equipment embedded within the system.
- [29:45]
Landon Mossberg
Exactly, exactly that, that and then there's other ones, like slightly better rte, less swelling, things like this. They all accrue to system benefits. So that's the chemistry right. Now let me back up to the system level. How do we use that? A normal LFP system out in the wild, you basically have a bunch of batteries in a container that maybe need to sit in a desert for 20 years and operate and push enough power to power hundreds or thousands of homes every day out of this block. And as you're doing that, it generates a lot of heat. You also want to make sure that none of these cells go into thermal runaway and then like explode. And that causes a lot of issues. Right. So there's a huge amount of design and complexity go into the system. And if you actually look at what that nets out to is you get like thermal management systems where cooling is the most complex, complex and expensive part of this. So just on a capex perspective, you got to install like fans, coolers, pumps, like water cooling. In a lot of these cases, there's a ton of material, a ton of like volumetric energy density Loss because you're having to put all this stuff in there and auxiliary power to power all of this stuff is actually becomes really, really significant. So in like a hot region, these things use like you know, on the order of about 50 megawatt hour for, for given like equivalent unit or like block container of energy, LFP energy storage per, per year of energy just to, to cool them. Right? So that, that's the aux power load and that becomes actually pretty expensive, right. And then all this stuff, like if you think about pumps and fans, it's all moving, right? So the moving stuff's the stuff that's going to break. This thing has to be out in the desert for 20 years and that's what you're going to have to go maintain. You're having to change filters and do regular maintenance. If the thermal management breaks, you probably have to shut the system down. You can't use it for a while. So it hits reliability and drives a ton of cost. So you end up spending a lot on operating and maintenance and on auxiliary power for these things in addition to the CAPEX cost. Right. So, but back to the CAPEX cost, all these things plus the safety, plus some mechanical stuff you have to do drive a lot of cost and a lot of energy density loss. And so because I'll sort of our system and what I'm really excited about our system is, yeah, it's great that it's a sodium ion system. It's the largest sodium ion system deployed to the grid. We actually are the first three and a half megawatt hour unit of capacity is going into the grid right now in Denver. It's going to be the largest outside of China. All that's exciting, but what I'm really excited about is that it's the first completely passive thermal management system on the cooling side ever deployed anywhere in the world at grid scale. This means like no moving parts at all through the whole system. And we dramatically simplified the aux power system because of this. So we have no external aux power requirements. We've managed to depopulate a ton of systems. So a lot of our team come from Tesla and SpaceX. So there's this engineering philosophy in there where everyone always says best part is no part. And so we've taken that to heart, try to depopulate a lot of the subsystems that drive cost complexity and energy density loss here. And what that lets us do is actually get to a balance of system cost despite a serious energy density penalty that is already today pretty much on par with where LFP Systems are. And that's massive because we're a three and a half.
- [33:35]
Shayel Khan
Sorry, is that the balance of systems cost or is that the total installed cost?
- [33:38]
Landon Mossberg
Total installed cost is still a little bit higher, primarily because we have that.
- [33:41]
Shayel Khan
Sell because you have this penalty. Okay. So the way to think about it is you've got. Right, so you've got some portion. That's the sell cost, you've got a premium. There's, you've got the rest of it. That's balanced system. Despite the energy penalty or, sorry, the energy density penalty which should drive higher balanced system costs. You're saying you can get to basically parity energy?
- [33:57]
Landon Mossberg
Exactly, yeah, pretty much there. Right. Again, really depends on the system you're talking about and all that stuff.
- [34:03]
Shayel Khan
But we're working well and it's idiosyncratic based on the labor rates in the region and all that. But yeah, high level.
- [34:08]
Landon Mossberg
Exactly.
- [34:08]
Shayel Khan
I understand. So that's CapEx.
- [34:11]
Landon Mossberg
CapEx, yeah. So we end up being today again, all of this is on scale curves and stuff like that. But if you look at equivalence conditions, we're within 20 to $30 per kilowatt hour of a good LFP system from China today on a cost basis, which is a massive achievement given the energy density penalty. Then that's trending as I said, as those cell costs come down, we'll be within probably $10 per kilow 20, 28. And that is exciting because, you know, it's. Yeah, we're still more. If that's where we stopped, we're like, why do we exist? There's no reason to buy a sodium ion system in the world. But I think the reason that it's exciting is because you go to these, the O and M cost portion of this and that's where it really, really gets interesting.
- [35:06]
Shayel Khan
Yeah, that was going to be my next step. So, you know, there's the cell level, the system total CAPEX level and then there's the lifetime cost of ownership level. You've already mentioned sort of two pieces here, which is OPEX in general, for example, the electricity load driven by the aux power, things like that, and then lifetime and degradation. So talk to me about the OPEX and lifetime portion.
- [35:30]
Landon Mossberg
Yeah, what's interesting about this, and it was super surprising to me when I got into this space and we started the company because at the time and still today, I think everybody's focused on the DC block cost. Right? That's what like you're trying to get energy density into that. Everyone's going higher energy density just trying to drive Those costs down on the CAPEX level. And because intuitively, it seems like that would make sense. It's a battery. How much operating cost should there even be? But as you pull these numbers apart, especially today, because the cost for the hardware has come down so much over the last three, four years, today the cost of the hardware is probably only about a third of the total project cost. O and M. So all operating and maintenance, including degradation, maintenance, AUX power, RTE losses, that is about another third of the total cost, NPV'd at a 10% discount. If you don't take an NPV of it, it's massive. It's by far the biggest thing. And then the other third is installation commissioning, which is still quite, quite high. But while the hardware cost has been massively focused since the beginning of the ESS industry, those other two buckets really haven't gotten much focus. They haven't moved too much. And what we found is that with these systems that we've talked about, these improvements that we've been able to build into this first passive system, we've been able to reduce those by really, really material amounts. So, like, just on aux power, we're 50 times, a little bit more than 50 times more efficient. We use 50 times less power than an equivalent LFP system. And then on maintenance, we're like, substantially less maintenance. Something like 90 or like almost 90% of all the components that require regular maintenance or break in a system we've just completely removed. By the way, those are also the things that drive a lot of the safety incidents. So if you look at most causes of fires in ess, which are still fairly rare, but when they happen, they're usually caused by some thermal management system or some auxiliary system that's there. We don't have those. So it's a safety system. By that, if you add all that stuff together, we're at about in a hot region. Like, let's take like Miami or Phoenix. We're at about A$75 per kilowatt hour NPV benefit on a TCO basis versus an equivalent LFP system NPV benefit on a TCO basis.
- [38:06]
Shayel Khan
Okay, I understand if you're doing like, a levelized cost of storage type of calculation. What about lifetime? What about cycle life? Yeah, and also, how certain can we be about cycle life with sodium ion, given how new it is?
- [38:20]
Landon Mossberg
Cycle life is not. Actually cycle life is pretty good. We are getting close to. I think we're at, like, very close to 10,000 cycles now on these cells. The one that I think also for LFP by the way, I think everybody should worry about this is calendar life, right? Where you're like these things have been on test for over a year now in calendar conditions and we're really stressing them doing a lot of accelerated life testing. But these are in cases, 20 year systems. And also for LFP, this industry is not 20 years old. So there's a lot of work you have to do to try to estimate that. The good news is that the degradation mechanisms in this chemistry are simpler than they're fairly equivalent to lfp, there's just less of them. So there's multiple different mechanisms of degradation. In all batteries in nfp hard carbon we have less. For instance, we don't have any graphite, so there's no graphite exfoliation, which is a major issue in LFP chemistries. But, but we both have SEI dissolution and the way that that happens seems to be very, very similar in both these architectures. So we feel like the risk there of some unknown unknowns popping up is substantially less than if you were going to something that was really novel and new. To answer your question about where the data is showing us that we're going to get to this chemistry is just incredibly stable. So you have very, very little mechanical stress. You don't have, you have almost no iron dissolution in the cathode, which is a problem in LFP chemistries. You do have SEI dissolution, but that is a very well understood problem. And it seems like most of the strategies used to stabilize SEI for LFP work also for in fpp. So we've seen massive improvements in things like first cycle efficiency loss and overall degradation on SEI over the last year and that's continued to get better. The punchline of this is that the cyclability data that we see is substantially better. So compared to LFP, if you take two cells just cycling equivalent at 45 degrees C. I'm just looking at the data right here that we have after we got two cells equivalent cells, same size on test in our lab right now LFP is at about 2,600 cycles and it's at 80% state of health. NFPP is almost 3,000 cycles, same cell, and we're at 94.5% and like I said, we have seen almost 10,000 cycles still trending way above 80% state of health on those things. They just don't seem to really want to move down. So cyclability is one of the principal reasons that this thing is better. And some of our OPEX savings come from reduced augmentation. But actually what we've done is we've tried to design the system to push to sort of like not drive as much benefit in terms of augmentation because the way customers think about augmentation, everyone has a little bit different of a strategy around that. And some customers really value less augmentation, others don't. So we see more value in trying to be better than LFP in degradation, but not way, way better. Instead we're sort of of taking the system and designing it so that it uses less hawk power, needs less cooling, has less maintenance and that sort of stuff. So we pushed the cells harder and still had better degradation performance. But it could even be better if we wanted to cool them the same way for instance, that LFP does.
- [42:00]
Shayel Khan
All right, so stepping back I guess one last time here, I want to talk briefly about geography of manufacturing. I think in LFP world we have been very China dominant at the cell level. That's what a big capex investment is on the cell. And now we're starting to see LFP manufacturing stood up in the US at least to some extent. Right. We've got LG and Panasonic, Tesla and so on. Come in. What do you think happens with sodium ion and what is your plan? Right. Right now you're buying cells from China because that's where they're produced. Are you eventually going to have to stand up a cell line in assuming you stick with sodium ion in the US and what's that going to look like?
- [42:42]
Landon Mossberg
We're definitely going to build cell manufacturing here in the States. We're also going to continue to work with partners all over the world. Obviously we have some good partners in China Right now We're in the process of basically getting the plan of the company is kind of like a multi phase plan where the first phase is get the technology in the hand of customers, get them comfortable with the technology so that they'll give us off takes to make enough a good bankability case to build the cell factory. And we've done it like I think we're at the tail end of that part right now. So we'll be coming out fairly soon with some pretty big customer announcements around this. But we see tons of traction based on these OPEX benefits and better reliability, better safety characteristics that make this thing really great for all existing kind of IPP applications, but also really attractive for data centers who really care about reliability, stuff like that. And on the back of that we have the bank ability to set up the factories here and invest in the supply chain to get this going, but you can't do that. You've talked a lot on prior podcasts about Foak financing and all that stuff. It's the same here. Even though this cell technology is manufactured in a materially similar way to lfp, it still takes some convincing to the market to show that it works and it's real. And that's what we're in the business of doing now. But I think your general challenge in setting up a competitive, long term, competitive sodium ion based supply chain is probably less like we talked a little bit before than LFP or any lithium ion, just because you're competing with a much less scaled supply chain, at least on active material. And I think there are some properties of sodium ion that give you more flexibility in different ways that haven't been fully explored. On lithium ion for instance, like the plating mechanism there maybe like shows a lot of promise for anode lists or self forming anode or whatever you want to call it, type cell architectures where that's been really challenging for lithium ion. It's not going to be easy for sodium ion, but looks like it might be easier. That could unlock some really interesting products that might be great for automotive and stuff like that and really changes your manufacturing process. Same thing for things like dry coating larger cell formats. So I think it just like, you know the nice thing about sodium ion is it lets you go ahead and get started at scale with a product that is really competitive out the gate in the right applications on today. Right. You don't have to be in the lab for 10 years, but then it has the promise where you can take it in new directions and kind of disrupt the the incumbents potentially because the technology allows you to do things down the road that that might not be possible with lithium ion.
- [45:34]
Shayel Khan
All right, Landon, this was super illuminating, really interesting. Excited to see some sodium ion systems out in the wild that you guys are going to put out there. But thank you so much for the time.
- [45:44]
Landon Mossberg
Of course. Great talking to you show.
- [45:47]
Shayel Khan
Landon Mossberg is the CEO and co founder of Peak Energy. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf Mixing in theme song by Sean Marquand. Stephen Lacy is our executive editor. I'm Shayl Khan and this is Catalyst.