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Ep326: How Linear Generators Empower Businesses
00:20:46
Shannon Miller, CEO of Mainspring Energy, describes the company’s modular linear generator technology and discusses its potential uses and cost considerations for various energy customers.
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- [00:00]
A
Foreign.
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Fulbright podcast. Today we're recording with Shannon Miller, CEO of MainSpring Energy. Mainspring is a distributed energy company using an innovative technology. And Shannon joins us today to explain a little bit more about it. Thanks for recording with us today.
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B
Oh, thanks for having me.
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A
All right, so first, I was very vague there because I know you have something that's called linear generators, but I'm not 100% clear what that is. So maybe to educate me and the audience, what is a linear generator?
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B
Absolutely. Well, maybe I can start by telling you what Mainspring does. So Mainspring is tackling the urgent problems around the need for more power. So we build a new type of power generation technology called the linear generator. And essentially we've applied advances in power electronics and software to reinvent the generator from the ground up. What's unique about the technology is that first of all, it's extremely low emissions, and second, its level of flexibility. It's a very modular system. It's very fuel flexible. It's very dispatchable, which means it can ramp up and down, turn on and off. And it means we can be used for a variety of use cases, everything from commercial and industrial applications to utilities and data centers. We've been operating at customer sites now for about five years, and we've expanded beyond our initial markets of commercial and industrial companies into utilities and data centers. And just to answer your part more directly about the linear generator, it essentially uses a reaction of fuel and air to drive two large tubes with magnets on them through a set of coils. And that motion is linear, which is why we call it the linear generator. But that motion of pushing magnets through coils produces electricity. And because we can control the position of those moving parts, the tubes, really precisely with software, and that's through the power electronics, we can control the reaction and the performance of the system really, really effectively. And so all of the capabilities that I talked about earlier come from that software and power electronics integration.
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A
So now that you've piqued our interest with this incredible technology that sounds like it's almost too good to be true here, let me ask you a few more specific question.
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How, from what I saw when I looked up at, looked at your website, it looks to me like a modular type design. Do you have a specific size that you just build over and over again, the exact same size and then aggregate them together? If people want 6 megawatts versus 2 megawatts, is that the idea or how does it work?
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B
That's exactly right. So we have a 250 kilowatt base system. That the nice thing about that is that you can build them, like you said, in a factory and ship them to the customer and then hook them up and get running very, very quickly. So the installation and commissioning is very fast compared to a technology that you have to build on site.
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A
And does the. Is are there major economies of scale then or are you really. Because you're able to build it off site, you benefit from the ability to be able to do maybe smaller projects that other people can't do because they need to customize it and you don't. But that if you're doing 1 versus 10, the cost is not 6. It's, you know, 9.1 or whatever. You know, it's not. There's not that much.
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B
Yeah, exactly. We can Right. Size the technology to the customer's needs. So if a customer says, Well, I need five megawatts this year, but maybe 10 or 15 or even 100 over the next five to 10 years, they have that optionality to build what they need today and then expand later. So we can really. Right. Size the project for what the customer needs today and give optionality to expand in the future.
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A
And you mentioned that you.
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Are not wed to a specific fuel. What type of fuels? You know, the more you talk about it, the more it sounds like, you know, like CHP projects that I've seen that are small CHPs that are module or a fuel cell. How does this compare to that? And what are your. What types of fuels are you using?
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B
Yeah, so customers use typically what's available to them. So a lot of our projects today are natural gas, RNG or biogas. But most of our customers are buying our technology because of the fuel flexibility and the ability to switch to different fuels, both from a reliability perspective, but also from a sustainability or carbon perspective. And so we, you know, we typically run, we can run on things like hydrogen, also things like ammonia. And the evolution of that is going to really depend on the geography and the economics for what customers have have nearby.
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A
And how do you get customer comfortable, what their cost is? I can understand the construction costs seem like it's pretty easy to get people comfortable because you're building something that you built many times before or off site. So it's very similar. But when you're talking about their operating costs, how do they get comfortable? Given that you're talking about different fuels and in different applications and probably, you know, whether it's used for backup power, baseload power peaking, you know, how. How do you get people Comfortable what it's going to actually cost to use the power that you're linear generator is producing.
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B
Yeah, we can, we can help the customer model pretty effectively what their costs are going to look like. So they have pretty good visibility into what their fuel costs are going to, how they're going to evolve. And they can also hedge their fuel if that's something that they care a lot about. And then, and many of our customers do that, they also like the fuel flexibility because it builds in some robustness to changes in fuel costs that are unexpected. And so if fuel costs change dramatically in a way that is unanticipated, they have that optionality to look at different, different fuels over time. And when you're looking at power assets, they're often 10, 15, 20 year assets and so, or, or even longer. And so having that flexibility builds in a lot more confidence for customers. For exactly the case that you mentioned.
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A
And how would the cost of implementing one of your generators compare with, let's say either putting in a chp, a fuel cell, or even on site energy storage?
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B
Yeah. So compared to other generation technologies, we're typically going to have a lower total cost of ownership and total cost of ownership is a few different components. There's the capital cost of installing the systems, then there's also the operating costs, which really comes down to the efficiency because higher efficiency is going to mean lower fuel costs. And then you also have often a service cost that goes along with that. And so typically we're going to have lower total cost of ownership. But again, we look at each customer site and help them really understand their use case, how often they're running and what their installation costs are going to look like so that they have a full grasp of that.
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A
So what is kind of the, the low hanging fruit or the ideal applications for something like this? Because you're, you know, you're talking about so many different variables. It seems to me that there must be some that are better than others. You know, you, you're talking about hydrogen, you're talking about using hydrogen, you're talking about using natural gas, you're talking about 250 kilowatts. And then you're talking about, you know, something much bigger, you know, 5, 10 megawatts as, as they scale up for where, where, like for someone's in the audience listening. What, what, where do you find this to have the highest value application at this point?
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B
Yeah, so we started the company focused on commercial and industrial customers and to your point, Those are typically 1 to 15 megawatt projects. So on the smaller side, and that's really because that's what the customer needs. So these are manufacturing customers, logistics companies with a lot of automation at their facilities. It's EV charging, it's cold storage. So the applications are pretty wide. But the use case for the customer is always the same. It's they need more power typically than what the when the utility can give them. They want to save money on their electricity and they want to add reliability to their site. They want on site generation because it improves the reliability and resilience of their facility. So that's where we started and we've got a lot of customers in that category. We're now doing our first data center and utility projects and those are typically in the 10 to 100 megawatt range. So they're larger scale and that's where the modularity and flexibility of the system really allows us to tackle this broad market. But again, the use case and the value for the customer actually isn't changed. Those customers want power faster. They can't get enough from their utilities. They want lower cost and they want higher reliability. And so again, the same use case and the same value to the customer, just larger sizes.
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A
So in terms of price and where this works the best, is it for somebody who, you know, like cold storage, where it's critical that they have access to power all the time, or is it somebody like who is in an area where the price of power is expensive and they can basically self generate at a better price? Or you know, I'm sure it's probably both, but it's both.
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B
Exactly. It's both. Yeah, this is exactly how we target, yeah, we target customers that are in regions where the electricity costs are high or where there's constraints where they can't get enough, where the utility is being inundated by data centers and they need more power and they can't get it fast enough. And then also where they want reliability because they have a manufacturing facility, they have EV charging, that's critical infrastructure. They've got a logistics facility that can't go down and they want to have resiliency in addition to lower costs and more power. So it's exactly right. We look for all three of those things when we're targeting customers.
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A
And in terms of financing, sounds like some of these kind of customers, especially if they're smaller, might just buy them from you. But for now that if you're getting into the data center and you're starting to talk 10 to 100 megawatts, how are you? Or if you're providing it kind of stapled or your customers, are you finding their ability to raise third party financing for these types of projects? And also are the projects eligible for the investment tax credit?
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B
Yeah. So to answer your last question first, we do, we do qualify for the investment tax credit and that's through 2035. So that's helpful for our customers who are, you know, looking, looking for cost savings. We do have a number, we are working with a number of different financing partners. We have a partnership with Nextera that's been very helpful. First, that was really focused on commercial and industrial applications. But we're now starting to expand beyond and look at additional financing for different customers, for data centers, for utilities offering different types of products, lease products, shorter term leases versus a traditional 15 year energy service agreement. So lots of different flavors that are out there now with a lot of different types of financiers. And so you're absolutely right. We're looking at a number of those options with our customers. And some of them bring their own cash, some of them bring their own financing and some need help. And that's where we can bring in a third party to help.
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A
So you do have a model where either you or your partner would retain ownership of the generator itself and just sell the energy, just sign the energy service agreement or whatever to the host.
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B
Yeah, that's typically through a partner today. But, but yeah, we do have that option for customers. So.
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A
Okay, so in terms of. It's interesting, it seems sound. So is it fair to say that your linear generator is really a backup, not a backup? Is it really a competitor then to what other people have been using for backup power, whether it's diesel or chp. And it's also a competitor to either battery storage or other methods that are used, maybe even other behind the meter kind of applications that people are using to help them in areas where the power costs are high and where there's transmission constraints, those kind of applications, or where do you see the future for your product? I guess in the next year or two?
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B
Yeah, maybe. I can give you a couple of examples of projects that might help clarify where, where we are used most effectively because oftentimes we can be used as part of a microgrid. And so we're integrating, we can be integrating with other technologies. So you mentioned Bess. We don't see ourselves really as a competitor to Bess, but really they're two different tools that customers can use. So we have a microgrid in Southern California with Prologis where we have their customer Maersk bought 96 EV trucks and they couldn't charge the trucks. There was not enough grid power and the trucks were going to replace diesel trucks. So it was a really big win from noise, from environment, from an emissions standpoint. And so prologis built a microgrid for them in less than a year using mainspring, linear generators and BESS. And the reason the BESS were helpful is because the EVs all sort of come back at the same time and need to charge. And so there's a big spike in power and having the best there really helps manage that spike in power. But if the trucks were sort of continuously charging all day, 24, 7, not having that spike, then you probably wouldn't need the best. And so you really look at the customer site and the load requirements for their facility and then decide if it makes sense to include some of these other technologies. So there's other examples where we're doing cold storage facilities with solar. And in those cases the afternoons are hot, the acs are running, the cold storage is running, can use a lot of the solar, don't necessarily need to store it. And then the linear generators run at night or when it's really cloudy. And so in those cases you don't necessarily need BESS to support the system. You can use solar and mainspring as the microgrid.
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A
The controls, are they just done remotely or does each customer have the basically the dispatch capability for the system?
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B
Typically in the commercial and industrial applications you've got a building management system that is dispatching that automatically dispatches based on the use case needs for the building.
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A
It's interesting. So to me it just sounds like another tool to manage load and other problems that people have that are big energy consumers and kind of nice application given the flexibility on the fuel and the ability to scale it up.
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B
Yeah, I think that's right. It's. And just the other piece is just to remember is that you know, higher efficiencies, lower emissions and the fuel flexibility is what gives, gives people that additional value and lower costs.
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A
And is there similar like to a fuel cell? Are there, is there any kind of catalyst or something or proprietary technology that is here that. Because to me otherwise what you're describing, it sounds like there's, you know, no reason that this either wouldn't be competitive with or replace a lot of the existing technologies that are out there.
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B
Yeah, there's a lot of proprietary technology in terms of our development, but there isn't a, you know, a, there's no special catalyst in terms of how the tech tech works itself, like I said, we have these tube with magnets that goes through a set of coils. It's a simple and elegant design. The innovation is really in the overall architecture of the system and then in the software and the controls around how we operate it. And so that really is where a lot of our IP is and a lot of the development work that we've done to build it.
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A
And so just in wrapping up, where do you go from here? Do you keep working on these 250kW systems or as the technology becomes more commercialized and common, you start doing megawatt system. I'm assuming that if you could ship a megawatt container with this as opposed to 250, you might be able to bring the cost down a little bit and so eventually make more and more of the market accessible to you.
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B
Yeah, we do have a very deep technical product roadmap. As you can imagine. With a new technology, there's lots of room for improvement and driving scale, lowering costs and continuing to drive efficiencies across the entire system. So we are absolutely looking at improvements and lowering costs for the system.
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I would mention one of the benefits of the modularity is that you do get really high availability by having a small amount of overbuild. And so it's counterintuitive because bigger is always better in power. But in many ways, by getting very high efficiencies and low emissions in a small module, we're actually able to achieve the same benefits of those larger systems. But in a factory built, very repeatable and more easily installed modular scalable design. And so in addition to making the installations easier.
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And the costs lower, because you don't have all that install costs, you also have very low overbuild to get high availability. So if you had just imagine if you had a 50 megawatt turbine and you had any failure inside that turbine, the whole thing comes down, you have no power. If you have 50 megawatts of linear generators and you have any one module shut down, you know, the probability that you have 48 megawatts at any one time is very high. And so it's a much more reliable and available system than a much larger individual single module. And so one of the benefits of that is that it gives both utilities and data centers with these larger installation footprints higher availability with that smaller module size. So there is a real benefit to that. And even as we go larger will still keep that modular nature of the system because of the benefits of that.
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A
So in conclusion, I guess, where do you see the company going here over the next, let's say, two years? What's your plan?
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B
Yeah, so we're doing, we're doing a number of, you know, looking at larger utility projects. So we have a 35 megawatt project we're looking at with a utility that is also managing data center load increases, needs, capacity. They wanted low emissions, they wanted fuel flexibility. So we see a lot of those types of projects coming online in the next few years and really helping to enable both utilities, data centers and commercial and industrial customers manage this need to grow their businesses by getting rid of this constraint around power, but not sacrificing emissions, not sacrificing local air quality in the process.
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A
All right. I mean, it sounds great. Good luck.
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B
Thank you. Really enjoyed the opportunity to talk about this.
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A
You can find us online at www.projectfinance.law or send us an email at currentsordonrosefullbright.com Please rate, review and subscribe on Apple Podcasts, Spotify or your preferred podcast app. Our show today was produced by Emily Rogers. Stay ahead of the Currents.