The Exchanges

Q So let's talk about what actually happened here. Can you just describe the meteorological phenomenon that just gripped Europe?

A Europe was the victim of a conspiracy of atmospheric factors, and they're both, ah, pretty unusual. One is a stubborn area of high pressure, also referred to popularly as a heat dome, that was sitting Over, um, pretty much central to Western Europe. Now, what's that, what that's doing is it's causing air to sink, it's rerouting weather systems around it, and it is, uh, causing its own area of above average temperatures. And then you had this air mass straight out of the Sahara Desert, pretty much, that Moved north into Spain and Portugal and affected them for quite a significant period of time, and we saw temperatures go all the way up to almost, almost a 117 degrees in Portugal. But what happened next was you still had that heat dome with its clockwise area of rotation around it, and then you had an area of low pressure Sitting to the west of the, of Iberia. Now, that low pressure area then moved a little bit north. And the air currents between the, you know, the flow around the low and the flow around the high basically kind of formed, like, a funnel and rocketed that hot air all the way up to the UK, all the way up to the far northern reaches of the UK, and today it's actually traceable, uh, in Sweden and other parts of Scandinavia. So, Is this some sort of unprecedented atmospheric setup like Hurricane Sandy was? No. We've been seeing these stubborn, strong heat domes occur…

AI assessment note: “One is a stubborn area of high pressure, also referred to popularly as a heat dome”

Q So, summarize the majority opinion for us. What did the Supreme Court decide?

A So, what the Supreme Court said was that EPA had acted outside its authority under the Clean Air Act, To use generation shifting, which is shifting from fossil fuel based energy sources to renewable energy sources as sort of the foundation of its, um, regulatory approach. And it said, it used, um, what's known as the major questions doctrine as the basis for that. So basically, uh, what that means is it's this legal theory that agencies While they generally get discretion from courts in how they interpret their authority under laws, in the case where you have, um, a regulation that's really politically or economically significant, Congress needs to speak, uh, clearly to wanting to, um, Sort of delegate that power to agencies. So in this case, EPA didn't have a clear mandate under the Clean Air Act from Congress to use generation shifting specifically to create a regulation. So the ruling is actually, you know, a bit more narrow than it could have been. I think a lot of observers were concerned that, you know, what would happen is the Supreme Court might undermine EPA's power and All together to, you know, regulate emissions from power plants, and, and that didn't seem to be what, what happened today.

AI assessment note: “what the Supreme Court said was that EPA had acted outside its authority”

Q So, Alexandria, when the news hit, I got a text from you, and you said, I really want to write this article. Can I do it? I said, of course. What did you start writing about?

A Well, I was interested in a couple of things, and one of those things was the overlap between places where abortion will be banned and places where pollution and heat islands are making pregnancies riskier from a health perspective. But I was also interested in how this will make pregnancies riskier from a legal perspective, and And the thing is, reproductive justice advocates have been raising the alarm about this for a long time, but ever since the Roe v. Wade decision, there have been over 1700 documented arrests and prosecutions related to pregnancy outcomes, and that includes stillbirth. So basically, pregnant people have been criminalized for their birth outcomes for a really long time already, and that might only get worse if the Roe v. Wade decision is overturned.

AI assessment note: “one of those things was the overlap between places where abortion will be banned”

Q But politicians don't see it that way. There is a steady drumbeat of support for domestic manufacturing. Why have tariffs dominated the political landscape in solar for the last decade?

A Well, as ineffective as tariffs have been over the last decade, no, they've been ineffective in the sense that there hasn't been a large increase in U.S. solar manufacturing. It's an easy Dogmatic principle to get behind if you're a politician. Of course, we all want more solar manufacturing. Of course, we all want more solar employment. However, I have to say that the United States is no more suitable to solar manufacturing than it is to iPhone manufacturing. We are a, we are not a basic manufacturing country, and it's difficult to imagine the Us creating a manufacturing hub in solar, despite the righteousness and virtue of that happening. The energy transition does not happen in the United States without imports.

AI assessment note: “It's an easy Dogmatic principle to get behind if you're a politician.”

Q more about how President Biden is putting military preparedness at the center of his climate agenda, as the real world impacts in the field mount. How has this military strategy changed or become more prominent or fallen into the background as administrations have changed? So I'm thinking from Obama to Trump to Biden. Has the jolting political shift shaped how the military has been talking about this strategy on climate?

A Yes and no. I think that on the one hand, you know, when you look at the national defense strategy that was released under President Trump, there is no mention directly of climate change in that national defense strategy. And almost certainly there will be in the one we expect from, from President Biden's Pentagon. At the operational level, climate security, climate change has continued to be a consideration at the department. It's something that Secretary of Defense James Mattis under, under President Trump, when he testified before Congress, talked about concerns about climate security risks. But certainly the amount of attention, the amount of resources that are put toward it will shift given who's in the White House for sure.

AI assessment note: “when you look at the national defense strategy that was released under President Trump”

Q And so if and when we do see significant reductions in demand, why would it be that the state-owned suppliers would be the last producers standing long-term? What power do they continue to have under that scenario?

A Well, there's this near term period where oil and gas use are falling slowly, not, not, not falling quickly enough, or maybe not even falling at all, but you see, um, pulled back investment from the large international majors that we talk about all the time, Exxon, Shell, BP, those are the ones under the greatest scrutiny and spotlight. We should remember that when you put them all together, they're only 15% of world oil and gas supply. Most of the world's oil and gas comes from state controlled companies. So if there was a mismatch between supply and demand, um, you're gonna see, I think, less, fewer of those social pressures and fewer of the need for external financing and capital for large state-controlled companies than you do for some of the private companies. So state-controlled companies will be in a better position then. Even in a world that gets on track for net zero by twenty-fifty, net zero doesn't mean zero. Uh, the International Energy Agency, again, did this big landmark report on what net zero looks like by twenty-fifty, and in that world, if we get there, We're using 25% as much oil as today and about half as much natural gas as we are today. That's much less, but it's not zero, so it has to come from somewhere. And I suspect the places it'll come from are the ones that can produce the oil most cheaply and most cleanly. And Gulf, Gulf Arab producers like Saudi A…

AI assessment note: “places it'll come from are the ones that can produce the oil most cheaply”

Q becomes. There's a lot of truth in that, says Jason. But this simplistic framing ignores all the other ways the energy transition will create vulnerabilities and conflicts. Trade wars, disputes over critical minerals, and, as we heard earlier, Price volatility that strengthens petro states in the midterm. So I asked Jason, in a net zero world, where will the risks be lower, and where will they emerge in different ways?

A A clean energy world is, in many respects, going to reduce the geopolitical influence of energy, because it's inherently more local. Um, we know that a clean energy world is going to be a much more electrified one than today. Things like transportation and heat will much of, maybe not all, but much of that will be electrified. And electricity is just more local. Most electricity is produced locally. We don't transport electricity over high voltage transmission lines halfway around the world. It doesn't make any sense. The International Energy Agency, for that reason, projects that total global trade in energy in a net zero world is around just over one third what it would be otherwise. So that's much less global trade, and trade in energy is where a lot of those geopolitical dynamics come from. In a net zero world, the things that are being traded are different, much less oil and gas. Much more hydrogen. Uh, so another kind of fuel, and those fuels can be subject to similar risks of problems in, um, you know, uh, the Strait of Hormuz or somewhere else, uh, conflict of the seas or, or, um, or other, the same kind of risks that we worry about with fuel today might apply to low carbon fuels if they're globally traded. And then the second is critical minerals. And, um, we do see today rapidly growing need for lithium and for cobalt and for rare earth elements, um, A small number of…

AI assessment note: “reduce the geopolitical influence of energy, because it's inherently more local”

Q Coming up after the break, the gas industry's influence campaign and the potential collateral damage to clean energy. What did you find when you dug into the local utilities involvement in these legislative efforts?

A What we found in Florida was there was a money trail between the Tampa Electric Company and Travis Hudson, so Tico, Tampa Electric Company, funneled about 15,000 dollars to him, like, right before this legislative session, and kind of as he was working on these bills. Tico also had six registered lobbyists on the bills, and we obtained public records through The Energy and Policy Institute, which is a sort of watchdog of utilities and how they're blocking climate action all over the country, and there were a set of internal emails from a municipally owned gas utility in Clearwater, Florida, and this was really interesting. Basically, these internal emails had the executive director of this utility referring to the bills that Hudson had Introduced and saying, you know, this is the bill that Florida Natural Gas Association is championing. Their public affairs manager at Clearwater Gas said she would donate to her senator's reelection campaign if he gets it through. So this is just sort of like internal dialogue at this gas company about these bills and how they're supporting them. And then kind of one step beyond that, there were Also older emails from around 2019 where these same figures were sort of looking at this pattern of kind of local climate action happening all over the country. They had seen an agenda from, um, the U.S. Conference of Mayors that had a bunch of kind of d…

AI assessment note: “What we found in Florida was there was a money trail between the Tampa Electric”

Q Mm-hmm. Okay, and so I think a lot of folks in your position, again, particularly if you're facing sort of a big legacy industry, work as hard as they can to get corporate venture, particularly that's aligned with your industry, on the cap table as quickly as possible. But you all have not done that, so say more. No. About why not?

A We, not having CVCs on our cap table has been a deliberate structural choice. We work closely with a lot of the large mining companies. We publicly are working with BHP and Rio Tinto, and from my side, I would much rather have them as customers than as investors that could potentially have a finger on the scale of what gets built. Those to me are different relationships, and when you start to blur them, it can be at your own cost. If a strategic investor is also your customer, then every roadmap conversation sometimes can have a second agenda. You have to be very careful about if you're sharing information with other customers, and we went in eyes wide open. We have some advisors who have sat on corporate venture arms and public boards, and one of the universal themes was to preserve our optionality. Our customers should be our customers, and our investors should be our investors. Getting the technology to win for everyone is the most important bit, and it's, it's a somewhat orthogonal take. Most mining startups go the other reason, the other direction, mostly for good reasons. Um, for us, it really comes down to focus, and we've had the optionality to raise oversubscribed rounds both times with some really unique perspectives.

AI assessment note: “I would much rather have them as customers than as investors”

Q and copper wires specifically serving some of our, you know, AT&T and other kinds of internet needs. Um, our copper wires get stolen in my neighborhood on the order of once every three weeks, um, which is insane. So something has changed in the price of copper, and it sounds like you're saying maybe something has changed in demand for copper. Can you say a bit more about those things?

A Well, it will surprise no one that supply and demand are intimately linked in some regard. I remember watching an episode of The Wire where one of the characters goes and steals copper wire, which this is from, what, 20 years ago? It's just become increasingly prevalent because copper prices are going up. A lot of critical minerals like lithium, if you were to look at the prices over the past few years, it would be a roller coaster that's pretty fun to ride on. Copper is just that lift hill going into a roller coaster. Part of that is because we, as I want to say, the people that think about technology and innovation are starting to realize that we just Do not have enough copper. Companies like Wood Mackenzie, where I used to work, have been trying to sound the alarm for years and years and years now. Um, but the other thing is that copper supply has been relatively inelastic. As I mentioned, new mines take 10 to 16 plus years from discovery to first ore, and we've seen Nearly every technology advancement that has made my life easier has required additional copper beyond what the original projections were. That's not counting places where the grid needs to be modernized, like Alaska, where I grew up, or even in Houston, Texas, where I lived, and electrification of developing nations, whereas you move from small-scale microgrids or not having reliable electricity, having access …

AI assessment note: “copper supply has been relatively inelastic. As I mentioned, new mines take 10 to 16”

Q I love that. Okay. And so what have you actually built so far? We've talked about your two garages, which is really an exciting expansion for you all. But so tell me what you've built in the lab and what you've been able to deploy so far in the field.

A Um, We are live in the field right now in Arizona. We are working with a very cool mining customer that, if you follow me on LinkedIn, you'll see an announcement about that at some point in the foreseeable future. Um, I don't mean to downplay it in just two garages. We have a full analytics lab where we can quantify elemental analysis. We can do some, a lot of the chemistry insight. We have a DNA sequencer. We have a MySeq here. We have, uh, the ability to run over a hundred columns in parallel with instrumentation. We have our bio rig, which is where we grow the microbes on site. That is in the final wet stages of commissioning with an incredible engineering firm. So we're, we're in the field.

AI assessment note: “We are live in the field right now in Arizona.”

Q Um, and so maybe say a little bit more just about some of the advantages, advantages of nuclear sort of generally as a technology, because I think one of the things, you mentioned firm power, um, it's also really concentrated. A gigawatt solar farm takes up a lot more space, Then a gigawatt of nuclear. Are you finding that that's a reason that people are excited about nuclear right now?

A Yeah, it's, it's fine. funny. Every power source has its attributes that people get excited about. Nuclear is this really unique power generation technology, because it, it checks all the boxes, and it has some extremely unique attributes that make it really appealing. So it's, it's, it's firm capacity. Firm capacity, for those who don't know what it means, it means, it means that Not only is it dispatchable, so it turns on when you need it, not when the weather tells you it'll turn on, ah, like renewables. But in addition to that, it's firm, which means that it'll produce that power almost regardless of how extreme the weather conditions are. So even if it's so cold that coal piles are frozen and you can't, you have, you have to break out the jackhammers to get the conveyor belts to push coal into the furnace, or it's so cold that natural gas pipes are freezing, or You can't actually, so much natural gas is going to home heating, you can't get natural gas to the, to the power generators. Nuclear operates even in those conditions, so it's, it's extremely firm, it's extremely resilient. That's one attribute. The second attribute, as you said, it's extremely power dense. It's, it's almost comically more power dense than any other power generation source we have, uh, on the, you know, orders of magnitude. I think it's on the order of, I don't know, per unit Gram of fuel basis comp…

AI assessment note: “Nuclear is this really unique power generation technology, because it, it checks all the boxes”

Q you know, the world's first project, financeable nuclear plant, and then as your subtext, more like Duplo's than a complex Lego set, and so all the parents out there are going to be fully tracking with us. Okay, wait, so real question for you. Why hasn't this been done before? Why aren't other nuclear reactor designers all designing for constructability and thinking about how to modularize their systems this way?

A Yeah, it's fine. I, I will start with, uh, I have two ways to answer this question, because I get this question a lot. Uh, One is that this is not a wholly new idea. There is actually a fun history to this idea of building a nuclear plant in a shipyard. Uh, and not a lot of people know this history, but to go back in time to the history we started with, uh, in this discussion, nuclear light water reactors were originally invented for submarines. They were built in a maritime environment in a shipyard. Uh, that actually That concept didn't just, uh, go into the U.S. Navy for nuclear subs. The Army Corps of Engineers actually built the, it's called the MH-I-A or MH-I-A if I'm getting the name right, that they built a nuclear plant on a barge that powered the Panama Canal for many years in the 19 sixties. There was a joint venture between Westinghouse and Newport News Shipbuilding, uh, called, uh, Offshore Power Systems during the 19 seventies to build eight, uh, Four loop PWRs in a shipyard down in Jacksonville, Florida, and float them up to New Jersey for PSAG, and they actually licensed this. This was the only manufacturing license the NRC has ever issued in 1982. They did all the environmental reporting on this, and basically they were going to prefab an entire nuclear plant on a barge and float it off the east coast. And the only reason that got killed was because of the stag…

AI assessment note: “this is not a wholly new idea. There is actually a fun history to this”

Q to make this stuff happen. So, again, because the way climate works is you take climate challenge and multiply it times a hundred for nuclear. We're talking huge plants. We're talking huge amounts of money. We're talking, you know, really, I think, a kind of technology that raises risk aversion in a way that almost nothing else does. So, how are you going to finance and build your first plant?

A We have a uniquely, I think we're uniquely In the nuclear space right now as being the only one who has a credible path towards being able to project, commercially project finance. It would be great to get government support, DOE loan support, because it would help tremendously, particularly on the first unit, help reduce the cost of capital, but we actually have a path that we're confident on that can get us to commercial project finance. We engaged really early With a number of the big infrastructure funds and the big project financing banks we actually have retained already. We did a competitive process and retained one of the largest project financing banks in the world to advise us on this process. We, we engaged really early with the financial community that was involved in Venture Global LNG's first financing, which was in many ways a first of a kind project in the LNG space. And we really have looked closely at how can we map that risk Allocation and contracting structure and build strategy to the nuclear space such that we can unlock basically what is non-recourse project debt and project equity financing to lower the cost of capital and do this in a scalable, repeatable way. Because you can't, you can't finance a power plant, you know, as you said before, We're making a commodity at the end of the day. We're making electricity. It's gotta be cost competitive. This is,…

AI assessment note: “can get us to commercial project finance. We engaged really early With a number of”

Q So when you started tinkering with this technology back when you were working on this kind of plasma-based technology that you have, did you know you were going to be making an alternative fertilizer?

A The goal from the beginning was to electrify and decarbonize the fertilizer industry. Today, fertilizer uses coal or natural gas and accounts for about five to seven percent of global emissions if you account for the manufacturing and the field application emissions. And our goal was, you know, hey, can we find a way to produce fertilizer with solar power? So we thought we had the one technology to rule them all and, um, upon founding, and it was a super cool technology. We made molten lithium metal. We, you know, combined it with nitrogen. We made fertilizer that way, and we were very excited about it. And someone who I was house-sitting for in Palo Alto at the time, you know, wrote us our first investment check. And, uh, we started pitching at pitch competitions. Um, however, upon scaling that technology to a reasonable size prototype, um, you know, we very quickly realized that, um, that that wasn't going to be a successful, uh, technology and, and startup. And I, you know, distinctly remember offering to return the money that we raised at that, uh, at that point.

AI assessment note: “The goal from the beginning was to electrify and decarbonize the fertilizer industry.”

Q And so at first, was that your, was that what you thought your go-to-market strategy was going to be, that you were basically building distributed fertilizer production on farmers' fields?

A Yes, the thought was you build an extension of an irrigation pump that pumps water to the field, but then this, you know, there's some solar, and then under it, there's a device that, that produces fertilizer from thin air, and then injects it into the water. So your field fertilizes itself, um, because there's nitrogen available at the irrigation pump, there's power available at the irrigation pump. In theory, you can have your irrigation pump Uh, you know, fix nitrogen fertilizer from the air and send it out to the, to the field. So this was our initial idea. Obviously, uh, we're not doing that today for a lot of good reasons, um, but in theory that, that is possible. Um, you, you need really, really reliable, uh, technology that virtually never needs to be serviced for that to pencil out.

AI assessment note: “Yes, the thought was you build an extension of an irrigation pump”

Q Did you consider building something in other states, or was it always clear to you that you were going to do something in the Central Valley?

A It's, um, it's such a painful question for some reason. So, um, we are, are, we're based in, uh, Fremont. That's where our team was at the time, and where our pilot was. And this pilot was pretty hands-on. Um, and I, yeah, so there's two, there's two risks in building the next project. One is operations execution. Um, and if it's, if the project's too far away, I can't, you know, be there, and our team can't, we're not going to just be around enough, and so there's a genuine risk for operational excellence. Um, and then the second risk is price of power. Um, we need a, we need a good price of power, and in most of California, that's hard to find, um, but we stumbled upon this, this, um, Delhi, um, Which is not, you know, Delhi, India, but Delhi is short for, you know, the Delta High Line or something like that, which is Delta High Line Canal. So Delhi, California has a large hydro dam. Um, it's part of Turlock, uh, water and power district. Um, and, um, there's very low cost power. It's, I think, some of the cheapest electricity in all of, uh, California, and it's about a, a 90 minute drive from Fremont. Um, So we found a good facility there, um, that also qualified for USDA Rural Development Loan, and, uh, checked all the boxes. Um, we could drive there, it had cheap power, um, qualified for Rural Development Loan, um, um, it was about the right size, um, good price, uh, and s…

AI assessment note: “if the project's too far away, I can't, you know, be there”

Q you. You also did something pretty unusual when you started your company, which is in addition to standing up this engineering team, obviously, to work on, you know, your technology, you also stood up an analytics team to help understand and really define the business cases for these batteries. So can you say a bit about why you did that and what the journey has been like for that team?

A Yeah, absolutely. In fact, even before we picked The chemistry to work on, which of course ultimately became Iron Air, um, we built software tools. This is my co-founder Marco Ferrara, uh, who himself was an energy trader, uh, for, for a number of years, so he really understood the energy markets, and funnily enough, he has a PhD in, uh, in nuclear fusion engineering from MIT, so he's not doing that. Yeah, um, but, uh, Marco built these, what we call comp, You know, sort of complex co-optimization modeling tools, um, what the utility industry would call capacity expansion modeling tools. Um, and, and he built them, uh, with capabilities that, that went beyond what the industry was currently using. In other words, you know, um, sub hourly resolution data, multiple years of, uh, you know, non-standard, um, meteorological data coming in, you know, multiple, multiple decades of time series of, of data, um, and, and sort of doing the co-optimization that way, as opposed to, Really simplifying the problem. In other words, take an average week out of a year and solve for that, which is what they had been doing. Um, so, so go do the optimization, you know, with hard math and, and, and modern compute. Um, and you get very different answers about what kinds of storage are then therefore, uh, entitled to bring a lot of value on the grid. What duration matters, for example, that that was o…

AI assessment note: “In fact, even before we picked The chemistry to work on... we built software tools.”

Q looking at manufacturing in China and basically finding creative ways to partner with manufacturing capacity there. Um, so you all made the very clear decision to manufacture in the United States. Was there a moment where you were considering either some sort of, like, joint venture with overseas companies or contract manufacturing, or was it always very clear to you that you needed to be manufacturing in the United States?

A Yeah, um, it was always very clear that we needed to manufacture in the U.S. for a couple of reasons. One, um, there is no existing manufacturing supply chain for an ion-air battery. We were inventing that from, from the, from scratch. Um, I don't mean we were inventing the machine sets. I mean, we were putting it all together for the first time. There was no incumbent that, you say, oh, give me, give me the, the line that makes a, uh, discharge cathode, right? Like, that doesn't exist. We, we had to sort of piece together different Machine sets from different existing industries and, and get them to do what we needed them to do. So, so that was, you know, sort of .1 on, on why you asked. Point, .2 is we were still improving and inventing the electrochemistry as we went. And, and it's never as discrete tasks, right, to say, oh, the electrochemistry versus the manufacturing. In fact, those are in many ways the same problem. Like, and you can't say that you've solved the electrochemistry until you're making it at a relevant scale You know, relevant, uh, throughput, with relevant yields, with relevant costs. Like, that's when you know you're done, I don't want to say done, that's when you know you actually have, have, have an understanding, I would say, of your electrochemistry. And so that notion that we would be making, you know, something overseas while developing it here, that…

AI assessment note: “it was always very clear that we needed to manufacture in the U.S.”

Q size analogy is the relevant starting point, but maybe how different, like, when you, when you, like, open the factory in twenty-twenty-four, and you're like, we're gonna go build this battery, and you have an idea for what it's gonna look like. How different is what you're doing now? Have a lot of things really fundamentally changed about what you're building, and are they still changing, or is it? Well,

A I would say from, like, for all the electrochemical pieces, they have not changed going sort of through subsequent designs. Um, and that's because once you get that process control and you really understand the electrochemistry, you do not want to change it, right? You want to keep it, you know, all the same. Um, the only changes we've made to the, to the electrodes, um, since we sort of started production was to make them a little bit, a slightly different form factor so that it's, in fact, easier to manufacture. Uh, but, but fundamentally the exact same material sets, the exact same processes, the exact same people involved, right? Um, what has changed is sort of how you then take those electrodes and put them in a, in a device, how you, how you combine them, but, but the fundamentals of all of the electrochemistry of an iron air battery are, are very much the same. Um, but, but sort of the, the packaging of that, you know, all the parts that I mentioned where we already had very high yields, um, you know, from the cell all the way through the, the complete system, um, You know, making design changes that still keep it super high yield, but, but lead to a much more manufacturable and reliable product, um, you know, once it's deployed. And so, you know, just kind of, I'll give you one sort of example. Um, you know, batteries need, need to be sealed. Ours happens to be air brea…

AI assessment note: “for all the electrochemical pieces, they have not changed going sort of through subsequent designs”

Q Okay, let's talk about the financing for a second. How did you finance this plan to get it built? Because it is no joke getting the funding to do something like this.

A Yeah, so we, ah, when we were looking at where to go for, for the factory, part, the reason we are in West Virginia is because the state, um, provided two hundred ninety million dollars of financing in exchange for 750 jobs by the end of 28. Um, that let us go, go build the building and stand things up from scratch. There, we could have gone to a cheaper, lower risk option there, just rented a building, you know, sort of deal with the whatever legacy Type infrastructure you're dealing with there. We love that site for a lot of reasons that I, that I mentioned. Um, and we like the idea of sort of building our own factory if we could, right? We didn't want to pay for it with equity, but, um, but, but given the support of the state, we were able to go do that. Um, and additionally, we won a hundred fifty million dollar grant from the, um, Department of Energy in the US, uh, for the CapEx equipment. So scaling up the manufacturing equipment. Um, this is out of the manufacturing and energy supply Uh, grants that, that, um, were part of the infrastructure bill. And, and so we're very actively invoicing on that project and, and scaling it up here. And then, of course, we do need to use equity dollars to, to finance beyond that, because it doesn't, doesn't pay for everything. Um, and so it's, it's a combination of, of those things. We have some equipment financing debt, but it's a huge…

AI assessment note: “state, um, provided two hundred ninety million dollars of financing in exchange for 750 jobs”

Q how it's working for you all, though. And one of the things I love about this story is that it's not just about, like, creating AI models or trying to sell things in an AI market. It's about actually using the results of the, of the AI work that you're doing. So can you say a bit about how you're incorporating AI, what it's doing for you at this stage?

A Yeah. More than, of course, AI data center demand driving, you know, our own, uh, growth, you know, the demand for our product. Um, we are heavy users of the tools themselves, maybe no surprise. Um, and, and of course, like in all the typical corporate ways that you would expect to, you know, have efficiency for information retrieval and, you know, that kind of thing. Um, but, but being, being a company that has a very core function of material science, um, discovery and innovation, um, Um, we found that the, that the models now are, are quite capable in a way that we didn't expect maybe a year ago, I would say. Uh, we sort of, around that time, we sort of noticed a, a step function of the capabilities there. Um, again, led by Marco Ferraro, who originally built those models that, that helped us sort of, you know, understand this, this space from a value perspective. And, uh, and so now those, uh, those are being very actively implemented in, in the discovery process and in, in the improvement process. Um, And, and specifically, um, you know, we have built our own physics-based models of, of each of the electrodes and then of the entire system for, for some time, and inevitably when you build physics, you know, multi-physical models of, of electrochemistry, somewhere it doesn't, uh, correspond to the empirical results that you have, right? That, that's just sort of, you know, a…

AI assessment note: “Proposed designs of experiments that help collapse that gap between the prediction”

Q Yeah, totally. But it sounds like you all had the right idea on coming up with something that is very low cost compared to lithium ion and that does the thing that lithium ion is bad at, which is long duration storage. What led you ultimately to iron air versus some of the other technology options out there?

A Costs. Pure, pure costs. Um, in, in the end, the duration is, is the valuable thing, and, and to provide that duration, right, a hundred hours plus, uh, you know, four straight days of discharging at the rated power You need to be in a very different cost regime from anything else that's out there. You know, in our case, what, what, what is the chemistry? Just real briefly, we're, we're oxidizing and reducing iron, rusting and unrusting iron. Um, so you start with iron, which is, you know, the most abundant substance on earth, just about, and, um, the most mined metal by a few orders of magnitude. And, uh, and you oxidize it from obviously air out of the

AI assessment note: “Costs. Pure, pure costs.”

Q And is there kind of a lot of variability among utilities and geographies around how your batteries are being used? Are you finding that there, that there's kind of one One way that folks are tending to approach this.

A No, there's, there's a few very consistent use cases. Um, what does vary is how often they sort of tap into the different use cases. Um, and, and as you would imagine, that varies by, by geography. It also varies by, by market structures. Um, so, you know, what, what kinds of market designs are in place. Um, the easy, obvious one is just reliability event. You've got a multi-day weather event. You, you just want to discharge, right? So of course, famously winter storm URI in Texas in 2001, and, you know, four days of black, so 21, I should say, and, and, you know, four days of blackout that, It costs tens of billions of dollars in damage. If we had been there, we would have just discharged flat out, right, for, for those four days, and there you go. Um, you know, the other is just tight grid capacity, uh, 10 days in a row. You're, you're operating within the reserve margins, right? You don't want to add any of your incremental stress to the grid. You, you operate almost exactly like what a gas beaker would do. You discharge only for 10 hours a day, 10 days in a row, right? Something like that. Um, and, uh, and then the other is just how do you enable these new large loads to come Online faster. Um, this is, this doesn't have a neat tidy graph that I can point to, uh, like the other, like the first two use cases. Um, but in that case, you know, bringing those large loads primari…

AI assessment note: “No, there's, there's a few very consistent use cases.”

Q looking at manufacturing in China and basically finding creative ways to partner with manufacturing capacity there. Um, so you all made the very clear decision to manufacture in the United States. Was there a moment where you were considering either some sort of, like, joint venture with overseas companies or contract manufacturing, or was it always very clear to you that you needed to be manufacturing in the United States?

A Yeah, um, it was always very clear that we needed to manufacture in the U.S. for a couple of reasons. One, um, there is no existing manufacturing supply chain for an ion-air battery. We were inventing that from, from the, from scratch. Um, I don't mean we were inventing the machine sets. I mean, we were putting it all together for the first time. There was no incumbent that, you say, oh, give me, give me the, the line that makes a, uh, discharge cathode, right? Like, that doesn't exist. We, we had to sort of piece together different Machine sets from different existing industries and, and get them to do what we needed them to do. So, so that was, you know, sort of .1 on, on why you asked. Point, .2 is we were still improving and inventing the electrochemistry as we went. And, and it's never as discrete tasks, right, to say, oh, the electrochemistry versus the manufacturing. In fact, those are in many ways the same problem. Like, and you can't say that you've solved the electrochemistry until you're making it at a relevant scale You know, relevant, uh, throughput, with relevant yields, with relevant costs. Like, that's when you know you're done, I don't want to say done, that's when you know you actually have, have, have an understanding, I would say, of your electrochemistry. And so that notion that we would be making, you know, something overseas while developing it here, that…

AI assessment note: “it was always very clear that we needed to manufacture in the U.S.”

Q Okay, let's talk about the financing for a second. How did you finance this plan to get it built? Because it is no joke getting the funding to do something like this.

A Yeah, so we, ah, when we were looking at where to go for, for the factory, part, the reason we are in West Virginia is because the state, um, provided two hundred ninety million dollars of financing in exchange for 750 jobs by the end of 28. Um, that let us go, go build the building and stand things up from scratch. There, we could have gone to a cheaper, lower risk option there, just rented a building, you know, sort of deal with the whatever legacy Type infrastructure you're dealing with there. We love that site for a lot of reasons that I, that I mentioned. Um, and we like the idea of sort of building our own factory if we could, right? We didn't want to pay for it with equity, but, um, but, but given the support of the state, we were able to go do that. Um, and additionally, we won a hundred fifty million dollar grant from the, um, Department of Energy in the US, uh, for the CapEx equipment. So scaling up the manufacturing equipment. Um, this is out of the manufacturing and energy supply Uh, grants that, that, um, were part of the infrastructure bill. And, and so we're very actively invoicing on that project and, and scaling it up here. And then, of course, we do need to use equity dollars to, to finance beyond that, because it doesn't, doesn't pay for everything. Um, and so it's, it's a combination of, of those things. We have some equipment financing debt, but it's a huge…

AI assessment note: “state, um, provided two hundred ninety million dollars of financing in exchange for 750 jobs”

Q Yeah, totally. But it sounds like you all had the right idea on coming up with something that is very low cost compared to lithium ion and that does the thing that lithium ion is bad at, which is long duration storage. What led you ultimately to iron air versus some of the other technology options out there?

A Costs. Pure, pure costs. Um, in, in the end, the duration is, is the valuable thing, and, and to provide that duration, right, a hundred hours plus, uh, you know, four straight days of discharging at the rated power You need to be in a very different cost regime from anything else that's out there. You know, in our case, what, what, what is the chemistry? Just real briefly, we're, we're oxidizing and reducing iron, rusting and unrusting iron. Um, so you start with iron, which is, you know, the most abundant substance on earth, just about, and, um, the most mined metal by a few orders of magnitude. And, uh, and you oxidize it from obviously air out of the

AI assessment note: “Costs. Pure, pure costs.”

Q And is there kind of a lot of variability among utilities and geographies around how your batteries are being used? Are you finding that there, that there's kind of one One way that folks are tending to approach this.

A No, there's, there's a few very consistent use cases. Um, what does vary is how often they sort of tap into the different use cases. Um, and, and as you would imagine, that varies by, by geography. It also varies by, by market structures. Um, so, you know, what, what kinds of market designs are in place. Um, the easy, obvious one is just reliability event. You've got a multi-day weather event. You, you just want to discharge, right? So of course, famously winter storm URI in Texas in 2001, and, you know, four days of black, so 21, I should say, and, and, you know, four days of blackout that, It costs tens of billions of dollars in damage. If we had been there, we would have just discharged flat out, right, for, for those four days, and there you go. Um, you know, the other is just tight grid capacity, uh, 10 days in a row. You're, you're operating within the reserve margins, right? You don't want to add any of your incremental stress to the grid. You, you operate almost exactly like what a gas beaker would do. You discharge only for 10 hours a day, 10 days in a row, right? Something like that. Um, and, uh, and then the other is just how do you enable these new large loads to come Online faster. Um, this is, this doesn't have a neat tidy graph that I can point to, uh, like the other, like the first two use cases. Um, but in that case, you know, bringing those large loads primari…

AI assessment note: “No, there's, there's a few very consistent use cases.”

Q is the foundation for being able to move forward into this first-of-a-kind moment. Um, so, you've already mentioned degradation. Can you talk a little bit about, like, who are Tandem PV's customers, and what are some of the things that they are thinking about as their key performance indicators around, you know, is it efficiency? Is it degradation? What are the things that they're looking for in a solar panel?

A Yeah, so, I mean, conventional knowledge would say, okay, higher efficiency solar panels, you can capture the highest margin from space-constrained areas. So, You know, rooftop solar, carports, community solar, and, you know, utility scale solar is, like, the least exciting. Um, initially, sure, but you also, when you step back and look at the entire kind of pie, utility scale solar is 80% of the market, right? And each of the large utility scale solar developers do anywhere from half a gig to a couple gigs a year, right? So if you're talking about scaling quickly, You really only need a handful of these customers to lean in with you. Um, they also tend to be super sophisticated, right? So they can look at a new technology, have, like, the deep technical expertise to evaluate the technology, get comfortable with it, and it doesn't just stop there. They're financiers, so their solar tax equity and project finance, um, partners are also sophisticated, right? And so from the perspective of Who can actually evaluate and get comfortable? It's utility scale developers. Um, and then, you know, when we're, when you think about our technology compared to silicon, it's like a 30% improvement. When you think about it in compared to cad tell, it's a 50% improvement. When you have such a massive step change in efficiency, every application of solar is in play. So for our utility scale devel…

AI assessment note: “utility scale solar is 80% of the market... who can actually evaluate and get comfortable? It's utility scale developers.”

Q just said is wild, that you got a hundred percent equipment financing, and obviously, you know, that was one of the reasons that we were really excited about supporting your Series A, was to enable you all to unlock that, but can you say a bit more about how the equipment financing works, and why you were able to get so much of it as effectively an earlier stage startup?

A Um, I mean, it is, It's backed by the asset, right? And so I think, like I said, a big part of it is that the equipment wasn't bespoke, right? This is standard thin film equipment, um, that the lenders felt that, you know, had intrinsic value if we weren't able to repay it. But also, all of our lenders have worked with Eclipse, right? Eclipse has so many manufacturing companies in their portfolio, um, And they know, lenders know that Eclipse is not gonna turn the lights off here, right? So, um, they know that, you know, Eclipse will do their, you know, follow on and pro rata. Um, and I think that was a big part of it. So, I think I've told you this story before, but I did, I had one, uh, climate investor that told me I was lying to him. And so, like, there's no way you can get a hundred percent, a hundred percent equipment financing. I tried to help my portfolio companies with that, and I couldn't do it. So, There's no way you can do it. And I was like, well, you could see the term sheets if you want to, but we did it.

AI assessment note: “It's backed by the asset... a big part of it is that the equipment wasn't bespoke”