Andy Tang, Wartsila’s vice president of energy storage and optimization, had a winding path on his way to becoming a force for global decarbonisation. He started in finance and telecommunications, focusing on infrastructure optimization. He spent time in advisory roles, but wanted to turn to a more direct role of leadership and ownership.
Two bridge roles helped him along the way. He left telecom and joined Intel, which worked on a 4G competitor, introducing it much more to wireless technologies. He then moved to Pacific Gas and Electric (PG&E), a large Northern California company that set up a network of smart meters, and wanted his own wireless and business modeling.
When smart metering data started to appear, the question arises, what do you do with knowing when electricity is used in a more precise way? PG & E’s analysis of EV charging, for example, began in Tang’s office when he was there.
Like telecommunications, electricity distribution is designed for business hours, usually 5 to 7 p.m. You can find other uses in telecommunications for effectively free bandwidth. Tang saw an opportunity in parallel, at that time you couldn’t really Tivo energy. At that time, the network storage was dominated by pumped storage hydropower plants, which were large infrastructure projects. However, with the cost curves for battery storage, the Tivo model has now opened up. Telecom used to do demand management, just like electricity does. Telecommunications have learned to transmit much more data through the same fiber with modern multiplexing, but there is no equivalent ability to multiply the current flowing through a wire.
Silicon Valley did not get the basic physicality of energy infrastructure and thought it could be easily disrupted as data and media. They lacked that the interruption in the flow of electricity was wind and solar energy, and that it was only moving much slower due to the inertia of the large infrastructure. They also felt that electricity could be turned off as the media was, and they missed that any solution must necessarily involve the utility as a partner. The first generation of investments in the early 2000s missed it. VC lost patience and moved on. There is a second generation WC that has emerged with more patient capital and more insight.
Historically, telecommunications and utilities have been natural monopolies. Wireless technologies enabled for data and voice transmission in the last mile have enabled real competition and made telecommunications monopolies no longer useful. Wireless power does not exist more than an inch with Qi charging and the like, and distribution remains a natural monopoly. Monopolies in energy distribution still make sense. Some market providers, such as Bullfrog Power, lease capacity on existing distribution networks from utilities to deliver at different pricing models or to deliver only green electricity, so competition is emerging, but they are not pulling their strings.
PG&E was a deliberate bridge role for Tang because he wanted to be more enterprising and able to change the world in a way that recognizes the role the utility company plays. The first startup was the efficiency of commercial buildings through AI and smart construction technology. That business model was difficult and the business failed.
The second startup was focused on improving demand responses through forecasting. It was a software company that helped utilities better predict demand response results. The other half of the company was focused on controlling devices in people’s homes in order to reduce the load. It wasn’t perfect and Tang kept going.
In 2009, Tang considered the effects of EV charging on utilities. They started with Prius registrations in California, but as electricity is a very local business, they had to know the distribution of electric vehicles. He found that EVs congregated in neighborhoods and that, when clusters appeared, they happened very quickly. This is becoming a problem faster than averages suggest. They had the concept of a smart garage that would charge the level overnight to reduce shocks. This is not yet a widespread offer of any utility company that Tang is aware of.
Vehicle-to-grid technologies are becoming more useful for demand management, but Tivo-ing energy most likely requires dedicated storage facilities. There is also a basic conceptual barrier that utility companies have. Demand management depends on the counter fact. You think that load will be in this place at the moment at a load of ten units, and with demand management there will be a load of eight instead, but there is no way to prove it. It’s not like a gas production unit you reject and you can measure the difference. Utility procurement people told Tang that if his company’s demand management projections are wrong, it’s not a big deal for Tang & co, but the utility supplier will lose his job.
What Tang liked about storage is that it is an energy control that is not the opposite, but tangible and measurable. Storage is security. The readiness to take this into account in the control room of communal services is much higher. As a result, sales are much easier.
This led Tang to become the 12th employee of Greensmith Energy, which was founded in 2009 to build an energy management system to control new storage solutions. By the time Tang joined in 2014, it had become clear that they needed to create a data storage system to control, as well as software. They remained as technology-neutral as possible, becoming compatible with 12 batteries and 16 inverters with their own hardware.
In 2016, he was at a trade fair in Dusseldorf, Germany, and was approached by a representative of Wärtsilä, someone tasked with determining the strategy of that storage company. Wärtsilä is a 180-year-old company that has turned through many changes in technology from pulp and paper to glass to reciprocating engines, basically very large internal combustion engines, where they are still leaders in marine energy systems. About 30 years ago, someone in the company had the idea that engines could be installed in buildings and become an energy business. Half of the revenue now comes from the energy business, somewhat countercyclical to maritime. And the question is, what would storage mean for their energy business?
Greensmith has entered into a strategic partnership with Wärtsilä in which Wärtsilä’s global sales force will gain leadership positions in over 170 countries, and Greensmith will continue to do so. They began working together on offerings in places like Australia, with Greensmith’s inherited sales force in the U.S. dealing with that geography.
And then Wärtsilä decided to buy Greensmith right away, the acquisition was concluded on July 2, 2017, and they are approaching their five-year history. Greensmith’s Max product has become one of Wärtsilä’s products. At the time the containers were delivered to the construction site and the batteries were shipped and installed separately due to security concerns and reduced calendar lifespan. Starting in 2019, with Tesla’s industry leadership in delivering pre-installed batteries, the industry turned to follow and Max was no longer fit. And so Tang launched Project Mavericks after the great California wave and developed his Quantum product.
Our conversation continued in another episode of CleanTech Talks, so take a look in this space at what Tang and Wärtsilä have been doing since then.
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