This week Chris and Johan are joined by James Macnaghten, the CEO of Caldera. Caldera has developed a so called Warmstone heat battery which is an alternative to the gas and oil heaters. The three discuss challenges, opportunities and pecularities of the heating sector. Listen in to find out why people only spend little time thinking about their heating system and why grants and feed-in-tariffs can also be counterproductive.
Caldera's Homepage:
https://www.caldera.co.uk/
This week Chris and Johan are joined by James Macnaghten, the CEO of Caldera. Caldera has developed a so called Warmstone heat battery which is an alternative to the gas and oil heaters. The three discuss challenges, opportunities and pecularities of the heating sector. Listen in to find out why people only spend little time thinking about their heating system and why grants and feed-in-tariffs can also be counterproductive.
Caldera's Homepage:
https://www.caldera.co.uk/
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| Timestamp | Speaker | Transcript
| 00:34.44 | chrissass | Welcome to insiders' guide to energy I'm your host chris sass and with me as always as co-host Johan Oberg, Johan what's happening.
| 00:39.23 | Johan | Good evening Chris another great week. So so happily surprised this morning or actually the few couple of days we've been discussing covid since we started this podcast and finally. There's light in the tunnel especially now coming out of Switzerland and the nordic country. So hopefully we can get together with our guests in the near future.
| 01:02.23 | chrissass | Yeah I'm expecting to do that I was on a caller earlier today already you making plans to travel. So um, yeah I like the restrictions coming up I think also you said it's been a good week I think it's interesting. 1 of the threads I've been following on Twitter this week is. Ah, there's there's some conversation about whether nuclear energy and gas are renewable because apparently in the eu those are considered renewable now.
| 01:25.59 | Johan | I Guess we've we've had a few guys on the show before we talked about regulations and and hitting the the sustainable goals etc. And if you can tweak a few things of them I Guess that's one way of doing it but I saw that a few countries were. Opposing this quite heavily and and some of them were driving it so it comes in a little bit now to the political factor I guess.
| 01:48.51 | chrissass | Yeah I think so and I think it'll be interesting, but there is a lot of heated discussion. A lot of passion. So my my Twitter was very much alive over the last twenty four hours of people and I think even in Linkedin I was seeing conversations on that which was was kind of interesting. But um, rather than going into that and rather than talking about skiing because I'd be happy to do that because it's been snowing this week as well. So I'm looking forward to this weekend and getting back up to the mountain. So our audience I think got to see that picture of you and I a couple weeks ago out skiing. But I think we have one more weekend planned for us to go skiing. So.
| 02:18.77 | Johan | Um, one more.
| 02:22.16 | chrissass | We we could talk about that. But what I really want to talk about today is is heat batteries and and and what that means so this current guest I found I think he came through my feed on Linkedin I started reading something he put up and said you know that sounds interesting. We should talk about this on the podcast. And so I really had no idea of what heat batteries were he he kind of made me feel silly on the pre-colon he said well do you remember in the 80 s when they they had this things called heat batteries and I looked like a deer in the headlight and said not really and so we got a brief education there I'm super excited to to have this topic on board.
| 02:49.73 | Johan | Um, or 50
| 02:56.83 | Johan | No I agree and as I totally agree and as as you can see. Also if you are looking at the Youtube video I even wear my wes today because I got freezing cold at my house so that's maybe something we can discuss. But I think it's it's an interesting part as well because we we talked about the ecosystem around the energy.
| 02:57.36 | chrissass | And what? what do you think about heat batteries. Do you know what? they are.
| 03:15.48 | Johan | But we haven't touched so much on consumer products or or for houses as well which is something that I think will be quite interesting and and also to understanding it. You know we've had batteries on before but what is the difference. What does it do? what? what is revolutionary and what can change.
| 03:28.30 | chrissass | but but I think it's it's it's initiatives right? So I remember in the Us when we moved to these wonderful things called leds and you had to go buy all new light bulbs and things like that. But if you looked at the energy consumption in North America when the regulation went into place.
| 03:37.53 | Johan | Um, yeah.
| 03:44.40 | chrissass | Household usage of energy dropped significantly and it wasn't because we all stopped using all our appliances and things like that. It's just we had a more efficient way to light our houses and it became regulated and that's all the light bulbs you could buy right. So you know if we if we take another agmin and you say okay, well heating is something that we do at our house or cooling or whatever but heating in this particular example, there's a lot of energy that probably goes into that. So if you could systemically change the way people heat and cold climates I bet that would have an impact to the demand of energy. But I'm no expert. But I think our guest might be so let's let's let's look here from the expert. Um I'd like to introduce. This show is James mcnaughten James from caldera James welcome to the program.
| 04:14.77 | Johan | Um, well we certainly hope so.
| 04:23.97 | James Macnaghten | Chris Johann thank you very much indeed for for having having me on the show. Um I'm always slightly nervous when I'm called an expert so I will do my best um but and and you know with it with the heat battery. It. It's. I think the problem we haven't found is really sort of storing thermal energy. So it's sort of best word. We've come up with to describe what we do, but we don't produce electricity and there's no chemicals. Um, what we do is we take electricity in. We convert it to heat we store it. Until you need it and then we let the heat out in a nice controlled manner. Um, and the simplest example that pretty much everyone's familiar with is a hot water tank does a very similar job. You heat your hot water tank up different times of the day. It just sits there until you want your shower your bath that is a thermal store. Um. I would say with heat batteries what we're doing is is ah a light to think quite a bit more sophisticated but it's really a new take on really what's a very old technology.
| 05:25.80 | chrissass | All right? So So you tove right into what it is You did though it is awesome. Um, and and I want to find out more about that. But maybe I'd like to find out more about who you are and what company you're with first because I. I'm all for the heat battery the concept and I understand how a hot water heater Basically I heat it up and when I want hot water I turn the knob and there's hot water there. Um I think that there's probably some economic advantage to the reason we're going to talk about your company is to maybe when renewable energies perhaps are available. Maybe that's a good time to heat up or Maybe. Ah, heat up when the energy costs are low but before we get there tell tell us a little bit about your background. So How did you get to be at this company and how did you get into the the heat batteries.
| 06:09.83 | James Macnaghten | Ah, so I trained as an engineer and I had a slightly varied career I would say I took at least a good 10 year detail from engineering before returning to it and I ended up spending 10 years running a Uk company called isonropic. Which was looking to store this is sort of late 2000 s early twenty ten we were looking to store electricity as heat where you would take electricity in convert it to heat and store it in very large thermal stores and then when you wanted the electricity back you would reverse the processes and this was being done at a time when. Wind was much more expensive solar panels were much more expensive. Um, but you could see what was coming. You could see that there was this sort of huge cost reduction process going on ah in the renewables world and to me it was pretty evident that you wanted ability to store energy and be able to shift it from 1 period to another. Um, so that that was sort of where my background came caldera itself is a two and a half year old company I founded it with guy who guy win Stanley who I've worked with for the better part of a Decade. We're relatively small company so we're based in the Uk. We've got 12 employees. And I would say you know we're we're probably at the start of our journey in that we're putting units into people's homes to heat them. But we're certainly not where we want to be which is ah you know, firing firing these things out of a factory at a you know ten an hour or whatever, whatever number we can manage to get to. So so we're sort of so I think you know so but I sort of because of my earlier background I I've sort of watched this space for a very long period of time and you're you know you're exactly right? which is you know we're looking we are developing a technology who is. It's only relevant when you have lots of renewables on the grid and we're only just starting people might think we've got lots of renewables on the grid I promise you there's like so much more coming.
| 08:05.94 | Johan | So So if we go back a little bit then I'm just curious and I'm not an engineer. So so that probably begs the question but you you mentioned there's no chemicals I can understand the concept of a boiler a hot water. Obviously that's something I've had in my house. But. If. There's no chemicals How how does it work and and how long can you actually store how long does it last.
| 08:29.42 | James Macnaghten | So so for us, we we sort of I say we we go fairly hot. So ah, we make we make a one point three ton block of this material that we've designed and patented and I sort of describe. It's solid and I sort of go. Well, it's non-flammable, non-toxic non-corrosive. It's safe. Um, it's made from a lot of recycled materials. It does have stones in it and you can recycle it at the end of the life. So we basically have a big one point three tun block we then heat it up to °c so consider that to your oven which goes to 250 and it's the same heat again. Um, and we basically keep it between 20500 and when it's at 200 we say effectively. It's empty. It's still got energy in but we just treat it as empty and when it's at 500 we say it's full and and we put the whole thing in a giant thermos flask. So it's within a vacuum it's within a vacuum chamber space which is why it then keeps the heat in and just to say so from five hundred to two hundred if I just left a unit. It takes twenty one days to go from five hundred to two hundred which we're really, we're really pleased about it's it's because it's small and it's hot and that's hard.
| 09:41.47 | chrissass | So it sounds like the yeti mug for heating.
| 09:45.94 | James Macnaghten | It is the Yedy mug for heating. So um, ah and I think my view. Um, but I think my my whole our our thinking was that you know you want something low-cost to put the heat into you. You now want to keep it there so that's where the insulation and then the last bit is we have a really nice way that we. Take the heat out and put it into your home. So from a homeowner's perspective. It. It behaves just like a boiler you set the temperature at ° you have 2 pipe a pipe coming in a pipe coming out your central heating switch is on and we heat the water up to that temperature. So from the homeowner's perspective. We say. It behaves like a boiler the same power output same temperature. You don't need to change anything inside your home.
| 10:27.23 | Johan | So so obviously a boiler you have X amount of litres of of of water and in terms of ah of this one. Ah what is the capacity. How how long can you? How long does it last is is it hours days.
| 10:39.70 | James Macnaghten | Okay, so so so it's got one hundred Kilowatt hours of um ah of energy that you can use in there and if I was to compare it to a um, a car company that makes a home energy battery system but I won't mention their name It's it's like the same capacity as 7 of their large batteries if you were to look at it in terms of hot water cylinders and like one hundred and fifty litre hot water cylinder. It'll heat up about 14 of them.
| 11:08.63 | chrissass | So so I think that the premise you you said earlier? What I heard was. There's the tip the iceberg basically for renewables you know people think there's renewable everywhere. It's it's yet to really have the impact. It's going to. Why is this a renewable solution. Why does this make sense with renewables and not with more conventional or why didn't this work in the 80 s when they tried to do it when there was nuclear power and other things. What? what's changed in the environment.
| 11:35.33 | James Macnaghten | So so so so interesting enough. Ah, it works really well with nuclear and most of the storage in the world today has been built because of nuclear. So we pump we built dams where you could pump water up a hill in the pretty much. Ah, for every three Gigawatts of nuclear power station. We built one Gigawatt of pump hydro and there's a lovely some lovely grass where you show they were literally built together and that was to use the the nuclear energy at night. We also had these things called night storage heaters which ah was what you referred to at the start of your call. They were quite popular in Germany and the Uk and there. They're a bunch of bricks with some insulation that you heat up even hotter than ° they normally go to about 600 and you would do that overnight on ah, a special 7 hour rate of electricity sort of cheap rate of electricity. So a lot was being done so nuclear is is good. My biggest reason I don't tend to mention nuclear is because. It's just not being deployed in any large numbers and it's just being closed down. Um, we work really well with nuclear and we work really well with wind and solar and the reason is that once you've built these types of generation the cost of producing electricity is basically zero. So. You want to produce whenever you can if you're nuclear, you want to run constantly all the time if you're wind and solar if it's sunny you want to be generating and neither of what I've described to you which is the nuclear power plant running all the time or a solar or or Windvan actually matches the generation requirement through the demand of the customers so customers tend to want. The most demand comes in the morning in the evening. There's a pire point during the day and maybe between 12 and 5 it's it's quite low wind systems in Northern Europe can last 2 3 4 days and so you're going to have these periods when there is more generation. Definitely. Ah. The low period but potentially there's more generation than you need for 2 or 3 days and and we're sort of moving from a world where I describe it where historically we've turned power stations up and down to meet the demand of the customers. Actually we need to turn the customers up and down. To use more or less energy depending on what's working on the grid at the time and and it's just as a very very fundamental shift in how we manage our electricity networks.
| 13:49.81 | chrissass | So But I think that is what I was trying to say in my opening statement where I give the example of leds where the demand was reduced by technology change and um, what I'm hearing you say is well actually you still need to heat this there's still energy used. So You're not necessarily changing the demand so much as the flexibility of when you demand it which means that you can level the power out on the grid or when you use it is that true.
| 14:15.14 | James Macnaghten | It is true but we're doing 2 things we're taking homes that are heated. Let's say by oil or natural gas. Um, and we're converting them to electricity on a 1 to one so and and at the moment most and the alternative there are 2 options sort of to heat your home if you want to electrify one of them is. Direct electric or time shifting which is what we're offering the other one is heat pumps now we're really clear heat pumps when they can be installed easily great. They're the best better solution. You know if you can reduce your energy demand by 3 times. That's absolutely fabulous if it's more than that. Great. The problem is to get a heat pump performing. Well. Is tricky in older housing stock. It can be done but there are sort of financial implications of changing radiators pulling up floors. Ah adding extra insulation and and our argument is you know? So so so you go and put heat pumps into the homes where it's easy and our argument is there are certain types of homes where. You're better off not trying to change that economically just you're going to need something to soak up this off peak electricity this is where heat batteries come in so we sort of see a world of heating and and to put the heating in context I think in the uk they had a peak demand that we had something called the beast from the east which was like four days of cold weather and. Ah, the electricity demand peaked at Fifty Gigawatts and the gas demand peaked at three hundred Gigawatts so we can soak up a small you know I say a small number of homes can soak up a huge amount of energy and um, part of the value of that from the grid is we're we're tackling these homes that are very hard. To decarbonize with a heat pump but on top of that we're providing demand for the wind farms and you know these these sort of these sort of 0 marginal cost generators that actually makes the economics better better. So you can keep installing them because if you don't have flexible demand. You hit a point where you're suddenly throwing away half of your electricity. You're generating and you stop building.
| 16:10.43 | chrissass | So how green are these things to make so you said you'd love to get to the point we're spitting 10 of these out an hour um what's the impact making these things.
| 16:21.51 | James Macnaghten | So when I do the when I do sort of lifecycle analysis it if I use most of our materials are recycled we use steel which is not but if you look at the energy process by unit over the life. Ah, if I use new materials Throughout. It's something like it's about 2% of the energy process goes into making it if I use recycle materials which is what we're broadly doing. It's less than 1% over the life. So It's really really low and then the nicest thing is once I've got to the end of life I can simply make another unit with it.
| 16:54.94 | chrissass | Great and then how big I see pictures behind you your audience doesn't see it. They they they look like a little bit of a robust hot water heater a little bit rounder but you you mentioned that they have all these materials in it and it looks like a heavy thing. So if I'm replacing my boiler down in the basement.
| 17:12.41 | James Macnaghten | You don't um, well not, you are 1 You don't it weighs one point Eight Tons um ah so we tend to we tend to be targeting homes with oil so they tend to have an oil tank outside. They have an oil boiler. They tend to be in rural areas so they've got more space.
| 17:12.76 | chrissass | Do I get these things into my house.
| 17:13.52 | Johan | Um.
| 17:30.37 | James Macnaghten | We're not going to put one into a small terist house in London um, you know there's no there's no space for them so they're one meter in diameter One point eight meters high but you need a bit of space around them and from our and one of our challenges always is where do we put it in your home. So the places people like to put it. Aren't often the easiest ones to get to from a installation point of view.
| 17:51.53 | chrissass | Understood, Um, all right? So so there's a there's a very specific niche this fits how big is the market.
| 17:59.96 | James Macnaghten | If you just to look at homes. So I don't we don't have a breakdown in terms of within of subsets of houses. There are two ways you can look at this in the near term. We're focused on homes with oil but broadly. It's larger homes with space around. It. So in the uk there's about a million in Europe. There's 14000000 onefour um, so you could be looking at a replacement rate of 700000 units a year. Um, if you look at the overall market for heating. It's about 8000000 units a year in europe for boilers get replaced every year and our view is that we are suited to broadly the larger detached properties. So you know within the uk market at the moment I would say there's about 25% that were probably fit within our initial criteria. How much that's then splits down to actual factors around installation. That mean we wouldn't work. We don't you know we're working on that but we don't have a number.
| 18:53.49 | Johan | So in terms of replacing an an oil driven Boiler is there Any Yeah I don't know anything about this industry but is there a regture and how often do you replace one of these and and how do you see a cycle on this in terms of. Actually doing because there's a cost implication of actually doing something.. The biggest problem is doing that that it's easy and not doing anything.
| 19:13.25 | James Macnaghten | Oh yeah. So the average age of a gas boiler in the u k is meant to be about 1112 years um and it sort of gets to the end of the life and there's a problem and your installer says. Well, you might as well just buy a new one. They're not They're not very gas. Boilers are quite cheap oil boilers tend to be more expensive and from my experience.
| 19:30.77 | Johan | Okay.
| 19:37.37 | James Macnaghten | It's at least 20 years on average the life I have seen a boiler recently that was over fifty years old um and ah, no, there's not massive churn I think of the I think there's about 40000 a year in the Uk gets sold every year so but it's from our side that's still a very big number.
| 19:37.58 | Johan | Are. So So so not massive churn.
| 19:50.14 | Johan | Um, how right I mean it's yeah for sure.
| 19:56.10 | James Macnaghten | You know? Yeah, um and you get. Yeah, so so that's that's the oil Boiler market. They're also they tend to be oil. Boilers tend to be bigger and heavier and a lot of people just don't like ah so a lot of people I talked to just don't like having them because you know you do get leaks from oil tanks.
| 20:12.63 | Johan | Um, death.
| 20:15.25 | James Macnaghten | And it smells I don't know if you've been around oil boilers but they do tend to smell a bit when they're they're running.
| 20:17.80 | chrissass | Well, the us I remember oil also for your property. There was some hazmat issue of having oil stored in your old tanks and whenever you get home inspection. You had to see if they had had oil at 1 time and there was some risk there as well. So I don't know if that's the same in the Uk but that was clearly for the us home market. If you looked at older homes you you probably weren't as excited if they didn't do a ah graceful job of getting rid of their oil tanks.
| 20:40.80 | James Macnaghten | Yes, and look they do tend to have little leaks and drips. You know So I I think most people would prefer not to have an oil tank. Um, that's my experience. But again as you said the the ineraries why change anything and you know there may be some.
| 20:55.31 | Johan | Um, yeah.
| 21:00.11 | James Macnaghten | Regulatory points where from 2026 the uk government's consulting on ah not allowing you to buy a replacement one. But then again you know you can keep an oil when when is an oil boiler a new boiler and you know you can replace a lot of parts. So I think from our side it it needs to be driven by cost.
| 21:10.53 | Johan | Um, yeah.
| 21:19.30 | James Macnaghten | Effectiveness and really low low-cost cheap electricity I think most people will change if they are they will pay slightly more to change and when I say slightly more you know five ten percent more I don't believe people will pay 50% 100% more the ones that will are a much smaller subset. So. It's very much around time of use pricing versus the price of oil.
| 21:40.75 | Johan | Yeah, so what's if if I look at it ah from an your perspective. What's the lifecycle of of 1 or yours if we put it into to my house tomorrow. How how long will I have it. That's the design life 20 years okay yeah
| 21:52.71 | James Macnaghten | 20 years that's that's the design life and that's what I think that's what I think we can make it for yeah.
| 21:59.78 | Johan | And and looking at it because I've read that the uk as every other country now has put out a C O two free or c two neutral by 20 x I think it's twenty fifty in the Uk and then everyone plays around with these numbers like Chris said in the beginning if it's if it's now also with gas or or with with nuclear but but are there. Any.
| 22:08.63 | James Macnaghten | Um.
| 22:19.29 | Johan | Kind of grants or incentives for from governments you touched on this a little bit in terms of replacing. You know we see with electric cars I'm from the nordics where they were quite quick out in terms of doing the replacement or actually the incentives of moving to electric cars. But. With with such a hard and and and home offices and homes are the biggest kind of one of the biggest ones and and don't wouldn't that be a great way to to kind of subsidize or or support this change should we get rid of the oil quicker.
| 22:48.50 | James Macnaghten | I'm so chance there is no grant. We're two, we're too early stage. You can get a grant for a heat pump in the Uk um, so as's the boiler upgrade scheme I have a very mixed view of grants. Um in in the.
| 22:52.31 | Johan | Um, so he pumps it. Okay.
| 23:03.68 | James Macnaghten | It's very sometimes it's very hard to wean yourself off them and so in the example, there's enough money for 20000 insals a year for the next three years um what you then tend to is feast off famine. Everybody's running around trying to install their unit then the money runs out and everyone goes I'm stopping now and I wait and then suddenly you've got no work for four months because people's head they're like.
| 23:22.76 | Johan | A.
| 23:23.16 | James Macnaghten | Want that £5000 which is what what it looks I would much rather get to the position where you know it's a straight commercial sale and proposition and you get there if you have the right pricing structure and electricity so you can do 1 of 2 things you can either put the right pricing structure in place and go. The wholesale price is low. The consumer can buy it for a low price when it's high. They they buy it for a high price. Um, or you end up going? No we're we're going to put a whole lot of charges on at the moment which is part of what they do they put network charges on they put social charges for previous wind farms that wind turbines are being built. And so you end up going ah and then you go I need to pay people to be flexible and I'm like if you actually have the right market structure. You don't need to pay people to be flexible. They simply will do the right behavior because they it makes economic sense.
| 24:11.87 | chrissass | So what I've heard you say in our precall when we spoke about this is that although you're producing and installing units right now. Eventually you see this model maybe licensed out or going somewhere wider as well is that still did I Misunderstand or is that correct.
| 24:27.22 | James Macnaghten | No, so so I think there are maybe there were 2 aspects to it the when we put a unit into someone's home. We end up just because of the way the unit you you know in charging it. You know when it's discharged you get to understand really. Accurately how much energy that home uses and and and heat usage you know heat usage is the sort of I was to try and describe it that you know you use 1 unit of energy for electricity. Normally if you put an electric vehicle in you'll now use 2 units on your home. Ah, your hot water is a third unit. But actually heating is 3 more units again. So the heating and hot water is like 2 wo-thirds of your home energy usage. Um, so but ah, the heating bit is very much related to temperature so in our in our world. We see a scenario where you you sign a deal with your energy supplier and. They say to you look every unit of electricity use I'm going to charge you I don't know 20 p 25 p but every unit I put into your heat battery I'm I'm only going to charge you 5 p you let me decide when to charge it you can take heat out whenever you want and the energy supplier they can now aggregate hundreds of thousands of these units. They can look at the the fact it's going to be windy for the next few days they decide when to charge it and it allows them to manage their customer's demand to match everything they you know to fit in with the you know the generation of the market and to me that's the sort of where we're trying to build too slowly which is most homeowners have no interest in heating I think. I read somewhere that if they spend 30 seconds a year thinking about their heating that's about you know I you know I'm I I clearly have you know need to get out more because you know I I think about it but most people I know just some of them don't even know whether they're on gas or oil.
| 26:15.80 | chrissass | Yeah, but I think right now with the price of energy people are keenly aware that that they're they're spending more than perhaps they had in the Past. Um, but what you describe to me sounds like a plan where if I were sitting over in your shoes I'm in the cheap seats here as I say. Um, I'd be working with the developers. The the renewable projects and and have this be incorporated into their business plan where they're where they're selling your unit almost subsidizing and bringing the unit in in a model like you just said right? So you know if you use this kind of technology. It gives me a more predictable customer for my my variable. Renewable. So when it's really windy I Can you know sell it afford to sell it to you cheaper and I'm not going to you know run into that energy into the ground or whatever I need to do to to not have surplus capacity and then I can sell it at regular times at a mark of values and when the market's high I mean it sounds like your your model anyway. But the the gate is you need to have critical mass of these devices within their footprint to make that that works you get the economies of scale.
| 27:15.49 | James Macnaghten | Yes, so you need ah you need reliable units which is why we're putting them out in the field so we can get ah you know good running data and we get to understand the installation issues we are looking at how to scale production so we can make them you know for for as low as possible cost. And we're talking to the energy suppliers about how this sort of model will work but to give you an ah sort of idea the the inflection point in the the uk will sort of hit this inflection point where when you start installing more and more of your wind you get these longer longer periods of 0 wholesale pricing. Um. That doesn't happen till about 25 26 we hit the inflection point mayven be 27 and we are ahead of the world. So we're trying to. We're trying to position ourselves so that when that point comes we can scale rapidly and everybody's comfortable with the technology There's absolutely you know with all the best will in the world. Everybody wants to see units running for several years to understand reliability points customer feedback customer satisfaction you know is it is it doing what it says on the tin.
| 28:22.20 | Johan | So if we talk in scale which which we we like on this show because that's part of the transition. You mentioned in the beginning that you're a small company or fairly small in the startup right now. So apart from the technology and and production scale which which is a separate topic. Definitely. Difficult enough. But then the other part is obviously the commercial scale. So how do I get this out to x number of thousands or even million of customers. So how how do you see? How do you look at this because that's also a wind of an opportunity to making sure that. Ah, that the the units actually goes out was produced and and with a smaller team. It's it's a consumer market. It's not super easy to to get access to to consumers.
| 29:07.79 | James Macnaghten | So we're more. But so so it's fair for exact fair. Um, so we want units in the field ah to prove reliability to and you know to to hundred a whole installation process but our main focus is actually on stripping cost out of manufacturing and automating the process. So. Where I would like to be is within 2 years have all of the elements of a I mentioned to you about this It's actually a factory that can produce 10 units an hour 20000 units a year. Um because our view is that the sort of numbers you would want is 15 factories like that by 2030 so we need to. Design. We've got the product but if I went to someone else in in Europe big big manufacturer you and and I think we see ourselves. We're very much we will fit with another people's product portfolio. It's no good me taking our unit to them and they go it weighs how much and how do I make this what I want to do is take them unit. Go here. It works customers. Love it. This is how you make it now we can sign a license deal because actually I think we're going to need to scale this sort of production in pretty much every country in the europe at the same time because of the timing of when renewables suddenly come online so the way to scale. It is to have a proven product and factory design that you can you can sell to people. And they can you know they've got this factory that was making gas boilers. They've got the space and they convert it.
| 30:28.43 | chrissass | So the 1 thing I noticed having lived in the us and moved to Europe is we have these wonderful thing called heat waves in the summer and in Europe and and so with my heat pump in the us it. It is didn't do really well when it got very cold. It did okay when it was cold but it didn't do the extremes. Well. But it sure kept me cool when it was warm ah does this solution lend itself to any kind of cooling as well does that thermos analogy work for making things cool or is it really only efficient for heat.
| 30:57.83 | James Macnaghten | Ah, it doesn't it's really only for heat. Um I think that that would be well so one of the other benefits. You said if air condition it so heat pumps if you put them into ducted systems are great for both cooling and heating. We tend not to use ducted systems if you try and put cold water through your radiators in the summer to cool your house. It gets quite messy. You know you get a lot of condensation. So I would say while I would love to do some cooling. No and you can drive cooling processes with heat. But it.
| 31:20.50 | chrissass | Yeah, yeah, yeah.
| 31:33.73 | James Macnaghten | It doesn't make sense every time I do the numbers it. It just doesn't stack up.
| 31:36.52 | chrissass | But that means in your is is that limited the market or is that just accepting because what I see in Europe and yet Johan and I have talked about this number of times especially in the summertime while I'm sitting here in my apartment and in the alps where it should theoretically be cool and it perhaps isn't as cool as I would like um. Does that really cut the market down in your in your estimation or is there enough old properties and properties that have you know the the plumbing in place and not enough new construction to go on where where they would change to a different architecture right? So those numbers you threw out of the 22000000 ah the boilers getting replaced are people just replacing that or are they going to forced air and things. Like that like they have in North America
| 32:15.89 | James Macnaghten | The primary look I think everywhere is heat pumps. So um, depending on whether you've got a wet hydronic system or a forced air I suspect with forced air people will predominately go for heat pumps for the reasons you've said which is you can reverse it in the summer to get some cooling. It depends on where you are in the yeah uk well, it's very nice to have air conditioning most homes don't um, it's only a tiny set of the market I suspect as you go further south into europe it becomes more and more popular. Um I think from our side and where we are sizewise you know. If we got to a point where we'd saturated the market I would be very happy.
| 32:54.40 | chrissass | Yeah, just curious because that's one of my pet peeves when it gets hot here that with global warming or whatever that that there seems to be more and more heatways. But I don't have a long enough history in Europe to know if that's really statistical or just an anomaly but I've lived through a lot of omen. Miss Air conditioning when I live here and I can't imagine I'm the only person on the continent thinking that way. So but but so it does make sense what you're telling me I I like the idea of taking the energy and storing it. So what's the efficiency level of doing it this way. Do do we need to go in.
| 33:16.20 | James Macnaghten | I'm so assure you're not.
| 33:30.16 | chrissass | And rewire. So this thing goes outside maybe or in the garage or so on it's too heavy to carry into the house. So is there a huge electrical component that needs to put in to create to create this kind of heat.
| 33:37.61 | James Macnaghten | Ah, no, well. so so we we it depends on the so in the uk we design it around single phase I think in most of Europe it's 3 phase supplies. So yeah, if we were in Europe. It'd be a 32 amp supply in the Uk about Hundred amps is the maximum supply you get in a single phase. We can draw 90 amps on a single phase but we've put in some I would say smarts around the charging working we work with a company called Myener energy who ah make a very popular. They make a couple of products. 1 ne's called a zapi and 1 ne's called an eddy. Basically the edy is a hot water heater that was originally designed for using extra solar excess cellappv and we've basically built an eddy on steroids which means that when we plug it into the home. It can go anywhere between 0 and ninety amps. If you're generating extra pv. It can use it if you switch your car charger on it turns down if you switch your you know your othern on it turns down so it's very much we regulate and we always keep the unit charging below your fuse limit but the aim is to get the absolute maximum through your connection to the grid that you can.
| 34:46.56 | chrissass | And then how does this scalup so the other thing about being in Switzerland is we have a lot of multifamily so and not like in the us where where probably many people live in their own homes here. It's very popular. For example I'm in a flat here. Um. How would I scale this up for this kind because there's a large population living in multifamily.
| 35:06.20 | James Macnaghten | With just multiple units. You can gang them. They're like you know in the sense they're like cells you could just put 5 or 6 together to do the whole property we've we have done 2 not that we've done 2 for a specific application which I'm not allowed to talk about yet because it.
| 35:13.44 | chrissass | And have you done that yet have you gone into multifamily.
| 35:24.46 | James Macnaghten | Might is just get the publicity round. It's going to come out soon. But it was they just needed more power and more heat. So we put 2 units in but is it what we saw from doing that is I could put I could have put 5 in it's it's relatively straightforward from a plumbing perspective. You know.
| 35:39.82 | chrissass | And what about swimming pools have you done any pools yet.
| 35:42.98 | James Macnaghten | No, and I would broadly refuse to do swinging pools because they are perfect application for heat pump. So you only need the water heated to sort of 28 ° you will get very very high c ops on a heat pump but ah delivering at that sort of low temperature and it would just be wrong to use. You know we're really clear. We want to tackle problems that heat pumps can't tackle. We don't want to go and so we don't really tackle new build. We don't tackle applications like that I just think I just refuse because it's the wrong solution and I get you know grumpy let' time.
| 36:15.67 | chrissass | And you say you're not the subject matter expert.
| 36:16.35 | Johan | Um.
| 36:21.26 | James Macnaghten | Know but I do well I've done a lot with heat pumps and I really like them and and it just so actually swimming pools so swiming pools are one of the best you know, especially in if they're used in the summer or they're outdoors you get lots of solar energy in the summer from solar pv it's warm. You can run your heat pump for your swimming pool. And then I go and see people and they have an oil boiler heating the swimming pool and I just I despair.
| 36:41.67 | Johan | So so if we go back a little bit. We talked about the technology and 1 thing that we I'm actually very interested in is is obviously the business models and how do you get it out and we're talking here about. An upfront cost if you're going to change the boiler or not or if you're going to do it as a retrofit for for something else. It is an upfront cost in 1 way or the other is there any way of looking at this. We're seeing more and more for example, Pbs that it becomes more as a service model like solar per hour or.
| 37:02.17 | James Macnaghten | Yes.
| 37:15.38 | Johan | Is there anything you're looking for this to kind of stop kind of come over the hurdle of an upfront cost and and and put that on to more of a recurrent cost for better. Ah roi.
| 37:22.22 | James Macnaghten | You know? So I think so I think that that has an option but it's still quite a long way. You know you know to do a sort of heat as a service model is broadly what I was describing with the the utility model where you let them decide how to charge it. Um, the problem is is that.
| 37:35.60 | Johan | Um.
| 37:41.31 | James Macnaghten | It's quite difficult in the uk the regulator won't doesn't allow energy sp suppliers to lock customers into long-term contracts so it's then hard to see you but you probably want a pension fund or a third -party owner owning the asset and you could easily see that happening but it's very unlikely that you will get. The the energy sp supplier will want to own the heat battery because you know if you switch to their competitor then they're just sitting there owning an asset that their competitors turning on and off. So I think from a competition perspective. Ah, you're likely to have it split into having these units should be able to be asset finance so you could imagine a. Pension fund having you know thousands of them in a portfolio understanding the credit risk you know and they just get and then at the same time. The homeowner has one energy sply and they don't like them and they have the ability to switch to another one.
| 38:28.92 | Johan | Which could be an interesting Part. We're actually running some of these investment fund pensions fund on the show later on this spring I'll ah make sure I'll ask that question because I think this is a really interesting Perspective. We're not just talking about heat pumps or or batteries. Ah, but we're also talking about Pvs on the roof So Whatever needs to be done electric charges for the cars. We're looking at ah upfront investment in this transition and and how do we get by it and we see it a lot in the software industry and the service industry is coming more and more to a kind of reoccurrent model. But. We're also talking a lot of regulation in the energy industry which always complicates things that takes a long time. Well so does utility so we got double on it I guess.
| 39:05.40 | James Macnaghten | And takes a long time.
| 39:11.76 | chrissass | How How are they? How are you going to market with this. Ah, if you showed up my door with your pamphlet. You can get your pickup truck out there. You're the heat heat guy and my Boiler's broken I've called you. What's the market's reception of this. Um, ah they sketch. Yeah, they scratch in their head is is this seem too good to be true. Do they not believe the energy prices. What what kind of questions or feedback you getting.
| 39:31.82 | James Macnaghten | No, so the biggest problem is that you your boiler is broken and you need a quick solution So Almost certainly at this moment in time you're just going to buy another boiler because you you want your house to be warm. Ah so with us it's like where's it going to be Sighted. Ah. You know so outside do we need? we put a concrete pad down. For example, if it's you know you can go in your garage but otherwise you can need a concrete pad. There are things at the moment that take time so we're not, We're not at the position yet where I would like to be which is where we get that call and we go. Yes, we can do that we'll give you a temporary solution for a couple of days and we'll get it all Installed. Um. But if you look at us in terms of where we are within the marketplace we are. You've got the early adopters. Um, you know we are but we are customers are before the early adopters at the moment so you know we've been to some homes where we go not sure this is going to work and they go no no, it really will work and we're Going. No I think it I think you know there's a. You know it's going to be difficult. No no, they're going. It'll be absolutely fine and so but that doesn't tell us where we want to go which is if you sort of look at the the distribution Curve. You know the sort of big block in the middle just to sort of upfront that is work in progress which is. If your average customer their boiler breaks down which is normally when they make a decision about changing a boiler and they ring up and you go to them Iki I can replace it. This is the price but there's an alternative and we can get it in how many of them is it 5% is it 1% is it 10% so that is sort of again work in Progress. We don't know the answer to that. But at the current moment I Love my customers. They're all in they're all interested in not producing carbon. Ah they want to do this. They're engaged with energy I get sidetracked regularly with conversations I get told off because we just talk about the whole house. So but it's yeah you know that's where we are at the moment but that's not. Where our long-term market is which is can you have widespread adoption of this just in the same way you would have a ah different type of boiler.
| 41:29.33 | chrissass | And how far away are you from that model because to me that that's analogous to someone had an early electric car or even today having electric car. You're probably not mainstream quite yet even though they're getting there. Um, but yeah, you're you're still ways away from regular market then.
| 41:42.47 | James Macnaghten | I think yeah, yeah, we're definitely reg so I to my mind we're at least you know? Ah, we're we the earliest we could start doing those sort of conversations would be next year you know when we and we might start to want to have some you might want the conversations but you want to have units available that are just sitting there so that somebody rings up and we go right? Can we get it into that house in three days so we're not so we need to have both the spare capacity. We need to understand the installation processor. That's really really slick and at the moment. You know you go into homes and we we generally go into older homes and you know plumbing is often complicated sometimes it doesn't work anyway. Even before that you know before we go in there so to me, we've got a ah fair bit of work to do but I would say the earliest I would be able to know that answer is later on next year
| 42:34.44 | chrissass | And then going out to Market is this direct right now or are you expecting plumbers and folks across.
| 42:43.51 | James Macnaghten | It's direct. It's it's direct. Um, we're generally going to keep we keep most the installation in-house because then it just gets done and it's in our control and it's everything's done to the right standards. Um Roots Market is one of the things where which is why? which Also why we're talking to the energy suppliers because what we really want. Are large routes to large numbers of customers going individually via smaller plumbers. You know heating engineers that's going to you know to my mind. That's not really where we want to want to take this.. It's it's too slow and it requires too many people to manage.
| 43:18.12 | Johan | So so coming back a little bit to you. You mentioned the when you come to the house you look around. Obviously you have all the discussions we have that with ev customers. We have that with Pb customers and everyone especially before the early adopters who maybe now the early adopters that are very equal. Ah, savvy they they they have done their research and all the rest 1 question I'm still looking at this ah big thing behind you on on on the board. Ah for the people that are watching the Youtube channel but eggs how how.
| 43:46.40 | James Macnaghten | There just man.
| 43:50.43 | Johan | If you put this into the garage or even sometimes you a block of cement or or something stable on outside is it hazardous is so so you can you can run into it. Obviously you get a little bit hit but it's not youre gonna tip it over. It's a ton of several tonnes. It's not hot. Ah.
| 43:56.69 | James Macnaghten | No, but it it's like it's it's it's like it's It's like a um in terms of you know, steel. So It's like it's a bit like a you know Propane Big Propane cylinder as In. It's just thick steel on the outside. Ah,, there's no fire Hazard. You can put it next to the house you can put it in the garage. You know you don't need to have it a certain distance from the house or anything like that. Um and surprising enough when you stand next to it it because I think because of the shape or because it's Circular. It really doesn't feel as large as you might think it would be.
| 44:33.92 | chrissass | How did you get to that size is how how is the thing that we're looking at what makes that optimal.
| 44:39.85 | James Macnaghten | Um, I wanted to make it well I wanted something that charged at the maximum rate you could charge on a single phase to apply for 5 hours which is the period of time you get cheap off peak tariffs in the Uk. So that's a hundred kilowatt hours that the unit behind me stores a hundred Kilowatt hours um it was it was that that was sort of how I got the logic and I also wanted it to behave ah have the same power output as a boiler you know which is 30 we've we've put it at a thirty Kilowatts but what I wanted was something that was nice and ah punchy in terms of power output and heat. And gave people the same sort of feeling they have at the moment because generally I think people don't like change and when you fit a heat pump. You'd need certain changes in behavior and how you heat your house which people often struggle with.
| 45:30.61 | Johan | So I know we're coming up to to the 45 minutes if we take a little bit of a side track not for for another 45 minutes because that's unfortunately not what we have time for but I did some background background research. We also had a pre-talk I know that you're ah so. An advocate of sustainability. You do a lot of things around this. You've you've done a lot of battery projects kind of in your past as well. Any kind of I wouldn't say a magic ball here. But what do? What do you think in terms of your discussions also with with the home consumers. what what are what are the main. Changes that are happening in the near future and and what do you see some of the obstacles now of actually moving towards what we all want I guess ah, especially on this show a net zero.
| 46:20.95 | James Macnaghten | So I I think current energy prices just make the whole market challenging I think people are you know electricity prices are high gas prices are high. Oil is high. Um I think it's making that that's the negative I think on a positive. It's making people focus. Can they use less energy. What can they switch to. Um, I think the biggest thing I keep coming across is people where how you you know when you start from a relatively old to the Uk I think we have pretty much the oldest properties in in Europe ah, certainly on average I think there are some of the least well insulated. Um. So you're starting from a position where and people look at how they switch to reduce the carbon and every time they come back and they look at the bill they go. This is crazy and I can't afford this. Um you know people are told if a fabric first and there are types of insulation that make total sense. If you cavities in your walls. You fill them up. You're loft. You do it when you go and do some of these other things like solid wallll insulation on the outside of building it never ever ever pays back just just you know and and and so people keep getting these bills and they're going I'll just buy another gas boiler because they and I think so the the bit I think is. Lack of clarity. There's lack of guidance from the government. There's lack of trained people in the industry and I think ah homeowners are generally confused because they want to do the right thing they get so many different opinions. Someone says someone says there's there's very little clear guidance and and they end up.
| 47:47.28 | Johan | Um, and.
| 47:53.81 | James Macnaghten | Just going I don't know so I'm going to stick with what I've got um and I think the lack of clarity from the government makes it very hard for the industry. You know it's 1 minute there's lots of this is we going back to the grant idea remember solar panels 1 minute every everyone is installed in the next minute the grants have gone and suddenly all your workers dried up. So.
| 48:05.67 | Johan | Um, is.
| 48:13.21 | James Macnaghten | And and consumers don't want to switch because they're used to having the grants. So I I Just think I'm not a fan of grants I think the government can give support. It can give low 0 rates of vat. It can give ah sort of more soft and fairer levels of support around electricity pricing all of which would to my mind drive it in a more consistent Manner. So at the moment I think the U K is not moving fast enough I think the government wants to move faster but heating your homes has always been difficult from a decarbonization point of view.
| 48:40.44 | Johan | Are.
| 48:42.94 | chrissass | I think what I hear from being in this podcast and making the energy business is is. It's complicated. There. There's a lot of choices. There's ah, a lot of fit even in this conversation. What I appreciated you doing is qualifying out where it fits and where it does it. You're like absolutely I don't want to do a swimming pool cool I get that. Does it fit in every house probably not but there's there's certainly a market and a piece for every element. Um, my final question that that I'm curious about is where are you as a company. So I think you you mentioned that you're not really hitting the market till next year you talked about scaling up so that usually involves some sort of. Third party funding from my experience of starting companies. Ah, where are you guys? What are you doing.
| 49:24.68 | James Macnaghten | Ah, so we had a really good fundraise last year and we were very lucky. We got a very nice grant from uk government. So thank you very much. Ah few k government we are likely to go out fundraising ah sometime around q two q 3 of this year hasn't been set and that will allow us to scale up and start selling. We've we've got I think we've had over 50 people pay deposits which is around six months of production for us um of where we're aiming to be this year so to scale up and do that yes, we will need more money I think we haven't set an actual timeframe. But if we do go out. It'll probably be very similar most of our investors are high net worth investors and private individuals. We haven't gone out for institutional funding and we're probably around a way away from that.
| 50:15.47 | chrissass | And it seems like based on what you just said have you considered crowdsourcing I have a a friend that did an ebike company over in London that that has done very well with crowdsoururcing and building 1 of the largest ebyte companies in Europe in u k.
| 50:19.47 | James Macnaghten | But.
| 50:26.50 | James Macnaghten | So we went on Crowdcube last year I don't I but that went really well so we smashed our targets we had masses of inquiries and 1 of the so one of the advantages of crowdfunding for consumer facingcing product like ours is you not only get investors but you also get.
| 50:43.77 | Johan | Um, if so.
| 50:44.17 | chrissass | Yeah, get the pipeline exactly Well this is exciting I appreciate you coming on our program and sharing with our audience I Want to thank you very much for being our guest. It's been fascinating to me yo on any final thoughts.
| 50:45.16 | James Macnaghten | Customers. Yeah.
| 50:56.60 | Johan | No Likewise I'm always fascinated when we bring on topics that that are barely new or fairly new to us or sometimes really new to us and as consumers and households. Even if we all have our households at home As you said we don't pay enough attention maybe to this So for me fascinating. Really interesting even though I live my house up in the Scandinavian countries is very isolated because we need extremely isolated houses but we also need a lot of heat. So look forward to seeing you there.
| 51:27.16 | James Macnaghten | Brilliant well look Chris Johann thank you so much for having us on and giving me a bit of a chance to talk about caldera and what we do? Um I'm amazing. How has gone so quickly. But thank you very much indeed and you know, ah. Maybe we? we'll be able to give you an update in a year's time or something like that.
| 51:44.73 | chrissass | James I'd very much like that I like to see where are they now? Yeah Mtv does this where are they now or behind you where they've gone so I do anticipate coming back to our earlier guests just to see especially companies like yours where it's been a passionate story and and there's a lot of opportunity. So thank you again for our audience.
| 51:44.89 | Johan | Um, perfect.
| 52:03.88 | chrissass | You spent another hour listening to insider's guide to energy if you've enjoyed the content. Please share it with your friends and don't forget to hit that subscribe button follow us on Linkedin and watch the Youtube channel and you can see what this device looks like in the background behind our guests look forward to speaking to you again next week bye bye