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Ep345: Funding the Next Generation of Energy Technologies
00:21:00
Brandon Owens, vice president of innovation and research at NYSERDA, discusses how New York is supporting energy innovation through grants and research programs focused on grid modernization, buildings, energy storage and emerging technologies.
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- [00:00]
A
Foreign. Welcome to Currents, the Norton Rose Fulbright podcast. Today we're recording with Brandon Owens, who's Vice President of Innovation and research at NYSERDA. He joins us today to discuss NYSERDA's role in energy innovation in New York State. Brandon, thanks for recording with us today.
- [00:18]
B
Thank you. It's a pleasure to be here.
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A
All right, so one, especially for people who are outside of New York, they may not realize what NYSERDA does and in particular, particular what NYSERDA does to facilitate energy innovation. So maybe give us, you know, your, your 30 second blurb that you gotta give when you meet people at a cocktail party, tell us what you do.
- [00:41]
B
Sure, yeah. I mean, NYSERDA is fantastic. Most people know what a state energy office is. NYSERDA is New York State Energy Office, but it's, it's state energy office plus where the New York State Energy Research and Development Authority were actually founded 51 years ago. We had our 50th celebration last year. It's a fantastic organization and innovation and research, it's in our name, it's part of what we do. It's a cornerstone of the organization. And so we make strategic investment across a range of energy innovation technologies in an effort to move them into market to commercialize them, to help reduce costs, but also facilitate New York's energy transition and transformation. There's a lot going on in the state.
- [01:32]
A
And when you're saying you're investing in energy innovation, is that in the form of a grant? Is that in the form of a loan? Is that in the form of an equity investment?
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B
Yeah, it's not equity, but it's grants primarily. But we do everything through competitive solicitation. And then we sort of select the best organizations that we think are going to help us develop the technology to solve specific problems. Then we provide grants or other direct funding to those organizations that are tied to specific technology research milestones. And then we manage that sort of whole portfolio of projects.
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A
And is there a typical size or any limitation in terms of how small and more important how big the grants can be?
- [02:19]
B
I mean, not really. When we release a solicitation, we'll put a, you know, sort of a cap on the total funds available. Could be 5, 10, could be 20 million. And then we'll select the winning projects within that funding amount. Whatever our budget is, we have quite a bit of funding available for the innovation program. And so specific projects really don't have any hard caps.
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A
And what kind of connection to New York State does the project have to have?
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B
All the benefits, have to Flow in state to New Yorkers to reduce their energy costs, to help transition the New York energy system, but also kind of to create in state economic development benefits. You know, the entire effort here is to provide economic and energy benefits and environmental benefits to people in New York.
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A
So maybe you can give an example of some of the areas that you're particularly interested in supporting right now.
- [03:22]
B
Well, I manage a pretty broad portfolio of R and D efforts. So we have a group that's focused on grid modernization. So these are next generation grid technologies to make the grid kind of more flexible and able to accommodate intermittent resources, things like that. We have an end use innovations group and that's their focus on advanced building technologies, but increasingly on data centers and AI. We have an energy storage program. So here we're talking about long duration energy storage, but also the conventional short duration energy storage, lithium ion and convent alternative chemistries. We have a zero emissions power generation group. We focus on low carbon fuels and other alternative fuels. And so we're really kind of covering the waterfront, you know, everything that impacts the New York energy system, we're conducting research on it.
- [04:15]
A
So let's talk in specifics on some of these. So first, first for the grid, to make the grid more flexible for intermittent resources. And I'm assuming maybe there's line loss things you can do, and probably there's all kinds of technologies that you can do. What's what, what do you see on the horizon? What's potentially feasible here over the next few years? What are the types of projects that you see could make things more efficient and allow for decarbonization in New York? And of course, I'm sure the goal is once it's in New York, for it to be applied across the US and the rest of the world, right?
- [04:53]
B
Yeah, I mean, the grid is really kind of the centerpiece of everything, isn't it? It's kind of the nervous and information system of all of our energy networks. So we spend a lot of time on grid technologies. And here in New York, as in other places, you've got a lot of pressure because of the aging infrastructure, increasing demand and the rise of variable technologies such as renewable energies. So the, the traditional grid is challenged to maintain two way power flows, real time generation and deal with decentralized generation and be reliable and resilient. So it needs modernization and that means advanced technologies, smarter controls, flexible storage options. And so we've really focused a lot over the last several years in looking forward on grid technologies. So what we're trying to do is deploy what we call grid enhancing technologies to get more out of the existing infrastructure, but also develop new technologies that provide better data flow, more flexibility and more capacity. So we're helping to defer additional large capital investments in the grid.
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A
How many states have something comparable to nyserda?
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B
There are very few states that have the level of innovation investment that NYSERDA has. So, you know, California does energy innovation investment. Mass CEC also has some, but New York's right up there. And that's why I started off the discussion talking about the energy office. Plus, the Governor and the State of New York have made a large, sustained commitment to advancing energy innovation in the state of New York.
- [06:39]
A
All right, so I got you a little bit off topic there. How about building efficiency? I know I've had several podcast guests that have worked on making buildings, particularly in Manhattan, a lot more efficient than you see when you're walking around on the streets. All these, you know, LEDs, LED certification and stuff like that. What, what has NYSERDA done so far and where do you see that going?
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B
Yeah, I mean, buildings is another great topic and there's a need for innovation there. You know, if you look at buildings in New York, they actually account for just about 60% of total primary energy consumption. And about 70% of New York's buildings were built before modern energy codes, which means there's a lot of inefficient efficiency and room for improvement. About a third of New York's statewide carbon emissions are coming from buildings. So we've spent a lot of time focusing on buildings. Some of the things we've funded and will continue to fund is clean heating, cooling solutions, low global warming potential refrigerants, low embodied carbon materials, high performance building envelopes, thermostat storage, and also intelligent buildings is an area that we continue to move into and we've had a lot of success in that area. But there's more work to be done.
- [07:59]
A
How about on batteries? There have been talk for several years about long duration batteries, and batteries certainly have penetrated the market and they're growing very rapidly across the country. But I still see basically the ones that, that I'm working on at least are lithium ion and usually not more than four hour duration. And there have been all kinds of talk about longer duration, different technologies, and I'm assuming that to get to where NYSERDA wants us to go, that's, that's what you're hoping for. What do you guys see in terms of proposals that come to you and what types of programs specifically are you looking to support yeah, and so we
- [08:44]
B
have over the last several years funded quite a few efforts on long duration energy storage technologies. And you know, long duration energy storage is kind of a key piece of the puzzle for the New York grid and for a lot of other grids. As they transition and you start adding more intermittent or variable resources to the system, then those gaps will, whether diurnal, monthly, seasonal, are going to start to need to be filled by the long duration energy storage. So the short duration energy storage solutions, which are becoming cost effective today, aren't going to be able to solve some of the problems we expect to run into as we transition the grid and ramp up variable resources. So we've spent a lot of time thinking about this. We've funded a variety of solutions. I would say that there's no kind of silver bullet solution here, it just depends on the use case. But we've looked at, looked into and funded flow batteries, iron air solutions. Of course, pump storage is the traditional technology. We think we've got about 20 gigawatts of pump storage here in New York and there's room for improvement there. We've also looked into compressed air, liquid air hydrogen is a long duration energy storage option. And then there's some other emerging hybrid solutions. So long lots going on, but a real important piece of the puzzle in terms of really enabling the energy transformation
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A
as we look ahead beyond pump storage, are there, are any of these other technologies really providing long duration storage in New York today?
- [10:23]
B
No, we have some pilot projects, but we are still working on moving these technologies to commercialization. But our expectation is in the next three to five years we're going to see some of these technologies commercialized and start to be more economically attractive. And so we're getting, we're getting there in terms of these technologies. But no, it's really pump storage. Right.
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A
Right now how do you guys view, just generally talking about any technology, view your role relative to like a VC investor. Right, because you're, you're doing a lot of stuff probably that's fairly high risk and if it was that easy to get funding, either you wouldn't do it or they wouldn't come to you. It seems like a lot of it's investing in stuff that you need some technical expertise and you really need to make a judgment as to whether this is a viable path forward, both knowing the market and knowing the technology.
- [11:19]
B
Yeah, I mean we're earlier than some of the traditional investors, but I see our job as creating optionality for the state and de risking technologies so that they can reach commercialization and trying to identify those technologies where we think there's some opportunity that can eventually be commercialized. We spend a lot of our time focused on cost compression. You know, how do you take a technology and advance it in a way that's going to sort of reduce the unit costs and reduce costs as you scale up manufacturing, et cetera. We try to position these technologies so that they are something that can be commercialized and attractive to investors.
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A
Are you usually making your grant alongside a very early round of equity investment or is this usually coming in after a couple rounds of investment have already occurred?
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B
No, it's prior to equity investment. The grantees are often leveraging other funding sources, whether it's public or private, but they're R and D related funding sources that are, that are earlier, earlier in the process. Well, it's one of the nice things about this program from the State of New York's perspective is we have something like a 15 to 1 leverage ratio. So when we put funds and invest in any of these projects creates confidence for other investors to come in and support the technology as well.
- [12:50]
A
You didn't mention community Solar, but I think NYSERDA has been at the forefront of kind of regularizing making community solar kind of household product that is acceptable both for equity and debt finance. I don't know what you can say about community Solar and what you're trying to do there, if anything. Or maybe you guys feel like that's already a success story and you don't need to say anything further.
- [13:19]
B
Yeah, well, the reason I'm not mentioning it is we're just focused on sort of our innovation program here which is a little more up upstream. Whereas community solar is really part of our deployment activities. Technology that we continue to be very excited about. And NYSERDA was really a pioneer helping to move that technology into the marketplace and help that technology get developed, not just here in New York, but across, across the country. So yeah, that's a, that's a great success story of what NYSERDA can do when we focus on deploying some of these technologies.
- [13:55]
A
And you mentioned low carbon fuels. I mean my experience with them are largely either through corn based ethanol or biodiesel from soy or fats or things like that. But I'm sure that's not what you're focused on. You're probably looking at cellulosic or something, something else. You know, what, what type of feedstocks are you looking for and what are you guys trying to do on the low carbon fuels forefront?
- [14:22]
B
Yeah, I mean again, fuels is a part of what we're doing. We're looking across a spectrum of fuels, trying to find the right use case for the technologies. Whether it's industrial application or heavy duty transportation, some of these other sort of harder to decarbonize sectors. We think that alternative fuels has a big role role. But some of the stuff that we funded is, you know, we have a clean hydrogen program. We are looking into waste synthetic fuels. We also have a program around gas system innovation, so upgrading and making the existing fuel network in the state more efficient and lower cost. So fuels are a big part of the picture. But yeah, we are funding some more of the upstream stuff. Again, I mentioned optionality to bring down the cost cost of the technology and to create optionality for the state to implement alternative fuels in the use cases where they make the most sense.
- [15:26]
A
What type of feedstocks are you guys looking at again?
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B
Across the board, but more recently we've been looking at waste streams and how do we take whether it's wood waste or whatever, but how do we take that stuff and convert it to useful alternative fuels?
- [15:45]
A
How about you didn't mention this and maybe because you're not doing it, but what about like electric vehicles? You know, I think one of the other big CO2 emitters is cars here in New York. Is that something that you guys work on or. That's so far not one of the core areas.
- [16:02]
B
We don't do a lot of R and D around EVs, but we certainly are advancing the electrification of all energy systems, whether that's transportation or buildings. And the idea there is that as you and industry, as you electrify these other sectors, then you can work on cleaning up your power generation technology and then decarbonize that way. So the push towards electrification, including EVs is an important part of what we're focused on. But in terms of the innovation program, we spend less time doing innovation and R and D around EVs and chargers and things like that.
- [16:45]
A
So so far you've mentioned the areas that you're active in. If you could wave your magic wand and have somebody show up at, at your offices with proposal for some different areas, you know, could be more than one that are needed for energy innovation based on the state New York State's priorities. What areas you think are lacking right now and that you're hoping to have the chance to invest in going forward over the next couple years?
- [17:16]
B
Yeah, I mean there's a few areas that we're starting to look into and move into that are really sort of driven by what's happening kind of in the market. The one is data centers. There's a lot of increased demand and new load because of data centers even here in New York. And that's creating some unique challenges at transmission, but particularly on the distribution system. And so we're starting to look into some technologies that can help create flexibility, but also reduce the energy and water requirements of data centers. And so that's something we're looking into. Artificial intelligence is another area. There are a lot of intersections between artificial intelligence and energy. And unlike on the demand side when you talk about data centers, artificial intelligence can actually be a solution on the supply side by helping your power system work more efficiently and having sort of buildings intelligence and intelligence and ed use to integrate into the system to make energy use decarbonized, less expensive and more efficient. So exactly what role AI is going to play and what exactly we're going to do in that area remains to be seen. We need to continue to focus on making sure that we're reducing the costs and we're doing investment that's appropriate for the State of New York to be involved in. So that's the AI piece. There's another piece which is really not just introducing new technologies into the energy system to transition, but converting existing technologies and retrofitting existing infrastructure to the extent possible. And carbon capture and storage certainly fits in that bucket. So that's something we continue to look into, but we're going to look into a little more moving forward. So those are some of the areas that we're kind of frontier areas that we're moving into.
- [19:16]
A
So if someone in the audience either has one of the tech, has a technology that's along the lines of what you already raised, or one of the ones that you're looking for, or even better, something that you didn't know was out there but needs support and you think is a good idea. How do they get a hold of you? How do they get an application for financing or funding from NYSERDA?
- [19:39]
B
Sure. Our website, NYSERDA.NY.gov has an innovation section in it. And there you can do a few things. You can see all of our open solicitations and apply to the solicitations. If you're interested in participating, you can see all of our existing projects that we've done to give you a flavor of those projects and the benefits that they've provided to the the State of New York, or you can just send us a query with any questions and make connection or contact with nyserda That's a mailbox that we are constantly monitoring and taking information. But that website and that landing page will give you all the information you need.
- [20:21]
A
All right. Hopefully you get some good leads out of this podcast. Thanks for joining us today.
- [20:26]
B
Thank you so much. Have a great day.
- [20:31]
A
You can find us online at www.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 current.