The Exchanges, every show

Q let's, I think we should start by giving diesel generators their flowers. There's a reason why we use them everywhere all over the world. So we should talk about what's good and uniquely good about them, and then we can talk about what's bad, which in my opinion is a longer list. But first, like, what is good about diesel generators? Why are they fit for purpose for these applications?

A Yeah, there is a very good reason that they are so prevalent and nothing has been able to displace them so far, because it's a very unique combination of capabilities. So, number one, a diesel generator is essentially a highly convenient microgrid in a box. When you have the generator, you need nothing else to provide electricity wherever you are if the grid is down or if the grid's not available. It's also incredibly low cost. Diesel generators are on the order of hardware alone, five to 800 dollars per kilowatt. Even the more expensive emissions controlled ones are about a thousand dollars per kilowatt. You're talking about incredibly low cost compared to a gas turbine or supplicating engine. Or a fuel cell or any other, most other kinds of technologies. And then fundamentally, it's also about the fuel itself. When you think about what diesel is as a liquid fuel, it's a way to store energy incredibly compactly. Ultra high energy density. It's reasonably stable. It won't just, you know, catch on fire on its own spontaneously. It doesn't leak out. You don't need specialized tanks like you do with natural gas or other gaseous fuels like hydrogen. Um, so it's a very simple fuel Easy to store on site. You have a simple plastic tank. You can store 48 hours of fuel or 96 hours of fuel. What people in the battery world can consider very long durations is basically trivial to store wi…

AI assessment note: “number one, a diesel generator is essentially a highly convenient microgrid in a box.”

Q Right. Okay, so for all those reasons, we have so, so much diesel being used to generate power. Let's talk about why that's a problem. What's bad about diesel generators?

A Well, I think the challenge is most obvious when you look at who these days uses diesel generators at the most enormous scale, and that's where the problems are most acute, and that is particularly with data centers. And so data centers, typically almost all of them, will have a giant fleet of diesel generators backing up a majority or even a hundred percent of the load. They even have extra generators behind that to back the generators themselves for extra redundancy to ensure their five nines reliability. So you have these enormous data center fleets. Of course, many data centers are built close to urban corridors, like Northern Virginia in particular, is where we've seen a lot of the most acute challenges with the diesel generator fleets there. And what you see when you read the news publications is incredible community opposition to the diesel generators. Even though these are not typically running most of the year, they might only run a hundred hours for a Per year for maintenance and emergency operations. The reality is when they do run, they are number one, incredibly noisy, and the vibrations basically can shake up the whole community. And then on top of that, it's really the air emissions, specifically the NOx emissions that come out of the generators that are incredibly polluting. They have substantial local health impacts, you know, millions or tens of million dollar…

AI assessment note: “incredibly noisy, and the vibrations basically can shake up the whole community. And then... air emissions”

Q Okay, so, diesel generators, they're everywhere. They suck. We haven't had a great replacement. Let's talk about aluminum as fuel. Um, talk to me about, first of all, just give the fundamentals here. Like, why could aluminum be a fuel? Why can a metal be a fuel?

A Yeah, it's a very non-obvious concept. Most people have never heard of metal fuels or aluminum as a source of energy, but in fact is a remarkably efficient way to think about storing And transporting and delivering electricity at enormous scale, independent of the electric grid. And so how it works is, when you think about how aluminum exists in the Earth's crust, it in fact is found in bauxite, which is an ore that contains aluminum bonded with oxygen. That's its natural state in the Earth. And then what we do when we think about producing aluminum as a metal for structural applications, beverage cans, cars, and things like this, Is that you take that mining ore, you dissolve it down with sodium hydroxide, and then you get out aluminum hydroxide in a pure form as a chemical. That's then dried out into aluminum oxide, and then the key process, aluminum smelting, is splitting apart aluminum from oxygen by using electricity to drive an electrochemical process. Uh, and that form of electrolysis splits that bond, and then you get molten aluminum that then gets cast out and produced into whatever products you need. And then, typically at that point, we forget about the energy side of the equation. You just have this great metal. It's structural. It's stable. It doesn't corrode. It's great for all sorts of uses, and sort of that's the end of the story. But, you know, the reality is, …

AI assessment note: “that aluminum, in fact, has all that embodied energy held inside”

Q We'll come back to the Voyager Generator in 1:02. I realize one thing we didn't actually make a clear point of, I think, in talking about aluminum as fuel is its energy density. I mean, you said it sort of got all this embodied energy, chemical energy from the aluminum smelting. Just how, how dense is it?

A Yeah, so aluminum has a whole bunch of great properties as a fuel. Most critically, I would say, is the energy density, and you want to compare it to diesel, which is sort of the gold standard in terms of fossil fuel energy density. I mean, diesel is far more energy dense than natural gas, for example. Um, in fact, is, uh, from a volume basis, about twice as energy dense as diesel on an as-converted basis. So come at the amount of electricity you're getting out per, you know, liter per gallon of fuel. And then even on a weight basis, you are a little bit better than diesel in terms of energy per weight. Um, so, uh, moderately to significantly better than diesel and dramatically better than every other solution out there. And then you combine this with the fact that it is a safe solid aluminum, of course. It doesn't burn. It doesn't rust or corrode. Basically, you can stockpile this for years on end and not lose any of the material to oxidation or side reactions. Um, and because it's such a safe, simple, stable solid, it transports extremely efficiently through existing logistics chains. Uh, whether it's bulk carriers, the way that we move ores or grains or coal around the world, some of the lowest cost logistics options globally are available to aluminum as well. You can put it on rail cars. You can put it on trucks. You don't need any special training or permitting to haul thi…

AI assessment note: “from a volume basis, about twice as energy dense as diesel”

Q know, you don't want to divert too much of it. We need it, uh, for structural applications. It's also pretty expensive if you're buying primary aluminum. So this gets into your fuel strategy. Uh, why, why does it make sense? And in what conditions does it make sense to actually use aluminum as a fuel? And like, what are you going to do? How are you going to get fuel?

A Yes, so our fuel strategy is twofold. So our primary strategy, the first, let's say, quite a few five-plus years of the business is based on scrap aluminum. And what is attractive about the scrap aluminum industry is it's an industry with many, many different grades of scrap that are available at a moderate to substantial discount versus primary aluminum, depending on the quality of that scrap. And certainly, if you think about scrap aluminum and aluminum recycling, there's the notion that aluminum is infinitely recyclable. And that is true of certain grades of scrap. If we think about beverage cans, they recycle very, very cleanly in a closed loop. We don't want to touch any of those streams because not only are they expensive, at the end of the day, they are serving a valuable purpose by diverting the need to use more primary aluminum. So we're not going to touch those kinds of scrap. But you also have other forms of scrap, especially things like shredded end-of-life cars that are intrinsically mixed alloys. They're And other impurities that really impact their ability to be recycled for any kind of high-strength structural application. And because of that, they are much more discounted versus primary aluminum. It's not really a direct replacement for primary aluminum. The prices are much more decoupled. Even if primary gets expensive, low-grade scrap doesn't get that much mo…

AI assessment note: “our primary strategy, the first, let's say, quite a few five-plus years of the business is based on scrap aluminum.”

Q with the product. It's quite the opposite. But as you said, we've sort of lived with them out of necessity. I think we should spend a minute talking about why there hasn't been a great replacement. Like there are, you know, I think Intuitively, you might think, okay, well, we have natural gas generators reciprocating engines or whatever. Why is that not a universal solution to the diesel generator problem?

A Yeah, we can look at a few of the plausible alternatives, and there are companies that are looking to replace diesel generator fleets with natural gas-based systems, especially uh, reciprocating engines, and it, it partially works, but I think if you talk to a lot of the demanding users of diesel, What they'll tell you is that your natural gas systems are dependent on the security of your gas pipeline network, um, and the gas pipelines typically undergo stress at exactly the same times when your overall electric grid is overstressed, and so there's a big winter storm that's rolling through that's leading to a regional blackout. There's a pretty decent chance at a correlated risk that your gas pipeline is also at risk, and so that external dependency means that you have this common mode failure, which means that your natural gas systems can never Be as provably reliable as truly having fuel on site. We're totally independent without any kind of external, um, intervention. You can operate for 48 or 96 hours continuously because you have your fuel stored on site. And so fundamentally, natural gas is a fuel that should be delivered just in time through pipelines rather than stored on site. It's much more painful to try to store a gaseous fuel.

AI assessment note: “natural gas systems are dependent on the security of your gas pipeline network”

Q Okay, and so what version of that are you doing?

A Uh, we are taking the, uh, electrochemical approach. Um, so, so originally Voya went through a fairly deep, uh, incubation, looked at many different metals technologies and different pathways for getting out, uh, electricity or energy. From the metal. First of all, we decided that we really wanted to get electricity out of metal fuels, not heat and not hydrogen, because electricity fundamentally is the most critical need facing our energy landscape today. And then number two, you can imagine trying to burn a metal powder. For example, fine metal powders are known to be highly flammable, but if you burn it, you then have super high grade heat, but then you have to pass it through a steam turbine. All of a sudden, you're talking about a very expensive And challenging system that's hard to scale and, and, uh, very costly. And so we decided to really pursue the electrochemical pathway, which we believe has, uh, incredible potential, uh, because electrochemistry, fundamentally what we're doing at Voya, leverages the fundamental investments and breakthroughs that have happened in the battery and fuel cell industries over the last, uh, couple decades. And these days with the maturity of, uh, electrochemical technologies, with the sort of capability of the workforce and talent base that's out there, You can really design electrochemical systems that are incredibly cost-effective and ca…

AI assessment note: “we are taking the, uh, electrochemical approach.”

Q Okay, so that's the direct head-to-head Voya versus diesel comparison, but then you alluded to, like, there's things a Voya generator can do that a diesel generator can't, so what were you referring to there?

A Yeah, and so when you think about what a diesel generator is, it's actually not only great for on-site backup, it's fundamentally a very valuable tool that can be used by the electric grid. Whenever the grid is overstressed and you're running out of peak capacity, that entire installed base of diesel theoretically would be super attractive as a grid resource. Now, you know, why don't we typically use it as a grid resource? It's because there are strict air quality constraints on run times when it comes to the emissions coming out, and local communities are going to be up in arms if you're running these things hundreds of hours a year, even, because of all the pollution that's coming out of the diesel generators. Um, even despite that, if you look at the Department of Energy, they're trying to basically have these emergency rulings To allow diesel generators to run when the grid is stressed to, to buffer the grid. So the, the opportunity is there, but your diesel is fundamentally restricted because of the local pollution that it causes from being a useful grid asset. With Voya, what we can do is, is twofold. Number one, Voya can serve as a pretty idealized grid asset because you have basically instant start capability. Whenever the grid needs to call upon this, you can run for tens or hundreds of hours in duration. Even writing out the most severe winter storms, it's a highly re…

AI assessment note: “With Voya, what we can do is, is twofold. Number one, Voya can serve as a pretty idealized grid asset”

Q Okay, so that's part one of the fuel strategy is, is leverage this existing broad liquid supply chain for scrap, particularly low-grade scrap. Uh, what's part two?

A Well, what, and on part one, I'll maybe just wrap up and say that ultimately when you look at the net cost of the fuel, uh, we believe even in early days, even the scrap in the U.S. being more expensive than other countries, with U.S. scrap, you're already at diesel parity when it comes to fuel costs. Uh, which is a critical thing for us. We're not commanding a green premium or any other sort of premium. Direct cost parity with diesel for fully delivered cost, including all the processing, all the logistics steps, and so forth. So I wanted to lay that out there clearly. Like, from the beginning, we're on cost parity with diesel in the US. In other countries, we'd actually be far cheaper than diesel, where aluminum's cheaper and diesel's more expensive, like in Europe or in Asia, for example. So very cost-competitive, even early days. But then long term, we believe the vision for metal fuels goes far beyond using scrap as a fuel resource. And ultimately, if you want to really drive aluminum fuels into a foundational new technology for the global energy system, you need to drive incredible volumes of fuel on the scale of fossil fuels when you think about oil drilling and oil refineries and so forth. And you also need, ah, very cost competitive. Something ideally that's far cheaper than diesel and can really compete For grid power with things like liquefite natural gas or nuclear …

AI assessment note: “long-term, the vision is to take that byproduct that comes out of our generator”