MFG Podcast Ep5 with Yotta Energy's CEO Omeed Badkoobeh

We have no choice but to develop more and more solar plus storage resources. It’s either that or you have to go back and upgrade the entire grid system.

It’s very exciting. I would say in midst of all this we went through a pandemic. So given the fact that we went through a pandemic and all the adjustments that we’ve had to make from workflow to precautions. I mean it’s just been an amazing journey to be at this point and what you’re seeing here is our new headquarters here in South Austin we. We’re moving into a 20,000 square foot building where we’re going to be processing orders as well as fulfillment as well as doing some light manufacturing.

In a nutshell, Yotta is a solar plus storage full solution. Everyone kind of knows about solar today. The prices have come down. You’re seeing more and more of it, but the problem with solar by itself is that you can’t store the energy and without storing the energy it creates all kinds of other problems. You actually can have too much solar into the grid and it causes too many imbalances or fluctuations. The next frontier is how do we solve energy storage? We can use solar energy as a power source to compete against fossil fuel peaker plants.

The battery is the next frontier in this sector and many other companies are building one big containerized battery system. We came to it at a completely different approach rather than building a big centralized battery system that has a lot of different layers of complexity and fire suppression systems and siding issues. We’ve created a modular battery, it’s called the solar leaf and it tucks neatly behind a solar module. So with our solution, if you have room for solar by default you have room for storage. The modular format enables you to very quickly develop it into any project that’s out in the field or a rooftop.

The first knock we get when we describe our product is “It gets really hot on rooftops. How can you put batteries on rooftops?” As we experienced a few months ago, it can get really cold as well. The secret to all energy storage products that will be successful fundamentally is thermal management. For a company like Tesla, they’ve pioneered liquid cooling of their batteries which they use in their cars and their battery products. We’ve pioneered a completely new technology. It’s called a phase change heat exchange system and each battery that’s about the size of a briefcase has this system built in that essentially regulates its temperature. It’s almost like the human body. It just regulates the battery temperature doesn’t let it get too hot; doesn’t let it get below freezing.

I came from the solar industry. I started back in 2010 when it was a very nascent field; very much a green movement. People bought solar because of an emotional appeal—it wasn’t quite economical just yet. I spent a lot of time developing battery systems as well from the time we were using car batteries to more and more advanced products. I knew that there had to be a fundamental shift. What I was witnessing is not the cost of the technology being the barrier but the cost of the implementation as the barrier.

So fast forward, I move to Austin. We chose Austin because of a progressive solar policy. This was before Austin became the boom town it is today. I went to a function called 3 Day Startup and I met my co-founder Vikram. Vikram came from a battery background—an engineering background—and he was really the one who motivated me to quit my job and start a company. I didn’t know what startup was at that time. We started tinkering in our garages. His garage was the electrical; mine was the mechanical. We would build various prototypes and lo and behold we worked backwards and said well how do we fundamentally change how easy it is to deploy energy storage? That is what’s called panel level storage (our product sector). [We] said well, ‘No one’s doing this. Why isn’t anyone doing this?’ Well temperature is extremely hot; it’s extremely cold. We worked backwards from there and that’s how we developed the core thermal technology. Now it’s been patented, we’ve receive various levels of funding and we’re actually building it out and delivering it to customers.

The majority of VCs want to just invest in software because software either rises really quickly or falls really quickly. Whereas manufacturing hardware is a little bit different nut to crack but it’s all about finding the right investors. You can look at some of the most successful cleantech companies they are hardware based with a prominent software layer on top of their hardware. That’s the same journey for us. I would say it’s not really as expensive to launch a hardware-based company as it used to be because you have all these advances in manufacturing you have all of these global CMs that help with a lot of the various factors. I think we’ve done something remarkably well. We’ve executed really well with the funding that we’ve had. What we’ve been able to do with the amount of funding that we’ve brought in some software only companies wouldn’t have achieved what we’ve achieved.

You have to be really passionate about what problem it is you’re trying to solve. I love solar. I got into it. I just see such a huge potential. The idea that we can produce electrons from a device that sits on a roof is just amazing to me. I was a geek for the industry. I used to go to all the trade shows and see all the companies coming out with products: what worked; what didn’t work. Because of that I’ve been able to navigate really well in our product fit and what kind of features we build out. But it’s a journey. Anytime you’re trying to start anything from scratch it’s a long journey. I often joke that people think they leave a 9 to 5 [job] to do something like this, they’re really leaving a 9 to 5 to work 24/7. But at the end of the day you have to be passionate about it and if you don’t have that passion for what problem you’re solving, you’re not going to make it.

We are going on 15 full-time employees. We’re actively hiring some key positions. We are starting to ship product out to early customers. There’s two components in our solution: we have our inverter system (dual power inverter that’s the first of its kind) that works interchangeably with both solar and storage; and then we have our flagship product, the solar leaf, the storage component that’s coming out to market around Q4 for manufacturing. So there’s a whole layer of learning logistics. Now we’re getting orders in the door: How do we process these orders? How do we ship them out? Hiring talent [has] gotten a little bit tough. Austin used to be a market where you could pay someone on a startup salary and they could afford a nice home and a Tesla. That’s quickly vanished. It’s getting harder and harder to get people here to Austin, but I think in spite of all those challenges, we’ve picked the right place. When I first started Yotta there was a real serious thought that we needed to move out to California. We weren’t meeting the right investors we were not moving traction. We knew we had something special [but thought] maybe we’re in the wrong place, maybe we need to pick up and go to California. Right now I know that would have been the wrong decision because Austin is the new Silicon Valley. There’s so much happening here. There’s so many resources. It’s perfect for manufacturing. It’s perfect for new startups. We’re in a little bit of a boom right now but there’s so much land and potential to grow in central Texas.

I’m not a UT graduate so I won’t take credit for that but I do love that motto, “What happens here changes the world.” It’s such a great motto to have as a university.

Yeah, exactly. There’s our sector that we’ve focused on. Within solar there’s three major sectors:

• Residential, which is your homes
• Utility scale, which is big fields of solar
• Middle market, which is referred to as C&I commercial/industrial [C&I] is the sector we’ve decided as our beachhead for our product. It is a more difficult sector, traditionally, than the residential and the utility scale but it’s primed for great growth. Part of that is there’s a lot of businesses that are looking to invest in solar and have their electrons come from solar energy. There’s all new kinds of financing structures that were not in place before. Now what you have is a whole new way of paying for solar where you have groups and investors that basically want to own these systems on your rooftop. You have no CapEx towards the system; you’re just getting green electrons from solar at a lower rate. What will get really interesting is when utilities start to [adopt] that model. Imagine hypothetically if Austin Energy came to one of the ARMA groups and said, “Hey you’ve got this beautiful rooftop we want to own and operate a system on and you’re going to benefit by having lower demand charges and lower price for electricity.” Then the benefit is also going to all the ratepayers within the Austin Energy territory.

Yeah, think of solar and battery storage as a really good way to back up some critical loads. You have to build a massive system to back up 100%. That’s where you would maybe still have a diesel or gas generator on site. But for backup loads or critical loads—things that could have saved really high-end equipment—it could be a really good solution for that. The other thing is that the day after the first big storm, it was actually bright and sunny and all of our systems here in Austin were actually pumping kilowatt hours into the grid when it was at astronomical rates. The price for four days was $9 a kilowatt hour and utilities were selling it for the folks who had power at around 9 cents per kilowatt hour. The utilities were taking huge losses on just delivering power for those days.

I think it’s a great technology and that’s where it gets political in some ways in the sense that if you’re going to have solar, you should have storage. You should have the ability to have a reserve capacity in the event that you have price spikes in the grid or you have an outage. How do these systems contribute to that?

Yeah, of course. I think the FERC order, if it gets adopted here in Texas, it means that any system that’s at least 100 kw or larger gets to participate in the market. When you can participate in the market you can actually find additional value in that system that’s on the rooftop.

I often give this analogy: think of solar as the computer and think of energy storage as the internet. In a sense that a computer has value and we did a lot of amazing things with it but when the internet came around it was like ‘Wow!’ we could do all of these things now. With energy storage there’s actually about 19 different value streams of how energy storage can be monetized with solar. We’re just in the early days of figuring out how those business models would play out.

To be honest, I haven’t looked into it too deeply. I should being in this sector. Regardless of what happens, this technology is amazing enough that one policy may spring [it forward] much quicker, but at the end of the day, solar technology is becoming very inexpensive and storage is now on the frontier of dropping that cost. Yes policies will help spring forth and make it quicker, but it’s going to happen eventually anyway. Then you know with electric vehicles, I think everyone now understands that you can’t fight against the adoption of electric vehicles. It’s going to happen. Every major manufacturer is going to come out with models. It’s as Elon [Musk] said in his calls the other day, there’s going to be a 3x increase in the demand for our electricity. How are we going to meet that demand?

We have no choice but to develop more and more solar plus storage resources. It’s either that or you have to go back and upgrade the entire grid system. It’s far less costly to incentivize more deployments of locally produced power on factory buildings and industrial sites.