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Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 321 of the energy talks podcast. I'm energy and climate journalist, Markham Hislop. A few episodes ago, we interviewed John O'Donnell, who's the CEO of Rondo, Heat Batteries. They're located in California. They have a a new technology based on very old technology.
Markham:It's a heat battery that takes its inspiration, its technology from, 8 19th century, 18th century steelmaking in England. It's very it's fascinating stuff. The company is growing very quickly, and our membership at the Energy Circle are very interested in the application of that technology to the Alberta oil sands, which does require quite a lot of process tea, which is currently, being provided by burning natural gas to make steam. And this, the heat battery Rondo heat battery might be an alternative to that. So I'm gonna talk to John O'Donnell, and we're going to discuss, applications of his technology to the oil sands.
Markham:So welcome to the interview, John.
John:Thank you so much. It's a pleasure to be with you.
Markham:Well, it's good to have you back again because at the, the last podcast interview we did was very high level. We talked to we didn't talk about, specifics, but that's what we wanna do in this episode is talk about the specifics of applying the heat battery to the oil sands. So why don't we start with oh, and I should mention that after we're done, we'll go about a half an hour or so. And after we're done, we're going to open up the, the mics to, our audience, and we'll have a a q and a. Many of them will be technical professionals in the energy sector.
Markham:So I look forward to the I think you're gonna get some good questions today. And, for the audience, if you would, prior to, me opening it up, if you could go to the, reactions, icon at the bottom of the Zoom screen, and there you'll find, the, icon that lets you raise your hand. And if you can do that, then I will I'll go down the list, and I'll call on you and and open up the mic for you. So, John, let's get started. If you can give us an overview of the Rondo heat battery, please.
John:Sure. Rondo, as you said, is building a new kind of energy storage using century old materials, actually 200 year old materials, in combination with fundamentally new automation to become the clean energy infrastructure for the 21st century. The thing that is happening everywhere in the world, every year, wind and solar technologies are getting cheaper. They're being deployed bigger and faster. And in place after place, they are becoming the cheapest form of energy humans have ever known.
John:And they're, okay, they're finding their way into the electricity grid and with electrochemical energy storage technologies serving the grid more widely. Rondo is focused on an, shall we say, an adjacent problem. We're not really focused on electrical loads. We're focused on heat loads. Industry worldwide uses more energy than any sector of the world economy, and 3 quarters of that energy is in the form of heat, not electric power.
John:Alberta's economy is maybe the poster child. I think Alberta's economy runs on heat. Right? It's something like 12% of national emissions come from provide burning fuel to provide the heat that powers the oil sands and the downstream operations on which the economy rests. And the cost of that heat is actually the single biggest portion of the cost of producing a barrel of fuel.
John:And so decarbonized pathways, decarbonized sources, if they're gonna be relevant, they need to be available at giant scale, and they need to be cheap, and they need to be reliable, and they need to be safe. Right? We've built an industry for a couple of centuries on, you know, using fuels and optimizing those systems. Rhonda was building a bridge to today's heat systems harvesting that intermittent renewable electricity. We recognize that, look, if you want heat as the output, you don't need to do electrochemistry for storage.
John:You don't need critical minerals. You don't need any of the you're not solving that problem. You can use simple physics. Put a stone in your oven. When it's hot, put it in your bed.
John:It'll keep your feet warm all night. You're storing electrical energy as heat. We found a way to do that. We build systems. We put a gigawatt hour of energy storage in a box.
John:It happens to have 6,000 tons of brick in that box, and will deliver 100 bar, 150 bar oilfield steam in a once through configuration or in a recirculating configuration exactly matching the existing infrastructure that it's it's fields, but not connected to a gasoline, but to a power line so that we've built a foundation technology to allow construction of giant new renewable infrastructure, tying into grids and harvesting existing over generation to serve this purpose of industrial steam, and we've created the definitive solution. The company is now about a 150 people. Our investors include Saudi Aramco, Sabik, who have giant steam loads in their operations. Microsoft, Rio Tinto, again, giant steam and electric power loads. And a number of others who are focused on deep decarbonization in their sectors.
John:We're building projects on 4 continents and just really beginning the dialogue in Alberta. Now that we're building, we've been we've been operating a 1st commercial unit for a year and a half, commissioning a unit that is a heavy oil unit later this year, so we will have 12 months from now, everything is absolutely proven for a large scale deployment. And the from my my perspective sorry to be going on so long with your first question. From my perspective, the real questions are some of the things that you've touched on with me previously about strategic direction and policy and finance and the ability to build renewables at scale. And we are excited to engage and help that dialogue at whatever pace it makes sense.
Markham:John, one of the things I know about the, Alberta oil industry is that whenever you come up with a new technology, the question becomes, who's behind it? What are the technical qualifications? What kind of test data do you have? What kind and who's using it already? Nobody wants to be the first one out of the box, right, or out of the gate.
Markham:They all want to know, is it being used someplace else with an application that's analogous to mine so that I have some confidence that, in fact, it's been tested and it's reliable and will do the things that you say it will do. So maybe could you address those technical men, maybe your background, if you don't mind, technical qualifications, test data, and applications where it's already in, already in use.
John:Yeah. Sure. Thank you. This is the 3rd renewables company that I've taken from founding. I previously built companies in the computer industry and the semiconductor industry.
John:In our previous venture, we built a pipeline of several 1,000 megawatts of projects, all focused on heavy oil production in California and the Middle East. 300 megawatts is is running today and was on time, on budget, 0 injury on spec, 7,000,000 man hours, no not not a single lost time injury. That was for the shell government of of Oman joint venture that is Petroleum Development Oman. So we know, you know, we know a lot about executing in oil fields anywhere in the world, what the specific safety, water quality, all those requirements are. At Rondo, as I mentioned, our investor base includes operators who have extremely high safety and reliability standards.
John:3 weeks ago in Riyadh with Jennifer Granholm, the US Department of Energy Secretary, and Abdul Aziz bin Salman, the Saudi Energy Minister, gigawatt family of projects with Aramco driving steam generation for downstream carbon capture and, blue hydrogen project. So we have been in field operation now for just a year and a half. We are commissioning a first unit that would be a drop in at, any heavy oil field, later this year. So, you know, the the and we have established 2 gigawatt hours a year of production capacity right now with a quality award winning partner who does business in 60 countries and is a winner of the Deming prize and also an investor, rising to 90 gigawatt hours a year, but within 3, 4 years. I mentioned the production capacity because if the oil sands are to decarbonize, they need some of the largest energy infrastructure in the world.
John:Right? They need hundreds of many hundreds of gigawatt hours of and hundreds of gigawatts of generation, ultimately, if they're to continue to provide the heat that's in use today. And it is readily doable. That's the thing. That we've built something where there are absolutely we absolutely have that capacity to scale.
John:We absolutely have an understanding of how to execute, and we know that partnerships, really lining up partnerships, are gonna be foundational to to if if this is to go forward, it will take working groups like this one and among finance government, and the operators themselves to make it possible to build the giant new renewable infrastructure needed, and that renewable infrastructure will have all kinds of benefits across the province and the economy.
Markham:Building at scale is one of the questions, I have for you. And I know you said you can you can do it. Let's talk about what that scale might look like, because it's not really well known. And I made this point on Twitter the other day, and nobody knew it. So that's one of the reasons why I'm saying this.
Markham:But, the, Alberta Oil Sands output is about it's just under, a shade under 3,500,000 barrels a day. I think it's 3.3 or 3.4. Well, ExxonMobil's production around the world is only 3.75. I mean, literally, Alberta is an energy superpower, and the, the oil sands all by themselves, amount to an energy you know, an oil an oil superpower. So the scale required to decarbonize all of that production is really quite staggering.
Markham:And maybe you could give us an idea about how long it might take to to build. Is there a particular cost per barrel, per gigawatt, per, you know, some measurement that we can, you know, so we can compare existing costs, and how much what kind of policy requirements or policy changes might be required? Those sorts of questions. I wanna get into the dig into the nitty gritty a bit.
John:Yeah. That no. Look. That's a great question. And, you know, there are a set of boiler sizes, OTSG and boiler sizes in use in the field today.
John:They range from 1 to about 500,000,000 BTUs per hour, gigajoules per hour. You know, our sort of standard unit, the larger of our standard units is 33 140,000,000 BTUs per hour. We build something that's about the same size, if I have my sums right. Yeah. So in that unit needs depending upon what capacity factors look like, that'll take 2 or 300 megawatts of wind or solar to fully charge that to deliver 1200 megawatt hours, 1300 megawatt hours a day, 8, you know, or put it the other way, 20,000 barrels of steam, you know, depending upon kind of what your units are.
John:So in that order. So if we look at the steam oil ratios, etcetera, it's you know, the scale is large, then the scale will be dominated by building the generation. We can go much faster than the generation can be built because and the the one of the unique things about Rondo heat batteries is they will manage islanded wind farms or islanded solar projects, building a substantial islanded project right now. The it is often said that we can't possibly do this because it will take a decade to get grid connectivity. If we put the renewables in the right places, we can you know, they may not be perfect resource, but they are good enough.
John:And I think that's one of the matters that when I mentioned partnerships is, like, looking at where would these generation things be built, how would the relationship with the grid operator evolve. We actually think that some of the early points on the scoreboard here because, obviously, the technology needs to be proven at scale, But the coming changes in the electricity system right now that are going to drive negative price exposure for the cogens that are operating today. We see opportunities for these heat batteries installed just powered in the existing system to pay for themselves in 3, 4 years, by harvesting and eliminating those negative prices and putting them to beneficial use where the cogens are. And, you know, we're we've been really trying to think about crawl, walk, run. But at this at run, it becomes one of the largest, if not the largest, renewable cluster of projects in the world that will power those fields, power the grid as well, create huge opportunities for clean manufacturing long after the oil is gone or when we stop producing, but immediately move those fields from some of the highest carbon intensity on earth to some of the lowest because they don't require ocean transport.
Markham:Let's talk about the, the renewable electricity that would be required for this. So if we're talking about, oh, let's say you were talking about wind. How many gigawatts of wind capacity will it have to be built to power the Rondo heat batteries necessary to decarbonize the oil sands.
John:See, when I answer questions like this, people think my hair is on fire or I'm a nut. Okay. But you asked the question. And, you know, if you do a units conversion and we and it so it partly depends on what exactly is that wind capacity factor. But if we're sort of in some of these locations where, excuse me, it's on the order of 35%, all in roughly, the total heat load is about continuous, something like 40 gigawatts.
John:And so all in roughly, multiply by 3. The Rondo heat battery happens to be the world's highest efficiency energy storage of any kind. So in converting intermittent electricity to continuous heat we do that at 98% efficiency, a 100 kilowatt hours of intermittent power gives you a 100 kilowatt hours of heat in steam. So unlike hydrogen systems for example, which people have said that's how we're gonna do intermittent to continuous that are 50% efficient input to output, you would double the necessary generation. It we and it's on the order again, this is the part where it sounds crazy, but it's on the order of a 140 gigawatts to deliver those megawatt hours or those gigawatt hours of heat, and we are the highest efficiency way of doing that.
John:Now what in what order and what sequence will those things be built? One thing that we know year by year, the world is deploying wind and solar faster and faster year by year. All that equipment and the capital is becoming lower cost. And how does one plan for what that future looks like? We're a humble provider of the heat batteries to make it possible.
John:But, you know, you asked the the right question that is the scale of this energy need is giant. Yeah.
Markham:What do we do? I you know, Northern Alberta has very cold winters. I think last year, it was well into the minus forties and, even poor old Edmonton, I think, with windchill was minus 57. So sometimes the wind just doesn't blow in those kinds of temperatures. And, what do we do, in if we have the entire oil sands serviced by all that steam created by Rondo heat batteries, which require, 40 gigawatts of generating capacity, on a consistent basis.
Markham:What do we do with I remember the that horrible German word, or whatever.
John:The question is, indeed.
Markham:Thank you. That one. But, anyway, what do we do during those periods?
John:Yeah. So wind variability is a, you know, is a core core matter. The environment is not a challenge. You know, we we actually have projects that need to be at plus 60 c ambient temperature and projects at negative 60 c ambient temperature north of the Arctic Circle. So for us, it's not a problem, but the Dunkelflate event is, in fact, the the matter.
John:And, of course, on the journey to 0, you don't run into the Dunkelflatten problem significantly until you're at 70 or 80%. That is, just by backing with natural gas, using the infrastructure that is there because we know days ahead that that's coming, and it's very easy to jointly manage the existing infrastructure and the new infrastructure to cover that off. The International Energy Agency has studied this matter of they've asked, okay, let's go to a 100%. There's a major chemical complex in Germany that they studied, then they found that there, the cheapest 100% renewable was about 70% electric thermal energy storage, heat batteries like ours, and about 30% hydrogen where some, you know, hydrogen made in July was burned in January and, you know, that you've it's easy to store enough to cover the 14 day outages. Even though that portion of the energy is fully 3 times more expensive, it is the answer to those those long gaps.
John:In the meantime, you know, on the journey to 0, we can get to 70 or 80%. Again, just backing, infilling with gas.
Markham:What I wanna ask a question about the, kind the advanced geothermal technology represented by companies like Ever Technologies. That's based out of Calgary. A lot of its technologies, drilling technology is based on comes out of SAG d, in the oil sands. And because it takes its heat from, you know, deep inside the the earth, it's always hot. It it really is kind of dispatchable power, and, it can also provide, hot water.
Markham:But what role might a technology like that and I've been told when I interviewed John Redford, the CEO, that they make power now without before scaling up at about $65 a a megawatt hour. So is something like that as part of the the mix along with wind, let's say, does that make the project more attractive?
John:You know, this is the part where I say I'm not a geologist. The, you know, the I can tell you a lot about wind and solar resources around the world. The only thing I can tell you about geothermal resources is that they're not close enough to any of the thermal recovery operations such that the thermal recovery operations don't need other heat. So, you know, one geologist friend said the, you know, the distribution of that heat, we don't see hydrocarbon formations that's near act shallow. And so, someone else has to answer that question, I think.
John:Obviously You
Markham:know what? It it it another source
John:of heat, it's certainly worth exploring.
Markham:Right. I'm gonna interrupt you because, actually, that's not the way the Evers, closed loop system worked works. It is, it conducts heat from the rocks into the pipe which warms water. You don't need you don't actually need a source of hot water. But, anyway, that's that's not relevant to
John:the system. So, yeah, in that case, that could provide, we've looked at water preheating and it can provide on the order of 9% or something like that of the total energy needed, right? SAGD depends on steam to move energy at the same temperature across large areas. And so, you know, that's 300 C roughly and we can get up to some level with geothermal preheating. That's certainly useful if it's doable.
Markham:Let's talk about SAG d. What conversations have you had with SAG d operators, with about your Rondo heat battery?
John:I I can tell you in general about technology because it's mostly been with the engineering companies that serve the operators. And, we've worked with people who are doing both vertical development, for example, in California, and horizontal development in operate in locations around the world. And what I can tell you is that from a technology readiness point standpoint, we have a drop in solution that's again, we'll have, fully prove the technology fully proven at scale by the end of this year. On the the other matters that I mentioned, everything from regulatory development, all those matters, I'm delighted that there are others who are beginning to work on this because we have our heads down building out this technology right now. We're building out the delivery organization to deal with the projects that we've got.
John:So this conversation is really valuable, but all of you on the call know vastly more about the the specifics of where we should be starting, how we should be exploring than I do. And I think Jan in particular has been considering, some of these matters. I just met Jan recently who maybe wanna offer comments about some of that. But I think, Markham, you you know where the loads are and what the the challenges are. So our conversations are at an early stage, and I'm grateful for your help in moving this forward.
Markham:Well, we'll we'll get Jan to raise his hand so that he can ask a question, and, we've got a couple people in the queue already. John, let's talk dollars, because the, what the the the former CEO of Synovus, whose name, escapes me right at the moment. Usually, I'm gonna hit my tongue. But, anyway, he was in public, and he had said that it would cost $75,000,000,000 to decarbonize the, oil sands. And I interviewed Mark, Cameron from the, Pathways Alliance, and he confirmed that that's basically what the the price would be.
Markham:And are we talking about similar dollars? Would it take $75,000,000,000 to do the job using your technology?
John:What we have found so this is a subject that we have been, side by side compared to carbon capture in other heavy industrial operations. And there, what we found is that the the capital costs for the heat battery installations are notably lower than the capital costs for the car for carbon capture equipment, and that the economics depend entirely on the economics of renewable electricity. So and and there, there is very large amounts of project capital around the world that wants to build wind and solar infrastructure. As we all know, the grid is clogging in many places and is the gating matter. We're talking about creating gigawatt class point loads at facilities that don't need electricity grids so that the opportunity to build projects at scale with interesting returns on capital with velocity, let's do it in 2 years, not in 20, is one of the opportunities that we are creating.
John:And and what you wind up with is something that has permanently lower operating cost from whatever that that wind power or solar power operating contract is, and lower capital cost than the the, carbon capture facilities that it would substitute for.
Markham:Is this a case where private capital comes in and actually builds the generating capacity that then, I assume that the the operating companies, the producing companies have to buy the the Rondo heat battery and, you know, and and operate it and and and maintain it and so on. But the the actual electricity, the energy that goes into heating those your your technology, gets produced by the private sector. All they they look after all the CapEx, and they produce it at a low cost, sell it to the producer who then uses it with your technology. That produces the capital load on the producers, quite significantly. Is that what we're talking about?
John:Yeah. Indeed. I mean, every industry that we are working with has exactly the same matter. We wanna use our capital for our own expanding production and our own purposes. You know, I've had we're we're working at scale with producers of metals and, minerals across Australia and Latin America.
John:I've had senior leadership say, look. The cost of the renewables to decarbonize this metals refinery or this mine is larger than the capital investment in the mine, and our investors invested in us to be a metals and mining company, not an energy company. And so on on the other hand, there is this enormous appetite and capital available to build renewables at scale. So there's a really excellent match in connecting those 2. There are always issues about creditworthiness and tenor of offtake and all those things.
John:But, yeah, I you know, it's typically the case. If I'm gonna spend my own capital, I could spend it on something in my factory or something in my own operations. If it's gonna be on energy, it needs to pay for itself in 2 or 3 years. And, of course, return on equity for renewable infrastructure is measured in decades, not years. So it's it it's seems to always be the most capital efficient thing.
John:And as it happens, we are we are right in the middle of announcing a series of projects that are just like that, serving multiple industries around the world where we are originating heat as a service and storage as a service project. Most recently, a couple of months ago with EDP in Portugal, who announced the first gigawatt hour with us where they are building and owning and operating renewables, and they're writing heat as a service contracts to their customers to enable decarbonization without people can buy energy services, not energy equipment. Exactly what role what structure that plays out here, you know, we we don't know. And, you know, Rondo is set up to enable any of those structures. And that's why we think the partnerships here on generation, transmission, finance, all those things are essential to how this industry goes forward.
Markham:This could be my last question for you, John, and then we're gonna open it up to audience questions. We have a couple already in the queue. If anybody would like to ask a question of John, if you could please, go and raise your hand, get in the queue, and then I'll call on you when the time comes. So, John, one of the I'd like to know how your technology works with the the overall grid, because there's quite a lot of electricity in Alberta that's created by the cogeneration, from the oil sands. It gets sold into the the wholesale market with that that's all all of that is great.
Markham:But it seems like the idea of building out renewables at scale that then, powers your technology, and it could be an islanded it could be islanded. Right? I mean, because, all it does is feed your your heat batteries, or it could be integrated into the the larger grid, which already exists. And and then you could have a development up north where it doesn't interfere with pristine views, which is a big issue in southern Alberta at the moment. But it could work hand in glove with the existing power grid, and I would imagine there are benefits of having a heat of heat of giant heat batteries, into the integrated into that grid.
Markham:Maybe you could just address that if you would.
John:Sure. Yeah. Thank you. You know, the the purpose of these units is to capture electricity and use it to replace the burning of fuel. Right?
John:We're not replacing electricity from power stations, which means we can really only we need very low cost electricity. And when we are tied into grids, Jesse Jenkins, a grid modeler at Princeton, has looked at heat batteries in a couple of portions of the US grid. And what he found was if there are devices like this that charge very rapidly, you can fully charge a Rondo heat battery in 4 or 5 hours, but deliver continuously. They charge rapidly. They only take the cheapest power, that are very agile when they charge.
John:What we found was that for in the least cost grid, for every megawatt of heat batteries between 1.21.9 megawatts of renewables show up, that is because intermittent negative prices are falling away, start stops of thermal assets are reduced, average electricity prices for everybody else are reduced and more renewables are in the grid than so if we we bring in a 100 megawatts and we're releasing the power when the grid needs it the most. The and broadening the shoulders of those renewable assets, participating 2 ways. The it is this is a class of battery that per kilowatt per kilowatt of its connection to the grid, it's far cheaper because, again, it's not an electrochemical cell. It's just a hot wire like the heating element in your toaster. So that having massive flexible loads in electricity grids enables renewable deployment for other purposes.
John:So there is this yeah. I'm glad you mentioned that because it's more than just the the point load. Jenkins' research actually, if you play that out, if there's for every megawatt, it's at an industrial site, another half a megawatt showed up in the grid. That half a megawatt is replacing 40% efficient power stations versus 85% of just employers. That extra half a megawatt is saving as much carbon in the region as the stuff at the factory facility.
John:So now do do you get to take credit for scope 4 kind of impact? Maybe not. But they're we're sure we're finding and as we have a project that we'll be announcing, I expect, next week that's located next to an offshore wind landing point. And as though as that deployment goes to scale, it's gonna enable more offshore wind to come into this system by providing balancing loads right there. So I'm sorry.
John:There are yes. That's a it's a very important topic that you raised, and there are multiple points. And and one of the things that we see, though, is that we need to look to really answer that qualitatively. We need to run models of that particular area, and Alberta has been studied substantially, and that's an area that we're keen to participate and contribute to.
Markham:Excellent. Well, we're gonna move to q and a now. So, Chris Wolfe, you're gonna be up next. So the you have the the mic. And all I ask is that you keep your questions relatively short, please.
Speaker 3:Sure. I just wanted to point the folks, to a graphic in the chat, and I'm not sure if we could put it on the screen, but it's basically showing that Alberta is is, you know, dominated by gas generation, and about a third of it is cogeneration. And I recall there was the, the Volts, podcast, very informative podcast, that introduced me to the the Rondo technology. And I believe in that podcast, John, you talked about economic advantages specifically for cogeneration facilities that you could take, maximum heat in parts of the process up higher and then get better thermodynamic efficiency. And I was wondering if you wanted to maybe bring up that graphic and and talk on that for a second or 2.
John:Yeah. Thank you. We store energy and deliver energy at a continuous higher temperature than any other type of energy storage. And so for a number of applications, if you deliver high temperature, high pressure steam, you can drive steam turbine cogeneration and deliver baseload electric and steam at very high efficiency over 95%. That is a hallmark of what we're doing in the chemical industry and the food and beverage industry.
John:We're gonna be doing that in Kentucky making whiskey and in Europe making beer, and we just signed a deal for ice cream. And all of those things that use lower pressure steam. In the oil sands, they directly use high pressure steam, and they do cogeneration with gas turbines, not steam turbines. That's not in the near term. The end of solving those and it's often the case that smaller industrials are short of electricity, so that cogeneration setup makes sense.
John:The I think something like 80% of the oil field cogens could be shut down that the in order to meet their own electricity needs, that is the vast amount of electricity is being exported, and the value that we bring is for the heat. The cogeneration of electricity is well solved. Did I answer your question? I mean, specifically for the oil sands. For other industries, it's super valuable.
John:Yes.
Speaker 3:For for the most part, yeah. There there's also a number of, like, there's coal fired facilities with converted to gas. And, are you doing any thermal generation to heat battery projects currently that are like that? I'm I'm sure there'll be different types that come out of that. And
John:We are. And in places so in Oklahoma last year and up and down mid continent US, there are there's a rapidly growing number of hours of negative electricity prices in the grid as more and more renewables deploy based on grid dynamics and tax policies and other things, you know, there were 2 1000 hours of negative prices, and we're seeing combined cycle gas fired power plants operating in start stop regimes that hugely disadvantage them financially. Integrating heat batteries with those plants reduces their o and m, improves their heat rate, and eventually opens the path for them to transition to become principally energy storage, not gas fired generation. We have half a dozen projects right now looking at repurposing coal fired power stations to become very large energy stored long duration energy storage units as well. Again, those are completely different applications, but of exactly, identically the same heat battery technology.
Markham:Jan, you're up next. If you could open your mic, please, and, you have the, you have the floor, sir.
Speaker 4:Thank you, Markham. Brief question. So we had at Ardo, we've been working with John and his team for a while now looking at opportunities in Alberta and specifically for oil sands to deploy. And I think in addition to the the usual challenges that no one's ever heard of a heat battery before, And of course, being a conservative industry. I mean, one other challenge is obviously just on the carbon accounting.
Speaker 4:And I guess my question is, so last Sunday for example, we had 15 hours in the Alberta pool of $0 power prices and significant curtailment of renewables generation especially in Southeast Alberta. But if anyone comes in provided the grid capacities there and takes this power to power up a heat battery, that person gets with it under our bolus tier regulations, gets hammered with the grid intense, the average grid intensity, not with the incremental effect. I think, John, you call it the scope 4. Have you seen similar challenges in other places? And I'm just wondering, how do you derisk this?
Speaker 4:Because obviously, you need to find a client who's interested in derisking the heat technology first. It's really hard to convince someone to build a dedicated renewals project behind the fence at the same time as trying out the technology first time. Yet if you take power from the grid, you get in a way penalized because you replace a a heat a boiler with a 4 to 5 heat rate. So like a 253 100 kilogram per megawatt hour perm intensity with a grid intensity factor above 400 kilogram per per megawatt hour. I assume we're not the only place here, but that's just a challenge we just heard this morning from from one of the the companies here.
John:Yeah. You're touching on something that is, of course, around the world, renewable deployment and technologies are racing much faster than market regulation framework. There are places everywhere in the world where regulation frameworks need to be updated. Here in California, we measure the carbon intensity of electricity grid electricity 4 different ways in 4 different programs. Sometimes it's an hourly average.
John:Sometimes it's, like, just, you know, 24 hour average. Sometimes it it's location marginal. Sometimes it's location average. What's happening with hydrogen deployment in the US is driving a lot of examination and tool development because the tools have always been available to develop. Right.
John:And, I mean, your point was a perfect one. If I'm if I'm, you know, if I'm taking cogen power, first of all, my my my actual carbon inside is far below that average, which is reflective of, open cycle. And second, if there's curtailment going on and I'm relieving that curtailment, of course, my marginal car carbon tension is 0, and, okay, that's a regulatory frame. We've seen other energy transitions over the years that have required updates in regulatory frames, and we're certainly at a moment like that. And one of the things that we spent a lot of time working on is where are the places where it works now and how do we constructively engage to create awareness and drive those regulatory changes to really open markets to what's possible?
Markham:I wanna make 2 points here. Well, the first one is that on February 29th, the premier premier Danielle Smith announced that the Alberta electric system operator would undertake a market restructuring process. So the very issue that you're talking about is all is in the very is in the early stages of being addressed by the system operator, and I think the, the changes are due to take place, 2026, 2027. So not that far in the future. So that's that's one thing.
Markham:And this might be an opportunity to introduce the unique issues that come up with a heat battery that maybe would not have been addressed otherwise. Don't know, but just throw that out there. The second thing is, we have in Alberta, in 2022, they installed a gigawatt of renewables generating capacity. 2023 was supposed to be, 2 gigawatts, except that it got short short circuited by a a renewables moratorium from the government. And the the point I wanna make here is a lot of that was driven by very large companies like Microsoft and Google and Amazon who are looking for clean electricity and we're entering into power purchase agreements with developers.
Markham:So in this context, would a PPA not be one way of addressing the concern that, has been raised?
John:Potentially, yes. Because that is the thing that works essentially, it works everywhere. If we are connected behind the meter to, generate a renewable generator, then I can't think of any place where the 0 is not recognized. Right? So in all 4 of California's measurement systems, if you're connected behind the meter, okay, we recognize it's 0.
John:So that particular carbon matter can be addressed. Of course, if we can only take that power, you know, some of the greatest value is being able to participate as a balancing and a frequency stability and an absorbing over generation resource on the grid. But, yes, starting there is a great place to start for sure.
Markham:That's everybody that's in the queue. If there's anybody else that would like to, ask a question, please put up your hand now. We would, normally, we have a long a long queue, John. But in the absence of a long queue, I'm perfectly capable and happy to chat with you and ask you questions. And, one of the things I'm I'm kinda curious about is if there's been any discussion with the, you know, the the EPCs that you've been talking to about the viability of building large scale wind, in the north of Fort McMurray.
Markham:I mean, that is, you know, I grew up in in Northern Manitoba, and it's Muscate. And I I would imagine that presents a bit of an engineering challenge. And I don't know what the, the wind resource is up there. You know, maybe you could comment on that. And what role might solar play, if any?
John:I think Jan has done more mapping of the resource. I, I will say, of course, we know how to build industrial facilities all kinds in many places. And elsewhere in Canada, we have a project that's in engineering that's north of the Arctic Circle, but I think it's even tougher than Fort McMurray. The the the the heat battery, making sure that a 1000 c heat battery does not melt what's underneath it if we're if we're on permafrost is is a challenge. That's one of the things that is in engineering right now.
John:But the wind resource, the wind industry back in, about 7 years ago, I think, is one of the first north of the Arctic Circle wind farms was opened. They learned many lessons building it. And, yeah, I I look. It's an it's an important issue, and, there are others who can can comment on that bet much better than I can.
Markham:Well, one of the questions I wanna ask you, John, is the, opportunities for building the heat batteries in Alberta. The Alberta has more industry, than I don't I think it has maybe less industry than in Ontario, but on a per capita basis. I mean, the oil sands is the biggest in, industrial project in in all of Canada. And, there's always, there's a fair amount of manufacturing capacity, and I know the government is always interested when a project like this rolls around to say, okay. Fine.
Markham:We like this technology. Can you build it locally? What are the opportunities for that?
John:Well, you know, a lot of the existing steam structure is built locally, the large the large boilers and those things. And, we work directly with that industry that builds that stuff. And I've actually had conversations with some of the fab shops and others. And, it you know, we are localizing our supply chain pretty much everywhere we go. I'm manufacturing boilers right now in United States and Southeast Asia, and we're working on projects, you know.
John:So as projects go forward, there's nothing in the in a Rondo box except brick, steel, and iron wire, and then a lot of electrical switch gear. And by design, the whole boiler subsystem is literally identical to the cogen boilers that feed the, you know, those heat recovery steam generators that are on the cogens today, our design principles, our prem, our flow rates, temperatures are all exactly to to those so that we can work with those local local suppliers.
Markham:Russ, you've got your you've got your hand up, if you could open your mic, please.
Speaker 3:Sure. John, you mentioned, getting started with some work with Sabik in in Saudi Arabia, who I believe, do the petrochemicals, side of things there. And That's right. I was wondering if that discussion involves, electric, e cracking for ethylene. I know that, I believe Shell and Dow were testing out ecracking in the Netherlands at a small scale, and I was wondering if Sabik's looking at that as well.
John:Yeah. Actually, Sabik is a partner in a project with, BASF and Linda on an ecracker that is in operation now in Germany. It's a little 4 or 5 megawatt thing. It requires continuous electricity. And, of course, that's been the first step that the industry's gone, Fatima.
John:We wanna get to 0, but similar like, that's the thing that we can do with intermittent electricity. Our patents in that area recently issued, so I can comment on the fact that, yeah, you're onto something interesting. It's a it's a very interesting topic of being able to do that at scale at high efficiency, but using intermittent electricity so we can directly be solar powered without require because you know that, you know, a cracking facility, an ethylene plant, must operate continuously. It takes hours or days to restart it if it has even a brief outage. And so the reliability, the safety, and the continuity are critical.
John:So but that's we enable that from intermittent electricity. And today, we are deploying steam systems, but the we created a strategic investor advisory board of which Sabik is a member that's guiding our focus on where we use this platform technology next.
Speaker 3:Well, hopefully, Dow comes to talk to you in the near future because they're they're building a big facility in in near Edmonton, Fort Saskatchewan. That's two phases. I I I understand the first phase involves carbon carbon capture, amine based systems, But perhaps the second phase, they they might be comfortable with ecracking at that time, and they're they're doing testing in the Netherlands right now, shell with shell.
John:Yeah. So Testing.
Markham:John, actually, Chris raised a really good point, and that is that, Alberta has the 2nd largest petrochemical cluster outside sorry, in in North America. The only bigger one, of course, is Texas and Louisiana. There's a lot of heavy industry down in the in Yeah. The Edmonton area. So what is the potential in that part of the of the, you know, the industry, for using your technology?
John:Well, yeah, you you, Chris, you mentioned that, that that ecracker thing that that's based on work that's going on in Europe. One of the things about Southern Alberta that it's blessed with is both wind and solar resources that are somewhat anticorrelated so that you can make up a longer average day of just renewable power. And, you know, the the what is the value of our energy storage does depend critically on what are the respective prices and all those things. But in terms of integrating with that industry, you know, we're in a major petrochemical process, plant in Texas that's coming. Just last week, Eastman announced this molecular recycling polyester production facility with Rondo in Texas.
John:The renewables configuration in Alberta is a lot better than it is in East Texas. You know, so is the carbon price and a lot of I mean, we know it is, it's really a matter of bandwidth for us. We are a small growing company. We have not really begun to engage with industry in Alberta, but, you know, today we are making chemicals, food, paper, biofuels, petroleum fuels, clothing, a major clothing manufacturer is announcing Rondo tomorrow. So we're in many, many industries, and it would be very we're making cement in Southeast Asia.
John:So we are over the next 2 years, I think, as we investigate, we'll figure out how to execute and develop there. And this conversation, you know, the more I talk to you, Mark, and the more interested I am in what in the the local situation, and you've been teaching me a lot.
Markham:Well, yeah, you know, I will say that Alberta is a very interesting place. There's no question about that. But, these issues of, new energy technologies that, maybe don't get a lot of play, they don't get a lot of visibility, part of what we're trying to do at Energy Media and through the Energy Circle is to remedy that, is to bring technologies like yours, give them visibility, put them into the energy conversation. John, this has been fascinating. I I learned even more than I did the last time we talked.
Markham:But for anybody who's not familiar with what with with the Rondo heat battery, I went to your website last time, and you have some, animations and some graphics there that really helped me understand how it actually works. And I'm wondering if you could give us maybe, the, the, the website address where folks could get more information if they would like.
John:Yeah. It's as simple as it can be. It's rondo.com, r o n d o dot com. And Well done. There is a how it works page.
John:There's a there's an 8 minute TED talk that sort of talks it through a little bit, but the animation, I think, makes it pretty clear. It it's really, really, really very simple. There was a physics breakthrough that let us use these very, very simple materials and processes.
Markham:Simple is always better. John, thank you very much for this. We really appreciate it.
John:Thank you so much. It's an honor. Thanks.