Why Batteries Are Changing Faster Than the Industry Expected - Marek Kubik

I'm your host, Ed Porter. Welcome back to Transmission. Ten years ago, the companies that dominated the battery storage cell industry no longer make up the top ten today. That's the story of this market. Intense competition and innovation keeps changing. What is world class? Today's leading battery chemistry already has a challenger snapping at its heels in sodium ion, and even some of the biggest players today are losing ground. Marek Kubik has watched these shifts happen from inside the industry since the early days. He's back on Transmission to explain why the balance of power in battery storage keeps changing and what's coming next. This episode isn't about who's winning today. It's about how fast that changes. For answers on power markets, solar chemistry and everything in between. Try Ko, Modo Energy's AI analyst. Register for free and get three research articles a month on the latest in battery storage. Let's jump in. Hello, Marek. Welcome back to Transmission. Thanks, Ed. It's good to be back. And as ever we're going to get straight into it. So what is one thing that people get wrong about battery storage in the Middle East? That sort of depends on how much you know about battery storage in the Middle East, because the first thing I would say is probably that it's a much larger market than most people realise or think. Um, obviously in the GCC, especially Gulf, uh, regional countries or places like Saudi Arabia, United Arab Emirates, um, they're massive oil producers. And so you wouldn't really expect a lot of storage, a lot of solar, but it's one of the fastest growing regions, probably the fastest growing region outside of China in the world, Saudi Arabia. Just for context, I'm living in Saudi Arabia now, so this is kind of why we're starting, I guess, with the Middle East. Question. Um, had at the end of 2024, zero grid-scale batteries at all. So the first one came online January 2025, and today we have about 18 gigawatt hours of installed operational battery storage, another four in construction and another 20 gigawatt hours that are in tender. So those numbers are mind bogglingly huge in the context of most markets, considering this is like just one country, um, UAE just today, I don't know if I'm supposed to use dates given that might date the podcast, but that's okay. Today just is the. What is today, the. 9th of. July? The 9th of July 2026, 2026? Yeah. For those watching in the future of the past. Um, yeah. So just today, um, there was an announcement on a huge round the clock renewable power project in the United Arab Emirates as well, 19 gigawatt, our best as part of that along with with solar. So basically the first thing I would say is just it's a huge region growing very, very fast, which might be sort of counter to what you think in a country that, you know, produces and exports a lot of a lot of oil. Yeah. And that's kind of that's more than, say, like a Great Britain's power, uh, battery fleet today. Um, only done in, say, two years. So testament to kind of what you're saying. Yeah. Um, obviously China is sort of far and beyond. I think maybe Texas and California might have a little bit more, um, but like the the pace of it is, is super impressive. And I think people will be surprised about that. Just in terms of the the other project, you mentioned the sort of 24/7 concept, right? Um, what is unique about that area that allows it to go after 24/7 projects? So, well, there's a few different factors. So first is the land and the irradiance. Right. So you have the the sun belt of the world has the best solar yield per square metre. So that means you can use your land more efficiently, get more power out of a solar panel that you place in the desert than if you place it in northern Europe. So that part is, um, let's say helping helping the economics quite a bit. And you also have relatively stable capacity factors. So it's not that much more sunny in the summer than the winter. So you don't have this like yearly pattern that makes it a little bit harder to to balance the solar supply. Which means that when you look at the storage part of it and you want to basically deliver solar 24/7 you don't need an absolutely gigantic battery of hundreds of hours. You can get away with six, eight, ten hours, something like that, just to shift solar day to night. And it more or less will work that way the whole year. So the combination of Solar plus BESS is really quite powerful in the Middle East, because you can get economics that are comparable or better than fossil fuels, nuclear, and more importantly, much, much faster to build. So you can bring it online in a couple of years. And the Middle East has very rapidly growing demand for various reasons, like just still growing populations. Things like AI data centres require a lot of power speed to power fast. So I think it's a combination of those elements. And then, I mean, it's desert. There's a lot of land available, right? So you don't have the same maybe constraints around planning and, and other sort of issues that you might have in northern Europe. And I think we may come back on to this later on. But I know that people love talking about sort of battery prices and what's happening in the space. And with so many projects going live recently, it'd be great to get your view on sort of battery prices. It feels like they're falling faster than anyone has forecast. Are we approaching a floor? Or is there some? Are there dynamics at play like sort of Chinese overcapacity in terms of overproduction. And is that going to sort of come out the market and we'll see things tick back up. What's your what's your take. Yeah. Great question. I mean and there's a few different elements to this one because. So it depends on where you draw your line. Um, the last time I was on 20, 22 and I was having a conversation with Q and it was about the basically the massive spike in prices of lithium carbonate, which was sort of like post-Covid rebound, basically. So we were back in the beginning of the war in Ukraine, Covid, all these sort of things. Since then, 2022 down to end of last year, the cost of BESS systems fell by a factor of three. So you can buy three times as many say, batteries. I don't mean the cell, I mean three times the system that you could have bought back in 2022. So that's a huge decline, very, very rapid, like year on year collapse in prices in the last six months. It's kind of actually at least on the, let's say, raw materials side. And the sell side started to invert a little bit. And that's basically because demand is now really, really accelerating. Uh, you're seeing longer and longer duration battery storage projects built. So that's more and more gigawatt hours. Yeah. Uh, huge growth in like incremental demand with AI, hyperscale data centres. So the demand side has really grown. And now the supply side has become a little bit constrained. So lithium carbonate has, which is sort of one of the core ingredients that goes into an a battery cell has actually increased. And it's gone up from $8 a kilogram to about 24, 25, um, which is nowhere near the like it was something like 80 or 90 during the peak in 2022. But it has come up and it's like tripled or quadrupled. So that doesn't necessarily mean that energy storage system costs triple or quadruple. They only go up a few percent because it sort of works its way up the up the stream, but the raw material costs have gone up. The cell costs therefore have gone up a bit. And then the system costs, because they're being exported from China. And China has recently, um, say at the end of last year, come out with something called anti-evolution measures, which is basically a, yeah, essentially a set of tools to try and encourage all of the Chinese battery suppliers not to over compete with one another because it's essentially China on China competition, which dilutes margins and prices. Um, but some of those measures, like removing export rebates on the batteries, um, mean that prices have gone up a little bit in actually the near term. What's offsetting that? And the reason you might not necessarily see that is still the overall trend of innovation is actually really exciting. So there's these bigger cells being built. There's bigger and bigger DC or AC blocks like energy storage system block designs, which if even if your raw material costs are becoming a little bit more expensive, if you can pack more into the same footprint and divide that by the capacity, the price per kilowatt hour still keeps coming down. So it's a little complicated. There's a lot of parts to that story, but sort of steep declines, a little bit of a blip upwards. But the overarching trend of bigger and bigger system designs and optimisations still kind of pulling prices down. So where does that leave us? Right. Having said all of that, um, and we had one acronym in there — LFP — which is lithium iron phosphate. That's the the type of battery that most grid scale batteries are today. Yeah. Um, but where does that leave us from a sort of dollar per kilowatt hour perspective. So I mean, this. And this can be a ballpark number. Yeah, but this is a classic. It depends. It really does depend where you are in the world, uh, how you're building system, what you're procuring and the scale. So I can give some Middle East examples because outside of China, probably the Middle East is attracting some of the lowest prices that there are public domain references for in the world. And this is for like a delivered battery system. Or is this for a cell. So this would be for um a energy storage system. So that doesn't necessarily mean the turnkey project. It means the turnkey product or system. So basically the core components are the you have either a DC block or an AC block. So it's the battery cells. It's the cooling system, safety systems, the EMS. The 20 foot shipping container that you would see. Yeah. Um, as well as then the power conversion system that takes the DC power of the batteries converts it into the AC power of the grid. Yeah. Usually it includes the MV transformer. So that's part of what's usually called something like a MV skid. Um, and it usually would include the controls. So in some cases it's very, very simple because it's all one block right. Tesla has a new product called Megablock. And that basically comes and ships as like a full product. In other cases you're buying like two different things, like a DC block from one supplier that supplies the the battery cell and the block, and another party that maybe supplies the inverter, but for that sort of scope. So the equipment excluding like the civils, the installation, the actual plug in to the the grid. The grid connection. Yeah, yeah. Um, for a utility scale base, like in the, let's say for our range, it's sub $100 a kilowatt hour. Now, um, for these kind of large scale procurements in the Middle East, and then it varies hugely by region. So that's kind of the, the, uh, you know, an average across some of these different dimensions. The US actually has one of the highest prices now because of the tariff wars on, on, uh, Chinese imports. And then the sort of subsidies and domestic content orders to encourage local supply chain. It is kind of a crazy level of, of where that cost has got to. And did the second part of the question, do you think it can get further? Do you think we can go further? Because if anything, all we've seen is so we have seen some recovery in, uh, lithium carbonate costs, but we have seen sort of relentless competition in China and and improvement in the product in terms of getting more from the same amount that they're putting in or more from the same footprint. So do you think that as we get to say, 100, do we do we look to the next five years and go, I can see it pretty clear pathway to say 50. Or is it sort of like we're going to we're going to we're going to run out of improvements we can make here. And and to fundamentally go further, we need to do something new. So in in China. And this is why we just have to start differentiating between regions. So in China there have already been in the last six months a year prices for the same scope considerably lower than 100, right down to about $6,065 a kilowatt hour mark. Now, China has a few unique characteristics. They're one which is incredibly intense competition domestically, which is why actually more and more Chinese suppliers are moving internationally to try and sell, because the margins are much better actually internationally, selling into Europe and other places. The second is there's no tariffs. Obviously it's a domestic market. And third, there's no shipping logistics costs, right? It's all that that that piece is eliminated and it can be a few percent of the project. So so those elements are all there. And again, those prices are probably a bit of a low watermark in the near term with some of the measures we just discussed which might be pushing them up. But I'm actually pretty, uh, bullish on them coming down further because of some of the innovation points we talked about. Right. The if you can get the same sell, or even if the sell increases very slightly in, um, in cost, if you can pack that same cell more efficiently into fewer containers. Um, some of these like stacked modular designs are starting to see that brings down the price per kilowatt hour, um, both for the product, but then also the EPC component, because the less land that takes up, the less foundations you need, the less cables, the less installation work, right? That brings down the overall project costs as well. And then the last part of it might be the sell. And what could happen aside from these near-term measures like in the long run, we are getting closer towards the end of maybe LFP's journey, of how much scale can bring down cost when we're in terawatt hour territory now, right for scale, so there's not much more. You can keep taxing the scale. And so it's getting towards the end of like it's very steep like learning curve. But the raw material costs if you if you ignore the manufacturing costs, the raw material costs for a battery might be somewhere between 20 and $30 a kilowatt hour. So you could see a cell getting, I mean, whenever we reach that floor because there is a production cost, but we've got more and more efficient at producing that. That's the gap that could get closed. And it's also with PP, right? It's not like it's the same from three years ago. There's kind of constant iterations in exactly the the formulas that are used and how they're made. And so, so there's sort of continuous improvement. But perhaps one thing that I'm quite excited about, which is this, as you mentioned, that sort of 20 to $30 range, the part of the market that people talk about a lot is sodium ion, which could be even cheaper or would be even cheaper. So do you see sodium ion kind of muscling in on the dominance? Or is that an overblown story, or are we just sort of hyping it up? But it's not really going to happen? No, I think it will because the to to explain a little bit of the history lesson. Like we talked about being the dominant one in grid scale storage, about 95% of large scale battery storage, like stationary storage as opposed to EVs is now as a global fleet. You go back five years, it was much more of a mix with NMC chemistry. Um, so nickel manganese, cobalt, which is basically a higher energy density chemistry that was higher cost. Um, but basically the reason it started there was more NMC batteries were being built for EV use, and the first storage systems were basically just taking the batteries from the EV sector and moving them into stationary containers. Um, we've now started to see more and more innovation as special product lines there. Even companies that, uh, that only do stationary storage batteries. And that sort of shift led to becoming much more competitive for stationary storage use cases than NMC. Why? Because the cell cost, um, even if in the early days it wasn't that much cheaper, it got it had the potential to get cheaper, much faster because the raw materials are cheaper. Like lithium is the sort of most expensive part. But iron and phosphate are cheap, whereas nickel expensive, cobalt expensive and also has like, you know, limitations of where it can be, um, extracted from. So the raw materials story was good, the density was a little bit lower, but the performance and cycle life was higher. And for the grid storage, the cycle life like how many times you can cycle the battery matters a lot more because the car you're going to use maybe five years, ten years. A grid storage system is an infrastructure asset that might be there for 20, 25, 30 years. Yeah. So and you're cycling it probably once a day or more instead of, uh, once a week. So it's quite. Hard to put a put 15,000 cycles on a car battery? Exactly. You have to drive a really bloody long way. Yeah. So. And I'm using this contrast deliberately. There's one or more element which is safety, which is the NMC. Batteries have a higher. Like all batteries of a thermal runaway propensity. Right. That they can basically use the stored energy to self ignite and fuel and cascade, um, essentially the heat that's stored in them. But NMC has a higher, more spiky profile and basically as a relative comparison is safer. It's not safe. It's just safer. So all of these characteristics I've just described happened five years ago, somewhere between 5 and 10 years ago. Sodium ion were in a very similar situation. The first thing we need to do is clarify. Sodium ion is not one chemistry because we keep talking like sodium ion is one thing. It's just like lithium ion has lithium titanate. Uh, NMC, LFP, like all these different kinds of sub chemistries. Yes. And when people talk about say NMC sort of 811. Right. And they're talking about sort of the. Various ratios. The various ratios of each element within it. Yeah. And and you're seeing that same thing coming through in sodium and that it's not just like one, one formula. There are many kinds in just the same way. Right. So the it's the cathode side. So sodium ion battery is very, very similar. And that's part of the advantage of how easy it is potentially to swap in. Just like was very easy to swap in for NMC. Um, you, you have basically all of the same relative characteristics with one particular type of sodium ion. So again with sodium ion you can draw a lot of analogies to the the lithium ion. So there's layered oxide chemistries. So layered sodium oxides are sort of like the NMC. They're a bit more energy dense. They don't get as much cycle life. But the density matters more for cars. So you might see more of the layered oxides being used in three wheelers or electric vehicles over time. The one that because I won't go through all of them, probably just about interest of time. Um, but the other one that's like the analogous one to is something called NFP, which is sodium iron phosphate pyrophosphate. So we're not going to see that again on the podcast. Uh, PHP is the sort of equivalent of. So again, relative to the, the like layered oxides chemistries, it is safer not safe, but safer has higher cycle life, has much cheaper raw material costs. Because again things we're talking about sodium is salt. Um, again I'm phosphate. Like all these things are cheap. So the raw material floor is really low. And the real only trade off is the cell density is lower. And, um, even if you can get the, uh, uh, the other things improved, that density piece is a penalty. You will never fully be able to catch up. How does the cycling compare on sodium ion versus, say. So significant? I mean, so you have to put a bit of caution to it because there's just less data on seeing these. You know, it's based on simulation and extrapolation, but there are claims of 20,000 cycles compared to. That crazy number. Like ten is probably quite standard 10,000 cycles. Now for an RP battery. There are claims of like 15,000 with, you know, some of the higher performing ones and ones that are doped with more lithium. But so 20,000 cycles is obviously extremely, extremely good. So that makes sodium ion good. So the reason I think it's so let's say like that NMC to RP story is it's the same set of characteristics. Right. You have a chemistry that is lower density. The cell cost itself is not yet that cheap. But it has the potential to get much cheaper than NFP. Um, so safety is better, cycle life is better and your trade off is the density. But we have we dealt with that density trade off before in in the move from NMC to and now we're at 95%. It's also energy storage. Right. And you don't you generally shouldn't put energy storage in the middle of a giant city. Right. You should put energy storage in places where perhaps there's solar panels and those places. Generally you can get a bit more space if you need to. Yeah. So interesting. When do you get your hands on a sodium ion battery, and when do you think you'd be able to get one and sort of test it? Because I know that's the kind of thing you'll be doing. Yeah, that's I mean, that's the hard one to answer because let's say there's a lot of announcements at the moment. Both. Like I'd say the cell level data is a little bit clearer, right? There are plenty of parties now in fact. And the other reason that this is such a like the the way that this is going to accelerate more quickly than, let's say, another technology would is it's the same OEMs, the same cell makers that make it lithium ion are making the sodium ion. For two reasons. One, it's just a hedge, right? If prices are increasing, you would switch and and make sodium ion batteries instead. And the second is what if it beats NFP? You're better in the ring than having someone else come in. But although there are also companies that are just doing the sodium ion. So it'll be in next couple of years, you think you might see those first sodium systems coming through for grid scale. So the cell data is sort of there. The product announcements are largely there as well. So you can go out and see. CATL has announced a project. Envision has announced a project. HiTHIUM announced one. There are European companies providing them as well, like Moonwalk. Um, and in the US, Peak Energy. So there are parties now starting to bring this to the table. But let's say it's very limited actually getting pricing and a full technical spec for the system itself right there. So that's the bit that's still lacking. I don't think we're far away because like those announcements, you know, presumably they're going to follow with with like why would you announce a product without. If you don't want to sell it at some point in the future. Right. So it's on its way. And also it's announced from enough parties that it's not just someone coming up with something that's almost like fake news. Yeah. So it's to it's to kind of it's to out of the box to be uh, to, to be wrong. Interesting. And you mentioned CATL. I'm really interested in about the sort of the dynamics of these players. Right. So CATL has been sort of dominant in, in some ways of the battery market for for a while. Do you think that if we start to see things like, um, sodium ion coming through or we see sort of more competition coming from China, do you think that that could sort of, uh, rock that position of battery supply, or do you think that, like now it's got sort of a hold over a certain part of industry? It'll just keep on with that position? It's a good question. And this was one where I have to start making, you know, predictions, forecasts like to, to to be able to answer. I think um, cables in a very different situations to the Koreans where they were ten years ago. So uh, for context on this story, I'm referring to companies like LG chem, Samsung, who were dominantly the suppliers of uh, and it was NMC chemistry like we were talking about earlier. So NMC chemistry is mainly being used in grid storage. So they were the two biggest names, the two two main suppliers, maybe with Panasonic as the, as the third. Um, and they've now completely dropped out of the top ten largest cell makers over the last ten years, and that's partly because they basically bet on NMC and did not consider or entertain. And that would explain why CATL is both looking at LFP and also sodium-ion. Right. Because it doesn't want history. That's why I'm saying it's different because it's not like making a sort of bet that this is the only chemistry or work that CATL has a gigantic R&D department. Tens of thousands of people that look at every aspect of cathode, anode, electrolyte, and that will include different chemistries, it will do different composition compositions. There are all sorts of things you can do. So I don't think that they're going to go in that same sort of like massive direction of that career squandered at the time. Like again, they've they've started pivoting more now into as well. Are you seeing some of the Giga factories being retooled to make. So it's not let's say a story that's completely over yet, but CATL at the same time has been losing market share like quite a lot in the last few years. As an integrator, for instance, in the last few years they went from being the number one integrator, providing a product to dropping. I think it's out of the top five now last year. And on the sell front, there's still number one, but have gone from 32% market share down to 20. So there's this sort of the disaggregation maybe happening or like just more and more competition on both the integration side and on the sell side. So I think that is likely to continue anyway. Right. You'll see the top three, uh, sell supplier's uh dominance erode, uh, as more and more suppliers come in and maybe at some point that will reverse with consolidation. So you think that edge might not come from, let's say, the best sell chemistry out there. But actually, if you can put together your block the best way possible and that integrates most easily with other parts of the world, and you are, um, very ready to work with other grids and get your tech installed in a way that people can understand it. Maybe that's where you find an edge. You might be fourth in or fifth in your battery cell chemistry, but if you're first in integration, then that's a way that you could outcompete like an incumbent. Yeah, I mean, potentially there's a bit of a split actually, because in the let's say top integrators, generally speaking, actually don't make the cell okay. Right. That's a bit of a split in the market. Right. You see uh, parties like sun Grow, uh, Tesla are basically integrators, right? Compared to an OEM, like an OEM being a hykeham or a CATL or BYD, right. Where they make the cell. And so they come at a kind of slightly two ends of the spectrum. One is very, very good at producing a, let's say, a high quality product with, uh, let's say low losses. Um, so like a good yield, um. And that's like a factory yield. Right? So that's like trying to get 98, 99% in terms of the materials that go in, end up getting towards the end product. Exactly as high as possible. And this is some of where some of the European giga factories like struggled on here. We're talking about the cell as opposed to maybe the system, but really getting those yield qualities up because if you're wasting 70, you know, 30% of your material, you only have a 70% yield. That's a lot of money you're throwing away. And that was like the Northvolt story, right? Yeah. Exactly. Yeah. So so the the sort of production and batteries have become not just the cells but the systems much more factory produced than they were when I started in the industry, like 17 years ago, where it was a lot, a lot more custom. So the more standard and factory built you get, the higher the quality of production is likely to be, so that that element matters quite a lot. But as you alluded to, it also matters a lot to be able to integrate into different grids and test to different standards and understand what your customer actually needs and wants. And one thing is selling a product, another is servicing it and supporting it and standing behind it for, you know, 20 plus years. Maybe doing that sort of going back five years, I'd be really interested to know, like, what's one thing that's being offered to you in procurement that's different today than it was sort of five years ago. I think you implied a little bit about the integration side, but I also wondered like additional things like, uh, like finance from OEMs who are looking to kind of complement their, their tech with something extra like a cherry on top to make it happen. Yeah. I haven't really seen finance. I mean, that's an idea that I've, you know, I've seen when I was involved on the technology provider side, we, we looked at as well. It's just very tricky to standardise like in that sort of finance package would have been great for CNI storage. Right. Commercial industrial scale, smaller, more standardised, especially because the buyers usually have smaller storage systems like factories or, you know, other energy users energies in their core business, and they usually don't have a lot of money up front to put down. So the financing piece would be interesting, but I haven't really seen a lot of that. I guess the main thing that's starting to become, well, even two years ago or a year ago, everyone had a very, very standard looking product, right? 20 foot container. Everyone figured out you can pack about five megawatt hours into it. And there was really very little differentiation between these five megawatt hour blocks. The limit has sort of been found for that. It's the with the larger cells, the next generation of cells, um, you can get maybe to 6.25, but that's hits like weight limits and size limits. So now we're starting to see matters. Because you need to get it off a lorry somewhere. Right. So if it's too heavy you can't put it on lorry. You can't get a cheap crane to lift it. Yeah. And if it's too big, too wide, too heavy for a ship like or it's an overweight problem you have there are the shipping routes become them much more expensive or you have fewer vessels. So that piece became what's changing there is you're starting to see modularisation of the technology. So there was a sort of wave of modularisation, like going to smaller blocks, cubes, like Powin, and had a Centipede, um, Fluence. And they had, uh, the, the Cube. Yeah. Remember you had a cube that was more like CNI, wasn't it? That was. No, no, it was the it was the utility scale product. The idea was like it was just very, you know, small enough. Very easily. Yeah. Yeah. And then that sort of shifted to the 20 foot. And now we're starting to see this shift back. Right. So more like stack technologies or, you know, different modular ways of assembling something in a very compact way on site. By that you mean is going higher. In some cases. Yeah. Or in some cases it's longer. Right. So BYD has a product, which basically is also cubes. They call it MC cube individual cabinets, but they assemble on site so it's not 20ft. It's longer because they're basically able to break each individual component into a small enough amount, the size that's ship able within standard limits. So it can be like different parties are doing different things. Fluence has gone more vertical. CATL as well has got this TENER stack which sort of goes upwards. And that's uh yeah, that certainly saves your space because you can get, you know, more on the, on on the same land. Um, but the installation then has to be be done. Right. You have to think about the maintenance and the other aspects. So there are basically I just think there's still a lot of innovation going on. And like in the last couple of years, there's just more and more of these different design dimensions to consider and more optimisation for like long duration as well. So it never saw like it was starting to get now eight hour battery cells right there are optimized for eight hour use. Instead of using the same batteries that you would use for 2 hours or 4 hours. Mhm. What about like um, like the long term service arrangements that go around this. So if I'm sort of dealing with a company A, company B but company B says, you know what, I'm going to have a, there's going to be a service depot that's going to be in this country, I'm going to be able to get parts to you within like an hour if I need to. Do you ever see that coming up in conversations? Yeah. It's well, so services are a really important part that it can be under loved and forgotten. Um, but you can. Yeah. You can buy a cheap system. But if you can't get your parts in the country or you don't have a local service team and they're being flown in from. Yeah, I'll use China because China is 76% of the market, right? You can have visa issues. You can have delays to fix any any issues. Right. So local team, um, local warehouse or whether it's spare parts on site. So traditionally spare parts on site was the way you would do the these projects. But then as a project owner you have to take care of the maintenance, the fire risk, the insurance of of that. So it's actually better to have, you know, an off site model. But usually for from the technology provider side, you want a critical mass of projects before you're going to set up the cost of a warehouse and a local team. So it's a bit of a chicken, chicken and egg. Yeah. Fun. Uh, I love that. Uh, yeah, a little bit unloved, a little bit forgotten, but still critical to to get right. Um, let's start back the clock then. So you were on the founding team at Fluence a decade ago. I'd love to get your take on what did the industry believe back then that turned out to be completely wrong? Yeah, I think the biggest one, um, was probably the underestimation of how China would move from sell upstream. Right? So at the time, like I would say, I firmly believed it would become a 2 or 3 horse race. Um, a lot of names are like, so there was Fluence and there was Tesla that are still around with a lot of other names that are no longer, um, you know, around, like Powin, Greensmith, Younicos. Uh, rez was in, in the very early days. Nidec. I mean, Nidec is still around, but a smaller scale. So all of the competition back then was was Western, and I thought it would become a bit like a, you know, Microsoft or an Apple. You know, you'd have a few big players and then, um, you know, some, some other ones that might be more regional. And that one I've been pretty wrong on because it's gone completely. Like we just discussed earlier, the other direction where the integration market is, even though the top few integrators are kind of consistent, the share that they have of the overall market has been falling and falling every year. It's like so there isn't really much consolidation. It's the other direction at the moment that it's getting more fragmented, more regional. I think that's the biggest one that I've I've got wrong back at the time. That feels like a really unfair question. Let's go the other way. Like, what's one thing that you thought would happen that did happen? The battery. So I strongly believe that batteries would win in the LDES space. Okay. I think you and I had conversations many times over the years. Honestly, I thought. It just played out here. Yeah. So, you know, BESS is LDES was kind of a mantra that I pushed for many years before. That was one of the ones that, like. I mean, now I think it's more accepted. I don't know if that's. That's now. Absolutely. I mean, we just had the Ofgem Elders long duration energy storage competition, where it was originally intended to be support for pumped hydro. Then it was opened up to long duration storage. And then by sort of gigawatt share, it's about 5050 in terms of the amount of pumped hydro that's come through in this round versus pumped hydro versus lithium. And some of those lithium projects are 16 to 18 hours in duration. And if you cast your sort of mind back ten years, you'll remember that long duration in inverted commas was sort of two hours. And we kind of thought, oh, two hours. That's a that's a long that's a long project. And here it is at 16, 18. right? Um, so I think that that has really been sort of shattered. Yeah. The only I sort of predicted that 10 to 12 hours was kind of going to be the economic limit. So it's interesting to see it go even further. I think it's a little bit of a special case of just the way the support mechanism, uh, is designed, because without that cap and floor, you wouldn't have built a 16 hour battery. So it's a little bit of a market, uh, let's say, uh, distortion that causes that. But you see ten our best being built in other places, or 11 hours, 12 hours without that structure happening. So, so that's kind of got there. It's just use case driven. And the reason we didn't see much less five years ago was there just wasn't much need for long duration storage. Right. It was all about frequency or regulation or shaping the peak, which is 2 or 4 hours to do around the clock power. You start to need six. Eight. Ten hours. Yeah. Um, in the sunny countries. And then it gets more complicated in places where you have worse irradiance, but. It gets really expensive. Right. If you're using a battery like once a year to deal with that, that one cycle, it's kind of the business case still doesn't make sense. So your prediction of 10 to 12 hours to be sort of the economic limit. I think I'm still there. Like I outside of sort of specific regulatory intervention in markets, I generally I don't think we'll see too much more. That's longer than that 10 to 12 because that still gives you that round the day coverage that you want. Yeah I tend to agree. Right. It comes down to sort of regulatory intervention is kind of what you need to push this into multi-day, um, territory. And you can ask the pragmatic argument. I used to be a bit more of a purist about it, of thinking like 100% renewable is is the, the goal. But you can get to especially in the senior agencies now 95 to 99% renewable without really going extremely high on the oversize. Yeah. I mean, the Masdar project goes quite high on over sizing. Um, it's like it's it's a one gigawatt baseload solar project basically. And they have. 24/7 full year. Yeah, exactly. With, uh, 5.2GW of solar and 19 gigawatt hours of bass. So that's quite a heavy over size to deliver that, that one gigawatt. But you can choose where your economic, you know, limit is. And it's somewhere today, most places it would be maybe more around the 80 to 85% mark. Um, and then you have to decide what you want to do with to fill that gap. Um, and let's take the 99% case. Right. Rather than over size, another ten x to get to 100% reliable. Which seems very expensive. Which it is very expensive. Your alternative is use gas. Right. Like that's in most places. You have flexible, dispatchable generation. And if it's only going to be a very small percentage of the time to deal with your, uh, you know, rare occurrences where, um, you know, have a sandstorm, maybe for a few days. Yeah, that's probably a worthwhile trade off. Right? So rather than go 100% into decarbonising electricity, get to 95, 99 and then focus on the next to decarbonise. So I've become a lot more, let's say, nuanced in that thinking of saying, actually 9599 is probably good enough. Yeah, I think. I think I totally agree that we we shouldn't be worried about that, that sort of final percentage, in fact, overbuilding battery storage or solar to try and get rid of that last like 1% just feels totally unnecessary. And it's also not like your battery stops working. Like when you get into that sandstorm or whatever it might be, you can still use your battery fleet alongside your gas to sort of flex the batteries to meet whatever the demand looks like. Let's say the demand isn't totally flat. You can you can sort of you don't have to over build the gas to the same degree, because you're just looking to get sort of a terawatt hour out of it over a 10 or 20 day period. Yeah. I mean, it's also a full system for you because you can look at demand side response side of things, or it depends what your demand is, right. If it's critical uninterruptible power in a hospital or a, you know, a high performing data centre, it's a little bit different to an industry where if there is a 1% a year or a, it can be even 1 in 5 or 1 in 10 year, right? You really have to start to get to the extremes in renewable variability to look at these really rare events that for sizing for all of them becomes very difficult. But there are other ways you can manage that. That problem is there's also a bit of a funky outcome that happens as well. If you actually have a 16 hour lithium system, it's quite hard to get enough cycles on it to start hitting the warranty because like most lithium systems, one two cycles a day. Okay, but if it's a 16 to 18 hour system, you were, you can't cycle that enough to get to two cycles a day because there aren't the hours in a day. So you're not going to put the wear on it that say other use cases would. Yeah. And this this was the problem with other like let's say non best technologies because often the selling point was well our technology doesn't degrade right. There's a lot of different technology classes that basically say well we can have infinite cycles but also try to pitch for long duration storage. The longer the duration the lower the cycles. So that benefit really isn't there. So that you either target high cycle, short duration use cases or low cycle long duration, or somewhere in between. And the problem is, best has just become very good, pretty much all the way across that spectrum. There are going to be always niches and exceptions and, you know, cases where other technologies will be successful. But it's like if you look at the LDES cap-and-floor, it was 1.5% was of the stuff not best and not flow. And I think the compressed air energy storage, I think it was. Yeah. Um, well, let's do those texts now. Right. Uh, I think it's fair to be really frank. Like, where do you where do you see kind of the, the hope for those technologies. Do you, do you see them finding corners of the energy market that will work for them? Or do you think that this kind of once you look at that headline of, say, lithium going into 18 hours, it gets quite hard? I do think it's quite hard. There will be niches, and one of probably the best case cases we've seen recently of that is some of the other like alternative non best non PFS technologies that have been successful have been with the hyperscale data centres who just have a, you know, bring your own power problem, that they don't have a grid connection, they want to build their data centre. And so they have to go for long duration storage to make that possible because they need the reliability, whether it's baseload or. 24/7 supply. So you've seen like a form energy with 100 hour storage. Um, I think Energy Dome has some very long duration storage as well. So the carbon dioxide into, like a giant pressurized tent. Yeah. And then comes back through a generator effectively. Yeah. It's like a giant, but it's quite an interesting looking thing. It looks like a giant inflatable tent, which is, uh. Yeah. So certainly interesting to see. And form is the, uh, iron oxide. Yeah. Iron oxide. Batteries. Yeah. And David Hill has previously been on Transmission. So if you want to check that out then, then look for that episode. It does exist. Um, okay. I'm going to take us to a close. I'm going to move to our final question. Um, what is a contrarian view that you hold about the energy storage market that not everyone agrees with? I mean, I've heard a lot over the years, and the question is, how many of them remain contrarian and which are now accepted. So I think if I have one that's left, uh, let's say that maybe isn't widely accepted today. We talked about the sodium mine before. I think there is a heavy underestimation of how Our strongly sodium ion is going to move into stationary energy storage. So I think like I'm seeing that NMC to story and how quickly it switched. It obviously depends a little bit on the trajectory of how sodium ion improves. And it depends also what happens with lithium carbonate because it's basically a relative calculation. But the system level benefits that you can get from the sodium ion, like basically higher temperature tolerances, more cycle life means you can design simpler, more passive systems with higher efficiency, longer life that will start winning on a total cost of ownership and a level i's cost of storage bases before it wins on CapEx. But the tipping point, I think, is moving quite quickly. Like, it's not going to be many years. So currently analysts are sort of predicting there's a few different views, but like 10 or 15%, maybe by 2036, I think it could be significantly higher. And I'm a little bit wary about putting a number. And I see you rather probed me for a number. Um, but yeah, it's hard to say because it feels ridiculous to say like the 95% that is at today, right? Like, but I think it could be a very significant. Yeah, maybe maybe less of a probing question. I'll just just say that when these texts come through, we go from product, product specs, they start being talked about stuff being advertised until we actually can really see, because you said there that the the cycles could be longer. And I think that if you go back a year, the sort of the wisdom was that sodium ion might be sort of fewer cycles on the system. And so I think I'm quite excited to see is as those first systems come out, when you get your hands on them, you can actually test them. You'll be able to say, look, I actually I've got a pretty good idea of where this is. And then it's much easier to make a number. So I won't hold you to a number right now. Yeah, I think that's basically it. Right. Like it's based on uh, let's say at the moment mostly marketing. And you need to do the actual testing to see whether that. But if, if it lives up to its promises and I think there is a stronger like credibility to why the performance will be the way it is. Than than has been may be the case with other technologies in the past. Then it could take a very significant. More than 10 or 15% by 2036. By 2036, I mean, I'm still like, if it really does improve the way I think it will improve, I think this could be an NMC to store. So it could be even like a major sweep, like it could be 1995. Like that's why I'm worried about saying this and then it coming back to bite me. Um, but let's say like, yeah, good. If even if it reaches 5050, that could be quite interesting. It will start in the niches, it will start in, you know, high low temperature markets and certain use cases. But as the costs come down, as the scale is there, it's the exact same thing we've seen with so. America, it's been far too long since you came on Transmission. We look forward to having you on again soon. Thank you for your insights into the battery supply chain world and what's coming next. I'm sure our listeners will have learned a lot. No problem. Thanks very much for having me on again.