Green Giants – Episode 4

Eric Dresselhuys (3:02)

Well, I started in this space in the mid 90s, which is I think mostly a testament to the fact that I’m old, but I think it also talks about that people have been working on these issues for a really long time. People who predated me. And my story is a little unique in that I was working for Procter & Gamble at the time, as you mentioned, and you might wonder what the heck does that have to do with anything in energy.

But I grew up in a clean tech household. My dad was in the water purification and desalination and water conditioning business. And so we grew up in a house where it was “turn off the water” and “turn off the lights.” We grew up in a time when the awareness of conservation, and I like to think of, you know, kind of the oil embargoes of the 70s is when we all really started paying more attention to these things.

And so I grew up in that environment and that house. And then, you know, fast forward into the mid-nineties, I was working at Procter and Gamble and, you know, at the time, the hot thing to do was to kind of, go quit your good day job and go start a .com, right? That was what everybody wants. It was, you know, you were going to do, you know, chewy, chewy toys.com or something as a… that wasn’t terribly interesting to me. But there was kind of underlying evolution of technology around cell phones and things. And it was coming at a time when market deregulation and energy was starting to become very much a hot topic. And it was the merger of those two things that got me initially interested, and that eventually led to the founding of Silver Spring, which was how could you leverage these, you know, these kind of advances in telecommunications and compute power and networking to fundamentally change the most important thing that’s out there, which is the energy that fuels society and fuels our economy. And it was the cross of those two things that eventually gave birth to Silver Spring.

Wes Ashworth (5:22)

Yeah, I love that story. It’s kind of in your DNA and in your bones and it’s been a part of your life from the beginning, which is incredible. What was that transition like going from, you know, big Procter and Gamble, very structured, to this startup and getting that off the ground and eventually, obviously, I’ve mentioned the success there in the intro.

Eric Dresselhuys (5:44)

Well, yeah, I mean, it was from a hundred- I think Procter probably had one hundred and twenty thousand employees the day I left. And yeah, we had two. And maybe this is a case of where ignorance is bliss. And if you would have really thought more about it, it would have said, oh my gosh, I can’t possibly do that. So it was really different because if you think about what big companies do, they’re really focused on optimization and scale and predictability and all of those things. And when you’re starting a new company and then particularly when you’re starting a new company and creating a new industry, a new segment or a new technology space at the same time, the hardest part is that there’s really no rules. And you don’t really know how it’s all gonna go forward. Of course, you start with a, everybody writes a business plan and you start with a thesis and say, I think this is how it’s all going to go forward. But what you learn pretty quickly is that you’re probably wrong, you know, on almost all of it, right? You know, you may be right in terms of the outcome. I think ultimately our thesis that, you know, this- that everything that kind of generates, distributes and consumes electricity will eventually be connected through an information system is, you know, proved out to be true and continues to prove out to be true. Everything, you know, the kind of the internet of things was not a term of art at the time, but now it’s just the way we live our lives. And so I think we were right in the big picture, but all of the details of how it would get from point A to point B, you know, you learn along the way. And I think that’s probably a pretty common entrepreneurial journey.

I think that the difference when you’re doing things in, in energy or what we would now call energy transition is the level of complexity here is frankly a lot higher. The bar is a lot higher than it is in some other industries.

Wes Ashworth (8:04)

Yeah, no, absolutely. And how is that past experience sort of combining all of that, all that you saw prior to, how has that shaped your leadership style now at, yes.

Eric Dresselhuys (8:17)

Well, hopefully you try not to make all the same mistakes that you made the first time again. So that’s the first thing. You’ve got the advantage of having gone through the journey before and being able to anticipate the pace of things. And I think that’s important in our story here at ESS. We have a really, really big idea that has the impact, that has the potential to have a really massive impact. And it’s easy to try to, you know, swallow that whole thing all at once. And when you try to do that, you tend to fail. You try to do everything. And as a result of trying to do everything, you end up doing nothing. You just get so… so hopefully what I can bring to the party is help the team understand that pacing. And it’s, I think the tricky part is you have to go fast. You have to move quickly. You have to move this and make progress and show that you’re moving along a path. But not too fast, right? You have to be ambitious, but not overly ambitious, and knowing how to balance those things out is, I think, a real challenge and something that we work hard at doing and hopefully we get it right more times than we don’t.

Wes Ashworth (9:48)

Yeah, no question. And I think that’s something that’s easier said than done, right? I think most people would say, yeah, you just take one bite at a time, one step at a time. It’s this, you know, big, hairy, audacious goal. How does that actually live in your world today? How do you get the team focused on that and truly embracing that idea? Like, you’ve you’ve had this huge, huge goal out there. And when we look at the success in the end result of energy transition, how do you keep that focus that one bite at a time without, like you said, too, you’ve got to move fast, so that makes it a little more complicated. And then there’s a lot of shiny objects too, that can kind of distract you and send you off on a different route. So curious to hear your insight there.

Eric Dresselhuys (10:38)

Yeah, well, it is, I think it is hard. I mean, two things that I think are certainly true is that the first is that every successful company in this space – so, and I’m going to just generically think very broadly about the energy transition or energy technology, if you look at all of the most successful stories and most successful companies, every one of them has a story of having persevered, right? I really, you know, they fell into the valley of death, you know, they had the prototype and they were thought, “we’re ready to go.” And then getting to the other side proved out to be harder or the technology was harder. The market adoption was slower or the regulatory environment was counterproductive. You know, there’s always different reasons for different people, but every one of them has a story of having to persevere, right? And stick to it of this, is something we really value. And yet we just said that it’s important to move fast and kind of fail fast and adjust your plan. And I think that’s the hardest thing. And I don’t have a, I wish I knew the formula. I’d write a book and then, you know, that would be my story. But knowing, constantly questioning and evaluating, you know, as you go through that journey is, is I think about all you can do. Do we still believe? Does the premise, our thesis of what we thought was going to happen, is it still holding true, but it’s just taking longer or we haven’t cracked the code yet exactly how to pull it off? In which case you stick with it. And then along the way, you try to make the small adjustments to keep kind of pushing and testing and probing to see if you can move it forward. And at some point, you may have to make the call that the premise just didn’t work.

You know, it just, the combination of forces was too hard and you weren’t able to figure it out. But in the back of your mind, you always think, if I just had another day, if just I had another week, if I had, I could crack the code.

Wes Ashworth (12:53)

That’s it. Yeah, that’s the entrepreneurial dilemma right there. So thinking about your transition to ESS: What motivated that move? What made you join ESS and how did your previous roles prepare you for the challenge there?

Eric Dresselhuys (13:10)

Yeah, well, I had followed the energy storage space and specifically had looked at non-lithium kind of longer duration batteries for some time. I never worked at one, but there were companies in the same kind of portfolios and in the same market space as us in Silver Spring and other places. And so I think that people who really studied the energy transition and really thought about how these things were going to evolve knew from an early day that at some point, at some level of penetration, the need to time shift energy was going to be critically important.

If you go talk to consumers and say, you know, what’s most important out of the electricity system for them, they probably say, I’d like the lights to come on when you throw the switch. You know, it’s got to be available. Reliability, availability, resiliency of the grid and of the energy system in general is the most important thing. And then the second thing, of course, is, you know, people say it’s got to be reasonably priced. And then the third thing for most people is if it could not kill the planet, that would be great. So with that as the context, you could kind of see from years ago that as renewable penetrations kept rising, we were going to have a problem with that very first thing, which is, how do we keep resiliency and reliability? We want the electricity system to work 24 hours a day, seven days a week, 365 days a year, and you just simply can’t get there without long duration storage. So with that as the background, when I met the company, which was actually a couple of years, I became aware of ESS a couple of years before I joined. I was really impressed with, if you were starting this journey from scratch and saying, what are the characteristics you want in long duration storage? And listen, you’d say, well, you know, geez, it’s got to be low, low costs when it gets to massive scale. It’s got to be, you know, non -toxic. We want it to have a very good total carbon impact. It’s going to be really flexible in terms of where and how you deploy it. You know, you should run down that whole list. You would basically describe the ESS solution. You’d describe an iron flow battery. And the time that the founders had put into solving some of the really tricky technical problems that made this a viable battery to operate in a production environment at scale, you know, it was a little bit kind of too good to be true, in the sense that they had started the investment that they have made years and years before was kind of coming to a head right when the market’s awareness of that problem was starting to peak. And so when I got the call, I thought, wow, that’s a pretty unique opportunity to leverage my experience of what I’ve done into something that really has massive impact, can have massive impact right at the time when the market’s ready to receive it.

Wes Ashworth (16:34)

Yeah, absolutely. Checks all the boxes. Easy decision. I love it. So thinking about, too, the importance, and we hit on it earlier, moving quickly and then innovating really quickly too. And following ESS, you look at some of those early prototypes to where it is now. There’s a fast cycle of innovation and things happening and improving constantly. How do you foster that culture of innovation within ESS?

Eric Dresselhuys (17:04)

Well, I think you’ve got to do two things. The first is, you know, we try to really operate as a single company with a lot of visibility across everybody on what the problem we’re trying to solve is. I think if engineers and R&D people and the folks in the labs and the folks out on the factory floor, if they don’t really understand the market problem we’re solving, we just say, hey, go do the thing you were told to go do – we really don’t untap a huge amount of the potential innovation and creativity that exists within the building. And then I think the second thing you have to do, and this is hard to do, when you’re marching towards, you know, towards a schedule and you’re trying to stay on track, you have to, you have to not have any sacred cows in terms of how you’ve done things in the past. And that creates some legitimate, but real tension in the system because, you know, a part of our success is driven by a lot of experimentation and a lot of things that have been tried that haven’t worked as ever has. And so, you know, there’s a, there can be a tendency for people to say, you know, no, we have to do it a certain way, because that’s the way we know how to do it. But you don’t ever move forward. If you can’t get people to say you’ve got a forum, your voice counts, and you can have, any good ideas can come from anywhere.

Wes Ashworth (18:36)

Absolutely. And I love kind of breaking that down and building that innovative culture. And I’m sure it starts from the beginning, right? When you’re hiring, when you’re interviewing, when you’re onboarding, ongoing training and those sort of things. But talk me through that beginning stage. When you’re looking for talent within the organization, what do you look for to know that, hey, this person might add value to what we’re trying to do here in our innovative culture?

Eric Dresselhuys (19:06)

Yeah. Well, I think, you know, obviously for any role you’re hiring for there’s a certain amount of technical skill, you know, electrical engineer – you probably should have an electrical engineering degree and have some experience, you know, designing electrical circuits or whatever it is you’re hiring them. But one thing I’ve found, my personal experience is that, you know, people will sometimes, when they’re looking for a job or when companies are looking for people, they tend to focus on things like the industry. Did you come from the battery business or the energy business? Sometimes when people are hiring, they get very much caught in their head that, you know, there’s a certain title or, you know, that they’re looking for something. And I understand that, but to me, a lot of the match comes from, are they a good cultural fit for a company at the stage of development where we exist, where we are today? Because there are a lot of people who, great people, smart people, do really good work, but they’re really comfortable working in a very structured environment. And so they may end up in a big, big company, and they can do great things there and be super productive. And they may be considered even the wild, reckless one within the big company, pushing things forward. But that’s their happy place. A lot of times we’ve seen those people don’t, it can be a very rocky transition for those people to come to work at a smaller company. And similarly, in some cases, people, there are people like who I know, good friends in the industry, who are really happy working in a very, very small environment. They’re happy when there’s 10 people or 15 people, but 100 people is way too many. So I think finding someone who’s at the right, you know, has the right disposition and culture can really take a lot of personal ownership, but also work well with others is the part that works the best for us at this point. And that may, you know, that may change over time for some people. And we may, we’ll be a different company in a couple of years than we are today because we’ll hopefully continue to grow and achieve our ambitions and the company will grow alongside.

Wes Ashworth (21:29)

Yeah, absolutely, that do really, really big company structure environments and all that. And then there are those that are more entrepreneurial spirited and want to be a part of that. So I think that’s the important piece. And I think too, there are plenty of people that I’ve found at these big massive corporations that have been there, they’ve been successful and done really well, but they’ve got something inside that it’s not quite getting fulfilled. And then you present an opportunity like, you know, at ESS, and they’re all over it and kind of going, I didn’t even know I was looking for this, but this is what I’m looking for. And that’s where the kind of magic happens, is in that fit. So I love that.

Eric Dresselhuys (22:11)

Well, one thing in our case that I had, Wes is that, you know, we’re a very mission driven company. I think that especially for younger people who have joined the company, they’re really in tune to what is it that we’re working on. I’m not sure that that was as true for me when I was coming out of college and looking for a job. I don’t know that that was as top of mind in my consideration, but I can tell you that we hire off campus, we hire young engineers, we of course hire a lot of people with experience, but we’re hiring young people right off campus. And they’re really dialed into what we’re trying to do. The impact that we can have as a company.

I think that’s a pretty terrific part of what we offer as a company, but also what attracts the best people to us is they want to be part of a team and they want to be part of a mission that’s doing a really important thing.

Wes Ashworth (23:08)

Yeah, that’s a critical piece there. And I see that trend as well, especially with those that are in the first to middle half of their career, that they really want to be aligned with that, with the mission of the company. I want to believe in it. I want to feel good about it. Be excited about it. And the companies that win that battle usually are the ones that can tell that story and their leaders can talk about it and get people excited about it. So I love that point. Transition a little bit back to innovation – so in a field that, again, is constantly evolving, constantly changing, how do you keep the company’s approach, not just embracing innovation, but keeping that approach fresh and sort of ahead of the curve.

Eric Dresselhuys (23:48.846)

Well, it’s hard is the short answer because, you know, the one thing, especially when you’re in an innovative mode like this and you really get something and you’ve got it working and people like it, you know, your natural human tendency is to say, you know, nobody touch anything. Leave it alone.

But I think we’ve been fortunate that a lot of the folks, especially through the leadership team that have come to the company, have gone through the journey again and again. And it’s something you just have to reinforce every day. And we sit as a team, we’re just kind of coming through our annual planning process now. And something like a battery, really probably similar to most parts of the renewable energy kind of value chain, is there’s a couple of things you just know are important in goodness in terms of improving performance, lowering cost. In our case, we look a lot at levelized cost of storage, which kind of takes a look from the customer’s view. You know, the all-in cost, cost of buying the battery, but the cost of installing it and operating it and tearing it down at the end of its life in 20 years and all of those things.

And if you keep pushing those metrics and those goals out in front of people and saying, hey, how do we make this 10% cheaper? How do we make it fit? How do we make it easier to deploy? How do we make it faster to go? The necessity is the mother of invention. And so you have to just keep raising the bar on yourself and say, this is how I’m going to make it better.

I look at, you know, there’s a lot of football going on now. A lot of sports is where we’ve got a lot of events going. And, you know, we talk about, if you typically use a lot of sports analogies at work, but for me, I’m always fascinated by the fact that if you look at the NBA, like everybody’s a great player. Like they’re all like, this is the best people who play basketball on earth. And yet some teams and some people constantly outperform the others. And so, it’s not happenstance, right? You know, there’s a reason for it. And the characteristics of those at a team level, at a company level are always about just raising the expectation and raising the bar. How can you keep pushing the next frontier? And the good news is there’s enough examples now of companies who were once very successful who have not made it through where I think people recognize that, if you don’t keep innovating, if you don’t keep pushing it forward, your days are numbered.

Wes Ashworth (26:46)

Yeah, absolutely. Absolutely. And I think as humans, we’re hardwired that way. We crave that and want that challenge to be there, that constant kind of pushing. It’s a balance of, I think, not increasing the expectations so high that it feels unattainable, right? But it’s that balance of pushing you and driving you to innovate and come up with a different idea and figure out how do we get there. And that’s when you get in kind of flow states. I love it.

Eric Dresselhuys (27:15)

Well, and I think having great customers is a great asset in this, too. You know, one thing, especially when you have a new market, a new tool, which is in some ways what we are, we’re new and different and a better kind of tool. There are certainly plenty of use cases and applications that we know of and we’ve predicted. But what usually happens and is starting to happen for us is people are using the battery in ways that are different than the ways we imagined. And there are use cases for long duration storage that are starting to emerge that weren’t talked about three years ago.

And when you have great customers and collaborators out in the world, you can start to ask all of those, well, would it be possible for us to blank kind of thing? I think that gets everybody’s juices flowing to say, how would you solve that problem? What would you need to change to make, to make that thing come true? And it’s like everything in the energy business, it’s always a little bit more complex than you think it is, maybe to figure those things out, but that’s part of the fun.

Wes Ashworth (28:38)

Yeah. Can you share one of those examples, essentially, of something that you didn’t really see the use being there and then it came up or came about after the fact?

Eric Dresselhuys (28:49)

Well, I’ll tell you, one that’s coming up quite a bit now in many discussions at a lot of different levels of the industry is this idea of storage as a grid asset or what people will call SAGA. We’ll see if that fixes the next acronym of the industry. The background is, of course, we all know that we have transmission and distribution constraint problems. And a lot of talk about building new transmission and expanding transmission capacity to enable renewables.

All of which, by the way, should happen. So we should definitely do all those things. But the reality, two realities are, well, maybe three. The first is T and D infrastructure takes a long time to build. So will we be able to snap our fingers and have the capacity we need in the near term? It’s probably hard. The second thing is that it’s expensive. It is not an inexpensive or trivial undertaking to build out these large new transmission projects. But the third reality is that most transmission and distribution infrastructure actually has comparatively low utilization rates. It’s a peaking problem. So it’s like driving on the highway. When you can, you know, three lanes in each direction, it’s easy to get around most of the time. But at five at night, you’re stuck in traffic, right? And you sit there pounding the steering wheel saying, well, you know, we should build more lanes. Well, what would happen is we’d still have congestion at five o ‘clock in the afternoon, but we’d have even more open lanes at two o ‘clock in the morning. So one of the applications that people are starting to really push on now is how can we use energy storage as a way to help enhance grid capacity, by time shifting and physically, geographically shifting the location of where energy is stored? If I’ve got extra capacity at a time when, extra generation capacity at a time when I have sufficient TND infrastructure, can I move the electricity to a different part of the world, right, downstream, closer to the population centers and the load centers and store the energy locally to help mitigate near term congestion problems that happen? And that could be driven by the load side or by the TND side. But it’s looking, and obviously circumstances vary place to place, but it looks like that could be a much more cost effective and much faster to deploy answer than waiting for the giant new high voltage DC transmission line to get built.

Wes Ashworth (31:40)

Yeah. Yeah. Is that something that you think can happen now or is that a years down the road? Like what’s the process like to implement that kind of solution?

Eric Dresselhuys (31:52)

Well, I think it’s two things. There’s technical questions to resolve and a lot of people are thinking about that now. And then there’s regulatory questions to resolve. We know how people get paid for building transmission infrastructure, right? Yeah, the well known model and we know how that works, either on a regulated or a deregulated basis. What is the treatment of a battery in that circumstance? Does the battery… you know, for a lot of people, batteries still are basically considered generation. Right? Even though, obviously, a battery doesn’t generate the actual electricity, when it feeds in, it’s generational. Of course, a battery is both a load and a source of electricity.

And so how does the treatment of that get paid? Do you get paid for the physical asset? Will you get paid for the transaction of the kilowatt hour? When we get the rules right in the world of regulation, it’s amazing how the private market will step in and address the need. But if we don’t get the regulation right, it goes slower.

Wes Ashworth (33:03)

Yeah, absolutely. And that’s all the complexity that comes in. A lot of different areas to address. So thinking about, too, so you know, you hear a lot and I think the topic comes up all the time in terms of just scaling and scalability and how do we do this, so what strategies have you employed to scale ESS in the competitive storage market?

Eric Dresselhuys (33:29)

Well, a couple, a bunch of things, I suppose. But the top of mind things are for us, you know, and I suppose for a lot of businesses in the space, we’ve really thought about what our business model is. There’s a lot of different, we could be a battery developer, we could be an owner-operator out in the field. There’s lots of different things we could do. And we’ve decided for our business, we really wanna be a technology provider. We really focus on building the most cost effective, longest lasting, safest kind of battery we can build.

And then we sell that through, you know, partners and two end users directly. But we’re not a developer, so I’m not speculatively buying land in West Texas right now, hoping to play arbitrage pricing games with the ERCOT market or something crazy. But there are people who are in that business and that’s awesome. And I’m glad that those people are in the business and hopefully they can become customers. I’m not, I’m not an EPC. I’m not an inverter maker. I don’t make any MS software package. I mean, we really focus on what we do. And so we put all of our energy into scaling the thing that we do. As opposed to trying to be kind of all things to all people. Over time, who knows how that evolves, but that’s what we’ve chosen today.

The second thing that we’ve tried to do is build really long-term relationships with our clients, which gives better predictability to the business. And we haven’t been perfect on that. We’ve had, you know, surprises and lumps and starts and stops as a lot of people have. But we’ve really tried to focus on building predictability into the business. Because the more predictable you are, the easier it is to drive to scale. What’s really hard for a company like ours is, you know,

to build one thing one month and 10 things the next month and then two things after that, but then 40 things month after that, right? It’s just, you can’t really go that way. And yet as a young company, you inherently don’t have predictability. It’s all new, right? Figuring it’s off for the first time. So, but you really have to try to focus on finding ways to take some of the variability. Some of the… you can’t, it’s hard to have an equation where you’re solving for 14 variables all at the same time.

Wes Ashworth (36:03)

Yeah, absolutely. Such golden nuggets in there, you know, just in terms of just scale and success and business kind of things and sticking to the main thing. And I think that’s such a critical thing. I think it’s hard for a lot of companies to do and you get caught up in that. And again, kind of going back to shiny objects and things like that coming up, but really knowing who you are, you know, what you do best, focusing all your time, effort and energy on that.

And then I love the long-term, you know, kind of relationship and partnership piece. And what you mentioned earlier too, then they’re coming to you and going, Hey, you know, we’re kind of thinking about this, you know, what do you think about this or how could we do this? Or, you know, those kinds of things as well too. So, any other significant challenges you’ve faced in scaling up and, if so, how have you addressed those?

Eric Dresselhuys (36:53)

Well, uh, how much time did you say we have seven hours?

Wes Ashworth (36:56)

Seven hours! Yeah. It’s our marathon.

Eric Dresselhuys (36:58)

No, well, I think one thing that’s hit the whole industry and we certainly were not immune was some of the supply chain issues. And I think that, you know, it’s actually people may laugh at this, but I think it’s actually been great that supply chains are getting more attention these days. And that includes not just some of the near term disruptions that have been experienced, but also people starting to think very, very seriously about where do things come from? What’s the whole control chain? Where did the cobalt in my lithium battery come from? When you find out it was from the Democratic Republic of the Congo, mined by effectively slave laborer, child laborer. Sure. Oh, wait a minute. This was my big ESG push to go buy a clean thing, and that’s where it came from.

So I think, you know, thinking about supply chains is, I think, a good thing for our industry. For us in particular, you know, we’ve really looked at where do we get our stuff? How much can we build domestically? You know, ESS made a commitment to being the U.S. battery manufacturing company long, long before the IRA was passed. Now that we have the IRA, everybody thinks it’s a good idea. But we had decided that a long time ago.

And I think the part of that that has not gotten as much attention, and we’ve certainly done a ton of work, our team has to address it is when manufacturing started to get offshore years ago from the US, it’s not just the end use manufacturing that moved with them, the whole supply chain moved with them. So now you’re trying to start building things back in the US and rebuilding that supply chain, domestically is real work.

Wes Ashworth (39:00)

Absolutely. Yeah, I think we saw that impact so many industries and companies and I agree. I mean, I, you’re an optimist, I guess, which is great. It probably tries a lot of success. It is. It’s, it’s a good thing in the long run to allow you to kind of take a deeper look and also just create that culture of innovation, too. You had to get pretty creative and innovative during especially the worst of it and figure it out. How do we get the materials we need? How do we get the supplies we need? How do we still make it to where we’re profitable and those kind of things too? So again, it all pushes you forward.

Eric Dresselhuys (39:37)

Yeah, well, and I’ll tell you one thing, the truest thing I’ll say on this call is that it’s easy to talk yourself out of it, right? It’s easy to come up with all the reasons why it’s too hard and it’s too confusing. It’ll take too long and the odds are against you and the incumbents are gonna force you out or whatever. The list of reasons that it won’t work is endless. You just have to believe as an individual and as a team that you can find a way through. You will solve the problem. You believe you can. And if you believe you can, you probably will.

Wes Ashworth (40:17)

Yeah, that’s the resiliency that comes in. And back to sports analogies, but even people talk about, you know, it’s January and New Year’s resolutions and people trying to do things. But it’s that, it’s like, don’t think about “I want to run a marathon.” Think about “you need to lace up your shoes,” you know, like step one lace up your shoes, just commit to that one step. But  then you start committing to the next step and the next step. But yeah, that’s, that’s it. That’s everything.

So thinking about this year, 2024, how are you feeling? What do you see for the year? What are some of your predictions for 2024?

Eric Dresselhuys (40:56)

Well, I left my crystal ball in the car, so I’ll have to find some broken… Well, listen, I think it’s going to be a big year. There’s a lot of issues to work through, but we see kind of demand growth.

For us as a company, we’re continuing to increase our scale. And for us, you know, big part, we’ve been very public about this, is driving cost out of the product. And so we’ve made great progress on that last year. And we’re going to continue to work hard on that into next year. One thing that I’d like to see happen that I think could be important is, you know, the IRA is such an important bill across so much of the world of energy transition and decarbonization. I’d love to see all of this IRS rulemaking – this is down in the weeds kind of stuff, but I’d love to see all of those just get put to bed. You know, and people are moving forward and the bold folks in our space are a little more risk accepting. But I think for a lot of people in this space, the gross margins and the renewable energy business aren’t rich enough to say, well, maybe I’ll get it, maybe I won’t. People who really need to know the rules. So I’d love to see that get done. I think that could be pretty accretive to what’s happening in the space in total. And I think for the long duration energy storage space, I think getting more and more stuff out in the field and getting more and more success stories and reference points is just kind of goodness from a market development perspective. I think back to the Smart Grid days and it went from in a relatively short period of time to, from, like, people would say, I don’t know, is that even a good idea? To, well, I think it’s interesting and we probably will be interested in it, to a really kind of mass adoption pretty quickly. And that came from a relatively small handful of big operators, the Florida Power, the PG&E’s and people like that, starting to do it at big scale. And then all of a sudden, everybody says, wow, I always knew that was going to be a good idea. And then there’s a rush to go make it happen.

Wes Ashworth (43:36)

Yeah, no question. So thinking about, too, just your vision for the future and things like that. So what’s your long term vision for ESS? How does it align with the future of the energy sector?

Eric Dresselhuys (43:49)

Well, I think listen, I think that just to steal shamelessly from the Secretary of Energy and her staff, you know, this is one of the five really kind of key pillars of decarbonization. So, you know, it’s, in our world, it’s about scale. It’s about making the product. You know, obviously you’re working on the roadmap of product improvement and improving all the performance metrics that go into batteries, you know, longer storage is better, faster RTE is better, you know, there’s just universal kind of truths in anything battery wise, better energy density is better and so on.

But I think it’s really about just getting the use cases out there that this becomes a default part of the capacity planning process. I look at the state of California and we look at it here and I haven’t seen formally the final numbers, but an interesting metric for us has always been how much electricity was curtailed in California the year before. Right? So, a few years back, and not that many years back, the number was negligible. It wasn’t a meaningful number. You wouldn’t have noticed. Then all of a sudden, it started to grow. Then a few years ago, it hit a terawatt hour. Then last year, two years ago, 2023, it was two and a half terawatt hours. I heard, I haven’t confirmed this personally, so nobody sent me hate mail if I got it wrong – I literally saw something posted on LinkedIn that said that last year’s number 2023 broke three terawatt hours. So if you think about what that means, is there are a lot of people working very hard to build renewable plants. Of course, it’s mostly solar in California. And somebody’s paying for all of that. And somebody’s paying for all of that electricity.

And because of our mismatch of supply and demand, our inability to get electricity to the right place at the right time that we needed to do it, we took three terawatt hours of perfectly good solar electricity and we drove it into the ground. And that’s not compatible with my view of sustainability.

Wes Ashworth (46:16)

Yeah, absolutely. And that’s why that long duration energy storage is at the heart of it, right? I mean, I think if anything, it’s, to me, could be the most important piece of it and topic of it. So, you know, thankful for companies like ESS that are filling that void and solving those problems. And like you said, you know, creating just as better solutions that – we can’t be happy with that, that that’s an acceptable, like, yeah, let’s just do that forever. You know, there’s got to be better ways.

Eric Dresselhuys (46:48)

So, let’s build some more renewable energy that we won’t use so that we can then crank up a bunch of gas-fired peaker plants to make sure that we have enough energy to watch, I should have some sort of a joke about some TV show I’ve never watched, but we can all watch The Bachelor at night. I don’t know. The patterns, when I started in the business, you know, most places you looked peak energy consumption was somewhere between one and three o ‘clock in the afternoon. Right? Warm afternoons, air conditioning loads and things would be cranking up. Everybody’s at work or at school. And you’d have peak on the system. Nope. Nobody has that peak anymore. Peak is four and five and six o ‘clock at night. And so, you know, there’s a, there’s some really fundamental things happening to how the system operates as we decarbonize the system. And I give an immense amount of credit to people like the Sacramento Municipal Utility District, SMUD, who is one of the few people, and there are a few others, but they were one of the first I ever saw, that actually published a plan for decarbonization. And I think that’s, you can put that in your, you know, bin of themes for 2024, but you have a lot of people who have set goals, right? We’re gonna be zero carbon by 2040, by 2045, by 2050 or something. But just saying that isn’t really a goal as much as it is an aspiration. It’s a wish, like wouldn’t it be great? We would be carbonized by 2040.

What the real leaders, people like SMUD are doing is they’re taking that and translating it into an actual, you know, action plan. With milestones and targets and they really are thinking through, what does it take to get there? So I put that as a goal and in SMUD’s case, a much more aggressive goal, 2030 for them. And they’re off doing a bunch of different things to help achieve that vision. And I think that’s something that everybody needs to do now is to kind of click down a few layers into it – okay, what’s my actual plan to get this stuff?

Wes Ashworth (49:21)

Yeah, yeah, that’s the message. Hope isn’t a strategy. Create a plan. Got to create the plan. I love that. So final thoughts, you know, anything else you’d like to share with the listeners about ESS, future renewable energy or, or your personal journey.

Eric Dresselhuys (49:38.926)

Well, I’ll do them all. I’ll do it in a few seconds. First, for everybody that’s interested in this and thinks it’s a cool space, give us a ring. Engineering, operations, you name it. Come join the fight and jump on the bus because we need a lot of help to go make this happen. And I’d say the same thing for anybody with a complimentary kind of technology or company. This is the ultimate, kind of it takes a village journey. So, um, so reach out and, you know, let’s figure out how to move it forward. You know, for me, for me personally, you know, and I would share this with anybody who cares – what motivates me, I get up really early in the morning, to the chagrin of my team. And I’ve spent the last 25 years jumping out of bed at 4:30 or five o ‘clock in the morning, aching to get on with doing the work and trying to make progress. And I won’t use one of those cliche lines like, if you do what you love, you’ll never work a day in your life. I’ve worked a lot. Everything in this place is work. There’s nothing easy.

But you’ll get a ton of satisfaction out of being involved in something where, you know, even now I look back and things that we deployed in 25 years ago, 20 years ago at Silver Spring, I’m out in the world in some town in America and I turned the corner and I see one of our things that are helping to, you know, optimize the grid. And I think, wow, you know, that’s what we’re working on here at the ESS.

Wes Ashworth (51:29)

Yeah. Perfect. Perfectly said, great conclusion there. Thank you so, so much for your time. It’s such a great conversation. So many valuable insights there and nuggets that I know I’m excited about. I’m sure the listeners will be as well. So thank you so much again. The audience out there, thanks as always for listening. And if you enjoy the conversation, share it with a colleague, help us get the word out, spread this message around. Don’t forget to subscribe, rate, review the podcast and stay tuned for our next episode.