The State of Renewable Energy and Storage: 2025 Preview ft. ADAPTR Inc., Climate First Bank, Brevian Energy, Nostromo Energy

[Host: Lauren Scott] As we get closer to wrapping up the year, numerous reports are coming out regarding the state of renewables around the world. 

At a very high, macro level, we are investing more in renewable energy than ever before, especially in solar and wind power. Last year, “a record-breaking USD$622.5 billion was invested in renewables! 

Most of this money went into solar panels and wind farms, with a 70% increase in tech investments like batteries (for energy storage) and solar panels. In fact, renewable power installations attracted far more investment than fossil fuel power plants did in 2023.

Which countries are leading the charge? China leads (44%) global renewable energy investments, followed by Europe at 20.9% and the U.S. at 15%. 

Renewable energy generated an impressive 30% of the world’s electricity in 2023 which is a MASSIVE increase from just 21.7% in 2013.

At last year’s COP28 in Dubai, governments agreed on a big goal: triple renewable energy capacity and double energy efficiency by 2030. While we’ve made great progress, we’re not quite there yet.” (350.org).

Of course, it depends a lot on regulations. So, changes in governments at a municipal, state / province or country level can have a big impact.

To help get all of us ready for the year ahead, one that I am sure will be full of exciting progress, I have pulled together a special renewables and energy storage deep dive for us. These include our talented past experts ranging in areas from microgrids to energy storage to renewable financing:

·         Hassan Shahriar, President & Founder, ADAPTR Inc.

·         Rod Matthews, Co-Founder & CEO, Brevian Energy

·         Lauren Dube, VP and Director of Good Things, Climate First Bank

·         Yoram Ashery, CEO, Nostromo Energy

I know that this area is one many of our listeners have expressed interest in, so this is my promise to you that I will continue to bring more renewable and energy storage content to you in 2025. Until then, enjoy this special deep dive!

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ADAPTR Inc. (Hassan Shahriar, President & Founder)

Can you give us a little bit of background as to the state of renewables in Canada, which is where your company primarily operates?

So I am probably going to have a narrow perspective on this, because, you know, there are so many things that are going on as it is today. 

Maybe one way to frame this is that renewables really started small, like any new technologies, back in the early '90s going up to the 2000s. But what really kicked it off was some of the motivations around policies and then those policies that were shaped by individuals that wanted to bring these new technologies into the ground as an option for power generation - they really made it happen. 

So the early 2000s mid-2000s, wind kicked off and very recently solar has been very, very competitive. The state of technology is optimal from the renewable technologies standpoint. Where we currently stand is that the technology has matured, the industry has gained a lot of experience and they have matured in terms of executing, technology has matured, the people have matured, the market policies have matured.

But the challenge now is interfacing and integrating all these of these maturities, and and how do they tie in with how our grid is currently structured.

Our grid was built 150 years ago. It was not designed for renewables, it was designed for something else. 

So the grid got more and more complex over the years for a different set of technologies and now they have to deal with - and I say they have to deal with because the new technologies are providing a new kind of value proposition - so the interface and merger areas are becoming more and more critical. And that is where we are today: we have very mature technology, great and competent people in the renewable energy space, we have a goal of a sustainable future (everybody agrees to it) but we also have legacy systems and how that energy is delivered to the consumers.

And so adapting that legacy system is going to be the most critical aspect on how we can move forward, and that's where we are today.

Would you say that that's the biggest challenge that the renewable space is facing right now, is how to connect into the grid? And, if not, are there other kinds of bottlenecks that you see happening right now?

And then, on the flip side, is the biggest opportunity you see right now that there's a genuine groundswell of interest in terms of these alternative forms of energy?

The biggest challenge, I mean if you look at what's going on in the States, there is a lot of potential for decarbonization. Because they're very coal heavy, there's lots of opportunity for decarbonization and renewables are hands down the best way to do it.

But the biggest challenge is that  - and I'm using the States as an example here - the biggest challenge they're now facing is the backlog of projects in the interconnection queue.

Basically you have proponents that come up and say “hey, I have this project, dear utility, could you assess and let me know how if I can interconnect?” The utility takes some time and then assesses all the potential projects that might be developed over that time frame and gives an answer.

But, by that time, there are other developers that have proposed new projects. So the interconnection queue is now super long, the cost for interconnecting renewables is super high, and so now you have this kind of slowdown of being able to deploy the most efficient generation systems that are out there. 

So that challenge exists for the US, because they're full on decarbonizing, but that challenge also exists here [in Canada] because the grid architecture is pretty much the same. And that's why utilities and system operators are thinking “wait, how do I mitigate the ability to incorporate more renewables?”

And so storage is becoming a big topic. Again, it's more of a reactive approach that we are seeing in the market, rather than a proactive approach. So storage now is being pushed because of the reaction towards the renewables that were deployed, but maybe we should be thinking proactively “what should we be deploying really to solve the needs of the next 5, 10, 50 years?”

Just a few barriers to overcome, and because I want to get our listeners to better understand ADAPTR and the work that you're doing there, could you maybe help explain two (I guess) bridge concepts that will get us there? One is that of hybrid renewables and the other one is microgrids? And maybe just assume that listeners might be coming from the renewable space but they might be coming from a completely different industry - so you might just want to level set the description there.

This is a tough one! We're talking about a very complex system that has been developed over decades. So the simplest way to think about it and and I've been trying to figure out for myself as well as I talk to my friends when they're like “Hassan, what do you really do? What is ADAPTR really all about?”

Here is the analogy that I've come to really like. So let's say you're going to the UK. You take all of your devices and your power outlets, plugs and whatever for your laptop. You go to the UK, try to plug in your two pin into the three flat pin. You can’t.

What if the only solution you have was to call an electrician to change out the outlets before you can plug it in?

Yeah, not quite convenient.

It's going to cost you, I don't know, maybe 150 pounds and I'm going to go and do it next week. That is what happens when we propose renewable projects to connect to the grid. 

We do not have any means of adapting how the grid behaves with how a renewable generation system behaves. And so that interface, which exists in our travel adapter, like you know when we're plugging in a power outlet to a different country you have it right? That's the solution: you go, we buy it, plug it in, off you go.

But today that system does not exist in the power sector. That's what we are developing and that's what we want to make sure helps with that speed of transition. Because then you make it easy for the utilities, make it easy for the developers, and it doesn't cost an arm and a leg for the consumers.

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Brevian Energy (Rod Matthews, Co-Founder & CEO)

Could you maybe first walk us through that traditional grid, and then I'll pull you over, and you can explain the difference between the traditional grid and a micro grid?

Okay. 50,000-foot view. I don't want to get too in depth. So, essentially are the major grid you can look at it as generation, transmission, distribution, consumption. We'll look at it at those four parts. So, generation, traditionally, you're looking at these large power plants that boil water to produce steam to turn a generator. Now, there are several different ways they can use to heat up that water. I mean, a lot of times they use coal as a mixture to get the water to steam temperature. Sometimes they use nuclear power, sometimes they use natural gas, but in a lot of places they use coal to do that. Now, when they use that coal to heat up the water to turn the generator, that power gets transmitted over long distances because you usually have a 500- 600 mile radius sometimes that each one of these power plants can cover and that gets transmitted to an area maybe 300-400 miles of transmission lines, that’s because it's easier to transmit power at a high frequency / high level. Then they step that down and distribute it to an area. That's where you see your substations: all the houses and businesses, you're connected to a substation in an area. And then from that area, you use that to consume your power coming from that. So that's essentially the national grid. So, they generate the power, transmit power long distances to the substation, then distribute power to the individual houses or businesses in those individual houses. They see the meter they connect to a meter. And that's how you are charged for the usage of that power. 

A microgrid is effectively the same thing, but on a much, much smaller scale. You have generation assets, like solar: solar panels - they generate power. You can have hydrogen fuel cells. You can have things like storage, like battery systems that can store power and still be considered as an asset, sort of like generation because you're able to draw power from it. And that power is transmitted and distributed over a much smaller distance. Instead of hundreds of miles, it's hundreds of inches or a few feet. So, then you convert that power. Most of the time, that power is what's called DC, direct current and your appliances in your house, that's like the distribution system use AC. So, they convert that power, convert it from DC to AC and then you use it locally, you consume it locally, just like you would in a grid. So that's why they call it a microgrid because it's a much smaller version of the larger grid where you have generation transmission, distribution and consumption and you have that hyperlocal generation, transmission and consumption.

That was very digestible. Thank you for breaking it down away.

That was probably about as easy as I can make that!

I got it; it was perfect. So, you're the co-founder and CEO of a company called Brevian Energy, which is a microgrid solutions provider, correct? Would you mind walking us through that?

All right, well, essentially, we just said what a microgrid is. And we like to say: if you've seen one microgrid, you've seen one microgrid, right? Because every one is totally different. So that's where we come in and we analyze. If you are an existing location, we can analyze your usage over usually at least a one year to two year timeframe to understand the cyclical nature of your usage. We can make sure we design a system that can meet your needs during your peak times. So, we perform that analysis. And then we come in with, most of the time, we use solar - it is a real large component of what we do. Solar panels come in with battery systems that can and the type of battery systems that can take your whole load and can shift the load on a daily basis instead of just being a backup system that only can take your load when the grid is not available. 

What a lot of people don't realize is that there is what's called a demand charge which is number one on your bill. So, you get charged for the energy that you use; that's your consumption. But that's the consumption charge or per kilowatt hour charge. And you also get charged for the amount of power that's made available for you to consume at your peak. And that's measured in 15-minute intervals. That's why they call it your interval information; so, your highest peak usage or your highest 15-minutes of usage in a given month is what you're charged for as a demand charge. That could be as much as a third of your bill, depending on how much that's made available to you for you to use. So, a lot of people really don't understand that. And here -- we're in San Diego, California - and I won’t say the name of our utility company here, but we have the highest utility rates in all of the United States of America. And we have what's called Time of Use, where we are charged three different rates depending on the time that you use it. So, there's a rate from 7am to 3:59pm. That's called Off Peak. There's a rate for 4pm to 8:59pm and it's called Peak, and in some cases we've seen that to can go to as much as 74-75 cents per kilowatt hour. And that's a lot. And then after that, that 9pm to 6:59am: that is the Super Off Peak, which is obviously much cheaper. That's when people are encouraged to charge their cars and things like that. Certainly not at that four o'clock to nine o'clock timeframe because that is the most expensive and that's at the time everybody's home, everybody's washing dishes and cooking and watching television and so that peak time really is getting to us. But we have the ability with the microgrid, when you're producing your own energy and we have the battery systems and the control systems that come with them, to shift your load at 3:59. If your solar panels aren't really producing particularly in the evenings in the wintertime when the sun goes down relatively early, these timeframes your power is kicking in almost at eight o'clock at night. But in other time periods, when that is not the case, we have the ability to shift the load to the battery system. So now you don't have to draw from the grid during those peak usage times. So, you don't have to do that at all. And if it's not grid-attached, you don’t have to worry about that anyway.

And does Brevian Energy partner with manufacturers? Or do you work with whoever is looking to put in the microgrid and they select, for example the renewable energy source?

We have a solar panel company that we work with for all of our projects. We toured their facility and we met with the founders and owners, so we have a great relationship with them. We have a battery manufacturer that we've partnered with, our control systems partner that we partner with, hydrogen fuel cell company that we partnered with, wind turbine company that we partner with to bring in these technologies. 

And again, like I said, that mixture of technologies is totally different, depending on the requirements and the needs of each customer. Some customers may be more mission critical than others. Some customers may be more cyclical in nature, like a school: in the summertime, there's very little usage, some of them may have summer school, but some of them no may not so it really kind of kind of depends. Some have requirements and operate 24/7 (for example a manufacturing company) so it really depends on the usage and the nature of each particular individual customer; it would depend on that mixture of technologies they will need to sustain.

Based on your comment that “once you've seen one microgrid you’ve seen one microgrid”, I imagine your answer is going to be yes to this question, but is there a big difference between microgrids that you have for residential setups versus commercial?

For us, we only do what's called the CNI or commercial and industrial. We don't necessarily do individual houses. Now, we will work with developers to do a neighborhood or individual neighborhood, so we would supply power feed power directly into that substation. We could help to eliminate a lot of those charges for a particular neighborhood, particularly new development. Now we can really do that quite easily. Here in California, there's a mandate that any new home that's constructed must be net zero consumption, meaning they must produce as much power as they consume. A lot of that they're doing with solar, but we're looking to partner with property developers who would build these new communities so that we could do that for the entire community instead of each individual house.

And do you see a difference – and it sounds like California at a state level is very unique – do you see a difference from state to state and possibly even country to country when it comes to the market for microgrids?

Oh, absolutely. Absolutely. Particularly here in California, and a lot of the West Coast states. There are several local incentives. There are several incentives by the investor-owned utilities in each of these areas, and by the California PUC (public utilities commission). Now there's all kinds of federal money that's available, there's incentives, but we pair that with the actual state-led incentives, such as the Self-Generation Incentive Program (SGIP). That's here, local and unique to California, that even offers an additional layer of incentives for people to get these projects financed. 

So, with the combination of the inflation Reduction Act that we've seen, which can pay up to 40-60% of your project between incentives, and you pair that with some 30% incentives for bringing in battery storage and things like that with the local incentives - a large portion of these projects are paid with incentives. So up to 70% of these projects are paid for directly with these incentives. That's why you're seeing such a huge demand for the services. And, frankly, with the market that we're focused on, there's not a lot of people really focused on that market; we feel it's underserved that below one megawatt or that small to medium size customer, and people are either focused on the individual residential or they're really focused on the larger utility-scale projects. So, our core focus is on that small to medium sized customer that has a real need. We feel that we can make an impression doing that.

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Climate First Bank (Lauren Dube, VP and Director of All Good Things)

The marketing hat in me loves the tagline of Climate First Bank, which is "Bank like tomorrow depends on it." Maybe to start things off, you touched on that lightly, but can we start by looking at how maybe traditional banks have fallen short when it comes to this future-looking environmental-looking impact way of banking?

Yeah, I think at least most of your podcast listeners would agree that climate change is real. We see it in a lot of our day-to-day, especially me here in Florida, who gets hit with really impactful hurricanes. I used to live in California where there were weeks where I couldn't go outside without proper masking protection due to breathing in smoke. So it's always been a really real part of my life, dealing with these effects of climate change. I literally don't take my dog for walks in the middle of the day because of the extreme heat here in Florida. So we know that climate change is an issue from a scientific point of view, but what we're finding is that, for a lot of times, those traditional larger banks are still heavily invested in the fossil fuel industry. Obviously, there's still a heavy reliance on fossil fuels and therefore a need to lend to them, but what we're seeing is that those lending activities continue to increase; they're not backing down. So for us at Climate First Bank, it was - going back to the whole, you know, me as a consumer with a set of values - what bank am I supporting with their lending practices? Then for us, Climate First Bank becomes that option for folks that do believe in climate change and want to see more investments go into projects like renewable energy, solar panels, green infrastructure, and want a place to align those deposit dollars with their values. So when we say "bank like tomorrow depends on it," it quite literally does because we're trying to create a movement in which more investments are going towards projects that are needed most.

You're definitely disrupting a very traditional industry. Maybe we can speak to the genesis of Climate First Bank coming to be. It is a very different model, and we could maybe speak to that a little bit more about what makes it so different than what most of our listeners are used to when we're talking about banking.

Yeah, it might be helpful for me to tell just a little bit of a story on how Climate First Bank was founded. Our founder and CEO, Ken LaRoe, actually started a bank a while ago called First Green Bank that was here in Florida. First Green Bank had a very similar mission, but it was sold, and that mission didn't stay a part of our community. He was actually reading a book called "Project Drawdown" that details a lot of the projects and initiatives that actually draw down carbon from our atmosphere and was like, "What if we paired climate solutions to these initiatives?" There was a disconnect between knowing what some of those solutions are and where the financing for them is coming from. That was a big reason why Climate First Bank was started. Ken had it in his heart to create this model for change in the finance industry that didn't get a chance to stick around. He saw that we know what to do; it's just about putting the capital behind it. When we talk about what makes Climate First Bank different, it's really that. It's how we shift capital in the direction of projects that are important to our future and how we transition to renewable energies or have more EV charging infrastructure or greener buildings. For us, it's all about how we invest in projects in those spaces as well as educate those that are coming along for the ride on things they can do in their own businesses or day-to-day lives to be more sustainable.

I love that shift you're talking about from purely shareholders to the full value chain of stakeholders. That's an important nuance. Part of that growth you've seen is definitely linked with your mission, as you were saying. So you are based in Florida, the Sunshine State. It obviously makes a lot of sense that your bank is directly linked with a lot of solar projects specifically and offers a couple of different options that I don't think are necessarily very traditional through a bank. Could you speak to how the organization has been supporting the transition towards renewables within the state?

We actually have a company called One Ethos. Climate First Bank and One Ethos are under the same holding company. They developed technology for Climate First Bank to provide an application process or a whole loan process that helps us do solar lending at scale. We leveraged technology to be able to, instead of just getting applications from people as they come in the door, have a technology platform that we can share with all the solar installers here in the state of Florida. As of the end of last year, we had supported 1,870 households in the transition to solar energy. We have that advantage of leveraging technology to do this at scale, but we also created a product that I think is pretty revolutionary. I mean, I think solar has had a bad reputation at times, a lot in part because it's not always been a transparent product. You have some financial products that maybe advertise a really low interest rate, but there's a financing fee or what they call a dealer fee that gets tacked on, so you're paying 20-30% more for solar than you really should be just to get that bottom line rate. For us, it was important to automatically, right out of the gate, say we're not going to charge those financing fees or those dealer fees, so that way the price of the system is the price of the system. We're very upfront with what our rate is. We amortize that over, oh gosh, is it 25 or 30 years now for residential solar lending? The goal is that as utility rates are increasing, you can essentially replace that utility bill with a stable solar loan payment. So if I'm paying $200 for electricity here in 2024, which might increase to $250 in the years to come, if I lock in a solar loan rate at $175 a month, I have that ability to save money in the future and have that stability. Not to mention, if you have all the battery backups and stuff, not losing power during a hurricane is a nice advantage too. It's the product, our technology partner, and it really helped us do this at scale in a way that is transparent, fair, and provides an advantage to our customers that we're serving.

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Nostromo Energy (Yoram Ashery, CEO

I think most people can understand that buildings use energy, but I don't think many people understand how much demand that buildings actually place on the grid and energy demand. So, can you help us understand that a little bit more, and then maybe directionally do you feel like this demand is just going to get more and more challenging?

Yes, well, absolutely. So, according to the Department of Energy in the US, there's plenty of data about the energy market. It's actually 74% of electricity. Okay, it's not just energy. If you look at energy, there are other forms of energy, but we're just looking purely at electricity. It's 74%. And why is it important to focus on electricity? Because we're in the electrification era. Electrify everything, right? Heating, transportation, etc. And most of the charging, if you talk about EVs, is done in a building. It could be a parking garage, could be your home, could be your office, somewhere. There's some in the public space, but it's mostly going to be in buildings. Heating will become electric as well, right? So, that's the goal. The idea is to electrify everything and then make sure that the electricity is generated from clean sources. So, today we're at 74%. We're probably going to get much higher than that as this trend continues on electrification, and we have some new loads coming on. Think about data centers and AI and what that's going to bring on. People are talking about building nuclear plants just to supply the electricity requirements, and these are also some forms of buildings. So, essentially, the built environment will account for the vast majority of energy consumption. Obviously, kind of leading to the next stage is, what do we do about that? What tools are there for buildings to manage that energy usage in the most efficient and environmental way?

Absolutely. A lot of the research sounds like storage, energy storage is really one of the solutions. How can the idea of or the concept of storage, and certainly the technology, help with this increasing demand?

Yeah, so, you know, the need for storage has really become a focus and now really a necessity as more and more renewables are available and the effort to integrate them into the power grid. These resources are variable; they're not steady. So, the way to stabilize that energy supply is through storage. You store when it's available, and then you provide the energy from storage when those resources are not available. I mean, take solar as an example. You have an abundance during the day; you have zero at night. Store as much as you can during the day and use the stored energy at night. If we take California, for instance, there are plenty of days in the year today that 100% of the consumption is met from solar, even at a surplus. On the other hand, when you come to the peak hours, which is between 4:00 and 9:00 p.m., the sun is going down, demand is going up, you have that daily ramp-up phenomenon. Then you start to use all the peaker plants, all these inefficient gas turbines that just work a few hours a day and therefore are least efficient and most polluting. Those account for a very significant portion of the carbon emissions related to electricity production. Storage can help you avoid that. If you can use the energy during those hours instead of using those peaker plants, then you'll be saving a lot of carbon and other pollutants released into the atmosphere. That's where storage really comes into the equation. 

Tying that to buildings, you can put storage in two places. You can put this on the front of the grid, or the meter, or let's say on the grid side, on the supply side. You have a generation source, doesn't matter what source it is. It could be renewable, it could be any type. That's charging the batteries, and then when you want to use the stored energy, you just run the electrons through the grid, through the wires. On the other hand, you can have storage on the demand side, and then you have it actually where you need it. You're not dependent on the grid anymore, you're not dependent on infrastructure, you have the energy on the side of the demand, and that can save you all the infrastructure in the middle. It's much more reliable and resilient because you already have it on the side of the demand, not on the side of the supply. That's where buildings come into play because that's when 74% of electricity is consumed. That's where you really want to have that storage in place. That's why we believe that buildings have a key role in the whole energy transition and modernizing the power grid. Storage in buildings is a major component of that.

I think two pieces in that, for me, are a big eye-opening moment because, again, I have experience in the renewable side and certainly we're talking about storage. I think we were mostly talking about storage on the supply side. So, I'm less familiar with learning about actually having storage where you need it and having that locally. I think that's brilliant. From a storage side, I've always associated it with your classic battery, or at least that's how I picture it from a storage standpoint. But the technology at Nostromo Energy is really different, and I would love for you to share how that is because I didn't even know necessarily that this existed. So, I think our listeners would love to learn more.

Sure, I’d love to. Storage is almost synonymous with batteries, with lithium batteries. Just Google energy storage, and this is what you're going to find mostly. Because, yeah, when the grid started to install, to procure more storage, lithium was the technology available, still is. But because of the safety issues, we know what happens when a little scooter goes off in an apartment, or the dangers of lithium when it catches fire. Most of that went on the supply side. It's easier to put a battery farm outside in the field, where damage can be contained as opposed to a building or an apartment. So, it's easier to scale and build big storage facilities in those outer areas. That's why all storage right now, not all, but 90 plus percent of storage goes on the front of the meter, or the grid side. 

Buildings don't really want to have those big, if you were thinking of an office building, or a hospital, or a hotel, or any of those, they would need batteries on the scale of several megawatt-hours. This is several containers of lithium batteries. They don't want to put those things inside a building for obvious reasons. That's why they really didn't think that storage was relevant, because storage is batteries. Batteries? No, we don't want that. So, they're not in the game. Only 1% of storage really goes into commercial buildings, which are the biggest users. If we talk about 74% of the electricity in buildings, 50 to 60% goes into the commercial and industrial sectors, and the rest goes to residential. The safety, the regulatory barriers, regulatory in the sense of fire codes and those kinds of things, make the installation much more complicated and expensive, keeping them out of this game. You have to think about, okay, what are the benefits? Why would a building even have a motivation to install storage? Why would you play in this? This is the grid's problem, right? I'm a consumer; I just want to flip on a switch and get my power. I don't want to, that's your problem, not mine. True, the grid is responsible, but here comes the decarbonization factor. Buildings want to be green. It's good for business, it's good for the climate. Buildings are being rated for their carbon footprint. Real estate investors raise their capital. It reduces their cost of capital if they're showing the buildings have a better carbon profile. Storage is probably the most impactful way to reduce the carbon footprint of a building.

I think that goes to the question of when do you consume energy? Because if you consume the energy while most of it is clean, you can consume as much as you want. It's like good cholesterol and bad cholesterol. So, you got good kilowatts and bad kilowatts. If you consume all good kilowatts, nobody's going to care how much. When you consume the bad ones, that's when it's a problem because those are emitting a lot of carbon. If you can draw electricity during the day when it's clean, first of all, your carbon footprint is pretty low, could be even zero. If you can draw more and store that, then during the evening, using that during the evening, that allows you to avoid using the more carbon-intensive electricity of the evening and instead use it from your storage. By that, you can reduce your carbon emissions from the building. Now the building has an incentive to do that. The other incentive is that electricity costs are starting to climb rapidly. Part of that is because of the energy transition. There's more infrastructure to be placed, sources are less reliable. Again, that's the nature of renewables, and that brings more costs to the power market. We see that reflected in the consumer prices. So, how can you save energy costs with storage? Same thing. If you have a time-of-use tariff, which is in most states, you have peak prices and off-peak prices. You can store your energy during off-peak prices and avoid using it during peak prices. You're playing this arbitrage, and you're able to reduce your energy costs. Buildings now are getting a big benefit from installing energy storage, and it's getting more interesting. Then comes the question of the technology. Lithium is, like we said, a problem from a safety perspective. So, looking at safe technologies, and this is the category that we're in, thermal energy storage, specifically for cold energy, is a completely safe category. We're not the only ones doing it, but we have engineered it in a way that almost every building can install it.

First, let's talk about what thermal energy means, and then we can get to the practical side of that. About 50% of the energy in a building goes for thermal conditions, heating and cooling. We are taking care right now of the cooling side because this is what's using electricity. Heating is still mostly gas. Cooling uses, in big buildings, machines called chillers. Chillers are huge machines, big compressors that cool water down to like 45 degrees F. That water circulates throughout the building, talking about hundreds of tons of water that circulates in the pipes of the building, goes to every space in the building. There, you have some fan coils that blow air over the water coils, and that's how you get your air conditioning. Then, it goes back to the chiller room to be recooled again. That takes about half the electricity that the building is using. That's the biggest use of electricity in the building. If you can store that energy and provide that instead of using chillers, have a device that stores cold energy and cools that water instead of using a chiller, you can drop the consumption of the building by half when you supply that cold energy from this storage device. That storage device is what Nostromo is doing. We call it the IceBrick. It's called ice brick because we store it in water. Water, when it freezes, changes phase from liquid to solid. It stores a tremendous amount of energy, 80 times more energy than the energy you use when you just change the temperature. It's just the rearrangement of the molecules from a liquid form to a solid form. You store 80 kilocalories per gram of water, whereas if you just change the temperature, it's one kilocalorie. So, 80 more. We use electricity to freeze that water during off-peak hours or during surplus renewables, so it's cheap and clean. Then, when you want to use the energy, let's say you're on peak prices or your high carbon footprint electricity, instead of using the chiller, you just use the ice and cold energy in the ice and use that to cool the water of the building instead of using electricity. It sounds very simple, but the engineering is a little more complicated. You want to do this very efficiently, you want to do this in a compact way. How do you install this in the building? There are a lot of practical challenges in doing this, and that's where our technology has been pretty successful in engineering this concept in a way that every building can have it.

That's so fascinating because so much of the conversation, at least if you're reading the news in this area, is really just around this idea of our grid can't handle the electrification of where we're going. So, this sounds so complementary to that transition of making sure it's more balanced and steady throughout. You did mention some maybe more governmental incentives. Do you see, maybe from a regulatory standpoint, that we're going to start seeing changes that are going to impact the way buildings are managing electricity or energy, depending on what the mix is? And what kind of role does storage play in that future, in those changing regulations, whether it's specifically in California, across the US, or globally?

Sure, yeah. It's happening in different places. I mean, not yet in a uniform way, but you see different states or cities that adopt, or markets, or utility public utilities commissions that start to develop regulation or market mechanisms in order to either require or incentivize, I'll just call it shifting consumption. Okay, energy storage is just a great tool to shift your consumption without changing your operation or behavior. All right, so if I tell you to charge your EV at a certain hour versus another hour, and you're at home, that's fine. But I cannot tell you to turn your air conditioning on in another hour, not the other hour, because you turn it on when you need it, right? You don't have that flexibility. Businesses even have less flexibility. So, regulations around time-of-use power prices, peak and off-peak prices, those kinds of things are starting to become much, much more common. There is a great example recently in New York City. It's called Local Law 97.

I'm familiar with it, but if you want to speak to it, it's probably not everybody who nerds out about local laws like that, so feel free.

Yeah, it actually came into force this year, January of 2024. It was enacted five years ago, and basically, it puts a cap on carbon emissions of buildings, I think about 25,000 square feet. That cap is based on their historical assumed emissions, and they have to come down every year. I can't exactly remember the steps, but if you are above your step, you have to pay a fine of, I think it's like something $270 per ton per year of excess emissions. The way that they would calculate emissions is based on your energy use, of course. Okay, I mean, there's obviously, if you use energy outside, then the other form of energy is the electricity that you consume, and they account for the emissions of the building, and then see if you're above your cap, and you get fined for that. Those fines can be pretty massive. I mean, some buildings might have millions of dollars of fines that they will have to pay if they can't fall under their cap. There are various ways to reduce your carbon footprint in the building, but like I said before, storage is probably the most effective one. Because if you can charge your storage device during hours where electricity has a low carbon footprint, that's probably your best way. Think about just efficiency. Okay, so efficiency meaning do the same work just using less electricity. You can save 10, 20%, maybe 30% by putting in very much more efficient lighting, heating, other types of appliances, or even air conditioning. You can invest in the most expensive air conditioning systems, and you can get 10, 20% more efficient machines. When you're using storage, and you're charging it with clean energy, you can win even 100%. Okay, if you're able to source that energy from a clean source on-site or on the grid, or through a PPA, like a power purchase agreement from a solar facility somewhere, you can basically run them on 100% clean energy. That's the best way to reduce your carbon footprint. That's a great example, and people believe that other cities will adopt similar regulations going forward. The way they are treating storage or any type of shifting technologies is by time of day and carbon calculation. So, same as you have time of day for electricity, there will also be a carbon price, if you will, for electricity during every hour of the day. This is how they're going to calculate your consumption. So, based on the time you used it, electricity, they're going to calculate your carbon emissions. If you can move out your consumption during the hours where the carbon price is low, that's a great way to avoid those fines. That's one example.

I can give another example, just maybe more on a federal and national level. There's this regulation by FERC, the Federal Energy Regulatory Commission, that says distributed energy resources, like buildings or anything that's in the building, okay, it's a distributed energy resource, can participate in the wholesale market like any other energy resource on the grid. So, what does it mean? That means you can sell the energy into the grid and earn money. And how do you do this? One of the ways is by dropping demand. Dropping demand is the same as supply, okay? Adding supply, dropping demand, at the end of the day, we just want to stabilize that. There's different ways of measuring how much demand you're dropping, but if you have storage, it's pretty easy. You just meter how much energy you're releasing from that storage device. If you do this based on the market signals, that is through the system operator, you can provide a bid, and you get a schedule, and you operate it based on that schedule, and you get paid. And that's part of your economics of the system. It's a little complicated to do, that's something that we provide our customers as a service, but that enhances the economics, makes it much more profitable to install this kind of technology. So, that's a great example of how market mechanisms can provide the incentives without putting any more dollars. It's just redistributing the dollars. So now, they can call it democratizing the market because now a building owner can participate in the energy market, and not just a big power plant. We're both part of the same market. They're selling electrons, and I'm selling avoidance of electrons. At the end of the day, it's about when supply meets demand. So, that's another example of a very important regulation. It's adopted in a few states right now, but it's mandatory, so ultimately, it's going to be across all the US.