By Jim Probasco
Imergy Power Systems CEO Bill Watkins heads a most unusual company and sees an alternative energy future that many others do not.
Watkins, previously CEO of Bridgelux and before that, CEO of Seagate (STX) where he was named Forbes Magazine CEO Of The Year, talked about alternative energy, micro grids and why he wouldn’t be surprised if future consumers bought their electricity from stores like Wal-Mart (WMT).
Benzinga: How will cheaper oil and natural gas impact the future of alternative energy?
Bill Watkins: I think natural gas will be around for a long time. I think oil will be around for a long time, to be honest. I don't think either is going to go away. I see the demise of coal, though. It’s expensive and a pollutant.
It’s about cost more than anything else. People like to ‘talk green’ and there are people who will pay extra to be green, but not everybody will. In fact, not a majority of people, to be honest, right now.
With regard to wind and solar, I think what's really changing is how you distribute this energy. Currently, we distribute energy through utilities. I’m sure we will for a while, but there are growing opportunities to distribute energy in micro grids.
I don't think that's going to be a big deal in the U.S. right away, but in places like India and Africa where they have no electricity at all, where they're using kerosene and diesel for their lights, there's tremendous opportunity.
Something we pay 10 or 12 cents for is costing people in India 60 cents and people in Africa a dollar. It's easy to put a micro grid in there with solar and a battery and get electricity under that cost structure. With storage, eventually it will be solar or wind hooked to the grid.
BZ: So, all this depends on storage?
Watkins: When you have low-cost batteries, you have the opportunity to create micro grids. The grid doesn't have to be (physically) there. They’re detached, and you can scale them independently.
All of a sudden, batteries are becoming very important. There are secondary markets created around the building of solar to store energy and then re-deploy it at a time when it's easy to be paid the most for it.
Same thing with wind. Wind blows at night, but if you store that energy and then deal it during the day when you get high rates, there’s a business model there.
BZ: You’ve mentioned the use of micro grids in remote locations. Is there a place for micro grids in developed countries?
Watkins: There is. I think you have to look at need. I'll give you an example.
There’s a college where we are putting in a micro grid, because they have a lot of solar deployment that they want to run off that at night.
We just put three batteries in a Navy installation. They have a lot of solar deployed but when a hurricane comes, it shuts down the solar. Then they have to run diesel, which has many issues for electronics.
The Navy wants the ability, if the grid goes down, to run on solar and keep their plants operating with a battery.
BZ: What about environmental concerns with batteries?
Watkins: We're very clean box. We sell a storage device that can be cycled an unlimited number of times. You can discharge it as many times as you want, it never wears out.
We sell a different type of battery. Everybody else sells you a battery that every time you discharge it you’re spending capital dollars. That’s because you can only discharge the battery so many times, and it has a limited number of cycles.
Our battery does not have a problem being discharged every day, three times a day or even discharged to zero. Many batteries, if you discharge them to zero and then recharge them, they don't charge as well the next time, the kind of fade out. Lithium is a big victim of that. However, those are not our batteries. Our batteries use vanadium.
BZ: Why don't we have commercially available batteries such as the ones you make that are out there available for the consumer market?
Watkins: You could buy my battery for a house. Our batteries are big. In order to get this reliability, we separate power and energy.
Our batteries will never be small. We will never be in a phone. We’ll probably never be in your car. We're good at stationery storage or Telecom or a home micro grid system or utility-scaled storage. Our smallest battery is about the size of a double-size refrigerator. (laughs) You're not going to put it on the roof.
At Imergy, we found a way to make vanadium batteries inexpensively and stable. Our battery will operate in minus 10 degrees all the way to 55 degrees C with no air conditioning and no preventative.
BZ: What’s going on with the recently announced deal with Juno Capital and China?
Watkins: What we're doing with Juno Capital is really a partnership. We're a small company trying to grow fast, and the way to do that is to partner with people, especially in different geographical areas of the world.
When I go to China and market for the first time, I like to do it with a partner. This deal is specifically for the telecom market in Western China.
In Western China, there's a lot of wind, but they don't have much grid so they burn a lot of diesel. The application we're going after is to replace the diesel by hooking up to our batteries and seeing if we can charge all that extra wind out there in the batteries.
BZ: What does the future of alternative energy look like?
Watkins: I think you're going to see much more solar deployed. Solar is becoming as cheap as the grid. Wind has interesting issues, because people don't like to have windmills around.
I think diesel will really be hammered. I’ll bet 40 percent of the world still gets their energy from diesel. It's still a massive number and I think you're going to see that reduced because solar and a battery can pretty much replace diesel at a lower cost.
I also see more distributive power. It'll be interesting the day someone like a Wal-Mart could put solar in to run its facility. If they put extra in, do they actually sell energy and create their own energy company?
It will be interesting if other companies can sell you electricity and run like the telephone business where they rent you “the last mile.”
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