Distributed batteries for grid resilience Zach Dell (CEO & Founder @ Base Power)

Hello, everybody. Welcome back to Transmission. It's me, Quentin. And this week, we're talking all about residential batteries.

Now this gets a lot of coverage, but there's not many companies who really manage to pull it off. And the company today, Base Power, is one that I admire greatly, and their CEO, Zack Dowell, really knows his stuff. They're Texas based, and they've managed to install and operate well, he'll tell you all about it himself, but a large swarm of distributed batteries. And I've got no doubt that at this speed, base power will be all across the US and international very soon.

Really cool conversation. So if you listen to this and you like it, please do hit like, subscribe, and hit all the good buttons. They help us increase our reach and get our stories to more people. And without further ado, let's jump in.

Hey, Zach. Welcome to the podcast.

Thank you. Great to be here.

And, well, here is not that far for you. You're actually from Austin. Right?

I grew up here. Born and raised.

Wow. So what do you think about all the new people coming like me? If I go on Reddit, Reddit basically tells me that all the original Austenoids hate all the transplants like me, and all the high rise buildings should never have been built. Is that true?

I don't think so. Austin was a great place to grow up, and it's a great place to live today. It's changed a lot in the last twenty years, but I think a lot of the growth has been great for the city. And if you're not growing, you're dying.

So I'm really excited about it. I think we're in the early innings of of what Austin can be. You know, I was in New York for the last couple years, started my career out there, and moved back to Austin to start the company. Our office is ten minutes from here.

Our whole team is is based here. It's really good to to be back.

At Base Power, what you guys do is pretty unusual. Can you just explain the model to our listeners? Yeah. If you listen to this, we're gonna do something different, which is focus more on smaller batteries this time rather than bigger ones. But you guys have been really successful in in getting batteries out there into the real world with a quite an unusual model. So can you just talk about that?

Yeah. So we're a distributed energy technology company that deploys battery storage on-site with homeowners. So we're really a battery developer and a retail provider combined. So when you sign up with Base, you pay a small upfront fee that's a fraction of the cost of a comparable home battery or generator, and then you pay sixteen dollars a month for access to our services, which include backup power protection and then affordable monthly electricity rates.

So you sign up with base. We come install our battery on your home. When the grid is up and running, we use that battery to support the power grid. And when the grid goes down, you get that battery to back up your home.

And this is an especially acute situation in Texas. Right? Right. Was the the power cuts of storm Yuri, was that something that really affected you starting this business? Were you already thinking about this problem before that?

Yes and yes. So I had spent some time kind of studying the utility scale battery opportunity.

And, you know, I think back in twenty eighteen, I started looking at the industry, and and one thing became really clear to me, which was the marginal cost of wind and solar, but primarily solar plus storage, which is gonna be lower than the marginal cost of coal and natural gas. And I think in energy, if you're not talking about marginal cost, you're you're getting it wrong.

But that is a fact that's disputed a lot. Right?

It is.

It doesn't matter which side of the aisle you're on, if you like. There are people putting their hand up and challenging that assumption left, right, and center. So could you just delve into that a little bit more? How how you come to that conclusion?

Yeah. I think if you look at the cost curves of solar and and storage, they're coming down just so aggressively, particularly in the case of storage due to the CapEx coming in from the auto OEMs. There's so much investment going into the storage supply chain that batteries are becoming a lot more efficient, cost effective to install, and the same thing is happening in the solar space. So what I saw at the time was that the cost to deploy these assets was going down rapidly. And so it was likely that and we'll talk about this, in the discussion, was that more and more of the generation stack was gonna be made up by these intermittent resources, and batteries are really the unlock.

At that time, what I saw was that there are really two fundamental constraints to utility scale storage, two constraints that you guys have covered in detail, which is one, interconnection capacity. It takes too long to get these batteries grid connected on the order of five to ten years depending on where in the country you're getting them connected. And, obviously, the interconnection queue has been widely covered by the media. The other is transmission congestion.

Right? So where you need these batteries is where the load is, but you can't put a gigawatt of storage in the middle of downtown Austin or, you know, in the middle of downtown Houston. And so our insight was that a distributed architecture allowed us to deploy storage would allow us to deploy storage much faster, much more cost effectively than a centralized architecture. So that's really at the core of what we do at a system level and why it's different from utility scale.

And then at the customer level so, actually, let's let's let's chat about utility scale for a second. So if you wanna go deploy utility scale battery, you have to buy or lease the land that the battery sits on. You have to pay for the interconnection to the grid. You have to do a bunch of project development, and then you have to wait in the interconnection queue, which all those things introduce a bunch of cost.

In the case of distributed storage, the land already exists, and it's it's owned by the homeowner. The interconnect already exists. There's no product development because the battery goes on the home site. And so you can get these batteries deployed a lot quicker, a lot more cost effectively, and you circumvent that interconnection queue.

The other side of this is the customer. Right? And so if you're a homeowner in in Texas and really many other places in the country, over the last decade, your power has gotten more expensive and less reliable. And deploying batteries on homes allows us to reverse that trend.

We can make power more reliable and less expensive. And so those two insights, the distributed architecture that allows us to deploy storage much faster, much more cost effectively than utility scale, and then the customer offering, which allows us to lower electricity rates and and keep the lights on for the homeowner. Those are the two big motivations to to starting the company.

Very impressive and remarkable about you guys' positioning is how you've distilled a very complex problem into quite a simple and I don't mean that in a bad way. I mean that in a very positive way, a simple value proposition for customers who are they're not b to b. They're not big energy users. They are homeowners.

B to c is really hard to do in utilities and in in energy. Yeah. Full stop. B to c is hard, full stop, especially in a world that we're in, which is full of jargon and complicated terms and who owns this and what does that really mean for my electricity supplier.

Somehow, you've managed to get the messaging right. And so I I just take my hat off to you and the team for getting that right because, also, you're in people's homes. That's their that is their space. They've worked their whole life to have that space.

And so there's there's a trust element to the product too. Can you just talk a little bit about well, let's talk scale for a second. So how big are these batteries that you're putting in people's homes and how many how many have you sold or how many are online in the base power universe right now? Yeah.

So our generation one product is a twenty five kilowatt hour battery that we can install in parallel. So most customers, most members will opt for two.

So they'll get fifty kilowatt hours in their home.

Fifty kilowatt hours.

Our gen two product will be larger. Our gen three product will be will be larger.

So we're That's that's half the size of a Tesla model three, for example, roughly half the size of that battery strapped to the house.

Yeah. And I think that there's an important point to make here, which is that our business model is is really aligned with deploying more storage per home, and that is really well aligned with the customer who wants as much backup as possible. And if you look at the last kind of decade of home battery businesses, they've been very focused on high margin upfront sales. And as you know, battery costs scale with size.

And so if you wanna sell a twenty five kilowatt hour or fifty kilowatt hour battery, it's gonna be incredibly expensive if you're selling it upfront. Well, we're not selling batteries. We sell affordable, reliable power. And so our model allows us to deploy bigger and bigger batteries, which serve our goals, which is bit building out our fleet to serve the power grid and expand our capacity for power consumption here in Texas.

And it also really aligns well with the customer who's looking for as much backup protection as they can get.

Is is that normal to have that much backup power? And I I I say this because with my European hat on, our domestic batteries tend to be quite a bit smaller than that. And I know everything's bigger in Texas, blah blah blah. But, you know, having fifty kilowatt hours for for a home, why does a home need that much?

Well, in a long duration outage, you want as much protection as you can get. Right? So outages most outages on the distribution grid are on the order of thirty minutes to three hours. And so you'll be if you have ten kilowatts or fifteen kilowatts, kilowatt hours, you'll be protected from an outage of that duration.

But for an outage that lasts eight hours or ten hours or sixteen hours or thirty six hours, you need a much larger battery. And we also wanna deploy as much storage per home as possible because we wanna build the size of our fleet. So the incentives are really well aligned there. And I think, to your point, the reason this doesn't exist is because we're the first company to roll out this kind of business model.

So no other business has had the economic incentive to develop the larger batteries. They wanna sell as many units as possible. And so, actually, a smaller battery is better for that because you can drop the price to the homeowner. We don't price based on the the size of the battery because we're not selling it for an upfront fee.

I live in quite a small house for techs and terms, quite a modest sized house. Well, I imagine with some of the huge homes here, the power consumption of those homes, especially in the height of summer, is massive. Yeah. So could you just help our audience get their head around? What's the power consumption of a of a home in Texas look and feel like?

Yeah. It really varies by home to your point. You could have a twenty five hundred square foot home with one AC unit. You could have a five thousand square foot home with three AC units and a pool pump and a hot tub and all kinds of things that draw a lot of power.

So it it really varies. There's homes that consume five kilowatt hours in a day. There's homes that consume two. There's homes that consume twenty.

And so it really varies by usage. So we opt for a big solution that can back up the entire home. So a lot of home batteries on the market today, they do what's called a critical loads panel or subpanel backup, which is fine if you're not in Texas and don't really you know, they see is not as important. But as you know, if you lose power in July or August in Texas, you're in a really tough spot.

If you have young kids or elderly parents or really just anyone, you know, you you wanna have that whole whole home backed up. And so that's another reason why we opt for the larger form factor so we can back up that entire home's panel.

We can back up question about that.

Sure. So I actually lost power last summer for twenty four hours, and it was brutal. But one thing that it did make me realize as a newcomer to Texas, why does every everywhere's got air conditioning, but then also every room has got those ceiling fans? So, guys, if you're gonna I I don't understand it.

It's like as a foreigner, it doesn't make any sense. Like, the the whole house is a a solid seventy degrees c. I was really glad of the ceiling fans when the power went out, by the way. But why have both?

It it blows my mind.

I don't have a good answer to that. But what I will say is that our orientation is that we wanna enable energy abundance. Right? And so we wanna deploy big batteries on homes, give them a ton of capacity.

We don't wanna live in a world where you're told by the utility or somebody else that's controlling your thermostat that you have to turn your heat up or down or you know, we want people to be able to run those fans, run those AC units, keep their lights running, keep their fridge running during the summer, during the winter. You know, we want people to be able to use electricity. I think we've all seen the chart of energy consumption per capita and GDP per capita. We wanna keep moving the country up that chart.

We wanna expand our capacity for power consumption, run those AC units, run those fans if you want. People should have the freedom to do what they want with their electricity that they pay for, and we wanna enable that.

It's such a different mindset, isn't it? As an it's it's not about energy reduction or preservation. You're the opposite end. You're saying abundance. You're saying let's just go for it.

Wow. Okay. What's this we I I alluded to it earlier, and I I do know the answer to this question before our listeners. How does this value proposition work for the for the homeowner? So say, I live in Texas, and I I I wanna come to base power.

Yeah.

Give it a pitch. So what you're paying for is battery as a service. Right? We install our battery on your home.

When the grid's up and running, we use that battery to support the power grid. When the grid goes down, you get that battery to back up your home. You also get access to our electricity rates, which are low, reliable, transparent, and they're not gimmicky. I think, you know, there's a lot of retail electric providers in Texas who do free nights and free weekends and, you know, low price up to two thousand kilowatt hours.

And then if you get, you know, to two thousand and one kilowatt hours, the price goes up, or they have you on a three month contract. And then when you roll off that three month contract, the price goes up a lot. And they're playing a lot of games with the electricity pricing to acquire customers quickly. That's not really our core business.

So we have very clear, very transparent pricing, and we aim to come in kinda below market on electricity prices because our main goal is to build out our fleet of storage to support the Texas power grid. So we really are incentivized to deploy as much storage per house as possible on as many homes as possible. And we can talk about scale and speed of deployment in a second. And so we wanna be super clear, super transparent on power pricing.

So to your question, you pay four ninety five upfront. You pay sixteen bucks a month. You get all the benefits of home backup without the high upfront cost, and you get a a trustworthy, transparent, and fair electricity provider to to interact with on the electricity side.

And you get that feel good feeling of I'm with base power, and I'm doing something good for the grid. That's right.

What about the actual batteries then? So they they've gotta sit on somebody's balance sheet, and I imagine that you own them or that's a third party. How does that work? How does your business operate in this way? Because if you've got thousands of these batteries out there, there's a lot of CapEx.

Yep. So the batteries sit on our balance sheet. We're a developer of the assets, and we see them as a really valuable infrastructure asset that we wanna own. I think that, you know, it's lost on people sometimes that businesses are money machines, and a good money machine is one that you can put a lot of money into.

So we see capital intensity as a feature, not a bug, as long as you can generate really high returns on capital. So I have a finance background, and we take a very analytically rigorous approach to our underwriting on assets and our cost of capital and our return on capital. And so the whole business really thinks in terms of IRR on a forward looking basis and ROIC on a backward looking basis. And we think we can generate really high returns on capital based on our our vertically integrated business model.

So I would describe our strategy as compounding cost advantage through vertical integration. So we design the batteries. We install the batteries. We own them.

We operate them. We deal directly with the customer. We sell you the electricity, and we bid those batteries from the wholesale market. And by doing all of those things, we can, a, capture more value per customer, which, b, allows us to provide more value to the customer on a per customer basis.

So because we do all the steps in the chain, we can take cost out of all of the steps, and we can pass those savings on to the consumer. You know, I think that something that gets lost on folks is that people just want their lights to stay on and their bills to stay low. Right? Batteries are cool, and the technology is interesting.

And, you know, we do interesting things with inverters and power electronics, and we can get into all that. But at the end of the day, people wanna have affordable, reliable power. And the business is designed to deliver that. And it is capital intense, but it's capital intense by design.

Okay. And just going back to scale then, how many people are in the company? How many batteries do you have out there on the grid? And what's the big vision? So How big can this thing get?

Yeah. So about eighty people. We deployed almost thirty megawatt hours to the grid. A little over a thousand batteries deployed.

Wow. Congratulations. That is huge.

Thank you. Yeah. We're deploying on the order of fifteen to twenty batteries a day. We've had thousands of people sign up on the wait list, and we're deploying them very rapidly.

And we're kinda building up our capacity to increase that rate from fifteen to twenty a day to fifty a day to a hundred a day. We think this could be really big. We think that this has a lot of potential, not only here in the state of Texas, but across the rest of the country. You you know this, but just for the benefit of the listeners, Texas is a deregulated electricity market, but it's actually deregulated in eighty percent of the market, and twenty percent of the market is regulated.

So here in Austin, you're probably in Austin Energy Territory. I live in Austin Energy Territory. CPS, I'm in San Antonio. Pedernales Electric is actually the largest co op in the country.

So Just to note on that, if you're if you're English or European listening to this, it's a deregulated market, but you can't choose your supplier in many cases.

Right.

So Which is is quite quite alien for an Englishman. So in eighty percent of the state, you can.

In twenty percent of the state, you can't. We think about our business as kind of two segments, the deregulated segment and the regulated segment. So our business today, all all thirty of those megawatt hours, those are deployed in deregulated parts of Texas. Although and we'll talk more about this publicly in in the coming months, but we're working on partnerships with some of the regulated utilities in Texas to deploy fleets of of of batteries in their service territory and give them the opportunity to lower their costs and pass those savings on to their customers as well.

So you'll see us expand that part of our business through the state of Texas, partnering with some of the co ops and some of the munis across the state. And then, eventually, we'll bring that to the rest of the country. So, you know, there's regulated, you know, utilities in California and Colorado and Florida and Arizona, etcetera. And we'll look to partner with some of those folks to bring our technology, our hardware, our software, our deployment operations to them to allow them to lower their costs and pass those savings on to their customers.

What type of batteries are they?

They're lithium iron phosphate, so LFP batteries.

And who's the supplier? How do you how do you choose well, first question, does that evolve over time? So you are you bringing out new the new generations of the product?

Yeah. Good question. So we're we have this strategy of kinda stepping into vertical integration. So our gen one product is off the shelf, but we design a compute model that's made by us that we insert into the system.

Our gen two system is a JDM model, so joint design manufacturing. So we design the system in partnership with manufacturers, and then they use we use their scale to kinda help us manufacture the system. Our gen three model will take another step in that vertical integration. We're not making the cells.

Cell chemistry is very complicated, requires a ton of CapEx, ton of time. Potentially, we'll get there one day in terms of making our own cells. We when we started the company, we're very focused on how do we get a product to market really quickly. And so we did a big down selection process of what are all the batteries out there today, how do they work, how reliable are they.

We came to one that we really like, and we'll continue to iterate on that. So we have a number of suppliers that we work with, and we'll continue to kinda step into that vertical innovation over time. Hopefully, eventually, we'll have a big battery factory in Texas where we're producing these assets, and that's something we're really excited about.

I'd imagine you have to be ten years ago, I used to work at a utility in the UK. One of the biggest suppliers in the UK back then or was the biggest was British Gas. And so they had lots of assets around and fifty million homes or something like that. And one of the biggest challenges of installing more equipment into people's homes is they're really worried about safety.

And so I imagine in your world, you have to be really careful about supplier selection. And whilst it would be lovely to be made in America on you know, battery cells made in America, really, you need quality with these things. Yeah. And I assume you go to Far East for that.

Yeah. Absolutely. Safety is our number one priority. And if you come to our our office, which we'd love to have you by, we have a twenty thousand square foot facility where we have an r and d lab. We run all of the safety testing there. By the way, all of our products are UL certified. They've gone through rigorous amount of testing, and then we put them through another layer of testing to make sure that they're safe for our customers.

So tell me, why did you go for domestic rather than commercial and industrial?

Because this doesn't really happen much, what you're doing. Yeah. The the the sensible choice, right, is the b to b route with the big energy consumer, maybe kind of mid market or small companies.

So why did you go to the why did you go and start at the hard end of the market?

Yeah. It's a good question. You know, we spent a lot of time kind of looking at different applications for deploying batteries really quickly, and we determined that residential was actually the place where we can move the fastest and get to the most scale. There's eleven million single family homes in Texas.

Eight million of those are in the deregulated part of the state. You can acquire those customers quickly. We can get a battery installed in a matter of days. Right?

And so getting these installations done on, you know, think like a gas station, grocery store, restaurant, or even a industrial facility, they're construction projects. Right? They take weeks, months, etcetera. We're able to move really quickly on the residential side.

I don't know that we would have been able to get thirty megawatt hours in the ground in, you know, just over six months had we gone that direction. That said, we're really excited about opportunities in commercial. And we had some initial conversations with some potential large scale customers in that regard, and I think you'll see us move in that direction in the next, call it, year or two.

Yeah. You want a sweet spot between you need a sufficient size so you can deploy enough batteries and capital, but then you also want there's probably a crossover between that and the amount of friction and pain in transaction cost.

Very interesting. And how do you acquire customers?

So a lot of our customer acquisition is through referrals and word-of-mouth. And then we do traditional direct marketing, paid advertising, direct mail. We do community events where we we go out there and we talk to people. Home energy services are something that people talk about.

And, you know, when your neighbor gets one and you ask your neighbor, hey. What's that thing on your house? Like, oh, I'm at base. I have this, you know, really affordable rate.

And when the grid goes down, I never lose power. And we find that a lot of people are coming in through their friends and their family. And one of our first customers had a battery on his home during the college football national championship, and his whole street lost power. And his neighbors reached out to him, and they're like, hey, Jason.

Like, how are your lights still on? He's like, oh, I'm with base. I didn't even know there was an outage. Then, of course, all the neighbors sign up, and they tell their friends.

And so there's a there's a a strong viral component to this. There's a lot of social proof and things that kind of go around the home, and so that's been a really strong strong channel for us. Awesome. And then, of course, we do have a partnership that's been publicly announced with Lennar.

They're one of the largest publicly traded home builders in the country. We've deployed over two hundred homes batteries on on homes with them, and we plan to scale that into twenty twenty five.

So in select buy a home and it's got base power out of the box?

Exactly. So in select communities across Texas, when you go to buy a Lennar home, you have the option to sign up to have your home be base powered. And when you move in on day one, there's a base battery on your home, and we're your electricity provider.

Could you just briefly explain what it's like to get a permit to connect one of these things? Because in different jurisdictions, it's it's it's more or less difficult to even get a small, smallish twenty five kilowatt hour system Yeah. Installed. The amount of application and studies and all that kind of stuff, yes, varies state by state. So so what's it like in Texas?

It actually varies widely by municipality. So in certain parts of the state, you can get auto issued permits, and they move very quickly. In other parts of the state, it takes a little bit longer. What we've decided to do is build out the systems to manage those interconnection agreements with the local utility Encore and CenterPoint and the permitting process ourselves.

So today, if you go buy a home battery from one of the companies that sells them at a high upfront cost, they typically connect you with a local installer, and then you and the installer go back and forth on getting the permits. That process is not very fast. It's not very efficient. And so we've built a lot of software to automate a lot of those steps and make it a lot more efficient for the customer.

And we wanna take that friction away. So you come to our website, you sign up, and within weeks, we're able to get a bat battery on your home because we handle that whole process for you and make it a lot more efficient. So it does vary a lot by by jurisdiction. There are certain parts of Texas where we can get a battery installed on your home literally the next day.

There's other parts of Texas where it takes two, three, four weeks. But I think if you go look at most options on the market today where you're buying the battery, it's gonna take two to six months. And we're able to get batteries in the ground a lot faster back to our vertically integrated strategy. Because we manage the whole part of the process, we can make it happen really, really quickly.

Now let's talk about operating them and getting them into the markets.

What's your operating philosophy for this swarm of distributed batteries? And how is that different to a grid scale system?

Yeah. So we monetize the batteries in the same way that the grid scale guys do. So we bid into the the the wholesale electricity markets, the day ahead market, the real time market, and we're in the process of being qualified for ancillary services. So we participate in the market in a very similar way, although we really prioritize protecting our customer from power outages.

So we never discharge our batteries below twenty percent. So even in the event that we're at the bottom of a discharge window, when the power goes out, you guaranteed have backup. And I think that also is related to why we have such a big battery in the home. It's because if you have twenty percent of a fifty kilowatt hour battery, you've got ten kilowatt hours ready ready to go.

And to our earlier discussion, you know, ninety seven percent of outages in Texas are on the order of three hours to thirty minutes. And so ten kilowatt hours is gonna give you more than enough backup for a situation like that. So in terms of actual cash flow streams, they look a lot like the utility scale guys. But the way we actually operate them is a little different because we have a different optimization function, which is making sure that we have enough energy in the batteries to keep our homeowners protected.

Surely, a huge part of your job at Base Power is billing. And this this sounds like such a complex billing problem. How do you go about getting that right? Billing, the more time I spend in the electricity industry, the more I realize that billing might be the most difficult thing on the planet.

I don't know why It's definitely so hard for me to hard.

Look. I'll say this. We have an incredible team of software engineers that come from some of the best technology companies in the world who have helped us build our own homegrown systems to do billing. And we built we built a lot of systems over the last, you know, almost two years that have made this process actually super seamless and super efficient for us. There's actually a world where we turn around and we sell these billing software products to some of the other players in the space. Right now, we're really focused on our homegrown tools and kind of building them for our use case. But to your point, it's a really hard problem, and we have solved some really hard engineering problems that, you know, to be totally honest, like, we didn't know were gonna be such hard problems, to your point, around billing, but it is really difficult, and we solve all of those problems.

Just addition. Right? It's addition and subtraction. That's why everyone thinks billing is it's just such a headache.

Yeah. It is. Let me ask you. This this all sounds marvelous. Right? And so my question is, well, this this feels like a way to get way more batteries on the grid that we're not really thinking and talking about Right.

In the rest of the battery universe. Yeah. So what what's holding you guys back? How do we push this thing to go faster?

We're trying. We're moving as fast as we can. Look. I think it's a complex coordination problem.

Right? It is a highly operationally complex machine that we're building, And that's really where the challenge lies in execution. You know, everything from getting the batteries to getting them outfitted with our compute module to getting them in the right place at the right time, getting them installed correctly, getting them up and running, getting them commissioned, doing the billing correctly. There's There's a lot of hard engineering problems to solve there that we've spent the last two years working on.

And now it's a lot of you know, it's still solving tons of engineering problems around scaling the fleet and on the battery hardware side. But there's a ton of blocking and tackling on the installation and the deployment operations. And, frankly, we have the best team in the world. We've just got an incredible group of people that come from a lot of the the best technology companies in the world who've seen similar problems.

They've dealt with such critical systems at scale. And so, you know, credit goes to our team. They've just done an amazing job of, you know, a standing start in May of twenty four to doing, you know, fifteen to twenty of these a day where we are today. And we're really excited to take that installation motion to the next level over the course of next year.

Yeah. Tell tell me about this compute module.

It's basically a system that allows us to do command and control of the inverter and decide when to charge, when to discharge, and do that really reliably with triple nines uptime.

Okay. It's like you guys built that? Correct. Alright. So we're gonna get loads of these things, tens of thousands, hundreds of thousands installed.

Very exciting. What do the regulated entities think about this? What does ERCOT think about this? What do the utilities think?

They've been extremely supportive. I think that they all see the demand growth that's coming in Texas. Obviously, ERCOT is vocal about this. And what we're saying is, hey, guys.

We're here with capacity, and that capacity can be deployed really quickly. And so I think they see it as a solution. And ERCOT actually has been fantastic to work with. Encore and Cineport have been fantastic to work with.

We built very collaborative relationships with them as we scale storage on the grid really quickly. And we're very encouraged by the feedback we're getting from some of the regulated utilities who see load growth coming in their area. And they turned to us and they say, hey, base. Can you deploy ten megawatts?

Can you deploy fifty megawatts? Can you deploy a hundred megawatts? And we say, yes. We can do it really quickly.

We can do a lot faster than the utility scale developers, and they're really excited about that. So we're excited to continue partnering with ERCOT, with Encore, with CenterPoint, and with some of the regulated utilities in the country, and in the state and and in the country to get storage deployed in their service territory very fast. And as you know, a massive amount of load growth is coming.

The electrification of transportation, a heavy industry, and then, of course, all the demand coming from the data centers is putting these utilities in a very hard position, and we're here to help them solve that problem.

So you're obviously very bullish on distributed energy and distributed or residential solar and battery and and all that. Let me I wanna understand how you think about the future and how much of the pie is gonna be distributed.

And I'm putting putting words in your mouth here, but do you believe there's a world where the majority of the power generated or stored is at distribution level rather than utility? Or, Jack, can this the distribution level is always gonna be the smaller brother of the utility scale?

I think it all comes down to cost. Right? Back to the what we were saying earlier. In energy, if you're not talking about marginal cost, you're you're kinda just missing the point.

And our goal is to deploy storage and eventually solar on the grid faster and more cost effectively than any other solution. And so if distributed solutions become the lowest marginal cost way to get solar and storage deployed, then our bet is that that's that's gonna win the day. And at the end of the day, you know, cost is is king. And, you know, our strategy, like I said, is to develop a compounding cost advantage through vertical integration.

Right? And we think that through this vertical integrated strategy, we can drive cost down so much that it does make the most economic sense to deploy the incremental megawatt in in this distributed architecture.

In all of this discussion, you've been really positive about the grid and the you know, there's you got lots of technical challenges to build your business, and you've been very successful at doing it. But it must have been challenging. There must have been lots of roadblocks, whether that's regulatory or market access or connections or or whatever.

And it's great to see that your your lens on that is still a positive one.

If you could change something about the grid or the the power system in Texas, what would it be?

Well, first, I'll say that anything worth doing is hard. And so no one ever told us that this is going to be easy. We didn't expect it to be easy. We don't expect the next chapter of the company to be easy. You know, we're in the bottom of the first inning here, and the rest of the game is gonna be really, really difficult.

And I'll also say that we've got an incredible team. Our team works really hard. They're really motivated. They're incredibly capable, and that has enabled our success thus far.

And I think that that will enable our future success. And, you know, why I'm so optimistic about the future is because I know the people on the team here at base, and I know what we're capable of. And we do see we have a very clear mission, vision, and strategy, and we think that there is massive potential to go deploy that across Texas and across the rest of the country. To your question specifically, what would I change about the grid in Texas?

I don't know that there's there's one thing I would change. Although, what I will say is I think that Texas is an amazing place to build and deploy distributed energy technology because it's a competitive market. Right? And competitive markets lead to increased competition, which lead to lower prices and better services for customers.

And so we're big fans of competitive markets. And, you know, I think one extension of that would be more price signals for distributed energy resources and distributed energy technology as a whole. So, you know, some people talk about, you know, nodal pricing versus pricing at the load zone. And I think, generally, more price signals are good.

More price signals in markets lead to increased liquidity, which is good for all market participants. So I think if we move to a contract where distributed energy resources were able to settle at the node versus the load zone, you'd see a lot more people entering the space. So I'm a fan of increased competition, increased price signals, increased liquidity, and I think that'll be really good for the in consumer of electricity.

So why won't that happen? That will make sense to me.

Texas is a is a big place, and it's hard to make kind of sweeping change quickly. So I think it likely will, but these changes are hard to implement. There are systems that have been around for a long time, and so reconfiguring them is challenging. But the folks at ERCOT are working really hard on these kinds of problems, and there's some really good people there, and they really understand these systems deeply. And so I'm pretty optimistic that some of this change will come.

Alright. Now to, two final questions, which the last one especially is my favorite. So is there anything you wanna plug to our listeners who are generally energy storage and renewable energy folks?

Yeah. I would say that we are really excited about the opportunity to partner with regulated utilities both here in Texas and across the country. And so if you're working at a regulated utility and you see coming demand growth and you're thinking, how do we get enough capacity on the grid quickly? Give us a call.

Reach out. You can find me on x. You can find me on LinkedIn. You can reach out.

I'm zach at base power company dot com. And we're working on developing products for these regulated utilities to absorb that load growth that's coming. So packaging our hardware, software, and deployment operations to provide to these regulated utilities to help lower costs on on their infrastructure.

Yeah. I think that's the main thing. I mean, we announced our launch in Houston on Wednesday. So if you live in Houston and you're looking for affordable, reliable power, you should go to base power company dot com and sign up and chat with one of our energy advisers. That's that's all I have to shield today.

Yeah. That's enough. That's enough. And now what's your what's your concern with you?

Well, could take this a bunch of directions. I think that there's a lot of excitement about nuclear, and I'm very excited about nuclear. I'm very pro nuclear. In fact, I'm pro all forms of energy generation.

I think, you know, energy is a highly geographically defined problem. Right? And in some parts of the country in the world, solar makes sense, wind makes sense, geothermal, hydroelectric, nuclear, gas, coal. There are kind of places for all kinds of of power generation.

And I I really think we need an all of the above energy strategy. Right? We're not like solar is the only thing, wind is the only thing. You know, we think that batteries are highly complimentary to all forms of power generation.

You know, I think that it still costs a lot of money and takes a lot of time to build a fission plant. Fusion is really exciting and interesting, but it's not commercially viable yet. And I think, you know, back to the original point around kinda what I saw in twenty eighteen, the cost of solar in particular and storage is coming down so I mean, Elon talks about this in some of the Tesla master plan stuff, and a lot of that stuff resonates with us. The cost of solar and storage is coming down so quickly that I think in the next ten years, some of this nuclear stuff is actually not gonna matter because there's gonna be so much cheap, you know, abundant solar that it's not gonna make a lot of sense to spend ten years building efficient plant.

Now if we're able to make some breakthroughs on the fusion side, that's super awesome and very exciting. And I'm a fan of energy abundance, and so I I'm a huge proponent of that. But I do think that that solar and storage are gonna win the day.

Yeah. I mean, if we can get to a stage where solar and storage look and feel like base load power, You've gotta wonder when does the when does the cost the CapEx cost come down far enough where that is true and it costs less than I don't know. What does new nuclear cost in the US? Let's say, sixty, seventy cents a kilowatt hour, something like that.

Right? But you gotta lock it in for a long time. I don't know. Someone can fact check me on that.

We might be even higher than that. Certainly, in Europe, it's much higher.

We're not that far away from that being the case.

The question, though, I think we could always come back to is, does the United States and does the United States and Europe and many other countries want to give all those dollars to Chinese producers of those? Is the war already lost on production of cells and PV? I don't know.

I think there's a lot of work that's going on to domesticate that supply chain. And I think the current administration is is working on that, and I'm pretty optimistic about what the next ten years has in store in that regard. But as I've been saying this whole time, marginal cost is what matters. Right?

And so, you know, we named the company Base Power for a reason. Right? We think that our strategy of vertical integration will allow us to bring solar and storage to a place where it does look like Base Power. And that is going to be the future.

That's our bet. And, you know, we're not kinda religious around that. Right? To my point earlier, this is a geographically defined problem.

And in parts of the country, wind makes a ton of sense. Geothermal makes a ton of sense. Hydroelectric makes a ton of sense. But we do think that our technology and our strategy will bring about a future where solar and storage are the lowest marginal cost way to add capacity to the power grid.

And you think so your contrarian view is, if I got this right, is that you think that solar and storage feeling like base power base power will undercut nuclear in the foreseeable future.

That's right.

Well, you heard it here first. Wanna say a massive thank you for joining us on the podcast. That was absolutely fantastic. If you're listening to this and you wanna follow what these guys are doing, plea you should go to the website and check it out.

It's very, very cool even if you're not in Texas. And we need more companies like this in Europe as well. We really need to get this domestic market right. Germany is pretty good at it, and then the rest of the European countries, we all need to do much better as well.

Zach, thank you. It's been a pleasure, and we'd love to have you again on sometime soon when you're in the next generation and you've got more assets to talk about.

Thank you very much. Would love to do that. Really enjoyed it. Thank you.