My Climate Journey

Ep 48: Ramya Swaminathan, CEO of Malta, Inc.

Episode Summary

Today’s guest is Ramya Swaminathan, CEO of Malta, Inc. Ramya has been an investment banker focused on public power clients, a largescale hydropower developer, and now, the CEO of one of the leading long duration energy storage companies, which spun out of Google X and has raised a bunch of funding from top tier firms like Bill Gates' Breakthrough Energy Ventures. Ramya does a great job in this episode of explaining why long duration storage matters, where it is in its evolution, Malta's unique approach, and what it will take to make it successful. Enjoy the show!

Episode Notes

Today’s guest is Ramya Swaminathan, CEO of Malta, Inc.

Malta’s electro-thermal energy storage system is a new grid-scale technology that collects and stores energy for long durations. Energy can be stored from any power generation source in any location – be it wind, solar, or fossil fuels – enabling reliable and predictable operation of the grid.

Ramya joined Malta from Rye Development, where she was CEO, co-founder, and Member of the Board of FFP New Hydro. Under her leadership, Rye Development grew to be the leading developer of new hydropower projects in the United States and its portfolio of development projects, held at its holdco affiliate, FFP New Hydro, advanced from concept through FERC licensing and late stage development financing. She was also responsible for the expansion of Rye’s platform into energy storage, with the addition of two sizable pumped hydro storage development projects in the Pacific Northwest. At Rye Development, Ms. Swaminathan led a multi-disciplinary team, with specialists in engineering and construction, regulatory and environmental aspects, and power marketing.  She also led the company through several financing rounds, both at the platform and the project levels. 

Prior to her work in the hydropower space, Ms. Swaminathan was a public finance banker, most recently as a Director at UBS, where she focused on public power clients and senior managed more than $10 billion in financings. Ms. Swaminathan holds a Master’s in Public Policy from the John F. Kennedy School of Government and a BA in Anthropology from Amherst College.

In today’s episode, we cover:

Links to topics discussed in this episode:

You can find me on twitter @jjacobs22 or @mcjpod and email at, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

Enjoy the show!

Episode Transcription

Jason Jacobs:                Hello everyone, this is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help.

Jason Jacobs:                Today's guest is Ramya Swaminathan, the CEO of Malta. I was excited for this one because Ramya comes at this from a very interesting perspective. She spent her early career as an investment banker. As the director at UBS she focused on public power clients and senior managed more than $10 billion in financings. Then she was a large scale hydropower project developer. At Rye Development she was CEO, co-founder and member of the board of FFP New Hyrdro. Under her leadership Rye Development grew to be the leading developer of new hydropower projects in the United States. Now she's CEO of Malta, which is doing long duration energy storage. Malta spun out of Google X and has raised a bunch of money from top share places like Bill Gate's breakthrough energy adventures.

Jason Jacobs:                Ramya's seen this tough tech innovation from many different sides and she does a great job in this episode of providing an overview of the energy storage market, talking about where long duration storage fits in, Malta where it is on its journey, some of the challenges its had along the way, and some of the opportunities, and also a really great discussion about this kind of tough tech innovation in general. What kind of impact it can have in the climate fight and how we can help accelerate these efforts so that more breakthrough technologies see the light of day. Ramya Swaminathan, welcome to the show.

Ramya S.:                     Hello.

Jason Jacobs:                Thanks so much for coming.

Ramya S.:                     Really appreciate being here.

Jason Jacobs:                I'm excited for a few reasons for this one. One, so you're the second Google X man out that I've talked to. I've had Kathy Kathy Hannun from Dandelion come on recently.

Ramya S.:                     Excellent.

Jason Jacobs:                Actually Dan Yates came on as well who's executive chair at Dandelion, so I guess third Google X man we can count in as well. That's one reason it's just compare and contrast the different spin out experiences from Google X. Another is that there's a couple areas that I think are important for climate innovation that I'm not well versed in. One is building big stuff and you've done that, and another is financing big stuff and you've done that. You have these two big pieces of your background that I'm not well versed in and I want to understand better. Then the third is what you're actually doing because grid stuff and long duration energy storage, it's a very important piece of the puzzle and I think this is the first episode that I've done that is tackling that head on in some way so I'm really excited for all those reasons.

Ramya S.:                     Excellent, well very well said.

Jason Jacobs:                Maybe we'll just take it from the top. What is Malta?

Ramya S.:                     I think that's the best place to start. Malta is a company that's developing a technology for low cost long duration energy storage. Let me start by explaining what storage is and why it's important, and then I'll tell you Malta's particular take on storage and why that's important.

Ramya S.:                     I think that when we talk about climate change, renewables penetration, one of the things I hear a little bit is the sense that increased renewables penetration, in some cases 100% renewables is kind of the holy grail. People offer that as a solution to climate change. Well if we could just get rid of fossil fuels, convert the entire electricity grid to 100% renewables then we wouldn't have this issue. One of the things is that I don't think gets as much air play is the fact that for a grid system to be 100% renewable, actually requires a huge amount of energy storage because renewables are intermittent. There are times that renewables produce a lot of electricity and there are times where they don't produce any electricity. For example, when the wind doesn't blow or the sun doesn't shine.

Ramya S.:                     To have a grid, an electricity grid, an electricity supply system that is stable, reliable, and resilient, you need to actually do something about that intermittency. You need to be able to smooth it out so that every time you turn on the lights, every time you flip the switch you have electricity coming in. Part of what the message that I wanted to get across was really that storage is a key part of this energy transition and I feel like it's a little bit in the white space or in the overlooked part of the conversation, which is a transition to greater and greater percentages of renewables is not possible without energy storage. That's the context.

Ramya S.:                     Within that I wanted to talk a little bit about Malta itself. The goal really that Malta has, and there are a number of other companies that are pursuing solutions to the technological question of how are-

Jason Jacobs:                Some of them here in Boston.

Ramya S.:                     Many of them here in Boston, and isn't that a wonderful thing that Boston become this hub of clean tech innovation?

Jason Jacobs:                It is. We don't talk about it enough but it is becoming that.

Ramya S.:                     It is and I think it's necessary. There are some real positive impacts of the concentration of such companies. There are number of companies, as I mentioned, that are pursuing similar solutions, not so much technologically but in the space of energy storage. What is Malta's system and how is it different? Malta's technology is essentially electricity in, electricity out. It's agnostic as to the source of electricity. It could be very well be in the specific example that I mentioned in the lead up to this conversation, it very well could be that it's during an oversupply of renewables, you have excess wind or excess solar, therefore there's excess energy. Electricity comes into the Malta system, that's not by the way, the only case, certainly it can be paired with any source of electricity generation.

Ramya S.:                     Electricity comes into the Malta system. The front part of the Malta system acts as a heat pump. The best known examples of heat pumps that I could offer you are refrigerators and air conditioners. Think about a refrigerator or an air conditioner, it basically separates the hot from the cold. In the case of a refrigerator, the cold goes inside the system and is insulated to keep whatever is inside your refrigerator cold, and the heat gets dumped to the ambient. The front part of the Malta system is like a giant refrigerator. It essentially takes that electric energy, and then through a heat pump, converts it into thermal energy and separates the hot from the cold. The hot side is stored in molten salt. At the temperatures we operate at, which is think about it as 565 degrees centigrade, salt actually becomes melted, it becomes a liquid. Molten salt on the hot side and then the cold side is stored in an antifreeze solution.

Ramya S.:                     Essentially that energy is stored and sits there until it's needed. When there's a signal that energy is needed again, on the electric side the back half of the system essentially acts as a heat engine. It's very similar to a heat pump just in reverse. You take that thermal energy and reconvert it back to electric energy and it goes out back to the grid or wherever it's needed to a customer site. That's really the Malta system. The benefits or the advantages of the Malta system are that all the different components are well understood. They're not available off the shelf, but if you think about the basic machinery components, that's turbo machinery, that's heat exchangers, both of which have been made, designed, built, manufactured and used for 100 years. The hot side, the molten salt has been used, including at these temperatures in the concentrated solar industry, the cold side antifreeze is obviously known. The particular solution notwithstanding, is known in a variety of contexts, and the rest of the balance of plant is piping, valving, etc.

Ramya S.:                     If you want to think about Malta it really is a matter of taking well understood individual sub-systems and integrating them into an overall system that offers a solution, that as I sort of started with in premise, was low cost and long duration.

Jason Jacobs:                Well thank you for that. I have a lot of questions.

Ramya S.:                     Yeah.

Jason Jacobs:                One question is conceptually it's come up a lot that energy storage, as you said, is a big gap in terms of renewable deployment at scale. I get a lot of different contradictory perspectives on that. I was up making the rounds in terms of where we are, where we need to go, what the barriers are, etc. Before we talk about where we need to go, I guess just looking at where we are. What is the state of the storage landscape? Malta aside, where are we with storage on the grid today?

Ramya S.:                     Today, so something like 97%, the vast majority of storage that exists in the world, electricity storage that exists in the world today is pumped hydro storage. It's an incumbent technology, it's been known for decades. Hydro itself is a very well understood, it's the first source of power, first source of electric power. Very well understood technology, and in many ways pumped hydro storage is a terrific technology. It offers a variety of ancillary services that really have helped historically stabilize electric grids, provided a huge amount of the kinds of services that electric grids need in order to maintain stable reliable and resilient power.

Ramya S.:                     Let me take just 30 seconds and explain what pumped hydro storage is if that's helpful.

Jason Jacobs:                This is my first episode, so it's all helpful to me.

Ramya S.:                     Pumped hydro storage... Essentially you know what hydro power is. Hydro power is running water through a turbine to create electric energy. Pumped hydro storage uses the same principle, but instead of running water in one direction just to generate, you have two different reservoirs and you pump it back and forth between those two reservoirs. It operates like a water battery essentially. When you have too much power then what you do is you use that electricity to pump, so essentially at that point the pumped hydro storage system is a user of electricity, you use it to pump the water from the lower reservoir to the higher reservoir. When the power is needed you basically transfer the water back through a turbine, not in pumped mode but in generation mode, back out and generate electricity and it goes out to the grid.

Ramya S.:                     Now pumped hydro storage has very many benefits. It has very high efficiency, it's very well understood, it has relatively low cost. If you think about it on a dollars per kilowatt hour on a unit cost basis, although typically they have enormous upfront costs because the size of pumped hydro storage projects are very, very large.

Jason Jacobs:                That's the dominant form of storage today?

Ramya S.:                     That is the vastly dominant. Something, as I said, something like 97% of storage in the world today is pumped hydro storage.

Jason Jacobs:                But I hear so much about lithium ion.

Ramya S.:                     Yes, so that's the second thing we should talk about, which is other incumbents within the space. Let me just finish up on pumped hydro storage by telling you one thing, which is that... And I say this as someone who was a pumped hydro storage developer. Pumped hydro storage is limited in its ability to scale in the world from this point forward, and the reasons for that are that it really depends on finding the right site with the right amount of elevation between the lower reservoir and the upper reservoir. It's very dependent on natural terrain and it's very dependent on ones ability to flood two reservoirs. There are ways to do it that can be environmentally less impactful certainly and closed looped pumped hydro storage systems are gaining some traction. It's actually the kind of pumped hydro storage that my old company was doing where you're not impacting a natural waterway.

Ramya S.:                     If you think about pumped hydro storage on a natural waterway, essentially you're varying significantly the elevation of that water surface level, significantly as you pump and generate in successive turns. In that context, pumped hydro storage has limits as we have come to recognize the environmental issues associated with that kind of variability.

Jason Jacobs:                Is it third-party companies that are providing that pumped hydro today or is the utilities themselves?

Ramya S.:                     It's all kinds, so it depends a lot on the history of the particular grid, whether it's vertically integrated, meaning in that context the utility would be responsible not only for the generation and the transmission but also the grid balancing within a particular area. The electric system worldwide is very varied as to who has responsibility for what portion of the electric system.

Jason Jacobs:                The pumped hydro that exists today, are you saying that we've reached its limit or that it needs to be phased out?

Ramya S.:                     We've reached close to its limit, so I would not wager that the world is not going to build any more pumped hydro systems, I would not wager that. I think there are probably some sites that are going to get built in the future. However, it's very close to its ability to scale significantly beyond this in order to be responsible for the kinds of pressures that we see on the electric system. Said differently and more simply, we need a huge amount of storage to deal with everything that's happening in the electric systems worldwide, and pumped hydro storage I don't think is scalable to the extent needed.

Jason Jacobs:                Is it not scalable because of economics or because of the environmental impact that you were describing?

Ramya S.:                     The need for terrain, specific kinds of terrain. You need elevation between the upper pool and the lower pool.

Jason Jacobs:                Is the environmental impact for the proper terrain places also detrimental?

Ramya S.:                     It can be. It depends a lot. I mean all of these issues with respect to environmental degradation are site specific.

Jason Jacobs:                Got it, and what are the negative environmental issues that are caused by pump hydro?

Ramya S.:                     One basic issue with respect to anytime you create a reservoir is you have to think about what is the nature of the land that you're flooding? It can be done in a way that is not environmentally degrading, but certainly there are areas that are more sensitive, that are critical habitat, that are necessary for a particular reason. You would think about the kind of land that you're flooding to create these reservoirs and then what is the impact of varying that water surface level elevation as much as you would need to in the context of a pumped hydro storage.

Jason Jacobs:                Are the companies that have been developing that 97% that you described, is pumped hydro their only business or do they tend to be the big diversified utilities, for example, that are well positioned to just shift the portfolio to a different mix?

Ramya S.:                     It can be both. In the United States I believe the last pumped hydro that was actually built was sometime in the 80s. There has not been pumped hydro storage developed in the US and brought to fruition, that is brought to conclusion and turned on, in a significantly long time. When you think about the history of pumped hydro storage development it varies, but it's also true that the electric system was different at the time that a lot of these projects were built. The specific ownership and operation of pumped hydro storage, and I can extrapolate this lesson worldwide, depends a lot on what the regulatory framework was at the time that that plant was built.

Jason Jacobs:                Today it's 97%, what should that mix look like in 10 years optimally?

Ramya S.:                     I think you're going to see that percent go down significantly. I couldn't wager a number on it, but you're going to see that other kinds of technologies are going to have to pick up the slack because if we look at the energy transition that is happening worldwide, and I want to get to that in just a second because I want to make sure that you understand the stresses on the electricity system that are creating this need for storage. But if you think about the kinds of shifts that are happening in the generation mix worldwide, we're going to need a lot more storage and I believe that pumped hydro storage will not be able to offer the 97% solution. That number's going to go down significant.

Jason Jacobs:                Will the actual number go down or just the percentage?

Ramya S.:                     I think the percentage.

Jason Jacobs:                Got it.

Ramya S.:                     One of the benefits of hydro power in general, and pumped hydro specifically, is that when appropriately maintained they have an extremely long asset life. As long as you're doing your regular operations and maintenance and making sure that all the different maintenance protocols are followed, they're extremely long asset life. You could talk about 100 year asset life.

Jason Jacobs:                Should we talk about the 3% today and where does lithium ion fit into that mix?

Ramya S.:                     Let's talk then about what else is out there in terms of storage. All conversations there really have to address lithium ion, which is the new incumbent and there have been dramatic declines in the cost of lithium ion and dramatic uptick in the adoption of lithium ion in a variety of applications. You see a lot of increasing amounts of solar plus storage being offered in almost always that is PV, that is photovoltaic solar panels plus lithium ion. Lithium ion is being used in increasing amounts in grid scale energy projects. When you think about the remainder of that 3%, a significant portion and a growing portion is lithium ion. I think its important to see that.

Ramya S.:                     Now let's talk a little bit about lithium ion. Some significant value, particularly in terms of costs. You've seen significant declines on the cost of lithium ion, increasing adoption in terms of integration into energy projects and adoption across a variety of contexts. But we also have to think about some of the characteristics of lithium ion that I believe will also act as a natural limitation on lithium ions ability to offer the solution that the grid needs in terms of increased storage potential. Let's talk about the characteristics of lithium ion for a sec.

Ramya S.:                     A battery's modular, the electrochemistry is all contained within a module, and that installed module has a particular life, it happens to the design life of most lithium ion would be around 10 years. Actually just like you know from your personal electronics, there's degradation during the lifetime of that battery.

Jason Jacobs:                Not just the phone, my boosted board too.

Ramya S.:                     Right, so every year that you have a lithium ion battery there is degradation in that lifetime. When you think about the asset life and utility scale power plants, typically you would think about an asset life that extends beyond 10 years. Utilities have long planning horizons, and so if you're talking about something like a 30 year window or a 20 year window, you really have to take into account not just the upfront cost of installing a lithium ion module or set of modules, but you have to talk about what it's going to cost you over that entire design life, over that entire lifetime that you're looking at. If it's 20 years or 30 years you're looking at replacing it every 10 years and an increasing amount of degradation throughout that life, which boosts it's overall life cycle costs.

Jason Jacobs:                Is that the primary downside of lithium ion?

Ramya S.:                     There are a variety, so that's one point. The other is duration, and so remember that I said Malta's goal is to really create a low cost, long duration energy storage technology.

Jason Jacobs:                How is long duration defined?

Ramya S.:                     Duration generally... Do you know what duration is?

Jason Jacobs:                Yes.

Ramya S.:                     Okay, so duration is really the amount of time that you can provide power.

Jason Jacobs:                But what's the threshold for long duration?

Ramya S.:                     It's one of those terms that is used in a somewhat malleable way and people do mean different things. Generally I'd say eight hours and above.

Jason Jacobs:                Okay, and what's the sweet spot for lithium ion today?

Ramya S.:                     It's four hours and below.

Jason Jacobs:                Mm-hmm (affirmative), and is there anything directionally that will extend that number for lithium ion?

Ramya S.:                     You can extend the duration of a lithium ion installation by installing more modules because it's completely modular, but that is a linear increasing cost. There is nothing that I'm aware of technologically that is going to intrinsically change the duration that a lithium ion battery installation would be available to be used for more than four hours. In fact four hours is pushing it.

Jason Jacobs:                What I've heard some people say is that lithium ion costs are falling so much that even if they're inefficient the low cost will make up for it and that lithium ion will carry the day. What do you say to that?

Ramya S.:                     I think the declining costs of lithium ion are real, they're important for anybody involved in the storage market. You will have to look at that relationship. Here is the other thing I see though, which is that there is increasing conscious, we hear it from potential customers about the other aspects of lithium ion that are a barrier to further adoption. One is in actual operation the flammability and safety, so I don't know if you followed but there have been some significant fires of lithium ion installations that have actually created outages and real safety issues with respect to the operations of lithium ion.

Jason Jacobs:                Well there was a doorman at this office building of my friend, I brought my booster board in and he said, "Oh, those aren't allowed in the building because it's got a lithium ion battery in it."

Ramya S.:                     I mean you've heard about it, as have many of your listeners, in the context of lithium ion batteries being in luggage on planes.

Jason Jacobs:                Oh that was another thing with the smart suitcases, there have been some issues.

Ramya S.:                     You've heard about it in that context. Now think about that risk that airlines are saying you can't do certain things with lithium ion batteries because the risk of flammability is too high when we're in the air and now multiply that, magnify that in an installation perhaps in very hot ambient temperatures and the risk is significant. We are starting to hear that from the customer side, which is there's increasing consciousness about the dangers. There was a fire earlier this year in Arizona of a lithium ion storage project and I think four firefighters ended up in the hospital in critical condition. Significant issues that customers are starting to become conscious of.

Ramya S.:                     The other major thing to think about with respect to lithium ion are the supply chain issues with respect to the materials that go into lithium ion, primarily lithium and cobalt. The mining is constrained to certain jurisdictions. Cobalt in particular is only produced in Congo and I think there's also increasing consciousness, particularly among customers that are being driven to the adoption either of 100% renewables mandate or to adopt storage because of corporate social CRS mandates, corporate social responsibility mandates, or political mandates for overall carbon footprint, for overall environmental reasons to be conscious of the supply chain related issues with respect to lithium ion. It's pretty dirty mining.

Jason Jacobs:                When you say supply chain issues is it about the miner rights and their health and safety or what issues are those specifically?

Ramya S.:                     I would say they fall into two categories. One is the actual conditions under which the mining happens, whether it's miner health and safety and or the environmental degradation that happens as a result of some of that mining. Similarly though, another concern is really about supply chain constraints since all of these elements are imported to the United States.

Jason Jacobs:                Let me try to summarize what I've heard so far. Pumped hydro is 97% but with pumped hydro we're approaching a peak just in a time when we've just scratched the surface of what we'll need to do increase in energy consumption, rise of renewables, etc., where we need a whole lot more storage capacity and there's no way that pumped hydro can carry the day. Lithium ion is growth, it's still small, but it's the fastest growing but one there's challenges as it relates to duration, two there's challenges as it relates to scalability because you can make up for the duration by adding a lot of them but then you run into that fire risk, and also just the overhead of maintenance because of each individual ones duration is small. If you try to do it for long you swap them all out all the time and then there's both the health costs of the mining of that cobalt, but also the pollution that comes from mining that at the kind of scale that we'll need would be potentially limiting if not prohibitive.

Ramya S.:                     You're exactly right. Basically what we've said is the world needs a lot of storage. There are some great technologies that exist there and they're going to stay part of the mix, but they all have challenges with further adoption, particularly at the scale that we're going to need for the changing world.

Jason Jacobs:                One question before we get to long duration storage. If you look at, I'll call it the front end, I don't know if that's the right word, but solar or wind or nuclear or coal or natural gas or natural gas with CCS, there's all these different types and so there's some religion that says it should be 100% this or 100% that. The pragmatic view and the pragmatists as they call themselves say, "Look, whoever wins we can figure out the mix but it's going to be a mix and we should just accept that not only will it be a mix but that a mix is the healthiest way so that we don't have all our eggs in one basket." Is there a similar dynamic as it relates to storage where certain people say it's going to be 100% this and other people say it should be 100% that? Is it a consensus view that there'll be a mix?

Ramya S.:                     I think it's probably a little too early in the storage markets to really have a consensus view because so many of the technologies that are promising are nascent. It's a little hard to tell. I think what is a consensus is that there are a a variety of attributes that the grid needs in terms of what storage provides, what are called ancillary services. That no technology really offers the entire range of them, and so I think that there is some wisdom to the fact that there's going to be a mix. The market's going to decide ultimately what is the right mix, but I think that it's a little nascent to pick winners at the moment. My view is that we're going to need so much storage and the kinds of attributes that that storage needs to provide are range across a wide variety of characteristics so that there is space at the table for a variety of winners in the storage race.

Jason Jacobs:                One other concern that I've heard that I just honestly haven't known enough to agree with or refute, is I've heard people say that the business model for storage is flawed and so even if you figure it out from a technology standpoint that the math will never work.

Ramya S.:                     They're certainly onto something. I don't know flawed is the right word. The business model for storage, meaning how do people actually make money operating storage plants, is as I said flawed in my view is not the right word. It is that the regulatory regime and policy regimes that really recognize the value that storage provides to grids has not yet been fully developed worldwide. The FERC recognized that in 2018. They passed unanimously an order called FERC order 841, which mandated that all the traded markets come up with a tariff regime that recognized all the values and services provided by storage.

Ramya S.:                     Now that process is still underway, it has not come to its fruition. What you see is that regulatory and policy frameworks that really speak to how much money you can make off a storage plant are changing worldwide. I think we're in the middle of that story. I understand exactly why people say that the revenue model is not clear and it's because it's changing. Storage has a lot of-

Jason Jacobs:                It's equivalent of just regulatory risk essentially.

Ramya S.:                     Essentially yes and I think you have a lot of tailwinds on the regulatory risk, meaning that the change that I have seen in a variety of different markets globally, is all heading in the right direction because I think policymakers and regulators have woken up to the fact that we need storage and we need a lot of it. The barriers to people adopting more storage have a lot to do with the kinds of regulatory frameworks that operate in energy markets. Electricity markets are heavily regulated everywhere for the appropriate reason that we demand a lot of safety and reliability from people who operate our energy markets. That risk aversion or that kind of heavy hand of regulation is, in my view, appropriate. It's almost universal, but you're seeing changes there because there is a real recognition of the fact that if you were just to take a snapshot today or last year of energy markets worldwide, you probably wouldn't have widespread adoption of storage, even though it was really desperately needed. It's because the mechanisms within regulatory frameworks to make money are not there.

Jason Jacobs:                Depending on how that plays out could it potentially favor one technology or another or is it all being done in a way that affects all the different types that we've covered equally?

Ramya S.:                     It certainly could, so regulatory risk is that way. You certainly could have a regulatory regime that picks a winner or a set of winners as opposed to another. I think our strong view is that the regulatory framework should be technology neutral and should really identify the attributes that would be valuable to the grid and then let the market dictate which are the winners. Where we've participated in regulatory processes and legislative processes, it has really been to say, "Let's make sure that the legislation and or the regulatory frameworks and rules that are being promulgated are technology neutral."

Jason Jacobs:                Great, so should we talk about long duration storage?

Ramya S.:                     Yeah, absolutely. Absolutely, so I would say there are a number of secular trends in electricity markets that are driving the need for long duration storage. We've talked about one of them on and off throughout this entire conversation and that has to do with renewables penetration. For the first time ever renewables are the cheapest form of energy generation, of electricity generation. For the first time ever, it also doesn't actually matter what anybody or any particular framework has in terms of a position towards climate change.

Jason Jacobs:                One clarifying question. Is there an asterisks there that in certain pockets where the sun shines this way or the wind blows this way, or is that just before you even get to that level of evaluation. Is there a caveat there?

Ramya S.:                     Well of course you have to have the resource. You have to have a place where there is wind or there is solar. In the places where there is resource potential, the technologies have declined in cost enough that it is the cheapest form of generation.

Jason Jacobs:                Okay, got it.

Ramya S.:                     I understand the point and I appreciate the point of your question. You certainly see some oddities because of subsidies or regulatory frameworks. You do have significant penetration of a particular kind of technology in places that are not that rich in the resource. That happens too, so you can have such a rich subsidy for a particular technology, call it solar or wind, in a place that may not be very favorable for solar or wind, and you might still have widespread adoption but that relies on the economic framework offered by the subsidy.

Jason Jacobs:                Got it, and then when it's not there that intermittency-

Ramya S.:                     That may be different, right exactly.

Jason Jacobs:                That intermittency blows the economics.

Ramya S.:                     Right or the fact that you just don't generate enough. Let's say you site a solar project in a place where there's not that much sun, but the government has decided that they're really going to offer a terrific tariff for solar so you site your project there. And as long as the tariff with the subsidy is in place you're making money. But let's say that that sun sets or is somehow taken away, then you might be in a position of not having enough resource, not generating enough to make that project worthwhile. From a developer standpoint I think regulatory certainty is absolutely critical, meaning that you need to know what the frameworks are, how you're going to make money and have some certainty that that's the framework that's going to operate once you get into actually investing your capital for a particular project. That's a kind of baseline requirement. I would elucidate that as a general principle really unrelated to wind or solar or anything else.

Ramya S.:                     We've talked about renewables penetration and for the first time ever renewables are cheap. They're so cheap that whether or not there is a determination to do something about climate change, economics are going to dictate that many jurisdictions have heavier and heavier renewables penetration. The second major secular trend is electrification of sectors that are not originally electrified. Transportation is a classic example. You've got increased electric vehicle penetration, in many cases it's not just the residential or the consumer adoption of electric vehicles, but for example bus fleets are increasingly becoming electrified in a variety of jurisdictions. Increased electrification means that there's more demand for electricity, and so that's another major trend.

Jason Jacobs:                Are there other big sectors that are getting electrified beyond land based transportation?

Ramya S.:                     Transportation's the big one, but I think you will increasingly see that trend as generation becomes cheaper and cheaper. That you will find other applications for other electrification.

Jason Jacobs:                Are there other big areas that are promising that we should keep an eye on?

Ramya S.:                     Yeah, I'm sure there are. I'm not as aware of them.

Jason Jacobs:                Okay, keep going.

Ramya S.:                     The third one really has to do with the architecture of electric grids, which is that the electric grids in most advanced economies arose when generation and load were co-located. You had a lot of people living in one area and you'd really locate your electricity generation in that same area. As renewables have increased, think about where there's a lot of wind, a lot of sun, offshore wind is also an example of this where you really have a distance that has grown between where the generation is and where the load is. That increasing separation has meant that the original grid architecture really is starting to struggle to cope with all the electricity that has to travel long distances. There are increasing thermal and voltage violations, significant congestion. Think about it just like a highway. You're having to travel long distances to get the electricity where it's generated to where it needs to go, and that is creating some significant strain on electricity grids.

Jason Jacobs:                Are there specific areas like transmission where there's a bottleneck or are there multiple and what are there?

Ramya S.:                     There are multiple. Transmission is a big one and the transmission system and the distribution system, which is lower voltage, are stressed in different ways due to different reasons. There's significant congestion at particular nodes, which affects pricing. Where there is really a heavy amount of congestion you would see a pricing respond to that. Electricity also becomes more expensive as congestion increases. If you take this pool of secular trends, and we would expect all of them to increase, driven in a variety of ways, many of them as I said have tailwinds in the sense that you have policy changes that are mandating increases in renewables, increases in electrification, and certainly resulting in all the transmission, voltage, and thermal violations that are happening in the electricity grid.

Ramya S.:                     I'll note completely separately that there is an opportunity in places that are not heavily electrified, I'm thinking about particularly parts of Africa where there's an opportunity to completely leap frog where all of these advanced grids have been for the last 50, 60, 70 years and really talk about distributed generation islanded with storage completely enveloped inside, locally provided generation and distribution. Rather than having a central grid system architected that really has to keep changing to adapt to where the generation is and where the load is. I'm not addressing that at all when I talk about all these voltage and thermal violations in the electric grid.

Jason Jacobs:                Yeah, okay. Due to the factors that you mentioned, the lowering of costs of renewables, which is making them proliferate more, the trend of distributed generation.

Ramya S.:                     Absolutely, microgrids where people want resiliency. If you remember 2003 there was an outage that I think spanned almost the entire East Coast in the United States because there was a major transformer that went offline somewhere near the Canadian border. That really is a failure of what we call resiliency in the electric grid. What you want is a grid where if one part of it goes down, which is unavoidable, that the rest of the grid stays online and operational.

Jason Jacobs:                Mm-hmm (affirmative), okay. With the increase in distributed generation there's been some bottlenecks there, resiliency as you just mentioned and then just the electrification. I knew I missed one. The electrification of sectors like transportation that are just causing a lot more demand for energy. Where does long duration storage fit in?

Ramya S.:                     In our view long duration storage is a missing piece of the puzzle. You have a need to essentially ease the stress on the grid and you can do that using long duration storage. If we think about these secular trends that are happening in electricity markets, increased renewables penetration means that sometimes there's too much power, sometimes there's too little power. Thermal and voltage violations means that you're constantly having to spend money either upgrading the capacity of your transmission lines or dealing with all the negativity that comes out of it, increased pricing, congestion, etc. Long duration storage really has the ability to absorb and time shift increased renewables that are penetrating all kinds of markets.

Ramya S.:                     If you have too much power being generated by a wind or a solar plant, you can take it, store it, and essentially use it at a time where it's marginal value is higher. Right now you may have heard the word curtailment, there are a variety of places where renewables are simply being curtailed, meaning shut down because the grid cannot absorb them. Or there's negative pricing where a generator has to pay to generate as opposed to being paid.

Jason Jacobs:                That's happening in California, right?

Ramya S.:                     It's happening in California, it's happening in a variety of places. One of the really interesting data points actually is in jurisdictions where there is a must take mandate for renewables, meaning that the government has decided that if there are renewables being produced, that the utility has to take them. Where there are those kinds of mandates actually base load generators suffer a lot. Think of a nuclear plant, which is designed to really operate at a very stable level, it is not easy for a nuclear plant to vary its generation and it's certainly not easy to ramp down its generation. In that jurisdiction think about a situation in where you have a lot of production of renewables, the utility must take those renewables because there is a mandate that says that they must, but there's also a nuclear plant or a coal plant that then offers base load power and it's not easy for them to ramp down, so they're paying negative pricing in order to have the ability to generate.

Ramya S.:                     In that context actually a Malta plant fits right into that story, but on the side of the nuclear or the coal plant, enables them to generate, which is what they're designed to do. To take their generated power and to store it, and then to provide it to the grid at a different time where there are not as many renewables.

Jason Jacobs:                It seems to be a consensus view that long duration energy storage is an important gap, that doesn't seem controversial. It seems like there's so many different approaches using so many different types of technologies and they all seem pretty early, although you're talking about it sounds like more engineering risk than science risk, at least because each of the components has been proven out on it's own although maybe not together. It's very hard for me as an outsider to assess how to think about these technologies, how to think about how to compare one versus the other, how to think about the criteria that these big customers would use. I mean it's hard for me. Is it hard for them too, the utilities?

Ramya S.:                     Yes, I was going to say I would be surprised if it wasn't hard for you, and I think it's a little premature, as I said kind of going back to our original conversation. It's a little premature to be deciding which of the technologies are going to offer what solutions because there are many technologies that are still in what I'd consider fairly nascent stages. You put your finger on what I think is a real differentiator for Malta, which is that we are not in an R&D phase. We're not proving chemistry, we're not proving physics, we're not really researching the applicability of any particular technology to this particular application.

Ramya S.:                     What we are doing is taking technologies that are well understood, not used in this context, not available off the shelf many of them. The machinery components are not just plug and chug, we can't buy them off the shelf so we are custom developing them for this particular application. However, they're well understood, have been made and designed for a very long period of time, and we're integrating a system where each of the subsystems is well known. That to me is a major differentiator of Malta and it really is, from my perspective, speaks to one of the fundamental things we thought about when we sat down during the original effort to spin the company out as an independent company, which is time to market is an absolutely critical task here. The need is now, the need is critical, we hear that from customers, and so our goal is to try to get a commercial product to the market as fast as possible.

Ramya S.:                     In that, the fact that Malta systems are all well understood and are well known, that we've taken the specific tack of bringing experts to the table in each of the subsystems and Malta itself is focused on the system integration rather than in the design and manufacturing of the subsystems, means that we've really contained a lot of the risk of the manufacturing and design by putting them in the hands of people who've been doing this for a long time and really focused on the system integration.

Jason Jacobs:                My naïve outsider view you have asset classes like venture capital where you are investing in things where there's not a lot of science risk and they're pretty capital efficient and can get big quickly as well, and then you've got the more project development like what you used to do where you're taking things that are proven and you're building them where it might take a lot of capital but there's-

Ramya S.:                     There's no technology risk.

Jason Jacobs:                Yeah, and so what you guys are doing has that existed for a long time in different areas, this combination of technology risk and big deployment costs or is this a new thing?

Ramya S.:                     Right, so I'd call this sort of what classically would be defined as tough tech, tough technology. It has a couple of characteristics that are from accessed capital point of view are fairly tough when you put them all together. You put your finger on all of them, but to put a fine point on each of them. One is large amounts of capital. To get to a proof of concept, to build a 10 megawatt plant you're talking about tens of millions of dollars. The second is long amount of time. Because these are manufacturing real components that need to sit in the context of an overall system that then plugs into the electric grid, leading to the third criteria, which is generally risk averse customers. You have utilities, other participants in the electricity markets, which is heavily regulated, and from a customer standpoint, that is the individuals who participate as customers of those utilities, we demand a 100% safety and reliability of that grid.

Ramya S.:                     It's not misplaced that the customers for the Malta system and all these other storage technologies are somewhat risk averse. When you put these three factors together, which is large amounts of capital, long amounts of time, and potentially quite risk averse customers, that is a tough nut to crack, is a difficult package of characteristics. From a financing point of view, as you say, there's certainly a very well established venture capital markets and funding streams that certainly deploy huge amounts of capital, but this particular set of characteristics is not typically one that is attractive.

Jason Jacobs:                When you raise capital initially I think it was Breakthrough Energy Ventures that led it.

Ramya S.:                     They led our round, yeah.

Jason Jacobs:                It seems like philosophically, although they're financial investors and they would describe themselves as concessionary as it relates to returns, is the big difference with them the time horizon, that it's more patient capital?

Ramya S.:                     It's more patient capital. I think they're also motivated with respect to their mission, which is really centered around climate change. That's an important thing and in that context, many if not most of the companies that they're investing in are tough tech companies because we're all trying to address very difficult problems. I think that's an important core part of their mandate and their reason for existence.

Jason Jacobs:                If you take company as you're describing where you're taking things not off the shelf, but that already existed that need to be customized and fused together and then prove it out and then build an initial plan and then look at scaling in a broader way I think is what I'm hearing. How do you phase that? Where are you now and what phase are you in and then where do you hope to get to and how do you think about staging?

Ramya S.:                     We're still in the design phase, so the company is under a year old so I would say it's early days still. We're in the design phase. We are a major activity along with advancing the design is really to choose a site for our pilot project. We would like to have a 10 megawatt, 10 hour installation, which as far as first installations go is quite large, 10 megawatt it's commercial scale and is of the model that we would anticipate being our first product. An MVP approach to that but still a commercial scale product that is intended to be sold. Major milestone for us is choosing that pilot site and we hope to start construction on that pilot project sometime within the next couple years.

Ramya S.:                     Construction of that project itself will take a couple years, and so the stage that comes after that is commercialization is really putting together the sales plan during that period so that we will be selling units out after that. The goal for Malta really is to transform the electricity sector, I just want to be clear about that. We think we're offering a solution to all the problems that we set out together in this conversation and we have the ability really to provide a very specific solution to a variety of stresses that are faced by participants in the market. In our conversations with potential customers even today where we're not actually in the position of having something to sell, what we're seeing in the strain, the pain coming from the customers that want a solution that's similar to this one.

Jason Jacobs:                What I've heard, as I made the rounds not necessarily in energy storage but just in general with these kinds of projects that are more capital intensive with longer time horizons where there's technical risk, science risk, or both, is that it's the BEVs of the world or the family offices maybe that are the early sources of capital. But then as you get later and you look at larger dollar amounts that right now strategics are playing that role and there's not much else. Did I get that right or any color that you can add there in terms of what's the landscape that you see?

Ramya S.:                     I think your description is very accurate. If you look at our investors we've had a lot of resonance with strategics and obviously the BEV who led our round. The reason for that is that strategics, I think, are motivated in a slightly different way. They're looking at a strategic interest in the product for a variety of reasons. If we've got, for example, an OEM that is an investor in the company and ultimately is doing the joint design development on the head exchangers, that's Alfa Laval. They're very interested in the heat exchanger business, that is their core business, they're worlds largest manufacture of heat exchangers and they see Malta as a way to really play in the storage market, which is a whole new market for them.

Ramya S.:                     I think that there is a real benefit to being able to access strategics in a thoughtful way. Part of the challenge in front of all of the companies like Malta, not just for Malta itself is to be thoughtful about the capital raise because dollars are one thing and they're absolutely essential, but I think it's also important to have partners at the table who really help catalyze the path that the company takes. Because it's hard enough with respect to large amounts of capital deploying these large projects, commercialization is tough task. Our goal has always been to find partners as investors who really will help make that path easier.

Jason Jacobs:                How much of a hangover is still left from 2005, '06, '07, '08, and also is it warranted at this point or has the world changed and investors are still lagging?

Ramya S.:                     Yeah, there certainly is still some lagging behavior. I definitely think, as I mentioned earlier, I think this kind of tough tech investment is a difficult prospect for the investing world that really ideally would look for all the characteristics that are at the opposite end of the spectrum from what I described. Really short amounts of time, small amounts of capital, and the ability to roll out a product to customers almost instantly would be the ideal kind of investment platform.

Ramya S.:                     I think when they look at this they definitely see that this is a harder path and I think there definitely is some hangover from the first kind of clean tech bump. I'm hopeful though. I definitely have seen that there is more interest in talking to companies like Malta among a variety of investment funds, strategics, corporates, etc. I'm hopeful that we're at the earliest stages of a new stage of significant clean tech investing.

Jason Jacobs:                Mm-hmm (affirmative). Do you see a capital gap and if so, what would be the right vehicle to fill it?

Ramya S.:                     I think there definitely is a gap and it really has to do a lot with the path to commercialization. One of the things we hear from customers all the time, remember that we described them as being risk averse, is being the 11th customer for the 11th unit is a home run. With all of these characteristics you've got your 2,000 or 8,000 hours of operating history, you've got 10 other customers who've gone before you, which is a very good way to reduce the risk of being a first to adopt or a second to adopt. Once you get to that point where you have your 11th customer who's buying a unit and deploying it in a project, project finance is a very accepted and really low cost way of financing those kinds of projects. They're very active markets in the project finance world.

Jason Jacobs:                That's a world that you spent a lot of time in in different capacities, right?

Ramya S.:                     What you see however is a bit of a gap. The difficulty is really pushing uphill between the time that you've got your very early stage R&D type investors and the path to commercialization. It's still units one through 10 or two through 10, let's assume that for the moment unit one is covered by the R&D spend. Units two through 10 are still large amounts of capital, they're still long amounts of time, and they may not have the widespread acceptance that you would expect from a project finance market. I think that really is where the gap is for this kind of what I'd call tough tech company investment and technology.

Jason Jacobs:                It's got project finance attributes but different kinds of risk than project finance is used to seeing.

Ramya S.:                     Correct, particularly the technology risk.

Jason Jacobs:                Yeah, what do you think about insurance filling that void? I've heard about that recently some companies that are starting to actually de-risk those projects for the project finance by enabling new kinds of insurance.

Ramya S.:                     Yeah exactly, so that's part of what fills me with promise and hope for the path forward, which is I do think that there is significant responsiveness to this issue. That what I'm describing is not unknown, it's not unrecognized, and I think there's a lot of interest in figuring out how to move these technologies and projects further along. You are seeing participation from insurance companies, etc.

Jason Jacobs:                Yeah, when looking at this or looking at anything you can't just look at the point in time snapshot, you need to look at the trends. I was asking about the point in time snapshot fully understanding that you need to look at the trends to have a fully formed opinion and that the trends are in the favor of whatever gap exists, closing it over time from different directions. It is helpful to understand where we are at this point in time snapshot as well. If you could wave your magic wand and change one thing, it could be a policy thing, it could be a science thing, it could be a cost thing, anything to make the path easier and faster for Malta what would it be?

Ramya S.:                     It's regulatory change. It's really about recognizing the value that storage brings in all it's glory, I mean in all the different attributes that storage brings to markets and that needs to happen globally. It is happening but policy and regulatory frameworks are notoriously sticky, they're difficult to change. Changing that would mean that the customers are setup to recognize the value of long duration storage.

Jason Jacobs:                This brings me to a question that's been on my mind not just with Malta but in general that I'm really interested to get your input on based on what you just said, which is the efforts to push on that regulatory change and the efforts to do what you're doing, which is on the innovation side, are those well integrated and coordinated at this point or are they very siloed?

Ramya S.:                     I think they are more siloed. They need to be coordinated better. They are more siloed-

Jason Jacobs:                That's what I've been thinking.

Ramya S.:                     Yeah, they are more siloed than they should be.

Jason Jacobs:                How do we fix that?

Ramya S.:                     It's a huge bandwidth issue. Think about a company like Malta, we could work 24 hours a day on our technology and still have a long path to go. I think the recognition of the need for policy change, the ability to build coalitions across companies, across participants in this space, is to me absolutely the solution. We're not going to get this change from individual small companies in the spare time that they don't have trying to foster change and regulatory frameworks. It's really going to come because there is a coalition built across a variety of companies who are early enough, who understand that the early stages of companies. Competition is not the right word, coopatition potential is, which is that changing the frameworks is in everyone's interest.

Jason Jacobs:                Exactly, I mean you look at you guys and then 10 other different long duration energy storage players coming at it with different mixes of science risk and technical risk and whatever, and it's like, "Hey, what's more important that I beat you or that you beat me or that long duration energy storage becomes a thing?"

Ramya S.:                     Well we create a market for storage, absolutely.

Jason Jacobs:                Yeah, that makes a lot of sense. You mentioned that there's a capital gap at this point in time snapshot and you mentioned that there's regulatory change that's needed. If there were one entity or asset class that could exist that does not exist to best address these two big areas that you've mentioned what does that look like? Let me just out my pen to take some notes on whatever you're about to say.

Ramya S.:                     I mean it's a great question right, but more financial investors that have great backing and large amounts of capital that are willing to play in the gap zone that can also use their heft to enact regulatory and policy change, to me would be an ideal solution.

Jason Jacobs:                It's not just the venture capital time horizons and risk profile that's a gap, it's that they don't play in Washington. That's what I've been feeling. My thoughts are early and unrefined but I-

Ramya S.:                     You're with me.

Jason Jacobs:                Yeah, no there's my spidey sense is pointing in that direction. It feels like there's both opportunity and gap in that area.

Ramya S.:                     Right, perhaps that's something for you to take notes on.

Jason Jacobs:                Perhaps, yeah perhaps. What is the next big milestone that Malta is driving towards?

Ramya S.:                     Obviously completing our design to the point of being able to construct a project, choosing the project site, and getting that demonstration project at commercial scale. Both underway and then completed, that's what our near term path forward is. I use the word near term very loosely. We're sort of like dog lives, there are several Malta years that are equivalent to a human year.

Jason Jacobs:                Mm-hmm (affirmative), and feel free to not answer this if it's not something that you're at will to talk about publicly, but is the goal to take the financing that you have and get it to a place where you have really tight plans and then bring in more financing to actually build the plant or are you financed through getting that milestone done?

Ramya S.:                     No, we would be raising capital to build the plant.

Jason Jacobs:                Got it, okay cool. I mean I think the work you're doing is important and so a lot of the questions that I've been asking is with a lens of how do we accelerate it and make it so, and same thing for... I mean a lot of the listeners that are tuning in are tuning in for similar reasons. They're concerned about the problem. I'm sure some competitors are probably also listening in, but I don't know. I mean even competitors, as you said, I mean we're all motivated by the same thing.

Ramya S.:                     We're in a place where we are trying to solve the same problem. That ultimately is what gets me up everyday, which is we've got great days, we've got less great days, but at the end of the day everyday I can tell myself I'm doing something that matters.

Jason Jacobs:                Yeah, I definitely agree. I guess two final questions and they're more standard questions that I ask every guest. One is just if you had $100 billion and you could put it towards anything to maximize it's impact on the climate fight where you would put it and how would you allocate it?

Ramya S.:                     Mm-hmm (affirmative), I think for me it goes back to what we were just saying, which is there is a capital gap and there's a political gap. I would very much focus on playing in that zone.

Jason Jacobs:                Mm-hmm (affirmative), awesome. Yeah, that's really validating for me.

Ramya S.:                     Well then mission accomplished.

Jason Jacobs:                The last question is just for listeners that are concerned about climate and they haven't found their lane like you have, what advice do you have for them?

Ramya S.:                     Be open to possibility. I wouldn't have guessed as an investment banker in 2007 that this is where I would end up, and the only thing I'd say is don't be afraid of risk and be open to possibility. What you'll do in adopting those two things is to find a mission that makes sense to you.

Jason Jacobs:                This was an amazing discussion and you're an amazing guest and what you're doing is awesome, so I wish you every success.

Ramya S.:                     Thank you.

Jason Jacobs:                Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at Note that is .co, not .com. Someday we'll get the .com but right now .co. You can also find me on Twitter at @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. Before I let you go, if you enjoyed the show please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.