Bill Gates likes to talk about the green premium. That is, we're gonna pay more for commodities made with low carbon energy than we do today. Well, as I'm saying, you know, we're on this moment where we can see very clearly that green premium going away. We're headed toward a world where zero carbon commodities do not reduce our collective wealth. They increase it because they're lower cost of production

Hi everyone. Welcome to the Climate 21 Podcast. My name is Tom Raftery, and with me on the show today, I have my special guest, John. John, welcome to the podcast. Would you like to introduce yourself?

Thank you so much. Yeah. I'm John O'Donnell. I'm CEO of Rondo Energy.

Okay. And for people, John, who may be unaware. Rondo Energy is what?

Rondo Energy is building a new type of long duration energy storage. We're setting out to solve what people think is one of the hard to decarbonize sectors. The heat that's used by industry making every commodity from baby food to cement industry uses about three quarters of its energy in the form of heat, not electric power. Industrial emissions for heat from burning coal, natural gas, and oil are more than a quarter of total world CO2 emissions. It's a problem that I personally and a number of our team have been working on for 10 and 15 years in previous companies. Previously, we delivered more than half of all the solar industrial heat that's running in the world today. But Rondo was founded on a new foundation, the amazing transformation that has happened in wind and solar electricity. During the 15 years that I was working with other solar technologies, taking them to scale the cost of wind and solar electricity fell 90%. So that the world today is at this really exciting inflection point where wind and solar electricity have not just fallen below the price of conventional electricity. They've fallen below the price of combusting fuel, but they are intermittant. So if we had a technology for storing that energy and delivering continuous heat that had suitable costs, safety, temperature, scalability, we could make huge changes in world emissions profitably for everybody concerned. That's what Rondo's about is energy storage to transform the way we produce again, everything from baby food to cement.

Okay. When we think about energy storage, we typically think about more recently, lithium ion, battery storage, for example, maybe earlier we've been thinking pumped hydro. What technology is Rondo using?

Yeah. Thank you. So, I want to differentiate the technology we're using and the problem that we're solving, right? The, the exciting thing today is we can have as much intermittent electricity as we want. I mean, modulo, permitting and construction everywhere in the world, vast amounts of renewable energy are available from wind and solar. They are intermittent. Serving the electricity grid is a challenge, of course, and there are a ton of folks doing really exciting things, storing electricity for use as electricity. I wanna move electricity from noon to 7:00 PM right in a solar regime or from

00 PM in a wind regime. We're doing something different. I want to take that intermittent electricity and turn off a furnace or a cement kiln, or a boiler that today burns fuel all year long, continuously it's shut down one or two days a year for inspection and repair. We're harnessing intermittent electricity for that purpose. So what the output is, is high temperature heat, and it costs about 5% as much to store energy as heat as electrochemistry. Take a stone, put it in your oven, let it heat up, wrap it in a blanket, you know, wrap it in a lot of blankets. It'll be hot a week later. And it doesn't cost very much per kilowatt hour. And so this matter of storing energy as heat is a challenge that again, some of us have been working on previously for 10 and 15 years, coupled to solar collectors that directly collected heat. When we put Rondo together, we looked at a lot of options. I think we recognised, again, we didn't know it. Most folks don't know it. There is 300 gigawatts of energy storage running in the world right now. Every blast furnace has high temperature heat storage that captures waste heat from the furnace and delivers it as preheat inlet to the furnace. The technology's been around since the 1820s. It is brick there are materials that you make brick from that are good to very high temperatures. They're made from the most abundant elements in earth's crust, aluminum and silicon and oxygen. And, they're made everywhere in the world. And there are millions of tons in use today. Rondo's contribution. We figured out a way to use the same heating elements that are in your toaster, in your hair dryer to heat brick to well over a thousand degrees C in a structure that allows it to be heated very rapidly in as little as four hours a day, and deliver heat continuously just the way the blast furnace units do it by passing air through the brick structure and getting a continuous flow of superheated air that we can turn into steam in a boiler, or delivered directly to some, a cement kiln or a lime kil or high temperature industrial processes. So we're talking about thousands of tons of brick storing, hundreds and thousands of megawatt hours of heat charging at very high rates. You know, we are for scale, the typical cement plant might use 50 megawatts of electricity, but a thousand megawatts of heat, so we're, solving very big problems building very large scale energy storage units out of something that is dirt cheap. Fundamentally, brick is made from the right kind of dirt.

Okay, and let's, let's take that example of a cement plant needing a thousand megawatt hours of heat. What kind of size of Rondo brick storage unit is required to supply that cement plant?

Yeah. Thank you. So, that's exactly the right question because the transformation of the electricity sector can take play when we're going back to electricity storage for a moment. Uh, the transformation that we can move electricity thousands of miles with very low losses and think new energy storage technologies can be put wherever it's convenient. Heat storage has to be put at the point of use where the heat is so, the early yards. The early decades of transforming industry means transforming existing factories, existing cement plants. And you asked exactly the right question, how much space does it take? So the density of that energy storage, how many megawatt hours per square meter of land, the safety of that, can you put it right next to something, are really critical issues and we are building our energy storage units today. There's a particular model of industrial boiler, of which there are more than 300 sitting here in California. And, our first unit is a direct one for one replacement of that boiler. Now, as it happens, that boiler delivers 20 megawatts of heat burning 85 million BTUs an hour of fuel. So if you have a thousand megawatt load, it's a lot of units. So, I picked a large particular point in that. So we have to look very carefully at the density and we will be building larger modules. The industrial heat happens at everything from a creamery or a dairy or a cheese factory all the way up to an oil refinery, a cement plant. So it's important to have solutions for some of the small, medium size things as well as the very large ones. And we are building, bringing the technology to market at medium scale, and working with the very largest producers on the technology integration and piloting, and then it's very straightforward to take it to scale. You know, individual units, as I mentioned from the, that use this brick in the steel industry, 300 megawatts is a typical size. So just a few of those. Now they're sizeable amounts but this is a technology. Because again, brick is made from dirt. It's made at vast quantities everywhere, that can go to those large sizes very quickly.

Okay, and you guys are based in California if memory serves. This is a global issue. And you guys are pretty much in startup mode. How do you scale out from California to serve a cement plant in Switzerland, for example?

Excellent question and of course, we have one atmosphere. This is a global issue and you know, the short answer is, first of all, if you wanna scale, make sure what you're doing is boring. that is, that there's nothing to prove about how long will the unit last, How can we be sure, Because again, we we're talking about, when we're talking about industrial heat, we're talking about the thing that the factory manager depends on. You know, if a local, if an electrical battery isn't working today, his pow power's just gonna be flowing from the grid. But if his furnace isn't working, his plant is down. Right? So there is a very high standard that systems like ours have to have to address. So before we even get to how do you do it, it's like, are you going to do it? You have a lot to prove. Second, if we're gonna go fast, make sure that there is supply chain everywhere. Look very carefully, all the way back to materials. Don't use any critical materials and pass that test cuz again we use dirt, and then, figure out how you're gonna localize and optimize supply chains. What Rondo is doing here in California is developing technology, developing systems, and developing manufacturing processes. That we are now already taking and, and starting, uh, production runs elsewhere in the world based on this. And so the short version of the answer to your question is, work with industry leaders in all the commodity things associated with conventional boilers, you know, gas fired boilers, the people who build rondo powered boilers are largely gonna be the people who built gas fired boilers, and with the leaders in electrical infrastructure as we electrify heat, the huge portion of the overall stuff that needs to be built is the transformers and the circuit breakers and the switch gear. And then be thoughtful about how and where the core materials are produced. We have conversations underway with four parties in Europe today, including an, uh, very significant investor in Europe who's a cement producer. so the, give me a year and I'll give you the Switzerland answer, specifically we are today working across the places where renewable heat, zero carbon heat today is cheaper than business as usual or solves an important problem. And of course, Switzerland and all of Europe is one of the places today where what we are doing this, this using electricity, storing it as heat to deliver continuous heat is an important part of the solution to Europe's current energy crisis as well as the world's climate crisis in that replacing imported gas with domestic renewable electricity. That is the sprint. How fast can we do it? And what I'm, we're talking about here, of course, the other way to, replace fossil fuel with renewable energy and other way that is going to scale and it's great that it's going to scale, is using electrolytic hydrogen. We can take intermittent electricity, we can make hydrogen, we can store it, we can combust it, and we will get one unit of heat for every two units of electric power. The losses of each of those steps units about 48% efficient. There are today, I think, about a dozen companies doing this electric thermal storage. I think I can tell you why we think we're in the lead, but all of them are over 90% efficient. And for sure what we see is the rate limiting step at which Europe is gonna be able to get off imported gas is how fast the wind and solar projects can be permitted and built. And this, this class of electric thermal storage saves twice as much natural gas per megawatt hour of electricity as hydrogen. So it really is an important part of the total solution. That efficiency means it's much lower cost and it means that it's it's cost competitive or lower cost today, but also can be deployed much faster if the wind turbines and the solar panels are the limiting matter and they are in solving the current crisis as well as the climate.

Nice. You said you could tell us why you think you're in the lead,

Yeah, sure. Well, we solved a hard physics problem. It only took us 70 design revisions or maybe 73 to come up with a way that we could, directly, use electrical energy to heat this material that has 200 years of service. There are 300 gigawatts of brick based heat storage running in the world today. The units last 50 years between overhauls. There are zero gigawatts of any other heat storage technology running today. So, as I said, if you wanna go to scale quickly, it better be boring. Being built on a proven platform is the first step. And then the other matter is I mentioned a Rondo is a 18th century musical form where the same melody comes back again and again. You know, our core team has been working on this matter of industrial heat and trying to solve the problems of many industries for a long time. I mentioned we delivered more than half of all the solar industrial heat that's running today. So we started with an end in mind. How fast can we replace different kinds of energy for industry? So both on the technology platform and on the team, we are, we are moving at scale and we'll have interesting things to say over the next 12 months that I think we'll answer. Why do I think that? There are a lot of reasons I think that, and I look forward to discussing more of them.

Okay. Okay. And given that you guys are in startup mode, I assume you're, uh, funded?

Yeah, I, you know, we have, uh, I, I hate to brag, although I guess I'm doing some of that already. Um, we have what I would consider dream team of our, founding investors, Bill Gates', Breakthrough Energy Ventures and Energy Impact partners co-led our series A Round of Investment Energy Impact partners, is backed by their investors are primarily the North American electric power industry, and of course, the electrification of everything. The electric power industry is gonna be at the core of it. And together the depth of technical diligence, understanding of all the options out there, the fact that Breakthrough decided to focus on the industrial heat sector. They have a disciplined approach of looking at sectors that are important, choosing things that each, if it were to be successful, would deliver at least one giga ton of co2 reduction when it's at scale. That kind of approach and technical diligence and the deep understanding of the dynamics of electricity markets and the economics for electricity producers has really given us tremendous help, not just money, but tremendous help in maturing the business and driving it forward.

Okay. And do you think you can get to one giga ton of, emissions reduction?

Yeah, I'll be halfway there in 10 years. Absolutely. I can show you. I'll be halfway there in 10 years. So that's 1% of world CO2 emissions in 10 years, and the plan says six gigatons in 15. So 15% of world emissions. And um,

is that six gigatons total cumulative para,

no, no. Per

Okay, good.

People love to talk about their total. No, I, when I said one gigaton. You know when I said half a giga ton, I meant per annum in 10 years, not cumulative. You know, the things that we're building, I mentioned that medium scale thing that delivers 20 megawatts of heat. Each one of those saves as much CO2 per annum according to the EIA as 8,571 Teslas. The scale of industrial heat, people don't understand just turning off the furnaces and boilers in California and turning it, replacing it with electric power that would be five times more CO2 than all the electric cars in the United States.

Hm.

you know, I have an individual project in one of the European countries where that particular project alone, would replace twice as much CO2 as all the electric cars in the country. I'm not saying there's anything wrong with electric transportation. We urgently need to do it. But the scale of the opportunity and the speed at which it can be done is really, you know, we are at the kind of the beginning of a really important turning point. It's made possible, again, as I said earlier, because now intermittent electricity has become lower costs than fuel and everything that's going on in the grid is creating the perfect conditions for these technologies to go to scale. We have 20% of the hours last year in Oklahoma. Wholesale electricity prices were negative. We have projects in development in the middle of the US where if you have a unit that just buys all the energy it needs in the cheapest four hours every day. Your annual electricity bill is negative. That compares very favorably with whatever it is you're paying for natural gas, or oil or coal. The same dynamics exist everywhere where renewables are going to large scale. The recent Inflation reduction act is gonna drive lots more investment, lots of expansion of that. And there's this remarkable thing that now these electric thermal storage units, ours and others. Participating in those electrical grids actually improve the reliability and they harvest that negative price power. So the grid problem is a solution for industry and similarly industry is a solution for the grid. There's an interesting kind of synergy.

Fascinating. What are the biggest challenges you see to getting to your six gigatons per annum?

Well, the first one,. The first one is I, I have to thank you for this conversation because the first one is to a first approximation nobody knows about this yet, about what you and I are discussing That is, there are a lot of early studies. The International Energy Agency is just doing work. There are a lot of early studies. We have been working directly with, buyers groups that are seeking to find low cost zero carbon energy for industry. We've been working directly one on one with a number of industrials. But we're just at the beginning of prob a few years journey of wider understanding that we and other technologies like us exist. That's number one. Obviously, we need to stick to our own knitting and bring the product, to scale. And again, over the next year, we'll have a lot of interesting things to say about that. And you know that education matter, is really transformative because you know that the, the growth of conventional renewable energy was a technology story and all kinds of engineering revolution, and then a financial story, financial revolution. Financial engineering as large private capital recognize that infrastructure, investments in energy, this was an area that made sense and the growth and deployment hugely accelerated. What we're, you know, the hydrogen industry is at that moment that is, Finance is the, the technology is being figured out and finance is figuring out where is it that we could build, build big. We're gonna be going through that same journey. That's the next one will be the financial community understanding that there are giant opportunities that one cement plant I mentioned was an example. There are giant opportunities developing projects that provide heat as a service for industrials. Whether you make baby food or cement today, you buy fuel as a service. This tremendous interest among the industrials in someone walking off and offering them heat as a service at scale. And that is, you know, the giant financial engineering will be needed for that. I think those are the top few.

Okay, cool.

Also, I'm sorry. growing our team, right? Like right now, we are hiring in a ton of areas. rondo.com, please. We are looking for passionate people who share our vision and values and wanna help build this.

And are you hiring in the US only?

No, actually today we have operations in Latin America, a couple of European countries where there are a number of places around the world that we're seeking to build the team.

Okay, good. Good.

Yeah,

Do you have referenceable use cases you can talk to?

Sure. I mentioned, I think I mentioned one. The Denmark government is, supporting a, a, an innovative project called eco Clay in partnership with two cement manufacturers and a Danish cement plant builder to design and pilot a true zero cement production process that uses intermittent electricity to make zero emission cement that's sort of at the high temperature end. We will be announcing in the not distant future projects that are using this technology to make steam, to replace boilers in the production of liquid fuels, for biofuels, for example. Around 30 to 50% of the total carbon emissions associated with biofuel are the fuel used at the refinery to produce it. Where you are, rendering or processing biological oils or distilling alcohol from basically, from beer. You make fuel ethanol, you make beer and you distill it. So there are early use cases, but we're working across chemicals, industry, paper, and packaging. You know, making recycled paper and cardboard uses huge amounts of energy. There are a number of areas that we're working on early copper production, you know, the world, you know, the world is gonna need vastly increased supplies of copper, aluminum, as well as the critical minerals for batteries. Aluminum uses vast amounts of energy to produce it. The copper industry is working on new processes, taking them to scale that use 90% less water, but 10 times more energy. There are lots of places in the, you know, in our economy where heat is the thing that drives it. So I know it sounds like I've given you kind of a scattered answer. Uh, and it's because it, it's not a single thing. And of course we're working in a few sectors. Early, but we really are trying to start the conversation across a broad range of sectors, which is, again, I'm grateful for the work that you do because education is the first step in that.

And of all these sectors that you're looking at at the moment, which one do you think has the greatest potential for emissions reduction?

Yeah, actually that's a, that's a great question. So, Bill Gates spoke at the Breakthrough Summit a couple of weeks ago in Seattle and mentioned his favorite author Vaclav Smil, who, uh, is I think his recent, most recent book out of, I think 35 books is called How the World Works, I think. And Smil talks about the four pillars, steel cement, fertilizer and chemicals. So making petrochemicals, ethylene is the sort of the base feed stock for most of all plastic, fertilizer, of course feeding the world. It's actually one of Smil's books. It's the name of one of Smil's books that, you know, that's a giant. So those four things collectively are way over half of the total, heat used by industry. The total fuel used by industry. We have projects today in every single one of those, in development and some of them, chemicals, some of, fertilizer, they're very similar steel and, um, cement are more sim also sort of similar higher temperature processes. And so we are building. standard product that's kind of a technology platform and then working with others to adapt it to serve some of those processes. Rondo won't be building steel mills. We'll be working with people who build steel mills and we're the humble guys just, you know, replacing your fuel burner with now this thing that runs on intermittent solar power and delivers you the heat service that your fuel burner previously delivered.

Cool. Cool. John, we're coming towards the end of the podcast now. Is there any question that I have not asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Well, thank you. I, let's see. That's, the best question to ask, isn't it? You know, I think a theme of some of the conversations you have is that, look, there are, there's good news, right? We are facing giant challenges, but innovation, there are all kinds of areas where there are these transformative things and we need to find ways to, learn about them. Line up policies, identify early actors who want to take them to prototype and pilot scale. And then as we are certain about them, you know, work on, taking them to large scale. And that's a genuinely hard problem because look, lots of technology innovation, you know, maybe you've got a 10% hit rate. I spent part of my career as a venture capitalist looking at new technologies and I've built companies in the computer industry and other industries. You've gotta try a lot of things but, uh, this matter of recognizing that we are actually at a moment that what we're, what I'm talking with you about could go very fast. And again, it's not just about us. We think we are the leader, but there are others who are trying to do it as well. And when we look at what are the other impediments? Last year in Sweden, only 22% of the wind farms that were proposed were permitted. They might be regretting that right about now, but you know, the rate at which we can enable build out of the generation is one of the first terms in the equation of how fast are we gonna solve our collective climate crisis, and our individual energy crises, and you have to look across all kinds of soft things, permitting, policy making, how regulations were developed. A lot of our energy systems today were developed with regulatory frameworks that made great sense 50 years ago and we're struggling with all kinds of things. I said earlier, intermittent electricity is the thing that we can have in arbitrary quantities. A lot of our regulatory frameworks are set up assuming that every kilowatt needs a spinning generator somewhere and every kilowatt hour is from burning fuel. And so there, there's work to do in the regulatory sector and in a lot of cases that's local. The rules in Kansas are different than they are in Texas, than they are in Finland. You know, there's a longer list if we had more time of things that we doing. But there's a reason for doing them because we are at this moment where, Bill Gates likes to talk about the green premium. That is, we're gonna pay more for commodities made with low carbon energy than we do today. Well, as I'm saying, you know, we're on this moment where we can see very clearly that green premium going away. We're headed toward a world where zero carbon commodities do not reduce our collective wealth. They increase it because they're lower cost of production. And I know that sounds like kind of too good to be true, but we really are at that moment, there's a ton of work to do in a lot of different areas and probably a longer answer to the open question than you wanted.

No problem, no problem. No. John, that's been really interesting. If, if people want to know more about yourself or Rondo or any of the things we discussed in the podcast today, where would you have me direct them?

Yeah, to rondo.com. Our website is fairly limited, but there's the basics that are there. How the heat battery works, what are the key applications and contact forms, both for, commercial inquiries, employment inquiries. Yeah. Thank you for that.

Perfect. Great. John, that's been fascinating. Thanks a million for coming on the podcast today.

likewise. Thank you so much.

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about Climate 21, feel free to drop me an email to Tom Raftery at outlook.com, or connect with me on LinkedIn or Twitter. If you like the show, please, don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show Thanks. Catch you all next time.