Energy storage for hybrid & electric ships.
Brent Perry is the Co-Founder and CEO of Sterling PBES Energy Solution.
Sterling PBES Energy Solution provides energy storage solutions to optimize or replace diesel in marine, grid and heavy industrial applications. SPBES batteries have been specifically designed for marine and industrial applications: applications where safety, reliability and cost are the most important aspects of a battery system. SPBES battery systems are used to power hybrid and fully electric ferries, offshore supply vessels, large hybrid yachts, industrial machinery and in land-based grid energy projects.
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Welcome to The Thoughtful Entrepreneur Show. I'm Josh Elledge, Founder and CEO of UpMyInfluence.com. We turn entrepreneurs into media celebrities, grow their authority, and help them build partnerships with top influencers. We believe that every person has a unique message that can positively impact the world. stick around to the end of the show, where I'll reveal how you can be our next guest on one of the fastest growing daily inspiration podcasts on the planet in 15 to 20 minutes. Let's go.
And Brent Perry, thank you so much for joining us. You are the one of the Co-Founders and the CEO of SPBES, and you produce very large lithium batteries for marine applications for ships. Is that right?
So this has to be a good time for doing what you're doing. Because ships obviously produce a lot of emissions, and there is a, certainly a big push globally, and rightly so to reduce those emissions. So, how fortuitous on the timing, but I I would imagine it wasn't just happenstance that you that you aligned yourself with the opportunity that exists today.
No, not at all. It started actually in 2006 when the first lithium powered superyacht was built. And I was invited to participate in an audit of the lithium batteries to validate them for use in commercial rain applications. And at the time, the technology really didn't meet the performance requirements or the solution if you wish, but we were intrigued by the opportunity and the potential impact. So we pursued the creation of you want of the megawatt scale lithium energy storage system for marine and in 2010 introduced the first batteries into the commercial marine world. And since then it has been a incredible ride to all the problems you can imagine as an entrepreneur and a startup of a whole new industry, along with this incredible pool from the customers, we have all around the world who want to take advantage not only of the economics of what we produce, but also the environmental impact of what we do.
So just to kind of give an idea for scale, so people understand I'm on your website. So I'm seeing some examples of what this actually looks like the best way I can explain what a battery to power a look what would appear like a medium sized vessel. And again, you can kind of correct me in the terminology, but imagine that you're in a network operation center and you see like this big rack of servers, and it kind of looks like that, except it's all batteries.
Correct. So think about it in terms it's easy to contextualize when you think about containers. So a typical 20 foot container that we see being used every day to move equipment around, it will contain about one megawatt hour of energy storage weighs roughly 10 or 11 tons, and is enough power to run a community of about 600 people or in a small boat or a small ferry across a one hour run sort of thing back and forth all day long.
Now. So now my now my brain is going with like trivia questions here. What is the largest ship that you know of that is completely battery rotten?
Actually, we built the two largest fully electric ships in the world that they run, they run between Denmark and Sweden. And it boats called the Tyco bra and the Aurora. And their 4.2 megawatt hour ships that run 23 and a half hours a day fully electric.
Oh my gosh. So how many so that's ferrying cars and people So what would be the capacity on a ship like that just to kind of think in our brain about what size that is? They carry around 1300 people per trip fo roughly 300 cars and two full size locomotives. Oh my gosh, yeah. gratulations on this
million people hear
it say that more time,
please. They move about 6 million people here.
Amazing. And so I so just so again, I just want to talk just a little bit more about the technology before we kind of talk about the business of what you do. But um, so obviously with no emissions, and I think, you know, people just someone who doesn't understand, they think Well, listen, you're still plugging in and you're still charging up the batteries. So doesn't that cause pollution for the from from that power source?
Oh, sure. You every place we go has a different cost of energy if you want. Some places are powered by dams and hydro power some places are powered by coal in some places are powered by wind. So you do have to, there is no such thing as a free ride. energy is produced and has some sort of an impact cost however it is produced. But the whole goal of this is you're not going to eradicate fossil fuels or pollution in almost any sense, what we're really looking to do is introduce technology that optimizes the least amount of impact. So if it's a fully electric boat, and it can run without any emissions during that, it doesn't produce any particulate matter, it doesn't produce any socks and knocks and co2 and things like that the damaged environment. So that's a much less impact over the operational life of the boat. And then we always push it to our downstream if you want to try and find the most impactful renewable sources of energy that we can use to power the ships as well.
Now, couple more nerdy questions before I arrived. listen to an audio book many years ago called power hungry. So I got very interested in what is the future of energy. And again, I'm in the US. And so, unfortunately, and I and I really mean that, based on all of the learning that I've done, the US is just very heavily based on coal. And we, you know, haven't produced a nuclear power sources, I think, since the late 70s, if I'm not mistaken. Meanwhile, throughout Europe, you know, much larger percentage of energy is derived from nuclear sources. And I think the sad thing as I understand it, again, I'm not in my zone of genius here for a moment, but it's one that I'm really really interested in learning more about. And I wonder if you have some perspective on this, you know, in terms of what lies ahead for where we have to go, in terms of energy, obviously coal is There's, eventually we're going to start, it's going to get more and more and more expensive to produce that other liquid energy sources again, it's not, you know, a forever resource. So we have to look at other solutions. Where do you see probably, where do you what do you what do you guess? it? Are we going to see more of just in terms of energy, say over the next 10 to 15 years.
What what's happening around the world right now is that we're sort of the evolving if you want from macro grids, or large scale national grids, into local micro grids that are, power is generated from whatever the best combination of renewable energy is available. And then when you combine that with energy storage to give you the capacity to smooth it out and store energy for when you need it and the consistency. We're at Delivering zero what we call a zero mission power plant today at significantly less cost than most local grits, so and the efficiency is much higher, and you're not dealing with all the infrastructure and overhead costs of a large scale utility. So what we've seen in countries that don't have the kind of grid capability that we do in North America, is they're kind of leapfrogging what we've done for the last hundred years and going directly to micro grids. And in places like the United States, starting with rural communities that are more expensive to service anyways, they are usually now taking the choice of at least considering if not implementing micro grid strategies. And it improves your employment in the local areas there in because you're employing and servicing within your community. Yeah, it does afford a much higher efficiency. So typically a micro grid that we would develop runs at about 85% efficient versus a macro grid that runs about 22% efficient delivers a far lower and much more long term now cost of energy compared to what we're dealing with with the micro or the macro grids.
It's my impression with battery technology, that I mean, we are absolutely enjoying Moore's law. And that's it. Technology seems to be evolving so rapidly, you know, based on I'd say, just free enterprise and and opportunity and necessity. But I think it's going to be really exciting to see what happens over the next five to 10 years with battery technology. And, you know, when, remember, when Tesla announced their Wonderwall solution was a wonder wonder why is that? Why did I keep thinking of the basis of it? You know, where every home can have a battery and why that makes sense to do that so that we can stop pushing its peak peak power, right? So you know, if it's like eight o'clock or whatever, that's what everybody's just sucking their local power plant. And that causes a real strain. And so you end up having to build far greater that capacity because everybody needs it at peak power, as opposed to, if we were able to distribute it across the day, it would be, it would make so much more sense and batteries. You know, every home having a battery would really solve that problem.
Yeah, well, those the power wall concept is really a time machine. So right now, all of our energy demand is based on our consumption whenever we need it, we want it Yeah, so the grid has to be built to meet that mass expectation of the peak times as you described correctly. With something like a power wall or a built in renewable power plant. You effectively transfer the need for time. So instead of everyone needing power at seven o'clock or eight o'clock at night, if you have enough energy storage capacity, you can translate that time so that when energy is available, and Much less expensive at midnight, your batteries then depleted, unable to take the charge of lower costs, opportunity, better value, etc. So that's what we do. And you know, the key to all of this, of course, is that what we deliver is not only a solution that actually works and is commercially sustainable, but actually pays everybody more money than what they're using today. So in the marine industry, which is a very good bellwether of practicality, if you want, we have a saying that if propellers don't turn, nobody makes money. So in our world, if you also don't generate, you could have the world's greatest idea. But if it doesn't generate a positive impact to the bottom line, nobody would ever use it. And so when we brought this technology to the table, we focused on No, no grants and no tax credits. It had to be a straight business model, and generate us a really good idea with a payback in less than five years on let's say a 10 or 20 years system. So that from Pure economic point of view, it just makes common sense. And yet now the cost has come down enough. And the improvement of the performance has generated payback from six months to two years. So your your capex is lower your op x is a benefit to the customer. And ultimately, these guys, instead of looking like they're taking a huge risk, are actually investing in a much more sustainable business model again.
So, Brent, when I look at what you produce, it seems like a really big expensive thing that that you are manufacturing that then you sell and so how does someone start a business when there's, I mean, you might get the order, and then you have to invest it. I can't imagine how much money goes into, you know, a 20 foot wall of battery tech to outfit a show. chip that was originally designed for these just seemed like really expensive projects. And I don't know, I can't imagine how that works financially.
It is it's the biggest challenge because not only do banks not want to fund or support companies that are startups that haven't gone cash flow positive yet, and don't have, you know, seven to 10 year track record of houses of income. And but you're also dealing with multinational conglomerates like Siemens and ABB, who expect extraordinary terms when they are willing to give you a purchase order. So you're you happen to be a very small business, I like to call it I'm the grain of sand on a very big beach. And so we've had to really work with all of our customers and our suppliers in order to be able to create a sustainable cash flow in our business but still be able to fund the construction of this kind of equipment because it is very cost intense. And then we've raised a lot of money so The good thing is the business model shows pragmatic payback for your investors, and an opportunity to be cash flow positive within a short period of time. But the challenges that you're dealing with very large companies with very different commercial expectations than what a startup companies typically able to survive. So we've had to continually adapt our business model to keep our overheads as low as possible, constantly renegotiate with our entire supply chain, focus on bringing in investors who can offer project finance as well as equity capital. And you sort of start out with borrowing money to build things that said sort of what I call mezzanine interest rates. And then as you build credibility and work with some of the government sponsors to who will guarantee your bank lines, slowly build up the that line of credit and performance to be able to take on more and more business. But you know, what constrains us most in in growth is just available. Quality of working capital, however, our verticals growing at 500% a year. So the amount of capital it requires for me to keep up with that kind of volume of increase every year. It's it's not an organic growth at all it is completely if you want artificially developed financing not what we can do for our own bottom line profit.
Yeah, I can imagine so now s so you actually Sterling PBS Energy Solutions is actually you recently launched it since September 19. But prior to that you have five experience five years of experience in founding PBS. Why create the separate entity?
Well, what happened was when we created PBS, that was my second battery company. We spent two years in the dark and we had enough money to basically commercially develop our product, launched it in late 2016. We launched its almost 24 million US dollars in business. And then we have the challenge of how do we raise the money to build the product and survive the cash flow pitfalls that that kind of demand creates. So we were able to deliver about three quarters of our order book, but not on time. And so that hurt us in terms of gaining more business and credibility if you want with our customers. So we were constantly seeking investors. And we were very fortunate to find the founders of Sterling Wilson, which, oddly enough is an Indian company based out of Mumbai, that happens to be the world's largest solar EPC business in the world. So they build the largest solar power plants in the world. And they founded our energy storage technology, something that was very complementary to their business. So and we were in a position where we needed investors and they were in a position where they needed good energy storage. So it created a really natural relationship that they were kind of in our sphere of industrial business, so they understand All of the structures and the pitfalls, and the opportunities. So they came in and said, You guys have the best product in the world, you've got a fantastic team, we can bring the capital to help you execute this. And they've turned our business around completely by bringing the cash in. But one of their concerns was they didn't want to adopt the liability of anything that we had with PBS. So we created a new joint venture where our shareholders were partner, their partner, and effectively brought the assets into that business. And then we've cleaned up the balance sheet of PBS, with our suppliers and our staff and the government agencies, so that we can effectively put it to bed and startup spps properly
for the size of vessels that you're working with now, was it kind of a natural evolution that you worked with small, small personal sized vessels? And all right, that works. And then you do something a little bit bigger and you're like, hey, that worked do and you just keep on scaling from that.
No, no. We kind of jumped into the very big boat market. So our The reason that we've been successful has is been that we're not typical entrepreneurs who bring a really good idea to the table and say, hey world come and buy my product. We recognize the problem from our own history in these industries, and where where can you optimize Where is money being left on the table. And literally, we engineered our solution from the problem to what physical battery is today. So we knew long before we brought it to market that it was something that was going to generate between 15 and 50% returns for our customers. And then it was just a matter of going through the validation and engineering process to make sure that third party companies would agree that this was the right product, government agencies would drive legislation that would promote the use of this kind of technology. And then the, the actual financial and performance results are so compelling, that it costs the Cust cause the customers to actually demand what we do. Because they get they see us as something that we're such a we're such a difference in terms of cost and profitability, that we're not just a little bit compelling. We're effectively a necessity today.
You know, you have been, you've spoken at the United Nations Corp climate conference and in Paris, congratulations on that invite. And I recognize it was a couple years ago. But what an honor to be able to be part of the thought leadership in in moving this industry forward, I mean, that that had to have been kind of a cool pinch me moment to be able to do that.
It was totally amazing. But you know, the most interesting thing about that was for my presentation at the Paris cop, I literally just put a reel up of the installations we had done, and I spoke to what we could do and and here I am standing in front of maybe the most educated audience for what we regret. Present, yeah, or a mental impact. And what I discovered was none of them had a clue of what we could actually do today. Wow, we all thought we were talking future. I said, none of these are all working installations in the water now reducing impact. And because the marine industry operates and visibly, you don't really see anything at sea, that it doesn't have anywhere near the same kind of everyday impact that a Tesla has. But in terms of meaningful impact to the environment. The marine industry produces more pollution than all the cars buses and trucks on the planet put together.
No kidding. It
does. And because it works with such high frequency, so ships tend to run 24 hours a day. Yeah, you know, they represents the opportunity to drive very fast payback, so and very large environmental impact. So, what we do even though it isn't something you're going to read In the newspaper every day and we don't get that kind of publicity is something that because it's financially compelling and now being demanded by our customers and government agencies, the the impact is just going to continue to amalgamate if you want and every year, we just see bigger and bigger and bigger volume of business for everybody. And now, the cost has come down enough that even things like cruise ships and an ocean crossing cargo ships, were able to build I can build today a zero emission container ship to run between Rotterdam and New York. So that's the most polluting impact that we do because it runs with what we call heavy fuel oil. Oh yeah. Which is really sad stuff
that is going to be an exciting day when when the vessels of that size, start getting outfitted. I mean, that really is going to be wonderful for our oceans for our air. So So Brent Perry, thank you so much for joining us. This was I could talk with you for another half hour. This is really excited. This actually One of the longest interviews we've done because I just love what you're doing and I love that we can kind of I can kind of learn from someone who's really on the forefront of great technology that's making the world a better place. You're the CEO, and Founder, Co-Founder of SPBES, and so you can actually go on the web at spbes.com. And you can see lots of great images of the ships, the end and some of the installations that you've done. I think this is going to be a fun industry to watch. Brent, thank you so much for joining us, Josh. Thanks so much for the opportunity. It's been wonderful. Thank you very much.
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