Another ClimateTech Podcast
Another ClimateTech Podcast is a weekly interview series that explores the fight against climate change through the lens of entrepreneurship, investment, academia, activism, and art. Join Ryan Grant Little, a seasoned climatetech founder, advisor, and investor, as he interviews the climate warriors trying to save us from ourselves.
#Climate #Climatetech #Cleantech #Sustainability #Environment
Another ClimateTech Podcast
What to do after selling a $100 million company? Start another, with Alex Ivanenko of HyWatts
I spoke with Alex Ivanenko, the founder of HyWatts, about building “power plants in a box” and about why, after selling a company for more than $100 million, he started another one right away.
In this episode we talked about:
👉 Why traditional power generation philosophies don’t work for renewables
🔋 The high costs of transmission and distribution in the energy grid
💡 The potential for distributed energy solutions in reducing blackouts and fires
🚗 Why EV charging stations are the fastest path to commercialization for startups
📈 The implications of subsidies and regulations on the renewable energy market
#climatetech #renewableenergy #EVcharging
Welcome to another Climate Tech Podcast interviews with the people trying to save us from ourselves. Alex Ivnenko bought a home in California after selling his last company and was floored by the 40 cent per kilowatt hour price of electricity. So he quickly set out to build HiWatts, a company that makes, as he puts it, power plants in a box, using renewables to produce energy, hydrogen to store it and zero transportation costs to use it on site. I reached Alex in Menlo Park, california. I'm Ryan Grant. Little Thanks for being here, alex. Welcome to the podcast.
Alex Ivanenko:Hello Ryan, Hello everybody, so thank you that you're having me today.
Ryan Grant Little:You're the founder of HyWatts, which is based in beautiful Berkeley, California. Your production facility is further south in San Diego. Can you talk a little bit about what HyWatts does and specifically what problem it?
Alex Ivanenko:solves HyWatts. Our mission is to create a reliable renewable and low-cost energy anywhere with our power plant in the box, and the problem we are solving is that we see right now rapid increase in energy demand, which caused by energy-hungry industries such as electric vehicles, data centers, warehouses and et cetera, and, based on different reports, by 2030, by the way the demand of energy will be as much as 50 million homes in the United States, which right now is equal one-third of all homes in the United States at the moment. So it means that we have to create additional generation and transmission lines to satisfy that requirement, that demand, and it will cost our economy, only in the United States, about $2 trillion. And because you have to create additional generation, build once again transmission lines and we think it should be a much better way. That is why we started HiWatts Very easy.
Ryan Grant Little:So as we electrify everything, the need for electricity not surprisingly goes up substantially, and so we're looking for all kinds of different ways, including kind of distributed energy, which is kind of what you're providing solutions like that. You talk about high-wats as being, I think, a power plant in a box for off-grid and EV charging, and as someone who spends more and more time off-grid in very difficult places and relying on expensive energy solutions or energy storage solutions like I'm lugging around these big eco flows and stuff like that I wonder who is this for? Is this for someone like me, or is this really kind of the? You know, if you're talking about a power plant, that's not necessarily something for a consumer.
Alex Ivanenko:Ryan, if you have some couple of millions of dollars in your pocket and you're ready to build EV charging stations, of course we will be ideal solution. But if you wanted to go like for camping, our solution is not. It will not work for you down 100% because we are like a megawatt level generation and our like average, like a storage capacity, so 150 megawatt hours. So you know this is a really big boy, I would say.
Ryan Grant Little:Okay, so that's more than I need for my coffee machine and my laptop. Oh yes, yeah, 100%.
Ryan Grant Little:And so how does it work? So what's special about this? I know you know I've been looking into hydrogen storage solutions on the market granted, some of the kind of smaller ones. So interesting to hear that you are like power plant scale. I know that you're using reversible fuel cell technology which cuts down, I think, on the amount of equipment that you need, so you don't you can use half as much equipment as with kind of the traditional approach. Can you talk a bit about how it works specifically and what kind of the secret sauces about the technology?
Alex Ivanenko:Great question so let me start from explanation how the system works. What is? What does it mean? Power plant in the box, right? So power plant in the box, as I said earlier, is to produce a reliable, renewable and low-cost energy anywhere, and it works by combining solar generation and our proprietary hydrogen-based energy storage technology based on reversible fuel cell, as you mentioned. So let me briefly explain how it works, based on the EV charging station example.
Alex Ivanenko:So during the day, solar panels generate power and directly supply to the charging stations. Unused excess power is converted into hydrogen, on-site stored in tanks and used as an energy storage medium, because hydrogen can store a lot of energy for a long time. And when solar power is not available, such as during the night or rainy days, the hydrogen is converted back to electricity to supply the charges for multiple days, unlike battery-based system. As a result, we can deliver reliable, renewable and low-cost energy. And if we're talking specifically about our hydrogen-based storage, so of course the core technology is reversible fuel cell. And what is the secret source? Right? So if you want to right now use hydrogen as an energy storage medium, you need to use two components electrolyzer and fuel cell electrolyzer to convert electricity to hydrogen and fuel cell to convert hydrogen back to electricity later on. So and it means in general, you have to pay twice for that, because it's almost similar devices and that is why it's very expensive. The copies of this system will be very expensive and this is, by the way, one of the reasons why you don't see a lot of implementation and deployment of hydrogen technology on these specific market segments.
Alex Ivanenko:So we found a way how to make reversible. View cell is where you can do both electrochemical process in one single unit. So let's imagine that from this is like I know that it's an audio podcast, but let's imagine this is like a cell, so from one side it works like an electrolyzer and from another side, the same cell works in few-cell mode. As a result, so by default, our system will be two times cheaper compared to traditional system configuration. And what is our secret sauce is that we found a way how to make reversible few-cell in a much more reliable and efficient way compared to other reversible few-cell reactions, because we, of course, are not inventors fuel cell, 100% not but we found a way of how to make it in much more efficient way and, as I said earlier, much more reliable. And that's actually our crucial and novel discovery in conductive polymer which is unlock, that reversible fuel cell reaction in our system.
Ryan Grant Little:And are you protecting that? Is that a trade secret? Are you? Do you have patents? How do you protect the IP around this?
Alex Ivanenko:I would say that's a combination. So because you know investors, they required us to have like a formal patents application but of course, a bunch of technologies in trade secrets. So because, like, for instance, formula of polymers or formula, the specific construction of the membrane electrode assembly on the fuel cell, what is the selection material, like the sealant materials. Of course it's on trade secret level so, but because it's a market requirement, so we have to have some IPs formally issued and applied. That is why we have a few patents application, of course.
Ryan Grant Little:Yeah, investors love patents, even if they don't understand always why they do. And sometimes trade secrets are much better.
Alex Ivanenko:No, our investors who invested in the company. I would like to emphasize they understand everything. They're really great guys.
Ryan Grant Little:Okay, I love them. Well, you can mention them by name if you want.
Alex Ivanenko:Yeah, sure, for instance, alonic, it's a venture fund, it's Mark Shmulevich, so it's a built equity, so a few private equity funds. So, and Ronald, who is also supported and started to believe in the company from the beginning, which is a great team. I actually, I have to say, invited in our company from the beginning in terms of investments.
Ryan Grant Little:Okay, they'll probably get a few more LinkedIn follows after this episode.
Alex Ivanenko:No problem.
Ryan Grant Little:So let's get back to so. If I understand correctly, the core of what you're doing is the storage, but you're doing the production as well, using renewables like wind and solar, and those are probably more off the shelf, right? So you're not trying to necessarily innovate in that space, you're innovating in the storage, and so you have probably two types of major types of cost savings. So one is that the fuel costs are nil because you're using renewables, but also the transportation, the energy transportation costs are nil because you don't have to move this from anywhere, because you're producing exactly at the same site where you're storing and eventually using this as well. So that just basically leaves the capital expenditure of buying the high watt system. That's then the major kind of economic event here.
Ryan Grant Little:Can you talk about the economics? You mentioned that this is kind of in the millions level and the megawatt level. So what does this look like? What do the economics look like of working with using a high-watt system versus and let's just say for California, you know using energy the traditional way and paying for energy in the traditional way? How does it stack up?
Alex Ivanenko:So Ryan, before I have to ask another question. This is like a personal story, right? So I, the second time founder, my first company, high Point so, was acquired by ZeroAvia. I received some cash and actually that helped me to buy the first property in the United States, in California, and I was happy about a month so, until I received my first, which is I have to pay. And I was shocked because I have to pay about 40 cents per kilowatt hour. I said wait, wait, wait, wait.
Alex Ivanenko:I heard a lot that California has a lot of renewable energy in the grid. Why I have to pay so much. I started to analyze my bill breakdown, you know what? And I figured out that more than 60% of the bill is for transmission and distribution lines. That is the reason why I started HiWAS, because I thought so. Of course, renewable energy is a great technology. If you need to like produce locally the power, right so. That is why you must eliminate the transmission components from the bill, right so?
Alex Ivanenko:And back to your question about like California and pricing and et cetera, of course our technology is much cheaper compared to even utility companies because we can deliver like a produced power, store that power in the place and exactly where it is needed for our customers and, just like, for your example, one of our customers we are working on we're with on the project for electric vehicle charging hub for heavy-duty trucks and cars in Mojave Deserts as a California City Industrial Park customer. So they have two limitations. The first limitation the Edison, which is a local utility company, can't deliver the unnecessary power level. The second the pricing is much higher than high-watt can offer. So they initially started to think about big batteries, integration, blah, blah, blah, and they figured out the cost of electricity will be even about 18 cents per kilowatt hour.
Alex Ivanenko:Everything is included, right so, including solar panels and et cetera. And when we calculated our system based on their requirements, the same modes of operation and et cetera, we can deliver a price per kilowatt hour is about 11 cents, which is very attractive for their business model. So for your comparison, edison depends on the, of course depends on period of time of where you consume the energy. Business rates will be starting from like 10 cents to 32 cents per kilowatt hour. So but we can provide like a stable electricity in the fixed price for next 25 years. So that is why we're going to sign like a power purchase agreement and fix the price per electricity for our customers? Did I answer your question?
Ryan Grant Little:Yeah, that's great. The transmission and distribution is not just expensive in the US but it's problematic in some other ways. My understanding is that over kind of decades it's not been maintained properly. There's been kind of disincentives for utilities to invest in upgrading the.
Alex Ivanenko:The problem. You know, rand, you go deeper in the problem, because everybody, what you see right now in the market, that's they're trying to use standard philosophy where they used before in power generation philosophy, where they used before in power generation. So, for instance, when you use, like, a power plant based on dump coal or based on standard natural gas, it's built far from population big station like a gigawatt hour, and they build transmission lines. And they're actually trying to do the same stuff with renewable energy. They're building in the middle of nowhere huge facilities and then after this trying to build new distribution lines because they still wanted to locate them far from the center of population.
Alex Ivanenko:And this is, I think, in general this is my opinion, I would like to emphasize this is a general mistake. So because, once again, with the feature of renewable energy, like solar or wind, you can deploy it in the exact place where it is needed. So that is why, like a previous philosophy, it will not work here. And that's the problem, because it's not existing transmission lines, I would like to emphasize, they are building a new one and a point of connection, etc. That is why so it's like a sort of paradox Cheaper energy we want to have in the grid renewable, which is the cheapest energy in the world, one of the solutions. But at the same time we have to pay more because of transmission and distribution lines and the transmission and distribution lines are, so I mean it's expensive.
Ryan Grant Little:As you said, it could be 60% of the bill, yeah it's very expensive, so I don't remember the exact figures but we're talking about like a few million dollars per mile of installation.
Ryan Grant Little:And it's also at risk, right, because a lot of it's above ground. As climate change gets worse, with extreme heat, with, you know, more tornadoes and extreme weather events, it's coming down right. So the wires are being knocked down on a more regular basis than before. A lot of the existing stuff has not been well maintained. Some of it's been around for 100 years and hasn't, you know, had updated metal contacts and that type of thing. So we see a lot of blackouts, we see a lot of electrical fires because of this.
Ryan Grant Little:So there are other reasons beyond just cost, I think, to talk about, you know, distributed energy. That, I think, is becoming more and more clear to people who work in energy in general. Correct, fully agree. One of the things also that I was, you know, thinking about is so you know, I worked in renewable energy in 2006 to 2010. I was in biogas, which is kind of more or less baseload, but you know, most of the stuff is intermittent, like wind and solar.
Ryan Grant Little:Most of the renewables that we talk about, that we look at that are coming online, that have, especially in the past, kind of what's that 18 years have been more intermittent and storage has been kind of the main issue and kind of load balancing, and so of course what you're doing is great for storing, for intermittent, but I also was thinking it probably solves an issue of too much right? So if you have nuclear plants that are producing, you know, and you can't just kind of turn down the dial on a nuclear plant, it's producing as much as it's producing, but if the demand isn't as high as the supply, you need to do something with that energy as well. And this is presumably also. I mean, I don't know if this is a use case for you right now, but are you actually looking at storing energy from baseload that's not needed as well?
Alex Ivanenko:Yeah, so actually our technology, we are, I would say, power and dry agnostic, right, so we can work with any energy which is a need to be stored, right so in our power plant, in the box and specifically in our hydrogen-based energy storage technology, right In our hydrogen storage. So, and of course, we can work with nuclear stations, so with solar, with wind farms. But right now, the market, what we are targeting to EV charging station market, so and of course, for them, deploying nuclear stations for just like, let's say, 20 megawatts, it doesn't make sense at all right.
Ryan Grant Little:No, no, but I'm thinking of legacy nuclear plants that might be online now. I mean, what do they do when they're overproducing right now? Are they basically doing the equivalent of like flaring the energy, or what?
Alex Ivanenko:I think, okay, I understand the question, sorry. You know, a nuclear station is a first priority power source. So, because you're absolutely right, it power source. So because you're absolutely right, it's hard to manage the type of station. So that is why, when the operator manages the grid, so he provides the priority to nuclear station first. So that is why they usually operate in a very, very efficient, like the most efficient way, so they provide exactly the power they can generate in a much more efficient way. So that is why.
Alex Ivanenko:So usually there is no such big problem as far as I understood, right. So because, once again, a grid operator, so they dispatcher, so they provide priority to nuclear first, because actually this is the most cheapest energy, right, so it's cost nothing, I would say. And then, after it started to like, uh, some other power plants and etc, etc, depends on the peak, they turn on renewable energy, right, so, as the end, because you absolutely right, the high intermittency. But at the same time, like all renewable energy requires to have because of high intermittency, they require to have a sort of storage, right, so, to store that energy, to be always online.
Ryan Grant Little:So you talk a lot about EV stations and I think that makes a lot of sense as a key use case, and I think it feels especially in the US that one of the major focuses on electrifying transportation. I wonder if you are looking beyond kind of the Tesla level EV and also looking at kind of commercial transportation like trucking, shipping, these kinds of things. Are there opportunities there as well?
Alex Ivanenko:Yes, of course. So, once again, we are providing the solution for our customers, right. So we actually provide a wire, so in the place, exactly where you need that wire to have, right? So that is why we don't care what type of consumption, what is the consumer will require to consume that power, right? So it might be heavy duty trucks, it might be sheep, but I don't think that it's for sheep exactly, it's for big tankers. So it will be fully electrified, so it will work on ammonia. So, again, they need to use hydrogen, in this case anyway, to produce ammonium. But in general, yes, so we are, once again, we're just a solution provider, so we don't think about how exactly, because, based on customer requirements, we provide the configuration of the system, the configuration of the power plant.
Ryan Grant Little:Sure, but you're targeting specific types of customers presumably. I read today in the Guardian that in Ireland the total power consumption for server farms has surpassed all of the residential consumption combined. Is there an opportunity for applications like that? Are you? I recognize this can work anywhere, but presumably you're targeting specific verticals first, as the kind of the highest impact or opportunity ones first, and EV sounds like number one. But what are two and three?
Alex Ivanenko:Yeah because we actually we're a startup company, don't forget about that, right? So we have to focus on something very specific where we can commercialize our technology as soon as possible, and we analyzed different market segments and community microgrids and data centers and utility-scale storage, and we figured out that the most like fast path to commercialization is EV charging station, because a lot of subsidies, and to commercialization is the eb charging station because a lot of subsidies and incentives available on the market, not, by the way, only in the united states, in europe and in the united kingdom too. So that is why we started this market, because we understand that we can develop our technology, prove it and then after move to next level, like data centers, community microgrids and in our portfolio by the, we have already a few LOIs with developers of communities, because for them it's also very attractive to have independent power sources, right? So for them the idea is about that. Hmm, a developer can become a sort of utility company. You can build people who live in your community. That's a great idea for them because it will be like a recurring revenue for them, right? So, and once again, it's the cheapest cost of and we also will deliver low-cost energy in the community.
Alex Ivanenko:Because why they want to have our technology? Not because of only price, but don't forget the land without infrastructure, so without building infrastructure, it's cost nothing, even in the United States. So comparatively nothing right. But that is why for them, using technology like HiWAS is very attractive. And, of course, our timeline. So we expect to deliver the first system for data centers and community microgrids starting from 2027 and eventually utility-scale storage from 2030. Because they have a lot of requirements, I mean utility companies, so certified products, et cetera, et cetera. So we think that our timeline, like five, six years to develop the system specifically for utilities. So it's okay for us. But right now, if you charge extension market subsidies, a lot of programs, grants not only for us but also for our customer available. That is why we decided to start from this market first.
Ryan Grant Little:That makes sense. So that's the target. Everything else is opportunistic. So if someone comes to you and says they want to purchase one, you're happy to sell it to them. But EV charging is the holy grail right now. You mentioned regulation and subsidy and I wonder if you could just talk a little bit about that. Maybe in the American context. So is storage and hydrogen. Did these topics make it into the Inflation Reduction Act, and has this been a big boost it sounds like it for your company?
Alex Ivanenko:Yes, exactly. So, actually you know our technology, so it's in our products. So we have actually two byproducts, I would say electrons itself, right, and molecular hydrogen. So that is why we can combine different progress in the one program, I would say in the one contract, right? So? And of course that's great that United States and by the way, not only here but in Europe too, that's a lot of programs which support penetration, but in Europe too that's a lot of programs which support penetration.
Alex Ivanenko:But my general idea, and this is my vision and intention, how to make a business, we have to make like a real case without any subsidies for our customers, right? So? Because all figures, all prices I announced earlier it's not including subsidies, by the way so because subsidies they may expire in two years, I don't know, this may expire in two years, I don't know, this may expire in one year. So what we will do, right? So, anyway, you have to have a case in a business case and your technology should be attractive for customers, even without the story and without subsidies and different support from government. And actually in California specifically, you may, by the way, receive up to 90% of compensation for Carpex using our system. That is why, right now. I would say for our customers our technology is also attractive because they can get like a real compensation, real cash of their expenses they're going to spend on building and integrate our technology in their solution.
Ryan Grant Little:Yeah, that makes a lot of sense. And who knows what happens after November 7th if Donnie and JD come into power? That could be a very dangerous Correct.
Alex Ivanenko:And I'm confident that's even and actually that will be even better for HiWatts. You know what? Because a lot of companies right now like building their business model based on only subsidies. Hiwatts is not integrating that we are showing everybody. Say, hey, even without subsidies, we are on the safe side, right, so you will get that without subsidies. So that is why, for me, it will boost our business. I actually think so. So because everybody will become, not everybody. Some of companies will become bankruptcy after that, right? So because without support, how are you going to be? Because their business model initially was based on that support programs. Hyva's not, we're not doing the same stuff.
Ryan Grant Little:I take your point. We'll see if it boosts anything, but I take your point about that. You mentioned that this is the second hydrogen company that you found and the first was Highpoint, which you sold to ZeroAvia, if I'm pronouncing that correctly, just two years ago for about $100 million. So congratulations, and that hopefully gives you some runway. And congratulations on being a homeowner in the US for the first time, in California. Can you talk a little bit about what that company did and kind of how it might have been different or similar to this one?
Alex Ivanenko:Yeah, so it's, I would say, completely different of course. So at that time, high Point, so we are designing the hydrogen and develop hydrogen fuel cells for aircrafts. So when we solve the fundamental aviation problem is the weight of the system. So of course we use like a baseline technology, like a high temperature membrane technology was this HiWatts and in High Point are the same because we're teaming with the same suppliers, like a bsf, blue world and etc. But in general so high watts. Right now we're not targeting to the weight of the system because we are solving here. Other fundamental problem for customers is the cost. So that is why we're we don't care about the weight of the system because it's a traditional application anyway, it's land-based, right. So but we're using over-the-shelf components which is already validated, certified and actually has much lower cost. If you wanted to just like design a new compressor for aviation. So it's, I would say, same gas, hydrogen, but completely different technologies and completely different philosophy behind that.
Ryan Grant Little:Interesting. I like how you kind of focus on one North Star so with high point it was weight and with high watts it's cost, and then you kind of optimize around that. That creates some real clarity kind of in the business strategy. I like that a lot. Thank you, ryan. So you mentioned that you've got some VCs involved. So if you're two years old that means you've done either a pre-seed or potentially already a seed round. I wonder what your plans are now. Are you looking at kind of a series A or are you doing another fundraise? Is there another fundraise in the books?
Alex Ivanenko:Yeah, just a small correction. The company high pass exists only 11 months. By the way, today is exactly 11 months when we incorporated okay, you took a year off to build your home. I worked for vrb, I was like a general manager in the company so and I found that's a bit, you know it's. It's complicated to work after startups hard to go from founder to manager exactly so.
Alex Ivanenko:So this is not my path, so that is why I actually left about 70% of my earn out on the table just to start Highlands. So we exist only 11 months, and you're absolutely right. So we actively working with investors. I invested my personal money into the company from the beginning. All my Auerka founders actually invested money, all our co-founders actually invested money. So, and we, of course, I went to my previous investors because it was a successful deal for them and they also put some money in the beginning. But this we call like friends and family rounds, right. So, and right now we're closing our Pre-Sea Stage round. So I think in a couple of weeks we will expect to have an announcement that we closed our fully powerful pre-seed round. So we're actively working with different investors who are experts, as I mentioned earlier, so they understand the technology and the potential of the technology for the future. So that is why they invested.
Ryan Grant Little:Okay, so investors listening right now are going to have to probably wait until the next round to join in no, they can't reach out at any time.
Alex Ivanenko:So you know, okay, by the way, this is a funny story. So because at high point, well, you know, it was like a lot of money market full, completely different, and a lot of people wanted to invest in high point and at that time I was so stupid and I and I said, no time to time people you know investors and I was, so I don't want to do the same mistake. So everybody who wanted to put any dollar in my company, of course I will get it. Okay, yeah, market conditions are different, exactly Conditions. Chores of that might be different, depends on the situation, but of course, everybody are welcome.
Ryan Grant Little:Okay, alex is open for business, and what's the best way for people to get in touch with you if they want to participate in your mission in that way or in any other way?
Alex Ivanenko:So I would recommend first of all, to subscribe in our corporate LinkedIn page, hiwatts, so it's easily find me in LinkedIn. So I have an open profile in LinkedIn too, which is I prefer to communicate with people who initially request some like heavy questions and et cetera, and I'm very responsive right. So I'm happy to develop my network. So I would recommend go through LinkedIn.
Ryan Grant Little:Yeah, okay, and I'll put all of that, as always, in show notes. I think with my episodes it's been 54 LinkedIn's and one Instagram.
Alex Ivanenko:It's been 54 LinkedIn's and one Instagram. Oh, no, instagram, so I don't remember. I think I deleted that app from my phone.
Ryan Grant Little:That's yeah, that seems to be more.
Alex Ivanenko:B2C.
Ryan Grant Little:Yeah, yeah, Alex, it's been great talking to you Just past midnight in Menlo Park, where you are right now. So I really appreciate you staying up late for this conversation and much appreciated wishing you great success with HiWatts. Thank you, Ryan. Thank so, I really appreciate you staying up late for this conversation and much appreciated Wishing you great success with HiWATS. Thank you, Ryan. Thank you everybody. Thanks for listening to another Climate Tech Podcast. It would mean a lot if you would subscribe, rate and share this podcast. Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom. Find me, Ryan Grant Little, on LinkedIn. I'll be back with another episode next week. Bye for now.
