195. The Battery Doctor - Sep25

Foreign. Segolen from London and Gerard Reed from Berlin. This is Redefining Energy. Today on Redefine Energy. Gerard, we're going to talk about batteries but not battery chemistry. We're going to talk about the digital layer around the batteries. Exactly. And I suppose it's all about getting the best out of batteries while at the same time making sure that they stay as healthy for as long as possible. Right, but first a word from my partner. Abloco Energy is Europe's Premier Leaser of 10 Foot Container Mobile batteries built in Europe with CATL Best LFP cells. Abloco Energy serves 14 European countries including France, Germany and the UK. Abloco's batteries can be leased for any duration between six weeks and six years and they are monitored by the Dutch award winning platform School a bloco energy. Make your life easier, make your business more flexible. Back to the show. Yeah, absolutely. And there's been a few startups developing unique expertise around monitoring those batteries and they arrive with absolutely phenomenal results. So we decided to bring another doctor. You know, we had a doctor last week and there would be another doctor. Yeah, no, it's great to get Dr. Kyle Phillip Kyres on the show. I call him Kai Phillips, but everybody these days call him kp. Anyway, was really super to bring KP on the show. So he's obviously been an incredible entrepreneur in the space and very knowledgeable in and around batteries and what you should and shouldn't do with them. Right. He is the founder and CEO of a German company called Accure is probably one of the best in the world in the field of predictive battery analytics. Yeah. Accure currently supports over 6 gigawatt hours of battery system across EVs, energy storage, marine applications all over the world. Yeah, well, so listen, why don't we just bring them on the show? Kp, welcome to the show. And I see behind you there's a picture saying get shit done. Absolutely. Thanks for the invitation. Great to be here. And as a startup founder in an industry that tends to be somewhat slow moving sometimes, I think startups like Accure can really be an agent of acceleration and change. And so it's a mantra that I try to involve into everything we're doing here to just keep moving. Well, I think actually what's really lovely is to see the other thing that's behind you, which is a book on energy storage and that's actually what we're going to talk about today. And maybe I just kick off. Guy Phillips, great to have you firstly on the show. But really what I'd be interested in talking about certainly at the beginning here is just what's going on in the whole area of battery technology. And when I say battery technology, I'm not even just talking about the chemistries and this, that and the other thing, because there's battery management systems, there's analytics in your area. There's a whole pile of stuff going on that we sort of don't talk about. So could you give us just a quick overview of what you see going on in the sort of technology landscape in and around batteries? Yeah. I hope you're sitting comfortable. This will take about two or three hours. Well, no, I'll try to keep it short. My personal background really is I've been working with batteries professionally since 2008 over 15 years. And what's mind boggling, and has been mind boggling for over a decade, is the continuous growth, exponential growth of the entire industry along every perceivable dimension. And so the complexity of this entire battery landscape is continuously increasing and it's hard for people to comprehend exponential growth. And what I mean is today we are looking at prices, for example, or energy densities of LFP batteries that are far beyond the most optimistic predictions from five or six years ago. We're off the charts today and we continue to be off the charts with any upcoming prediction. And as an industry, as an energy industry, we're always two or three steps behind in adapting to the new realities that that are coming our way, mostly driven by Chinese industry policies, which have been amazingly effective in unlocking this entire new vertical in the energy industry. And from a technological perspective, I would really see batteries are by far the most interesting area that you could work in today as an energy professional. But unfortunately, sometimes they burn. Unfortunately they do. And regardless of the chemistry. Yeah, absolutely. There's been a lot of discussion around, oh, lfp, you know, lithium iron phosphate, is now, you know, winning against nmc, the more traditional nickel manganese cobalt batteries that had mostly been developed for E mobility. However, the flammable agent in the battery is the electrolyte. And LFP batteries actually have more electrolyte in them per unit of energy per kilowatt hour because the energy density is somewhat lower. So even a LFP battery can ignite and can burn and can cause damage. They are slightly more stable in terms of temperature resilience. But however, it's the same in any energy technology. If you force a lot of energy into a small space, you create a risk. And, and as engineers, as an industry, it's our job to manage Those risks through good design, through high production quality, through analytics, of course, and through processes and quality assurance, the industry has made tremendous progress over the last couple of years. The last really big disaster that we had, MOS Landing, was built with a system layout that no one would use anymore today. So it's kind of not representative of what's going on right now. And the fact that everyone can agree that we should never build something like that is a good sign of maturity. Sorry, let me cut across there, because I actually don't think that's a fair question from Laurent. And the reason I don't think it's a fair question from Laurent is that we've been dealing with flammable fossil fuels for 100 years, are in the exact same situation where oil and gas, you can blow up your house, you can blow up. It's an engineering thing that's. That's resorted. And the point is, it is being sorted. And for me, the thing that's interesting about batteries is, you said it at the beginning, it's the innovation in the battery space, which is creating new markets that were not there five years ago. I don't want to get lost in the negativity about what goes wrong. I want to talk about what the hell you can do with batteries and what's happening in the market because you're sorting all these issues out, you know, Gerard. No, I come down. It was just. I just don't. Sorry. Maybe it's just I didn't have a coffee in the morning or whatever. Right. But it was just like, why do that? Because we are bringing solutions. But the question, you understand, where I come from, we have a big picture. We're talking about how great batteries are. And then your first question is a negative question in and around fire risk, which is a tiny risk in the market that we're in now. Talking about people listening to what we're talking about. That's not the appropriate second question on that podcast. Okay, that's all. No, no, no, it's fine. So ask your question. I don't want to ask a question. Now you go and ask another thing. What is it? You're going to make good cop, bad cop. Okay, kp, maybe just dig in a little bit. I like what you said. I said there. And techno talk a little bit more about the innovations in the last few years that you've seen in the market. So one kind of meta development that I find incredibly interesting, and I think a lot of people aren't fully aware of it, is if you track each of those dimensions in which batteries got better. Lower prices, higher energy density, more vendors, higher availability and all these things. If you all take that together, you end up with a deflation spiral where lower battery costs unlock new markets which create more demand, which create more supply, and supply again lowers prices. We've seen similar things with solar over the last years, but because batteries are much more versatile and can be used in more applications and you have more cross pollination, if you will, between the mobility and, and the energy space, this cycle is actually much faster and much stronger. So any new improvement in battery technology will lead to more batteries, which in turn will lead to better improvements. A friend of mine who's working in the battery production industry recently told me in China at the moment There are over 1000 independent battery cell manufacturers that are trying to out compete each other. The competitive pressure is incredible and only the strongest will survive. And the rest of the world at the moment really benefits from these incredible competitive dynamics through cheap, extremely high quality batteries. And here I'd like to quote a friend of the show friend of ours, Marek Kubik. He publishes regularly the results of the tenders that you have in China which are very transparent. And just before the summer, the result of the CEEC tender, they came at system level, not cell level at $50 per kilowatt hour, which is insane. It's a drop of 15% in six months. When I started my PhD over a decade ago, we were working on some market studies of hey, what are reasonable assumptions in 10 years. And the rock bottom that a lot of researchers always saw was US$100 on cell level, not on system level. And now we're talking about between 50 and 60 US dollars on system level. So we're 50% below rock bottom already and the industry is still scaling up and still professionalizing. And there are still, I want to say the low hanging fruits have all been reaped. But there are still developments that companies like Catl, BYD and all the others are working on that will reasonably compress prices by another 5 to 15% over the next three or four years. For me, the big revolution is going to be behind the meta because you know, we've put the big system at transmission level and those, you know, 300 megawatts and 500 megawatts. But this is going to unlock a lot of, you know, new load data centers and so on because let's admit it, the grid as is cannot support all that additional demand. Now if you look at that additional demand is going to be probably 5 or 10% of the time, the rest of the time, the grid can deal with it. And it's. The batteries are going to solve all those problems. Yeah. And just in terms of timing, in order to extend your grid, the companies that are responsible for it, they tend to work at a conservative pace. So it might take three, four, five years to put in place a new grid connection, whereas adding a microgrid with solar and batteries, you can do that in six to nine months. And if you look at the hyperscalers, it's a myth that they have a 24,7 constant load profile. They actually have fairly dynamic load profiles. They just don't want to talk about it because you can actually reverse engineer some of the underlying strategies by looking at the energy consumption. And so it's a secret how the power consumption is and those low profiles aren't public. But batteries will be a key enabler of adding additional computational power, especially in markets that are low regulation, like Texas, for example, in the US where you can just start building. Can I take that a step further? Because if I look at my desktop here, I've got six devices on it and four of them have batteries. Yeah. Now I'm going to make a prediction and say we sat here and we had this conversation. In five years time, they'll all have batteries in. And I think you're going to have the batterization of our buildings, which means the devices have it. And it makes a huge amount of sense because you can then if you're selling a washing machine, you put a battery in there and actually you have a different business model. And if I look at the white good manufacturers, the battery manufacturers, Samsung, lg, Panasonic, you know, I don't know if you think I'm mad, but I think that's where we're going because the technology is just so cheap. It is and continues the idea of energy storage. And batteries are really the most advanced and most practical form of energy storage. But the problem on a fundamental level that we're solving at scale now is the question of energy storage. For 100 years, it was basically impossible to store energy outside of fossil fuels. The reason as a society we're so much in love with fossil fuels is because there's they are energy on demand. Oil is fairly easy to store, gas as well. And when you need energy, you just push a button and you convert it from coal gas oil into electricity. But energy storage batteries really allow us to do the same thing without the fossil fuels. And if you look at modern warfare, if you look at the conflict zones of the world right now. Conflicts are now fought out with drones, and drones are most often not always in a fair share battery powered devices. So batteries also gained this critical defense importance. And that of course again triggers the question of can any country afford to be 100% reliant on foreign batteries when it comes to grid stability, when it comes to being able to defend themselves? And right now there's no country outside of China and perhaps a bit South Korea and Japan who has a fully functioning battery industry. Kp, Can I ask you? Then I would say to myself, what's more important is not the battery cells or whatever. I think they're almost a commodity. But what's really interesting is the management of those batteries and the analytics and that's the area that ultimately you're working in. So could you talk a little bit about the innovation you're seeing in that area and your view in and around the importance of it? If you just look at the general trajectory of what industries develop, like, you start with something really simple and then you kind of build a more sophisticated product. And at some point you add intelligence. You look at the iPhone. It started as an amazing hardware device, but one of the main reasons it keeps getting better today is not better hardware, but actually better software. It's better intelligence, better connectivity with other parts of your life. And the same thing is happening with batteries. You need a solid quality of hardware to start with. That's the foundation. But once you have that, better intelligence will provide better results for you, whatever you're doing. And you know, the industry that we're most familiar with, where most of our customers sit is the energy industry. Owners and operators of big batteries. 500 megawatt hours a gigawatt hour. We have analyzed about 15 gigawatt hours of large scale storage. And you can just see that depending on which factory they got produced in, which bms they're using, which energy management system they're using, which operational strategies the companies have, the outcome is incredibly wide. So if we narrow it down completely and say, how much money can you make with 1 megawatt hour? Depending on how you use the battery and how intelligent you're operating it, it can be plus, minus 20%. And most people that are funds or investing in energy storage, they don't really look at technical performance so much. They are very passionate about trading, optimization, bidding into the right markets, having smart tolling agreements with a floor and a cap and all these things. But then they're kind of ignorant about this huge lever that you can pull and just make 15% more revenue by orchestrating the hardware that you have in a smarter way. And that's really we're working on and where we're trying to make the industry faster because if you can get more output from the same hardware, it's cheaper and it's faster. Let's go to your company that you created five years ago and congratulation you continue to attract more capital. We'll talk about your cap raise. So if I read accure Battery Intelligence KmbH, founded in Aachen, Germany develops AI powered predictive analytics software to optimize battery safety, performance and longevity for EVs and battery energy storage system base its cloud based platform use AI physics based modeling and field data to monitor battery health, detect issues, thermal runaway, provide. Okay, so how does it work? Because that's beautiful. But I guess what you have computer everywhere and then where do you plug into? Because if you're monitoring some batteries in Australia, in Texas, how does it work? Yeah. Let me give you like two minutes about the background of how we ended up starting a company. To be honest, two years before starting Accure as an engineer, I never thought about starting a business. It was not something I thought I could do. We're in Germany. Do you need a license to start a business? I don't know. Everything is complicated here. But in my last job at the largest research group on grid connected storage systems that I had the honor to lead for a couple of years, we developed our own 5 megawatt hour battery that was back in like 2013. It was a really big battery at the time. We were one of the first ones in Europe. And so we tried our best to do it well and to do it professionally, but there were just a lot of questions that no one could answer. So we had to try and we tried and failed and tried and failed. And eventually we had five different battery technologies up and running. They're still operating profitably in Germany. And during that time we were so busy with fixing issues, among others. We had the first CATL battery that was installed in Europe at our site. But it really had some issues in the beginning with the, the bms with state of charge estimation with power limits and these things. And just to help ourselves, during the time we developed algorithms that help us pinpoint any issue and then suggest fixes. And we did similar things actually with behind the meter storage systems. And over time we gathered so many of those algorithms, physics based models, some AI, some pretty straightforward decision trees that we thought hey, someone else could benefit from that. And that's how we started A cure. So we did it ourselves first and now we want to help others in doing it. And we plug into the energy management system, the data we need is already there and it's fairly easy to connect. And then you just see exactly what could be better. And the impact is pretty crazy. Like 10% more revenue within the first three months are not rare. What type of data do you collect? Charging, discharging, temperature, voltage, current temperature. Really the basics. So what the sensors collect and then any other metrics that the BMS might calculate. State of charge, state of power, state of energy, H VAC inverter data. Do you do it like at the container level or you can go on cell by cell? It depends a bit on the manufacturer. So some manufacturers have cell level available, for some it's module, for some it's string. Okay, so let's say I'm a big owner of batteries and I say KP your system. Extraordinary. Can you plug in? So how long does it take to plug in? Technical integration? Usually about six weeks. And this is including some buffers. Sometimes people are on holiday, sometimes the manufacturer needs to answer a question about how did you connect this here? How did you connect this here? But so we can onboard new customers fairly quickly. And if they have multiple sites of the same type, say you have three fluence assets or three BYD assets, any other asset after the first one, we usually can onboard within a week. So that goes really fast. Okay. And then so the information start flowing. Can you immediately benchmark versus all the others you have in your database? And that's how it start working. So you have your best in class, worst in class. We can immediately see where a battery falls into the broader quality comparison in terms of safety, in terms of performance, in terms of aging, warranty, in terms of imbalances and state of charge, estimation errors and all these things. Of course, just knowing that you have an issue isn't helpful. What's helpful is taking that information and going to fix it. And, and so we have a strong and large team of experts that work closely together with our customers. Like really, they become a part of their team as the technical helper to help them fix these issues. And then we can validate that it's actually better and that they're now making more money. And that way, ideally after three or six months, we can clearly show, hey, since you started working with a Cure, you made $3 million more in revenue, but you only pay a cure, I don't know, 100, 200,000. And so the difference is just pure profit. For you. And that's our business model. Do you think some guys would like to develop that in house because they say it's super proprietary or are people happy to have you look into their system? I think one of the limiting factors really in the industry at the moment is talent. The battery industry is growing exponentially. That means the growth every year is larger than the growth in the last year. And all these new owners and operators that are being created, the growing ones, they're already struggling to backfill fundamental positions. And it's incredibly challenging to find the 2025 engineers and pay them to build such tools. And if you just do a very quick back of the envelope calculation, it's not a good business decision to build these things if there are ready made solutions that large parts of the industry are using. In some markets we have over 20% market share. It's a classical build or buy decision where buying is just lower risk and faster and cheaper. Usually, I guess there are two type of institutions who are interested by your result. It's bankers and insurers. Absolutely. So a big part of our platform is we make reporting easier and more granular for our customers. And we have insurance partnerships where our customers can benefit from improved insurance conditions. But of course the insurance wants to see that the suggestions that we make are actually being followed. And so we have automated insurance reporting, we have automated investor reporting. If you think about resale value, it's incredibly challenging to say how much a battery system is still worth. But in the spreadsheet, in the financial modeling, resale value is a very relevant factor. And so through our analytics, through warranty management, through state of health analytics, we can give them a precise number of where they stand. And of course also if you want to flip a system, if you want to sell an old asset to buy a new portfolio, in all these transactions, having better data really streamlines that. And I think the industry is still at a point that's quite immature and having an independent third party that does it for everyone. Just give you a full report on this is the state of your technology. It just makes things easier. Guyfeld just on the insurance point there, are we going to see insurance companies really incentivize, maybe even force battery owners, be they in the home or elsewhere, to actually deploy your type technology? We are seeing this. So this is happening as we speak. As the saying goes, the future is already here. It's just unevenly distributed. Some insurance groups are much more advanced when it comes to these issues, while others are still quite new to this. And so it's unevenly distributed. Kai Phillips, maybe just to wrap up there, can you talk a little bit about how you see the future in terms of technology developments? What you see as the major technology developments, whether it is battery chemistry, whether that's power, electrons, whatever it is, what are we looking forward to in the next three years? The battery industry is incredibly buzzing. People are working on thousands of potential new cell chemistries and system designs and all these things. And as a researcher and as an engineer, I get really excited about these things from a theoretical perspective. But from a practical perspective, I believe it's going to be more of the same. I think that the recent developments we've seen with lithium prices, with the advancements in LFP batteries, are a showstopper for sodium ion. Right now, sodium ion is solving a problem that doesn't exist anymore. The same as with solid state batteries. Incredibly interesting. Like, I love reading those papers and the smart approaches that these researchers found to solve these fundamental challenges. However, no one needs solid state batteries. My controversial opinion, when you look at trends in the automotive industry, in the stationary storage industry, everyone is moving to lower energy density, lower price options. Solid state batteries are high energy density, high price options. So my personal take is for consumer electronics, for smartphones, smartwatches, solid state batteries, even if they cost double, will be a huge win. I'm certainly willing to pay 100 bucks extra to have a phone that lasts for three days, easy. But I think no one's willing to pay 30,000 more for a car that has a thousand kilometers of range. Because by now people have figured out that they're rarely driving more than 300 in one trip and it's just not a good investment to get even more battery into the car. My view, I love the controversy. It's great. Thank you very much for coming on the show. Thank you for having me. Thank you very much. Well, Gerard, it's absolutely extraordinary how the whole battery ecosystem is developing. And look, he was absolutely right. There's simply not enough experts. The industry cannot produce sufficient technicians. So they have to subcontract part of the monitoring to companies like Accure. And you know what, they have 80 employees. So they are in Germany, they're also in Boston and multidisciplinary team around battery data scientists. I can tell you there's not a lot in the world. So those companies are very valuable. Oh, absolutely, absolutely. I know again, this was also a little bit technical as well. But it's critical firstly. And secondly, it just again is just pushing this battery revolution that we've both been talking about for many years along. Right? Yeah. You just can't install your prismatic CATM and hope for the best. You need to mature. So on one hand, you get guys like Modo who are checking the revenues, and it's really about trading strategy and it's really about location and so on. But that's outside. That's what's happening outside the battery. What's happening inside. We need guys like a cure. Say, hey, guys, you know, the same battery and now they can compare. You know, they have really sufficient database and say, look, the same technical box could give you 10% more power if you. If you manage it, you know, slightly differently. And that is fascinating. Yeah, absolutely. Totally with you. And again, the other thing is, I think it's also we're only at the beginning of it, which is the use of AI with batteries. Right? Yeah. Okay. Gerard, we thank Dr. K.P. for coming on the show. We learn a lot and wish him the best. Exactly. Kp, keep in contact. See you soon. Okay, ciao. Talk to you next week. Look forward to it. Laurent, thank you for listening to Redefining Energy. Don't forget to rate the show and subscribe on Apple Podcast, Spotify or the platform of your choice.