Over the past few years, Helsinki-based Wärtsilä has made inroads into the U.S. power generation market with its huge gas-fired reciprocating engines, including a 190-megawatt deal it struck with the Lower Colorado River Authority in February. In this episode, Karl Meeusen, who directs Wärtsilä’s legislative and regulatory team in the U.S., explains why his company’s fast start-and-stop engines are a good match for grids that need to offset the variability of wind and solar, the ongoing challenges of building high-voltage transmission capacity, and why Texas “is a big focus” for his company. (Recorded April 17, 2023.)
Robert Bryce 0:04
Hi, everyone. Welcome to the power hungry Podcast. I'm Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And I'm pleased to welcome Carl Musen. I'm sorry mucin Karl mucin. He is the director of markets legislative and regulatory policy at Wartsila, which is a very large finit, Finland based engine producer Carl, welcome to the power hungry podcast.
Karl Meeusen 0:27
Thank you, Rob. It's great to be here today. We really appreciate your time. Now,
Robert Bryce 0:31
I didn't warn you because sometimes I ambush the guests. Guests introduce themselves. I've introduced you as the director of markets legislative and regulatory policy at Wartsila. What does that mean? Who imagined you've arrived somewhere and you have a minute to introduce yourself, please introduce yourself?
Speaker 2 0:43
Great, great. Thanks. So basically means I serve two roles for work. So first, obviously, is the legislative and regulatory policy that's helping to engage with regulators and legislators help them understand what it is we do as a company and in our technology solutions. Because what we find is that by and large regulators and policymakers are familiar with other technologies and engines are unique bird out there in the engine power in the engine, or sorry, in the energy world. And so we'd like to help make them aware of things. The markets perspective is looking at two pieces of the market. One is our technologies fit into some of the markets out there are caught SPP miso chi, so as well as trying to identify where our engines are good fit for potential customers. So we look at where there's a lot of price variability where renewables are coming in, and there's opportunity where flexibility is really needed. So identifying those and how I can help identifying those for the company.
Robert Bryce 1:42
Gotcha. Okay, so I did name Wartsila. As a Finnish company. My familiarity with word Scylla was as an engine producer, a very producer, very large engines for containerships. But the reason I wanted to talk with you is you weren't so recently struck a deal with the Lower Colorado River Authority which of course is based here in Austin for 190 megawatts of power plants, to for as peaking for peaking power. But bring bring us up to date on word Scylla as a as a corporate entity, how old it is. And your main business is making big big honkin engines Am I am I'm saying it too bluntly, they're
Speaker 2 2:24
no I think big honkin engines is the technical term. So there's three things that we're we're working on first, obviously, yes, the big engines for the container ships and the cruise liners. That was kind of the origin of our engines from from the onset of that part of it. But also for the engine power plants, where what we realized sometime about 2030 years ago was, wow, we're producing a lot of power and electricity for these big ships. What if we were to bring that to the land? What can we do on land with that? That same technology. The other thing we've gotten into a bit more recently is the battery storage systems and various storage solutions. So when I think of word Scylla, now from an energy standpoint, I think of us as the one stop shop for all your flexible generation needs, the engine power plants, have an extraordinary flexibility ramping starts off, we'll get into that a little bit more detail down the road, but also, obviously the inverter base battery system that we provide to provide similar flexibility. So in a world where we're seeing now, renewables are coming, whether we've asked for them or whether they're just showing up. Again, that's kind of an irrelevant question. The more relevant question is, what do we do? How do we how do we help manage them? How do we help balance those so when you mentioned LCRA, you mentioned peekers, I like to think of the two the the technologies we offer especially the engine power plants is is kind of peeker plus, which is we can do a little bit more than than your typical peak peaking resource.
Robert Bryce 3:59
So let's talk about those engines because you know, people not not familiar with the Lower Colorado River Authority they manage several hydropower plants on the Colorado River that's the Texas Colorado separate Of course, from the one that flows into the bay a real the into Baja. But this, this entity was formed I guess in the 30s. They own power plants as well. They own of course, the Fayette do the Fayette plant, which is a coal power, coal fired power plant, and gas fired power plants. But it was interesting. I knew of Wartsila before and this is 190 megawatts and you're using a the 50 s g engine. So I looked it up 377 Tons 18 meters long, and each engine is going to emits multiple engines, each of them producing about 18 and a half megawatts. I mean, these are these are monster mock big, big, big honking engines. Yes, that's and they're gonna be fired with natural gas. Yeah, so tell me why these engines are finding favor. as speakers now how do they compare with gas turbines.
Speaker 2 5:03
So if you're looking at a pure gas turbine with the heat rate, somewhere up around 10,000, give or take, usually a little bit higher, our engines are running at heat rates closer to about 80, to 8500. So our efficiencies are very good relative to some of those peaking resources, which is, again, one of the reasons I can call it peaking class, which is, if you need to run it a little bit more frequently to baseload, that thermal efficiency that we offer it at that lower heat rate is going to get you more affordable, more effective output. Beyond that, when we look at what a peaking resource is going to be doing, it's coming in at about two o'clock in the afternoon, maybe run until about six or 7pm, single star type of resource, we've talked a little bit and I mentioned, you know, the variability in the system, Texas is becoming one of the largest, renewable producing states in the US. And again, it's not a matter of whether Texas asked for them to come, they are there. And so in that instance, what you see is the need not to just run at a single output, which a lot of peaking resources, you turn them on, and they just run flat out for about four hours at about 50 megawatts give or take. And it's not a Start Stop type resource. With the variability, ramping up ramping down starting and stopping is is a much more critical attribute that the engines bring to the marketplace to really help any customers try and balance and hedge price risks.
Robert Bryce 6:35
So to be clear, these are auto so these are the old auto cycle engines, right? This is the technology that was first developed by an inventor named Otto and I think it was first patented 1862. Now we're here, how many is that? 170 years later? I mean, it's a remarkably durable form of energy conversion. You warned me before we started well, I'm not an engineer. But nevertheless, these are I mean, you've talked about the fact already that these the thermal efficiency of these, which are I mean, if for people who don't understand they're really just oversized car engines, right? There's very similar to what the engine in your automobile and yet supersized here. So is it surprising to you, I mean, you think about the technology, how durable it's been and how you've been able to achieve these increases in efficiency over time.
Speaker 2 7:25
It is kind of fascinating to me that, you know, I, when I first came to work till about two years ago, it's he was kind of looking around and saying what's old is new again, it's it's bringing back things and technologies and using solutions that we've had out there, and realizing the different capabilities, attributes and value propositions that they bring to the market. Again, in a world where, you know, baseload mid range and peaking was was your diverse portfolio definition. Flexibility, and the ability to ramp quickly was not necessarily a huge value proposition. But I think what we're seeing now with the greater variability, were prices or spring swing hundreds of megawatts and 510 15 minute intervals, having the ability to have a technology that's fast enough to chase price spikes and get offline when prices come back to to normal is really valuable. We've we've been doing a lot of studies recently trying to assess what that value proposition for five minute capability is. So instead of looking at, well, let's do a an hour long interval plan for the next 20 years, you really miss the benefits of a capture that price by can help mitigate that price spike for a customer. And when prices dropped, I didn't have to stay online and have them incur costs. And we're seeing some pretty staggering numbers. We think it's one of the big reasons LCRA when they were looking at technology options out there saw the value of that five minute capability that dispatch on capability.
Robert Bryce 9:03
So what was the value of that contract was announced in February? What's the value of that contract?
Speaker 2 9:08
Unfortunately, that contracts comp that contract bill is confidential information. We're not too distant that one out right now.
Robert Bryce 9:15
Okay. But if I wanted to come to work till and I needed a megawatt or 10 megawatts of new capacity and I wanted or Well, you're 50 SG is about 18 megawatts. So say I wanted to buy 20 megawatts, 18 megawatts of capacity. For more chiller, what would it cost me?
Speaker 2 9:32
So the interesting thing about the technology we offer, Robert, is that it's very scalable and modular. So you got 18 megawatts and you can build all the plant to support 80 megawatts, and I can come up with a number for you. But when you move to 36, and to 64, in those larger increments where you're spreading that bulk of plant over more megawatts, those costs come down really quickly. To the point where, you know, we are still talking a little bit over We're over $1,000 per kW coming online. But again, when we looked at our studies thinking about what those energy market revenues are, we looked at, for example, one node in SPP, and over a 20 year horizon, we found an additional $93 million worth of market revenues that can be attained just from being five minutes dispatchable. We've looked at nodes in Texas, and showed that when comparing to heavy duty gas turbine, that you're going to capture significant benefits again from that five minute market. So when we look at costs, are when we think about costs, we try and think about more than just the installed cost or even levelized cost of energy, it's really thinking about how does this resource fit within your portfolio? And how do you make the best next investment for your ratepayers and customers. And when it's really about capturing and avoiding caught capturing market revenues, or avoiding market costs, we do that exceptionally for our customers.
Robert Bryce 11:05
So what I hear you saying is the installed cost now rather, the rule of thumb, as I recall, for gas, natural gas turbines can be brought online in the neighborhood of $1,000 a kilowatt a million dollars a megawatt, something like that. Yeah. So you're saying that this, these 50 SG engines are in that neighborhood. But you're gonna read back, what I've heard you say is that the difference is, you can ramp up and down faster than the gas turbines.
Speaker 2 11:33
That then I think not only can we ramp up and down, at least, comparably probably a little bit faster than some of the other benefits is we can go offline and come back online much more quickly. starts and stops for us are much less costly, because again, our minimum operating levels are a couple of megawatts per engine. So if you've got that 190 megawatt plan, we can run that as low as three to five megawatts as opposed to trying to ramp up a single single source up to 150 megawatts, so we're only producing as much energy as you absolutely need. And then we can get back offline as quickly. So there's not an excess production from our technologies.
Robert Bryce 12:12
So that LCRA plant, where is it going to be located?
Speaker 2 12:16
I think they've just chosen the property for that one, Robert, I don't have that information off the top of my head, okay.
Robert Bryce 12:22
But it's, it's going to be about 10 of these 50 SG engines then, right. So if they need 190 megawatts, or nearly 200, they can turn them all on or if they need half that they can turn on half of them. So you have a more modular offering in terms of the scalability or the scale of the response to the peaks can be then scaled to whatever the demand is at that given moment.
Speaker 2 12:48
Whether it's whether it's a local peak, meaning, if we happen to see a price spike in a five or five minute interval, we can we can get to that as high as they needed to go or the daytime peaks, you know, summer peaks, we can get to that as well. Another benefit of the engines, particularly when you're talking about summer peaks is that 190 megawatts and those summer text in those Texas summers, it's gonna be 190 megawatts, there's not a thermal D right, the cooling system for those resources is radiator cooled. They joke around and work. So let's say that the the operators will use more water in the toilets than the engines will use in the radiators in a given day.
Robert Bryce 13:26
Well, it's interesting, it's it's one of the things that I thought was interesting here, because this has been one of the criticisms of big power plants, right, both coal and big thermal plants, coal and nuclear. And last summer of as I recall, in France, there were problems in operating some of the nuclear plants because they need big water intakes, right, they have to have, they need a lot of water. So but again, the car engine comparison is very similar here where you're not you don't have to put water in your car, you runs off the antifreeze in the radiator, because the the cooling mechanism. And so that is one of the other selling points, you can put these pretty much anywhere, you don't have to be near a lake or have other some big water resource for cooling because you're using air cooling through the thermal world through the heat exchanger or the radiator right to manage manage your thermal load.
Speaker 2 14:14
Yeah. And again, it's it's an additional cost that we're working on calculating, you know, what is the water cost savings, I mean, obviously, that's going to depend on where you are and what that water is going to cost to consume and buy and utilize. But again, that's that's just another benefit in terms of both operational and cost standpoint. Again, when you're putting that in a Texas summer, and temperatures are pushing 100 Plus. There's no thermal directs on these these engines, or at least very minimal even up to 100 degrees. You're not looking at it thermal direct or need to cool them beyond just the regular cooling system. So it's it is additional benefits of your building on 190 megawatts to get 190 megawatts. Well, it's
Robert Bryce 14:57
interesting you say that because there's one thing that pops in my head Is that solar panels? Did their their power output degrades? What? As it gets hotter? Right? They're not as efficient. So
Speaker 2 15:11
yeah, they they'll, they'll degrade based on, you know, age, solar radiation. You know how many birds are flying over in a given run up in the clouds of
Robert Bryce 15:21
clouds, etc. So let's talk about heat rate and why it's important. Now, you said about 10,000 BTUs for a gas peaker plant, but combined cycle plants, as I recall, run it as like a 7000 heat rate, something like that. So and I looked it up your your, I think you said they were about your your, the 50s, GE is about an 8000 BTUs per kilowatt hour
Speaker 2 15:46
heat to 82 and 85 8200 to
Robert Bryce 15:51
8500 BTUs per kilowatt per kilowatt hour. An online hesitant SI units was at 7200 kilojoules, which would be the killer joules to BT is not quite one to one, but nevertheless, it's in the same neighborhood. So but if but do you have the ability to use the thermal offtake, then to improve the efficiency? I've seen something about that, that you can, it's not a combined cycle technology, but you couldn't, could you, in theory, capture some of the heat off of these engines and use it for another purpose?
Speaker 2 16:24
There have, it's not combined, like I have seen instances where they use them for combined heat and power.
Robert Bryce 16:30
All right, that was the that was the term I was looking for. Yep,
Speaker 2 16:33
see, like a CHP you can do that. I'm not as familiar with some of the instances where we have used them for CHP, but I know that originally as the engines were coming in, that was one of the big benefits was you could capture the residual heat for heating purposes, you're not going to get additional energy production out of them at this point.
Robert Bryce 16:55
Right. And I also saw there was a difference in efficiencies, whether you run them at 50 and the power Gen, rather at 50 hertz or 60 Hertz. And I don't quite know why that was, did you?
Speaker 2 17:06
That's an engineers question about whether or not to run in Europe or America. And I'm not exactly sure why they're gonna get a different efficiency at those different perks. But I've heard similar thing, Robert pologize, for not being
Robert Bryce 17:20
right, no problem. So how it seems like is I've and I've heard that well, I've know that similar projects were deployed in Mexico by an independent power producer there in Monterrey is how quickly is this part of word Sillas business growing this part of the power sector? Business? How? What's the business been like, there? I know you're recently hired on two years ago, how you know, how's, I guess I'm asking the right How's business? Business is
Speaker 2 17:47
booming. Last year, we were over 500 megawatts of sales and take for North America. And I guess I should specify us, we are seeing a lot more interest, people are asking a lot more questions. Because I think we've been very effective with getting our names out there a little bit more, again, letting people know when you used to see an RFP come out of a planning process. The words used to say we're looking for extra megawatts of turbines, and blah, blah, blah. And we're seeing the shift to all source RFPs. We're seeing a recognition and a lot more questions when we step out into place like wait, wait, who are you? And what do you do, and people really curious and digging into the technologies and all the benefits that we bring to balancing renewables providing reliable output. You know, I came on just after winter storm area, which you know, impacted millions of Texans. And the thing that I really take a lot of pride in is as the word skilled employees. So Texas electric cooperative runs two of our power plants, and they were running through winter storm area, you know, helping maintain some reliability and stability for their customers. Because again, when the pipeline's pressure pipeline pressures were dropping across Texas, our engines are operating at a much, much lower gas pipeline pressure, so we don't need additional pressurization we're pulling out but I think 70 to 90 psi out of that pipeline, as opposed to three or 400, that other technologies are going to have to pull that out or more. So we're still running on the flow pipeline pressures when they're just kind of eking by.
Robert Bryce 19:32
So tell me about the fuel supply, then can you switch these because this has been an issue in Texas of having on site fuel and when Rick Perry was Secretary of Energy, he pushed a regulation or FERC considered one I think that would have done given some incentives to have on site fuel. And this is the ultimate in energy security. You know where the energy is you don't have to bring it in by pipeline or truck or something it's on site. So will these will these power plants can you switch them off gas and put them on diesel. What's the what's the capability for that?
Speaker 2 20:04
Absolutely. So I think the two cases I like to talk about on this one is in Humboldt, California. There's transmission challenges out there single single line of transmission, and single pipeline out to that area. And when California has some of the wildfires, they'll turn off those transmissions in Humboldt has to go into Island. Well, the humble Generating Station is a work Sillas supplied engines, it's running on dual fuel. So we've talked about the 50 s G's, that's the spark gas. We also have the 50, DFC, which is the dual fuel. So they do have on site diesel capability. So if they have to go into Island mode, they've got that source of fuel online and can maintain reliability up Anana. Net transmission Island area. The other one is theirs, I won't mention specific names, but there's a military base and why that is running Wurtzel engines. On a DF basis, the primary operation is natural gas. But if the military base needs to go into Island mode, again, it's running on 100% Local biodiesel. So again, it can switch these fuels on the fly as long as you're talking liquid fuels that can do it without even turning the engine on.
Robert Bryce 21:18
So well, that's interesting. So then you have a sphere, the DF then it's a combined I guess, a Diesel cycle and an auto cycle engine then so you have spark ignition and the ability to do compression ignition in the same in the same engine?
Speaker 2 21:31
Yeah, there's there's some different setups and specifications that they do for the engines on how they fire but yeah, they we can specify the engines to do your capability.
Robert Bryce 21:41
And is that the same output that you said that 50 SG and the 50 D F, they're both about 18 megawatts, then both
Speaker 2 21:47
comes down just a little bit on that one, Robert, but not a lot.
Robert Bryce 21:50
So where are they made? Where do you make it? And I it's interesting to come back towards Scylla, because I wrote about wrote about the company. In fact, I have a photo in my fourth book power hungry, have a big word Scylla engine. Now that book came out 13 years ago. So I've been familiar with your company for a while, as I recall that one was being made in Japan, or where are your manufacturing facilities located?
Speaker 2 22:09
Recently, we opened a state of the art manufacturing facility in Basa, Finland. So if you think about warehouse think is and just had north north west, bosses is just on the northern side of Finland. That's where the vast majority of our engines are made. We were doing some in, in Italy a little while ago. But again, we've just opened this new plant, state of the art to produce our engines.
Robert Bryce 22:36
Sure, was I wrong, then it's not being produced in Japan or whether the you know, maybe I
Speaker 2 22:40
point in time, we had other manufacturing plants around the world, Robert, but again, I will concede ignorance on the deep 180 year plus history of the company.
Robert Bryce 22:49
And so how different of these engines this 50 S G from what goes into a container ship or into a passenger cruise liner? How different are they
Speaker 2 23:01
not Vaseline, honestly, the nice thing about having both of those business units in the same under the same heading is that we get to learn from each other. So yeah, they're gonna mount them differently. And there's going to be some different methods on how we do the radiator cooling versus, you know, using some of the water from the rain slag sector. But by and large, they're utilizing similar technologies, things we learned in the marine industry are, are things that we can turn over and say, Okay, how can we apply that into the energy energy engine power plant sector? And so it's really great for synergistic learning. So for example, right now, one of the other big pushes is what are you doing with future fuels? How are you thinking about these, these non fossil based technologies, you know, we've got the engines in the marine sector working on methanol and ethanol, we just ran a pilot, up in the up in Michigan, with wak, fantastic, pure hydrogen blended into the engines and field systems 25%. And we get to feed these back into the other other sectors so and learn from each other, it's really a great place to have that knowledge base kind of feeding each other.
Robert Bryce 24:12
Well, I was going to ask you about you beat me to it, because I saw that that announcement about the hydrogen blending. So that was 25% Hydrogen 75% methane, then is that right? That's correct. So what are the challenges then is there? I know you said you're not an engineer, you're a sales guy, right or regulatory guy. But what is the what's the challenge in adding hydrogen? Is it more heat inside the combustion cycle? What is the difference there?
Speaker 2 24:36
It is a more volatile combustion cycle. So it has different corrosive reactions to some of the metals. Again, some of the similar things you're gonna see with you know, whether or not you want to put hydrogen into your natural gas pipeline systems. But the biggest challenge right now with some of these traditional fuels is just simply getting a supply chain going for them and having a distribution network for them for This one we literally brought in a truck with the hydrogen in it. And you know, connected that that system to the engine with, frankly, minimal modifications to the engine to get a really up and going they did have they did make some minor tweaks along through the operational interval but everything ran beautifully. For the engine, no, no, no carbon emissions were down thermal efficiency was was minimally degraded because again, it's it's it's more volatile, but less energy dense elements. So there there is, again, anybody that's burning hydrogen, you kind of lose some of that, that energy punch, but by and large that that pilot ran, as well as we ever could have hoped. And I think the output from EPA and whack could have said volumes about how well that might progress. They were with our technology during that time.
Robert Bryce 25:52
So it was that he made that point just now, but the fuel itself has less energy density, right, depending on course on the pressure that's applied. But in terms of the, you know, the the scale, or the volume, energy density by volume, but it was that way, I just saw that we had when it was running when the engine was tested with 25%. Hydrogen, it ran at 95% Load cutting it to 17%, you got 100% Load Was that was that due to the that energy density? Or did you do you know why that change in the output was so different from the different concentrations?
Speaker 2 26:26
I think as an initial pilot, Robert, there's, there's not a goal really pushing to see what a maximum 100% load would do. We're very comfortable at that 95% load and a 25% plan. Again, right now we're at 25%, primarily because of safety questions. You know, trying to understand how this works. In the field, we've done greater than 25% in the laboratory. But again, when you're out in the field, we're not everything is that perfect laboratory space, and you have some differences there. You want to take a bit more cautious approach. And so that's that's one of the reasons why we're at 25%.
Robert Bryce 27:05
Gotcha. So what are the Who are your biggest competitors? Now then in this? We can talk about batteries. But I think that's kind of a separate business. I mean, even the combustion peaking, or or even baseload generation? Because I know your your engines are used for baseload in some applications as well. Who are your biggest competitors, General Electric, Siemens, who do you compete with?
Speaker 2 27:29
I think that's where we see ourselves going forward, Robert really is, you know, if you're gonna try and integrate into a system, you got to figure out, you know, obviously, geez, the 500 pound gorilla in the room. But I think the technology we bring to the table is really well suited for the needs of the system going forward. So, again, if you're seeing ramping issues, because you can't really get a resource online in time, or wind and solar are dying off quicker than you expected, you need something that can come online and be responsive, as often as you need it, whether that's at nine o'clock in the morning to in the afternoon, or 11 o'clock at night, without limitations for some of those minimum startup or startup times a minimum downtime. That's something that our technology is bringing in spades. I think about it, as you know, when you have a renewable system, or variable system, I think it may be a better way of talking about, you don't want fast start resources. That's just not enough. You want fast start fast, stop fast restart resources. And I think that's, that's where we really excel is online and under five minutes offline, and 30 seconds of backlog on them, and five minutes after that. That's just, that's exactly what you know, an ERCOT, or a system operator like that is is going to need as you get a more variable volatile system.
Robert Bryce 28:56
So we'll I'm going to read that back to you then is it fair to say that the the increasing variability or the increasing transient nature of the fuel energy supplies onto the grid are being are are fueling your business to a large degree that increasing variability due to the renewal of the influx of renewables is leading to more demand for products like yours?
Speaker 2 29:16
I think so. I think that's fair. I think that's part of what we've seen, as well as the, in the battery systems. They were that was a driving force in for example, California, when you look to balance them out, and extend some of the solar into later parts of the day. But that variability that fast ramping fast balancing type technologies is yeah, in by and large, is supported and helped by trying to move to or when systems move to more variable system, right?
Robert Bryce 29:48
When I've seen word Scylla, the, you know, the what do they call it the path to 100 or road to 100 that you can support that and you've talked about we haven't talked much about your batteries, what kind of chemistry you're using in your batteries,
Speaker 2 29:58
chemistry and batteries as well. Am I on technology right now? But the podium,
Robert Bryce 30:04
lithium iron phosphate or what do you know the chemistry there?
Speaker 2 30:07
I'm not specifically familiar with all the chemistry on that one. Okay. But beyond that, Robert, I think one of the other things that we've got with the batteries is the optimization software is state of the art top of the line called gems, which allows our batteries to work with whatever system, you want to put them into whether you want to hybridize them with wind or solar resource, run them autonomously in the system, to try and help the customer maximize the return on that investment. So again, pairing a tool that is really designed to help you use the batteries more effectively, with the batteries that we're providing as well. So you get really good bang for your buck on the battery systems we provide.
Robert Bryce 30:46
So how does that compare? How do you as your deployment or sales of your engines compared to your battery deployments? Are you doing more engines than batteries is a two to one five to one, compare that that sales are that a deployment and in terms of megawatts?
Speaker 2 31:04
I don't have the specific numbers on our batteries from last year, but I think they're very comparable. We may be doing a little bit more battery sales in terms of megawatts, the megawatt hour durations differ from the two obviously because again, the batteries are duration limited. But I don't have the specific numbers as far as what our our battery sales are from last year.
Robert Bryce 31:25
Gotcha. So you, you also said So you did 500 megawatts of engine sales last year. Will you do more than that this year? We fully expect to you but and what about the battery sales? And where are you? Where are you? Where are your most? Where are your best markets in the in the US for these? Yeah.
Speaker 2 31:43
So we expect our batteries are going to be increasing and selling more of those as well. The best markets as with anything variable. We're looking and building down in Texas, we there was a recent announcement on it. battery storage sale down there that we were involved with, as well as we've had some good sales in California as well as Hawaii.
Robert Bryce 32:07
Gotcha. And in Hawaii, that's batteries. Where's that engines?
Unknown Speaker 32:10
Robert Bryce 32:12
I see. Because Hawaii is just recently shut down their last coal fired power plant as well. Right. That's me. So are you have you have you sold engines in Hawaii as well.
Speaker 2 32:23
As I mentioned earlier, we have one on one of the major military bases down there. We have one quiet Electric has been running I think it works well engine for I think 20 to 30 years they've been running that.
Robert Bryce 32:35
That's right. Yeah.
Speaker 2 32:37
The other place like when you look at islands as well, you can go down to the Caribbean that's a place where we're we're Tillet engines are very dominant, we can withstand the hurricanes that the Caribbean throws at us as well as right sizing the generation output to what the island needs.
Robert Bryce 32:54
So that we've been talking about the 50 SG which is 18 megawatts. So the what are the what are your smallest? Well walk me through your product line here you're the sales guy right? So what is smallest to largest what's if I you know, I know Island some islands are small, some are big what how how what is the range and output of your power sector engines.
Speaker 2 33:17
So two primary engines are are smaller one is nine megawatts or larger one is 18. battery systems obviously can be built to size and scale of whatever the customer is looking for. So again, you can buy, you know, we talked earlier about if you wanted to buy 150, SV 18 megawatts. You can stack these like Legos. But sideways. In the sense that, you know, if you need 18, or if you need 12345 engines, you can bring them in, expand the system as you need to. So again, it's easily expandable. And just by the right number of megawatts for you, you're not going to sit there and say, Well, I've got a potter manual or 50 megawatt system. I don't need to buy 100 megawatt resource to build that I need, you know, maybe 350s G's, and I'll have some residual reserve capacity for planning purposes or contingencies.
Robert Bryce 34:17
Right. So yeah, so repeat it back to you. You have two building blocks, one that's nine and when the other is 18. Right. So below nine, then you're seeding that market or I'm just not participating in that market. But other companies like Caterpillar or I don't know, some of the other companies that produce Gen sets that are going to be smaller than nine megawatts. That's you're not going to play in that area, which is
Speaker 2 34:38
we, I mean, unless you're looking for our batteries, nine megawatts is the smallest engine we're building these days.
Robert Bryce 34:45
Okay, so you said you've been at work so for two years where were you before this you were in the power sector as well? Missy, I'm reading you worked at Casio in California then I assume you worked out there so you know the California market. And then where did where? Where were you where Looking before you were chilling,
Speaker 2 35:02
so I spent 10 years at pi. So doing resource adequacy system planning for them working on trying to think about what the system needed to get to 3350, and then 100% renewable targets. So I spent 10 years doing that. And before that, I was working at the Public Utilities Commission in California, helping set those. So. So once once we got the goals set and got renewable targets set, then it was time to go figure out how to actually do those, once we got to our head around how to do them, I thought it was time to get out there and try and help get those solutions in place.
Robert Bryce 35:38
So well, since you've worked in California, how hard is the permitting battle out there? I've heard many stories about permitting for any kind of large infrastructure. And I've said before and written many times the transmission grid we have is the transmission grid we're going to have? Can you talk a little bit since you're a veteran of chi, so what it's it can California expand its transmission grid to a meaningful degree? And if so, how much will it cost?
Speaker 2 36:08
If I had the answer to that, Robert, I'd be making a lot more money. No. No, I think your point is silly, right? Building transmission is an incredibly challenging effort. Putting generation in local pockets is comparably challenging. And so I think the system we have is what we're dealing with. I know that even the interconnection process for for California right now. You know, they call it a cluster process, I think that's aptly named. I'll just leave it at that.
Robert Bryce 36:46
With another adjective coming after cluster with that.
Speaker 2 36:50
I mean, in fairness, having worked with with the people that are working through that process is challenging, because their goal is to say, we need to bring this this generation on, we need to do it in a safe and reliable way, that's not going to bring down the rest of the power system. And, you know, when you've been working with systems and processes that are built for bulk power, you know, studying 1015 20 projects in a given cycle is is doable, it's feasible, there during the hundreds now, that process needs evolve, Burke, all the ISOs are caught included. They've all recognized the interconnection process is a challenge, and it's becoming a bind. So trying to figure out how to evolve that to say, we're getting more smaller distributed resources online, and we need the similar reliability to protect the bulk power system very challenging. I don't have any other jobs.
Robert Bryce 37:50
Well, I've talked to many people. And I've written about the high voltage transmission issue, because it seems like this is the one of the binding constraints on the entire system, right and thinking about the system as a system, right, that, it seems to me that the networks that we have now, whether it's the electric grid, or the power or the the gas grid or the liquid fuels, pipeline network, we're not going to see radical expansion of any of those because of the land use constraints. So do you agree with that? Yes.
Speaker 2 38:20
I mean, when I started studying energy, again, I'm I'm old enough now. I, I remember looking at the idea of, you know, can we use financial transmission rights to incentivize transmission buildouts. And there's similarly to L MPs and an energy market. It's kind of that field of not good dreams, which is, you know, if you build it, they will go, like, how do you get them to build up enough to eliminate the scarcity.
Robert Bryce 38:51
And so So I want to interrupt there, because you use some technical terms, though. So you're talking about high voltage incentives, you're saying you would pay landowners to come across their property based on the amount of energy through the wires.
Speaker 2 39:04
Now knowing I apologize. This is an older term from you know, early 2000s, which is to incentivize investors in transmission, they will pay you based on a transmission rate, how much flows across your power line, how much congestion you alleviate, will give you compensation based on that. But the more transmission you have, the less congestion you have, the less incentive you have to build. And so what you do is you use up some of those limited right of ways for transmission as well as limited property for generation so if I have local need, I have high prices in, you know, Dallas Fort Worth. If I build too much generation there to print, the average prices will tank and those prices are basing that investment on gone. And so trying to again, assess how you want to build in those limited spaces, and what your value proposition is if you eliminate that scarcity.
Robert Bryce 40:07
Okay, so but there, you're only talking about incentivizing the people who are building the wires, and then you use the but then you use the term LMP. Explain that, please.
Speaker 2 40:16
Oh, apologies. LMP is local market locational marginal price. So that's just the price of producing the next megawatt hour of energy at a given location.
Robert Bryce 40:27
Okay. Right. So again, these are all based on, you know, it's all about geography, right? What are where's the power being produced? Where's, where's it going? And how much is available? How much is demanded? Right? So but that, so the LMP, the local marginal price, or locational. marginal pricing determines where power where it's where it's where it's where it's dear, and where it's cheap. Right. So that, but that all depends on transmission. So getting back to California, is it is California unique in this regard? You know, I know you were there for a long time, now you're working across the country. And we've heard over and over from, you know, different I've written about it, that that difficulty of building high voltage transmission. There are numerous studies that have been done and say, Oh, well, we just need to double the rate of high voltage transmission or something like that. Is that feasible, that we would see a rapid increase in the build out? Even if we saw permitting some kind of permitting reform bill in Washington that we would see a rapid build out of the high voltage system? No.
Speaker 2 41:28
I mean, everywhere you listen to like, I mean, for commissioners are pretty candid about the need for traditional transmission transmission side reforms. And like, permitting aside, the cost of transmission is still very hot. The time lag and permitting processes is not just a federal issue, you still have to deal with local areas. It is extraordinarily complex record. It's unnecessary enhancement. I think it's something that we need to continue looking at, I'd hate to think that we're going to try and move in, you know, continue moving forward with new generation technologies with 50 plus year old transmission system, we do need to figure out solutions to it. In the short term, though, it is going to continue to be a bottleneck.
Robert Bryce 42:16
And when you say short term, what does that mean? 10 years, 15 years what I mean, because these projects I wrote about TransWest Express, the Bureau of Land Management just said that they gave final approval to one part of it. But there are people in Wyoming promising litigation over this and TransWest Express has been pending now for what 12 years something like that Greenbelt express a similar kind of timeline. So I want to I'm asking, I'm saying these because you're underscored that this is not it's not just a federal issue. You have the states, you have the counties, you have the even the municipalities, and the landowners, all of which are going to have to say, Oh, sure, we want these 200 foot high, you know, pylons on our property or across our, our county? Is that what you're referring to?
Speaker 2 43:04
So, short term? I think anything planning related in energy? You're really talking 10 years? I think that's so a decade
Robert Bryce 43:15
is short term. That's kind of how I look. I mean, now that well, I'm not done not not pushing back. I think that that sounds reasonable to me.
Speaker 2 43:23
Yeah. I mean, integrated resource planning processes typically look out 10 years, because that's about the best that you could hope to see. I mean, you can claim perfect foresight to 2050. And I think those studies are necessary and helpful from a planning process. But I think, you know, the reality of getting things built and done, you know, five years is, is in some instances doing pretty good. For transmission. You're right, those time horizons was 1215. Your time horizons for long power long bulk power lines, probably not an unreasonable estimate.
Robert Bryce 43:57
And if that's the case, I mean, it's joking here, but it might as well be for you know, forever, because the capital is gonna have to wait around that long you have to very patient capital, very patient systems have in place regulatory networks, etc. But bring it back to Word Silla, does this then bode well for your technology? Because you could put it pretty much anywhere, right? As long as you have access to high voltage transmission. You don't need water, you need the gas pipeline, right? Or maybe you don't if you're going to run it off diesel fuel, which be more expensive, right? But you've got a more flexible, I'll use that corporate term solution that you can deploy where the load is and not have the not necessarily have to contend with these other constraints on transmission and distribution is that am I not trying to get join your sales team here, but Is that does that does that ring true to you?
Speaker 2 44:50
Well, every generator on the system has to deal with the congestion around. Yeah, so there is going to be you know those limitations but as far as Where you see variability, we can be there to balance it. So I think that's one of the important things, I guess we need access to the natural gas pipeline and the political power system. But that's really about it. You know, we can provide that flexibility. So if you know things are need balancing in West Texas, or things constrained at that West Texas interconnection, we can be there to pick up where wind is not either not able to get through that, that transmission, or be there to balance it when it drops off. On that transmission.
Robert Bryce 45:36
Gotcha. Well, you mentioned West Texas, Mike, one of my guests recently was Scott Sheffield, who's the CEO of pioneer Natural Resources permit the Permian Basin is woefully short of electricity. Are you? Are you are you? Are you going to put some some power plants out there? Was that a good opportunity for you?
Speaker 2 45:52
You sure hope so. We're very active. I think when you look at the markets around the country, for places that our technology is just if you were to ask where the perfect fit is, I don't know that you could ask for much better place than what Texas offers. The variability, the access to transmission, the permitting processes are ours as clean as you're probably going to find in the US. It's, we just see that need and that benefit down in Texas very clearly. So that's been a big focus for us. Lately, we've been tracking your cotton market redesign and the actions happening in the state legislature as well. And so we just think Texas is a great place for our technologies, especially as the wind and solar continue to increase in penetration.
Robert Bryce 46:40
And as as West Texas and more specifically the Permian then the best of the best in Texas because of the move to electrify a lot of the drilling out there and the pumping needs the demand for power out there. Is that one of the areas where you you're you're prospecting then is that fair to say?
Speaker 2 46:57
I don't want to reveal any trade secrets here. Okay, fair enough.
Robert Bryce 47:01
Well, so we've been talking for nearly well, more than 45 minutes, my guest is Carl mucin. He's at word Scylla. He's the director of markets legislative and regulatory policy at word solar, which is a large Finnish company, based in Helsinki, with revenues of what was it nearly 6 billion euros last year. So I don't know what my math on that would be what, seven or 8 billion US dollars. You can find more about them at work. scylla.com. So Carl, I always ask my guests, they introduce themselves. And then I ask what are you reading? What what books are on your, your list or on your desk or nightstand?
Speaker 2 47:37
Well, let's see, I have the cases latest transmission planning process update on my desk right now I have a lot of Texas legislation on my desk right now. And
Robert Bryce 47:48
you know how to party, there's just
Speaker 2 47:52
I joke around and, you know, you ask to know, a little bit about us. I you know, I think me my team. You know, one of the things that that makes his job fun is we are energy geeks. And so when we're looking through things, it's really looking at models and numbers and data and analytics. So again, I know that I think I'm trying to remember there was just a new report came out on levelized cost of energy that I'm checking out right now. So again, it's it's not exciting, you know, full full novels and literature's about you know, you know, what happened in Enron, or, more recently, some of the pipeline infrastructure battles that have been going on, it really is looking at models and some of the interesting studies that we've been putting out. So I wish I had a more relatable piece to talk about, but it's really about some of the studies that we're geeking out on right now.
Robert Bryce 48:54
There's no tom No, Tom Clancy novels?
Unknown Speaker 48:57
Not recently. No.
Robert Bryce 48:59
Okay, fair enough. So my last question for you, Carl, what gives you hope?
Speaker 2 49:03
What gives me hope is I think that there is a solution based mindset out there. You know, whether you want to agree with the environmental policies that some states put out there or not, one of the things that I have hoped for is that people want to maintain reliable, affordable, dependable energy systems. And even when you disagree, you can always come back to and look at the ISOs RTOS around the country. So they need to keep the power on how do we help them and I think there is a renewed focus on it's not just we need to hit these policy goals. It's how do we evolve the system in a cost effective and and that reliability piece after 10 years at the ISO? I cannot look at a power system and not ask what work comp need to run this whole SPP need to run the system. And I think that for better or for worse the events when California had rolling blackouts a couple years ago in Texas so winter storm airy they illuminated challenges and a return to talking about reliability. That gives me hope because that's what I want. I want a system that is there for everybody. providing affordable, reliable, dependable electricity.
Robert Bryce 50:27
I can definitely agree with that one right there. So we'll, we'll stop at that then. I guess it's been Karl mucin. He's at word Silla. The finished company word zillow.com. You can find out more about them. He's director of markets legislative and regulatory policy at word, Zillow. Carl, thanks for your time. Very interesting to catch up on auto cycle engines which I'm an energy geek. So you know I love to talk about Spark cycle Diesel cycle, all that other stuff. So it's been been great fun to talk to you. Thanks for coming. I
Unknown Speaker 50:55
appreciate your time. Robert,
Robert Bryce 50:56
thank you so much. And for all you in podcast land tune into the next episode of the power hungry podcast. And when you do that as well check out my substack Robert rice.substack.com. Until the next time, thanks a lot. See ya